CNO FINANCIAL GROUP, INC., 10-K filed on 2/19/2013
Annual Report
DOCUMENT AND ENTITY INFORMATION Document (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Feb. 7, 2013
Jun. 30, 2012
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
CNO Financial Group, Inc. 
 
 
Entity Central Index Key
0001224608 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2012 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Document Fiscal Year Focus
2012 
 
 
Document Fiscal Period Focus
FY 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Voluntary Filers
No 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Current Reporting Status
Yes 
 
 
Amendment Flag
false 
 
 
Entity Public Float
 
 
$ 1.8 
Entity Common Stock, Shares Outstanding
 
221,517,871 
 
CONSOLIDATED BALANCE SHEET (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Investments:
 
 
Fixed maturities, available for sale, at fair value (amortized cost: 2012 - $21,626.8; 2011 - $21,779.1)
$ 24,614.1 
$ 23,516.0 
Equity securities at fair value (cost: 2012 - $167.1; 2011 - $177.0)
171.4 
175.1 
Mortgage loans
1,573.2 
1,602.8 
Policy loans
272.0 
279.7 
Trading securities
266.2 
91.6 
Investments held by variable interest entities
814.3 
496.3 
Other invested assets
248.1 
202.8 
Total investments
27,959.3 
26,364.3 
Cash and cash equivalents - unrestricted
582.5 
436.0 
Cash and cash equivalents held by variable interest entities
54.2 
74.4 
Accrued investment income
286.2 
288.7 
Present value of future profits
626.0 
697.7 
Deferred acquisition costs
629.7 
797.1 
Reinsurance receivables
2,927.7 
3,091.1 
Income tax assets, net
716.9 
865.4 
Assets held in separate accounts
14.9 
15.0 
Other assets
334.0 
292.2 
Total assets
34,131.4 
32,921.9 
Liabilities for insurance products:
 
 
Interest-sensitive products
12,893.2 
13,165.5 
Traditional products
11,196.3 
10,482.7 
Claims payable and other policyholder funds
985.1 
1,034.3 
Liabilities related to separate accounts
14.9 
15.0 
Other liabilities
570.6 
556.3 
Investment borrowings
1,650.8 
1,676.5 
Borrowings related to variable interest entities
767.0 
519.9 
Notes payable - direct corporate obligations
1,004.2 
857.9 
Total liabilities
29,082.1 
28,308.1 
Commitments and contingencies (Note 7)
   
   
Shareholders' equity:
 
 
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: 2012 - 221,502,371; 2011 – 241,304,503)
2.2 
2.4 
Additional paid-in capital
4,174.7 
4,361.9 
Accumulated other comprehensive income
1,197.4 
781.6 
Accumulated deficit
(325.0)
(532.1)
Total shareholders' equity
5,049.3 
4,613.8 
Total liabilities and shareholders' equity
$ 34,131.4 
$ 32,921.9 
PARENTHETICAL DATA TO THE CONSOLIDATED BALANCE SHEET (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Investments:
 
 
Fixed maturities, available for sale, amortized cost
$ 21,626.8 
$ 21,779.1 
Equity securities cost
$ 167.1 
$ 177.0 
Shareholders' equity:
 
 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
8,000,000,000 
8,000,000,000 
Common stock, shares issued
221,502,371 
241,304,503 
Common stock, shares outstanding
221,502,371 
241,304,503 
CONSOLIDATED STATEMENT OF OPERATIONS (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Revenues:
 
 
 
Insurance policy income
$ 2,755.4 
$ 2,690.5 
$ 2,670.0 
Net investment income (loss):
 
 
 
General account assets
1,398.5 
1,360.7 
1,295.0 
Policyholder and reinsurer accounts and other special- purpose portfolios
87.9 
(6.6)
71.9 
Realized investment gains (losses):
 
 
 
Net realized investment gains, excluding impairment losses
118.9 
96.4 
180.0 
Other-than-temporary impairment losses:
 
 
 
Total other-than-temporary impairment losses
(37.8)
(39.9)
(146.8)
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income
0 
5.3 
(3.0)
Net impairment losses recognized
(37.8)
(34.6)
(149.8)
Total realized gains
81.1 
61.8 
30.2 
Fee revenue and other income
19.8 
18.2 
16.8 
Total revenues
4,342.7 
4,124.6 
4,083.9 
Benefits and expenses:
 
 
 
Insurance policy benefits
2,763.9 
2,699.0 
2,723.7 
Interest expense
114.6 
114.1 
113.2 
Amortization
289.0 
297.4 
325.0 
Loss on extinguishment of debt
200.2 
3.4 
6.8 
Other operating costs and expenses
819.3 
704.5 
690.3 
Total benefits and expenses
4,187.0 
3,818.4 
3,859.0 
Income before income taxes
155.7 
306.2 
224.9 
Income tax expense:
 
 
 
Tax expense on period income
106.2 
113.5 
79.3 
Valuation allowance for deferred tax assets
(171.5)
(143.0)
(95.0)
Net income
$ 221.0 
$ 335.7 
$ 240.6 
Basic:
 
 
 
Weighted average shares outstanding
233,685,000 
247,952,000 
250,973,000 
Net income
$ 0.95 
$ 1.35 
$ 0.96 
Diluted:
 
 
 
Weighted average shares outstanding
281,427,000 
304,081,000 
301,858,000 
Net income
$ 0.83 
$ 1.15 
$ 0.84 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Net income
$ 221.0 
$ 335.7 
$ 240.6 
Unrealized gains for period
1,336.2 
1,357.7 
1,052.2 
Amortization of present value of future profits and deferred acquisition costs
(107.1)
(167.1)
(136.1)
Amount related to premium deficiences assuming the net unrealized gains had been realized
(531.0)
(271.0)
0 
Reclassification adjustments:
 
 
 
For net realized investment losses included in net income
(68.7)
(101.0)
(97.2)
For amortization of the present value of future profits and deferred acquisition costs relared to net realized investment gains (losses) included in net income
6.5 
5.4 
9.3 
Cumulative effect of accounting change
0 
0 
(9.5)
Unrealized gains on investments
635.9 
824.0 
818.7 
Change related to deferred compensation plan
0.4 
(0.6)
0.5 
Other comprehensive income before tax
636.3 
823.4 
819.2 
Income tax related to items of accumulated other comprehensive income
(220.5)
(294.5)
(292.5)
Other comprehensive income, net of tax
415.8 
528.9 
526.7 
Comprehensive income
$ 636.8 
$ 864.6 
$ 767.3 
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $)
In Millions, unless otherwise specified
Total
Common stock and additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings (accumulated deficit)
Balance, beginning of period at Dec. 31, 2009
$ 3,038.6 
$ 4,411.3 
$ (274.0)
$ (1,098.7)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Net income
240.6 
   
   
240.6 
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense)
462.2 
   
462.2 
   
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense (benefit))
70.7 
   
70.7 
   
Cumulative effect of accounting change
(15.9)
   
(6.2)
(9.7)
Beneficial conversion feature related to the issuance of convertible debentures
4.0 
4.0 
   
   
Stock options, restricted stock and performance units
11.4 
11.4 
   
   
Balance, end of period at Dec. 31, 2010
3,811.6 
4,426.7 
252.7 
(867.8)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Net income
335.7 
   
   
335.7 
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense)
528.7 
   
528.7 
   
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense (benefit))
0.2 
   
0.2 
   
Cost of shares acquired
(69.8)
(69.8)
   
   
Stock options, restricted stock and performance units
7.4 
7.4 
   
   
Balance, end of period at Dec. 31, 2011
4,613.8 
4,364.3 
781.6 
(532.1)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Net income
221.0 
0 
0 
221.0 
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense)
407.8 
0 
407.8 
0 
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense (benefit))
8.0 
0 
8.0 
0 
Extinguishment of beneficial conversion feature related to repurchase of convertible debentures
(24.0)
(24.0)
0 
0 
Cost of shares acquired
(180.2)
(180.2)
0 
0 
Dividends on common stock
(13.9)
0 
0 
(13.9)
Stock options, restricted stock and performance units
16.8 
16.8 
0 
0 
Balance, end of period at Dec. 31, 2012
$ 5,049.3 
$ 4,176.9 
$ 1,197.4 
$ (325.0)
PARENTHETICAL DATA TO THE CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Statement of Stockholders' Equity [Abstract]
 
 
 
Change in unrealized appreciation (depreciation) of investments, applicable income tax expense
$ 216.1 
$ 294.4 
$ 256.3 
Change in noncredit component of impairment losses on fixed maturities, available for sale, applicable income tax expense
$ 4.4 
$ 0.1 
$ 39.5 
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Cash flows from operating activities:
 
 
 
Insurance policy income
$ 2,419.7 
$ 2,382.8 
$ 2,359.3 
Net investment income
1,385.8 
1,418.6 
1,304.9 
Fee revenue and other income
19.8 
18.2 
16.8 
Insurance policy benefits
(2,096.5)
(2,044.9)
(1,975.4)
Interest expense
(109.0)
(95.5)
(108.2)
Deferrable policy acquisition costs
(191.7)
(216.7)
(225.2)
Other operating costs
(786.7)
(684.3)
(637.8)
Taxes
(6.5)
(3.4)
(0.4)
Net cash provided by operating activities
634.9 
774.8 
734.0 
Cash flows from investing activities:
 
 
 
Sales of investments
2,057.6 
5,504.5 
8,632.6 
Maturities and redemptions of investments
1,967.4 
1,093.5 
894.0 
Purchases of investments
(4,271.1)
(8,156.1)
(10,739.2)
Net sales (purchases) of trading securities
60.4 
300.2 
(51.7)
Change in cash and cash equivalents held by variable interest entities
20.2 
(47.6)
(19.6)
Other
(31.6)
(32.5)
(14.7)
Net cash used by investing activities
(197.1)
(1,338.0)
(1,298.6)
Cash flows from financing activities:
 
 
 
Issuance of notes payable, net
944.5 
0 
756.1 
Payments on notes payable
(810.6)
(144.8)
(793.6)
Expenses related to extinguishment of debt
(183.0)
0 
0 
Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures
(24.0)
0 
0 
Issuance of common stock
3.1 
2.2 
0 
Payments to repurchase common stock
(180.2)
(69.8)
0 
Common stock dividends paid
(13.9)
0 
0 
Amounts received for deposit products
1,296.7 
1,693.5 
1,730.1 
Withdrawals from deposit products
(1,544.9)
(1,664.3)
(1,704.4)
Issuance of investment borrowings:
 
 
 
Federal Home Loan Bank
375.0 
717.0 
787.0 
Related to variable interest entities
246.7 
236.4 
0 
Payments on investment borrowings:
 
 
 
Federal Home Loan Bank
(375.0)
(267.0)
(37.0)
Related to variable interest entities and other
(0.9)
(100.7)
(125.1)
Investment borrowings - repurchase agreements, net
(24.8)
24.8 
0 
Net cash provided (used) by financing activities
(291.3)
427.3 
613.1 
Net increase (decrease) in cash and cash equivalents
146.5 
(135.9)
48.5 
Cash and cash equivalents, beginning of year
436.0 
571.9 
523.4 
Cash and cash equivalents, end of year
$ 582.5 
$ 436.0 
$ 571.9 
BUSINESS AND BASIS OF PRESENTATION
BUSINESS AND BASIS OF PRESENTATION
BUSINESS AND BASIS OF PRESENTATION

CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products.  CNO became the successor to Conseco, Inc., an Indiana corporation (our "Predecessor"), in connection with our bankruptcy reorganization which became effective on September 10, 2003 (the "Effective Date").  The terms "CNO Financial Group, Inc.", "CNO", the "Company", "we", "us", and "our" as used in these financial statements refer to CNO and its subsidiaries or, when the context requires otherwise, our Predecessor and its subsidiaries.  Such terms, when used to describe insurance business and products, refer to the insurance business and products of CNO's insurance subsidiaries.

We focus on serving the senior and middle-income markets, which we believe are attractive, underserved, high growth markets.  We sell our products through three distribution channels: career agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing.

The Company manages its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; Other CNO Business, comprised primarily of products we no longer sell actively; and corporate operations, comprised of holding company activities and certain noninsurance company businesses. The Company's segments are described below:

•
Bankers Life, which markets and distributes Medicare supplement insurance, interest-sensitive life insurance, traditional life insurance, fixed annuities and long-term care insurance products to the middle-income senior market through a dedicated field force of career agents and sales managers supported by a network of community-based sales offices. The Bankers Life segment includes primarily the business of Bankers Life and Casualty Company ("Bankers Life"). Bankers Life also markets and distributes Medicare Advantage plans primarily through distribution arrangements with Humana, Inc. and United HealthCare and Medicare Part D prescription drug plans ("PDP") through a distribution and reinsurance arrangement with Coventry Health Care ("Coventry").
  
•
Washington National, which markets and distributes supplemental health (including specified disease, accident and hospital indemnity insurance products) and life insurance to middle-income consumers at home and at the worksite. These products are marketed through Performance Matters Associates of Texas, Inc., a wholly owned subsidiary, and through independent marketing organizations and insurance agencies, including worksite marketing. The products being marketed are underwritten by Washington National Insurance Company ("Washington National").
 
•
Colonial Penn, which markets primarily graded benefit and simplified issue life insurance directly to customers in the senior middle-income market through television advertising, direct mail, the internet and telemarketing. The Colonial Penn segment includes primarily the business of Colonial Penn Life Insurance Company ("Colonial Penn").

•
Other CNO Business, which consists of blocks of interest-sensitive life insurance, traditional life insurance, annuities, long-term care insurance and other supplemental health products. These blocks of business are not actively marketed and were primarily issued or acquired by Conseco Life Insurance Company ("Conseco Life") and Washington National.

We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The accompanying financial statements include the accounts of the Company and its subsidiaries. Our consolidated financial statements exclude the results of material transactions between us and our consolidated affiliates, or among our consolidated affiliates.

When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods.  For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation and guaranty fund assessment accruals.  If our future experience differs from these estimates and assumptions, our financial statements could be materially affected.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary of Significant Accounting Policies
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investments

We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of tax and related adjustments, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as net investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios)).

Equity securities include investments in common stock and non-redeemable preferred stock. We carry these investments at estimated fair value. We record any unrealized gain or loss, net of tax and related adjustments, as a component of shareholders' equity.

Mortgage loans held in our investment portfolio are carried at amortized unpaid balances, net of provisions for estimated losses. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Payment terms specified for mortgage loans may include a prepayment penalty for unscheduled payoff of the investment. Prepayment penalties are recognized as investment income when received.

Policy loans are stated at current unpaid principal balances.

Our trading securities include: (i) investments purchased with the intent of selling in the near term to generate income on price changes; (ii) investments supporting certain insurance liabilities (including investments backing the market strategies of our multibucket annuity products) and certain reinsurance agreements; and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of these securities is recognized in income from policyholder and reinsurer accounts and other special-purpose portfolios (a component of net investment income). Investment income from trading securities backing certain insurance liabilities and certain reinsurance agreements is substantially offset by the change in insurance policy benefits related to certain products and agreements.  Prior to June 30, 2011, certain of our trading securities were held to offset the income statement volatility caused by the effect of interest rate fluctuations on the value of embedded derivatives related to our fixed index annuity products.  During the second quarter of 2011, we sold this trading portfolio. See the section of this note entitled "Accounting for Derivatives" for further discussion regarding these embedded derivatives.  The change in value of these securities is recognized in realized investment gains (losses). Our trading securities totaled $266.2 million and $91.6 million at December 31, 2012 and 2011, respectively.

Other invested assets include: (i) call options purchased in an effort to offset or hedge the effects of certain policyholder benefits related to our fixed index annuity and life insurance products; (ii) Company-owned life insurance ("COLI"); and (iii) certain non-traditional investments. We carry the call options at estimated fair value as further described in the section of this note entitled "Accounting for Derivatives". We carry COLI at its cash surrender value which approximates its net realizable value. Non-traditional investments include investments in certain limited partnerships, which are accounted for using the equity method; promissory notes, which are accounted for using the cost method; and investments in certain hedge funds that are carried at estimated fair value.

We defer any fees received or costs incurred when we originate investments. We amortize fees, costs, discounts and premiums as yield adjustments over the contractual lives of the investments without anticipation of prepayments. We consider anticipated prepayments on mortgage-backed securities in determining estimated future yields on such securities.

When we sell a security (other than trading securities), we report the difference between the sale proceeds and amortized cost (determined based on specific identification) as a realized investment gain or loss.

We regularly evaluate our investments for possible impairment as further described in the note to the consolidated financial statements entitled "Investments".

When a security defaults (including mortgage loans) or securities (other than structured securities) are other-than-temporarily impaired, our policy is to discontinue the accrual of interest and eliminate all previous interest accruals, if we determine that such amounts will not be ultimately realized in full.

Cash and Cash Equivalents

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.

Deferred Acquisition Costs

Deferred acquisition costs represent incremental direct costs related to the successful acquisition of new or renewal insurance contracts. For universal life or investment products, we amortize these costs in relation to the estimated gross profits using the interest rate credited to the underlying policies. For other products, we amortize these costs in relation to future anticipated premium revenue using the projected investment earnings rate.

When we realize a gain or loss on investments backing our universal life or investment-type products, we adjust the amortization to reflect the change in estimated gross profits from the products due to the gain or loss realized and the effect on future investment yields. We also adjust deferred acquisition costs for the change in amortization that would have been recorded if our fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields. We limit the total adjustment related to the impact of unrealized losses to the total of costs capitalized plus interest related to insurance policies issued in a particular year. We include the impact of this adjustment in accumulated other comprehensive income (loss) within shareholders' equity.

We regularly evaluate the recoverability of the unamortized balance of the deferred acquisition costs. We consider estimated future gross profits or future premiums, expected mortality or morbidity, interest earned and credited rates, persistency and expenses in determining whether the balance is recoverable. If we determine a portion of the unamortized balance is not recoverable, it is charged to amortization expense. In certain cases, the unamortized balance of the deferred acquisition costs may not be deficient in the aggregate, but our estimates of future earnings indicate that profits would be recognized in early periods and losses in later periods. In this case, we increase the amortization of the deferred acquisition costs over the period of profits, by an amount necessary to offset losses that are expected to be recognized in the later years.

Refer to the caption "Recently Issued Accounting Standards - Accounting Standard Adopted on a Retrospective Basis" for further information regarding the impact of adoption.

Present Value of Future Profits

The value assigned to the right to receive future cash flows from policyholder insurance contracts existing at the Effective Date is referred to as the present value of future profits.  The discount rate we used to determine the present value of future profits was 12 percent. The balance of this account is amortized and evaluated for recovery in the same manner as described above for deferred acquisition costs.  We also adjust the present value of future profits for the change in amortization that would have been recorded if the fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields, similar to the manner described above for deferred acquisition costs.  We limit the total adjustment related to the impact of unrealized losses to the total present value of future profits plus interest.

Assets Held in Separate Accounts

Separate accounts are funds on which investment income and gains or losses accrue directly to certain policyholders. The assets of these accounts are legally segregated. They are not subject to the claims that may arise out of any other business of CNO. We report separate account assets at fair value; the underlying investment risks are assumed by the contractholders. We record the related liabilities at amounts equal to the separate account assets. We record the fees earned for administrative and contractholder services performed for the separate accounts in insurance policy income.

Recognition of Insurance Policy Income and Related Benefits and Expenses on Insurance Contracts

For universal life and investment contracts that do not involve significant mortality or morbidity risk, the amounts collected from policyholders are considered deposits and are not included in revenue. Revenues for these contracts consist of charges for policy administration, cost of insurance charges and surrender charges assessed against policyholders' account balances. Such revenues are recognized when the service or coverage is provided, or when the policy is surrendered.

We establish liabilities for investment and universal life products equal to the accumulated policy account values, which include an accumulation of deposit payments plus credited interest, less withdrawals and the amounts assessed against the policyholder through the end of the period. Sales inducements provided to the policyholders of these products are recognized as liabilities over the period that the contract must remain in force to qualify for the inducement. The options attributed to the policyholder related to our fixed index annuity products are accounted for as embedded derivatives as described in the section of this note entitled "Accounting for Derivatives".

Premiums from individual life products (other than interest-sensitive life contracts), and health products are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for all expected future benefits and expenses) is deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as an expense when they are incurred.

We establish liabilities for traditional life, accident and health insurance, and life contingent payment annuity products using mortality tables in general use in the United States, which are modified to reflect the Company's actual experience when appropriate. We establish liabilities for accident and health insurance products using morbidity tables based on the Company's actual or expected experience. These reserves are computed at amounts that, with additions from estimated future premiums received and with interest on such reserves at estimated future rates, are expected to be sufficient to meet our obligations under the terms of the policy. Liabilities for future policy benefits are computed on a net-level premium method based upon assumptions as to future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses determined when the policies were issued (or with respect to policies inforce at August 31, 2003, the Company's best estimate of such assumptions on the Effective Date). We make an additional provision to allow for potential adverse deviation for some of our assumptions. Once established, assumptions on these products are generally not changed unless a premium deficiency exists. In that case, a premium deficiency reserve is recognized and the future pattern of reserve changes is modified to reflect the relationship of premiums to benefits based on the current best estimate of future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses, determined without an additional provision for potential adverse deviation.

We establish claim reserves based on our estimate of the loss to be incurred on reported claims plus estimates of incurred but unreported claims based on our past experience.

Accounting for Long-term Care Premium Rate Increases

Many of our long-term care policies have been subject to premium rate increases. In some cases, these premium rate increases were materially consistent with the assumptions we used to value the particular block of business at the Effective Date. With respect to certain premium rate increases, some of our policyholders were provided an option to cease paying their premiums and receive a non-forfeiture option in the form of a paid-up policy with limited benefits. In addition, our policyholders could choose to reduce their coverage amounts and premiums in the same proportion, when permitted by our contracts or as required by regulators. The following describes how we account for these policyholder options:

•
Premium rate increases - If premium rate increases reflect a change in our previous rate increase assumptions, the new assumptions are not reflected prospectively in our reserves. Instead, the additional premium revenue resulting from the rate increase is recognized as earned and original assumptions continue to be used to determine changes to liabilities for insurance products unless a premium deficiency exists.

•
Benefit reductions - A policyholder may choose reduced coverage with a proportionate reduction in premium, when permitted by our contracts. This option does not require additional underwriting. Benefit reductions are treated as a partial lapse of coverage, and the balance of our reserves and deferred insurance acquisition costs is reduced in proportion to the reduced coverage.

•
Non-forfeiture benefits offered in conjunction with a rate increase - In some cases, non-forfeiture benefits are offered to policyholders who wish to lapse their policies at the time of a significant rate increase. In these cases, exercise of this option is treated as an extinguishment of the original contract and issuance of a new contract. The balance of our reserves and deferred insurance acquisition costs are released, and a reserve for the new contract is established.

•
Florida Order - In 2004, the Florida Office of Insurance Regulation issued an order regarding home health care business in Florida in our Other CNO Business segment. The order required a choice of three alternatives to be offered to holders of home health care policies in Florida subject to premium rate increases as follows:

•
retention of their current policy with a rate increase of 50 percent in the first year and actuarially justified increases in subsequent years;

•
receipt of a replacement policy with reduced benefits and a rate increase in the first year of 25 percent and no more than 15 percent in subsequent years; or

•
receipt of a paid-up policy, allowing the holder to file future claims up to 100 percent of the amount of premiums paid since the inception of the policy.

Reserves for all three groups of policies under the order were prospectively adjusted using a prospective revision methodology, as these alternatives were required by the Florida Office of Insurance Regulation. These policies had no insurance acquisition costs established at the Effective Date.

Some of our policyholders may receive a non-forfeiture benefit if they cease paying their premiums pursuant to their original contract (or pursuant to changes made to their original contract as a result of a litigation settlement made prior to the Effective Date or an order issued by the Florida Office of Insurance Regulation). In these cases, exercise of this option is treated as the exercise of a policy benefit, and the reserve for premium paying benefits is reduced, and the reserve for the non-forfeiture benefit is adjusted to reflect the election of this benefit.

Accounting for Marketing and Reinsurance Agreements with Coventry

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 provided for the introduction of a prescription drug benefit. In order to offer this product to our current and potential future policyholders without investing in management and infrastructure, we entered into a national distribution agreement with Coventry to use our career and independent agents to distribute Coventry's prescription drug plan, Advantra Rx. We receive a fee based on the premiums collected on plans sold through our distribution channels. In addition, CNO has a quota-share reinsurance agreement with Coventry for CNO enrollees that provides CNO with 50 percent of net premiums and related policy benefits subject to a risk corridor.

The following describes how we account for and report our PDP business:

Our accounting for the national distribution agreement

•
We recognize distribution income based on a fixed fee per PDP contract. This fee income is recognized over the calendar year term as premiums are collected.

•
We also pay commissions to our agents who sell the plans on behalf of Coventry. These payments are deferred and amortized over the remaining term of the initial enrollment period (the one-year life of the initial policy).

Our accounting for the quota-share agreement

•
We recognize premium revenue evenly over the period of the underlying Medicare Part D contracts.

•
We recognize policyholder benefits and ceding commission expense as incurred.

•
We recognize risk-share premium adjustments consistent with Coventry's risk-share agreement with the Centers for Medicare and Medicaid Services.

Reinsurance

In the normal course of business, we seek to limit our loss exposure on any single insured or to certain groups of policies by ceding reinsurance to other insurance enterprises. We currently retain no more than $.8 million of mortality risk on any one policy. We diversify the risk of reinsurance loss by using a number of reinsurers that have strong claims-paying ratings. In each case, the ceding CNO subsidiary is directly liable for claims reinsured in the event the assuming company is unable to pay.

The cost of reinsurance on life and health coverages is recognized over the life of the reinsured policies using assumptions consistent with those used to account for the underlying policy. The cost of reinsurance ceded totaled $220.0 million, $238.1 million and $258.6 million in 2012, 2011 and 2010, respectively.  We deduct this cost from insurance policy income.  Reinsurance recoveries netted against insurance policy benefits totaled $210.2 million, $204.9 million and $471.6 million in 2012, 2011 and 2010, respectively.

From time-to-time, we assume insurance from other companies.  Any costs associated with the assumption of insurance are amortized consistent with the method used to amortize deferred acquisition costs described above.  Reinsurance premiums assumed totaled $69.4 million, $80.4 million and $92.6 million in 2012, 2011 and 2010, respectively.  Reinsurance premiums included amounts assumed pursuant to marketing and quota-share agreements with Coventry of $49.9 million, $58.1 million and $67.2 million in 2012, 2011 and 2010, respectively.

See the section of this note entitled "Accounting for Derivatives" for a discussion of the derivative embedded in the payable related to certain modified coinsurance agreements.

Income Taxes

Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and net operating loss carryforwards ("NOLs"). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted.

A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income during the periods in which our temporary differences become deductible and before our capital loss carryforwards and NOLs expire.

At December 31, 2012, our valuation allowance for our net deferred tax assets was $766.9 million, as we have determined that it is more likely than not that a portion of our deferred tax assets will not be realized. This determination was made by evaluating each component of the deferred tax assets and assessing the effects of limitations and/or interpretations on the value of such component to be fully recognized in the future.

Investments in Variable Interest Entities

We have concluded that we are the primary beneficiary with respect to certain variable interest entities ("VIEs"), which are consolidated in our financial statements.  The following is a description of our significant investments in VIEs:

All of the VIEs are collateralized loan trusts that were established to issue securities and use the proceeds to principally invest in corporate loans and other permitted investments (including a new VIE which was consolidated in the first quarter of 2012).  The assets held by the trusts are legally isolated and not available to the Company.  The liabilities of the VIEs are expected to be satisfied from the cash flows generated by the underlying investments held by the trusts, not from the assets of the Company.  The Company has no further commitments to the VIEs.

The investment portfolios held by the VIEs are primarily comprised of corporate fixed maturity securities which are almost entirely rated as below-investment grade securities. Refer to the note to the consolidated financial statements entitled "Investments in Variable Interest Entities" for additional information about VIEs.

Investment Borrowings

Three of the Company's insurance subsidiaries (Conseco Life, Washington National and Bankers Life) are members of the Federal Home Loan Bank ("FHLB").  As members of the FHLB, Conseco Life, Washington National and Bankers Life have the ability to borrow on a collateralized basis from the FHLB.  Conseco Life, Washington National and Bankers Life are required to hold certain minimum amounts of FHLB common stock as a condition of membership in the FHLB, and additional amounts based on the amount of the borrowings.  At December 31, 2012, the carrying value of the FHLB common stock was $82.5 million.  As of December 31, 2012, collateralized borrowings from the FHLB totaled $1.7 billion and the proceeds were used to purchase fixed maturity securities.  The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet.  The borrowings are collateralized by investments with an estimated fair value of $2.0 billion at December 31, 2012, which are maintained in custodial accounts for the benefit of the FHLB.  Such investments are classified as fixed maturities, available for sale, in our consolidated balance sheet.  Interest expense of $28.0 million, $25.7 million and $20.8 million in 2012, 2011 and 2010, respectively, was recognized related to the borrowings.

The following summarizes the terms of the borrowings (dollars in millions):

Amount
 
Maturity
 
Interest rate at
borrowed
 
date
 
December 31, 2012
$
67.0

 
February 2014
 
Fixed rate – 1.830%
50.0

 
August 2014
 
Variable rate – 0.440%
100.0

 
August 2014
 
Variable rate – 0.470%
50.0

 
September 2015
 
Variable rate – 0.613%
150.0

 
October 2015
 
Variable rate – 0.559%
100.0

 
November 2015
 
Variable rate – 0.390%
146.0

 
November 2015
 
Fixed rate – 5.300%
100.0

 
December 2015
 
Fixed rate – 4.710%
100.0

 
June 2016
 
Variable rate – 0.650%
75.0

 
June 2016
 
Variable rate – 0.471%
100.0

 
October 2016
 
Variable rate – 0.535%
50.0

 
November 2016
 
Variable rate – 0.581%
50.0

 
November 2016
 
Variable rate – 0.680%
100.0

 
June 2017
 
Variable rate – 0.735%
100.0

 
July 2017
 
Fixed rate – 3.900%
50.0

 
August 2017
 
Variable rate – 0.510%
75.0

 
August 2017
 
Variable rate – 0.462%
100.0

 
October 2017
 
Variable rate – 0.770%
37.0

 
November 2017
 
Fixed rate – 3.750%
50.0

 
July 2018
 
Variable rate – 0.783%
$
1,650.0

 
 
 
 


The variable rate borrowings are pre-payable on each interest reset date without penalty.  The fixed rate borrowings are pre-payable subject to payment of a yield maintenance fee based on current market interest rates.  At December 31, 2012, the aggregate fee to prepay all fixed rate borrowings was $51.2 million.

As part of our investment strategy, we may enter into investment borrowings, including repurchase agreements, to increase our investment return. With respect to repurchase agreements, we account for these transactions as collateralized borrowings, where the amount borrowed is equal to the sales price of the underlying securities. Repurchase agreements involve a sale of securities and an agreement to repurchase the same securities at a later date at an agreed-upon price. We had no such borrowings outstanding at December 31, 2012. The primary risks associated with short-term collateralized borrowings are: (i) a substantial decline in the market value of the margined security; and (ii) that a counterparty may be unable to perform under the terms of the contract or be unwilling to extend such financing in future periods especially if the liquidity or value of the margined security has declined. Exposure is limited to any depreciation in value of the related securities.

At December 31, 2012, investment borrowings consisted of:  (i) collateralized borrowings from the FHLB of $1.7 billion; and (ii) other borrowings of $.8 million.

At December 31, 2011, investment borrowings consisted of:  (i) collateralized borrowings from the FHLB of $1.7 billion; (ii) repurchase agreements of $24.8 million; and (ii) other borrowings of $1.7 million.

Accounting for Derivatives

Our fixed index annuity products provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the Standard & Poor's 500 Index, over a specified period.  Typically, on each policy anniversary date, a new index period begins.  We are generally able to change the participation rate at the beginning of each index period during a policy year, subject to contractual minimums.  We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked.  We reflect changes in the estimated fair value of these options in net investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios).  Net investment gains (losses) related to fixed index products were $25.5 million, $(21.2) million and $28.2 million in 2012, 2011 and 2010, respectively. These amounts were substantially offset by a corresponding change to insurance policy benefits.  The estimated fair value of these options was $54.4 million and $37.9 million at December 31, 2012 and 2011, respectively.  We classify these instruments as other invested assets.

