x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Iowa
|
|
42-1447959
|
(State of Incorporation)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
6000 Westown Parkway
West Des Moines, Iowa
|
|
50266
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
|
Registrant's telephone number, including area code
|
|
(515) 221-0002
|
|
|
(Telephone)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, par value $1
|
|
New York Stock Exchange
|
Large accelerated filer
o
|
|
Accelerated filer
x
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
(Do not check if a smaller reporting company)
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
||||
Available for sale, at fair value (amortized cost: 2011 - $15,323,420; 2010 - $15,621,894)
|
$
|
15,682,872
|
|
|
$
|
15,830,663
|
|
Held for investment, at amortized cost (fair value: 2011 - $2,124,918; 2010 - $781,748)
|
2,135,968
|
|
|
822,200
|
|
||
Equity securities, available for sale, at fair value (cost: 2011 - $59,196; 2010 - $61,185)
|
66,612
|
|
|
65,961
|
|
||
Mortgage loans on real estate
|
2,798,233
|
|
|
2,598,641
|
|
||
Derivative instruments
|
537,920
|
|
|
479,786
|
|
||
Other investments
|
26,030
|
|
|
19,680
|
|
||
Total investments
|
21,247,635
|
|
|
19,816,931
|
|
||
|
|
|
|
||||
Cash and cash equivalents
|
949,484
|
|
|
597,766
|
|
||
Coinsurance deposits
|
2,699,158
|
|
|
2,613,191
|
|
||
Accrued investment income
|
215,457
|
|
|
167,645
|
|
||
Deferred policy acquisition costs
|
1,825,392
|
|
|
1,747,760
|
|
||
Deferred sales inducements
|
1,326,984
|
|
|
1,227,328
|
|
||
Deferred income taxes
|
185,152
|
|
|
143,253
|
|
||
Income taxes recoverable
|
9,442
|
|
|
6,134
|
|
||
Other assets
|
108,067
|
|
|
106,755
|
|
||
Total assets
|
$
|
28,566,771
|
|
|
$
|
26,426,763
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Policy benefit reserves
|
$
|
25,940,513
|
|
|
$
|
23,655,807
|
|
Other policy funds and contract claims
|
318,420
|
|
|
222,860
|
|
||
Notes payable
|
337,239
|
|
|
330,835
|
|
||
Subordinated debentures
|
268,512
|
|
|
268,435
|
|
||
Other liabilities
|
662,555
|
|
|
1,010,779
|
|
||
Total liabilities
|
27,527,239
|
|
|
25,488,716
|
|
||
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, no par value, 2,000,000 shares authorized, 2011 and 2010 no shares issued and oustanding
|
—
|
|
|
—
|
|
||
Common stock, par value $1 per share, 125,000,000 shares authorized; issued and outstanding:
2011 - 57,832,075 shares (excluding 5,568,860 treasury shares); 2010 - 56,968,446 shares (excluding 5,874,392 treasury shares)
|
57,832
|
|
|
56,968
|
|
||
Additional paid-in capital
|
463,245
|
|
|
454,454
|
|
||
Unallocated common stock held by ESOP; 2011 - 395,859 shares; 2010 - 447,048 shares
|
(4,264
|
)
|
|
(4,815
|
)
|
||
Accumulated other comprehensive income
|
123,482
|
|
|
81,820
|
|
||
Retained earnings
|
399,237
|
|
|
349,620
|
|
||
Total stockholders' equity
|
1,039,532
|
|
|
938,047
|
|
||
Total liabilities and stockholders' equity
|
$
|
28,566,771
|
|
|
$
|
26,426,763
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Traditional life and accident and health insurance premiums
|
$
|
3,289
|
|
|
$
|
2,643
|
|
|
$
|
6,205
|
|
|
$
|
5,930
|
|
Annuity product charges
|
19,892
|
|
|
18,617
|
|
|
36,854
|
|
|
34,135
|
|
||||
Net investment income
|
296,878
|
|
|
254,845
|
|
|
589,006
|
|
|
497,755
|
|
||||
Change in fair value of derivatives
|
(22,029
|
)
|
|
(208,737
|
)
|
|
126,624
|
|
|
(126,722
|
)
|
||||
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses
|
(854
|
)
|
|
1,063
|
|
|
(2,047
|
)
|
|
10,966
|
|
||||
OTTI losses on investments:
|
|
|
|
|
|
|
|
||||||||
Total OTTI losses
|
(113
|
)
|
|
(1,603
|
)
|
|
(5,213
|
)
|
|
(14,187
|
)
|
||||
Portion of OTTI losses recognized in (from) other comprehensive income
|
(2,116
|
)
|
|
785
|
|
|
(3,587
|
)
|
|
10,146
|
|
||||
Net OTTI losses recognized in operations
|
(2,229
|
)
|
|
(818
|
)
|
|
(8,800
|
)
|
|
(4,041
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
(292
|
)
|
|
—
|
|
|
(292
|
)
|
||||
Total revenues
|
294,947
|
|
|
67,321
|
|
|
747,842
|
|
|
417,731
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Benefits and expenses:
|
|
|
|
|
|
|
|
||||||||
Insurance policy benefits and change in future policy benefits
|
2,499
|
|
|
2,169
|
|
|
4,394
|
|
|
4,501
|
|
||||
Interest sensitive and index product benefits
|
238,420
|
|
|
228,818
|
|
|
398,085
|
|
|
425,687
|
|
||||
Amortization of deferred sales inducements
|
20,265
|
|
|
3,243
|
|
|
50,957
|
|
|
16,332
|
|
||||
Change in fair value of embedded derivatives
|
(60,963
|
)
|
|
(190,211
|
)
|
|
67,340
|
|
|
(126,336
|
)
|
||||
Interest expense on notes payable
|
7,832
|
|
|
4,673
|
|
|
15,739
|
|
|
9,324
|
|
||||
Interest expense on subordinated debentures
|
3,481
|
|
|
3,716
|
|
|
6,947
|
|
|
7,401
|
|
||||
Interest expense on amounts due under repurchase agreements
|
1
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Amortization of deferred policy acquisition costs
|
38,862
|
|
|
917
|
|
|
94,085
|
|
|
28,185
|
|
||||
Other operating costs and expenses
|
16,634
|
|
|
16,702
|
|
|
34,108
|
|
|
32,687
|
|
||||
Total benefits and expenses
|
267,031
|
|
|
70,027
|
|
|
671,660
|
|
|
397,781
|
|
||||
Income (loss) before income taxes
|
27,916
|
|
|
(2,706
|
)
|
|
76,182
|
|
|
19,950
|
|
||||
Income tax expense (benefit)
|
9,642
|
|
|
(1,202
|
)
|
|
26,565
|
|
|
6,569
|
|
||||
Net income (loss)
|
$
|
18,274
|
|
|
$
|
(1,504
|
)
|
|
$
|
49,617
|
|
|
$
|
13,381
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share
|
$
|
0.31
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.84
|
|
|
$
|
0.23
|
|
Earnings (loss) per common share - assuming dilution
|
$
|
0.28
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.77
|
|
|
$
|
0.23
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Unallocated
Common
Stock Held
by ESOP
|
|
Accumulated
Other
Comprehensive
Income (Loss) |
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2010
|
$
|
56,968
|
|
|
$
|
454,454
|
|
|
$
|
(4,815
|
)
|
|
$
|
81,820
|
|
|
$
|
349,620
|
|
|
$
|
938,047
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income for period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,617
|
|
|
49,617
|
|
||||||
Change in net unrealized investment gains/losses
|
—
|
|
|
—
|
|
|
—
|
|
|
40,687
|
|
|
—
|
|
|
40,687
|
|
||||||
Noncredit component of OTTI losses, available for sale securities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
975
|
|
|
—
|
|
|
975
|
|
||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
91,279
|
|
|||||||||||
Acquisition of 500 shares of common stock
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||||
Allocation of 51,189 shares of common stock by ESOP, including excess income tax benefits
|
—
|
|
|
69
|
|
|
551
|
|
|
—
|
|
|
—
|
|
|
620
|
|
||||||
Share-based compensation, including excess income tax benefits
|
—
|
|
|
5,229
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,229
|
|
||||||
Issuance of 864,129 shares of common stock under compensation plans, including excess income tax benefits
|
864
|
|
|
3,499
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,363
|
|
||||||
Balance at June 30, 2011
|
$
|
57,832
|
|
|
$
|
463,245
|
|
|
$
|
(4,264
|
)
|
|
$
|
123,482
|
|
|
$
|
399,237
|
|
|
$
|
1,039,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2009
|
$
|
56,203
|
|
|
$
|
422,225
|
|
|
$
|
(5,679
|
)
|
|
$
|
(30,456
|
)
|
|
$
|
312,330
|
|
|
$
|
754,623
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income for period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,381
|
|
|
13,381
|
|
||||||
Change in net unrealized investment gains/losses
|
—
|
|
|
—
|
|
|
—
|
|
|
146,867
|
|
|
—
|
|
|
146,867
|
|
||||||
Noncredit component of OTTI losses, available for sale securities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,762
|
)
|
|
—
|
|
|
(2,762
|
)
|
||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
157,486
|
|
|||||||||||
Conversion of $60 of subordinated debentures
|
7
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
||||||
Acquisition of 6,300 shares of common stock
|
(6
|
)
|
|
(44
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
||||||
Allocation of 29,745 shares of common stock by ESOP, including excess income tax benefits
|
—
|
|
|
(27
|
)
|
|
321
|
|
|
—
|
|
|
—
|
|
|
294
|
|
||||||
Share-based compensation, including excess income tax benefits
|
—
|
|
|
4,150
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,150
|
|
||||||
Issuance of 377,215 shares of common stock under compensation plans, including excess income tax benefits
|
377
|
|
|
1,546
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,923
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(13
|
)
|
||||||
Balance at June 30, 2010
|
$
|
56,581
|
|
|
$
|
427,899
|
|
|
$
|
(5,358
|
)
|
|
$
|
113,649
|
|
|
$
|
325,698
|
|
|
$
|
918,469
|
|
|
Six Months Ended June 30,
|
||||||
|
2011
|
|
2010
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
49,617
|
|
|
$
|
13,381
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Interest sensitive and index product benefits
|
398,085
|
|
|
425,687
|
|
||
Amortization of deferred sales inducements
|
50,957
|
|
|
16,332
|
|
||
Annuity product charges
|
(36,854
|
)
|
|
(34,135
|
)
|
||
Change in fair value of embedded derivatives
|
67,340
|
|
|
(126,336
|
)
|
||
Increase in traditional life and accident and health insurance reserves
|
45,720
|
|
|
11,616
|
|
||
Policy acquisition costs deferred
|
(222,358
|
)
|
|
(155,813
|
)
|
||
Amortization of deferred policy acquisition costs
|
94,085
|
|
|
28,185
|
|
||
Provision for depreciation and other amortization
|
9,292
|
|
|
4,744
|
|
||
Amortization of discounts and premiums on investments
|
(78,582
|
)
|
|
(122,658
|
)
|
||
Realized gains on investments and net OTTI losses recognized
|
10,847
|
|
|
(6,925
|
)
|
||
Change in fair value of derivatives
