10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

ý  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2019

or 

o  TransitionReport Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to       

 Commission File Number 001-11339

PROTECTIVE LIFE CORPORATION

(Exact name of registrant as specified in its charter) 

DELAWARE	95-2492236
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

2801 HIGHWAY 280 SOUTH

BIRMINGHAM, ALABAMA 35223

(Address of principal executive offices and zip code)

 Registrant’s telephone number, including area code (205) 268-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).  Yes ý No o

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

Large accelerated filer o	Accelerated Filer o
Non-accelerated filer x	Smaller Reporting Company o
	Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 ý

Number of shares of Common Stock, $0.01 Par Value, outstanding as of July 23, 2019:  1,000

PROTECTIVE LIFE CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR QUARTERLY PERIOD ENDED JUNE 30, 2019

TABLE OF CONTENTS

PART I

		Page
Item 1.	Financial Statements (unaudited):
	Consolidated Condensed Statements of Income For The Three and Six Months Ended June 30, 2019 and 2018	2
	Consolidated Condensed Statements of Comprehensive Income (Loss) For The Three and Six Months Ended June 30, 2019 and 2018	3
	Consolidated Condensed Balance Sheets as of June 30, 2019 and December 31, 2018	4
	Consolidated Condensed Statements of Shareowner’s Equity For The Three and Six Months Ended June 30, 2019 and 2018	6
	Consolidated Condensed Statements of Cash Flows For The Six Months Ended June 30, 2019 and 2018	7
	Notes to Consolidated Condensed Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	59
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	108
Item 4.	Controls and Procedures	108
PART II
Item 1.	Legal Proceedings	109
Item 1A.	Risk Factors	109
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	111
Item 6.	Exhibits	112
	Signature	113

PROTECTIVE LIFE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Revenues
Premiums and policy fees	$	945,883		$	941,868		$	1,876,211		$	1,831,034
Reinsurance ceded	(339,996		)	(390,941		)	(658,373		)	(736,364		)
Net of reinsurance ceded	605,887			550,927			1,217,838			1,094,670
Net investment income	725,811			616,462			1,411,735			1,137,325
Realized investment gains (losses)	(48,547		)	(37,337		)	(38,628		)	(46,877		)
Other-than-temporary impairment losses	(198		)	(10		)	(1,493		)	(701		)
Portion recognized in other comprehensive income (before taxes)	(500		)	5			(2,347		)	(2,949		)
Net impairment losses recognized in earnings	(698		)	(5		)	(3,840		)	(3,650		)
Other income	136,322			113,861			245,700			228,272
Total revenues	1,418,775			1,243,908			2,832,805			2,409,740
Benefits and expenses
Benefits and settlement expenses, net of reinsurance ceded: (three and six months 2019 - $260,358 and $515,186; three and six months 2018 - $298,016 and $645,653)	1,003,987			861,548			1,976,753			1,648,350
Amortization of deferred policy acquisition costs and value of business acquired	33,783			52,517			64,183			110,498
Other operating expenses, net of reinsurance ceded: (three and six months 2019 - $55,124 and $106,415; three and six months 2018 - $51,559 and $94,676)	250,931			231,071			486,880			460,322
Total benefits and expenses	1,288,701			1,145,136			2,527,816			2,219,170
Income before income tax	130,074			98,772			304,989			190,570
Income tax expense	21,963			17,277			58,594			34,963
Net income	$	108,111		$	81,495		$	246,395		$	155,607

See Notes to Consolidated Condensed Financial Statements

2

PROTECTIVE LIFE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Net income	$	108,111		$	81,495		$	246,395		$	155,607
Other comprehensive income (loss):
Change in net unrealized gains (losses) on investments, net of income tax: (three and six months 2019 - $264,523 and $566,586; three and six months 2018 - $(113,653) and $(267,032))	995,112			(427,550		)	2,131,443			(1,005,262		)
Reclassification adjustment for investment amounts included in net income, net of income tax: (three and six months 2019 - $(84) and $(499); three and six months 2018 - $(1,162) and $(981))	(316		)	(4,372		)	(1,876		)	(3,691		)
Change in net unrealized gains (losses) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (three and six months 2019 - $4,127 and $6,464; three and six months 2018 - $3 and $6)	15,524			11			24,316			22
Change in accumulated (loss) gain - derivatives, net of income tax: (three and six months 2019 - $(742) and $(1,264); three and six months 2018 - $623 and $752)	(2,788		)	2,344			(4,754		)	2,831
Reclassification adjustment for derivative amounts included in net income, net of income tax: (three and six months 2019 - $70 and $128; three and six months 2018 - $43 and $67)	266			162			486			251
Total other comprehensive income (loss)	1,007,798			(429,405		)	2,149,615			(1,005,849		)
Total comprehensive income (loss)	$	1,115,909		$	(347,910	)	$	2,396,010		$	(850,242	)

See Notes to Consolidated Condensed Financial Statements

3

PROTECTIVE LIFE CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

	As of
	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
Assets
Fixed maturities, at fair value (amortized cost: 2019 - $63,349,246; 2018 - $54,466,305)	$	64,710,656	$	51,904,699
Fixed maturities, at amortized cost (fair value: 2019 - $2,640,827; 2018 - $2,547,210)	2,576,216		2,633,474
Equity securities, at fair value (cost: 2019 - $622,178; 2018 - $627,087)	629,965		595,884
Mortgage loans (related to securitizations: 2019 - $0; 2018 - $134)	9,053,400		7,724,733
Investment real estate, net of accumulated depreciation (2019 - $315; 2018 - $251)	6,777		6,816
Policy loans	1,709,110		1,695,886
Other long-term investments	934,770		759,354
Short-term investments	1,220,840		807,283
Total investments	80,841,734		66,128,129
Cash	243,291		173,714
Accrued investment income	730,149		634,921
Accounts and premiums receivable	262,163		113,507
Reinsurance receivables	4,558,158		4,764,743
Deferred policy acquisition costs and value of business acquired	3,474,557		3,023,154
Goodwill	825,511		825,511
Other intangibles, net of accumulated amortization (2019 - $225,912; 2018 - $197,583)	616,931		613,431
Property and equipment, net of accumulated depreciation (2019 - $40,620; 2018 - $33,199)	212,905		184,957
Other assets	1,972,083		250,036
Assets related to separate accounts:
Variable annuity	12,790,474		12,288,919
Variable universal life	1,073,020		937,732
Reinsurance assumed	9,844,996		—
Total assets	$	117,445,972	$	89,938,754

See Notes to Consolidated Condensed Financial Statements

4

PROTECTIVE LIFE CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

(continued)

	As of
	June 30, 2019			December 31, 2018
	(Dollars In Thousands)
Liabilities
Future policy benefits and claims	$	53,470,312		$	41,901,552
Unearned premiums	887,691			872,594
Total policy liabilities and accruals	54,358,003			42,774,146
Stable value product account balances	5,816,503			5,234,731
Annuity account balances	14,179,277			13,720,081
Other policyholders’ funds	1,542,296			1,128,379
Other liabilities	3,246,982			2,374,112
Income tax payable	67,837			38,547
Deferred income taxes	1,177,197			839,316
Non-recourse funding obligations	2,576,538			2,632,497
Secured financing liabilities	126,862			495,307
Debt	1,677,557			1,101,827
Subordinated debt	605,494			605,426
Liabilities related to separate accounts:
Variable annuity	12,790,474			12,288,919
Variable universal life	1,073,020			937,732
Reinsurance assumed	9,844,996			—
Total liabilities	109,083,036			84,171,020
Commitments and contingencies - Note 11
Shareowner’s equity
Common Stock: 2019 and 2018 - $0.01 par value; shares authorized: 5,000; shares issued: 1,000	—			—
Additional paid-in-capital	5,804,059			5,554,059
Retained earnings	1,835,028			1,639,441
Accumulated other comprehensive income (loss):
Net unrealized (losses) gains on investments, net of income tax: (2019 - $197,257; 2018 - $(368,830))	742,063			(1,387,504		)
Net unrealized losses relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (2019 - $410; 2018 - $(6,054))	1,543			(22,773		)
Accumulated gain (loss) - derivatives, net of income tax: (2019 - $(1,136); 2018 - $(2))	(4,275		)	(7		)
Postretirement benefits liability adjustment, net of income tax: (2019 - $(4,112); 2018 - $(4,112))	(15,482		)	(15,482		)
Total shareowner’s equity	8,362,936			5,767,734
Total liabilities and shareowner’s equity	$	117,445,972		$	89,938,754

See Notes to Consolidated Condensed Financial Statements

5

PROTECTIVE LIFE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF SHAREOWNER’S EQUITY

(Unaudited)

	Common Stock		Additional Paid-In- Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareowner’s Equity
	(Dollars In Thousands)
Balance, December 31, 2018	$	—	$	5,554,059	$	1,639,441		$	(1,425,766	)	$	5,767,734
Net income for the three months ended March 31, 2019					138,284						138,284
Other comprehensive income								1,141,817			1,141,817
Comprehensive income for the three months ended March 31, 2019											1,280,101
Cumulative effect adjustments					(50,808		)				(50,808		)
Balance, March 31, 2019	—		5,554,059		1,726,917			(283,949		)	6,997,027
Net income for the three months ended June 30, 2019					108,111						108,111
Other comprehensive income								1,007,798			1,007,798
Comprehensive income for the three months ended June 30, 2019											1,115,909
Capital contributions from parent			250,000								250,000
Balance, June 30, 2019	$	—	$	5,804,059	$	1,835,028		$	723,849		$	8,362,936

	Common Stock		Additional Paid-In- Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareowner’s Equity
	(Dollars In Thousands)
Balance, December 31, 2017	$	—	$	5,554,059	$	1,560,444		$	12,696		$	7,127,199
Net income for the three months ended March 31, 2018					74,112						74,112
Other comprehensive loss								(576,444		)	(576,444		)
Comprehensive loss for the three months ended March 31, 2018											(502,332		)
Cumulative effect adjustments					(81,973		)	(10,552		)	(92,525		)
Dividends to parent					(140,000		)				(140,000		)
Balance, March 31, 2018	—		5,554,059		1,412,583			(574,300		)	6,392,342
Net income for the three months ended June 30, 2018					81,495						81,495
Other comprehensive loss								(429,405		)	(429,405		)
Comprehensive loss for the three months ended June 30, 2018											(347,910		)
Balance, June 30, 2018	$	—	$	5,554,059	$	1,494,078		$	(1,003,705	)	$	6,044,432

See Notes to Consolidated Condensed Financial Statements

6

PROTECTIVE LIFE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For The Six Months Ended June 30,
	2019			2018
	(Dollars In Thousands)
Cash flows from operating activities
Net income	$	246,395		$	155,607
Adjustments to reconcile net income to net cash used in operating activities:
Realized investment (gains) losses	42,468			50,527
Amortization of DAC and VOBA	64,183			110,498
Capitalization of DAC	(237,622		)	(223,686		)
Depreciation and amortization expense	37,428			33,785
Deferred income tax	(219,558		)	3,065
Accrued income tax	29,290			103,092
Interest credited to universal life and investment products	593,993			389,009
Policy fees assessed on universal life and investment products	(829,697		)	(748,474		)
Change in reinsurance receivables	206,585			111,242
Change in accrued investment income and other receivables	41,677			(34,198		)
Change in policy liabilities and other policyholders’ funds of traditional life and health products	(352,132		)	(246,397		)
Trading securities:
Maturities and principal reductions of investments	54,501			117,994
Sale of investments	254,573			118,370
Cost of investments acquired	(204,187		)	(206,741		)
Other net change in trading securities	(43,145		)	13,791
Amortization of premiums and accretion of discounts on investments and mortgage loans	147,485			150,402
Change in other liabilities	241,895			37,809
Other, net	(107,562		)	8,256
Net cash used in operating activities	$	(33,430	)	$	(56,049	)

See Notes to Consolidated Condensed Financial Statements

7

PROTECTIVE LIFE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(continued)

	For The Six Months Ended June 30,
	2019			2018
	(Dollars In Thousands)
Cash flows from investing activities
Maturities and principal reductions of investments, available-for-sale	$	923,494		$	592,514
Sale of investments, available-for-sale	2,033,618			1,417,304
Cost of investments acquired, available-for-sale	(3,246,486		)	(2,126,627		)
Change in investments, held-to-maturity	55,000			39,000
Mortgage loans:
New lendings	(476,310		)	(811,103		)
Repayments	518,663			494,729
Change in investment real estate, net	178			615
Change in policy loans, net	30,778			25,361
Change in other long-term investments, net	62,301			(225,809		)
Change in short-term investments, net	(362,608		)	(101,662		)
Net unsettled security transactions	(263,560		)	141,791
Purchase of property, equipment, and intangibles	(17,262		)	(6,956		)
Cash received from reinsurance transaction	—			20,669
Payment for business acquisition, net of cash acquired	(731,457		)	—
Net cash used in investing activities	$	(1,473,651	)	$	(540,174	)
Cash flows from financing activities
Borrowings under line of credit arrangement, debt, and subordinated debt	$	600,000		$	655,000
Principal payments on line of credit arrangement, debt, and subordinated debt	(9,325		)	(348,684		)
Issuance (repayment) of non-recourse funding obligations	(55,000		)	(77,000		)
Secured financing liabilities	(368,445		)	(913,210		)
Dividends to shareowner	—			(140,000		)
Capital contributions from parent	250,000			—
Deposits to universal life and investment contracts	3,309,880			2,959,133
Withdrawals from universal life and investment contracts	(2,149,967		)	(1,600,400		)
Other financing activities, net	(485		)	(194		)
Net cash provided by financing activities	$	1,576,658		$	534,645
Change in cash	69,577			(61,578		)
Cash at beginning of period	173,714			252,310
Cash at end of period	$	243,291		$	190,732

See Notes to Consolidated Condensed Financial Statements

8

PROTECTIVE LIFE CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1.BASIS OF PRESENTATION

Basis of Presentation

On February 1, 2015, Protective Life Corporation (the “Company”) became a wholly owned subsidiary of The Dai-ichi Life Insurance Company, Limited, a kabushiki kaisha organized under the laws of Japan (now known as Dai-ichi Life Holdings, Inc., “Dai-ichi Life”), when DL Investment (Delaware), Inc., a wholly owned subsidiary of Dai-ichi Life, merged with and into the Company (the “Merger”). Prior to February 1, 2015, the Company’s stock was publicly traded on the New York Stock Exchange. Subsequent to the Merger, the Company remains as an SEC registrant within the United States. The Company is a holding company with subsidiaries that provide financial services through the production, distribution, and administration of insurance and investment products. The Company markets individual life insurance, credit life and disability insurance, guaranteed investment contracts, guaranteed funding agreements, fixed and variable annuities, and extended service contracts throughout the United States. The Company also maintains a separate segment devoted to the acquisition of insurance policies from other companies. Founded in 1907, Protective Life Insurance Company (“PLICO”) is the Company’s largest operating subsidiary.

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for the interim periods presented herein. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting only of normal recurring items) necessary for a fair presentation of the results for the interim periods presented. Operating results for the three and six months ended June 30, 2019, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2019. The year-end consolidated condensed financial data included herein was derived from audited financial statements but this report does not include all disclosures required by GAAP. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The operating results of companies in the insurance industry have historically been subject to significant fluctuations due to changing competition, economic conditions, interest rates, investment performance, insurance ratings, claims, persistency, and other factors.

Certain reclassifications have been made in previously reported financial statements and accompanying notes to make prior period amounts comparable to those of the current period. Such reclassifications had no effect on previously reported net income or shareowner’s equity.

Entities Included

The consolidated condensed financial statements in this report include the accounts of Protective Life Corporation and subsidiaries and its affiliate companies in which the Company holds a majority voting or economic interest. Intercompany balances and transactions have been eliminated.

During the second quarter of 2019, the Company recorded an adjustment related to prior periods to correct an error pertaining to the deferred policy acquisition costs (“DAC”) tax reimbursements paid under reinsurance agreements the Company entered in previous years. The adjustment resulted in an $8.96 million increase to accounts and premiums receivable on the Company’s consolidated balance sheet, with a corresponding increase to income. The Company concluded that the adjustment was not quantitatively or qualitatively material to previously reported periods or the current interim period. As a result, this adjustment was recorded by the Company within the consolidated financial statements as of and for the period ended June 30, 2019.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

For a full description of significant accounting policies, see Note 2 to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. There were no significant changes to the Company’s accounting policies during the six months ended June 30, 2019.

Accounting Pronouncements Recently Adopted

Accounting Standards Update (“ASU” or “Update”) No. 2016-02 - Leases. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of leases. The most significant change relates to the accounting model used by lessees. The Update requires all leases with terms greater than 12 months to be recorded on the balance sheet in the form of a lease asset and liability. The lease asset and liability are measured at the present value of the minimum lease payments less any upfront payments or fees. The amendments in the Update became effective for annual and interim periods beginning after December 15, 2018 on a modified retrospective basis. The Company recorded a cumulative effect adjustment as of the date of adoption, January 1, 2019, establishing a right of use asset and lease liability of $21.5 million on its consolidated condensed balance sheet reflected in the property and equipment and other liabilities line items, respectively.

ASU No. 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update require that premiums on callable debt securities be amortized to the first call date. This is a change from previous guidance, under which premiums are amortized to the maturity date

9

of the security. The amendments became effective for annual and interim periods beginning after December 15, 2018. The Company recorded a cumulative effect adjustment as of the adoption date, January 1, 2019, resulting in a $50.8 million reduction to retained earnings, net of income tax.

ASU No. 2017-12 - Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this Update are designed to permit hedge accounting to be applied to a broader range of hedging strategies as well as to more closely align hedge accounting and risk management objectives. Specific provisions include requiring changes in the fair value of a hedging instrument be recorded in the same income statement line as the hedged item when it affects earnings. In addition, after a hedge has initially qualified as an effective hedge the Update permits the use of a qualitative hedge effectiveness test in subsequent periods. The amendments in this Update became effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. At adoption, January 1, 2019, this standard did not have an impact on the Company’s operations or financial results.

Accounting Pronouncements Not Yet Adopted

ASU No. 2016-13 - Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this Update introduce a new current expected credit loss (“CECL”) model for certain financial assets, including mortgage loans and reinsurance receivables. The new model will not apply to debt securities classified as available-for-sale. For assets within the scope of the new model, an entity will recognize as an allowance against earnings its estimate of the contractual cash flows not expected to be collected on day one of the asset’s acquisition. The allowance may be reversed through earnings if a security recovers in value. This differs from the current impairment model, which requires recognition of credit losses when they have been incurred and recognizes a security’s subsequent recovery in value in other comprehensive income. The Update also makes targeted changes to the current impairment model for available-for-sale debt securities, which comprise the majority of the Company’s invested assets. Similar to the CECL model, credit loss impairments will be recorded in an allowance against earnings that may be reversed for subsequent recoveries in value. The amendments in this Update, along with related amendments in ASU No. 2018-19 - Codification Improvements to Topic 326, Financial Instruments-Credit Losses, are effective for annual and interim periods beginning after December 15, 2019 on a modified retrospective basis. The Company has completed its scoping and gap analysis with respect to the implementation of the new standard. Based on the results of this analysis, the Company’s implementation efforts are primarily focused on the application of the CECL model to a) its portfolio of commercial mortgage loans and b) amounts recoverable from reinsurers. The Company is currently engaged in a project to implement new processes with respect to the measurement and recognition of the CECL allowance for these assets, along with the additional disclosures required by the Update. The impact of this standard on the Company’s financial results cannot yet be reasonably estimated.

ASU No. 2018-12 - Financial Services - Insurance (Topic 944): Targeted Improvements to Accounting for Long-Duration Contracts. The amendments in this Update are designed to make improvements to the existing recognition, measurement, presentation, and disclosure requirements for certain long-duration contracts issued by an insurance company. The new amendments require insurance entities to provide a more current measure of the liability for future policy benefits for traditional and limited-payment contracts by regularly refining the liability for actual past experience and updated future assumptions. This differs from current requirements where assumptions are locked-in at contract issuance for these contract types. In addition, the updated liability will be discounted using an upper-medium grade (low-credit-risk) fixed income instrument yield that reflects the characteristics of the liability which differs from currently used rates based on the invested assets supporting the liability. In addition, the amendments introduce new requirements to assess market-based insurance contract options and guarantees for Market Risk Benefits and measure them at fair value. This Update also requires insurance entities to amortize deferred acquisition costs on a constant-level basis over the expected life of the contract. Finally this Update requires new disclosures including liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in the measurement. The amendments in this Update are currently effective for annual and interim periods beginning after December 31, 2020 with early adoption permitted. However, in July 2019, the Financial Accountings Standards Board (the “FASB”) voted to expose an Accounting Standards Update for public comment which would extend the implementation deadline for public business entities by one year to periods beginning after December 15, 2021. The Company is currently reviewing its policies, processes, and applicable systems to determine the impact this standard will have on its operations and financial results. 

3.SIGNIFICANT TRANSACTIONS

The Lincoln National Life Insurance Company

On May 1, 2018, The Lincoln National Life Insurance Company (“Lincoln Life”) completed its previously announced acquisition (the “Closing”) of Liberty Mutual Group Inc.’s (“Liberty Mutual”) Group Benefits Business and Individual Life and Annuity Business (the “Life Business”) through the acquisition of all of the issued and outstanding capital stock of Liberty Life Assurance Company of Boston (“Liberty”). In connection with the Closing and  pursuant to the Master Transaction Agreement, dated January 18, 2018 (the “Master Transaction Agreement”), previously reported in our Current Report on Form 8-K filed on January 23, 2018, PLICO and Protective Life and Annuity Insurance Company (“PLAIC”), a wholly owned subsidiary of PLICO, entered into reinsurance agreements (the “Liberty Reinsurance Agreements”) and related ancillary documents (including administrative services agreements and transition services agreements) providing for the reinsurance and administration of the Life Business. 

Pursuant to the Liberty Reinsurance Agreements, Liberty ceded to PLICO and PLAIC the insurance policies related to the Life Business on a 100% coinsurance basis. The aggregate ceding commission for the reinsurance of the Life Business was $422.4 million, which is the purchase price and remains subject to adjustment.

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All policies issued in states other than New York were ceded to PLICO under a reinsurance agreement between Liberty and PLICO, and all policies issued in New York were ceded to PLAIC under a reinsurance agreement between Liberty and PLAIC.  The aggregate statutory reserves of Liberty ceded to PLICO and PLAIC as of the closing of the Transaction were approximately $13.2 billion, which amount was based on initial estimates. The final reserve amount determined, as adjusted during the measurement period, is $13.7 billion. In addition, there are certain pending items which remain subject to adjustment in accordance with the Master Transaction Agreement and could result in a gain in future periods. Pursuant to the terms of the Liberty Reinsurance Agreements, each of PLICO and PLAIC are required to maintain assets in trust for the benefit of Liberty to secure their respective obligations to Liberty under the Liberty Reinsurance Agreements. The trust accounts were initially funded by each of PLICO and PLAIC principally with the investment assets that were received from Liberty. Additionally, PLICO and PLAIC have each agreed to provide, on behalf of Liberty, administration and policyholder servicing of the Life Business reinsured by it pursuant to administrative services agreements between Liberty and each of PLICO and PLAIC.

The terms of the Liberty Reinsurance Agreements resulted in an acquisition of the Life Business by the Company in accordance with ASC Topic 805, Business Combinations.

The following table details the purchase consideration and final allocation of assets acquired and liabilities from the Life Business reinsurance transaction as of the transaction date.

	Fair Value as of May 1, 2018
	(Dollars In Thousands)
ASSETS
Fixed maturities	$	12,588,512
Mortgage loans	435,405
Policy loans	131,489
Total investments	13,155,406
Cash	35,179
Accrued investment income	152,030
Reinsurance receivables	272
Value of business acquired	379,717
Other assets	916
Total assets	13,723,520
LIABILITIES
Future policy benefits and claims	$	11,751,895
Unearned premiums	—
Total policy liabilities and accruals	11,751,895
Annuity account balances	1,864,141
Other policyholders’ funds	41,936
Other liabilities	65,548
Total liabilities	13,723,520
NET ASSETS ACQUIRED	$	—

The following unaudited pro forma condensed consolidated results of operations assumes that the aforementioned transactions of the Life Business were completed as of January 1, 2017. The unaudited pro forma condensed results of operations are presented solely for information purposes and are not necessarily indicative of the consolidated condensed results of operations that might have been achieved had the transaction been completed as of the date indicated:

	Unaudited
	For The Three Months Ended June 30, 2018		For The Six Months Ended June 30, 2018
	(Dollars In Thousands)
Revenue	$	1,317,159	$	2,733,479
Net income	$	88,883	$	201,751

Great-West Life & Annuity Insurance Company

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On January 23, 2019, PLICO entered into a Master Transaction Agreement (the “GWL&A Master Transaction Agreement”) with Great-West Life & Annuity Insurance Company (“GWL&A”), Great-West Life & Annuity Insurance Company of New York (“GWL&A of NY”), The Canada Life Assurance Company (“CLAC”) and The Great-West Life Assurance Company (“GWL” and, together with GWL&A, GWL&A of NY and CLAC, the “Sellers”), pursuant to which PLICO will acquire via reinsurance (the “Transaction”) substantially all of the Sellers’ individual life insurance and annuity business (the “Individual Life Business”). 

On June 3, 2019, PLICO and PLAIC completed the Transaction (the “Closing”). Pursuant to the GWL&A Master Transaction Agreement, previously reported in our Current Report on Form 8-K filed on January 25, 2019, PLICO and PLAIC entered into reinsurance agreements (the “GWL&A Reinsurance Agreements”) and related ancillary documents at the Closing. On the terms and subject to the conditions of the GWL&A Reinsurance Agreements, the Sellers ceded to PLICO and PLAIC, effective as of the closing of the Transaction, substantially all of the insurance policies related to the Individual Life Business on a 100% indemnity basis net of reinsurance recoveries. The aggregate ceding commission for the reinsurance of the Individual Life Business paid at the Closing was $767.1 million, which amount is subject to adjustment in accordance with the GWL&A Master Transaction Agreement. All policies issued in states other than New York were ceded to PLICO under reinsurance agreements between the applicable Seller and the Company, and all policies issued in New York were ceded to PLAIC under a reinsurance agreement between GWL&A of NY and PLAIC. The aggregate statutory reserves of the Sellers ceded to PLICO and PLAIC as of the Closing were approximately $20.4 billion, which amount was based on initial estimates and is subject to adjustment following the Closing. To support its obligations under the GWL&A Reinsurance Agreements, PLICO established trust accounts for the benefit of GWL&A, CLAC and GWL, and PLAIC established a trust account for the benefit of GWL&A of NY. The Sellers retained a block of participating policies, which will be administered by the Company.

As of the purchase date, the Company has recorded an estimate in the amount of $51.9 million related to contingent consideration. The final ceding commission is subject to adjustment based on these amounts. These amounts are accrued within other liabilities in the Company’s consolidated condensed balance sheet.

The contingent consideration is comprised of a holdback provision and a post-closing sales adjustment. The holdback amount is related to the performance of certain blocks of business for a specified period of time after the close of the transaction.  The range of amounts payable to Great West under this provision is $0 - $40 million. The Company’s best estimate as of June 30, 2019 was $40 million.

Great West is also entitled to a payment for certain post-closing sales occurring between June 1, 2019 and December 31, 2019. At this time, a range for this payment cannot be estimated and the Company established a liability of $11.9 million on the transaction date, which represents the Company's best estimate of the present value of future payments as of the transaction date.

The GWL&A Master Transaction Agreement and other transaction documents contain certain customary representations and warranties made by each of the parties, and certain customary covenants regarding the Sellers and the Individual Life Business, and provide for indemnification, among other things, for breaches of those representations, warranties, and covenants. The terms of the GWL&A Reinsurance Agreements resulted in an acquisition of the Individual Life Business by the Company in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations.

The following table details the preliminary allocation of assets acquired and liabilities assumed from the Individual Life Business reinsurance transaction as of the transaction date. The Company has not completed the process of determining the fair value of assets acquired and liabilities assumed, but will do so in the twelve month measurement period subsequent to the transaction date. These estimates are provisional subject to adjustment. Any adjustments to these fair value estimates will be reflected, retroactively, as of the date of the acquisition, and may result in adjustments to the value of business acquired.

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	Fair Value as of June 1, 2019
	(Dollars In Thousands)
ASSETS
Fixed maturities	$	8,697,533
Mortgage loans	1,386,228
Policy loans	44,002
Other long-term investments	1,579
Total investments	10,129,342
Cash	35,607
Accrued investment income	101,306
Accounts and premiums receivable	62
Premium due and deferred	1,657
Value of business acquired	491,493
Other intangibles	28,600
Other assets	1,537,848
Assets related to separate accounts	9,583,217
Total assets	21,909,132
LIABILITIES
Future policy benefits and claims	$	10,993,716
Annuity account balances	253,748
Other policyholders’ funds	220,117
Other liabilities	39,370
Liabilities related to separate accounts	9,583,217
Total liabilities	21,090,168
NET ASSETS ACQUIRED	$	818,964

Assets related to separate accounts and liabilities related to separate accounts represent amounts receivable and payable for variable annuity and variable universal life products reinsured on a modified co-insurance basis.

The following unaudited pro forma condensed consolidated results of operations assumes that the aforementioned transactions of the Individual Life Business were completed as of January 1, 2018. The unaudited pro forma condensed results of operations are presented solely for information purposes and are not necessarily indicative of the consolidated condensed results of operations that might have been achieved had the transaction been completed as of the date indicated:

	Unaudited				Unaudited
	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars In Thousands)
Revenue	$	1,548,668	$	1,461,832	$	3,203,698	$	2,828,369
Net income	$	124,161	$	122,977	$	263,490	$	182,034

The amount of revenue and income before income tax of the Individual Life Business since the transaction date, June 1, 2019, included in the consolidated statements of income for the six months ended June 30, 2019, amounted to $77.7 million and $7.7 million. The Company incurred approximately $12.2 million of non-recurring transaction costs for the six months ended June 30, 2019.

Intangible assets recognized by the Company included the following (excluding goodwill):

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	Estimated Fair Value on Acquisition Date		Estimated Useful Life
	(Dollars In Thousands)		(In Years)
Distribution relationships	$	15,000	18
Technology	13,600		10
Total intangible assets	$	28,600

Amortizable intangible assets will be amortized straight line over their assigned useful lives. The following is a schedule of future estimated aggregate amortization expense:

Year	Amount
	(Dollars In Thousands)
Remainder of 2019	$	1,279
2020	2,193
2021	2,193
2022	2,193
2023	2,193

Based on the balance recorded as of June 1, 2019, the expected amortization of VOBA for the next five years is as follows:

Year	Amount
	(Dollars In Thousands)
Remainder of 2019	$	(4,966	)
2020	(12,292		)
2021	(6,807		)
2022	(1,010		)
2023	3,259

VOBA is calculated at a product level and can either be positive or negative depending on the underlying fair values of the associated product lines. VOBA is amortized in accordance with ASC 944-805-35-1, which requires that the amortization should be on a basis consistent with the related reinsurance liability. As such, the net amortization related to a specific transaction in a given year can be either positive or negative as amortization patterns differ between the product lines.

4.MONY CLOSED BLOCK OF BUSINESS

In 1998, MONY Life Insurance Company (“MONY”) converted from a mutual insurance company to a stock corporation (“demutualization”). In connection with its demutualization, an accounting mechanism known as a closed block (the “Closed Block”) was established for certain individuals’ participating policies in force as of the date of demutualization. Assets, liabilities, and earnings of the Closed Block are specifically identified to support its participating policyholders. The Company acquired the Closed Block in conjunction with the acquisition of MONY in 2013.

Assets allocated to the Closed Block inure solely to the benefit of each Closed Block’s policyholders and will not revert to the benefit of MONY or the Company. No reallocation, transfer, borrowing or lending of assets can be made between the Closed Block and other portions of MONY’s general account, any of MONY’s separate accounts or any affiliate of MONY without the approval of the Superintendent of The New York State Department of Financial Services (the “Superintendent”). Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the general account.

The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in accumulated other comprehensive income (loss) “AOCI”) at the acquisition date of October 1, 2013, represented the estimated maximum future post-tax earnings from the Closed Block that would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force. In connection with the acquisition of MONY, the Company developed an actuarial calculation of the expected timing of MONY’s Closed Block’s earnings as of October 1, 2013. Pursuant to the acquisition of the Company by Dai-ichi Life, this actuarial calculation of the expected timing of MONY’s Closed Block earnings was recalculated and reset as February 1, 2015, along with the establishment of a policyholder dividend obligation as of such date.

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If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in the Company’s net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected. If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero). If, over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block.

Many expenses related to Closed Block operations, including amortization of VOBA, are charged to operations outside of the Closed Block; accordingly, net revenues of the Closed Block do not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside of the Closed Block.

Summarized financial information for the Closed Block as of June 30, 2019, and December 31, 2018, is as follows:

	As of
	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
Closed block liabilities
Future policy benefits, policyholders’ account balances and other policyholder liabilities	$	5,611,917	$	5,679,732
Policyholder dividend obligation	173,147		—
Other liabilities	11,043		22,505
Total closed block liabilities	5,796,107		5,702,237
Closed block assets
Fixed maturities, available-for-sale, at fair value	$	4,583,161	$	4,257,437
Mortgage loans on real estate	74,290		75,838
Policy loans	658,971		672,213
Cash	55,960		116,225
Other assets	107,306		136,388
Total closed block assets	5,479,688		5,258,101
Excess of reported closed block liabilities over closed block assets	316,419		444,136
Portion of above representing accumulated other comprehensive income:
Net unrealized investment gains (losses) net of policyholder dividend obligation: $47,972 and $(141,128); and net of income tax: $(10,074) and $61,676	—		(120,528		)
Future earnings to be recognized from closed block assets and closed block liabilities	$	316,419	$	323,608

Reconciliation of the policyholder dividend obligation is as follows:

	For The Six Months Ended June 30,
	2019			2018
	(Dollars In Thousands)
Policyholder dividend obligation, beginning of period	$	—		$	160,712
Applicable to net revenue (losses)	(15,953		)	(19,536		)
Change in net unrealized investment gains (losses) allocated to the policyholder dividend obligation	189,100			(141,176		)
Policyholder dividend obligation, end of period	$	173,147		$	—

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Closed Block revenues and expenses were as follows:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2019		2018		2019			2018
	(Dollars In Thousands)
Revenues
Premiums and other income	$	40,105	$	42,465	$	77,549		$	82,077
Net investment income	51,663		50,872		102,791			101,415
Net investment gains (losses)	43		263		(411		)	26
Total revenues	91,811		93,600		179,929			183,518
Benefits and other deductions
Benefits and settlement expenses	87,213		87,940		165,879			167,892
Other operating expenses	247		337		606			20
Total benefits and other deductions	87,460		88,277		166,485			167,912
Net revenues before income taxes	4,351		5,323		13,444			15,606
Income tax expense	913		1,118		2,823			3,277
Net revenues	$	3,438	$	4,205	$	10,621		$	12,329

5.INVESTMENT OPERATIONS

Net realized gains (losses) are summarized as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Fixed maturities	$	1,098		$	5,539		$	6,215		$	8,322
Equity gains and losses	7,696			(1,044		)	38,413			(9,830		)
Modco trading portfolio	89,571			(52,817		)	184,473			(137,525		)
Other investments	1,137			(1,280		)	(9		)	1,832
Realized gains (losses) - all other investments	99,502			(49,602		)	229,092			(137,201		)
Realized gains (losses) - derivatives(1)	(148,049		)	12,265			(267,720		)	90,324
Realized investment gains (losses)	$	(48,547	)	$	(37,337	)	$	(38,628	)	$	(46,877	)
Net impairments losses recognized in earnings	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)
(1) See Note 7, Derivative Financial Instruments

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Gross realized gains and gross realized losses on investments available-for-sale (fixed maturities and short-term investments) are as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Gross realized gains	$	6,812		$	10,137		$	14,682		$	18,187
Gross realized losses:
Impairment losses	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)
Other realized losses	$	(5,714	)	$	(4,598	)	$	(8,467	)	$	(9,865	)

The chart below summarizes the fair value (proceeds) and the gains (losses) realized on securities the Company sold that were in an unrealized gain position and an unrealized loss position.

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Securities in an unrealized gain position:
Fair value (proceeds)	$	491,121		$	466,153		$	1,140,012		$	608,286
Gains realized	$	6,812		$	10,137		$	14,682		$	18,187
Securities in an unrealized loss position(1):
Fair value (proceeds)	$	160,125		$	201,191		$	338,129		$	258,175
Losses realized	$	(5,714	)	$	(4,598	)	$	(8,467	)	$	(9,865	)
(1) The Company made the decision to exit these holdings in conjunction with its overall asset/liability management process.

The chart below summarizes the realized gains (losses) on equity securities sold during the period and equity securities still held at the reporting date.

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars In Thousands)
Net gains (losses) recognized during the period on equity securities	$	7,696	$	(1,044	)	$	38,413	$	(9,830	)
Less: net gains (losses) recognized on equity securities sold during the period	$	193	$	(680	)	$	253	$	(2,381	)
Gains (losses) recognized during the period on equity securities still held	$	7,503	$	(364	)	$	38,160	$	(7,449	)

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The amortized cost and fair value of the Company’s investments classified as available-for-sale are as follows:

As of June 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Total OTTI Recognized in OCI(1)
	(Dollars In Thousands)
Fixed maturities:
Residential mortgage-backed securities	$	4,482,547	$	132,602	$	(8,901	)	$	4,606,248
Commercial mortgage-backed securities	2,648,121		51,634		(3,894		)	2,695,861
Other asset-backed securities	1,848,061		22,063		(8,526		)	1,861,598		(3		)
U.S. government-related securities	1,304,382		5,179		(9,004		)	1,300,557
Other government-related securities	555,767		31,550		(4,168		)	583,149
States, municipals, and political subdivisions	4,652,897		183,920		(5,851		)	4,830,966		1,193
Corporate securities	45,267,764		1,549,526		(572,173		)	46,245,117		764
Redeemable preferred stocks	87,459		1,211		(3,758		)	84,912
	60,846,998		1,977,685		(616,275		)	62,208,408		1,954
Short-term investments	1,138,931		—		—			1,138,931		—
	$	61,985,929	$	1,977,685	$	(616,275	)	$	63,347,339	$	1,954
As of December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Total OTTI Recognized in OCI(1)
	(Dollars In Thousands)
Fixed maturities:
Residential mortgage-backed securities	$	3,650,539	$	23,247	$	(62,196	)	$	3,611,590	$	(18	)
Commercial mortgage-backed securities	2,349,274		3,911		(58,101		)	2,295,084		—
Other asset-backed securities	1,410,059		17,232		(35,398		)	1,391,893		—
U.S. government-related securities	1,683,432		1,795		(45,722		)	1,639,505		—
Other government-related securities	545,522		4,292		(33,850		)	515,964		—
States, municipals, and political subdivisions	3,682,037		25,706		(118,902		)	3,588,841		876
Corporate securities	38,634,888		112,992		(2,385,052		)	36,362,828		(29,685		)
Redeemable preferred stocks	94,362		—		(11,560		)	82,802		—
	52,050,113		189,175		(2,750,781		)	49,488,507		(28,827		)
Short-term investments	776,357		—		—			776,357		—
	$	52,826,470	$	189,175	$	(2,750,781	)	$	50,264,864	$	(28,827	)
(1) These amounts are included in the gross unrealized gains and gross unrealized losses columns above.

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     The Company holds certain investments pursuant to certain modified coinsurance (“Modco”) arrangements. The fixed maturities held as part of these arrangements are classified as trading securities. The fair value of the investments held pursuant to these Modco arrangements are as follows:    

	As of
	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
Fixed maturities:
Residential mortgage-backed securities	$	203,455	$	241,836
Commercial mortgage-backed securities	204,445		188,925
Other asset-backed securities	147,997		159,907
U.S. government-related securities	51,080		59,794
Other government-related securities	24,342		44,207
States, municipals, and political subdivisions	293,560		286,413
Corporate securities	1,565,561		1,423,833
Redeemable preferred stocks	11,808		11,277
	2,502,248		2,416,192
Equity securities	8,488		9,892
Short-term investments	81,909		30,926
	$	2,592,645	$	2,457,010

The amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities as of June 30, 2019, by expected maturity, are shown below. Expected maturities of securities without a single maturity date are allocated based on estimated rates of prepayment that may differ from actual rates of prepayment.

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars In Thousands)
Due in one year or less	$	1,440,860	$	1,438,699	$	—	$	—
Due after one year through five years	10,103,874		10,229,353		—		—
Due after five years through ten years	13,210,907		13,623,029		—		—
Due after ten years	36,091,357		36,917,327		2,576,216		2,640,827
	$	60,846,998	$	62,208,408	$	2,576,216	$	2,640,827

The chart below summarizes the Company’s other-than-temporary impairments of investments. All of the impairments were related to fixed maturities.

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	Fixed Maturities			Fixed Maturities			Fixed Maturities			Fixed Maturities
	(Dollars In Thousands)
Other-than-temporary impairments	$	(198	)	$	(10	)	$	(1,493	)	$	(701	)
Non-credit impairment losses recorded in other comprehensive income (loss)	(500		)	5			(2,347		)	(2,949		)
Net impairment losses recognized in earnings	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)

There were no other-than-temporary impairments related to fixed maturities or equity securities that the Company intended to sell or expected to be required to sell for the three and six months ended June 30, 2019 and 2018.

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The following chart is a rollforward of available-for-sale credit losses on fixed maturities held by the Company for which a portion of an other-than-temporary impairment was recognized in other comprehensive income (loss):

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Beginning balance	$	27,215		$	2,235		$	24,868		$	3,268
Additions for newly impaired securities	—			—			751			—
Additions for previously impaired securities	660			2			3,007			2
Reductions for previously impaired securities due to a change in expected cash flows	(8,202		)	—			(8,834		)	—
Reductions for previously impaired securities that were sold in the current period	(7,175		)	(2,235		)	(7,294		)	(3,268		)
Ending balance	$	12,498		$	2		$	12,498		$	2

The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2019:

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(Dollars In Thousands)
Residential mortgage-backed securities	$	118,932	$	(427	)	$	576,350	$	(8,474	)	$	695,282	$	(8,901	)
Commercial mortgage-backed securities	3,609		(6		)	574,967		(3,888		)	578,576		(3,894		)
Other asset-backed securities	409,753		(5,931		)	134,156		(2,595		)	543,909		(8,526		)
U.S. government-related securities	32,421		(314		)	902,249		(8,690		)	934,670		(9,004		)
Other government-related securities	5,509		(198		)	93,790		(3,970		)	99,299		(4,168		)
States, municipals, and political subdivisions	13,242		(13		)	145,668		(5,838		)	158,910		(5,851		)
Corporate securities	1,244,536		(52,639		)	10,318,328		(519,534		)	11,562,864		(572,173		)
Redeemable preferred stocks	—		—			17,180		(3,758		)	17,180		(3,758		)
	$	1,828,002	$	(59,528	)	$	12,762,688	$	(556,747	)	$	14,590,690	$	(616,275	)

Residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”) had gross unrealized losses greater than twelve months of $8.5 million and $3.9 million as of June 30, 2019. Factors such as the credit enhancement within the deal structure, the average life of the securities, and the performance of the underlying collateral support the recoverability of these investments.

The other asset-backed securities had a gross unrealized loss greater than twelve months of $2.6 million as of June 30, 2019. This category predominately includes student loan backed auction rate securities (“ARS”) whose underlying collateral is at least 97% guaranteed by the Federal Family Education Loan Program (“FFELP”). At this time, the Company has no reason to believe that the U.S. Department of Education would not honor the FFELP guarantee, if it were necessary.

The U.S. government-related securities and the other government-related securities had gross unrealized losses greater than twelve months of $8.7 million and $4.0 million, respectively, as of June 30, 2019. These declines were related to changes in interest rates.

The states, municipals, and political subdivisions category had gross unrealized losses greater than twelve months of $5.8 million as of June 30, 2019. The aggregate decline in fair value of these securities was deemed temporary due to positive factors supporting the recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, and other pertinent information.

The corporate securities category had gross unrealized losses greater than twelve months of $519.5 million as of June 30, 2019. The aggregate decline in fair value of these securities was deemed temporary due to positive factors supporting the

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recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, interest rate movement, and other pertinent information.

     As of June 30, 2019, the Company had a total of 1,322 positions that were in an unrealized loss position, but the Company does not consider these unrealized loss positions to be other-than-temporary. This is based on the aggregate factors discussed previously and because the Company has the ability and intent to hold these investments until the fair values recover, and the Company does not intend to sell or expect to be required to sell the securities before recovering the Company’s amortized cost of the securities.

The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2018:

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(Dollars In Thousands)
Residential mortgage-backed securities	$	1,485,009	$	(31,302	)	$	804,364	$	(30,894	)	$	2,289,373	$	(62,196	)
Commercial mortgage-backed securities	422,438		(7,442		)	1,429,384		(50,659		)	1,851,822		(58,101		)
Other asset-backed securities	687,271		(30,963		)	148,871		(4,435		)	836,142		(35,398		)
U.S. government-related securities	130,290		(4,668		)	1,085,654		(41,054		)	1,215,944		(45,722		)
Other government-related securities	226,201		(15,267		)	131,569		(18,583		)	357,770		(33,850		)
States, municipals, and political subdivisions	1,004,262		(27,180		)	1,129,152		(91,722		)	2,133,414		(118,902		)
Corporate securities	18,326,331		(970,553		)	12,859,732		(1,414,499		)	31,186,063		(2,385,052		)
Redeemable preferred stocks	41,147		(4,467		)	41,655		(7,093		)	82,802		(11,560		)
	$	22,322,949	$	(1,091,842	)	$	17,630,381	$	(1,658,939	)	$	39,953,330	$	(2,750,781	)

     As of June 30, 2019, the Company had securities in its available-for-sale portfolio which were rated below investment grade of $1.6 billion and had an amortized cost of $1.7 billion. In addition, included in the Company’s trading portfolio, the Company held $119.9 million of securities which were rated below investment grade. Approximately $275.6 million of the available-for-sale and trading securities that were below investment grade were not publicly traded.

The change in unrealized gains (losses), net of income tax, on fixed maturities, classified as available-for-sale is summarized as follows:

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars In Thousands)
Fixed maturities	$	1,541,352	$	(585,527	)	$	3,099,183	$	(1,505,298	)

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The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of June 30, 2019 and December 31, 2018, are as follows:

As of June 30, 2019	Amortized Cost		Gross Unrecognized Holding Gains		Gross Unrecognized Holding Losses			Fair Value		Total OTTI Recognized in OCI
	(Dollars In Thousands)
Fixed maturities:
Securities issued by affiliates:
Red Mountain, LLC	$	773,216	$	—	$	(14,249	)	$	758,967	$	—
Steel City, LLC	1,803,000		78,860		—			1,881,860		—
	$	2,576,216	$	78,860	$	(14,249	)	$	2,640,827	$	—
As of December 31, 2018	Amortized Cost		Gross Unrecognized Holding Gains		Gross Unrecognized Holding Losses			Fair Value		Total OTTI Recognized in OCI
	(Dollars In Thousands)
Fixed maturities:
Securities issued by affiliates:
Red Mountain, LLC	$	750,474	$	—	$	(81,657	)	$	668,817	$	—
Steel City, LLC	1,883,000		—		(4,607		)	1,878,393		—
	$	2,633,474	$	—	$	(86,264	)	$	2,547,210	$	—

During the three and six months ended June 30, 2019 and 2018, the Company recorded no other-than-temporary impairments on held-to-maturity securities.

The Company’s held-to-maturity securities had $78.9 million of gross unrecognized holding gains and $14.2 million of gross unrecognized holding losses as of June 30, 2019. The Company does not consider these unrecognized holding losses to be other-than-temporary based on certain positive factors associated with the securities which include credit ratings of the guarantor, financial health of the issuer and guarantor, continued access of the issuer to capital markets and other pertinent information. These held-to-maturity securities are issued by affiliates of the Company which are considered variable interest entities (“VIEs”). The Company is not the primary beneficiary of these entities and thus the securities are not eliminated in consolidation. These securities are collateralized by non-recourse funding obligations issued by captive insurance companies that are affiliates of the Company.

The Company’s held-to-maturity securities had $86.3 million of gross unrecognized holding losses as of December 31, 2018. The Company does not consider these unrecognized holding losses to be other-than-temporary based on certain positive factors associated with the securities which include credit ratings of the guarantor, financial health of the issuer and guarantor, continued access of the issuer to capital markets and other pertinent information.

Variable Interest Entities

The Company holds certain investments in entities in which its ownership interests could possibly be considered variable interests under Topic 810 of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC” or “Codification”) (excluding debt and equity securities held as trading, available for sale, or held to maturity). The Company reviews the characteristics of each of these applicable entities and compares those characteristics to applicable criteria to determine whether the entity is a VIE. If the entity is determined to be a VIE, the Company then performs a detailed review to determine whether the interest would be considered a variable interest under the guidance. The Company then performs a qualitative review of all variable interests with the entity and determines whether the Company is the primary beneficiary. ASC 810 provides that an entity is the primary beneficiary of a VIE if the entity has 1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and 2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.

Based on this analysis, the Company had an interest in two subsidiaries as of June 30, 2019 and December 31, 2018, Red Mountain, LLC (“Red Mountain”) and Steel City, LLC (“Steel City”), that were determined to be VIEs.

The activity most significant to Red Mountain is the issuance of a note in connection with a financing transaction involving Golden Gate V Vermont Captive Insurance Company (“Golden Gate V”) in which Golden Gate V issued non-recourse funding obligations to Red Mountain and Red Mountain issued a note (the “Red Mountain Note”) to Golden Gate V. For details of this transaction, see Note 10, Debt and Other Obligations. The Company had the power, via its 100% ownership through an affiliate, to direct the activities of the VIE, but did not have the obligation to absorb losses related to the primary risks or sources of variability to the VIE. The variability of loss would be borne primarily by the third party in its function as provider of credit enhancement on the Red Mountain Note. Accordingly, it was determined that the Company is not the primary beneficiary of the VIE. The Company’s risk of loss related to the VIE is limited to its investment, through an affiliate, of $10,000. Additionally, the Company

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has guaranteed Red Mountain’s payment obligation for the credit enhancement fee to the unrelated third party provider. As of June 30, 2019, no payments have been made or required related to this guarantee.

Steel City, a wholly owned subsidiary of the Company, entered into a financing agreement on January 15, 2016 involving Golden Gate Captive Insurance Company ("Golden Gate"), in which Golden Gate issued non-recourse funding obligations to Steel City and Steel City issued three notes (the “Steel City Notes”) to Golden Gate. Credit enhancement on the Steel City Notes is provided by unrelated third parties. For details of the financing transaction, see Note 10, Debt and Other Obligations. The activity most significant to Steel City is the issuance of the Steel City Notes. The Company had the power, via its 100% ownership, to direct the activities of the VIE, but did not have the obligation to absorb losses related to the primary risks or sources of variability to the VIE. The variability of loss would be borne primarily by the third parties in their function as providers of credit enhancement on the Steel City Notes. Accordingly, it was determined that the Company is not the primary beneficiary of the VIE. The Company’s risk of loss related to the VIE is limited to its investment of $10,000. Additionally, the Company has guaranteed Steel City’s payment obligation for the credit enhancement fee to the unrelated third party providers. As of June 30, 2019, no payments have been made or required related to this guarantee.

6.FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company determined the fair value of its financial instruments based on the fair value hierarchy established in FASB guidance referenced in the Fair Value Measurements and Disclosures Topic which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company has adopted the provisions from the FASB guidance that is referenced in the Fair Value Measurements and Disclosures Topic for non-financial assets and liabilities (such as property and equipment, goodwill, and other intangible assets) that are required to be measured at fair value on a periodic basis. The effect on the Company’s periodic fair value measurements for non-financial assets and liabilities was not material.

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded at fair value on the consolidated balance sheets are categorized as follows:

•Level 1:  Unadjusted quoted prices for identical assets or liabilities in an active market.

• Level 2:  Quoted prices in markets that are not active or significant inputs that are observable either directly or indirectly. Level 2 inputs include the following:

a)    Quoted prices for similar assets or liabilities in active markets;

b)    Quoted prices for identical or similar assets or liabilities in non-active markets;

c)    Inputs other than quoted market prices that are observable; and

d) Inputs that are derived principally from or corroborated by observable market data through correlation or other means.

• Level 3:  Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect management’s own estimates about the assumptions a market participant would use in pricing the asset or liability.

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The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of June 30, 2019:

	Measurement Category	Level 1		Level 2		Level 3		Total
		(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	4	$	—	$	4,606,248	$	—	$	4,606,248
Commercial mortgage-backed securities	4	—		2,686,495		9,366		2,695,861
Other asset-backed securities	4	—		1,443,288		418,310		1,861,598
U.S. government-related securities	4	884,053		416,504		—		1,300,557
Other government-related securities	4	—		583,149		—		583,149
States, municipals, and political subdivisions	4	—		4,830,966		—		4,830,966
Corporate securities	4	—		44,916,626		1,328,491		46,245,117
Redeemable preferred stocks	4	67,732		17,180		—		84,912
Total fixed maturity securities - available-for-sale		951,785		59,500,456		1,756,167		62,208,408
Fixed maturity securities - trading
Residential mortgage-backed securities	3	—		203,455		—		203,455
Commercial mortgage-backed securities	3	—		204,445		—		204,445
Other asset-backed securities	3	—		85,817		62,180		147,997
U.S. government-related securities	3	25,929		25,151		—		51,080
Other government-related securities	3	—		24,342		—		24,342
States, municipals, and political subdivisions	3	—		293,560		—		293,560
Corporate securities	3	—		1,560,267		5,294		1,565,561
Redeemable preferred stocks	3	11,808		—		—		11,808
Total fixed maturity securities - trading		37,737		2,397,037		67,474		2,502,248
Total fixed maturity securities		989,522		61,897,493		1,823,641		64,710,656
Equity securities	3	560,302		36		69,627		629,965
Other long-term investments(1)	3 & 4	65,231		467,642		110,923		643,796
Short-term investments	3	1,153,978		66,862		—		1,220,840
Total investments		2,769,033		62,432,033		2,004,191		67,205,257
Cash	3	240,157		—		—		240,157
Other assets	3	34,335		—		—		34,335
Assets related to separate accounts
Variable annuity	3	12,790,474		—		—		12,790,474
Variable universal life	3	1,073,020		—		—		1,073,020
Total assets measured at fair value on a recurring basis		$	16,907,019	$	62,432,033	$	2,004,191	$	81,343,243
Liabilities:
Annuity account balances (2)	3	$	—	$	—	$	72,585	$	72,585
Other liabilities(1)	3 & 4	23,552		198,564		1,097,077		1,319,193
Total liabilities measured at fair value on a recurring basis		$	23,552	$	198,564	$	1,169,662	$	1,391,778
(1) Includes certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.
(3) Fair Value through Net Income
(4) Fair Value through Other Comprehensive Income (Loss)

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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, 2018:

	Measurement Category	Level 1		Level 2		Level 3		Total
		(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	4	$	—	$	3,611,590	$	—	$	3,611,590
Commercial mortgage-backed securities	4	—		2,295,084		—		2,295,084
Other asset-backed securities	4	—		970,251		421,642		1,391,893
U.S. government-related securities	4	1,010,485		629,020		—		1,639,505
Other government-related securities	4	—		515,964		—		515,964
State, municipals, and political subdivisions	4	—		3,588,841		—		3,588,841
Corporate securities	4	—		35,724,552		638,276		36,362,828
Redeemable preferred stocks	4	65,536		17,266		—		82,802
Total fixed maturity securities - available-for-sale		1,076,021		47,352,568		1,059,918		49,488,507
Fixed maturity securities - trading
Residential mortgage-backed securities	3	—		241,836		—		241,836
Commercial mortgage-backed securities	3	—		188,925		—		188,925
Other asset-backed securities	3	—		133,851		26,056		159,907
U.S. government-related securities	3	27,453		32,341		—		59,794
Other government-related securities	3	—		44,207		—		44,207
State, municipals, and political subdivisions	3	—		286,413		—		286,413
Corporate securities	3	—		1,417,591		6,242		1,423,833
Redeemable preferred stocks	3	11,277		—		—		11,277
Total fixed maturity securities - trading		38,730		2,345,164		32,298		2,416,192
Total fixed maturity securities		1,114,751		49,697,732		1,092,216		51,904,699
Equity securities	3	531,523		36		64,325		595,884
Other long-term investments(1)	3&4	83,047		180,438		112,344		375,829
Short-term investments	3	730,067		77,216		—		807,283
Total investments		2,459,388		49,955,422		1,268,885		53,683,695
Cash	3	173,714		—		—		173,714
Other assets	3	29,257		—		—		29,257
Assets related to separate accounts
Variable annuity	3	12,288,919		—		—		12,288,919
Variable universal life	3	937,732		—		—		937,732
Total assets measured at fair value on a recurring basis		$	15,889,010	$	49,955,422	$	1,268,885	$	67,113,317
Liabilities:
Annuity account balances(2)	3	$	—	$	—	$	76,119	$	76,119
Other liabilities(1)	3&4	56,018		69,501		629,942		755,461
Total liabilities measured at fair value on a recurring basis		$	56,018	$	69,501	$	706,061	$	831,580
(1) Includes certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.
(3) Fair Value through Net Income
(4) Fair Value through Other Comprehensive Income (Loss)

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Determination of fair values

The valuation methodologies used to determine the fair values of assets and liabilities reflect market participant assumptions and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. The Company determines the fair values of certain financial assets and financial liabilities based on quoted market prices, where available. The Company also determines certain fair values based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, the Company’s credit standing, liquidity, and where appropriate, risk margins on unobservable parameters. The following is a discussion of the methodologies used to determine fair values for the financial instruments as listed in the above table.

The fair value of fixed maturity, short-term, and equity securities is determined by management after considering one of three primary sources of information: third party pricing services, non-binding independent broker quotations, or pricing matrices. Security pricing is applied using a “waterfall” approach whereby publicly available prices are first sought from third party pricing services, the remaining unpriced securities are submitted to independent brokers for non-binding prices, or lastly, securities are priced using a pricing matrix. Typical inputs used by these three pricing methods include, but are not limited to: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. Third party pricing services price 91.8% of the Company’s available-for-sale and trading fixed maturity securities. Based on the typical trading volumes and the lack of quoted market prices for available-for-sale and trading fixed maturities, third party pricing services derive the majority of security prices from observable market inputs such as recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information outlined above. If there are no recent reported trades, the third party pricing services and brokers may use matrix or model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Certain securities are priced via independent non-binding broker quotations, which are considered to have no significant unobservable inputs. When using non-binding independent broker quotations, when available the Company obtains two quotes per security. Where multiple broker quotes are obtained, the Company reviews the quotes and selects the quote that provides the best estimate of the price a market participant would pay for these specific assets in an arm’s length transaction. A pricing matrix is used to price securities for which the Company is unable to obtain or effectively rely on either a price from a third party pricing service or an independent broker quotation.

The pricing matrix used by the Company begins with current spread levels to determine the market price for the security. The credit spreads, assigned by brokers, incorporate the issuer’s credit rating, liquidity discounts, weighted- average of contracted cash flows, risk premium, if warranted, due to the issuer’s industry, and the security’s time to maturity. The Company uses credit ratings provided by nationally recognized rating agencies.

For securities that are priced via non-binding independent broker quotations, the Company assesses whether prices received from independent brokers represent a reasonable estimate of fair value. The Company’s assessment incorporates various metrics (yield curves, credit spreads, prepayment rates, etc.) along with other information available to the Company from both internal and external sources to determine the valuation of such holdings. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon the analytics, the price received from the independent broker is adjusted accordingly. The Company did not adjust any quotes or prices received from brokers during the six months endedJune 30, 2019.

The Company has analyzed the third party pricing services’ valuation methodologies and related inputs and has also evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs that is in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. Based on this evaluation and investment class analysis, each price was classified into Level 1, 2, or 3. Most prices provided by third party pricing services are classified into Level 2 because the significant inputs used in pricing the securities are market observable and the observable inputs are corroborated by the Company. Since the matrix pricing of certain debt securities includes significant non-observable inputs, they are classified as Level 3.

Asset-Backed Securities

This category mainly consists of residential mortgage-backed securities, commercial mortgage-backed securities, and other asset-backed securities (collectively referred to as asset-backed securities or “ABS”). As of June 30, 2019, the Company held $9.2 billion of ABS classified as Level 2. These securities are priced from information provided by a third party pricing service and independent broker quotes. The third party pricing services and brokers mainly value securities using both a market and income approach to valuation. As part of this valuation process they consider the following characteristics of the item being measured to be relevant inputs: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, and 7) credit ratings of the securities.

After reviewing these characteristics of the ABS, the third party pricing service and brokers use certain inputs to determine the value of the security. For ABS classified as Level 2, the valuation would consist of predominantly market observable inputs such as, but not limited to: 1) monthly principal and interest payments on the underlying assets, 2) average life of the security, 3) prepayment speeds, 4) credit spreads, 5) treasury and swap yield curves, and 6) discount margin. The Company reviews the methodologies and valuation techniques (including the ability to observe inputs) in assessing the information received from external pricing services and in consideration of the fair value presentation.

As of June 30, 2019, the Company held $489.9 million of Level 3 ABS, which included $427.7 million of other asset-backed securities classified as available-for-sale and $62.2 million of other asset-backed securities classified as trading. These securities are predominantly ARS whose underlying collateral is at least 97% guaranteed by the FFELP. As a result of the ARS market collapse during 2008, the Company prices its ARS using an income approach valuation model. As part of the valuation process the Company reviews the following characteristics of the ARS in determining the relevant inputs: 1) weighted-average

26

coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, 7) credit ratings of the securities, 8) liquidity premium, and 9) paydown rate. In periods where market activity increases and there are transactions at a price that is not the result of a distressed or forced sale we consider those prices as part of our valuation. If the market activity during a period is solely the result of the issuer redeeming positions we consider those transactions in our valuation, but still consider them to be Level 3 measurements due to the nature of the transaction.

Corporate Securities, Redeemable Preferred Stocks, U.S. Government-Related Securities, States, Municipals, and Political Subdivisions, and Other Government-Related Securities

As of June 30, 2019, the Company classified approximately $52.7 billion of corporate securities, redeemable preferred stocks, U.S. government-related securities, states, municipals, and political subdivisions, and other government-related securities as Level 2. The fair value of the Level 2 securities is predominantly priced by broker quotes and a third party pricing service. The Company has reviewed the valuation techniques of the brokers and third party pricing service and has determined that such techniques used Level 2 market observable inputs. The following characteristics of the securities are considered to be the primary relevant inputs to the valuation: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) seniority, and 4) credit ratings. The Company reviews the methodologies and valuation techniques (including the ability to observe inputs) in assessing the information received from external pricing services and in consideration of the fair value presentation.

The brokers and third party pricing service utilize valuation models that consist of a hybrid income and market approach to valuation. The pricing models utilize the following inputs: 1) principal and interest payments, 2) treasury yield curve, 3) credit spreads from new issue and secondary trading markets, 4) dealer quotes with adjustments for issues with early redemption features, 5) liquidity premiums present on private placements, and 6) discount margins from dealers in the new issue market.

As of June 30, 2019, the Company classified approximately $1.3 billion of securities as Level 3 valuations. Level 3 securities primarily represent investments in illiquid bonds for which no price is readily available. To determine a price, the Company uses a discounted cash flow model with both observable and unobservable inputs. These inputs are entered into an industry standard pricing model to determine the final price of the security. These inputs include: 1) principal and interest payments, 2) coupon rate, 3) sector and issuer level spread over treasury, 4) underlying collateral, 5) credit ratings, 6) maturity, 7) embedded options, 8) recent new issuance, 9) comparative bond analysis, and 10) an illiquidity premium.

Equities

As of June 30, 2019, the Company held approximately $69.7 million of equity securities classified as Level 2 and Level 3. Of this total, $68.5 million represents Federal Home Loan Bank (“FHLB”) stock. The Company believes that the cost of the FHLB stock approximates fair value.

Other Long-term Investments and Other Liabilities

Other long-term investments and other liabilities consist entirely of free-standing and embedded derivative financial instruments. Refer to Note 7, Derivative Financial Instruments for additional information related to derivatives. Derivative financial instruments are valued using exchange prices, independent broker quotations, or pricing valuation models, which utilize market data inputs. Excluding embedded derivatives, as of June 30, 2019, 100.0% of derivatives based upon notional values were priced using exchange prices or independent broker quotations. Inputs used to value derivatives include, but are not limited to, interest swap rates, credit spreads, interest rate and equity market volatility indices, equity index levels, and treasury rates. The Company performs monthly analysis on derivative valuations that includes both quantitative and qualitative analyses.

Derivative instruments classified as Level 1 generally include futures and options, which are traded on active exchange markets.

Derivative instruments classified as Level 2 primarily include swaps, options, and swaptions, which are traded over-the-counter. Level 2 also includes certain centrally cleared derivatives. These derivative valuations are determined using independent broker quotations, which are corroborated with observable market inputs.

Derivative instruments classified as Level 3 are embedded derivatives and include at least one significant non-observable input. A derivative instrument containing Level 1 and Level 2 inputs will be classified as a Level 3 financial instrument in its entirety if it has at least one significant Level 3 input.

The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instruments may not be classified within the same fair value hierarchy level as the associated assets and liabilities. Therefore, the changes in fair value on derivatives reported in Level 3 may not reflect the offsetting impact of the changes in fair value of the associated assets and liabilities.

The embedded derivatives are carried at fair value in other long-term investments and other liabilities on the Company’s consolidated condensed balance sheet. The changes in fair value are recorded in earnings as Realized investment gains (losses). Refer to Note 7, Derivative Financial Instruments for more information related to each embedded derivatives gains and losses.

The fair value of the guaranteed living withdrawal benefits (“GLWB”) embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using multiple risk neutral stochastic equity scenarios and policyholder behavior assumptions. The risk neutral scenarios are generated using the current swap curve and projected equity volatilities and correlations. The projected equity volatilities are based on a blend of historical volatility and near-term equity market implied volatilities. The equity correlations are based on historical price observations. For policyholder behavior

27

assumptions, expected lapse and utilization assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the Ruark 2015 ALB table, with attained age factors varying from 87.0% - 100.0% based on company experience. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR plus a credit spread (to represent the Company’s non-performance risk). As a result of using significant unobservable inputs, the GLWB embedded derivative is categorized as Level 3. Policyholder assumptions are reviewed on an annual basis.

The balance of the fixed indexed annuity (“FIA”) embedded derivative is impacted by policyholder cash flows associated with the FIA product that are allocated to the embedded derivative in addition to changes in the fair value of the embedded derivative during the reporting period. The fair value of the FIA embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder assumptions (both elective and non-elective). For policyholder behavior assumptions, expected lapse and withdrawal assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the 2015 Ruark ALB mortality table, with attained age factors varying from 87.0% - 100.0% based on company experience. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR up to one year and constant maturity treasury rates plus a credit spread (to represent the Company’s non-performance risk) thereafter. Policyholder assumptions are reviewed on an annual basis. As a result of using significant unobservable inputs, the FIA embedded derivative is categorized as Level 3.

The balance of the indexed universal life (“IUL”) embedded derivative is impacted by policyholder cash flows associated with the IUL product that are allocated to the embedded derivative in addition to changes in the fair value of the embedded derivative during the reporting period. The fair value of the IUL embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder assumptions (both elective and non-elective). For policyholder behavior assumptions, expected lapse and withdrawal assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the SOA 2015 VBT Primary Tables, with attained age factors varying from 37% - 577% based on company experience. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR up to one year and constant maturity treasury rates plus a credit spread (to represent the Company’s non-performance risk) thereafter. Policyholder assumptions are reviewed on an annual basis. As a result of using significant unobservable inputs, the IUL embedded derivative is categorized as Level 3.

The Company has assumed and ceded certain blocks of policies under modified coinsurance agreements in which the investment results of the underlying portfolios inure directly to the reinsurers. As a result, these agreements contain embedded derivatives that are reported at fair value. Changes in their fair value are reported in earnings. The investments supporting the agreements where the Company has ceded certain blocks of policies are designated as “trading securities”; therefore changes in their fair value are also reported in earnings. As of June 30, 2019, the fair value of the embedded derivative is based upon the relationship between the statutory policy liabilities (net of policy loans) of $3.5 billion and the statutory unrealized gain (loss) of the securities of $210.5 million. As a result, changes in the fair value of the embedded derivatives where the Company has ceded certain blocks of policies are largely offset by the changes in fair value of the related investments and each are reported in earnings. The fair value of the embedded derivative is considered a Level 3 valuation due to the unobservable nature of the policy liabilities.

Annuity Account Balances

The Company records a certain legacy block of FIA reserves at fair value. Based on the characteristics of these reserves, the Company believes that the fund value approximates fair value. The fair value measurement of these reserves is considered a Level 3 valuation due to the unobservable nature of the fund values. The Level 3 fair value as of June 30, 2019 is $72.6 million.

Separate Accounts

Separate account assets are invested in open-ended mutual funds and are included in Level 1.

28

Valuation of Level 3 Financial Instruments

The following table presents the 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 June 30, 2019		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	418,178	Liquidation	Liquidation value	$95.39 - $97.00 ($96.48)
			Discounted cash flow	Liquidity premium	0.11% - 1.50% (0.73%)
				Paydown rate	10.84% - 12.88% (11.98%)
Corporate securities	1,328,490		Discounted cash flow	Spread over treasury	0.87% - 4.10% (1.75%)
Liabilities:(1)
Embedded derivatives - GLWB(2)	$	338,648	Actuarial cash flow model	Mortality	87% to 100% of
					Ruark 2015 ALB table
				Lapse	Ruark Predictive Model
				Utilization	99%. 10% of policies have a one-
					time over-utilization of 400%
				Nonperformance risk	0.17% - 0.88%
Embedded derivative - FIA	300,364		Actuarial cash flow model	Expenses	$145 per policy
				Withdrawal rate	1.5% prior to age 70, 100% of the
					RMD for ages 70+
				Mortality	87% to 100% of Ruark 2015 ALB
					table
				Lapse	1.0% - 30.0%, depending
					on duration/surrender
					charge period
					Dynamically adjusted for WB moneyness and projected market rates vs credited rates
				Nonperformance risk	0.17% - 0.88%
Embedded derivative - IUL	136,660		Actuarial cash flow model	Mortality	37% - 577% of 2015
					VBT Primary Tables
				Lapse	0.5% - 10.0%, depending
					on duration/distribution
					channel and smoking class
				Nonperformance risk	0.17% - 0.88%
(1) Excludes modified coinsurance arrangements.
(2) The fair value for the GLWB embedded derivative is presented as a net liability.

The chart above excludes Level 3 financial instruments that are valued using broker quotes and for which book value approximates fair value.

The Company has considered all reasonably available quantitative inputs as of June 30, 2019, but the valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company. This resulted in $77.9 million of financial instruments being classified as Level 3 as of June 30, 2019. Of the $77.9 million, $71.7 million are other asset-backed securities, $5.3 million are corporate securities, and $0.9 million are equity securities.

In certain cases, the Company has determined that book value materially approximates fair value. As of June 30, 2019, the Company held $68.7 million of financial instruments where book value approximates fair value which was predominantly FHLB stock.

29

The following table presents the 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 December 31, 2018		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	421,458	Liquidation	Liquidation value	$85.75 - $99.99 ($95.36)
			Discounted Cash Flow	Liquidity premium	0.02% - 1.25% (0.64%)
				Paydown rate	10.96% - 13.11% (12.03%)
Corporate securities	631,068		Discounted cash flow	Spread over treasury	0.84% - 3.0% (1.84%)
Liabilities:(1)
Embedded derivatives - GLWB(2)	$	184,071	Actuarial cash flow model	Mortality	87% to 100% of
					Ruark 2015 ALB table
				Lapse	Ruark Predictive Model
				Utilization	99%. 10% of policies have a one-
					time over-utilization of 400%
				Nonperformance risk	0.21% - 1.16%
Embedded derivative - FIA	217,288		Actuarial cash flow model	Expenses	$145 per policy
				Withdrawal rate	1.5% prior to age 70, 100% of the
					RMD for ages 70+
				Mortality	87% to 100% of Ruark 2015 ALB
					table
				Lapse	1.0% - 30.0%, depending
					on duration/surrender
					charge period
				Nonperformance risk	0.21% - 1.16%
Embedded derivative - IUL	90,231		Actuarial cash flow model	Mortality	37% - 577% of 2015
					VBT Primary Tables
				Lapse	0.5% - 10.0%, depending
					on duration/distribution
					channel and smoking class
				Nonperformance risk	0.21% - 1.16%
(1) Excludes modified coinsurance arrangements.
(2) The fair value for the GLWB embedded derivative is presented as a net liability.

The chart above excludes Level 3 financial instruments that are valued using broker quotes and for which book value approximates fair value.

The Company had considered all reasonably available quantitative inputs as of December 31, 2018, but the valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company. This resulted in $40.4 million of financial instruments being classified as Level 3 as of December 31, 2018. Of the $40.4 million, $26.2 million are other asset-backed securities, $13.5 million are corporate securities, and $0.7 million are equity securities.

In certain cases the Company has determined that book value materially approximates fair value. As of December 31, 2018, the Company held $63.6 million of financial instruments where book value approximates fair value which was predominantly FHLB stock.

The asset-backed securities classified as Level 3 are predominantly ARS. A change in the paydown rate (the projected annual rate of principal reduction) of the ARS can significantly impact the fair value of these securities. A decrease in the paydown rate would increase the projected weighted average life of the ARS and increase the sensitivity of the ARS’ fair value to changes in interest rates. An increase in the liquidity premium would result in a decrease in the fair value of the securities, while a decrease in the liquidity premium would increase the fair value of these securities. The liquidation values for these securities are sensitive to the issuer’s available cash flows and ability to redeem the securities, as well as the current holders’ willingness to liquidate at the specified price.

The fair value of corporate bonds classified as Level 3 is sensitive to changes in the interest rate spread over the corresponding U.S. Treasury rate. This spread represents a risk premium that is impacted by company-specific and market factors. An increase in the spread can be caused by a perceived increase in credit risk of a specific issuer and/or an increase in the overall market risk premium associated with similar securities. The fair values of corporate bonds are sensitive to changes in spread. When

30

holding the treasury rate constant, the fair value of corporate bonds increases when spreads decrease, and decreases when spreads increase.

The fair value of the GLWB embedded derivative is sensitive to changes in the discount rate which includes the Company’s nonperformance risk, volatility, lapse, and mortality assumptions. The volatility assumption is an observable input as it is based on market inputs. The Company’s nonperformance risk, lapse, and mortality are unobservable. An increase in the three unobservable assumptions would result in a decrease in the fair value of the liability and conversely, if there is a decrease in the assumptions the fair value would increase. The fair value is also dependent on the assumed policyholder utilization of the GLWB where an increase in assumed utilization would result in an increase in the fair value of the liability and conversely, if there is a decrease in the assumption, the fair value would decrease.

The fair value of the FIA embedded derivative is predominantly impacted by observable inputs such as discount rates and equity returns. However, the fair value of the FIA embedded derivative is sensitive to non-performance risk, which is unobservable. The value of the liability increases with decreases in the discount rate and non-performance risk and decreases with increases in the discount rate and nonperformance risk. The value of the liability increases with increases in equity returns and the liability decreases with a decrease in equity returns.