The Company accounts for the options attributed to the policyholder for the estimated life of the annuity contract as embedded derivatives.  The Company purchases options to hedge liabilities for the next policy year on each policy anniversary date and must estimate the fair value of the forward embedded options related to the policies.  These accounting requirements often create volatility in the earnings from these products.  We record the changes in the fair values of the embedded derivatives in earnings as a component of insurance policy benefits.  The fair value of these derivatives, which are classified as "liabilities for interest-sensitive products", was $734.0 million and $666.3 million at December 31, 2012 and 2011, respectively. Prior to June 30, 2011, we maintained a specific block of investments in our trading securities account (which we carried at estimated fair value with changes in such value recognized as investment income from policyholder and reinsurer accounts and other special-purpose portfolios) to offset the income statement volatility caused by the effect of interest rate fluctuations on the value of embedded derivatives related to our fixed index annuity products.  During the second quarter of 2011, we sold this trading portfolio. Because we no longer seek to offset changes from the effect of interest rates on derivative embedded in our fixed index annuity products, we recognized $2.8 million and $20.4 million of decreased earnings in 2012 and 2011, respectively, since the volatility caused by the accounting requirements to record embedded options at fair value was no longer being offset.

If the counterparties for the call options we hold fail to meet their obligations, we may have to recognize a loss.  We limit our exposure to such a loss by diversifying among several counterparties believed to be strong and creditworthy.  At December 31, 2012, substantially all of our counterparties were rated "BBB+" or higher by Standard & Poor's Corporation ("S&P").

Certain of our reinsurance payable balances contain embedded derivatives.  Such derivatives had an estimated fair value of $5.5 million and $3.5 million at December 31, 2012 and 2011, respectively.  We record the change in the fair value of these derivatives as a component of investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios).  We maintain the investments related to these agreements in our trading securities account, which we carry at estimated fair value with changes in such value recognized as investment income (also classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios).  The change in value of these trading securities offsets the change in value of the embedded derivatives.

We purchase certain fixed maturity securities that contain embedded derivatives that are required to be bifurcated from the instrument and held at fair value on the consolidated balance sheet. For certain of these securities, we have elected the fair value option to carry the entire security at fair value with changes in fair value reported in net income for operational ease.

Multibucket Annuity Product

The Company's multibucket annuity is an annuity product that credits interest based on the experience of a particular market strategy. Policyholders allocate their annuity premium payments to several different market strategies based on different asset classes within the Company's investment portfolio. Interest is credited to this product based on the market return of the given strategy, less management fees, and funds may be moved between different strategies. The Company guarantees a minimum return of premium plus approximately 3 percent per annum over the life of the contract. The investments backing the market strategies of these products are designated by the Company as trading securities. The change in the fair value of these securities is recognized as investment income (classified as income from policyholder and reinsurer accounts and other special-purpose portfolios), which is substantially offset by the change in insurance policy benefits for these products. We hold insurance liabilities of $47.8 million and $52.6 million related to multibucket annuity products as of December 31, 2012 and 2011, respectively.

Fair Value Measurements

Definition of Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price.  We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, cash and cash equivalents, separate account assets and embedded derivatives.  We carry our company-owned life insurance policy, which is backed by a series of mutual funds, at its cash surrender value and our hedge fund investments at their net asset values; in both cases, we believe these values approximate their fair values. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, insurance liabilities for interest-sensitive products, investment borrowings, notes payable and borrowings related to VIEs.

The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information.  Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value.  Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value.

Valuation Hierarchy

There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable.

•
Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities.  Our Level 1 assets primarily include cash and exchange traded securities.

•
Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data.  Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies.  These models are primarily industry-standard models that consider various inputs such as interest rate, credit or issuer spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace.  Financial assets in this category primarily include:  certain public and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; and most short-term investments; and non-exchange-traded derivatives such as call options to hedge liabilities related to our fixed index annuity products. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs.

•
Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions.  Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information.  Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities.  Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions.

At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value.  This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions.  Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no transfers between Level 1 and Level 2 in 2012.

The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value.  These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value.  Substantially all of our Level 2 fixed maturity securities and separate account assets were valued from independent pricing services.  Third party pricing services normally derive the security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information.  If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are developed and discounted at an estimated risk-adjusted market rate.  The number of prices obtained for a given security is dependent on the Company's analysis of such prices as further described below.

For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes.  These broker quotes are non-binding and represent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs.  Approximately 20 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs.  The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs.  For these securities, we use internally developed valuations.  Key assumptions used to determine fair value for these securities may include risk-free rates, risk premiums, performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market.  For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are developed and discounted at an estimated market rate.  The pricing matrix utilizes a spread level to determine the market price for a security.  The credit spread generally incorporates the issuer's credit rating and other factors relating to the issuer's industry and the security's maturity.  In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity.

As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value.  The Company's analysis includes:  (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services' valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably stale; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties.  As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions.  In those instances, we may request additional pricing quotes or apply internally developed valuations.  However, the number of instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received.

The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company's judgment of the inputs or methodologies used by the independent pricing services to value different asset classes.  Such inputs include:  benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data.  The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments.

The fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options; market interest rates; and non-performance risk.  For certain embedded derivatives, we may use actuarial assumptions in the determination of fair value.

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2012 is as follows (dollars in millions):

 
Quoted prices in active markets
 for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
16,498.6

 
$
355.5

 
$
16,854.1

United States Treasury securities and obligations of United States government corporations and agencies
—

 
99.5

 
—

 
99.5

States and political subdivisions
—

 
2,115.0

 
13.1

 
2,128.1

Debt securities issued by foreign governments
—

 
.8

 
—

 
.8

Asset-backed securities
—

 
1,416.9

 
44.0

 
1,460.9

Collateralized debt obligations
—

 
—

 
324.0

 
324.0

Commercial mortgage-backed securities
—

 
1,471.2

 
6.2

 
1,477.4

Mortgage pass-through securities
—

 
19.9

 
1.9

 
21.8

Collateralized mortgage obligations
—

 
2,230.6

 
16.9

 
2,247.5

Total fixed maturities, available for sale
—

 
23,852.5

 
761.6

 
24,614.1

Equity securities:
 
 
 
 
 
 
 
Corporate securities
49.7

 
118.8

 
.1

 
168.6

Venture capital investments
—

 
—

 
2.8

 
2.8

Total equity securities
49.7

 
118.8

 
2.9

 
171.4

Trading securities:
 

 
 

 
 

 
 

Corporate securities
—

 
46.6

 
—

 
46.6

United States Treasury securities and obligations of United States government corporations and agencies
—

 
4.8

 
—

 
4.8

States and political subdivisions
—

 
14.0

 
.6

 
14.6

Asset-backed securities
—

 
50.1

 
—

 
50.1

Collateralized debt obligations
—

 
—

 
7.3

 
7.3

Commercial mortgage-backed securities
—

 
93.3

 
—

 
93.3

Mortgage pass-through securities
—

 
.1

 
—

 
.1

Collateralized mortgage obligations
—

 
41.2

 
5.8

 
47.0

Equity securities
.9

 
1.5

 
—

 
2.4

Total trading securities
.9

 
251.6

 
13.7

 
266.2

Investments held by variable interest entities - corporate securities
—

 
814.3

 
—

 
814.3

Other invested assets - derivatives
—

 
54.4

 
—

 
54.4

Assets held in separate accounts
—

 
14.9

 
—

 
14.9

Total assets carried at fair value by category
$
50.6

 
$
25,106.5

 
$
778.2

 
$
25,935.3

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

Liabilities for insurance products:
 

 
 

 
 

 
 

Interest-sensitive products - embedded derivatives associated with fixed index annuity products
—

 
—

 
734.0

 
734.0

Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement
—

 
—

 
5.5

 
5.5

Total liabilities for insurance products
—

 
—

 
739.5

 
739.5

Total liabilities carried at fair value by category
$
—

 
$
—

 
$
739.5

 
$
739.5



For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values:

Mortgage loans and policy loans.  We discount future expected cash flows for loans included in our investment portfolio based on interest rates currently being offered for similar loans to borrowers with similar credit ratings.  We aggregate loans with similar characteristics in our calculations.  The fair value of policy loans approximates their carrying value.

Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value.

Hedge fund investments are carried at their net asset values which approximates estimated fair value.

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.

Insurance liabilities for interest-sensitive products.  We discount future expected cash flows based on interest rates currently being offered for similar contracts with similar maturities.

Investment borrowings, notes payable and borrowings related to variable interest entities.  For publicly traded debt, we use current fair values.  For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements.

The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):

 
December 31, 2012
 
December 31, 2011
 
Quoted prices in active markets for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total estimated fair value
 
Total carrying amount
 
Total estimated fair value
 
Total carrying amount
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans
$
—

 
$
—

 
$
1,682.1

 
$
1,682.1

 
$
1,573.2

 
$
1,735.4

 
$
1,602.8

Policy loans
—

 
—

 
272.0

 
272.0

 
272.0

 
279.7

 
279.7

Other invested assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Company-owned life insurance
—

 
123.0

 
—

 
123.0

 
123.0

 
103.9

 
103.9

Hedge funds
—

 
16.1

 
—

 
16.1

 
16.1

 
18.2

 
18.2

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrestricted
432.3

 
150.2

 
—

 
582.5

 
582.5

 
436.0

 
436.0

Held by variable interest entities
54.2

 
—

 
—

 
54.2

 
54.2

 
74.4

 
74.4

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance liabilities for interest-sensitive products excluding embedded derivatives (a)
—

 
—

 
12,153.7

 
12,153.7

 
12,153.7

 
13,165.5

 
13,165.5

Investment borrowings
—

 
1,702.0

 
—

 
1,702.0

 
1,650.8

 
1,735.7

 
1,676.5

Borrowings related to variable interest entities
—

 
752.2

 
—

 
752.2

 
767.0

 
485.1

 
519.9

Notes payable – direct corporate obligations
—

 
1,100.3

 
—

 
1,100.3

 
1,004.2

 
978.3

 
857.9


____________________
(a)
The estimated fair value of insurance liabilities for interest-sensitive products was approximately equal to its carrying value at December 31, 2012.  This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year.

The categorization of fair value measurements, by input level, for our fixed maturity securities, equity securities, trading securities, certain other invested assets, assets held in separate accounts and embedded derivative instruments included in liabilities for insurance products at December 31, 2011 is as follows (dollars in millions):

 
Quoted prices in active markets for identical assets or liabilities (Level 1)
 
Significant other observable inputs
(Level 2) (a)
 
Significant unobservable inputs
 (Level 3) (a)
 
 
 
Total
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
15,594.4

 
$
278.1

 
 
 
$
15,872.5

United States Treasury securities and obligations of United States government corporations and agencies
—

 
303.8

 
1.6

 
 
 
305.4

States and political subdivisions
—

 
1,952.3

 
2.1

 
 
 
1,954.4

Debt securities issued by foreign governments
—

 
1.4

 
—

 
 
 
1.4

Asset-backed securities
—

 
1,334.3

 
79.7

 
 
 
1,414.0

Collateralized debt obligations
—

 
—

 
327.3

 
 
 
327.3

Commercial mortgage-backed securities
—

 
1,415.7

 
17.3

 
 
 
1,433.0

Mortgage pass-through securities
—

 
29.8

 
2.2

 
 
 
32.0

Collateralized mortgage obligations
—

 
2,051.2

 
124.8

 
 
 
2,176.0

Total fixed maturities, available for sale
—

 
22,682.9

 
833.1

 
 
 
23,516.0

Equity securities
17.9

 
87.3

 
69.9

 
 
 
175.1

Trading securities:
 

 
 

 
 

 
 
 
 

Corporate securities
—

 
67.6

 
—

 
 
 
67.6

United States Treasury securities and obligations of United States government corporations and agencies
—

 
4.9

 
—

 
 
 
4.9

States and political subdivisions
—

 
15.6

 
—

 
 
 
15.6

Asset-backed securities
—

 
.1

 
—

 
 
 
.1

Commercial mortgage-backed securities
—

 
—

 
.4

 
 
 
.4

Mortgage pass-through securities
—

 
.2

 
—

 
 
 
.2

Collateralized mortgage obligations
—

 
.7

 
—

 
 
 
.7

Equity securities
.7

 
1.4

 
—

 
 
 
2.1

Total trading securities
.7

 
90.5

 
.4

 
 
 
91.6

Investments held by variable interest entities
—

 
496.3

 
—

 
 
 
496.3

Other invested assets - derivatives
—

 
37.8

 
—

 
 
 
37.8

Assets held in separate accounts
—

 
15.0

 
—

 
 
 
15.0

Liabilities:
 

 
 

 
 

 
 
 
 

Liabilities for insurance products:
 

 
 

 
 

 
 
 
 

Interest-sensitive products
—

 
—

 
669.8

 
(b)
 
669.8

_____________
(a)
We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.
(b)
Includes $666.3 million of embedded derivatives associated with our fixed index annuity products and $3.5 million of embedded derivatives associated with a modified coinsurance agreement.

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2012 (dollars in millions):

 
December 31, 2012
 
 
 
Beginning balance as of December 31, 2011 (a)
 
Purchases, sales, issuances and settlements, net (c)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3
 
Transfers out of Level 3 (b)
 
Ending balance as of December 31, 2012
 
Amount of total gains (losses) for the year ended December 31, 2012 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
278.1

 
$
88.1

 
$
(.2
)
 
$
9.9

 
$
68.6

 
$
(89.0
)
 
$
355.5

 
$
—

United States Treasury securities and obligations of United States government corporations and agencies
1.6

 
(1.6
)
 
—

 
—

 
—

 
—

 
—

 
—

States and political subdivisions
2.1

 
(1.8
)
 
—

 
.9

 
11.9

 
—

 
13.1

 
—

Asset-backed securities
79.7

 
15.2

 
(.3
)
 
6.3

 
.5

 
(57.4
)
 
44.0

 
—

Collateralized debt obligations
327.3

 
(24.8
)
 
—

 
21.5

 
—

 
—

 
324.0

 
—

Commercial mortgage-backed securities
17.3

 
(2.5
)
 
—

 
.8

 
5.7

 
(15.1
)
 
6.2

 
—

Mortgage pass-through securities
2.2

 
(.3
)
 
—

 
—

 
—

 
—

 
1.9

 
—

Collateralized mortgage obligations
124.8

 
.2

 
—

 
(.1
)
 
5.0

 
(113.0
)
 
16.9

 
—

Total fixed maturities, available for sale
833.1

 
72.5

 
(.5
)
 
39.3

 
91.7

 
(274.5
)
 
761.6

 
—

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
6.4

 
(3.2
)
 
(3.8
)
 
.7

 
—

 
—

 
.1

 
(3.8
)
Venture capital investments
63.5

 
(34.3
)
 
(26.0
)
 
(.4
)
 
—

 
—

 
2.8

 
—

Total equity securities
69.9

 
(37.5
)
 
(29.8
)
 
.3

 
—

 
—

 
2.9

 
(3.8
)
Trading securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

States and political subdivisions
—

 
—

 
.1

 
—

 
.5

 
—

 
.6

 
.1

Collateralized debt obligations
—

 
6.9

 
.4

 
—

 
—

 
—

 
7.3

 
.4

Commercial mortgage-backed securities
.4

 
—

 
—

 
—

 
—

 
(.4
)
 
—

 
—

Collateralized mortgage obligations
—

 
4.5

 
1.3

 
—

 
—

 
—

 
5.8

 
1.3

Total trading securities
.4

 
11.4

 
1.8

 
—

 
.5

 
(.4
)
 
13.7

 
1.8

Liabilities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Liabilities for insurance products:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-sensitive products
(669.8
)
 
(54.5
)
 
(15.2
)
 
—

 
—

 
—

 
(739.5
)
 
(15.2
)
____________
(a)
We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.
(b)
For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period.
(c)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the year ended December 31, 2012 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
110.3

 
$
(22.2
)
 
$
—

 
$
—

 
$
88.1

United States Treasury securities and obligations of United States government corporations and agencies
—

 
(1.6
)
 
—

 
—

 
(1.6
)
States and political subdivisions
—

 
(1.8
)
 
—

 
—

 
(1.8
)
Asset-backed securities
19.0

 
(3.8
)
 
—

 
—

 
15.2

Collateralized debt obligations
35.4

 
(60.2
)
 
—

 
—

 
(24.8
)
Commercial mortgage-backed securities
—

 
(2.5
)
 
—

 
—

 
(2.5
)
Mortgage pass-through securities
—

 
(.3
)
 
—

 
—

 
(.3
)
Collateralized mortgage obligations
11.2

 
(11.0
)
 
—

 
—

 
.2

Total fixed maturities, available for sale
175.9

 
(103.4
)
 
—

 
—

 
72.5

Equity securities:
 
 
 
 
 
 
 
 
 
Corporate securities
—

 
(3.2
)
 
—

 
—

 
(3.2
)
Venture capital investments
—

 
(34.3
)
 
—

 
—

 
(34.3
)
Total equity securities
—

 
(37.5
)
 
—

 
—

 
(37.5
)
Trading securities:

 
 
 
 
 
 
 
 
Collateralized debt obligations
6.9

 
—

 
—

 
—

 
6.9

Collateralized mortgage obligations
4.5

 
—

 
—

 
—

 
4.5

Total trading securities
11.4

 
—

 
—

 
—

 
11.4

Liabilities:
 
 
 
 
 
 
 
 
 
Liabilities for insurance products:
 
 
 
 
 
 
 
 
 
Interest-sensitive products
(103.3
)
 
60.4

 
(50.9
)
 
39.3

 
(54.5
)
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2011 (dollars in millions):
 
 
December 31, 2011
 
 
 
 
Beginning balance as of December 31, 2010 (a)
 
Purchases, sales, issuances and settlements, net (c)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3
 
Transfers out of Level 3 (b)
 
Ending balance as of December 31, 2011
 
Amount of total gains (losses) for the year ended December 31, 2011 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
 
$
1,907.8

 
$
(292.3
)
 
$
(17.0
)
 
$
15.2

 
$
43.3

 
$
(1,378.9
)
 
$
278.1

 
$
(11.5
)
United States Treasury securities and obligations of United States government corporations and agencies
 
2.0

 
(.1
)
 
—

 
(.3
)
 
—

 
—

 
1.6

 
—

States and political subdivisions
 
2.5

 
—

 
—

 
.1

 
2.0

 
(2.5
)
 
2.1

 
—

Asset-backed securities
 
182.3

 
(4.1
)
 
—

 
4.8

 
39.4

 
(142.7
)
 
79.7

 
—

Collateralized debt obligations
 
256.5

 
69.4

 
1.5

 
(.1
)
 
—

 
—

 
327.3

 
—

Commercial mortgage-backed securities
 
—

 
—

 
—

 
.2

 
17.1

 
—

 
17.3

 
—

Mortgage pass-through securities
 
3.5

 
(1.3
)
 
—

 
—

 
—

 
—

 
2.2

 
—

Collateralized mortgage obligations
 
197.1

 
28.4

 
(2.1
)
 
3.7

 
3.9

 
(106.2
)
 
124.8

 
—

Total fixed maturities, available for sale
 
2,551.7

 
(200.0
)
 
(17.6
)
 
23.6

 
105.7

 
(1,630.3
)
 
833.1

 
(11.5
)
Equity securities
 
6.9

 
67.0

 
(3.8
)
 
(.2
)
 
—

 
—

 
69.9

 
—

Trading securities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial mortgage-backed securities
 
.4

 
—

 
—

 
—

 
—

 
—

 
.4

 
—

Collateralized mortgage obligations
 
.4

 
(.4
)
 
—

 
—

 
—

 
—

 
—

 
—

Total trading securities
 
.8

 
(.4
)
 
—

 
—

 
—

 
—

 
.4

 
—

Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Liabilities for insurance products:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-sensitive products
 
(553.2
)
 
(62.5
)
 
(54.1
)
 
—

 
—

 
—

 
(669.8
)
 
(54.1
)
_________
(a)
We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.
(b)
For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period.
(c)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the year ended December 31, 2011 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
5.8

 
$
(298.1
)
 
$
—

 
$
—

 
$
(292.3
)
United States Treasury securities and obligations of United States government corporations and agencies
—

 
(.1
)
 
—

 
—

 
(.1
)
Asset-backed securities
.2

 
(4.3
)
 
—

 
—

 
(4.1
)
Collateralized debt obligations
182.2

 
(112.8
)
 
—

 
—

 
69.4

Mortgage pass-through securities
—

 
(1.3
)
 
—

 
—

 
(1.3
)
Collateralized mortgage obligations
63.6

 
(35.2
)
 
—

 
—

 
28.4

Total fixed maturities, available for sale
251.8

 
(451.8
)
 
—

 
—

 
(200.0
)
Equity securities - venture capital investments
67.0

 
—

 
—

 
—

 
67.0

Trading securities - collateralized mortgage obligations
—

 
(.4
)
 
—

 
—

 
(.4
)
Liabilities:
 
 
 
 
 
 
 
 
 
Liabilities for insurance products:
 
 
 
 
 
 
 
 
 
Interest-sensitive products
(119.8
)
 
54.5

 
(34.6
)
 
37.4

 
(62.5
)


At December 31, 2012, 91 percent of our Level 3 fixed maturities, available for sale, were investment grade and 43 percent and 47 percent of our Level 3 fixed maturities, available for sale, consisted of collateralized debt securities and corporate securities, respectively.

Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses during the time the applicable financial instruments were classified as Level 3.

Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and reinsurer accounts and other special-purpose portfolios, net realized investment gains (losses) or insurance policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders' equity based on the appropriate accounting treatment for the instrument.

The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date.
The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2012 (dollars in millions):

 
Fair value at December 31, 2012
 
Valuation technique(s)
 
Unobservable inputs
 
Range (weighted average)
Assets:
 
 
 
 
 
 
 
Corporate securities (a)
$
248.3

 
Discounted cash flow analysis
 
Discount margins
 
1.90% - 3.25% (2.78%)
Asset-backed securities (b)
33.3

 
Discounted cash flow analysis
 
Discount margins
 
2.78% - 3.14% (2.99%)
Collateralized debt obligations (c)
331.4

 
Discounted cash flow analysis
 
Recoveries
 
65% - 66%
 
 
 
 
 
Constant prepayment rate
 
20%
 
 
 
 
 
Discount margins
 
.95% - 8.75% (2.02%)
 
 
 
 
 
Annual default rate
 
.95% - 5.54% (3.01%)
 
 
 
 
 
Portfolio CCC %
 
1.18% - 21.56% (11.99%)
Venture capital investments (d)
2.8

 
Market multiples
 
EBITDA multiple
 
6.8
 
 
 
 
 
Revenue multiple
 
1.5
Other assets categorized as Level 3 (e)
162.4

 
Unadjusted third-party price source
 
Not applicable
 
Not applicable
Total
778.2

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Interest sensitive products (f)
739.5

 
Discounted projected embedded derivatives
 
Projected portfolio yields
 
5.35% - 5.61% (5.55%)
 
 
 
 
 
Discount rates
 
0.0 - 3.6% (1.4%)
 
 
 
 
 
Surrender rates
 
4% - 43% (19%)
________________________________
(a)
Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(b)
Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(c)
Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes.
(d)
Venture capital investments - The significant unobservable inputs used in the fair value measurement of our venture capital investments are the EBITDA multiple and revenue multiple. Generally, a significant increase (decrease) in the EBITDA or revenue multiples in isolation would result in a significantly higher (lower) fair value measurement.
(e)
Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.
(f)
Interest sensitive products - The significant unobservable inputs used in the fair value measurement of our interest sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

Sales Inducements

Certain of our annuity products offer sales inducements to contract holders in the form of enhanced crediting rates or bonus payments in the initial period of the contract.  Certain of our life insurance products offer persistency bonuses credited to the contract holders balance after the policy has been outstanding for a specified period of time.  These enhanced rates and persistency bonuses are considered sales inducements in accordance with GAAP.  Such amounts are deferred and amortized in the same manner as deferred acquisition costs.  Sales inducements deferred totaled $4.4 million, $11.5 million and $20.0 million in 2012, 2011 and 2010, respectively.  Amounts amortized totaled $27.1 million, $28.7 million and $31.2 million in 2012, 2011 and 2010, respectively.  The unamortized balance of deferred sales inducements was $126.5 million and $149.2 million at December 31, 2012 and 2011, respectively.  The balance of insurance liabilities for persistency bonus benefits was $34.6 million and $50.0 million at December 31, 2012 and 2011, respectively.

Out-of-Period Adjustments

We recorded the net effect of out-of-period adjustments which had the impact of decreasing our net income by $6.6 million (or two cents per diluted share) in 2012. Specific accounts were impacted as follows: a $12.1 million increase to insurance policy benefits; a $4.3 million increase to net realized gains; a $1.8 million increase to other expenses; a $.6 million decrease to net investment income related to special purpose portfolios; and a $3.6 million decrease to tax expense. We evaluated these errors taking into account both qualitative and quantitative factors and considered the impact of the errors in relation to 2012, as well as the materiality to the periods in which they originated. The impact of correcting these errors in prior years was not significant to any individual period. Management believes these errors are immaterial to the consolidated financial statements.

Recently Issued Accounting Standards

Accounting Standard Adopted on a Retrospective Basis

In October 2010, the Financial Accounting Standards Board ("FASB") issued authoritative guidance that modified the definition of the types of costs incurred by insurance entities that could be capitalized in the acquisition of new and renewal contracts.  The guidance impacts the timing of GAAP reported financial results, but has no impact on cash flows, statutory financial results or the ultimate profitability of the business.

The guidance specifies that an insurance entity shall only capitalize incremental direct costs related to the successful acquisition of new or renewal insurance contracts.  The guidance also states that advertising costs should be included in deferred acquisition costs only if the capitalization criteria in the direct-response advertising guidance is met.  The guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011, and was adopted by the Company on January 1, 2012. As permitted by the guidance, we elected to apply the provisions on a retrospective basis. The guidance reduced the balance of deferred acquisition costs, its amortization and the amount of costs capitalized. We are able to defer most commission payments, plus other costs directly related to the production of new business. The change did not impact the balance of the present value of future profits. Therefore, in contrast to the reduction in amortization of deferred acquisition costs, there was no change in the amortization of the present value of future profits.

The adoption of ASU 2010-26 has been reflected in the accompanying updated financial statements. The revision of the financial statements affected prior period information as follows (dollars in millions, except per share amounts):

 
December 31, 2011
 
Amounts prior to adoption of ASU 2010-26
 
Effect of adoption of ASU 2010-26
 
As reported
Deferred acquisition costs
$
1,418.1

 
$
(621.0
)
 
$
797.1

Income tax assets, net
630.5

 
234.9

 
865.4

Other assets
316.9

 
(24.7
)
 
292.2

Total assets
33,332.7

 
(410.8
)
 
32,921.9

 
 
 
 
 
 
Other liabilities
548.3

 
8.0

 
556.3

Total liabilities
28,300.1

 
8.0

 
28,308.1

 
 
 
 
 
 
Accumulated other comprehensive income
625.5

 
156.1

 
781.6

Retained earnings (accumulated deficit)
42.8

 
(574.9
)
 
(532.1
)
Total shareholders' equity
5,032.6

 
(418.8
)
 
4,613.8

Total liabilities and shareholders' equity
33,332.7

 
(410.8
)
 
32,921.9



 
Year ended
 
December 31, 2011
 
Amounts prior to adoption of ASU 2010-26
 
Effect of adoption of ASU 2010-26
 
As reported
Amortization
$
432.4

 
$
(135.0
)
 
$
297.4

Other operating costs and expenses
496.5

 
208.0

 
704.5

Total benefits and expenses
3,745.4

 
73.0

 
3,818.4

Income before income taxes
379.2

 
(73.0
)
 
306.2

Tax expense on period income
139.7

 
(26.2
)
 
113.5

Net income
382.5

 
(46.8
)
 
335.7

 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
  Basic:
 
 
 
 
 
    Net income
$
1.54

 
$
(.19
)
 
$
1.35

  Diluted:
 
 
 
 
 
    Net income
1.31

 
(.16
)
 
1.15


 
Year ended
 
December 31, 2010
 
Amounts prior to adoption of ASU 2010-26
 
Effect of adoption of ASU 2010-26
 
As reported
Amortization
$
443.8

 
$
(118.8
)
 
$
325.0

Other operating costs and expenses
502.9

 
187.4

 
690.3

Total benefits and expenses
3,790.4

 
68.6

 
3,859.0

Income before income taxes
293.5

 
(68.6
)
 
224.9

Tax expense on period income
103.9

 
(24.6
)
 
79.3

Net income
284.6

 
(44.0
)
 
240.6

 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
  Basic:
 
 
 
 
 
    Net income
$
1.13

 
$
(.17
)
 
$
.96

  Diluted:
 
 
 
 
 
    Net income
.99

 
(.15
)
 
.84




 
Year ended
 
December 31, 2011
 
As originally reported
 
Effect of adoption of ASU 2010-26
 
As adjusted
Cash flows from operating activities:
 
 
 
 
 
  Deferrable policy acquisition costs
$
(428.7
)
 
$
212.0

 
$
(216.7
)
  Other operating costs
(472.3
)
 
(212.0
)
 
(684.3
)
Net cash used by operating activities
774.8

 
—

 
774.8


 
Year ended
 
December 31, 2010
 
As originally reported
 
Effect of adoption of ASU 2010-26
 
As adjusted
Cash flows from operating activities:
 
 
 
 
 
  Deferrable policy acquisition costs
$
(418.2
)
 
$
193.0

 
$
(225.2
)
  Other operating costs
(444.8
)
 
(193.0
)
 
(637.8
)
Net cash used by operating activities
734.0

 
—

 
734.0


Adopted Accounting Standards

In June 2011, the FASB issued authoritative guidance to increase the prominence of items reported in other comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in shareholders' equity. Such guidance requires that all non-owner changes in shareholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income and the total of comprehensive income. The guidance was applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this guidance resulted in a change in the presentation of our financial statements but did not have any impact on our financial condition, operating results or cash flows.

In May 2011, the FASB issued authoritative guidance which clarifies or updates requirements for measuring fair value and for disclosing information about fair value measurements. The guidance clarifies: (i) the application of the highest and best use and valuation premise concepts; (ii) measuring the fair value of an instrument classified in a reporting entity's shareholders' equity; and (iii) disclosure of quantitative information about the unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy. The guidance changes certain requirements for measuring fair value or disclosing information about fair value measurements including: (i) measuring the fair value of financial instruments that are managed within a portfolio; (ii) application of premiums and discounts in a fair value measurement; and (iii) additional disclosures about fair value measurements. Such additional disclosures include a description of the valuation process used for measuring Level 3 instruments and the sensitivity of the Level 3 fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any. The guidance was effective prospectively for interim and annual periods beginning after December 15, 2011. Refer to the note to our consolidated financial statements entitled "Fair Value Measurements" for additional disclosures required by this guidance. The adoption of this guidance expanded our disclosures, but did not have a material impact on our financial condition, operating results or cash flows.

In March 2010, the FASB issued authoritative guidance clarifying the scope exception for embedded credit derivatives and when those features would be bifurcated from the host contract. Under the new guidance, only embedded credit derivative features that are in the form of subordination of one financial instrument to another would not be subject to the bifurcation requirements. Accordingly, entities will be required to bifurcate any embedded credit derivative features that no longer qualify under the amended scope exception, or, for certain investments, an entity can elect the fair value option and record the entire investment at fair value. This guidance was effective for fiscal quarters beginning after June 15, 2010. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2010, the FASB issued authoritative guidance which requires additional disclosures related to purchases, sales, issuances and settlements in the rollforward of Level 3 fair value measurements.  This guidance was effective for reporting periods beginning after December 15, 2010.  The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2010, the FASB issued authoritative guidance which requires new disclosures and clarifies existing disclosure requirements related to fair value. An entity is also required to disclose significant transfers in and out of Levels 1 and 2 of the fair value hierarchy. In addition, the guidance amends the fair value disclosure requirement for pension and postretirement benefit plan assets to require this disclosure at the investment class level. The guidance was effective for interim and annual reporting periods beginning after December 15, 2009. Such disclosures are included in the note to the consolidated financial statements entitled "Fair Value Measurements". The adoption of this guidance did not have a material impact on our consolidated financial statements.
INVESTMENTS
INVESTMENTS
INVESTMENTS

At December 31, 2012, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions):

 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair
value
 
Other-than-temporary impairments included in accumulated other comprehensive income
Investment grade (a):
 
 
 
 
 
 
 
 
 
Corporate securities
$
13,531.8

 
$
2,221.4

 
$
(12.1
)
 
$
15,741.1

 
$
—

United States Treasury securities and obligations of United States government corporations and agencies
93.9

 
5.6

 
—

 
99.5

 
—

States and political subdivisions
1,840.7

 
277.3

 
(4.3
)
 
2,113.7

 
—

Debt securities issued by foreign governments
.8

 
—

 
—

 
.8

 
—

Asset-backed securities
1,002.9

 
70.9

 
(2.8
)
 
1,071.0

 
—

Collateralized debt obligations
311.5

 
7.5

 
(1.0
)
 
318.0

 
—

Commercial mortgage-backed securities
1,325.7

 
152.3

 
(.6
)
 
1,477.4

 
—

Mortgage pass-through securities
20.6

 
1.2

 
—

 
21.8

 
—

Collateralized mortgage obligations
1,157.7

 
107.2

 
(.7
)
 
1,264.2

 
(.8
)
Total investment grade fixed maturities, available for sale
19,285.6

 
2,843.4

 
(21.5
)
 
22,107.5

 
(.8
)
Below-investment grade (a):
 

 
 

 
 

 
 

 
 
Corporate securities
1,055.8

 
65.3

 
(8.1
)
 
1,113.0

 
—

States and political subdivisions
15.3

 
—

 
(.9
)
 
14.4

 
—

Asset-backed securities
360.9

 
31.4

 
(2.4
)
 
389.9

 
—

Collateralized debt obligations
5.5

 
.5

 
—

 
6.0

 
—

Collateralized mortgage obligations
903.7

 
79.6

 
—

 
983.3

 
(5.2
)
Total below-investment grade fixed maturities, available for sale
2,341.2

 
176.8

 
(11.4
)
 
2,506.6

 
(5.2
)
Total fixed maturities, available for sale
$
21,626.8

 
$
3,020.2

 
$
(32.9
)
 
$
24,614.1

 
$
(6.0
)
Equity securities
$
167.1

 
$
5.9

 
$
(1.6
)
 
$
171.4

 
 
_______________
(a)
Investment ratings – Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organization ("NRSROs") (Moody's Investor Services, Inc. ("Moody's"), S&P or Fitch Ratings ("Fitch")), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC").  NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch).  NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch).  References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above.