|
(127,799
|
)
|
|
125,469
|
|
||
Deferred income taxes
|
(64,332
|
)
|
|
(68,812
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
292
|
|
||
Share-based compensation
|
4,181
|
|
|
3,975
|
|
||
Change in accrued investment income
|
(47,812
|
)
|
|
637
|
|
||
Change in income taxes recoverable/payable
|
(3,308
|
)
|
|
118,267
|
|
||
Change in other assets
|
2,182
|
|
|
6,641
|
|
||
Change in other policy funds and contract claims
|
95,560
|
|
|
34,767
|
|
||
Change in collateral held for derivatives
|
12,910
|
|
|
(244,816
|
)
|
||
Change in other liabilities
|
(74,889
|
)
|
|
(16,479
|
)
|
||
Other
|
703
|
|
|
255
|
|
||
Net cash provided by operating activities
|
185,545
|
|
|
14,274
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
||||
Sales, maturities, or repayments of investments:
|
|
|
|
||||
Fixed maturity securities - available for sale
|
3,244,966
|
|
|
2,038,295
|
|
||
Fixed maturity securities - held for investment
|
—
|
|
|
892,464
|
|
||
Equity securities - available for sale
|
2,958
|
|
|
23,020
|
|
||
Mortgage loans on real estate
|
86,079
|
|
|
53,277
|
|
||
Derivative instruments
|
275,473
|
|
|
307,799
|
|
||
Other investments
|
57
|
|
|
—
|
|
||
Acquisition of investments:
|
|
|
|
||||
Fixed maturity securities - available for sale
|
(3,189,624
|
)
|
|
(3,641,409
|
)
|
||
Fixed maturity securities - held for investment
|
(1,279,831
|
)
|
|
—
|
|
||
Equity securities - available for sale
|
—
|
|
|
(10,125
|
)
|
||
Mortgage loans on real estate
|
(296,884
|
)
|
|
(137,301
|
)
|
||
Derivative instruments
|
(189,759
|
)
|
|
(156,318
|
)
|
||
Other investments
|
(1,660
|
)
|
|
(81
|
)
|
||
Purchases of property, furniture and equipment
|
(3,552
|
)
|
|
(4,985
|
)
|
||
Net cash used in investing activities
|
(1,351,777
|
)
|
|
(635,364
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2011
|
|
2010
|
||||
Financing activities
|
|
|
|
||||
Receipts credited to annuity policyholder account balances
|
$
|
2,450,646
|
|
|
$
|
1,893,642
|
|
Coinsurance deposits
|
(37,196
|
)
|
|
(158,442
|
)
|
||
Return of annuity policyholder account balances
|
(898,472
|
)
|
|
(788,938
|
)
|
||
Financing fees incurred and deferred
|
(1,566
|
)
|
|
—
|
|
||
Repayments of notes payable
|
—
|
|
|
(6,641
|
)
|
||
Acquisition of common stock
|
(6
|
)
|
|
(50
|
)
|
||
Excess tax benefits realized from share-based compensation plans
|
1,117
|
|
|
250
|
|
||
Proceeds from issuance of common stock
|
4,255
|
|
|
1,864
|
|
||
Change in checks in excess of cash balance
|
(828
|
)
|
|
(3,222
|
)
|
||
Net cash provided by financing activities
|
1,517,950
|
|
|
938,463
|
|
||
Increase in cash and cash equivalents
|
351,718
|
|
|
317,373
|
|
||
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
597,766
|
|
|
528,002
|
|
||
Cash and cash equivalents at end of period
|
$
|
949,484
|
|
|
$
|
845,375
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information
|
|
|
|
||||
Cash paid during period for:
|
|
|
|
||||
Interest expense
|
$
|
15,210
|
|
|
$
|
12,983
|
|
Income taxes
|
93,200
|
|
|
56,488
|
|
||
Income tax refunds received
|
—
|
|
|
100,000
|
|
||
Non-cash operating activity:
|
|
|
|
||||
Deferral of sales inducements
|
189,200
|
|
|
151,079
|
|
||
Non-cash investing activity:
|
|
|
|
||||
Real estate acquired in satisfaction of mortgage loans
|
6,308
|
|
|
4,300
|
|
||
Mortgage loan on real estate sold
|
1,215
|
|
|
—
|
|
||
Non-cash financing activities:
|
|
|
|
||||
Conversion of subordinated debentures
|
—
|
|
|
56
|
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
||||||||
Available for sale
|
|
$
|
15,682,872
|
|
|
$
|
15,682,872
|
|
|
$
|
15,830,663
|
|
|
$
|
15,830,663
|
|
Held for investment
|
|
2,135,968
|
|
|
2,124,918
|
|
|
822,200
|
|
|
781,748
|
|
||||
Equity securities, available for sale
|
|
66,612
|
|
|
66,612
|
|
|
65,961
|
|
|
65,961
|
|
||||
Mortgage loans on real estate
|
|
2,798,233
|
|
|
2,856,400
|
|
|
2,598,641
|
|
|
2,670,009
|
|
||||
Derivative instruments
|
|
537,920
|
|
|
537,920
|
|
|
479,786
|
|
|
479,786
|
|
||||
Other investments
|
|
2,120
|
|
|
2,185
|
|
|
558
|
|
|
558
|
|
||||
Cash and cash equivalents
|
|
949,484
|
|
|
949,484
|
|
|
597,766
|
|
|
597,766
|
|
||||
Coinsurance deposits
|
|
2,699,158
|
|
|
2,394,311
|
|
|
2,613,191
|
|
|
2,282,998
|
|
||||
2015 notes hedges
|
|
63,141
|
|
|
63,141
|
|
|
66,595
|
|
|
66,595
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Policy benefit reserves
|
|
25,702,884
|
|
|
21,448,934
|
|
|
23,464,810
|
|
|
19,594,396
|
|
||||
Notes payable
|
|
337,239
|
|
|
480,635
|
|
|
330,835
|
|
|
489,097
|
|
||||
Subordinated debentures
|
|
268,512
|
|
|
246,502
|
|
|
268,435
|
|
|
213,369
|
|
||||
2015 notes embedded derivatives
|
|
63,141
|
|
|
63,141
|
|
|
66,595
|
|
|
66,595
|
|
||||
Interest rate swaps
|
|
937
|
|
|
937
|
|
|
1,976
|
|
|
1,976
|
|
|
|
Total
Fair Value
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
|
$
|
4,419
|
|
|
$
|
4,419
|
|
|
$
|
—
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
|
1,152,300
|
|
|
—
|
|
|
1,152,300
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
|
2,763,142
|
|
|
—
|
|
|
2,763,142
|
|
|
—
|
|
||||
Corporate securities
|
|
8,657,083
|
|
|
61,324
|
|
|
8,595,759
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
|
2,827,512
|
|
|
—
|
|
|
2,825,319
|
|
|
2,193
|
|
||||
Other asset backed securities
|
|
278,416
|
|
|
—
|
|
|
278,416
|
|
|
—
|
|
||||
Equity securities, available for sale: finance, insurance and real estate
|
|
66,612
|
|
|
46,842
|
|
|
19,770
|
|
|
—
|
|
||||
Derivative instruments
|
|
537,920
|
|
|
—
|
|
|
537,920
|
|
|
—
|
|
||||
Cash and cash equivalents
|
|
949,484
|
|
|
949,484
|
|
|
—
|
|
|
—
|
|
||||
2015 notes hedges
|
|
63,141
|
|
|
—
|
|
|
63,141
|
|
|
—
|
|
||||
|
|
$
|
17,300,029
|
|
|
$
|
1,062,069
|
|
|
$
|
16,235,767
|
|
|
$
|
2,193
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
|
$
|
937
|
|
|
$
|
—
|
|
|
$
|
937
|
|
|
$
|
—
|
|
2015 notes embedded derivatives
|
|
63,141
|
|
|
—
|
|
|
63,141
|
|
|
—
|
|
||||
Fixed index annuities - embedded derivatives
|
|
2,368,533
|
|
|
—
|
|
|
—
|
|
|
2,368,533
|
|
||||
|
|
$
|
2,432,611
|
|
|
$
|
—
|
|
|
$
|
64,078
|
|
|
$
|
2,368,533
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2010
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
|
$
|
4,388
|
|
|
$
|
4,388
|
|
|
$
|
—
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
|
3,003,651
|
|
|
—
|
|
|
3,003,651
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
|
2,367,003
|
|
|
—
|
|
|
2,367,003
|
|
|
—
|
|
||||
Corporate securities
|
|
7,372,537
|
|
|
71,230
|
|
|
7,301,307
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
|
2,878,557
|
|
|
—
|
|
|
2,875,855
|
|
|
2,702
|
|
||||
Other asset backed securities
|
|
204,527
|
|
|
—
|
|
|
204,527
|
|
|
—
|
|
||||
Equity securities, available for sale: finance, insurance and real estate
|
|
65,961
|
|
|
46,925
|
|
|
19,036
|
|
|
—
|
|
||||
Derivative instruments
|
|
479,786
|
|
|
—
|
|
|
479,786
|
|
|
—
|
|
||||
Cash and cash equivalents
|
|
597,766
|
|
|
597,766
|
|
|
—
|
|
|
—
|
|
||||
2015 notes hedges
|
|
66,595
|
|
|
—
|
|
|
66,595
|
|
|
—
|
|
||||
|
|
$
|
17,040,771
|
|
|
$
|
720,309
|
|
|
$
|
16,317,760
|
|
|
$
|
2,702
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
|
$
|
1,976
|
|
|
$
|
—
|
|
|
$
|
1,976
|
|
|
$
|
—
|
|
2015 notes embedded derivatives
|
|
66,595
|
|
|
—
|
|
|
66,595
|
|
|
—
|
|
||||
Fixed index annuities - embedded derivatives
|
|
1,971,383
|
|
|
—
|
|
|
—
|
|
|
1,971,383
|
|
||||
|
|
$
|
2,039,954
|
|
|
$
|
—
|
|
|
$
|
68,571
|
|
|
$
|
1,971,383
|
|
•
|
reported trading prices,
|
•
|
benchmark yields
|
•
|
broker-dealer quotes,
|
•
|
benchmark securities,
|
•
|
bids and offers,
|
•
|
credit ratings,
|
•
|
relative credit information, and
|
•
|
other reference data.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Available for sale securities
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
4,301
|
|
|
$
|
18,909
|
|
|
$
|
2,702
|
|
|
$
|
17,918
|
|
Sales
|
—
|
|
|
(14,838
|
)
|
|
—
|
|
|
(14,838
|
)
|
||||
Principal returned
|
(78
|
)
|
|
(157
|
)
|
|
(266
|
)
|
|
(314
|
)
|
||||
(Amortization)/accretion of premium/discount
|
(4
|
)
|
|
10
|
|
|
8
|
|
|
32
|
|
||||
Reclassification
|
(1,600
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
||||||||
Included in other comprehensive income (loss)
|
104
|
|
|
7,216
|
|
|
279
|
|
|
8,342
|
|
||||
Included in operations
|
(530
|
)
|
|
(2,230
|
)
|
|
(530
|
)
|
|
(2,230
|
)
|
||||
Ending balance
|
$
|
2,193
|
|
|
$
|
8,910
|
|
|
$
|
2,193
|
|
|
$
|
8,910
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Fixed index annuities - embedded derivatives
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
2,242,000
|
|
|
$
|
1,526,117
|
|
|
$
|
1,971,383
|
|
|
$
|
1,375,866
|
|
Premiums less benefits
|
251,733
|
|
|
251,587
|
|
|
467,676
|
|
|
414,735
|
|
||||
Change in unrealized gains, net
|
(125,200
|
)
|
|
(295,275
|
)
|
|
(70,526
|
)
|
|
(308,172
|
)
|
||||
Ending balance
|
$
|
2,368,533
|
|
|
$
|
1,482,429
|
|
|
$
|
2,368,533
|
|
|
$
|
1,482,429
|
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
|
$
|
4,083
|
|
|
$
|
345
|
|
|
$
|
(9
|
)
|
|
$
|
4,419
|
|
United States Government sponsored agencies
|
|
1,137,254
|
|
|
15,390
|
|
|
(344
|
)
|
|
1,152,300
|
|
||||
United States municipalities, states and territories
|
|
2,723,736
|
|
|
66,969
|
|
|
(27,563
|
)
|
|
2,763,142
|
|
||||
Corporate securities
|
|
8,362,716
|
|
|
422,447
|
|
|
(128,080
|
)
|
|
8,657,083
|
|
||||
Residential mortgage backed securities
|
|
2,820,507
|
|
|
100,566
|
|
|
(93,561
|
)
|
|
2,827,512
|
|
||||
Other asset backed securities
|
|
275,124
|
|
|
8,933
|
|
|
(5,641
|
)
|
|
278,416
|
|
||||
|
|
$
|
15,323,420
|
|
|
$
|
614,650
|
|
|
$
|
(255,198
|
)
|
|
$
|
15,682,872
|
|
|
|
|
|
|
|
|
|
|
||||||||
Held for investment:
|
|
|
|
|
|
|
|
|
||||||||