The fair value of the IUL embedded derivative is predominantly impacted by observable inputs such as discount rates and equity returns. However, the fair value of the IUL embedded derivative is sensitive to non-performance risk, which is unobservable. The value of the liability increases with decreases in the discount rate and non-performance risk and decreases with increases in the discount rate and non-performance risk. The value of the liability increases with increases in equity returns and the liability decreases with a decrease in equity returns.

31

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended June 30, 2019, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																							Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3			Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	—	$	—		$	—		$	—	$	—
Commercial mortgage-backed securities	—		—		16		—			—			9,359		(7		)	—		—		—			(2		)	9,366		—
Other asset-backed securities	420,091		—		2,513		(37		)	(4,468		)	—		(7		)	—		—		—			218			418,310		—
Corporate securities	648,608		82		25,371		—			(497		)	661,627		(56,183		)	—		—		49,350			133			1,328,491		—
Total fixed maturity securities - available-for-sale	1,068,699		82		27,900		(37		)	(4,965		)	670,986		(56,197		)	—		—		49,350			349			1,756,167		—
Fixed maturity securities - trading
Other asset-backed securities	66,484		810		—		(3,468		)	—			—		(781		)	—		—		(797		)	(68		)	62,180		(2,717		)
Corporate securities	5,251		68		—		—			—			—		1			—		—		—			(26		)	5,294		68
Total fixed maturity securities - trading	71,735		878		—		(3,468		)	—			—		(780		)	—		—		(797		)	(94		)	67,474		(2,649		)
Total fixed maturity securities	1,140,434		960		27,900		(3,505		)	(4,965		)	670,986		(56,977		)	—		—		48,553			255			1,823,641		(2,649		)
Equity securities	64,394		157		—		(3		)	—			5,079		—			—		—		—			—			69,627		153
Other long-term investments(1)	109,532		13,700		—		(13,888		)	—			1,579		—			—		—		—			—			110,923		(188		)
Total investments	1,314,360		14,817		27,900		(17,396		)	(4,965		)	677,644		(56,977		)	—		—		48,553			255			2,004,191		(2,684		)
Total assets measured at fair value on a recurring basis	$	1,314,360	$	14,817	$	27,900	$	(17,396	)	$	(4,965	)	$	677,644	$	(56,977	)	$	—	$	—	$	48,553		$	255		$	2,004,191	$	(2,684	)
Liabilities:
Annuity account balances(2)	$	74,613	$	—	$	—	$	(825	)	$	—		$	—	$	—		$	56	$	2,909	$	—		$	—		$	72,585	$	—
Other liabilities(1)	797,891		364		—		(262,346		)	—			37,204		—			—		—		—			—			1,097,077		(261,982		)
Total liabilities measured at fair value on a recurring basis	$	872,504	$	364	$	—	$	(263,171	)	$	—		$	37,204	$	—		$	56	$	2,909	$	—		$	—		$	1,169,662	$	(261,982	)
(1) Represents certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.

For the three months ended June 30, 2019, there were $50.1 million of securities transferred into Level 3.

For the three months ended June 30, 2019, there were $1.6 million of securities transferred into Level 2 from Level 3.These transfers resulted from securities that were priced internally using significant unobservable inputs where market observable inputs were not available in previous periods but were priced by independent pricing services or brokers as of June 30, 2019.

For the three months ended June 30, 2019, there were no transfers from Level 2 into Level 1.

For the three months ended June 30, 2019, there were no transfers from Level 1 into Level 2.

32

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the six months ended June 30, 2019, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																						Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3		Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	—	$	—	$	—		$	—	$	—
Commercial mortgage-backed securities	—		—		16		—			—			9,359		(7		)	—		—		—		(2		)	9,366		—
Other asset-backed securities	421,642		446		10,660		(57		)	(4,799		)	—		(10,015		)	—		—		—		433			418,310		—
Corporate securities	638,276		82		43,956		—			(3,509		)	695,627		(84,956		)	—		—		39,255		(240		)	1,328,491		—
Total fixed maturity securities - available-for-sale	1,059,918		528		54,632		(57		)	(8,308		)	704,986		(94,978		)	—		—		39,255		191			1,756,167		—
Fixed maturity securities - trading
Other asset-backed securities	26,056		4,006		—		(3,584		)	—			15,463		(5,892		)	—		—		26,267		(136		)	62,180		1,068
Corporate securities	6,242		169		—		(31		)	—			—		(1,035		)	—		—		—		(51		)	5,294		134
Total fixed maturity securities - trading	32,298		4,175		—		(3,615		)	—			15,463		(6,927		)	—		—		26,267		(187		)	67,474		1,202
Total fixed maturity securities	1,092,216		4,703		54,632		(3,672		)	(8,308		)	720,449		(101,905		)	—		—		65,522		4			1,823,641		1,202
Equity securities	64,325		239		—		(16		)	—			5,079		—			—		—		—		—			69,627		222
Other long-term investments(1)	112,344		26,922		—		(29,922		)	—			1,579		—			—		—		—		—			110,923		(3,000		)
Total investments	1,268,885		31,864		54,632		(33,610		)	(8,308		)	727,107		(101,905		)	—		—		65,522		4			2,004,191		(1,576		)
Total assets measured at fair value on a recurring basis	$	1,268,885	$	31,864	$	54,632	$	(33,610	)	$	(8,308	)	$	727,107	$	(101,905	)	$	—	$	—	$	65,522	$	4		$	2,004,191	$	(1,576	)
Liabilities:
Annuity account balances(2)	$	76,119	$	—	$	—	$	(1,152	)	$	—		$	—	$	—		$	67	$	4,753	$	—	$	—		$	72,585	$	—
Other liabilities(1)	629,942		12,034		—		(441,965		)	—			37,204		—			—		—		—		—			1,097,077		(429,931		)
Total liabilities measured at fair value on a recurring basis	$	706,061	$	12,034	$	—	$	(443,117	)	$	—		$	37,204	$	—		$	67	$	4,753	$	—	$	—		$	1,169,662	$	(429,931	)
(1) Represents certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.

For the six months ended June 30, 2019, there were $86.1 million securities transferred into Level 3.

For the six months ended June 30, 2019, there were $20.6 million securities transferred into Level 2 from Level 3.These transfers resulted from securities that were priced internally using significant unobservable inputs where market observable inputs were not available in previous periods but were priced by independent pricing services or brokers as of June 30, 2019.

For the six months ended June 30, 2019, there were no transfers from Level 2 into Level 1.

For the six months ended June 30, 2019, there were no transfers from Level 1 into Level 2.

33

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended June 30, 2018, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																							Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3			Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	(457	)	$	22,225	$	—		$	—	$	—	$	—		$	12		$	21,780	$	—
Commercial mortgage-backed securities	—		—		—		—			(1,284		)	48,621		(94		)	—		—		—			(16		)	47,227		—
Other asset-backed securities	503,789		—		11,353		—			(13		)	—		(9		)	—		—		222			359			515,701		—
Corporate securities	626,409		—		5,662		—			(6,828		)	43,491		(14,818		)	—		—		(7,894		)	(1,211		)	644,811		—
Total fixed maturity securities - available-for-sale	1,130,198		—		17,015		—			(8,582		)	114,337		(14,921		)	—		—		(7,672		)	(856		)	1,229,519		—
Fixed maturity securities - trading
Other asset-backed securities	34,958		—		—		(3,570		)	—			4,600		(11,273		)	—		—		164			(27		)	24,852		(3,570		)
Corporate securities	5,324		—		—		(45		)	—			—		—			—		—		—			(25		)	5,254		(45		)
Total fixed maturity securities - trading	40,282		—		—		(3,615		)	—			4,600		(11,273		)	—		—		164			(52		)	30,106		(3,615		)
Total fixed maturity securities	1,170,480		—		17,015		(3,615		)	(8,582		)	118,937		(26,194		)	—		—		(7,508		)	(908		)	1,259,625		(3,615		)
Equity securities	66,061		1		—		(15		)	—			36		—			—		—		—			—			66,083		(14		)
Other long-term investments(1)	144,352		12,821		—		(499		)	—			—		—			—		—		—			—			156,674		12,322
Total investments	1,380,893		12,822		17,015		(4,129		)	(8,582		)	118,973		(26,194		)	—		—		(7,508		)	(908		)	1,482,382		8,693
Total assets measured at fair value on a recurring basis	$	1,380,893	$	12,822	$	17,015	$	(4,129	)	$	(8,582	)	$	118,973	$	(26,194	)	$	—	$	—	$	(7,508	)	$	(908	)	$	1,482,382	$	8,693
Liabilities:
Annuity account balances(2)	$	81,399	$	—	$	—	$	(1,059	)	$	—		$	—	$	—		$	89	$	2,449	$	—		$	—		$	80,098	$	—
Other liabilities(1)	621,102		96,138		—		(47,952		)	—			—		—			—		—		—			—			572,916		48,186
Total liabilities measured at fair value on a recurring basis	$	702,501	$	96,138	$	—	$	(49,011	)	$	—		$	—	$	—		$	89	$	2,449	$	—		$	—		$	653,014	$	48,186
(1) Represents certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.

For the three months ended June 30, 2018, there were $11.1 million securities transferred into Level 3.

For the three months ended June 30, 2018, there were $18.6 million of securities transferred into Level 2 from Level 3. These transfers resulted from securities that were priced internally using significant unobservable inputs where market observable inputs were not available in previous periods but were priced by independent pricing services or brokers as of June 30, 2018.

For the three months ended June 30, 2018, there were no transfers from Level 2 into Level 1.

For the three months ended June 30, 2018, there were no transfers from Level 1 into Level 2.

34

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the six months ended June 30, 2018, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																							Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3			Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	(457	)	$	22,225	$	—		$	—	$	—	$	—		$	12		$	21,780	$	—
Commercial mortgage-backed securities	—		—		—		—			(1,284		)	48,621		(94		)	—		—		—			(16		)	47,227		—
Other asset-backed securities	504,365		—		11,867		—			(1,647		)	—		(23		)	—		—		222			917			515,701		—
Corporate securities	626,901		—		7,061		—			(18,929		)	78,491		(38,453		)	—		—		(7,894		)	(2,366		)	644,811		—
Total fixed maturity securities - available-for-sale	1,131,266		—		18,928		—			(22,317		)	149,337		(38,570		)	—		—		(7,672		)	(1,453		)	1,229,519		—
Fixed maturity securities - trading
Other asset-backed securities	35,222		194		—		(3,598		)	—			4,600		(11,669		)	—		—		164			(61		)	24,852		(3,405		)
Corporate securities	5,442		—		—		(139		)	—			—		—			—		—		—			(49		)	5,254		(139		)
Total fixed maturity securities - trading	40,664		194		—		(3,737		)	—			4,600		(11,669		)	—		—		164			(110		)	30,106		(3,544		)
Total fixed maturity securities	1,171,930		194		18,928		(3,737		)	(22,317		)	153,937		(50,239		)	—		—		(7,508		)	(1,563		)	1,259,625		(3,544		)
Equity securities	66,110		1		—		(64		)	—			36		—			—		—		—			—			66,083		(63		)
Other long-term investments(1)	136,004		21,685		—		(1,015		)	—			—		—			—		—		—			—			156,674		20,670
Short-term investments	—		—		—		—			—			—		—			—		—		—			—			—		—
Total investments	1,374,044		21,880		18,928		(4,816		)	(22,317		)	153,973		(50,239		)	—		—		(7,508		)	(1,563		)	1,482,382		17,063
Total assets measured at fair value on a recurring basis	$	1,374,044	$	21,880	$	18,928	$	(4,816	)	$	(22,317	)	$	153,973	$	(50,239	)	$	—	$	—	$	(7,508	)	$	(1,563	)	$	1,482,382	$	17,063
Liabilities:
Annuity account balances(2)	$	83,472	$	—	$	—	$	(1,853	)	$	—		$	—	$	—		$	530	$	5,757	$	—		$	—		$	80,098	$	—
Other liabilities(1)	760,890		257,456		—		(69,482		)	—			—		—			—		—		—			—			572,916		187,974
Total liabilities measured at fair value on a recurring basis	$	844,362	$	257,456	$	—	$	(71,335	)	$	—		$	—	$	—		$	530	$	5,757	$	—		$	—		$	653,014	$	187,974
(1) Represents certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.

For the six months ended June 30, 2018, there were $11.1 million securities transferred into Level 3.

For the six months ended June 30, 2018, there were $18.6 million securities transferred into Level 2 from Level 3. These transfers resulted from securities that were priced internally using significant unobservable inputs where market observable inputs were not available in previous periods but were priced by independent pricing services or brokers as of June 30, 2018.

For the six months ended June 30, 2018, there were no transfers from Level 2 into Level 1.

For the six months ended June 30, 2018, there were no transfers from Level 1 into Level 2.

Total realized and unrealized gains (losses) on Level 3 assets and liabilities are primarily reported in either realized investment gains (losses) within the consolidated condensed statements of income (loss) or other comprehensive income (loss) within shareowner’s equity based on the appropriate accounting treatment for the item.

Purchases, sales, issuances, and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily relates to purchases and sales of fixed maturity securities and issuances and settlements of fixed indexed annuities.

35

The Company reviews the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. The asset transfers in the table(s) above primarily related to positions moved from Level 3 to Level 2 as the Company determined that certain inputs were observable.

The amount of total gains (losses) for assets and liabilities still held as of the reporting date primarily represents changes in fair value of trading securities and certain derivatives that exist as of the reporting date and the change in fair value of fixed indexed annuities.

Estimated Fair Value of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments as of the periods shown below are as follows:

		As of
		June 30, 2019				December 31, 2018
	Fair Value Level	Carrying Amounts		Fair Values		Carrying Amounts		Fair Values
		(Dollars In Thousands)
Assets:
Mortgage loans on real estate	3	$	9,053,400	$	9,123,182	$	7,724,733	$	7,447,702
Policy loans	3	1,709,110		1,709,110		1,695,886		1,695,886
Fixed maturities, held-to-maturity(1)	3	2,576,216		2,640,827		2,633,474		2,547,210
Liabilities:
Stable value product account balances	3	$	5,816,503	$	5,885,528	$	5,234,731	$	5,200,723
Future policy benefits and claims(2)	3	1,725,194		1,729,081		1,671,414		1,671,434
Other policyholders’ funds(3)	3	105,136		107,702		131,150		131,782
Debt:(4)
Bank borrowings(5)	3	$	599,627	$	600,000	$	—	$	—
Senior Notes	2	1,075,370		1,095,907		1,100,508		1,065,338
Subordinated debentures	2	495,494		506,720		495,426		494,265
Subordinated funding obligations	3	110,000		108,455		110,000		95,476
Non-recourse funding obligations(6)	3	2,576,538		2,701,194		2,632,497		2,550,237
Except as noted below, fair values were estimated using quoted market prices.
(1) Securities purchased from unconsolidated affiliates, Red Mountain, LLC and Steel City, LLC.
(2) Single premium immediate annuity without life contingencies.
(3) Supplementary contracts without life contingencies.
(4) Excludes capital lease obligations of $2.6 million and $1.3 million as of June 30, 2019 and December 31, 2018, respectively.
(5) As June 30, 2019, includes the Term Loan Credit Agreement.
(6) As of June 30, 2019, carrying amount of $2.6 billion and a fair value of $2.7 billion related to non-recourse funding obligations issued by Golden Gate and Golden Gate V. As of December 31, 2018, carrying amount of $2.6 billion and a fair value of $2.5 billion related to non-recourse funding obligations issued by Golden Gate and Golden Gate V.

Fair Value Measurements

Mortgage loans on real estate

The Company estimates the fair value of mortgage loans using an internally developed model. This model includes inputs derived by the Company based on assumed discount rates relative to the Company’s current mortgage loan lending rate and an expected cash flow analysis based on a review of the mortgage loan terms. The model also contains the Company’s determined representative risk adjustment assumptions related to credit and liquidity risks.

Policy loans

The Company believes the fair value of policy loans approximates book value. Policy loans are funds provided to policyholders in return for a claim on the policy. The funds provided are limited to the cash surrender value of the underlying policy. The nature of policy loans is to have a negligible default risk as the loans are fully collateralized by the value of the policy. Policy loans do not have a stated maturity and the balances and accrued interest are repaid either by the policyholder or with proceeds from the policy. Due to the collateralized nature of policy loans and unpredictable timing of repayments, the Company believes the carrying value of policy loans approximates fair value.

36

Fixed maturities, held-to-maturity

The Company estimates the fair value of its fixed maturity, held-to-maturity securities using internal discounted cash flow models. The discount rates used in the model are based on a current market yield for similar financial instruments.

Stable value product and other investment contract balances

The Company estimates the fair value of stable value product account balances and other investment contract balances (included in Future policy benefits and claims as well as Other policyholders’ funds line items on our consolidated condensed balance sheet) using models based on discounted expected cash flows. The discount rates used in the models are based on a current market rate for similar financial instruments.

Debt

Bank borrowings

The Company believes the carrying value of its bank borrowings approximates fair value as the borrowings pay a floating interest rate plus a spread based on the rating of the Company’s senior debt which the Company believes approximates a market interest rate.

Senior notes and subordinated debt securities

The Company estimates the fair value of its Senior Notes and Subordinated debt securities using quoted market prices from third party pricing services, where available. The Company also determines certain fair values based on future cash flows discounted at the appropriate current market rate.

Funding obligations

The Company estimates the fair value of its subordinated and non-recourse funding obligations using internal discounted cash flow models. The discount rates used in the model are based on a current market yield for similar financial instruments.

7.DERIVATIVE FINANCIAL INSTRUMENTS

Types of Derivative Instruments and Derivative Strategies

The Company utilizes a risk management strategy that incorporates the use of derivative financial instruments to reduce exposure to certain risks, including but not limited to, interest rate risk, currency exchange risk, volatility risk, and equity market risk. These strategies are developed through the Company’s analysis of data from financial simulation models and other internal and industry sources, and are then incorporated into the Company’s risk management program.

Derivative instruments expose the Company to credit and market risk and could result in material changes from period to period. The Company attempts to minimize its credit in connection with its overall asset/liability management programs and risk management strategies. In addition, all derivative programs are monitored by our risk management department.

Derivatives Related to Interest Rate Risk Management

Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps, interest rate futures, interest rate caps, and interest rate swaptions.

Derivatives Related to Foreign Currency Exchange Risk Management

Derivative instruments that are used as part of the Company’s foreign currency exchange risk management strategy include foreign currency swaps, foreign currency futures, foreign equity futures, and foreign equity options.

Derivatives Related to Risk Mitigation of Certain Annuity Contracts

The Company may use the following types of derivative contracts to mitigate its exposure to certain guaranteed benefits related to variable annuity (“VA”) contracts, fixed indexed annuities, and indexed universal life contracts:

•Foreign Currency Futures

•Variance Swaps

•Interest Rate Futures

•Equity Options

•Equity Futures

•Credit Derivatives

•Interest Rate Swaps

•Interest Rate Swaptions

•Volatility Futures

•Volatility Options

•Total Return Swaps

Accounting for Derivative Instruments

37

The Company records its derivative financial instruments in the consolidated balance sheet in other long-term investments and other liabilities in accordance with GAAP, which requires that all derivative instruments be recognized in the balance sheet at fair value. The change in the fair value of derivative financial instruments is reported either in the statement of income or in other comprehensive income (loss), depending upon whether it qualified for and also has been properly identified as being part of a hedging relationship, and also on the type of hedging relationship that exists.

It is the Company's policy not to offset assets and liabilities associated with open derivative contracts. However, the Chicago Mercantile Exchange (“CME”) rules characterize variation margin transfers as settlement payments, as opposed to adjustments to collateral. As a result, derivative assets and liabilities associated with centrally cleared derivatives for which the CME serves as the central clearing party are presented as if these derivatives had been settled as of the reporting date.

For a derivative financial instrument to be accounted for as an accounting hedge, it must be identified and documented as such on the date of designation. For cash flow hedges, the effective portion of their realized gain or loss is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged item impacts earnings. Any remaining gain or loss, the ineffective portion, is recognized in current earnings. For fair value hedge derivatives, their gain or loss as well as the offsetting loss or gain attributable to the hedged risk of the hedged item is recognized in current earnings. Effectiveness of the Company’s hedge relationships is assessed on a quarterly basis.

The Company reports changes in fair values of derivatives that are not part of a qualifying hedge relationship through earnings in the period of change. Changes in the fair value of derivatives that are recognized in current earnings are reported in realized investment gains (losses).

Derivative Instruments Designated and Qualifying as Hedging Instruments

Cash-Flow Hedges

• To hedge a fixed rate note denominated in a foreign currency, the Company entered into a fixed-to-fixed foreign currency swap in order to hedge the foreign currency exchange risk associated with the note. The cash flows received on the swap are identical to the cash flows paid on the note.

• To hedge a floating rate note, the Company entered into an interest rate swap to exchange the floating rate on the note for a fixed rate in order to hedge the interest rate risk associated with the note. The cash flows received on the swap are identical to the cash flow variability paid on the note.

Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments

The Company uses various other derivative instruments for risk management purposes that do not qualify for hedge accounting treatment. Changes in the fair value of these derivatives are recognized in earnings during the period of change.

Derivatives Related to Variable Annuity Contracts

• The Company uses equity futures, equity options, total return swaps, interest rate futures, interest rate swaps, interest rate swaptions, currency futures, volatility futures, volatility options, and variance swaps to mitigate the risk related to certain guaranteed minimum benefits, including GLWB, within its VA products. In general, the cost of such benefits varies with the level of equity and interest rate markets, foreign currency levels, and overall volatility.

• The Company markets certain VA products with a GLWB rider. The GLWB component is considered an embedded derivative, not considered to be clearly and closely related to the host contract.

Derivatives Related to Fixed Annuity Contracts

• The Company uses equity futures and options to mitigate the risk within its fixed indexed annuity products. In general, the cost of such benefits varies with the level of equity markets and overall volatility.

• The Company markets certain fixed indexed annuity products. The FIA component is considered an embedded derivative as it is, not considered to be clearly and closely related to the host contract.

Derivatives Related to Indexed Universal Life Contracts

• The Company uses equity futures and options to mitigate the risk within its indexed universal life products. In general, the cost of such benefits varies with the level of equity markets.

• The Company markets certain IUL products. The IUL component is considered an embedded derivative as it is not considered to be clearly and closely related to the host contract.

Other Derivatives

• The Company uses various swaps and other types of derivatives to manage risk related to other exposures.

• The Company is involved in various modified coinsurance and funds withheld arrangements which contain embedded derivatives. Changes in their fair value are recorded in current period earnings. The investment portfolios that support the related modified coinsurance reserves and funds withheld arrangements had fair value changes which substantially offset the gains or losses on these embedded derivatives.

38

The following table sets forth realized investments gains and losses for the periods shown:

Realized investment gains (losses) - derivative financial instruments

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Derivatives related to VA contracts:
Interest rate futures	$	(11,280	)	$	1,552		$	(17,302	)	$	(15,340	)
Equity futures	2,559			(10,864		)	32,297			(17,292		)
Currency futures	(397		)	12,063			1,847			4,480
Equity options	(21,702		)	(38,216		)	(93,397		)	(26,200		)
Interest rate swaptions	—			—			—			(14		)
Interest rate swaps	117,934			(26,149		)	192,795			(89,859		)
Total return swaps	(8,545		)	(10,055		)	(48,572		)	(3,565		)
Embedded derivative - GLWB	(134,692		)	35,554			(154,318		)	91,846
Total derivatives related to VA contracts	(56,123		)	(36,115		)	(86,650		)	(55,944		)
Derivatives related to FIA contracts:
Embedded derivative	(24,819		)	(4,927		)	(63,633		)	6,403
Equity futures	431			(167		)	2			(328		)
Equity options	13,191			7,398			55,241			2,729
Total derivatives related to FIA contracts	(11,197		)	2,304			(8,390		)	8,804
Derivatives related to IUL contracts:
Embedded derivative	(11,286		)	(1,226		)	(24,656		)	8,658
Equity futures	85			—			256			136
Equity options	2,606			2,086			8,786			836
Total derivatives related to IUL contracts	(8,595		)	860			(15,614		)	9,630
Embedded derivative - Modco reinsurance treaties	(70,679		)	45,183			(155,677		)	127,841
Other derivatives	(1,455		)	33			(1,389		)	(7		)
Total realized gains (losses) - derivatives	$	(148,049	)	$	12,265		$	(267,720	)	$	90,324

39

The following table presents the components of the gain or loss on derivatives that qualify as a cash flow hedging relationship.

Gain (Loss) on Derivatives in Cash Flow Hedging Relationship

	Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives			Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss)			Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives
	(Effective Portion)			(Effective Portion)			(Ineffective Portion)
				Benefits and settlement			Realized investment
				expenses			gains (losses)
				(Dollars In Thousands)
For The Three Months Ended June 30, 2019
Foreign currency swaps	$	(1,733	)	$	(188	)	$	—
Interest rate swaps	(1,796		)	(148		)	—
Total	$	(3,529	)	$	(336	)	$	—
For The Six Months Ended June 30, 2019
Foreign currency swaps	$	(3,626	)	$	(394	)	$	—
Interest rate swaps	(2,391		)	(220		)	—
Total	$	(6,017	)	$	(614	)	$	—
For The Three Months Ended June 30, 2018
Foreign currency swaps	$	2,967		$	(205	)	$	—
Total	$	2,967		$	(205	)	$	—
For The Six Months Ended June 30, 2018
Foreign currency swaps	$	3,582		$	(318	)	$	—
Total	$	3,582		$	(318	)	$	—

Based on expected cash flows of the underlying hedged items, the Company expects to reclassify $2.9 million out of accumulated other comprehensive income (loss) into earnings during the next twelve months.

40

The table below presents information about the nature and accounting treatment of the Company’s primary derivative financial instruments and the location in and effect on the consolidated condensed financial statements for the periods presented below:

	As of
	June 30, 2019				December 31, 2018
	Notional Amount		Fair Value		Notional Amount		Fair Value
	(Dollars In Thousands)
Other long-term investments
Derivatives not designated as hedging instruments:
Interest rate swaps	$	2,188,000	$	90,599	$	1,515,500	$	28,501
Total return swaps	132,044		1,065		138,070		3,971
Embedded derivative - Modco reinsurance treaties	1,248,634		13,738		585,294		7,072
Embedded derivative - GLWB	3,153,016		97,185		3,984,070		105,272
Interest rate futures	393,518		8,703		286,208		10,302
Equity futures	101,064		639		12,633		483
Equity options	6,176,649		431,694		5,624,081		220,092
Other	157		173		157		136
	$	13,393,082	$	643,796	$	12,146,013	$	375,829
Other liabilities
Cash flow hedges:
Interest rate swaps	$	350,000	$	—	$	350,000	$	—
Foreign currency swaps	117,178		2,309		117,178		904
Derivatives not designated as hedging instruments:
Interest rate swaps	70,000		—		775,000		11,367
Total return swaps	361,607		1,112		768,177		23,054
Embedded derivative - Modco reinsurance treaties	2,287,547		188,853		1,795,287		32,828
Embedded derivative - GLWB	6,943,853		471,199		6,282,712		289,343
Embedded derivative - FIA	2,739,208		298,721		2,576,033		217,288
Embedded derivative - IUL	262,828		136,660		233,550		90,231
Interest rate futures	901,165		16,464		863,706		20,100
Equity futures	225,125		2,967		659,357		33,753
Currency futures	256,513		1,105		202,747		2,163
Equity options	4,008,015		198,159		4,199,687		34,178
Other	13,109		1,644		3,288		252
	$	18,536,148	$	1,319,193	$	18,826,722	$	755,461

8.    OFFSETTING OF ASSETS AND LIABILITIES

Certain of the Company's derivative instruments are subject to enforceable master netting arrangements that provide for the net settlement of all derivative contracts between the Company and a counterparty in the event of default or upon the occurrence of certain termination events. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event either minimum thresholds, or in certain cases ratings levels, have been reached. Additionally, certain of the Company's repurchase agreements provide for net settlement on termination of the agreement. Refer to Note 10, Debt and Other Obligations for details of the Company’s repurchase agreement programs.

Collateral received includes both cash and non-cash collateral.  Cash collateral received by the Company is recorded on the consolidated condensed balance sheet as “cash”, with a corresponding amount recorded in “other liabilities” to represent the Company’s obligation to return the collateral.  Non-cash collateral received by the Company is not recognized on the consolidated condensed balance sheet unless the Company exercises its right to sell or re-pledge the underlying asset. As of June 30, 2019, the fair value of non-cash collateral received was $30.4 million. As of December 31, 2018, the fair value of non-cash collateral received was $45.0 million.

41

The tables below present the derivative instruments by assets and liabilities for the Company as of June 30, 2019:

	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Received		Net Amount
	(Dollars In Thousands)
Offsetting of Assets
Derivatives:
Free-Standing derivatives	$	532,700	$	—	$	532,700	$	210,744	$	214,952	$	107,004
Total derivatives, subject to a master netting arrangement or similar arrangement	532,700		—		532,700		210,744		214,952		107,004
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	13,738		—		13,738		—		—		13,738
Embedded derivative - GLWB	97,185		—		97,185		—		—		97,185
Other	173		—		173		—		—		173
Total derivatives, not subject to a master netting arrangement or similar arrangement	111,096		—		111,096		—		—		111,096
Total derivatives	643,796		—		643,796		210,744		214,952		218,100
Total Assets	$	643,796	$	—	$	643,796	$	210,744	$	214,952	$	218,100

	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Posted		Net Amount
	(Dollars In Thousands)
Offsetting of Liabilities
Derivatives:
Free-Standing derivatives	$	222,116	$	—	$	222,116	$	210,744	$	11,215	$	157
Total derivatives, subject to a master netting arrangement or similar arrangement	222,116		—		222,116		210,744		11,215		157
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	188,853		—		188,853		—		—		188,853
Embedded derivative - GLWB	471,199		—		471,199		—		—		471,199
Embedded derivative - FIA	298,721		—		298,721		—		—		298,721
Embedded derivative - IUL	136,660		—		136,660		—		—		136,660
Other	1,644		—		1,644		—		—		1,644
Total derivatives, not subject to a master netting arrangement or similar arrangement	1,097,077		—		1,097,077		—		—		1,097,077
Total derivatives	1,319,193		—		1,319,193		210,744		11,215		1,097,234
Repurchase agreements(1)	60,000		—		60,000		—		—		60,000
Total Liabilities	$	1,379,193	$	—	$	1,379,193	$	210,744	$	11,215	$	1,157,234
(1) Borrowings under repurchase agreements are for a term less than 90 days.

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The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2018: 

	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Received		Net Amount
	(Dollars In Thousands)
Offsetting of Assets
Derivatives:
Free-Standing derivatives	$	263,349	$	—	$	263,349	$	70,322	$	99,199	$	93,828
Total derivatives, subject to a master netting arrangement or similar arrangement	263,349		—		263,349		70,322		99,199		93,828
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	7,072		—		7,072		—		—		7,072
Embedded derivative - GLWB	105,272		—		105,272		—		—		105,272
Other	136		—		136		—		—		136
Total derivatives, not subject to a master netting arrangement or similar arrangement	112,480		—		112,480		—		—		112,480
Total derivatives	375,829		—		375,829		70,322		99,199		206,308
Total Assets	$	375,829	$	—	$	375,829	$	70,322	$	99,199	$	206,308

	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Posted		Net Amount
	(Dollars In Thousands)
Offsetting of Liabilities
Derivatives:
Free-Standing derivatives	$	125,519	$	—	$	125,519	$	70,322	$	47,856	$	7,341
Total derivatives, subject to a master netting arrangement or similar arrangement	125,519		—		125,519		70,322		47,856		7,341
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	32,828		—		32,828		—		—		32,828
Embedded derivative - GLWB	289,343		—		289,343		—		—		289,343
Embedded derivative - FIA	217,288		—		217,288		—		—		217,288
Embedded derivative - IUL	90,231		—		90,231		—		—		90,231
Other	252		—		252		—		—		252
Total derivatives, not subject to a master netting arrangement or similar arrangement	629,942		—		629,942		—		—		629,942
Total derivatives	755,461		—		755,461		70,322		47,856		637,283
Repurchase agreements(1)	418,090		—		418,090		—		—		418,090
Total Liabilities	$	1,173,551	$	—	$	1,173,551	$	70,322	$	47,856	$	1,055,373
(1) Borrowings under repurchase agreements are for a term less than 90 days.

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9.MORTGAGE LOANS

Mortgage Loans

The Company invests a portion of its investment portfolio in commercial mortgage loans. As of June 30, 2019, the Company’s mortgage loan holdings were approximately $9.1 billion. The Company has specialized in making loans on credit-oriented commercial properties, credit-anchored strip shopping centers, senior living facilities, and apartments. The Company’s underwriting procedures relative to its commercial loan portfolio are based, in the Company’s view, on a conservative and disciplined approach. The Company concentrates on a small number of commercial real estate asset types associated with the necessities of life (retail, multi-family, senior living, professional office buildings, and warehouses). The Company believes that these asset types tend to weather economic downturns better than other commercial asset classes in which it has chosen not to participate. The Company believes this disciplined approach has helped to maintain a relatively low delinquency and foreclosure rate throughout its history. The majority of the Company’s mortgage loans portfolio was underwritten by the Company. From time to time, the Company may acquire loans in conjunction with an acquisition.

The Company’s commercial mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, and net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts and prepayment fees are reported in net investment income.

Certain of the mortgage loans have call options that occur within the next 10 years. However, if interest rates were to significantly increase, the Company may be unable to exercise the call options on its existing mortgage loans commensurate with the significantly increased market rates. As of June 30, 2019, assuming the loans are called at their next call dates, approximately $70.3 million of principal would become due for the remainder of 2019, $789.6 million in 2020 through 2024 and $60.0 million in 2025 through 2029.

The Company offers a type of commercial mortgage loan under which the Company will permit a loan-to-value ratio of up to 85% in exchange for a participating interest in the cash flows from the underlying real estate. As of June 30, 2019 and December 31, 2018, approximately $669.5 million and $700.6 million, respectively, of the Company’s total mortgage loans principal balance have this participation feature. Cash flows received as a result of this participation feature are recorded as interest income. During the three and six months ended June 30, 2019 and 2018, the Company recognized $12.0 million and $14.2 million, and $5.1 million and $12.4 million, respectively, of participating mortgage loan income.

As of June 30, 2019, $0.8 million of the Company’s invested assets consisted of nonperforming mortgage loans, restructured mortgage loans, or mortgage loans that were foreclosed and were converted to real estate properties. The Company does not expect these investments to adversely affect its liquidity or ability to maintain proper matching of assets and liabilities. During the six months ended June 30, 2019, the Company recognized three troubled debt restructurings as a result of granting concessions to borrowers which included loan terms unavailable from other lenders. During the three and six months ended June 30, 2019, the Company did not recognize any mortgage loans that were foreclosed and were converted to real estate properties. The Company did not identify any loans whose principal was permanently impaired during the three and six months ended June 30, 2019.

As of June 30, 2019 and December 31, 2018, the Company had an allowance for mortgage loan credit losses of $2.5 million and $1.3 million, respectively. Due to the Company’s loss experience and nature of the loan portfolio, the Company believes that a collectively evaluated allowance would be inappropriate. The Company believes an allowance calculated through an analysis of specific loans that are believed to have a higher risk of credit impairment provides a more accurate presentation of expected losses in the portfolio and is consistent with the applicable guidance for loan impairments in ASC Subtopic 310. Since the Company uses the specific identification method for calculating the allowance, it is necessary to review the economic situation of each borrower to determine those that have higher risk of credit impairment. The Company has a team of professionals that monitors borrower conditions such as payment practices, borrower credit, operating performance, and property conditions, as well as ensuring the timely payment of property taxes and insurance. Through this monitoring process, the Company assesses the risk of each loan. When issues are identified, the severity of the issues are assessed and reviewed for possible credit impairment. If a loss is probable, an expected loss calculation is performed and an allowance is established for that loan based on the expected loss. The expected loss is calculated as the excess carrying value of a loan over either the present value of expected future cash flows discounted at the loan’s original effective interest rate, or the current estimated fair value of the loan’s underlying collateral. A loan may be subsequently charged off at such point that the Company no longer expects to receive cash payments, the present value of future expected payments of the renegotiated loan is less than the current principal balance, or at such time that the Company is party to foreclosure or bankruptcy proceedings associated with the borrower and does not expect to recover the principal balance of the loan.

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A charge off is recorded by eliminating the allowance against the mortgage loan and recording the renegotiated loan or the collateral property related to the loan as investment real estate on the balance sheet, which is carried at the lower of the appraised fair value of the property or the unpaid principal balance of the loan, less estimated selling costs associated with the property.

As of June 30, 2019 and December 31, 2018, the Company had an allowance for mortgage loan credit losses of $2.5 million and $1.3 million, respectively, which is shown in the chart below.

	As of
	June 30, 2019			December 31, 2018
	(Dollars In Thousands)
Beginning balance	$	1,296		$	—
Charge offs	(350		)	—
Recoveries	—			(209		)
Provision	1,535			1,505
Ending balance	$	2,481		$	1,296

It is the Company’s policy to cease to carry accrued interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued unless it is determined that the accrued interest is not collectible. If a loan becomes over 90 days delinquent, it is the Company’s general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current is in place. For loans subject to a pooling and servicing agreement, there are certain additional restrictions and/or requirements related to workout proceedings, and as such, these loans may have different attributes and/or circumstances affecting the status of delinquency or categorization of those in nonperforming status.

The carrying value of the delinquent loans is shown in the following chart.

					Greater
	30-59 Days		60-89 Days		than 90 Days		Total
As of June 30, 2019	Delinquent		Delinquent		Delinquent		Delinquent
	(Dollars In Thousands)
Commercial mortgage loans	$	8,405	$	—	$	83	$	8,488
Number of delinquent commercial mortgage loans	2		—		1		3
As of December 31, 2018
Commercial mortgage loans	$	1,044	$	—	$	1,234	$	2,278
Number of delinquent commercial mortgage loans	4		—		1		5

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     The Company’s commercial mortgage loan portfolio consists of mortgage loans that are collateralized by real estate. Due to the collateralized nature of the loans, any assessment of impairment and ultimate loss given a default on the loans is based upon a consideration of the estimated fair value of the real estate. The Company limits accrued interest income on impaired loans to 90 days of interest. Once accrued interest on the impaired loan is received, interest income is recognized on a cash basis.

The following table includes the recorded investment, unpaid principal balance, related allowance, average recorded investment, interest income recognized, and cash basis interest income of commercial loan portfolio as of June 30, 2019 and December 31, 2018:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Income
	(Dollars In Thousands)
As of June 30, 2019
Commercial mortgage loans:
With no related allowance recorded	$	83	$	83	$	—	$	83	$	—	$	—
With an allowance recorded	$	9,445	$	9,305	$	2,481	$	3,148	$	184	$	217
As of December 31, 2018
Commercial mortgage loans:
With no related allowance recorded	$	—	$	—	$	—	$	—	$	—	$	—
With an allowance recorded	$	5,684	$	5,309	$	1,296	$	1,895	$	267	$	293

     Mortgage loans that were modified in a troubled debt restructuring as of June 30, 2019 and December 31, 2018 were as follows:

	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars In Thousands)
As of June 30, 2019
Troubled debt restructuring:
Commercial mortgage loans	1	$	1,114	$	759
As of December 31, 2018
Troubled debt restructuring:
Commercial mortgage loans	1	$	2,688	$	1,742

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10.    DEBT AND OTHER OBLIGATIONS

Debt and Subordinated Debt

Debt and subordinated debt are summarized as follows:

	As of
	June 30, 2019				December 31, 2018
	Outstanding Principal		Carrying Amounts		Outstanding Principal		Carrying Amounts
	(Dollars In Thousands)
Debt (year of issue):
Credit Facility	$	—	$	—	$	—	$	—
Term Loan Credit Agreement	600,000		599,627		—		—
Capital lease obligation	2,560		2,560		1,319		1,319
7.375% Senior Notes (2009), due 2019	400,000		406,627		400,000		416,469
8.45% Senior Notes (2009), due 2039	180,719		273,029		190,044		288,547
4.30% Senior Notes (2018), due 2028	400,000		395,714		400,000		395,492
	$	1,583,279	$	1,677,557	$	991,363	$	1,101,827
Subordinated debt (year of issue):
5.35% Subordinated Debentures (2017), due 2052	$	500,000	$	495,494	$	500,000	$	495,426
3.55% Subordinated Funding Obligations (2018), due 2038	55,000		55,000		55,000		55,000
3.55% Subordinated Funding Obligations (2018), due 2038	55,000		55,000		55,000		55,000
	$	610,000	$	605,494	$	610,000	$	605,426

During the six months ended June 30, 2019, the Company repurchased and subsequently extinguished $14.1 million (par value - $9.3 million) of the Company’s 8.45% Senior Notes due 2039. These repurchases resulted in a $1.1 million pre-tax gain for the Company. The gain is recorded in other income in the consolidated condensed statements of income.

During 2019, the Company entered into a $600.0 million Term Loan Credit Agreement, due 2024. The loan is classified as debt on the Company’s balance sheet and is carried net of the associated deferred issuance expenses of $0.4 million. The loan pays interest at a rate equal to the one-month LIBOR plus 100 bps. The Company used the net loan proceeds to assist with funding the GWL&A transaction.

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 2018, the Company issued $400.0 million of its Senior Notes at a rate of 4.30%, due 2028. These notes were issued net of a discount of $1.0 million. These notes are carried on the Company’s balance sheet net of the discount and the associated deferred issuance expenses of $3.7 million. The Company used the net proceeds from the offering for general corporate purposes, including the repayment of amounts outstanding under our Credit Facility.

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.

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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, 2019. There was no outstanding balance as of June 30, 2019.

Non-RecourseFunding Obligations

Non-recourse funding obligations outstanding as of June 30, 2019, 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)	$	1,803,000	$	1,803,000	2039	4.75	%
Golden Gate II Captive Insurance Company	20,600		17,729		2052	5.60	%
Golden Gate V Vermont Captive Insurance Company(2)(3)	695,000		753,503		2037	5.12	%
MONY Life Insurance Company(3)	1,091		2,306		2024	6.19	%
Total	$	2,519,691	$	2,576,538
(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

Non-recourse funding obligations outstanding as of December 31, 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)	$	1,883,000	$	1,883,000	2039	4.75	%
Golden Gate II Captive Insurance Company	20,600		17,703		2052	4.99	%
Golden Gate V Vermont Captive Insurance Company(2)(3)	670,000		729,454		2037	5.12	%
MONY Life Insurance Company(3)	1,091		2,340		2024	6.19	%
Total	$	2,574,691	$	2,632,497
(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

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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, 2019, the fair value of securities pledged under the repurchase program was $62.6 million, and the repurchase obligation of $60.0 million was included in the Company’s consolidated condensed balance sheets (at an average borrowing rate of 246 basis points). During the six months ended June 30, 2019, the maximum balance outstanding at any one point in time related to these programs was $540.0 million. The average daily balance was $104.8 million (at an average borrowing rate of 247 basis points) during the six months ended June 30, 2019. As of December 31, 2018, the fair value of securities pledged under the repurchase program was $451.9 million, and the repurchase obligation of $418.1 million was included in the Company’s consolidated condensed balance sheets (at an average borrowing rate of 245 basis points). During 2018, the maximum balance outstanding at any one point in time related to these programs was $885.0 million. The average daily balance was $511.4 million (at an average borrowing rate of 184 basis points) during the year ended December 31, 2018.

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 fair value of the loaned securities to be separately maintained. The loaned securities’ fair value is monitored on a daily basis. As of June 30, 2019, securities with a fair value of $75.1 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, 2019, the fair value of the collateral related to this program was $66.9 million and the Company has an obligation to return $66.9 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, 2019 and December 31, 2018:

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, 2019
	(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	$	62,611	$	—	$	—	$	—	$	62,611
Total repurchase agreements and repurchase-to-maturity transactions	62,611		—		—		—		62,611
Securities lending transactions
Corporate securities	57,941		—		—		—		57,941
Equity securities	14,642		—		—		—		14,642
Other government related securities	2,488		—		—		—		2,488
Total securities lending transactions	75,071		—		—		—		75,071
Total securities	$	137,682	$	—	$	—	$	—	$	137,682

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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, 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	$	433,182	$	18,713	$	—	$	—	$	451,895
Total repurchase agreements and repurchase-to-maturity transactions	$	433,182	$	18,713	$	—	$	—	$	451,895
Securities lending transactions
Fixed maturity securities	$	71,285	$	—	$	—	$	—	$	71,285
Equity securities	891		—		—		—		891
Total securities lending transactions	72,176		—		—		—		72,176
Total securities	$	505,358	$	18,713	$	—	$	—	$	524,071

11.    COMMITMENTS AND CONTINGENCIES

The Company has entered into indemnity agreements with each of its current directors other than those that are employees of Dai-ichi Life that provide, among other things and subject to certain limitations, a contractual right to indemnification to the fullest extent permissible under the law. The Company has agreements with certain of its officers providing up to $10.0 million in indemnification. These obligations are in addition to the customary obligation to indemnify officers and directors contained in the Company’s governance documents.

The Company leases administrative and marketing office space in approximately 19 cities (excluding the home office building), as well as various office equipment. Most leases have terms ranging from 1 to 10. Leases with an initial term of 12 months or less are not recorded on the consolidated condensed balance sheet. The Company accounts for lease components separately from non-lease components (e.g., common area maintenance). Certain of the Company’s lease agreements include options to renew at its discretion. Management has concluded that the Company is not reasonably certain to elect any of these renewal options. The Company will use the interest rates received on its funding agreement backed notes as the collateralized discount rate when calculating the present value of remaining lease payments when the rate implicit in the lease is unavailable. Additionally, the Company previously leased a building contiguous to its home office. The lease was renewed in December 2013 and was extended to December 2018. At the end of the lease term in December 2018, the Company purchased the building for approximately $75.0 million. The building is recorded in property and equipment on the consolidated condensed balance sheet.

Under the insurance guaranty fund laws in most states, insurance companies doing business therein can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. From time to time, companies may be asked to contribute amounts beyond prescribed limits. It is possible that the Company could be assessed with respect to product lines not offered by the Company. In addition, legislation may be introduced in various states with respect to guaranty fund assessment laws related to insurance products, including long term care insurance and other specialty products, that increases the cost of future assessments or alters future premium tax offsets received in connection with guaranty fund assessments. The Company cannot predict the amount, nature, or timing of any future assessments or legislation, any of which could have a material and adverse impact on the Company’s financial condition or results of operations.

A number of civil jury verdicts have been returned against insurers, broker-dealers, and other providers of financial services involving sales, refund, or claims practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or persons with whom the insurer does business, and other matters. Often these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive and non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very limited appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The financial services and insurance industries in particular are also sometimes the target of law enforcement and regulatory investigations relating to the numerous laws and regulations that govern such companies. Some companies have been the subject of law enforcement or regulatory actions or other actions resulting from such investigations. The Company, in the ordinary course of business, is involved in such matters.

The Company establishes liabilities for litigation and regulatory actions when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. For matters where a loss is believed to be reasonably possible, but not probable, no liability is established. For such matters, the Company may provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. The Company reviews relevant information with respect to litigation and

50

regulatory matters on a quarterly and annual basis and updates its established liabilities, disclosures, and estimates of reasonably possible losses or range of loss based on such reviews.

Certain of the Company’s insurance subsidiaries, as well as certain other insurance companies for which the Company has coinsured blocks of life insurance and annuity policies, are under audit for compliance with the unclaimed property laws of a number of states. The audits are being conducted on behalf of the treasury departments or unclaimed property administrators in such states. The focus of the audits is on whether there have been unreported deaths, maturities, or policies that have exceeded limiting age with respect to which death benefits or other payments under life insurance or annuity policies should be treated as unclaimed property that should be escheated to the state. The Company is presently unable to estimate the reasonably possible loss or range of loss that may result from the audits due to a number of factors, including the early stages of the audits being conducted, and uncertainty as to whether the Company or other companies are responsible for the liabilities, if any, arising in connection with certain co-insured policies. The Company will continue to monitor the matter for any developments that would make the loss contingency associated with the audits reasonably estimable.

Advance Trust & Life Escrow Services, LTA, as Securities Intermediary of Life Partners Position Holder Trust v. Protective Life Insurance Company, Case No. 2:18-CV-01290, is a putative class action that was filed on August 13, 2018 in the United States District Court for the Northern District of Alabama. Plaintiff alleges that PLICO required policyholders to pay unlawful and excessive cost of insurance charges. Plaintiff seeks to represent all owners of universal life and variable universal life policies issued or administered by PLICO or its predecessors that provide that cost of insurance rates are to be determined based on expectations of future mortality experience. The plaintiff seeks class certification, compensatory damages, pre-judgment and post-judgment interest, costs, and other unspecified relief. The Company is vigorously defending this matter and cannot predict the outcome of or reasonably estimate the possible loss or range of loss that might result from this litigation.

Scottish Re (U.S.), Inc. ("SRUS") was placed in rehabilitation on March 6, 2019 by the State of Delaware. Under the related order, the Insurance Commissioner of the State of Delaware has been appointed the receiver of SRUS and provided with authority to conduct and continue the business of SRUS in the interest of its cedents, creditors, and stockholder. The order was accompanied by an injunction requiring the continued payment of reinsurance premiums to SRUS and temporarily prohibiting cedents, including the Company, from offsetting premiums payable against receivables from SRUS. On June 20, 2019, the Delaware Court of Chancery entered an order approving a Revised Offset Plan, which allows cedents, including the Company, to offset premiums under certain circumstances.

As of June 30, 2019, the Company had outstanding claims receivable from SRUS of $20.5 million, and other exposures associated with reinsurance receivables of approximately $102.3 million and statutory reserve credit of approximately $118.2 million. The Company continues to monitor SRUS and the actions of the receiver through discussions with legal counsel and review of publicly available information. However, management does not have access to current information about the assets or capital position of SRUS. Additionally, it is unclear how the rehabilitation process will proceed or whether or to what extent the ultimate outcome of the rehabilitation process will be unfavorable to the Company.

The Company considered whether the accrual of a loss contingency under FASB ASC Topic 450, Contingencies, was appropriate with respect to amounts receivable from SRUS for ceded claims and reserves as of June 30, 2019. Due to the lack of sufficient information to support an analysis of SRUS's financial condition as of June 30, 2019 and uncertainty regarding whether and to what extent the ultimate outcome of the rehabilitation process will result in an outcome unfavorable to the Company, management concluded that any possible impairment of its reinsurance receivables balance could not be reasonably estimated.

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12.    EMPLOYEE BENEFIT PLANS

Components of the net periodic benefit cost for the three and six months ended June 30, 2019 and 2018, are as follows:

	For The Three Months Ended June 30,										For The Six Months Ended June 30,
	2019					2018					2019					2018
	Qualified Pension Plan			Nonqualified Excess Pension Plan		Qualified Pension Plan			Nonqualified Excess Pension Plan		Qualified Pension Plan			Nonqualified Excess Pension Plan		Qualified Pension Plan			Nonqualified Excess Pension Plan
	(Dollars In Thousands)
Service cost — benefits earned during the period	$	3,114		$	285	$	3,441		$	387	$	6,228		$	570	$	6,882		$	774
Interest cost on projected benefit obligation	2,778			371		2,397			359		5,556			742		4,794			718
Expected return on plan assets	(4,463		)	—		(4,026		)	—		(8,926		)	—		(8,052		)	—
Amortization of actuarial loss	—			74		—			265		—			148		—			530
Preliminary net periodic benefit cost	1,429			730		1,812			1,011		2,858			1,460		3,624			2,022
Settlement/curtailment expense	—			—		—			—		—					—			—
Total net periodic benefit costs	$	1,429		$	730	$	1,812		$	1,011	$	2,858		$	1,460	$	3,624		$	2,022

During the six months ended June 30, 2019, the Company did not make a contribution to its defined benefit pension plan. The Company will make contributions in future periods as necessary to at least satisfy minimum funding requirements, to maintain an adjusted funding target attainment percentage (“AFTAP”) of at least 80% and to avoid certain Pension Benefit Guaranty Corporation (“PBGC”) reporting triggers. The Company may also make additional discretionary contributions in excess of the contribution amounts established by the current funding policy.

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13.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) (“AOCI”) as of June 30, 2019 and December 31, 2018.

Changes in Accumulated Other Comprehensive Income (Loss) by Component

	Unrealized Gains and Losses on Investments(2)			Accumulated Gain and Loss  Derivatives			Minimum Pension Liability Adjustment			Total Accumulated Other Comprehensive  Income (Loss)
	(Dollars In Thousands, Net of Tax)
Balance, December 31, 2017	$	25,874		$	747		$	(13,925	)	$	12,696
Other comprehensive income (loss) before reclassifications	(1,420,499		)	(1,884		)	(3,546		)	(1,425,929		)
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	(20,751		)	—			—			(20,751		)
Amounts reclassified from accumulated other comprehensive income (loss)(1)	15,651			1,130			1,989			18,770
Cumulative effect adjustments	(10,552		)	—			—			(10,552		)
Balance, December 31, 2018	$	(1,410,277	)	$	(7	)	$	(15,482	)	$	(1,425,766	)
Other comprehensive income (loss) before reclassifications	2,131,443			(4,754		)	—			2,126,689
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	24,316			—			—			24,316
Amounts reclassified from accumulated other comprehensive income (loss)(1)	(1,876		)	486			—			(1,390		)
Cumulative effect adjustments	—			—			—			—
Balance, June 30, 2019	$	743,606		$	(4,275	)	$	(15,482	)	$	723,849
(1)  See Reclassifications Out of Accumulated Other Comprehensive Income (Loss) table below for details.
(2)  As of December 31, 2018 and June 30, 2019, net unrealized losses reported in AOCI were offset by $613.4 million and $(343.1) million, respectively, due to the impact those net unrealized losses would have had on certain of the Company’s insurance assets and liabilities if the net unrealized losses had been recognized in net income.

The following tables summarize the reclassifications amounts out of AOCI for the three and six months ended June 30, 2019 and 2018.

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

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	Affected Line Item in the Condensed Consolidated
Gains/(losses) in net income:	Statements of Income	For The Three Months Ended June 30,						For The Six Months Ended June 30,
		2019			2018			2019			2018
		(Dollars In Thousands)
Derivative instruments	Benefits and settlement expenses, net of reinsurance ceded(1)	$	(336	)	$	(205	)	$	(614	)	$	(318	)
	Tax (expense) benefit	70			43			128			67
		$	(266	)	$	(162	)	$	(486	)	$	(251	)
Unrealized gains and losses on available-for-sale securities	Realized investment gains (losses): All other investments	$	1,098		$	5,539		$	6,215		$	8,322
	Net impairment losses recognized in earnings	(698		)	(5		)	(3,840		)	(3,650		)
	Tax (expense) benefit	(84		)	(1,162		)	(499		)	(981		)
		$	316		$	4,372		$	1,876		$	3,691
(1) See Note 7, Derivative Financial Instruments for additional information.

14.INCOME TAXES

The Company used its respective estimates for its annual 2019 and 2018 incomes in computing its effective income tax rates for the three and six months ended June 30, 2019 and 2018. The effective tax rates for the three and six months ended June 30, 2019 and 2018, were 16.9% and 19.2% and 17.5% and 18.4%, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	As of
	June 30, 2019			December 31, 2018
	(Dollars In Thousands)
Balance, beginning of period	$	7,134		$	11,353
Additions for tax positions of the current year	—			—
Additions for tax positions of prior years	—			—
Reductions of tax positions of prior years:
Changes in judgment	—			(4,219		)
Settlements during the period	(5,343		)	—
Lapses of applicable statute of limitations	—			—
Balance, end of period	$	1,791		$	7,134

Included in the end of period balance above, as of June 30, 2019 and December 31, 2018 there were no unrecognized tax benefits for which the ultimate deductibility is certain but for which there is uncertainty about the timing of such deductions. As of December 31, 2017, there were approximately $0.7 million of such unrecognized tax benefits. Other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective income tax rate but would accelerate to an earlier period the payment of cash to the taxing authority. The total amount of unrecognized tax benefits, if recognized, that would affect the effective income tax rate is approximately $1.8 million, $7.1 million, and $11.4 million for the period ending June 30, 2019 and the years ending December 31, 2018 and 2017, respectively.

Any accrued interest related to the unrecognized tax benefits and other accrued income taxes have been included in income tax expense. These amounts were a $0.6 million detriment, $0.04 million detriment, and a $2.4 million benefit for the period ending June 30, 2019 and the years ending December 31, 2018 and 2017, respectively (before taking into account the related income tax benefit associated with such an expense).

In April, 2019, the IRS proposed favorable and unfavorable adjustments to the Company’s 2014 through 2016 reported taxable income. The Company agreed to these adjustments. The resulting taxes have not yet been settled but settlement will not materially impact the Company or its effective tax rate. This agreement with the IRS is the primary cause for the reductions of unrecognized tax benefits shown in the chart above.

The Company believes that in the next twelve months, none of the unrecognized tax benefits will be reduced.

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Statute of limitations for years before 2017 are still open but, in general, the Company is no longer subject to income tax examinations by taxing authorities for tax years that began before 2017.

Due to IRS adjustments to the Company's pre-2014 taxable income, the Company has amended certain of its 2003 through 2013 state income tax returns. Such amendments will cause such years to remain open, pending the states' acceptances of the returns.

15.OPERATINGSEGMENTS

The Company has several operating segments, each having a strategic focus. An operating segment is distinguished by products, channels of distribution, and/or other strategic distinctions. The Company periodically evaluates its operating segments and makes adjustments to its segment reporting as needed. A brief description of each segment follows.

• The Life Marketing segment markets fixed universal life (“UL”), indexed universal life (“IUL”), variable universal life (“VUL”), bank-owned life insurance (“BOLI”), and level premium term insurance (“traditional”) products on a national basis primarily through networks of independent insurance agents and brokers, broker-dealers, financial institutions, independent marketing organizations, and affinity groups.

• The Acquisitions segment focuses on acquiring, converting, and servicing policies and contracts acquired from other companies. The segment’s primary focus is on life insurance policies and annuity products that were sold to individuals. The level of the segment’s acquisition activity is predicated upon many factors, including available capital, operating capacity, potential return on capital, and market dynamics. Policies acquired through the Acquisitions segment are typically blocks of business where no new policies are being marketed, however, some recent acquisitions have included ongoing new business activities. Ongoing new product sales written by the Company from these acquisitions are included in the Life Marketing and/or Annuities segment. As a result, earnings and account values are expected to decline as the result of lapses, deaths, and other terminations of coverage unless new acquisitions are made.

• The Annuities segment markets fixed and VA products. These products are primarily sold through broker-dealers, financial institutions, and independent agents and brokers.

• The Stable Value Products segment sells fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, money market funds, bank trust departments, and other institutional investors. This segment also issues funding agreements to the FHLB, and markets guaranteed investment contracts (“GICs”) to 401(k) and other qualified retirement savings plans. The Company also has an unregistered funding agreement-backed notes program which provides for offers of notes to both domestic and international institutional investors.

• The Asset Protection segment markets extended service contracts, guaranteed asset protection (“GAP”) products, credit life and disability insurance, and other specialized ancillary products to protect consumers’ investments in automobiles, recreational vehicles, watercraft, and powersports. GAP products are designed to cover the difference between the scheduled loan pay-off amount and an asset’s actual cash value in the case of a total loss. Each type of specialized ancillary product protects against damage or other loss to a particular aspect of the underlying asset.

• The Corporate and Other segment primarily consists of net investment income on assets supporting our equity capital, unallocated corporate overhead and expenses not attributable to the segments above (including interest on corporate debt). This segment includes earnings from several non-strategic or runoff lines of business, various financing and investment related transactions, and the operations of several small subsidiaries.

The Company's management and Board of Directors analyzes and assesses the operating performance of each segment using "pre-tax adjusted operating income (loss)" and "after-tax adjusted operating income (loss)". Consistent with GAAP accounting guidance for segment reporting, pre-tax adjusted operating income (loss) is the Company's measure of segment performance. Pre-tax adjusted operating income (loss) is calculated by adjusting "income (loss) before income tax," by excluding the following items:

• realized gains and losses on investments and derivatives,

• changes in the GLWB embedded derivatives exclusive of the portion attributable to the economic cost of the GLWB,

• actual GLWB incurred claims, and

• the amortization of DAC, value of business acquired (“VOBA”), and certain policy liabilities that is impacted by the exclusion of these items.

The items excluded from adjusted operating income (loss) are important to understanding the overall results of operations. Pre-tax adjusted operating income (loss) and after-tax adjusted operating income (loss) are not substitutes for income before income taxes or net income (loss), respectively. These measures may not be comparable to similarly titled measures reported by other companies. The Company believes that pre-tax and after-tax adjusted operating income (loss) enhances management’s and the Board of Directors’ understanding of the ongoing operations, the underlying profitability of each segment, and helps facilitate the allocation of resources.

After-tax adjusted operating income (loss) is derived from pre-tax adjusted operating income (loss) with the inclusion of income tax expense or benefits associated with pre-tax adjusted operating income. Income tax expense or benefits is allocated to the items excluded from pre-tax adjusted operating income (loss) at the statutory federal income tax rate for the associated period.

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Income tax expense or benefits allocated to after-tax adjusted operating income (loss) can vary period to period based on changes in the Company’s effective income tax rate.

In determining the components of the pre-tax adjusted operating income (loss) for each segment, premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC and VOBA are attributed directly to each operating segment. Net investment income is allocated based on directly related assets required for transacting the business of that segment. Realized investment gains (losses) and other operating expenses are allocated to the segments in a manner that most appropriately reflects the operations of that segment. Investments and other assets are allocated based on statutory policy liabilities net of associated statutory policy assets, while DAC/VOBA and goodwill are shown in the segments to which they are attributable.

There were no significant intersegment transactions during the three and six months ended June 30, 2019 and 2018.

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The following tables present a summary of results and reconciles pre-tax adjusted operating income (loss) to consolidated income before income tax and net income:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Revenues
Life Marketing	$	441,559		$	414,954		$	898,899		$	849,870
Acquisitions	667,031			509,639			1,276,973			888,733
Annuities	100,407			133,177			239,624			283,890
Stable Value Products	67,585			45,748			127,164			99,616
Asset Protection	76,014			77,814			152,212			154,189
Corporate and Other	66,179			62,576			137,933			133,442
Total revenues	$	1,418,775		$	1,243,908		$	2,832,805		$	2,409,740
Pre-tax Adjusted Operating Income (Loss)
Life Marketing	$	(462	)	$	(7,737	)	$	772		$	(25,586	)
Acquisitions	69,810			59,038			144,722			114,558
Annuities	45,271			55,934			99,487			96,465
Stable Value Products	28,106			19,992			50,345			49,072
Asset Protection	9,211			7,166			18,954			13,384
Corporate and Other	(20,445		)	(17,797		)	(40,119		)	(38,476		)
Pre-tax adjusted operating income	131,491			116,596			274,161			209,417
Realized (losses) gains on investments and derivatives	(1,417		)	(17,824		)	30,828			(18,847		)
Income before income tax	130,074			98,772			304,989			190,570
Income tax expense	(21,963		)	(17,277		)	(58,594		)	(34,963		)
Net income	$	108,111		$	81,495		$	246,395		$	155,607
Pre-tax adjusted operating income	$	131,491		$	116,596		$	274,161		$	209,417
Adjusted operating income tax (expense) benefit	(22,261		)	(20,877		)	(52,120		)	(38,920		)
After-tax adjusted operating income	109,230			95,719			222,041			170,497
Realized (losses) gains on investments and derivatives	(1,417		)	(17,824		)	30,828			(18,847		)
Income tax benefit (expense) on adjustments	298			3,600			(6,474		)	3,957
Net income	$	108,111		$	81,495		$	246,395		$	155,607
Realized investment (losses) gains:
Derivative financial instruments	$	(148,049	)	$	12,265		$	(267,720	)	$	90,324
All other investments	99,502			(49,602		)	229,092			(137,201		)
Net impairment losses recognized in earnings	(698		)	(5		)	(3,840		)	(3,650		)
Less: related amortization(1)	(26,840		)	1,763			(31,201		)	10,919
Less: VA GLWB economic cost	(20,988		)	(21,281		)	(42,095		)	(42,599		)
Realized (losses) gains on investments and derivatives	$	(1,417	)	$	(17,824	)	$	30,828		$	(18,847	)
(1)  Includes amortization of DAC/VOBA and benefits and settlement expenses that are impacted by realized gains (losses).

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	Operating Segment Assets As of June 30, 2019
	(Dollars In Thousands)
	Life Marketing		Acquisitions		Annuities		Stable Value Products
Investments and other assets	$	15,433,940	$	52,753,065	$	21,206,967	$	5,688,707
DAC and VOBA	1,494,118		914,610		890,214		6,877
Other intangibles	253,243		38,291		172,420		7,056
Goodwill	215,254		23,862		343,247		113,924
Total assets	$	17,396,555	$	53,729,828	$	22,612,848	$	5,816,564

	Asset Protection		Corporate and Other		Total Consolidated
Investments and other assets	$	1,055,887	$	16,390,407	$	112,528,973
DAC and VOBA	168,738		—		3,474,557
Other intangibles	117,374		28,547		616,931
Goodwill	129,224		—		825,511
Total assets	$	1,471,223	$	16,418,954	$	117,445,972

	Operating Segment Assets As of December 31, 2018
	(Dollars In Thousands)
	Life Marketing		Acquisitions		Annuities		Stable Value Products
Investments and other assets	$	14,575,702	$	31,859,520	$	20,199,597	$	5,107,334
DAC and VOBA	1,499,386		458,977		889,697		6,121
Other intangibles	262,758		31,975		156,785		7,389
Goodwill	215,254		23,862		343,247		113,924
Total assets	$	16,553,100	$	32,374,334	$	21,589,326	$	5,234,768

	Asset Protection		Corporate and Other		Total Consolidated
Investments and other assets	$	1,019,297	$	12,715,208	$	85,476,658
DAC and VOBA	168,973		—		3,023,154
Other intangibles	122,590		31,934		613,431
Goodwill	129,224		—		825,511
Total assets	$	1,440,084	$	12,747,142	$	89,938,754

16.SUBSEQUENT EVENTS

The Company has evaluated the effects of events subsequent to June 30, 2019, and through the date we filed our consolidated condensed financial statements with the United States Securities and Exchange Commission. All accounting and disclosure requirements related to subsequent events are included in our consolidated condensed financial statements.

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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our consolidated condensed financial statements included under Part I, Item 1, Financial Statements (Unaudited), of this Quarterly Report on Form 10-Q and our audited consolidated financial statements for the year ended December 31, 2018, included in our most recent Annual Report on Form 10-K.

For a more complete understanding of our business and current period results, please read the following MD&A in conjunction with our latest Annual Report on Form 10-K and other filings with the United States Securities and Exchange Commission (the “SEC”).

Certain reclassifications have been made in the previously reported financial statements and accompanying notes to make the prior period amounts comparable to those of the current period. Such reclassifications had no effect on previously reported net income or shareowner’s equity.

FORWARD-LOOKING STATEMENTS — CAUTIONARY LANGUAGE

This report reviews our financial condition and results of operations, including our liquidity and capital resources. Historical information is presented and discussed, and where appropriate, factors that may affect future financial performance are also identified and discussed. Certain statements made in this report include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that may predict, forecast, indicate, or imply future results, performance, or achievements instead of historical facts and may contain words like “believe,” “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “plan,” “will,” “shall,” “may,” and other words, phrases, or expressions with similar meaning. Forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from the results contained in the forward-looking statements, and we cannot give assurances that such statements will prove to be correct. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise. For more information about the risks, uncertainties, and other factors that could affect our future results, please refer to Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 1A, Risk Factors, of this report, as well as Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

IMPORTANT INVESTOR INFORMATION

We file reports with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other reports as required. We are an electronic filer and the SEC maintains an internet site at http://www.sec.gov that contains our annual quarterly and current reports and other information filed electronically by the Company.

We make available through our website, http://www.protective.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC. The information found on our website is not part of this or any other report filed with or furnished to the SEC. We will furnish such documents to anyone who requests such copies in writing. Requests for copies should be directed to: Financial Information, Protective Life Corporation, P. O. Box 2606, Birmingham, Alabama 35202, Telephone (205) 268-3912, Fax (205) 268-3642.

We also make available to the public current information, including financial information, regarding the Company and our affiliates on the Financial Information page of our website, www.protective.com. We encourage investors, the media, and others interested in us and our affiliates to review the information we post on our website. The information found on our website is not part of this or any other report filed with or furnished to the SEC.

OVERVIEW

On February 1, 2015, Protective Life Corporation (the “Company”) became a wholly owned subsidiary of The Dai-ichi Life Insurance Company, Limited, a kabushiki kaisha organized under the laws of Japan (now known as Dai-ichi Life Holdings, Inc., “Dai-ichi Life”), when DL Investment (Delaware), Inc., a wholly owned subsidiary of Dai-ichi Life, merged with and into the Company (the “Merger”). Prior to February 1, 2015, our stock was publicly traded on the New York Stock Exchange. Subsequent to the Merger, we remain an SEC registrant for financial reporting purposes in the United States. The Company, which is headquartered in Birmingham, Alabama, operates as a holding company for its insurance and other subsidiaries that provide financial services primarily in the United States through the production, distribution, and administration of insurance and investment products. Founded in 1907, Protective Life Insurance Company (“PLICO”) is our largest operating subsidiary. Unless the context otherwise requires, the “Company,” “we,” “us,” or “our” refers to the consolidated group of Protective Life Corporation and our subsidiaries.

We have several operating segments, each having a strategic focus. An operating segment is distinguished by products, channels of distribution, and/or other strategic distinctions. We periodically evaluate our operating segments and make adjustments to our segment reporting as needed.

Our operating segments are Life Marketing, Acquisitions, Annuities, Stable Value Products, and Asset Protection. We have an additional reporting segment referred to as Corporate and Other.

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• Life Marketing—We market fixed universal life (“UL”), indexed universal life (“IUL”), variable universal life (“VUL”), bank-owned life insurance (“BOLI”), and level premium term insurance (“traditional”) products on a national basis primarily through networks of independent insurance agents and brokers, broker-dealers, financial institutions, independent distribution organizations, and affinity groups.

• Acquisitions—We focus on acquiring, converting, and/or servicing policies and contracts from other companies. This segment’s primary focus is on life insurance policies and annuity products that were sold to individuals. The level of the segment’s acquisition activity is predicated upon many factors, including available capital, operating capacity, potential return on capital, and market dynamics. Policies acquired through the Acquisitions segment are typically blocks of business where no new policies are being marketed, however, some recent acquisitions have included ongoing new business activities. Ongoing new product sales written by the Company from these acquisitions are included in the Life Marketing and/or Annuities segment. As a result, earnings and account values are expected to decline as the result of lapses, deaths, and other terminations of coverage unless new acquisitions are made.

• Annuities—We market fixed and variable annuity (“VA”) products. These products are primarily sold through broker-dealers, financial institutions, and independent agents and brokers.

• Stable Value Products—We sell fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, money market funds, bank trust departments, and other institutional investors. The segment also issues funding agreements to the Federal Home Loan Bank (“FHLB”), and markets guaranteed investment contracts (“GICs”) to 401(k) and other qualified retirement savings plans. We also have an unregistered funding agreement-backed notes program which provides for offers of notes to both domestic and international institutional investors.

• Asset Protection—We market extended service contracts, guaranteed asset protection (“GAP”) products, credit life and disability insurance, and other specialized ancillary products to protect consumers’ investments in automobiles, recreational vehicles, watercraft, and powersports. GAP products are designed to cover the difference between the scheduled loan pay-off amount and an asset’s actual cash value in the case of a total loss. Each type of specialized ancillary product protects against damage or other loss to a particular aspect of the underlying asset.

• Corporate and Other—This segment primarily consists of net investment income on assets supporting our equity capital, unallocated corporate overhead, and expenses not attributable to the segments above (including interest on corporate debt). This segment includes earnings from several non-strategic or runoff lines of business, financing and investment-related transactions, and the operations of several small subsidiaries.

RECENT SIGNIFICANT TRANSACTIONS

Great-West Life & Annuity Insurance Company

On January 23, 2019, PLICO entered into a Master Transaction Agreement (the “GWL&A Master Transaction Agreement”) with Great-West Life & Annuity Insurance Company (“GWL&A”), Great-West Life & Annuity Insurance Company of New York (“GWL&A of NY”), The Canada Life Assurance Company (“CLAC”), and The Great-West Life Assurance Company (“GWL” and, together with GWL&A, GWL&A of NY, and CLAC, the “Sellers”), pursuant to which PLICO acquired via reinsurance (the “Transaction”) substantially all of the Sellers’ individual life insurance and annuity business (the “Individual Life Business”). 

On June 3, 2019, PLICO and PLAIC completed the Transaction (the “Closing”). Pursuant to the GWL&A Master Transaction Agreement, PLICO and Protective Life and Annuity Insurance Company (“PLAIC”), entered into reinsurance agreements (the “GWL&A Reinsurance Agreements”) and related ancillary documents at the Closing. On the terms and subject to the conditions of the GWL&A Reinsurance Agreements, the Sellers ceded to PLICO and PLAIC, effective as of the closing of the Transaction, substantially all of the insurance policies relating to the Individual Life Business. The aggregate ceding commission for the reinsurance of the Individual Life Business paid at the Closing was $767.1 million, which amount is subject to adjustment in accordance with the GWL&A Master Transaction Agreement. All policies issued in states other than New York were ceded to the Company under reinsurance agreements between the applicable Seller and the Company, and all policies issued in New York were ceded to PLAIC under a reinsurance agreement between GWL&A of NY and PLAIC. The aggregate statutory reserves of the Sellers ceded to the Company and PLAIC as of the Closing were approximately $20.4 billion, which amount was based on initial estimates and is subject to adjustment following the Closing. To support its obligations under the GWL&A Reinsurance Agreements, PLICO established trust accounts for the benefit of GWL&A, CLAC and GWL, and PLAIC established a trust account for the benefit of GWL&A of NY. The Sellers will retain a block of participating policies, which will be administered by the Company.

The GWL&A Master Transaction Agreement and other transaction documents contain certain customary representations and warranties made by each of the parties, and certain customary covenants regarding the Sellers and the Individual Life Business, and provide for indemnification, among other things, for breaches of those representations, warranties, and covenants.