The NAIC evaluates the fixed maturity investments of insurers for regulatory and capital assessment purposes and assigns securities to one of six credit quality categories called NAIC designations, which are used by insurers when preparing their annual statements based on statutory accounting principles. The NAIC designations are generally similar to the credit quality designations of the NRSROs for marketable fixed maturity securities, except for certain structured securities as described below. The following summarizes the NAIC designations and NRSRO equivalent ratings:

NAIC Designation
 
NRSRO Equivalent Rating
1
 
AAA/AA/A
2
 
BBB
3
 
BB
4
 
B
5
 
CCC and lower
6
 
In or near default

The NAIC adopted revised rating methodologies for non-agency residential mortgage-backed securities that became effective December 31, 2009 and for commercial mortgage-backed securities and all other asset-backed securities that became effective December 31, 2010. The NAIC's objective with the revised ratings was to increase the accuracy in assessing potential losses, and to use the improved assessment to determine a more appropriate capital requirement for such structured securities. Accordingly, certain structured securities rated below investment grade by the NRSROs could be assigned as NAIC 1 or NAIC 2 securities dependent on the cost basis of the holder relative to estimated recoverable amounts as determined by the NAIC. In late December 2012, the NAIC released valuation information used to calculate capital requirements on non-agency residential mortgage-backed and commercial mortgage-backed securities for year-end 2012. The 2012 valuation process incorporated more conservative assumptions, whereby higher probability weights were assigned to more pessimistic macroeconomic scenarios. The impact of the more conservative assumptions resulted in less than 1 percentage point reduction to the Company's consolidated risk-based capital ("RBC") ratio.

A summary of our fixed maturity securities, available for sale, by NAIC designations (or for fixed maturity securities held by non-regulated entities, based on NRSRO ratings) as of December 31, 2012 is as follows (dollars in millions):

NAIC designation
 
Amortized cost
 
Estimated fair value
 
Percentage of total estimated fair value
1
 
$
10,133.6

 
$
11,586.8

 
47.1
%
2
 
10,309.4

 
11,779.5

 
47.8

3
 
849.3

 
902.6

 
3.7

4
 
300.4

 
314.9

 
1.3

5
 
33.7

 
29.8

 
.1

6
 
.4

 
.5

 
—

 
 
$
21,626.8

 
$
24,614.1

 
100.0
%




At December 31, 2011, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions):

 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair
value
 
Other-than-temporary impairments included in accumulated other comprehensive income
Investment grade:
 
 
 
 
 
 
 
 
 
Corporate securities
$
13,414.9

 
$
1,513.4

 
$
(86.4
)
 
$
14,841.9

 
$
—

United States Treasury securities and obligations of United States government corporations and agencies
298.0

 
7.4

 
—

 
305.4

 
—

States and political subdivisions
1,778.7

 
189.3

 
(13.6
)
 
1,954.4

 
—

Debt securities issued by foreign governments
1.3

 
.1

 
—

 
1.4

 
—

Asset-backed securities
1,227.2

 
43.3

 
(30.9
)
 
1,239.6

 
—

Collateralized debt obligations
323.1

 
1.1

 
(4.4
)
 
319.8

 
—

Commercial mortgage-backed securities
1,351.0

 
89.9

 
(7.9
)
 
1,433.0

 
—

Mortgage pass-through securities
30.5

 
1.6

 
(.1
)
 
32.0

 
—

Collateralized mortgage obligations
1,314.8

 
77.8

 
(4.0
)
 
1,388.6

 
(.3
)
Total investment grade fixed maturities, available for sale
19,739.5

 
1,923.9

 
(147.3
)
 
21,516.1

 
(.3
)
Below-investment grade:
 
 
 
 
 
 
 
 
 
Corporate securities
1,055.5

 
25.6

 
(50.5
)
 
1,030.6

 
—

Asset-backed securities
178.0

 
2.2

 
(5.8
)
 
174.4

 
—

Collateralized debt obligations
9.4

 
—

 
(1.9
)
 
7.5

 
—

Collateralized mortgage obligations
796.7

 
8.1

 
(17.4
)
 
787.4

 
(11.5
)
Total below-investment grade fixed maturities, available for sale
2,039.6

 
35.9

 
(75.6
)
 
1,999.9

 
(11.5
)
Total fixed maturities, available for sale
$
21,779.1

 
$
1,959.8

 
$
(222.9
)
 
$
23,516.0

 
$
(11.8
)
Equity securities
$
177.0

 
$
1.2

 
$
(3.1
)
 
$
175.1

 
 

Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments.  These amounts, included in shareholders' equity as of December 31, 2012 and 2011, were as follows (dollars in millions):

 
2012
 
2011
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized
$
9.8

 
$
(4.4
)
Net unrealized gains on all other investments
2,986.5

 
1,733.2

Adjustment to present value of future profits (a)
(193.0
)
 
(214.8
)
Adjustment to deferred acquisition costs
(452.9
)
 
(289.3
)
Adjustment to insurance liabilities
(489.8
)
 
—

Unrecognized net loss related to deferred compensation plan
(7.9
)
 
(8.3
)
Deferred income tax liabilities
(655.3
)
 
(434.8
)
Accumulated other comprehensive income
$
1,197.4

 
$
781.6

_________
(a)
The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003 (the date our Predecessor emerged from bankruptcy).

At December 31, 2012, adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(162.3) million, $(149.9) million, $(489.8) million and $288.7 million, respectively, for premium deficiencies that would exist on certain long-term health products if unrealized gains on the assets backing such products had been realized and the proceeds from our sales of such assets were invested at then current yields.

Below-Investment Grade Securities

At December 31, 2012, the amortized cost of the Company's below-investment grade fixed maturity securities was $2,341.2 million, or 11 percent of the Company's fixed maturity portfolio. The estimated fair value of the below-investment grade portfolio was $2,506.6 million, or 107 percent of the amortized cost.

Below-investment grade corporate debt securities typically have different characteristics than investment grade corporate debt securities.  Based on historical performance, probability of default by the borrower is significantly greater for below-investment grade corporate debt securities and in many cases severity of loss is relatively greater as such securities are generally unsecured and often subordinated to other indebtedness of the issuer.  Also, issuers of below-investment grade corporate debt securities frequently have higher levels of debt relative to investment-grade issuers, hence, all other things being equal, are generally more sensitive to adverse economic conditions.  The Company attempts to reduce the overall risk related to its investment in below-investment grade securities, as in all investments, through careful credit analysis, strict investment policy guidelines, and diversification by issuer and/or guarantor and by industry.

Contractual Maturity

The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2012, by contractual maturity.  Actual maturities will differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.  In addition, structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
167.6

 
$
170.2

Due after one year through five years
1,605.0

 
1,754.5

Due after five years through ten years
4,375.0

 
4,932.7

Due after ten years
10,390.7

 
12,225.1

Subtotal
16,538.3

 
19,082.5

Structured securities
5,088.5

 
5,531.6

Total fixed maturities, available for sale
$
21,626.8

 
$
24,614.1



Net Investment Income

Net investment income consisted of the following (dollars in millions):

 
2012
 
2011
 
2010
 
 
 
 
 
 
Fixed maturities
$
1,280.9

 
$
1,233.8

 
$
1,162.6

Trading income related to policyholder and reinsurer accounts and other special-purpose portfolios
62.4

 
14.6

 
43.7

Equity securities
4.4

 
1.7

 
.8

Mortgage loans
99.8

 
111.7

 
121.7

Policy loans
17.1

 
17.6

 
18.2

Options related to fixed index products:
 
 
 
 
 
Option income
.4

 
36.5

 
57.3

Change in value of options
25.1

 
(57.7
)
 
(29.1
)
Other invested assets
14.4

 
14.5

 
9.1

Cash and cash equivalents
.6

 
.4

 
.5

Gross investment income
1,505.1

 
1,373.1

 
1,384.8

Less investment expenses
18.7

 
19.0

 
17.9

Net investment income
$
1,486.4

 
$
1,354.1

 
$
1,366.9



The estimated fair value of fixed maturity investments and mortgage loans not accruing investment income totaled $.5 million and $10.0 million at December 31, 2012 and 2011, respectively.

Net Realized Investment Gains (Losses)

The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions):

 
2012
 
2011
 
2010
Fixed maturity securities, available for sale:
 
 
 
 
 
Realized gains on sale
$
115.4

 
$
183.1

 
$
347.1

Realized losses on sale
(15.4
)
 
(59.9
)
 
(147.7
)
Impairments:
 
 
 
 
 
Total other-than-temporary impairment losses
(1.0
)
 
(19.2
)
 
(94.8
)
Other-than-temporary impairment losses recognized in accumulated other comprehensive income (loss)
—

 
5.3

 
(4.7
)
Net impairment losses recognized
(1.0
)
 
(13.9
)
 
(99.5
)
Net realized investment gains from fixed maturities
99.0

 
109.3

 
99.9

Equity securities
.1

 
(.2
)
 
.1

Commercial mortgage loans
(3.7
)
 
(29.3
)
 
(16.9
)
Impairments of mortgage loans and other investments
(36.8
)
 
(20.7
)
 
(50.3
)
Other
22.5

 
2.7

 
(2.6
)
Net realized investment gains
$
81.1

 
$
61.8

 
$
30.2



During 2012, we recognized net realized investment gains of $81.1 million, which were comprised of $98.8 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $2.1 billion, the increase in fair value of certain fixed maturity investments with embedded derivatives of $20.1 million and $37.8 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

During 2011, we recognized net realized investment gains of $61.8 million, which were comprised of $96.4 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $5.5 billion and $34.6 million of writedowns of investments for other than temporary declines in fair value recognized through net income ($39.9 million, prior to the $5.3 million of impairment losses recognized through accumulated other comprehensive income).

During 2010, we recognized net realized investment gains of $30.2 million, which were comprised of $180.0 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $8.6 billion and $149.8 million of writedowns of investments for other than temporary declines in fair value recognized through net income ($146.8 million, prior to the $(3.0) million of impairment losses recognized through other comprehensive income).

At December 31, 2012, fixed maturity securities in default or considered nonperforming had an aggregate amortized cost and a carrying value of $.4 million and $.5 million, respectively.

During 2010, we recorded an impairment charge of $70.6 million on an investment made by our Predecessor in a guaranteed investment contract issued by a Bermuda insurance company. We decided to pursue the early commutation of this investment in exchange for interests in certain underlying invested assets held by the insurance company. Information related to these underlying invested assets obtained in late December 2010 and early 2011 resulted in the recognition of the impairment charge. The guaranteed investment contract was scheduled to mature in December 2029 and had a projected future yield of 1.33 percent (the guaranteed minimum rate) immediately prior to the impairment charge. The estimated fair value of our investment in the guaranteed investment contract was $213 million at December 31, 2010. Also during 2010, other-than-temporary impairments recorded in earnings included: (i) $23.6 million of losses related to mortgage-backed and asset-backed securities, primarily reflecting changes related to the estimated future cash flows of the underlying assets and, for certain securities, changes in our intent to hold the securities; (ii) $40.8 million of losses related to commercial mortgage loans reflecting our concerns regarding the issuers' ability to continue to make contractual payments related to these loans and our estimate of the value of the underlying properties; (iii) $1.6 million related to a home office building which is available for sale; and (iv) $13.2 million of additional losses primarily related to various corporate securities and other invested assets following unforeseen issue-specific events or conditions.

During 2011, we completed the commutation of the investment in the guaranteed investment contract as discussed above pursuant to which we received government agency securities as well as equity interests in certain corporate investments with an aggregate fair value of $197.5 million in exchange for our holdings with a book value of $201.5 million (resulting in a net realized loss of $4.0 million).  During 2011, we recognized impairment charges of $11.5 million on the underlying invested assets.

During 2012, the $37.8 million of other-than-temporary impairments we recorded in earnings included:  (i) $5.4 million of losses related to certain commercial mortgage loans; (ii) $29.9 million of losses on equity securities primarily related to investments obtained through the commutation of an investment made by our Predecessor (as further described above); and (iii) $2.5 million of additional losses following unforeseen issue-specific events or conditions.

During 2012, the $15.4 million of realized losses on sales of $402.5 million of fixed maturity securities, available for sale, included:  (i) $5.2 million of losses related to the sales of mortgage-backed securities and asset-backed securities; and (ii) $10.2 million of additional losses primarily related to various corporate securities.  Securities are generally sold at a loss following unforeseen issue-specific events or shifts in perceived risks.  These reasons include but are not limited to:  (i) changes in the investment environment; (ii) expectation that the fair value could deteriorate further; (iii) desire to reduce our exposure to an asset class, an issuer or an industry; (iv) prospective or actual changes in credit quality; or (v) changes in expected cash flows related to structured securities.

During 2011, the $34.6 million of other-than-temporary impairments we recorded in earnings included:  (i) $11.5 million on an investment in a guaranteed investment contract as discussed above; (ii) $11.8 million of losses related to certain commercial mortgage loans; (iii) $4.3 million related to investments held by a VIE as a result of our intent to sell such investments; and (iv) $7.0 million of additional losses following unforeseen issue-specific events or conditions.

During 2011, the $59.9 million of realized losses on sales of $1.0 billion of fixed maturity securities, available for sale, included: (i) $24.1 million of losses related to the sales of mortgage-backed securities and asset-backed securities; (ii) $13.4 million related to sales of securities issued by states and political subdivisions; (iii) $8.9 million related to the partial commutations of the guaranteed investment contract as discussed above; and (iv) $13.5 million of additional losses primarily related to various corporate securities.

During 2010, the $147.7 million of realized losses on sales of $1.4 billion of fixed maturity securities, available for sale, included: (i) $125.4 million of losses related to the sales of mortgage-backed securities and asset-backed securities; and (ii) $22.3 million of additional losses primarily related to various corporate securities.

Our fixed maturity investments are generally purchased in the context of a long-term strategy to fund insurance liabilities, so we do not generally seek to generate short-term realized gains through the purchase and sale of such securities.  In certain circumstances, including those in which securities are selling at prices which exceed our view of their underlying economic value, or when it is possible to reinvest the proceeds to better meet our long-term asset-liability objectives, we may sell certain securities.

We regularly evaluate all of our investments with unrealized losses for possible impairment.  Our assessment of whether unrealized losses are "other than temporary" requires significant judgment.  Factors considered include:  (i) the extent to which fair value is less than the cost basis; (ii) the length of time that the fair value has been less than cost; (iii) whether the unrealized loss is event driven, credit-driven or a result of changes in market interest rates or risk premium; (iv) the near-term prospects for specific events, developments or circumstances likely to affect the value of the investment; (v) the investment's rating and whether the investment is investment-grade and/or has been downgraded since its purchase; (vi) whether the issuer is current on all payments in accordance with the contractual terms of the investment and is expected to meet all of its obligations under the terms of the investment; (vii) whether we intend to sell the investment or it is more likely than not that circumstances will require us to sell the investment before recovery occurs; (viii) the underlying current and prospective asset and enterprise values of the issuer and the extent to which the recoverability of the carrying value of our investment may be affected by changes in such values; (ix) projections of, and unfavorable changes in, cash flows on structured securities including mortgage-backed and asset-backed securities; (x) our best estimate of the value of any collateral; and (xi) other objective and subjective factors.

Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio.  Significant losses could have a material adverse effect on our consolidated financial statements in future periods.

Impairment losses on equity securities are recognized in net income.  The manner in which impairment losses on fixed maturity securities, available for sale, are recognized in the financial statements is dependent on the facts and circumstances related to the specific security.  If we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its amortized cost, the security is other-than-temporarily impaired and the full amount of the impairment is recognized as a loss through earnings.  If we do not expect to recover the amortized cost basis, we do not plan to sell the security, and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, less any current period credit loss, the recognition of the other-than-temporary impairment is bifurcated.  We recognize the credit loss portion in net income and the noncredit loss portion in accumulated other comprehensive income.

We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security.  The present value is determined using the best estimate of future cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security.  The methodology and assumptions for establishing the best estimate of future cash flows vary depending on the type of security.

For most structured securities, cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including excess spread, subordination and guarantees.  For corporate bonds, cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances. The previous amortized cost basis less the impairment recognized in net income becomes the security's new cost basis.  We accrete the new cost basis to the estimated future cash flows over the expected remaining life of the security, except when the security is in default or considered nonperforming.

The remaining noncredit impairment, which is recorded in accumulated other comprehensive income, is the difference between the security's estimated fair value and our best estimate of future cash flows discounted at the effective interest rate prior to impairment.  The remaining noncredit impairment typically represents changes in the market interest rates, current market liquidity and risk premiums.  As of December 31, 2012, other-than-temporary impairments included in accumulated other comprehensive income of $6.0 million (before taxes and related amortization) related to structured securities.

Mortgage loans are impaired when it is probable that we will not collect the contractual principal and interest on the loan. We measure impairment based upon the difference between the carrying value of the loan and the estimated fair value of the collateral securing the loan less cost to sell.

The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for the years ended December 31, 2012, 2011 and 2010 (dollars in millions):

 
Year ended
 
December 31,
 
2012
 
2011
 
2010
Credit losses on fixed maturity securities, available for sale, beginning of period
$
(2.0
)
 
$
(6.1
)
 
$
(27.2
)
Add:  credit losses on other-than-temporary impairments not previously recognized
—

 
(1.1
)
 
(1.7
)
Less:  credit losses on securities sold
.4

 
5.2

 
33.3

Less:  credit losses on securities impaired due to intent to sell (a)
—

 
—

 
1.9

Add:  credit losses on previously impaired securities
—

 
—

 
(12.4
)
Less:  increases in cash flows expected on previously impaired securities
—

 
—

 
—

Credit losses on fixed maturity securities, available for sale, end of period
$
(1.6
)
 
$
(2.0
)
 
$
(6.1
)
__________
(a)
Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis.

Investments with Unrealized Losses

The following table sets forth the amortized cost and estimated fair value of those fixed maturities, available for sale, with unrealized losses at December 31, 2012, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.  Structured securities frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
—

 
$
—

Due after one year through five years
35.5

 
35.2

Due after five years through ten years
106.5

 
103.1

Due after ten years
513.0

 
491.3

Subtotal
655.0

 
629.6

Structured securities
286.5

 
279.0

Total
$
941.5

 
$
908.6



There were no investments in our portfolio rated below-investment grade which have been continuously in an unrealized loss position exceeding 20 percent of the cost basis at December 31, 2012.






The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2012 (dollars in millions):

 
 
Less than 12 months
 
12 months or greater
 
Total
Description of securities
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
States and political subdivisions
 
$
48.3

 
$
(1.8
)
 
$
68.7

 
$
(3.4
)
 
$
117.0

 
$
(5.2
)
Corporate securities
 
338.1

 
(11.2
)
 
174.5

 
(9.0
)
 
512.6

 
(20.2
)
Asset-backed securities
 
41.7

 
(.3
)
 
111.6

 
(4.9
)
 
153.3

 
(5.2
)
Collateralized debt obligations
 
19.4

 
(.4
)
 
32.5

 
(.6
)
 
51.9

 
(1.0
)
Commercial mortgage-backed securities
 
4.9

 
(.1
)
 
6.2

 
(.5
)
 
11.1

 
(.6
)
Mortgage pass-through securities
 
—

 
—

 
1.9

 
—

 
1.9

 
—

Collateralized mortgage obligations
 
27.0

 
(.4
)
 
33.8

 
(.3
)
 
60.8

 
(.7
)
Total fixed maturities, available for sale
 
$
479.4

 
$
(14.2
)
 
$
429.2

 
$
(18.7
)
 
$
908.6

 
$
(32.9
)
Equity securities
 
$
17.8

 
$
(1.6
)
 
$
—

 
$
—

 
$
17.8

 
$
(1.6
)

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2011 (dollars in millions):

 
 
Less than 12 months
 
12 months or greater
 
Total
Description of securities
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
United States Treasury securities and obligations of United States government corporations and agencies
 
$
9.1

 
$
—

 
$
.2

 
$
—

 
$
9.3

 
$
—

States and political subdivisions
 
6.9

 
(.2
)
 
155.4

 
(13.4
)
 
162.3

 
(13.6
)
Debt securities issued by foreign governments
 
.5

 
—

 
—

 
—

 
.5

 
—

Corporate securities
 
1,394.7

 
(57.0
)
 
466.2

 
(79.9
)
 
1,860.9

 
(136.9
)
Asset-backed securities
 
437.6

 
(14.5
)
 
147.5

 
(22.2
)
 
585.1

 
(36.7
)
Collateralized debt obligations
 
268.8

 
(6.3
)
 
1.7

 
—

 
270.5

 
(6.3
)
Commercial mortgage-backed securities
 
168.8

 
(5.2
)
 
33.0

 
(2.7
)
 
201.8

 
(7.9
)
Mortgage pass-through securities
 
1.2

 
—

 
2.2

 
(.1
)
 
3.4

 
(.1
)
Collateralized mortgage obligations
 
645.0

 
(20.8
)
 
29.7

 
(.6
)
 
674.7

 
(21.4
)
Total fixed maturities, available for sale
 
$
2,932.6

 
$
(104.0
)
 
$
835.9

 
$
(118.9
)
 
$
3,768.5

 
$
(222.9
)
Equity securities
 
$
41.6

 
$
(3.0
)
 
$
.4

 
$
—

 
$
42.0

 
$
(3.0
)


Based on management's current assessment of investments with unrealized losses at December 31, 2012, the Company believes the issuers of the securities will continue to meet their obligations (or with respect to equity-type securities, the investment value will recover to its cost basis).  While we do not have the intent to sell securities with unrealized losses and it is not more likely than not that we will be required to sell securities with unrealized losses prior to their anticipated recovery, our intent on an individual security may change, based upon market or other unforeseen developments.  In such instances, if a loss is recognized from a sale subsequent to a balance sheet date due to these unexpected developments, the loss is recognized in the period in which we had the intent to sell the security before its anticipated recovery.

Structured Securities

At December 31, 2012 fixed maturity investments included structured securities with an estimated fair value of $5.5 billion (or 23 percent of all fixed maturity securities).  The yield characteristics of structured securities generally differ in some respects from those of traditional corporate fixed-income securities or government securities.  For example, interest and principal payments on structured securities may occur more frequently, often monthly.  In many instances, we are subject to the risk that the amount and timing of principal and interest payments may vary from expectations.  For example, in many cases, partial prepayments may occur at the option of the issuer and prepayment rates are influenced by a number of factors that cannot be predicted with certainty, including:  the relative sensitivity of prepayments on the underlying assets backing the security to changes in interest rates; a variety of economic, geographic and other factors; the timing, pace and proceeds of liquidations of defaulted collateral; and various security-specific structural considerations (for example, the repayment priority of a given security in a securitization structure).  In addition, the total amount of payments for non-agency structured securities could be affected by changes to cumulative default rates or loss severities of the related collateral.

Historically, the rate of prepayments on structured securities has tended to increase when prevailing interest rates have declined significantly in absolute terms and also relative to the interest rates on the underlying collateral. The yields recognized on structured securities purchased at a discount to par will increase (relative to the stated rate) when the underlying collateral prepays faster than expected. The yields recognized on structured securities purchased at a premium will decrease (relative to the stated rate) when the underlying collateral prepays faster than expected. When interest rates decline, the proceeds from prepayments may be reinvested at lower rates than we were earning on the prepaid securities. When interest rates increase, prepayments may decrease below expected levels. When this occurs, the average maturity and duration of structured securities increases, decreasing the yield on structured securities purchased at discounts and increasing the yield on those purchased at a premium because of a decrease in the annual amortization of premium.

For structured securities included in fixed maturities, available for sale, that were purchased at a discount or premium, we recognize investment income using an effective yield based on anticipated future prepayments and the estimated final maturity of the securities. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. For credit sensitive mortgage-backed and asset-backed securities, and for securities that can be prepaid or settled in a way that we would not recover substantially all of our investment, the effective yield is recalculated on a prospective basis. Under this method, the amortized cost basis in the security is not immediately adjusted and a new yield is applied prospectively. For all other structured and asset-backed securities, the effective yield is recalculated when changes in assumptions are made, and reflected in our income on a retrospective basis. Under this method, the amortized cost basis of the investment in the securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the securities. Such adjustments were not significant in 2012.

The following table sets forth the par value, amortized cost and estimated fair value of structured securities, summarized by interest rates on the underlying collateral, at December 31, 2012 (dollars in millions):

 
Par
value
 
Amortized
cost
 
Estimated
fair value
Below 4 percent
$
609.4

 
$
564.1

 
$
581.8

4 percent – 5 percent
793.1

 
773.7

 
850.3

5 percent – 6 percent
2,718.1

 
2,575.9

 
2,825.0

6 percent – 7 percent
941.4

 
881.4

 
967.2

7 percent – 8 percent
159.5

 
164.8

 
176.3

8 percent and above
127.7

 
128.7

 
131.0

Total structured securities
$
5,349.2

 
$
5,088.6

 
$
5,531.6


The amortized cost and estimated fair value of structured securities at December 31, 2012, summarized by type of security, were as follows (dollars in millions):

 
 
 
Estimated fair value
Type
Amortized
cost
 
Amount
 
Percent
of fixed
maturities
Pass-throughs, sequential and equivalent securities
$
1,376.6

 
$
1,492.7

 
6.1
%
Planned amortization classes, target amortization classes and accretion-directed bonds
678.9

 
746.8

 
3.0

Commercial mortgage-backed securities
1,325.7

 
1,477.4

 
6.0

Asset-backed securities
1,363.9

 
1,460.9

 
6.0

Collateralized debt obligations
317.0

 
324.1

 
1.3

Other
26.5

 
29.7

 
.1

Total structured securities
$
5,088.6

 
$
5,531.6

 
22.5
%


Pass-throughs, sequentials and equivalent securities have unique prepayment variability characteristics.  Pass-through securities typically return principal to the holders based on cash payments from the underlying mortgage obligations. Sequential securities return principal to tranche holders in a detailed hierarchy.  Planned amortization classes, targeted amortization classes and accretion-directed bonds adhere to fixed schedules of principal payments as long as the underlying mortgage loans experience prepayments within certain estimated ranges.  In most circumstances, changes in prepayment rates are first absorbed by support or companion classes insulating the timing of receipt of cash flows from the consequences of both faster prepayments (average life shortening) and slower prepayments (average life extension).

Commercial mortgage-backed securities are secured by commercial real estate mortgages, generally income producing properties that are managed for profit.  Property types include multi-family dwellings including apartments, retail centers, hotels, restaurants, hospitals, nursing homes, warehouses, and office buildings.  Most commercial mortgage-backed securities have call protection features whereby underlying borrowers may not prepay their mortgages for stated periods of time without incurring prepayment penalties.

Commercial Mortgage Loans

At December 31, 2012, the mortgage loan balance was primarily comprised of commercial loans. Approximately 8 percent, 7 percent, 6 percent, 6 percent, 5 percent, 5 percent and 5 percent of the mortgage loan balance were on properties located in California, Minnesota, Arizona, Indiana, Florida, Maryland and Texas, respectively. No other state comprised greater than five percent of the mortgage loan balance. None of the commercial mortgage loan balance was noncurrent at December 31, 2012. Our commercial mortgage loan portfolio is comprised of large commercial mortgage loans. We do not hold groups of smaller-balance homogeneous loans. Our loans have risk characteristics that are unique to an individual borrower. Accordingly, we measure potential losses on a loan-by-loan basis rather than establishing an allowance for losses on mortgage loans.
 
The following table provides the carrying value and estimated fair value of our outstanding mortgage loans and the underlying collateral as of December 31, 2012 (dollars in millions):

 
 
 
Estimated fair
value
Loan-to-value ratio (a)
Carrying value
 
Mortgage loans
 
Collateral
Less than 60%
$
758.9

 
$
838.7

 
$
2,172.6

60% to 70%
323.1

 
342.7

 
498.2

Greater than 70% to 80%
266.9

 
281.5

 
358.7

Greater than 80% to 90%
114.1

 
118.5

 
135.0

Greater than 90%
110.2

 
100.7

 
117.3

Total
$
1,573.2

 
$
1,682.1

 
$
3,281.8

________________
(a)
Loan-to-value ratios are calculated as the ratio of:  (i) the carrying value of the commercial mortgage loans; to (ii) the estimated fair value of the underlying collateral.

Other Investment Disclosures

Life insurance companies are required to maintain certain investments on deposit with state regulatory authorities. Such assets had aggregate carrying values of $67.8 million and $74.5 million at December 31, 2012 and 2011, respectively.

The changes in unrealized appreciation (depreciation) included in accumulated other comprehensive income are net of reclassification adjustments for after-tax net gains (losses) from the sale of investments included in net income of approximately $5 million, $38 million and $(114) million for the years ended December 31, 2012, 2011 and 2010, respectively.

CNO had no fixed maturity investments that were in excess of 10 percent of shareholders' equity at December 31, 2012 and 2011.

LIABILITIES FOR INSURANCE PRODUCTS
LIABILITIES FOR INSURANCE PRODUCTS
LIABILITIES FOR INSURANCE PRODUCTS

These liabilities consisted of the following (dollars in millions):

 
Withdrawal assumption
 
Mortality assumption
 
Interest rate assumption
 
2012
 
2011
 
 
 
 
 
 
 
 
 
 
Future policy benefits:
 
 
 
 
 
 
 
 
 
Interest-sensitive products:
 
 
 
 
 
 
 
 
 
Investment contracts
N/A
 
N/A
 
(c)
 
$
9,648.9

 
$
9,832.9

Universal life contracts
N/A
 
N/A
 
N/A
 
3,244.3

 
3,332.6

Total interest-sensitive products
 
 
 
 
 
 
12,893.2

 
13,165.5

Traditional products:
 
 
 
 
 
 
 
 
 
Traditional life insurance contracts
Company experience
 
(a)
 
5%
 
2,389.6

 
2,396.2

Limited-payment annuities
Company experience, if applicable
 
(b)
 
4%
 
903.5

 
848.8

Individual and group accident and health
Company experience
 
Company experience
 
6%
 
7,903.2

 
7,237.7

Total traditional products
 
 
 
 
 
 
11,196.3

 
10,482.7

Claims payable and other policyholder funds
N/A
 
N/A
 
N/A
 
985.1

 
1,034.3

Liabilities related to separate accounts
N/A
 
N/A
 
N/A
 
14.9

 
15.0

Total
 
 
 
 
 
 
$
25,089.5

 
$
24,697.5

____________________
(a)
Principally, modifications of the 1965 ‑ 70 and 1975 - 80 Basic, Select and Ultimate Tables.
(b)
Principally, the 1984 United States Population Table and the NAIC 1983 Individual Annuitant Mortality Table.
(c)
In 2012 and 2011, all of this liability represented account balances where future benefits are not guaranteed.

The Company establishes reserves for insurance policy benefits based on assumptions as to investment yields, mortality, morbidity, withdrawals, lapses and maintenance expenses. These reserves include amounts for estimated future payment of claims based on actuarial assumptions. The balance is based on the Company's best estimate of the future policyholder benefits to be incurred on this business, given recent and expected future changes in experience.