United States Government sponsored agencies
|
|
$
|
2,060,110
|
|
|
$
|
10,172
|
|
|
$
|
(407
|
)
|
|
$
|
2,069,875
|
|
Corporate security
|
|
75,858
|
|
|
—
|
|
|
(20,815
|
)
|
|
55,043
|
|
||||
|
|
$
|
2,135,968
|
|
|
$
|
10,172
|
|
|
$
|
(21,222
|
)
|
|
$
|
2,124,918
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
|
|
||||||||
Finance, insurance, and real estate
|
|
$
|
59,196
|
|
|
$
|
8,370
|
|
|
$
|
(954
|
)
|
|
$
|
66,612
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2010
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
|
$
|
4,082
|
|
|
$
|
324
|
|
|
$
|
(18
|
)
|
|
$
|
4,388
|
|
United States Government sponsored agencies
|
|
2,994,174
|
|
|
11,123
|
|
|
(1,646
|
)
|
|
3,003,651
|
|
||||
United States municipalities, states and territories
|
|
2,397,622
|
|
|
22,765
|
|
|
(53,384
|
)
|
|
2,367,003
|
|
||||
Corporate securities
|
|
7,124,316
|
|
|
380,124
|
|
|
(131,903
|
)
|
|
7,372,537
|
|
||||
Residential mortgage backed securities
|
|
2,900,028
|
|
|
86,950
|
|
|
(108,421
|
)
|
|
2,878,557
|
|
||||
Other asset backed securities
|
|
201,672
|
|
|
7,792
|
|
|
(4,937
|
)
|
|
204,527
|
|
||||
|
|
$
|
15,621,894
|
|
|
$
|
509,078
|
|
|
$
|
(300,309
|
)
|
|
$
|
15,830,663
|
|
|
|
|
|
|
|
|
|
|
||||||||
Held for investment:
|
|
|
|
|
|
|
|
|
||||||||
United States Government sponsored agencies
|
|
$
|
746,414
|
|
|
$
|
—
|
|
|
$
|
(15,309
|
)
|
|
$
|
731,105
|
|
Corporate security
|
|
75,786
|
|
|
—
|
|
|
(25,143
|
)
|
|
50,643
|
|
||||
|
|
$
|
822,200
|
|
|
$
|
—
|
|
|
$
|
(40,452
|
)
|
|
$
|
781,748
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
|
|
||||||||
Finance, insurance, and real estate
|
|
$
|
61,185
|
|
|
$
|
6,722
|
|
|
$
|
(1,946
|
)
|
|
$
|
65,961
|
|
|
|
Available-for-sale
|
|
Held for investment
|
||||||||||||
|
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Due in one year or less
|
|
$
|
28,157
|
|
|
$
|
28,971
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
|
416,992
|
|
|
470,079
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
|
1,858,825
|
|
|
2,039,722
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
|
3,830,178
|
|
|
3,916,472
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
|
6,093,637
|
|
|
6,121,700
|
|
|
2,135,968
|
|
|
2,124,918
|
|
||||
|
|
12,227,789
|
|
|
12,576,944
|
|
|
2,135,968
|
|
|
2,124,918
|
|
||||
Residential mortgage backed securities
|
|
2,820,507
|
|
|
2,827,512
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
|
275,124
|
|
|
278,416
|
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
15,323,420
|
|
|
$
|
15,682,872
|
|
|
$
|
2,135,968
|
|
|
$
|
2,124,918
|
|
|
|
June 30,
2011 |
|
December 31,
2010 |
||||
|
|
(Dollars in thousands)
|
||||||
Net unrealized gains on available for sale fixed maturity securities and equity securities
|
|
$
|
366,868
|
|
|
$
|
213,545
|
|
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements
|
|
(211,564
|
)
|
|
(122,336
|
)
|
||
Deferred income tax valuation allowance reversal
|
|
22,534
|
|
|
22,534
|
|
||
Deferred income tax benefit
|
|
(54,356
|
)
|
|
(31,923
|
)
|
||
Net unrealized gains reported as accumulated other comprehensive income
|
|
$
|
123,482
|
|
|
$
|
81,820
|
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
|
$
|
558
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
558
|
|
|
$
|
(9
|
)
|
United States Government sponsored agencies
|
|
$
|
53,253
|
|
|
$
|
(344
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
53,253
|
|
|
$
|
(344
|
)
|
United States municipalities, states and territories
|
|
945,652
|
|
|
(27,181
|
)
|
|
8,554
|
|
|
(382
|
)
|
|
954,206
|
|
|
(27,563
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
|
608,845
|
|
|
(23,541
|
)
|
|
86,065
|
|
|
(7,415
|
)
|
|
694,910
|
|
|
(30,956
|
)
|
||||||
Manufacturing, construction and mining
|
|
1,203,704
|
|
|
(41,396
|
)
|
|
12,998
|
|
|
(1,874
|
)
|
|
1,216,702
|
|
|
(43,270
|
)
|
||||||
Utilities and related sectors
|
|
1,046,966
|
|
|
(37,300
|
)
|
|
15,833
|
|
|
(2,855
|
)
|
|
1,062,799
|
|
|
(40,155
|
)
|
||||||
Wholesale/retail trade
|
|
173,230
|
|
|
(5,147
|
)
|
|
9,150
|
|
|
(1,324
|
)
|
|
182,380
|
|
|
(6,471
|
)
|
||||||
Services, media and other
|
|
235,752
|
|
|
(7,228
|
)
|
|
—
|
|
|
—
|
|
|
235,752
|
|
|
(7,228
|
)
|
||||||
Residential mortgage backed securities
|
|
248,319
|
|
|
(14,285
|
)
|
|
819,884
|
|
|
(79,276
|
)
|
|
1,068,203
|
|
|
(93,561
|
)
|
||||||
Other asset backed securities
|
|
93,237
|
|
|
(5,641
|
)
|
|
—
|
|
|
—
|
|
|
93,237
|
|
|
(5,641
|
)
|
||||||
|
|
$
|
4,609,516
|
|
|
$
|
(162,072
|
)
|
|
$
|
952,484
|
|
|
$
|
(93,126
|
)
|
|
$
|
5,562,000
|
|
|
$
|
(255,198
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government sponsored agencies
|
|
993,800
|
|
|
(407
|
)
|
|
—
|
|
|
—
|
|
|
993,800
|
|
|
(407
|
)
|
||||||
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
|
—
|
|
|
—
|
|
|
55,043
|
|
|
(20,815
|
)
|
|
55,043
|
|
|
(20,815
|
)
|
||||||
|
|
993,800
|
|
|
(407
|
)
|
|
55,043
|
|
|
(20,815
|
)
|
|
1,048,843
|
|
|
(21,222
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,828
|
|
|
$
|
(954
|
)
|
|
$
|
16,828
|
|
|
$
|
(954
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
|
$
|
548
|
|
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
548
|
|
|
$
|
(18
|
)
|
United States Government sponsored agencies
|
|
110,101
|
|
|
(1,646
|
)
|
|
—
|
|
|
—
|
|
|
110,101
|
|
|
(1,646
|
)
|
||||||
United States municipalities, states and territories
|
|
1,510,354
|
|
|
(51,989
|
)
|
|
7,525
|
|
|
(1,395
|
)
|
|
1,517,879
|
|
|
(53,384
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
|
570,978
|
|
|
(27,603
|
)
|
|
114,128
|
|
|
(13,001
|
)
|
|
685,106
|
|
|
(40,604
|
)
|
||||||
Manufacturing, construction and mining
|
|
1,024,454
|
|
|
(33,239
|
)
|
|
34,490
|
|
|
(2,333
|
)
|
|
1,058,944
|
|
|
(35,572
|
)
|
||||||
Utilities and related sectors
|
|
927,476
|
|
|
(34,630
|
)
|
|
14,157
|
|
|
(4,552
|
)
|
|
941,633
|
|
|
(39,182
|
)
|
||||||
Wholesale/retail trade
|
|
153,699
|
|
|
(4,947
|
)
|
|
9,175
|
|
|
(1,304
|
)
|
|
162,874
|
|
|
(6,251
|
)
|
||||||
Services, media and other
|
|
181,857
|
|
|
(10,294
|
)
|
|
—
|
|
|
—
|
|
|
181,857
|
|
|
(10,294
|
)
|
||||||
Residential mortgage backed securities
|
|
396,083
|
|
|
(14,100
|
)
|
|
966,332
|
|
|
(94,321
|
)
|
|
1,362,415
|
|
|
(108,421
|
)
|
||||||
Other asset backed securities
|
|
83,011
|
|
|
(4,937
|
)
|
|
—
|
|
|
—
|
|
|
83,011
|
|
|
(4,937
|
)
|
||||||
|
|
$
|
4,958,561
|
|
|
$
|
(183,403
|
)
|
|
$
|
1,145,807
|
|
|
$
|
(116,906
|
)
|
|
$
|
6,104,368
|
|
|
$
|
(300,309
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government sponsored agencies
|
|
$
|
731,105
|
|
|
$
|
(15,309
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
731,105
|
|
|
$
|
(15,309
|
)
|
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
|
—
|
|
|
—
|
|
|
50,643
|
|
|
(25,143
|
)
|
|
50,643
|
|
|
(25,143
|
)
|
||||||
|
|
$
|
731,105
|
|
|
$
|
(15,309
|
)
|
|
$
|
50,643
|
|
|
$
|
(25,143
|
)
|
|
$
|
781,748
|
|
|
$
|
(40,452
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
|
$
|
14,583
|
|
|
$
|
(1,199
|
)
|
|
$
|
16,253
|
|
|
$
|
(747
|
)
|
|
$
|
30,836
|
|
|
$
|
(1,946
|
)
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2011
|
|
2010
|
||||
|
|
(Dollars in thousands)
|
||||||
Fixed maturity securities held for investment carried at amortized cost
|
|
$
|
29,402
|
|
|
$
|
(2,432
|
)
|
|
|
|
|
|
||||
Investments carried at fair value:
|
|
|
|
|
||||
Fixed maturity securities, available for sale
|
|
$
|
150,683
|
|
|
$
|
530,050
|
|
Equity securities, available for sale
|
|
2,640
|
|
|
(769
|
)
|
||
|
|
153,323
|
|
|
529,281
|
|
||
Adjustment for effect on other balance sheet accounts:
|
|
|
|
|
||||
Deferred policy acquisition costs and deferred sales inducements
|
|
(89,228
|
)
|
|
(307,581
|
)
|
||
Deferred income tax asset
|
|
(22,433
|
)
|
|
(77,595
|
)
|
||
|
|
(111,661
|
)
|
|
(385,176
|
)
|
||
Increase/decrease in net unrealized gains/losses on investments carried at fair value
|
|
$
|
41,662
|
|
|
$
|
144,105
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Available for sale fixed maturity securities:
|
|
|
|
|
|
|
|
|
||||||||
Gross realized gains
|
|
$
|
2,901
|
|
|
$
|
4,393
|
|
|
$
|
4,542
|
|
|
$
|
12,287
|
|
Gross realized losses
|
|
(1,423
|
)
|
|
(2,230
|
)
|
|
(1,423
|
)
|
|
(2,359
|
)
|
||||
|
|
1,478
|
|
|
2,163
|
|
|
3,119
|
|
|
9,928
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
Gross realized gains
|
|
966
|
|
|
—
|
|
|
966
|
|
|
6,207
|
|
||||
Other investments:
|
|
|
|
|
|
|
|
|
||||||||
Gross realized losses
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
||||
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
||||||||
Increase in allowance for credit losses
|
|
(3,286
|
)
|
|
(1,100
|
)
|
|
(6,120
|
)
|
|
(5,169
|
)
|
||||
|
|
$
|
(854
|
)
|
|
$
|
1,063
|
|
|
$
|
(2,047
|
)
|
|
$
|
10,966
|
|
•
|
the length of time and the extent to which the fair value has been less than amortized cost or cost;
|
•
|
whether the issuer is current on all payments and all contractual payments have been made as agreed;
|
•
|
the remaining payment terms and the financial condition and near-term prospects of the issuer;
|
•
|
the lack of ability to refinance due to liquidity problems in the credit market;
|
•
|
the fair value of any underlying collateral;
|
•
|
the existence of any credit protection available;
|
•
|
our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;
|
•
|
our assessment in the case of equity securities including perpetual preferred stocks with credit deterioration that the security cannot recover to cost in a reasonable period of time;
|
•
|
our intent and ability to retain equity securities for a period of time sufficient to allow for recovery;
|
•
|
consideration of rating agency actions; and
|
•
|
changes in estimated cash flows of residential mortgage and asset backed securities.