RISKS AND UNCERTAINTIES

The factors which could affect our future results include, but are not limited to, general economic conditions and the following risks and uncertainties:

General

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• we are controlled by Dai-ichi Life, which has the ability to make important decisions affecting our business;

• exposure to risks related to natural and man-made disasters and catastrophes, such as diseases, epidemics, pandemics, malicious acts, cyber attacks, terrorist acts, and climate change, which could adversely affect our operations and results;

• a disruption or cyber attack affecting the electronic, communication, and information technology systems or other technologies of the Company or those on whom the Company relies could adversely affect our business, financial condition, and results of operations;

• confidential information maintained in the systems of the Company or other parties upon which we rely could be compromised or misappropriated as a result of security breaches or other related lapses or incidents, damaging our business and reputation and adversely affecting our financial condition and results of operations;

• our results and financial condition may be negatively affected should actual experience differ from management’s models, assumptions, or estimates;

• we may not realize our anticipated financial results from our acquisitions strategy;

• we may experience competition in our acquisition segment;

• assets allocated to the MONY Closed Block benefit only the holders of certain policies; adverse performance of Closed Block assets or adverse experience of Closed Block liabilities may negatively affect us;

• we are dependent on the performance of others;

• our risk management policies, practices, and procedures could leave us exposed to unidentified or unanticipated risks, which could negatively affect our business or result in losses;

• our strategies for mitigating risks arising from our day-to-day operations may prove ineffective, resulting in a material adverse effect on our results of operations and financial condition;

• events that damage our reputation or the reputation of our industry could adversely impact our business, results of operations, or financial condition;

• we may not be able to protect our intellectual property and may be subject to infringement claims;

• developments in technology may impact our business;

Financial Environment

• interest rate fluctuations and sustained periods of low or high interest rates could negatively affect our interest earnings and spread income, or otherwise impact our business;

• our investments are subject to market and credit risks, which could be heightened during periods of extreme volatility or disruption in financial and credit markets;

• credit market volatility or disruption could adversely impact the Company’s financial condition or results from operations;

• disruption of the capital and credit markets could negatively affect the Company’s ability to meet its liquidity and financial needs;

• equity market volatility could negatively impact our business;

• our use of derivative financial instruments within our risk management strategy may not be effective or sufficient;

• our ability to grow depends in large part upon the continued availability of capital;

• we could be forced to sell investments at a loss to cover policyholder withdrawals;

• difficult general economic conditions could materially adversely affect our business and results of operations;

• we may be required to establish a valuation allowance against our deferred tax assets, which could have a material adverse effect on our results of operations, financial condition, and capital position;

• we could be adversely affected by an inability to access our credit facility;

• the amount of statutory capital or risk-based capital that we have and the amount of statutory capital or risk-based capital that we must hold to maintain our financial strength and credit ratings and meet other requirements can vary significantly from time to time and is sensitive to a number of factors outside of our control;

• we could be adversely affected by a ratings downgrade or other negative action by a rating organization;

• we operate as a holding company and depend on the ability of our subsidiaries to transfer funds to us to meet our obligations;

• we could be adversely affected by an inability to access FHLB lending;

• our securities lending program may subject us to liquidity and other risks;

• our financial condition or results of operations could be adversely impacted if our assumptions regarding the fair value and future performance of our investments differ from actual experience;

• adverse actions of certain funds or their advisers could have a detrimental impact on our ability to sell our variable life and annuity products, or maintain current levels of assets in those products;

Industry and Regulation

• the business of our company is highly regulated and is subject to routine audits, examinations, and actions by regulators, law enforcement agencies, and self-regulatory organizations;

• we may be subject to regulations of, or regulations influenced by, international regulatory authorities or initiatives;

• NAIC actions, pronouncements, and initiatives may affect our product profitability, reserve and capital requirements, financial condition, or results of operations;

• our use of captive reinsurance companies to finance statutory reserves related to our term and universal life products and to reduce volatility affecting our variable annuity products, may be limited or adversely affected by regulatory action, pronouncements, and interpretations;

• laws, regulations, and initiatives related to unreported deaths and unclaimed property and death benefits may result in operational burdens, fines, unexpected payments or escheatments;

• we are subject to insurance guaranty fund laws, rules, and regulations that could adversely affect our financial condition or results of operations;

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• we are subject to insurable interest laws, rules and regulations that could adversely affect our financial condition or results of operations;

• the Healthcare Act and related regulations could adversely affect our results of operations or financial condition;

• laws, rules and regulations promulgated in connection with the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act may adversely affect our results of operations or financial condition;

• new and amended regulations regarding the standard of care or standard of conduct applicable to investment professionals, insurance agencies, and financial institutions that recommend or sell annuities or life insurance products may have a material adverse impact on our ability to sell annuities and other products and to retain in-force business and on our financial condition or results of operations;

• we may be subject to regulation, investigations, enforcement actions, fines and penalties imposed by the SEC, FINRA and other federal and international regulators in connection with our business operations;

• changes to tax law, or interpretations of existing tax law could adversely affect our ability to compete with non-insurance products or reduce the demand for certain insurance products;

• financial services companies are frequently the targets of legal proceedings, including class action litigation, which could result in substantial judgments;

• the financial services and insurance industries are sometimes the target of law enforcement investigations and the focus of increased regulatory scrutiny;

• new accounting rules, changes to existing accounting rules, or the grant of permitted accounting practices to competitors could negatively impact us;

• if our business does not perform well, we may be required to recognize an impairment of our goodwill and indefinite lived intangible assets which could adversely affect our results of operations or financial condition;

• use of reinsurance introduces variability in our statements of income;

• our reinsurers could fail to meet assumed obligations, increase rates, terminate agreements or be subject to adverse developments that could affect us;

• our policy claims fluctuate from period to period resulting in earnings volatility;

• we operate in a mature, highly competitive industry, which could limit our ability to gain or maintain our position in the industry and negatively affect profitability; and

• our ability to maintain competitive unit costs is dependent upon the level of new sales and persistency of existing business.

For more information about the risks, uncertainties, and other factors that could affect our future results, please see Part II, Item 1A, Risk Factors of this report and Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K.

CRITICAL ACCOUNTING POLICIES

Our accounting policies require the use of judgments relating to a variety of assumptions and estimates, including, but not limited to expectations of current and future mortality, morbidity, persistency, expenses, and interest rates, as well as expectations around the valuations of securities. Because of the inherent uncertainty when using the assumptions and estimates, the effect of certain accounting policies under different conditions or assumptions could be materially different from those reported in the consolidated condensed financial statements. For a complete listing of our critical accounting policies, refer to our Annual Report on Form 10-K for the year ended December 31, 2018.

RESULTS OF OPERATIONS

Our management and Board of Directors analyzes and assesses the operating performance of each segment using "pre-tax adjusted operating income (loss)" and "after-tax adjusted operating income (loss)". Consistent with GAAP accounting guidance for segment reporting, pre-tax adjusted operating income (loss) is our measure of segment performance. Pre-tax adjusted operating income (loss) is calculated by adjusting "income (loss) before income tax," by excluding the following items:

• realized gains and losses on investments and derivatives,

• changes in the guaranteed living withdrawal benefits (“GLWB”) embedded derivatives exclusive of the portion attributable to the economic cost of the GLWB,

• actual GLWB incurred claims, and

• the amortization of deferred policy acquisition costs (“DAC”), value of business acquired (“VOBA”), and certain policy liabilities that is impacted by the exclusion of these items.

After-tax adjusted operating income (loss) is derived from pre-tax adjusted operating income (loss) with the inclusion of income tax expense or benefits associated with pre-tax adjusted operating income. Income tax expense or benefits is allocated to the items excluded from pre-tax adjusted operating income (loss) at the statutory federal income tax rate for the associated period. Income tax expense or benefits allocated to after-tax adjusted operating income (loss) can vary period to period based on changes in our effective income tax rate.

The items excluded from adjusted operating income (loss) are important to understanding the overall results of operations. Pre-tax adjusted operating income (loss) and after-tax adjusted operating income (loss) are not substitutes for income before income taxes or net income (loss), respectively. These measures may not be comparable to similarly titled measures reported by other companies. Our belief is that pre-tax and after-tax adjusted operating income (loss) enhances management’s and the Board of Directors’ understanding of the ongoing operations, the underlying profitability of each segment, and helps facilitate the allocation of resources.

In determining the components of the pre-tax adjusted operating income (loss) for each segment, premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC and VOBA are attributed directly to each operating

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segment. Net investment income is allocated based on directly related assets required for transacting the business of that segment. Realized investment gains (losses) and other operating expenses are allocated to the segments in a manner that most appropriately reflects the operations of that segment. Investments and other assets are allocated based on policy liabilities net of associated policy assets, while DAC/VOBA and goodwill are shown in the segments to which they are attributable.

We periodically review and update as appropriate our key assumptions used to measure certain balances related to insurance products, including future mortality, expenses, lapses, premium persistency, benefit utilization, investment yields, interest rates, and separate account fund returns. Changes to these assumptions result in adjustments which increase or decrease DAC and VOBA amortization and/or benefits and expenses. Assumptions may be updated as part of our annual assumption review process, as well as during our quarterly update of historical business activity. This periodic review and updating of assumptions is collectively referred to as “unlocking.” When referring to unlocking the reference is to changes in all balance sheet components associated with these changes. The adjustments associated with unlocking can create significant variability from period to period in the profitability of certain of the Company’s operating segments.

The following table presents a summary of results and reconciles pre-tax adjusted operating income (loss) to consolidated income before income tax and net income:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Pre-tax Adjusted Operating Income (Loss)
Life Marketing	$	(462	)	$	(7,737	)	$	772		$	(25,586	)
Acquisitions	69,810			59,038			144,722			114,558
Annuities	45,271			55,934			99,487			96,465
Stable Value Products	28,106			19,992			50,345			49,072
Asset Protection	9,211			7,166			18,954			13,384
Corporate and Other	(20,445		)	(17,797		)	(40,119		)	(38,476		)
Pre-tax adjusted operating income	131,491			116,596			274,161			209,417
Realized (losses) gains on investments and derivatives	(1,417		)	(17,824		)	30,828			(18,847		)
Income before income tax	130,074			98,772			304,989			190,570
Income tax expense	(21,963		)	(17,277		)	(58,594		)	(34,963		)
Net income	$	108,111		$	81,495		$	246,395		$	155,607
Pre-tax adjusted operating income	$	131,491		$	116,596		$	274,161		$	209,417
Adjusted operating income tax (expense) benefit	(22,261		)	(20,877		)	(52,120		)	(38,920		)
After-tax adjusted operating income	109,230			95,719			222,041			170,497
Realized (losses) gains on investments and derivatives	(1,417		)	(17,824		)	30,828			(18,847		)
Income tax benefit (expense) on adjustments	298			3,600			(6,474		)	3,957
Net income	$	108,111		$	81,495		$	246,395		$	155,607
Realized investment (losses) gains:
Derivative financial instruments	$	(148,049	)	$	12,265		$	(267,720	)	$	90,324
All other investments	99,502			(49,602		)	229,092			(137,201		)
Net impairment losses recognized in earnings	(698		)	(5		)	(3,840		)	(3,650		)
Less: related amortization(1)	(26,840		)	1,763			(31,201		)	10,919
Less: VA GLWB economic cost	(20,988		)	(21,281		)	(42,095		)	(42,599		)
Realized (losses) gains on investments and derivatives	$	(1,417	)	$	(17,824	)	$	30,828		$	(18,847	)
(1) Includes amortization of DAC/VOBA and benefits and settlement expenses that are impacted by realized gains (losses).

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For The Three Months Ended June 30, 2019, as compared to The Three Months Ended June 30, 2018

Net income for the three months ended June 30, 2019 was $108.1 million, an increase of $26.6 million. Pre-tax adjusted operating income was $131.5 million, an increase of $14.9 million. The increase consisted of a $7.3 millionincrease in the Life Marketing segment, a $10.8 millionincrease in the Acquisitions segment, a $2.0 millionincrease in the Asset Protection segment, and a $8.1 millionincrease in the Stable Value Products segment. These increases were partially offset by a $10.7 milliondecrease in the Annuities segment and a $2.6 milliondecrease in the Corporate and Other segment.

Net realized losses on investments and derivatives for the three months ended June 30, 2019 was $1.4 million as compared to net realized losses of $17.8 million for the three months endedJune 30, 2018.

• Life Marketing segment pre-tax adjusted operating loss was $0.5 million for the three months ended June 30, 2019, representing an increase of $7.3 million from the three months ended June 30, 2018. The increase was primarily due to higher investment income, higher revenue in the segment’s non-insurance operations, and lower DAC and VOBA amortization in the traditional life block, partly offset by higher life claims. Universal life claims were approximately $10.5 million higher while traditional life claims were approximately $5.4 million lower for the three months ended June 30, 2019 when compared to the three months ended June 30, 2018.

• Acquisitions segment pre-tax adjusted operating income was $69.8 million for the three months ended June 30, 2019, an increase of $10.8 million as compared to the three months ended June 30, 2018, primarily due to addition of the Liberty reinsurance transaction. The Liberty reinsurance transaction added three months of pre-tax adjusted operating income in the second quarter of 2019, as compared to only two months in the second quarter of 2018. This was partly offset by the expected runoff of the in-force blocks of business, as well as the unfavorable impact of $3.7 million from the GWL&A transaction.

• Annuities segment pre-tax adjusted operating income was $45.3 million for the three months ended June 30, 2019, as compared to $55.9 million for the three months ended June 30, 2018, a decrease of $10.7 million, or 19.1%. This variance was primarily the result of lower variable annuities (“VA”) fee income and an unfavorable change in single premium immediate annuities ("SPIA") mortality. Segment results were minimally impacted by unlocking for the three months ended June 30, 2019, as compared to $1.6 million of unfavorable unlocking for the three months ended June 30, 2018.

• Stable Value segment pre-tax adjusted operating income was $28.1 million, an increase of $8.1 million, or 40.6%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. The increase in pre-tax adjusted operating income primarily resulted from higher participating mortgage income and higher average account balances. Participating mortgage income for the three months ended June 30, 2019, was $10.7 million as compared to $5.0 million for the three months ended June 30, 2018. The adjusted operating spread, which excludes participating income, decreased by 8 basis points for the three months ended June 30, 2019, from the prior year, due primarily to an increase in credited interest.

• Asset Protection segment pre-tax adjusted operating income was $9.2 million, representing an increase of $2.0 million, or 28.5%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. Earnings from the GAP product line increased $1.3 million due to lower loss ratios. Service contract earnings increased $0.9 million primarily due to higher administrative fees and investment income. Earnings from the credit insurance product line decreased $0.2 million due to higher ceded premiums and lower volume.

• The Corporate and Other segment pre-tax adjusted operating loss was $20.4 million for the three months ended June 30, 2019, as compared to a pre-tax adjusted operating loss of $17.8 million for the three months ended June 30, 2018. The increased operating loss was primarily due to a decrease in other income and an increase in general operating expenses.

For The Six Months Ended June 30, 2019, as compared to The Six Months Ended June 30, 2018

Net income for the six months ended June 30, 2019 was $246.4 million, an increase of $90.8 million. Pre-tax adjusted operating income was $274.2 million, an increase of $64.7 million. The increase consisted of a $26.4 millionincrease in the Life Marketing segment, a $30.2 millionincrease in the Acquisitions segment, a $3.0 millionincrease in the Annuities segment, a $5.6 millionincrease in the Asset Protection segment, and a $1.3 millionincrease in the Stable Value Products segment. These increases were partially offset by a $1.6 milliondecrease in the Corporate and Other segment.

Net realized gains on investments and derivatives for the six months ended June 30, 2019 was $30.8 million as compared to net realized losses of $18.8 million for the six months ended June 30, 2018.

• Life Marketing segment pre-tax adjusted operating income was $0.8 million for the six months ended June 30, 2019, representing an increase of $26.4 million from the six months ended June 30, 2018. The increase was primarily due to higher investment income, lower expenses, lower DAC and VOBA amortization and lower claims in the traditional life block, partly offset by higher claims in the universal life block. Universal life claims were approximately $10.7 million higher while traditional life claims were approximately $11.2 million lower for the six months ended June 30, 2019 when compared to the six months ended June 30, 2018.

• Acquisitions segment pre-tax adjusted operating income was $144.7 million for the six months ended June 30, 2019, an increase of $30.2 million as compared to the six months ended June 30, 2018, primarily due to the addition of the Liberty reinsurance transaction. The Liberty reinsurance transaction added $46.6 million of pre-tax adjusted operating income for the six months ended June 30, 2019, an increase of $39.5 million as compared to the six months ended

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June 30, 2018. This was partly offset by the expected runoff of the in-force blocks of business, as well as the unfavorable impact of $3.7 million from the GWL&A transaction.

• Annuities segment pre-tax adjusted operating income was $99.5 million for the six months ended June 30, 2019, as compared to $96.5 million for the six months ended June 30, 2018, an increase of $3.0 million, or 3.1%. This variance was primarily the result of favorable unlocking, increased interest spreads and a favorable change in guaranteed benefit reserves, partially offset by a decline in VA fee income and an unfavorable change in SPIA mortality. Segment results were positively impacted by $7.7 million of favorable unlocking for the six months ended June 30, 2019, as compared to $6.9 million of unfavorable unlocking for the six months ended June 30, 2018.

• Stable Value segment pre-tax adjusted operating income was $50.3 million, an increase of $1.3 million, or 2.6%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. The increase in pre-tax adjusted operating income primarily resulted from higher average account balances. Participating mortgage income for the six months ended June 30, 2019, was $11.5 million as compared to $11.8 million for the six months ended June 30, 2018. The adjusted operating spread, which excludes participating income, decreased by 19 basis points for the six months ended June 30, 2019, from the prior year, due primarily to an increase in credited interest.

• Asset Protection segment pre-tax adjusted operating income was $19.0 million, representing an increase of $5.6 million, or 41.6%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. Earnings from the GAP product line increased $4.0 million due to lower loss ratios. Service contract earnings increased $1.4 million primarily due to higher administrative fees and investment income. Earnings from the credit insurance product line increased $0.2 million primarily due to lower expenses.

• The Corporate and Other segment pre-tax adjusted operating loss was $40.1 million for the six months ended June 30, 2019, as compared to a pre-tax adjusted operating loss of $38.5 million for the six months ended June 30, 2018. The increased operating loss was primarily due to an increase in corporate overhead expenses, partially offset by an increase in net investment income due to increased asset balances and increased yields.

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Life Marketing

Segment Results of Operations

Segment results were as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
REVENUES
Gross premiums and policy fees	$	492,782		$	505,861		$	980,887		$	993,811
Reinsurance ceded	(220,978		)	(266,107		)	(429,387		)	(486,129		)
Net premiums and policy fees	271,804			239,754			551,500			507,682
Net investment income	143,955			139,903			285,174			275,259
Other income	33,141			31,997			64,121			63,906
Total operating revenues	448,900			411,654			900,795			846,847
Realized investment gains (losses)	(7,341		)	3,300			(1,896		)	3,023
Total revenues	441,559			414,954			898,899			849,870
BENEFITS AND EXPENSES
Benefits and settlement expenses	374,928			336,965			744,024			698,116
Amortization of DAC/VOBA	28,527			33,792			60,546			65,446
Other operating expenses	45,907			48,634			95,453			108,871
Operating benefits and settlement expenses	449,362			419,391			900,023			872,433
Amortization related to benefits and settlement expenses	(7,076		)	(32		)	(6,904		)	3,386
Amortization of DAC/VOBA related to realized gains (losses) - investments	407			480			1,755			386
Total benefits and expenses	442,693			419,839			894,874			876,205
INCOME (LOSS) BEFORE INCOME TAX	(1,134		)	(4,885		)	4,025			(26,335		)
Less: realized gains (losses)	(7,341		)	3,300			(1,896		)	3,023
Less: amortization related to benefits and settlement expenses	7,076			32			6,904			(3,386		)
Less: related amortization of DAC/VOBA	(407		)	(480		)	(1,755		)	(386		)
PRE-TAX ADJUSTED OPERATING INCOME (LOSS)	$	(462	)	$	(7,737	)	$	772		$	(25,586	)

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The following table summarizes key data for the Life Marketing segment:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars In Thousands)
Sales By Product(1)
Traditional life	$	13,355	$	13,558	$	27,500	$	26,150
Universal life	27,656		31,877		55,753		61,636
	$	41,011	$	45,435	$	83,253	$	87,786
Sales By Distribution Channel
Traditional brokerage	$	26,869	$	37,763	$	54,148	$	71,573
Institutional	12,136		5,412		25,001		11,722
Direct	2,006		2,260		4,104		4,491
	$	41,011	$	45,435	$	83,253	$	87,786
Average Life Insurance In-force(2)
Traditional	$	358,374,682	$	349,391,858	$	357,745,705	$	347,257,597
Universal life	287,131,903		276,884,393		286,257,024		274,837,394
	$	645,506,585	$	626,276,251	$	644,002,729	$	622,094,991
Average Account Values
Universal life	$	7,802,418	$	7,740,055	$	7,800,099	$	7,728,539
Variable universal life	791,619		766,183		763,050		768,878
	$	8,594,037	$	8,506,238	$	8,563,149	$	8,497,417
(1) Sales data for traditional life insurance is based on annualized premiums. Universal life sales are based on annualized planned premiums, or “target” premiums if lesser, plus 6% of amounts received in excess of target premiums and 10% of single premiums. “Target” premiums for universal life are those premiums upon which full first year commissions are paid.
(2) Amounts are not adjusted for reinsurance ceded.

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Operating expenses detail

Other operating expenses for the segment were as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Insurance companies:
First year commissions	$	38,592		$	49,890		$	82,664		$	98,242
Renewal commissions	9,772			10,687			19,700			20,516
First year ceding allowances	(235		)	(94		)	(406		)	(226		)
Renewal ceding allowances	(48,140		)	(43,883		)	(93,097		)	(78,658		)
General & administrative	54,168			57,946			109,652			113,811
Taxes, licenses, and fees	9,797			9,304			19,635			19,850
Other operating expenses incurred	63,954			83,850			138,148			173,535
Less: commissions, allowances & expenses capitalized	(52,039		)	(67,618		)	(109,621		)	(130,781		)
Other insurance company operating expenses	11,915			16,232			28,527			42,754
Distribution companies:
Commissions	24,121			23,357			47,834			46,710
Other operating expenses	9,871			9,045			19,092			19,407
Other distribution company operating expenses	33,992			32,402			66,926			66,117
Other operating expenses	$	45,907		$	48,634		$	95,453		$	108,871

For The Three Months Ended June 30, 2019, as compared to The Three Months Ended June 30, 2018

Pre-tax adjusted operating income (loss)

Pre-tax adjusted operating loss was $0.5 million for the three months ended June 30, 2019, representing an increase of $7.3 million from the three months ended June 30, 2018. The increase was primarily due to higher investment income, higher revenue in the segment’s non-insurance operations, and lower DAC and VOBA amortization in the traditional life block, partly offset by higher claims. Universal life claims were approximately $10.5 million higher while traditional life claims were approximately $5.4 million lower for the three months ended June 30, 2019 when compared to three months ended June 30, 2018.

Operating revenues

Total operating revenues for the three months ended June 30, 2019, increased$37.2 million, or 9.0%, as compared to the three months ended June 30, 2018. This increase was driven by higher premiums and policy fees, higher investment income, and higher distribution company revenue for the three months ended June 30, 2019 when compared to the three months ended June 30, 2018.

Net premiums and policy fees

Net premiums and policy fees increased by $32.1 million, or 13.4%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, due to higher net premiums, mostly in the traditional life block.

Net investment income

Net investment income in the segment increased$4.1 million, or 2.9%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, driven by higher universal life investment income of $4.0 million, due to growth in reserves in the block.

Other income

Other income increased$1.1 million, or 3.6%, for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due to higher revenue in the segment’s non-insurance operations.

Benefits and settlement expenses

Benefits and settlement expenses increased by $38.0 million, or 11.3%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, driven by an increase in reserves, partly offset by unlocking. For the three

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months ended June 30, 2019, universal life unlocking increased policy benefits and settlement expenses $2.0 million, as compared to an increase of $4.1 million for the three months ended June 30, 2018.

Amortization of DAC/VOBA

DAC/VOBA amortization decreased$5.3 million, or 15.6%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to lower amortization in the traditional life block, offset in part by unlocking in the universal life block. For the three months ended June 30, 2019, universal life unlocking increased amortization $1.3 million, as compared to an increase of $0.8 million for the three months ended June 30, 2018.

Other operating expenses

Other operating expenses decreased$2.7 million for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. This decrease was primarily driven by higher ceding allowances and lower commissions, partly offset by higher new business costs after capitalization.

Sales

Sales for the segment decreased$4.4 million for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to lower sales in the universal life product line.

For The Six Months Ended June 30, 2019, as compared to The Six Months Ended June 30, 2018

Pre-tax adjusted operating income (loss)

Pre-tax adjusted operating income was $0.8 million for the six months ended June 30, 2019, representing an increase of $26.4 million from the six months ended June 30, 2018. The increase was primarily due to higher investment income, lower expenses, lower DAC and VOBA amortization and lower claims in the traditional life block, partly offset by higher claims in the universal life block. Universal life claims were approximately $10.7 million higher while traditional life claims were approximately $11.2 million lower for the six months ended June 30, 2019 when compared to the six months ended June 30, 2018.

Operating revenues

Total operating revenues for the six months ended June 30, 2019increased$53.9 million, or 6.4%, as compared to the six months ended June 30, 2018. This increase was driven by higher premiums and policy fees and investment income.

Net premiums and policy fees

Net premiums and policy fees increased by $43.8 million, or 8.6%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, due to higher net premiums, mostly in the traditional life block.

Net investment income

Net investment income in the segment increased$9.9 million, or 3.6%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, driven by higher universal life investment income of $7.7 million, due to growth in reserves in the block, and higher distribution company investment income of $2.4 million.

Other income

Other income increased$0.2 million for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018 due to higher revenue in the segment’s non-insurance operations.

Benefits and settlement expenses

Benefits and settlement expenses increased by $45.9 million, or 6.6%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, driven by an increase in reserves, partly offset by unlocking. For the six months ended June 30, 2019, universal life unlocking decreased policy benefits and settlement expenses $1.1 million, as compared to an increase of $7.9 million for the six months ended June 30, 2018.

Amortization of DAC/VOBA

DAC/VOBA amortization decreased$4.9 million, or 7.5%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, due to lower amortization in the traditional life block and favorable unlocking in the universal life block. For the six months ended June 30, 2019, universal life unlocking decreased amortization $0.2 million, as compared to an increase of $5.0 million for the six months ended June 30, 2018.

Other operating expenses

Other operating expenses decreased$13.4 million for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. This decrease was primarily driven by higher ceding allowances and lower commissions, partly offset by higher new business costs after capitalization.

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Sales

Sales for the segment decreased$4.5 million for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, primarily due to lower sales in the universal life product line.

Reinsurance

Currently, the Life Marketing segment reinsures significant amounts of its life insurance in-force. Pursuant to the underlying reinsurance contracts, reinsurers pay allowances to the segment as a percentage of both first year and renewal premiums. Reinsurance allowances represent the amount the reinsurer is willing to pay for reimbursement of acquisition costs incurred by the direct writer of the business. A portion of reinsurance allowances received is deferred as part of DAC and a portion is recognized immediately as a reduction of other operating expenses. As the non-deferred portion of allowances reduces operating expenses in the period received, these amounts represent a net increase to adjusted operating income during that period.

Reinsurance allowances do not affect the methodology used to amortize DAC or the period over which such DAC is amortized. However, they do affect the amounts recognized as DAC amortization. DAC on universal life-type, limited-payment long duration, and investment contracts business is amortized based on the estimated gross profits of the policies in-force. Reinsurance allowances are considered in the determination of estimated gross profits, and therefore, impact DAC amortization on these lines of business. Deferred reinsurance allowances on level term business are recorded as ceded DAC, which is amortized over estimated ceded premiums of the policies in-force. Thus, deferred reinsurance allowances may impact DAC amortization. A more detailed discussion of the components of reinsurance can be found in the Reinsurance section of Note 2, Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Impact of reinsurance

Reinsurance impacted the Life Marketing segment line items as shown in the following table:

Life Marketing Segment

Line Item Impact of Reinsurance

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
REVENUES
Reinsurance ceded	$	(220,978	)	$	(266,107	)	$	(429,387	)	$	(486,129	)
BENEFITS AND EXPENSES
Benefits and settlement expenses	(174,365		)	(214,580		)	(342,460		)	(447,718		)
Amortization of DAC/VOBA	(1,063		)	(1,388		)	(2,228		)	(2,711		)
Other operating expenses(1)	(46,743		)	(42,374		)	(90,161		)	(75,850		)
Total benefits and expenses	(222,171		)	(258,342		)	(434,849		)	(526,279		)
NET IMPACT OF REINSURANCE	$	1,193		$	(7,765	)	$	5,462		$	40,150
Allowances received	$	(48,375	)	$	(43,977	)	$	(93,503	)	$	(78,884	)
Less: Amount deferred	1,632			1,603			3,342			3,034
Allowances recognized (ceded other operating expenses)(1)	$	(46,743	)	$	(42,374	)	$	(90,161	)	$	(75,850	)
(1)  Other operating expenses ceded per the income statement are equal to reinsurance allowances recognized after capitalization.

The table above does not reflect the impact of reinsurance on our net investment income. By ceding business to the assuming companies, we forgo investment income on the reserves ceded. Conversely, the assuming companies will receive investment income on the reserves assumed, which will increase the assuming companies’ profitability on the business that we cede. The net investment income impact to us and the assuming companies has not been quantified. The impact of including foregone investment income would be to substantially reduce the favorable net impact of reinsurance reflected above. We estimate that the impact of foregone investment income would be to reduce the net impact of reinsurance presented in the table above by 326% to 342%. The Life Marketing segment’s reinsurance programs do not materially impact the other income line of our income statement.

As shown above, reinsurance generally has a favorable impact on the Life Marketing segment’s operating income results. The impact of reinsurance is largely due to our quota share coinsurance program in place prior to mid-2005. Under that program, generally 90% of the segment’s traditional new business was ceded to reinsurers. Since mid-2005, a much smaller percentage of overall term business has been ceded due to a change in reinsurance strategy on traditional business. In addition, since 2012, a

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much smaller percentage of the segment’s new universal life business has been ceded. As a result of that change, the relative impact of reinsurance on the Life Marketing segment’s overall results is expected to decrease over time. While the significance of reinsurance is expected to decline over time, the overall impact of reinsurance for a given period may fluctuate due to variations in mortality and the unlocking of balances.

For The Three Months Ended June 30, 2019, as compared to The Three Months Ended June 30, 2018

The lower ceded premium and policy fees for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, was caused primarily by lower ceded traditional life premiums of $43.2 million.

Ceded benefits and settlement expenses were lower for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to lower ceded reserves and ceded claims. Traditional life ceded reserves were $46.1 million lower as compared to the three months ended June 30, 2018, partially offset by higher universal life ceded reserves of $20.6 million. Ceded claims were $14.1 million lower as compared to the three months ended June 30, 2018, primarily due to lower universal life ceded claims of $15.3 million.

Ceded amortization of DAC and VOBA decreased slightly for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018.

Ceded other operating expenses increased for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to higher ceding allowances on the universal life block. Ceded other operating expenses reflect the impact of reinsurance allowances, net of amounts deferred.

For The Six Months Ended June 30, 2019, as compared to The Six Months Ended June 30, 2018

The lower ceded premium and policy fees for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, was caused primarily by lower ceded traditional life premiums of $68.4 million, partially offset by higher ceded universal life policy fees of $11.6 million.

Ceded benefits and settlement expenses were lower for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, primarily due to lower ceded claims. Universal life and traditional life ceded claims were $20.7 million lower and $55.9 million lower, respectively, as compared to the six months ended June 30, 2018.

Ceded amortization of DAC and VOBA decreased slightly for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018.

Ceded other operating expenses increased for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, due in part to a settlement in the prior year that reduced ceding allowances by approximately $6.2 million. Ceded other operating expenses reflect the impact of reinsurance allowances, net of amounts deferred.

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Acquisitions

Segment Results of Operations

Segment results were as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
REVENUES
Gross premiums and policy fees	$	333,515		$	312,608		$	656,887		$	589,397
Reinsurance ceded	(69,289		)	(78,593		)	(130,221		)	(156,245		)
Net premiums and policy fees	264,226			234,015			526,666			433,152
Net investment income	355,761			278,865			680,272			462,462
Other income	27,912			3,329			31,680			6,918
Total operating revenues	647,899			516,209			1,238,618			902,532
Realized investment gains (losses)	19,132			(6,570		)	38,355			(13,799		)
Total revenues	667,031			509,639			1,276,973			888,733
BENEFITS AND EXPENSES
Benefits and settlement expenses	508,542			416,214			985,199			722,308
Amortization of VOBA	11,978			2,492			10,508			1,318
Other operating expenses	57,569			38,465			98,189			64,348
Operating benefits and expenses	578,089			457,171			1,093,896			787,974
Amortization related to benefits and settlement expenses	2,280			4,366			4,443			5,530
Amortization of VOBA related to realized gains (losses) - investments	59			862			453			405
Total benefits and expenses	580,428			462,399			1,098,792			793,909
INCOME BEFORE INCOME TAX	86,603			47,240			178,181			94,824
Less: realized gains (losses)	19,132			(6,570		)	38,355			(13,799		)
Less: amortization related to benefits and settlement expenses	(2,280		)	(4,366		)	(4,443		)	(5,530		)
Less: related amortization of VOBA	(59		)	(862		)	(453		)	(405		)
PRE-TAX ADJUSTED OPERATING INCOME	$	69,810		$	59,038		$	144,722		$	114,558

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The following table summarizes key data for the Acquisitions segment:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Average Life Insurance In-Force(1)
Traditional	$	242,688,694		$	225,872,573		$	233,623,764		$	222,001,290
Universal life	50,018,819			29,432,690			40,922,491			27,824,572
	$	292,707,513		$	255,305,263		$	274,546,255		$	249,825,862
Average Account Values
Universal life	$	12,441,649		$	6,159,958		$	10,225,765		$	5,160,024
Fixed annuity(2)	12,121,489			7,720,552			11,885,792			5,633,029
Variable annuity	1,120,690			1,187,754			1,094,050			1,196,569
	$	25,683,828		$	15,068,264		$	23,205,607		$	11,989,622
Interest Spread - Fixed Annuities
Net investment income yield	4.37		%	4.04		%	4.32		%	4.07		%
Interest credited to policyholders	3.18		%	3.49		%	3.36		%	3.42		%
Interest spread(3)	1.19		%	0.55		%	0.96		%	0.65		%
(1)  Amounts are not adjusted for reinsurance ceded.
(2)  Includes general account balances held within variable annuity products and is net of coinsurance ceded.
(3)  Earned rates exclude portfolios supporting modified coinsurance and crediting rates exclude 100% cessions.

For The Three Months Ended June 30, 2019, as compared to The Three Months Ended June 30, 2018

Pre-tax adjusted operating income

Pre-tax adjusted operating income was $69.8 million for the three months ended June 30, 2019, an increase of $10.8 million as compared to the three months ended June 30, 2018, primarily due to the addition of the Liberty reinsurance transaction. The Liberty reinsurance transaction added three months of pre-tax adjusted operating income in the second quarter of 2019, as compared to only two months in the second quarter of 2018. This was partly offset by the expected runoff of the in-force blocks of business, as well as the unfavorable impact of $3.7 million from the GWL&A transaction.

Operating revenues

Net premiums and policy fees increased$30.2 million, or 12.9% for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to the premiums associated with the Liberty and GWL&A reinsurance transactions more than offsetting the expected runoff of the in-force blocks of business. Liberty net premiums and policy fees increased $27.3 million with the addition of an extra month as compared to the second quarter of 2018. Net investment income increased$76.9 million, or 27.6%, for the three months ended June 30, 2019, primarily due to the addition of one more month of Liberty net investment income and the $33.9 million impact of the GWL&A reinsurance transaction, partly offset by the expected runoff of the in-force blocks of business.

Total benefits and expenses

Total benefits and expenses increased$118.0 million, or 25.5%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. The increase was primarily due to the GWL&A reinsurance transaction, which increased benefits and expenses $69.8 million, as well as the addition of one more month of Liberty benefits and expenses in 2019. This was partly offset by the expected runoff of the in-force blocks of business.

For The Six Months Ended June 30, 2019, as compared to The Six Months Ended June 30, 2018

Pre-tax adjusted operating income

Pre-tax adjusted operating income was $144.7 million for the six months ended June 30, 2019, an increase of $30.2 million as compared to the six months ended June 30, 2018, primarily due to the addition of the Liberty reinsurance transaction. The Liberty reinsurance transaction added $46.6 million of pre-tax adjusted operating income for the six months ended June 30, 2019, an increase of $39.5 million as compared to the six months ended June 30, 2018. This was partly offset by the expected runoff of the in-force blocks of business, as well as the unfavorable impact of $3.7 million from the GWL&A transaction.

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Operating revenues

Net premiums and policy fees increased$93.5 million, or 21.6%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, primarily due to the premiums associated with the Liberty and GWL&A reinsurance transaction more than offsetting the expected runoff of the in-force blocks of business. Net investment income increased$217.8 million, or 47.1%, for the six months ended June 30, 2019, primarily due to the addition of the Liberty reinsurance transaction and the $33.9 million impact of the GWL&A reinsurance transaction, partly offset by the expected runoff of the in-force blocks of business.

Total benefits and expenses

Total benefits and expenses increased$304.9 million, or 38.4%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. The increase was primarily due to the GWL&A reinsurance transaction, which increased benefits and expenses $69.8 million, as well as the addition of four more months of Liberty business in 2019. This was partly offset by the expected runoff of the in-force blocks of business.

Reinsurance

The Acquisitions segment currently reinsures portions of both its life and annuity in-force. The cost of reinsurance to the segment is reflected in the chart shown below. A more detailed discussion of the components of reinsurance can be found in the Reinsurance section of Note 2, Summary of Significant Accounting Policies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Impact of reinsurance

Reinsurance impacted the Acquisitions segment line items as shown in the following table:

Acquisitions Segment

Line Item Impact of Reinsurance

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
REVENUES
Reinsurance ceded	$	(69,289	)	$	(78,593	)	$	(130,221	)	$	(156,245	)
BENEFITS AND EXPENSES
Benefits and settlement expenses	(56,782		)	(56,589		)	(116,251		)	(139,620		)
Amortization of VOBA	(144		)	(174		)	(268		)	(375		)
Other operating expenses	(8,197		)	(8,680		)	(15,749		)	(17,495		)
Total benefits and expenses	(65,123		)	(65,443		)	(132,268		)	(157,490		)
NET IMPACT OF REINSURANCE(1)	$	(4,166	)	$	(13,150	)	$	2,047		$	1,245
(1) Assumes no investment income on reinsurance. Foregone investment income would substantially reduce the favorable impact of reinsurance.

The segment’s reinsurance programs do not materially impact the other income line of our income statement. In addition, net investment income generally has no direct impact on reinsurance cost. However, by ceding business to the assuming companies, we forgo investment income on the reserves ceded to the assuming companies. Conversely, the assuming companies will receive investment income on the reserves assumed which will increase the assuming companies’ profitability on business assumed from the Company. For business ceded under modified coinsurance arrangements, the amount of investment income attributable to the assuming company is included as part of the overall change in policy reserves and, as such, is reflected in benefit and settlement expenses. The net investment income impact to us and the assuming companies has not been quantified as it is not fully reflected in our consolidated financial statements.

The net impact of reinsurance was more favorable by $9.0 million for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to lower ceded revenues partly offset by lower ceded benefits and expenses. For the three months ended June 30, 2019, ceded revenues decreased by $9.3 million, while ceded benefits and expenses decreased by $0.3 million.

The net impact of reinsurance was more favorable by $0.8 million for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, primarily due to lower ceded revenues partly offset by lower ceded benefits and expenses. For the six months ended June 30, 2019, ceded revenues decreased by $26.0 million, while ceded benefits and expenses decreased by $25.2 million.

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Annuities

Segment Results of Operations

Segment results were as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
REVENUES
Gross premiums and policy fees	$	34,645		$	38,104		$	68,075		$	76,748
Reinsurance ceded	—			—			—			—
Net premiums and policy fees	34,645			38,104			68,075			76,748
Net investment income	89,871			84,073			183,073			166,082
Realized investment gains (losses)	(20,988		)	(21,281		)	(42,095		)	(42,599		)
Other income	40,040			42,781			78,768			86,211
Total operating revenues	143,568			143,677			287,821			286,442
Realized investment gains (losses)	(43,161		)	(10,500		)	(48,197		)	(2,552		)
Total revenues	100,407			133,177			239,624			283,890
BENEFITS AND EXPENSES
Benefits and settlement expenses	57,874			46,761			115,820			104,131
Amortization of DAC/VOBA	1,399			2,565			(4,798		)	8,932
Other operating expenses	39,024			38,417			77,312			76,914
Operating benefits and expenses	98,297			87,743			188,334			189,977
Amortization related to benefits and settlement expenses	2,577			605			6,361			528
Amortization of DAC/VOBA related to realized gains (losses) - investments	(25,087		)	(4,518		)	(37,309		)	684
Total benefits and expenses	75,787			83,830			157,386			191,189
INCOME BEFORE INCOME TAX	24,620			49,347			82,238			92,701
Less: realized investment gains (losses)	(43,161		)	(10,500		)	(48,197		)	(2,552		)
Less: amortization related to benefits and settlement expenses	(2,577		)	(605		)	(6,361		)	(528		)
Less: related amortization of DAC/VOBA	25,087			4,518			37,309			(684		)
PRE-TAX ADJUSTED OPERATING INCOME	$	45,271		$	55,934		$	99,487		$	96,465

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The following tables summarize key data for the Annuities segment:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Sales(1)
Fixed annuity	$	625,616		$	665,135		$	958,194		$	1,083,777
Variable annuity	64,014			72,133			109,347			161,019
	$	689,630		$	737,268		$	1,067,541		$	1,244,796
Average Account Values				.
Fixed annuity(2)	$	9,709,506		$	8,867,958		$	9,620,734		$	8,724,404
Variable annuity	12,190,463			12,887,771			12,076,929			13,020,630
	$	21,899,969		$	21,755,729		$	21,697,663		$	21,745,034
Interest Spread - Fixed Annuities(3)
Net investment income yield	3.57		%	3.63		%	3.67		%	3.64		%
Interest credited to policyholders	2.54			2.52			2.50			2.51
Interest spread	1.03		%	1.11		%	1.17		%	1.13		%
(1) Sales are measured based on the amount of purchase payments received less surrenders occurring within twelve months of the purchase payments.
(2)  Includes general account balances held within VA products.
(3)  Interest spread on average general account values.

	As of
	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
GMDB - Net amount at risk(1)	$	88,383	$	274,399
GMDB Reserves	35,661		39,240
GLWB and GMAB Reserves	338,648		184,071
Account value subject to GLWB rider	8,575,733		8,399,300
GLWB Benefit Base	10,096,869		10,265,545
GMAB Benefit Base	—		1,238
S&P 500® Index	2,942		2,507
(1) Guaranteed benefits in excess of contract holder account balance.

For The Three Months Ended June 30, 2019, as compared to The Three Months Ended June 30, 2018

Pre-tax adjusted operating income

Pre-tax adjusted operating income was $45.3 million for the three months ended June 30, 2019, as compared to $55.9 million for the three months ended June 30, 2018, a decrease of $10.7 million, or 19.1%. This variance was primarily the result of lower VA fee income and an unfavorable change in SPIA mortality. Segment results were minimally impacted by unlocking for the three months ended June 30, 2019, as compared to $1.6 million of unfavorable unlocking for the three months ended June 30, 2018.

Operating revenues

Segment operating revenues decreased$0.1 million, or 0.1%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to lower VA fee income related to a decline in variable annuity account values and higher investment income related to growth in fixed account value and. Average fixed account balances increased9.5% and average variable account balances decreased5.4% for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018.

Benefits and settlement expenses

Benefits and settlement expenses increased$11.1 million, or 23.8%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. This increase was primarily the result of higher credited interest and an unfavorable

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change in SPIA mortality. Included in benefits and settlement expenses was $1.2 million of unfavorable unlocking for the three months ended June 30, 2019, as compared to $1.0 million of unfavorable unlocking for the three months ended June 30, 2018.

Amortization of DAC and VOBA

DAC and VOBA amortization favorably changed by $1.2 million for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. The favorable change was primarily due to favorable unlocking. DAC and VOBA unlocking for the three months ended June 30, 2019, was $1.2 millionfavorable as compared to $0.6 millionunfavorable for the three months ended June 30, 2018.

Other operating expenses

Other operating expenses increased$0.6 million, or 1.6%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. Higher non-deferred acquisition expenses and maintenance and overhead expenses were partially offset by lower non-deferred commission expenses.

Sales

Total sales decreased$47.6 million, or 6.5%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. Sales of variable annuities decreased$8.1 million, or 11.3% for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to the relative competitiveness of our product within the market. Sales of fixed annuities decreased by $39.5 million, or 5.9% for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to a decrease in fixed indexed annuities (“FIA”) sales.

For The Six Months Ended June 30, 2019, as compared to The Six Months Ended June 30, 2018

Pre-tax adjusted operating income

Pre-tax adjusted operating income was $99.5 million for the six months ended June 30, 2019, as compared to $96.5 million for the six months ended June 30, 2018, an increase of $3.0 million, or 3.1%. This variance was primarily the result of favorable unlocking, increased interest spreads, and a favorable change in guaranteed benefit reserves, partially offset by a decline in VA fee income and an unfavorable change in SPIA mortality. Segment results were positively impacted by $7.7 million of favorable unlocking for the six months ended June 30, 2019, as compared to $6.9 million of unfavorable unlocking for the six months ended June 30, 2018.

Operating revenues

Segment operating revenues increased$1.4 million, or 0.5%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, primarily due to higher investment income, partially offset by lower VA fee income. The higher investment income related to growth in fixed account value and lower VA fee income related to a decline in variable annuity account value. Average fixed account balances increased10.3% and average variable account balances decreased7.2% for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018.

Benefits and settlement expenses

Benefits and settlement expenses increased$11.7 million, or 11.2%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. This increase was primarily the result of higher credited interest and an unfavorable change in SPIA mortality, partially offset by a favorable change in guaranteed benefit reserves. Included in benefits and settlement expenses was $2.5 million of unfavorable unlocking for the six months ended June 30, 2019, as compared to $1.1 million of unfavorable unlocking for the six months ended June 30, 2018.

Amortization of DAC and VOBA

DAC and VOBA amortization favorably changed by $13.7 million for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. The favorable change was primarily due to favorable unlocking. DAC and VOBA unlocking for the six months ended June 30, 2019, was $10.2 millionfavorable as compared to $5.8 millionunfavorable for the six months ended June 30, 2018.

Other operating expenses

Other operating expenses increased$0.4 million, or 0.5%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. Higher non-deferred acquisition expense and maintenance and overhead expense were partially offset by lower non-deferred commission expense.

Sales

Total sales decreased$177.3 million, or 14.2%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. Sales of variable annuities decreased$51.7 million, or 32.1% for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, primarily due to the relative competitiveness of our product within the market. Sales of fixed annuities decreased by $125.6 million, or 11.6%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, primarily due to a decrease in FIA and single premium deferred annuities (“SPDA”) sales.

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Stable Value Products

Segment Results of Operations

Segment results were as follows:

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars In Thousands)
REVENUES
Net investment income	$	67,122	$	46,078		$	124,743	$	99,971
Other income	5		—			5		178
Total operating revenues	67,127		46,078			124,748		100,149
Realized investment gains (losses)	458		(330		)	2,416		(533		)
Total revenues	67,585		45,748			127,164		99,616
BENEFITS AND EXPENSES
Benefits and settlement expenses	37,221		24,576			71,061		48,219
Amortization of DAC	854		722			1,727		1,452
Other operating expenses	946		788			1,615		1,406
Total benefits and expenses	39,021		26,086			74,403		51,077
INCOME BEFORE INCOME TAX	28,564		19,662			52,761		48,539
Less: realized gains (losses)	458		(330		)	2,416		(533		)
PRE-TAX ADJUSTED OPERATING INCOME	$	28,106	$	19,992		$	50,345	$	49,072

The following table summarizes key data for the Stable Value Products segment: 

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Sales(1)
GIC	$	—		$	—		$	—		$	10,000
GFA	700,000			800,000			1,350,000			800,000
	$	700,000		$	800,000		$	1,350,000		$	810,000
Average Account Values	$	5,778,340		$	4,685,710		$	5,617,415		$	4,698,044
Ending Account Values	$	5,816,502		$	5,025,930		$	5,816,502		$	5,025,930
Operating Spread
Net investment income yield	4.65		%	3.94		%	4.44		%	4.27		%
Other income yield	—			—			—			0.01
Interest credited	2.58			2.10			2.53			2.06
Operating expenses	0.13			0.13			0.12			0.13
Operating spread	1.94		%	1.71		%	1.79		%	2.09		%
Adjusted operating spread(2)	1.20		%	1.28		%	1.39		%	1.58		%
(1) Sales are measured at the time the purchase payments are received.
(2)  Excludes participating mortgage loan income.

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For The Three Months Ended June 30, 2019, as compared to The Three Months Ended June 30, 2018

Pre-tax adjusted operating income

Pre-tax adjusted operating income was $28.1 million, an increase of $8.1 million, or 40.6%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. The increase in pre-tax adjusted operating income primarily resulted from higher participating mortgage income and higher average account balances. Participating mortgage income for the three months ended June 30, 2019, was $10.7 million as compared to $5.0 million for the three months ended June 30, 2018. The adjusted operating spread, which excludes participating income, decreased by 8 basis points for the three months ended June 30, 2019, from the prior year, due primarily to an increase in credited interest.

For The Six Months Ended June 30, 2019, as compared to The Six Months Ended June 30, 2018

Pre-tax adjusted operating income

Pre-tax adjusted operating income was $50.3 million, an increase of $1.3 million, or 2.6%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. The increase in pre-tax adjusted operating income primarily resulted from higher average account balances. Participating mortgage income for the six months ended June 30, 2019, was $11.5 million as compared to $11.8 million for the six months ended June 30, 2018. The adjusted operating spread, which excludes participating income, decreased by 19 basis points for the six months ended June 30, 2019, from the prior year, due primarily to an increase in credited interest.

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Asset Protection

Segment Results of Operations

Segment results were as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
REVENUES
Gross premiums and policy fees	$	82,125		$	82,321		$	164,302		$	164,921
Reinsurance ceded	(49,709		)	(46,218		)	(98,629		)	(93,962		)
Net premiums and policy fees	32,416			36,103			65,673			70,959
Net investment income	8,454			7,353			16,660			14,322
Other income	35,144			34,358			69,879			68,908
Total operating revenues	76,014			77,814			152,212			154,189
BENEFITS AND EXPENSES
Benefits and settlement expenses	24,563			28,840			48,509			57,949
Amortization of DAC/VOBA	15,646			16,122			31,301			31,875
Other operating expenses	26,594			25,686			53,448			50,981
Total benefits and expenses	66,803			70,648			133,258			140,805
INCOME BEFORE INCOME TAX	9,211			7,166			18,954			13,384
PRE-TAX ADJUSTED OPERATING INCOME	$	9,211		$	7,166		$	18,954		$	13,384

The following table summarizes key data for the Asset Protection segment: 

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Sales(1)
Credit insurance	$	2,343		$	3,243		$	4,623		$	6,409
Service contracts	111,177			108,009			203,759			204,512
GAP	20,239			17,646			36,965			33,242
	$	133,759		$	128,898		$	245,347		$	244,163
Loss Ratios(2)
Credit insurance	20.1		%	21.2		%	23.2		%	25.1		%
Service contracts	66.5			62.2			61.4			58.4
GAP	113.3			123.9			117.0			131.8
(1) Sales are based on the amount of single premiums and fees received
(2) Incurred claims as a percentage of earned premiums

For The Three Months Ended June 30, 2019, as compared to The Three Months Ended June 30, 2018

Pre-tax adjusted operating income

Pre-tax adjusted operating income was $9.2 million, representing an increase of $2.0 million, or 28.5%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. Earnings from the GAP product line increased $1.3 million due to lower loss ratios. Service contract earnings increased $0.9 million primarily due to higher administrative fees and investment income. Earnings from the credit insurance product line decreased $0.2 million due to higher ceded premiums and lower volume.

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Net premiums and policy fees

Net premiums and policy fees decreased$3.7 million, or 10.2%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. GAP premiums decreased $3.9 million due to previously discontinuing the relationship with a significant distribution partner and the related impact on earned premiums. Credit insurance premiums decreased $0.7 million as a result of lower sales. This was partly offset by an increase in service contract premiums of $0.9 million.

Other income

Other income increased$0.8 million, or 2.3% for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. Other income from the service contract line increased $1.1 million. Other income from the GAP product line decreased $0.3 million.

Benefits and settlement expenses

Benefits and settlement expenses decreased$4.3 million, or 14.8%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. GAP claims decreased $5.7 million due to lower loss ratios and lower volume as a result of previously discontinuing the relationship with a significant distribution partner. Credit insurance claims decreased $0.2 million due to lower volume. Service contract claims increased $1.6 million due to higher volume and higher loss ratios.

Amortization of DAC and VOBA and Other operating expenses

Amortization of DAC and VOBA decreased$0.5 million and other operating expenses increased$0.9 million for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018.

Sales

Total segment sales increased$4.9 million, or 3.8%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. Service contract sales increased$3.2 million. GAP sales increased$2.6 million as a result of lower cancellations from a discontinued distribution partner. Credit insurance sales decreased$0.9 million due to decreasing demand for the product.

For The Six Months Ended June 30, 2019, as compared to The Six Months Ended June 30, 2018

Pre-tax adjusted operating income

Pre-tax adjusted operating income was $19.0 million, representing an increase of $5.6 million, or 41.6%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. Earnings from the GAP product line increased $4.0 million due to lower loss ratios. Service contract earnings increased $1.4 million primarily due to higher administrative fees and investment income. Earnings from the credit insurance product line increased $0.2 million primarily due to lower expenses.

Net premiums and policy fees

Net premiums and policy fees decreased$5.3 million, or 7.4%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. GAP premiums decreased $7.4 million due to previously discontinuing the relationship with a significant distribution partner and the related impact on earned premiums. Credit insurance premiums decreased $1.0 million as a result of lower sales. This was partly offset by an increase in service contract premiums of $3.1 million.

Other income

Other income increased$1.0 million, or 1.4% for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. Other income from the service contract line increased $1.8 million. Other income from the GAP product line decreased $0.8 million.

Benefits and settlement expenses

Benefits and settlement expenses decreased$9.4 million, or 16.3%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. GAP claims decreased $12.3 million due to lower loss ratios and lower volume as a result of previously discontinuing the relationship with a significant distribution partner. Credit insurance claims decreased $0.3 million due to lower volume and loss ratios. Service contract claims increased $3.2 million due to higher volume and higher loss ratios.

Amortization of DAC and VOBA and Other operating expenses

Amortization of DAC and VOBA decreased$0.6 million and other operating expenses increased$2.5 million for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018.

Sales

Total segment sales increased$1.2 million, or 0.5%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. GAP sales increased$3.7 million as a result of lower cancellations from a discontinued distribution partner. Service contract sales decreased$0.8 million primarily due to lower volume resulting from the impact of previous price increases. Credit insurance sales decreased$1.8 million due to decreasing demand for the product.

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Reinsurance

The majority of the Asset Protection segment’s reinsurance activity relates to the cession of single premium credit life and credit accident and health insurance, vehicle service contracts, and guaranteed asset protection insurance to producer affiliated reinsurance companies (“PARCs”). These arrangements are coinsurance contracts ceding the business on a first dollar quota share basis at 100% to limit the segment’s exposure and allow the PARCs to share in the underwriting income of the product. Reinsurance contracts do not relieve the Asset Protection segment from obligations to policyholders. A more detailed discussion of the components of reinsurance can be found in the Reinsurance section of Note 2, Summary of Significant Accounting Policies, to the Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Impact of Reinsurance

Reinsurance impacted the Asset Protection segment line items as shown in the following table:

Asset Protection Segment

Line Item Impact of Reinsurance

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
REVENUES
Reinsurance ceded	$	(49,709	)	$	(46,218	)	$	(98,629	)	$	(93,962	)
BENEFITS AND EXPENSES
Benefits and settlement expenses	(23,499		)	(21,804		)	(44,638		)	(41,794		)
Amortization of DAC/VOBA	(1,145		)	(932		)	(2,126		)	(1,965		)
Other operating expenses	(175		)	(488		)	(474		)	(1,287		)
Total benefits and expenses	(24,819		)	(23,224		)	(47,238		)	(45,046		)
NET IMPACT OF REINSURANCE(1)	$	(24,890	)	$	(22,994	)	$	(51,391	)	$	(48,916	)
(1)  Assumes no investment income on reinsurance. Foregone investment income would substantially change the impact of reinsurance.

For The Three Months Ended June 30, 2019, as compared to The Three Months Ended June 30, 2018

Reinsurance premiums ceded increased$3.5 million, or 7.6%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. The increase was primarily due to an increase in the percentage of ceded service contract premiums versus retained service contract premiums over time.

Benefits and settlement expenses ceded increased$1.7 million, or 7.8%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. The increase was primarily due to higher ceded losses in the service contract product line.

Amortization of DAC and VOBA ceded increased$0.2 million for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, as the result of changes in ceded activity in all product lines. Other operating expenses ceded decreased$0.3 million for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, as a result of changes in ceded activity in all product lines.

Net investment income has no direct impact on reinsurance cost. However, by ceding business to the assuming companies, the Asset Protection segment forgoes investment income on the assets backing the reserves ceded. Conversely, the assuming companies will receive investment income on the assets backing the reserves assumed which generally will increase the assuming companies’ profitability on business ceded. The net investment income impact has not been quantified as it is not reflected in the consolidated financial statements.

For The Six Months Ended June 30, 2019, as compared to The Six Months Ended June 30, 2018

Reinsurance premiums ceded increased$4.7 million, or 5.0%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. The increase was primarily due to an increase in the percentage of ceded service contract premiums versus retained service contract premiums over time.

Benefits and settlement expenses ceded increased$2.8 million, or 6.8%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. The increase was primarily due to higher ceded losses in the service contract product line.

Amortization of DAC and VOBA ceded increased$0.2 million for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, as the result of changes in ceded activity in the service contract product line. Other operating

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expenses ceded decreased$0.8 million for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, as a result of changes in ceded activity in all product lines.

Net investment income has no direct impact on reinsurance cost. However, by ceding business to the assuming companies, the Asset Protection segment forgoes investment income on the assets backing the reserves ceded. Conversely, the assuming companies will receive investment income on the assets backing the reserves assumed which generally will increase the assuming companies’ profitability on business ceded. The net investment income impact has not been quantified as it is not reflected in the consolidated financial statements.

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Corporate and Other

Segment Results of Operations

Segment results were as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
REVENUES
Gross premiums and policy fees	$	2,816		$	2,974		$	6,060		$	6,157
Reinsurance ceded	(20		)	(23		)	(136		)	(28		)
Net premiums and policy fees	2,796			2,951			5,924			6,129
Net investment income	60,648			60,190			121,813			119,229
Other income	80			1,396			1,247			2,151
Total operating revenues	63,524			64,537			128,984			127,509
Realized investment gains (losses)	2,655			(1,961		)	8,949			5,933
Total revenues	66,179			62,576			137,933			133,442
BENEFITS AND EXPENSES
Benefits and settlement expenses	3,078			3,253			8,240			8,183
Amortization of DAC/VOBA	—			—			—			—
Other operating expenses	80,891			79,081			160,863			157,802
Total benefits and expenses	83,969			82,334			169,103			165,985
INCOME (LOSS) BEFORE INCOME TAX	(17,790		)	(19,758		)	(31,170		)	(32,543		)
Less: realized investment gains (losses)	2,655			(1,961		)	8,949			5,933
PRE-TAX ADJUSTED OPERATING INCOME (LOSS)	$	(20,445	)	$	(17,797	)	$	(40,119	)	$	(38,476	)

For The Three Months Ended June 30, 2019, as compared to The Three Months Ended June 30, 2018

Pre-tax adjusted operating income (loss)

Pre-tax adjusted operating loss was $20.4 million for the three months ended June 30, 2019, as compared to a pre-tax adjusted operating loss of $17.8 million for the three months ended June 30, 2018. The increased operating loss was primarily due to a decrease in other income and an increase in general operating expenses.

Operating revenues

Net investment income for the segment increased$0.5 million, or 0.8%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. The increase was primarily due to an increase in investment yields.

Total benefits and expenses

Total benefits and expenses increased$1.6 million or 2.0%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to increases in interest expense and corporate overhead expenses.

For The Six Months Ended June 30, 2019, as compared to The Six Months Ended June 30, 2018

Pre-tax adjusted operating income (loss)

Pre-tax adjusted operating loss was $40.1 million for the six months ended June 30, 2019, as compared to a pre-tax adjusted operating loss of $38.5 million for the six months ended June 30, 2018. The increased operating loss was primarily due to an increase in corporate overhead expenses, partially offset by an increase in net investment income due to increased asset balances and increased yields.

Operating revenues

Net investment income for the segment increased$2.6 million, or 2.2%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. The increase was primarily due to an increase in invested asset balances and increased yields.

84

Total benefits and expenses

Total benefits and expenses increased$3.1 million or 1.9%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018, primarily due to increases in interest expense and corporate overhead expenses.

85

CONSOLIDATED INVESTMENTS

As of June 30, 2019, our investment portfolio was approximately $80.8 billion. The types of assets in which we may invest are influenced by various state insurance laws which prescribe qualified investment assets. Within the parameters of these laws, we invest in assets giving consideration to such factors as liquidity and capital needs, investment quality, investment return, matching of assets and liabilities, and the overall composition of the investment portfolio by asset type and credit exposure.

Within our fixed maturity investments, we maintain portfolios classified as “available-for-sale”, “trading”, and “held-to-maturity”. We purchase our available-for-sale investments with the intent to hold to maturity by purchasing investments that match future cash flow needs. However, we may sell any of our available-for-sale and trading investments to maintain proper matching of assets and liabilities. Accordingly, we classified $62.2 billion, or 92.5%, of our fixed maturities as “available-for-sale” as of June 30, 2019. These securities are carried at fair value on our consolidated condensed balance sheets. Changes in fair value for our available-for-sale portfolio, net of tax and the related impact on certain insurance assets and liabilities are recorded directly to shareowner’s equity. Declines in fair value that are other-than-temporary are recorded as realized losses in the consolidated condensed statements of income, net of any applicable non-credit component of the loss, which is recorded as an adjustment to other comprehensive income (loss).

Trading securities are carried at fair value and changes in fair value are recorded on the income statement as they occur. Our trading portfolio accounted for $2.5 billion, or 3.7%, of our fixed maturities and $81.9 million of short-term investments as of June 30, 2019. Changes in fair value on the Modco trading portfolios, including gains and losses from sales, are passed to third party reinsurers through the contractual terms of the related reinsurance arrangements. Partially offsetting these amounts are corresponding changes in the fair value of the embedded derivative associated with the underlying reinsurance arrangement.

Fixed maturities with respect to which we have both the positive intent and ability to hold to maturity are classified as “held-to-maturity”. We classified $2.6 billion, or 3.8%, of our fixed maturities as “held-to-maturity” as of June 30, 2019. These securities are carried at amortized cost on our consolidated condensed balance sheets.

Fair values for private, non-traded securities are determined as follows: 1) we obtain estimates from independent pricing services and 2) we estimate fair value based upon a comparison to quoted issues of the same issuer or issues of other issuers with similar terms and risk characteristics. We analyze the independent pricing services valuation methodologies and related inputs, including an assessment of the observability of market inputs. Upon obtaining this information related to fair value, management makes a determination as to the appropriate valuation amount. For more information about the fair values of our investments please refer to Note 6, Fair Value of Financial Instruments, to the financial statements.

The following table presents the reported values of our invested assets:

	As of
	June 30, 2019				December 31, 2018
	(Dollars In Thousands)
Publicly issued bonds (amortized cost: 2019 - $44,987,204; 2018 - $40,496,617)	$	45,900,329	56.8	%	$	38,346,708	58.1	%
Privately issued bonds (amortized cost: 2019 - $20,838,991; 2018 - $16,497,523)	21,289,823		26.3		16,097,386		24.3
Redeemable preferred stocks (amortized cost: 2019 - $99,267; 2018 - $105,639)	96,720		0.1		94,079		0.1
Fixed maturities	67,286,872		83.2	%	54,538,173		82.5	%
Equity securities (cost: 2019 - $622,178; 2018 - $627,087)	629,965		0.8		595,884		0.9
Mortgage loans	9,053,400		11.2		7,724,733		11.7
Investment real estate	6,777		—		6,816		—
Policy loans	1,709,110		2.1		1,695,886		2.6
Other long-term investments	934,770		1.2		759,354		1.1
Short-term investments	1,220,840		1.5		807,283		1.2
Total investments	$	80,841,734	100.0	%	$	66,128,129	100.0	%

Included in the preceding table are $2.5 billion and $2.4 billion of fixed maturities and $81.9 million and $30.9 million of short-term investments classified as trading securities as of June 30, 2019 and December 31, 2018, respectively. All of the fixed maturities in the trading portfolio are invested assets that are held pursuant to Modco arrangements under which the economic risks and benefits of the investments are passed to third party reinsurers.

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Fixed Maturity Investments

As of June 30, 2019, our fixed maturity investment holdings were approximately $67.3 billion. The approximate percentage distribution of our fixed maturity investments by quality rating is as follows: 

	As of
Rating	June 30, 2019				December 31, 2018
	(Dollars In Thousands)
AAA	$	8,252,724	12.3	%	$	6,822,118	12.5	%
AA	7,741,552		11.5		6,219,579		11.4
A	22,592,239		33.6		17,694,697		32.4
BBB	24,356,297		36.2		19,455,634		35.7
Below investment grade	1,767,844		2.6		1,712,671		3.2
Not rated(1)	2,576,216		3.8		2,633,474		4.8
	$	67,286,872	100.0	%	$	54,538,173	100.0	%
(1) Our “not rated” securities are $2.6 billion or 3.8% of our fixed maturity investments, of held-to-maturity securities issued by affiliates of the Company which are considered variable interest entities (“VIEs”) and are discussed in Note 5, Investment Operations, to the consolidated condensed financial statements. We are not the primary beneficiary of these entities and thus these securities are not eliminated in consolidation. These securities are collateralized by non-recourse funding obligations issued by captive insurance companies that are wholly owned subsidiaries of the Company.

We use various Nationally Recognized Statistical Rating Organizations’ (“NRSRO”) ratings when classifying securities by quality ratings. When the various NRSRO ratings are not consistent for a security, we use the second-highest convention in assigning the rating. When there are no such published ratings, we assign a rating based on the statutory accounting rating system if such ratings are available.

The distribution of our fixed maturity investments by type is as follows:

	As of
Type	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
Corporate securities	$	47,810,678	$	37,786,661
Residential mortgage-backed securities	4,809,703		3,853,426
Commercial mortgage-backed securities	2,900,306		2,484,009
Other asset-backed securities	2,009,595		1,551,800
U.S. government-related securities	1,351,637		1,699,299
Other government-related securities	607,491		560,171
States, municipals, and political subdivisions	5,124,526		3,875,254
Redeemable preferred stocks	96,720		94,079
Securities issued by affiliates	2,576,216		2,633,474
Total fixed income portfolio	$	67,286,872	$	54,538,173

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We periodically update our industry segmentation based on an industry accepted index. Updates to this index can result in a change in segmentation for certain securities between periods.

The industry segment composition of our fixed maturity securities is presented in the following table: 

	As of June 30, 2019		% Fair Value		As of December 31, 2018		% Fair Value
	(Dollars In Thousands)
Banking	$	6,139,168	9.1	%	$	5,260,725	9.6	%
Other finance	988,879		1.5		255,445		0.5
Electric utility	5,465,781		8.1		4,550,917		8.3
Energy	5,048,361		7.5		4,064,340		7.5
Natural gas	1,135,504		1.7		829,685		1.5
Insurance	4,904,397		7.3		3,916,905		7.2
Communications	2,624,573		3.9		2,086,592		3.8
Basic industrial	2,183,507		3.2		1,744,853		3.2
Consumer noncyclical	6,356,708		9.4		5,217,111		9.6
Consumer cyclical	2,476,883		3.7		1,850,868		3.4
Finance companies	230,060		0.3		192,074		0.4
Capital goods	3,452,507		5.1		2,711,728		5.0
Transportation	2,091,515		3.1		1,669,627		3.1
Other industrial	627,018		0.9		382,138		0.7
Brokerage	1,311,844		1.9		999,554		1.8
Technology	2,300,968		3.4		1,908,823		3.5
Real estate	532,611		0.8		206,795		0.4
Other utility	37,114		0.4		32,560		0.1
Commercial mortgage-backed securities	2,900,306		4.3		2,484,009		4.6
Other asset-backed securities	2,009,595		3.0		1,551,800		2.8
Residential mortgage-backed non-agency securities	3,931,757		5.8		3,017,064		5.5
Residential mortgage-backed agency securities	877,946		1.3		836,362		1.5
U.S. government-related securities	1,351,637		2.0		1,699,299		3.1
Other government-related securities	607,491		0.9		560,171		1.0
State, municipals, and political divisions	5,124,526		7.6		3,875,254		7.1
Securities issued by affiliates	2,576,216		3.8		2,633,474		4.8
Total	$	67,286,872	100.0	%	$	54,538,173	100.0	%

The total Modco trading portfolio fixed maturities by rating is as follows: 

	As of
Rating	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
AAA	$	274,147	$	301,155
AA	299,220		299,438
A	830,016		798,691
BBB	979,010		872,613
Below investment grade	119,855		144,295
	$	2,502,248	$	2,416,192

A portion of our bond portfolio is invested in residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”), and other asset-backed securities (collectively referred to as asset-backed securities or “ABS”). ABS are securities that are backed by a pool of assets. These holdings as of June 30, 2019, were approximately $9.7 billion. Mortgage-

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backed securities (“MBS”) are constructed from pools of mortgages and may have cash flow volatility as a result of changes in the rate at which prepayments of principal occur with respect to the underlying loans. Excluding limitations on access to lending and other extraordinary economic conditions, prepayments of principal on the underlying loans can be expected to accelerate with decreases in market interest rates and diminish with increases in interest rates.

The following tables include the percentage of our collateral grouped by rating category and categorizes the estimated fair value by year of security origination for our Prime, Non-Prime, Commercial, and Other asset-backed securities as of June 30, 2019 and December 31, 2018.

	As of June 30, 2019
	Prime(1)						Non-Prime(1)						Commercial						Other asset-backed						Total
	Fair			Amortized			Fair			Amortized			Fair			Amortized			Fair			Amortized			Fair			Amortized
	Value			Cost			Value			Cost			Value			Cost			Value			Cost			Value			Cost
	(Dollars In Millions)
Rating $
AAA	$	3,817.9		$	3,710.5		$	3.5		$	3.5		$	1,693.0		$	1,665.7		$	627.6		$	619.9		$	6,142.0		$	5,999.6
AA	15.9			15.9			0.2			0.2			568.2			561.2			255.5			251.3			839.8			828.6
A	880.4			864.5			10.7			10.7			580.0			566.5			939.5			938.5			2,410.6			2,380.2
BBB	8.5			8.4			3.0			3.0			59.1			59.1			147.3			146.3			217.9			216.8
Below	29.7			29.5			39.9			39.9			—			—			39.7			40.1			109.3			109.5
	$	4,752.4		$	4,628.8		$	57.3		$	57.3		$	2,900.3		$	2,852.5		$	2,009.6		$	1,996.1		$	9,719.6		$	9,534.7
Rating %
AAA	80.4		%	80.2		%	6.1		%	6.1		%	58.4		%	58.3		%	31.2		%	31.1		%	63.3		%	62.9		%
AA	0.3			0.3			0.4			0.4			19.6			19.7			12.7			12.6			8.6			8.7
A	18.5			18.7			18.7			18.7			20.0			19.9			46.8			47.0			24.8			25.0
BBB	0.2			0.2			5.2			5.2			2.0			2.1			7.3			7.3			2.2			2.3
Below	0.6			0.6			69.6			69.6			—			—			2.0			2.0			1.1			1.1
	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%
Estimated Fair Value of Security by Year of Security Origination
2015 and prior	$	1,780.7		$	1,747.0		$	53.8		$	53.8		$	1,886.1		$	1,857.2		$	1,140.4		$	1,127.4		$	4,861.0		$	4,785.4
2016	364.3			358.2			—			—			519.6			514.2			180.2			179.9			1,064.1			1,052.3
2017	839.6			822.8			3.5			3.5			256.0			251.9			477.9			477.9			1,577.0			1,556.1
2018	1,214.5			1,164.3			—			—			146.1			138.6			166.0			166.1			1,526.6			1,469.0
2019	553.3			536.5			—			—			92.5			90.6			45.1			44.8			690.9			671.9
Total	$	4,752.4		$	4,628.8		$	57.3		$	57.3		$	2,900.3		$	2,852.5		$	2,009.6		$	1,996.1		$	9,719.6		$	9,534.7
(1) Included in Residential Mortgage-Backed securities.

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	As of December 31, 2018
	Prime(1)						Non-Prime(1)						Commercial						Other asset-backed						Total
	Fair			Amortized			Fair			Amortized			Fair			Amortized			Fair			Amortized			Fair			Amortized
	Value			Cost			Value			Cost			Value			Cost			Value			Cost			Value			Cost
	(Dollars In Millions)
Rating $
AAA	$	2,900.5		$	2,930.7		$	—		$	—		$	1,398.8		$	1,427.2		$	533.3		$	536.3		$	4,832.6		$	4,894.2
AA	2.9			2.9			0.2			0.2			543.1			562.7			209.8			207.2			756.0			773.0
A	837.9			846.6			19.0			19.0			503.5			509.9			671.1			687.5			2,031.5			2,063.0
BBB	3.7			3.7			3.1			3.1			38.6			38.5			99.5			100.4			144.9			145.7
Below	22.4			22.4			63.7			63.7			—			—			38.1			38.6			124.2			124.7
	$	3,767.4		$	3,806.3		$	86.0		$	86.0		$	2,484.0		$	2,538.3		$	1,551.8		$	1,570.0		$	7,889.2		$	8,000.6
Rating %
AAA	77.0		%	77.0		%	—		%	—		%	56.2		%	56.2		%	34.4		%	34.1		%	61.3		%	61.1		%
AA	0.1			0.1			0.3			0.3			21.9			22.2			13.5			13.2			9.6			9.7
A	22.2			22.2			22.1			22.1			20.3			20.1			43.2			43.8			25.7			25.8
BBB	0.1			0.1			3.6			3.6			1.6			1.5			6.4			6.4			1.8			1.8
Below	0.6			0.6			74.0			74.0			—			—			2.5			2.5			1.6			1.6
	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%
Estimated Fair Value of Security by Year of Security Origination
2014 and prior	$	1,114.3		$	1,121.7		$	86.0		$	86.0		$	1,510.6		$	1,538.9		$	729.0		$	730.7		$	3,439.9		$	3,477.3
2015	579.1			586.5			—			—			298.7			303.1			64.4			66.2			942.2			955.8
2016	340.6			348.2			—			—			441.0			460.1			227.5			230.0			1,009.1			1,038.3
2017	666.6			689.1			—			—			123.0			126.4			406.1			415.5			1,195.7			1,231.0
2018	1,066.8			1,060.8			—			—			110.7			109.8			124.8			127.6			1,302.3			1,298.2
Total	$	3,767.4		$	3,806.3		$	86.0		$	86.0		$	2,484.0		$	2,538.3		$	1,551.8		$	1,570.0		$	7,889.2		$	8,000.6
(1) Included in Residential Mortgage-Backed securities

The majority of our RMBS holdings as of June 30, 2019, were super senior or senior bonds in the capital structure. Our total non-agency portfolio has a weighted-average life of 9.02 years. The following table categorizes the weighted-average life for our non-agency portfolio, by category of material holdings, as of June 30, 2019: 

	Weighted-Average
Non-agency portfolio	Life
Prime	9.14
Alt-A	3.98
Sub-prime	4.21

Mortgage Loans

We invest a portion of our investment portfolio in commercial mortgage loans. As of June 30, 2019, our mortgage loan holdings were approximately $9.1 billion. We have specialized in making loans on either credit-oriented commercial properties or credit-anchored strip shopping centers and apartments. Our underwriting procedures relative to our commercial loan portfolio are based, in our view, on a conservative and disciplined approach. We concentrate on a small number of commercial real estate asset types associated with the necessities of life (retail, multi-family, senior living, professional office buildings, and warehouses). We believe that these asset types tend to weather economic downturns better than other commercial asset classes in which we have chosen not to participate. We believe this disciplined approach has helped to maintain a relatively low delinquency and foreclosure rate throughout our history. The majority of our mortgage loans portfolio was underwritten and funded by us. From time to time, we may acquire loans in conjunction with an acquisition.