Changes in the unpaid claims reserve (included in claims payable) and disabled life reserves related to accident and health insurance (included in individual and group accident and health liabilities) were as follows (dollars in millions):

 
2012
 
2011
 
2010
Balance, beginning of the year
$
1,637.3

 
$
1,543.7

 
$
1,444.0

Incurred claims (net of reinsurance) related to:
 
 
 
 
 
Current year
1,570.1

 
1,545.8

 
1,505.8

Prior years (a)
(56.4
)
 
(41.7
)
 
(15.6
)
Total incurred
1,513.7

 
1,504.1

 
1,490.2

Interest on claim reserves
77.8

 
78.4

 
73.4

Paid claims (net of reinsurance) related to:
 
 
 
 
 
Current year
891.3

 
866.5

 
827.0

Prior years
663.9

 
626.2

 
694.1

Total paid
1,555.2

 
1,492.7

 
1,521.1

Net change in balance for reinsurance assumed and ceded
5.7

 
3.8

 
57.2

Balance, end of the year
$
1,679.3

 
$
1,637.3

 
$
1,543.7

___________
(a)
The reserves and liabilities we establish are necessarily based on estimates, assumptions and prior years' statistics. Such amounts will fluctuate based upon the estimation procedures used to determine the amount of unpaid losses. It is possible that actual claims will exceed our reserves and have a material adverse effect on our results of operations and financial condition.
INCOME TAXES
INCOME TAXES
INCOME TAXES

The components of income tax expense were as follows (dollars in millions):

 
2012
 
2011
 
2010
Current tax expense
$
12.5

 
$
11.9

 
$
9.7

Deferred tax expense
117.4

 
101.6

 
69.6

Valuation allowance applicable to current year income
(60.3
)
 
—

 
—

Income tax expense calculated based on annual effective tax rate
69.6

 
113.5

 
79.3

Valuation allowance reduction applicable to income in future years
(111.2
)
 
(143.0
)
 
(95.0
)
Deferred tax benefit related to loss on extinguishment of debt and other items
(23.7
)
 
—

 
—

Total income tax benefit
$
(65.3
)
 
$
(29.5
)
 
$
(15.7
)


A reconciliation of the U.S. statutory corporate tax rate to the effective rate reflected in the consolidated statement of operations is as follows:
 
 
2012
 
2011
 
2010
U.S. statutory corporate rate
35.0
 %
 
35.0
 %
 
35.0
 %
Valuation allowance
(110.1
)
 
(46.7
)
 
(42.2
)
Other nondeductible benefits
32.3

 
.7

 
(.6
)
State taxes
1.4

 
.9

 
.9

Provision for tax issues, tax credits and other
(.5
)
 
.5

 
(.1
)
Effective tax rate
(41.9
)%
 
(9.6
)%
 
(7.0
)%


The components of the Company's income tax assets and liabilities were as follows (dollars in millions):

 
2012
 
2011
Deferred tax assets:
 
 
 
Net federal operating loss carryforwards
$
1,330.2

 
$
1,445.2

Net state operating loss carryforwards
16.2

 
16.8

Tax credits
39.2

 
32.6

Capital loss carryforwards
296.2

 
342.3

Deductible temporary differences:
 

 
 

Insurance liabilities
746.3

 
744.4

Other
86.0

 
64.8

Gross deferred tax assets
2,514.1

 
2,646.1

Deferred tax liabilities:
 

 
 

Investments
(24.1
)
 
(24.2
)
Present value of future profits and deferred acquisition costs
(325.2
)
 
(363.7
)
Accumulated other comprehensive income
(655.3
)
 
(434.8
)
Gross deferred tax liabilities
(1,004.6
)
 
(822.7
)
Net deferred tax assets before valuation allowance
1,509.5

 
1,823.4

Valuation allowance
(766.9
)
 
(938.4
)
Net deferred tax assets
742.6

 
885.0

Current income taxes accrued
(25.7
)
 
(19.6
)
Income tax assets, net
$
716.9

 
$
865.4



Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and NOLs. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted.

A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income during the periods in which our temporary differences become deductible and before our capital loss carryforwards and NOLs expire.

Based on our assessment, it appears more likely than not that $876 million of our NOLs and capital loss carryforwards will be realized through future taxable earnings. Accordingly, we reduced our deferred tax valuation allowance by $171.5 million in 2012. We will continue to assess the need for a valuation allowance in the future. If future results are less than projected, a valuation allowance may be required to reduce the deferred tax assets, which could have a material impact on our results of operations in the period in which it is recorded.
 
There are three principal components of the reduction to our valuation allowance for deferred tax assets in 2012. First, our 2012 taxable operating income, exceeded the amount previously reflected in our deferred tax valuation model, resulting in a reduction to the valuation allowance of $13.7 million in 2012. Second, we reduced the valuation allowance by $46.6 million for taxable investment gains realized in 2012. Last, our recent higher levels of operating income resulted in the projection of higher levels of future years taxable income based on evidence we consider to be objective and verifiable. This change is further described in the following paragraph and resulted in a reduction to the valuation allowance for deferred tax assets of $111.2 million in 2012.

Our analysis at December 31, 2012, is consistent with the deferred tax valuation model used in the prior year. Our deferred tax valuation model reflects projections of future taxable income based on a normalized average annual taxable income for the last three years, plus 5 percent growth for the next five years and no growth thereafter. In our new projections, our three year average increased to $292 million, compared to $260 million in our prior projection. The projections used to support the recovery of our NOLs do not anticipate the use of tax planning strategies that we could consider in the future to avoid a tax benefit from expiring. We have evaluated each component of the deferred tax assets and assessed the effect of limitations and/or interpretations on the value of each component to be fully recognized in the future.

Changes in our valuation allowance are summarized as follows (dollars in millions):

Balance, December 31, 2009
$
1,176.4

 
Decrease in 2010
(95.0
)
(a)
Balance, December 31, 2010
1,081.4

 
Decrease in 2011
(143.0
)
(b)
Balance, December 31, 2011
938.4

 
Decrease in 2012
(171.5
)
(c)
Balance, December 31, 2012
$
766.9

 
____________________
(a)
The $95.0 million reduction to the deferred tax valuation allowance during 2010 resulted from the utilization of NOLs and capital loss carryforwards and higher projections of future taxable income based on evidence we consider to be objective and verifiable.
(b)
The $143.0 million reduction to the deferred tax valuation allowance during 2011 resulted primarily from our recent higher levels of operating income when projecting future taxable income.
(c)
The $171.5 million reduction to the deferred tax valuation allowance during 2012 resulted primarily from: (i) higher taxable income in 2012 (including investment gains); and (ii) our recent higher levels of operating income when projecting future taxable income as further discussed above.

Recovery of our deferred tax assets is dependent on achieving the future taxable income used in our deferred tax valuation model and failure to do so would result in an increase in the valuation allowance in a future period.  Any future increase in the valuation allowance may result in additional income tax expense and reduce shareholders' equity, and such an increase could have a significant impact upon our earnings in the future.  In addition, the use of the Company's NOLs is dependent, in part, on whether the Internal Revenue Service (the "IRS") ultimately agrees with the tax positions we have taken in our tax returns with respect to the allocation of cancellation of indebtedness income ("CODI") resulting from the bankruptcy of our Predecessor and the classification of the loss we recognized as a result of the transfer (the "Transfer") of the stock of Senior Health Insurance Company of Pennsylvania ("Senior Health") to Senior Health Care Oversight Trust, an independent trust (the "Independent Trust") (as further described below).

The Internal Revenue Code (the "Code") limits the extent to which losses realized by a non-life entity (or entities) may offset income from a life insurance company (or companies) to the lesser of:  (i) 35 percent of the income of the life insurance company; or (ii) 35 percent of the total loss of the non-life entities (including NOLs of the non-life entities).  There is no similar limitation on the extent to which losses realized by a life insurance entity (or entities) may offset income from a non-life entity (or entities).

Section 382 of the Code imposes limitations on a corporation's ability to use its NOLs when the company undergoes an ownership change.  Future transactions and the timing of such transactions could cause an ownership change for Section 382 income tax purposes.  Such transactions may include, but are not limited to, additional repurchases under our securities repurchase program, issuances of common stock (including upon conversion of our outstanding 7.0% Convertible Senior Debentures due 2016 (the "7.0% Debentures")), and acquisitions or sales of shares of CNO stock by certain holders of our shares, including persons who have held, currently hold or may accumulate in the future five percent or more of our outstanding common stock for their own account.  Many of these transactions are beyond our control.  If an additional ownership change were to occur for purposes of Section 382, we would be required to calculate an annual restriction on the use of our NOLs to offset future taxable income.  The annual restriction would be calculated based upon the value of CNO's equity at the time of such ownership change, multiplied by a federal long-term tax exempt rate (2.87 percent at December 31, 2012), and the annual restriction could effectively eliminate our ability to use a substantial portion of our NOLs to offset future taxable income.  We regularly monitor ownership change (as calculated for purposes of Section 382) and, as of December 31, 2012, we were below the 50 percent ownership change level that would trigger further impairment of our ability to utilize our NOLs.

On January 20, 2009, the Company's Board of Directors adopted a Section 382 Rights Agreement designed to protect shareholder value by preserving the value of our tax assets primarily associated with tax NOLs under Section 382. The Section 382 Rights Agreement was adopted to reduce the likelihood of this occurring by deterring the acquisition of stock that would create "5 percent shareholders" as defined in Section 382. On December 6, 2011, the Company's Board of Directors amended the Section 382 Rights Agreement to, among other things, (i) extend the final expiration date of the Amended Rights Agreement to December 6, 2014, (ii) update the purchase price of the rights described below, (iii) provide for a new series of preferred stock relating to the rights that is substantially identical to the prior series of preferred stock, (iv) provide for a 4.99% percent ownership threshold relating to any Company 382 Securities (as defined below), and amend other provisions to reflect best practices for tax benefit preservation plans, including updates to certain definitions.

Under the Section 382 Rights Agreement, one right was distributed for each share of our common stock outstanding as of the close of business on January 30, 2009 and for each share issued after that date. Pursuant to the Amended Section 382 Rights Agreement, if any person or group (subject to certain exemptions) becomes an owner of more than 4.99 percent of the Company's outstanding common stock (or any other interest in the Company that would be treated as "stock" under applicable Section 382 regulations) without the approval of the Board of Directors, there would be a triggering event causing significant dilution in the voting power and economic ownership of that person or group. Shareholders who held more than 4.99 percent of the Company's outstanding common stock as of December 6, 2011 will trigger a dilutive event only if they acquire additional shares exceeding one percent of our outstanding shares without prior approval from the Board of Directors.

The Amended Section 382 Rights Agreement was approved by our shareholders at the Company's 2012 annual meeting and will continue in effect until December 6, 2014, unless earlier terminated or redeemed by the Board of Directors. The Company's Audit and Enterprise Risk Committee will review our NOLs on an annual basis and will recommend amending or terminating the Section 382 Rights Agreement based on its review.

On May 11, 2010, our shareholders approved an amendment to CNO's certificate of incorporation designed to prevent certain transfers of common stock which could otherwise adversely affect our ability to use our NOLs (the "Section 382 Charter Amendment"). Subject to the provisions set forth in the Section 382 Charter Amendment, transfers of our common stock would be void and of no effect if the effect of the purported transfer would be to: (i) increase the direct or indirect ownership of our common stock by any person or public group (as such term is defined in the regulations under Section 382) from less than 5% to 5% or more of our common stock; (ii) increase the percentage of our common stock owned directly or indirectly by a person or public group owning or deemed to own 5% or more of our common stock; or (iii) create a new public group. The Section 382 Charter Amendment will continue in effect until December 31, 2013.

As of December 31, 2012, we had $3.8 billion of federal NOLs and $.8 billion of capital loss carryforwards. The following table summarizes the expiration dates of our loss carryforwards assuming the IRS does not ultimately agree with the positions we have taken with respect to the allocation of CODI and the loss on our investment in Senior Health, both as further described below (dollars in millions):

Year of expiration
 
Net operating loss carryforwards (a)
 
Capital loss
 
Total loss
 
 
Life
 
Non-life
 
carryforwards
 
carryforwards
2013
 
$
—

 
 
 
$
—

 
 
 
$
808.6

(b)
$
808.6

2014
 
—

 
 
 
—

 
 
 
28.6

 
28.6

2015
 
—

 
 
 
—

 
 
 
9.1

 
9.1

2018
 
475.0

 
(a)
 
—

 
 
 
—

 
475.0

2021
 
29.5

 
 
 
—

 
 
 
—

 
29.5

2022
 
204.1

 
 
 
—

 
 
 
—

 
204.1

2023
 
—

 
(b)
 
2,603.1

 
(a)
 
—

 
2,603.1

2024
 
—

 
 
 
3.2

 
 
 
—

 
3.2

2025
 
—

 
 
 
118.8

 
 
 
—

 
118.8

2027
 
—

 
 
 
216.8

 
 
 
—

 
216.8

2028
 
—

 
 
 
.5

 
 
 
—

 
.5

2029
 
—

 
 
 
148.9

 
 
 
—

 
148.9

2032
 
—

 
 
 
.8

 
 
 
—

 
.8

Total
 
$
708.6

 
 
 
$
3,092.1

 
 
 
$
846.3

 
$
4,647.0

_________________________
(a)
The life/non-life allocation summarized above assumes the IRS does not ultimately agree with the tax position we have taken in our tax returns with respect to the allocation of CODI.  If the IRS ultimately agrees with our tax position, approximately $631 million of the non-life NOLs expiring in 2023 would be characterized as life NOLs expiring in 2018.
(b)
The allocation of the capital loss carryforwards summarized above assumes the IRS does not ultimately agree with the tax position we have taken with respect to our investment in Senior Health, which was worthless when it was transferred to the Independent Trust in 2008. If the IRS ultimately agrees with our tax position of classifying this loss as ordinary, capital loss carryforwards expiring in 2013 would decrease and life NOLs expiring in 2023 would increase by $742.0 million.

We had deferred tax assets related to NOLs for state income taxes of $16.2 million and $16.8 million at December 31, 2012 and 2011, respectively.  The related state NOLs are available to offset future state taxable income in certain states through 2019.

As more fully discussed below, the following interpretations of the tax law may have an impact on our ability to utilize our NOLs and are uncertain tax positions of the Company: (i) whether the CODI recognized in conjunction with our bankruptcy should be classified as a reduction to life or non-life NOLs; and (ii) whether the loss on our investment in Senior Health should be classified as an NOL or a capital loss carryforward. The recorded NOLs and capital loss carryforwards related to these items are fully offset by tax valuation allowances, as it is uncertain whether such assets will be realized.

In July 2006, the Joint Committee of Taxation accepted the audit and the settlement which characterized $2.1 billion of the tax losses on our Predecessor's investment in Conseco Finance Corp. as life company losses and the remaining $3.8 billion as non-life losses prior to the application of the CODI attribute reductions described below.

The Code provides that any income realized as a result of the CODI in bankruptcy must reduce NOLs. We realized $2.5 billion of CODI when we emerged from bankruptcy. Pursuant to the Company's interpretation of the tax law, the CODI reductions were all used to reduce non-life NOLs and this position has been taken in our tax returns. However, the IRS has issued a proposed adjustment which is not in agreement with our position. We have requested an appeal of the IRS proposed adjustment through their early appeals process. Due to uncertainties with respect to the position the IRS may take and limitations on our ability to utilize NOLs based on projected life and non-life income, we have consistently considered the $631 million of CODI to be a reduction to life NOLs when determining our valuation allowance, pending resolution. If the IRS ultimately agrees with our position that the $631 million of CODI is a reduction to non-life NOLs, our valuation allowance would be reduced by approximately $140 million based on the income projection used in determining our valuation allowance. The outcome of this uncertainty cannot be predicted.

We recognized a $742 million loss on our investment in Senior Health which was worthless when it was transferred to the Independent Trust in 2008. We have treated the loss as a capital loss when determining the deferred tax benefit we may receive. We also established a full valuation allowance as we believe we will not generate capital gains to utilize the benefit. However, due to uncertainties in the Code, we have reflected this loss as an ordinary loss in our tax return, contrary to certain IRS rulings. If classifying this loss as ordinary is ultimately determined to be correct, our valuation allowance would be reduced by approximately $145 million based on the income projections used in determining our valuation allowance.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2012 and 2011 is as follows (dollars in millions):

 
Years ended December 31,
 
2012
 
2011
 
 
 
 
Balance at beginning of year
$
318.2

 
$
311.1

Increase based on tax positions taken in prior years
7.3

 
7.1

Decrease based on tax positions taken in prior years
(15.0
)
 
—

Balance at end of year
$
310.5

 
$
318.2



As of December 31, 2012 and 2011, $285.0 million and $300.0 million, respectively, of our unrecognized tax benefits, if recognized, would have resulted in a decrease in our valuation allowance for deferred tax assets. The remaining balances relate to timing differences which, if recognized, would have no effect on the Company's tax expense or our evaluation of the valuation allowance for deferred tax assets. The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense in the consolidated statement of operations. Included in tax expense in 2012 and 2011 is $.7 million and $1.1 million, respectively, of interest. No such amounts were recognized in 2010. The liability for accrued interest was $1.8 million and $1.1 million at December 31, 2012 and 2011, respectively.

Tax years 2004 and 2008 through 2010 are open to examination by the IRS through September 2014, while tax year 2011 is open through September 2015.  The Company's various state income tax returns are generally open for tax years 2009 through 2011 based on the individual state statutes of limitation. Generally, for tax years which generate NOLs, capital losses or tax credit carryforwards, the statute of limitations does not close until the expiration of the statute of limitations for the tax year in which such carryforwards are utilized.

In accordance with GAAP, we are precluded from recognizing the tax benefits of any tax windfall upon the exercise of a stock option or the vesting of restricted stock unless such deduction resulted in actual cash savings to the Company. Because of the Company's NOLs, no cash savings have occurred. NOL carryforwards of $2.9 million related to deductions for stock options and restricted stock will be reflected in additional paid-in capital if realized.
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS

The following notes payable were direct corporate obligations of the Company as of December 31, 2012 and 2011 (dollars in millions):

 
2012
 
2011
New Senior Secured Credit Agreement (as defined below)
$
644.6

 
$
—

7.0% Debentures
93.0

 
293.0

Previous Senior Secured Credit Agreement (as defined below)
—

 
255.2

6.375% Senior Secured Notes due October 2020 (the "6.375% Notes")
275.0

 
—

9.0% Senior Secured Notes due January 2018 (the "9.0% Notes")
—

 
275.0

Senior Health Note due November 12, 2013 (the "Senior Health Note")
—

 
50.0

Unamortized discount on New Senior Secured Credit Agreement
(5.0
)
 
—

Unamortized discount on 7.0% Debentures
(3.4
)
 
(12.9
)
Unamortized discount on Previous Senior Secured Credit Agreement
—

 
(2.4
)
Direct corporate obligations
$
1,004.2

 
$
857.9



In the third quarter of 2012, as further discussed below, we completed a comprehensive recapitalization plan. The following table sets forth the sources and uses of cash from the recapitalization transactions (dollars in millions):

Sources:
 
 
New Senior Secured Credit Agreement
$
669.5

 
Issuance of 6.375% Notes
275.0

 
   Total sources
$
944.5

 
 
 
Uses:
 
 
Cash on hand for general corporate purposes
$
13.7

 
Repurchase of $200 million principal amount of 7.0% Debentures pursuant to Debenture Repurchase Agreement
355.1

 
Repayment of Previous Senior Secured Credit Agreement
223.8

 
Repayment of $275.0 million principal amount of 9.0% Notes, including redemption premium
322.7

 
Debt issuance costs
23.1

 
Accrued interest
6.1

 
   Total uses
$
944.5



6.375% Notes

On September 28, 2012, we issued $275.0 million in aggregate principal amount of 6.375% Notes pursuant to an indenture, dated as of September 28, 2012 (the "6.375% Indenture"), among the Company, the subsidiary guarantors party thereto (the "Subsidiary Guarantors") and Wilmington Trust, National Association, as trustee (the "Trustee") and as collateral agent (the "Collateral Agent"). The net proceeds from the issuance of the 6.375% Notes, together with the net proceeds from the New Senior Secured Credit Agreement (as defined below), were used to repay other outstanding indebtedness, as further described below, and for general corporate purposes.

The 6.375% Notes will mature on October 1, 2020. Interest on the 6.375% Notes accrues at a rate of 6.375% per annum and is payable semiannually in arrears on April 1 and October 1 of each year, commencing on April 1, 2013. The 6.375% Notes and the guarantees thereof (the "Guarantees") are senior secured obligations of the Company and the Subsidiary Guarantors and rank equally in right of payment with all of the Company's and the Subsidiary Guarantors' existing and future senior obligations, and senior to all of the Company's and the Subsidiary Guarantors' future subordinated indebtedness. The 6.375% Notes are secured by a first-priority lien on substantially all of the assets of the Company and the Subsidiary Guarantors, subject to certain exceptions. The 6.375% Notes and the Guarantees are pari passu with respect to security and in right of payment with all of the Company's and the Subsidiary Guarantors' existing and future secured indebtedness under the New Senior Secured Credit Agreement (as defined below). The 6.375% Notes are structurally subordinated to all of the liabilities and preferred stock of each of the Company's insurance subsidiaries, which are not guarantors of the 6.375% Notes.

The Company may redeem all or part of the 6.375% Notes beginning on October 1, 2015, at the redemption prices set forth in the 6.375% Indenture. The Company may also redeem all or part of the 6.375% Notes at any time and from time to time prior to October 1, 2015, at a price equal to 100% of the aggregate principal amount of the 6.375% Notes to be redeemed, plus a "make-whole" premium and accrued and unpaid interest to, but not including, the redemption date. In addition, prior to October 1, 2015, the Company may redeem up to 35% of the aggregate principal amount of the 6.375% Notes with the net cash proceeds of certain equity offerings at a price equal to 106.375% of the aggregate principal amount of the 6.375% Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

Upon the occurrence of a Change of Control (as defined in the 6.375% Indenture), each holder of the 6.375% Notes may require the Company to repurchase all or a portion of the 6.375% Notes in cash at a price equal to 101% of the aggregate principal amount of the 6.375% Notes to be repurchased, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

The 6.375% Indenture contains covenants that, among other things, limit (subject to certain exceptions) the Company's ability and the ability of the Company's Restricted Subsidiaries (as defined in the 6.375% Indenture) to:

•
incur or guarantee additional indebtedness or issue preferred stock;

•
pay dividends or make other distributions to shareholders;

•
purchase or redeem capital stock or subordinated indebtedness;

•
make investments;

•
create liens;

•
incur restrictions on the Company's ability and the ability of its Restricted Subsidiaries to pay dividends or make other payments to the Company;

•
sell assets, including capital stock of the Company's subsidiaries;

•
consolidate or merge with or into other companies or transfer all or substantially all of the Company's assets; and

•
engage in transactions with affiliates.

The 6.375% Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants in the 6.375% Indenture, failure to pay at maturity or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy and insolvency. Generally, if an event of default occurs, the Trustee or holders of at least 25% in principal amount of the then outstanding 6.375% Notes may declare the principal of and accrued but unpaid interest, including any additional interest, on all of the 6.375% Notes to be due and payable.

Under the 6.375% Indenture, the Company can make Restricted Payments (as such term is defined in the 6.375% Indenture) up to a calculated limit, provided that the Company's pro forma risk-based capital ratio exceeds 225% after giving effect to the Restricted Payment and certain other conditions are met. Restricted Payments include, among other items, repurchases of common stock and cash dividends on common stock (to the extent such dividends exceed $30 million in the aggregate in any calendar year). Restricted payments do not include cash paid to purchase our outstanding 7% Debentures pursuant to the tender offer we announced on February 11, 2013, as further described in the note to the consolidated financial statements entitled "Subsequent Event".

The limit of Restricted Payments permitted under the 6.375% Indenture is the sum of (x) 50% of the Company's "Net Excess Cash Flow" (as defined in the 6.375% Indenture) for the period (taken as one accounting period) from July 1, 2012 to the end of the Company's most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment, (y) $175.0 million and (z) certain other amounts specified in the 6.375% Indenture. Based on the provisions set forth in the 6.375% Indenture and the Company's Net Excess Cash Flow for the period from July 1, 2012 through December 31, 2012, the Company could have made additional Restricted Payments under this 6.375% Indenture covenant of approximately $212 million as of December 31, 2012. This limitation on Restricted Payments does not apply if the Debt to Total Capitalization Ratio (as defined in the 6.375% Indenture) as of the last day of the Company's most recently ended fiscal quarter for which financial statements are available that immediately precedes the date of any Restricted Payment, calculated immediately after giving effect to such Restricted Payment and any related transactions on a pro forma basis, is equal to or less than 17.5%.

In connection with the issuance of the 6.375% Notes and execution of the 6.375% Indenture, the Company and the Subsidiary Guarantors entered into a security agreement, dated as of September 28, 2012 (the "Security Agreement"), by and among the Company, the Subsidiary Guarantors and the Collateral Agent, pursuant to which the Company and the Subsidiary Guarantors pledged substantially all of their assets to secure their obligations under the 6.375% Notes and the 6.375% Indenture, subject to certain exceptions as set forth in the Security Agreement.

New Senior Secured Credit Agreement

On September 28, 2012, the Company entered into a new senior secured credit agreement, providing for: (i) a $425.0 million six-year term loan facility; (ii) a $250.0 million four-year term loan facility; and (iii) a $50.0 million three-year revolving credit facility, with JPMorgan Chase Bank, N.A., as administrative agent (the "Agent"), and the lenders from time to time party thereto (the "New Senior Secured Credit Agreement"). The New Senior Secured Credit Agreement is guaranteed by the Subsidiary Guarantors and secured by a first-priority lien (which ranks pari passu with the liens securing the 6.375% Notes) on substantially all of the Company's and the Subsidiary Guarantors' assets. As of December 31, 2012, the Company had borrowed in full the amounts available under each of the term loan facilities and no amounts have been borrowed under the revolving credit facility. The net proceeds from the New Senior Secured Credit Agreement, together with the net proceeds from the 6.375% Notes, were used to repay other outstanding indebtedness, as further described below, and for general corporate purposes.

The revolving credit facility includes an uncommitted subfacility for swingline loans of up to $5.0 million, and up to $5.0 million of the revolving credit facility is available for the issuance of letters of credit. The six-year term loan facility will amortize in quarterly installments in amounts resulting in an annual amortization of 1% and the four-year term loan facility will amortize in quarterly installments resulting in an annual amortization of 20% during the first and second years and 30% during the third and fourth years. Subject to certain conditions, the Company may incur additional incremental loans under the New Senior Secured Credit Agreement in an amount of up to $250.0 million.

Mandatory prepayments of the New Senior Secured Credit Agreement will be required, subject to certain exceptions, in an amount equal to: (i) 100% of the net cash proceeds from certain asset sales or casualty events; (ii) 100% of the net cash proceeds received by the Company or any of its restricted subsidiaries from certain debt issuances; and (iii) 100% of the amount of certain restricted payments made (including any common stock dividends and share repurchases) as defined in the New Senior Secured Credit Agreement provided that if, as of the end of the fiscal quarter immediately preceding such restricted payment, the debt to total capitalization ratio is: (x) equal to or less than 22.5%, but greater than 17.5%, the prepayment requirement shall be reduced to 33.33%; or (y) equal to or less than 17.5%, the prepayment requirement shall not apply.

Notwithstanding the foregoing, no mandatory prepayments pursuant to item (i) in the preceding paragraph shall be required if: (x) the debt to total capitalization ratio is equal or less than 20% and (y) either (A) the financial strength rating of certain of the Company's insurance subsidiaries is equal or better than A- (stable) from A.M. Best Company ("A.M. Best") or (B) the New Senior Secured Credit Agreement is rated equal or better than BBB- (stable) from S&P and Baa3 (stable) by Moody's.

In 2012, as required under the terms of the New Senior Secured Credit Agreement, we made mandatory prepayments of $28.4 million due to repurchases of our common stock and payment of a common stock dividend. We also made an additional payment of $2.0 million to cover the remaining portion of the scheduled term loan installment.

The interest rates with respect to loans under: (i) the six-year term loan facility will be, at the Company's option, equal to a eurodollar rate, plus 3.75% per annum, or a base rate, plus 2.75% per annum, subject to a eurodollar rate "floor" of 1.25% and a base rate "floor" of 2.25% (such rate was 5.0% at December 31, 2012); (ii) the four-year term loan facility will be, at the Company's option, equal to a eurodollar rate, plus 3.25% per annum, or a base rate, plus 2.25% per annum, subject to a eurodollar rate "floor" of 1.00% and a base rate "floor" of 2.00% (such rate was 4.25% at December 31, 2012); and (iii) the revolving credit facility will be, at the Company's option, equal to a eurodollar rate, plus 3.50% per annum, or a base rate, plus 2.50% per annum, in each case, with respect to revolving credit facility borrowings only, subject to certain step-downs based on the debt to total capitalization ratio of the Company.

The New Senior Secured Credit Agreement contains covenants that limit the Company's ability to take certain actions and perform certain activities, including (each subject to exceptions as set forth in the New Senior Secured Credit Agreement):

•
limitations on debt (including, without limitation, guarantees and other contingent obligations);
 
•
limitations on issuances of disqualified capital stock;

•
limitations on liens and further negative pledges;

•
limitations on sales, transfers and other dispositions of assets;

•
limitations on transactions with affiliates;

•
limitations on changes in the nature of the Company's business;

•
limitations on mergers, consolidations and acquisitions;

•
limitations on dividends and other distributions, stock repurchases and redemptions and other restricted payments;

•
limitations on investments and acquisitions;

•
limitations on prepayment of certain debt;

•
limitations on modifications or waivers of certain debt documents and charter documents;

•
investment portfolio requirements for insurance subsidiaries;

•
limitations on restrictions affecting subsidiaries;

•
limitations on holding company activities; and

•
limitations on changes in accounting policies.

In addition, the New Senior Secured Credit Agreement requires the Company to maintain (each as calculated in accordance with the New Senior Secured Credit Agreement): (i) a debt to total capitalization ratio of not more than 27.5 percent (such ratio was 20.9 percent at December 31, 2012); (ii) an interest coverage ratio of not less than 2.50 to 1.00 for each rolling four quarters (or, if less, the number of full fiscal quarters commencing after the effective date of the New Senior Secured Credit Agreement) (such ratio was 8.08 to 1.00 for the period ended December 31, 2012); (iii) an aggregate ratio of total adjusted capital to company action level risk-based capital for the Company's insurance subsidiaries of not less than 250 percent (such ratio was 367 percent at December 31, 2012); and (iv) a combined statutory capital and surplus for the Company's insurance subsidiaries of at least $1,300.0 million (combined statutory capital and surplus at December 31, 2012, was $1,782.6 million).

The New Senior Secured Credit Agreement provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, incorrectness of any representation or warranty in any material respect, breach of covenants in the New Senior Secured Credit Agreement or other loan documents, cross default to certain other indebtedness, certain events of bankruptcy and insolvency, certain ERISA events, a failure to pay certain judgments, certain material regulatory events, the occurrence of a change of control, and the invalidity of any material provision of any loan document or material lien or guarantee granted under the loan documents. If an event of default under the New Senior Secured Credit Agreement occurs and is continuing, the Agent may accelerate the amounts and terminate all commitments outstanding under the New Senior Secured Credit Agreement and may exercise remedies in respect of the collateral.

In connection with the execution of the New Senior Secured Credit Agreement, the Company and the Subsidiary Guarantors entered into a guarantee and security agreement, dated as of September 28, 2012 (the "Guarantee and Security Agreement"), by and among the Company, the Subsidiary Guarantors and the Agent, pursuant to which the Subsidiary Guarantors guaranteed all of the obligations of the Company under the New Senior Secured Credit Agreement and the Company and the Subsidiary Guarantors pledged substantially all of their assets to secure the New Senior Secured Credit Agreement, subject to certain exceptions as set forth in the Guarantee and Security Agreement.

Pari Passu Intercreditor Agreement

In connection with the issuance of the 6.375% Notes and entry into the New Senior Secured Credit Agreement, the Agent and the Collateral Agent, as authorized representative with respect to the 6.375% Notes, entered into a Pari Passu Intercreditor Agreement, dated as of September 28, 2012 (the "Intercreditor Agreement"), which sets forth agreements with respect to the first-priority liens granted by the Company and the Subsidiary Guarantors pursuant to the 6.375% Indenture and the New Senior Secured Credit Agreement.

Under the Intercreditor Agreement, any actions that may be taken with respect to the collateral that secures the 6.375% Notes and the New Senior Secured Credit Agreement, including the ability to cause the commencement of enforcement proceedings against such collateral, to control such proceedings and to approve amendments to releases of such collateral from the lien of, and waive past defaults under, such documents relating to such collateral, will be at the direction of the authorized representative of the lenders under the New Senior Secured Credit Agreement until the earliest of: (i) the Company's obligations under the New Senior Secured Credit Agreement (or refinancings thereof) are discharged; (ii) the earlier of (x) the date on which the outstanding principal amount of loans and commitments under the New Senior Secured Credit Agreement is less than $25.0 million and (y) the date on which the outstanding principal amount of another tranche of first-priority indebtedness exceeds the principal amount of loans and commitments under the New Senior Secured Credit Agreement; and (iii) 180 days after the occurrence of both an event of default under the 6.375% Indenture and the authorized representative of the holders of the New Notes making certain representations as described in the Intercreditor Agreement, unless the authorized representative of the lenders under the New Senior Secured Credit Agreement has commenced and is diligently pursuing enforcement action with respect to the collateral or the grantor of the security interest in that collateral (whether the Company or the applicable Subsidiary Guarantor) is then a debtor under or with respect to (or otherwise subject to) any insolvency or liquidation proceeding.

