Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Carrying Amount and Fair Value of Financial Instruments

The carrying amount and fair value of financial instruments are shown below (in thousands):

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Fixed maturity securities, bonds held-to-maturity	$	8,394,157	$	8,668,599	$	8,211,449	$	8,130,084
Fixed maturity securities, bonds available-for-sale	6,842,917		6,842,917		6,215,563		6,215,563
Equity securities	1,672,394		1,672,394		1,530,228		1,530,228
Equity-indexed options	231,044		231,044		148,006		148,006
Mortgage loans on real estate, net of allowance	5,014,710		5,127,595		5,124,707		5,049,468
Policy loans	377,669		377,669		376,254		376,254
Short-term investments	597,183		597,183		206,760		206,760
Separate account assets ($1,012,462 and $905,824 included in fair value hierarchy)	1,028,961		1,028,961		918,369		918,369
Separately managed accounts	30,655		30,655		16,532		16,532
Total financial assets	$	24,189,690	$	24,577,017	$	22,747,868	$	22,591,264
Financial liabilities
Investment contracts	$	10,444,204	$	10,444,204	$	10,003,990	$	10,003,990
Embedded derivative liability for equity-indexed contracts	695,676		695,676		596,075		596,075
Notes payable	159,577		159,577		137,963		137,963
Separate account liabilities ($1,012,462 and $905,824 included in fair value hierarchy)	1,028,961		1,028,961		918,369		918,369
Total financial liabilities	$	12,328,418	$	12,328,418	$	11,656,397	$	11,656,397

Schedule of Significant Unobservable Inputs Used to Calculate Level 3 Fair Value of Embedded Derivatives within Policyholder Contract Deposits

Shown below are the significant unobservable inputs used to calculate the Level 3 fair value of the embedded derivatives within policyholder contract deposits (in millions, except range percentages):

	Fair Value					Range
	June 30, 2019		December 31, 2018		Unobservable Input	June 30, 2019	December 31, 2018
Indexed Annuities	$	680.5	$	592.8	Lapse Rate	1-70%	1-70%
					Mortality Multiplier	90-100%	90-100%
					Equity Volatility	13-30%	19-26%
Indexed Life	15.2		3.3		Equity Volatility	13-30%	19-26%

Quantitative Disclosures Regarding Fair Value Hierarchy Measurements

The carrying value and estimated fair value of financial instruments not recorded at fair value on a recurring basis but required to be disclosed were as follows:

	June 30, 2019
	FV Hierarchy Level	Carrying Amount		Fair Value
Financial assets
Fixed maturity securities, bonds held-to-maturity
U.S. states and political subdivisions	Level 2	$	207,563	$	214,657
Foreign governments	Level 2	3,934		4,426
Corporate debt securities	Level 2 & 3	7,849,211		8,105,793
Residential mortgage-backed securities	Level 2	205,408		212,780
Collateralized debt securities	Level 2	127,892		130,793
Other debt securities	Level 2	149		150
Total fixed maturity securities, bonds held-to-maturity		8,394,157		8,668,599
Mortgage loans on real estate, net allowance	Level 3	5,014,710		5,127,595
Policy loans	Level 3	377,669		377,669
Separately managed accounts	Level 3	30,655		30,655
Total financial assets		$	13,817,191	$	14,204,518
Financial liabilities
Investment contracts	Level 3	$	10,444,204	$	10,444,204
Notes payable	Level 3	159,577		159,577
Total financial liabilities		$	10,603,781	$	10,603,781

	December 31, 2018
	FV Hierarchy Level	Carrying Amount		Fair Value
Financial assets
Fixed maturity securities, bonds held-to-maturity
U.S. states and political subdivisions	Level 2	$	245,360	$	250,899
Foreign governments	Level 2	3,961		4,430
Corporate debt securities	Level 2	7,640,891		7,548,829
Residential mortgage-backed securities	Level 2	315,306		319,910
Collateralized debt securities	Level 2	5,214		5,285
Other debt securities	Level 2	717		731
Total fixed maturity securities, bonds held-to-maturity		8,211,449		8,130,084
Mortgage loans on real estate, net allowance	Level 3	5,124,707		5,049,468
Policy loans	Level 3	376,254		376,254
Separately managed accounts	Level 3	16,532		16,532
Total financial assets		$	13,728,942	$	13,572,338
Financial liabilities
Investment contracts	Level 3	$	10,003,990	$	10,003,990
Notes payable	Level 3	137,963		137,963
Total financial liabilities		$	10,141,953	$	10,141,953