Our commercial mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, and net of an allowance for loan losses. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts, and prepayment fees are reported in net investment income.

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Certain of the mortgage loans have call options that occur within the next 10 years. However, if interest rates were to significantly increase, we may be unable to exercise the call options on our existing mortgage loans commensurate with the significantly increased market rates. As of June 30, 2019, assuming the loans are called at their next call dates, approximately $70.3 million of principal would become due for the remainder of 2019, $789.6 million in 2020 through 2024, and $60.0 million in 2025 through 2029.

We offer a type of commercial mortgage loan under which we will permit a loan-to-value ratio of up to 85% in exchange for a participating interest in the cash flows from the underlying real estate. As of June 30, 2019 and December 31, 2018, approximately $669.5 million and $700.6 million, respectively, of our total mortgage loans principal balance have this participation feature. Cash flows received as a result of this participation feature are recorded as interest income. During the three and six months ended June 30, 2019 and 2018, we recognized $12.0 million and $14.2 million and $5.1 million and $12.4 million, respectively, of participating mortgage loan income.

The following table includes a breakdown of our commercial mortgage loan portfolio:

Commercial Mortgage Loan Portfolio Profile
	As of June 30, 2019		As of December 31, 2018
	(Dollars In Thousands)
Total number of loans	1,852		1,732
Total amortized cost	9,053,400		7,724,733
Total unpaid principal balance	8,918,477		7,602,389
Current allowance for loan losses	(2,481	)	(1,296	)
Average loan size	4,816		4,389
Weighted-average amortization	20.3 years		22.5 years
Weighted-average coupon	4.50	%	4.60	%
Weighted-average LTV	53.54	%	55.39	%
Weighted-average debt coverage ratio	1.55		1.55

We record mortgage loans net of an allowance for credit losses. This allowance is calculated through analysis of specific loans that have indicators of potential impairment based on current information and events. As of June 30, 2019 and December 31, 2018, there were allowance for mortgage loan credit losses of $2.5 million and $1.3 million, respectively.

While our mortgage loans do not have quoted market values, as of June 30, 2019, we estimated the fair value of our mortgage loans to be $9.1 billion (using an internal fair value model which calculates the value of most loans by using the loan’s discounted cash flows to the loan’s call or maturity date), which was approximately 0.8% more than the amortized cost, less any related loan loss reserve.

At the time of origination, our mortgage lending criteria targets that the loan-to-value ratio on each mortgage is 75.0% or less. We target projected rental payments from credit anchors (i.e., excluding rental payments from smaller local tenants) of 70.0% of the property’s projected operating expenses and debt service.

As of June 30, 2019, $0.8 million of our invested assets consisted of nonperforming mortgage loans, restructured mortgage loans, or mortgage loans that were foreclosed and were converted to real estate properties. We do not expect these investments to adversely affect our liquidity or ability to maintain proper matching of assets and liabilities. During the six months ended June 30, 2019, we recognized three troubled debt restructurings as a result of granting concession to borrowers which included loan terms unavailable from other lenders. During the three and six months ended June 30, 2019, we did not recognize any mortgage loans that were foreclosed and were converted to real estate properties. We did not identify any loans whose principal was permanently impaired during the three and six months ended June 30, 2019.

It is our policy to cease to carry accrued interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued unless it is determined that the accrued interest is not collectible. If a loan becomes over 90 days delinquent, it is our general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current is in place.

Unrealized Gains and Losses — Available-for-Sale Securities

The information presented below relates to investments at a certain point in time and is not necessarily indicative of the status of the portfolio at any time after June 30, 2019, the balance sheet date. Information about unrealized gains and losses is subject to rapidly changing conditions, including volatility of financial markets and changes in interest rates. Management considers a number of factors in determining if an unrealized loss is other-than-temporary, including the expected cash to be collected and the intent, likelihood, and/or ability to hold the security until recovery. Consistent with our long-standing practice, we do not utilize a “bright line test” to determine other-than-temporary impairments. On a quarterly basis, we perform an analysis on every security with an unrealized loss to determine if an other-than-temporary impairment has occurred. This analysis includes reviewing several metrics including collateral, expected cash flows, ratings, and liquidity. Furthermore, since the timing of recognizing realized

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gains and losses is largely based on management’s decisions as to the timing and selection of investments to be sold, the tables and information provided below should be considered within the context of the overall unrealized gain/(loss) position of the portfolio. We had an overall net unrealized gain of $1.4 billion, prior to tax and the related impact of certain insurance assets and liabilities offsets, as of June 30, 2019, and an overall net unrealized loss of $2.6 billion as of December 31, 2018.

For fixed maturity securities held that are in an unrealized loss position as of June 30, 2019, the fair value, amortized cost, unrealized loss, and total time period that the security has been in an unrealized loss position are presented in the table below: 

	Fair Value		% Fair Value		Amortized Cost		% Amortized Cost		Unrealized Loss			% Unrealized Loss
	(Dollars In Thousands)
<= 90 days	$	775,512	5.3	%	$	789,855	5.2	%	$	(14,343	)	2.4	%
>90 days but <= 180 days	203,239		1.4		206,230		1.4		(2,991		)	0.5
>180 days but <= 270 days	305,330		2.1		314,172		2.1		(8,842		)	1.4
>270 days but <= 1 year	543,922		3.7		577,273		3.8		(33,351		)	5.4
>1 year but <= 2 years	3,630,734		24.9		3,730,194		24.5		(99,460		)	16.1
>2 years but <= 3 years	3,697,015		25.3		3,777,227		24.8		(80,212		)	13.0
>3 years but <= 4 years	85,124		0.6		101,940		0.7		(16,816		)	2.7
>4 years but <= 5 years	5,349,814		36.7		5,710,074		37.5		(360,260		)	58.5
>5 years	—		—		—		—		—			—
Total	$	14,590,690	100.0	%	$	15,206,965	100.0	%	$	(616,275	)	100.0	%

The range of maturity dates for securities in an unrealized loss position as of June 30, 2019, varies, with 21.0% maturing in less than 5 years, 8.3% maturing between 5 and 10 years, and 70.7% maturing after 10 years. The following table shows the credit rating of securities in an unrealized loss position as of June 30, 2019:

S&P or Equivalent	Fair		% Fair		Amortized		% Amortized		Unrealized			% Unrealized
Designation	Value		Value		Cost		Cost		Loss			Loss
	(Dollars In Thousands)
AAA/AA/A	$	7,439,774	51.0	%	$	7,600,000	50.0	%	$	(160,226	)	26.0	%
BBB	6,336,112		43.4		6,666,133		43.8		(330,021		)	53.6
Investment grade	13,775,886		94.4	%	14,266,133		93.8	%	(490,247		)	79.6	%
BB	473,606		3.3		524,398		3.5		(50,792		)	8.2
B	138,037		0.9		169,960		1.1		(31,923		)	5.2
CCC or lower	203,161		1.4		246,474		1.6		(43,313		)	7.0
Below investment grade	814,804		5.6	%	940,832		6.2	%	(126,028		)	20.4	%
Total	$	14,590,690	100.0	%	$	15,206,965	100.0	%	$	(616,275	)	100.0	%

As of June 30, 2019, the Barclays Investment Grade Index was priced at 110.4 bps versus a 10 year average of 139.1 bps. Similarly, the Barclays High Yield Index was priced at 406.8 bps versus a 10 year average of 536.4 bps. As of June 30, 2019, the five, ten, and thirty-year U.S. Treasury obligations were trading at levels of 1.8%, 2.0%, and 2.5%, as compared to 10 year averages of 1.7%, 2.5%, and 3.3%, respectively.

As of June 30, 2019, 79.6% of the unrealized loss was associated with securities that were rated investment grade. We have examined the performance of the underlying collateral and cash flows and expect that our investments will continue to perform in accordance with their contractual terms. Factors such as credit enhancements within the deal structures and the underlying collateral performance/characteristics support the recoverability of the investments. Based on the factors discussed, we do not consider these unrealized loss positions to be other-than-temporary. However, from time to time, we may sell securities in the ordinary course of managing our portfolio to meet diversification, credit quality, yield enhancement, asset/liability management, and liquidity requirements.

Expectations that investments in mortgage-backed and asset-backed securities will continue to perform in accordance with their contractual terms are based on assumptions that a market participant would use in determining the current fair value. It is reasonably possible that the underlying collateral of these investments will perform worse than current market expectations and that such an event may lead to adverse changes in the cash flows on our holdings of these types of securities. This could lead to potential future write-downs within our portfolio of mortgage-backed and asset-backed securities. Expectations that our investments in corporate securities and/or debt obligations will continue to perform in accordance with their contractual terms are based on evidence gathered through our normal credit surveillance process. Although we do not anticipate such events, it is reasonably possible that issuers of our investments in corporate securities will perform worse than current expectations. Such events may lead us to recognize potential future write-downs within our portfolio of corporate securities. It is also possible that such unanticipated

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events would lead us to dispose of those certain holdings and recognize the effects of any such market movements in our financial statements.

As of June 30, 2019, we held a total of 1,322 positions that were in an unrealized loss position. Included in that amount were 80 positions of below investment grade securities with a fair value of $814.8 million that were in an unrealized loss position. Total unrealized losses related to below investment grade securities were $126.0 million, $121.7 million of which had been in an unrealized loss position for more than twelve months. Below investment grade securities in an unrealized loss position were 1.0% of invested assets.

As of June 30, 2019, securities in an unrealized loss position that were rated as below investment grade represented 5.6% of the total fair value and 20.4% of the total unrealized loss. We have the ability and intent to hold these securities to maturity. After a review of each security and its expected cash flows, we believe the decline in fair value to be temporary.

The following table includes the fair value, amortized cost, unrealized loss, and total time period that the security has been in an unrealized loss position for all below investment grade securities as of June 30, 2019:

	Fair Value		% Fair Value		Amortized Cost		% Amortized Cost		Unrealized Loss			% Unrealized Loss
	(Dollars In Thousands)
<= 90 days	$	46,126	5.7	%	$	47,908	5.0	%	$	(1,782	)	1.4	%
>90 days but <= 180 days	—		—		—		—		—			—
>180 days but <= 270 days	25,409		3.1		26,896		2.9		(1,487		)	1.2
>270 days but <= 1 year	8,752		1.1		9,857		1.0		(1,105		)	0.9
>1 year but <= 2 years	250,351		30.7		270,578		28.8		(20,227		)	16.0
>2 years but <= 3 years	95,852		11.8		100,402		10.7		(4,550		)	3.6
>3 years but <= 4 years	34,505		4.2		48,870		5.2		(14,365		)	11.4
>4 years but <= 5 years	353,809		43.4		436,321		46.4		(82,512		)	65.5
>5 years	—		—		—		—		—			—
Total	$	814,804	100.0	%	$	940,832	100.0	%	$	(126,028	)	100.0	%

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We have no material concentrations of issuers or guarantors of fixed maturity securities. The industry segment composition of all securities in an unrealized loss position held as of June 30, 2019, is presented in the following table:

	Fair Value		% Fair Value		Amortized Cost		% Amortized Cost		Unrealized Loss			% Unrealized Loss
	(Dollars In Thousands)
Banking	$	797,849	5.5	%	$	809,808	5.3	%	$	(11,959	)	1.9	%
Other finance	105,756		0.7		110,812		0.7		(5,056		)	0.8
Electric utility	2,431,580		16.5		2,547,212		16.8		(115,632		)	18.8
Energy	1,035,328		7.1		1,132,091		7.4		(96,763		)	15.7
Natural gas	476,716		3.3		492,604		3.2		(15,888		)	2.6
Insurance	1,192,431		8.2		1,246,704		8.2		(54,273		)	8.8
Communications	751,285		5.1		796,369		5.2		(45,084		)	7.3
Basic industrial	521,029		3.6		549,950		3.6		(28,921		)	4.7
Consumer noncyclical	1,835,622		12.6		1,945,378		12.8		(109,756		)	17.8
Consumer cyclical	490,807		3.4		516,310		3.4		(25,503		)	4.1
Finance companies	39,279		0.3		40,552		0.3		(1,273		)	0.2
Capital goods	770,638		5.3		792,905		5.2		(22,267		)	3.6
Transportation	466,079		3.2		485,469		3.2		(19,390		)	3.1
Other industrial	116,503		0.8		118,263		0.8		(1,760		)	0.3
Brokerage	189,725		1.3		195,476		1.3		(5,751		)	0.9
Technology	341,866		2.3		357,876		2.4		(16,010		)	2.6
Real estate	—		—		—		—		—			—
Other utility	17,551		0.1		18,196		0.2		(645		)	0.3
Commercial mortgage-backed securities	578,576		4.0		582,470		3.8		(3,894		)	0.6
Other asset-backed securities	543,909		3.7		552,435		3.6		(8,526		)	1.4
Residential mortgage-backed non-agency securities	483,349		3.3		490,111		3.2		(6,762		)	1.1
Residential mortgage-backed agency securities	211,933		1.5		214,072		1.4		(2,139		)	0.3
U.S. government-related securities	934,670		6.4		943,674		6.2		(9,004		)	1.5
Other government-related securities	99,299		0.7		103,467		0.7		(4,168		)	0.7
States, municipals, and political divisions	158,910		1.1		164,761		1.1		(5,851		)	0.9
Total	$	14,590,690	100.0	%	$	15,206,965	100.0	%	$	(616,275	)	100.0	%

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We have no material concentrations of issuers or guarantors of fixed maturity securities. The industry segment composition of all securities in an unrealized loss position held as of December 31, 2018, is presented in the following table:

	Fair Value		% Fair Value		Amortized Cost		% Amortized Cost		Unrealized Loss			% Unrealized Loss
	(Dollars In Thousands)
Banking	$	4,446,658	10.9	%	$	4,653,309	10.8	%	$	(206,651	)	7.5	%
Other finance	106,041		0.3		111,260		0.3		(5,219		)	0.2
Electric utility	4,070,115		10.2		4,426,609		10.4		(356,494		)	13.0
Energy	3,380,552		8.5		3,679,048		8.6		(298,496		)	10.9
Natural gas	723,330		1.8		782,418		1.8		(59,088		)	2.1
Insurance	3,420,321		8.6		3,699,793		8.7		(279,472		)	10.2
Communications	1,834,029		4.6		2,030,590		4.8		(196,561		)	7.1
Basic industrial	1,393,953		3.5		1,509,059		3.5		(115,106		)	4.2
Consumer noncyclical	4,256,258		10.7		4,629,877		10.8		(373,619		)	13.6
Consumer cyclical	1,391,705		3.5		1,496,425		3.5		(104,720		)	3.8
Finance companies	143,679		0.4		154,974		0.4		(11,295		)	0.4
Capital goods	2,258,807		5.7		2,406,722		5.6		(147,915		)	5.4
Transportation	1,394,137		3.5		1,489,670		3.5		(95,533		)	3.5
Other industrial	191,055		0.5		203,221		0.5		(12,166		)	0.4
Brokerage	807,667		2.0		848,231		2.0		(40,564		)	1.5
Technology	1,359,020		3.4		1,449,903		3.4		(90,883		)	3.3
Real estate	73,098		0.2		74,323		0.2		(1,225		)	—
Other utility	18,442		—		20,047		—		(1,605		)	—
Commercial mortgage-backed securities	1,851,821		4.6		1,909,922		4.5		(58,101		)	2.1
Other asset-backed securities	836,141		2.1		871,539		2.0		(35,398		)	1.3
Residential mortgage-backed non-agency securities	1,749,478		4.4		1,798,817		4.2		(49,339		)	1.8
Residential mortgage-backed agency securities	539,896		1.4		552,753		1.3		(12,857		)	0.5
U.S. government-related securities	1,215,944		3.0		1,261,666		3.0		(45,722		)	1.7
Other government-related securities	357,770		0.9		391,620		0.9		(33,850		)	1.2
States, municipals, and political divisions	2,133,413		5.3		2,252,315		5.3		(118,902		)	4.3
Total	$	39,953,330	100.0	%	$	42,704,111	100.0	%	$	(2,750,781	)	100.0	%

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Risk Management and Impairment Review

We monitor the overall credit quality of our portfolio within established guidelines. The following table includes our available-for-sale fixed maturities by credit rating as of June 30, 2019: 

			Percent of
Rating	Fair Value		Fair Value
	(Dollars In Thousands)
AAA	$	7,978,577	12.8	%
AA	7,442,332		12.0
A	21,762,223		35.0
BBB	23,377,287		37.6
Investment grade	60,560,419		97.4
BB	1,111,079		1.8
B	262,246		0.4
CCC or lower	274,664		0.4
Below investment grade	1,647,989		2.6
Total	$	62,208,408	100.0	%

Not included in the table above are $2.4 billion of investment grade and $119.9 million of below investment grade fixed maturities classified as trading securities and $2.6 billion of fixed maturities classified as held-to-maturity.

Limiting bond exposure to any creditor group is another way we manage credit risk. We held no credit default swaps on the positions listed below as of June 30, 2019. The following table summarizes our ten largest fixed maturity exposures to an individual creditor group as of June 30, 2019: 

	Fair Value of
	Funded		Unfunded		Total
Creditor	Securities		Exposures		Fair Value
	(Dollars In Millions)
Berkshire Hathaway Inc	$	332.5	$	—	$	332.5
Duke Energy Corp	273.1		—		273.1
Federal Home Loan Bank	268.9		—		268.9
UnitedHealth Group Inc	268.3		—		268.3
Comcast Corp	263.0		—		263.0
Dominion Resources Inc/VA	255.2		—		255.2
Verizon Communications Inc	251.9		—		251.9
Wells Fargo & Co	251.1		—		251.1
Exelon Corp	246.3		—		246.3
HSBC Holdings PLC	245.7		0.2		245.9
Total	$	2,656.0	$	0.2	$	2,656.2

Determining whether a decline in the current fair value of invested assets is an other-than-temporary decline in value is both objective and subjective, and can involve a variety of assumptions and estimates, particularly for investments that are not actively traded in established markets. We review our positions on a monthly basis for possible credit concerns and review our current exposure, credit enhancement, and delinquency experience.

Management considers a number of factors when determining the impairment status of individual securities. These include the economic condition of various industry segments and geographic locations and other areas of identified risks. Since it is possible for the impairment of one investment to affect other investments, we engage in ongoing risk management to safeguard against and limit any further risk to our investment portfolio. Special attention is given to correlative risks within specific industries, related parties, and business markets.

For certain securitized financial assets with contractual cash flows, including RMBS, CMBS, and other asset-backed securities (collectively referred to as asset-backed securities or “ABS”), GAAP requires us to periodically update our best estimate of cash flows over the life of the security. If the fair value of a securitized financial asset is less than its cost or amortized cost and there has been a decrease in the present value of the expected cash flows since the last revised estimate, considering both timing and amount, an other-than-temporary impairment charge is recognized. Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third party sources along with certain internal assumptions and judgments regarding the future performance of the underlying collateral. Projections of expected future cash flows may change based upon

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new information regarding the performance of the underlying collateral. In addition, we consider our intent and ability to retain a temporarily depressed security until recovery.

Securities in an unrealized loss position are reviewed at least quarterly to determine if an other-than-temporary impairment is present based on certain quantitative and qualitative factors. We consider a number of factors in determining whether the impairment is other-than-temporary. These include, but are not limited to: 1) actions taken by rating agencies, 2) default by the issuer, 3) the significance of the decline, 4) an assessment of our intent to sell the security (including a more likely than not assessment of whether we will be required to sell the security) before recovering the security’s amortized cost, 5) the time period during which the decline has occurred, 6) an economic analysis of the issuer’s industry, and 7) the financial strength, liquidity, and recoverability of the issuer. Management performs a security-by-security review each quarter in evaluating the need for any other-than-temporary impairments. Although no set formula is used in this process, the investment performance, collateral position, and continued viability of the issuer are significant measures considered, along with an analysis regarding our expectations for recovery of the security’s entire amortized cost basis through the receipt of future cash flows. Based on our analysis, for the six months ended June 30, 2019, we recognized approximately $3.8 million of credit related impairments on investment securities in an unrealized loss position that were other-than-temporarily impaired resulting in a charge to earnings.

There are certain risks and uncertainties associated with determining whether declines in fair values are other-than-temporary. These include significant changes in general economic conditions and business markets, trends in certain industry segments, interest rate fluctuations, rating agency actions, changes in significant accounting estimates and assumptions, commission of fraud, and legislative actions. We continuously monitor these factors as they relate to the investment portfolio in determining the status of each investment.

We have deposits with certain financial institutions which exceed federally insured limits. We have reviewed the creditworthiness of these financial institutions and believe that there is minimal risk of a material loss.

Certain European countries have experienced varying degrees of financial stress, which could have a detrimental impact on regional or global economic conditions and on sovereign and non-sovereign obligations. The chart shown below includes our non-sovereign fair value exposures in these countries as of June 30, 2019. As of June 30, 2019, we had no material unfunded exposure and had no material direct sovereign exposure. 

					Total Gross
	Non-sovereign Debt				Funded
Financial Instrument and Country	Financial		Non-financial		Exposure
	(Dollars In Millions)
Securities:
United Kingdom	$	1,027.3	$	1,317.7	$	2,345.0
France	380.5		524.5		905.0
Germany	129.7		607.3		737.0
Netherlands	383.1		345.5		728.6
Switzerland	362.3		240.1		602.4
Spain	100.7		387.8		488.5
Belgium	—		193.9		193.9
Ireland	58.9		122.5		181.4
Norway	4.1		159.2		163.3
Finland	150.3		—		150.3
Italy	11.1		133.3		144.4
Sweden	37.7		56.7		94.4
Luxembourg	—		69.3		69.3
Denmark	40.3		—		40.3
Portugal	—		23.3		23.3
Total securities	2,686.0		4,181.1		6,867.1
Derivatives:
Germany	39.7		—		39.7
United Kingdom	16.9		—		16.9
Switzerland	14.7		—		14.7
France	1.1		—		1.1
Total derivatives	72.4		—		72.4
Total securities	$	2,758.4	$	4,181.1	$	6,939.5

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Realized Gains and Losses

The following table sets forth realized investment gains and losses for the periods shown: 

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Fixed maturity gains - sales	$	6,812		$	10,137		$	14,682		$	18,187
Fixed maturity losses - sales	(5,714		)	(4,598		)	(8,467		)	(9,865		)
Equity gains and losses	7,696			(1,044		)	38,413			(9,830		)
Impairments on fixed maturity securities	(698		)	(5		)	(3,840		)	(3,650		)
Modco trading portfolio	89,571			(52,817		)	184,473			(137,525		)
Other	1,137			(1,280		)	(9		)	1,832
Total realized gains (losses) - investments	98,804			(49,607		)	$	225,252		$	(140,851	)
Derivatives related to VA contracts:
Interest rate futures	(11,280		)	1,552			$	(17,302	)	$	(15,340	)
Equity futures	2,559			(10,864		)	32,297			(17,292		)
Currency futures	(397		)	12,063			1,847			4,480
Equity options	(21,702		)	(38,216		)	(93,397		)	(26,200		)
Interest rate swaptions	—			—			—			(14		)
Interest rate swaps	117,934			(26,149		)	192,795			(89,859		)
Total return swaps	(8,545		)	(10,055		)	(48,572		)	(3,565		)
Embedded derivative - GLWB	(134,692		)	35,554			(154,318		)	91,846
Total derivatives related to VA contracts	(56,123		)	(36,115		)	(86,650		)	(55,944		)
Derivatives related to FIA contracts:
Embedded derivative	(24,819		)	(4,927		)	(63,633		)	6,403
Equity futures	431			(167		)	2			(328		)
Equity options	13,191			7,398			55,241			2,729
Total derivatives related to FIA contracts	(11,197		)	2,304			(8,390		)	8,804
Derivatives related to IUL contracts:
Embedded derivative	(11,286		)	(1,226		)	(24,656		)	8,658
Equity futures	85			—			256			136
Equity options	2,606			2,086			8,786			836
Total derivatives related to IUL contracts	(8,595		)	860			(15,614		)	9,630
Embedded derivative - Modco reinsurance treaties	(70,679		)	45,183			(155,677		)	127,841
Other derivatives	(1,455		)	33			(1,389		)	(7		)
Total realized gains (losses) - derivatives	(148,049		)	12,265			(267,720		)	90,324
Total realized investment gains (losses)	$	(49,245	)	$	(37,342	)	$	(42,468	)	$	(50,527	)

Realized gains and losses on investments reflect portfolio management activities designed to maintain proper matching of assets and liabilities and to enhance long-term investment portfolio performance. The change in net realized investment gains (losses), excluding impairments and Modco trading portfolio activity during the three and six months ended June 30, 2019, primarily reflects the normal operation of our asset/liability program within the context of the changing interest rate and spread environment.

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Realized losses are comprised of other-than-temporary impairments and actual sales of investments. These other-than-temporary impairments resulted from our analysis of circumstances and our belief that credit events, loss severity, changes in credit enhancement, and/or other adverse conditions of the respective issuers have caused, or will lead to, a deficiency in the contractual cash flows related to these investments. These other-than-temporary impairments are presented in the chart below: 

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Other MBS	$	(38	)	$	(5	)	(81		)	(36		)
Corporate securities	(660		)	—			(3,759		)	(3,614		)
Equities	—			—			—			—
Other	—			—			—			—
Total	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)

As previously discussed, management considers several factors when determining other-than-temporary impairments. Although we purchase securities with the intent to hold them until maturity, we may change our position as a result of a change in circumstances. Any such decision is consistent with our classification of all but a specific portion of our investment portfolio as available-for-sale. For the six months ended June 30, 2019, we sold securities in an unrealized loss position with a fair value of $338.1 million. For such securities, the proceeds, realized loss, and total time period that the security had been in an unrealized loss position are presented in the table below:

	Proceeds		% Proceeds		Realized Loss			% Realized Loss
	(Dollars In Thousands)
<= 90 days	$	224,030	66.3	%	$	(2,904	)	34.3	%
>90 days but <= 180 days	—		—		—			—
>180 days but <= 270 days	13,797		4.1		(1,348		)	15.9
>270 days but <= 1 year	5,862		1.7		(743		)	8.8
>1 year	94,440		27.9		(3,472		)	41.0
Total	$	338,129	100.0	%	$	(8,467	)	100.0	%

     For the three and six months ended June 30, 2019, we sold securities in an unrealized loss position with a fair value (proceeds) of $160.1 million and $338.1 million. The losses realized on the sale of these securities were $5.7 million and $8.5 million. We made the decision to exit these holdings in conjunction with our overall asset liability management process.

For the three and six months ended June 30, 2019, we sold securities in an unrealized gain position with a fair value of $491.1 million and $1.1 billion. The gains realized on the sale of these securities were $6.8 million and $14.7 million.

For the three and six months ended June 30, 2019, net gains of $89.6 million and $184.5 million related to changes in fair value on our Modco trading portfolios were included in realized gains and losses. Of the $184.5 million for the six months endedJune 30, 2019, approximately $4.1 million of gains were realized through the sale of certain securities, which will be reimbursed to our reinsurance partners over time through the reinsurance settlement process for this block of business. The Modco embedded derivative, included those associated with the trading portfolios had realized pre-tax losses of $70.7 million and $155.7 million during the three and six months ended June 30, 2019. The losses on the embedded derivative were due to treasury yields decreasing and credit spreads tightening.

Realized investment gains and losses related to equity securities is primarily driven by changes in fair value due to market fluctuations as changes in fair value of equity securities are recorded in net income.

Realized investment gains and losses related to derivatives represent changes in their fair value during the period and termination gains/(losses) on those derivatives that were closed during the period.

We use various derivative instruments to manage risks related to certain life insurance and annuity products. We can use these derivatives as economic hedges against risks inherent in the products. These risks have a direct impact on the cost of these products and are correlated with the equity markets, interest rates, foreign currency levels, and overall volatility. The hedged risks are recorded through the recognition of embedded derivatives associated with the products. These products include the GLWB rider associated with the variable annuity, fixed indexed annuity products as well as indexed universal life products. During the three and six months ended June 30, 2019, we experienced net realized losses on derivatives related to VA contracts of approximately $56.1 million and $86.7 million. These net losses on derivatives related to VA contracts were affected by capital market impacts, changes in the Company’s non-performance risk, and variations in actual sub-account fund performance from the indices included in our hedging program during the three and six months ended June 30, 2019.

We also use various swaps and other types of derivatives to mitigate risk related to other exposures. These contracts generated losses of $1.5 million and $1.4 millionfor the three and six months endedJune 30, 2019.

99

LIQUIDITY AND CAPITAL RESOURCES

The Holding Company

Overview

Our primary sources of funding are dividends from our operating subsidiaries; revenues from investment management, data processing, legal, and management services rendered to subsidiaries; investment income; and external financing. These sources of cash support our general corporate needs including our common stock dividends and debt service.We did not pay a dividend for the six months ended June 30, 2019.

The states in which our insurance subsidiaries are domiciled impose certain restrictions on the insurance subsidiaries’ ability to pay us dividends. These restrictions are based in part on the prior year’s statutory income and/or surplus. Generally, these restrictions pose no short-term liquidity concerns. We plan to retain portions of the earnings of our insurance subsidiaries in those companies primarily to support their future growth.

Debt and other capital resources

Our primary sources of capital are through retained income from our operating subsidiaries, capital infusions from our parent, Dai-ichi Life, as well as our ability to access debt financing markets. Additionally, we have access to the Credit Facility discussed below.

On May 3, 2018, we amended the Credit Facility (as amended the “Credit Facility”). We have the ability to borrow under the Credit Facility on an unsecured basis up to an aggregate principal amount of $1.0 billion. We have 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. We are not aware of any non-compliance with the financial debt covenants of the Credit Facility as of June 30, 2019. There was no outstanding balance as of June 30, 2019.

Liquidity

Liquidity refers to a company’s ability to generate adequate amounts of cash to meet its needs. We meet our liquidity requirements primarily through positive cash flows from our operating subsidiaries. Primary sources of cash from the operating subsidiaries are premiums, deposits for policyholder accounts, investment sales and maturities, and investment income. Primary uses of cash include benefit payments, withdrawals from policyholder accounts, investment purchases, policy acquisition costs, interest payments, and other operating expenses. We believe that we have sufficient liquidity to fund our cash needs under normal operating scenarios.

In the event of significant unanticipated cash requirements beyond our normal liquidity needs, we have additional sources of liquidity available depending on market conditions and the amount and timing of the liquidity need. These additional sources of liquidity include cash flows from operations, the sale of liquid assets, accessing our credit facility, and other sources described herein. Our decision to sell investment assets could be impacted by accounting rules, including rules relating to the likelihood of a requirement to sell securities before recovery of our cost basis. Under stressful market and economic conditions, liquidity may broadly deteriorate, which could negatively impact our ability to sell investment assets. If we require on short notice significant amounts of cash in excess of normal requirements, we may have difficulty selling investment assets in a timely manner, be forced to sell them for less than we otherwise would have been able to realize, or both.

The liquidity requirements of our regulated insurance subsidiaries primarily relate to the liabilities associated with their various insurance and investment products, operating expenses, and income taxes. Liabilities arising from insurance and investment products include the payment of policyholder benefits, as well as cash payments in connection with policy surrenders and withdrawals, policy loans, and obligations to redeem funding agreements.

Our insurance subsidiaries maintain investment strategies intended to provide adequate funds to pay benefits and expected surrenders, withdrawals, loans, and redemption obligations without forced sales of investments. In addition, our insurance subsidiaries hold highly liquid, high-quality short-term investment securities and other liquid investment grade fixed maturity securities to fund our expected operating expenses, surrenders, and withdrawals. As of June 30, 2019, our total cash and invested assets were $81.1 billion. The life insurance subsidiaries were committed as of June 30, 2019, to fund mortgage loans in the amount of $1.0 billion.

Our cash flows are used to fund an investment portfolio that provides for future benefit payments. We employ a formal asset/liability program to manage the cash flows of our investment portfolio relative to our long-term benefit obligations. The holding company held $146.1 million of cash and short-term investments, and our subsidiaries held approximately $1.2 billion in cash and short-term investments as of June 30, 2019.

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The following chart includes the cash flows provided by or used in operating, investing, and financing activities for the following periods:

	For The Six Months Ended June 30,
	2019			2018
	(Dollars In Thousands)
Net cash used in operating activities	$	(33,430	)	$	(56,049	)
Net cash used in investing activities	(1,473,651		)	(540,174		)
Net cash provided by financing activities	1,576,658			534,645
Total	$	69,577		$	(61,578	)

For The Six Months Ended June 30, 2019 as compared to the Six Months Ended June 30, 2018

Net cash used in operating activities-Cash flows from operating activities are affected by the timing of premiums received, investment income, and benefits and expenses paid. Principal sources of cash inflows from operating activities include sales of our products and services as well as income from investments. Due to the nature of our business and the fact that many of the products we sell produce financing and investing cash flows it is important to consider cash flows generated by investing and financing activities in conjunction with those generated by operating activities.

Net cash used in investing activities- Changes in cash from investing activities primarily related to our investment portfolio.We had payments for business acquisition of $731.5 million, net of cash acquired, for the GWL&A acquisition for the six months ended June 30, 2019, as compared to cash received of $20.7 million for the Liberty transaction for the six months ended June 30, 2018.

Net cash provided by financing activities - Changes in cash from financing activities included $368.4 million of outflows from secured financing liabilities for the six months ended June 30, 2019, as compared to the $913.2 million of outflows for the six months ended June 30, 2018 and $1.2 billion inflows of investment product and universal life net activity as compared to $1.4 billion in the prior year. Net activity related to the line of credit arrangement, debt, and subordinated debt resulted in inflows of $590.7 million for the six months ended June 30, 2019, as compared to $306.3 million of inflows for six months ended June 30, 2018. Net repayment of non-recourse funding obligations was $55.0 million during the six months ended June 30, 2019, as compared to $77.0 million during the six months ended June 30, 2018. The Company did not pay a dividend during the six months ended June 30, 2019, as compared to a dividend of $140.0 million during the six months ended June 30, 2018. The Company received a capital contribution from its parent of $250.0 million during the six months ended June 30, 2019.

Through our subsidiaries, we are members of the FHLB of Cincinnati and the FHLB of New York. FHLB advances provide an attractive funding source for short-term borrowing and for the sale of funding agreements. Membership in the FHLB requires that we purchase FHLB capital stock based on a minimum requirement and a percentage of the dollar amount of advances outstanding. Our borrowing capacity is determined by criteria established by each respective bank. In addition, our obligations under the advances must be collateralized. We maintain control over any such pledged assets, including the right of substitution. As of June 30, 2019, we had $1.2 billion of funding agreement-related advances and accrued interest outstanding under the FHLB program.

While we anticipate that the cash flows of our operating subsidiaries will be sufficient to meet our investment commitments and operating cash needs in a normal credit market environment, we recognize that investment commitments scheduled to be funded may, from time to time, exceed the funds then available. Therefore, we have established repurchase agreement programs for certain of our insurance subsidiaries to provide liquidity when needed. We expect that the rate received on its investments will equal or exceed its borrowing rate. Under this program, we 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 fair 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 provide for net settlement in the event of default or on termination of the agreements. As of June 30, 2019, the fair value of securities pledged under the repurchase program was $62.6 million and the repurchase obligation of $60.0 million was included in our consolidated condensed balance sheets (at an average borrowing rate of 246 basis points). During the six months ended June 30, 2019, the maximum balance outstanding at any one point in time related to these programs was $540.0 million. The average daily balance was $104.8 million (at an average borrowing rate of 247 basis points) during the six months ended June 30, 2019. As of December 31, 2018, the fair value of securities pledged under the repurchase program was $451.9 million and the repurchase obligation of $418.1 million was included in our consolidated condensed balance sheets (at an average borrowing rate of 245 basis points). During the year ended December 31, 2018, the maximum balance outstanding at any one point in time related to these programs was $885.0 million. The average daily balance was $511.4 million (at an average borrowing rate of 184 basis points) during the year ended December 31, 2018.

We participate 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. We require initial collateral of 102% of the market value of the loaned securities to be separately maintained. The loaned securities’ fair value is monitored on a daily basis. As of June 30, 2019, securities with a market value of $75.1 million were loaned under this program. As collateral for the loaned securities, we receive short-term investments, which are recorded in short-term investments with a corresponding liability recorded in other

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liabilities to account for its obligation to return the collateral. As of June 30, 2019, the fair value of the collateral related to this program was $66.9 million and we have an obligation to return $66.9 million of collateral to the securities borrowers.    

Statutory Capital

A life insurance company’s statutory capital is computed according to rules prescribed by the NAIC, as modified by state law. Generally speaking, other states in which a company does business defer to the interpretation of the domiciliary state with respect to NAIC rules, unless inconsistent with the other state’s regulations. Statutory accounting rules are different from GAAP and are intended to reflect a more conservative view, for example, requiring immediate expensing of policy acquisition costs. The NAIC’s risk-based capital requirements require insurance companies to calculate and report information under a risk-based capital formula. The achievement of long-term growth will require growth in the statutory capital of our insurance subsidiaries. The subsidiaries may secure additional statutory capital through various sources, such as retained statutory earnings or our equity contributions. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval of the insurance commissioner of the state of domicile. Dividends in larger amounts are considered extraordinary and are subject to affirmative prior approval by such commissioner. The maximum amount that would qualify as an ordinary dividend to us from our insurance subsidiaries in 2019 is approximately $434.0 million.

State insurance regulators and the NAIC have adopted risk-based capital (“RBC”) requirements for life insurance companies to evaluate the adequacy of statutory capital and surplus in relation to investment and insurance risks. The requirements provide a means of measuring the minimum amount of statutory surplus appropriate for an insurance company to support its overall business operations based on its size and risk profile. A company’s risk-based statutory surplus is calculated by applying factors and performing calculations relating to various asset, premium, claim, expense, and reserve items. Regulators can then measure the adequacy of a company’s statutory surplus by comparing it to RBC. We manage our capital consumption by using the ratio of our total adjusted capital, as defined by the insurance regulators, to our company action level RBC (known as the RBC ratio), also as defined by insurance regulators.

Statutory reserves established for VA contracts are sensitive to changes in the equity markets and are affected by the level of account values relative to the level of any guarantees and product design. As a result, the relationship between reserve changes and equity market performance may be non-linear during any given reporting period. Market conditions greatly influence the capital required due to their impact on the valuation of reserves and derivative investments mitigating the risk in these reserves. Risk mitigation activities may result in material and sometimes counterintuitive impacts on statutory surplus and RBC ratio. Notably, as changes in these market and non-market factors occur, both our potential obligation and the related statutory reserves and/or required capital can vary at a non-linear rate.

Our statutory surplus is impacted by credit spreads as a result of accounting for the assets and liabilities on our fixed market value adjusted (“MVA”) annuities. Statutory separate account assets supporting the fixed MVA annuities are recorded at fair value. In determining the statutory reserve for the fixed MVA annuities, we are required to use current crediting rates based on U.S. Treasuries. In many capital market scenarios, current crediting rates based on U.S. Treasuries are highly correlated with market rates implicit in the fair value of statutory separate account assets. As a result, the change in the statutory reserve from period to period will likely substantially offset the change in the fair value of the statutory separate account assets. However, in periods of volatile credit markets, actual credit spreads on investment assets may increase or decrease sharply for certain sub-sectors of the overall credit market, resulting in statutory separate account asset market value gains or losses. As actual credit spreads are not fully reflected in current crediting rates based on U.S. Treasuries, the calculation of statutory reserves will not substantially offset the change in fair value of the statutory separate account assets resulting in a change in statutory surplus.

We cede material amounts of insurance and transfer related assets to other insurance companies through reinsurance. However, notwithstanding the transfer of related assets, we remain liable with respect to ceded insurance should any reinsurer fail to meet the obligations that it assumed. We evaluate the financial condition of our reinsurers and monitor the associated concentration of credit risk. For the three and six months ended June 30, 2019, we ceded premiums to third party reinsurers amounting to $340.0 million and $658.4 million. In addition, we had receivables from reinsurers amounting to $4.6 billion as of June 30, 2019. We review reinsurance receivable amounts for collectability and establish bad debt reserves if deemed appropriate.

Scottish Re (U.S.), Inc. ("SRUS") was placed in rehabilitation on March 6, 2019 by the State of Delaware. Under the related order, the Insurance Commissioner of the State of Delaware has been appointed the receiver of SRUS and provided with authority to conduct and continue the business of SRUS in the interest of its cedents, creditors, and stockholder. The order was accompanied by an injunction requiring the continued payment of reinsurance premiums to SRUS and temporarily prohibiting cedents, including the Company, from offsetting premiums payable against receivables from SRUS. On June 20, 2019, the Delaware Court of Chancery entered an order approving a Revised Offset Plan, which allows cedents, including the Company, to offset premiums under certain circumstances.

As of June 30, 2019, we had outstanding claims receivable from SRUS of $20.5 million, and other exposures associated with GAAP reinsurance receivables of approximately $102.3 million, and statutory reserve credit of approximately $118.2 million. We continue to monitor SRUS and the actions of the receiver through discussions with legal counsel and review of publicly available information. We have considered the possible impact of an adverse outcome of the rehabilitation process and believe an adverse outcome would not have a material adverse impact on our operations, liquidity or financial condition.

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Captive Reinsurance Companies

Our life insurance subsidiaries are subject to a regulation entitled “Valuation of Life Insurance Policies Model Regulation,” commonly known as “Regulation XXX,” and a supporting guideline entitled “The Application of the Valuation of Life Insurance Policies Model Regulation,” commonly known as “Guideline AXXX”. The regulation and supporting guideline require insurers to establish statutory reserves for term and universal life insurance policies with long-term premium guarantees that are consistent with the statutory reserves required for other individual life insurance policies with similar guarantees. Many market participants believe that these levels of reserves are non-economic. We use captive reinsurance companies to implement reinsurance and capital management actions to satisfy these reserve requirements by financing the non-economic reserves either through the issuance of non-recourse funding obligations by the captives or obtaining letters of credit from third-party financial institutions.

Our captive reinsurance companies assume business from affiliates only. Our captives are capitalized to a level we believe is sufficient to support the contractual risks and other general obligations of the respective captive entity. All of our captive reinsurance companies are wholly owned subsidiaries and are located domestically. The captive insurance companies are subject to regulations in the state of domicile.

The National Association of Insurance Commissioners (“NAIC”), through various committees, subgroups and dedicated task forces, is reviewing the use of captives and special purpose vehicles used to transfer insurance risk in relation to existing state laws and regulations, and several committees have adopted or exposed for comment white papers and reports that, if or when implemented, could impose additional requirements on the use of captives and other reinsurers. The Financial Condition (E) Committee of the NAIC established a Variable Annuity Issues Working Group to examine company use of variable annuity captives. The Committee has proposed changes in the regulation of variable annuities and variable annuity captives, which could adversely affect our future financial condition and results of operations if adopted.

The NAIC has adopted Actuarial Guideline XLVIII (“AG48”) and the substantially similar “Term and Universal Life Insurance Reserve Financing Model Regulation” (the “Reserve Model”) which establish national standards for new reserve financing arrangements for term life insurance and universal life insurance with secondary guarantees. AG48 and the Reserve Model govern collateral requirements for captive reinsurance arrangements. In order to obtain reserve credit, AG48 and the Reserve Model require a minimum level of funds, consisting of primary and other securities, to be held by or on behalf of ceding insurers as security under each captive life reinsurance treaty. As a result of AG48 and the Reserve Model, the implementation of new captive structures in the future may be less capital efficient, lead to lower product returns and/or increased product pricing or result in reduced sales of certain products. In some circumstances, AG48 and the Reserve Model could impact the Company’s ability to engage in certain reinsurance transactions with non-affiliates.

We also use a captive reinsurance company to reinsure risks associated with GLWB and guaranteed minimum death benefits (“GMDB”) riders which helps us to manage those risks on an economic basis. In an effort to mitigate the equity market risks relative to our RBC ratio, in the fourth quarter of 2012, we established an insurance subsidiary, Shades Creek Captive Insurance Company (“Shades Creek”), to which PLICO has reinsured GLWB and GMDB riders related to its VA contracts. The purpose of Shades Creek is to reduce the volatility in RBC due to non-economic variables included within the RBC calculation.

We maintain an intercompany capital support agreement with Shades Creek that provides through a guarantee that we will contribute assets or purchase surplus notes (or cause an affiliate or third party to contribute assets or purchase surplus notes) in amounts necessary for Shades Creek’s regulatory capital levels to equal or exceed minimum thresholds as defined by the agreement. As of June 30, 2019, Shades Creek maintained capital levels in excess of the required minimum thresholds. The maximum potential future payment amount which could be required under the capital support agreement will be dependent on numerous factors, including the performance of equity markets, the level of interest rates, performance of associated hedges, and related policyholder behavior.

Ratings

Various Nationally Recognized Statistical Rating Organizations (“rating organizations”) review the financial performance and condition of insurers, including our insurance subsidiaries, and publish their financial strength ratings as indicators of an insurer’s ability to meet policyholder and contract holder obligations. These ratings are important to maintaining public confidence in an insurer’s products, its ability to market its products and its competitive position. The following table summarizes the current financial strength ratings of our significant member companies from the major independent rating organizations:

			Standard &
Ratings	A.M. Best	Fitch	Poor’s	Moody’s
Insurance company financial strength rating:
Protective Life Insurance Company	A+	A+	AA-	A1
West Coast Life Insurance Company	A+	A+	AA-	A1
Protective Life and Annuity Insurance Company	A+	A+	AA-	—
Protective Property & Casualty Insurance Company	A	—	—	—
MONY Life Insurance Company	A+	A+	A+	A1

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Our ratings are subject to review and change by the rating organizations at any time and without notice. A downgrade or other negative action by a rating organization with respect to the financial strength ratings of our insurance subsidiaries could adversely affect sales, relationships with distributors, the level of policy surrenders and withdrawals, competitive position in the marketplace, and the cost or availability of reinsurance. The rating agencies may take various actions, positive or negative, with respect to the financial strength ratings of our insurance subsidiaries, including as a result of our status as a subsidiary of Dai-ichi Life.

Rating organizations also publish credit ratings for the issuers of debt securities, including the Company. Credit ratings are indicators of a debt issuer’s ability to meet the terms of debt obligations in a timely manner. These ratings are important in the debt issuer’s overall ability to access credit markets and other types of liquidity. Ratings are not recommendations to buy our securities or products. A downgrade or other negative action by a rating organization with respect to our credit rating could limit our access to capital markets, increase the cost of issuing debt, and a downgrade of sufficient magnitude, combined with other negative factors, could require us to post collateral. The rating organizations may take various actions, positive or negative, with respect to our debt ratings, including as a result of our status as a subsidiary of Dai-ichi Life.

LIABILITIES

Many of our products contain surrender charges and other features that are designed to reward persistency and penalize the early withdrawal of funds. Certain stable value and annuity contracts have market-value adjustments that protect us against investment losses if interest rates are higher at the time of surrender than at the time of issue.

As of June 30, 2019, we had policy liabilities and accruals of approximately $54.4 billion. Our interest-sensitive life insurance policies have a weighted average minimum credited interest rate of approximately 3.46%.

Contractual Obligations

We enter into various obligations to third parties in the ordinary course of our operations. However, we do not believe that our cash flow requirements can be assessed solely based upon an analysis of these obligations. The most significant factors affecting our future cash flows are our ability to earn and collect cash from our customers, and the cash flows arising from our investment program. Future cash outflows, whether they are contractual obligations or not, will also vary based upon our future needs. Although some outflows are fixed, others depend on future events. Examples of fixed obligations include our obligations to pay principal and interest on fixed-rate borrowings. Examples of obligations that will vary include obligations to pay interest on variable-rate borrowings and insurance liabilities that depend on future interest rates, market performance, or surrender provisions. Many of our obligations are linked to cash-generating contracts. In addition, our operations involve significant expenditures that are not based upon contractual obligations. These include expenditures for income taxes and payroll.

As of June 30, 2019, we carried a $1.8 million liability for uncertain tax positions, including interest on unrecognized tax benefits. These amounts are not included in the long-term contractual obligations table because of the difficulty in making reasonably reliable estimates of the occurrence or timing of cash settlements with the respective taxing authorities.

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The table below sets forth future maturities of our contractual obligations: 

			Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(Dollars In Thousands)
Debt(1)	$	2,158,415	$	461,439	$	105,670	$	703,972	$	887,334
Non-recourse funding obligations(2)	3,962,283		341,075		660,169		503,913		2,457,126
Subordinated debt(3)	1,569,266		30,655		61,310		61,310		1,415,991
Stable value products(4)	6,193,283		1,010,806		3,421,023		1,627,124		134,330
Leases(5)	27,611		6,446		9,718		6,923		4,524
Mortgage loan and investment commitments	1,108,098		892,644		215,454		—		—
Secured financing liabilities(6)	126,862		126,862		—		—		—
Policyholder obligations(7)	68,537,280		3,274,371		8,185,061		6,842,235		50,235,613
Total(8)	$	83,683,098	$	6,144,298	$	12,658,405	$	9,745,477	$	55,134,918
(1) Debt includes all principal amounts owed on note agreements and expected interest payments due over the term of the notes.
(2) Non-recourse funding obligations include all undiscounted principal amounts owed and expected future interest payments due over the term of the notes. Of the total undiscounted cash flows, $1.7 billion relates to the Golden Gate V transaction. These cash outflows are matched and predominantly offset by the cash inflows Golden Gate V receives from notes issued by a nonconsolidated variable interest entity. Additionally, $2.2 billion relates to the Golden Gate transaction. These cash outflows are matched and predominantly offset by the cash inflows Golden Gate receives from notes issued by a nonconsolidated variable interest entity. The remaining amounts are associated with the Golden Gate II notes held by third parties as well as certain obligations assumed with the acquisition of MONY Life Insurance Company.
(3) Subordinated debt includes all principal amounts and interest payments due over the term of the obligations.
(4) Anticipated stable value products includes cash flows including interest.
(5) Includes all lease payments required under operating and finance lease agreements.
(6) Represents secured borrowings and accrued interest as part of our repurchase program as well as liabilities associated with securities lending transactions.
(7) Estimated contractual policyholder obligations are based on mortality, morbidity, and lapse assumptions comparable to our historical experience, modified for recent observed trends. These obligations are based on current balance sheet values and include expected interest crediting, but do not incorporate an expectation of future market growth, or future deposits. Due to the significance of the assumptions used, the amounts presented could materially differ from actual results. As variable separate account obligations are legally insulated from general account obligations, the variable separate account obligations will be fully funded by cash flows from variable separate account assets. We expect to fully fund the general account obligations from cash flows from general account investments.
(8) Excluded from this table are certain pension obligations.

OFF-BALANCE SHEET ARRANGEMENTS

We have entered into indemnity agreements with each of our directors as well as operating leases that do not result in an obligation being recorded on the balance sheet. Refer to Note 11, Commitments and Contingencies, of the consolidated condensed financial statements for more information on our indemnity agreements.

MARKET RISK EXPOSURES

Our financial position and earnings are subject to various market risks including changes in interest rates, the yield curve, spreads between risk-adjusted and risk-free interest rates, foreign currency rates, used vehicle prices, equity price risks and issuer defaults. We analyze and manage the risks arising from market exposures of financial instruments, as well as other risks, through an integrated asset/liability management process. The primary focus of our asset/liability program is the management of interest rate risk within the insurance operations. Our asset/liability management programs and procedures involve the monitoring of asset and liability durations for various product lines; cash flow testing under various interest rate scenarios; and the continuous rebalancing of assets and liabilities with respect to yield, credit and market risk, and cash flow characteristics to maintain an appropriate balance between risk and profitability for each product category, and for us as a whole.

It is our policy to maintain asset and liability durations within one year of one another, although, from time to time, a broader interval may be allowed.

We are exposed to credit risk within our investment portfolio and through derivative counterparties. Credit risk relates to the uncertainty of an obligor’s continued ability to make timely payments in accordance with the contractual terms of the instrument or contract. We manage credit risk through established investment policies which attempt to address quality of obligors and counterparties, credit concentration limits, diversification requirements, and acceptable risk levels under expected and stressed scenarios. Derivative counterparty credit risk is measured as the amount owed to us, net of collateral held, based upon current market conditions. In addition, we periodically assess exposure related to potential payment obligations between us and our counterparties. We minimize the credit risk in derivative financial instruments by entering into transactions with high quality

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counterparties (A-rated or higher at the time we enter into the contract), and we maintain credit support annexes with certain of those counterparties.

We utilize a risk management strategy that incorporates the use of derivative financial instruments to reduce exposure to certain risks, including but not limited to, interest rate risk, currency exchange risk, volatility risk, and equity market risk. These strategies are developed through our analysis of data from financial simulation models and other internal and industry sources, and are then incorporated into our risk management program. See Note 7, Derivative Financial Instruments, to the consolidated financial statements included in this report for additional information on our financial instruments.

Derivative instruments expose us to credit and market risk and could result in material changes from period to period. We attempt to minimize our credit risk by entering into transactions with highly rated counterparties. We manage the market risk by establishing and monitoring limits as to the types and degrees of risk that may be undertaken. We monitor our use of derivatives in connection with our overall asset/liability management programs and risk management strategies. In addition, all derivative programs are monitored by our risk management department.

Derivative instruments that are used as part of our interest rate risk management strategy include interest rate swaps, interest rate futures, interest rate caps, and interest rate swaptions.

Derivative instruments that are used as part of the Company’s foreign currency exchange risk management strategy include foreign currency swaps, foreign currency futures, foreign equity futures, and foreign equity options.

We may use the following types of derivative contracts to mitigate our exposure to certain guaranteed benefits related to VA contracts, fixed indexed annuities, and indexed universal life:

•Foreign Currency Futures

•Variance Swaps

•Interest Rate Futures

•Equity Options

•Equity Futures

•Credit Derivatives

•Interest Rate Swaps

•Interest Rate Swaptions

•Volatility Futures

•Volatility Options

•Total Return Swaps

We believe that our asset/liability management programs and procedures and certain product features provide protection against the effects of changes in interest rates under various scenarios. Additionally, we believe our asset/liability management programs and procedures provide sufficient liquidity to enable us to fulfill our obligation to pay benefits under our various insurance and deposit contracts. However, our asset/liability management programs and procedures incorporate assumptions about the relationship between short-term and long-term interest rates (i.e., the slope of the yield curve), relationships between risk-adjusted and risk-free interest rates, market liquidity, spread movements, implied volatility, policyholder behavior, and other factors, and the effectiveness of our asset/liability management programs and procedures may be negatively affected whenever actual results differ from those assumptions.

     In the ordinary course of our commercial mortgage lending operations, we may commit to provide a mortgage loan before the property to be mortgaged has been built or acquired. The mortgage loan commitment is a contractual obligation to fund a mortgage loan when called upon by the borrower. The commitment is not recognized in our financial statements until the commitment is actually funded. The mortgage loan commitment contains terms, including the rate of interest, which may be different than prevailing interest rates. As of June 30, 2019, we had outstanding mortgage loan commitments of $1.0 billion at an average rate of 5.13%.

Impact of Continued Low Interest Rate Environment

Significant changes in interest rates expose us to the risk of not realizing anticipated spreads between the interest rate earned on investments and the interest rate credited to in-force policies and contracts. In addition, certain of our insurance and investment products guarantee a minimum guaranteed interest rate (“MGIR”). In periods of prolonged low interest rates, the interest spread earned may be negatively impacted to the extent our ability to reduce policyholder crediting rates is limited by the guaranteed minimum credited interest rates. Additionally, those policies without account values may exhibit lower profitability in periods of prolonged low interest rates due to reduced investment income.

The tables below present account values by range of current minimum guaranteed interest rates and current crediting rates for our universal life and deferred fixed annuity products as of June 30, 2019, and December 31, 2018: 

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Credited Rate Summary

As of June 30, 2019

				1-50 bps			More than
Minimum Guaranteed Interest Rate	At			above			50 bps
Account Value	MGIR			MGIR			above MGIR			Total
	(Dollars In Millions)
Universal Life Insurance
2%	$	142		$	329		$	1,562		$	2,033
>2% - 3%	4,120			969			1,813			6,902
>3% - 4%	9,221			572			523			10,316
>4% - 5%	2,480			439			1			2,920
>5% - 6%	330			—			—			330
Subtotal	16,293			2,309			3,899			22,501
Fixed Annuities
1%	$	198		$	604		$	2,142		$	2,944
>1% - 2%	328			155			1,697			2,180
>2% - 3%	1,608			110			2			1,720
>3% - 4%	292			4			—			296
>4% - 5%	257			—			—			257
>5% - 6%	2			—			—			2
Subtotal	2,685			873			3,841			7,399
Total	$	18,978		$	3,182		$	7,740		$	29,900
Percentage of Total	63		%	11		%	26		%	100		%

Credited Rate Summary

As of December 31, 2018

				1-50 bps			More than
Minimum Guaranteed Interest Rate	At			above			50 bps
Account Value	MGIR			MGIR			above MGIR			Total
	(Dollars In Millions)
Universal Life Insurance
>2% - 3%	$	2,392		$	1,322		$	2,031		$	5,745
>3% - 4%	4,512			924			499			5,935
>4% - 5%	2,445			435			1			2,881
>5% - 6%	188			—			—			188
Subtotal	9,537			2,681			2,531			14,749
Fixed Annuities
1%	$	341		$	584		$	2,278		$	3,203
>1% - 2%	370			165			1,145			1,680
>2% - 3%	1,686			102			3			1,791
>3% - 4%	261			4			—			265
>4% - 5%	260			—			—			260
>5% - 6%	2			—			—			2
Subtotal	2,920			855			3,426			7,201
Total	$	12,457		$	3,536		$	5,957		$	21,950
Percentage of Total	57		%	16		%	27		%	100		%

We are active in mitigating the impact of a continued low interest rate environment through product design, as well as adjusting crediting rates on current in-force policies and contracts. We also manage interest rate and reinvestment risks through

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our asset/liability management process. Our asset/liability management programs and procedures involve the monitoring of asset and liability durations; cash flow testing under various interest rate scenarios; and the regular rebalancing of assets and liabilities with respect to yield, credit and market risk, and cash flow characteristics. These programs also incorporate the use of derivative financial instruments primarily to reduce our exposure to interest rate risk, inflation risk, currency exchange risk, volatility risk, and equity market risk.

IMPACT OF INFLATION

Inflation increases the need for life insurance. Many policyholders who once had adequate insurance programs may increase their life insurance coverage to provide the same relative financial benefit and protection. Higher interest rates may result in higher sales of certain of our investment products.

The higher interest rates that have traditionally accompanied inflation could also affect our operations. Policy loans increase as policy loan interest rates become relatively more attractive. As interest rates increase, disintermediation of stable value and annuity account balances and individual life policy cash values may increase. The fair value of our fixed-rate, long-term investments may decrease, we may be unable to implement fully the interest rate reset and call provisions of our mortgage loans, and our ability to make attractive mortgage loans, including participating mortgage loans, may decrease. In addition, participating mortgage loan income may decrease. The difference between the interest rate earned on investments and the interest rate credited to life insurance and investment products may also be adversely affected by rising interest rates. During the periods covered by this report, we believe inflation has not had a material impact on our business.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 2, Summary of Significant Accounting Policies, to the consolidated condensed financial statements for information regarding recently issued accounting standards.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

See Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Market Risk Exposures”.

Item 4.    Controls and Procedures

(a)    Disclosure controls and procedures

In order to ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission is recorded, processed, summarized, and reported on a timely basis, the Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as such term is defined in Rule 13a -15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), except as otherwise noted below. Based on their evaluation as of the end of the period covered by this Form 10-Q, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective. It should be noted that any system of controls, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of any control system is based in part upon certain judgments, including the costs and benefits of controls and the likelihood of future events. Because of these and other inherent limitations of control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within the Company have been detected.

As described in Note 3, Significant Transactions, we acquired substantially all of the individual life insurance and annuity business of Great-West Life & Annuity Insurance Company and certain of its affiliates (“GWL&A”) effective June 1, 2019. Pursuant to the SEC’s guidance that an assessment of recently acquired business may be omitted from the scope of an assessment of internal controls over financial reporting for one year from the date of acquisition, our evaluation of the effectiveness of the Company’s disclosure controls and procedures for the quarter ended June 30, 2019 has excluded those internal controls over financial reporting at Great-West Life & Annuity Insurance Company (“GWL&A”) that relate to systems and processes for assets and liabilities of the acquired business that were not integrated into our existing systems. The acquired GWL&A business not integrated into our existing systems and controls represents approximately $11.4 billion of consolidated assets, approximately $32.3 million of consolidated revenue, approximately $55.7 million of consolidated benefits and expenses, and approximately$21.3 billion of liabilities on the related consolidated financial statements.

(b)    Changes in internal control over financial reporting

During the second quarter of 2018, the Company began the conversion and integration of administrative processing into its internal controls over financial reporting for the Liberty block of business acquired on May 1, 2018. See Note 3, Significant Transactions, for additional information regarding the transaction with Liberty Mutual and Lincoln Life. The conversion to the Company’s operating environment was still in process, but not yet completed, as of June 30, 2019. The Company has, therefore, included in its internal controls over financial reporting certain additional controls associated with the Liberty insurance and annuities administrative systems that have not yet been integrated into the Company’s operating environment.

Other than as described in the preceding paragraph, there were no changes in the Company’s internal control over financial reporting during the three months ended June 30, 2019, that have materially affected, or are reasonably likely to materially affect,

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the Company’s internal control over financial reporting. The Company’s internal controls exist within a dynamic environment and the Company continually strives to improve its internal controls and procedures to enhance the quality of its financial reporting.

PART II

Item 1.    Legal Proceedings

To the knowledge and in the opinion of management, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party or of which any of our properties is the subject, other than as set forth in Note 11, Commitments and Contingencies, of the notes to the consolidated financial statements, included herein.

Item 1A.    Risk Factors

The operating results of companies in the insurance industry have historically been subject to significant fluctuations. The factors which could affect the Company’s future results include, but are not limited to, general economic conditions and known trends and uncertainties. In addition to other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A, Risk Factors, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, which could materially affect the Company’s business, financial condition, or future results of operations which are discussed more fully below.

Risks Related to the Financial Environment

The amount of statutory capital or risk-based capital that the Company has and the amount of statutory capital or risk-based capital that it must hold to maintain its financial strength and credit ratings and meet other requirements can vary significantly from time to time and such amounts are sensitive to a number of factors outside of the Company’s control.

The Company primarily conducts business through licensed insurance company subsidiaries. Insurance regulators have established regulations that provide minimum capitalization requirements based on risk-based capital formulas for life and property and casualty companies. The risk-based capital formula for life insurance companies establishes capital requirements relating to insurance, business, asset, interest rate, and certain other risks. The risk-based capital formula for property and casualty companies establishes capital requirements relating to asset, credit, underwriting, and certain other risks.

In any particular year, statutory surplus amounts and risk-based capital ratios may increase or decrease depending on a variety of factors, including, but not limited to, the amount of statutory income or losses generated by the Company’s insurance subsidiaries, the amount of additional capital its insurance subsidiaries must hold to support business growth, changes in the Company’s statutory reserve requirements, the Company’s ability to secure capital market solutions to provide statutory reserve relief, changes in equity market levels, the value of certain fixed-income and equity securities in its investment portfolio, the credit ratings of investments held in its portfolio, including those issued by, or explicitly or implicitly guaranteed by, a government, the value of certain derivative instruments, changes in interest rates, foreign currency exchange rates or tax rates, credit market volatility, changes in consumer behavior, and changes to the National Association of Insurance Commissioners (the “NAIC”) risk-based capital formulas. Most of these factors are outside of the Company’s control.

Proposed changes to the NAIC’s risk-based capital formula that are currently under consideration would update the factors used to calculate required capital for bonds and life insurance risk. While the extent and timing of these proposed changes are unknown, if adopted, they would likely increase the Company’s required capital and decrease the statutory risk-based capital ratios of the Company and its subsidiaries.

The Company’s financial strength and credit ratings are significantly influenced by the statutory surplus amounts and risk-based capital ratios of its insurance company subsidiaries. Rating organizations may implement changes to their internal models that have the effect of increasing or decreasing the amount of statutory capital the Company must hold in order to maintain its current ratings. In addition, rating agencies may downgrade the investments held in the Company’s portfolio, which could result in a reduction of the Company’s capital and surplus and/or its risk-based capital ratio.

In scenarios of equity market declines, the amount of additional statutory reserves or risk-based capital the Company is required to hold for its variable product guarantees may increase at a rate greater than the rate of change of the markets. Increases in reserves or risk-based capital could result in a reduction to the Company’s capital, surplus, and/or risk-based capital ratio. Also, in environments where there is not a correlative relationship between interest rates and spreads, the Company’s market value adjusted annuity product can have a material adverse effect on the Company’s statutory surplus position.

Industry and Regulatory Related Risks

Laws, regulations, and initiatives related to unreported deaths and unclaimed property and death benefits may result in operational burdens, fines, unexpected payments, or escheatments.

Since 2012, various states have enacted laws that require life insurers to search for unreported deaths. The National Conference of Insurance Legislators (“NCOIL”) has adopted the Model Unclaimed Life Insurance Benefits Act (the “Unclaimed Benefits Act”) and legislation or regulations have been enacted in numerous states that are similar to the Unclaimed Benefits Act, although each state’s version differs in some respects. The Unclaimed Benefits Act imposes requirements on insurers to periodically compare their life insurance and annuity contracts and retained asset accounts against the U.S. Social Security Administration’s Death Master File or similar databases (a “Death Database”), investigate any potential matches to confirm the death and determine

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whether benefits are due, and to attempt to locate the beneficiaries of any benefits that are due or, if no beneficiary can be located, escheat the benefit to the state as unclaimed property. Other states in which the Company does business may also consider adopting legislation similar to the Unclaimed Benefits Act. The Company cannot predict whether such legislation will be proposed or enacted in additional states.

The Uniform Laws Commission has adopted revisions to the Uniform Unclaimed Property Act in a manner likely to impact state unclaimed property laws and requirements, though it is not clear at this time to what extent or whether requirements will conflict with otherwise imposed search requirements. Other life insurance industry associations and regulatory associations are also considering these matters. Certain states have amended or may amend their unclaimed property laws in a manner which creates additional obligations for life insurance companies. The enactment or amendment of such unclaimed property laws may require the Company to incur significant expenses, including benefits with respect to terminated policies for which no reserves are currently held and unanticipated operational expenses. Any of the foregoing could have a material adverse effect on the Company’s financial condition and results of operations.

A number of state treasury departments and administrators of unclaimed property have audited life insurance companies for compliance with unclaimed property laws, and state insurance regulators have initiated targeted multi-state examinations of life insurance companies with respect to the companies’ claims paying practices and use of a Death Database to identify unreported deaths in their life insurance policies, annuity contracts, and retained asset accounts. There is no clear basis in previously existing law for treating an unreported death as giving rise to a policy benefit that would be subject to unclaimed property procedures. However, a number of life insurers have entered into resolution agreements with state treasury departments and administrators of unclaimed property or settlement or consent agreements with state insurance regulators. The amounts publicly reported to have been paid to beneficiaries, escheated to the states, and/or paid as administrative and/or examination fees to the insurance regulators in connection with the settlement or consent agreements have been substantial.

Certain of the Company’s subsidiaries as well as certain other insurance companies from whom the Company has coinsured blocks of life insurance and annuity policies are subject to unclaimed property audits and/or targeted multi-state examinations by insurance regulators similar to those described above. It is possible that the audits, examinations, and/or the enactment of state laws similar to the Unclaimed Benefits Act could result in additional payments to beneficiaries, additional escheatment of funds deemed abandoned under state laws, payment of administrative penalties and/or examination fees to state authorities, and changes to the Company’s procedures for identifying unreported deaths and escheatment of abandoned property. It is possible any such additional payments and any costs related to such audits could materially impact the Company’s financial condition and/or results of operations. It is also possible that life insurers, including the Company and other insurance companies from whom the Company has coinsured blocks of life insurance and annuity policies, may be subject to claims, regulatory actions, law enforcement actions, and civil litigation arising from their prior business practices, unclaimed property practices, or related audits and examinations. Any resulting liabilities, payments or costs could be significant and could have a material adverse effect on the Company’s financial condition and/or results of operations.

New and amended regulations regarding the standard of care or standard of conduct applicable to investment professionals, insurance agencies, and financial institutions that recommend or sell annuities or life insurance products may have a material adverse impact on our ability to sell annuities and other products and to retain in-force business and on our financial condition or results of operations.

Sales of life insurance policies and annuity contracts offered by the Company are subject to regulations relating to sales practices adopted by a variety of federal and state regulatory authorities. Certain annuities and life insurance policies such as variable annuities and variable universal life insurance are regulated under the federal securities laws administered by the SEC. On June 5, 2019, the SEC adopted a comprehensive package of rulemakings and interpretations relating to the standard of conduct applicable to broker-dealers, investment advisers, and their representatives when making certain recommendations to retail customers. Regulation Best Interest (“Regulation BI”), a new rule establishing a “best interest” standard of conduct for broker-dealers and their natural associated persons when making recommendations to retail customers of any securities transaction or investment strategy involving securities or regarding the opening of an account. Specifically, Regulation BI requires a broker-dealer (or associated person) to act in the retail customer’s best interest and not place its (or his or her) own interests ahead of the retail customer’s interests. In addition to Regulation BI, the SEC also adopted a new rule and amended existing rules to require broker-dealers and registered investment advisers to provide a brief relationship summary to retail investors (“Form CRS Rules”). The Form CRS Rules are intended to assist retail investors with their initial selection of, and ongoing decision to maintain an existing relationship with, a financial professional or firm by summarizing in one place certain specified information about the broker-dealer or investment adviser. The rulemaking package also includes two interpretations: (i) the investment adviser interpretation, which clarifies certain aspects of the standard of conduct applicable to registered investment advisers under section 206 of the Investment Advisers Act of 1940 (“Advisers Act”), and (ii) the “solely incidental” interpretation, which clarifies the broker-dealer exclusion from the definition of “investment adviser” under section 202 of the Advisers Act.

In addition, broker-dealers, insurance agencies and other financial institutions sell the Company’s annuities to employee benefit plans governed by provisions of the Employee Retirement Income Security Act (“ERISA”) and Individual Retirement Accounts (“IRAs”) that are governed by similar provisions under the Internal Revenue Code (the “Code”). Consequently, our activities and those of the firms that sell the Company’s products are subject to restrictions that require ERISA fiduciaries to perform their duties solely in the interests of ERISA plan participants and beneficiaries, and that prohibit ERISA fiduciaries from causing a covered plan or retirement account to engage in certain prohibited transactions absent an exemption.

The NAIC is considering revisions to the Suitability in Annuity Transactions Model Regulation which, if adopted by regulators, could impose a stricter standard of care upon insurers who sell annuities. Likewise, several states are considering or have adopted legislation or regulatory measures that would implement new requirements and standards applicable to the sale of

110

annuities and, in some cases, life insurance products. The NAIC and several states, including Connecticut, Nevada, New Jersey, and New York have passed laws or proposed regulations requiring insurers, investment advisers, broker-dealers, and/or agents to disclose conflicts of interest to clients or to meet standards that their advice be in the customer’s best interest. These standards vary widely in scope, applicability, and timing of implementation. The adoption and enactment of these or any revised standards as law or regulation could have a material adverse effect upon the manner in which the Company’s products are sold and impact the overall market for such products.

There remains significant uncertainty surrounding the final form that these regulations may take. Our current distributors may continue to move forward with their plans to limit the number of products they offer, including the types of products offered by the Company. The Company may find it necessary to change sales representative and/or broker compensation, to limit the assistance or advice it can provide to owners of the Company’s annuities, to replace or engage additional distributors, or otherwise change the manner in which it designs, supervises, and supports sales of its annuities and, where applicable, life insurance products. In addition, the Company continues to incur expenses in connection with initial and ongoing compliance obligations with respect to such rules, and in the aggregate these expenses may be significant. Any of the foregoing regulatory, legislative, or judicial measures or the reaction to such activity by consumers or other members of the insurance industry could have a material adverse impact on our ability to sell annuities and other products, to retain in-force business, and on our financial condition or results of operations.

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

During the quarter ended June 30, 2019, the Company sold no equity securities in transactions which were not registered under the Securities Act of 1933, as amended.

Purchases of Equity Securities by the Issuer

During the quarter ended June 30, 2019, 100% of the Company’s common stock was owned by Dai-ichi Life Holdings, Inc., and was not available for repurchase by the Company.

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Item 6.    Exhibits

Exhibit
Number
2.1*±	Master Transaction Agreement, dated as of January 23, 2019, by and among Protective Life Insurance Company, Great-West Life & Annuity Insurance Company, Great-West Life & Annuity Insurance Company of New York, The Canada Life Assurance Company and The Great-West Life Assurance Company, incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed January 25, 2019 (No. 001-11339).
3.1*	Certificate of Incorporation of the Company effective as of February 1, 2015, incorporated by reference to Exhibit 3(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed February 26, 2015 (No. 001-11339).
3.2*	Amended and Restated Bylaws of the Company, effective as of February 25, 2019, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed March 1, 2019 (No. 001-11339).
10.1*	Credit Agreement, dated as of May 31, 2019, among Protective Life Corporation, as borrower, the several lenders from time to time a party thereto, and Mizuho Bank, Ltd., as administrative agent, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 5, 2019 (No. 001-11339).
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial statements from the quarterly report on Form 10-Q of Protective Life Corporation for the quarter ended June 30, 2019, filed on August 13, 2019, formatted in XBRL: (i) the Consolidated Condensed Statements of Income, (ii) the Consolidated Condensed Statements of Comprehensive Income (Loss), (iii) the Consolidated Condensed Balance Sheets, (iv) the Consolidated Condensed Statement of Shareowner’s Equity, (v) the Consolidated Condensed Statements of Cash Flows, and (iv) the Notes to Consolidated Condensed Financial Statements.
*	Incorporated by Reference
±	Pursuant to Item 601(b)(2) of Regulation S-K, the schedules have been omitted and will be furnished to the SEC supplementally upon request.

112

SIGNATURE

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.

	PROTECTIVE LIFE CORPORATION
Date: August 13, 2019	By:	/s/ PAUL R. WELLS
		Paul R. Wells
		Senior Vice President, Chief Accounting Officer, and
		Controller

113

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Richard J. Bielen, certify that:

1. I have reviewed the Quarterly Report on Form 10-Q for the period ended June 30, 2019, of Protective Life Corporation;

2. Based on my knowledge, this quarterly 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 quarterly 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 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 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 13, 2019

/s/ Richard J. Bielen

President and

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven G. Walker, certify that:

1. I have reviewed the Quarterly Report on Form 10-Q for the period ended June 30, 2019, of Protective Life Corporation;

2. Based on my knowledge, this quarterly 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 quarterly 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 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 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 13, 2019

/s/ Steven G. Walker

Executive Vice President and

Chief 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 Protective Life Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard J. Bielen, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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.