9.0% Notes

On December 21, 2010, we issued $275.0 million aggregate principal amount of 9.0% Notes. The net proceeds of $267.0 million were used to repay certain indebtedness. The Company could redeem all or part of the 9.0% Notes at any time and from time to time prior to January 15, 2014, at a price equal to 100% of the aggregate principal amount of the 9.0% Notes to be redeemed plus a "make-whole" premium and accrued and unpaid interest.

On September 28, 2012, the Company completed the cash tender offer for $273.8 million aggregate principal amount of the 9.0% Notes and received consents from such holders to proposed amendments to the indenture governing the 9.0% Notes (the "9.0% Indenture"). In addition, on September 28, 2012 (the "Initial Payment Date"), the Company, the Subsidiary Guarantors and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as trustee, executed a first supplemental indenture to the 9.0% Indenture (the "Supplemental Indenture") that eliminated substantially all of the restrictive covenants contained in the 9.0% Indenture and certain events of default and related provisions. The Supplemental Indenture became effective upon execution, and the amendments to the 9.0% Indenture became operative on the Initial Payment Date upon acceptance of and payment for the tendered 9.0% Notes by the Company.

On the Initial Payment Date, the Company paid an aggregate of $326.3 million (using a portion of the net proceeds from its offering of the 6.375% Notes, together with borrowings under the New Senior Secured Credit Agreements) in order to purchase the 9.0% Notes tendered prior to the Initial Payment Date (representing, in the aggregate, tender offer consideration of approximately $313.1 million, consent payments of approximately $8.2 million and accrued and unpaid interest to, but not including, the Initial Payment Date of approximately $5.0 million).

On September 28, 2012, the Company: (i) issued a notice of redemption to holders of the remaining $1.2 million aggregate principal amount of 9.0% Notes that were not tendered and remained outstanding following the Company's initial acceptance of and payments for the 9.0% Notes tendered in the tender offer prior to the Initial Payment Date; and (ii) deposited with the trustee of the 9.0% Notes sufficient funds to satisfy and discharge the 9.0% Indenture and to fund the make-whole redemption of the remaining outstanding 9.0% Notes and to pay accrued and unpaid interest on the redeemed notes to, but not including, the October 29, 2012 redemption date. Upon the satisfaction and discharge of the 9.0% Indenture, all of the collateral securing the 9.0% Notes was released and any remaining restrictive covenants and certain additional events of default contained in the 9.0% Indenture (as amended by the Supplemental Indenture) ceased to have effect. The remaining $1.2 million of 9.0% Notes were redeemed on October 29, 2012.

7.0% Debentures

On November 13, 2009, we issued $176.5 million aggregate principal amount of our 7.0% Debentures in the initial closing of our private offering of 7.0% Debentures to Morgan Stanley & Co. Incorporated, as the initial purchaser of the 7.0% Debentures. The net proceeds from the initial closing of the offering of our 7.0% Debentures, after deducting the initial purchaser's discounts and commissions and before other offering expenses, totaled $172.0 million. The Company used the net proceeds to fund a substantial portion of the consideration payable in connection with a cash tender offer for the 3.5% Convertible Debentures due September 30, 2035 (the "3.5% Debentures").

In February 2010, we completed a second closing of $64.0 million aggregate principal amount of our 7.0% Debentures and in May 2010, we completed a third closing of $52.5 million aggregate principal amount of our 7.0% Debentures. These issuances were made pursuant to the purchase agreement that we entered into in October 2009 relating to the private offering of up to $293 million of 7.0% Debentures. We received aggregate net proceeds (after taking into account the discounted offering price less the initial purchaser's discounts and commissions, but before expenses) of: (i) $61.4 million in the second closing of the 7.0% Debentures; and (ii) $49.4 million in the third closing of the 7.0% Debentures. At December 31, 2012 and 2011, unamortized issuance costs (classified as other assets) related to the 7.0% Debentures were $.4 million and $1.6 million, respectively, and are amortized as an increase to interest expense over the term of the 7.0% Debentures.

The 7.0% Debentures rank equally in right of payment with all of the Company's unsecured and unsubordinated obligations. The 7.0% Debentures are governed by an Indenture dated as of October 16, 2009 (the "7.0% Indenture") between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee ("Mellon"). The 7.0% Debentures bear interest at a rate of 7.0% per annum, payable semi-annually on June 30 and December 30 of each year, commencing on the interest payment date immediately succeeding the issuance date of such series. The 7.0% Debentures will mature on December 30, 2016, unless earlier converted. The 7.0% Debentures may not be redeemed at the Company's election prior to the stated maturity date and the holders may not require the Company to repurchase the 7.0% Debentures at any time. The 7.0% Debentures are not convertible prior to June 30, 2013, except under limited circumstances. Commencing on June 30, 2013, the 7.0% Debentures will be convertible into shares of our common stock at the option of the holder at any time, subject to certain exceptions and subject to our right to terminate such conversion rights under certain circumstances relating to the sale price of our common stock. If the holders elect to convert their 7.0% Debentures upon the occurrence of certain changes of control of CNO or certain other events, we will be required, under certain circumstances, to increase the conversion rate for such holders of the 7.0% Debentures who convert in connection with such events. Initially, the 7.0% Debentures will be convertible into 182.1494 shares of our common stock for each $1,000 principal amount of 7.0% Debentures, which is equivalent to an initial conversion price of approximately $5.49 per share. The conversion rate is subject to adjustment following the occurrence of certain events (including the payment of dividends on our common stock) in accordance with the terms of the 7.0% Indenture.

The 7.0% Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants in the 7.0% Indenture, failure to pay at maturity or acceleration of other indebtedness and certain events of bankruptcy and insolvency. Generally, if an event of default occurs, Mellon or holders of at least 50% in principal amount of the then outstanding 7.0% Debentures may declare the principal of, and accrued but unpaid interest on all of the 7.0% Debentures to be immediately due and payable.

The 7.0% Indenture provides that on and after the date of the 7.0% Indenture, the Company may not: (i) consolidate with or merge into any other person or sell, convey, lease or transfer the Company's consolidated properties and assets substantially as an entirety to any other person in any one transaction or series of related transactions; or (ii) permit any person to consolidate with or merge into the Company, unless certain requirements set forth in the 7.0% Indenture are satisfied.

In accordance with GAAP, we were required to consider on each issuance date whether the 7.0% Debentures issued on such date were issued with a beneficial conversion feature. A beneficial conversion feature exists if the 7.0% Debentures may be convertible into common stock at an effective conversion price (calculated by dividing the proceeds from the issuance of 7.0% Debentures issued on that date (per $1,000 principal amount of debentures) by the then effective conversion rate) that is lower than the market price of a share of common stock on the date of issuance. When a beneficial conversion feature exists, we are required to separately recognize the beneficial conversion feature at issuance by allocating a portion of the proceeds to the intrinsic value of that feature. The value of the beneficial conversion feature is recorded, net of taxes, as an increase to additional paid-in capital. If a beneficial conversion feature exists on the actual date(s) of issuance, a discount equal to the intrinsic value of the beneficial conversion feature will be recorded against the carrying value of the 7.0% Debentures. Such discount will be amortized from the actual date(s) of issuance to the stated maturity date of the 7.0% Debentures using the effective interest method. Accordingly, the interest expense we recognize related to the 7.0% Debentures will be dependent upon whether a beneficial conversion feature existed on the actual date(s) of issuance and the amount by which the market price(s) of our common stock exceeded the effective conversion price on such actual date(s) of issuance.

The closing market price of our common stock on May 4, 2010 (the last closing price prior to the issuance of $52.5 million of the 7.0% Debentures) was $5.81. Because this amount was higher than the effective conversion price of $5.17 on that date, a beneficial conversion feature existed with respect to the 7.0% Debentures we issued. The beneficial conversion feature related to the 7.0% Debentures issued on May 5, 2010 of $4.0 million, net of tax, was recorded as an increase to additional paid-in capital.

On September 4, 2012, the Company entered into a Debenture Repurchase Agreement (the "Debenture Repurchase Agreement") with Paulson Credit Opportunities Master Ltd. and Paulson Recovery Master Fund Ltd. (collectively, the "Paulson Holders"), funds managed by Paulson & Co. Inc., that held $200.0 million in aggregate principal amount of the Company's 7.0% Debentures. Pursuant to the Debenture Repurchase Agreement, the Company purchased from each of the Paulson Holders the 7.0% Debentures held by such Paulson Holders, for a cash purchase price of $355.1 million that provided for a 2.8% discount to the estimated fair market value of the 7.0% Debentures as defined in the Debenture Repurchase Agreement.

As further described in the note to the consolidated financial statements entitled "Subsequent Event", we commenced a cash tender offer in February 2013 for the remaining $93.0 million aggregate principal amount of 7.0% Debentures that were outstanding.

Previous Senior Secured Credit Agreement

On December 21, 2010, the Company entered into a $375 million senior secured term loan facility maturing on September 30, 2016, pursuant to an agreement among the Company, Morgan Stanley Senior Funding, Inc., as administrative agent, and the lenders from time to time party thereto (the "Previous Senior Secured Credit Agreement"). The net proceeds of $363.6 million were used to repay certain indebtedness. The pricing terms for the Previous Senior Secured Credit Agreement included upfront fees of 1.25 percent paid to the lenders. The Previous Senior Secured Credit Agreement was guaranteed by our primary non-insurance company subsidiaries and secured by substantially all of our and the subsidiary guarantors' assets.

In May 2011, we amended our Previous Senior Secured Credit Agreement. Pursuant to the amended terms, the applicable interest rate on the Previous Senior Secured Credit Agreement was decreased. The new interest rate was, at our option (in most instances): (i) a Eurodollar rate of LIBOR plus 5.00 percent subject to a LIBOR "floor" of 1.25 percent (previously LIBOR plus 6.00 percent with a LIBOR floor of 1.50 percent); or (ii) a Base Rate plus 4.00 percent subject to a Base Rate "floor" of 2.25 percent (previously a Base Rate plus 5.00 percent with a Base Rate floor of 2.50 percent).

In 2011, as required under the terms of the Previous Senior Secured Credit Agreement, we made mandatory prepayments totaling $69.8 million due to our repurchase of $69.8 million of our common stock. In March 2011, we also made a voluntary prepayment of $50.0 million on our outstanding principal balance under the Previous Senior Secured Credit Agreement using available cash. 

In September 2012, the Company used a portion of the net proceeds from its offering of the 6.375% Notes, together with borrowings under the New Senior Secured Credit Agreement to repay the remaining $223.8 million principal amount outstanding under its Previous Senior Secured Credit Agreement.

Also, in the first nine months of 2012, as required under the terms of the Previous Senior Secured Credit Agreement, we made mandatory prepayments of $31.4 million due to repurchases of our common stock and payment of a common stock dividend.

In December 2010, we repaid the $652.1 million outstanding principal balance under a prior senior credit agreement using: (i) the proceeds from the Previous Senior Secured Credit Agreement and the issuance of the 9.0% Notes; and (ii) available cash.

Senior Health Note

In connection with the Transfer, the Company issued the Senior Health Note payable to Senior Health. The Senior Health Note was unsecured and had an interest rate of 6.0 percent payable quarterly, beginning on March 15, 2009. We were required to make annual principal payments of $25.0 million beginning on November 12, 2009. The Company made a $25.0 million scheduled payment on the Senior Health Note in 2011, 2010 and 2009. In March 2012, we paid in full the remaining $50.0 million principal balance on the Senior Health Note, which had been scheduled to mature in November 2013. The repayment in full of the Senior Health Note removed the previous restriction on our ability to pay cash dividends on our common stock.

Loss on Extinguishment of Debt

In 2012, we recognized a loss on extinguishment of debt totaling $200.2 million consisting of:

(i)
$136.5 million due to our repurchase of $200.0 million principal amount of 7.0% Debentures pursuant to the Debenture Repurchase Agreement described above and the write-off of unamortized discount and issuance costs associated with the 7.0% Debentures. Additional paid-in capital was also reduced by $24.0 million to extinguish the beneficial conversion feature associated with a portion of the 7.0% Debentures that were repurchased. As the Code limits the deduction to taxable income for losses on the redemption of convertible debt, a minimal tax benefit was recognized related to the repurchase of the 7.0% Debentures;

(ii)
$58.2 million related to the tender offer and consent solicitation for the 9.0% Notes; the write-off of unamortized issuance costs related to the 9.0% Notes; and other transaction costs;

(iii)
$5.1 million representing the write-off of unamortized discount and issuance costs associated with repayments of our Previous Senior Secured Credit Agreement; and

(iv) $.4 million representing the write-off of unamortized discount and issuance costs associated with payments on our New Senior Secured Credit Agreement.

In 2011, we recognized an aggregate loss on the extinguishment of debt totaling $3.4 million representing the write-off of unamortized discount and issuance costs associated with repayments of the Previous Senior Secured Credit Agreement.

In 2010, we recognized an aggregate loss on the extinguishment of debt totaling $6.8 million representing the write-off of unamortized discount and issuance costs associated with: (i) the repurchases of 3.5% Debentures; and (ii) the repayment of a prior senior credit agreement, each as previously described above.

Scheduled Repayment of our Direct Corporate Obligations

The scheduled repayment of our direct corporate obligations was as follows at December 31, 2012 (dollars in millions):

Year ending December 31,
 
2013
$
51.1

2014
60.5

2015
79.2

2016
153.5

2017
4.2

Thereafter
664.1

 
$
1,012.6

COMMITMENTS AND CONTINGENCIES
LITIGATION AND OTHER LEGAL PROCEEDINGS
LITIGATION AND OTHER LEGAL PROCEEDINGS

Legal Proceedings

The Company and its subsidiaries are involved in various legal actions in the normal course of business, in which claims for compensatory and punitive damages are asserted, some for substantial amounts.  We recognize an estimated loss from these loss contingencies when we believe it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Some of the pending matters have been filed as purported class actions and some actions have been filed in certain jurisdictions that permit punitive damage awards that are disproportionate to the actual damages incurred.  The amounts sought in certain of these actions are often large or indeterminate and the ultimate outcome of certain actions is difficult to predict.  In the event of an adverse outcome in one or more of these matters, there is a possibility that the ultimate liability may be in excess of the liabilities we have established and could have a material adverse effect on our business, financial condition, results of operations and cash flows.  In addition, the resolution of pending or future litigation may involve modifications to the terms of outstanding insurance policies or could impact the timing and amount of rate increases, which could adversely affect the future profitability of the related insurance policies.  Based upon information presently available, and in light of legal, factual and other defenses available to the Company and its subsidiaries, the Company does not believe that it is probable that the ultimate liability from either pending or threatened legal actions, after consideration of existing loss provisions, will have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows. However, given the inherent difficulty in predicting the outcome of legal proceedings, there exists the possibility such legal actions could have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows.

In addition to the inherent difficulty of predicting litigation outcomes, particularly those that will be decided by a jury, many of the matters specifically identified below purport to seek substantial or an unspecified amount of damages for unsubstantiated conduct spanning several years based on complex legal theories and damages models. The alleged damages typically are indeterminate or not factually supported in the complaint, and, in any event, the Company's experience indicates that monetary demands for damages often bear little relation to the ultimate loss. In some cases, plaintiffs are seeking to certify classes in the litigation and class certification either has been denied or is pending and we have filed oppositions to class certification or sought to decertify a prior class certification. In addition, for many of these cases: (i) there is uncertainty as to the outcome of pending appeals or motions; (ii) there are significant factual issues to be resolved; and/or (iii) there are novel legal issues presented. Accordingly, the Company can not reasonably estimate the possible loss or range of loss in excess of amounts accrued, if any, or predict the timing of the eventual resolution of these matters.  The Company reviews these matters on an ongoing basis.  When assessing reasonably possible and probable outcomes, the Company bases its assessment on the expected ultimate outcome following all appeals.

Cost of Insurance Litigation
Valulife/Valuterm Litigation

On March 4, 2008, a complaint was filed in the United States District Court for the Central District of California, Celedonia X. Yue, M. D. on behalf of the class of all others similarly situated, and on behalf of the General Public v. Conseco Life Insurance Company, successor to Philadelphia Life Insurance Company and formerly known as Massachusetts General Life Insurance Company, Cause No. CV08-01506 CAS.  Plaintiff in this putative class action owns a Valulife universal life policy insuring the life of Ruth S. Yue originally issued by Massachusetts General Life Insurance Company in 1995.  Plaintiff is claiming breach of contract on behalf of the proposed national class and seeks injunctive and restitutionary relief pursuant to California Business & Professions Code Section 17200 and declaratory relief.  The putative class consists of all owners of Valulife and Valuterm universal life insurance policies issued by either Massachusetts General or Philadelphia Life and that were later acquired and serviced by Conseco Life.  Plaintiff alleges that members of the class will be damaged by increases in the cost of insurance (a non-guaranteed element ("NGE")) that are set to take place in the twenty first policy year of Valulife and Valuterm policies. At the time plaintiff filed her complaint, no such increases had yet been applied to the subject policies.  During 2010, Conseco Life voluntarily agreed not to implement the cost of insurance rate increase at issue in this litigation and is following a process with respect to any future cost of insurance rate increases as set forth in the regulatory settlement agreement described below under the caption entitled "Regulatory Examinations and Fines".  Plaintiff filed a motion for certification of a nationwide class and a California state class.  On December 7, 2009, the court granted that motion. On October 8, 2010, the court dismissed the causes of actions alleged in the California state class.  On January 19, 2011, the court granted the plaintiff's motion for summary judgment as to the declaratory relief claim and on February 2, 2011, the court issued an advisory opinion, in the form of a declaratory judgment, as to what, in its view, Conseco Life could consider in implementing future cost of insurance rate increases related to its Valulife and Valuterm block of policies.  Conseco Life is appealing the court's January 19, 2011 decision and the plaintiff is appealing the court's decision to dismiss the California causes of action.  These appeals are pending. We believe this case is without merit and intend to defend it vigorously.

On November 15, 2011, a second complaint was filed by Dr. Yue in the United States District Court for the Central District on California, Celedonia X. Yue, M. D. on behalf of the class of all others similarly situated, and on behalf of the General Public v. Conseco Life Insurance Company, Cause No. CV11-9506 AHM (SHx), involving the same Valulife universal life policy described in the preceding paragraph. Plaintiff, for herself and on behalf of proposed members of a national class and a California class is claiming breach of contract, injunctive and restitutionary relief pursuant to California Business & Professions Code Section 17200, breach of the covenant of good faith and fair dealing, declaratory relief, and temporary, preliminary, and permanent injunctive relief. The putative class consists of all owners and former owners of Valulife and Valuterm universal life insurance policies issued by either Massachusetts General or Philadelphia Life and that were later acquired and serviced by Conseco Life. Plaintiff alleges that members of the classes will be damaged by increases in the cost of insurance (a NGE) that took place on or about November 1, 2011. Plaintiff filed a motion for a preliminary injunction and a motion for certification of a California class. On April 2, 2012, the court granted the plaintiff's motions, which Conseco Life is appealing. Pending the outcome of that appeal, Conseco Life is preliminarily enjoined from imposing the 2011 increase in the cost of insurance on the members of the California class. Plaintiff also filed a motion on March 20, 2012 for certification of a nationwide class.
Conseco Life has agreed to a settlement with the plaintiff in the litigation described in the two preceding paragraphs, which would, upon court approval, resolve those cases as well as the Nicholas litigation described below. On January 25, 2013, the parties filed a stipulation of settlement and joint motion for preliminary approval of proposed nationwide class settlement and certification of settlement classes. The court set the hearing for preliminary approval of the settlement for February 25, 2013. The settlement includes a reduction in the cost of insurance increase implemented by Conseco Life in November 2011 and certain policy benefit enhancements. Final approval of the settlement is subject to a court fairness hearing after notice to the policyholders covered by the settlement, as well as other conditions.

On February 6, 2012, a complaint was filed in the United States District Court for the Northern District of Illinois, Daniel B. Nicholas, on behalf of himself and all others similarly situated v. Conseco Life Insurance Company, Cause No. 12cv845. Plaintiff in this putative class action owns a Valulife universal life policy insuring Plaintiff's life originally issued by Massachusetts General Life Insurance Company (now Conseco Life Insurance Company) in 1991. Plaintiff is claiming breach of contract on behalf of the proposed national class and seeks declaratory, injunctive, and supplemental relief. The putative class consists of all persons who own or have owned one or more universal life policies issued by Conseco Life which provide that the cost of insurance rates will be determined based upon expectations as to future mortality experience and who have experienced an increase in the cost of insurance rates. On April 20, 2012, we announced that Conseco Life had reached a tentative settlement in the Nicholas case. Venue of this case was subsequently transferred to the United States District Court for the Central District of California. The settlement described in the preceding paragraph would, if approved, resolve the Nicholas case.

In connection with the tentative settlement in the Nicholas litigation, the Company recorded a pre-tax charge of approximately $20 million in its Other CNO Business segment for the quarter ended March 31, 2012. The Company recorded an additional pre-tax charge of $21 million in its Other CNO Business segment for the quarter ended September 30, 2012 relating to the settlement agreement described above in the Yue litigation. The liability the Company has established related to these cases includes its best estimates of the costs of implementing the settlement, if finalized and approved by the court. While the Company believes its estimates are adequate to cover these costs, the estimates are subject to significant judgment and it is possible that the estimates will prove insufficient to cover the actual costs.

Lifetrend Litigation

On December 24, 2008, a purported class action was filed in the U.S. District Court for the Northern District of California, Cedric Brady, et. al. individually and on behalf of all other similarly situated v. Conseco, Inc. and Conseco Life Insurance Company Case No. 3:08-cv-05746.  The plaintiffs allege that Conseco Life and Conseco, Inc. committed breach of contract and insurance bad faith and violated various consumer protection statutes in the administration of various interest sensitive whole life products sold primarily under the name "Lifetrend" by requiring the payment of additional cash amounts to maintain the policies in force and by making changes to certain NGEs in their policies.  On April 23, 2009, the plaintiffs filed an amended complaint adding the additional counts of breach of fiduciary duty, fraud, negligent misrepresentation, conversion and declaratory relief.  On May 29, 2009, Conseco, Inc. and Conseco Life filed a motion to dismiss the amended complaint. On July 29, 2009, the court granted in part and denied in part the motion to dismiss.  The court dismissed the allegations that Conseco Life violated various consumer protection statutes, the breach of fiduciary duty count, and dismissed Conseco, Inc. for lack of personal jurisdiction.  
On July 2, 2009, a purported class action was filed in the U.S. District Court for the Middle District of Florida, Bill W. McFarland, and all those similarly situated v. Conseco Life Insurance Company, Case No. 3:09-cv-598-J-32MCR.  The plaintiff alleges that Conseco Life committed breach of contract and has been unjustly enriched in the administration, including changes to certain NGEs, of various interest sensitive whole life products sold primarily under the name "Lifetrend." The plaintiff seeks declaratory and injunctive relief, compensatory damages, punitive damages and attorney fees.
Conseco Life filed a motion with the Judicial Panel on Multidistrict Litigation ("MDL"), seeking the establishment of an MDL proceeding consolidating the Brady case and the McFarland case into a single action.  On February 3, 2010, the Judicial Panel on MDL ordered these cases be consolidated for pretrial proceedings in the Northern District of California Federal Court. On July 7, 2010, plaintiffs filed an amended motion for class certification of a nationwide class and a California state class.  On October 6, 2010, the court granted the motion for certification of a nationwide class and denied the motion for certification of a California state class.  Conseco Life filed a motion to decertify the nationwide class on July 1, 2011. On December 20, 2011, the court issued an order denying Conseco Life's motion to decertify the class as to current policyholders, but granted the motion to decertify as to former policyholders. On March 5, 2012, the plaintiffs filed a motion for a preliminary injunction requesting that the court enjoin Conseco Life from imposing increased cost of insurance charges until trial with regard to 157 members of the class, and on July 17, 2012, the court granted a preliminary injunction as to 100 members of the class and denied the plaintiff's motion for a preliminary injunction as to the other 57 members. Subsequently, the plaintiffs filed a motion for partial summary judgment on their breach of contract claim, Conseco Life filed a motion to decertify the nationwide class, and Conseco Life filed a motion for summary judgment. On January 29, 2013, the court granted in part and denied in part plaintiffs' motion for partial summary judgment and denied Conseco Life's motions. Trial in the MDL proceeding has been set for March 25, 2013.  We believe these cases are without merit and intend to defend them vigorously.
On October 25, 2012, a purported nationwide class action was filed in the United States District Court for the Central District of California, William Jeffrey Burnett and Joe H. Camp v. Conseco Life Insurance Company, CNO Financial Group, Inc., CDOC, Inc. and CNO Services, LLC, Case No. EDCV12-01715VAPSPX. The plaintiffs bring this action under Rule 23(B)(3) on behalf of various Lifetrend policyholders who since October 2008 have surrendered their policies or had them lapse. Such policyholders are no longer members of the class covered by the MDL litigation described in the previous paragraph after the court in the MDL litigation granted Conseco Life's motion to decertify as to former policyholders. Additionally, plaintiffs seek certification of a subclass of various Lifetrend policyholders who accepted optional benefits and signed a release pursuant to the regulatory settlement agreement described below under the caption entitled "Regulatory Examinations and Fines." The plaintiffs allege breach of contract and seek declaratory relief, compensatory damages, attorney fees and costs. On November 30, 2012, Conseco Life and the other defendants filed a motion to dismiss the complaint. We believe this case is without merit and intend to defend it vigorously.

Other Litigation
On December 8, 2008, a purported Florida state class action was filed in the U.S. District Court for the Southern District of Florida, Sydelle Ruderman individually and on behalf of all other similarly situated v. Washington National Insurance Company, Case No. 08-23401-CIV-Cohn/Selzer. The plaintiff alleges that the inflation escalation rider on her policy of long-term care insurance operates to increase the policy's lifetime maximum benefit, and that Washington National Insurance Company breached the contract by stopping her benefits when they reached the lifetime maximum.  The Company takes the position that the inflation escalator only affects the per day maximum benefit.  Additional parties have asked the court to allow them to intervene in the action, and on January 5, 2010, the court granted the motion to intervene and granted the plaintiff's motion for class certification.  The court certified a (B) (3) Florida state class alleging damages and a (B) (2) Florida state class alleging injunctive relief.  The parties reached a settlement of the (B) (3) class in 2010, which has been implemented. The amount recognized in 2010 related to the settlement was not significant to the Company's consolidated financial condition, cash flows or results of operations. The plaintiff filed a motion for summary judgment as to the (B) (2) class which was granted by the court on September 8, 2010.  The Company has appealed the court's decision and the appeal is pending.  On February 17, 2012, the Eleventh Circuit Court of Appeals referred the case to the Florida Supreme Court, which accepted jurisdiction of the case. On December 5, 2012, the Florida Supreme Court held oral argument and took the matter under advisement. We believe this case is without merit and intend to defend it vigorously.  
On January 26, 2009, a purported class action complaint was filed in the United States District Court for the Northern District of Illinois, Samuel Rowe and Estella Rowe, individually and on behalf of themselves and all others similarly situated v. Bankers Life & Casualty Company and Bankers Life Insurance Company of Illinois, Case No. 09CV491.  The plaintiffs are alleging violation of California Business and Professions Code Sections 17200 et seq. and 17500 et seq., breach of common law fiduciary duty, breach of implied covenant of good faith and fair dealing and violation of California Welfare and Institutions Code Section 15600 on behalf of the proposed national class and seek injunctive relief, compensatory damages, punitive damages and attorney fees.  The plaintiffs allege that the defendants used an improper and misleading sales and marketing approach to seniors that fails to disclose all facts, misuses consumers' confidential financial information, uses misleading sales and marketing materials, promotes deferred annuities that are fundamentally inferior and less valuable than readily available alternative investment products and fails to adequately disclose other principal risks including maturity dates, surrender penalties and other restrictions which limit access to annuity proceeds to a date beyond the applicant's actuarial life expectancy. Plaintiffs have amended their complaint attempting to convert this from a California only class action to a national class action. In addition, the amended complaint adds causes of action under the Racketeer Influenced and Corrupt Organization Act ("RICO"); aiding and abetting breach of fiduciary duty and for unjust enrichment.  On September 13, 2010, the court dismissed the plaintiff's RICO claims.  On October 25, 2010, the plaintiffs filed a second amended complaint re-alleging their RICO claims.  On March 29, 2012, the court denied plaintiff's motion for certification of a nationwide class and denied plaintiff's motion for certification of a California class. The court allowed the plaintiff the opportunity to file a renewed motion for a California class, which the plaintiff did on May 21, 2012. On July 24, 2012, Bankers Life filed a motion for summary judgment. We believe this case is without merit and intend to defend it vigorously.  
On August 23, 2012, a purported class action was filed in the United States District Court for the District of Massachusetts (Boston), Fay Glick, on behalf of herself and all others similarly situated, v. Bankers Life & Casualty Company, Case No. 1:12-cv-11579. The plaintiff is seeking injunctive and declaratory relief and damages arising from Bankers' alleged systematic business practices of delaying and/or denying the payment of claims for benefits provided for under its healthcare insurance policies and recovery of undisclosed interest that Bankers has charged on any policyholders who paid premiums on a monthly or "modal" basis (as opposed to paying premiums on an annual basis). On January 30, 2013, the court dismissed the modal premium related claims. Trial of the purported class claims has been set for December 2, 2013. We believe this case is without merit and intend to defend it vigorously.

Regulatory Examinations and Fines

Insurance companies face significant risks related to regulatory investigations and actions.  Regulatory investigations generally result from matters related to sales or underwriting practices, payment of contingent or other sales commissions, claim payments and procedures, product design, product disclosure, additional premium charges for premiums paid on a periodic basis, denial or delay of benefits, charging excessive or impermissible fees on products, changing the way cost of insurance charges are calculated for certain life insurance products or recommending unsuitable products to customers.  We are, in the ordinary course of our business, subject to various examinations, inquiries and information requests from state, federal and other authorities.  The ultimate outcome of these regulatory actions cannot be predicted with certainty.  In the event of an unfavorable outcome in one or more of these matters, the ultimate liability may be in excess of liabilities we have established and we could suffer significant reputational harm as a result of these matters, which could also have a material adverse effect on our business, financial condition, results of operations or cash flows.

The states of Pennsylvania, Illinois, Texas, Florida and Indiana led a multistate examination of the long-term care claims administration and complaint handling practices of Senior Health and Bankers Life, as well as the sales and marketing practices of Bankers Life.  On May 7, 2008, we announced a settlement among the state insurance regulators and Senior Health and Bankers Life.  This examination covered the years 2005, 2006 and 2007.  More than 40 states are parties to the settlement, which included a Senior Health fine of up to $2.3 million, with up to an additional $10 million payable, on the part of either Senior Health and/or Bankers Life, in the event the process improvements and benchmarks are not met.  Pursuant to the settlement agreement, the lead states conducted a re-examination of Bankers Life to confirm compliance with the process improvements and benchmarks. On November 9, 2012, Bankers Life and the lead states executed a regulatory settlement agreement finalizing the re-examination, pursuant to which Bankers Life paid a fine of $3.2 million.

In October 2008, Conseco Life mailed notice to approximately 12,000 holders of its "Lifetrend" life insurance products to inform them of:  (i) changes to certain NGEs of their policies; and (ii) the fact that certain policyholders who were not paying premiums may have failed to receive a notice that their policy was underfunded and that additional premiums were required in order for the policyholders to maintain their guaranteed cash values.  In December 2008, Conseco Life mailed notice to approximately 16,000 holders of its CIUL3+ universal life policies to inform them of an increase in certain NGEs with respect to their policies.  Prior to or around the time that the notices were sent, Conseco Life had informed the insurance regulators in a number of states, including among others Indiana, Iowa and Florida, of these matters and the planned communication with the impacted policyholders.  Several states initiated regulatory actions and inquiries after the notices were sent by Conseco Life, and Conseco Life agreed to take no further actions with respect to those policies during the pendency of a market conduct examination.

After working with various state insurance regulators to review the terms of the Lifetrend and CIUL3+ policies, Conseco Life reached a settlement in principle with the regulators regarding issues involving these policies. During this regulatory review process, Conseco Life had been allowed to move forward with implementing the NGE changes in its CIUL3+ policies while the regulators continued their review.  Conseco Life had also resumed the administration of its Lifetrend policies with administrative changes in place but did not implement the NGE changes pending execution of the final settlement agreement with the regulators.  On June 30, 2010, we announced that Conseco Life had finalized a regulatory settlement agreement that requires the establishment of a $10 million fund for certain owners of its Lifetrend life insurance products and the payment of a $1 million assessment to participating jurisdictions.  Forty-seven jurisdictions, representing almost 98% percent of the Lifetrend policyholders, have signed the settlement agreement.  Conseco Life has notified consumers of the settlement and the increase in their NGEs.  As previously disclosed, we accrued for the financial impact of the settlement in our consolidated financial statements for year-end 2009.