|
|
|
Number
of
Securities
|
|
|
Total OTTI
Losses
|
|
|
Portion of OTTI
Losses Recognized in (from) Other
Comprehensive
Income
|
|
|
Net OTTI Losses
in Operations
|
|
||
|
|
|
|
(Dollars in thousands)
|
||||||||||
Three months ended June 30, 2011
|
|
18
|
|
|
$
|
(113
|
)
|
|
$
|
(2,116
|
)
|
|
(2,229
|
)
|
|
|
|
|
|
|
|
|
|
||||||
Three months ended June 30, 2010
|
|
2
|
|
|
(1,603
|
)
|
|
785
|
|
|
(818
|
)
|
||
|
|
|
|
|
|
|
|
|
||||||
Six months ended June 30, 2011
|
|
29
|
|
|
$
|
(5,213
|
)
|
|
$
|
(3,587
|
)
|
|
(8,800
|
)
|
|
|
|
|
|
|
|
|
|
||||||
Six months ended June 30, 2010
|
|
6
|
|
|
(14,187
|
)
|
|
10,146
|
|
|
(4,041
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
|
(Dollars in thousands)
|
|
(Dollars in thousands)
|
||||||||||||
Cumulative credit loss at beginning of period
|
|
$
|
(102,251
|
)
|
|
$
|
(84,531
|
)
|
|
$
|
(96,893
|
)
|
|
$
|
(82,930
|
)
|
Credit losses on securities for which OTTI has not previously been recognized
|
|
—
|
|
|
(268
|
)
|
|
(789
|
)
|
|
(2,687
|
)
|
||||
Additional credit losses on securities for which OTTI has previously been recognized
|
|
(2,229
|
)
|
|
(550
|
)
|
|
(8,011
|
)
|
|
(1,354
|
)
|
||||
Accumulated losses on securities that were disposed of during the period
|
|
—
|
|
|
3,387
|
|
|
1,213
|
|
|
5,009
|
|
||||
Cumulative credit loss at end of period
|
|
$
|
(104,480
|
)
|
|
$
|
(81,962
|
)
|
|
$
|
(104,480
|
)
|
|
$
|
(81,962
|
)
|
|
|
Amortized Cost
|
|
OTTI
Recognized in
Other
Comprehensive
Income
|
|
Change in Fair
Value Since
OTTI was
Recognized
|
|
Fair Value
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
||||||||
Corporate fixed maturity securities
|
|
$
|
3,247
|
|
|
$
|
(2,151
|
)
|
|
$
|
6,215
|
|
|
$
|
7,311
|
|
Residential mortgage backed securities
|
|
937,309
|
|
|
(197,334
|
)
|
|
128,392
|
|
|
868,367
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
Finance, insurance and real estate
|
|
12,779
|
|
|
—
|
|
|
6,899
|
|
|
19,678
|
|
||||
|
|
$
|
953,335
|
|
|
$
|
(199,485
|
)
|
|
$
|
141,506
|
|
|
$
|
895,356
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
||||||||
Corporate fixed maturity securities
|
|
$
|
5,055
|
|
|
$
|
(2,151
|
)
|
|
$
|
5,437
|
|
|
$
|
8,341
|
|
Residential mortgage backed securities
|
|
904,704
|
|
|
(200,921
|
)
|
|
124,240
|
|
|
828,023
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
Finance, insurance and real estate
|
|
14,771
|
|
|
—
|
|
|
5,783
|
|
|
20,554
|
|
||||
|
|
$
|
924,530
|
|
|
$
|
(203,072
|
)
|
|
$
|
135,460
|
|
|
$
|
856,918
|
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||||||||
|
|
Carrying
Amount
|
|
Percent
|
|
Carrying
Amount
|
|
Percent
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
Geographic distribution
|
|
|
|
|
|
|
|
|
||||||
East
|
|
$
|
687,783
|
|
|
24.4
|
%
|
|
$
|
618,250
|
|
|
23.6
|
%
|
Middle Atlantic
|
|
185,222
|
|
|
6.6
|
%
|
|
172,443
|
|
|
6.6
|
%
|
||
Mountain
|
|
410,749
|
|
|
14.6
|
%
|
|
402,965
|
|
|
15.4
|
%
|
||
New England
|
|
40,430
|
|
|
1.4
|
%
|
|
42,695
|
|
|
1.6
|
%
|
||
Pacific
|
|
296,833
|
|
|
10.5
|
%
|
|
247,254
|
|
|
9.5
|
%
|
||
South Atlantic
|
|
502,278
|
|
|
17.9
|
%
|
|
496,606
|
|
|
19.0
|
%
|
||
West North Central
|
|
454,799
|
|
|
16.1
|
%
|
|
419,002
|
|
|
16.0
|
%
|
||
West South Central
|
|
239,366
|
|
|
8.5
|
%
|
|
215,650
|
|
|
8.3
|
%
|
||
|
|
2,817,460
|
|
|
100.0
|
%
|
|
2,614,865
|
|
|
100.0
|
%
|
||
Loan loss allowance
|
|
(19,227
|
)
|
|
|
|
(16,224
|
)
|
|
|
||||
|
|
$
|
2,798,233
|
|
|
|
|
$
|
2,598,641
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Property type distribution
|
|
|
|
|
|
|
|
|
||||||
Office
|
|
$
|
759,290
|
|
|
26.9
|
%
|
|
$
|
683,404
|
|
|
26.1
|
%
|
Medical Office
|
|
165,825
|
|
|
5.9
|
%
|
|
166,930
|
|
|
6.4
|
%
|
||
Retail
|
|
627,048
|
|
|
22.3
|
%
|
|
589,369
|
|
|
22.5
|
%
|
||
Industrial/Warehouse
|
|
711,972
|
|
|
25.3
|
%
|
|
666,908
|
|
|
25.6
|
%
|
||
Hotel
|
|
141,611
|
|
|
5.0
|
%
|
|
151,516
|
|
|
5.8
|
%
|
||
Apartment
|
|
167,210
|
|
|
5.9
|
%
|
|
131,682
|
|
|
5.0
|
%
|
||
Mixed use/other
|
|
244,504
|
|
|
8.7
|
%
|
|
225,056
|
|
|
8.6
|
%
|
||
|
|
2,817,460
|
|
|
100.0
|
%
|
|
2,614,865
|
|
|
100.0
|
%
|
||
Loan loss allowance
|
|
(19,227
|
)
|
|
|
|
(16,224
|
)
|
|
|
||||
|
|
$
|
2,798,233
|
|
|
|
|
$
|
2,598,641
|
|
|
|
|
|
June 30,
2011 |
|
December 31,
2010 |
||||
|
|
(Dollars in thousands)
|
||||||
Mortgage loans with allowances - individually evaluated for impairment
|
|
$
|
40,661
|
|
|
$
|
31,027
|
|
Mortgage loans with no allowance for losses - collectively evaluated for impairment
|
|
89,471
|
|
|
81,994
|
|
||
Allowance for probable loan losses
|
|
(15,027
|
)
|
|
(13,224
|
)
|
||
Net carrying value
|
|
$
|
115,105
|
|
|
$
|
99,797
|
|
|
Three months ended
June 30, 2011 |
|
Six months ended
June 30, 2011 |
||||||||||||
|
Specific Allowance
|
|
General Allowance
|
|
Specific Allowance
|
|
General Allowance
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Beginning allowance balance
|
$
|
(13,842
|
)
|
|
$
|
(3,100
|
)
|
|
$
|
(13,224
|
)
|
|
$
|
(3,000
|
)
|
Charge-offs
|
1,001
|
|
|
—
|
|
|
3,117
|
|
|
—
|
|
||||
Recoveries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Provision for credit losses
|
(2,186
|
)
|
|
(1,100
|
)
|
|
(4,920
|
)
|
|
(1,200
|
)
|
||||
Ending allowance balance
|
$
|
(15,027
|
)
|
|
$
|
(4,200
|
)
|
|
$
|
(15,027
|
)
|
|
$
|
(4,200
|
)
|
|
June 30,
2011
|
|
December 31, 2010
|
||||
|
(Dollars in thousands)
|
||||||
Credit Exposure--By Payment Activity
|
|
|
|
||||
Performing
|
$
|
2,687,327
|
|
|
$
|
2,501,843
|
|
In workout
|
79,270
|
|
|
68,477
|
|
||
Delinquent
|
7,691
|
|
|
20,482
|
|
||
Collateral dependent
|
43,172
|
|
|
24,063
|
|
||
|
$
|
2,817,460
|
|
|
$
|
2,614,865
|
|
|
30 - 59 Days
|
|
60 - 89 Days
|
|
90 Days and Over
|
|
Total Past Due
|
|
Current
|
|
Collateral Dependent Receivables
|
|
Total Financing Receivables
|
||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial mortgage loans
|
$
|
10,418
|
|
|
$
|
7,691
|
|
|
$
|
—
|
|
|
$
|
18,109
|
|
|
$
|
2,756,179
|
|
|
$
|
43,172
|
|
|
$
|
2,817,460
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial mortgage loans
|
$
|
3,002
|
|
|
$
|
9,169
|
|
|
$
|
11,313
|
|
|
$
|
23,484
|
|
|
$
|
2,567,318
|
|
|
$
|
24,063
|
|
|
$
|
2,614,865
|
|
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related Allowance
|
|
Average Recorded Investment
|
|
Interest Income Recognized
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage loans with an allowance
|
$
|
25,634
|
|
|
$
|
40,661
|
|
|
$
|
(15,027
|
)
|
|
$
|
30,680
|
|
|
$
|
229
|
|
Mortgage loans with no related allowance
|
89,471
|
|
|
89,471
|
|
|
—
|
|
|
90,014
|
|
|
2,340
|
|
|||||
|
$
|
115,105
|
|
|
$
|
130,132
|
|
|
$
|
(15,027
|
)
|
|
$
|
120,694
|
|
|
$
|
2,569
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage loans with an allowance
|
$
|
17,803
|
|
|
$
|
31,027
|
|
|
$
|
(13,224
|
)
|
|
$
|
24,062
|
|
|
$
|
656
|
|
Mortgage loans with no related allowance
|
81,994
|
|
|
81,994
|
|
|
—
|
|
|
82,535
|
|
|
4,921
|
|
|||||
|
$
|
99,797
|
|
|
$
|
113,021
|
|
|
$
|
(13,224
|
)
|
|
$
|
106,597
|
|
|
$
|
5,577
|
|
|
|
June 30,
2011 |
|
December 31,
2010 |
||||
|
|
(Dollars in thousands)
|
||||||
Assets
|
|
|
|
|
||||
Derivative Instruments
|
|
|
|
|
||||
Call options
|
|
$
|
537,920
|
|
|
$
|
479,786
|
|
Other Assets
|
|
|
|
|
||||
2015 notes hedges
|
|
63,141
|
|
|
66,595
|
|
||
|
|
$
|
601,061
|
|
|
$
|
546,381
|
|
Liabilities
|
|
|
|
|
||||
Policy benefit reserves - annuity products
|
|
|
|
|
||||
Fixed index annuities - embedded derivatives
|
|
$
|
2,368,533
|
|
|
$
|
1,971,383
|
|
Other liabilities
|
|
|
|
|
||||
2015 notes embedded derivatives
|
|
63,141
|
|
|
66,595
|
|
||
Interest rate swaps
|
|
937
|
|
|
1,976
|
|
||
|
|
$
|
2,432,611
|
|
|
$
|
2,039,954
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
Change in fair value of derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Call options
|
|
$
|
(13,238
|
)
|
|
$
|
(208,131
|
)
|
|
$
|
130,214
|
|
|
$
|
(124,829
|
)
|
2015 notes hedges
|
|
(8,723
|
)
|
|
—
|
|
|
(3,454
|
)
|
|
—
|
|
||||
Interest rate swaps
|
|
(68
|
)
|
|
(606
|
)
|
|
(136
|
)
|
|
(1,893
|
)
|
||||
|
|
$
|
(22,029
|
)
|
|
$
|
(208,737
|
)
|
|
$
|
126,624
|
|
|
$
|
(126,722
|
)
|
Change in fair value of embedded derivatives:
|
|
|
|
|
|
|
|
|
||||||||
2015 notes embedded derivatives
|
|
$
|
(8,723
|
)
|
|
$
|
—
|
|
|
$
|
(3,454
|
)
|
|
$
|
—
|
|
Fixed index annuities
|
|
(52,240
|
)
|
|
(190,211
|
)
|
|
70,794
|
|
|
(126,336
|
)
|
||||
|
|
$
|
(60,963
|
)
|
|
$
|
(190,211
|
)
|
|
$
|
67,340
|
|
|
$
|
(126,336
|
)
|
|
|
|
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||||||||||
Counterparty
|
|
Credit Rating (S&P)
|
|
Credit Rating (Moody's)
|
|
Notional
Amount
|
|
Fair Value
|
|
Notional
Amount
|
|
Fair Value
|
||||||||
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||||||||
Bank of America
|
|
A+
|
|
Aa3
|
|
$
|
1,649,650
|
|
|
$
|
59,938
|
|
|
$
|
588,650
|
|
|
$
|
25,704
|
|
BNP Paribas
|
|
AA
|
|
Aa2
|
|
1,724,375
|
|
|
56,610
|
|
|
786,561
|
|
|
34,772
|
|
||||
Bank of New York
|
|
AA-
|
|
Aa2
|
|
—
|
|
|
—
|
|
|
18,082
|
|
|
111
|
|
||||
Credit Suisse
|
|
A+
|
|
Aa1
|
|
2,193,640
|
|
|
114,760
|
|
|
2,462,920
|
|
|
95,910
|
|
||||
Barclays
|
|
AA-
|
|
Aa3
|
|
2,117,829
|
|
|
84,280
|
|
|
1,728,218
|
|
|
72,751
|
|
||||
SunTrust
|
|
BBB+
|
|
A3
|
|
—
|
|
|
—
|
|
|
50,540
|
|
|
3,164
|
|
||||
Wells Fargo (Wachovia)
|
|
NR
|
|
Aa2
|
|
1,941,659
|
|
|
87,905
|
|
|
1,745,775
|
|
|
76,250
|
|
||||
J.P. Morgan
|
|
AA-
|
|
Aa1
|
|
2,551,576
|
|
|
105,239
|
|
|
2,858,902
|
|
|
133,368
|
|
||||
UBS
|
|
A+
|
|
Aa3
|
|
377,771
|
|
|
23,518
|
|
|
921,596
|
|
|
37,756
|
|
||||
HSBC
|
|
AA
|
|
Aa2
|
|
226,387
|
|
|
5,670
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
$
|
12,782,887
|
|
|
$
|
537,920
|
|
|
$
|
11,161,244
|
|