/s/ Richard J. Bielen

President

and Chief Executive Officer

August 13, 2019

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

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 Protective Life Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven G. Walker, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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.

/s/ Steven G. Walker

Executive Vice President and

Chief Financial Officer

August 13, 2019

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Jul. 23, 2019
Document and Entity Information
Entity Registrant Name	PROTECTIVE LIFE CORPORATION
Entity Central Index Key	0000355429
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		1,000
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false

XML

CONSOLIDATED CONDENSED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues
Premiums and policy fees	$ 945,883	$ 941,868	$ 1,876,211	$ 1,831,034
Reinsurance ceded	(339,996)	(390,941)	(658,373)	(736,364)
Net of reinsurance ceded	605,887	550,927	1,217,838	1,094,670
Net investment income	725,811	616,462	1,411,735	1,137,325
Realized investment gains (losses)	(48,547)	(37,337)	(38,628)	(46,877)
Other-than-temporary impairment losses	(198)	(10)	(1,493)	(701)
Portion recognized in other comprehensive income (before taxes)	(500)	5	(2,347)	(2,949)
Net impairment losses recognized in earnings	(698)	(5)	(3,840)	(3,650)
Other income	136,322	113,861	245,700	228,272
Total revenues	1,418,775	1,243,908	2,832,805	2,409,740
Benefits and expenses
Benefits and settlement expenses, net of reinsurance ceded: (three and six months 2019 - $260,358 and $515,186; three and six months 2018 - $298,016 and $645,653)	1,003,987	861,548	1,976,753	1,648,350
Amortization of deferred policy acquisition costs and value of business acquired	33,783	52,517	64,183	110,498
Other operating expenses, net of reinsurance ceded: (three and six months 2019 - $55,124 and $106,415; three and six months 2018 - $51,559 and $94,676)	250,931	231,071	486,880	460,322
Total benefits and expenses	1,288,701	1,145,136	2,527,816	2,219,170
Income before income tax	130,074	98,772	304,989	190,570
Income tax expense	21,963	17,277	58,594	34,963
Net income	$ 108,111	$ 81,495	$ 246,395	$ 155,607

XML

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Benefits and settlement expense, reinsurance ceded	$ 260,358	$ 298,016	$ 515,186	$ 645,653
Other operating expenses, reinsurance ceded	$ 55,124	$ 51,559	$ 106,415	$ 94,676

XML

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 108,111	$ 81,495	$ 246,395	$ 155,607
Other comprehensive income (loss):
Change in net unrealized gains (losses) on investments, net of income tax: (three and six months 2019 - $264,523 and $566,586; three and six months 2018 - $(113,653) and $(267,032))	995,112	(427,550)	2,131,443	(1,005,262)
Reclassification adjustment for investment amounts included in net income, net of income tax: (three and six months 2019 - $(84) and $(499); three and six months 2018 - $(1,162) and $(981))	(316)	(4,372)	(1,876)	(3,691)
Change in net unrealized gains (losses) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (three and six months 2019 - $4,127 and $6,464; three and six months 2018 - $3 and $6)	15,524	11	24,316	22
Change in accumulated (loss) gain - derivatives, net of income tax: (three and six months 2019 - $(742) and $(1,264); three and six months 2018 - $623 and $752)	(2,788)		(4,754)
Change in accumulated (loss) gain - derivatives, net of income tax: (three and six months 2019 - $(742) and $(1,264); three and six months 2018 - $623 and $752)		2,344		2,831
Reclassification adjustment for derivative amounts included in net income, net of income tax: (three and six months 2019 - $70 and $128; three and six months 2018 - $43 and $67)	266		486
Reclassification adjustment for derivative amounts included in net income, net of income tax: (three and six months 2019 - $70 and $128; three and six months 2018 - $43 and $67)		162		251
Total other comprehensive income (loss)	1,007,798	(429,405)	2,149,615	(1,005,849)
Total comprehensive income (loss)	$ 1,115,909	$ (347,910)	$ 2,396,010	$ (850,242)

XML

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Change in net unrealized gains (losses) on investments, income tax	$ 264,523	$ (113,653)	$ 566,586	$ (267,032)
Reclassification adjustment for investment amounts included in net income, income tax	(84)	(1,162)	(499)	(981)
Change in net unrealized gains (losses) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax	4,127	3	6,464	6
Change in accumulated (loss) gain - derivatives, income tax	(742)		(1,264)
Change in accumulated (loss) gain - derivatives, income tax		623		752
Reclassification adjustment for derivative amounts included in net income, income tax	$ 70		$ 128
Reclassification adjustment for derivative amounts included in net income, income tax		$ 43		$ 67

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CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets
Fixed maturities, at fair value (amortized cost: 2019 - $63,349,246; 2018 - $54,466,305)	$ 64,710,656	$ 51,904,699
Fixed maturities, at amortized cost (fair value: 2019 - $2,640,827; 2018 - $2,547,210)	2,576,216	2,633,474
Equity securities, at fair value (cost: 2019 - $622,178; 2018 - $627,087)	629,965	595,884
Mortgage loans (related to securitizations: 2019 - $0; 2018 - $134)	9,053,400	7,724,733
Investment real estate, net of accumulated depreciation (2019 - $315; 2018 - $251)	6,777	6,816
Policy loans	1,709,110	1,695,886
Other long-term investments	934,770	759,354
Short-term investments	1,220,840	807,283
Total investments	80,841,734	66,128,129
Cash	243,291	173,714
Accrued investment income	730,149	634,921
Accounts and premiums receivable	262,163	113,507
Reinsurance receivables	4,558,158	4,764,743
Deferred policy acquisition costs and value of business acquired	3,474,557	3,023,154
Goodwill	825,511	825,511
Other intangibles, net of accumulated amortization (2019 - $225,912; 2018 - $197,583)	616,931	613,431
Property and equipment, net of accumulated depreciation (2019 - $40,620; 2018 - $33,199)	212,905	184,957
Other assets	1,972,083	250,036
Assets related to separate accounts:
Variable annuity	12,790,474	12,288,919
Variable universal life	1,073,020	937,732
Reinsurance assumed	9,844,996	0
Total assets	117,445,972	89,938,754
Liabilities
Future policy benefits and claims	53,470,312	41,901,552
Unearned premiums	887,691	872,594
Total policy liabilities and accruals	54,358,003	42,774,146
Stable value product account balances	5,816,503	5,234,731
Annuity account balances	14,179,277	13,720,081
Other policyholders’ funds	1,542,296	1,128,379
Other liabilities	3,246,982	2,374,112
Income tax payable	67,837	38,547
Deferred income taxes	1,177,197	839,316
Non-recourse funding obligations	2,576,538	2,632,497
Secured financing liabilities	126,862	495,307
Debt	1,677,557	1,101,827
Subordinated debt	605,494	605,426
Liabilities related to separate accounts:
Variable annuity	12,790,474	12,288,919
Variable universal life	1,073,020	937,732
Reinsurance assumed	9,844,996	0
Total liabilities	109,083,036	84,171,020
Commitments and contingencies
Shareowner’s equity
Common Stock: 2019 and 2018 - $0.01 par value; shares authorized: 5,000; shares issued: 1,000	0	0
Additional paid-in-capital	5,804,059	5,554,059
Retained earnings	1,835,028	1,639,441
Accumulated other comprehensive income (loss):
Net unrealized (losses) gains on investments, net of income tax: (2019 - $197,257; 2018 - $(368,830))	742,063	(1,387,504)
Net unrealized losses relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (2019 - $410; 2018 - $(6,054))	1,543	(22,773)
Accumulated gain (loss) - derivatives, net of income tax: (2019 - $(1,136); 2018 - $(2))	(4,275)	(7)
Postretirement benefits liability adjustment, net of income tax: (2019 - $(4,112); 2018 - $(4,112))	(15,482)	(15,482)
Total shareowner’s equity	8,362,936	5,767,734
Total liabilities and shareowner’s equity	$ 117,445,972	$ 89,938,754

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CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Fixed maturities, at fair value, amortized cost	$ 63,349,246	$ 54,466,305
Fixed maturities, at amortized cost, fair value	2,640,827	2,547,210
Equity securities, cost	622,178	627,087
Mortgage loans, related to securitizations	0	134
Investment real estate, net of accumulated depreciation	315	251
Other intangibles, net of accumulated amortization	225,912	197,583
Property and equipment, net of accumulated depreciation	$ 40,620	$ 33,199
Common stock par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	5,000	5,000
Common stock, shares issued (in shares)	1,000	1,000
Net unrealized gains (losses) on investments, net of income tax	$ 197,257	$ (368,830)
Net unrealized losses relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax	410	(6,054)
Accumulated gain (loss) - derivatives, income tax	(1,136)	(2)
Postretirement benefits liability adjustment, income tax	$ (4,112)	$ (4,112)

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CONSOLIDATED CONDENSED STATEMENTS OF SHAREOWNER'S EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In- Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2017	$ 7,127,199	$ 0	$ 5,554,059	$ 1,560,444	$ 12,696
Increase (decrease) in shareowners' equity
Net income	74,112			74,112
Other comprehensive income (loss)	(576,444)				(576,444)
Comprehensive income (loss)	(502,332)
Dividends to parent	(140,000)			(140,000)
Ending Balance at Mar. 31, 2018	6,392,342	0	5,554,059	1,412,583	(574,300)
Beginning Balance at Dec. 31, 2017	7,127,199	0	5,554,059	1,560,444	12,696
Increase (decrease) in shareowners' equity
Net income	155,607
Other comprehensive income (loss)	(1,005,849)
Comprehensive income (loss)	(850,242)
Ending Balance at Jun. 30, 2018	6,044,432	0	5,554,059	1,494,078	(1,003,705)
Beginning Balance at Mar. 31, 2018	6,392,342	0	5,554,059	1,412,583	(574,300)
Increase (decrease) in shareowners' equity
Net income	81,495			81,495
Other comprehensive income (loss)	(429,405)				(429,405)
Comprehensive income (loss)	(347,910)
Ending Balance at Jun. 30, 2018	6,044,432	0	5,554,059	1,494,078	(1,003,705)
Beginning Balance at Dec. 31, 2018	5,767,734	0	5,554,059	1,639,441	(1,425,766)
Increase (decrease) in shareowners' equity
Net income	138,284			138,284
Other comprehensive income (loss)	1,141,817				1,141,817
Comprehensive income (loss)	1,280,101
Ending Balance at Mar. 31, 2019	6,997,027	0	5,554,059	1,726,917	(283,949)
Beginning Balance at Dec. 31, 2018	5,767,734	0	5,554,059	1,639,441	(1,425,766)
Increase (decrease) in shareowners' equity
Net income	246,395
Other comprehensive income (loss)	2,149,615
Comprehensive income (loss)	2,396,010
Ending Balance at Jun. 30, 2019	8,362,936	0	5,804,059	1,835,028	723,849
Beginning Balance at Mar. 31, 2019	6,997,027	0	5,554,059	1,726,917	(283,949)
Increase (decrease) in shareowners' equity
Net income	108,111			108,111
Other comprehensive income (loss)	1,007,798				1,007,798
Comprehensive income (loss)	1,115,909
Capital contributions from parent	250,000		250,000
Ending Balance at Jun. 30, 2019	$ 8,362,936	$ 0	$ 5,804,059	$ 1,835,028	$ 723,849

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net income	$ 246,395	$ 155,607
Adjustments to reconcile net income to net cash used in operating activities:
Realized investment (gains) losses	42,468	50,527
Amortization of DAC and VOBA	64,183	110,498
Capitalization of DAC	(237,622)	(223,686)
Depreciation and amortization expense	37,428	33,785
Deferred income tax	(219,558)	3,065
Accrued income tax	29,290	103,092
Interest credited to universal life and investment products	593,993	389,009
Policy fees assessed on universal life and investment products	(829,697)	(748,474)
Change in reinsurance receivables	206,585	111,242
Change in accrued investment income and other receivables	41,677	(34,198)
Change in policy liabilities and other policyholders’ funds of traditional life and health products	(352,132)	(246,397)
Trading securities:
Maturities and principal reductions of investments	54,501	117,994
Sale of investments	254,573	118,370
Cost of investments acquired	(204,187)	(206,741)
Other net change in trading securities	(43,145)	13,791
Amortization of premiums and accretion of discounts on investments and mortgage loans	147,485	150,402
Change in other liabilities	241,895	37,809
Other, net	(107,562)	8,256
Net cash used in operating activities	(33,430)	(56,049)
Cash flows from investing activities
Maturities and principal reductions of investments, available-for-sale	923,494	592,514
Sale of investments, available-for-sale	2,033,618	1,417,304
Cost of investments acquired, available-for-sale	(3,246,486)	(2,126,627)
Change in investments, held-to-maturity	55,000	39,000
Mortgage loans:
New lendings	(476,310)	(811,103)
Repayments	518,663	494,729
Change in investment real estate, net	178	615
Change in policy loans, net	30,778	25,361
Change in other long-term investments, net	62,301	(225,809)
Change in short-term investments, net	(362,608)	(101,662)
Net unsettled security transactions	(263,560)	141,791
Purchase of property, equipment, and intangibles	(17,262)	(6,956)
Cash received from reinsurance transaction	0	20,669
Payment for business acquisition, net of cash acquired	(731,457)	0
Net cash used in investing activities	(1,473,651)	(540,174)
Cash flows from financing activities
Borrowings under line of credit arrangement, debt, and subordinated debt	600,000	655,000
Principal payments on line of credit arrangement, debt, and subordinated debt	(9,325)	(348,684)
Issuance (repayment) of non-recourse funding obligations	(55,000)	(77,000)
Secured financing liabilities	(368,445)	(913,210)
Dividends to shareowner	0	(140,000)
Capital contributions from parent	250,000	0
Deposits to universal life and investment contracts	3,309,880	2,959,133
Withdrawals from universal life and investment contracts	(2,149,967)	(1,600,400)
Other financing activities, net	(485)	(194)
Net cash provided by financing activities	1,576,658	534,645
Change in cash	69,577	(61,578)
Cash at beginning of period	173,714	252,310
Cash at end of period	$ 243,291	$ 190,732

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

Basis of Presentation

On February 1, 2015, Protective Life Corporation (the “Company”) became a wholly owned subsidiary of The Dai-ichi Life Insurance Company, Limited, a kabushiki kaisha organized under the laws of Japan (now known as Dai-ichi Life Holdings, Inc., “Dai-ichi Life”), when DL Investment (Delaware), Inc., a wholly owned subsidiary of Dai-ichi Life, merged with and into the Company (the “Merger”). Prior to February 1, 2015, the Company’s stock was publicly traded on the New York Stock Exchange. Subsequent to the Merger, the Company remains as an SEC registrant within the United States. The Company is a holding company with subsidiaries that provide financial services through the production, distribution, and administration of insurance and investment products. The Company markets individual life insurance, credit life and disability insurance, guaranteed investment contracts, guaranteed funding agreements, fixed and variable annuities, and extended service contracts throughout the United States. The Company also maintains a separate segment devoted to the acquisition of insurance policies from other companies. Founded in 1907, Protective Life Insurance Company (“PLICO”) is the Company’s largest operating subsidiary.

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for the interim periods presented herein. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting only of normal recurring items) necessary for a fair presentation of the results for the interim periods presented. Operating results for the three and six months ended June 30, 2019, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2019. The year-end consolidated condensed financial data included herein was derived from audited financial statements but this report does not include all disclosures required by GAAP. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The operating results of companies in the insurance industry have historically been subject to significant fluctuations due to changing competition, economic conditions, interest rates, investment performance, insurance ratings, claims, persistency, and other factors.

Certain reclassifications have been made in previously reported financial statements and accompanying notes to make prior period amounts comparable to those of the current period. Such reclassifications had no effect on previously reported net income or shareowner’s equity.

Entities Included

The consolidated condensed financial statements in this report include the accounts of Protective Life Corporation and subsidiaries and its affiliate companies in which the Company holds a majority voting or economic interest. Intercompany balances and transactions have been eliminated.

During the second quarter of 2019, the Company recorded an adjustment related to prior periods to correct an error pertaining to the deferred policy acquisition costs (“DAC”) tax reimbursements paid under reinsurance agreements the Company entered in previous years. The adjustment resulted in an $8.96 million increase to accounts and premiums receivable on the Company’s consolidated balance sheet, with a corresponding increase to income. The Company concluded that the adjustment was not quantitatively or qualitatively material to previously reported periods or the current interim period. As a result, this adjustment was recorded by the Company within the consolidated financial statements as of and for the period ended June 30, 2019.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

For a full description of significant accounting policies, see Note 2 to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. There were no significant changes to the Company’s accounting policies during the six months ended June 30, 2019.

Accounting Pronouncements Recently Adopted

Accounting Standards Update (“ASU” or “Update”) No. 2016-02 - Leases. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of leases. The most significant change relates to the accounting model used by lessees. The Update requires all leases with terms greater than 12 months to be recorded on the balance sheet in the form of a lease asset and liability. The lease asset and liability are measured at the present value of the minimum lease payments less any upfront payments or fees. The amendments in the Update became effective for annual and interim periods beginning after December 15, 2018 on a modified retrospective basis. The Company recorded a cumulative effect adjustment as of the date of adoption, January 1, 2019, establishing a right of use asset and lease liability of $21.5 million on its consolidated condensed balance sheet reflected in the property and equipment and other liabilities line items, respectively.

ASU No. 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update require that premiums on callable debt securities be amortized to the first call date. This is a change from previous guidance, under which premiums are amortized to the maturity date of the security. The amendments became effective for annual and interim periods beginning after December 15, 2018. The Company recorded a cumulative effect adjustment as of the adoption date, January 1, 2019, resulting in a $50.8 million reduction to retained earnings, net of income tax.

ASU No. 2017-12 - Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this Update are designed to permit hedge accounting to be applied to a broader range of hedging strategies as well as to more closely align hedge accounting and risk management objectives. Specific provisions include requiring changes in the fair value of a hedging instrument be recorded in the same income statement line as the hedged item when it affects earnings. In addition, after a hedge has initially qualified as an effective hedge the Update permits the use of a qualitative hedge effectiveness test in subsequent periods. The amendments in this Update became effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. At adoption, January 1, 2019, this standard did not have an impact on the Company’s operations or financial results.

Accounting Pronouncements Not Yet Adopted

ASU No. 2016-13 - Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this Update introduce a new current expected credit loss (“CECL”) model for certain financial assets, including mortgage loans and reinsurance receivables. The new model will not apply to debt securities classified as available-for-sale. For assets within the scope of the new model, an entity will recognize as an allowance against earnings its estimate of the contractual cash flows not expected to be collected on day one of the asset’s acquisition. The allowance may be reversed through earnings if a security recovers in value. This differs from the current impairment model, which requires recognition of credit losses when they have been incurred and recognizes a security’s subsequent recovery in value in other comprehensive income. The Update also makes targeted changes to the current impairment model for available-for-sale debt securities, which comprise the majority of the Company’s invested assets. Similar to the CECL model, credit loss impairments will be recorded in an allowance against earnings that may be reversed for subsequent recoveries in value. The amendments in this Update, along with related amendments in ASU No. 2018-19 - Codification Improvements to Topic 326, Financial Instruments-Credit Losses, are effective for annual and interim periods beginning after December 15, 2019 on a modified retrospective basis. The Company has completed its scoping and gap analysis with respect to the implementation of the new standard. Based on the results of this analysis, the Company’s implementation efforts are primarily focused on the application of the CECL model to a) its portfolio of commercial mortgage loans and b) amounts recoverable from reinsurers. The Company is currently engaged in a project to implement new processes with respect to the measurement and recognition of the CECL allowance for these assets, along with the additional disclosures required by the Update. The impact of this standard on the Company’s financial results cannot yet be reasonably estimated.

ASU No. 2018-12 - Financial Services - Insurance (Topic 944): Targeted Improvements to Accounting for Long-Duration Contracts. The amendments in this Update are designed to make improvements to the existing recognition, measurement, presentation, and disclosure requirements for certain long-duration contracts issued by an insurance company. The new amendments require insurance entities to provide a more current measure of the liability for future policy benefits for traditional and limited-payment contracts by regularly refining the liability for actual past experience and updated future assumptions. This differs from current requirements where assumptions are locked-in at contract issuance for these contract types. In addition, the updated liability will be discounted using an upper-medium grade (low-credit-risk) fixed income instrument yield that reflects the characteristics of the liability which differs from currently used rates based on the invested assets supporting the liability. In addition, the amendments introduce new requirements to assess market-based insurance contract options and guarantees for Market Risk Benefits and measure them at fair value. This Update also requires insurance entities to amortize deferred acquisition costs on a constant-level basis over the expected life of the contract. Finally this Update requires new disclosures including liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in the measurement. The amendments in this Update are currently effective for annual and interim periods beginning after December 31, 2020 with early adoption permitted. However, in July 2019, the Financial Accountings Standards Board (the “FASB”) voted to expose an Accounting Standards Update for public comment which would extend the implementation deadline for public business entities by one year to periods beginning after December 15, 2021. The Company is currently reviewing its policies, processes, and applicable systems to determine the impact this standard will have on its operations and financial results.

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SIGNIFICANT TRANSACTIONS

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

SIGNIFICANT TRANSACTIONS

SIGNIFICANT TRANSACTIONS

The Lincoln National Life Insurance Company

On May 1, 2018, The Lincoln National Life Insurance Company (“Lincoln Life”) completed its previously announced acquisition (the “Closing”) of Liberty Mutual Group Inc.’s (“Liberty Mutual”) Group Benefits Business and Individual Life and Annuity Business (the “Life Business”) through the acquisition of all of the issued and outstanding capital stock of Liberty Life Assurance Company of Boston (“Liberty”). In connection with the Closing and  pursuant to the Master Transaction Agreement, dated January 18, 2018 (the “Master Transaction Agreement”), previously reported in our Current Report on Form 8-K filed on January 23, 2018, PLICO and Protective Life and Annuity Insurance Company (“PLAIC”), a wholly owned subsidiary of PLICO, entered into reinsurance agreements (the “Liberty Reinsurance Agreements”) and related ancillary documents (including administrative services agreements and transition services agreements) providing for the reinsurance and administration of the Life Business. 

Pursuant to the Liberty Reinsurance Agreements, Liberty ceded to PLICO and PLAIC the insurance policies related to the Life Business on a 100% coinsurance basis. The aggregate ceding commission for the reinsurance of the Life Business was $422.4 million, which is the purchase price and remains subject to adjustment.

All policies issued in states other than New York were ceded to PLICO under a reinsurance agreement between Liberty and PLICO, and all policies issued in New York were ceded to PLAIC under a reinsurance agreement between Liberty and PLAIC.  The aggregate statutory reserves of Liberty ceded to PLICO and PLAIC as of the closing of the Transaction were approximately $13.2 billion, which amount was based on initial estimates. The final reserve amount determined, as adjusted during the measurement period, is $13.7 billion. In addition, there are certain pending items which remain subject to adjustment in accordance with the Master Transaction Agreement and could result in a gain in future periods. Pursuant to the terms of the Liberty Reinsurance Agreements, each of PLICO and PLAIC are required to maintain assets in trust for the benefit of Liberty to secure their respective obligations to Liberty under the Liberty Reinsurance Agreements. The trust accounts were initially funded by each of PLICO and PLAIC principally with the investment assets that were received from Liberty. Additionally, PLICO and PLAIC have each agreed to provide, on behalf of Liberty, administration and policyholder servicing of the Life Business reinsured by it pursuant to administrative services agreements between Liberty and each of PLICO and PLAIC.

The terms of the Liberty Reinsurance Agreements resulted in an acquisition of the Life Business by the Company in accordance with ASC Topic 805, Business Combinations.

The following table details the purchase consideration and final allocation of assets acquired and liabilities from the Life Business reinsurance transaction as of the transaction date.

	Fair Value as of May 1, 2018
	(Dollars In Thousands)
ASSETS
Fixed maturities	$	12,588,512
Mortgage loans	435,405
Policy loans	131,489
Total investments	13,155,406
Cash	35,179
Accrued investment income	152,030
Reinsurance receivables	272
Value of business acquired	379,717
Other assets	916
Total assets	13,723,520
LIABILITIES
Future policy benefits and claims	$	11,751,895
Unearned premiums	—
Total policy liabilities and accruals	11,751,895
Annuity account balances	1,864,141
Other policyholders’ funds	41,936
Other liabilities	65,548
Total liabilities	13,723,520
NET ASSETS ACQUIRED	$	—

The following unaudited pro forma condensed consolidated results of operations assumes that the aforementioned transactions of the Life Business were completed as of January 1, 2017. The unaudited pro forma condensed results of operations are presented solely for information purposes and are not necessarily indicative of the consolidated condensed results of operations that might have been achieved had the transaction been completed as of the date indicated:

	Unaudited
	For The Three Months Ended June 30, 2018		For The Six Months Ended June 30, 2018
	(Dollars In Thousands)
Revenue	$	1,317,159	$	2,733,479
Net income	$	88,883	$	201,751

Great-West Life & Annuity Insurance Company

On January 23, 2019, PLICO entered into a Master Transaction Agreement (the “GWL&A Master Transaction Agreement”) with Great-West Life & Annuity Insurance Company (“GWL&A”), Great-West Life & Annuity Insurance Company of New York (“GWL&A of NY”), The Canada Life Assurance Company (“CLAC”) and The Great-West Life Assurance Company (“GWL” and, together with GWL&A, GWL&A of NY and CLAC, the “Sellers”), pursuant to which PLICO will acquire via reinsurance (the “Transaction”) substantially all of the Sellers’ individual life insurance and annuity business (the “Individual Life Business”). 

On June 3, 2019, PLICO and PLAIC completed the Transaction (the “Closing”). Pursuant to the GWL&A Master Transaction Agreement, previously reported in our Current Report on Form 8-K filed on January 25, 2019, PLICO and PLAIC entered into reinsurance agreements (the “GWL&A Reinsurance Agreements”) and related ancillary documents at the Closing. On the terms and subject to the conditions of the GWL&A Reinsurance Agreements, the Sellers ceded to PLICO and PLAIC, effective as of the closing of the Transaction, substantially all of the insurance policies related to the Individual Life Business on a 100% indemnity basis net of reinsurance recoveries. The aggregate ceding commission for the reinsurance of the Individual Life Business paid at the Closing was $767.1 million, which amount is subject to adjustment in accordance with the GWL&A Master Transaction Agreement. All policies issued in states other than New York were ceded to PLICO under reinsurance agreements between the applicable Seller and the Company, and all policies issued in New York were ceded to PLAIC under a reinsurance agreement between GWL&A of NY and PLAIC. The aggregate statutory reserves of the Sellers ceded to PLICO and PLAIC as of the Closing were approximately $20.4 billion, which amount was based on initial estimates and is subject to adjustment following the Closing. To support its obligations under the GWL&A Reinsurance Agreements, PLICO established trust accounts for the benefit of GWL&A, CLAC and GWL, and PLAIC established a trust account for the benefit of GWL&A of NY. The Sellers retained a block of participating policies, which will be administered by the Company.

As of the purchase date, the Company has recorded an estimate in the amount of $51.9 million related to contingent consideration. The final ceding commission is subject to adjustment based on these amounts. These amounts are accrued within other liabilities in the Company’s consolidated condensed balance sheet.

The contingent consideration is comprised of a holdback provision and a post-closing sales adjustment. The holdback amount is related to the performance of certain blocks of business for a specified period of time after the close of the transaction.  The range of amounts payable to Great West under this provision is $0 - $40 million. The Company’s best estimate as of June 30, 2019 was $40 million.

Great West is also entitled to a payment for certain post-closing sales occurring between June 1, 2019 and December 31, 2019. At this time, a range for this payment cannot be estimated and the Company established a liability of $11.9 million on the transaction date, which represents the Company's best estimate of the present value of future payments as of the transaction date.

The GWL&A Master Transaction Agreement and other transaction documents contain certain customary representations and warranties made by each of the parties, and certain customary covenants regarding the Sellers and the Individual Life Business, and provide for indemnification, among other things, for breaches of those representations, warranties, and covenants. The terms of the GWL&A Reinsurance Agreements resulted in an acquisition of the Individual Life Business by the Company in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations.

The following table details the preliminary allocation of assets acquired and liabilities assumed from the Individual Life Business reinsurance transaction as of the transaction date. The Company has not completed the process of determining the fair value of assets acquired and liabilities assumed, but will do so in the twelve month measurement period subsequent to the transaction date. These estimates are provisional subject to adjustment. Any adjustments to these fair value estimates will be reflected, retroactively, as of the date of the acquisition, and may result in adjustments to the value of business acquired.

	Fair Value as of June 1, 2019
	(Dollars In Thousands)
ASSETS
Fixed maturities	$	8,697,533
Mortgage loans	1,386,228
Policy loans	44,002
Other long-term investments	1,579
Total investments	10,129,342
Cash	35,607
Accrued investment income	101,306
Accounts and premiums receivable	62
Premium due and deferred	1,657
Value of business acquired	491,493
Other intangibles	28,600
Other assets	1,537,848
Assets related to separate accounts	9,583,217
Total assets	21,909,132
LIABILITIES
Future policy benefits and claims	$	10,993,716
Annuity account balances	253,748
Other policyholders’ funds	220,117
Other liabilities	39,370
Liabilities related to separate accounts	9,583,217
Total liabilities	21,090,168
NET ASSETS ACQUIRED	$	818,964

Assets related to separate accounts and liabilities related to separate accounts represent amounts receivable and payable for variable annuity and variable universal life products reinsured on a modified co-insurance basis.

The following unaudited pro forma condensed consolidated results of operations assumes that the aforementioned transactions of the Individual Life Business were completed as of January 1, 2018. The unaudited pro forma condensed results of operations are presented solely for information purposes and are not necessarily indicative of the consolidated condensed results of operations that might have been achieved had the transaction been completed as of the date indicated:

	Unaudited				Unaudited
	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars In Thousands)
Revenue	$	1,548,668	$	1,461,832	$	3,203,698	$	2,828,369
Net income	$	124,161	$	122,977	$	263,490	$	182,034

The amount of revenue and income before income tax of the Individual Life Business since the transaction date, June 1, 2019, included in the consolidated statements of income for the six months ended June 30, 2019, amounted to $77.7 million and $7.7 million. The Company incurred approximately $12.2 million of non-recurring transaction costs for the six months ended June 30, 2019.

Intangible assets recognized by the Company included the following (excluding goodwill):

	Estimated Fair Value on Acquisition Date		Estimated Useful Life
	(Dollars In Thousands)		(In Years)
Distribution relationships	$	15,000	18
Technology	13,600		10
Total intangible assets	$	28,600

Amortizable intangible assets will be amortized straight line over their assigned useful lives. The following is a schedule of future estimated aggregate amortization expense:

Year	Amount
	(Dollars In Thousands)
Remainder of 2019	$	1,279
2020	2,193
2021	2,193
2022	2,193
2023	2,193

Based on the balance recorded as of June 1, 2019, the expected amortization of VOBA for the next five years is as follows:

Year	Amount
	(Dollars In Thousands)
Remainder of 2019	$	(4,966	)
2020	(12,292		)
2021	(6,807		)
2022	(1,010		)
2023	3,259

VOBA is calculated at a product level and can either be positive or negative depending on the underlying fair values of the associated product lines. VOBA is amortized in accordance with ASC 944-805-35-1, which requires that the amortization should be on a basis consistent with the related reinsurance liability. As such, the net amortization related to a specific transaction in a given year can be either positive or negative as amortization patterns differ between the product lines.

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MONY CLOSED BLOCK OF BUSINESS

6 Months Ended

Jun. 30, 2019

Closed Block Disclosure [Abstract]

MONY CLOSED BLOCK OF BUSINESS

MONY CLOSED BLOCK OF BUSINESS

In 1998, MONY Life Insurance Company (“MONY”) converted from a mutual insurance company to a stock corporation (“demutualization”). In connection with its demutualization, an accounting mechanism known as a closed block (the “Closed Block”) was established for certain individuals’ participating policies in force as of the date of demutualization. Assets, liabilities, and earnings of the Closed Block are specifically identified to support its participating policyholders. The Company acquired the Closed Block in conjunction with the acquisition of MONY in 2013.

Assets allocated to the Closed Block inure solely to the benefit of each Closed Block’s policyholders and will not revert to the benefit of MONY or the Company. No reallocation, transfer, borrowing or lending of assets can be made between the Closed Block and other portions of MONY’s general account, any of MONY’s separate accounts or any affiliate of MONY without the approval of the Superintendent of The New York State Department of Financial Services (the “Superintendent”). Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the general account.

The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in accumulated other comprehensive income (loss) “AOCI”) at the acquisition date of October 1, 2013, represented the estimated maximum future post-tax earnings from the Closed Block that would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force. In connection with the acquisition of MONY, the Company developed an actuarial calculation of the expected timing of MONY’s Closed Block’s earnings as of October 1, 2013. Pursuant to the acquisition of the Company by Dai-ichi Life, this actuarial calculation of the expected timing of MONY’s Closed Block earnings was recalculated and reset as February 1, 2015, along with the establishment of a policyholder dividend obligation as of such date.

If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in the Company’s net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected. If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero). If, over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block.

Many expenses related to Closed Block operations, including amortization of VOBA, are charged to operations outside of the Closed Block; accordingly, net revenues of the Closed Block do not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside of the Closed Block.

Summarized financial information for the Closed Block as of June 30, 2019, and December 31, 2018, is as follows:

	As of
	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
Closed block liabilities
Future policy benefits, policyholders’ account balances and other policyholder liabilities	$	5,611,917	$	5,679,732
Policyholder dividend obligation	173,147		—
Other liabilities	11,043		22,505
Total closed block liabilities	5,796,107		5,702,237
Closed block assets
Fixed maturities, available-for-sale, at fair value	$	4,583,161	$	4,257,437
Mortgage loans on real estate	74,290		75,838
Policy loans	658,971		672,213
Cash	55,960		116,225
Other assets	107,306		136,388
Total closed block assets	5,479,688		5,258,101
Excess of reported closed block liabilities over closed block assets	316,419		444,136
Portion of above representing accumulated other comprehensive income:
Net unrealized investment gains (losses) net of policyholder dividend obligation: $47,972 and $(141,128); and net of income tax: $(10,074) and $61,676	—		(120,528		)
Future earnings to be recognized from closed block assets and closed block liabilities	$	316,419	$	323,608

Reconciliation of the policyholder dividend obligation is as follows:

	For The Six Months Ended June 30,
	2019			2018
	(Dollars In Thousands)
Policyholder dividend obligation, beginning of period	$	—		$	160,712
Applicable to net revenue (losses)	(15,953		)	(19,536		)
Change in net unrealized investment gains (losses) allocated to the policyholder dividend obligation	189,100			(141,176		)
Policyholder dividend obligation, end of period	$	173,147		$	—

Closed Block revenues and expenses were as follows:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2019		2018		2019			2018
	(Dollars In Thousands)
Revenues
Premiums and other income	$	40,105	$	42,465	$	77,549		$	82,077
Net investment income	51,663		50,872		102,791			101,415
Net investment gains (losses)	43		263		(411		)	26
Total revenues	91,811		93,600		179,929			183,518
Benefits and other deductions
Benefits and settlement expenses	87,213		87,940		165,879			167,892
Other operating expenses	247		337		606			20
Total benefits and other deductions	87,460		88,277		166,485			167,912
Net revenues before income taxes	4,351		5,323		13,444			15,606
Income tax expense	913		1,118		2,823			3,277
Net revenues	$	3,438	$	4,205	$	10,621		$	12,329

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INVESTMENT OPERATIONS

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

INVESTMENT OPERATIONS

INVESTMENT OPERATIONS

Net realized gains (losses) are summarized as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Fixed maturities	$	1,098		$	5,539		$	6,215		$	8,322
Equity gains and losses	7,696			(1,044		)	38,413			(9,830		)
Modco trading portfolio	89,571			(52,817		)	184,473			(137,525		)
Other investments	1,137			(1,280		)	(9		)	1,832
Realized gains (losses) - all other investments	99,502			(49,602		)	229,092			(137,201		)
Realized gains (losses) - derivatives(1)	(148,049		)	12,265			(267,720		)	90,324
Realized investment gains (losses)	$	(48,547	)	$	(37,337	)	$	(38,628	)	$	(46,877	)
Net impairments losses recognized in earnings	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)
(1) See Note 7, Derivative Financial Instruments

Gross realized gains and gross realized losses on investments available-for-sale (fixed maturities and short-term investments) are as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Gross realized gains	$	6,812		$	10,137		$	14,682		$	18,187
Gross realized losses:
Impairment losses	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)
Other realized losses	$	(5,714	)	$	(4,598	)	$	(8,467	)	$	(9,865	)

The chart below summarizes the fair value (proceeds) and the gains (losses) realized on securities the Company sold that were in an unrealized gain position and an unrealized loss position.

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Securities in an unrealized gain position:
Fair value (proceeds)	$	491,121		$	466,153		$	1,140,012		$	608,286
Gains realized	$	6,812		$	10,137		$	14,682		$	18,187
Securities in an unrealized loss position(1):
Fair value (proceeds)	$	160,125		$	201,191		$	338,129		$	258,175
Losses realized	$	(5,714	)	$	(4,598	)	$	(8,467	)	$	(9,865	)
(1) The Company made the decision to exit these holdings in conjunction with its overall asset/liability management process.

The chart below summarizes the realized gains (losses) on equity securities sold during the period and equity securities still held at the reporting date.

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars In Thousands)
Net gains (losses) recognized during the period on equity securities	$	7,696	$	(1,044	)	$	38,413	$	(9,830	)
Less: net gains (losses) recognized on equity securities sold during the period	$	193	$	(680	)	$	253	$	(2,381	)
Gains (losses) recognized during the period on equity securities still held	$	7,503	$	(364	)	$	38,160	$	(7,449	)

The amortized cost and fair value of the Company’s investments classified as available-for-sale are as follows:

As of June 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Total OTTI Recognized in OCI(1)
	(Dollars In Thousands)
Fixed maturities:
Residential mortgage-backed securities	$	4,482,547	$	132,602	$	(8,901	)	$	4,606,248
Commercial mortgage-backed securities	2,648,121		51,634		(3,894		)	2,695,861
Other asset-backed securities	1,848,061		22,063		(8,526		)	1,861,598		(3		)
U.S. government-related securities	1,304,382		5,179		(9,004		)	1,300,557
Other government-related securities	555,767		31,550		(4,168		)	583,149
States, municipals, and political subdivisions	4,652,897		183,920		(5,851		)	4,830,966		1,193
Corporate securities	45,267,764		1,549,526		(572,173		)	46,245,117		764
Redeemable preferred stocks	87,459		1,211		(3,758		)	84,912
	60,846,998		1,977,685		(616,275		)	62,208,408		1,954
Short-term investments	1,138,931		—		—			1,138,931		—
	$	61,985,929	$	1,977,685	$	(616,275	)	$	63,347,339	$	1,954
As of December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Total OTTI Recognized in OCI(1)
	(Dollars In Thousands)
Fixed maturities:
Residential mortgage-backed securities	$	3,650,539	$	23,247	$	(62,196	)	$	3,611,590	$	(18	)
Commercial mortgage-backed securities	2,349,274		3,911		(58,101		)	2,295,084		—
Other asset-backed securities	1,410,059		17,232		(35,398		)	1,391,893		—
U.S. government-related securities	1,683,432		1,795		(45,722		)	1,639,505		—
Other government-related securities	545,522		4,292		(33,850		)	515,964		—
States, municipals, and political subdivisions	3,682,037		25,706		(118,902		)	3,588,841		876
Corporate securities	38,634,888		112,992		(2,385,052		)	36,362,828		(29,685		)
Redeemable preferred stocks	94,362		—		(11,560		)	82,802		—
	52,050,113		189,175		(2,750,781		)	49,488,507		(28,827		)
Short-term investments	776,357		—		—			776,357		—
	$	52,826,470	$	189,175	$	(2,750,781	)	$	50,264,864	$	(28,827	)
(1) These amounts are included in the gross unrealized gains and gross unrealized losses columns above.

     The Company holds certain investments pursuant to certain modified coinsurance (“Modco”) arrangements. The fixed maturities held as part of these arrangements are classified as trading securities. The fair value of the investments held pursuant to these Modco arrangements are as follows:    

	As of
	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
Fixed maturities:
Residential mortgage-backed securities	$	203,455	$	241,836
Commercial mortgage-backed securities	204,445		188,925
Other asset-backed securities	147,997		159,907
U.S. government-related securities	51,080		59,794
Other government-related securities	24,342		44,207
States, municipals, and political subdivisions	293,560		286,413
Corporate securities	1,565,561		1,423,833
Redeemable preferred stocks	11,808		11,277
	2,502,248		2,416,192
Equity securities	8,488		9,892
Short-term investments	81,909		30,926
	$	2,592,645	$	2,457,010

The amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities as of June 30, 2019, by expected maturity, are shown below. Expected maturities of securities without a single maturity date are allocated based on estimated rates of prepayment that may differ from actual rates of prepayment.

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars In Thousands)
Due in one year or less	$	1,440,860	$	1,438,699	$	—	$	—
Due after one year through five years	10,103,874		10,229,353		—		—
Due after five years through ten years	13,210,907		13,623,029		—		—
Due after ten years	36,091,357		36,917,327		2,576,216		2,640,827
	$	60,846,998	$	62,208,408	$	2,576,216	$	2,640,827

The chart below summarizes the Company’s other-than-temporary impairments of investments. All of the impairments were related to fixed maturities.

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	Fixed Maturities			Fixed Maturities			Fixed Maturities			Fixed Maturities
	(Dollars In Thousands)
Other-than-temporary impairments	$	(198	)	$	(10	)	$	(1,493	)	$	(701	)
Non-credit impairment losses recorded in other comprehensive income (loss)	(500		)	5			(2,347		)	(2,949		)
Net impairment losses recognized in earnings	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)

There were no other-than-temporary impairments related to fixed maturities or equity securities that the Company intended to sell or expected to be required to sell for the three and six months ended June 30, 2019 and 2018.

The following chart is a rollforward of available-for-sale credit losses on fixed maturities held by the Company for which a portion of an other-than-temporary impairment was recognized in other comprehensive income (loss):

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Beginning balance	$	27,215		$	2,235		$	24,868		$	3,268
Additions for newly impaired securities	—			—			751			—
Additions for previously impaired securities	660			2			3,007			2
Reductions for previously impaired securities due to a change in expected cash flows	(8,202		)	—			(8,834		)	—
Reductions for previously impaired securities that were sold in the current period	(7,175		)	(2,235		)	(7,294		)	(3,268		)
Ending balance	$	12,498		$	2		$	12,498		$	2

The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2019:

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(Dollars In Thousands)
Residential mortgage-backed securities	$	118,932	$	(427	)	$	576,350	$	(8,474	)	$	695,282	$	(8,901	)
Commercial mortgage-backed securities	3,609		(6		)	574,967		(3,888		)	578,576		(3,894		)
Other asset-backed securities	409,753		(5,931		)	134,156		(2,595		)	543,909		(8,526		)
U.S. government-related securities	32,421		(314		)	902,249		(8,690		)	934,670		(9,004		)
Other government-related securities	5,509		(198		)	93,790		(3,970		)	99,299		(4,168		)
States, municipals, and political subdivisions	13,242		(13		)	145,668		(5,838		)	158,910		(5,851		)
Corporate securities	1,244,536		(52,639		)	10,318,328		(519,534		)	11,562,864		(572,173		)
Redeemable preferred stocks	—		—			17,180		(3,758		)	17,180		(3,758		)
	$	1,828,002	$	(59,528	)	$	12,762,688	$	(556,747	)	$	14,590,690	$	(616,275	)

Residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”) had gross unrealized losses greater than twelve months of $8.5 million and $3.9 million as of June 30, 2019. Factors such as the credit enhancement within the deal structure, the average life of the securities, and the performance of the underlying collateral support the recoverability of these investments.

The other asset-backed securities had a gross unrealized loss greater than twelve months of $2.6 million as of June 30, 2019. This category predominately includes student loan backed auction rate securities (“ARS”) whose underlying collateral is at least 97% guaranteed by the Federal Family Education Loan Program (“FFELP”). At this time, the Company has no reason to believe that the U.S. Department of Education would not honor the FFELP guarantee, if it were necessary.

The U.S. government-related securities and the other government-related securities had gross unrealized losses greater than twelve months of $8.7 million and $4.0 million, respectively, as of June 30, 2019. These declines were related to changes in interest rates.

The states, municipals, and political subdivisions category had gross unrealized losses greater than twelve months of $5.8 million as of June 30, 2019. The aggregate decline in fair value of these securities was deemed temporary due to positive factors supporting the recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, and other pertinent information.

The corporate securities category had gross unrealized losses greater than twelve months of $519.5 million as of June 30, 2019. The aggregate decline in fair value of these securities was deemed temporary due to positive factors supporting the recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, interest rate movement, and other pertinent information.

     As of June 30, 2019, the Company had a total of 1,322 positions that were in an unrealized loss position, but the Company does not consider these unrealized loss positions to be other-than-temporary. This is based on the aggregate factors discussed previously and because the Company has the ability and intent to hold these investments until the fair values recover, and the Company does not intend to sell or expect to be required to sell the securities before recovering the Company’s amortized cost of the securities.

The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2018:

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(Dollars In Thousands)
Residential mortgage-backed securities	$	1,485,009	$	(31,302	)	$	804,364	$	(30,894	)	$	2,289,373	$	(62,196	)
Commercial mortgage-backed securities	422,438		(7,442		)	1,429,384		(50,659		)	1,851,822		(58,101		)
Other asset-backed securities	687,271		(30,963		)	148,871		(4,435		)	836,142		(35,398		)
U.S. government-related securities	130,290		(4,668		)	1,085,654		(41,054		)	1,215,944		(45,722		)
Other government-related securities	226,201		(15,267		)	131,569		(18,583		)	357,770		(33,850		)
States, municipals, and political subdivisions	1,004,262		(27,180		)	1,129,152		(91,722		)	2,133,414		(118,902		)
Corporate securities	18,326,331		(970,553		)	12,859,732		(1,414,499		)	31,186,063		(2,385,052		)
Redeemable preferred stocks	41,147		(4,467		)	41,655		(7,093		)	82,802		(11,560		)
	$	22,322,949	$	(1,091,842	)	$	17,630,381	$	(1,658,939	)	$	39,953,330	$	(2,750,781	)

     As of June 30, 2019, the Company had securities in its available-for-sale portfolio which were rated below investment grade of $1.6 billion and had an amortized cost of $1.7 billion. In addition, included in the Company’s trading portfolio, the Company held $119.9 million of securities which were rated below investment grade. Approximately $275.6 million of the available-for-sale and trading securities that were below investment grade were not publicly traded.

The change in unrealized gains (losses), net of income tax, on fixed maturities, classified as available-for-sale is summarized as follows:

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars In Thousands)
Fixed maturities	$	1,541,352	$	(585,527	)	$	3,099,183	$	(1,505,298	)

The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of June 30, 2019 and December 31, 2018, are as follows:

As of June 30, 2019	Amortized Cost		Gross Unrecognized Holding Gains		Gross Unrecognized Holding Losses			Fair Value		Total OTTI Recognized in OCI
	(Dollars In Thousands)
Fixed maturities:
Securities issued by affiliates:
Red Mountain, LLC	$	773,216	$	—	$	(14,249	)	$	758,967	$	—
Steel City, LLC	1,803,000		78,860		—			1,881,860		—
	$	2,576,216	$	78,860	$	(14,249	)	$	2,640,827	$	—
As of December 31, 2018	Amortized Cost		Gross Unrecognized Holding Gains		Gross Unrecognized Holding Losses			Fair Value		Total OTTI Recognized in OCI
	(Dollars In Thousands)
Fixed maturities:
Securities issued by affiliates:
Red Mountain, LLC	$	750,474	$	—	$	(81,657	)	$	668,817	$	—
Steel City, LLC	1,883,000		—		(4,607		)	1,878,393		—
	$	2,633,474	$	—	$	(86,264	)	$	2,547,210	$	—

During the three and six months ended June 30, 2019 and 2018, the Company recorded no other-than-temporary impairments on held-to-maturity securities.

The Company’s held-to-maturity securities had $78.9 million of gross unrecognized holding gains and $14.2 million of gross unrecognized holding losses as of June 30, 2019. The Company does not consider these unrecognized holding losses to be other-than-temporary based on certain positive factors associated with the securities which include credit ratings of the guarantor, financial health of the issuer and guarantor, continued access of the issuer to capital markets and other pertinent information. These held-to-maturity securities are issued by affiliates of the Company which are considered variable interest entities (“VIEs”). The Company is not the primary beneficiary of these entities and thus the securities are not eliminated in consolidation. These securities are collateralized by non-recourse funding obligations issued by captive insurance companies that are affiliates of the Company.

The Company’s held-to-maturity securities had $86.3 million of gross unrecognized holding losses as of December 31, 2018. The Company does not consider these unrecognized holding losses to be other-than-temporary based on certain positive factors associated with the securities which include credit ratings of the guarantor, financial health of the issuer and guarantor, continued access of the issuer to capital markets and other pertinent information.

Variable Interest Entities

The Company holds certain investments in entities in which its ownership interests could possibly be considered variable interests under Topic 810 of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC” or “Codification”) (excluding debt and equity securities held as trading, available for sale, or held to maturity). The Company reviews the characteristics of each of these applicable entities and compares those characteristics to applicable criteria to determine whether the entity is a VIE. If the entity is determined to be a VIE, the Company then performs a detailed review to determine whether the interest would be considered a variable interest under the guidance. The Company then performs a qualitative review of all variable interests with the entity and determines whether the Company is the primary beneficiary. ASC 810 provides that an entity is the primary beneficiary of a VIE if the entity has 1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and 2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.

Based on this analysis, the Company had an interest in two subsidiaries as of June 30, 2019 and December 31, 2018, Red Mountain, LLC (“Red Mountain”) and Steel City, LLC (“Steel City”), that were determined to be VIEs.

The activity most significant to Red Mountain is the issuance of a note in connection with a financing transaction involving Golden Gate V Vermont Captive Insurance Company (“Golden Gate V”) in which Golden Gate V issued non-recourse funding obligations to Red Mountain and Red Mountain issued a note (the “Red Mountain Note”) to Golden Gate V. For details of this transaction, see Note 10, Debt and Other Obligations. The Company had the power, via its 100% ownership through an affiliate, to direct the activities of the VIE, but did not have the obligation to absorb losses related to the primary risks or sources of variability to the VIE. The variability of loss would be borne primarily by the third party in its function as provider of credit enhancement on the Red Mountain Note. Accordingly, it was determined that the Company is not the primary beneficiary of the VIE. The Company’s risk of loss related to the VIE is limited to its investment, through an affiliate, of $10,000. Additionally, the Company has guaranteed Red Mountain’s payment obligation for the credit enhancement fee to the unrelated third party provider. As of June 30, 2019, no payments have been made or required related to this guarantee.

Steel City, a wholly owned subsidiary of the Company, entered into a financing agreement on January 15, 2016 involving Golden Gate Captive Insurance Company ("Golden Gate"), in which Golden Gate issued non-recourse funding obligations to Steel City and Steel City issued three notes (the “Steel City Notes”) to Golden Gate. Credit enhancement on the Steel City Notes is provided by unrelated third parties. For details of the financing transaction, see Note 10, Debt and Other Obligations. The activity most significant to Steel City is the issuance of the Steel City Notes. The Company had the power, via its 100% ownership, to direct the activities of the VIE, but did not have the obligation to absorb losses related to the primary risks or sources of variability to the VIE. The variability of loss would be borne primarily by the third parties in their function as providers of credit enhancement on the Steel City Notes. Accordingly, it was determined that the Company is not the primary beneficiary of the VIE. The Company’s risk of loss related to the VIE is limited to its investment of $10,000. Additionally, the Company has guaranteed Steel City’s payment obligation for the credit enhancement fee to the unrelated third party providers. As of June 30, 2019, no payments have been made or required related to this guarantee.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company determined the fair value of its financial instruments based on the fair value hierarchy established in FASB guidance referenced in the Fair Value Measurements and Disclosures Topic which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company has adopted the provisions from the FASB guidance that is referenced in the Fair Value Measurements and Disclosures Topic for non-financial assets and liabilities (such as property and equipment, goodwill, and other intangible assets) that are required to be measured at fair value on a periodic basis. The effect on the Company’s periodic fair value measurements for non-financial assets and liabilities was not material.

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded at fair value on the consolidated balance sheets are categorized as follows:

•Level 1:  Unadjusted quoted prices for identical assets or liabilities in an active market.

• Level 2:  Quoted prices in markets that are not active or significant inputs that are observable either directly or indirectly. Level 2 inputs include the following:

a)    Quoted prices for similar assets or liabilities in active markets;

b)    Quoted prices for identical or similar assets or liabilities in non-active markets;

c)    Inputs other than quoted market prices that are observable; and

d) Inputs that are derived principally from or corroborated by observable market data through correlation or other means.

• Level 3:  Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect management’s own estimates about the assumptions a market participant would use in pricing the asset or liability.

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of June 30, 2019:

	Measurement Category	Level 1		Level 2		Level 3		Total
		(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	4	$	—	$	4,606,248	$	—	$	4,606,248
Commercial mortgage-backed securities	4	—		2,686,495		9,366		2,695,861
Other asset-backed securities	4	—		1,443,288		418,310		1,861,598
U.S. government-related securities	4	884,053		416,504		—		1,300,557
Other government-related securities	4	—		583,149		—		583,149
States, municipals, and political subdivisions	4	—		4,830,966		—		4,830,966
Corporate securities	4	—		44,916,626		1,328,491		46,245,117
Redeemable preferred stocks	4	67,732		17,180		—		84,912
Total fixed maturity securities - available-for-sale		951,785		59,500,456		1,756,167		62,208,408
Fixed maturity securities - trading
Residential mortgage-backed securities	3	—		203,455		—		203,455
Commercial mortgage-backed securities	3	—		204,445		—		204,445
Other asset-backed securities	3	—		85,817		62,180		147,997
U.S. government-related securities	3	25,929		25,151		—		51,080
Other government-related securities	3	—		24,342		—		24,342
States, municipals, and political subdivisions	3	—		293,560		—		293,560
Corporate securities	3	—		1,560,267		5,294		1,565,561
Redeemable preferred stocks	3	11,808		—		—		11,808
Total fixed maturity securities - trading		37,737		2,397,037		67,474		2,502,248
Total fixed maturity securities		989,522		61,897,493		1,823,641		64,710,656
Equity securities	3	560,302		36		69,627		629,965
Other long-term investments(1)	3 & 4	65,231		467,642		110,923		643,796
Short-term investments	3	1,153,978		66,862		—		1,220,840
Total investments		2,769,033		62,432,033		2,004,191		67,205,257
Cash	3	240,157		—		—		240,157
Other assets	3	34,335		—		—		34,335
Assets related to separate accounts
Variable annuity	3	12,790,474		—		—		12,790,474
Variable universal life	3	1,073,020		—		—		1,073,020
Total assets measured at fair value on a recurring basis		$	16,907,019	$	62,432,033	$	2,004,191	$	81,343,243
Liabilities:
Annuity account balances (2)	3	$	—	$	—	$	72,585	$	72,585
Other liabilities(1)	3 & 4	23,552		198,564		1,097,077		1,319,193
Total liabilities measured at fair value on a recurring basis		$	23,552	$	198,564	$	1,169,662	$	1,391,778
(1) Includes certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.
(3) Fair Value through Net Income
(4) Fair Value through Other Comprehensive Income (Loss)

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, 2018:

	Measurement Category	Level 1		Level 2		Level 3		Total
		(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	4	$	—	$	3,611,590	$	—	$	3,611,590
Commercial mortgage-backed securities	4	—		2,295,084		—		2,295,084
Other asset-backed securities	4	—		970,251		421,642		1,391,893
U.S. government-related securities	4	1,010,485		629,020		—		1,639,505
Other government-related securities	4	—		515,964		—		515,964
State, municipals, and political subdivisions	4	—		3,588,841		—		3,588,841
Corporate securities	4	—		35,724,552		638,276		36,362,828
Redeemable preferred stocks	4	65,536		17,266		—		82,802
Total fixed maturity securities - available-for-sale		1,076,021		47,352,568		1,059,918		49,488,507
Fixed maturity securities - trading
Residential mortgage-backed securities	3	—		241,836		—		241,836
Commercial mortgage-backed securities	3	—		188,925		—		188,925
Other asset-backed securities	3	—		133,851		26,056		159,907
U.S. government-related securities	3	27,453		32,341		—		59,794
Other government-related securities	3	—		44,207		—		44,207
State, municipals, and political subdivisions	3	—		286,413		—		286,413
Corporate securities	3	—		1,417,591		6,242		1,423,833
Redeemable preferred stocks	3	11,277		—		—		11,277
Total fixed maturity securities - trading		38,730		2,345,164		32,298		2,416,192
Total fixed maturity securities		1,114,751		49,697,732		1,092,216		51,904,699
Equity securities	3	531,523		36		64,325		595,884
Other long-term investments(1)	3&4	83,047		180,438		112,344		375,829
Short-term investments	3	730,067		77,216		—		807,283
Total investments		2,459,388		49,955,422		1,268,885		53,683,695
Cash	3	173,714		—		—		173,714
Other assets	3	29,257		—		—		29,257
Assets related to separate accounts
Variable annuity	3	12,288,919		—		—		12,288,919
Variable universal life	3	937,732		—		—		937,732
Total assets measured at fair value on a recurring basis		$	15,889,010	$	49,955,422	$	1,268,885	$	67,113,317
Liabilities:
Annuity account balances(2)	3	$	—	$	—	$	76,119	$	76,119
Other liabilities(1)	3&4	56,018		69,501		629,942		755,461
Total liabilities measured at fair value on a recurring basis		$	56,018	$	69,501	$	706,061	$	831,580
(1) Includes certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.
(3) Fair Value through Net Income
(4) Fair Value through Other Comprehensive Income (Loss)

Determination of fair values

The valuation methodologies used to determine the fair values of assets and liabilities reflect market participant assumptions and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. The Company determines the fair values of certain financial assets and financial liabilities based on quoted market prices, where available. The Company also determines certain fair values based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, the Company’s credit standing, liquidity, and where appropriate, risk margins on unobservable parameters. The following is a discussion of the methodologies used to determine fair values for the financial instruments as listed in the above table.

The fair value of fixed maturity, short-term, and equity securities is determined by management after considering one of three primary sources of information: third party pricing services, non-binding independent broker quotations, or pricing matrices. Security pricing is applied using a “waterfall” approach whereby publicly available prices are first sought from third party pricing services, the remaining unpriced securities are submitted to independent brokers for non-binding prices, or lastly, securities are priced using a pricing matrix. Typical inputs used by these three pricing methods include, but are not limited to: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. Third party pricing services price 91.8% of the Company’s available-for-sale and trading fixed maturity securities. Based on the typical trading volumes and the lack of quoted market prices for available-for-sale and trading fixed maturities, third party pricing services derive the majority of security prices from observable market inputs such as recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information outlined above. If there are no recent reported trades, the third party pricing services and brokers may use matrix or model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Certain securities are priced via independent non-binding broker quotations, which are considered to have no significant unobservable inputs. When using non-binding independent broker quotations, when available the Company obtains two quotes per security. Where multiple broker quotes are obtained, the Company reviews the quotes and selects the quote that provides the best estimate of the price a market participant would pay for these specific assets in an arm’s length transaction. A pricing matrix is used to price securities for which the Company is unable to obtain or effectively rely on either a price from a third party pricing service or an independent broker quotation.

The pricing matrix used by the Company begins with current spread levels to determine the market price for the security. The credit spreads, assigned by brokers, incorporate the issuer’s credit rating, liquidity discounts, weighted- average of contracted cash flows, risk premium, if warranted, due to the issuer’s industry, and the security’s time to maturity. The Company uses credit ratings provided by nationally recognized rating agencies.

For securities that are priced via non-binding independent broker quotations, the Company assesses whether prices received from independent brokers represent a reasonable estimate of fair value. The Company’s assessment incorporates various metrics (yield curves, credit spreads, prepayment rates, etc.) along with other information available to the Company from both internal and external sources to determine the valuation of such holdings. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon the analytics, the price received from the independent broker is adjusted accordingly. The Company did not adjust any quotes or prices received from brokers during the six months endedJune 30, 2019.

The Company has analyzed the third party pricing services’ valuation methodologies and related inputs and has also evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs that is in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. Based on this evaluation and investment class analysis, each price was classified into Level 1, 2, or 3. Most prices provided by third party pricing services are classified into Level 2 because the significant inputs used in pricing the securities are market observable and the observable inputs are corroborated by the Company. Since the matrix pricing of certain debt securities includes significant non-observable inputs, they are classified as Level 3.

Asset-Backed Securities

This category mainly consists of residential mortgage-backed securities, commercial mortgage-backed securities, and other asset-backed securities (collectively referred to as asset-backed securities or “ABS”). As of June 30, 2019, the Company held $9.2 billion of ABS classified as Level 2. These securities are priced from information provided by a third party pricing service and independent broker quotes. The third party pricing services and brokers mainly value securities using both a market and income approach to valuation. As part of this valuation process they consider the following characteristics of the item being measured to be relevant inputs: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, and 7) credit ratings of the securities.

After reviewing these characteristics of the ABS, the third party pricing service and brokers use certain inputs to determine the value of the security. For ABS classified as Level 2, the valuation would consist of predominantly market observable inputs such as, but not limited to: 1) monthly principal and interest payments on the underlying assets, 2) average life of the security, 3) prepayment speeds, 4) credit spreads, 5) treasury and swap yield curves, and 6) discount margin. The Company reviews the methodologies and valuation techniques (including the ability to observe inputs) in assessing the information received from external pricing services and in consideration of the fair value presentation.

As of June 30, 2019, the Company held $489.9 million of Level 3 ABS, which included $427.7 million of other asset-backed securities classified as available-for-sale and $62.2 million of other asset-backed securities classified as trading. These securities are predominantly ARS whose underlying collateral is at least 97% guaranteed by the FFELP. As a result of the ARS market collapse during 2008, the Company prices its ARS using an income approach valuation model. As part of the valuation process the Company reviews the following characteristics of the ARS in determining the relevant inputs: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, 7) credit ratings of the securities, 8) liquidity premium, and 9) paydown rate. In periods where market activity increases and there are transactions at a price that is not the result of a distressed or forced sale we consider those prices as part of our valuation. If the market activity during a period is solely the result of the issuer redeeming positions we consider those transactions in our valuation, but still consider them to be Level 3 measurements due to the nature of the transaction.

Corporate Securities, Redeemable Preferred Stocks, U.S. Government-Related Securities, States, Municipals, and Political Subdivisions, and Other Government-Related Securities

As of June 30, 2019, the Company classified approximately $52.7 billion of corporate securities, redeemable preferred stocks, U.S. government-related securities, states, municipals, and political subdivisions, and other government-related securities as Level 2. The fair value of the Level 2 securities is predominantly priced by broker quotes and a third party pricing service. The Company has reviewed the valuation techniques of the brokers and third party pricing service and has determined that such techniques used Level 2 market observable inputs. The following characteristics of the securities are considered to be the primary relevant inputs to the valuation: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) seniority, and 4) credit ratings. The Company reviews the methodologies and valuation techniques (including the ability to observe inputs) in assessing the information received from external pricing services and in consideration of the fair value presentation.

The brokers and third party pricing service utilize valuation models that consist of a hybrid income and market approach to valuation. The pricing models utilize the following inputs: 1) principal and interest payments, 2) treasury yield curve, 3) credit spreads from new issue and secondary trading markets, 4) dealer quotes with adjustments for issues with early redemption features, 5) liquidity premiums present on private placements, and 6) discount margins from dealers in the new issue market.

As of June 30, 2019, the Company classified approximately $1.3 billion of securities as Level 3 valuations. Level 3 securities primarily represent investments in illiquid bonds for which no price is readily available. To determine a price, the Company uses a discounted cash flow model with both observable and unobservable inputs. These inputs are entered into an industry standard pricing model to determine the final price of the security. These inputs include: 1) principal and interest payments, 2) coupon rate, 3) sector and issuer level spread over treasury, 4) underlying collateral, 5) credit ratings, 6) maturity, 7) embedded options, 8) recent new issuance, 9) comparative bond analysis, and 10) an illiquidity premium.

Equities

As of June 30, 2019, the Company held approximately $69.7 million of equity securities classified as Level 2 and Level 3. Of this total, $68.5 million represents Federal Home Loan Bank (“FHLB”) stock. The Company believes that the cost of the FHLB stock approximates fair value.

Other Long-term Investments and Other Liabilities

Other long-term investments and other liabilities consist entirely of free-standing and embedded derivative financial instruments. Refer to Note 7, Derivative Financial Instruments for additional information related to derivatives. Derivative financial instruments are valued using exchange prices, independent broker quotations, or pricing valuation models, which utilize market data inputs. Excluding embedded derivatives, as of June 30, 2019, 100.0% of derivatives based upon notional values were priced using exchange prices or independent broker quotations. Inputs used to value derivatives include, but are not limited to, interest swap rates, credit spreads, interest rate and equity market volatility indices, equity index levels, and treasury rates. The Company performs monthly analysis on derivative valuations that includes both quantitative and qualitative analyses.

Derivative instruments classified as Level 1 generally include futures and options, which are traded on active exchange markets.

Derivative instruments classified as Level 2 primarily include swaps, options, and swaptions, which are traded over-the-counter. Level 2 also includes certain centrally cleared derivatives. These derivative valuations are determined using independent broker quotations, which are corroborated with observable market inputs.

Derivative instruments classified as Level 3 are embedded derivatives and include at least one significant non-observable input. A derivative instrument containing Level 1 and Level 2 inputs will be classified as a Level 3 financial instrument in its entirety if it has at least one significant Level 3 input.

The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instruments may not be classified within the same fair value hierarchy level as the associated assets and liabilities. Therefore, the changes in fair value on derivatives reported in Level 3 may not reflect the offsetting impact of the changes in fair value of the associated assets and liabilities.

The embedded derivatives are carried at fair value in other long-term investments and other liabilities on the Company’s consolidated condensed balance sheet. The changes in fair value are recorded in earnings as Realized investment gains (losses). Refer to Note 7, Derivative Financial Instruments for more information related to each embedded derivatives gains and losses.

The fair value of the guaranteed living withdrawal benefits (“GLWB”) embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using multiple risk neutral stochastic equity scenarios and policyholder behavior assumptions. The risk neutral scenarios are generated using the current swap curve and projected equity volatilities and correlations. The projected equity volatilities are based on a blend of historical volatility and near-term equity market implied volatilities. The equity correlations are based on historical price observations. For policyholder behavior assumptions, expected lapse and utilization assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the Ruark 2015 ALB table, with attained age factors varying from 87.0% - 100.0% based on company experience. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR plus a credit spread (to represent the Company’s non-performance risk). As a result of using significant unobservable inputs, the GLWB embedded derivative is categorized as Level 3. Policyholder assumptions are reviewed on an annual basis.

The balance of the fixed indexed annuity (“FIA”) embedded derivative is impacted by policyholder cash flows associated with the FIA product that are allocated to the embedded derivative in addition to changes in the fair value of the embedded derivative during the reporting period. The fair value of the FIA embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder assumptions (both elective and non-elective). For policyholder behavior assumptions, expected lapse and withdrawal assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the 2015 Ruark ALB mortality table, with attained age factors varying from 87.0% - 100.0% based on company experience. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR up to one year and constant maturity treasury rates plus a credit spread (to represent the Company’s non-performance risk) thereafter. Policyholder assumptions are reviewed on an annual basis. As a result of using significant unobservable inputs, the FIA embedded derivative is categorized as Level 3.

The balance of the indexed universal life (“IUL”) embedded derivative is impacted by policyholder cash flows associated with the IUL product that are allocated to the embedded derivative in addition to changes in the fair value of the embedded derivative during the reporting period. The fair value of the IUL embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder assumptions (both elective and non-elective). For policyholder behavior assumptions, expected lapse and withdrawal assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the SOA 2015 VBT Primary Tables, with attained age factors varying from 37% - 577% based on company experience. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR up to one year and constant maturity treasury rates plus a credit spread (to represent the Company’s non-performance risk) thereafter. Policyholder assumptions are reviewed on an annual basis. As a result of using significant unobservable inputs, the IUL embedded derivative is categorized as Level 3.

The Company has assumed and ceded certain blocks of policies under modified coinsurance agreements in which the investment results of the underlying portfolios inure directly to the reinsurers. As a result, these agreements contain embedded derivatives that are reported at fair value. Changes in their fair value are reported in earnings. The investments supporting the agreements where the Company has ceded certain blocks of policies are designated as “trading securities”; therefore changes in their fair value are also reported in earnings. As of June 30, 2019, the fair value of the embedded derivative is based upon the relationship between the statutory policy liabilities (net of policy loans) of $3.5 billion and the statutory unrealized gain (loss) of the securities of $210.5 million. As a result, changes in the fair value of the embedded derivatives where the Company has ceded certain blocks of policies are largely offset by the changes in fair value of the related investments and each are reported in earnings. The fair value of the embedded derivative is considered a Level 3 valuation due to the unobservable nature of the policy liabilities.

Annuity Account Balances

The Company records a certain legacy block of FIA reserves at fair value. Based on the characteristics of these reserves, the Company believes that the fund value approximates fair value. The fair value measurement of these reserves is considered a Level 3 valuation due to the unobservable nature of the fund values. The Level 3 fair value as of June 30, 2019 is $72.6 million.

Separate Accounts

Separate account assets are invested in open-ended mutual funds and are included in Level 1.

Valuation of Level 3 Financial Instruments

The following table presents the 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 June 30, 2019		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	418,178	Liquidation	Liquidation value	$95.39 - $97.00 ($96.48)
			Discounted cash flow	Liquidity premium	0.11% - 1.50% (0.73%)
				Paydown rate	10.84% - 12.88% (11.98%)
Corporate securities	1,328,490		Discounted cash flow	Spread over treasury	0.87% - 4.10% (1.75%)
Liabilities:(1)
Embedded derivatives - GLWB(2)	$	338,648	Actuarial cash flow model	Mortality	87% to 100% of
					Ruark 2015 ALB table
				Lapse	Ruark Predictive Model
				Utilization	99%. 10% of policies have a one-
					time over-utilization of 400%
				Nonperformance risk	0.17% - 0.88%
Embedded derivative - FIA	300,364		Actuarial cash flow model	Expenses	$145 per policy
				Withdrawal rate	1.5% prior to age 70, 100% of the
					RMD for ages 70+
				Mortality	87% to 100% of Ruark 2015 ALB
					table
				Lapse	1.0% - 30.0%, depending
					on duration/surrender
					charge period
					Dynamically adjusted for WB moneyness and projected market rates vs credited rates
				Nonperformance risk	0.17% - 0.88%
Embedded derivative - IUL	136,660		Actuarial cash flow model	Mortality	37% - 577% of 2015
					VBT Primary Tables
				Lapse	0.5% - 10.0%, depending
					on duration/distribution
					channel and smoking class
				Nonperformance risk	0.17% - 0.88%
(1) Excludes modified coinsurance arrangements.
(2) The fair value for the GLWB embedded derivative is presented as a net liability.

The chart above excludes Level 3 financial instruments that are valued using broker quotes and for which book value approximates fair value.

The Company has considered all reasonably available quantitative inputs as of June 30, 2019, but the valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company. This resulted in $77.9 million of financial instruments being classified as Level 3 as of June 30, 2019. Of the $77.9 million, $71.7 million are other asset-backed securities, $5.3 million are corporate securities, and $0.9 million are equity securities.

In certain cases, the Company has determined that book value materially approximates fair value. As of June 30, 2019, the Company held $68.7 million of financial instruments where book value approximates fair value which was predominantly FHLB stock.

The following table presents the 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 December 31, 2018		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	421,458	Liquidation	Liquidation value	$85.75 - $99.99 ($95.36)
			Discounted Cash Flow	Liquidity premium	0.02% - 1.25% (0.64%)
				Paydown rate	10.96% - 13.11% (12.03%)
Corporate securities	631,068		Discounted cash flow	Spread over treasury	0.84% - 3.0% (1.84%)
Liabilities:(1)
Embedded derivatives - GLWB(2)	$	184,071	Actuarial cash flow model	Mortality	87% to 100% of
					Ruark 2015 ALB table
				Lapse	Ruark Predictive Model
				Utilization	99%. 10% of policies have a one-
					time over-utilization of 400%
				Nonperformance risk	0.21% - 1.16%
Embedded derivative - FIA	217,288		Actuarial cash flow model	Expenses	$145 per policy
				Withdrawal rate	1.5% prior to age 70, 100% of the
					RMD for ages 70+
				Mortality	87% to 100% of Ruark 2015 ALB
					table
				Lapse	1.0% - 30.0%, depending
					on duration/surrender
					charge period
				Nonperformance risk	0.21% - 1.16%
Embedded derivative - IUL	90,231		Actuarial cash flow model	Mortality	37% - 577% of 2015
					VBT Primary Tables
				Lapse	0.5% - 10.0%, depending
					on duration/distribution
					channel and smoking class
				Nonperformance risk	0.21% - 1.16%
(1) Excludes modified coinsurance arrangements.
(2) The fair value for the GLWB embedded derivative is presented as a net liability.

The chart above excludes Level 3 financial instruments that are valued using broker quotes and for which book value approximates fair value.

The Company had considered all reasonably available quantitative inputs as of December 31, 2018, but the valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company. This resulted in $40.4 million of financial instruments being classified as Level 3 as of December 31, 2018. Of the $40.4 million, $26.2 million are other asset-backed securities, $13.5 million are corporate securities, and $0.7 million are equity securities.

In certain cases the Company has determined that book value materially approximates fair value. As of December 31, 2018, the Company held $63.6 million of financial instruments where book value approximates fair value which was predominantly FHLB stock.

The asset-backed securities classified as Level 3 are predominantly ARS. A change in the paydown rate (the projected annual rate of principal reduction) of the ARS can significantly impact the fair value of these securities. A decrease in the paydown rate would increase the projected weighted average life of the ARS and increase the sensitivity of the ARS’ fair value to changes in interest rates. An increase in the liquidity premium would result in a decrease in the fair value of the securities, while a decrease in the liquidity premium would increase the fair value of these securities. The liquidation values for these securities are sensitive to the issuer’s available cash flows and ability to redeem the securities, as well as the current holders’ willingness to liquidate at the specified price.

The fair value of corporate bonds classified as Level 3 is sensitive to changes in the interest rate spread over the corresponding U.S. Treasury rate. This spread represents a risk premium that is impacted by company-specific and market factors. An increase in the spread can be caused by a perceived increase in credit risk of a specific issuer and/or an increase in the overall market risk premium associated with similar securities. The fair values of corporate bonds are sensitive to changes in spread. When holding the treasury rate constant, the fair value of corporate bonds increases when spreads decrease, and decreases when spreads increase.

