22. OPERATING SEGMENTS

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, as prescribed in the ASC Segment Reporting Topic, and makes adjustments to its segment reporting as needed. A brief description of each segment follows.

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The Life Marketing segment markets UL, variable universal life, 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, stockbrokers, and independent marketing organizations.

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The Acquisitions segment focuses on acquiring, converting, and servicing policies 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 "closed" blocks of business (no new policies are being marketed). Therefore earnings and account values are expected to decline as the result of lapses, deaths, and other terminations of coverage unless new acquisitions are made.

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

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The Stable Value Products segment sells fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, institutional investors, bank trust departments, and money market funds. 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. Additionally, the Company has contracts outstanding pursuant to a funding agreement-backed notes program registered with the United States Securities and Exchange Commission (the "SEC") which offered notes to both institutional and retail investors.

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The Asset Protection segment markets extended service contracts and credit life and disability insurance to protect consumers' investments in automobiles, watercraft, and recreational vehicles. In addition, the segment markets a guaranteed asset protection ("GAP") product. GAP coverage covers the difference between the loan pay-off amount and an asset's actual cash value in the case of a total loss.

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The Corporate and Other segment primarily consists of net investment income not attributable to the segments above (including the impact of carrying liquidity), expenses not attributable to the segments above (including interest on certain corporate debt), and a trading portfolio that was previously part of a variable interest entity. This segment includes earnings from several non-strategic or runoff lines of business, various investment-related transactions, the operations of several small subsidiaries, and the repurchase of non-recourse funding obligations.

The Company uses the same accounting policies and procedures to measure segment operating income (loss) and assets as it uses to measure consolidated net income available to PLC's common shareowners and assets. Segment operating income (loss) is income before income tax, excluding net realized investment gains and losses (excluding periodic settlements of derivatives associated with debt and certain investments) net of the related amortization of DAC and VOBA. Operating earnings exclude changes in the GMWB embedded derivatives (excluding the portion attributed to economic cost), realized and unrealized gains (losses) on derivatives used to hedge the VA product, actual GMWB incurred claims and net of the related amortization of DAC attributed to each of these items.

In the first quarter of 2012, management revised the definition of operating income (loss) as it relates to certain features of our variable annuity contracts and related hedging activities, to better reflect the basis on which the performance of its business is internally assessed. Under the revised definition, the following items have been excluded from operating income for the historical periods presented within the document:

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Changes in GMWB embedded derivatives related to this rider feature of certain variable annuity products (excluding the portion attributed to economic costs). Economic cost is the long-term expected average cost of providing the product benefit over the life of the policy based on product pricing assumptions. These include assumptions about the economic/market environment, and elective and non-elective policy owner behavior (e.g. lapses, withdrawal timing, mortality, etc.). These features are considered embedded derivatives under ASC 815.

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Changes in value of certain derivative instruments used to mitigate the risk related to variable annuity contracts.

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That portion of the change in balance sheet components amortized over estimated gross profit that is attributed to the embedded GMWB derivative and related economic hedges (e.g. DAC amortization).

Prior periods have been revised to conform to the current period presentation for these changes.

Segment operating income (loss) represents the basis on which the performance of the Company's business is internally assessed by management. Premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC/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.

During the first quarter of 2010, the Company recorded a $7.8 million decrease in reserves related to the final settlement in the runoff Lender's Indemnity line of business within the Asset Protection Division.

During the first quarter of 2011, the Company recorded $8.5 million of pre-tax earnings in the Corporate and Other business segment relating to the settlement of a dispute with respect to certain investments.

There were no significant intersegment transactions during the year ended December 31, 2012, 2011, and 2010.