|
$
|
479,786
|
|
|
|
Notional Amount
|
|
|
|
|
|
|
|
Fair Value
|
||||||||||||
Maturity Date
|
|
June 30,
2011
|
|
December 31, 2010
|
|
Receive Rate
|
|
Pay Rate
|
|
Counterparty
|
|
June 30,
2011
|
|
December 31, 2010
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||||
April 7, 2011
|
|
—
|
|
|
20,000
|
|
|
*LIBOR (a)
|
|
5.23
|
%
|
|
Bank of America
|
|
—
|
|
|
(99
|
)
|
|||
October 15, 2011
|
|
15,000
|
|
|
15,000
|
|
|
**LIBOR
|
|
1.54
|
%
|
|
SunTrust
|
|
(108
|
)
|
|
(193
|
)
|
|||
October 31, 2011
|
|
30,000
|
|
|
30,000
|
|
|
**LIBOR
|
|
1.51
|
%
|
|
SunTrust
|
|
(209
|
)
|
|
(374
|
)
|
|||
October 31, 2011
|
|
30,000
|
|
|
30,000
|
|
|
**LIBOR
|
|
1.61
|
%
|
|
SunTrust
|
|
(224
|
)
|
|
(405
|
)
|
|||
October 31, 2011
|
|
75,000
|
|
|
75,000
|
|
|
**LIBOR
|
|
1.77
|
%
|
|
SunTrust
|
|
(396
|
)
|
|
(905
|
)
|
|||
|
|
$
|
150,000
|
|
|
170,000
|
|
|
|
|
|
|
|
|
$
|
(937
|
)
|
|
$
|
(1,976
|
)
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||||||||||||||||||
|
|
September 2015 Notes
|
|
December 2029 Notes
|
|
December 2024 Notes
|
|
September 2015 Notes
|
|
December 2029 Notes
|
|
December 2024 Notes
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
Notes payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Principal amount of liability component
|
|
$
|
200,000
|
|
|
$
|
115,839
|
|
|
$
|
74,494
|
|
|
$
|
200,000
|
|
|
$
|
115,839
|
|
|
$
|
74,494
|
|
Unamortized discount
|
|
(32,185
|
)
|
|
(20,003
|
)
|
|
(906
|
)
|
|
(35,335
|
)
|
|
(22,306
|
)
|
|
(1,857
|
)
|
||||||
Net carrying amount of liability component
|
|
$
|
167,815
|
|
|
$
|
95,836
|
|
|
$
|
73,588
|
|
|
$
|
164,665
|
|
|
$
|
93,533
|
|
|
$
|
72,637
|
|
Additional paid-in capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Carrying amount of equity component
|
|
|
|
$
|
15,586
|
|
|
$
|
22,637
|
|
|
|
|
$
|
15,586
|
|
|
$
|
22,637
|
|
||||
Amount by which the if-converted value exceeds principal
|
|
$
|
3,360
|
|
|
$
|
36,104
|
|
|
$
|
—
|
|
|
$
|
800
|
|
|
$
|
34,191
|
|
|
$
|
—
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended June 30,
|
||||||||||||
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
|
(Dollars in thousands, except per share data)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) - numerator for earnings per common share
|
|
$
|
18,274
|
|
|
$
|
(1,504
|
)
|
|
$
|
49,617
|
|
|
$
|
13,381
|
|
Interest on convertible subordinated debentures (net of income tax benefit)
|
|
258
|
|
|
258
|
|
|
517
|
|
|
517
|
|
||||
Numerator for earnings (loss) per common share - assuming dilution
|
|
$
|
18,532
|
|
|
$
|
(1,246
|
)
|
|
$
|
50,134
|
|
|
$
|
13,898
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding (1)
|
|
59,504,119
|
|
|
58,426,811
|
|
|
59,343,959
|
|
|
58,326,445
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Convertible subordinated debentures
|
|
2,727,084
|
|
|
2,729,400
|
|
|
2,727,084
|
|
|
2,731,950
|
|
||||
Convertible senior notes
|
|
2,612,637
|
|
|
—
|
|
|
2,612,637
|
|
|
—
|
|
||||
Stock options and deferred compensation agreements
|
|
686,352
|
|
|
435,416
|
|
|
753,272
|
|
|
306,787
|
|
||||
Denominator for earnings (loss) per common share - assuming dilution
|
|
$
|
65,530,192
|
|
|
$
|
61,591,627
|
|
|
$
|
65,436,952
|
|
|
$
|
61,365,182
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share
|
|
0.31
|
|
|
(0.03
|
)
|
|
0.84
|
|
|
0.23
|
|
||||
Earnings (loss) per common share - assuming dilution
|
|
0.28
|
|
|
(0.03
|
)
|
|
0.77
|
|
|
0.23
|
|
(1)
|
Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan and exclude unallocated shares held by the ESOP.
|
Period
|
|
Number of
Shares
|
|
Range of
Exercise Prices
|
|
Three months ended June 30, 2011
|
|
1,370,350
|
|
|
$12.79 - $14.34
|
Six months ended June 30, 2011
|
|
1,370,350
|
|
|
$12.79 - $14.34
|
Three months ended June 30, 2010
|
|
1,804,039
|
|
|
$10.24 - $14.34
|
Six months ended June 30, 2010
|
|
1,804,039
|
|
|
$8.75 - $14.34
|
•
|
general economic conditions and other factors, including prevailing interest rate levels and stock and credit market performance which may affect (among other things) our ability to sell our products, our ability to access capital resources and the costs associated therewith, the fair value of our investments, which could result in other than temporary impairments, and certain liabilities, and the lapse rate and profitability of policies;
|
•
|
customer response to new products and marketing initiatives;
|
•
|
changes in Federal income tax laws and regulations which may affect the relative income tax advantages of our products;
|
•
|
increasing competition in the sale of annuities;
|
•
|
regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products and regulation of the sale, underwriting and pricing of products; and
|
•
|
the risk factors or uncertainties listed from time to time in our filings with the SEC.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30,
|
||||||||||||
Product Type
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Fixed index annuities:
|
|
|
|
|
|
|
|
|
||||||||
Index strategies
|
|
$
|
595,422
|
|
|
$
|
545,238
|
|
|
$
|
1,374,004
|
|
|
$
|
948,362
|
|
Fixed strategy
|
|
312,161
|
|
|
366,448
|
|
|
669,633
|
|
|
704,230
|
|
||||
|
|
907,583
|
|
|
911,686
|
|
|
2,043,637
|
|
|
1,652,592
|
|
||||
Fixed rate annuities:
|
|
|
|
|
|
|
|
|
||||||||
Single-year rate guaranteed
|
|
34,036
|
|
|
28,389
|
|
|
80,889
|
|
|
57,784
|
|
||||
Multi-year rate guaranteed
|
|
85,592
|
|
|
72,704
|
|
|
162,639
|
|
|
125,885
|
|
||||
Single premium immediate annuities
|
|
81,591
|
|
|
34,008
|
|
|
163,481
|
|
|
57,381
|
|
||||
|
|
201,219
|
|
|
135,101
|
|
|
407,009
|
|
|
241,050
|
|
||||
Total before coinsurance ceded
|
|
1,108,802
|
|
|
1,046,787
|
|
|
2,450,646
|
|
|
1,893,642
|
|
||||
Coinsurance ceded
|
|
70,331
|
|
|
69,950
|
|
|
136,208
|
|
|
259,072
|
|
||||
Net after coinsurance ceded
|
|
$
|
1,038,471
|
|
|
$
|
976,837
|
|
|
$
|
2,314,438
|
|
|
$
|
1,634,570
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
Average yield on invested assets
|
|
5.78%
|
|
6.14%
|
|
5.87%
|
|
6.14%
|
|
|
|
|
|
|
|
|
|
Cost of money:
|
|
|
|
|
|
|
|
|
Aggregate
|
|
2.73%
|
|
2.91%
|
|
2.77%
|
|
2.93%
|
Cost of money for fixed index annuities
|
|
2.68%
|
|
2.85%
|
|
2.72%
|
|
2.87%
|
Average crediting rate for fixed rate annuities:
|
|
|
|
|
|
|
|
|
Annually adjustable
|
|
3.17%
|
|
3.26%
|
|
3.18%
|
|
3.26%
|
Multi-year rate guaranteed
|
|
3.66%
|
|
3.74%
|
|
3.67%
|
|
3.76%
|
|
|
|
|
|
|
|
|
|
Investment spread:
|
|
|
|
|
|
|
|
|
Aggregate
|
|
3.05%
|
|
3.23%
|
|
3.10%
|
|
3.21%
|
Fixed index annuities
|
|
3.10%
|
|
3.29%
|
|
3.15%
|
|
3.27%
|
Fixed rate annuities:
|
|
|
|
|
|
|
|
|
Annually adjustable
|
|
2.61%
|
|
2.88%
|
|
2.69%
|
|
2.88%
|
Multi-year rate guaranteed
|
|
2.12%
|
|
2.40%
|
|
2.20%
|
|
2.38%
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
||||||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Operating Income
|
$
|
29,013
|
|
|
$
|
29,208
|
|
|
$
|
59,587
|
|
|
$
|
54,991
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation to net income:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
18,274
|
|
|
$
|
(1,504
|
)
|
|
$
|
49,617
|
|
|
$
|
13,381
|
|
Net realized gains and net OTTI losses on investments, net of offsets
|
1,278
|
|
|
11
|
|
|
3,750
|
|
|
(2,358
|
)
|
||||
Convertible debt retirement, net of income taxes
|
—
|
|
|
171
|
|
|
—
|
|
|
171
|
|
||||
Net effect of derivatives, embedded derivatives and other index annuity, net of offsets
|
9,461
|
|
|
30,530
|
|
|
6,220
|
|
|
43,797
|
|
||||
Operating income
|
$
|
29,013
|
|
|
$
|
29,208
|
|
|
$
|
59,587
|
|
|
$
|
54,991
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30,
|
||||||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Call options:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on option expiration
|
$
|
74,343
|
|
|
$
|
91,386
|
|
|
$
|
106,461
|
|
|
$
|
169,767
|
|
Change in unrealized gain/loss
|
(87,581
|
)
|
|
(299,517
|
)
|
|
23,753
|
|
|
(294,596
|
)
|
||||
2015 notes hedges
|
(8,723
|
)
|
|
—
|
|
|
(3,454
|
)
|
|
—
|
|
||||
Interest rate swaps
|
(68
|
)
|
|
(606
|
)
|
|
(136
|
)
|
|
(1,893
|
)
|
||||
|
$
|
(22,029
|
)
|
|
$
|
(208,737
|
)
|
|
$
|
126,624
|
|
|
$
|
(126,722
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended June 30,
|
||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
S&P 500 Index
|
|
|
|
|
|
|
|
Point-to-point strategy
|
8.6% - 28.1%
|
|
11.7% - 45.3%
|
|
8.4% - 28.1%
|
|
11.7% - 68.6%
|
Monthly average strategy
|
0.0% - 20.2%
|
|
13.4% - 27.9%
|
|
0.0% - 20.2%
|
|
1.5% - 51.2%
|
Monthly point-to-point strategy
|
0.0% - 13.5%
|
|
0.0% - 23.7%
|
|
0.0% - 13.5%
|
|
0.0% - 23.7%
|
Fixed income (bond index) strategies
|
1.4% - 8.3%
|
|
0.0% - 10.7%
|
|
1.4% - 8.8%
|
|
0.0% - 10.7%
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Available for sale fixed maturity securities:
|
|
|
|
|
|
|
|
|
||||||||
Gross realized gains
|
|
$
|
2,901
|
|
|
$
|
4,393
|
|
|
$
|
4,542
|
|
|
$
|
12,287
|
|
Gross realized losses
|
|
(1,423
|
)
|
|
(2,230
|
)
|
|
(1,423
|
)
|
|
(2,359
|
)
|
||||
|
|
1,478
|
|
|
2,163
|
|
|
3,119
|
|
|
9,928
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
Gross realized gains
|
|
966
|
|
|
—
|
|
|
966
|
|
|
6,207
|
|
||||
Other investments:
|
|
|
|
|
|
|
|
|
||||||||
Gross realized losses
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
||||
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
||||||||
Increase in allowance for credit losses
|
|
(3,286
|
)
|
|
(1,100
|
)
|
|
(6,120
|
)
|
|
(5,169
|
)
|
||||
|
|
$
|
(854
|
)
|
|
$
|
1,063
|
|
|
$
|
(2,047
|
)
|
|
$
|
10,966
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended June 30,
|
||||||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Index credits on index policies
|
$
|
157,194
|
|
|
$
|
161,974
|
|
|
$
|
244,588
|