The fair value of the GLWB embedded derivative is sensitive to changes in the discount rate which includes the Company’s nonperformance risk, volatility, lapse, and mortality assumptions. The volatility assumption is an observable input as it is based on market inputs. The Company’s nonperformance risk, lapse, and mortality are unobservable. An increase in the three unobservable assumptions would result in a decrease in the fair value of the liability and conversely, if there is a decrease in the assumptions the fair value would increase. The fair value is also dependent on the assumed policyholder utilization of the GLWB where an increase in assumed utilization would result in an increase in the fair value of the liability and conversely, if there is a decrease in the assumption, the fair value would decrease.

The fair value of the FIA embedded derivative is predominantly impacted by observable inputs such as discount rates and equity returns. However, the fair value of the FIA embedded derivative is sensitive to non-performance risk, which is unobservable. The value of the liability increases with decreases in the discount rate and non-performance risk and decreases with increases in the discount rate and nonperformance risk. The value of the liability increases with increases in equity returns and the liability decreases with a decrease in equity returns.

The fair value of the IUL embedded derivative is predominantly impacted by observable inputs such as discount rates and equity returns. However, the fair value of the IUL embedded derivative is sensitive to non-performance risk, which is unobservable. The value of the liability increases with decreases in the discount rate and non-performance risk and decreases with increases in the discount rate and non-performance risk. The value of the liability increases with increases in equity returns and the liability decreases with a decrease in equity returns.

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended June 30, 2019, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																							Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3			Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	—	$	—		$	—		$	—	$	—
Commercial mortgage-backed securities	—		—		16		—			—			9,359		(7		)	—		—		—			(2		)	9,366		—
Other asset-backed securities	420,091		—		2,513		(37		)	(4,468		)	—		(7		)	—		—		—			218			418,310		—
Corporate securities	648,608		82		25,371		—			(497		)	661,627		(56,183		)	—		—		49,350			133			1,328,491		—
Total fixed maturity securities - available-for-sale	1,068,699		82		27,900		(37		)	(4,965		)	670,986		(56,197		)	—		—		49,350			349			1,756,167		—
Fixed maturity securities - trading
Other asset-backed securities	66,484		810		—		(3,468		)	—			—		(781		)	—		—		(797		)	(68		)	62,180		(2,717		)
Corporate securities	5,251		68		—		—			—			—		1			—		—		—			(26		)	5,294		68
Total fixed maturity securities - trading	71,735		878		—		(3,468		)	—			—		(780		)	—		—		(797		)	(94		)	67,474		(2,649		)
Total fixed maturity securities	1,140,434		960		27,900		(3,505		)	(4,965		)	670,986		(56,977		)	—		—		48,553			255			1,823,641		(2,649		)
Equity securities	64,394		157		—		(3		)	—			5,079		—			—		—		—			—			69,627		153
Other long-term investments(1)	109,532		13,700		—		(13,888		)	—			1,579		—			—		—		—			—			110,923		(188		)
Total investments	1,314,360		14,817		27,900		(17,396		)	(4,965		)	677,644		(56,977		)	—		—		48,553			255			2,004,191		(2,684		)
Total assets measured at fair value on a recurring basis	$	1,314,360	$	14,817	$	27,900	$	(17,396	)	$	(4,965	)	$	677,644	$	(56,977	)	$	—	$	—	$	48,553		$	255		$	2,004,191	$	(2,684	)
Liabilities:
Annuity account balances(2)	$	74,613	$	—	$	—	$	(825	)	$	—		$	—	$	—		$	56	$	2,909	$	—		$	—		$	72,585	$	—
Other liabilities(1)	797,891		364		—		(262,346		)	—			37,204		—			—		—		—			—			1,097,077		(261,982		)
Total liabilities measured at fair value on a recurring basis	$	872,504	$	364	$	—	$	(263,171	)	$	—		$	37,204	$	—		$	56	$	2,909	$	—		$	—		$	1,169,662	$	(261,982	)
(1) Represents certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.

For the three months ended June 30, 2019, there were $50.1 million of securities transferred into Level 3.

For the three months ended June 30, 2019, there were $1.6 million of securities transferred into Level 2 from Level 3.These transfers resulted from securities that were priced internally using significant unobservable inputs where market observable inputs were not available in previous periods but were priced by independent pricing services or brokers as of June 30, 2019.

For the three months ended June 30, 2019, there were no transfers from Level 2 into Level 1.

For the three months ended June 30, 2019, there were no transfers from Level 1 into Level 2.

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the six months ended June 30, 2019, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																						Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3		Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	—	$	—	$	—		$	—	$	—
Commercial mortgage-backed securities	—		—		16		—			—			9,359		(7		)	—		—		—		(2		)	9,366		—
Other asset-backed securities	421,642		446		10,660		(57		)	(4,799		)	—		(10,015		)	—		—		—		433			418,310		—
Corporate securities	638,276		82		43,956		—			(3,509		)	695,627		(84,956		)	—		—		39,255		(240		)	1,328,491		—
Total fixed maturity securities - available-for-sale	1,059,918		528		54,632		(57		)	(8,308		)	704,986		(94,978		)	—		—		39,255		191			1,756,167		—
Fixed maturity securities - trading
Other asset-backed securities	26,056		4,006		—		(3,584		)	—			15,463		(5,892		)	—		—		26,267		(136		)	62,180		1,068
Corporate securities	6,242		169		—		(31		)	—			—		(1,035		)	—		—		—		(51		)	5,294		134
Total fixed maturity securities - trading	32,298		4,175		—		(3,615		)	—			15,463		(6,927		)	—		—		26,267		(187		)	67,474		1,202
Total fixed maturity securities	1,092,216		4,703		54,632		(3,672		)	(8,308		)	720,449		(101,905		)	—		—		65,522		4			1,823,641		1,202
Equity securities	64,325		239		—		(16		)	—			5,079		—			—		—		—		—			69,627		222
Other long-term investments(1)	112,344		26,922		—		(29,922		)	—			1,579		—			—		—		—		—			110,923		(3,000		)
Total investments	1,268,885		31,864		54,632		(33,610		)	(8,308		)	727,107		(101,905		)	—		—		65,522		4			2,004,191		(1,576		)
Total assets measured at fair value on a recurring basis	$	1,268,885	$	31,864	$	54,632	$	(33,610	)	$	(8,308	)	$	727,107	$	(101,905	)	$	—	$	—	$	65,522	$	4		$	2,004,191	$	(1,576	)
Liabilities:
Annuity account balances(2)	$	76,119	$	—	$	—	$	(1,152	)	$	—		$	—	$	—		$	67	$	4,753	$	—	$	—		$	72,585	$	—
Other liabilities(1)	629,942		12,034		—		(441,965		)	—			37,204		—			—		—		—		—			1,097,077		(429,931		)
Total liabilities measured at fair value on a recurring basis	$	706,061	$	12,034	$	—	$	(443,117	)	$	—		$	37,204	$	—		$	67	$	4,753	$	—	$	—		$	1,169,662	$	(429,931	)
(1) Represents certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.

For the six months ended June 30, 2019, there were $86.1 million securities transferred into Level 3.

For the six months ended June 30, 2019, there were $20.6 million securities transferred into Level 2 from Level 3.These transfers resulted from securities that were priced internally using significant unobservable inputs where market observable inputs were not available in previous periods but were priced by independent pricing services or brokers as of June 30, 2019.

For the six months ended June 30, 2019, there were no transfers from Level 2 into Level 1.

For the six months ended June 30, 2019, there were no transfers from Level 1 into Level 2.

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended June 30, 2018, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																							Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3			Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	(457	)	$	22,225	$	—		$	—	$	—	$	—		$	12		$	21,780	$	—
Commercial mortgage-backed securities	—		—		—		—			(1,284		)	48,621		(94		)	—		—		—			(16		)	47,227		—
Other asset-backed securities	503,789		—		11,353		—			(13		)	—		(9		)	—		—		222			359			515,701		—
Corporate securities	626,409		—		5,662		—			(6,828		)	43,491		(14,818		)	—		—		(7,894		)	(1,211		)	644,811		—
Total fixed maturity securities - available-for-sale	1,130,198		—		17,015		—			(8,582		)	114,337		(14,921		)	—		—		(7,672		)	(856		)	1,229,519		—
Fixed maturity securities - trading
Other asset-backed securities	34,958		—		—		(3,570		)	—			4,600		(11,273		)	—		—		164			(27		)	24,852		(3,570		)
Corporate securities	5,324		—		—		(45		)	—			—		—			—		—		—			(25		)	5,254		(45		)
Total fixed maturity securities - trading	40,282		—		—		(3,615		)	—			4,600		(11,273		)	—		—		164			(52		)	30,106		(3,615		)
Total fixed maturity securities	1,170,480		—		17,015		(3,615		)	(8,582		)	118,937		(26,194		)	—		—		(7,508		)	(908		)	1,259,625		(3,615		)
Equity securities	66,061		1		—		(15		)	—			36		—			—		—		—			—			66,083		(14		)
Other long-term investments(1)	144,352		12,821		—		(499		)	—			—		—			—		—		—			—			156,674		12,322
Total investments	1,380,893		12,822		17,015		(4,129		)	(8,582		)	118,973		(26,194		)	—		—		(7,508		)	(908		)	1,482,382		8,693
Total assets measured at fair value on a recurring basis	$	1,380,893	$	12,822	$	17,015	$	(4,129	)	$	(8,582	)	$	118,973	$	(26,194	)	$	—	$	—	$	(7,508	)	$	(908	)	$	1,482,382	$	8,693
Liabilities:
Annuity account balances(2)	$	81,399	$	—	$	—	$	(1,059	)	$	—		$	—	$	—		$	89	$	2,449	$	—		$	—		$	80,098	$	—
Other liabilities(1)	621,102		96,138		—		(47,952		)	—			—		—			—		—		—			—			572,916		48,186
Total liabilities measured at fair value on a recurring basis	$	702,501	$	96,138	$	—	$	(49,011	)	$	—		$	—	$	—		$	89	$	2,449	$	—		$	—		$	653,014	$	48,186
(1) Represents certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.

For the three months ended June 30, 2018, there were $11.1 million securities transferred into Level 3.

For the three months ended June 30, 2018, there were $18.6 million of securities transferred into Level 2 from Level 3. These transfers resulted from securities that were priced internally using significant unobservable inputs where market observable inputs were not available in previous periods but were priced by independent pricing services or brokers as of June 30, 2018.

For the three months ended June 30, 2018, there were no transfers from Level 2 into Level 1.

For the three months ended June 30, 2018, there were no transfers from Level 1 into Level 2.

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the six months ended June 30, 2018, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																							Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3			Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	(457	)	$	22,225	$	—		$	—	$	—	$	—		$	12		$	21,780	$	—
Commercial mortgage-backed securities	—		—		—		—			(1,284		)	48,621		(94		)	—		—		—			(16		)	47,227		—
Other asset-backed securities	504,365		—		11,867		—			(1,647		)	—		(23		)	—		—		222			917			515,701		—
Corporate securities	626,901		—		7,061		—			(18,929		)	78,491		(38,453		)	—		—		(7,894		)	(2,366		)	644,811		—
Total fixed maturity securities - available-for-sale	1,131,266		—		18,928		—			(22,317		)	149,337		(38,570		)	—		—		(7,672		)	(1,453		)	1,229,519		—
Fixed maturity securities - trading
Other asset-backed securities	35,222		194		—		(3,598		)	—			4,600		(11,669		)	—		—		164			(61		)	24,852		(3,405		)
Corporate securities	5,442		—		—		(139		)	—			—		—			—		—		—			(49		)	5,254		(139		)
Total fixed maturity securities - trading	40,664		194		—		(3,737		)	—			4,600		(11,669		)	—		—		164			(110		)	30,106		(3,544		)
Total fixed maturity securities	1,171,930		194		18,928		(3,737		)	(22,317		)	153,937		(50,239		)	—		—		(7,508		)	(1,563		)	1,259,625		(3,544		)
Equity securities	66,110		1		—		(64		)	—			36		—			—		—		—			—			66,083		(63		)
Other long-term investments(1)	136,004		21,685		—		(1,015		)	—			—		—			—		—		—			—			156,674		20,670
Short-term investments	—		—		—		—			—			—		—			—		—		—			—			—		—
Total investments	1,374,044		21,880		18,928		(4,816		)	(22,317		)	153,973		(50,239		)	—		—		(7,508		)	(1,563		)	1,482,382		17,063
Total assets measured at fair value on a recurring basis	$	1,374,044	$	21,880	$	18,928	$	(4,816	)	$	(22,317	)	$	153,973	$	(50,239	)	$	—	$	—	$	(7,508	)	$	(1,563	)	$	1,482,382	$	17,063
Liabilities:
Annuity account balances(2)	$	83,472	$	—	$	—	$	(1,853	)	$	—		$	—	$	—		$	530	$	5,757	$	—		$	—		$	80,098	$	—
Other liabilities(1)	760,890		257,456		—		(69,482		)	—			—		—			—		—		—			—			572,916		187,974
Total liabilities measured at fair value on a recurring basis	$	844,362	$	257,456	$	—	$	(71,335	)	$	—		$	—	$	—		$	530	$	5,757	$	—		$	—		$	653,014	$	187,974
(1) Represents certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.

For the six months ended June 30, 2018, there were $11.1 million securities transferred into Level 3.

For the six months ended June 30, 2018, there were $18.6 million securities transferred into Level 2 from Level 3. These transfers resulted from securities that were priced internally using significant unobservable inputs where market observable inputs were not available in previous periods but were priced by independent pricing services or brokers as of June 30, 2018.

For the six months ended June 30, 2018, there were no transfers from Level 2 into Level 1.

For the six months ended June 30, 2018, there were no transfers from Level 1 into Level 2.

Total realized and unrealized gains (losses) on Level 3 assets and liabilities are primarily reported in either realized investment gains (losses) within the consolidated condensed statements of income (loss) or other comprehensive income (loss) within shareowner’s equity based on the appropriate accounting treatment for the item.

Purchases, sales, issuances, and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily relates to purchases and sales of fixed maturity securities and issuances and settlements of fixed indexed annuities.

The Company reviews the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. The asset transfers in the table(s) above primarily related to positions moved from Level 3 to Level 2 as the Company determined that certain inputs were observable.

The amount of total gains (losses) for assets and liabilities still held as of the reporting date primarily represents changes in fair value of trading securities and certain derivatives that exist as of the reporting date and the change in fair value of fixed indexed annuities.

Estimated Fair Value of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments as of the periods shown below are as follows:

		As of
		June 30, 2019				December 31, 2018
	Fair Value Level	Carrying Amounts		Fair Values		Carrying Amounts		Fair Values
		(Dollars In Thousands)
Assets:
Mortgage loans on real estate	3	$	9,053,400	$	9,123,182	$	7,724,733	$	7,447,702
Policy loans	3	1,709,110		1,709,110		1,695,886		1,695,886
Fixed maturities, held-to-maturity(1)	3	2,576,216		2,640,827		2,633,474		2,547,210
Liabilities:
Stable value product account balances	3	$	5,816,503	$	5,885,528	$	5,234,731	$	5,200,723
Future policy benefits and claims(2)	3	1,725,194		1,729,081		1,671,414		1,671,434
Other policyholders’ funds(3)	3	105,136		107,702		131,150		131,782
Debt:(4)
Bank borrowings(5)	3	$	599,627	$	600,000	$	—	$	—
Senior Notes	2	1,075,370		1,095,907		1,100,508		1,065,338
Subordinated debentures	2	495,494		506,720		495,426		494,265
Subordinated funding obligations	3	110,000		108,455		110,000		95,476
Non-recourse funding obligations(6)	3	2,576,538		2,701,194		2,632,497		2,550,237
Except as noted below, fair values were estimated using quoted market prices.
(1) Securities purchased from unconsolidated affiliates, Red Mountain, LLC and Steel City, LLC.
(2) Single premium immediate annuity without life contingencies.
(3) Supplementary contracts without life contingencies.
(4) Excludes capital lease obligations of $2.6 million and $1.3 million as of June 30, 2019 and December 31, 2018, respectively.
(5) As June 30, 2019, includes the Term Loan Credit Agreement.
(6) As of June 30, 2019, carrying amount of $2.6 billion and a fair value of $2.7 billion related to non-recourse funding obligations issued by Golden Gate and Golden Gate V. As of December 31, 2018, carrying amount of $2.6 billion and a fair value of $2.5 billion related to non-recourse funding obligations issued by Golden Gate and Golden Gate V.

Fair Value Measurements

Mortgage loans on real estate

The Company estimates the fair value of mortgage loans using an internally developed model. This model includes inputs derived by the Company based on assumed discount rates relative to the Company’s current mortgage loan lending rate and an expected cash flow analysis based on a review of the mortgage loan terms. The model also contains the Company’s determined representative risk adjustment assumptions related to credit and liquidity risks.

Policy loans

The Company believes the fair value of policy loans approximates book value. Policy loans are funds provided to policyholders in return for a claim on the policy. The funds provided are limited to the cash surrender value of the underlying policy. The nature of policy loans is to have a negligible default risk as the loans are fully collateralized by the value of the policy. Policy loans do not have a stated maturity and the balances and accrued interest are repaid either by the policyholder or with proceeds from the policy. Due to the collateralized nature of policy loans and unpredictable timing of repayments, the Company believes the carrying value of policy loans approximates fair value.

Fixed maturities, held-to-maturity

The Company estimates the fair value of its fixed maturity, held-to-maturity securities using internal discounted cash flow models. The discount rates used in the model are based on a current market yield for similar financial instruments.

Stable value product and other investment contract balances

The Company estimates the fair value of stable value product account balances and other investment contract balances (included in Future policy benefits and claims as well as Other policyholders’ funds line items on our consolidated condensed balance sheet) using models based on discounted expected cash flows. The discount rates used in the models are based on a current market rate for similar financial instruments.

Debt

Bank borrowings

The Company believes the carrying value of its bank borrowings approximates fair value as the borrowings pay a floating interest rate plus a spread based on the rating of the Company’s senior debt which the Company believes approximates a market interest rate.

Senior notes and subordinated debt securities

The Company estimates the fair value of its Senior Notes and Subordinated debt securities using quoted market prices from third party pricing services, where available. The Company also determines certain fair values based on future cash flows discounted at the appropriate current market rate.

Funding obligations

The Company estimates the fair value of its subordinated and non-recourse funding obligations using internal discounted cash flow models. The discount rates used in the model are based on a current market yield for similar financial instruments.

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DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

Types of Derivative Instruments and Derivative Strategies

The Company utilizes a risk management strategy that incorporates the use of derivative financial instruments to reduce exposure to certain risks, including but not limited to, interest rate risk, currency exchange risk, volatility risk, and equity market risk. These strategies are developed through the Company’s analysis of data from financial simulation models and other internal and industry sources, and are then incorporated into the Company’s risk management program.

Derivative instruments expose the Company to credit and market risk and could result in material changes from period to period. The Company attempts to minimize its credit in connection with its overall asset/liability management programs and risk management strategies. In addition, all derivative programs are monitored by our risk management department.

Derivatives Related to Interest Rate Risk Management

Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps, interest rate futures, interest rate caps, and interest rate swaptions.

Derivatives Related to Foreign Currency Exchange Risk Management

Derivative instruments that are used as part of the Company’s foreign currency exchange risk management strategy include foreign currency swaps, foreign currency futures, foreign equity futures, and foreign equity options.

Derivatives Related to Risk Mitigation of Certain Annuity Contracts

The Company may use the following types of derivative contracts to mitigate its exposure to certain guaranteed benefits related to variable annuity (“VA”) contracts, fixed indexed annuities, and indexed universal life contracts:

•Foreign Currency Futures

•Variance Swaps

•Interest Rate Futures

•Equity Options

•Equity Futures

•Credit Derivatives

•Interest Rate Swaps

•Interest Rate Swaptions

•Volatility Futures

•Volatility Options

•Total Return Swaps

Accounting for Derivative Instruments

The Company records its derivative financial instruments in the consolidated balance sheet in other long-term investments and other liabilities in accordance with GAAP, which requires that all derivative instruments be recognized in the balance sheet at fair value. The change in the fair value of derivative financial instruments is reported either in the statement of income or in other comprehensive income (loss), depending upon whether it qualified for and also has been properly identified as being part of a hedging relationship, and also on the type of hedging relationship that exists.

It is the Company's policy not to offset assets and liabilities associated with open derivative contracts. However, the Chicago Mercantile Exchange (“CME”) rules characterize variation margin transfers as settlement payments, as opposed to adjustments to collateral. As a result, derivative assets and liabilities associated with centrally cleared derivatives for which the CME serves as the central clearing party are presented as if these derivatives had been settled as of the reporting date.

For a derivative financial instrument to be accounted for as an accounting hedge, it must be identified and documented as such on the date of designation. For cash flow hedges, the effective portion of their realized gain or loss is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged item impacts earnings. Any remaining gain or loss, the ineffective portion, is recognized in current earnings. For fair value hedge derivatives, their gain or loss as well as the offsetting loss or gain attributable to the hedged risk of the hedged item is recognized in current earnings. Effectiveness of the Company’s hedge relationships is assessed on a quarterly basis.

The Company reports changes in fair values of derivatives that are not part of a qualifying hedge relationship through earnings in the period of change. Changes in the fair value of derivatives that are recognized in current earnings are reported in realized investment gains (losses).

Derivative Instruments Designated and Qualifying as Hedging Instruments

Cash-Flow Hedges

• To hedge a fixed rate note denominated in a foreign currency, the Company entered into a fixed-to-fixed foreign currency swap in order to hedge the foreign currency exchange risk associated with the note. The cash flows received on the swap are identical to the cash flows paid on the note.

• To hedge a floating rate note, the Company entered into an interest rate swap to exchange the floating rate on the note for a fixed rate in order to hedge the interest rate risk associated with the note. The cash flows received on the swap are identical to the cash flow variability paid on the note.

Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments

The Company uses various other derivative instruments for risk management purposes that do not qualify for hedge accounting treatment. Changes in the fair value of these derivatives are recognized in earnings during the period of change.

Derivatives Related to Variable Annuity Contracts

• The Company uses equity futures, equity options, total return swaps, interest rate futures, interest rate swaps, interest rate swaptions, currency futures, volatility futures, volatility options, and variance swaps to mitigate the risk related to certain guaranteed minimum benefits, including GLWB, within its VA products. In general, the cost of such benefits varies with the level of equity and interest rate markets, foreign currency levels, and overall volatility.

• The Company markets certain VA products with a GLWB rider. The GLWB component is considered an embedded derivative, not considered to be clearly and closely related to the host contract.

Derivatives Related to Fixed Annuity Contracts

• The Company uses equity futures and options to mitigate the risk within its fixed indexed annuity products. In general, the cost of such benefits varies with the level of equity markets and overall volatility.

• The Company markets certain fixed indexed annuity products. The FIA component is considered an embedded derivative as it is, not considered to be clearly and closely related to the host contract.

Derivatives Related to Indexed Universal Life Contracts

• The Company uses equity futures and options to mitigate the risk within its indexed universal life products. In general, the cost of such benefits varies with the level of equity markets.

• The Company markets certain IUL products. The IUL component is considered an embedded derivative as it is not considered to be clearly and closely related to the host contract.

Other Derivatives

• The Company uses various swaps and other types of derivatives to manage risk related to other exposures.

• The Company is involved in various modified coinsurance and funds withheld arrangements which contain embedded derivatives. Changes in their fair value are recorded in current period earnings. The investment portfolios that support the related modified coinsurance reserves and funds withheld arrangements had fair value changes which substantially offset the gains or losses on these embedded derivatives.

The following table sets forth realized investments gains and losses for the periods shown:

Realized investment gains (losses) - derivative financial instruments

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Derivatives related to VA contracts:
Interest rate futures	$	(11,280	)	$	1,552		$	(17,302	)	$	(15,340	)
Equity futures	2,559			(10,864		)	32,297			(17,292		)
Currency futures	(397		)	12,063			1,847			4,480
Equity options	(21,702		)	(38,216		)	(93,397		)	(26,200		)
Interest rate swaptions	—			—			—			(14		)
Interest rate swaps	117,934			(26,149		)	192,795			(89,859		)
Total return swaps	(8,545		)	(10,055		)	(48,572		)	(3,565		)
Embedded derivative - GLWB	(134,692		)	35,554			(154,318		)	91,846
Total derivatives related to VA contracts	(56,123		)	(36,115		)	(86,650		)	(55,944		)
Derivatives related to FIA contracts:
Embedded derivative	(24,819		)	(4,927		)	(63,633		)	6,403
Equity futures	431			(167		)	2			(328		)
Equity options	13,191			7,398			55,241			2,729
Total derivatives related to FIA contracts	(11,197		)	2,304			(8,390		)	8,804
Derivatives related to IUL contracts:
Embedded derivative	(11,286		)	(1,226		)	(24,656		)	8,658
Equity futures	85			—			256			136
Equity options	2,606			2,086			8,786			836
Total derivatives related to IUL contracts	(8,595		)	860			(15,614		)	9,630
Embedded derivative - Modco reinsurance treaties	(70,679		)	45,183			(155,677		)	127,841
Other derivatives	(1,455		)	33			(1,389		)	(7		)
Total realized gains (losses) - derivatives	$	(148,049	)	$	12,265		$	(267,720	)	$	90,324

The following table presents the components of the gain or loss on derivatives that qualify as a cash flow hedging relationship.

Gain (Loss) on Derivatives in Cash Flow Hedging Relationship

	Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives			Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss)			Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives
	(Effective Portion)			(Effective Portion)			(Ineffective Portion)
				Benefits and settlement			Realized investment
				expenses			gains (losses)
				(Dollars In Thousands)
For The Three Months Ended June 30, 2019
Foreign currency swaps	$	(1,733	)	$	(188	)	$	—
Interest rate swaps	(1,796		)	(148		)	—
Total	$	(3,529	)	$	(336	)	$	—
For The Six Months Ended June 30, 2019
Foreign currency swaps	$	(3,626	)	$	(394	)	$	—
Interest rate swaps	(2,391		)	(220		)	—
Total	$	(6,017	)	$	(614	)	$	—
For The Three Months Ended June 30, 2018
Foreign currency swaps	$	2,967		$	(205	)	$	—
Total	$	2,967		$	(205	)	$	—
For The Six Months Ended June 30, 2018
Foreign currency swaps	$	3,582		$	(318	)	$	—
Total	$	3,582		$	(318	)	$	—

Based on expected cash flows of the underlying hedged items, the Company expects to reclassify $2.9 million out of accumulated other comprehensive income (loss) into earnings during the next twelve months.

The table below presents information about the nature and accounting treatment of the Company’s primary derivative financial instruments and the location in and effect on the consolidated condensed financial statements for the periods presented below:

	As of
	June 30, 2019				December 31, 2018
	Notional Amount		Fair Value		Notional Amount		Fair Value
	(Dollars In Thousands)
Other long-term investments
Derivatives not designated as hedging instruments:
Interest rate swaps	$	2,188,000	$	90,599	$	1,515,500	$	28,501
Total return swaps	132,044		1,065		138,070		3,971
Embedded derivative - Modco reinsurance treaties	1,248,634		13,738		585,294		7,072
Embedded derivative - GLWB	3,153,016		97,185		3,984,070		105,272
Interest rate futures	393,518		8,703		286,208		10,302
Equity futures	101,064		639		12,633		483
Equity options	6,176,649		431,694		5,624,081		220,092
Other	157		173		157		136
	$	13,393,082	$	643,796	$	12,146,013	$	375,829
Other liabilities
Cash flow hedges:
Interest rate swaps	$	350,000	$	—	$	350,000	$	—
Foreign currency swaps	117,178		2,309		117,178		904
Derivatives not designated as hedging instruments:
Interest rate swaps	70,000		—		775,000		11,367
Total return swaps	361,607		1,112		768,177		23,054
Embedded derivative - Modco reinsurance treaties	2,287,547		188,853		1,795,287		32,828
Embedded derivative - GLWB	6,943,853		471,199		6,282,712		289,343
Embedded derivative - FIA	2,739,208		298,721		2,576,033		217,288
Embedded derivative - IUL	262,828		136,660		233,550		90,231
Interest rate futures	901,165		16,464		863,706		20,100
Equity futures	225,125		2,967		659,357		33,753
Currency futures	256,513		1,105		202,747		2,163
Equity options	4,008,015		198,159		4,199,687		34,178
Other	13,109		1,644		3,288		252
	$	18,536,148	$	1,319,193	$	18,826,722	$	755,461

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OFFSETTING OF ASSETS AND LIABILITIES

6 Months Ended

Jun. 30, 2019

Offsetting [Abstract]

OFFSETTING OF ASSETS AND LIABILITIES

OFFSETTING OF ASSETS AND LIABILITIES

Certain of the Company's derivative instruments are subject to enforceable master netting arrangements that provide for the net settlement of all derivative contracts between the Company and a counterparty in the event of default or upon the occurrence of certain termination events. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event either minimum thresholds, or in certain cases ratings levels, have been reached. Additionally, certain of the Company's repurchase agreements provide for net settlement on termination of the agreement. Refer to Note 10, Debt and Other Obligations for details of the Company’s repurchase agreement programs.

Collateral received includes both cash and non-cash collateral.  Cash collateral received by the Company is recorded on the consolidated condensed balance sheet as “cash”, with a corresponding amount recorded in “other liabilities” to represent the Company’s obligation to return the collateral.  Non-cash collateral received by the Company is not recognized on the consolidated condensed balance sheet unless the Company exercises its right to sell or re-pledge the underlying asset. As of June 30, 2019, the fair value of non-cash collateral received was $30.4 million. As of December 31, 2018, the fair value of non-cash collateral received was $45.0 million.

The tables below present the derivative instruments by assets and liabilities for the Company as of June 30, 2019:

	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Received		Net Amount
	(Dollars In Thousands)
Offsetting of Assets
Derivatives:
Free-Standing derivatives	$	532,700	$	—	$	532,700	$	210,744	$	214,952	$	107,004
Total derivatives, subject to a master netting arrangement or similar arrangement	532,700		—		532,700		210,744		214,952		107,004
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	13,738		—		13,738		—		—		13,738
Embedded derivative - GLWB	97,185		—		97,185		—		—		97,185
Other	173		—		173		—		—		173
Total derivatives, not subject to a master netting arrangement or similar arrangement	111,096		—		111,096		—		—		111,096
Total derivatives	643,796		—		643,796		210,744		214,952		218,100
Total Assets	$	643,796	$	—	$	643,796	$	210,744	$	214,952	$	218,100

	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Posted		Net Amount
	(Dollars In Thousands)
Offsetting of Liabilities
Derivatives:
Free-Standing derivatives	$	222,116	$	—	$	222,116	$	210,744	$	11,215	$	157
Total derivatives, subject to a master netting arrangement or similar arrangement	222,116		—		222,116		210,744		11,215		157
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	188,853		—		188,853		—		—		188,853
Embedded derivative - GLWB	471,199		—		471,199		—		—		471,199
Embedded derivative - FIA	298,721		—		298,721		—		—		298,721
Embedded derivative - IUL	136,660		—		136,660		—		—		136,660
Other	1,644		—		1,644		—		—		1,644
Total derivatives, not subject to a master netting arrangement or similar arrangement	1,097,077		—		1,097,077		—		—		1,097,077
Total derivatives	1,319,193		—		1,319,193		210,744		11,215		1,097,234
Repurchase agreements(1)	60,000		—		60,000		—		—		60,000
Total Liabilities	$	1,379,193	$	—	$	1,379,193	$	210,744	$	11,215	$	1,157,234
(1) Borrowings under repurchase agreements are for a term less than 90 days.

The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2018: 

	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Received		Net Amount
	(Dollars In Thousands)
Offsetting of Assets
Derivatives:
Free-Standing derivatives	$	263,349	$	—	$	263,349	$	70,322	$	99,199	$	93,828
Total derivatives, subject to a master netting arrangement or similar arrangement	263,349		—		263,349		70,322		99,199		93,828
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	7,072		—		7,072		—		—		7,072
Embedded derivative - GLWB	105,272		—		105,272		—		—		105,272
Other	136		—		136		—		—		136
Total derivatives, not subject to a master netting arrangement or similar arrangement	112,480		—		112,480		—		—		112,480
Total derivatives	375,829		—		375,829		70,322		99,199		206,308
Total Assets	$	375,829	$	—	$	375,829	$	70,322	$	99,199	$	206,308

	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Posted		Net Amount
	(Dollars In Thousands)
Offsetting of Liabilities
Derivatives:
Free-Standing derivatives	$	125,519	$	—	$	125,519	$	70,322	$	47,856	$	7,341
Total derivatives, subject to a master netting arrangement or similar arrangement	125,519		—		125,519		70,322		47,856		7,341
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	32,828		—		32,828		—		—		32,828
Embedded derivative - GLWB	289,343		—		289,343		—		—		289,343
Embedded derivative - FIA	217,288		—		217,288		—		—		217,288
Embedded derivative - IUL	90,231		—		90,231		—		—		90,231
Other	252		—		252		—		—		252
Total derivatives, not subject to a master netting arrangement or similar arrangement	629,942		—		629,942		—		—		629,942
Total derivatives	755,461		—		755,461		70,322		47,856		637,283
Repurchase agreements(1)	418,090		—		418,090		—		—		418,090
Total Liabilities	$	1,173,551	$	—	$	1,173,551	$	70,322	$	47,856	$	1,055,373
(1) Borrowings under repurchase agreements are for a term less than 90 days.

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MORTGAGE LOANS

6 Months Ended

Jun. 30, 2019

Mortgage Loans [Abstract]

MORTGAGE LOANS

MORTGAGE LOANS

Mortgage Loans

The Company invests a portion of its investment portfolio in commercial mortgage loans. As of June 30, 2019, the Company’s mortgage loan holdings were approximately $9.1 billion. The Company has specialized in making loans on credit-oriented commercial properties, credit-anchored strip shopping centers, senior living facilities, and apartments. The Company’s underwriting procedures relative to its commercial loan portfolio are based, in the Company’s view, on a conservative and disciplined approach. The Company concentrates on a small number of commercial real estate asset types associated with the necessities of life (retail, multi-family, senior living, professional office buildings, and warehouses). The Company believes that these asset types tend to weather economic downturns better than other commercial asset classes in which it has chosen not to participate. The Company believes this disciplined approach has helped to maintain a relatively low delinquency and foreclosure rate throughout its history. The majority of the Company’s mortgage loans portfolio was underwritten by the Company. From time to time, the Company may acquire loans in conjunction with an acquisition.

The Company’s commercial mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, and net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts and prepayment fees are reported in net investment income.

Certain of the mortgage loans have call options that occur within the next 10 years. However, if interest rates were to significantly increase, the Company may be unable to exercise the call options on its existing mortgage loans commensurate with the significantly increased market rates. As of June 30, 2019, assuming the loans are called at their next call dates, approximately $70.3 million of principal would become due for the remainder of 2019, $789.6 million in 2020 through 2024 and $60.0 million in 2025 through 2029.

The Company offers a type of commercial mortgage loan under which the Company will permit a loan-to-value ratio of up to 85% in exchange for a participating interest in the cash flows from the underlying real estate. As of June 30, 2019 and December 31, 2018, approximately $669.5 million and $700.6 million, respectively, of the Company’s total mortgage loans principal balance have this participation feature. Cash flows received as a result of this participation feature are recorded as interest income. During the three and six months ended June 30, 2019 and 2018, the Company recognized $12.0 million and $14.2 million, and $5.1 million and $12.4 million, respectively, of participating mortgage loan income.

As of June 30, 2019, $0.8 million of the Company’s invested assets consisted of nonperforming mortgage loans, restructured mortgage loans, or mortgage loans that were foreclosed and were converted to real estate properties. The Company does not expect these investments to adversely affect its liquidity or ability to maintain proper matching of assets and liabilities. During the six months ended June 30, 2019, the Company recognized three troubled debt restructurings as a result of granting concessions to borrowers which included loan terms unavailable from other lenders. During the three and six months ended June 30, 2019, the Company did not recognize any mortgage loans that were foreclosed and were converted to real estate properties. The Company did not identify any loans whose principal was permanently impaired during the three and six months ended June 30, 2019.

As of June 30, 2019 and December 31, 2018, the Company had an allowance for mortgage loan credit losses of $2.5 million and $1.3 million, respectively. Due to the Company’s loss experience and nature of the loan portfolio, the Company believes that a collectively evaluated allowance would be inappropriate. The Company believes an allowance calculated through an analysis of specific loans that are believed to have a higher risk of credit impairment provides a more accurate presentation of expected losses in the portfolio and is consistent with the applicable guidance for loan impairments in ASC Subtopic 310. Since the Company uses the specific identification method for calculating the allowance, it is necessary to review the economic situation of each borrower to determine those that have higher risk of credit impairment. The Company has a team of professionals that monitors borrower conditions such as payment practices, borrower credit, operating performance, and property conditions, as well as ensuring the timely payment of property taxes and insurance. Through this monitoring process, the Company assesses the risk of each loan. When issues are identified, the severity of the issues are assessed and reviewed for possible credit impairment. If a loss is probable, an expected loss calculation is performed and an allowance is established for that loan based on the expected loss. The expected loss is calculated as the excess carrying value of a loan over either the present value of expected future cash flows discounted at the loan’s original effective interest rate, or the current estimated fair value of the loan’s underlying collateral. A loan may be subsequently charged off at such point that the Company no longer expects to receive cash payments, the present value of future expected payments of the renegotiated loan is less than the current principal balance, or at such time that the Company is party to foreclosure or bankruptcy proceedings associated with the borrower and does not expect to recover the principal balance of the loan.

A charge off is recorded by eliminating the allowance against the mortgage loan and recording the renegotiated loan or the collateral property related to the loan as investment real estate on the balance sheet, which is carried at the lower of the appraised fair value of the property or the unpaid principal balance of the loan, less estimated selling costs associated with the property.

As of June 30, 2019 and December 31, 2018, the Company had an allowance for mortgage loan credit losses of $2.5 million and $1.3 million, respectively, which is shown in the chart below.

	As of
	June 30, 2019			December 31, 2018
	(Dollars In Thousands)
Beginning balance	$	1,296		$	—
Charge offs	(350		)	—
Recoveries	—			(209		)
Provision	1,535			1,505
Ending balance	$	2,481		$	1,296

It is the Company’s policy to cease to carry accrued interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued unless it is determined that the accrued interest is not collectible. If a loan becomes over 90 days delinquent, it is the Company’s general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current is in place. For loans subject to a pooling and servicing agreement, there are certain additional restrictions and/or requirements related to workout proceedings, and as such, these loans may have different attributes and/or circumstances affecting the status of delinquency or categorization of those in nonperforming status.

The carrying value of the delinquent loans is shown in the following chart.

					Greater
	30-59 Days		60-89 Days		than 90 Days		Total
As of June 30, 2019	Delinquent		Delinquent		Delinquent		Delinquent
	(Dollars In Thousands)
Commercial mortgage loans	$	8,405	$	—	$	83	$	8,488
Number of delinquent commercial mortgage loans	2		—		1		3
As of December 31, 2018
Commercial mortgage loans	$	1,044	$	—	$	1,234	$	2,278
Number of delinquent commercial mortgage loans	4		—		1		5

     The Company’s commercial mortgage loan portfolio consists of mortgage loans that are collateralized by real estate. Due to the collateralized nature of the loans, any assessment of impairment and ultimate loss given a default on the loans is based upon a consideration of the estimated fair value of the real estate. The Company limits accrued interest income on impaired loans to 90 days of interest. Once accrued interest on the impaired loan is received, interest income is recognized on a cash basis.

The following table includes the recorded investment, unpaid principal balance, related allowance, average recorded investment, interest income recognized, and cash basis interest income of commercial loan portfolio as of June 30, 2019 and December 31, 2018:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Income
	(Dollars In Thousands)
As of June 30, 2019
Commercial mortgage loans:
With no related allowance recorded	$	83	$	83	$	—	$	83	$	—	$	—
With an allowance recorded	$	9,445	$	9,305	$	2,481	$	3,148	$	184	$	217
As of December 31, 2018
Commercial mortgage loans:
With no related allowance recorded	$	—	$	—	$	—	$	—	$	—	$	—
With an allowance recorded	$	5,684	$	5,309	$	1,296	$	1,895	$	267	$	293

     Mortgage loans that were modified in a troubled debt restructuring as of June 30, 2019 and December 31, 2018 were as follows:

	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars In Thousands)
As of June 30, 2019
Troubled debt restructuring:
Commercial mortgage loans	1	$	1,114	$	759
As of December 31, 2018
Troubled debt restructuring:
Commercial mortgage loans	1	$	2,688	$	1,742

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DEBT AND OTHER OBLIGATIONS

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

DEBT AND OTHER OBLIGATIONS

DEBT AND OTHER OBLIGATIONS

Debt and Subordinated Debt

Debt and subordinated debt are summarized as follows:

	As of
	June 30, 2019				December 31, 2018
	Outstanding Principal		Carrying Amounts		Outstanding Principal		Carrying Amounts
	(Dollars In Thousands)
Debt (year of issue):
Credit Facility	$	—	$	—	$	—	$	—
Term Loan Credit Agreement	600,000		599,627		—		—
Capital lease obligation	2,560		2,560		1,319		1,319
7.375% Senior Notes (2009), due 2019	400,000		406,627		400,000		416,469
8.45% Senior Notes (2009), due 2039	180,719		273,029		190,044		288,547
4.30% Senior Notes (2018), due 2028	400,000		395,714		400,000		395,492
	$	1,583,279	$	1,677,557	$	991,363	$	1,101,827
Subordinated debt (year of issue):
5.35% Subordinated Debentures (2017), due 2052	$	500,000	$	495,494	$	500,000	$	495,426
3.55% Subordinated Funding Obligations (2018), due 2038	55,000		55,000		55,000		55,000
3.55% Subordinated Funding Obligations (2018), due 2038	55,000		55,000		55,000		55,000
	$	610,000	$	605,494	$	610,000	$	605,426

During the six months ended June 30, 2019, the Company repurchased and subsequently extinguished $14.1 million (par value - $9.3 million) of the Company’s 8.45% Senior Notes due 2039. These repurchases resulted in a $1.1 million pre-tax gain for the Company. The gain is recorded in other income in the consolidated condensed statements of income.

During 2019, the Company entered into a $600.0 million Term Loan Credit Agreement, due 2024. The loan is classified as debt on the Company’s balance sheet and is carried net of the associated deferred issuance expenses of $0.4 million. The loan pays interest at a rate equal to the one-month LIBOR plus 100 bps. The Company used the net loan proceeds to assist with funding the GWL&A transaction.

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 2018, the Company issued $400.0 million of its Senior Notes at a rate of 4.30%, due 2028. These notes were issued net of a discount of $1.0 million. These notes are carried on the Company’s balance sheet net of the discount and the associated deferred issuance expenses of $3.7 million. The Company used the net proceeds from the offering for general corporate purposes, including the repayment of amounts outstanding under our Credit Facility.

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, 2019. There was no outstanding balance as of June 30, 2019.

Non-RecourseFunding Obligations

Non-recourse funding obligations outstanding as of June 30, 2019, 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)	$	1,803,000	$	1,803,000	2039	4.75	%
Golden Gate II Captive Insurance Company	20,600		17,729		2052	5.60	%
Golden Gate V Vermont Captive Insurance Company(2)(3)	695,000		753,503		2037	5.12	%
MONY Life Insurance Company(3)	1,091		2,306		2024	6.19	%
Total	$	2,519,691	$	2,576,538
(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

Non-recourse funding obligations outstanding as of December 31, 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)	$	1,883,000	$	1,883,000	2039	4.75	%
Golden Gate II Captive Insurance Company	20,600		17,703		2052	4.99	%
Golden Gate V Vermont Captive Insurance Company(2)(3)	670,000		729,454		2037	5.12	%
MONY Life Insurance Company(3)	1,091		2,340		2024	6.19	%
Total	$	2,574,691	$	2,632,497
(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, 2019, the fair value of securities pledged under the repurchase program was $62.6 million, and the repurchase obligation of $60.0 million was included in the Company’s consolidated condensed balance sheets (at an average borrowing rate of 246 basis points). During the six months ended June 30, 2019, the maximum balance outstanding at any one point in time related to these programs was $540.0 million. The average daily balance was $104.8 million (at an average borrowing rate of 247 basis points) during the six months ended June 30, 2019. As of December 31, 2018, the fair value of securities pledged under the repurchase program was $451.9 million, and the repurchase obligation of $418.1 million was included in the Company’s consolidated condensed balance sheets (at an average borrowing rate of 245 basis points). During 2018, the maximum balance outstanding at any one point in time related to these programs was $885.0 million. The average daily balance was $511.4 million (at an average borrowing rate of 184 basis points) during the year ended December 31, 2018.

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 fair value of the loaned securities to be separately maintained. The loaned securities’ fair value is monitored on a daily basis. As of June 30, 2019, securities with a fair value of $75.1 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, 2019, the fair value of the collateral related to this program was $66.9 million and the Company has an obligation to return $66.9 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, 2019 and December 31, 2018:

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, 2019
	(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	$	62,611	$	—	$	—	$	—	$	62,611
Total repurchase agreements and repurchase-to-maturity transactions	62,611		—		—		—		62,611
Securities lending transactions
Corporate securities	57,941		—		—		—		57,941
Equity securities	14,642		—		—		—		14,642
Other government related securities	2,488		—		—		—		2,488
Total securities lending transactions	75,071		—		—		—		75,071
Total securities	$	137,682	$	—	$	—	$	—	$	137,682

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, 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	$	433,182	$	18,713	$	—	$	—	$	451,895
Total repurchase agreements and repurchase-to-maturity transactions	$	433,182	$	18,713	$	—	$	—	$	451,895
Securities lending transactions
Fixed maturity securities	$	71,285	$	—	$	—	$	—	$	71,285
Equity securities	891		—		—		—		891
Total securities lending transactions	72,176		—		—		—		72,176
Total securities	$	505,358	$	18,713	$	—	$	—	$	524,071

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

The Company has entered into indemnity agreements with each of its current directors other than those that are employees of Dai-ichi Life that provide, among other things and subject to certain limitations, a contractual right to indemnification to the fullest extent permissible under the law. The Company has agreements with certain of its officers providing up to $10.0 million in indemnification. These obligations are in addition to the customary obligation to indemnify officers and directors contained in the Company’s governance documents.

The Company leases administrative and marketing office space in approximately 19 cities (excluding the home office building), as well as various office equipment. Most leases have terms ranging from 1 to 10. Leases with an initial term of 12 months or less are not recorded on the consolidated condensed balance sheet. The Company accounts for lease components separately from non-lease components (e.g., common area maintenance). Certain of the Company’s lease agreements include options to renew at its discretion. Management has concluded that the Company is not reasonably certain to elect any of these renewal options. The Company will use the interest rates received on its funding agreement backed notes as the collateralized discount rate when calculating the present value of remaining lease payments when the rate implicit in the lease is unavailable. Additionally, the Company previously leased a building contiguous to its home office. The lease was renewed in December 2013 and was extended to December 2018. At the end of the lease term in December 2018, the Company purchased the building for approximately $75.0 million. The building is recorded in property and equipment on the consolidated condensed balance sheet.

Under the insurance guaranty fund laws in most states, insurance companies doing business therein can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. From time to time, companies may be asked to contribute amounts beyond prescribed limits. It is possible that the Company could be assessed with respect to product lines not offered by the Company. In addition, legislation may be introduced in various states with respect to guaranty fund assessment laws related to insurance products, including long term care insurance and other specialty products, that increases the cost of future assessments or alters future premium tax offsets received in connection with guaranty fund assessments. The Company cannot predict the amount, nature, or timing of any future assessments or legislation, any of which could have a material and adverse impact on the Company’s financial condition or results of operations.

A number of civil jury verdicts have been returned against insurers, broker-dealers, and other providers of financial services involving sales, refund, or claims practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or persons with whom the insurer does business, and other matters. Often these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive and non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very limited appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The financial services and insurance industries in particular are also sometimes the target of law enforcement and regulatory investigations relating to the numerous laws and regulations that govern such companies. Some companies have been the subject of law enforcement or regulatory actions or other actions resulting from such investigations. The Company, in the ordinary course of business, is involved in such matters.

The Company establishes liabilities for litigation and regulatory actions when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. For matters where a loss is believed to be reasonably possible, but not probable, no liability is established. For such matters, the Company may provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. The Company reviews relevant information with respect to litigation and regulatory matters on a quarterly and annual basis and updates its established liabilities, disclosures, and estimates of reasonably possible losses or range of loss based on such reviews.

Certain of the Company’s insurance subsidiaries, as well as certain other insurance companies for which the Company has coinsured blocks of life insurance and annuity policies, are under audit for compliance with the unclaimed property laws of a number of states. The audits are being conducted on behalf of the treasury departments or unclaimed property administrators in such states. The focus of the audits is on whether there have been unreported deaths, maturities, or policies that have exceeded limiting age with respect to which death benefits or other payments under life insurance or annuity policies should be treated as unclaimed property that should be escheated to the state. The Company is presently unable to estimate the reasonably possible loss or range of loss that may result from the audits due to a number of factors, including the early stages of the audits being conducted, and uncertainty as to whether the Company or other companies are responsible for the liabilities, if any, arising in connection with certain co-insured policies. The Company will continue to monitor the matter for any developments that would make the loss contingency associated with the audits reasonably estimable.

Advance Trust & Life Escrow Services, LTA, as Securities Intermediary of Life Partners Position Holder Trust v. Protective Life Insurance Company, Case No. 2:18-CV-01290, is a putative class action that was filed on August 13, 2018 in the United States District Court for the Northern District of Alabama. Plaintiff alleges that PLICO required policyholders to pay unlawful and excessive cost of insurance charges. Plaintiff seeks to represent all owners of universal life and variable universal life policies issued or administered by PLICO or its predecessors that provide that cost of insurance rates are to be determined based on expectations of future mortality experience. The plaintiff seeks class certification, compensatory damages, pre-judgment and post-judgment interest, costs, and other unspecified relief. The Company is vigorously defending this matter and cannot predict the outcome of or reasonably estimate the possible loss or range of loss that might result from this litigation.

Scottish Re (U.S.), Inc. ("SRUS") was placed in rehabilitation on March 6, 2019 by the State of Delaware. Under the related order, the Insurance Commissioner of the State of Delaware has been appointed the receiver of SRUS and provided with authority to conduct and continue the business of SRUS in the interest of its cedents, creditors, and stockholder. The order was accompanied by an injunction requiring the continued payment of reinsurance premiums to SRUS and temporarily prohibiting cedents, including the Company, from offsetting premiums payable against receivables from SRUS. On June 20, 2019, the Delaware Court of Chancery entered an order approving a Revised Offset Plan, which allows cedents, including the Company, to offset premiums under certain circumstances.

As of June 30, 2019, the Company had outstanding claims receivable from SRUS of $20.5 million, and other exposures associated with reinsurance receivables of approximately $102.3 million and statutory reserve credit of approximately $118.2 million. The Company continues to monitor SRUS and the actions of the receiver through discussions with legal counsel and review of publicly available information. However, management does not have access to current information about the assets or capital position of SRUS. Additionally, it is unclear how the rehabilitation process will proceed or whether or to what extent the ultimate outcome of the rehabilitation process will be unfavorable to the Company.

The Company considered whether the accrual of a loss contingency under FASB ASC Topic 450, Contingencies, was appropriate with respect to amounts receivable from SRUS for ceded claims and reserves as of June 30, 2019. Due to the lack of sufficient information to support an analysis of SRUS's financial condition as of June 30, 2019 and uncertainty regarding whether and to what extent the ultimate outcome of the rehabilitation process will result in an outcome unfavorable to the Company, management concluded that any possible impairment of its reinsurance receivables balance could not be reasonably estimated.

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EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

Components of the net periodic benefit cost for the three and six months ended June 30, 2019 and 2018, are as follows:

	For The Three Months Ended June 30,										For The Six Months Ended June 30,
	2019					2018					2019					2018
	Qualified Pension Plan			Nonqualified Excess Pension Plan		Qualified Pension Plan			Nonqualified Excess Pension Plan		Qualified Pension Plan			Nonqualified Excess Pension Plan		Qualified Pension Plan			Nonqualified Excess Pension Plan
	(Dollars In Thousands)
Service cost — benefits earned during the period	$	3,114		$	285	$	3,441		$	387	$	6,228		$	570	$	6,882		$	774
Interest cost on projected benefit obligation	2,778			371		2,397			359		5,556			742		4,794			718
Expected return on plan assets	(4,463		)	—		(4,026		)	—		(8,926		)	—		(8,052		)	—
Amortization of actuarial loss	—			74		—			265		—			148		—			530
Preliminary net periodic benefit cost	1,429			730		1,812			1,011		2,858			1,460		3,624			2,022
Settlement/curtailment expense	—			—		—			—		—					—			—
Total net periodic benefit costs	$	1,429		$	730	$	1,812		$	1,011	$	2,858		$	1,460	$	3,624		$	2,022

During the six months ended June 30, 2019, the Company did not make a contribution to its defined benefit pension plan. The Company will make contributions in future periods as necessary to at least satisfy minimum funding requirements, to maintain an adjusted funding target attainment percentage (“AFTAP”) of at least 80% and to avoid certain Pension Benefit Guaranty Corporation (“PBGC”) reporting triggers. The Company may also make additional discretionary contributions in excess of the contribution amounts established by the current funding policy.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2019

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) (“AOCI”) as of June 30, 2019 and December 31, 2018.

Changes in Accumulated Other Comprehensive Income (Loss) by Component

	Unrealized Gains and Losses on Investments(2)			Accumulated Gain and Loss  Derivatives			Minimum Pension Liability Adjustment			Total Accumulated Other Comprehensive  Income (Loss)
	(Dollars In Thousands, Net of Tax)
Balance, December 31, 2017	$	25,874		$	747		$	(13,925	)	$	12,696
Other comprehensive income (loss) before reclassifications	(1,420,499		)	(1,884		)	(3,546		)	(1,425,929		)
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	(20,751		)	—			—			(20,751		)
Amounts reclassified from accumulated other comprehensive income (loss)(1)	15,651			1,130			1,989			18,770
Cumulative effect adjustments	(10,552		)	—			—			(10,552		)
Balance, December 31, 2018	$	(1,410,277	)	$	(7	)	$	(15,482	)	$	(1,425,766	)
Other comprehensive income (loss) before reclassifications	2,131,443			(4,754		)	—			2,126,689
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	24,316			—			—			24,316
Amounts reclassified from accumulated other comprehensive income (loss)(1)	(1,876		)	486			—			(1,390		)
Cumulative effect adjustments	—			—			—			—
Balance, June 30, 2019	$	743,606		$	(4,275	)	$	(15,482	)	$	723,849
(1)  See Reclassifications Out of Accumulated Other Comprehensive Income (Loss) table below for details.
(2)  As of December 31, 2018 and June 30, 2019, net unrealized losses reported in AOCI were offset by $613.4 million and $(343.1) million, respectively, due to the impact those net unrealized losses would have had on certain of the Company’s insurance assets and liabilities if the net unrealized losses had been recognized in net income.

The following tables summarize the reclassifications amounts out of AOCI for the three and six months ended June 30, 2019 and 2018.

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

	Affected Line Item in the Condensed Consolidated
Gains/(losses) in net income:	Statements of Income	For The Three Months Ended June 30,						For The Six Months Ended June 30,
		2019			2018			2019			2018
		(Dollars In Thousands)
Derivative instruments	Benefits and settlement expenses, net of reinsurance ceded(1)	$	(336	)	$	(205	)	$	(614	)	$	(318	)
	Tax (expense) benefit	70			43			128			67
		$	(266	)	$	(162	)	$	(486	)	$	(251	)
Unrealized gains and losses on available-for-sale securities	Realized investment gains (losses): All other investments	$	1,098		$	5,539		$	6,215		$	8,322
	Net impairment losses recognized in earnings	(698		)	(5		)	(3,840		)	(3,650		)
	Tax (expense) benefit	(84		)	(1,162		)	(499		)	(981		)
		$	316		$	4,372		$	1,876		$	3,691
(1) See Note 7, Derivative Financial Instruments for additional information.

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INCOME TAXES

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company used its respective estimates for its annual 2019 and 2018 incomes in computing its effective income tax rates for the three and six months ended June 30, 2019 and 2018. The effective tax rates for the three and six months ended June 30, 2019 and 2018, were 16.9% and 19.2% and 17.5% and 18.4%, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	As of
	June 30, 2019			December 31, 2018
	(Dollars In Thousands)
Balance, beginning of period	$	7,134		$	11,353
Additions for tax positions of the current year	—			—
Additions for tax positions of prior years	—			—
Reductions of tax positions of prior years:
Changes in judgment	—			(4,219		)
Settlements during the period	(5,343		)	—
Lapses of applicable statute of limitations	—			—
Balance, end of period	$	1,791		$	7,134

Included in the end of period balance above, as of June 30, 2019 and December 31, 2018 there were no unrecognized tax benefits for which the ultimate deductibility is certain but for which there is uncertainty about the timing of such deductions. As of December 31, 2017, there were approximately $0.7 million of such unrecognized tax benefits. Other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective income tax rate but would accelerate to an earlier period the payment of cash to the taxing authority. The total amount of unrecognized tax benefits, if recognized, that would affect the effective income tax rate is approximately $1.8 million, $7.1 million, and $11.4 million for the period ending June 30, 2019 and the years ending December 31, 2018 and 2017, respectively.

Any accrued interest related to the unrecognized tax benefits and other accrued income taxes have been included in income tax expense. These amounts were a $0.6 million detriment, $0.04 million detriment, and a $2.4 million benefit for the period ending June 30, 2019 and the years ending December 31, 2018 and 2017, respectively (before taking into account the related income tax benefit associated with such an expense).

In April, 2019, the IRS proposed favorable and unfavorable adjustments to the Company’s 2014 through 2016 reported taxable income. The Company agreed to these adjustments. The resulting taxes have not yet been settled but settlement will not materially impact the Company or its effective tax rate. This agreement with the IRS is the primary cause for the reductions of unrecognized tax benefits shown in the chart above.

The Company believes that in the next twelve months, none of the unrecognized tax benefits will be reduced.

Statute of limitations for years before 2017 are still open but, in general, the Company is no longer subject to income tax examinations by taxing authorities for tax years that began before 2017.

Due to IRS adjustments to the Company's pre-2014 taxable income, the Company has amended certain of its 2003 through 2013 state income tax returns. Such amendments will cause such years to remain open, pending the states' acceptances of the returns.

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OPERATING SEGMENTS

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

OPERATING SEGMENTS

OPERATINGSEGMENTS

The Company has several operating segments, each having a strategic focus. An operating segment is distinguished by products, channels of distribution, and/or other strategic distinctions. The Company periodically evaluates its operating segments and makes adjustments to its segment reporting as needed. A brief description of each segment follows.

• The Life Marketing segment markets fixed universal life (“UL”), indexed universal life (“IUL”), variable universal life (“VUL”), bank-owned life insurance (“BOLI”), and level premium term insurance (“traditional”) products on a national basis primarily through networks of independent insurance agents and brokers, broker-dealers, financial institutions, independent marketing organizations, and affinity groups.

• The Acquisitions segment focuses on acquiring, converting, and servicing policies and contracts acquired from other companies. The segment’s primary focus is on life insurance policies and annuity products that were sold to individuals. The level of the segment’s acquisition activity is predicated upon many factors, including available capital, operating capacity, potential return on capital, and market dynamics. Policies acquired through the Acquisitions segment are typically blocks of business where no new policies are being marketed, however, some recent acquisitions have included ongoing new business activities. Ongoing new product sales written by the Company from these acquisitions are included in the Life Marketing and/or Annuities segment. As a result, earnings and account values are expected to decline as the result of lapses, deaths, and other terminations of coverage unless new acquisitions are made.

• The Annuities segment markets fixed and VA products. These products are primarily sold through broker-dealers, financial institutions, and independent agents and brokers.

• The Stable Value Products segment sells fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, money market funds, bank trust departments, and other institutional investors. This segment also issues funding agreements to the FHLB, and markets guaranteed investment contracts (“GICs”) to 401(k) and other qualified retirement savings plans. The Company also has an unregistered funding agreement-backed notes program which provides for offers of notes to both domestic and international institutional investors.

• The Asset Protection segment markets extended service contracts, guaranteed asset protection (“GAP”) products, credit life and disability insurance, and other specialized ancillary products to protect consumers’ investments in automobiles, recreational vehicles, watercraft, and powersports. GAP products are designed to cover the difference between the scheduled loan pay-off amount and an asset’s actual cash value in the case of a total loss. Each type of specialized ancillary product protects against damage or other loss to a particular aspect of the underlying asset.

• The Corporate and Other segment primarily consists of net investment income on assets supporting our equity capital, unallocated corporate overhead and expenses not attributable to the segments above (including interest on corporate debt). This segment includes earnings from several non-strategic or runoff lines of business, various financing and investment related transactions, and the operations of several small subsidiaries.

The Company's management and Board of Directors analyzes and assesses the operating performance of each segment using "pre-tax adjusted operating income (loss)" and "after-tax adjusted operating income (loss)". Consistent with GAAP accounting guidance for segment reporting, pre-tax adjusted operating income (loss) is the Company's measure of segment performance. Pre-tax adjusted operating income (loss) is calculated by adjusting "income (loss) before income tax," by excluding the following items:

• realized gains and losses on investments and derivatives,

• changes in the GLWB embedded derivatives exclusive of the portion attributable to the economic cost of the GLWB,

• actual GLWB incurred claims, and

• the amortization of DAC, value of business acquired (“VOBA”), and certain policy liabilities that is impacted by the exclusion of these items.

The items excluded from adjusted operating income (loss) are important to understanding the overall results of operations. Pre-tax adjusted operating income (loss) and after-tax adjusted operating income (loss) are not substitutes for income before income taxes or net income (loss), respectively. These measures may not be comparable to similarly titled measures reported by other companies. The Company believes that pre-tax and after-tax adjusted operating income (loss) enhances management’s and the Board of Directors’ understanding of the ongoing operations, the underlying profitability of each segment, and helps facilitate the allocation of resources.

After-tax adjusted operating income (loss) is derived from pre-tax adjusted operating income (loss) with the inclusion of income tax expense or benefits associated with pre-tax adjusted operating income. Income tax expense or benefits is allocated to the items excluded from pre-tax adjusted operating income (loss) at the statutory federal income tax rate for the associated period. Income tax expense or benefits allocated to after-tax adjusted operating income (loss) can vary period to period based on changes in the Company’s effective income tax rate.

In determining the components of the pre-tax adjusted operating income (loss) for each segment, premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC and VOBA are attributed directly to each operating segment. Net investment income is allocated based on directly related assets required for transacting the business of that segment. Realized investment gains (losses) and other operating expenses are allocated to the segments in a manner that most appropriately reflects the operations of that segment. Investments and other assets are allocated based on statutory policy liabilities net of associated statutory policy assets, while DAC/VOBA and goodwill are shown in the segments to which they are attributable.

There were no significant intersegment transactions during the three and six months ended June 30, 2019 and 2018.

The following tables present a summary of results and reconciles pre-tax adjusted operating income (loss) to consolidated income before income tax and net income:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Revenues
Life Marketing	$	441,559		$	414,954		$	898,899		$	849,870
Acquisitions	667,031			509,639			1,276,973			888,733
Annuities	100,407			133,177			239,624			283,890
Stable Value Products	67,585			45,748			127,164			99,616
Asset Protection	76,014			77,814			152,212			154,189
Corporate and Other	66,179			62,576			137,933			133,442
Total revenues	$	1,418,775		$	1,243,908		$	2,832,805		$	2,409,740
Pre-tax Adjusted Operating Income (Loss)
Life Marketing	$	(462	)	$	(7,737	)	$	772		$	(25,586	)
Acquisitions	69,810			59,038			144,722			114,558
Annuities	45,271			55,934			99,487			96,465
Stable Value Products	28,106			19,992			50,345			49,072
Asset Protection	9,211			7,166			18,954			13,384
Corporate and Other	(20,445		)	(17,797		)	(40,119		)	(38,476		)
Pre-tax adjusted operating income	131,491			116,596			274,161			209,417
Realized (losses) gains on investments and derivatives	(1,417		)	(17,824		)	30,828			(18,847		)
Income before income tax	130,074			98,772			304,989			190,570
Income tax expense	(21,963		)	(17,277		)	(58,594		)	(34,963		)
Net income	$	108,111		$	81,495		$	246,395		$	155,607
Pre-tax adjusted operating income	$	131,491		$	116,596		$	274,161		$	209,417
Adjusted operating income tax (expense) benefit	(22,261		)	(20,877		)	(52,120		)	(38,920		)
After-tax adjusted operating income	109,230			95,719			222,041			170,497
Realized (losses) gains on investments and derivatives	(1,417		)	(17,824		)	30,828			(18,847		)
Income tax benefit (expense) on adjustments	298			3,600			(6,474		)	3,957
Net income	$	108,111		$	81,495		$	246,395		$	155,607
Realized investment (losses) gains:
Derivative financial instruments	$	(148,049	)	$	12,265		$	(267,720	)	$	90,324
All other investments	99,502			(49,602		)	229,092			(137,201		)
Net impairment losses recognized in earnings	(698		)	(5		)	(3,840		)	(3,650		)
Less: related amortization(1)	(26,840		)	1,763			(31,201		)	10,919
Less: VA GLWB economic cost	(20,988		)	(21,281		)	(42,095		)	(42,599		)
Realized (losses) gains on investments and derivatives	$	(1,417	)	$	(17,824	)	$	30,828		$	(18,847	)
(1)  Includes amortization of DAC/VOBA and benefits and settlement expenses that are impacted by realized gains (losses).

	Operating Segment Assets As of June 30, 2019
	(Dollars In Thousands)
	Life Marketing		Acquisitions		Annuities		Stable Value Products
Investments and other assets	$	15,433,940	$	52,753,065	$	21,206,967	$	5,688,707
DAC and VOBA	1,494,118		914,610		890,214		6,877
Other intangibles	253,243		38,291		172,420		7,056
Goodwill	215,254		23,862		343,247		113,924
Total assets	$	17,396,555	$	53,729,828	$	22,612,848	$	5,816,564

	Asset Protection		Corporate and Other		Total Consolidated
Investments and other assets	$	1,055,887	$	16,390,407	$	112,528,973
DAC and VOBA	168,738		—		3,474,557
Other intangibles	117,374		28,547		616,931
Goodwill	129,224		—		825,511
Total assets	$	1,471,223	$	16,418,954	$	117,445,972

	Operating Segment Assets As of December 31, 2018
	(Dollars In Thousands)
	Life Marketing		Acquisitions		Annuities		Stable Value Products
Investments and other assets	$	14,575,702	$	31,859,520	$	20,199,597	$	5,107,334
DAC and VOBA	1,499,386		458,977		889,697		6,121
Other intangibles	262,758		31,975		156,785		7,389
Goodwill	215,254		23,862		343,247		113,924
Total assets	$	16,553,100	$	32,374,334	$	21,589,326	$	5,234,768

	Asset Protection		Corporate and Other		Total Consolidated
Investments and other assets	$	1,019,297	$	12,715,208	$	85,476,658
DAC and VOBA	168,973		—		3,023,154
Other intangibles	122,590		31,934		613,431
Goodwill	129,224		—		825,511
Total assets	$	1,440,084	$	12,747,142	$	89,938,754

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company has evaluated the effects of events subsequent to June 30, 2019, and through the date we filed our consolidated condensed financial statements with the United States Securities and Exchange Commission. All accounting and disclosure requirements related to subsequent events are included in our consolidated condensed financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

On February 1, 2015, Protective Life Corporation (the “Company”) became a wholly owned subsidiary of The Dai-ichi Life Insurance Company, Limited, a kabushiki kaisha organized under the laws of Japan (now known as Dai-ichi Life Holdings, Inc., “Dai-ichi Life”), when DL Investment (Delaware), Inc., a wholly owned subsidiary of Dai-ichi Life, merged with and into the Company (the “Merger”). Prior to February 1, 2015, the Company’s stock was publicly traded on the New York Stock Exchange. Subsequent to the Merger, the Company remains as an SEC registrant within the United States. The Company is a holding company with subsidiaries that provide financial services through the production, distribution, and administration of insurance and investment products. The Company markets individual life insurance, credit life and disability insurance, guaranteed investment contracts, guaranteed funding agreements, fixed and variable annuities, and extended service contracts throughout the United States. The Company also maintains a separate segment devoted to the acquisition of insurance policies from other companies. Founded in 1907, Protective Life Insurance Company (“PLICO”) is the Company’s largest operating subsidiary.

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for the interim periods presented herein. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting only of normal recurring items) necessary for a fair presentation of the results for the interim periods presented. Operating results for the three and six months ended June 30, 2019, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2019. The year-end consolidated condensed financial data included herein was derived from audited financial statements but this report does not include all disclosures required by GAAP. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The operating results of companies in the insurance industry have historically been subject to significant fluctuations due to changing competition, economic conditions, interest rates, investment performance, insurance ratings, claims, persistency, and other factors.

Reclassifications

Certain reclassifications have been made in previously reported financial statements and accompanying notes to make prior period amounts comparable to those of the current period. Such reclassifications had no effect on previously reported net income or shareowner’s equity.

Entities Included

Entities Included

The consolidated condensed financial statements in this report include the accounts of Protective Life Corporation and subsidiaries and its affiliate companies in which the Company holds a majority voting or economic interest. Intercompany balances and transactions have been eliminated.

Accounting Pronouncements Recently Adopted and Not Yet Adopted

Accounting Pronouncements Recently Adopted

Accounting Standards Update (“ASU” or “Update”) No. 2016-02 - Leases. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of leases. The most significant change relates to the accounting model used by lessees. The Update requires all leases with terms greater than 12 months to be recorded on the balance sheet in the form of a lease asset and liability. The lease asset and liability are measured at the present value of the minimum lease payments less any upfront payments or fees. The amendments in the Update became effective for annual and interim periods beginning after December 15, 2018 on a modified retrospective basis. The Company recorded a cumulative effect adjustment as of the date of adoption, January 1, 2019, establishing a right of use asset and lease liability of $21.5 million on its consolidated condensed balance sheet reflected in the property and equipment and other liabilities line items, respectively.

ASU No. 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update require that premiums on callable debt securities be amortized to the first call date. This is a change from previous guidance, under which premiums are amortized to the maturity date of the security. The amendments became effective for annual and interim periods beginning after December 15, 2018. The Company recorded a cumulative effect adjustment as of the adoption date, January 1, 2019, resulting in a $50.8 million reduction to retained earnings, net of income tax.

ASU No. 2017-12 - Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this Update are designed to permit hedge accounting to be applied to a broader range of hedging strategies as well as to more closely align hedge accounting and risk management objectives. Specific provisions include requiring changes in the fair value of a hedging instrument be recorded in the same income statement line as the hedged item when it affects earnings. In addition, after a hedge has initially qualified as an effective hedge the Update permits the use of a qualitative hedge effectiveness test in subsequent periods. The amendments in this Update became effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. At adoption, January 1, 2019, this standard did not have an impact on the Company’s operations or financial results.

Accounting Pronouncements Not Yet Adopted

ASU No. 2016-13 - Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this Update introduce a new current expected credit loss (“CECL”) model for certain financial assets, including mortgage loans and reinsurance receivables. The new model will not apply to debt securities classified as available-for-sale. For assets within the scope of the new model, an entity will recognize as an allowance against earnings its estimate of the contractual cash flows not expected to be collected on day one of the asset’s acquisition. The allowance may be reversed through earnings if a security recovers in value. This differs from the current impairment model, which requires recognition of credit losses when they have been incurred and recognizes a security’s subsequent recovery in value in other comprehensive income. The Update also makes targeted changes to the current impairment model for available-for-sale debt securities, which comprise the majority of the Company’s invested assets. Similar to the CECL model, credit loss impairments will be recorded in an allowance against earnings that may be reversed for subsequent recoveries in value. The amendments in this Update, along with related amendments in ASU No. 2018-19 - Codification Improvements to Topic 326, Financial Instruments-Credit Losses, are effective for annual and interim periods beginning after December 15, 2019 on a modified retrospective basis. The Company has completed its scoping and gap analysis with respect to the implementation of the new standard. Based on the results of this analysis, the Company’s implementation efforts are primarily focused on the application of the CECL model to a) its portfolio of commercial mortgage loans and b) amounts recoverable from reinsurers. The Company is currently engaged in a project to implement new processes with respect to the measurement and recognition of the CECL allowance for these assets, along with the additional disclosures required by the Update. The impact of this standard on the Company’s financial results cannot yet be reasonably estimated.

ASU No. 2018-12 - Financial Services - Insurance (Topic 944): Targeted Improvements to Accounting for Long-Duration Contracts. The amendments in this Update are designed to make improvements to the existing recognition, measurement, presentation, and disclosure requirements for certain long-duration contracts issued by an insurance company. The new amendments require insurance entities to provide a more current measure of the liability for future policy benefits for traditional and limited-payment contracts by regularly refining the liability for actual past experience and updated future assumptions. This differs from current requirements where assumptions are locked-in at contract issuance for these contract types. In addition, the updated liability will be discounted using an upper-medium grade (low-credit-risk) fixed income instrument yield that reflects the characteristics of the liability which differs from currently used rates based on the invested assets supporting the liability. In addition, the amendments introduce new requirements to assess market-based insurance contract options and guarantees for Market Risk Benefits and measure them at fair value. This Update also requires insurance entities to amortize deferred acquisition costs on a constant-level basis over the expected life of the contract. Finally this Update requires new disclosures including liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in the measurement. The amendments in this Update are currently effective for annual and interim periods beginning after December 31, 2020 with early adoption permitted. However, in July 2019, the Financial Accountings Standards Board (the “FASB”) voted to expose an Accounting Standards Update for public comment which would extend the implementation deadline for public business entities by one year to periods beginning after December 15, 2021. The Company is currently reviewing its policies, processes, and applicable systems to determine the impact this standard will have on its operations and financial results. 

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SIGNIFICANT TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Summary of Consideration Paid and Fair Value of Assets Acquired and Liabilities Assumed

The following table details the purchase consideration and final allocation of assets acquired and liabilities from the Life Business reinsurance transaction as of the transaction date.

	Fair Value as of May 1, 2018
	(Dollars In Thousands)
ASSETS
Fixed maturities	$	12,588,512
Mortgage loans	435,405
Policy loans	131,489
Total investments	13,155,406
Cash	35,179
Accrued investment income	152,030
Reinsurance receivables	272
Value of business acquired	379,717
Other assets	916
Total assets	13,723,520
LIABILITIES
Future policy benefits and claims	$	11,751,895
Unearned premiums	—
Total policy liabilities and accruals	11,751,895
Annuity account balances	1,864,141
Other policyholders’ funds	41,936
Other liabilities	65,548
Total liabilities	13,723,520
NET ASSETS ACQUIRED	$	—

The following table details the preliminary allocation of assets acquired and liabilities assumed from the Individual Life Business reinsurance transaction as of the transaction date. The Company has not completed the process of determining the fair value of assets acquired and liabilities assumed, but will do so in the twelve month measurement period subsequent to the transaction date. These estimates are provisional subject to adjustment. Any adjustments to these fair value estimates will be reflected, retroactively, as of the date of the acquisition, and may result in adjustments to the value of business acquired.