In August 2011, we were notified of an examination to be done on behalf of a number of states for the purpose of determining compliance with unclaimed property laws by the Company and its subsidiaries.  Such examination has included inquiries related to the use of data available on the U.S. Social Security Administration's Death Master File to identify instances where benefits under life insurance policies, annuities and retained asset accounts are payable. We are continuing to provide information to the examiners in response to their requests. A total of 38 states and the District of Columbia are currently participating in this examination.

Guaranty Fund Assessments

The balance sheet at December 31, 2012, included: (i) accruals of $30.5 million, representing our estimate of all known assessments that will be levied against the Company's insurance subsidiaries by various state guaranty associations based on premiums written through December 31, 2012; and (ii) receivables of $24.0 million that we estimate will be recovered through a reduction in future premium taxes as a result of such assessments. At December 31, 2011, such guaranty fund assessment accruals were $25.2 million and such receivables were $19.6 million. These estimates are subject to change when the associations determine more precisely the losses that have occurred and how such losses will be allocated among the insurance companies. We recognized expense for such assessments of $4.3 million, $2.3 million and $2.4 million in 2012, 2011 and 2010, respectively.

Guarantees

In accordance with the terms of the employment agreements of two of the Company's former chief executive officers, certain wholly-owned subsidiaries of the Company are the guarantors of the former executives' nonqualified supplemental retirement benefits. The liability for such benefits was $26.0 million and $24.8 million at December 31, 2012 and 2011, respectively, and is included in the caption "Other liabilities" in the consolidated balance sheet.

Leases and Certain Other Long-Term Commitments

The Company rents office space, equipment and computer software under noncancellable operating lease agreements. In addition, the Company has entered into certain sponsorship agreements which require future payments. Total expense pursuant to these lease and sponsorship agreements was $47.5 million, $43.5 million and $42.8 million in 2012, 2011 and 2010, respectively. Future required minimum payments as of December 31, 2012, were as follows (dollars in millions):

2013
$
44.3

2014
31.4

2015
21.1

2016
17.8

2017
15.2

Thereafter
25.3

Total
$
155.1

AGENT DEFERRED COMPENSATION PLAN
AGENT DEFERRED COMPENSATION PLAN
AGENT DEFERRED COMPENSATION PLAN

For our agent deferred compensation plan, it is our policy to immediately recognize changes in the actuarial benefit obligation resulting from either actual experience being different than expected or from changes in actuarial assumptions.

One of our insurance subsidiaries has a noncontributory, unfunded deferred compensation plan for qualifying members of its career agency force. Benefits are based on years of service and career earnings. The actuarial measurement date of this deferred compensation plan is December 31. The liability recognized in the consolidated balance sheet for the agents' deferred compensation plan was $151.7 million and $136.4 million at December 31, 2012 and 2011, respectively. Costs incurred on this plan were $20.5 million, $26.3 million and $13.0 million during 2012, 2011 and 2010, respectively (including the recognition of losses of $7.5 million, $16.2 million and $3.6 million in 2012, 2011 and 2010, respectively, primarily resulting from changes in the discount rate assumption used to determine the deferred compensation plan liability to reflect current investment yields). The estimated net loss for the agent deferred compensation plan that will be amortized from accumulated other comprehensive income (loss) into the net periodic benefit cost during 2013 is $4.0 million. We purchased COLI as an investment vehicle to fund the agent deferred compensation plan. The COLI assets are not assets of the agent deferred compensation plan, and as a result, are accounted for outside the plan and are recorded in the consolidated balance sheet as other invested assets. The carrying value of the COLI assets was $123.0 million and $103.9 million at December 31, 2012 and 2011, respectively. Changes in the cash surrender value (which approximates net realizable value) of the COLI assets are recorded as net investment income and totaled $9.0 million, $(3.8) million and $5.0 million in 2012, 2011 and 2010, respectively.

We used the following assumptions for the deferred compensation plan to calculate:

 
2012
 
2011
Benefit obligations:
 
 
 
Discount rate
4.00
%
 
4.50
%
Net periodic cost:
 
 
 
Discount rate
4.50
%
 
5.50
%


The discount rate is based on the yield of a hypothetical portfolio of high quality debt instruments which could effectively settle plan benefits on a present value basis as of the measurement date. At December 31, 2012, for our deferred compensation plan for qualifying members of our career agency force, we assumed a 4 percent annual increase in compensation until the participant's normal retirement date (age 65 and completion of five years of service).

The benefits expected to be paid pursuant to our agent deferred compensation plan as of December 31, 2012 were as follows (dollars in millions):

2013
$
5.5

2014
6.0

2015
6.2

2016
6.4

2017
6.7

2018 - 2022
39.1



The Company has qualified defined contribution plans for which substantially all employees are eligible. Company contributions, which match a portion of certain voluntary employee contributions to the plan, totaled $4.5 million, $4.5 million and $4.1 million in 2012, 2011 and 2010, respectively. Employer matching contributions are discretionary.
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY

In November 2009, we completed the private sale of 16.4 million shares of our common stock and warrants to purchase 5.0 million shares of our common stock to Paulson & Co. Inc. ("Paulson") on behalf of several investment funds and accounts managed by Paulson. Concurrently with the completion of the private placement of our common stock and warrants, we entered into an investor rights agreement with Paulson, pursuant to which we granted to Paulson, among other things, certain registration rights with respect to certain securities and certain preemptive rights, and Paulson agreed to, among other things, certain restrictions on transfer of certain securities, certain voting limitations and certain standstill provisions. The warrants have an exercise price of $6.50 per share of common stock, subject to customary anti-dilution adjustments. Prior to June 30, 2013, the warrants are not exercisable, except under limited circumstances. Commencing on June 30, 2013, the warrants will be exercisable for shares of our common stock at the option of the holder at any time, subject to certain exceptions. The warrants expire on December 30, 2016.

Prior to completing the private placement with Paulson, our Board of Directors deemed Paulson an "Exempted Entity" and therefore not an "Acquiring Person" for purposes of our Section 382 Rights Agreement, with respect to the 16.4 million shares of common stock, any shares of common stock issued upon exercise of the warrants, any common stock issued upon conversion of the 7.0% Debentures owned by Paulson, as well as the shares of common stock Paulson owned prior to the private placement. In connection with their approval of the Amended Section 382 Rights Agreement on December 6, 2011, our Board of Directors reaffirmed that Paulson would continue to be deemed an "Exempted Entity" with respect to the CNO securities it owned at that time. See the note to the consolidated financial statements entitled "Income Taxes" for more information on the Section 382 Rights Agreement.

Changes in the number of shares of common stock outstanding were as follows (shares in thousands):

 
2012
 
2011
 
2010
 
Balance, beginning of year
241,305

 
251,084

 
250,786

 
Treasury stock purchased and retired
(21,533
)
 
(11,120
)
 
—

 
Stock options exercised
1,191

 
862

 
33

 
Restricted stock vested
539

(a)
479

(a)
265

(a)
Balance, end of year
221,502

 
241,305

 
251,084

 

____________________
(a)
In 2012, 2011 and 2010, such amount was reduced by 237 thousand shares, 200 thousand shares and 74 thousand shares, respectively, which were tendered for the payment of federal and state taxes owed on the vesting of restricted stock.

In May 2011, the Company announced a common share repurchase program of up to $100.0 million. In February 2012, June 2012 and December 2012, the Company's Board of Directors approved, in aggregate, an additional $500.0 million to repurchase the Company's outstanding securities. During 2012, we repurchased 21.5 million shares of common stock for $180.2 million pursuant to the program. The Company had remaining repurchase authority of $350.0 million as of December 31, 2012.

In May 2012, we initiated a common stock dividend program. In the second, third and fourth quarters of 2012, dividends declared and paid on common stock were $0.02 per common share totaling $13.9 million.

The Company has a long-term incentive plan which permits the grant of CNO incentive or non-qualified stock options, restricted stock awards, stock appreciation rights, performance shares or units and certain other equity-based awards to certain directors, officers and employees of the Company and certain other individuals who perform services for the Company. As of December 31, 2012, 9.7 million shares remained available for issuance under the plan. Our stock option awards are generally granted with an exercise price equal to the market price of the Company's stock on the date of grant. For options granted in 2006 and prior years, our stock option awards generally vest on a graded basis over a four year service term and expire ten years from the date of grant. Our stock option awards granted in 2007 through 2009 generally vest on a graded basis over a three year service term and expire five years from the date of grant. Our stock options granted in 2010, 2011 and 2012 vest on a graded basis over a three year service term and expire seven years from the date of grant. The vesting periods for our restricted stock awards range from immediate vesting to a period of three years.

A summary of the Company's stock option activity and related information for 2012 is presented below (shares in thousands; dollars in millions, except per share amounts):

 
Shares
 
Weighted average exercise price
 
Weighted average remaining life (in years)
 
Aggregate intrinsic value
Outstanding at the beginning of the year
7,712

 
$
10.13

 
 
 
 
Options granted
1,389

 
7.55

 
 
 
 
Exercised
(1,191
)
 
3.14

 
 
 
$
2.7

Forfeited or terminated
(1,255
)
 
16.13

 
 
 
 
Outstanding at the end of the year
6,655

 
9.72

 
3.4
 
$
30.2

Options exercisable at the end of the year
3,715

 
 
 
1.7
 
$
15.5

Available for future grant
9,713

 
 
 
 
 
 

A summary of the Company's stock option activity and related information for 2011 is presented below (shares in thousands; dollars in millions, except per share amounts):

 
Shares
 
Weighted average exercise price
 
Weighted average remaining life (in years)
 
Aggregate intrinsic value
Outstanding at the beginning of the year
9,754

 
$
10.87

 
 
 
 
Options granted
1,262

 
7.38

 
 
 
 
Exercised
(862
)
 
2.52

 
 
 
$
1.3

Forfeited or terminated
(2,442
)
 
14.35

 
 
 
 
Outstanding at the end of the year
7,712

 
10.13

 
3.1
 
$
31.3

Options exercisable at the end of the year
4,135

 
 
 
1.8
 
$
18.0

Available for future grant
11,044

 
 
 
 
 
 

A summary of the Company's stock option activity and related information for 2010 is presented below (shares in thousands; dollars in millions, except per share amounts):

 
Shares
 
Weighted average exercise price
 
Weighted average remaining life (in years)
 
Aggregate intrinsic value
Outstanding at the beginning of the year
8,560

 
$
11.65

 
 
 
 
Options granted
1,849

 
6.43

 
 
 
 
Exercised
(33
)
 
2.83

 
 
 
$
—

Forfeited or terminated
(622
)
 
8.81

 
 
 
 
Outstanding at the end of the year
9,754

 
10.87

 
3.6
 
$
38.3

Options exercisable at the end of the year
4,374

 
 
 
2.9
 
$
24.1

Available for future grant
9,326

 
 
 
 
 
 



We recognized compensation expense related to stock options totaling $6.7 million ($4.4 million after income taxes) in 2012, $.2 million ($.1 million after income taxes) in 2011 and $7.1 million ($4.6 million after income taxes) in 2010. Compensation expense in 2011 was reduced by $7.4 million to reflect the true-up of forfeiture estimates for awards with service conditions. Compensation expense related to stock options reduced both basic and diluted earnings (loss) per share by 2 cents, nil cents and 2 cents in 2012, 2011 and 2010, respectively. At December 31, 2012, the unrecognized compensation expense for non-vested stock options totaled $7.6 million which is expected to be recognized over a weighted average period of 1.9 years. Cash received from the exercise of stock options was $3.1 million, $2.2 million and $.1 million during 2012, 2011 and 2010, respectively.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions:

 
2012
 
2011
 
2010
 
Grants
 
Grants
 
Grants
Weighted average risk-free interest rates
.9
%
 
2.2
%
 
2.5
%
Weighted average dividend yields
—
%
 
—
%
 
—
%
Volatility factors
108
%
 
107
%
 
105
%
Weighted average expected life (in years)
4.7

 
4.8

 
4.7

Weighted average fair value per share
$
5.76

 
$
5.68

 
$
4.90



The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is based on the Company's history and expectation of dividend payouts. Volatility factors are based on the weekly historical volatility of the Company's common stock equal to the expected life of the option or since our emergence from bankruptcy in September 2003. The expected life is based on the average of the graded vesting period and the contractual terms of the option.

The exercise price was equal to the market price of our stock on the date of grant for all options granted in 2012, 2011 and 2010.

The following table summarizes information about stock options outstanding at December 31, 2012 (shares in thousands):

 
 
 
 
Options outstanding
 
Options exercisable
Range of exercise prices
 
Number outstanding
 
Remaining life (in years)
 
Average exercise price
 
Number exercisable
 
Average exercise price
$1.13
 
171

 
1.3
 
$
1.13

 
171

 
$
1.13

$3.05 - $3.11
 
781

 
1.4
 
3.05

 
781

 
3.05

$4.79 - $6.77
 
1,150

 
4.2
 
6.40

 
527

 
6.36

$7.38 - $7.74
 
2,247

 
5.7
 
7.45

 
—

 
—

$8.29 - $11.20
 
1,054

 
0.7
 
10.38

 
984

 
10.53

$17.87 - $21.67
 
849

 
1.7
 
20.82

 
849

 
20.82

$22.42 - $25.45
 
403

 
3.1
 
23.20

 
403

 
23.20

 
 
6,655

 
 
 
 
 
3,715

 
 


During 2012, 2011 and 2010, the Company granted .7 million, .9 million and 1.0 million restricted shares, respectively, of CNO common stock to certain directors, officers and employees of the Company at a weighted average fair value of $7.35 per share, $6.97 per share and $6.28 per share, respectively. The fair value of such grants totaled $5.0 million, $6.0 million and $6.2 million in 2012, 2011 and 2010, respectively. Such amounts are recognized as compensation expense over the vesting period of the restricted stock. A summary of the Company's non-vested restricted stock activity for 2012 is presented below (shares in thousands):
 
Shares
 
Weighted average grant date fair value
Non-vested shares, beginning of year
1,318

 
$
6.09

Granted
686

 
7.35

Vested
(777
)
 
5.64

Forfeited
(65
)
 
7.05

Non-vested shares, end of year
1,162

 
7.08



At December 31, 2012, the unrecognized compensation expense for non-vested restricted stock totaled $5.4 million which is expected to be recognized over a weighted average period of 1.7 years. At December 31, 2011, the unrecognized compensation expense for non-vested restricted stock totaled $5.4 million. We recognized compensation expense related to restricted stock awards totaling $4.5 million, $4.3 million and $2.5 million in 2012, 2011 and 2010, respectively. The fair value of restricted stock that vested during 2012, 2011 and 2010 was $4.4 million, $3.2 million and $1.3 million, respectively.

Authoritative guidance also requires us to estimate the amount of unvested stock-based awards that will be forfeited in future periods and reduce the amount of compensation expense recognized over the applicable service period to reflect this estimate. We periodically evaluate our forfeiture assumptions to more accurately reflect our actual forfeiture experience.

The Company does not currently recognize tax benefits resulting from tax deductions in excess of the compensation expense recognized because of NOLs which are available to offset future taxable income.

In 2012, 2011 and 2010, the Company granted performance units totaling 406,500, 416,700 and 686,900, respectively, pursuant to its long-term incentive plan to certain officers of the Company. The criteria for payment for such awards are based on certain company-wide performance levels that must be achieved within a specified performance time, each as defined in the award. Unless antidilutive, the diluted weighted average shares outstanding would reflect the number of performance units expected to be issued, using the treasury stock method.

A summary of the Company's performance units is presented below (shares in thousands):

 
Total shareholder return awards
 
Operating return on equity awards
 
Pre-tax operating income awards
Awards outstanding at December 31, 2009
331

 
825

 
—

Granted in 2010
—

 
—

 
687

Forfeited
(331
)
 
(270
)
 
(35
)
Awards outstanding at December 31, 2010
—

 
555

 
652

Granted in 2011
—

 
—

 
417

Forfeited
—

 
(555
)
 
(233
)
Awards outstanding at December 31, 2011
—

 
—

 
836

Granted in 2012
203

 
—

 
203

Forfeited
(10
)
 
—

 
(62
)
Awards outstanding at December 31, 2012
193

 
—

 
977



The grant date fair value of the performance units awarded was $3.1 million and $3.1 million in 2012 and 2011, respectively. We recognized compensation expense of $3.8 million, $2.0 million and $2.2 million in 2012, 2011 and 2010, respectively, related to the performance units.

As further discussed in the footnote to the consolidated financial statements entitled "Income Taxes", the Company's Board of Directors adopted the Section 382 Rights Agreement on January 20, 2009 and amended and extended the Section 382 Rights Agreement on December 6, 2011. The Amended Section 382 Rights Agreement is designed to protect shareholder value by preserving the value of our tax assets primarily associated with NOLs. At the time the Section 382 Rights Agreement was adopted, the Company declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of common stock. The dividend was payable on January 30, 2009, to the shareholders of record as of the close of business on that date and a Right is also attached to each share of CNO common stock issued after that date. Pursuant to the Amended Section 382 Rights Agreement, each Right entitles the shareholder to purchase from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $.01 per share (the "Junior Preferred Stock") of the Company at a price of $25.00 per one one-thousandth of a share of Junior Preferred Stock. The description and terms of the Rights are set forth in the Amended Section 382 Rights Agreement. The Rights would become exercisable in the event any person or group (subject to certain exemptions) becomes an owner of more than 4.99 percent of the outstanding stock of CNO (a "Threshold Holder") without the approval of the Board of Directors or an existing shareholder who is currently a Threshold Holder acquires additional shares exceeding one percent of our outstanding shares without prior approval from the Board of Directors.

A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands):

 
2012
 
2011
 
2010
Net income for basic earnings per share
$
221.0

 
$
335.7

 
$
240.6

Add:  interest expense on 7.0% Debentures, net of income taxes
12.2

 
14.7

 
13.3

Net income for diluted earnings per share
$
233.2

 
$
350.4

 
$
253.9

Shares:
 

 
 

 
 
Weighted average shares outstanding for basic earnings per share
233,685

 
247,952

 
250,973

Effect of dilutive securities on weighted average shares:
 

 
 

 
 
7% Debentures
44,037

 
53,367

 
49,014

Stock options, restricted stock and performance units
2,762

 
2,513

 
1,871

Warrants
943

 
249

 
—

Dilutive potential common shares
47,742

 
56,129

 
50,885

Weighted average shares outstanding for diluted earnings per share
281,427

 
304,081

 
301,858



In August 2005, we completed the private offering of the 3.5% Debentures. For periods in which the 3.5% Debentures were outstanding, the conversion feature of the 3.5% Debentures did not have a dilutive effect because the weighted average market price of our common stock did not exceed the initial conversion price of $26.66. Therefore, the 3.5% Debentures had no effect on our diluted shares outstanding or our diluted earnings per share in 2010.

Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period.  Restricted shares (including our performance units) are not included in basic earnings per share until vested.  Diluted earnings per share reflect the potential dilution that could occur if outstanding stock options and warrants were exercised and restricted stock was vested.  The dilution from options, warrants and restricted shares is calculated using the treasury stock method.  Under this method, we assume the proceeds from the exercise of the options and warrants (or the unrecognized compensation expense with respect to restricted stock) will be used to purchase shares of our common stock at the average market price during the period, reducing the dilutive effect of the exercise of the options and warrants (or the vesting of the restricted stock). Initially, the 7.0% Debentures will be convertible into 182.1494 shares of our common stock for each $1,000 principal amount of 7.0% Debentures, which is equivalent to an initial conversion price of approximately $5.49 per share. The conversion rate is subject to adjustment following the occurrence of certain events in accordance with the terms of the 7.0% Debentures.
OTHER OPERATING STATEMENT DATA
OTHER OPERATING STATEMENT DATA
OTHER OPERATING STATEMENT DATA

Insurance policy income consisted of the following (dollars in millions):

 
2012
 
2011
 
2010
Direct premiums collected
$
3,883.1

 
$
4,214.7

 
$
4,252.0

Reinsurance assumed
70.4

 
87.7

 
99.4

Reinsurance ceded
(237.1
)
 
(243.2
)
 
(264.7
)
Premiums collected, net of reinsurance
3,716.4

 
4,059.2

 
4,086.7

Change in unearned premiums
20.8

 
17.2

 
2.9

Less premiums on universal life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities
(1,296.7
)
 
(1,693.5
)
 
(1,730.1
)
Premiums on traditional products with mortality or morbidity risk
2,440.5

 
2,382.9

 
2,359.5

Fees and surrender charges on interest-sensitive products
314.9

 
307.6

 
310.5

Insurance policy income
$
2,755.4

 
$
2,690.5

 
$
2,670.0



The four states with the largest shares of 2012 collected premiums were Florida (7.7 percent), California (6.5 percent), Texas (6.4 percent) and Pennsylvania (6.2 percent). No other state accounted for more than five percent of total collected premiums.

Other operating costs and expenses were as follows (dollars in millions):

 
2012
 
2011
 
2010
Commission expense
$
115.8

 
$
131.7

 
$
130.9

Salaries and wages
226.6

 
212.2

 
216.1

Other
476.9

 
360.6

 
343.3

Total other operating costs and expenses
$
819.3

 
$
704.5

 
$
690.3



Changes in the present value of future profits were as follows (dollars in millions):

 
2012
 
2011
 
2010
Balance, beginning of year
$
697.7

 
$
1,008.6

 
$
1,175.9

Amortization
(93.5
)
 
(113.7
)
 
(139.0
)
Amounts related to fair value adjustment of fixed maturities, available for sale
21.8

 
(197.2
)
 
(28.3
)
Balance, end of year
$
626.0

 
$
697.7

 
$
1,008.6



Based on current conditions and assumptions as to future events on all policies inforce, the Company expects to amortize approximately 9 percent of the December 31, 2012 balance of the present value of future profits in 2013, 8 percent in 2014, 7 percent in 2015, 7 percent in 2016 and 6 percent in 2017. The discount rate used to determine the amortization of the present value of future profits averaged approximately 5 percent in the years ended December 31, 2012, 2011 and 2010.

In accordance with authoritative guidance, we are required to amortize the present value of future profits in relation to estimated gross profits for universal life products and investment-type products. Such guidance also requires that estimates of expected gross profits used as a basis for amortization be evaluated regularly, and that the total amortization recorded to date be adjusted by a charge or credit to the statement of operations, if actual experience or other evidence suggests that earlier estimates should be revised.

Changes in deferred acquisition costs were as follows (dollars in millions):

 
2012
 
2011
 
2010
Balance, beginning of year
$
797.1

 
$
999.6

 
$
1,063.0

Additions
191.7

 
216.7

 
231.8

Amortization
(195.5
)
 
(183.7
)
 
(186.0
)
Amounts related to fair value adjustment of fixed maturities, available for sale
(163.6
)
 
(235.5
)
 
(98.5
)
Other adjustments
—

 
—

 
(10.7
)
Balance, end of year
$
629.7

 
$
797.1

 
$
999.6

CONSOLIDATED STATEMENT CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS

The following disclosures supplement our consolidated statement of cash flows.

The following reconciles net income to net cash provided by operating activities (dollars in millions):

 
2012
 
2011
 
2010
Cash flows from operating activities:
 
 
 
 
 
Net income
$
221.0

 
$
335.7

 
$
240.6

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 

 
 
Amortization and depreciation
315.0

 
323.6

 
346.5

Income taxes
(71.8
)
 
(32.9
)
 
(16.1
)
Insurance liabilities
330.0

 
346.4

 
437.6

Accrual and amortization of investment income
(100.7
)
 
64.5

 
(62.0
)
Deferral of policy acquisition costs
(191.7
)
 
(216.7
)
 
(225.2
)
Net realized investment gains
(81.1
)
 
(61.8
)
 
(30.2
)
Loss on extinguishment of debt
200.2

 
3.4

 
6.8

Other
14.0

 
12.6

 
36.0

Net cash provided by operating activities
$
634.9

 
$
774.8

 
$
734.0



Non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions):

 
2012
 
2011
 
2010
Stock options, restricted stock and performance units
$
13.7

 
$
5.2

 
$
11.4

Change in securities lending collateral
—

 
—

 
103.7

Change in securities lending payable
—

 
—

 
(103.7
)
STATUTORY INFORMATION
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES)
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES)

Statutory accounting practices prescribed or permitted by regulatory authorities for the Company's insurance subsidiaries differ from GAAP. The Company's insurance subsidiaries reported the following amounts to regulatory agencies, after appropriate elimination of intercompany accounts among such subsidiaries (dollars in millions):

 
2012
 
2011
Statutory capital and surplus
$
1,560.4

 
$
1,578.1

Asset valuation reserve
222.2

 
168.4

Interest maintenance reserve
585.8

 
552.0

Total
$
2,368.4

 
$
2,298.5



Statutory capital and surplus included investments in upstream affiliates of $52.4 million at both December 31, 2012 and 2011, which was eliminated in the consolidated financial statements prepared in accordance with GAAP.

Statutory earnings build the capital required by ratings agencies and regulators. Statutory earnings, fees and interest paid by the insurance companies to the parent company create the "cash flow capacity" the parent company needs to meet its obligations, including debt service. The consolidated statutory net income (a non-GAAP measure) of our insurance subsidiaries was $350.4 million, $366.8 million and $181.9 million in 2012, 2011 and 2010, respectively. Included in such net income were net realized capital gains (losses), net of income taxes, of $13.0 million, $3.7 million and $(79.6) million in 2012, 2011 and 2010, respectively. In addition, such net income included pre-tax amounts for fees and interest paid to CNO or its non-life subsidiaries totaling $155.3 million, $147.7 million and $132.4 million in 2012, 2011 and 2010, respectively.

Insurance regulators may prohibit the payment of dividends or other payments by our insurance subsidiaries to parent companies if they determine that such payment could be adverse to our policyholders or contract holders. Otherwise, the ability of our insurance subsidiaries to pay dividends is subject to state insurance department regulations. Insurance regulations generally permit dividends to be paid from statutory earned surplus of the insurance company without regulatory approval for any 12-month period in amounts equal to the greater of (or in a few states, the lesser of): (i) statutory net gain from operations or statutory net income for the prior year; or (ii) 10 percent of statutory capital and surplus as of the end of the preceding year. This type of dividend is referred to as an "ordinary dividend". Any dividend in excess of these levels requires the approval of the director or commissioner of the applicable state insurance department and is referred to as an "extraordinary dividend". During 2012, our insurance subsidiaries paid extraordinary dividends of $265.0 million to CDOC, Inc. ("CDOC") (our wholly owned subsidiary and the immediate parent of Washington National, Conseco Life and Conseco Life Insurance Company of Texas). We paid a capital contribution to our insurance subsidiaries of $26.0 million in 2012, which had been accrued at December 31, 2011.

Each of the immediate insurance subsidiaries of CDOC had negative earned surplus at December 31, 2012. Accordingly, any dividend payments from these subsidiaries require the approval of the director or commissioner of the applicable state insurance department. The payment of interest on surplus debentures requires either prior written notice or approval of the director or commissioner of the applicable state insurance department. Dividends and other payments from our non-insurance subsidiaries to CNO or CDOC do not require approval by any regulatory authority or other third party.

In accordance with an order from the Florida Office of Insurance Regulation, Washington National may not distribute funds to any affiliate or shareholder without prior notice to the Florida Office of Insurance Regulation. In addition, the RBC and other capital requirements described below can also limit, in certain circumstances, the ability of our insurance subsidiaries to pay dividends.

RBC requirements provide a tool for insurance regulators to determine the levels of statutory capital and surplus an insurer must maintain in relation to its insurance and investment risks and the need for possible regulatory attention. The RBC requirements provide four levels of regulatory attention, varying with the ratio of the insurance company's total adjusted capital (defined as the total of its statutory capital and surplus, asset valuation reserve and certain other adjustments) to its RBC (as measured on December 31 of each year) as follows: (i) if a company's total adjusted capital is less than 100 percent but greater than or equal to 75 percent of its RBC, the company must submit a comprehensive plan to the regulatory authority proposing corrective actions aimed at improving its capital position (the "Company Action Level"); (ii) if a company's total adjusted capital is less than 75 percent but greater than or equal to 50 percent of its RBC, the regulatory authority will perform a special examination of the company and issue an order specifying the corrective actions that must be taken; (iii) if a company's total adjusted capital is less than 50 percent but greater than or equal to 35 percent of its RBC, the regulatory authority may take any action it deems necessary, including placing the company under regulatory control; and (iv) if a company's total adjusted capital is less than 35 percent of its RBC, the regulatory authority must place the company under its control. In addition, the RBC requirements provide for a trend test if a company's total adjusted capital is between 100 percent and 125 percent of its RBC at the end of the year. The trend test calculates the greater of the decrease in the margin of total adjusted capital over RBC: (i) between the current year and the prior year; and (ii) for the average of the last 3 years. It assumes that such decrease could occur again in the coming year. Any company whose trended total adjusted capital is less than 95 percent of its RBC would trigger a requirement to submit a comprehensive plan as described above for the Company Action Level. In 2011, the NAIC approved an increase in the RBC requirements that would subject a company to the trend test if a company's total adjusted capital is between 100 percent and 150 percent of its RBC at the end of the year (previously between 100 percent and 125 percent). However, this change will require the states to modify their RBC law before it becomes effective for their domiciled insurance companies.

The 2012 statutory annual statements to be filed with the state insurance regulators of each of our insurance subsidiaries are expected to reflect total adjusted capital in excess of the levels subjecting the subsidiaries to any regulatory action. However, the RBC ratio of Conseco Life, which has experienced significant losses primarily related to pending legal settlements, was near the level at which it would have been required to submit a comprehensive plan to insurance regulators proposing corrective actions aimed at improving its capital position. Conseco Life's domestic state is expected to adopt the increased RBC requirements described in the preceding paragraph, in which event, they would be effective for the calculation of Conseco Life's RBC ratio as of December 31, 2013. If those increased requirements had been in effect at December 31, 2012, the RBC ratio of Conseco Life at that date would have been subject to the trend test described above and Conseco Life would have been required to submit a comprehensive plan to the state regulatory authority proposing corrective actions aimed at improving its capital position. No assurances can be given that capital will be contributed or otherwise made available to Conseco Life or the other insurance subsidiaries.

In addition to the RBC requirements, certain states have established minimum capital requirements for insurance companies licensed to do business in their state. These regulators have the discretionary authority, in connection with the continual licensing of the Company's insurance subsidiaries, to limit or prohibit writing new business within its jurisdiction when, in the state's judgment, the insurance subsidiary is not maintaining adequate statutory surplus or capital or that the insurance subsidiary's further transaction of business would be hazardous to policyholders. The state insurance department rules provide several standards for the regulators to use in identifying companies which may be deemed to be in hazardous financial condition. One of the standards defines hazardous conditions as existing if an insurer's operating loss in the last twelve months or any shorter period of time, (including, but not limited to: (A) net capital gain or loss; (B) change in nonadmitted assets; and (C) cash dividends paid to shareholders), is greater than fifty percent of the insurer's remaining surplus. One of the Company's subsidiaries, Conseco Life, has reported statutory financial results that indicate a surplus deficiency under this calculation. We have been in contact with regulators in Conseco Life's domestic state insurance department regarding this matter following the significant loss Conseco Life recognized in the third quarter of 2012, primarily related to a pending legal settlement. Based on our current discussions with the state insurance regulator, we do not expect any actions to be taken against Conseco Life that would have a material adverse effect on the financial position or results of operations of CNO.

In addition, although we are under no obligation to do so, we may elect to contribute additional capital or retain greater amounts of capital to strengthen the surplus of certain insurance subsidiaries. Any election to contribute or retain additional capital could impact the amounts our insurance subsidiaries pay as dividends to the holding company. The ability of our insurance subsidiaries to pay dividends is also impacted by various criteria established by rating agencies to maintain or receive higher ratings and by the capital levels that we target for our insurance subsidiaries.

At December 31, 2012, the consolidated RBC ratio of our insurance subsidiaries exceeded the minimum RBC requirement included in our New Senior Secured Credit Agreement. See the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations" for further discussion of various financial ratios and balances we are required to maintain. We calculate the consolidated RBC ratio by assuming all of the assets, liabilities, capital and surplus and other aspects of the business of our insurance subsidiaries are combined together in one insurance subsidiary, with appropriate intercompany eliminations.
BUSINESS SEGMENTS
BUSINESS SEGMENTS
BUSINESS SEGMENTS

The Company manages its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; Other CNO Business, comprised primarily of products we no longer sell actively; and corporate operations, comprised of holding company activities and certain noninsurance company businesses.  