|
|
$
|
295,532
|
|
Interest credited (including changes in minimum guaranteed interest for index annuities)
|
74,547
|
|
|
62,891
|
|
|
143,329
|
|
|
125,090
|
|
||||
Living income benefit rider
|
6,679
|
|
|
3,953
|
|
|
10,168
|
|
|
5,065
|
|
||||
|
$
|
238,420
|
|
|
$
|
228,818
|
|
|
$
|
398,085
|
|
|
$
|
425,687
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||||||||
|
Carrying
Amount
|
|
Percent
|
|
Carrying
Amount
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||
United States Government full faith and credit
|
$
|
4,419
|
|
|
—
|
%
|
|
$
|
4,388
|
|
|
—
|
%
|
United States Government sponsored agencies
|
3,212,410
|
|
|
15.1
|
%
|
|
3,750,065
|
|
|
18.9
|
%
|
||
United States municipalities, states and territories
|
2,763,142
|
|
|
13.0
|
%
|
|
2,367,003
|
|
|
12.0
|
%
|
||
Corporate securities
|
8,732,941
|
|
|
41.1
|
%
|
|
7,448,323
|
|
|
37.6
|
%
|
||
Residential mortgage backed securities
|
2,827,512
|
|
|
13.3
|
%
|
|
2,878,557
|
|
|
14.5
|
%
|
||
Other asset backed securities
|
278,416
|
|
|
1.3
|
%
|
|
204,527
|
|
|
1.0
|
%
|
||
Total fixed maturity securities
|
17,818,840
|
|
|
83.8
|
%
|
|
16,652,863
|
|
|
84.0
|
%
|
||
Equity securities
|
66,612
|
|
|
0.4
|
%
|
|
65,961
|
|
|
0.4
|
%
|
||
Mortgage loans on real estate
|
2,798,233
|
|
|
13.2
|
%
|
|
2,598,641
|
|
|
13.1
|
%
|
||
Derivative instruments
|
537,920
|
|
|
2.5
|
%
|
|
479,786
|
|
|
2.4
|
%
|
||
Other investments
|
26,030
|
|
|
0.1
|
%
|
|
19,680
|
|
|
0.1
|
%
|
||
|
$
|
21,247,635
|
|
|
100.0
|
%
|
|
$
|
19,816,931
|
|
|
100.0
|
%
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||||||||
Rating Agency Rating
|
|
Carrying
Amount
|
|
Percent of
Fixed Maturity
Securities
|
|
Carrying
Amount
|
|
Percent of
Fixed Maturity
Securities
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
Aaa/Aa/A
|
|
$
|
12,343,168
|
|
|
69.3
|
%
|
|
$
|
11,599,255
|
|
|
69.6
|
%
|
Baa
|
|
4,219,868
|
|
|
23.7
|
%
|
|
3,725,920
|
|
|
22.4
|
%
|
||
Total investment grade
|
|
16,563,036
|
|
|
93.0
|
%
|
|
15,325,175
|
|
|
92.0
|
%
|
||
Ba
|
|
268,566
|
|
|
1.5
|
%
|
|
294,200
|
|
|
1.8
|
%
|
||
B
|
|
59,684
|
|
|
0.3
|
%
|
|
69,033
|
|
|
0.4
|
%
|
||
Caa and lower
|
|
845,297
|
|
|
4.7
|
%
|
|
959,437
|
|
|
5.8
|
%
|
||
In or near default
|
|
82,257
|
|
|
0.5
|
%
|
|
5,018
|
|
|
—
|
%
|
||
Total below investment grade
|
|
1,255,804
|
|
|
7.0
|
%
|
|
1,327,688
|
|
|
8.0
|
%
|
||
|
|
$
|
17,818,840
|
|
|
100.0
|
%
|
|
$
|
16,652,863
|
|
|
100.0
|
%
|
NAIC Designation
|
|
NRSRO Equivalent Rating
|
1
|
|
Aaa/Aa/A
|
2
|
|
Baa
|
3
|
|
Ba
|
4
|
|
B
|
5
|
|
Caa and lower
|
6
|
|
In or near default
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||||||||||||||||||||||||
NAIC Designation
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percent
of Total
Carrying
Amount
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percent
of Total
Carrying
Amount
|
||||||||||||||
|
|
(Dollars in thousands)
|
|
|
|
(Dollars in thousands)
|
|
|
||||||||||||||||||||||
1
|
|
$
|
12,923,194
|
|
|
$
|
13,134,579
|
|
|
$
|
13,124,815
|
|
|
73.7
|
%
|
|
$
|
12,152,552
|
|
|
$
|
12,246,954
|
|
|
$
|
12,262,263
|
|
|
73.6
|
%
|
2
|
|
4,260,986
|
|
|
4,427,188
|
|
|
4,427,188
|
|
|
24.9
|
%
|
|
3,892,680
|
|
|
4,012,076
|
|
|
4,012,076
|
|
|
24.1
|
%
|
||||||
3
|
|
248,488
|
|
|
218,080
|
|
|
238,894
|
|
|
1.3
|
%
|
|
368,680
|
|
|
323,113
|
|
|
348,256
|
|
|
2.1
|
%
|
||||||
4
|
|
17,933
|
|
|
17,125
|
|
|
17,125
|
|
|
0.1
|
%
|
|
19,820
|
|
|
19,178
|
|
|
19,178
|
|
|
0.1
|
%
|
||||||
5
|
|
5,302
|
|
|
5,868
|
|
|
5,868
|
|
|
—
|
%
|
|
6,089
|
|
|
6,262
|
|
|
6,262
|
|
|
0.1
|
%
|
||||||
6
|
|
3,485
|
|
|
4,950
|
|
|
4,950
|
|
|
—
|
%
|
|
4,273
|
|
|
4,828
|
|
|
4,828
|
|
|
—
|
%
|
||||||
|
|
$
|
17,459,388
|
|
|
$
|
17,807,790
|
|
|
$
|
17,818,840
|
|
|
100.0
|
%
|
|
$
|
16,444,094
|
|
|
$
|
16,612,411
|
|
|
$
|
16,652,863
|
|
|
100.0
|
%
|
Collateral Type
|
|
Principal
Amount
|
|
|
Amortized
Cost
|
|
Fair Value
|
|||||
|
|
(Dollars in thousands)
|
||||||||||
OTTI has not been recognized
|
|
|
|
|
|
|
||||||
Government agency
|
|
$
|
517,340
|
|
|
$
|
457,636
|
|
|
$
|
485,703
|
|
Prime
|
|
1,447,864
|
|
|
1,374,183
|
|
|
1,420,913
|
|
|||
Alt-A
|
|
50,910
|
|
|
51,379
|
|
|
52,530
|
|
|||
|
|
$
|
2,016,114
|
|
|
$
|
1,883,198
|
|
|
$
|
1,959,146
|
|
OTTI has been recognized
|
|
|
|
|
|
|
||||||
Prime
|
|
$
|
586,137
|
|
|
$
|
534,606
|
|
|
$
|
496,048
|
|
Alt-A
|
|
486,128
|
|
|
402,703
|
|
|
372,318
|
|
|||
|
|
$
|
1,072,265
|
|
|
$
|
937,309
|
|
|
$
|
868,366
|
|
Total by collateral type
|
|
|
|
|
|
|
||||||
Government agency
|
|
$
|
517,340
|
|
|
$
|
457,636
|
|
|
$
|
485,703
|
|
Prime
|
|
2,034,001
|
|
|
1,908,789
|
|
|
1,916,961
|
|
|||
Alt-A
|
|
537,038
|
|
|
454,082
|
|
|
424,848
|
|
|||
|
|
$
|
3,088,379
|
|
|
$
|
2,820,507
|
|
|
$
|
2,827,512
|
|
Total by NAIC designation
|
|
|
|
|
|
|
||||||
1
|
|
$
|
2,618,412
|
|
|
$
|
2,391,196
|
|
|
$
|
2,441,122
|
|
2
|
|
401,185
|
|
|
364,330
|
|
|
327,796
|
|
|||
3
|
|
64,339
|
|
|
61,709
|
|
|
56,401
|
|
|||
6
|
|
4,443
|
|
|
3,272
|
|
|
2,193
|
|
|||
|
|
$
|
3,088,379
|
|
|
$
|
2,820,507
|
|
|
$
|
2,827,512
|
|
|
|
Available-for-sale
|
|
Held for investment
|
||||||||||||
|
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Due in one year or less
|
|
$
|
28,157
|
|
|
$
|
28,971
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
|
416,992
|
|
|
470,079
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
|
1,858,825
|
|
|
2,039,722
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
|
3,830,178
|
|
|
3,916,472
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
|
6,093,637
|
|
|
6,121,700
|
|
|
2,135,968
|
|
|
2,124,918
|
|
||||
|
|
12,227,789
|
|
|
12,576,944
|
|
|
2,135,968
|
|
|
2,124,918
|
|
||||
Residential mortgage backed securities
|
|
2,820,507
|
|
|
2,827,512
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
|
275,124
|
|
|
278,416
|
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
15,323,420
|
|
|
$
|
15,682,872
|
|
|
$
|
2,135,968
|
|
|
$
|
2,124,918
|
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Losses
|
|
Fair Value
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
2
|
|
|
567
|
|
|
(9
|
)
|
|
558
|
|
|||
United States Government sponsored agencies
|
1
|
|
|
53,597
|
|
|
(344
|
)
|
|
53,253
|
|
|||
United States municipalities, states and territories
|
182
|
|
|
981,769
|
|
|
(27,563
|
)
|
|
954,206
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
76
|
|
|
725,866
|
|
|
(30,956
|
)
|
|
694,910
|
|
|||
Manufacturing, construction and mining
|
123
|
|
|
1,259,972
|
|
|
(43,270
|
)
|
|
1,216,702
|
|
|||
Utilities and related sectors
|
163
|
|
|
1,102,954
|
|
|
(40,155
|
)
|
|
1,062,799
|
|
|||
Wholesale/retail trade
|
24
|
|
|
188,851
|
|
|
(6,471
|
)
|
|
182,380
|
|
|||
Services, media and other
|
27
|
|
|
242,980
|
|
|
(7,228
|
)
|
|
235,752
|
|
|||
Residential mortgage backed securities
|
90
|
|
|
1,161,764
|
|
|
(93,561
|
)
|
|
1,068,203
|
|
|||
Other asset backed securities
|
11
|
|
|
98,878
|
|
|
(5,641
|
)
|
|
93,237
|
|
|||
|
699
|
|
|
$
|
5,817,198
|
|
|
$
|
(255,198
|
)
|
|
$
|
5,562,000
|
|
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, held for investment:
|
|
|
|
|
|
|
|
|||||||
United States Government sponsored agencies
|
4
|
|
|
994,207
|
|
|
(407
|
)
|
|
993,800
|
|
|||
Corporate security:
|
|
|
|
|
|
|
|
|||||||
Insurance
|
1
|
|
|
$
|
75,858
|
|
|
$
|
(20,815
|
)
|
|
$
|
55,043
|
|
|
5
|
|
|
$
|
1,070,065
|
|
|
$
|
(21,222
|
)
|
|
$
|
1,048,843
|
|
|
|
|
|
|
|
|
|
|||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
3
|
|
|
$
|
17,782
|
|
|
$
|
(954
|
)
|
|
$
|
16,828
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2010
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
2
|
|
|
$
|
566
|
|
|
$
|
(18
|
)
|
|
$
|
548
|
|
United States Government sponsored agencies
|
1
|
|
|
111,747
|
|
|
(1,646
|
)
|
|
110,101
|
|
|||
United States municipalities, states and territories
|
289
|
|
|
1,571,263
|
|
|
(53,384
|
)
|
|
1,517,879
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
72
|
|
|
725,710
|
|
|
(40,605
|
)
|
|
685,105
|
|
|||
Manufacturing, construction and mining
|
110
|
|
|
1,094,516
|
|
|
(35,572
|
)
|
|
1,058,944
|
|
|||
Utilities and related sectors
|
144
|
|
|
980,815
|
|
|
(39,181
|
)
|
|
941,634
|
|
|||
Wholesale/retail trade
|
25
|
|
|
169,125
|
|
|
(6,251
|
)
|
|
162,874
|
|
|||
Services, media and other
|
17
|
|
|
192,151
|
|
|
(10,294
|
)
|
|
181,857
|
|
|||
Residential mortgage backed securities
|
98
|
|
|
1,470,836
|
|
|
(108,421
|
)
|
|
1,362,415
|
|
|||
Other asset backed securities
|
10
|
|
|
87,948
|
|
|
(4,937
|
)
|
|
83,011
|
|
|||
|
768
|
|
|
$
|
6,404,677
|
|
|
$
|
(300,309
|
)
|
|
$
|
6,104,368
|
|
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, held for investment:
|
|
|
|
|
|
|
|
|||||||
United States Government sponsored agencies
|
3
|
|
|
$
|
746,414
|
|
|
$
|
(15,309
|
)
|
|
$
|
731,105
|
|
Corporate security:
|
|
|
|
|
|
|
|
|||||||
Insurance
|
1
|
|
|
75,786
|
|
|
(25,143
|
)
|
|
50,643
|
|
|||
|
4
|
|
|
$
|
822,200
|
|
|
$
|
(40,452
|
)
|
|
$
|
781,748
|
|
|
|
|
|
|
|
|
|
|||||||
Equity securities, available for sale
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
8
|
|
|
$
|
32,782
|
|
|
$
|
(1,946
|
)
|
|
$
|
30,836
|
|
NAIC Designation
|
|
Carrying Value of
Securities with
Gross Unrealized
Losses
|
|
Percent of
Total
|
|
Gross
Unrealized Losses |
|
Percent of
Total
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
4,899,379
|
|
|
73.8
|
%
|
|
$
|
(159,682
|
)
|
|
57.8
|
%
|
2
|
|
1,523,316
|
|
|
23.0
|
%
|
|
(81,756
|
)
|
|
29.6
|
%
|
||
3
|
|
190,052
|
|
|
2.9
|
%
|
|
(33,095
|
)
|
|
12.0
|
%
|
||
4
|
|
17,125
|
|
|
0.3
|
%
|
|
(808
|
)
|
|
0.3
|
%
|
||
5
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||
6
|
|
2,193
|
|
|
—
|
%
|
|
(1,079
|
)
|
|
0.4
|
%
|
||
|
|
$
|
6,632,065