	Fair Value as of June 1, 2019
	(Dollars In Thousands)
ASSETS
Fixed maturities	$	8,697,533
Mortgage loans	1,386,228
Policy loans	44,002
Other long-term investments	1,579
Total investments	10,129,342
Cash	35,607
Accrued investment income	101,306
Accounts and premiums receivable	62
Premium due and deferred	1,657
Value of business acquired	491,493
Other intangibles	28,600
Other assets	1,537,848
Assets related to separate accounts	9,583,217
Total assets	21,909,132
LIABILITIES
Future policy benefits and claims	$	10,993,716
Annuity account balances	253,748
Other policyholders’ funds	220,117
Other liabilities	39,370
Liabilities related to separate accounts	9,583,217
Total liabilities	21,090,168
NET ASSETS ACQUIRED	$	818,964

Pro Forma Information

The following unaudited pro forma condensed consolidated results of operations assumes that the aforementioned transactions of the Individual Life Business were completed as of January 1, 2018. The unaudited pro forma condensed results of operations are presented solely for information purposes and are not necessarily indicative of the consolidated condensed results of operations that might have been achieved had the transaction been completed as of the date indicated:

	Unaudited				Unaudited
	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars In Thousands)
Revenue	$	1,548,668	$	1,461,832	$	3,203,698	$	2,828,369
Net income	$	124,161	$	122,977	$	263,490	$	182,034

The following unaudited pro forma condensed consolidated results of operations assumes that the aforementioned transactions of the Life Business were completed as of January 1, 2017. The unaudited pro forma condensed results of operations are presented solely for information purposes and are not necessarily indicative of the consolidated condensed results of operations that might have been achieved had the transaction been completed as of the date indicated:

	Unaudited
	For The Three Months Ended June 30, 2018		For The Six Months Ended June 30, 2018
	(Dollars In Thousands)
Revenue	$	1,317,159	$	2,733,479
Net income	$	88,883	$	201,751

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

Intangible assets recognized by the Company included the following (excluding goodwill):

	Estimated Fair Value on Acquisition Date		Estimated Useful Life
	(Dollars In Thousands)		(In Years)
Distribution relationships	$	15,000	18
Technology	13,600		10
Total intangible assets	$	28,600

Future Estimated Aggregate Amortization Expense

Amortizable intangible assets will be amortized straight line over their assigned useful lives. The following is a schedule of future estimated aggregate amortization expense:

Year	Amount
	(Dollars In Thousands)
Remainder of 2019	$	1,279
2020	2,193
2021	2,193
2022	2,193
2023	2,193

Schedule of Expected Amortization Expense of (VOBA)

Based on the balance recorded as of June 1, 2019, the expected amortization of VOBA for the next five years is as follows:

Year	Amount
	(Dollars In Thousands)
Remainder of 2019	$	(4,966	)
2020	(12,292		)
2021	(6,807		)
2022	(1,010		)
2023	3,259

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MONY CLOSED BLOCK OF BUSINESS (Tables)

6 Months Ended

Jun. 30, 2019

Closed Block Disclosure [Abstract]

Summary of Financial Information for the Closed Block

Summarized financial information for the Closed Block as of June 30, 2019, and December 31, 2018, is as follows:

	As of
	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
Closed block liabilities
Future policy benefits, policyholders’ account balances and other policyholder liabilities	$	5,611,917	$	5,679,732
Policyholder dividend obligation	173,147		—
Other liabilities	11,043		22,505
Total closed block liabilities	5,796,107		5,702,237
Closed block assets
Fixed maturities, available-for-sale, at fair value	$	4,583,161	$	4,257,437
Mortgage loans on real estate	74,290		75,838
Policy loans	658,971		672,213
Cash	55,960		116,225
Other assets	107,306		136,388
Total closed block assets	5,479,688		5,258,101
Excess of reported closed block liabilities over closed block assets	316,419		444,136
Portion of above representing accumulated other comprehensive income:
Net unrealized investment gains (losses) net of policyholder dividend obligation: $47,972 and $(141,128); and net of income tax: $(10,074) and $61,676	—		(120,528		)
Future earnings to be recognized from closed block assets and closed block liabilities	$	316,419	$	323,608

Schedule of Reconciliation of the Policyholder Dividend Obligation

Reconciliation of the policyholder dividend obligation is as follows:

	For The Six Months Ended June 30,
	2019			2018
	(Dollars In Thousands)
Policyholder dividend obligation, beginning of period	$	—		$	160,712
Applicable to net revenue (losses)	(15,953		)	(19,536		)
Change in net unrealized investment gains (losses) allocated to the policyholder dividend obligation	189,100			(141,176		)
Policyholder dividend obligation, end of period	$	173,147		$	—

Schedule of Closed Block Revenues and Expenses

Closed Block revenues and expenses were as follows:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2019		2018		2019			2018
	(Dollars In Thousands)
Revenues
Premiums and other income	$	40,105	$	42,465	$	77,549		$	82,077
Net investment income	51,663		50,872		102,791			101,415
Net investment gains (losses)	43		263		(411		)	26
Total revenues	91,811		93,600		179,929			183,518
Benefits and other deductions
Benefits and settlement expenses	87,213		87,940		165,879			167,892
Other operating expenses	247		337		606			20
Total benefits and other deductions	87,460		88,277		166,485			167,912
Net revenues before income taxes	4,351		5,323		13,444			15,606
Income tax expense	913		1,118		2,823			3,277
Net revenues	$	3,438	$	4,205	$	10,621		$	12,329

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INVESTMENT OPERATIONS (Tables)

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Realized Gain (Loss) on Investments

Net realized gains (losses) are summarized as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Fixed maturities	$	1,098		$	5,539		$	6,215		$	8,322
Equity gains and losses	7,696			(1,044		)	38,413			(9,830		)
Modco trading portfolio	89,571			(52,817		)	184,473			(137,525		)
Other investments	1,137			(1,280		)	(9		)	1,832
Realized gains (losses) - all other investments	99,502			(49,602		)	229,092			(137,201		)
Realized gains (losses) - derivatives(1)	(148,049		)	12,265			(267,720		)	90,324
Realized investment gains (losses)	$	(48,547	)	$	(37,337	)	$	(38,628	)	$	(46,877	)
Net impairments losses recognized in earnings	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)
(1) See Note 7, Derivative Financial Instruments

Gross realized gains and gross realized losses on investments available-for-sale (fixed maturities and short-term investments) are as follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Gross realized gains	$	6,812		$	10,137		$	14,682		$	18,187
Gross realized losses:
Impairment losses	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)
Other realized losses	$	(5,714	)	$	(4,598	)	$	(8,467	)	$	(9,865	)

Schedule of Investments' Gross Unrealized Losses and Fair Value of the Company's Investments that are Not Deemed to be Other-than-Temporarily Impaired

The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2019:

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(Dollars In Thousands)
Residential mortgage-backed securities	$	118,932	$	(427	)	$	576,350	$	(8,474	)	$	695,282	$	(8,901	)
Commercial mortgage-backed securities	3,609		(6		)	574,967		(3,888		)	578,576		(3,894		)
Other asset-backed securities	409,753		(5,931		)	134,156		(2,595		)	543,909		(8,526		)
U.S. government-related securities	32,421		(314		)	902,249		(8,690		)	934,670		(9,004		)
Other government-related securities	5,509		(198		)	93,790		(3,970		)	99,299		(4,168		)
States, municipals, and political subdivisions	13,242		(13		)	145,668		(5,838		)	158,910		(5,851		)
Corporate securities	1,244,536		(52,639		)	10,318,328		(519,534		)	11,562,864		(572,173		)
Redeemable preferred stocks	—		—			17,180		(3,758		)	17,180		(3,758		)
	$	1,828,002	$	(59,528	)	$	12,762,688	$	(556,747	)	$	14,590,690	$	(616,275	)

The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2018:

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(Dollars In Thousands)
Residential mortgage-backed securities	$	1,485,009	$	(31,302	)	$	804,364	$	(30,894	)	$	2,289,373	$	(62,196	)
Commercial mortgage-backed securities	422,438		(7,442		)	1,429,384		(50,659		)	1,851,822		(58,101		)
Other asset-backed securities	687,271		(30,963		)	148,871		(4,435		)	836,142		(35,398		)
U.S. government-related securities	130,290		(4,668		)	1,085,654		(41,054		)	1,215,944		(45,722		)
Other government-related securities	226,201		(15,267		)	131,569		(18,583		)	357,770		(33,850		)
States, municipals, and political subdivisions	1,004,262		(27,180		)	1,129,152		(91,722		)	2,133,414		(118,902		)
Corporate securities	18,326,331		(970,553		)	12,859,732		(1,414,499		)	31,186,063		(2,385,052		)
Redeemable preferred stocks	41,147		(4,467		)	41,655		(7,093		)	82,802		(11,560		)
	$	22,322,949	$	(1,091,842	)	$	17,630,381	$	(1,658,939	)	$	39,953,330	$	(2,750,781	)

The chart below summarizes the fair value (proceeds) and the gains (losses) realized on securities the Company sold that were in an unrealized gain position and an unrealized loss position.

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Securities in an unrealized gain position:
Fair value (proceeds)	$	491,121		$	466,153		$	1,140,012		$	608,286
Gains realized	$	6,812		$	10,137		$	14,682		$	18,187
Securities in an unrealized loss position(1):
Fair value (proceeds)	$	160,125		$	201,191		$	338,129		$	258,175
Losses realized	$	(5,714	)	$	(4,598	)	$	(8,467	)	$	(9,865	)
(1) The Company made the decision to exit these holdings in conjunction with its overall asset/liability management process.

Realized Gain (Loss) on Equity Securities

The chart below summarizes the realized gains (losses) on equity securities sold during the period and equity securities still held at the reporting date.

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars In Thousands)
Net gains (losses) recognized during the period on equity securities	$	7,696	$	(1,044	)	$	38,413	$	(9,830	)
Less: net gains (losses) recognized on equity securities sold during the period	$	193	$	(680	)	$	253	$	(2,381	)
Gains (losses) recognized during the period on equity securities still held	$	7,503	$	(364	)	$	38,160	$	(7,449	)

Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Available-for-Sale

The amortized cost and fair value of the Company’s investments classified as available-for-sale are as follows:

As of June 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Total OTTI Recognized in OCI(1)
	(Dollars In Thousands)
Fixed maturities:
Residential mortgage-backed securities	$	4,482,547	$	132,602	$	(8,901	)	$	4,606,248
Commercial mortgage-backed securities	2,648,121		51,634		(3,894		)	2,695,861
Other asset-backed securities	1,848,061		22,063		(8,526		)	1,861,598		(3		)
U.S. government-related securities	1,304,382		5,179		(9,004		)	1,300,557
Other government-related securities	555,767		31,550		(4,168		)	583,149
States, municipals, and political subdivisions	4,652,897		183,920		(5,851		)	4,830,966		1,193
Corporate securities	45,267,764		1,549,526		(572,173		)	46,245,117		764
Redeemable preferred stocks	87,459		1,211		(3,758		)	84,912
	60,846,998		1,977,685		(616,275		)	62,208,408		1,954
Short-term investments	1,138,931		—		—			1,138,931		—
	$	61,985,929	$	1,977,685	$	(616,275	)	$	63,347,339	$	1,954
As of December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Total OTTI Recognized in OCI(1)
	(Dollars In Thousands)
Fixed maturities:
Residential mortgage-backed securities	$	3,650,539	$	23,247	$	(62,196	)	$	3,611,590	$	(18	)
Commercial mortgage-backed securities	2,349,274		3,911		(58,101		)	2,295,084		—
Other asset-backed securities	1,410,059		17,232		(35,398		)	1,391,893		—
U.S. government-related securities	1,683,432		1,795		(45,722		)	1,639,505		—
Other government-related securities	545,522		4,292		(33,850		)	515,964		—
States, municipals, and political subdivisions	3,682,037		25,706		(118,902		)	3,588,841		876
Corporate securities	38,634,888		112,992		(2,385,052		)	36,362,828		(29,685		)
Redeemable preferred stocks	94,362		—		(11,560		)	82,802		—
	52,050,113		189,175		(2,750,781		)	49,488,507		(28,827		)
Short-term investments	776,357		—		—			776,357		—
	$	52,826,470	$	189,175	$	(2,750,781	)	$	50,264,864	$	(28,827	)
(1) These amounts are included in the gross unrealized gains and gross unrealized losses columns above.

Schedule of Fair Value of Trading Securities

The fair value of the investments held pursuant to these Modco arrangements are as follows:    

	As of
	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
Fixed maturities:
Residential mortgage-backed securities	$	203,455	$	241,836
Commercial mortgage-backed securities	204,445		188,925
Other asset-backed securities	147,997		159,907
U.S. government-related securities	51,080		59,794
Other government-related securities	24,342		44,207
States, municipals, and political subdivisions	293,560		286,413
Corporate securities	1,565,561		1,423,833
Redeemable preferred stocks	11,808		11,277
	2,502,248		2,416,192
Equity securities	8,488		9,892
Short-term investments	81,909		30,926
	$	2,592,645	$	2,457,010

Schedule of Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Fixed Maturities, by Expected Maturity

The amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities as of June 30, 2019, by expected maturity, are shown below. Expected maturities of securities without a single maturity date are allocated based on estimated rates of prepayment that may differ from actual rates of prepayment.

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars In Thousands)
Due in one year or less	$	1,440,860	$	1,438,699	$	—	$	—
Due after one year through five years	10,103,874		10,229,353		—		—
Due after five years through ten years	13,210,907		13,623,029		—		—
Due after ten years	36,091,357		36,917,327		2,576,216		2,640,827
	$	60,846,998	$	62,208,408	$	2,576,216	$	2,640,827

Gain (Loss) on Investments

The chart below summarizes the Company’s other-than-temporary impairments of investments. All of the impairments were related to fixed maturities.

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	Fixed Maturities			Fixed Maturities			Fixed Maturities			Fixed Maturities
	(Dollars In Thousands)
Other-than-temporary impairments	$	(198	)	$	(10	)	$	(1,493	)	$	(701	)
Non-credit impairment losses recorded in other comprehensive income (loss)	(500		)	5			(2,347		)	(2,949		)
Net impairment losses recognized in earnings	$	(698	)	$	(5	)	$	(3,840	)	$	(3,650	)

Schedule of Available-for-Sale Credit Losses on Fixed Maturities Held by the Company for Which a Portion of Other-than-Temporary Impairments were Recognized in Other Comprehensive Income (Loss)

The following chart is a rollforward of available-for-sale credit losses on fixed maturities held by the Company for which a portion of an other-than-temporary impairment was recognized in other comprehensive income (loss):

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Beginning balance	$	27,215		$	2,235		$	24,868		$	3,268
Additions for newly impaired securities	—			—			751			—
Additions for previously impaired securities	660			2			3,007			2
Reductions for previously impaired securities due to a change in expected cash flows	(8,202		)	—			(8,834		)	—
Reductions for previously impaired securities that were sold in the current period	(7,175		)	(2,235		)	(7,294		)	(3,268		)
Ending balance	$	12,498		$	2		$	12,498		$	2

Summary of Change in Unrealized Gains (Losses), Net of Income Tax, on Fixed Maturity and Equity Securities, Classified as Available-for-Sale

The change in unrealized gains (losses), net of income tax, on fixed maturities, classified as available-for-sale is summarized as follows:

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars In Thousands)
Fixed maturities	$	1,541,352	$	(585,527	)	$	3,099,183	$	(1,505,298	)

Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Held-to-Maturity

The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of June 30, 2019 and December 31, 2018, are as follows:

As of June 30, 2019	Amortized Cost		Gross Unrecognized Holding Gains		Gross Unrecognized Holding Losses			Fair Value		Total OTTI Recognized in OCI
	(Dollars In Thousands)
Fixed maturities:
Securities issued by affiliates:
Red Mountain, LLC	$	773,216	$	—	$	(14,249	)	$	758,967	$	—
Steel City, LLC	1,803,000		78,860		—			1,881,860		—
	$	2,576,216	$	78,860	$	(14,249	)	$	2,640,827	$	—
As of December 31, 2018	Amortized Cost		Gross Unrecognized Holding Gains		Gross Unrecognized Holding Losses			Fair Value		Total OTTI Recognized in OCI
	(Dollars In Thousands)
Fixed maturities:
Securities issued by affiliates:
Red Mountain, LLC	$	750,474	$	—	$	(81,657	)	$	668,817	$	—
Steel City, LLC	1,883,000		—		(4,607		)	1,878,393		—
	$	2,633,474	$	—	$	(86,264	)	$	2,547,210	$	—

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

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 June 30, 2019:

	Measurement Category	Level 1		Level 2		Level 3		Total
		(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	4	$	—	$	4,606,248	$	—	$	4,606,248
Commercial mortgage-backed securities	4	—		2,686,495		9,366		2,695,861
Other asset-backed securities	4	—		1,443,288		418,310		1,861,598
U.S. government-related securities	4	884,053		416,504		—		1,300,557
Other government-related securities	4	—		583,149		—		583,149
States, municipals, and political subdivisions	4	—		4,830,966		—		4,830,966
Corporate securities	4	—		44,916,626		1,328,491		46,245,117
Redeemable preferred stocks	4	67,732		17,180		—		84,912
Total fixed maturity securities - available-for-sale		951,785		59,500,456		1,756,167		62,208,408
Fixed maturity securities - trading
Residential mortgage-backed securities	3	—		203,455		—		203,455
Commercial mortgage-backed securities	3	—		204,445		—		204,445
Other asset-backed securities	3	—		85,817		62,180		147,997
U.S. government-related securities	3	25,929		25,151		—		51,080
Other government-related securities	3	—		24,342		—		24,342
States, municipals, and political subdivisions	3	—		293,560		—		293,560
Corporate securities	3	—		1,560,267		5,294		1,565,561
Redeemable preferred stocks	3	11,808		—		—		11,808
Total fixed maturity securities - trading		37,737		2,397,037		67,474		2,502,248
Total fixed maturity securities		989,522		61,897,493		1,823,641		64,710,656
Equity securities	3	560,302		36		69,627		629,965
Other long-term investments(1)	3 & 4	65,231		467,642		110,923		643,796
Short-term investments	3	1,153,978		66,862		—		1,220,840
Total investments		2,769,033		62,432,033		2,004,191		67,205,257
Cash	3	240,157		—		—		240,157
Other assets	3	34,335		—		—		34,335
Assets related to separate accounts
Variable annuity	3	12,790,474		—		—		12,790,474
Variable universal life	3	1,073,020		—		—		1,073,020
Total assets measured at fair value on a recurring basis		$	16,907,019	$	62,432,033	$	2,004,191	$	81,343,243
Liabilities:
Annuity account balances (2)	3	$	—	$	—	$	72,585	$	72,585
Other liabilities(1)	3 & 4	23,552		198,564		1,097,077		1,319,193
Total liabilities measured at fair value on a recurring basis		$	23,552	$	198,564	$	1,169,662	$	1,391,778
(1) Includes certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.
(3) Fair Value through Net Income
(4) Fair Value through Other Comprehensive Income (Loss)

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, 2018:

	Measurement Category	Level 1		Level 2		Level 3		Total
		(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	4	$	—	$	3,611,590	$	—	$	3,611,590
Commercial mortgage-backed securities	4	—		2,295,084		—		2,295,084
Other asset-backed securities	4	—		970,251		421,642		1,391,893
U.S. government-related securities	4	1,010,485		629,020		—		1,639,505
Other government-related securities	4	—		515,964		—		515,964
State, municipals, and political subdivisions	4	—		3,588,841		—		3,588,841
Corporate securities	4	—		35,724,552		638,276		36,362,828
Redeemable preferred stocks	4	65,536		17,266		—		82,802
Total fixed maturity securities - available-for-sale		1,076,021		47,352,568		1,059,918		49,488,507
Fixed maturity securities - trading
Residential mortgage-backed securities	3	—		241,836		—		241,836
Commercial mortgage-backed securities	3	—		188,925		—		188,925
Other asset-backed securities	3	—		133,851		26,056		159,907
U.S. government-related securities	3	27,453		32,341		—		59,794
Other government-related securities	3	—		44,207		—		44,207
State, municipals, and political subdivisions	3	—		286,413		—		286,413
Corporate securities	3	—		1,417,591		6,242		1,423,833
Redeemable preferred stocks	3	11,277		—		—		11,277
Total fixed maturity securities - trading		38,730		2,345,164		32,298		2,416,192
Total fixed maturity securities		1,114,751		49,697,732		1,092,216		51,904,699
Equity securities	3	531,523		36		64,325		595,884
Other long-term investments(1)	3&4	83,047		180,438		112,344		375,829
Short-term investments	3	730,067		77,216		—		807,283
Total investments		2,459,388		49,955,422		1,268,885		53,683,695
Cash	3	173,714		—		—		173,714
Other assets	3	29,257		—		—		29,257
Assets related to separate accounts
Variable annuity	3	12,288,919		—		—		12,288,919
Variable universal life	3	937,732		—		—		937,732
Total assets measured at fair value on a recurring basis		$	15,889,010	$	49,955,422	$	1,268,885	$	67,113,317
Liabilities:
Annuity account balances(2)	3	$	—	$	—	$	76,119	$	76,119
Other liabilities(1)	3&4	56,018		69,501		629,942		755,461
Total liabilities measured at fair value on a recurring basis		$	56,018	$	69,501	$	706,061	$	831,580
(1) Includes certain freestanding and embedded derivatives.
(2) Represents liabilities related to fixed indexed annuities.
(3) Fair Value through Net Income
(4) Fair Value through Other Comprehensive Income (Loss)

Schedule of the Valuation Method for Material Financial Instruments Included in Level 3, as well as the Unobservable Inputs Used in the Valuation of the Financial Instruments

The following table presents the 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 December 31, 2018		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	421,458	Liquidation	Liquidation value	$85.75 - $99.99 ($95.36)
			Discounted Cash Flow	Liquidity premium	0.02% - 1.25% (0.64%)
				Paydown rate	10.96% - 13.11% (12.03%)
Corporate securities	631,068		Discounted cash flow	Spread over treasury	0.84% - 3.0% (1.84%)
Liabilities:(1)
Embedded derivatives - GLWB(2)	$	184,071	Actuarial cash flow model	Mortality	87% to 100% of
					Ruark 2015 ALB table
				Lapse	Ruark Predictive Model
				Utilization	99%. 10% of policies have a one-
					time over-utilization of 400%
				Nonperformance risk	0.21% - 1.16%
Embedded derivative - FIA	217,288		Actuarial cash flow model	Expenses	$145 per policy
				Withdrawal rate	1.5% prior to age 70, 100% of the
					RMD for ages 70+
				Mortality	87% to 100% of Ruark 2015 ALB
					table
				Lapse	1.0% - 30.0%, depending
					on duration/surrender
					charge period
				Nonperformance risk	0.21% - 1.16%
Embedded derivative - IUL	90,231		Actuarial cash flow model	Mortality	37% - 577% of 2015
					VBT Primary Tables
				Lapse	0.5% - 10.0%, depending
					on duration/distribution
					channel and smoking class
				Nonperformance risk	0.21% - 1.16%
(1) Excludes modified coinsurance arrangements.
(2) The fair value for the GLWB embedded derivative is presented as a net liability.

The following table presents the 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 June 30, 2019		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	418,178	Liquidation	Liquidation value	$95.39 - $97.00 ($96.48)
			Discounted cash flow	Liquidity premium	0.11% - 1.50% (0.73%)
				Paydown rate	10.84% - 12.88% (11.98%)
Corporate securities	1,328,490		Discounted cash flow	Spread over treasury	0.87% - 4.10% (1.75%)
Liabilities:(1)
Embedded derivatives - GLWB(2)	$	338,648	Actuarial cash flow model	Mortality	87% to 100% of
					Ruark 2015 ALB table
				Lapse	Ruark Predictive Model
				Utilization	99%. 10% of policies have a one-
					time over-utilization of 400%
				Nonperformance risk	0.17% - 0.88%
Embedded derivative - FIA	300,364		Actuarial cash flow model	Expenses	$145 per policy
				Withdrawal rate	1.5% prior to age 70, 100% of the
					RMD for ages 70+
				Mortality	87% to 100% of Ruark 2015 ALB
					table
				Lapse	1.0% - 30.0%, depending
					on duration/surrender
					charge period
					Dynamically adjusted for WB moneyness and projected market rates vs credited rates
				Nonperformance risk	0.17% - 0.88%
Embedded derivative - IUL	136,660		Actuarial cash flow model	Mortality	37% - 577% of 2015
					VBT Primary Tables
				Lapse	0.5% - 10.0%, depending
					on duration/distribution
					channel and smoking class
				Nonperformance risk	0.17% - 0.88%
(1) Excludes modified coinsurance arrangements.
(2) The fair value for the GLWB embedded derivative is presented as a net liability.

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 June 30, 2018, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																							Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3			Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	(457	)	$	22,225	$	—		$	—	$	—	$	—		$	12		$	21,780	$	—
Commercial mortgage-backed securities	—		—		—		—			(1,284		)	48,621		(94		)	—		—		—			(16		)	47,227		—
Other asset-backed securities	503,789		—		11,353		—			(13		)	—		(9		)	—		—		222			359			515,701		—
Corporate securities	626,409		—		5,662		—			(6,828		)	43,491		(14,818		)	—		—		(7,894		)	(1,211		)	644,811		—
Total fixed maturity securities - available-for-sale	1,130,198		—		17,015		—			(8,582		)	114,337		(14,921		)	—		—		(7,672		)	(856		)	1,229,519		—
Fixed maturity securities - trading
Other asset-backed securities	34,958		—		—		(3,570		)	—			4,600		(11,273		)	—		—		164			(27		)	24,852		(3,570		)
Corporate securities	5,324		—		—		(45		)	—			—		—			—		—		—			(25		)	5,254		(45		)
Total fixed maturity securities - trading	40,282		—		—		(3,615		)	—			4,600		(11,273		)	—		—		164			(52		)	30,106		(3,615		)
Total fixed maturity securities	1,170,480		—		17,015		(3,615		)	(8,582		)	118,937		(26,194		)	—		—		(7,508		)	(908		)	1,259,625		(3,615		)
Equity securities	66,061		1		—		(15		)	—			36		—			—		—		—			—			66,083		(14		)
Other long-term investments(1)	144,352		12,821		—		(499		)	—			—		—			—		—		—			—			156,674		12,322
Total investments	1,380,893		12,822		17,015		(4,129		)	(8,582		)	118,973		(26,194		)	—		—		(7,508		)	(908		)	1,482,382		8,693
Total assets measured at fair value on a recurring basis	$	1,380,893	$	12,822	$	17,015	$	(4,129	)	$	(8,582	)	$	118,973	$	(26,194	)	$	—	$	—	$	(7,508	)	$	(908	)	$	1,482,382	$	8,693
Liabilities:
Annuity account balances(2)	$	81,399	$	—	$	—	$	(1,059	)	$	—		$	—	$	—		$	89	$	2,449	$	—		$	—		$	80,098	$	—
Other liabilities(1)	621,102		96,138		—		(47,952		)	—			—		—			—		—		—			—			572,916		48,186
Total liabilities measured at fair value on a recurring basis	$	702,501	$	96,138	$	—	$	(49,011	)	$	—		$	—	$	—		$	89	$	2,449	$	—		$	—		$	653,014	$	48,186
(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 June 30, 2019, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																							Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3			Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	—	$	—		$	—		$	—	$	—
Commercial mortgage-backed securities	—		—		16		—			—			9,359		(7		)	—		—		—			(2		)	9,366		—
Other asset-backed securities	420,091		—		2,513		(37		)	(4,468		)	—		(7		)	—		—		—			218			418,310		—
Corporate securities	648,608		82		25,371		—			(497		)	661,627		(56,183		)	—		—		49,350			133			1,328,491		—
Total fixed maturity securities - available-for-sale	1,068,699		82		27,900		(37		)	(4,965		)	670,986		(56,197		)	—		—		49,350			349			1,756,167		—
Fixed maturity securities - trading
Other asset-backed securities	66,484		810		—		(3,468		)	—			—		(781		)	—		—		(797		)	(68		)	62,180		(2,717		)
Corporate securities	5,251		68		—		—			—			—		1			—		—		—			(26		)	5,294		68
Total fixed maturity securities - trading	71,735		878		—		(3,468		)	—			—		(780		)	—		—		(797		)	(94		)	67,474		(2,649		)
Total fixed maturity securities	1,140,434		960		27,900		(3,505		)	(4,965		)	670,986		(56,977		)	—		—		48,553			255			1,823,641		(2,649		)
Equity securities	64,394		157		—		(3		)	—			5,079		—			—		—		—			—			69,627		153
Other long-term investments(1)	109,532		13,700		—		(13,888		)	—			1,579		—			—		—		—			—			110,923		(188		)
Total investments	1,314,360		14,817		27,900		(17,396		)	(4,965		)	677,644		(56,977		)	—		—		48,553			255			2,004,191		(2,684		)
Total assets measured at fair value on a recurring basis	$	1,314,360	$	14,817	$	27,900	$	(17,396	)	$	(4,965	)	$	677,644	$	(56,977	)	$	—	$	—	$	48,553		$	255		$	2,004,191	$	(2,684	)
Liabilities:
Annuity account balances(2)	$	74,613	$	—	$	—	$	(825	)	$	—		$	—	$	—		$	56	$	2,909	$	—		$	—		$	72,585	$	—
Other liabilities(1)	797,891		364		—		(262,346		)	—			37,204		—			—		—		—			—			1,097,077		(261,982		)
Total liabilities measured at fair value on a recurring basis	$	872,504	$	364	$	—	$	(263,171	)	$	—		$	37,204	$	—		$	56	$	2,909	$	—		$	—		$	1,169,662	$	(261,982	)
(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 six months ended June 30, 2018, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																							Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3			Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	(457	)	$	22,225	$	—		$	—	$	—	$	—		$	12		$	21,780	$	—
Commercial mortgage-backed securities	—		—		—		—			(1,284		)	48,621		(94		)	—		—		—			(16		)	47,227		—
Other asset-backed securities	504,365		—		11,867		—			(1,647		)	—		(23		)	—		—		222			917			515,701		—
Corporate securities	626,901		—		7,061		—			(18,929		)	78,491		(38,453		)	—		—		(7,894		)	(2,366		)	644,811		—
Total fixed maturity securities - available-for-sale	1,131,266		—		18,928		—			(22,317		)	149,337		(38,570		)	—		—		(7,672		)	(1,453		)	1,229,519		—
Fixed maturity securities - trading
Other asset-backed securities	35,222		194		—		(3,598		)	—			4,600		(11,669		)	—		—		164			(61		)	24,852		(3,405		)
Corporate securities	5,442		—		—		(139		)	—			—		—			—		—		—			(49		)	5,254		(139		)
Total fixed maturity securities - trading	40,664		194		—		(3,737		)	—			4,600		(11,669		)	—		—		164			(110		)	30,106		(3,544		)
Total fixed maturity securities	1,171,930		194		18,928		(3,737		)	(22,317		)	153,937		(50,239		)	—		—		(7,508		)	(1,563		)	1,259,625		(3,544		)
Equity securities	66,110		1		—		(64		)	—			36		—			—		—		—			—			66,083		(63		)
Other long-term investments(1)	136,004		21,685		—		(1,015		)	—			—		—			—		—		—			—			156,674		20,670
Short-term investments	—		—		—		—			—			—		—			—		—		—			—			—		—
Total investments	1,374,044		21,880		18,928		(4,816		)	(22,317		)	153,973		(50,239		)	—		—		(7,508		)	(1,563		)	1,482,382		17,063
Total assets measured at fair value on a recurring basis	$	1,374,044	$	21,880	$	18,928	$	(4,816	)	$	(22,317	)	$	153,973	$	(50,239	)	$	—	$	—	$	(7,508	)	$	(1,563	)	$	1,482,382	$	17,063
Liabilities:
Annuity account balances(2)	$	83,472	$	—	$	—	$	(1,853	)	$	—		$	—	$	—		$	530	$	5,757	$	—		$	—		$	80,098	$	—
Other liabilities(1)	760,890		257,456		—		(69,482		)	—			—		—			—		—		—			—			572,916		187,974
Total liabilities measured at fair value on a recurring basis	$	844,362	$	257,456	$	—	$	(71,335	)	$	—		$	—	$	—		$	530	$	5,757	$	—		$	—		$	653,014	$	187,974
(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 six months ended June 30, 2019, for which the Company has used significant unobservable inputs (Level 3):

			Total Realized and Unrealized Gains				Total Realized and Unrealized Losses																						Total Gains (losses) included in Earnings related to Instruments still held at the  Reporting Date
	Beginning Balance		Included  in Earnings		Included  in Other Comprehensive Income		Included  in Earnings			Included  in Other Comprehensive Income			Purchases		Sales			Issuances		Settlements		Transfers in/out of Level 3		Other			Ending Balance
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	—	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	—	$	—	$	—		$	—	$	—
Commercial mortgage-backed securities	—		—		16		—			—			9,359		(7		)	—		—		—		(2		)	9,366		—
Other asset-backed securities	421,642		446		10,660		(57		)	(4,799		)	—		(10,015		)	—		—		—		433			418,310		—
Corporate securities	638,276		82		43,956		—			(3,509		)	695,627		(84,956		)	—		—		39,255		(240		)	1,328,491		—
Total fixed maturity securities - available-for-sale	1,059,918		528		54,632		(57		)	(8,308		)	704,986		(94,978		)	—		—		39,255		191			1,756,167		—
Fixed maturity securities - trading
Other asset-backed securities	26,056		4,006		—		(3,584		)	—			15,463		(5,892		)	—		—		26,267		(136		)	62,180		1,068
Corporate securities	6,242		169		—		(31		)	—			—		(1,035		)	—		—		—		(51		)	5,294		134
Total fixed maturity securities - trading	32,298		4,175		—		(3,615		)	—			15,463		(6,927		)	—		—		26,267		(187		)	67,474		1,202
Total fixed maturity securities	1,092,216		4,703		54,632		(3,672		)	(8,308		)	720,449		(101,905		)	—		—		65,522		4			1,823,641		1,202
Equity securities	64,325		239		—		(16		)	—			5,079		—			—		—		—		—			69,627		222
Other long-term investments(1)	112,344		26,922		—		(29,922		)	—			1,579		—			—		—		—		—			110,923		(3,000		)
Total investments	1,268,885		31,864		54,632		(33,610		)	(8,308		)	727,107		(101,905		)	—		—		65,522		4			2,004,191		(1,576		)
Total assets measured at fair value on a recurring basis	$	1,268,885	$	31,864	$	54,632	$	(33,610	)	$	(8,308	)	$	727,107	$	(101,905	)	$	—	$	—	$	65,522	$	4		$	2,004,191	$	(1,576	)
Liabilities:
Annuity account balances(2)	$	76,119	$	—	$	—	$	(1,152	)	$	—		$	—	$	—		$	67	$	4,753	$	—	$	—		$	72,585	$	—
Other liabilities(1)	629,942		12,034		—		(441,965		)	—			37,204		—			—		—		—		—			1,097,077		(429,931		)
Total liabilities measured at fair value on a recurring basis	$	706,061	$	12,034	$	—	$	(443,117	)	$	—		$	37,204	$	—		$	67	$	4,753	$	—	$	—		$	1,169,662	$	(429,931	)
(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

The carrying amounts and estimated fair values of the Company’s financial instruments as of the periods shown below are as follows:

		As of
		June 30, 2019				December 31, 2018
	Fair Value Level	Carrying Amounts		Fair Values		Carrying Amounts		Fair Values
		(Dollars In Thousands)
Assets:
Mortgage loans on real estate	3	$	9,053,400	$	9,123,182	$	7,724,733	$	7,447,702
Policy loans	3	1,709,110		1,709,110		1,695,886		1,695,886
Fixed maturities, held-to-maturity(1)	3	2,576,216		2,640,827		2,633,474		2,547,210
Liabilities:
Stable value product account balances	3	$	5,816,503	$	5,885,528	$	5,234,731	$	5,200,723
Future policy benefits and claims(2)	3	1,725,194		1,729,081		1,671,414		1,671,434
Other policyholders’ funds(3)	3	105,136		107,702		131,150		131,782
Debt:(4)
Bank borrowings(5)	3	$	599,627	$	600,000	$	—	$	—
Senior Notes	2	1,075,370		1,095,907		1,100,508		1,065,338
Subordinated debentures	2	495,494		506,720		495,426		494,265
Subordinated funding obligations	3	110,000		108,455		110,000		95,476
Non-recourse funding obligations(6)	3	2,576,538		2,701,194		2,632,497		2,550,237
Except as noted below, fair values were estimated using quoted market prices.
(1) Securities purchased from unconsolidated affiliates, Red Mountain, LLC and Steel City, LLC.
(2) Single premium immediate annuity without life contingencies.
(3) Supplementary contracts without life contingencies.
(4) Excludes capital lease obligations of $2.6 million and $1.3 million as of June 30, 2019 and December 31, 2018, respectively.
(5) As June 30, 2019, includes the Term Loan Credit Agreement.
(6) As of June 30, 2019, carrying amount of $2.6 billion and a fair value of $2.7 billion related to non-recourse funding obligations issued by Golden Gate and Golden Gate V. As of December 31, 2018, carrying amount of $2.6 billion and a fair value of $2.5 billion related to non-recourse funding obligations issued by Golden Gate and Golden Gate V.

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Realized Investments Gains and Losses

The following table sets forth realized investments gains and losses for the periods shown:

Realized investment gains (losses) - derivative financial instruments

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Derivatives related to VA contracts:
Interest rate futures	$	(11,280	)	$	1,552		$	(17,302	)	$	(15,340	)
Equity futures	2,559			(10,864		)	32,297			(17,292		)
Currency futures	(397		)	12,063			1,847			4,480
Equity options	(21,702		)	(38,216		)	(93,397		)	(26,200		)
Interest rate swaptions	—			—			—			(14		)
Interest rate swaps	117,934			(26,149		)	192,795			(89,859		)
Total return swaps	(8,545		)	(10,055		)	(48,572		)	(3,565		)
Embedded derivative - GLWB	(134,692		)	35,554			(154,318		)	91,846
Total derivatives related to VA contracts	(56,123		)	(36,115		)	(86,650		)	(55,944		)
Derivatives related to FIA contracts:
Embedded derivative	(24,819		)	(4,927		)	(63,633		)	6,403
Equity futures	431			(167		)	2			(328		)
Equity options	13,191			7,398			55,241			2,729
Total derivatives related to FIA contracts	(11,197		)	2,304			(8,390		)	8,804
Derivatives related to IUL contracts:
Embedded derivative	(11,286		)	(1,226		)	(24,656		)	8,658
Equity futures	85			—			256			136
Equity options	2,606			2,086			8,786			836
Total derivatives related to IUL contracts	(8,595		)	860			(15,614		)	9,630
Embedded derivative - Modco reinsurance treaties	(70,679		)	45,183			(155,677		)	127,841
Other derivatives	(1,455		)	33			(1,389		)	(7		)
Total realized gains (losses) - derivatives	$	(148,049	)	$	12,265		$	(267,720	)	$	90,324

Components of the Gain or Loss on Derivatives that Qualify as a Cash Flow Hedging Relationship

The following table presents the components of the gain or loss on derivatives that qualify as a cash flow hedging relationship.

Gain (Loss) on Derivatives in Cash Flow Hedging Relationship

	Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives			Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss)			Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives
	(Effective Portion)			(Effective Portion)			(Ineffective Portion)
				Benefits and settlement			Realized investment
				expenses			gains (losses)
				(Dollars In Thousands)
For The Three Months Ended June 30, 2019
Foreign currency swaps	$	(1,733	)	$	(188	)	$	—
Interest rate swaps	(1,796		)	(148		)	—
Total	$	(3,529	)	$	(336	)	$	—
For The Six Months Ended June 30, 2019
Foreign currency swaps	$	(3,626	)	$	(394	)	$	—
Interest rate swaps	(2,391		)	(220		)	—
Total	$	(6,017	)	$	(614	)	$	—
For The Three Months Ended June 30, 2018
Foreign currency swaps	$	2,967		$	(205	)	$	—
Total	$	2,967		$	(205	)	$	—
For The Six Months Ended June 30, 2018
Foreign currency swaps	$	3,582		$	(318	)	$	—
Total	$	3,582		$	(318	)	$	—

Information about the Nature and Accounting Treatment of the Company's Primary Derivative Financial Instruments and Location in and Effect on the Financial Statements

The table below presents information about the nature and accounting treatment of the Company’s primary derivative financial instruments and the location in and effect on the consolidated condensed financial statements for the periods presented below:

	As of
	June 30, 2019				December 31, 2018
	Notional Amount		Fair Value		Notional Amount		Fair Value
	(Dollars In Thousands)
Other long-term investments
Derivatives not designated as hedging instruments:
Interest rate swaps	$	2,188,000	$	90,599	$	1,515,500	$	28,501
Total return swaps	132,044		1,065		138,070		3,971
Embedded derivative - Modco reinsurance treaties	1,248,634		13,738		585,294		7,072
Embedded derivative - GLWB	3,153,016		97,185		3,984,070		105,272
Interest rate futures	393,518		8,703		286,208		10,302
Equity futures	101,064		639		12,633		483
Equity options	6,176,649		431,694		5,624,081		220,092
Other	157		173		157		136
	$	13,393,082	$	643,796	$	12,146,013	$	375,829
Other liabilities
Cash flow hedges:
Interest rate swaps	$	350,000	$	—	$	350,000	$	—
Foreign currency swaps	117,178		2,309		117,178		904
Derivatives not designated as hedging instruments:
Interest rate swaps	70,000		—		775,000		11,367
Total return swaps	361,607		1,112		768,177		23,054
Embedded derivative - Modco reinsurance treaties	2,287,547		188,853		1,795,287		32,828
Embedded derivative - GLWB	6,943,853		471,199		6,282,712		289,343
Embedded derivative - FIA	2,739,208		298,721		2,576,033		217,288
Embedded derivative - IUL	262,828		136,660		233,550		90,231
Interest rate futures	901,165		16,464		863,706		20,100
Equity futures	225,125		2,967		659,357		33,753
Currency futures	256,513		1,105		202,747		2,163
Equity options	4,008,015		198,159		4,199,687		34,178
Other	13,109		1,644		3,288		252
	$	18,536,148	$	1,319,193	$	18,826,722	$	755,461

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OFFSETTING OF ASSETS AND LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2019

Offsetting [Abstract]

Schedule of Derivative Instruments by Assets

The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2018: 

	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Received		Net Amount
	(Dollars In Thousands)
Offsetting of Assets
Derivatives:
Free-Standing derivatives	$	263,349	$	—	$	263,349	$	70,322	$	99,199	$	93,828
Total derivatives, subject to a master netting arrangement or similar arrangement	263,349		—		263,349		70,322		99,199		93,828
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	7,072		—		7,072		—		—		7,072
Embedded derivative - GLWB	105,272		—		105,272		—		—		105,272
Other	136		—		136		—		—		136
Total derivatives, not subject to a master netting arrangement or similar arrangement	112,480		—		112,480		—		—		112,480
Total derivatives	375,829		—		375,829		70,322		99,199		206,308
Total Assets	$	375,829	$	—	$	375,829	$	70,322	$	99,199	$	206,308

The tables below present the derivative instruments by assets and liabilities for the Company as of June 30, 2019:

	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Received		Net Amount
	(Dollars In Thousands)
Offsetting of Assets
Derivatives:
Free-Standing derivatives	$	532,700	$	—	$	532,700	$	210,744	$	214,952	$	107,004
Total derivatives, subject to a master netting arrangement or similar arrangement	532,700		—		532,700		210,744		214,952		107,004
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	13,738		—		13,738		—		—		13,738
Embedded derivative - GLWB	97,185		—		97,185		—		—		97,185
Other	173		—		173		—		—		173
Total derivatives, not subject to a master netting arrangement or similar arrangement	111,096		—		111,096		—		—		111,096
Total derivatives	643,796		—		643,796		210,744		214,952		218,100
Total Assets	$	643,796	$	—	$	643,796	$	210,744	$	214,952	$	218,100

Schedule of Derivative Instruments by Liabilities

	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Posted		Net Amount
	(Dollars In Thousands)
Offsetting of Liabilities
Derivatives:
Free-Standing derivatives	$	125,519	$	—	$	125,519	$	70,322	$	47,856	$	7,341
Total derivatives, subject to a master netting arrangement or similar arrangement	125,519		—		125,519		70,322		47,856		7,341
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	32,828		—		32,828		—		—		32,828
Embedded derivative - GLWB	289,343		—		289,343		—		—		289,343
Embedded derivative - FIA	217,288		—		217,288		—		—		217,288
Embedded derivative - IUL	90,231		—		90,231		—		—		90,231
Other	252		—		252		—		—		252
Total derivatives, not subject to a master netting arrangement or similar arrangement	629,942		—		629,942		—		—		629,942
Total derivatives	755,461		—		755,461		70,322		47,856		637,283
Repurchase agreements(1)	418,090		—		418,090		—		—		418,090
Total Liabilities	$	1,173,551	$	—	$	1,173,551	$	70,322	$	47,856	$	1,055,373
(1) Borrowings under repurchase agreements are for a term less than 90 days.

	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position
							Financial Instruments		Collateral Posted		Net Amount
	(Dollars In Thousands)
Offsetting of Liabilities
Derivatives:
Free-Standing derivatives	$	222,116	$	—	$	222,116	$	210,744	$	11,215	$	157
Total derivatives, subject to a master netting arrangement or similar arrangement	222,116		—		222,116		210,744		11,215		157
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative - Modco reinsurance treaties	188,853		—		188,853		—		—		188,853
Embedded derivative - GLWB	471,199		—		471,199		—		—		471,199
Embedded derivative - FIA	298,721		—		298,721		—		—		298,721
Embedded derivative - IUL	136,660		—		136,660		—		—		136,660
Other	1,644		—		1,644		—		—		1,644
Total derivatives, not subject to a master netting arrangement or similar arrangement	1,097,077		—		1,097,077		—		—		1,097,077
Total derivatives	1,319,193		—		1,319,193		210,744		11,215		1,097,234
Repurchase agreements(1)	60,000		—		60,000		—		—		60,000
Total Liabilities	$	1,379,193	$	—	$	1,379,193	$	210,744	$	11,215	$	1,157,234
(1) Borrowings under repurchase agreements are for a term less than 90 days.

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MORTGAGE LOANS (Tables)

6 Months Ended

Jun. 30, 2019

Mortgage Loans [Abstract]

Allowance for Credit Losses on Financing Receivables

As of June 30, 2019 and December 31, 2018, the Company had an allowance for mortgage loan credit losses of $2.5 million and $1.3 million, respectively, which is shown in the chart below.

	As of
	June 30, 2019			December 31, 2018
	(Dollars In Thousands)
Beginning balance	$	1,296		$	—
Charge offs	(350		)	—
Recoveries	—			(209		)
Provision	1,535			1,505
Ending balance	$	2,481		$	1,296

Schedule of an Analysis of the Delinquent Loans

The carrying value of the delinquent loans is shown in the following chart.

					Greater
	30-59 Days		60-89 Days		than 90 Days		Total
As of June 30, 2019	Delinquent		Delinquent		Delinquent		Delinquent
	(Dollars In Thousands)
Commercial mortgage loans	$	8,405	$	—	$	83	$	8,488
Number of delinquent commercial mortgage loans	2		—		1		3
As of December 31, 2018
Commercial mortgage loans	$	1,044	$	—	$	1,234	$	2,278
Number of delinquent commercial mortgage loans	4		—		1		5

Impaired Financing Receivables

The following table includes the recorded investment, unpaid principal balance, related allowance, average recorded investment, interest income recognized, and cash basis interest income of commercial loan portfolio as of June 30, 2019 and December 31, 2018:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Income
	(Dollars In Thousands)
As of June 30, 2019
Commercial mortgage loans:
With no related allowance recorded	$	83	$	83	$	—	$	83	$	—	$	—
With an allowance recorded	$	9,445	$	9,305	$	2,481	$	3,148	$	184	$	217
As of December 31, 2018
Commercial mortgage loans:
With no related allowance recorded	$	—	$	—	$	—	$	—	$	—	$	—
With an allowance recorded	$	5,684	$	5,309	$	1,296	$	1,895	$	267	$	293

Schedule of Loans in Troubled Debt Restructuring

Mortgage loans that were modified in a troubled debt restructuring as of June 30, 2019 and December 31, 2018 were as follows:

	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars In Thousands)
As of June 30, 2019
Troubled debt restructuring:
Commercial mortgage loans	1	$	1,114	$	759
As of December 31, 2018
Troubled debt restructuring:
Commercial mortgage loans	1	$	2,688	$	1,742

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DEBT AND OTHER OBLIGATIONS (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Summary of Debt and Subordinated Debt Securities

Debt and subordinated debt are summarized as follows:

	As of
	June 30, 2019				December 31, 2018
	Outstanding Principal		Carrying Amounts		Outstanding Principal		Carrying Amounts
	(Dollars In Thousands)
Debt (year of issue):
Credit Facility	$	—	$	—	$	—	$	—
Term Loan Credit Agreement	600,000		599,627		—		—
Capital lease obligation	2,560		2,560		1,319		1,319
7.375% Senior Notes (2009), due 2019	400,000		406,627		400,000		416,469
8.45% Senior Notes (2009), due 2039	180,719		273,029		190,044		288,547
4.30% Senior Notes (2018), due 2028	400,000		395,714		400,000		395,492
	$	1,583,279	$	1,677,557	$	991,363	$	1,101,827
Subordinated debt (year of issue):
5.35% Subordinated Debentures (2017), due 2052	$	500,000	$	495,494	$	500,000	$	495,426
3.55% Subordinated Funding Obligations (2018), due 2038	55,000		55,000		55,000		55,000
3.55% Subordinated Funding Obligations (2018), due 2038	55,000		55,000		55,000		55,000
	$	610,000	$	605,494	$	610,000	$	605,426

Non-recourse Funding Obligations Outstanding

Non-recourse funding obligations outstanding as of June 30, 2019, 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)	$	1,803,000	$	1,803,000	2039	4.75	%
Golden Gate II Captive Insurance Company	20,600		17,729		2052	5.60	%
Golden Gate V Vermont Captive Insurance Company(2)(3)	695,000		753,503		2037	5.12	%
MONY Life Insurance Company(3)	1,091		2,306		2024	6.19	%
Total	$	2,519,691	$	2,576,538
(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

Non-recourse funding obligations outstanding as of December 31, 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)	$	1,883,000	$	1,883,000	2039	4.75	%
Golden Gate II Captive Insurance Company	20,600		17,703		2052	4.99	%
Golden Gate V Vermont Captive Insurance Company(2)(3)	670,000		729,454		2037	5.12	%
MONY Life Insurance Company(3)	1,091		2,340		2024	6.19	%
Total	$	2,574,691	$	2,632,497
(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

Schedule of Collateral Pledged for Repurchase Agreements

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, 2019 and December 31, 2018:

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, 2019
	(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	$	62,611	$	—	$	—	$	—	$	62,611
Total repurchase agreements and repurchase-to-maturity transactions	62,611		—		—		—		62,611
Securities lending transactions
Corporate securities	57,941		—		—		—		57,941
Equity securities	14,642		—		—		—		14,642
Other government related securities	2,488		—		—		—		2,488
Total securities lending transactions	75,071		—		—		—		75,071
Total securities	$	137,682	$	—	$	—	$	—	$	137,682

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, 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	$	433,182	$	18,713	$	—	$	—	$	451,895
Total repurchase agreements and repurchase-to-maturity transactions	$	433,182	$	18,713	$	—	$	—	$	451,895
Securities lending transactions
Fixed maturity securities	$	71,285	$	—	$	—	$	—	$	71,285
Equity securities	891		—		—		—		891
Total securities lending transactions	72,176		—		—		—		72,176
Total securities	$	505,358	$	18,713	$	—	$	—	$	524,071

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EMPLOYEE BENEFIT PLANS (Tables)

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Components of the Net Periodic Benefit Cost of the Company's Defined Benefit Pension Plan and Unfunded Excess Benefit Plan

Components of the net periodic benefit cost for the three and six months ended June 30, 2019 and 2018, are as follows:

	For The Three Months Ended June 30,										For The Six Months Ended June 30,
	2019					2018					2019					2018
	Qualified Pension Plan			Nonqualified Excess Pension Plan		Qualified Pension Plan			Nonqualified Excess Pension Plan		Qualified Pension Plan			Nonqualified Excess Pension Plan		Qualified Pension Plan			Nonqualified Excess Pension Plan
	(Dollars In Thousands)
Service cost — benefits earned during the period	$	3,114		$	285	$	3,441		$	387	$	6,228		$	570	$	6,882		$	774
Interest cost on projected benefit obligation	2,778			371		2,397			359		5,556			742		4,794			718
Expected return on plan assets	(4,463		)	—		(4,026		)	—		(8,926		)	—		(8,052		)	—
Amortization of actuarial loss	—			74		—			265		—			148		—			530
Preliminary net periodic benefit cost	1,429			730		1,812			1,011		2,858			1,460		3,624			2,022
Settlement/curtailment expense	—			—		—			—		—					—			—
Total net periodic benefit costs	$	1,429		$	730	$	1,812		$	1,011	$	2,858		$	1,460	$	3,624		$	2,022

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2019

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Summary of Changes in the Accumulated Balances for Each Component of AOCI

The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) (“AOCI”) as of June 30, 2019 and December 31, 2018.

Changes in Accumulated Other Comprehensive Income (Loss) by Component

	Unrealized Gains and Losses on Investments(2)			Accumulated Gain and Loss  Derivatives			Minimum Pension Liability Adjustment			Total Accumulated Other Comprehensive  Income (Loss)
	(Dollars In Thousands, Net of Tax)
Balance, December 31, 2017	$	25,874		$	747		$	(13,925	)	$	12,696
Other comprehensive income (loss) before reclassifications	(1,420,499		)	(1,884		)	(3,546		)	(1,425,929		)
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	(20,751		)	—			—			(20,751		)
Amounts reclassified from accumulated other comprehensive income (loss)(1)	15,651			1,130			1,989			18,770
Cumulative effect adjustments	(10,552		)	—			—			(10,552		)
Balance, December 31, 2018	$	(1,410,277	)	$	(7	)	$	(15,482	)	$	(1,425,766	)
Other comprehensive income (loss) before reclassifications	2,131,443			(4,754		)	—			2,126,689
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	24,316			—			—			24,316
Amounts reclassified from accumulated other comprehensive income (loss)(1)	(1,876		)	486			—			(1,390		)
Cumulative effect adjustments	—			—			—			—
Balance, June 30, 2019	$	743,606		$	(4,275	)	$	(15,482	)	$	723,849
(1)  See Reclassifications Out of Accumulated Other Comprehensive Income (Loss) table below for details.
(2)  As of December 31, 2018 and June 30, 2019, net unrealized losses reported in AOCI were offset by $613.4 million and $(343.1) million, respectively, due to the impact those net unrealized losses would have had on certain of the Company’s insurance assets and liabilities if the net unrealized losses had been recognized in net income.

Schedule of Reclassifications Amounts Out of AOCI

The following tables summarize the reclassifications amounts out of AOCI for the three and six months ended June 30, 2019 and 2018.

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

	Affected Line Item in the Condensed Consolidated
Gains/(losses) in net income:	Statements of Income	For The Three Months Ended June 30,						For The Six Months Ended June 30,
		2019			2018			2019			2018
		(Dollars In Thousands)
Derivative instruments	Benefits and settlement expenses, net of reinsurance ceded(1)	$	(336	)	$	(205	)	$	(614	)	$	(318	)
	Tax (expense) benefit	70			43			128			67
		$	(266	)	$	(162	)	$	(486	)	$	(251	)
Unrealized gains and losses on available-for-sale securities	Realized investment gains (losses): All other investments	$	1,098		$	5,539		$	6,215		$	8,322
	Net impairment losses recognized in earnings	(698		)	(5		)	(3,840		)	(3,650		)
	Tax (expense) benefit	(84		)	(1,162		)	(499		)	(981		)
		$	316		$	4,372		$	1,876		$	3,691
(1) See Note 7, Derivative Financial Instruments for additional information.

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Reconciliation of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	As of
	June 30, 2019			December 31, 2018
	(Dollars In Thousands)
Balance, beginning of period	$	7,134		$	11,353
Additions for tax positions of the current year	—			—
Additions for tax positions of prior years	—			—
Reductions of tax positions of prior years:
Changes in judgment	—			(4,219		)
Settlements during the period	(5,343		)	—
Lapses of applicable statute of limitations	—			—
Balance, end of period	$	1,791		$	7,134

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OPERATING SEGMENTS (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Summary of Financial Information for the Company's Segments

The following tables present a summary of results and reconciles pre-tax adjusted operating income (loss) to consolidated income before income tax and net income:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars In Thousands)
Revenues
Life Marketing	$	441,559		$	414,954		$	898,899		$	849,870
Acquisitions	667,031			509,639			1,276,973			888,733
Annuities	100,407			133,177			239,624			283,890
Stable Value Products	67,585			45,748			127,164			99,616
Asset Protection	76,014			77,814			152,212			154,189
Corporate and Other	66,179			62,576			137,933			133,442
Total revenues	$	1,418,775		$	1,243,908		$	2,832,805		$	2,409,740
Pre-tax Adjusted Operating Income (Loss)
Life Marketing	$	(462	)	$	(7,737	)	$	772		$	(25,586	)
Acquisitions	69,810			59,038			144,722			114,558
Annuities	45,271			55,934			99,487			96,465
Stable Value Products	28,106			19,992			50,345			49,072
Asset Protection	9,211			7,166			18,954			13,384
Corporate and Other	(20,445		)	(17,797		)	(40,119		)	(38,476		)
Pre-tax adjusted operating income	131,491			116,596			274,161			209,417
Realized (losses) gains on investments and derivatives	(1,417		)	(17,824		)	30,828			(18,847		)
Income before income tax	130,074			98,772			304,989			190,570
Income tax expense	(21,963		)	(17,277		)	(58,594		)	(34,963		)
Net income	$	108,111		$	81,495		$	246,395		$	155,607
Pre-tax adjusted operating income	$	131,491		$	116,596		$	274,161		$	209,417
Adjusted operating income tax (expense) benefit	(22,261		)	(20,877		)	(52,120		)	(38,920		)
After-tax adjusted operating income	109,230			95,719			222,041			170,497
Realized (losses) gains on investments and derivatives	(1,417		)	(17,824		)	30,828			(18,847		)
Income tax benefit (expense) on adjustments	298			3,600			(6,474		)	3,957
Net income	$	108,111		$	81,495		$	246,395		$	155,607
Realized investment (losses) gains:
Derivative financial instruments	$	(148,049	)	$	12,265		$	(267,720	)	$	90,324
All other investments	99,502			(49,602		)	229,092			(137,201		)
Net impairment losses recognized in earnings	(698		)	(5		)	(3,840		)	(3,650		)
Less: related amortization(1)	(26,840		)	1,763			(31,201		)	10,919
Less: VA GLWB economic cost	(20,988		)	(21,281		)	(42,095		)	(42,599		)
Realized (losses) gains on investments and derivatives	$	(1,417	)	$	(17,824	)	$	30,828		$	(18,847	)
(1)  Includes amortization of DAC/VOBA and benefits and settlement expenses that are impacted by realized gains (losses).

	Operating Segment Assets As of June 30, 2019
	(Dollars In Thousands)
	Life Marketing		Acquisitions		Annuities		Stable Value Products
Investments and other assets	$	15,433,940	$	52,753,065	$	21,206,967	$	5,688,707
DAC and VOBA	1,494,118		914,610		890,214		6,877
Other intangibles	253,243		38,291		172,420		7,056
Goodwill	215,254		23,862		343,247		113,924
Total assets	$	17,396,555	$	53,729,828	$	22,612,848	$	5,816,564

	Asset Protection		Corporate and Other		Total Consolidated
Investments and other assets	$	1,055,887	$	16,390,407	$	112,528,973
DAC and VOBA	168,738		—		3,474,557
Other intangibles	117,374		28,547		616,931
Goodwill	129,224		—		825,511
Total assets	$	1,471,223	$	16,418,954	$	117,445,972

	Operating Segment Assets As of December 31, 2018
	(Dollars In Thousands)
	Life Marketing		Acquisitions		Annuities		Stable Value Products
Investments and other assets	$	14,575,702	$	31,859,520	$	20,199,597	$	5,107,334
DAC and VOBA	1,499,386		458,977		889,697		6,121
Other intangibles	262,758		31,975		156,785		7,389
Goodwill	215,254		23,862		343,247		113,924
Total assets	$	16,553,100	$	32,374,334	$	21,589,326	$	5,234,768

	Asset Protection		Corporate and Other		Total Consolidated
Investments and other assets	$	1,019,297	$	12,715,208	$	85,476,658
DAC and VOBA	168,973		—		3,023,154
Other intangibles	122,590		31,934		613,431
Goodwill	129,224		—		825,511
Total assets	$	1,440,084	$	12,747,142	$	89,938,754

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BASIS OF PRESENTATION (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2019 USD ($)
Deferred Policy Acquisition Costs Tax Reimbursements
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Accounts and premiums receivable	$ 8,960

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Thousands	Jan. 01, 2019	Jan. 01, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect adjustments	$ (50,808)	$ (92,525)
Accounting Standards Update 2016-02
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Right-of-use asset	21,500
Operating lease liability	21,500
Retained Earnings
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect adjustments	(50,808)	$ (81,973)
Retained Earnings | Accounting Standards Update 2017-08
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect adjustments	$ 50,800

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SIGNIFICANT TRANSACTIONS - Narrative (Details) - P L I C O - USD ($)	Jun. 03, 2019	Jun. 01, 2019	May 01, 2018
Life Business
Business Combination Segment Allocation [Line Items]
Coinsurance basis percentage			100.00%
Ceded commissions for reinsurance			$ 422,400,000
Statutory reserves resulting from reinsurance, business acquired, estimate			13,200,000,000
Statutory reserves resulting from reinsurance business acquired, final amount			$ 13,700,000,000
Individual Life Business
Business Combination Segment Allocation [Line Items]
Coinsurance basis percentage	100.00%
Ceded commissions for reinsurance	$ 767,100,000
Statutory reserves resulting from reinsurance, business acquired, estimate	$ 20,400,000,000
Contingent consideration		$ 51,900,000
Range of outcomes, for contingent consideration liability. low		0
Range of outcomes for contingent consideration liability, high		40,000,000
Contingent consideration liability, estimate		40,000,000
Estimate of present value of future payments		$ 11,900,000

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SIGNIFICANT TRANSACTIONS - Purchase Consideration (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 01, 2019	May 01, 2018
Life Business
Pro Forma [Abstract]
Revenue			$ 1,317,159		$ 2,733,479
Net income			88,883		201,751
Individual Life Business
Pro Forma [Abstract]
Revenue		$ 1,548,668	1,461,832	$ 3,203,698	2,828,369
Net income		$ 124,161	$ 122,977	263,490	$ 182,034
Revenue since acquisition date	$ 77,700
Net income since acquisition date	$ 7,700
P L I C O | Life Business
ASSETS
Fixed maturities							$ 12,588,512
Mortgage loans							435,405
Policy loans							131,489
Total investments							13,155,406
Cash							35,179
Accrued investment income							152,030
Reinsurance receivables							272
Value of business acquired							379,717
Other assets							916
Total assets							13,723,520
LIABILITIES
Future policy benefits and claims							11,751,895
Unearned premiums							0
Total policy liabilities and accruals							11,751,895
Annuity account balances							1,864,141
Other policyholders’ funds							41,936
Other liabilities							65,548
Total liabilities							13,723,520
NET ASSETS ACQUIRED							$ 0
P L I C O | Individual Life Business
ASSETS
Fixed maturities						$ 8,697,533
Mortgage loans						1,386,228
Policy loans						44,002
Other long-term investments						1,579
Total investments						10,129,342
Cash						35,607
Accrued investment income						101,306
Accounts and premiums receivable						62
Reinsurance receivables						1,657
Value of business acquired						491,493
Other intangibles						28,600
Other assets						1,537,848
Assets related to separate accounts						9,583,217
Total assets						21,909,132
LIABILITIES
Future policy benefits and claims						10,993,716
Annuity account balances						253,748
Other policyholders’ funds						220,117
Other liabilities						39,370
Liabilities related to separate accounts						9,583,217
Total liabilities						21,090,168
NET ASSETS ACQUIRED						$ 818,964
Transaction costs | Individual Life Business
Pro Forma [Abstract]
Net income				$ 12,200

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SIGNIFICANT TRANSACTIONS - Intangible Assets and VOBA (Details) - Individual Life Business - USD ($) $ in Thousands	Jun. 01, 2019	Jun. 30, 2019
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of 2019		$ 1,279
2020		2,193
2021		2,193
2022		2,193
2023		2,193
Expected Amortization Expense VOBA [Abstract]
Remainder of 2019		(4,966)
2020		(12,292)
2021		(6,807)
2022		(1,010)
2023		$ 3,259
Distribution relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	18 years
Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	10 years
P L I C O
Acquired Finite-Lived Intangible Assets [Line Items]
Other intangibles	$ 28,600
P L I C O | Distribution relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Other intangibles	15,000
P L I C O | Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Other intangibles	$ 13,600

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MONY CLOSED BLOCK OF BUSINESS - Summary of Financial Information for the Closed Block (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Dec. 31, 2017
Closed block liabilities
Future policy benefits, policyholders’ account balances and other policyholder liabilities	$ 5,611,917	$ 5,679,732
Policyholder dividend obligation	173,147	0	$ 0	$ 160,712
Other liabilities	11,043	22,505
Total closed block liabilities	5,796,107	5,702,237
Closed block assets
Fixed maturities, available-for-sale, at fair value	4,583,161	4,257,437
Mortgage loans on real estate	74,290	75,838
Policy loans	658,971	672,213
Cash	55,960	116,225
Other assets	107,306	136,388
Total closed block assets	5,479,688	5,258,101
Excess of reported closed block liabilities over closed block assets	316,419	444,136
Portion of above representing accumulated other comprehensive income:
Net unrealized investment gains (losses) net of policyholder dividend obligation: $47,972 and $(141,128); and net of income tax: $(10,074) and $61,676	0	(120,528)
Future earnings to be recognized from closed block assets and closed block liabilities	316,419	323,608
Policyholder dividend obligation	47,972	(141,128)
Deferred income tax expense (benefit)	$ (10,074)	$ 61,676

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MONY CLOSED BLOCK OF BUSINESS - Schedule of Reconciliation of the Policyholder Dividend Obligation (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Movement in Closed Block Dividend Obligation [Roll Forward]
Policyholder dividend obligation, beginning of period	$ 0	$ 160,712
Applicable to net revenue (losses)	(15,953)	(19,536)
Change in net unrealized investment gains (losses) allocated to the policyholder dividend obligation	189,100	(141,176)
Policyholder dividend obligation, end of period	$ 173,147	$ 0

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MONY CLOSED BLOCK OF BUSINESS - Schedule of Closed Block Revenues and Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues
Premiums and other income	$ 40,105	$ 42,465	$ 77,549	$ 82,077
Net investment income	51,663	50,872	102,791	101,415
Net investment gains (losses)	43	263	(411)	26
Total revenues	91,811	93,600	179,929	183,518
Benefits and other deductions
Benefits and settlement expenses	87,213	87,940	165,879	167,892
Other operating expenses	247	337	606	20
Total benefits and other deductions	87,460	88,277	166,485	167,912
Net revenues before income taxes	4,351	5,323	13,444	15,606
Income tax expense	913	1,118	2,823	3,277
Net revenues	$ 3,438	$ 4,205	$ 10,621	$ 12,329

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INVESTMENT OPERATIONS - Summary of Net Realized Investment Gains (Losses) for all Other Investments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract]
Fixed maturities	$ 1,098	$ 5,539	$ 6,215	$ 8,322
Equity gains and losses	7,696	(1,044)	38,413	(9,830)
Modco trading portfolio	89,571	(52,817)	184,473	(137,525)
Other investments	1,137	(1,280)	(9)	1,832
Realized gains (losses) - all other investments	99,502	(49,602)	229,092	(137,201)
Derivative financial instruments	(148,049)	12,265	(267,720)	90,324
Realized investment gains (losses)	(48,547)	(37,337)	(38,628)	(46,877)
Net impairments losses recognized in earnings	$ (698)	$ (5)	$ (3,840)	$ (3,650)

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INVESTMENT OPERATIONS - Schedule of Gross Realized Gains (Losses) on Investments Available-for-Sale (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract]
Gross realized gains	$ 6,812	$ 10,137	$ 14,682	$ 18,187
Gross realized losses:
Impairment losses	(698)	(5)	(3,840)	(3,650)
Other realized losses	$ (5,714)	$ (4,598)	$ (8,467)	$ (9,865)

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INVESTMENT OPERATIONS - Schedule of Fair Value (Proceeds) and Gains (Losses) Realized on Securities Sold in an Unrealized Gain/Loss Position (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Securities in an unrealized gain position:
Fair value (proceeds)	$ 491,121	$ 466,153	$ 1,140,012	$ 608,286
Gains realized	6,812	10,137	14,682	18,187
Securities in an unrealized loss position:
Fair value (proceeds)	160,125	201,191	338,129	258,175
Losses realized	$ (5,714)	$ (4,598)	$ (8,467)	$ (9,865)

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INVESTMENT OPERATIONS - Schedule of Realized Gain(Losses) on Equity Securities Sold (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract]
Net gains (losses) recognized during the period on equity securities	$ 7,696	$ (1,044)	$ 38,413	$ (9,830)
Less: net gains (losses) recognized on equity securities sold during the period	193	(680)	253	(2,381)
Gains (losses) recognized during the period on equity securities still held	$ 7,503	$ (364)	$ 38,160	$ (7,449)

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INVESTMENT OPERATIONS - Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Available-for-Sale (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Investment [Line Items]
Amortized Cost	$ 61,985,929	$ 52,826,470
Gross Unrealized Gains	1,977,685	189,175
Gross Unrealized Losses	(616,275)	(2,750,781)
Fair Value	63,347,339	50,264,864
Total OTTI Recognized in OCI	1,954	(28,827)
Residential mortgage-backed securities
Investment [Line Items]
Amortized Cost	4,482,547	3,650,539
Gross Unrealized Gains	132,602	23,247
Gross Unrealized Losses	(8,901)	(62,196)
Fair Value	4,606,248	3,611,590
Total OTTI Recognized in OCI		(18)
Commercial mortgage-backed securities
Investment [Line Items]
Amortized Cost	2,648,121	2,349,274
Gross Unrealized Gains	51,634	3,911
Gross Unrealized Losses	(3,894)	(58,101)
Fair Value	2,695,861	2,295,084
Total OTTI Recognized in OCI		0
Other asset-backed securities
Investment [Line Items]
Amortized Cost	1,848,061	1,410,059
Gross Unrealized Gains	22,063	17,232
Gross Unrealized Losses	(8,526)	(35,398)
Fair Value	1,861,598	1,391,893
Total OTTI Recognized in OCI	(3)	0
U.S. government-related securities
Investment [Line Items]
Amortized Cost	1,304,382	1,683,432
Gross Unrealized Gains	5,179	1,795
Gross Unrealized Losses	(9,004)	(45,722)
Fair Value	1,300,557	1,639,505
Total OTTI Recognized in OCI		0
Other government-related securities
Investment [Line Items]
Amortized Cost	555,767	545,522
Gross Unrealized Gains	31,550	4,292
Gross Unrealized Losses	(4,168)	(33,850)
Fair Value	583,149	515,964
Total OTTI Recognized in OCI		0
States, municipals, and political subdivisions
Investment [Line Items]
Amortized Cost	4,652,897	3,682,037
Gross Unrealized Gains	183,920	25,706
Gross Unrealized Losses	(5,851)	(118,902)
Fair Value	4,830,966	3,588,841
Total OTTI Recognized in OCI	1,193	876
Corporate securities
Investment [Line Items]
Amortized Cost	45,267,764	38,634,888
Gross Unrealized Gains	1,549,526	112,992
Gross Unrealized Losses	(572,173)	(2,385,052)
Fair Value	46,245,117	36,362,828
Total OTTI Recognized in OCI	764	(29,685)
Redeemable preferred stocks
Investment [Line Items]
Amortized Cost	87,459	94,362
Gross Unrealized Gains	1,211	0
Gross Unrealized Losses	(3,758)	(11,560)
Fair Value	84,912	82,802
Total OTTI Recognized in OCI		0
Fixed maturities
Investment [Line Items]
Amortized Cost	60,846,998	52,050,113
Gross Unrealized Gains	1,977,685	189,175
Gross Unrealized Losses	(616,275)	(2,750,781)
Fair Value	62,208,408	49,488,507
Total OTTI Recognized in OCI	1,954	(28,827)
Short-term investments
Investment [Line Items]
Amortized Cost	1,138,931	776,357
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	1,138,931	776,357
Total OTTI Recognized in OCI	$ 0	$ 0

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INVESTMENT OPERATIONS - Schedule of Fair Value of Trading Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Trading Securities [Line Items]
Trading securities	$ 2,592,645	$ 2,457,010
Residential mortgage-backed securities
Trading Securities [Line Items]
Trading securities	203,455	241,836
Commercial mortgage-backed securities
Trading Securities [Line Items]
Trading securities	204,445	188,925
Other asset-backed securities
Trading Securities [Line Items]
Trading securities	147,997	159,907
U.S. government-related securities
Trading Securities [Line Items]
Trading securities	51,080	59,794
Other government-related securities
Trading Securities [Line Items]
Trading securities	24,342	44,207
States, municipals, and political subdivisions
Trading Securities [Line Items]
Trading securities	293,560	286,413
Corporate securities
Trading Securities [Line Items]
Trading securities	1,565,561	1,423,833
Redeemable preferred stocks
Trading Securities [Line Items]
Trading securities	11,808	11,277
Fixed maturities
Trading Securities [Line Items]
Trading securities	2,502,248	2,416,192
Equity securities
Trading Securities [Line Items]
Trading securities	8,488	9,892
Short-term investments
Trading Securities [Line Items]
Trading securities	$ 81,909	$ 30,926

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INVESTMENT OPERATIONS - Schedule of Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Fixed Maturities, by Expected Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Available-for-sale, Amortized Cost
Amortized Cost	$ 61,985,929	$ 52,826,470
Available-for-sale, Fair Value
Fair Value	63,347,339	50,264,864
Held-to-maturity, Fair Value
Fair Value	2,640,827	2,547,210
Fixed maturities
Available-for-sale, Amortized Cost
Due in one year or less	1,440,860
Due after one year through five years	10,103,874
Due after five years through ten years	13,210,907
Due after ten years	36,091,357
Amortized Cost	60,846,998
Available-for-sale, Fair Value
Due in one year or less	1,438,699
Due after one year through five years	10,229,353
Due after five years through ten years	13,623,029
Due after ten years	36,917,327
Fair Value	62,208,408
Held-to-maturity, Amortized Cost
Due in one year or less	0
Due after one year through five years	0
Due after five years through ten years	0
Due after ten years	2,576,216
Amortized Cost	2,576,216	2,633,474
Held-to-maturity, Fair Value
Due in one year or less	0
Due after one year through five years	0
Due after five years through ten years	0
Due after ten years	2,640,827
Fair Value	$ 2,640,827	$ 2,547,210