The fair value hierarchy measurements of the financial instruments are shown below (in thousands):

	Assets and Liabilities Carried at Fair Value by Hierarchy Level as of June 30, 2019
	Total Fair Value		Level 1		Level 2		Level 3
Financial assets
Fixed maturity securities, bonds available-for-sale
U.S. treasury and government	$	28,745	$	—	$	28,745	$	—
U.S. states and political subdivisions	1,106,031		—		1,106,031		—
Foreign governments	6,361		—		6,361		—
Corporate debt securities	5,666,546		—		5,662,313		4,233
Residential mortgage-backed securities	24,685		—		24,685		—
Collateralized debt securities	10,549		—		10,549		—
Total bonds available-for-sale	6,842,917		—		6,838,684		4,233
Equity securities
Common stock	1,651,398		1,651,285		—		113
Preferred stock	20,996		20,996		—		—
Total equity securities	1,672,394		1,672,281		—		113
Options	231,044		—		—		231,044
Short-term investments	597,183		—		597,183		—
Separate account assets	1,012,462		253,053		759,409		—
Total financial assets	$	10,356,000	$	1,925,334	$	8,195,276	$	235,390
Financial liabilities
Embedded derivative liability for equity-indexed contracts	$	695,676	$	—	$	—	$	695,676
Separate account liabilities	1,012,462		253,053		759,409		—
Total financial liabilities	$	1,708,138	$	253,053	$	759,409	$	695,676

	Assets and Liabilities Carried at Fair Value by Hierarchy Level as of December 31, 2018
	Total Fair Value		Level 1		Level 2		Level 3
Financial assets
Fixed maturity securities, bonds available-for-sale
U.S. treasury and government	$	28,399	$	—	$	28,399	$	—
U.S. states and political subdivisions	862,030		—		862,030		—
Foreign governments	6,210		—		6,210		—
Corporate debt securities	5,283,818		—		5,279,585		4,233
Residential mortgage-backed securities	31,662		—		31,662		—
Collateralized debt securities	3,444		—		3,444		—
Total bonds available-for-sale	6,215,563		—		6,211,330		4,233
Equity securities
Common stock	1,509,186		1,509,073		—		113
Preferred stock	21,042		21,042		—		—
Total equity securities	1,530,228		1,530,115		—		113
Options	148,006		—		—		148,006
Short-term investments	206,760		—		206,760		—
Separate account assets	905,824		227,448		678,376		—
Total financial assets	$	9,006,381	$	1,757,563	$	7,096,466	$	152,352
Financial liabilities
Embedded derivative liability for equity-indexed contracts	$	596,075	$	—	$	—	$	596,075
Separate account liabilities	905,824		227,448		678,376		—
Total financial liabilities	$	1,501,899	$	227,448	$	678,376	$	596,075

Financial Instruments Measured at Fair Value on Recurring Basis Using (Level 3) Inputs

For financial instruments measured at fair value on a recurring basis using Level 3 inputs during the period, a reconciliation of the beginning and ending balances is shown below (in thousands):

	Level 3
	Three months ended June 30, 2019								Six months ended June 30, 2019
	Assets					Liability			Assets					Liability
	Investment Securities		Equity-Indexed Options			Embedded Derivative			Investment Securities		Equity-Indexed Options			Embedded Derivative
Beginning balance at January 1, 2019	$	4,346	$	216,156		$	668,485		$	4,346	$	148,006		$	596,075
Net gain for derivatives included in net investment  income	—		23,125			—			—		89,610			—
Net change included in interest credited	—		—			36,255			—		—			94,411
Purchases, sales and settlements or maturities
Purchases	—		21,412			—			—		38,768			—
Settlements or maturities	—		(29,649		)	—			—		(45,340		)	—
Premiums less benefits	—		—			(9,064		)	—		—			5,190
Ending balance at June 30, 2019	$	4,346	$	231,044		$	695,676		$	4,346	$	231,044		$	695,676
Beginning balance at January 1, 2018	$	—	$	204,308		$	535,641		$	—	$	220,190		$	512,526
Net gain for derivatives included in net investment  income	—		21,712			—			—		7,567			—
Net change included in interest credited	—		—			17,599			—		—			4,163
Purchases, sales and settlements or maturities
Purchases	—		26,084			—			—		43,012			—
Settlements or maturities	—		(34,763		)	—			—		(53,428		)	—
Premiums less benefits	—		—			39,673			—		—			76,224
Ending balance at June 30, 2018	$	—	$	217,341		$	592,913		$	—	$	217,341		$	592,913