We measure segment performance by excluding realized investment gains (losses) and fair value changes in embedded derivative liabilities because we believe that this performance measure is a better indicator of the ongoing business and trends in our business.  Our primary investment focus is on investment income to support our liabilities for insurance products as opposed to the generation of realized investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business.

Realized investment gains (losses) and fair value changes in embedded derivative liabilities depend on market conditions and do not necessarily relate to the underlying business of our segments.  Realized investment gains (losses) and fair value changes in embedded derivative liabilities may affect future earnings levels since our underlying business is long-term in nature and changes in our investment portfolio may impact our ability to earn the assumed interest rates needed to maintain the profitability of our business.
Operating information by segment was as follows (dollars in millions):

 
2012
 
2011
 
2010
Revenues:
 
 
 
 
 
Bankers Life:
 
 
 
 
 
Insurance policy income:
 
 
 
 
 
Annuities
$
28.4

 
$
33.4

 
$
39.5

Health
1,342.7

 
1,347.3

 
1,366.0

Life
286.3

 
231.7

 
190.7

Net investment income (a)
838.9

 
766.3

 
758.9

Fee revenue and other income (a)
15.2

 
13.8

 
12.8

Total Bankers Life revenues
2,511.5

 
2,392.5

 
2,367.9

Washington National:
 

 
 

 
 
Insurance policy income:
 

 
 

 
 
Health
572.4

 
565.7

 
559.3

Life
15.2

 
15.6

 
16.8

Other
2.8

 
3.8

 
4.9

Net investment income (a)
204.1

 
189.5

 
185.4

Fee revenue and other income (a)
1.1

 
1.0

 
1.1

Total Washington National revenues
795.6

 
775.6

 
767.5

Colonial Penn:
 

 
 

 
 
Insurance policy income:
 

 
 

 
 
Health
5.2

 
5.9

 
6.8

Life
212.6

 
197.1

 
188.1

Net investment income (a)
40.4

 
41.1

 
39.3

Fee revenue and other income (a)
.7

 
.9

 
.7

Total Colonial Penn revenues
258.9

 
245.0

 
234.9

Other CNO Business:
 

 
 

 
 
Insurance policy income:
 

 
 

 
 
Annuities
10.6

 
12.2

 
12.9

Health
25.7

 
27.7

 
29.9

Life
252.9

 
248.4

 
252.5

Other
.6

 
1.7

 
2.6

Net investment income (a)
340.6

 
344.1

 
364.6

Total Other CNO Business revenues
630.4

 
634.1

 
662.5

Corporate operations:
 

 
 

 
 
Net investment income
62.4

 
13.1

 
18.7

Fee and other income
2.8

 
2.5

 
2.2

Total corporate revenues
65.2

 
15.6

 
20.9

Total revenues
4,261.6

 
4,062.8

 
4,053.7


(continued on next page)

(continued from previous page)
 
2012
 
2011
 
2010
Expenses:
 
 
 
 
 
Bankers Life:
 
 
 
 
 
Insurance policy benefits
$
1,642.9

 
$
1,570.1

 
$
1,607.3

Amortization
187.6

 
206.3

 
207.9

Interest expense on investment borrowings
5.3

 
4.8

 
1.0

Other operating costs and expenses
374.8

 
320.4

 
314.2

Total Bankers Life expenses
2,210.6

 
2,101.6

 
2,130.4

Washington National:
 

 
 

 
 
Insurance policy benefits
447.1

 
464.5

 
450.6

Amortization
47.7

 
44.9

 
46.6

Interest expense on investment borrowings
2.8

 
.7

 
—

Other operating costs and expenses
170.9

 
169.4

 
169.9

Total Washington National expenses
668.5

 
679.5

 
667.1

Colonial Penn:
 

 
 

 
 
Insurance policy benefits
161.1

 
150.1

 
144.8

Amortization
15.0

 
15.0

 
12.5

Other operating costs and expenses
91.4

 
84.6

 
73.4

Total Colonial Penn expenses
267.5

 
249.7

 
230.7

Other CNO Business:
 

 
 

 
 
Insurance policy benefits
508.4

 
479.9

 
521.0

Amortization
33.8

 
39.8

 
48.7

Interest expense on investment borrowings
19.9

 
20.3

 
20.0

Other operating costs and expenses
117.1

 
78.8

 
82.0

Total Other CNO Business expenses
679.2

 
618.8

 
671.7

Corporate operations:
 

 
 

 
 
Interest expense on corporate debt
66.2

 
76.3

 
79.3

Interest expense on borrowings of variable interest entities
20.0

 
11.8

 
12.9

Interest expense on investment borrowings
.4

 
.2

 
—

Loss on extinguishment of debt
200.2

 
3.4

 
6.8

Other operating costs and expenses
65.1

 
51.3

 
50.8

Total corporate expenses
351.9

 
143.0

 
149.8

Total expenses
4,177.7

 
3,792.6

 
3,849.7

Income (loss) before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes:
 

 
 

 
 
Bankers Life
300.9

 
290.9

 
237.5

Washington National
127.1

 
96.1

 
100.4

Colonial Penn
(8.6
)
 
(4.7
)
 
4.2

Other CNO Business
(48.8
)
 
15.3

 
(9.2
)
Corporate operations
(286.7
)
 
(127.4
)
 
(128.9
)
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes
$
83.9

 
$
270.2

 
$
204.0

___________________
(a)
It is not practicable to provide additional components of revenue by product or services.

A reconciliation of segment revenues and expenses to consolidated revenues and expenses is as follows (dollars in millions):

 
2012
 
2011
 
2010
Total segment revenues                                                                                            
$
4,261.6

 
$
4,062.8

 
$
4,053.7

Net realized investment gains (losses)                                                                                            
81.1

 
61.8

 
30.2

Consolidated revenues                                                                                       
$
4,342.7

 
$
4,124.6

 
$
4,083.9

 
 
 
 
 
 
Total segment expenses                                                                                            
$
4,177.7

 
$
3,792.6

 
$
3,849.7

Insurance policy benefits - fair value changes in embedded derivative liabilities (a)
4.4

 
34.4

 
—

Amortization related to fair value changes in embedded derivative liabilities (a)
(1.6
)
 
(14.0
)
 
—

Amortization related to net realized investment gains (losses)
6.5

 
5.4

 
9.3

Consolidated expenses                                                                                       
$
4,187.0

 
$
3,818.4

 
$
3,859.0



____________
(a)
Prior to June 30, 2011, we maintained a specific block of investments in our trading securities account (which we carried at estimated fair value with changes in such value recognized as investment income from policyholder and reinsurer accounts and other special-purpose portfolios) to offset the income statement volatility caused by the effect of interest rate fluctuations on the value of embedded derivatives related to our fixed index annuity products.  During the second quarter of 2011, we sold this trading portfolio, which resulted in $2.8 million and $20.4 million of decreased earnings in 2012 and 2011, respectively, since the volatility caused by the accounting requirements to record embedded options at fair value was no longer being offset.

Segment balance sheet information was as follows (dollars in millions):

 
2012
 
2011
Assets:
 
 
 
Bankers Life
$
17,637.7

 
$
16,800.0

Washington National
4,499.5

 
4,360.4

Colonial Penn
917.8

 
879.2

Other CNO Business
8,679.5

 
8,964.9

Corporate operations
2,396.9

 
1,917.4

Total assets
$
34,131.4

 
$
32,921.9

Liabilities:
 
 
 
Bankers Life
$
15,590.1

 
$
14,757.1

Washington National
3,425.6

 
3,449.1

Colonial Penn
749.6

 
742.4

Other CNO Business
7,451.1

 
7,857.8

Corporate operations
1,865.7

 
1,501.7

Total liabilities
$
29,082.1

 
$
28,308.1



The following table presents selected financial information of our segments (dollars in millions):

Segment
Present value of future profits
 
Deferred acquisition costs
 
Insurance liabilities
2012
 
 
 
 
 
Bankers Life
$
168.8

 
$
332.8

 
$
14,548.0

Washington National
375.8

 
157.3

 
2,911.7

Colonial Penn
63.6

 
57.5

 
763.1

Other CNO Business
17.8

 
82.1

 
6,866.7

Total
$
626.0

 
$
629.7

 
$
25,089.5

2011
 
 
 
 
 
Bankers Life
$
201.8

 
$
491.0

 
$
13,720.4

Washington National
402.0

 
142.3

 
2,954.7

Colonial Penn
72.6

 
51.5

 
725.5

Other CNO Business
21.3

 
112.3

 
7,296.9

Total
$
697.7

 
$
797.1

 
$
24,697.5

QUARTERLY FINANCIAL DATA
QUARTERLY FINANCIAL DATA (UNAUDITED)
QUARTERLY FINANCIAL DATA (UNAUDITED)

We compute earnings per common share for each quarter independently of earnings per share for the year. The sum of the quarterly earnings per share may not equal the earnings per share for the year because of: (i) transactions affecting the weighted average number of shares outstanding in each quarter; and (ii) the uneven distribution of earnings during the year. Quarterly financial data (unaudited) were as follows (dollars in millions, except per share data):

2012
1st Qtr.
 
2nd Qtr.
 
3rd Qtr.
 
4th Qtr.
Revenues
$
1,123.9

 
$
1,065.0

 
$
1,093.0

 
$
1,060.8

Income (loss) before income taxes
$
92.3

 
$
104.5

 
$
(158.8
)
 
$
117.7

Income tax expense (benefit)
33.2

 
38.8

 
(153.8
)
 
16.5

Net income (loss)
$
59.1

 
$
65.7

 
$
(5.0
)
 
$
101.2

Earnings per common share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Net income (loss)
$
.25

 
$
.28

 
$
(.02
)
 
$
.45

Diluted:
 
 
 
 
 
 
 
Net income (loss)
$
.21

 
$
.24

 
$
(.02
)
 
$
.41

 
 
 
 
 
 
 
 
2011
1st Qtr.
 
2nd Qtr.
 
3rd Qtr.
 
4th Qtr.
Revenues
$
1,049.2

 
$
1,032.0

 
$
992.3

 
$
1,051.1

Income before income taxes
$
70.4

 
$
71.8

 
$
61.7

 
$
102.3

Income tax expense (benefit)
25.0

 
25.4

 
(117.8
)
 
37.9

Net income
$
45.4

 
$
46.4

 
$
179.5

 
$
64.4

Earnings per common share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Net income
$
.18

 
$
.18

 
$
.73

 
$
.27

Diluted:
 
 
 
 
 
 
 
Net income
$
.16

 
$
.16

 
$
.61

 
$
.23

INVESTMENTS IN VARIABLE INTEREST ENTITIES
INVESTMENTS IN VARIABLE INTEREST ENTITIES
INVESTMENTS IN VARIABLE INTEREST ENTITIES

We have concluded that we are the primary beneficiary with respect to certain VIEs, which are consolidated in our financial statements.  The following is a description of our significant investments in VIEs.

All of the VIEs are collateralized loan trusts that were established to issue securities and use the proceeds to principally invest in corporate loans and other permitted investments (including a new VIE which was consolidated in the first quarter of 2012).  The assets held by the trusts are legally isolated and not available to the Company.  The liabilities of the VIEs are expected to be satisfied from the cash flows generated by the underlying loans held by the trusts, not from the assets of the Company.  The Company has no further commitments to the VIEs.

In the second quarter of 2011, one of the VIEs was liquidated and its obligations were repaid pursuant to the priority of payments as defined in the indenture of the VIE. Such liquidation did not have a material effect on our consolidated financial statements. In addition, in the second quarter of 2011, certain of our insurance subsidiaries invested in the formation of a new VIE which has been consolidated in our financial statements.

Certain of our insurance subsidiaries are noteholders of the VIEs.  Another subsidiary of the Company is the investment manager for the VIEs.  As such, it has the power to direct the most significant activities of the VIEs which materially impacts the economic performance of the VIEs.

The following table provides supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions):
 
December 31, 2012
 
VIEs
 
Eliminations
 
Net effect on
consolidated
balance sheet
Assets:
 
 
 
 
 
Investments held by variable interest entities
$
814.3

 
$
—

 
$
814.3

Notes receivable of VIEs held by insurance subsidiaries
—

 
(78.5
)
 
(78.5
)
Cash and cash equivalents held by variable interest entities
54.2

 
—

 
54.2

Accrued investment income
1.8

 
—

 
1.8

Income tax assets, net
3.3

 
(2.6
)
 
.7

Other assets
9.6

 
—

 
9.6

Total assets
$
883.2

 
$
(81.1
)
 
$
802.1

Liabilities:
 

 
 

 
 

Other liabilities
$
39.9

 
$
(3.3
)
 
$
36.6

Borrowings related to variable interest entities
767.0

 
—

 
767.0

Notes payable of VIEs held by insurance subsidiaries
82.5

 
(82.5
)
 
—

Total liabilities
$
889.4

 
$
(85.8
)
 
$
803.6


 
December 31, 2011
 
VIEs
 
Eliminations
 
Net effect on
consolidated
balance sheet
Assets:
 
 
 
 
 
Investments held by variable interest entities
$
496.3

 
$
—

 
$
496.3

Notes receivable of VIEs held by insurance subsidiaries
—

 
(45.3
)
 
(45.3
)
Cash and cash equivalents held by variable interest entities
74.4

 
—

 
74.4

Accrued investment income
1.7

 
—

 
1.7

Income tax assets, net
6.8

 
(1.4
)
 
5.4

Other assets
7.7

 
—

 
7.7

Total assets
$
586.9

 
$
(46.7
)
 
$
540.2

Liabilities:
 

 
 

 
 

Other liabilities
$
30.3

 
$
(.1
)
 
$
30.2

Borrowings related to variable interest entities
519.9

 
—

 
519.9

Notes payable of VIEs held by insurance subsidiaries
49.3

 
(49.3
)
 
—

Total liabilities
$
599.5

 
$
(49.4
)
 
$
550.1



The following table provides supplemental information about the revenues and expenses of the VIEs which have been consolidated in accordance with authoritative guidance, after giving effect to the elimination of our investment in the VIEs and investment management fees earned by a subsidiary of the Company (dollars in millions):

 
2012
 
2011
 
2010
Revenues:
 
 
 
 
 
Net investment income – policyholder and reinsurer accounts and other special-purpose portfolios
$
31.3

 
$
18.8

 
$
20.1

Fee revenue and other income
1.6

 
1.2

 
.6

Total revenues
32.9

 
20.0

 
20.7

Expenses:
 
 
 
 
 
Interest expense
20.0

 
11.8

 
12.9

Other operating expenses
.6

 
.7

 
.6

Total expenses
20.6

 
12.5

 
13.5

Income before net realized investment losses and income taxes
12.3

 
7.5

 
7.2

Net realized investment losses
(.4
)
 
(1.3
)
 
(3.7
)
Income before income taxes
$
11.9

 
$
6.2

 
$
3.5



The investment portfolios held by the VIEs are primarily comprised of corporate fixed maturity securities which are almost entirely rated as below-investment grade securities.  At December 31, 2012, such securities had an amortized cost of $809.3 million; gross unrealized gains of $6.6 million; gross unrealized losses of $1.6 million; and an estimated fair value of $814.3 million.

The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at December 31, 2012, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
3.8

 
$
3.8

Due after one year through five years
400.7

 
402.3

Due after five years through ten years
404.8

 
408.2

Total
$
809.3

 
$
814.3




The following table sets forth the amortized cost and estimated fair value of those investments held by the VIEs with unrealized losses at December 31, 2012, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
1.8

 
$
1.8

Due after one year through five years
118.6

 
117.1

Due after five years through ten years
54.4

 
54.3

Total
$
174.8

 
$
173.2



There were no investments held by the VIEs rated below-investment grade which have been continuously in an unrealized loss position exceeding 20 percent of the cost basis as of December 31, 2012.

During 2012, we recognized net realized investment losses on the VIE investments of $.4 million, which were comprised of $.4 million of net gains from the sales of fixed maturities, and $.8 million of writedowns of investments for other than temporary declines in fair value recognized through net income.  During 2011, we recognized net realized investment losses on the VIE investments of $1.3 million, which were comprised of $3.0 million of net gains from the sales of fixed maturities, and $4.3 million of writedowns of investments for other than temporary declines in fair value recognized through net income. During 2010, we recognized net realized investment losses on the VIE investments of $3.7 million, which were comprised of $.4 million of net losses from the sales of fixed maturities, and $3.3 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

At December 31, 2012, there were no investments held by the VIEs that were in default.

During 2012, $34.9 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $.3 million. During 2011, $27.5 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $2.7 million.

At December 31, 2012, the VIEs held:  (i) investments with a fair value of $114.1 million and gross unrealized losses of $.7 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $59.1 million and gross unrealized losses of $.9 million that had been in an unrealized loss position for greater than twelve months.

At December 31, 2011, the VIEs held:  (i) investments with a fair value of $349.9 million and gross unrealized losses of $6.0 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $33.0 million and gross unrealized losses of $1.7 million that had been in an unrealized loss position for greater than twelve months.

The investments held by the VIEs are evaluated for other-than-temporary declines in fair value in a manner that is consistent with the Company's fixed maturities, available for sale.

In addition, the Company, in the normal course of business, makes passive investments in structured securities issued by VIEs for which the Company is not the investment manager.  These structured securities include asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, residential mortgage-backed securities and collateralized mortgage obligations.  Our maximum exposure to loss on these securities is limited to our cost basis in the investment.  We have determined that we are not the primary beneficiary of these structured securities due to the relative size of our investment in comparison to the total principal amount of the individual structured securities and the level of credit subordination which reduces our obligation to absorb gains or losses.

At December 31, 2012, we hold investments in various limited partnerships, in which we are not the primary beneficiary, totaling $28.4 million (classified as other invested assets).  At December 31, 2012, we had unfunded commitments to these partnerships of $40.5 million.  Our maximum exposure to loss on these investments is limited to the amount of our investment.
SUBSEQUENT EVENT
Subsequent Events [Text Block]
SUBSEQUENT EVENT

On February 11, 2013, we commenced a tender offer to purchase for cash any and all of our outstanding 7.0% Debentures. The tender offer (the "Offer") is being made pursuant to the terms set forth in our Offer to Purchase, dated February 11, 2013 (the "Offer to Purchase"), and the related Letter of Transmittal. The Offer will expire on March 27, 2013, (the "Expiration Date") unless it is extended or earlier terminated by us.
The Offer is being conducted as part of our previously announced securities repurchase program. As of February 8, 2013, we had repurchase capacity of approximately $350.0 million under our securities repurchase program. As of February 8, 2013, there was $93.0 million aggregate principal amount of 7.0% Debentures outstanding.
Pursuant to the terms of the Offer, holders of the 7.0% Debentures who tender and do not withdraw their 7.0% Debentures prior to the Expiration Date, will receive, for each $1,000 principal amount of such 7.0% Debentures, a cash purchase price (the "Purchase Price") equal to the sum of: (i) the average volume weighted average price of our common stock (as defined in the Offer to Purchase) multiplied by 183.5145; plus (ii) a fixed cash amount of $61.25, provided that in no event will the Purchase Price be less than $1,454.13 per $1,000 principal amount of such 7.0% Debentures. The Purchase Price will not be adjusted at any time during the Offer for any dividends declared and/or paid on our common stock during the Offer. In addition to the Purchase Price, holders will receive accrued and unpaid interest on any 7.0% Debentures that are tendered to, but excluding, the settlement date of the offer.
SCHEDULE II
Condensed Financial Information of Registrant (Parent Company)
Condensed Financial Information of Registrant (Parent Company)

Balance Sheet
as of December 31, 2012 and 2011
(Dollars in millions)


ASSETS
 
2012
 
2011
Fixed maturities, available for sale, at fair value (amortized cost: 2012 - $66.3; 2011 - $93.3)
$
68.5

 
$
93.5

Cash and cash equivalents - unrestricted
165.7

 
70.2

Cash and cash equivalents - restricted
—

 
26.0

Equity securities at fair value (cost: 2012 - $28.5; 2011 - $18.7)
30.0

 
17.9

Trading securities
2.3

 
16.5

Other invested assets
26.3

 
28.6

Investment in wholly-owned subsidiaries (eliminated in consolidation)
6,034.5

 
5,488.6

Receivable from subsidiaries (eliminated in consolidation)
1.4

 
4.1

Other assets
22.7

 
19.1

Total assets
$
6,351.4

 
$
5,764.5

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
 
 
 
Notes payable
$
1,004.2

 
$
857.9

Payable to subsidiaries (eliminated in consolidation)
110.9

 
84.6

Income tax liabilities, net
105.6

 
100.2

Investment borrowings
—

 
24.8

Other liabilities
81.4

 
83.2

Total liabilities
1,302.1

 
1,150.7

Commitments and Contingencies

 

Shareholders' equity:
 
 
 
Common stock and additional paid-in capital ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding:  2012 – 221,502,371; 2011 – 241,304,503)
4,176.9

 
4,364.3

Accumulated other comprehensive income
1,197.4

 
781.6

Accumulated deficit
(325.0
)
 
(532.1
)
Total shareholders' equity
5,049.3

 
4,613.8

Total liabilities and shareholders' equity
$
6,351.4

 
$
5,764.5







The accompanying notes are an integral part
of the consolidated financial statements.

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II

Condensed Financial Information of Registrant (Parent Company)

Statement of Operations
for the years ended December 31, 2012, 2011 and 2010
(Dollars in millions)


 
2012
 
2011
 
2010
Revenues:
 
 
 
 
 
Net investment income (loss)
$
22.3

 
$
(4.0
)
 
$
—

Net realized investment gains
1.9

 
1.0

 
—

Investment income from subsidiaries (eliminated in consolidation)
—

 
.2

 
—

Total revenues
24.2

 
(2.8
)
 
—

Expenses:
 
 
 
 
 
Interest expense
66.6

 
76.3

 
79.3

Intercompany expenses (eliminated in consolidation)
.4

 
.3

 
1.3

Operating costs and expenses
50.9

 
53.8

 
49.3

Loss on extinguishment of debt
200.2

 
3.4

 
6.8

Total expenses
318.1

 
133.8

 
136.7

Loss before income taxes and equity in undistributed earnings of subsidiaries
(293.9
)
 
(136.6
)
 
(136.7
)
Income tax benefit on period income
(59.8
)
 
(42.2
)
 
(50.8
)
Loss before equity in undistributed earnings of subsidiaries
(234.1
)
 
(94.4
)
 
(85.9
)
Equity in undistributed earnings of subsidiaries (eliminated in consolidation)
455.1

 
430.1

 
326.5

Net income
$
221.0

 
$
335.7

 
$
240.6

 
 
 
 
 
 



















The accompanying notes are an integral part
of the consolidated financial statements.
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II

Condensed Financial Information of Registrant (Parent Company)

Statement of Cash Flows
for the years ended December 31, 2012, 2011 and 2010
(Dollars in millions)

 
2012
 
2011
 
2010
Cash flows used by operating activities
$
(95.3
)
 
$
(85.5
)
 
$
(119.1
)
Cash flows from investing activities:
 
 
 
 
 
Sales of investments
159.7

 
1,422.9

 
—

Sales of investments - affiliated*
—

 
10.0

 
—

Purchases of investments
(145.0
)
 
(1,569.5
)
 
—

Purchases of investments - affiliated*
—

 
(10.0
)
 
—

Net sales (purchases) of trading securities
37.4

 
(16.5
)
 
—

Dividends received from consolidated subsidiary, net of capital contributions*
245.0

 
236.0

 
26.6

Change in restricted cash
26.0

 
(26.0
)
 
—

Net cash provided by investing activities
323.1

 
46.9

 
26.6

Cash flows from financing activities:
 
 
 
 
 
Issuance of notes payable, net
944.5

 
—

 
756.1

Payments on notes payable
(810.6
)
 
(144.8
)
 
(793.6
)
Issuance of common stock
3.1

 
2.2

 
—

Payments to repurchase common stock
(180.2
)
 
(69.8
)
 
—

Common stock dividends paid
(13.9
)
 
—

 
—

Expenses related to extinguishment of debt
(183.0
)
 
—

 
—

Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures
(24.0
)
 
—

 
—

Investment borrowings - repurchase agreements, net
(24.8
)
 
24.8

 
—

Issuance of notes payable to affiliates*
208.6

 
169.7

 
177.0

Payments on notes payable to affiliates*
(52.0
)
 
(33.3
)
 
(32.3
)
Net cash provided (used) by financing activities
(132.3
)
 
(51.2
)
 
107.2

Net increase (decrease) in cash and cash equivalents
95.5

 
(89.8
)
 
14.7

Cash and cash equivalents, beginning of the year
70.2

 
160.0

 
145.3

Cash and cash equivalents, end of the year
$
165.7

 
$
70.2

 
$
160.0


* Eliminated in consolidation









The accompanying notes are an integral part
of the consolidated financial statements.

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II

Notes to Condensed Financial Information

1. Basis of Presentation

The condensed financial information should be read in conjunction with the consolidated financial statements of CNO Financial Group, Inc. The condensed financial information includes the accounts and activity of the parent company.

Certain items related to our insurance subsidiaries have been restated to reflect the adoption of authoritative guidance related to the accounting for incremental direct costs associated with the successful acquisition of new or renewal insurance contracts. Refer to the note to the consolidated financial statements entitled "Summary of Significant Accounting Policies - Recently Issued Accounting Standards" in Item 8 for additional information. The adoption of such guidance, referred to as ASU 2010-26, affected prior period information as follows (dollars in millions):

 
December 31, 2011
 
Amounts prior to adoption of ASU 2010-26
 
Effect of adoption of ASU 2010-26
 
As reported
Investment in wholly-owned subsidiaries
$
5,907.4

 
$
(418.8
)
 
$
5,488.6

Total assets
6,183.3

 
(418.8
)
 
5,764.5

 
 
 
 
 
 
Accumulated other comprehensive income
625.5

 
156.1

 
781.6

Retained earnings (accumulated deficit)
42.8

 
(574.9
)
 
(532.1
)
Total shareholders' equity
5,032.6

 
(418.8
)
 
4,613.8

Total liabilities and shareholders' equity
6,183.3

 
(418.8
)
 
5,764.5



 
Year ended
 
December 31, 2011
 
Amounts prior to adoption of ASU 2010-26
 
Effect of adoption of ASU 2010-26
 
As reported
Equity in undistributed earning of subsidiaries
$
476.9

 
$
(46.8
)
 
$
430.1

Net income
382.5

 
(46.8
)
 
335.7



 
Year ended
 
December 31, 2010
 
Amounts prior to adoption of ASU 2010-26
 
Effect of adoption of ASU 2010-26
 
As reported
Equity in undistributed earning of subsidiaries
$
370.5

 
$
(44.0
)
 
$
326.5

Net income
284.6

 
(44.0
)
 
240.6

SCHEDULE IV
Reinsurance

 
2012
 
2011
 
2010
Life insurance inforce:
 
 
 
 
 
Direct
$
53,750.8

 
$
56,540.1

 
$
59,388.5

Assumed
325.7

 
349.3

 
374.2

Ceded
(12,392.4
)
 
(13,616.9
)
 
(14,800.9
)
Net insurance inforce
$
41,684.1

 
$
43,272.5

 
$
44,961.8

Percentage of assumed to net
.8
%
 
.8
%
 
.8
%

 
2012
 
2011
 
2010
Insurance policy income:
 
 
 
 
 
Direct
$
2,591.1

 
$
2,540.6

 
$
2,525.5

Assumed
69.4

 
80.4

 
92.6

Ceded
(220.0
)
 
(238.1
)
 
(258.6
)
Net premiums
$
2,440.5

 
$
2,382.9

 
$
2,359.5

Percentage of assumed to net
2.8
%
 
3.4
%
 
3.9
%
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (POLICIES)
Investments 
We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of tax and related adjustments, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as net investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios)).

Equity securities include investments in common stock and non-redeemable preferred stock. We carry these investments at estimated fair value. We record any unrealized gain or loss, net of tax and related adjustments, as a component of shareholders' equity.

Mortgage loans held in our investment portfolio are carried at amortized unpaid balances, net of provisions for estimated losses. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Payment terms specified for mortgage loans may include a prepayment penalty for unscheduled payoff of the investment. Prepayment penalties are recognized as investment income when received.

Policy loans are stated at current unpaid principal balances.

Our trading securities include: (i) investments purchased with the intent of selling in the near term to generate income on price changes; (ii) investments supporting certain insurance liabilities (including investments backing the market strategies of our multibucket annuity products) and certain reinsurance agreements; and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of these securities is recognized in income from policyholder and reinsurer accounts and other special-purpose portfolios (a component of net investment income). Investment income from trading securities backing certain insurance liabilities and certain reinsurance agreements is substantially offset by the change in insurance policy benefits related to certain products and agreements.  Prior to June 30, 2011, certain of our trading securities were held to offset the income statement volatility caused by the effect of interest rate fluctuations on the value of embedded derivatives related to our fixed index annuity products.  During the second quarter of 2011, we sold this trading portfolio. See the section of this note entitled "Accounting for Derivatives" for further discussion regarding these embedded derivatives.  The change in value of these securities is recognized in realized investment gains (losses). Our trading securities totaled $266.2 million and $91.6 million at December 31, 2012 and 2011, respectively.

Other invested assets include: (i) call options purchased in an effort to offset or hedge the effects of certain policyholder benefits related to our fixed index annuity and life insurance products; (ii) Company-owned life insurance ("COLI"); and (iii) certain non-traditional investments. We carry the call options at estimated fair value as further described in the section of this note entitled "Accounting for Derivatives". We carry COLI at its cash surrender value which approximates its net realizable value. Non-traditional investments include investments in certain limited partnerships, which are accounted for using the equity method; promissory notes, which are accounted for using the cost method; and investments in certain hedge funds that are carried at estimated fair value.

We defer any fees received or costs incurred when we originate investments. We amortize fees, costs, discounts and premiums as yield adjustments over the contractual lives of the investments without anticipation of prepayments. We consider anticipated prepayments on mortgage-backed securities in determining estimated future yields on such securities.

When we sell a security (other than trading securities), we report the difference between the sale proceeds and amortized cost (determined based on specific identification) as a realized investment gain or loss.

We regularly evaluate our investments for possible impairment as further described in the note to the consolidated financial statements entitled "Investments".

When a security defaults (including mortgage loans) or securities (other than structured securities) are other-than-temporarily impaired, our policy is to discontinue the accrual of interest and eliminate all previous interest accruals, if we determine that such amounts will not be ultimately realized in full.
Cash and Cash Equivalents 
Cash and Cash Equivalents

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.
Deferred Acquisition Costs 
Deferred Acquisition Costs

Deferred acquisition costs represent incremental direct costs related to the successful acquisition of new or renewal insurance contracts. For universal life or investment products, we amortize these costs in relation to the estimated gross profits using the interest rate credited to the underlying policies. For other products, we amortize these costs in relation to future anticipated premium revenue using the projected investment earnings rate.

When we realize a gain or loss on investments backing our universal life or investment-type products, we adjust the amortization to reflect the change in estimated gross profits from the products due to the gain or loss realized and the effect on future investment yields. We also adjust deferred acquisition costs for the change in amortization that would have been recorded if our fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields. We limit the total adjustment related to the impact of unrealized losses to the total of costs capitalized plus interest related to insurance policies issued in a particular year. We include the impact of this adjustment in accumulated other comprehensive income (loss) within shareholders' equity.

We regularly evaluate the recoverability of the unamortized balance of the deferred acquisition costs. We consider estimated future gross profits or future premiums, expected mortality or morbidity, interest earned and credited rates, persistency and expenses in determining whether the balance is recoverable. If we determine a portion of the unamortized balance is not recoverable, it is charged to amortization expense. In certain cases, the unamortized balance of the deferred acquisition costs may not be deficient in the aggregate, but our estimates of future earnings indicate that profits would be recognized in early periods and losses in later periods. In this case, we increase the amortization of the deferred acquisition costs over the period of profits, by an amount necessary to offset losses that are expected to be recognized in the later years.

Refer to the caption "Recently Issued Accounting Standards - Accounting Standard Adopted on a Retrospective Basis" for further information regarding the impact of adoption.

Present Value of Future Profits 
Present Value of Future Profits

The value assigned to the right to receive future cash flows from policyholder insurance contracts existing at the Effective Date is referred to as the present value of future profits.  The discount rate we used to determine the present value of future profits was 12 percent. The balance of this account is amortized and evaluated for recovery in the same manner as described above for deferred acquisition costs.  We also adjust the present value of future profits for the change in amortization that would have been recorded if the fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields, similar to the manner described above for deferred acquisition costs.  We limit the total adjustment related to the impact of unrealized losses to the total present value of future profits plus interest.

