Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2013

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

During the three and nine months ended September 30, 2013, the Company had no transfers into or out of Levels 1, 2 or 3.



	December 31, 2012
	Total		Level 1	Level 2	Level 3
	(In thousands)

Debt securities, available for sale	$	2,813,734	—	2,813,734	—
Equity securities, available for sale	12,267		11,968	299	—
Derivatives, index options	57,890		—	57,890	—

Total assets	$	2,883,891	11,968	2,871,923	—

Policyholder account balances (a)	$	72,470	—	72,470	—
Other liabilities (b)	2,718		—	—	2,718

Total liabilities	$	75,188	—	72,470	2,718

(a) Represents the fair value of certain product-related embedded derivatives that were recorded at fair value.

(b) Represents the liability for share-based compensation.

The following tables set forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of the date indicated:



	September 30, 2013
	Total		Level 1	Level 2	Level 3
	(In thousands)

Debt securities, available for sale	$	2,738,977	—	2,738,977	—
Equity securities, available for sale	13,553		12,848	705	—
Derivatives, index options	119,276		—	119,276	—

Total assets	$	2,871,806	12,848	2,858,958	—

Policyholder account balances (a)	$	136,742	—	136,742	—
Other liabilities (b)	4,553		—	—	4,553

Total liabilities	$	141,295	—	136,742	4,553

Schedule of Assets by Pricing Source and Fair Value Hierarchy Measured on Recurring Basis

The following tables present, by pricing source and fair value hierarchy level, the Company’s assets that are measured at fair value on a recurring basis:



	September 30, 2013
	Total			Level 1		Level 2		Level 3
	(In thousands)

Debt securities, available for sale:
Priced by third-party vendors	$	2,738,977		—		2,738,977		—
Priced internally	—			—		—		—
Subtotal	2,738,977			—		2,738,977		—

Equity securities, available for sale:
Priced by third-party vendors	13,553			12,848		705		—
Priced internally	—			—		—		—
Subtotal	13,553			12,848		705		—

Derivatives, index options:
Priced by third-party vendors	119,276			—		119,276		—
Priced internally	—			—		—		—
Subtotal	119,276			—		119,276		—

Total	$	2,871,806		12,848		2,858,958		—

Percent of total	100.0		%	0.4	%	99.6	%	—	%



	December 31, 2012
	Total			Level 1		Level 2		Level 3
	(In thousands)

Debt securities, available for sale:
Priced by third-party vendors	$	2,813,734		—		2,813,734		—
Priced internally	—			—		—		—
Subtotal	2,813,734			—		2,813,734		—

Equity securities, available for sale:
Priced by third-party vendors	12,267			11,968		299		—
Priced internally	—			—		—		—
Subtotal	12,267			11,968		299		—

Derivatives, index options:
Priced by third-party vendors	57,890			—		57,890		—
Priced internally	—			—		—		—
Subtotal	57,890			—		57,890		—

Total	$	2,883,891		11,968		2,871,923		—

Percent of total	100.0		%	0.4	%	99.6	%	—	%

Schedule of Significant Unobservable Inputs for Fair Value Measurements

The following tables provide additional information about fair value measurements for which significant unobservable (Level 3) inputs were utilized to determine fair value.



	For the Three Months Ended September 30, 2013
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Total Assets	Other Liabilities
	(In thousands)

Balance at July 1, 2013	$	—	—	—	4,370
Total realized and unrealized gains (losses):
Included in net income	—		—	—	1,010
Included in other comprehensive income	—		—	—	—
Purchases, sales, issuances and settlements, net	—		—	—	(827	)
Transfers into (out of) Level 3	—		—	—	—

Balance at end of period	$	—	—	—	4,553

Amount of total gains (losses) for the period included in net income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—	—	—	1,601



	For the Three months ended September 30, 2012
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Total Assets	Other Liabilities
	(In thousands)

Balance at July 1, 2012	$	—	—	—	2,217
Total realized and unrealized gains (losses):
Included in net income	—		—	—	(166	)
Included in other comprehensive income	—		—	—	—
Purchases, sales, issuances and settlements, net	—		—	—	(48	)
Transfers into (out of) Level 3	—		—	—	—

Balance at end of period	$	—	—	—	2,003

Amount of total gains (losses) for the period included in net income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—	—	—	(68	)



	Nine Months Ended September 30, 2013
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Total Assets	Other Liabilities
	(In thousands)

Beginning balance, January 1, 2013	$	—	—	—	2,718
Total realized and unrealized gains (losses):
Included in net income	—		—	—	3,976
Included in other comprehensive income	—		—	—	—
Purchases, sales, issuances and settlements, net	—		—	—	(2,141	)
Transfers into (out of) Level 3	—		—	—	—

Balance at end of period	$	—	—	—	4,553

Amount of total gains (losses) for the period included in net income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—	—	—	5,343



	Nine Months Ended September 30, 2012
	Debt Securities, Available for Sale		Equity Securities, Available for Sale		Total Assets		Other Liabilities
	(In thousands)

Beginning balance, January 1, 2012	$	—	8,118		8,118		1,647
Total realized and unrealized gains (losses):
Included in net income	—		—		—		422
Included in other comprehensive income	—		897		897		—
Purchases, sales, issuances and settlements, net	—		—		—		(66	)
Transfers into (out of) Level 3	—		(9,015	)	(9,015	)	—

Balance at end of period	$	—	—		—		2,003

Amount of total gains (losses) for the period included in net income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—	—		—		583

Schedule of Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of the Company's financial instruments are as follows:



	September 30, 2013			December 31, 2012
	Carrying Values		Fair Values	Carrying Values	Fair Values
	(In thousands)
ASSETS
Investments in debt and equity securities:
Securities held to maturity	$	6,345,116	6,574,186	5,962,120	6,503,627
Securities available for sale	2,752,530		2,752,530	2,826,001	2,826,001

Cash and short-term investments	94,458		94,458	124,561	124,561
Mortgage loans	117,091		122,782	142,170	147,365
Policy loans	68,307		68,307	71,549	71,549
Other loans	3,185		3,360	14,997	15,273
Derivatives, index options	119,276		119,276	57,890	57,890
Life interest in Libbie Shearn Moody Trust	—		12,775	—	12,775

LIABILITIES
Deferred annuity contracts	$	7,154,103	6,876,234	6,907,055	6,624,111
Immediate annuity and supplemental contracts	471,825		498,502	492,853	531,857

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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