|
|
|
100.0
|
%
|
|
$
|
(276,420
|
)
|
|
100.0
|
%
|
December 31, 2010
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
5,017,596
|
|
|
72.4
|
%
|
|
$
|
(186,066
|
)
|
|
54.6
|
%
|
2
|
|
1,619,437
|
|
|
23.4
|
%
|
|
(102,931
|
)
|
|
30.2
|
%
|
||
3
|
|
269,555
|
|
|
3.9
|
%
|
|
(49,764
|
)
|
|
14.6
|
%
|
||
4
|
|
17,278
|
|
|
0.2
|
%
|
|
(642
|
)
|
|
0.2
|
%
|
||
5
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||
6
|
|
2,702
|
|
|
0.1
|
%
|
|
(1,358
|
)
|
|
0.4
|
%
|
||
|
|
$
|
6,926,568
|
|
|
100.0
|
%
|
|
$
|
(340,761
|
)
|
|
100.0
|
%
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
|
$
|
558
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
558
|
|
|
$
|
(9
|
)
|
United States Government sponsored agencies
|
|
$
|
53,253
|
|
|
$
|
(344
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
53,253
|
|
|
$
|
(344
|
)
|
United States municipalities, states and territories
|
|
945,652
|
|
|
(27,181
|
)
|
|
8,554
|
|
|
(382
|
)
|
|
954,206
|
|
|
(27,563
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
|
608,845
|
|
|
(23,541
|
)
|
|
86,065
|
|
|
(7,415
|
)
|
|
694,910
|
|
|
(30,956
|
)
|
||||||
Manufacturing, construction and mining
|
|
1,203,704
|
|
|
(41,396
|
)
|
|
12,998
|
|
|
(1,874
|
)
|
|
1,216,702
|
|
|
(43,270
|
)
|
||||||
Utilities and related sectors
|
|
1,046,966
|
|
|
(37,300
|
)
|
|
15,833
|
|
|
(2,855
|
)
|
|
1,062,799
|
|
|
(40,155
|
)
|
||||||
Wholesale/retail trade
|
|
173,230
|
|
|
(5,147
|
)
|
|
9,150
|
|
|
(1,324
|
)
|
|
182,380
|
|
|
(6,471
|
)
|
||||||
Services, media and other
|
|
235,752
|
|
|
(7,228
|
)
|
|
—
|
|
|
—
|
|
|
235,752
|
|
|
(7,228
|
)
|
||||||
Residential mortgage backed securities
|
|
248,319
|
|
|
(14,285
|
)
|
|
819,884
|
|
|
(79,276
|
)
|
|
1,068,203
|
|
|
(93,561
|
)
|
||||||
Other asset backed securities
|
|
93,237
|
|
|
(5,641
|
)
|
|
—
|
|
|
—
|
|
|
93,237
|
|
|
(5,641
|
)
|
||||||
|
|
$
|
4,609,516
|
|
|
$
|
(162,072
|
)
|
|
$
|
952,484
|
|
|
$
|
(93,126
|
)
|
|
$
|
5,562,000
|
|
|
$
|
(255,198
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government sponsored agencies
|
|
993,800
|
|
|
(407
|
)
|
|
—
|
|
|
—
|
|
|
993,800
|
|
|
(407
|
)
|
||||||
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
|
—
|
|
|
—
|
|
|
55,043
|
|
|
(20,815
|
)
|
|
55,043
|
|
|
(20,815
|
)
|
||||||
|
|
993,800
|
|
|
(407
|
)
|
|
55,043
|
|
|
(20,815
|
)
|
|
1,048,843
|
|
|
(21,222
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,828
|
|
|
$
|
(954
|
)
|
|
$
|
16,828
|
|
|
$
|
(954
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
|
$
|
548
|
|
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
548
|
|
|
$
|
(18
|
)
|
United States Government sponsored agencies
|
|
110,101
|
|
|
(1,646
|
)
|
|
—
|
|
|
—
|
|
|
110,101
|
|
|
(1,646
|
)
|
||||||
United States municipalities, states and territories
|
|
1,510,354
|
|
|
(51,989
|
)
|
|
7,525
|
|
|
(1,395
|
)
|
|
1,517,879
|
|
|
(53,384
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
|
570,978
|
|
|
(27,603
|
)
|
|
114,128
|
|
|
(13,001
|
)
|
|
685,106
|
|
|
(40,604
|
)
|
||||||
Manufacturing, construction and mining
|
|
1,024,454
|
|
|
(33,239
|
)
|
|
34,490
|
|
|
(2,333
|
)
|
|
1,058,944
|
|
|
(35,572
|
)
|
||||||
Utilities and related sectors
|
|
927,476
|
|
|
(34,630
|
)
|
|
14,157
|
|
|
(4,552
|
)
|
|
941,633
|
|
|
(39,182
|
)
|
||||||
Wholesale/retail trade
|
|
153,699
|
|
|
(4,947
|
)
|
|
9,175
|
|
|
(1,304
|
)
|
|
162,874
|
|
|
(6,251
|
)
|
||||||
Services, media and other
|
|
181,857
|
|
|
(10,294
|
)
|
|
—
|
|
|
—
|
|
|
181,857
|
|
|
(10,294
|
)
|
||||||
Residential mortgage backed securities
|
|
396,083
|
|
|
(14,100
|
)
|
|
966,332
|
|
|
(94,321
|
)
|
|
1,362,415
|
|
|
(108,421
|
)
|
||||||
Other asset backed securities
|
|
83,011
|
|
|
(4,937
|
)
|
|
—
|
|
|
—
|
|
|
83,011
|
|
|
(4,937
|
)
|
||||||
|
|
$
|
4,958,561
|
|
|
$
|
(183,403
|
)
|
|
$
|
1,145,807
|
|
|
$
|
(116,906
|
)
|
|
$
|
6,104,368
|
|
|
$
|
(300,309
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government sponsored agencies
|
|
$
|
731,105
|
|
|
$
|
(15,309
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
731,105
|
|
|
$
|
(15,309
|
)
|
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
|
—
|
|
|
—
|
|
|
50,643
|
|
|
(25,143
|
)
|
|
50,643
|
|
|
(25,143
|
)
|
||||||
|
|
$
|
731,105
|
|
|
$
|
(15,309
|
)
|
|
$
|
50,643
|
|
|
$
|
(25,143
|
)
|
|
$
|
781,748
|
|
|
$
|
(40,452
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
|
$
|
14,583
|
|
|
$
|
(1,199
|
)
|
|
$
|
16,253
|
|
|
$
|
(747
|
)
|
|
$
|
30,836
|
|
|
$
|
(1,946
|
)
|
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
|
(Dollars in thousands)
|
|||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
|
303
|
|
|
$
|
2,296,846
|
|
|
$
|
2,260,300
|
|
|
$
|
(36,546
|
)
|
Six months or more and less than twelve months
|
|
294
|
|
|
3,297,065
|
|
|
3,182,070
|
|
|
(114,995
|
)
|
|||
Twelve months or greater
|
|
26
|
|
|
257,221
|
|
|
242,599
|
|
|
(14,622
|
)
|
|||
Total investment grade
|
|
623
|
|
|
5,851,132
|
|
|
5,684,969
|
|
|
(166,163
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
|
15
|
|
|
121,256
|
|
|
110,977
|
|
|
(10,279
|
)
|
|||
Six months or more and less than twelve months
|
|
3
|
|
|
50,628
|
|
|
49,969
|
|
|
(659
|
)
|
|||
Twelve months or greater
|
|
63
|
|
|
864,247
|
|
|
764,928
|
|
|
(99,319
|
)
|
|||
Total below investment grade
|
|
81
|
|
|
1,036,131
|
|
|
925,874
|
|
|
(110,257
|
)
|
|||
Equity securities:
|
|
|
|
|
|
|
|
|
|||||||
Less then six months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Six months or more and less than twelve months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
|
3
|
|
|
17,782
|
|
|
16,828
|
|
|
(954
|
)
|
|||
Total equity securities
|
|
3
|
|
|
17,782
|
|
|
16,828
|
|
|
(954
|
)
|
|||
|
|
707
|
|
|
$
|
6,905,045
|
|
|
$
|
6,627,671
|
|
|
$
|
(277,374
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2010
|
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
|
656
|
|
|
$
|
5,805,583
|
|
|
$
|
5,611,000
|
|
|
$
|
(194,583
|
)
|
Six months or more and less than twelve months
|
|
1
|
|
|
7,874
|
|
|
7,848
|
|
|
(26
|
)
|
|||
Twelve months or greater
|
|
34
|
|
|
313,127
|
|
|
292,173
|
|
|
(20,954
|
)
|
|||
Total investment grade
|
|
691
|
|
|
6,126,584
|
|
|
5,911,021
|
|
|
(215,563
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
|
5
|
|
|
65,359
|
|
|
61,296
|
|
|
(4,063
|
)
|
|||
Six months or more and less than twelve months
|
|
1
|
|
|
9,562
|
|
|
9,522
|
|
|
(40
|
)
|
|||
Twelve months or greater
|
|
75
|
|
|
1,025,372
|
|
|
904,277
|
|
|
(121,095
|
)
|
|||
Total below investment grade
|
|
81
|
|
|
1,100,293
|
|
|
975,095
|
|
|
(125,198
|
)
|
|||
Equity securities:
|
|
|
|
|
|
|
|
|
|||||||
Less then six months
|
|
1
|
|
|
3,000
|
|
|
2,995
|
|
|
(5
|
)
|
|||
Six months or more and less than twelve months
|
|
2
|
|
|
12,782
|
|
|
11,588
|
|
|
(1,194
|
)
|
|||
Twelve months or greater
|
|
5
|
|
|
17,000
|
|
|
16,253
|
|
|
(747
|
)
|
|||
Total equity securities
|
|
8
|
|
|
32,782
|
|
|
30,836
|
|
|
(1,946
|
)
|
|||
|
|
780
|
|
|
$
|
7,259,659
|
|
|
$
|
6,916,952
|
|
|
$
|
(342,707
|
)
|
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
|
(Dollars in thousands)
|
|||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
|
1
|
|
|
$
|
2,318
|
|
|
$
|
1,755
|
|
|
$
|
(563
|
)
|
Six months or more and less than twelve months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
|
1
|
|
|
2,318
|
|
|
1,755
|
|
|
(563
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
|
4
|
|
|
22,954
|
|
|
15,471
|
|
|
(7,483
|
)
|
|||
Six months or more and less than twelve months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
|
5
|
|
|
84,640
|
|
|
61,513
|
|
|
(23,127
|
)
|
|||
Total below investment grade
|
|
9
|
|
|
107,594
|
|
|
76,984
|
|
|
(30,610
|
)
|
|||
|
|
10
|
|
|
$
|
109,912
|
|
|
$
|
78,739
|
|
|
$
|
(31,173
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2010
|
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Six months or more and less than twelve months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
|
2
|
|
|
24,645
|
|
|
19,648
|
|
|
(4,997
|
)
|
|||
Six months or more and less than twelve months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
|
7
|
|
|
104,129
|
|
|
71,368
|
|
|
(32,761
|
)
|
|||
Total below investment grade
|
|
9
|
|
|
128,774
|
|
|
91,016
|
|
|
(37,758
|
)
|
|||
|
|
9
|
|
|
$
|
128,774
|
|
|
$
|
91,016
|
|
|
$
|
(37,758
|
)
|
|
|
Available for sale
|
|
Held for investment
|
||||||||||||
|
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
June 30, 2011
|
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
|
20,728
|
|
|
20,278
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
|
233,323
|
|
|
228,070
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
|
996,805
|
|
|
967,590
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
|
3,305,700
|
|
|
3,184,622
|
|
|
1,070,065
|
|
|
1,048,843
|
|
||||
|
|
4,556,556
|
|
|
4,400,560
|
|
|
1,070,065
|
|
|
1,048,843
|
|
||||
Residential mortgage backed securities
|
|
1,161,764
|
|
|
1,068,203
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
|
98,878
|
|
|
93,237
|
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
5,817,198
|
|
|
$
|
5,562,000
|
|
|
$
|
1,070,065
|
|
|
$
|
1,048,843
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2010
|
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
|
30,367
|
|
|
29,858
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
|
245,978
|
|
|
238,108
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
|
1,249,052
|
|
|
1,201,090
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
|
3,320,496
|
|
|
3,189,886
|
|
|
822,200
|
|
|
781,748
|
|
||||
|
|
4,845,893
|
|
|
4,658,942
|
|
|
822,200
|
|
|
781,748
|
|
||||
Residential mortgage backed securities
|
|
1,470,836
|
|
|
1,362,415
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