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INVESTMENT OPERATIONS - Schedule of Other-than-Temporary Impairments of Investments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Investment [Line Items]
Other-than-temporary impairments	$ 198	$ 10	$ 1,493	$ 701
Net impairment losses recognized in earnings	(698)	(5)	(3,840)	(3,650)
Fixed maturities
Investment [Line Items]
Other-than-temporary impairments	(198)	(10)	(1,493)	(701)
Non-credit impairment losses recorded in other comprehensive income (loss)	(500)	5	(2,347)	(2,949)
Net impairment losses recognized in earnings	$ (698)	$ (5)	$ (3,840)	$ (3,650)

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INVESTMENT OPERATIONS - Schedule of Available-for-Sale Credit Losses on Fixed Maturities Held by the Company for Which a Portion of Other-than-Temporary Impairments were Recognized in Other Comprehensive Income (Loss) (Details) - Fixed maturities - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Beginning balance	$ 27,215	$ 2,235	$ 24,868	$ 3,268
Additions for newly impaired securities	0	0	751	0
Additions for previously impaired securities	660	2	3,007	2
Reductions for previously impaired securities due to a change in expected cash flows	(8,202)	0	(8,834)	0
Reductions for previously impaired securities that were sold in the current period	(7,175)	(2,235)	(7,294)	(3,268)
Ending balance	$ 12,498	$ 2	$ 12,498	$ 2

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INVESTMENT OPERATIONS - Schedule of Investments' Gross Unrealized Losses and Fair Value of the Company's Investments that are Not Deemed to be Other-than-Temporarily Impaired (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Fair Value
Less Than 12 Months	$ 1,828,002	$ 22,322,949
12 Months or More	12,762,688	17,630,381
Total	14,590,690	39,953,330
Unrealized Loss
Less Than 12 Months	(59,528)	(1,091,842)
12 Months or More	(556,747)	(1,658,939)
Total	(616,275)	(2,750,781)
Residential mortgage-backed securities
Fair Value
Less Than 12 Months	118,932	1,485,009
12 Months or More	576,350	804,364
Total	695,282	2,289,373
Unrealized Loss
Less Than 12 Months	(427)	(31,302)
12 Months or More	(8,474)	(30,894)
Total	(8,901)	(62,196)
Commercial mortgage-backed securities
Fair Value
Less Than 12 Months	3,609	422,438
12 Months or More	574,967	1,429,384
Total	578,576	1,851,822
Unrealized Loss
Less Than 12 Months	(6)	(7,442)
12 Months or More	(3,888)	(50,659)
Total	(3,894)	(58,101)
Other asset-backed securities
Fair Value
Less Than 12 Months	409,753	687,271
12 Months or More	134,156	148,871
Total	543,909	836,142
Unrealized Loss
Less Than 12 Months	(5,931)	(30,963)
12 Months or More	(2,595)	(4,435)
Total	(8,526)	(35,398)
U.S. government-related securities
Fair Value
Less Than 12 Months	32,421	130,290
12 Months or More	902,249	1,085,654
Total	934,670	1,215,944
Unrealized Loss
Less Than 12 Months	(314)	(4,668)
12 Months or More	(8,690)	(41,054)
Total	(9,004)	(45,722)
Other government-related securities
Fair Value
Less Than 12 Months	5,509	226,201
12 Months or More	93,790	131,569
Total	99,299	357,770
Unrealized Loss
Less Than 12 Months	(198)	(15,267)
12 Months or More	(3,970)	(18,583)
Total	(4,168)	(33,850)
States, municipals, and political subdivisions
Fair Value
Less Than 12 Months	13,242	1,004,262
12 Months or More	145,668	1,129,152
Total	158,910	2,133,414
Unrealized Loss
Less Than 12 Months	(13)	(27,180)
12 Months or More	(5,838)	(91,722)
Total	(5,851)	(118,902)
Corporate securities
Fair Value
Less Than 12 Months	1,244,536	18,326,331
12 Months or More	10,318,328	12,859,732
Total	11,562,864	31,186,063
Unrealized Loss
Less Than 12 Months	(52,639)	(970,553)
12 Months or More	(519,534)	(1,414,499)
Total	(572,173)	(2,385,052)
Redeemable preferred stocks
Fair Value
Less Than 12 Months	0	41,147
12 Months or More	17,180	41,655
Total	17,180	82,802
Unrealized Loss
Less Than 12 Months	0	(4,467)
12 Months or More	(3,758)	(7,093)
Total	$ (3,758)	$ (11,560)

XML

INVESTMENT OPERATIONS - Additional Information (Details)		6 Months Ended
	Jan. 15, 2016	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($) subsidiary
Investment [Line Items]
Gross unrealized loss greater than twelve months		$ 556,747,000	$ 1,658,939,000
Total positions that were in an unrealized loss position		1,322
Fair Value		$ 63,347,339,000	50,264,864,000
Available-for-sale securities, amortized cost		61,985,929,000	52,826,470,000
Trading securities		$ 2,592,645,000	$ 2,457,010,000
Red Mountain and Steel City
Investment [Line Items]
Number of wholly owned subsidiaries that were determined to be VIEs		2	2
Red Mountain, LLC
Investment [Line Items]
Ownership through an affiliate (as a percent)		100.00%
Risk of loss related to the VIE limited to the entity's investment		$ 10,000
Payments made		$ 0
Steel City, LLC
Investment [Line Items]
Ownership through an affiliate (as a percent)		100.00%
Risk of loss related to the VIE limited to the entity's investment		$ 10,000
Payments made		0
Number of notes issued	3
Below investment grade
Investment [Line Items]
Fair Value		1,600,000,000
Available-for-sale securities, amortized cost		1,700,000,000
Trading securities		119,900,000
Securities not publicly traded		275,600,000
Residential mortgage-backed securities
Investment [Line Items]
Gross unrealized loss greater than twelve months		8,474,000	$ 30,894,000
Trading securities		203,455,000	241,836,000
Commercial mortgage-backed securities
Investment [Line Items]
Gross unrealized loss greater than twelve months		3,888,000	50,659,000
Trading securities		204,445,000	188,925,000
Other asset-backed securities
Investment [Line Items]
Gross unrealized loss greater than twelve months		$ 2,595,000	4,435,000
Percentage of underlying collateral of student-loan backed auction rate securities guaranteed by the Federal Family Education Loan Program (FFELP), minimum		97.00%
Trading securities		$ 147,997,000	159,907,000
U.S. government-related securities
Investment [Line Items]
Gross unrealized loss greater than twelve months		8,690,000	41,054,000
Trading securities		51,080,000	59,794,000
Other government-related securities
Investment [Line Items]
Gross unrealized loss greater than twelve months		3,970,000	18,583,000
Trading securities		24,342,000	44,207,000
States, municipals, and political subdivisions
Investment [Line Items]
Gross unrealized loss greater than twelve months		5,838,000	91,722,000
Trading securities		293,560,000	286,413,000
Corporate securities
Investment [Line Items]
Gross unrealized loss greater than twelve months		519,534,000	1,414,499,000
Trading securities		1,565,561,000	1,423,833,000
Fixed maturities
Investment [Line Items]
Fair Value		62,208,408,000
Available-for-sale securities, amortized cost		60,846,998,000
Trading securities		2,502,248,000	2,416,192,000
Gross unrecognized holding gains		78,860,000	0
Gross unrecognized holding losses		$ 14,249,000	$ 86,264,000

XML

INVESTMENT OPERATIONS - Summary of Change in Unrealized Gains (Losses), Net of Income Tax, on Fixed Maturity and Equity Securities, Classified as Available-for-Sale (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Fixed maturities
Investment Holdings [Line Items]
Change in unrealized gains (losses), net of income tax	$ 1,541,352	$ (585,527)	$ 3,099,183	$ (1,505,298)

XML

INVESTMENT OPERATIONS - Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Held-to-Maturity (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Investment [Line Items]
Fair Value	$ 2,640,827	$ 2,547,210
Fixed maturities
Investment [Line Items]
Amortized Cost	2,576,216	2,633,474
Gross Unrecognized Holding Gains	78,860	0
Gross Unrecognized Holding Losses	(14,249)	(86,264)
Fair Value	2,640,827	2,547,210
Total OTTI Recognized in OCI	0	0
Fixed maturities | Red Mountain, LLC
Investment [Line Items]
Amortized Cost	773,216	750,474
Gross Unrecognized Holding Gains	0	0
Gross Unrecognized Holding Losses	(14,249)	(81,657)
Fair Value	758,967	668,817
Total OTTI Recognized in OCI	0	0
Fixed maturities | Steel City, LLC
Investment [Line Items]
Amortized Cost	1,803,000	1,883,000
Gross Unrecognized Holding Gains	78,860	0
Gross Unrecognized Holding Losses	0	(4,607)
Fair Value	1,881,860	1,878,393
Total OTTI Recognized in OCI	$ 0	$ 0

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets:
Fixed maturity securities - available-for-sale	$ 63,347,339	$ 50,264,864
Fixed maturity securities - trading	2,592,645	2,457,010
Total fixed maturity securities	64,710,656	51,904,699
Equity securities	629,965	595,884
Other long-term investments	643,796	375,829
Short-term investments	1,220,840	807,283
Assets related to separate accounts:
Variable annuity	12,790,474	12,288,919
Variable universal life	1,073,020	937,732
Fixed maturities
Assets:
Fixed maturity securities - available-for-sale	62,208,408
Fixed maturity securities - trading	2,502,248	2,416,192
Residential mortgage-backed securities
Assets:
Fixed maturity securities - trading	203,455	241,836
Commercial mortgage-backed securities
Assets:
Fixed maturity securities - trading	204,445	188,925
Other asset-backed securities
Assets:
Fixed maturity securities - trading	147,997	159,907
Other government-related securities
Assets:
Fixed maturity securities - trading	24,342	44,207
States, municipals, and political subdivisions
Assets:
Fixed maturity securities - trading	293,560	286,413
Corporate securities
Assets:
Fixed maturity securities - trading	1,565,561	1,423,833
Level 3 | Other asset-backed securities
Assets:
Total investments	418,178	421,458
Level 3 | Corporate securities
Assets:
Total investments	1,328,490	631,068
Measured at fair value on a recurring basis
Assets:
Total fixed maturity securities	64,710,656	51,904,699
Equity securities	629,965	595,884
Other long-term investments	643,796	375,829
Short-term investments	1,220,840	807,283
Total investments	67,205,257	53,683,695
Cash	240,157	173,714
Other assets	34,335	29,257
Assets related to separate accounts:
Variable annuity	12,790,474	12,288,919
Variable universal life	1,073,020	937,732
Total assets measured at fair value on a recurring basis	81,343,243	67,113,317
Liabilities:
Annuity account balances	72,585	76,119
Other liabilities	1,319,193	755,461
Total liabilities measured at fair value on a recurring basis	1,391,778	831,580
Measured at fair value on a recurring basis | Fixed maturities
Assets:
Fixed maturity securities - available-for-sale	62,208,408	49,488,507
Fixed maturity securities - trading	2,502,248	2,416,192
Measured at fair value on a recurring basis | Residential mortgage-backed securities
Assets:
Fixed maturity securities - available-for-sale	4,606,248	3,611,590
Fixed maturity securities - trading	203,455	241,836
Measured at fair value on a recurring basis | Commercial mortgage-backed securities
Assets:
Fixed maturity securities - available-for-sale	2,695,861	2,295,084
Fixed maturity securities - trading	204,445	188,925
Measured at fair value on a recurring basis | Other asset-backed securities
Assets:
Fixed maturity securities - available-for-sale	1,861,598	1,391,893
Fixed maturity securities - trading	147,997	159,907
Measured at fair value on a recurring basis | U.S. government-related securities
Assets:
Fixed maturity securities - available-for-sale	1,300,557	1,639,505
Fixed maturity securities - trading	51,080	59,794
Measured at fair value on a recurring basis | Other government-related securities
Assets:
Fixed maturity securities - available-for-sale	583,149	515,964
Fixed maturity securities - trading	24,342	44,207
Measured at fair value on a recurring basis | States, municipals, and political subdivisions
Assets:
Fixed maturity securities - available-for-sale	4,830,966	3,588,841
Fixed maturity securities - trading	293,560	286,413
Measured at fair value on a recurring basis | Corporate securities
Assets:
Fixed maturity securities - available-for-sale	46,245,117	36,362,828
Fixed maturity securities - trading	1,565,561	1,423,833
Measured at fair value on a recurring basis | Redeemable preferred stocks
Assets:
Fixed maturity securities - available-for-sale	84,912	82,802
Fixed maturity securities - trading	11,808	11,277
Measured at fair value on a recurring basis | Level 1
Assets:
Total fixed maturity securities	989,522	1,114,751
Equity securities	560,302	531,523
Other long-term investments	65,231	83,047
Short-term investments	1,153,978	730,067
Total investments	2,769,033	2,459,388
Cash	240,157	173,714
Other assets	34,335	29,257
Assets related to separate accounts:
Variable annuity	12,790,474	12,288,919
Variable universal life	1,073,020	937,732
Total assets measured at fair value on a recurring basis	16,907,019	15,889,010
Liabilities:
Annuity account balances	0	0
Other liabilities	23,552	56,018
Total liabilities measured at fair value on a recurring basis	23,552	56,018
Measured at fair value on a recurring basis | Level 1 | Fixed maturities
Assets:
Fixed maturity securities - available-for-sale	951,785	1,076,021
Fixed maturity securities - trading	37,737	38,730
Measured at fair value on a recurring basis | Level 1 | Residential mortgage-backed securities
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 1 | Commercial mortgage-backed securities
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 1 | Other asset-backed securities
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 1 | U.S. government-related securities
Assets:
Fixed maturity securities - available-for-sale	884,053	1,010,485
Fixed maturity securities - trading	25,929	27,453
Measured at fair value on a recurring basis | Level 1 | Other government-related securities
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 1 | States, municipals, and political subdivisions
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 1 | Corporate securities
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 1 | Redeemable preferred stocks
Assets:
Fixed maturity securities - available-for-sale	67,732	65,536
Fixed maturity securities - trading	11,808	11,277
Measured at fair value on a recurring basis | Level 2
Assets:
Total fixed maturity securities	61,897,493	49,697,732
Equity securities	36	36
Other long-term investments	467,642	180,438
Short-term investments	66,862	77,216
Total investments	62,432,033	49,955,422
Cash	0	0
Other assets	0	0
Assets related to separate accounts:
Variable annuity	0	0
Variable universal life	0	0
Total assets measured at fair value on a recurring basis	62,432,033	49,955,422
Liabilities:
Annuity account balances	0	0
Other liabilities	198,564	69,501
Total liabilities measured at fair value on a recurring basis	198,564	69,501
Measured at fair value on a recurring basis | Level 2 | Fixed maturities
Assets:
Fixed maturity securities - available-for-sale	59,500,456	47,352,568
Fixed maturity securities - trading	2,397,037	2,345,164
Measured at fair value on a recurring basis | Level 2 | Residential mortgage-backed securities
Assets:
Fixed maturity securities - available-for-sale	4,606,248	3,611,590
Fixed maturity securities - trading	203,455	241,836
Measured at fair value on a recurring basis | Level 2 | Commercial mortgage-backed securities
Assets:
Fixed maturity securities - available-for-sale	2,686,495	2,295,084
Fixed maturity securities - trading	204,445	188,925
Measured at fair value on a recurring basis | Level 2 | Other asset-backed securities
Assets:
Fixed maturity securities - available-for-sale	1,443,288	970,251
Fixed maturity securities - trading	85,817	133,851
Measured at fair value on a recurring basis | Level 2 | U.S. government-related securities
Assets:
Fixed maturity securities - available-for-sale	416,504	629,020
Fixed maturity securities - trading	25,151	32,341
Measured at fair value on a recurring basis | Level 2 | Other government-related securities
Assets:
Fixed maturity securities - available-for-sale	583,149	515,964
Fixed maturity securities - trading	24,342	44,207
Measured at fair value on a recurring basis | Level 2 | States, municipals, and political subdivisions
Assets:
Fixed maturity securities - available-for-sale	4,830,966	3,588,841
Fixed maturity securities - trading	293,560	286,413
Measured at fair value on a recurring basis | Level 2 | Corporate securities
Assets:
Fixed maturity securities - available-for-sale	44,916,626	35,724,552
Fixed maturity securities - trading	1,560,267	1,417,591
Measured at fair value on a recurring basis | Level 2 | Redeemable preferred stocks
Assets:
Fixed maturity securities - available-for-sale	17,180	17,266
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 3
Assets:
Total fixed maturity securities	1,823,641	1,092,216
Equity securities	69,627	64,325
Other long-term investments	110,923	112,344
Short-term investments	0	0
Total investments	2,004,191	1,268,885
Cash	0	0
Other assets	0	0
Assets related to separate accounts:
Variable annuity	0	0
Variable universal life	0	0
Total assets measured at fair value on a recurring basis	2,004,191	1,268,885
Liabilities:
Annuity account balances	72,585	76,119
Other liabilities	1,097,077	629,942
Total liabilities measured at fair value on a recurring basis	1,169,662	706,061
Measured at fair value on a recurring basis | Level 3 | Fixed maturities
Assets:
Fixed maturity securities - available-for-sale	1,756,167	1,059,918
Fixed maturity securities - trading	67,474	32,298
Measured at fair value on a recurring basis | Level 3 | Residential mortgage-backed securities
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 3 | Commercial mortgage-backed securities
Assets:
Fixed maturity securities - available-for-sale	9,366	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 3 | Other asset-backed securities
Assets:
Fixed maturity securities - available-for-sale	418,310	421,642
Fixed maturity securities - trading	62,180	26,056
Measured at fair value on a recurring basis | Level 3 | U.S. government-related securities
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 3 | Other government-related securities
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 3 | States, municipals, and political subdivisions
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	0	0
Measured at fair value on a recurring basis | Level 3 | Corporate securities
Assets:
Fixed maturity securities - available-for-sale	1,328,491	638,276
Fixed maturity securities - trading	5,294	6,242
Measured at fair value on a recurring basis | Level 3 | Redeemable preferred stocks
Assets:
Fixed maturity securities - available-for-sale	0	0
Fixed maturity securities - trading	$ 0	$ 0

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Assets and liabilities measured at fair value on a recurring basis
Number of sources of information considered			1
Number of sources of information			3
Minimum percentage of the Company's fixed maturity securities priced by third party pricing services			91.80%
Number of broker quotes obtained per security			2
Percentage of derivatives excluding embedded derivatives that were priced using exchange prices or independent broker quotations			100.00%
Financial instruments with book value approximating fair value	$ 68,700,000		$ 68,700,000			$ 63,600,000
Transfers into Level 3	50,100,000	$ 11,100,000	86,100,000	$ 11,100,000
Securities transferred from level 3 to level 2	1,600,000	18,600,000	20,600,000	18,600,000
Transfers from Level 2 to Level 1	0	0	0	0
Transfers from Level 1	0	0	0	0
Level 3
Assets and liabilities measured at fair value on a recurring basis
Level 3 fair value	1,169,662,000	653,014,000	1,169,662,000	653,014,000	$ 872,504,000	706,061,000	$ 702,501,000	$ 844,362,000
Financial instruments that are valued using broker quotes	77,900,000		77,900,000			40,400,000
Level 3 | Annuity account
Assets and liabilities measured at fair value on a recurring basis
Level 3 fair value	72,585,000	$ 80,098,000	72,585,000	$ 80,098,000	$ 74,613,000	76,119,000	$ 81,399,000	$ 83,472,000
Asset-backed securities | Level 2
Assets and liabilities measured at fair value on a recurring basis
Fair value	9,200,000,000		9,200,000,000
Asset-backed securities | Level 3
Assets and liabilities measured at fair value on a recurring basis
Fair value	489,900,000		$ 489,900,000
Other asset-backed securities
Assets and liabilities measured at fair value on a recurring basis
Percentage of underlying collateral of student-loan backed auction rate securities guaranteed by the Federal Family Education Loan Program (FFELP), minimum			97.00%
Other asset-backed securities | Level 3
Assets and liabilities measured at fair value on a recurring basis
Fair value	418,178,000		$ 418,178,000			421,458,000
Percentage of underlying collateral of student-loan backed auction rate securities guaranteed by the Federal Family Education Loan Program (FFELP), minimum			97.00%
Financial instruments that are valued using broker quotes	71,700,000		$ 71,700,000			26,200,000
Other asset-backed securities | Level 3 | Available-for-sale securities
Assets and liabilities measured at fair value on a recurring basis
Fair value	427,700,000		427,700,000
Other asset-backed securities | Level 3 | Trading securities
Assets and liabilities measured at fair value on a recurring basis
Fair value	62,200,000		62,200,000
Corporate bonds and securities | Level 2
Assets and liabilities measured at fair value on a recurring basis
Fair value	52,700,000,000		52,700,000,000
Corporate bonds and securities | Level 3
Assets and liabilities measured at fair value on a recurring basis
Fair value	1,300,000,000		1,300,000,000
Equity securities
Assets and liabilities measured at fair value on a recurring basis
Fair value	69,700,000		69,700,000
Federal Home Loan Bank (FHLB) stock	68,500,000		68,500,000
Equity securities | Level 3
Assets and liabilities measured at fair value on a recurring basis
Financial instruments that are valued using broker quotes	900,000		$ 900,000			700,000
Embedded derivative - GLWB | Minimum
Assets and liabilities measured at fair value on a recurring basis
Mortality (as a percent)			87.00%
Embedded derivative - GLWB | Maximum
Assets and liabilities measured at fair value on a recurring basis
Mortality (as a percent)			100.00%
Embedded derivative - FIA | Minimum
Assets and liabilities measured at fair value on a recurring basis
Mortality (as a percent)			87.00%
Embedded derivative - FIA | Maximum
Assets and liabilities measured at fair value on a recurring basis
Mortality (as a percent)			100.00%
Embedded derivative - IUL | Minimum
Assets and liabilities measured at fair value on a recurring basis
Mortality (as a percent)			37.00%
Embedded derivative - IUL | Maximum
Assets and liabilities measured at fair value on a recurring basis
Mortality (as a percent)			577.00%
Embedded derivative - Modified coinsurance agreements
Assets and liabilities measured at fair value on a recurring basis
Statutory policy liabilities (net of policy loans)	3,500,000,000		$ 3,500,000,000
Embedded derivative - Modified coinsurance agreements | Trading securities
Assets and liabilities measured at fair value on a recurring basis
Fair value	210,500,000		210,500,000
Corporate securities | Level 3
Assets and liabilities measured at fair value on a recurring basis
Fair value	1,328,490,000		1,328,490,000			631,068,000
Financial instruments that are valued using broker quotes	$ 5,300,000		$ 5,300,000			$ 13,500,000

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS - Valuation of Level 3 Financial Instruments (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) usd_per_policy	Dec. 31, 2018 USD ($) usd_per_policy
Liabilities:
Fair Value	$ 1,319,193,000	$ 755,461,000
Level 3 | Other asset-backed securities
Assets:
Fair value	418,178,000	421,458,000
Level 3 | Corporate securities
Assets:
Fair value	1,328,490,000	631,068,000
Level 3 | Embedded derivative - GLWB
Liabilities:
Fair Value	338,648,000	184,071,000
Level 3 | Embedded derivative - FIA
Liabilities:
Fair Value	300,364,000	217,288,000
Level 3 | Embedded derivative - IUL
Liabilities:
Fair Value	$ 136,660,000	$ 90,231,000
Level 3 | Discounted cash flow | Corporate securities | Minimum
Liabilities:
Debt securities, measurement input	0.0087	0.0084
Level 3 | Discounted cash flow | Corporate securities | Maximum
Liabilities:
Debt securities, measurement input	0.0410	0.0300
Level 3 | Discounted cash flow | Corporate securities | Weighted average
Liabilities:
Debt securities, measurement input	0.0175	0.0184
Level 3 | Actuarial cash flow model | Embedded derivative - FIA
Liabilities:
Embedded derivative, measurement input	145	145
Liquidation value | Level 3 | Liquidation Technique | Other asset-backed securities | Minimum
Liabilities:
Debt securities, measurement input, value	$ 95.39	$ 85.75
Liquidation value | Level 3 | Liquidation Technique | Other asset-backed securities | Maximum
Liabilities:
Debt securities, measurement input, value	97.00	99.99
Liquidation value | Level 3 | Liquidation Technique | Other asset-backed securities | Weighted average
Liabilities:
Debt securities, measurement input, value	$ 96.48	$ 95.36
Liquidity premium | Level 3 | Discounted cash flow | Other asset-backed securities | Minimum
Liabilities:
Debt securities, measurement input	0.0011	0.0002
Liquidity premium | Level 3 | Discounted cash flow | Other asset-backed securities | Maximum
Liabilities:
Debt securities, measurement input	0.0150	0.0125
Liquidity premium | Level 3 | Discounted cash flow | Other asset-backed securities | Weighted average
Liabilities:
Debt securities, measurement input	0.0073	0.0064
Paydown rate | Level 3 | Discounted cash flow | Other asset-backed securities | Minimum
Liabilities:
Debt securities, measurement input	0.1084	0.1096
Paydown rate | Level 3 | Discounted cash flow | Other asset-backed securities | Maximum
Liabilities:
Debt securities, measurement input	0.1288	0.1311
Paydown rate | Level 3 | Discounted cash flow | Other asset-backed securities | Weighted average
Liabilities:
Debt securities, measurement input	0.1198	0.1203
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB | Minimum
Liabilities:
Embedded derivative, measurement input	0.87	0.87
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB | Maximum
Liabilities:
Embedded derivative, measurement input	1.00	1.00
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - FIA
Liabilities:
Embedded derivative, measurement input		1.00
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Minimum
Liabilities:
Embedded derivative, measurement input	0.87
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Maximum
Liabilities:
Embedded derivative, measurement input	0.01
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Minimum
Liabilities:
Embedded derivative, measurement input	0.37	0.0037
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Maximum
Liabilities:
Embedded derivative, measurement input	5.77	0.0577
Utilization | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB
Liabilities:
Embedded derivative, measurement input	0.99	0.99
Policies that have a one-time over-utilization rate of a specified amount	10.00%	10.00%
Specified level of one-time over-utilization	400.00%	400.00%
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB | Minimum
Liabilities:
Embedded derivative, measurement input	0.0017	0.0021
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB | Maximum
Liabilities:
Embedded derivative, measurement input	0.0088	0.0116
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Minimum
Liabilities:
Embedded derivative, measurement input	0.0017	0.0021
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Maximum
Liabilities:
Embedded derivative, measurement input	0.0088	0.0116
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Minimum
Liabilities:
Embedded derivative, measurement input	0.0017	0.0021
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Maximum
Liabilities:
Embedded derivative, measurement input	0.0088	0.0116
Withdrawal rate, prior to age 70 | Level 3 | Actuarial cash flow model | Embedded derivative - FIA
Liabilities:
Embedded derivative, measurement input	0.015	0.015
Withdrawal rate | Level 3 | Actuarial cash flow model | Embedded derivative - FIA
Liabilities:
Embedded derivative, measurement input	1.000	1.00
Lapse | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Minimum
Liabilities:
Embedded derivative, measurement input	0.010	0.010
Lapse | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Maximum
Liabilities:
Embedded derivative, measurement input	0.300	0.300
Lapse | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Minimum
Liabilities:
Embedded derivative, measurement input	0.005	0.005
Lapse | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Maximum
Liabilities:
Embedded derivative, measurement input	0.100	0.100

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS - Reconciliation of Beginning and Ending Balances for Fair Value Measurements (Details) - Level 3 - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Assets:
Beginning Balance	$ 1,314,360	$ 1,380,893	$ 1,268,885	$ 1,374,044
Total Realized and Unrealized Gains, Included in Earnings, Assets	14,817	12,822	31,864	21,880
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	27,900	17,015	54,632	18,928
Total Realized and Unrealized Losses, Included in Earnings, Assets	(17,396)	(4,129)	(33,610)	(4,816)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	(4,965)	(8,582)	(8,308)	(22,317)
Purchases	677,644	118,973	727,107	153,973
Sales	(56,977)	(26,194)	(101,905)	(50,239)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	48,553	(7,508)	65,522	(7,508)
Other	255	(908)	4	(1,563)
Ending Balance	2,004,191	1,482,382	2,004,191	1,482,382
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	(2,684)	8,693	(1,576)	17,063
Liabilities:
Beginning Balance	872,504	702,501	706,061	844,362
Total Realized and Unrealized Gains, Included in Earnings, Liabilities	364	96,138	12,034	257,456
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Liabilities	0	0	0	0
Total Realized and Unrealized Losses, Included in Earnings, Liabilities	(263,171)	(49,011)	(443,117)	(71,335)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Liabilities	0	0	0	0
Purchases	37,204	0	37,204	0
Sales	0	0	0	0
Issuances	56	89	67	530
Settlements	2,909	2,449	4,753	5,757
Transfers in/out of Level 3	0	0	0	0
Other	0	0	0	0
Ending Balance	1,169,662	653,014	1,169,662	653,014
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	(261,982)	48,186	(429,931)	187,974
Annuity account
Liabilities:
Beginning Balance	74,613	81,399	76,119	83,472
Total Realized and Unrealized Gains, Included in Earnings, Liabilities	0	0	0	0
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Liabilities	0	0	0	0
Total Realized and Unrealized Losses, Included in Earnings, Liabilities	(825)	(1,059)	(1,152)	(1,853)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Liabilities	0	0	0	0
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	56	89	67	530
Settlements	2,909	2,449	4,753	5,757
Transfers in/out of Level 3	0	0	0	0
Other	0	0	0	0
Ending Balance	72,585	80,098	72,585	80,098
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	0	0	0	0
Other liabilities
Liabilities:
Beginning Balance	797,891	621,102	629,942	760,890
Total Realized and Unrealized Gains, Included in Earnings, Liabilities	364	96,138	12,034	257,456
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Liabilities	0	0	0	0
Total Realized and Unrealized Losses, Included in Earnings, Liabilities	(262,346)	(47,952)	(441,965)	(69,482)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Liabilities	0	0	0	0
Purchases	37,204	0	37,204	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	0	0	0	0
Other	0	0	0	0
Ending Balance	1,097,077	572,916	1,097,077	572,916
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	(261,982)	48,186	(429,931)	187,974
Total investments
Assets:
Beginning Balance	1,314,360	1,380,893	1,268,885	1,374,044
Total Realized and Unrealized Gains, Included in Earnings, Assets	14,817	12,822	31,864	21,880
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	27,900	17,015	54,632	18,928
Total Realized and Unrealized Losses, Included in Earnings, Assets	(17,396)	(4,129)	(33,610)	(4,816)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	(4,965)	(8,582)	(8,308)	(22,317)
Purchases	677,644	118,973	727,107	153,973
Sales	(56,977)	(26,194)	(101,905)	(50,239)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	48,553	(7,508)	65,522	(7,508)
Other	255	(908)	4	(1,563)
Ending Balance	2,004,191	1,482,382	2,004,191	1,482,382
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	(2,684)	8,693	(1,576)	17,063
Fixed maturities
Assets:
Beginning Balance	1,140,434	1,170,480	1,092,216	1,171,930
Total Realized and Unrealized Gains, Included in Earnings, Assets	960	0	4,703	194
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	27,900	17,015	54,632	18,928
Total Realized and Unrealized Losses, Included in Earnings, Assets	(3,505)	(3,615)	(3,672)	(3,737)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	(4,965)	(8,582)	(8,308)	(22,317)
Purchases	670,986	118,937	720,449	153,937
Sales	(56,977)	(26,194)	(101,905)	(50,239)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	48,553	(7,508)	65,522	(7,508)
Other	255	(908)	4	(1,563)
Ending Balance	1,823,641	1,259,625	1,823,641	1,259,625
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	(2,649)	(3,615)	1,202	(3,544)
Equity securities
Assets:
Beginning Balance	64,394	66,061	64,325	66,110
Total Realized and Unrealized Gains, Included in Earnings, Assets	157	1	239	1
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	0	0	0	0
Total Realized and Unrealized Losses, Included in Earnings, Assets	(3)	(15)	(16)	(64)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	0	0	0	0
Purchases	5,079	36	5,079	36
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	0	0	0	0
Other	0	0	0	0
Ending Balance	69,627	66,083	69,627	66,083
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	153	(14)	222	(63)
Other long-term investments
Assets:
Beginning Balance	109,532	144,352	112,344	136,004
Total Realized and Unrealized Gains, Included in Earnings, Assets	13,700	12,821	26,922	21,685
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	0	0	0	0
Total Realized and Unrealized Losses, Included in Earnings, Assets	(13,888)	(499)	(29,922)	(1,015)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	0	0	0	0
Purchases	1,579	0	1,579	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	0	0	0	0
Other	0	0	0	0
Ending Balance	110,923	156,674	110,923	156,674
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	(188)	12,322	(3,000)	20,670
Available-for-sale securities | Fixed maturities
Assets:
Beginning Balance	1,068,699	1,130,198	1,059,918	1,131,266
Total Realized and Unrealized Gains, Included in Earnings, Assets	82	0	528	0
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	27,900	17,015	54,632	18,928
Total Realized and Unrealized Losses, Included in Earnings, Assets	(37)	0	(57)	0
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	(4,965)	(8,582)	(8,308)	(22,317)
Purchases	670,986	114,337	704,986	149,337
Sales	(56,197)	(14,921)	(94,978)	(38,570)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	49,350	(7,672)	39,255	(7,672)
Other	349	(856)	191	(1,453)
Ending Balance	1,756,167	1,229,519	1,756,167	1,229,519
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	0	0	0	0
Available-for-sale securities | Residential mortgage-backed securities
Assets:
Beginning Balance	0	0	0	0
Total Realized and Unrealized Gains, Included in Earnings, Assets	0	0	0	0
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	0	0	0	0
Total Realized and Unrealized Losses, Included in Earnings, Assets	0	0	0	0
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	0	(457)	0	(457)
Purchases	0	22,225	0	22,225
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	0	0	0	0
Other	0	12	0	12
Ending Balance	0	21,780	0	21,780
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	0	0	0	0
Available-for-sale securities | Commercial mortgage-backed securities
Assets:
Beginning Balance	0	0	0	0
Total Realized and Unrealized Gains, Included in Earnings, Assets	0	0	0	0
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	16	0	16	0
Total Realized and Unrealized Losses, Included in Earnings, Assets	0	0	0	0
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	0	(1,284)	0	(1,284)
Purchases	9,359	48,621	9,359	48,621
Sales	(7)	(94)	(7)	(94)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	0	0	0	0
Other	(2)	(16)	(2)	(16)
Ending Balance	9,366	47,227	9,366	47,227
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	0	0	0	0
Available-for-sale securities | Other asset-backed securities
Assets:
Beginning Balance	420,091	503,789	421,642	504,365
Total Realized and Unrealized Gains, Included in Earnings, Assets	0	0	446	0
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	2,513	11,353	10,660	11,867
Total Realized and Unrealized Losses, Included in Earnings, Assets	(37)	0	(57)	0
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	(4,468)	(13)	(4,799)	(1,647)
Purchases	0	0	0	0
Sales	(7)	(9)	(10,015)	(23)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	0	222	0	222
Other	218	359	433	917
Ending Balance	418,310	515,701	418,310	515,701
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	0	0	0	0
Available-for-sale securities | Corporate securities
Assets:
Beginning Balance	648,608	626,409	638,276	626,901
Total Realized and Unrealized Gains, Included in Earnings, Assets	82	0	82	0
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	25,371	5,662	43,956	7,061
Total Realized and Unrealized Losses, Included in Earnings, Assets	0	0	0	0
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	(497)	(6,828)	(3,509)	(18,929)
Purchases	661,627	43,491	695,627	78,491
Sales	(56,183)	(14,818)	(84,956)	(38,453)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	49,350	(7,894)	39,255	(7,894)
Other	133	(1,211)	(240)	(2,366)
Ending Balance	1,328,491	644,811	1,328,491	644,811
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	0	0	0	0
Trading securities | Fixed maturities
Assets:
Beginning Balance	71,735	40,282	32,298	40,664
Total Realized and Unrealized Gains, Included in Earnings, Assets	878	0	4,175	194
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	0	0	0	0
Total Realized and Unrealized Losses, Included in Earnings, Assets	(3,468)	(3,615)	(3,615)	(3,737)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	0	0	0	0
Purchases	0	4,600	15,463	4,600
Sales	(780)	(11,273)	(6,927)	(11,669)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	(797)	164	26,267	164
Other	(94)	(52)	(187)	(110)
Ending Balance	67,474	30,106	67,474	30,106
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	(2,649)	(3,615)	1,202	(3,544)
Trading securities | Other asset-backed securities
Assets:
Beginning Balance	66,484	34,958	26,056	35,222
Total Realized and Unrealized Gains, Included in Earnings, Assets	810	0	4,006	194
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	0	0	0	0
Total Realized and Unrealized Losses, Included in Earnings, Assets	(3,468)	(3,570)	(3,584)	(3,598)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	0	0	0	0
Purchases	0	4,600	15,463	4,600
Sales	(781)	(11,273)	(5,892)	(11,669)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	(797)	164	26,267	164
Other	(68)	(27)	(136)	(61)
Ending Balance	62,180	24,852	62,180	24,852
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	(2,717)	(3,570)	1,068	(3,405)
Trading securities | Corporate securities
Assets:
Beginning Balance	5,251	5,324	6,242	5,442
Total Realized and Unrealized Gains, Included in Earnings, Assets	68	0	169	0
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets	0	0	0	0
Total Realized and Unrealized Losses, Included in Earnings, Assets	0	(45)	(31)	(139)
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets	0	0	0	0
Purchases	0	0	0	0
Sales	1	0	(1,035)	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers in/out of Level 3	0	0	0	0
Other	(26)	(25)	(51)	(49)
Ending Balance	5,294	5,254	5,294	5,254
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date	$ 68	$ (45)	$ 134	$ (139)

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS - Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets:
Mortgage loans on real estate	$ 9,053,400	$ 7,724,733
Policy loans	1,709,110	1,695,886
Fixed maturities, held-to-maturity	2,576,216	2,633,474
Liabilities:
Stable value product account balances	5,816,503	5,234,731
Future policy benefits and claims	14,179,277	13,720,081
Other policyholders’ funds	1,542,296	1,128,379
Debt:
Subordinated debt	605,494	605,426
Non-recourse funding obligations	2,576,538	2,632,497
Capital lease obligation	2,600	1,300
Golden Gate V
Debt:
Non-recourse funding obligations	753,503	729,454
Level 3 | Carrying Amounts
Assets:
Mortgage loans on real estate	9,053,400	7,724,733
Policy loans	1,709,110	1,695,886
Fixed maturities, held-to-maturity	2,576,216	2,633,474
Liabilities:
Stable value product account balances	5,816,503	5,234,731
Future policy benefits and claims	1,725,194	1,671,414
Other policyholders’ funds	105,136	131,150
Debt:
Bank borrowings(5)	599,627	0
Subordinated funding obligations	110,000	110,000
Non-recourse funding obligations	2,576,538	2,632,497
Level 3 | Carrying Amounts | Golden Gate V
Debt:
Non-recourse funding obligations	2,600,000	2,600,000
Level 3 | Fair Values
Assets:
Mortgage loans on real estate	9,123,182	7,447,702
Policy loans	1,709,110	1,695,886
Fixed maturities, held-to-maturity	2,640,827	2,547,210
Liabilities:
Stable value product account balances	5,885,528	5,200,723
Future policy benefits and claims	1,729,081	1,671,434
Other policyholders’ funds	107,702	131,782
Debt:
Bank borrowings(5)	600,000	0
Subordinated funding obligations	108,455	95,476
Non-recourse funding obligations	2,701,194	2,550,237
Level 3 | Fair Values | Golden Gate V
Debt:
Non-recourse funding obligations	2,700,000	2,500,000
Level 2 | Carrying Amounts
Debt:
Senior Notes	1,075,370	1,100,508
Subordinated debt	495,494	495,426
Level 2 | Fair Values
Debt:
Senior Notes	1,095,907	1,065,338
Subordinated debt	$ 506,720	$ 494,265

XML

DERIVATIVE FINANCIAL INSTRUMENTS - Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	$ (148,049)	$ 12,265	$ (267,720)	$ 90,324
Derivatives not designated as hedging instruments
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(148,049)	12,265	(267,720)	90,324
Derivatives not designated as hedging instruments | Embedded derivative - Modco reinsurance treaties
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(70,679)	45,183	(155,677)	127,841
Derivatives not designated as hedging instruments | Other derivatives
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(1,455)	33	(1,389)	(7)
Derivatives not designated as hedging instruments | VA
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(56,123)	(36,115)	(86,650)	(55,944)
Derivatives not designated as hedging instruments | VA | Interest rate futures
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(11,280)	1,552	(17,302)	(15,340)
Derivatives not designated as hedging instruments | VA | Equity futures
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	2,559	(10,864)	32,297	(17,292)
Derivatives not designated as hedging instruments | VA | Currency futures
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(397)	12,063	1,847	4,480
Derivatives not designated as hedging instruments | VA | Equity options
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(21,702)	(38,216)	(93,397)	(26,200)
Derivatives not designated as hedging instruments | VA | Interest rate swaptions
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	0	0	0	(14)
Derivatives not designated as hedging instruments | VA | Interest rate swaps
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	117,934	(26,149)	192,795	(89,859)
Derivatives not designated as hedging instruments | VA | Total return swaps
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(8,545)	(10,055)	(48,572)	(3,565)
Derivatives not designated as hedging instruments | VA | Embedded derivative - GLWB
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(134,692)	35,554	(154,318)	91,846
Derivatives not designated as hedging instruments | FIA
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(11,197)	2,304	(8,390)	8,804
Derivatives not designated as hedging instruments | FIA | Equity futures
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	431	(167)	2	(328)
Derivatives not designated as hedging instruments | FIA | Equity options
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	13,191	7,398	55,241	2,729
Derivatives not designated as hedging instruments | FIA | Embedded derivative - FIA
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(24,819)	(4,927)	(63,633)	6,403
Derivatives not designated as hedging instruments | IUL
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	(8,595)	860	(15,614)	9,630
Derivatives not designated as hedging instruments | IUL | Equity futures
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	85	0	256	136
Derivatives not designated as hedging instruments | IUL | Equity options
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	2,606	2,086	8,786	836
Derivatives not designated as hedging instruments | IUL | Embedded derivative - IUL
Notional amount and fair value of the entity's derivative financial instruments
Total realized gains (losses) - derivatives	$ (11,286)	$ (1,226)	$ (24,656)	$ 8,658

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DERIVATIVE FINANCIAL INSTRUMENTS - Gain (Loss) on Derivatives in Cash Flow Hedging Relationship (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship
Amount of gains (losses) reclassified from accumulated other comprehensive income (loss) into income (loss) next 12 months			$ 2,900
Cash flow hedges
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives	$ (3,529)		(6,017)
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives		$ 2,967		$ 3,582
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss)	(336)		(614)
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss)		(205)		(318)
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives	0		0
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives		0		0
Cash flow hedges | Foreign currency swaps
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives	(1,733)		(3,626)
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives		2,967		3,582
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss)	(188)		(394)
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss)		(205)		(318)
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives	0		0
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives		$ 0		$ 0
Cash flow hedges | Interest rate swaps
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives	(1,796)		(2,391)
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss)	(148)		(220)
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives	$ 0		$ 0

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DERIVATIVE FINANCIAL INSTRUMENTS - Nature and Accounting Treatment of Derivative Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Derivative [Line Items]
Other long-term investments, Fair Value	$ 643,796	$ 375,829
Embedded derivative - Modco reinsurance treaties
Derivative [Line Items]
Other long-term investments, Fair Value	13,738	7,072
Embedded derivative - GLWB
Derivative [Line Items]
Other long-term investments, Fair Value	97,185	105,272
Derivatives not designated as hedging instruments
Derivative [Line Items]
Other long-term investments, Notional Amount	13,393,082	12,146,013
Other long-term investments, Fair Value	643,796	375,829
Other liabilities, Notional Amount	18,536,148	18,826,722
Other liabilities, Fair Value	1,319,193	755,461
Derivatives not designated as hedging instruments | Interest rate swaps
Derivative [Line Items]
Other long-term investments, Notional Amount	2,188,000	1,515,500
Other long-term investments, Fair Value	90,599	28,501
Other liabilities, Notional Amount	70,000	775,000
Other liabilities, Fair Value	0	11,367
Derivatives not designated as hedging instruments | Total return swaps
Derivative [Line Items]
Other long-term investments, Notional Amount	132,044	138,070
Other long-term investments, Fair Value	1,065	3,971
Other liabilities, Notional Amount	361,607	768,177
Other liabilities, Fair Value	1,112	23,054
Derivatives not designated as hedging instruments | Embedded derivative - Modco reinsurance treaties
Derivative [Line Items]
Other long-term investments, Notional Amount	1,248,634	585,294
Other long-term investments, Fair Value	13,738	7,072
Other liabilities, Notional Amount	2,287,547	1,795,287
Other liabilities, Fair Value	188,853	32,828
Derivatives not designated as hedging instruments | Embedded derivative - GLWB
Derivative [Line Items]
Other long-term investments, Notional Amount	3,153,016	3,984,070
Other long-term investments, Fair Value	97,185	105,272
Other liabilities, Notional Amount	6,943,853	6,282,712
Other liabilities, Fair Value	471,199	289,343
Derivatives not designated as hedging instruments | Embedded derivative - FIA
Derivative [Line Items]
Other liabilities, Notional Amount	2,739,208	2,576,033
Other liabilities, Fair Value	298,721	217,288
Derivatives not designated as hedging instruments | Embedded derivative - IUL
Derivative [Line Items]
Other liabilities, Notional Amount	262,828	233,550
Other liabilities, Fair Value	136,660	90,231
Derivatives not designated as hedging instruments | Interest rate futures
Derivative [Line Items]
Other long-term investments, Notional Amount	393,518	286,208
Other long-term investments, Fair Value	8,703	10,302
Other liabilities, Notional Amount	901,165	863,706
Other liabilities, Fair Value	16,464	20,100
Derivatives not designated as hedging instruments | Equity futures
Derivative [Line Items]
Other long-term investments, Notional Amount	101,064	12,633
Other long-term investments, Fair Value	639	483
Other liabilities, Notional Amount	225,125	659,357
Other liabilities, Fair Value	2,967	33,753
Derivatives not designated as hedging instruments | Currency futures
Derivative [Line Items]
Other liabilities, Notional Amount	256,513	202,747
Other liabilities, Fair Value	1,105	2,163
Derivatives not designated as hedging instruments | Equity options
Derivative [Line Items]
Other long-term investments, Notional Amount	6,176,649	5,624,081
Other long-term investments, Fair Value	431,694	220,092
Other liabilities, Notional Amount	4,008,015	4,199,687
Other liabilities, Fair Value	198,159	34,178
Derivatives not designated as hedging instruments | Other
Derivative [Line Items]
Other long-term investments, Notional Amount	157	157
Other long-term investments, Fair Value	173	136
Other liabilities, Notional Amount	13,109	3,288
Other liabilities, Fair Value	1,644	252
Derivatives designated as hedging instruments | Cash flow hedges | Interest rate swaps
Derivative [Line Items]
Other liabilities, Notional Amount	350,000	350,000
Other liabilities, Fair Value	0	0
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency swaps
Derivative [Line Items]
Other liabilities, Notional Amount	117,178	117,178
Other liabilities, Fair Value	$ 2,309	$ 904

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OFFSETTING OF ASSETS AND LIABILITIES - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Offsetting [Abstract]
Fair value of non-cash collateral received	$ 30.4	$ 45.0

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OFFSETTING OF ASSETS AND LIABILITIES - Schedule of Derivative Instruments by Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Offsetting of Assets
Gross Amounts of Recognized Assets, Derivatives not subject to a master netting arrangement	$ 643,796	$ 375,829
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	643,796	375,829
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	210,744	70,322
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Received	214,952	99,199
Net Amount	218,100	206,308
Free-Standing derivatives
Offsetting of Assets
Gross Amounts of Recognized Assets, Derivatives subject to a master netting arrangement	532,700	263,349
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	532,700	263,349
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, subject to a master netting arrangement	210,744	70,322
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Received	214,952	99,199
Net Amount	107,004	93,828
Total derivatives, subject to a master netting arrangement or similar arrangement
Offsetting of Assets
Gross Amounts of Recognized Assets, Derivatives subject to a master netting arrangement	532,700	263,349
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	532,700	263,349
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, subject to a master netting arrangement	210,744	70,322
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Received	214,952	99,199
Net Amount	107,004	93,828
Embedded derivative - Modco reinsurance treaties
Offsetting of Assets
Gross Amounts of Recognized Assets, Derivatives not subject to a master netting arrangement	13,738	7,072
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	13,738	7,072
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Received	0	0
Net Amount	13,738	7,072
Embedded derivative - GLWB
Offsetting of Assets
Gross Amounts of Recognized Assets, Derivatives not subject to a master netting arrangement	97,185	105,272
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	97,185	105,272
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Received	0	0
Net Amount	97,185	105,272
Other
Offsetting of Assets
Gross Amounts of Recognized Assets, Derivatives not subject to a master netting arrangement	173	136
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	173	136
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Received	0	0
Net Amount	173	136
Total derivatives, not subject to a master netting arrangement or similar arrangement
Offsetting of Assets
Gross Amounts of Recognized Assets, Derivatives not subject to a master netting arrangement	111,096	112,480
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	111,096	112,480
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Received	0	0
Net Amount	$ 111,096	$ 112,480

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OFFSETTING OF ASSETS AND LIABILITIES - Schedule of Derivative Instruments by Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities, not subject to a master netting arrangement	$ 1,319,193	$ 755,461
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	1,319,193	755,461
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	210,744	70,322
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Posted	11,215	47,856
Net Amount	1,097,234	637,283
Repurchase agreements
Gross Amounts of Recognized Liabilities	60,000	418,090
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	60,000	418,090
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid	0	0
Net Amount	60,000	418,090
Total Liabilities
Gross Amounts of Recognized Liabilities	1,379,193	1,173,551
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	1,379,193	1,173,551
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	210,744	70,322
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid	11,215	47,856
Net Amount	1,157,234	1,055,373
Free-Standing derivatives
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities, subject to a master netting arrangement	222,116	125,519
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	222,116	125,519
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, subject to a master netting arrangement	210,744	70,322
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Posted	11,215	47,856
Net Amount	157	7,341
Total derivatives, subject to a master netting arrangement or similar arrangement
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities, subject to a master netting arrangement	222,116	125,519
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	222,116	125,519
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, subject to a master netting arrangement	210,744	70,322
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Posted	11,215	47,856
Net Amount	157	7,341
Embedded derivative - Modco reinsurance treaties
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities, not subject to a master netting arrangement	188,853	32,828
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	188,853	32,828
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Posted	0	0
Net Amount	188,853	32,828
Embedded derivative - GLWB
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities, not subject to a master netting arrangement	471,199	289,343
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	471,199	289,343
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Posted	0	0
Net Amount	471,199	289,343
Embedded derivative - FIA
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities, not subject to a master netting arrangement	298,721	217,288
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	298,721	217,288
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Posted	0	0
Net Amount	298,721	217,288
Embedded derivative - IUL
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities, not subject to a master netting arrangement	136,660	90,231
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	136,660	90,231
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Posted	0	0
Net Amount	136,660	90,231
Other
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities, not subject to a master netting arrangement	1,644	252
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	1,644	252
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Posted	0	0
Net Amount	1,644	252
Total derivatives, not subject to a master netting arrangement or similar arrangement
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities, not subject to a master netting arrangement	1,097,077	629,942
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	1,097,077	629,942
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments, not subject to a master netting arrangement	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Collateral Posted	0	0
Net Amount	$ 1,097,077	$ 629,942

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MORTGAGE LOANS - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Financing Receivable, Allowance for Credit Loss [Line Items]
Mortgage loans holdings	$ 9,053,400		$ 9,053,400		$ 7,724,733
Mortgage loan call option period			10 years
Amount that would become due in remainder of 2019, if loans are called at their next call dates	70,300		$ 70,300
Amount that would become due in 2020 through 2024, if loans are called at their next call dates	789,600		789,600
Amount that would become due in 2025 through 2029, if loans are called at their next call dates	60,000		60,000
Commercial mortgage loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Mortgage loans having participation feature	669,500		669,500		700,600
Income recognized on participating mortgage loans	12,000	$ 5,100	14,200	$ 12,400
Loans not subject to a pooling and servicing agreement which are either nonperforming or restructured	800		800
Allowance for mortgage loan credit losses	$ 2,481		$ 2,481		$ 1,296	$ 0
Past due period at which to cease carrying accrued interest on delinquent loans			90 days
Number of days accrued interest on impaired loans (less than)			90 days
Commercial mortgage loans | Maximum
Financing Receivable, Allowance for Credit Loss [Line Items]
Loan-to-value ratio with participating interest (as a percent)	85.00%		85.00%

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MORTGAGE LOANS - Change in Allowance for Credit Losses (Details) - Commercial mortgage loans - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	$ 1,296	$ 0
Charge offs	(350)	0
Recoveries	0	(209)
Provision	1,535	1,505
Ending balance	$ 2,481	$ 1,296

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MORTGAGE LOANS - Delinquent Loans (Details) - Commercial mortgage loans $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) loan	Dec. 31, 2018 USD ($) loan
Delinquent loans
Commercial mortgage loans | $	$ 8,488	$ 2,278
Number of delinquent commercial mortgage loans | loan	3	5
30 to 59 Days Delinquent
Delinquent loans
Commercial mortgage loans | $	$ 8,405	$ 1,044
Number of delinquent commercial mortgage loans | loan	2	4
60 to 89 Days Delinquent
Delinquent loans
Commercial mortgage loans | $	$ 0	$ 0
Number of delinquent commercial mortgage loans | loan	0	0
Greater than 90 Days Delinquent
Delinquent loans
Commercial mortgage loans | $	$ 83	$ 1,234
Number of delinquent commercial mortgage loans | loan	1	1

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MORTGAGE LOANS - Impaired Loans (Details) - Commercial mortgage loans - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Recorded Investment
With no related allowance recorded, recorded investment	$ 83	$ 0
With an allowance recorded, recorded investment	9,445	5,684
Unpaid Principal Balance
With no related allowance recorded, unpaid principal balance	83	0
With an allowance recorded, unpaid principal balance	9,305	5,309
Related Allowance
With an allowance recorded, related allowance	2,481	1,296
Average Recorded Investment
With no related allowance recorded, average recorded investment	83	0
With an allowance recorded, average recorded investment	3,148	1,895
Interest Income Recognized
With no related allowance recorded, interest income recognized	0	0
With an allowance recorded, interest income recognized	184	267
Cash Basis Interest Income
With no related allowance recorded, cash basis interest income	0	0
With an allowance recorded, cash basis interest income	$ 217	$ 293

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MORTGAGE LOANS - Troubled Debt Restructuring (Details) - Commercial mortgage loans $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) contract	Dec. 31, 2018 USD ($) contract
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	1	1
Pre-Modification Outstanding Recorded Investment	$ 1,114	$ 2,688
Post-Modification Outstanding Recorded Investment	$ 759	$ 1,742

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DEBT AND OTHER OBLIGATIONS - Summary of Debt and Subordinated Debt Securities (Details) - USD ($)		6 Months Ended
	May 03, 2018	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Outstanding Principal		$ 1,583,279,000	$ 991,363,000
Carrying Amounts, Debt		1,677,557,000	1,101,827,000
Carrying Amounts, Subordinated debt securities		605,494,000	605,426,000
Credit Facility
Debt Instrument [Line Items]
Outstanding Principal		0	0
Carrying Amounts, Debt		0	0
Term Loan Credit Agreement
Debt Instrument [Line Items]
Outstanding Principal		600,000,000	0
Carrying Amounts, Debt		599,627,000	0
Deferred issuance expenses		$ 400,000
Interest rate added to the base rate (as a percent)		100.00%
Capital lease obligation
Debt Instrument [Line Items]
Outstanding Principal		$ 2,560,000	1,319,000
Carrying Amounts, Debt		2,560,000	1,319,000
Subordinated debt securities
Debt Instrument [Line Items]
Outstanding Principal		610,000,000	610,000,000
Carrying Amounts, Subordinated debt securities		605,494,000	605,426,000
7.375% Senior Notes (2009), due 2019
Debt Instrument [Line Items]
Outstanding Principal		400,000,000	400,000,000
Carrying Amounts, Debt		$ 406,627,000	$ 416,469,000
Stated interest rate (as a percent)		7.375%	7.375%
8.45% Senior Notes (2009), due 2039
Debt Instrument [Line Items]
Outstanding Principal		$ 180,719,000	$ 190,044,000
Carrying Amounts, Debt		273,029,000	$ 288,547,000
Debt repurchased and subsequently extinguished		14,100,000
Par value of extinguished debt		$ 9,300,000
Stated interest rate (as a percent)		8.45%	8.45%
Pre-tax gain (loss) on extinguishment of debt		$ 1,100,000
4.30% Senior Notes (2018), due 2028
Debt Instrument [Line Items]
Outstanding Principal		400,000,000	$ 400,000,000
Carrying Amounts, Debt		$ 395,714,000	$ 395,492,000
Stated interest rate (as a percent)		4.30%	4.30%
Debt issued discount, amount			$ 1,000,000
5.35% Subordinated Debentures (2017), due 2052
Debt Instrument [Line Items]
Stated interest rate (as a percent)		5.35%	5.35%
5.35% Subordinated Debentures (2017), due 2052 | Subordinated debt securities
Debt Instrument [Line Items]
Outstanding Principal		$ 500,000,000	$ 500,000,000
Carrying Amounts, Subordinated debt securities		$ 495,494,000	495,426,000
Deferred issuance expenses			$ 3,700,000
3.55% Subordinated Funding Obligations (2018), due 2038 (One)
Debt Instrument [Line Items]
Stated interest rate (as a percent)		3.55%	3.55%
3.55% Subordinated Funding Obligations (2018), due 2038 (One) | Subordinated debt securities
Debt Instrument [Line Items]
Outstanding Principal		$ 55,000,000	$ 55,000,000
Carrying Amounts, Subordinated debt securities		$ 55,000,000	55,000,000
3.55% Subordinated Funding Obligations (2018), due 2038 (Two)
Debt Instrument [Line Items]
Stated interest rate (as a percent)		3.55%
3.55% Subordinated Funding Obligations (2018), due 2038 (Two) | Subordinated debt securities
Debt Instrument [Line Items]
Outstanding Principal		$ 55,000,000	55,000,000
Carrying Amounts, Subordinated debt securities		$ 55,000,000	$ 55,000,000
3.55% Subordinated Funding Obligations (2018), due 2038
Debt Instrument [Line Items]
Stated interest rate (as a percent)			3.55%
3.55% Subordinated Funding Obligations (2018), due 2038 | Subordinated debt securities
Debt Instrument [Line Items]
Outstanding Principal			$ 110,000,000
2015 Credit Facility
Debt Instrument [Line Items]
Line of credit, maximum borrowing capacity	$ 1,000,000,000
Line of credit, maximum borrowing capacity to be granted upon entity's request	$ 1,250,000,000
Facility fee percentage	0.125%
2015 Credit Facility | Federal Funds Rate
Debt Instrument [Line Items]
Interest rate added to the base rate (as a percent)	0.50%
2015 Credit Facility | One-Month LIBOR
Debt Instrument [Line Items]
Interest rate added to the base rate (as a percent)	1.00%
Credit Facility
Debt Instrument [Line Items]
Line of credit, maximum borrowing capacity	$ 1,000,000,000
Line of credit, maximum borrowing capacity to be granted upon entity's request	$ 1,500,000,000
Facility fee percentage	0.125%
Credit Facility | Federal Funds Rate
Debt Instrument [Line Items]
Interest rate added to the base rate (as a percent)	0.50%
Credit Facility | One-Month LIBOR
Debt Instrument [Line Items]
Interest rate added to the base rate (as a percent)	1.00%

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DEBT AND OTHER OBLIGATIONS - Non-Recourse Funding Obligations (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Outstanding Principal	$ 2,519,691	$ 2,574,691
Carrying Value	2,576,538	2,632,497
Golden Gate Captive Insurance Company
Debt Instrument [Line Items]
Outstanding Principal	1,803,000	1,883,000
Carrying Value	$ 1,803,000	$ 1,883,000
Year-to-Date Weighted-Avg Interest Rate	4.75%	4.75%
Golden Gate II Captive Insurance Company
Debt Instrument [Line Items]
Outstanding Principal	$ 20,600	$ 20,600
Carrying Value	$ 17,729	$ 17,703
Year-to-Date Weighted-Avg Interest Rate	5.60%	4.99%
Golden Gate V Vermont Captive Insurance Company
Debt Instrument [Line Items]
Outstanding Principal	$ 695,000	$ 670,000
Carrying Value	$ 753,503	$ 729,454
Year-to-Date Weighted-Avg Interest Rate	5.12%	5.12%
MONY Life Insurance Company
Debt Instrument [Line Items]
Outstanding Principal	$ 1,091	$ 1,091
Carrying Value	$ 2,306	$ 2,340
Year-to-Date Weighted-Avg Interest Rate	6.19%	6.19%

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DEBT AND OTHER OBLIGATIONS - Repurchase Program Borrowings (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Percent of initial collateral	102.00%
Securities lending transactions	$ 75,071	$ 72,176
Fair value of collateral	66,900
Obligation to return securities	66,900
Repurchase Program Borrowings
Debt Instrument [Line Items]
Fair value of securities pledged under the repurchase program	62,600	451,900
Secured financing liabilities	$ 60,000	$ 418,100
Average interest rate	2.46%	2.45%
Average daily balance at average interest rate	2.47%	1.84%
Maximum balance outstanding	$ 540,000	$ 885,000
Average borrowing rate	$ 104,800	$ 511,400
Repurchase Program Borrowings | Maximum
Debt Instrument [Line Items]
Term of financing agreement	90 days

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DEBT AND OTHER OBLIGATIONS - Amount of Collateral Pledged for Repurchase Agreements and Securities Lending Transactions, Grouped by Asset Class (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	$ 62,611	$ 451,895
Securities lending transactions	75,071	72,176
Total securities	137,682	524,071
Overnight and Continuous
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	62,611	433,182
Securities lending transactions	75,071	72,176
Total securities	137,682	505,358
Up to 30 days
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	0	18,713
Securities lending transactions	0	0
Total securities	0	18,713
30-90 days
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	0	0
Securities lending transactions	0	0
Total securities	0	0
Greater Than 90 days
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	0	0
Securities lending transactions	0	0
Total securities	0	0
U.S. Treasury and agency securities
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	62,611	451,895
U.S. Treasury and agency securities | Overnight and Continuous
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	62,611	433,182
U.S. Treasury and agency securities | Up to 30 days
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	0	18,713
U.S. Treasury and agency securities | 30-90 days
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	0	0
U.S. Treasury and agency securities | Greater Than 90 days
Debt Instrument [Line Items]
Repurchase agreements and repurchase-to-maturity transactions	0	0
Corporate securities
Debt Instrument [Line Items]
Securities lending transactions	57,941
Corporate securities | Overnight and Continuous
Debt Instrument [Line Items]
Securities lending transactions	57,941
Corporate securities | Up to 30 days
Debt Instrument [Line Items]
Securities lending transactions	0
Corporate securities | 30-90 days
Debt Instrument [Line Items]
Securities lending transactions	0
Corporate securities | Greater Than 90 days
Debt Instrument [Line Items]
Securities lending transactions	0
Fixed maturities
Debt Instrument [Line Items]
Securities lending transactions		71,285
Fixed maturities | Overnight and Continuous
Debt Instrument [Line Items]
Securities lending transactions		71,285
Fixed maturities | Up to 30 days
Debt Instrument [Line Items]
Securities lending transactions		0
Fixed maturities | 30-90 days
Debt Instrument [Line Items]
Securities lending transactions		0
Fixed maturities | Greater Than 90 days
Debt Instrument [Line Items]
Securities lending transactions		0
Equity securities
Debt Instrument [Line Items]
Securities lending transactions	14,642	891
Equity securities | Overnight and Continuous
Debt Instrument [Line Items]
Securities lending transactions	14,642	891
Equity securities | Up to 30 days
Debt Instrument [Line Items]
Securities lending transactions	0	0
Equity securities | 30-90 days
Debt Instrument [Line Items]
Securities lending transactions	0	0
Equity securities | Greater Than 90 days
Debt Instrument [Line Items]
Securities lending transactions	0	$ 0
Other government related securities
Debt Instrument [Line Items]
Securities lending transactions	2,488
Other government related securities | Overnight and Continuous
Debt Instrument [Line Items]
Securities lending transactions	2,488
Other government related securities | Up to 30 days
Debt Instrument [Line Items]
Securities lending transactions	0
Other government related securities | 30-90 days
Debt Instrument [Line Items]
Securities lending transactions	0
Other government related securities | Greater Than 90 days
Debt Instrument [Line Items]
Securities lending transactions	$ 0

XML

COMMITMENTS AND CONTINGENCIES (Details)	Jun. 30, 2019 USD ($) city	Dec. 31, 2018 USD ($)
Commitments and contingencies
Outstanding caims receivable	$ 20,500,000
Reinsurance receivable	102,300,000
Statutory reserve credit	$ 118,200,000
Administrative and marketing office space
Commitments and contingencies
Number of cities in which properties are leased | city	19
Building contiguous to home office
Commitments and contingencies
Approximate purchase price of property		$ 75,000,000
Minimum | Administrative and marketing office space
Commitments and contingencies
Operating lease term	1 year
Maximum | Administrative and marketing office space
Commitments and contingencies
Operating lease term	10 years
Indemnification Agreement
Commitments and contingencies
Indemnification agreement with certain officers, maximum	$ 10,000,000

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EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Qualified Pension Plan | Minimum
EMPLOYEE BENEFIT PLANS
Adjusted funding target percentage to be maintained			80.00%
Qualified Pension Plan | Pension Plan
EMPLOYEE BENEFIT PLANS
Service cost — benefits earned during the period	$ 3,114	$ 3,441	$ 6,228	$ 6,882
Interest cost on projected benefit obligation	2,778	2,397	5,556	4,794
Expected return on plan assets	(4,463)	(4,026)	(8,926)	(8,052)
Amortization of actuarial loss	0	0	0	0
Preliminary net periodic benefit cost	1,429	1,812	2,858	3,624
Settlement/curtailment expense	0	0	0	0
Total net periodic benefit costs	1,429	1,812	2,858	3,624
Nonqualified Excess Pension Plan | Pension Plan
EMPLOYEE BENEFIT PLANS
Service cost — benefits earned during the period	285	387	570	774
Interest cost on projected benefit obligation	371	359	742	718
Expected return on plan assets	0	0	0	0
Amortization of actuarial loss	74	265	148	530
Preliminary net periodic benefit cost	730	1,011	1,460	2,022
Settlement/curtailment expense	0	0		0
Total net periodic benefit costs	$ 730	$ 1,011	$ 1,460	$ 2,022

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	$ 5,767,734	$ 7,127,199
Ending Balance	8,362,936	5,767,734
Accumulated Other Comprehensive Income (Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(1,425,766)	12,696
Other comprehensive income (loss) before reclassifications	2,126,689	(1,425,929)
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	24,316	(20,751)
Amounts reclassified from accumulated other comprehensive income (loss)	(1,390)	18,770
Cumulative effect adjustments	0	(10,552)
Ending Balance	723,849	(1,425,766)
Unrealized Gains and Losses on Investments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(1,410,277)	25,874
Other comprehensive income (loss) before reclassifications	2,131,443	(1,420,499)
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	24,316	(20,751)
Amounts reclassified from accumulated other comprehensive income (loss)	(1,876)	15,651
Cumulative effect adjustments	0	(10,552)
Ending Balance	743,606	(1,410,277)
Offset of net unrealized losses in AOCI due to impact those net unrealized losses would have on certain of the Company's insurance assets and liabilities had the net unrealized losses been recognized in net income	(343,100)	613,400
Accumulated Gain and Loss Derivatives
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(7)	747
Other comprehensive income (loss) before reclassifications		(1,884)
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings		0
Amounts reclassified from accumulated other comprehensive income (loss)		1,130
Cumulative effect adjustments		0
Ending Balance		(7)
Accumulated Gain and Loss Derivatives
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Other comprehensive income (loss) before reclassifications	(4,754)
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	0
Amounts reclassified from accumulated other comprehensive income (loss)	486
Cumulative effect adjustments	0
Ending Balance	(4,275)
Minimum Pension Liability Adjustment
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(15,482)	(13,925)
Other comprehensive income (loss) before reclassifications	0	(3,546)
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings	0	0
Amounts reclassified from accumulated other comprehensive income (loss)	0	1,989
Cumulative effect adjustments	0	0
Ending Balance	$ (15,482)	$ (15,482)

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Reclassifications out of accumulated other comprehensive income (loss)
Benefits and settlement expenses, net of reinsurance ceded	$ (1,003,987)		$ (861,548)		$ (1,976,753)	$ (1,648,350)
Net impairment losses recognized in earnings	(698)		(5)		(3,840)	(3,650)
Tax (expense) benefit	(21,963)		(17,277)		(58,594)	(34,963)
Net income	108,111	$ 138,284	81,495	$ 74,112	246,395	155,607
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Gains and losses on derivative instruments
Reclassifications out of accumulated other comprehensive income (loss)
Benefits and settlement expenses, net of reinsurance ceded	(336)				(614)
Tax (expense) benefit	70				128
Net income	(266)				(486)
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Gains and losses on derivative instruments
Reclassifications out of accumulated other comprehensive income (loss)
Benefits and settlement expenses, net of reinsurance ceded			(205)			(318)
Tax (expense) benefit			43			67
Net income			(162)			(251)
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized gains and losses on available-for-sale securities
Reclassifications out of accumulated other comprehensive income (loss)
Realized investment gains (losses): All other investments	1,098		5,539		6,215	8,322
Net impairment losses recognized in earnings	(698)		(5)		(3,840)	(3,650)
Tax (expense) benefit	(84)		(1,162)		(499)	(981)
Net income	$ 316		$ 4,372		$ 1,876	$ 3,691

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INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Effective income tax rate	16.90%	17.50%	19.20%	18.40%
Unrecognized tax benefits with certainty of deductibility but with uncertainty about the timing of deductions	$ 0		$ 0		$ 0	$ 700
Unrecognized tax benefits	$ 1,800		1,800		7,100	11,400
Accrued interest related to unrecognized tax benefits			$ 600		$ 40	$ 2,400

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INCOME TAXES - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance, beginning of period	$ 7,134	$ 11,353
Additions for tax positions of the current year	0	0
Additions for tax positions of prior years	0	0
Changes in judgment	0	(4,219)
Settlements during the period	(5,343)	0
Lapses of applicable statute of limitations	0	0
Balance, end of period	$ 1,791	$ 7,134

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OPERATING SEGMENTS (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Summarized financial information for the company's segments
Total revenues	$ 1,418,775		$ 1,243,908		$ 2,832,805	$ 2,409,740
Pre-tax Adjusted Operating Income (Loss)	131,491		116,596		274,161	209,417
Realized (losses) gains on investments and derivatives	(1,417)		(17,824)		30,828	(18,847)
Income before income tax	130,074		98,772		304,989	190,570
Income tax expense	(21,963)		(17,277)		(58,594)	(34,963)
Net income	108,111	$ 138,284	81,495	$ 74,112	246,395	155,607
Adjusted operating income tax (expense) benefit	(22,261)		(20,877)		(52,120)	(38,920)
After-tax adjusted operating income	109,230		95,719		222,041	170,497
Income tax benefit (expense) on adjustments	298		3,600		(6,474)	3,957
Realized investment (losses) gains:
Derivative financial instruments	(148,049)		12,265		(267,720)	90,324
All other investments	99,502		(49,602)		229,092	(137,201)
Net impairment losses recognized in earnings	(698)		(5)		(3,840)	(3,650)
Less: related amortization	(26,840)		1,763		(31,201)	10,919
Less: VA GLWB economic cost	(20,988)		(21,281)		(42,095)	(42,599)
Operating Segment Assets
Investments and other assets	112,528,973				112,528,973		$ 85,476,658
DAC and VOBA	3,474,557				3,474,557		3,023,154
Other intangibles	616,931				616,931		613,431
Goodwill	825,511				825,511		825,511
Total assets	117,445,972				117,445,972		89,938,754
Life Marketing
Summarized financial information for the company's segments
Total revenues	441,559		414,954		898,899	849,870
Pre-tax Adjusted Operating Income (Loss)	(462)		(7,737)		772	(25,586)
Operating Segment Assets
Investments and other assets	15,433,940				15,433,940		14,575,702
DAC and VOBA	1,494,118				1,494,118		1,499,386
Other intangibles	253,243				253,243		262,758
Goodwill	215,254				215,254		215,254
Total assets	17,396,555				17,396,555		16,553,100
Acquisitions
Summarized financial information for the company's segments
Total revenues	667,031		509,639		1,276,973	888,733
Pre-tax Adjusted Operating Income (Loss)	69,810		59,038		144,722	114,558
Operating Segment Assets
Investments and other assets	52,753,065				52,753,065		31,859,520
DAC and VOBA	914,610				914,610		458,977
Other intangibles	38,291				38,291		31,975
Goodwill	23,862				23,862		23,862
Total assets	53,729,828				53,729,828		32,374,334
Annuities
Summarized financial information for the company's segments
Total revenues	100,407		133,177		239,624	283,890
Pre-tax Adjusted Operating Income (Loss)	45,271		55,934		99,487	96,465
Operating Segment Assets
Investments and other assets	21,206,967				21,206,967		20,199,597
DAC and VOBA	890,214				890,214		889,697
Other intangibles	172,420				172,420		156,785
Goodwill	343,247				343,247		343,247
Total assets	22,612,848				22,612,848		21,589,326
Stable Value Products
Summarized financial information for the company's segments
Total revenues	67,585		45,748		127,164	99,616
Pre-tax Adjusted Operating Income (Loss)	28,106		19,992		50,345	49,072
Operating Segment Assets
Investments and other assets	5,688,707				5,688,707		5,107,334
DAC and VOBA	6,877				6,877		6,121
Other intangibles	7,056				7,056		7,389
Goodwill	113,924				113,924		113,924
Total assets	5,816,564				5,816,564		5,234,768
Asset Protection
Summarized financial information for the company's segments
Total revenues	76,014		77,814		152,212	154,189
Pre-tax Adjusted Operating Income (Loss)	9,211		7,166		18,954	13,384
Operating Segment Assets
Investments and other assets	1,055,887				1,055,887		1,019,297
DAC and VOBA	168,738				168,738		168,973
Other intangibles	117,374				117,374		122,590
Goodwill	129,224				129,224		129,224
Total assets	1,471,223				1,471,223		1,440,084
Corporate and Other
Summarized financial information for the company's segments
Total revenues	66,179		62,576		137,933	133,442
Pre-tax Adjusted Operating Income (Loss)	(20,445)		$ (17,797)		(40,119)	$ (38,476)
Operating Segment Assets
Investments and other assets	16,390,407				16,390,407		12,715,208
DAC and VOBA	0				0		0
Other intangibles	28,547				28,547		31,934
Goodwill	0				0		0
Total assets	$ 16,418,954				$ 16,418,954		$ 12,747,142

XML

Label	Element	Value
AOCI Attributable to Parent [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (10,552,000)