The following tables summarize financial information for the Company's segments:

		For The Year Ended December 31,

		2012			2011			2010
		(Dollars In Thousands)
Revenues
Life Marketing		$	1,346,933		$	1,301,301		$	1,219,392
Acquisitions			1,064,295			982,821			761,344
Annuities			612,202			634,347			502,236
Stable Value Products			122,849			170,115			167,883
Asset Protection			283,297			277,271			267,126
Corporate and Other			193,430			200,287			179,774

Total revenues		$	3,623,006		$	3,566,142		$	3,097,755

Segment Operating Income (Loss)
Life Marketing		$	105,032		$	96,123		$	123,864
Acquisitions			171,060			157,393			111,143
Annuities			119,092			80,224			52,163
Stable Value Products			60,329			56,780			39,207
Asset Protection			16,454			25,407			31,491
Corporate and Other			(3,203	)		5,767			(25,053	)

Total segment operating income			468,764			421,694			332,815
Realized investment (losses) gains—investments⁽¹⁾⁽³⁾			186,186			181,907			130,359
Realized investment (losses) gains—derivatives⁽²⁾			(201,979	)		(133,370	)		(127,957	)
Income tax expense			(150,519	)		(154,839	)		(109,903	)

Net income available to PLC's common shareowners		$	302,452		$	315,392		$	225,314


⁽¹⁾	Realized investment (losses) gains—investments	$	172,149		$	187,473		$	112,856
	Less: related amortization of DAC/VOBA		(14,037	)		5,566			(17,503	)

		$	186,186		$	181,907		$	130,359

⁽²⁾	Realized investment gains (losses)—derivatives	$	(238,480	)	$	(155,251	)	$	(138,249	)
	Less: settlements on certain interest rate swaps		—			—			168
	Less: derivative activity related to certain annuities		(36,501	)		(21,881	)		(10,460	)

		$	(201,979	)	$	(133,370	)	$	(127,957	)

Net investment income
Life Marketing		$	486,463		$	446,175		$	388,061
Acquisitions			550,334			529,261			458,703
Annuities			504,345			507,230			482,264
Stable Value Products			128,239			145,150			171,327
Asset Protection			24,310			26,501			28,820
Corporate and Other			168,641			166,326			154,501

Total net investment income		$	1,862,332		$	1,820,643		$	1,683,676

Amortization of DAC and VOBA
Life Marketing		$	45,079		$	87,461		$	47,809
Acquisitions			77,251			75,041			64,410
Annuities			45,319			57,201			76
Stable Value Products			947			4,556			5,430
Asset Protection			33,951			38,080			45,544
Corporate and Other			1,018			2,654			1,694

Total amortization of DAC and VOBA		$	203,565		$	264,993		$	164,963

⁽³⁾: Includes credit related other-than-temporary impairments of $58.9 million, $47.4 million, and $41.5 million for the year ended December 31, 2012, 2011, and 2010, respectively.

	Operating Segment Assets As of December 31, 2012

	(Dollars In Thousands)
	Life Marketing		Acquisitions		Annuities		Stable Value Products
Investments and other assets	$	12,171,405	$	11,312,550	$	17,649,488	$	2,509,160
Deferred policy acquisition costs and value of business acquired		2,001,708		679,746		491,184		1,399
Goodwill		10,192		35,615		—		—

Total assets	$	14,183,305	$	12,027,911	$	18,140,672	$	2,510,559

	Asset Protection		Corporate and Other		Adjustments		Total Consolidated

Investments and other assets	$	789,916	$	9,584,411	$	19,662	$	54,036,592
Deferred policy acquisition costs and value of business acquired		64,416		1,066		—		3,239,519
Goodwill		62,671		83		—		108,561

Total assets	$	917,003	$	9,585,560	$	19,662	$	57,384,672

	Operating Segment Assets As of December 31, 2011

	(Dollars In Thousands)
	Life Marketing		Acquisitions		Annuities		Stable Value Products
Investments and other assets	$	10,885,833	$	11,471,856	$	14,945,002	$	2,767,163
Deferred policy acquisition costs and value of business acquired		1,912,916		824,277		435,462		2,347
Goodwill		10,192		38,713		—		—

Total assets	$	12,808,941	$	12,334,846	$	15,380,464	$	2,769,510

	Asset Protection		Corporate and Other		Adjustments		Total Consolidated

Investments and other assets	$	727,417	$	7,964,907	$	21,491	$	48,783,669
Deferred policy acquisition costs and value of business acquired		71,427		1,612		—		3,248,041
Goodwill		62,671		83		—		111,659

Total assets	$	861,515	$	7,966,602	$	21,491	$	52,143,369