|
87,948
|
|
|
83,011
|
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
6,404,677
|
|
|
$
|
6,104,368
|
|
|
$
|
822,200
|
|
|
$
|
781,748
|
|
General Description
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Gains/
(Losses)
|
|
Fair Value
|
|
Months in
Continuous
Unrealized
Loss Position
|
|
Months
Unrealized
Losses
Greater
Than 20%
|
||||||||
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||
Below investment grade
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Finance
|
|
1
|
|
|
$
|
4,090
|
|
|
—
|
|
|
$
|
4,090
|
|
|
—
|
|
|
—
|
|
Retail
|
|
1
|
|
|
10,474
|
|
|
(1,324
|
)
|
|
9,150
|
|
|
—
|
|
|
73
|
|
||
|
|
2
|
|
|
$
|
14,564
|
|
|
(1,324
|
)
|
|
$
|
13,240
|
|
|
|
|
|
|
|
Number
of
Securities
|
|
|
Total OTTI
Losses
|
|
|
Portion of OTTI
Losses Recognized in (from) Other
Comprehensive
Income
|
|
|
Net OTTI Losses
in Operations
|
|
||
|
|
|
|
(Dollars in thousands)
|
||||||||||
Three months ended June 30, 2011
|
|
18
|
|
|
$
|
(113
|
)
|
|
$
|
(2,116
|
)
|
|
(2,229
|
)
|
|
|
|
|
|
|
|
|
|
||||||
Three months ended June 30, 2010
|
|
2
|
|
|
(1,603
|
)
|
|
785
|
|
|
(818
|
)
|
||
|
|
|
|
|
|
|
|
|
||||||
Six months ended June 30, 2011
|
|
29
|
|
|
$
|
(5,213
|
)
|
|
$
|
(3,587
|
)
|
|
(8,800
|
)
|
|
|
|
|
|
|
|
|
|
||||||
Six months ended June 30, 2010
|
|
6
|
|
|
(14,187
|
)
|
|
10,146
|
|
|
(4,041
|
)
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||
|
|
(Dollars in thousands)
|
||||||
Mortgage loans with allowances
|
|
$
|
40,661
|
|
|
$
|
31,027
|
|
Mortgage loans with no allowance for losses
|
|
89,471
|
|
|
81,994
|
|
||
Allowance for probable loan losses
|
|
(15,027
|
)
|
|
(13,224
|
)
|
||
Net carrying value
|
|
$
|
115,105
|
|
|
$
|
99,797
|
|
|
|
June 30,
2011 |
|
December 31,
2010 |
||||
|
|
(Dollars in thousands)
|
||||||
Assets
|
|
|
|
|
||||
Derivative Instruments
|
|
|
|
|
||||
Call options
|
|
$
|
537,920
|
|
|
$
|
479,786
|
|
Other Assets
|
|
|
|
|
||||
2015 notes hedges
|
|
63,141
|
|
|
66,595
|
|
||
|
|
$
|
601,061
|
|
|
$
|
546,381
|
|
Liabilities
|
|
|
|
|
||||
Policy benefit reserves - annuity products
|
|
|
|
|
||||
Fixed index annuities - embedded derivatives
|
|
$
|
2,368,533
|
|
|
$
|
1,971,383
|
|
Other liabilities
|
|
|
|
|
||||
2015 notes embedded derivatives
|
|
63,141
|
|
|
66,595
|
|
||
Interest rate swaps
|
|
937
|
|
|
1,976
|
|
||
|
|
$
|
2,432,611
|
|
|
$
|
2,039,954
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
Change in fair value of derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Call options
|
|
$
|
(13,238
|
)
|
|
$
|
(208,131
|
)
|
|
$
|
130,214
|
|
|
$
|
(124,829
|
)
|
2015 notes hedges
|
|
(8,723
|
)
|
|
—
|
|
|
(3,454
|
)
|
|
—
|
|
||||
Interest rate swaps
|
|
(68
|
)
|
|
(606
|
)
|
|
(136
|
)
|
|
(1,893
|
)
|
||||
|
|
$
|
(22,029
|
)
|
|
$
|
(208,737
|
)
|
|
$
|
126,624
|
|
|
$
|
(126,722
|
)
|
Change in fair value of embedded derivatives:
|
|
|
|
|
|
|
|
|
||||||||
2015 notes embedded derivatives
|
|
$
|
(8,723
|
)
|
|
$
|
—
|
|
|
$
|
(3,454
|
)
|
|
$
|
—
|
|
Fixed index annuities
|
|
(52,240
|
)
|
|
(190,211
|
)
|
|
70,794
|
|
|
(126,336
|
)
|
||||
|
|
$
|
(60,963
|
)
|
|
$
|
(190,211
|
)
|
|
$
|
67,340
|
|
|
$
|
(126,336
|
)
|
|
|
|
|
|
|
June 30, 2011
|
|
December 31, 2010
|
||||||||||||
Counterparty
|
|
Credit Rating (S&P)
|
|
Credit Rating (Moody's)
|
|
Notional
Amount
|
|
Fair Value
|
|
Notional
Amount
|
|
Fair Value
|
||||||||
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||||||||
Bank of America
|
|
A+
|
|
Aa3
|
|
$
|
1,649,650
|
|
|
$
|
59,938
|
|
|
$
|
588,650
|
|
|
$
|
25,704
|
|
BNP Paribas
|
|
AA
|
|
Aa2
|
|
1,724,375
|
|
|
56,610
|
|
|
786,561
|
|
|
34,772
|
|
||||
Bank of New York
|
|
AA-
|
|
Aa2
|
|
—
|
|
|
—
|
|
|
18,082
|
|
|
111
|
|
||||
Credit Suisse
|
|
A+
|
|
Aa1
|
|
2,193,640
|
|
|
114,760
|
|
|
2,462,920
|
|
|
95,910
|
|
||||
Barclays
|
|
AA-
|
|
Aa3
|
|
2,117,829
|
|
|
84,280
|
|
|
1,728,218
|
|
|
72,751
|
|
||||
SunTrust
|
|
BBB+
|
|
A3
|
|
—
|
|
|
—
|
|
|
50,540
|
|
|
3,164
|
|
||||
Wells Fargo (Wachovia)
|
|
NR
|
|
Aa2
|
|
1,941,659
|
|
|
87,905
|
|
|
1,745,775
|
|
|
76,250
|
|
||||
J.P. Morgan
|
|
AA-
|
|
Aa1
|
|
2,551,576
|
|
|
105,239
|
|
|
2,858,902
|
|
|
133,368
|
|
||||
UBS
|
|
A+
|
|
Aa3
|
|
377,771
|
|
|
23,518
|
|
|
921,596
|
|
|
37,756
|
|
||||
HSBC
|
|
AA
|
|
Aa2
|
|
226,387
|
|
|
5,670
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
$
|
12,782,887
|
|
|
$
|
537,920
|
|
|
$
|
11,161,244
|
|
|
$
|
479,786
|
|
Date: August 5, 2011
|
AMERICAN EQUITY INVESTMENT LIFE
|
|
|
|
HOLDING COMPANY
|
|
|
|
|
|
|
|
By:
|
/s/ Wendy C. Waugaman
|
|
|
|
Wendy C. Waugaman, President
and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
By:
|
/s/ John M. Matovina
|
|
|
|
John M. Matovina, Vice Chairman,
Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
By:
|
/s/ Ted M. Johnson
|
|
|
|
Ted M. Johnson, Vice President - Controller
|
|
|
|
(Principal Accounting Officer)
|
|
Designation of Group
|
|
Shares Outstanding
|
|
Votes Entitled to be Cast on Amendment
|
|
Votes Represented at Meeting
|
|||
|
|
|
|
|
|
|
|||
Common
|
|
59,455,510
|
|
|
59,232,887
|
|
|
55,341,323
|
|
Preferred (nonvoting)
|
|
—
|
|
|
—
|
|
|
—
|
|
A.
|
The total number of votes cast for and against the amendment by each voting group entitled to vote separately on the amendment is as follows:
|
Voting Group
|
|
Votes For
|
|
Votes Against
|
|
Abstaining
|
|||
|
|
|
|
|
|
|
|||
Common
|
|
50,570,877
|
|
|
4,728,481
|
|
|
41,955
|
|
Preferred (nonvoting)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Six Months
Ended
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
June 30, 2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
||||||||||||
|
|
|
(Dollars in thousands)
|
||||||||||||||||||||
Consolidated income before income taxes and minority interests
|
$
|
76,182
|
|
|
$
|
65,266
|
|
|
$
|
86,164
|
|
|
$
|
77,053
|
|
|
$
|
38,144
|
|
|
$
|
116,029
|
|
Interest credited to account balances and amortization of deferred sales inducements
|
446,042
|
|
|
793,091
|
|
|
387,882
|
|
|
235,836
|
|
|
571,917
|
|
|
429,062
|
|
||||||
Interest expense on notes payable
|
15,739
|
|
|
22,125
|
|
|
14,853
|
|
|
19,773
|
|
|
20,916
|
|
|
21,278
|
|
||||||
Interest expense on subordinated debentures
|
6,947
|
|
|
14,906
|
|
|
15,819
|
|
|
19,445
|
|
|
22,520
|
|
|
21,354
|
|
||||||
Interest expense on amounts due under repurchase agreements and other interest expense
|
5
|
|
|
—
|
|
|
534
|
|
|
8,207
|
|
|
15,926
|
|
|
32,931
|
|
||||||
Interest portion of rental expense
|
315
|
|
|
648
|
|
|
570
|
|
|
459
|
|
|
468
|
|
|
431
|
|
||||||
Consolidated earnings
|
$
|
545,230
|
|
|
$
|
896,036
|
|
|
$
|
505,822
|
|
|
$
|
360,773
|
|
|
$
|
669,891
|
|
|
$
|
621,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest credited to account balances and amortization of deferred sales inducements
|
446,042
|
|
|
793,091
|
|
|
387,882
|
|
|
235,836
|
|
|
571,917
|
|
|
429,062
|
|
||||||
Interest expense on notes payable
|
15,739
|
|
|
22,125
|
|
|
14,853
|
|
|
19,773
|
|
|
20,916
|
|
|
21,278
|
|
||||||
Interest expense on subordinated debentures
|
6,947
|
|
|
14,906
|
|
|
15,819
|
|
|
19,445
|
|
|
22,520
|
|
|
21,354
|
|
||||||
Interest expense on amounts due under repurchase agreements and other interest expense
|
5
|
|
|
—
|
|
|
534
|
|
|
8,207
|
|
|
15,926
|
|
|
32,931
|
|
||||||
Interest portion of rental expense
|
315
|
|
|
648
|
|
|
570
|
|
|
459
|
|
|
468
|
|
|
431
|
|
||||||
Combined fixed charges
|
$
|
469,048
|
|
|
$
|
830,770
|
|
|
$
|
419,658
|
|
|
$
|
283,720
|
|
|
$
|
631,747
|
|
|
$
|
505,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of consolidated earnings to fixed charges
|
1.2
|
|
|
1.1
|
|
|
1.2
|
|
|
1.3
|
|
|
1.1
|
|
|
1.2
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of consolidated earnings to fixed charges, excluding interest credited to account balances and amortization of deferred sales inducements
|
4.3
|
|
|
2.7
|
|
|
3.7
|
|
|
2.6
|
|
|
1.6
|
|
|
2.5
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of American Equity Investment Life Holding Company;
|
||
|
|
|
|
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 quarterly 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 quarterly 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 we 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 quarterly 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 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(s) and I have disclosed, based on our most recent evaluation, 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 5, 2011
|
By:
|
/s/ Wendy C. Waugaman
|
|
|
|
Wendy C. Waugaman, President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of American Equity Investment Life Holding Company;
|
||
|
|
|
|
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 quarterly 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 quarterly 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 we 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 quarterly 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 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(s) and I have disclosed, based on our most recent evaluation, 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 5, 2011
|
By:
|
/s/ John M. Matovina
|
|
|
|
John M. Matovina, Vice Chairman, Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|
|
|
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
|
Date: August 5, 2011
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wendy C. Waugaman
|
|
|
|
Wendy C. Waugaman, President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
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
|
Date: August 5, 2011
|
|
|
|
|
|
|
|
|
By:
|
/s/ John M. Matovina
|
|
|
|
John M. Matovina, Vice Chairman, Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|
|