Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Summary of Company's fair value hierarchy measured at recurring basis

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2013
Financial Assets
Investments
Fixed maturities
U.S. government and federally sponsored agency obligations:
Mortgage-backed securities	$	613,869	$	613,869	$	-	$	613,869	$	-
Other, including
U.S. Treasury securities		438,305		438,305		20,281		418,024		-
Municipal bonds		1,508,249		1,508,249		-		1,504,485		3,764
Foreign government bonds		55,214		55,214		-		55,214		-
Corporate bonds		2,513,705		2,513,705		10,563		2,446,552		56,590
Other mortgage-backed securities		801,272		801,272		-		751,929		49,343
Total fixed maturities		5,930,614		5,930,614		30,844		5,790,073		109,697
Equity securities		83,040		83,040		66,167		16,867		6
Short-term investments		82,120		82,120		67,249		14,871		-
Totals		6,095,774		6,095,774		164,260		5,821,811		109,703
Separate Account (variable annuity) assets (1)		1,525,509		1,525,509		1,525,509		-		-
Financial Liabilities		-		-		-		-		-

December 31, 2012
Financial Assets
Investments
Fixed maturities
U.S. government and federally sponsored agency obligations:
Mortgage-backed securities	$	619,559	$	619,559	$	-	$	619,559	$	-
Other, including
U.S. Treasury securities		409,428		409,428		18,594		390,834		-
Municipal bonds		1,586,037		1,586,037		-		1,573,762		12,275
Foreign government bonds		57,869		57,869		-		57,869		-
Corporate bonds		2,567,034		2,567,034		11,934		2,469,378		85,722
Other mortgage-backed securities		722,305		722,305		-		689,133		33,172
Total fixed maturities		5,962,232		5,962,232		30,528		5,800,535		131,169
Equity securities		53,503		53,503		43,704		9,459		340
Short-term investments		87,561		87,561		87,561		-		-
Totals		6,103,296		6,103,296		161,793		5,809,994		131,509
Separate Account (variable annuity) assets (1)		1,398,281		1,398,281		1,398,281		-		-
Financial Liabilities		-		-		-		-		-

(1)	Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets.

Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis

	Municipal Bonds		Corporate Bonds		Other Mortgage- Backed Securities		Total Fixed Maturities		Equity Securities		Total
Financial Assets
Beginning balance April 1, 2013	$	15,146	$	55,527	$	33,083	$	103,756	$	340	$	104,096
Transfers into Level 3 (1)		1,000		18,768		35,533		55,301		-		55,301
Transfers out of Level 3 (1)		-		(16,663)		(18,403)		(35,066)		-		(35,066)
Total gains or losses
Net realized gains (losses) included in net income		-		-		-		-		-		-
Net unrealized gains (losses) included in other comprehensive income		(315)		(824)		(291)		(1,430)		-		(1,430)
Purchases		-		-		-		-		-		-
Issuances		-		-		-		-		-		-
Sales		-		-		-		-		(334)		(334)
Settlements		-		-		-		-		-		-
Paydowns, maturities and distributions		(12,067)		(218)		(579)		(12,864)		-		(12,864)
Ending balance, June 30, 2013	$	3,764	$	56,590	$	49,343	$	109,697	$	6	$	109,703

Beginning balance, January 1, 2013	$	12,275	$	85,722	$	33,172	$	131,169	$	340	$	131,509
Transfers into Level 3 (1)		3,907		23,439		43,999		71,345		-		71,345
Transfers out of Level 3 (1)		-		(50,341)		(18,403)		(68,744)		-		(68,744)
Total gains or losses
Net realized gains (losses) included in net income		-		-		-		-		-		-
Net unrealized gains (losses) included in other comprehensive income		(351)		(1,709)		(418)		(2,478)		-		(2,478)
Purchases		-		-		-		-		-		-
Issuances		-		-		-		-		-		-
Sales		-		-		-		-		(334)		(334)
Settlements		-		-		-		-		-		-
Paydowns, maturities and distributions		(12,067)		(521)		(9,007)		(21,595)		-		(21,595)
Ending balance, June 30, 2013	$	3,764	$	56,590	$	49,343	$	109,697	$	6	$	109,703

(1)

Transfers into and out of Level 3 during the periods ended June 30, 2013 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as of the ending date of the reporting period.

	Corporate Bonds		Other Mortgage- Backed Securities		Total Fixed Maturities		Equity Securities		Total
Financial Assets
Beginning balance, April 1, 2012	$	89,920	$	13,065	$	102,985	$	385	$	103,370
Transfers into Level 3 (1)		9,407		-		9,407		-		9,407
Transfers out of Level 3 (1)		(45,460)		-		(45,460)		-		(45,460)
Total gains or losses
Net realized gains (losses) included in net income		-		-		-		-		-
Net unrealized gains (losses) included in other comprehensive income		2,725		9		2,734		-		2,734
Purchases		-		-		-		-		-
Issuances		-		-		-		-		-
Sales		-		-		-		-		-
Settlements		-		-		-		-		-
Paydowns and maturities		(133)		(163)		(296)		-		(296)
Ending balance, June 30, 2012	$	56,459	$	12,911	$	69,370	$	385	$	69,755

Beginning balance, January 1, 2012	$	88,256	$	4,532	$	92,788	$	385	$	93,173
Transfers into Level 3 (1)		18,240		8,504		26,744		-		26,744
Transfers out of Level 3 (1)		(50,707)		-		(50,707)		-		(50,707)
Total gains or losses
Net realized gains (losses) included in net income		-		-		-		-		-
Net unrealized gains (losses) included in other comprehensive income		946		165		1,111		-		1,111
Purchases		-		-		-		-		-
Issuances		-		-		-		-		-
Sales		-		-		-		-		-
Settlements		-		-		-		-		-
Paydowns and maturities		(276)		(290)		(566)		-		(566)
Ending balance, June 30, 2012	$	56,459	$	12,911	$	69,370	$	385	$	69,755

(1)

Transfers into and out of Level 3 during the periods ended June 30, 2012 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as of the ending date of the reporting period.

Carrying value, fair value and fair value hierarchy of financial assets and financial liabilities

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2013
Financial Assets
Investments
Other investments	$	136,632	$	140,062	$	-	$	-	$	140,062
Financial Liabilities
Fixed annuity contract liabilities		3,366,495		3,172,072		-		-		3,172,072
Policyholder account balances on interest-sensitive life contracts		78,732		78,235		-		-		78,235
Other policyholder funds		99,921		99,921		-		-		99,921
Short-term debt		38,000		38,000		-		38,000		-
Long-term debt		199,842		220,484		220,484		-		-
Other liabilities, repurchase agreement obligations		133,980		133,980		-		133,980		-

December 31, 2012
Financial Assets
Investments
Other investments	$	134,985	$	135,121	$	-	$	-	$	135,121
Financial Liabilities
Fixed annuity contract liabilities		3,257,758		3,070,111		-		-		3,070,111
Policyholder account balances on interest-sensitive life contracts		79,017		78,519		-		-		78,519
Other policyholder funds		103,227		103,227		-		-		103,227
Short-term debt		38,000		38,000		-		38,000		-
Long-term debt		199,809		219,319		219,319		-		-

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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- 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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