Assets Held in Separate Accounts 

Assets Held in Separate Accounts

Separate accounts are funds on which investment income and gains or losses accrue directly to certain policyholders. The assets of these accounts are legally segregated. They are not subject to the claims that may arise out of any other business of CNO. We report separate account assets at fair value; the underlying investment risks are assumed by the contractholders. We record the related liabilities at amounts equal to the separate account assets. We record the fees earned for administrative and contractholder services performed for the separate accounts in insurance policy income.
Recognition of Insurance Policy Income and Related Benefits and Expenses on Insurance Contracts 

Recognition of Insurance Policy Income and Related Benefits and Expenses on Insurance Contracts

For universal life and investment contracts that do not involve significant mortality or morbidity risk, the amounts collected from policyholders are considered deposits and are not included in revenue. Revenues for these contracts consist of charges for policy administration, cost of insurance charges and surrender charges assessed against policyholders' account balances. Such revenues are recognized when the service or coverage is provided, or when the policy is surrendered.

We establish liabilities for investment and universal life products equal to the accumulated policy account values, which include an accumulation of deposit payments plus credited interest, less withdrawals and the amounts assessed against the policyholder through the end of the period. Sales inducements provided to the policyholders of these products are recognized as liabilities over the period that the contract must remain in force to qualify for the inducement. The options attributed to the policyholder related to our fixed index annuity products are accounted for as embedded derivatives as described in the section of this note entitled "Accounting for Derivatives".

Premiums from individual life products (other than interest-sensitive life contracts), and health products are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for all expected future benefits and expenses) is deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as an expense when they are incurred.

We establish liabilities for traditional life, accident and health insurance, and life contingent payment annuity products using mortality tables in general use in the United States, which are modified to reflect the Company's actual experience when appropriate. We establish liabilities for accident and health insurance products using morbidity tables based on the Company's actual or expected experience. These reserves are computed at amounts that, with additions from estimated future premiums received and with interest on such reserves at estimated future rates, are expected to be sufficient to meet our obligations under the terms of the policy. Liabilities for future policy benefits are computed on a net-level premium method based upon assumptions as to future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses determined when the policies were issued (or with respect to policies inforce at August 31, 2003, the Company's best estimate of such assumptions on the Effective Date). We make an additional provision to allow for potential adverse deviation for some of our assumptions. Once established, assumptions on these products are generally not changed unless a premium deficiency exists. In that case, a premium deficiency reserve is recognized and the future pattern of reserve changes is modified to reflect the relationship of premiums to benefits based on the current best estimate of future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses, determined without an additional provision for potential adverse deviation.

We establish claim reserves based on our estimate of the loss to be incurred on reported claims plus estimates of incurred but unreported claims based on our past experience.
Accounting for Long-term Care Premium Rate Increases 

Accounting for Long-term Care Premium Rate Increases

Many of our long-term care policies have been subject to premium rate increases. In some cases, these premium rate increases were materially consistent with the assumptions we used to value the particular block of business at the Effective Date. With respect to certain premium rate increases, some of our policyholders were provided an option to cease paying their premiums and receive a non-forfeiture option in the form of a paid-up policy with limited benefits. In addition, our policyholders could choose to reduce their coverage amounts and premiums in the same proportion, when permitted by our contracts or as required by regulators. The following describes how we account for these policyholder options:

•
Premium rate increases - If premium rate increases reflect a change in our previous rate increase assumptions, the new assumptions are not reflected prospectively in our reserves. Instead, the additional premium revenue resulting from the rate increase is recognized as earned and original assumptions continue to be used to determine changes to liabilities for insurance products unless a premium deficiency exists.

•
Benefit reductions - A policyholder may choose reduced coverage with a proportionate reduction in premium, when permitted by our contracts. This option does not require additional underwriting. Benefit reductions are treated as a partial lapse of coverage, and the balance of our reserves and deferred insurance acquisition costs is reduced in proportion to the reduced coverage.

•
Non-forfeiture benefits offered in conjunction with a rate increase - In some cases, non-forfeiture benefits are offered to policyholders who wish to lapse their policies at the time of a significant rate increase. In these cases, exercise of this option is treated as an extinguishment of the original contract and issuance of a new contract. The balance of our reserves and deferred insurance acquisition costs are released, and a reserve for the new contract is established.

•
Florida Order - In 2004, the Florida Office of Insurance Regulation issued an order regarding home health care business in Florida in our Other CNO Business segment. The order required a choice of three alternatives to be offered to holders of home health care policies in Florida subject to premium rate increases as follows:

•
retention of their current policy with a rate increase of 50 percent in the first year and actuarially justified increases in subsequent years;

•
receipt of a replacement policy with reduced benefits and a rate increase in the first year of 25 percent and no more than 15 percent in subsequent years; or

•
receipt of a paid-up policy, allowing the holder to file future claims up to 100 percent of the amount of premiums paid since the inception of the policy.

Reserves for all three groups of policies under the order were prospectively adjusted using a prospective revision methodology, as these alternatives were required by the Florida Office of Insurance Regulation. These policies had no insurance acquisition costs established at the Effective Date.

Some of our policyholders may receive a non-forfeiture benefit if they cease paying their premiums pursuant to their original contract (or pursuant to changes made to their original contract as a result of a litigation settlement made prior to the Effective Date or an order issued by the Florida Office of Insurance Regulation). In these cases, exercise of this option is treated as the exercise of a policy benefit, and the reserve for premium paying benefits is reduced, and the reserve for the non-forfeiture benefit is adjusted to reflect the election of this benefit.

Reinsurance Accounting Policy 
Accounting for Marketing and Reinsurance Agreements with Coventry

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 provided for the introduction of a prescription drug benefit. In order to offer this product to our current and potential future policyholders without investing in management and infrastructure, we entered into a national distribution agreement with Coventry to use our career and independent agents to distribute Coventry's prescription drug plan, Advantra Rx. We receive a fee based on the premiums collected on plans sold through our distribution channels. In addition, CNO has a quota-share reinsurance agreement with Coventry for CNO enrollees that provides CNO with 50 percent of net premiums and related policy benefits subject to a risk corridor.

The following describes how we account for and report our PDP business:

Our accounting for the national distribution agreement

•
We recognize distribution income based on a fixed fee per PDP contract. This fee income is recognized over the calendar year term as premiums are collected.

•
We also pay commissions to our agents who sell the plans on behalf of Coventry. These payments are deferred and amortized over the remaining term of the initial enrollment period (the one-year life of the initial policy).

Our accounting for the quota-share agreement

•
We recognize premium revenue evenly over the period of the underlying Medicare Part D contracts.

•
We recognize policyholder benefits and ceding commission expense as incurred.

•
We recognize risk-share premium adjustments consistent with Coventry's risk-share agreement with the Centers for Medicare and Medicaid Services.

Reinsurance

In the normal course of business, we seek to limit our loss exposure on any single insured or to certain groups of policies by ceding reinsurance to other insurance enterprises. We currently retain no more than $.8 million of mortality risk on any one policy. We diversify the risk of reinsurance loss by using a number of reinsurers that have strong claims-paying ratings. In each case, the ceding CNO subsidiary is directly liable for claims reinsured in the event the assuming company is unable to pay.

The cost of reinsurance on life and health coverages is recognized over the life of the reinsured policies using assumptions consistent with those used to account for the underlying policy. The cost of reinsurance ceded totaled $220.0 million, $238.1 million and $258.6 million in 2012, 2011 and 2010, respectively.  We deduct this cost from insurance policy income.  Reinsurance recoveries netted against insurance policy benefits totaled $210.2 million, $204.9 million and $471.6 million in 2012, 2011 and 2010, respectively.

From time-to-time, we assume insurance from other companies.  Any costs associated with the assumption of insurance are amortized consistent with the method used to amortize deferred acquisition costs described above.  Reinsurance premiums assumed totaled $69.4 million, $80.4 million and $92.6 million in 2012, 2011 and 2010, respectively.  Reinsurance premiums included amounts assumed pursuant to marketing and quota-share agreements with Coventry of $49.9 million, $58.1 million and $67.2 million in 2012, 2011 and 2010, respectively.

See the section of this note entitled "Accounting for Derivatives" for a discussion of the derivative embedded in the payable related to certain modified coinsurance agreements.

Income Taxes 

Income Taxes

Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and net operating loss carryforwards ("NOLs"). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted.

A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income during the periods in which our temporary differences become deductible and before our capital loss carryforwards and NOLs expire.
Investments in Variable Interest Entities 
Investments in Variable Interest Entities

We have concluded that we are the primary beneficiary with respect to certain variable interest entities ("VIEs"), which are consolidated in our financial statements.  The following is a description of our significant investments in VIEs:

All of the VIEs are collateralized loan trusts that were established to issue securities and use the proceeds to principally invest in corporate loans and other permitted investments (including a new VIE which was consolidated in the first quarter of 2012).  The assets held by the trusts are legally isolated and not available to the Company.  The liabilities of the VIEs are expected to be satisfied from the cash flows generated by the underlying investments held by the trusts, not from the assets of the Company.  The Company has no further commitments to the VIEs.

The investment portfolios held by the VIEs are primarily comprised of corporate fixed maturity securities which are almost entirely rated as below-investment grade securities. Refer to the note to the consolidated financial statements entitled "Investments in Variable Interest Entities" for additional information about VIEs.

Investment Borrowings 

Investment Borrowings

Three of the Company's insurance subsidiaries (Conseco Life, Washington National and Bankers Life) are members of the Federal Home Loan Bank ("FHLB").  As members of the FHLB, Conseco Life, Washington National and Bankers Life have the ability to borrow on a collateralized basis from the FHLB.  Conseco Life, Washington National and Bankers Life are required to hold certain minimum amounts of FHLB common stock as a condition of membership in the FHLB, and additional amounts based on the amount of the borrowings.  At December 31, 2012, the carrying value of the FHLB common stock was $82.5 million.  As of December 31, 2012, collateralized borrowings from the FHLB totaled $1.7 billion and the proceeds were used to purchase fixed maturity securities.  The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet.  The borrowings are collateralized by investments with an estimated fair value of $2.0 billion at December 31, 2012, which are maintained in custodial accounts for the benefit of the FHLB.  Such investments are classified as fixed maturities, available for sale, in our consolidated balance sheet.  Interest expense of $28.0 million, $25.7 million and $20.8 million in 2012, 2011 and 2010, respectively, was recognized related to the borrowings.

The following summarizes the terms of the borrowings (dollars in millions):

Amount
 
Maturity
 
Interest rate at
borrowed
 
date
 
December 31, 2012
$
67.0

 
February 2014
 
Fixed rate – 1.830%
50.0

 
August 2014
 
Variable rate – 0.440%
100.0

 
August 2014
 
Variable rate – 0.470%
50.0

 
September 2015
 
Variable rate – 0.613%
150.0

 
October 2015
 
Variable rate – 0.559%
100.0

 
November 2015
 
Variable rate – 0.390%
146.0

 
November 2015
 
Fixed rate – 5.300%
100.0

 
December 2015
 
Fixed rate – 4.710%
100.0

 
June 2016
 
Variable rate – 0.650%
75.0

 
June 2016
 
Variable rate – 0.471%
100.0

 
October 2016
 
Variable rate – 0.535%
50.0

 
November 2016
 
Variable rate – 0.581%
50.0

 
November 2016
 
Variable rate – 0.680%
100.0

 
June 2017
 
Variable rate – 0.735%
100.0

 
July 2017
 
Fixed rate – 3.900%
50.0

 
August 2017
 
Variable rate – 0.510%
75.0

 
August 2017
 
Variable rate – 0.462%
100.0

 
October 2017
 
Variable rate – 0.770%
37.0

 
November 2017
 
Fixed rate – 3.750%
50.0

 
July 2018
 
Variable rate – 0.783%
$
1,650.0

 
 
 
 


The variable rate borrowings are pre-payable on each interest reset date without penalty.  The fixed rate borrowings are pre-payable subject to payment of a yield maintenance fee based on current market interest rates.  At December 31, 2012, the aggregate fee to prepay all fixed rate borrowings was $51.2 million.

As part of our investment strategy, we may enter into investment borrowings, including repurchase agreements, to increase our investment return. With respect to repurchase agreements, we account for these transactions as collateralized borrowings, where the amount borrowed is equal to the sales price of the underlying securities. Repurchase agreements involve a sale of securities and an agreement to repurchase the same securities at a later date at an agreed-upon price. We had no such borrowings outstanding at December 31, 2012. The primary risks associated with short-term collateralized borrowings are: (i) a substantial decline in the market value of the margined security; and (ii) that a counterparty may be unable to perform under the terms of the contract or be unwilling to extend such financing in future periods especially if the liquidity or value of the margined security has declined. Exposure is limited to any depreciation in value of the related securities.

Accounting for Derivatives 
Accounting for Derivatives

Our fixed index annuity products provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the Standard & Poor's 500 Index, over a specified period.  Typically, on each policy anniversary date, a new index period begins.  We are generally able to change the participation rate at the beginning of each index period during a policy year, subject to contractual minimums.  We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked.  We reflect changes in the estimated fair value of these options in net investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios).  Net investment gains (losses) related to fixed index products were $25.5 million, $(21.2) million and $28.2 million in 2012, 2011 and 2010, respectively. These amounts were substantially offset by a corresponding change to insurance policy benefits.  The estimated fair value of these options was $54.4 million and $37.9 million at December 31, 2012 and 2011, respectively.  We classify these instruments as other invested assets.

The Company accounts for the options attributed to the policyholder for the estimated life of the annuity contract as embedded derivatives.  The Company purchases options to hedge liabilities for the next policy year on each policy anniversary date and must estimate the fair value of the forward embedded options related to the policies.  These accounting requirements often create volatility in the earnings from these products.  We record the changes in the fair values of the embedded derivatives in earnings as a component of insurance policy benefits.  The fair value of these derivatives, which are classified as "liabilities for interest-sensitive products", was $734.0 million and $666.3 million at December 31, 2012 and 2011, respectively. Prior to June 30, 2011, we maintained a specific block of investments in our trading securities account (which we carried at estimated fair value with changes in such value recognized as investment income from policyholder and reinsurer accounts and other special-purpose portfolios) to offset the income statement volatility caused by the effect of interest rate fluctuations on the value of embedded derivatives related to our fixed index annuity products.  During the second quarter of 2011, we sold this trading portfolio. Because we no longer seek to offset changes from the effect of interest rates on derivative embedded in our fixed index annuity products, we recognized $2.8 million and $20.4 million of decreased earnings in 2012 and 2011, respectively, since the volatility caused by the accounting requirements to record embedded options at fair value was no longer being offset.

If the counterparties for the call options we hold fail to meet their obligations, we may have to recognize a loss.  We limit our exposure to such a loss by diversifying among several counterparties believed to be strong and creditworthy.  At December 31, 2012, substantially all of our counterparties were rated "BBB+" or higher by Standard & Poor's Corporation ("S&P").

Certain of our reinsurance payable balances contain embedded derivatives.  Such derivatives had an estimated fair value of $5.5 million and $3.5 million at December 31, 2012 and 2011, respectively.  We record the change in the fair value of these derivatives as a component of investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios).  We maintain the investments related to these agreements in our trading securities account, which we carry at estimated fair value with changes in such value recognized as investment income (also classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios).  The change in value of these trading securities offsets the change in value of the embedded derivatives.

We purchase certain fixed maturity securities that contain embedded derivatives that are required to be bifurcated from the instrument and held at fair value on the consolidated balance sheet. For certain of these securities, we have elected the fair value option to carry the entire security at fair value with changes in fair value reported in net income for operational ease.

Multibucket Annuity Product 
Multibucket Annuity Product

The Company's multibucket annuity is an annuity product that credits interest based on the experience of a particular market strategy. Policyholders allocate their annuity premium payments to several different market strategies based on different asset classes within the Company's investment portfolio. Interest is credited to this product based on the market return of the given strategy, less management fees, and funds may be moved between different strategies. The Company guarantees a minimum return of premium plus approximately 3 percent per annum over the life of the contract. The investments backing the market strategies of these products are designated by the Company as trading securities. The change in the fair value of these securities is recognized as investment income (classified as income from policyholder and reinsurer accounts and other special-purpose portfolios), which is substantially offset by the change in insurance policy benefits for these products.
Fair Value Measurements 
Fair Value Measurements

Definition of Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price.  We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, cash and cash equivalents, separate account assets and embedded derivatives.  We carry our company-owned life insurance policy, which is backed by a series of mutual funds, at its cash surrender value and our hedge fund investments at their net asset values; in both cases, we believe these values approximate their fair values. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, insurance liabilities for interest-sensitive products, investment borrowings, notes payable and borrowings related to VIEs.

The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information.  Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value.  Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value.

Valuation Hierarchy

There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable.

•
Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities.  Our Level 1 assets primarily include cash and exchange traded securities.

•
Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data.  Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies.  These models are primarily industry-standard models that consider various inputs such as interest rate, credit or issuer spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace.  Financial assets in this category primarily include:  certain public and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; and most short-term investments; and non-exchange-traded derivatives such as call options to hedge liabilities related to our fixed index annuity products. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs.

•
Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions.  Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information.  Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities.  Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions.

At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value.  This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions.  Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no transfers between Level 1 and Level 2 in 2012.

The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value.  These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value.  Substantially all of our Level 2 fixed maturity securities and separate account assets were valued from independent pricing services.  Third party pricing services normally derive the security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information.  If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are developed and discounted at an estimated risk-adjusted market rate.  The number of prices obtained for a given security is dependent on the Company's analysis of such prices as further described below.

For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes.  These broker quotes are non-binding and represent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs.  Approximately 20 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs.  The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs.  For these securities, we use internally developed valuations.  Key assumptions used to determine fair value for these securities may include risk-free rates, risk premiums, performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market.  For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are developed and discounted at an estimated market rate.  The pricing matrix utilizes a spread level to determine the market price for a security.  The credit spread generally incorporates the issuer's credit rating and other factors relating to the issuer's industry and the security's maturity.  In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity.

As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value.  The Company's analysis includes:  (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services' valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably stale; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties.  As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions.  In those instances, we may request additional pricing quotes or apply internally developed valuations.  However, the number of instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received.

The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company's judgment of the inputs or methodologies used by the independent pricing services to value different asset classes.  Such inputs include:  benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data.  The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments.

The fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options; market interest rates; and non-performance risk.  For certain embedded derivatives, we may use actuarial assumptions in the determination of fair value.

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2012 is as follows (dollars in millions):

 
Quoted prices in active markets
 for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
16,498.6

 
$
355.5

 
$
16,854.1

United States Treasury securities and obligations of United States government corporations and agencies
—

 
99.5

 
—

 
99.5

States and political subdivisions
—

 
2,115.0

 
13.1

 
2,128.1

Debt securities issued by foreign governments
—

 
.8

 
—

 
.8

Asset-backed securities
—

 
1,416.9

 
44.0

 
1,460.9

Collateralized debt obligations
—

 
—

 
324.0

 
324.0

Commercial mortgage-backed securities
—

 
1,471.2

 
6.2

 
1,477.4

Mortgage pass-through securities
—

 
19.9

 
1.9

 
21.8

Collateralized mortgage obligations
—

 
2,230.6

 
16.9

 
2,247.5

Total fixed maturities, available for sale
—

 
23,852.5

 
761.6

 
24,614.1

Equity securities:
 
 
 
 
 
 
 
Corporate securities
49.7

 
118.8

 
.1

 
168.6

Venture capital investments
—

 
—

 
2.8

 
2.8

Total equity securities
49.7

 
118.8

 
2.9

 
171.4

Trading securities:
 

 
 

 
 

 
 

Corporate securities
—

 
46.6

 
—

 
46.6

United States Treasury securities and obligations of United States government corporations and agencies
—

 
4.8

 
—

 
4.8

States and political subdivisions
—

 
14.0

 
.6

 
14.6

Asset-backed securities
—

 
50.1

 
—

 
50.1

Collateralized debt obligations
—

 
—

 
7.3

 
7.3

Commercial mortgage-backed securities
—

 
93.3

 
—

 
93.3

Mortgage pass-through securities
—

 
.1

 
—

 
.1

Collateralized mortgage obligations
—

 
41.2

 
5.8

 
47.0

Equity securities
.9

 
1.5

 
—

 
2.4

Total trading securities
.9

 
251.6

 
13.7

 
266.2

Investments held by variable interest entities - corporate securities
—

 
814.3

 
—

 
814.3

Other invested assets - derivatives
—

 
54.4

 
—

 
54.4

Assets held in separate accounts
—

 
14.9

 
—

 
14.9

Total assets carried at fair value by category
$
50.6

 
$
25,106.5

 
$
778.2

 
$
25,935.3

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

Liabilities for insurance products:
 

 
 

 
 

 
 

Interest-sensitive products - embedded derivatives associated with fixed index annuity products
—

 
—

 
734.0

 
734.0

Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement
—

 
—

 
5.5

 
5.5

Total liabilities for insurance products
—

 
—

 
739.5

 
739.5

Total liabilities carried at fair value by category
$
—

 
$
—

 
$
739.5

 
$
739.5



For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values:

Mortgage loans and policy loans.  We discount future expected cash flows for loans included in our investment portfolio based on interest rates currently being offered for similar loans to borrowers with similar credit ratings.  We aggregate loans with similar characteristics in our calculations.  The fair value of policy loans approximates their carrying value.

Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value.

Hedge fund investments are carried at their net asset values which approximates estimated fair value.

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.

Insurance liabilities for interest-sensitive products.  We discount future expected cash flows based on interest rates currently being offered for similar contracts with similar maturities.

Investment borrowings, notes payable and borrowings related to variable interest entities.  For publicly traded debt, we use current fair values.  For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements.

The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):

 
December 31, 2012
 
December 31, 2011
 
Quoted prices in active markets for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total estimated fair value
 
Total carrying amount
 
Total estimated fair value
 
Total carrying amount
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans
$
—

 
$
—

 
$
1,682.1

 
$
1,682.1

 
$
1,573.2

 
$
1,735.4

 
$
1,602.8

Policy loans
—

 
—

 
272.0

 
272.0

 
272.0

 
279.7

 
279.7

Other invested assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Company-owned life insurance
—

 
123.0

 
—

 
123.0

 
123.0

 
103.9

 
103.9

Hedge funds
—

 
16.1

 
—

 
16.1

 
16.1

 
18.2

 
18.2

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrestricted
432.3

 
150.2

 
—

 
582.5

 
582.5

 
436.0

 
436.0

Held by variable interest entities
54.2

 
—

 
—

 
54.2

 
54.2

 
74.4

 
74.4

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance liabilities for interest-sensitive products excluding embedded derivatives (a)
—

 
—

 
12,153.7

 
12,153.7

 
12,153.7

 
13,165.5

 
13,165.5

Investment borrowings
—

 
1,702.0

 
—

 
1,702.0

 
1,650.8

 
1,735.7

 
1,676.5

Borrowings related to variable interest entities
—

 
752.2

 
—

 
752.2

 
767.0

 
485.1

 
519.9

Notes payable – direct corporate obligations
—

 
1,100.3

 
—

 
1,100.3

 
1,004.2

 
978.3

 
857.9


____________________
(a)
The estimated fair value of insurance liabilities for interest-sensitive products was approximately equal to its carrying value at December 31, 2012.  This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year.

The categorization of fair value measurements, by input level, for our fixed maturity securities, equity securities, trading securities, certain other invested assets, assets held in separate accounts and embedded derivative instruments included in liabilities for insurance products at December 31, 2011 is as follows (dollars in millions):

 
Quoted prices in active markets for identical assets or liabilities (Level 1)
 
Significant other observable inputs
(Level 2) (a)
 
Significant unobservable inputs
 (Level 3) (a)
 
 
 
Total
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
15,594.4

 
$
278.1

 
 
 
$
15,872.5

United States Treasury securities and obligations of United States government corporations and agencies
—

 
303.8

 
1.6

 
 
 
305.4

States and political subdivisions
—

 
1,952.3

 
2.1

 
 
 
1,954.4

Debt securities issued by foreign governments
—

 
1.4

 
—

 
 
 
1.4

Asset-backed securities
—

 
1,334.3

 
79.7

 
 
 
1,414.0

Collateralized debt obligations
—

 
—

 
327.3

 
 
 
327.3

Commercial mortgage-backed securities
—

 
1,415.7

 
17.3

 
 
 
1,433.0

Mortgage pass-through securities
—

 
29.8

 
2.2

 
 
 
32.0

Collateralized mortgage obligations
—

 
2,051.2

 
124.8

 
 
 
2,176.0

Total fixed maturities, available for sale
—

 
22,682.9

 
833.1

 
 
 
23,516.0

Equity securities
17.9

 
87.3

 
69.9

 
 
 
175.1

Trading securities:
 

 
 

 
 

 
 
 
 

Corporate securities
—

 
67.6

 
—

 
 
 
67.6

United States Treasury securities and obligations of United States government corporations and agencies
—

 
4.9

 
—

 
 
 
4.9

States and political subdivisions
—

 
15.6

 
—

 
 
 
15.6

Asset-backed securities
—

 
.1

 
—

 
 
 
.1

Commercial mortgage-backed securities
—

 
—

 
.4

 
 
 
.4

Mortgage pass-through securities
—

 
.2

 
—

 
 
 
.2

Collateralized mortgage obligations
—

 
.7

 
—

 
 
 
.7

Equity securities
.7

 
1.4

 
—

 
 
 
2.1

Total trading securities
.7

 
90.5

 
.4

 
 
 
91.6

Investments held by variable interest entities
—

 
496.3

 
—

 
 
 
496.3

Other invested assets - derivatives
—

 
37.8

 
—

 
 
 
37.8

Assets held in separate accounts
—

 
15.0

 
—

 
 
 
15.0

Liabilities:
 

 
 

 
 

 
 
 
 

Liabilities for insurance products:
 

 
 

 
 

 
 
 
 

Interest-sensitive products
—

 
—

 
669.8

 
(b)
 
669.8

_____________
(a)
We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.
(b)
Includes $666.3 million of embedded derivatives associated with our fixed index annuity products and $3.5 million of embedded derivatives associated with a modified coinsurance agreement.

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2012 (dollars in millions):

 
December 31, 2012
 
 
 
Beginning balance as of December 31, 2011 (a)
 
Purchases, sales, issuances and settlements, net (c)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3
 
Transfers out of Level 3 (b)
 
Ending balance as of December 31, 2012
 
Amount of total gains (losses) for the year ended December 31, 2012 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
278.1

 
$
88.1

 
$
(.2
)
 
$
9.9

 
$
68.6

 
$
(89.0
)
 
$
355.5

 
$
—

United States Treasury securities and obligations of United States government corporations and agencies
1.6

 
(1.6
)
 
—

 
—

 
—

 
—

 
—

 
—

States and political subdivisions
2.1

 
(1.8
)
 
—

 
.9

 
11.9

 
—

 
13.1

 
—

Asset-backed securities
79.7

 
15.2

 
(.3
)
 
6.3

 
.5

 
(57.4
)
 
44.0

 
—

Collateralized debt obligations
327.3

 
(24.8
)
 
—

 
21.5

 
—

 
—

 
324.0

 
—

Commercial mortgage-backed securities
17.3

 
(2.5
)
 
—

 
.8

 
5.7

 
(15.1
)
 
6.2

 
—

Mortgage pass-through securities
2.2

 
(.3
)
 
—

 
—

 
—

 
—

 
1.9

 
—

Collateralized mortgage obligations
124.8

 
.2

 
—

 
(.1
)
 
5.0

 
(113.0
)
 
16.9

 
—

Total fixed maturities, available for sale
833.1

 
72.5

 
(.5
)
 
39.3

 
91.7

 
(274.5
)
 
761.6

 
—

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
6.4

 
(3.2
)
 
(3.8
)
 
.7

 
—

 
—

 
.1

 
(3.8
)
Venture capital investments
63.5

 
(34.3
)
 
(26.0
)
 
(.4
)
 
—

 
—

 
2.8

 
—

Total equity securities
69.9

 
(37.5
)
 
(29.8
)
 
.3

 
—

 
—

 
2.9

 
(3.8
)
Trading securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

States and political subdivisions
—

 
—

 
.1

 
—

 
.5

 
—

 
.6

 
.1

Collateralized debt obligations
—

 
6.9

 
.4

 
—

 
—

 
—

 
7.3

 
.4

Commercial mortgage-backed securities
.4

 
—

 
—

 
—

 
—

 
(.4
)
 
—

 
—

Collateralized mortgage obligations
—

 
4.5

 
1.3

 
—

 
—

 
—

 
5.8

 
1.3

Total trading securities
.4

 
11.4

 
1.8

 
—

 
.5

 
(.4
)
 
13.7

 
1.8

Liabilities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Liabilities for insurance products:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-sensitive products
(669.8
)
 
(54.5
)
 
(15.2
)
 
—

 
—

 
—

 
(739.5
)
 
(15.2
)
____________
(a)
We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.
(b)
For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period.
(c)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the year ended December 31, 2012 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
110.3

 
$
(22.2
)
 
$
—

 
$
—

 
$
88.1

United States Treasury securities and obligations of United States government corporations and agencies
—

 
(1.6
)
 
—

 
—

 
(1.6
)
States and political subdivisions
—

 
(1.8
)
 
—

 
—

 
(1.8
)
Asset-backed securities
19.0

 
(3.8
)
 
—

 
—

 
15.2

Collateralized debt obligations
35.4

 
(60.2
)
 
—

 
—

 
(24.8
)
Commercial mortgage-backed securities
—

 
(2.5
)
 
—

 
—

 
(2.5
)
Mortgage pass-through securities
—

 
(.3
)
 
—

 
—

 
(.3
)
Collateralized mortgage obligations
11.2

 
(11.0
)
 
—

 
—

 
.2

Total fixed maturities, available for sale
175.9

 
(103.4
)
 
—

 
—

 
72.5

Equity securities:
 
 
 
 
 
 
 
 
 
Corporate securities
—

 
(3.2
)
 
—

 
—

 
(3.2
)
Venture capital investments
—

 
(34.3
)
 
—

 
—

 
(34.3
)
Total equity securities
—

 
(37.5
)
 
—

 
—

 
(37.5
)
Trading securities:

 
 
 
 
 
 
 
 
Collateralized debt obligations
6.9

 
—

 
—

 
—

 
6.9

Collateralized mortgage obligations
4.5

 
—

 
—

 
—

 
4.5

Total trading securities
11.4

 
—

 
—

 
—

 
11.4

Liabilities:
 
 
 
 
 
 
 
 
 
Liabilities for insurance products:
 
 
 
 
 
 
 
 
 
Interest-sensitive products
(103.3
)
 
60.4

 
(50.9
)
 
39.3

 
(54.5
)
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2011 (dollars in millions):
 
 
December 31, 2011
 
 
 
 
Beginning balance as of December 31, 2010 (a)
 
Purchases, sales, issuances and settlements, net (c)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3
 
Transfers out of Level 3 (b)
 
Ending balance as of December 31, 2011
 
Amount of total gains (losses) for the year ended December 31, 2011 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
 
$
1,907.8

 
$
(292.3
)
 
$
(17.0
)
 
$
15.2

 
$
43.3

 
$
(1,378.9
)
 
$
278.1

 
$
(11.5
)
United States Treasury securities and obligations of United States government corporations and agencies
 
2.0

 
(.1
)
 
—

 
(.3
)
 
—

 
—

 
1.6

 
—

States and political subdivisions
 
2.5

 
—

 
—

 
.1

 
2.0

 
(2.5
)
 
2.1

 
—

Asset-backed securities
 
182.3

 
(4.1
)
 
—

 
4.8

 
39.4

 
(142.7
)
 
79.7

 
—

Collateralized debt obligations
 
256.5

 
69.4

 
1.5

 
(.1
)
 
—

 
—

 
327.3

 
—

Commercial mortgage-backed securities
 
—

 
—

 
—

 
.2

 
17.1

 
—

 
17.3

 
—

Mortgage pass-through securities
 
3.5

 
(1.3
)
 
—

 
—

 
—

 
—

 
2.2

 
—

Collateralized mortgage obligations
 
197.1

 
28.4

 
(2.1
)
 
3.7

 
3.9

 
(106.2
)
 
124.8

 
—

Total fixed maturities, available for sale
 
2,551.7

 
(200.0
)
 
(17.6
)
 
23.6

 
105.7

 
(1,630.3
)
 
833.1

 
(11.5
)
Equity securities
 
6.9

 
67.0

 
(3.8
)
 
(.2
)
 
—

 
—

 
69.9

 
—

Trading securities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial mortgage-backed securities
 
.4

 
—

 
—

 
—

 
—

 
—

 
.4

 
—

Collateralized mortgage obligations
 
.4

 
(.4
)
 
—

 
—

 
—

 
—

 
—

 
—

Total trading securities
 
.8

 
(.4
)
 
—

 
—

 
—

 
—

 
.4

 
—

Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Liabilities for insurance products:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-sensitive products
 
(553.2
)
 
(62.5
)
 
(54.1
)
 
—

 
—

 
—

 
(669.8
)
 
(54.1
)
_________
(a)
We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.
(b)
For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period.
(c)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the year ended December 31, 2011 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
5.8

 
$
(298.1
)
 
$
—

 
$
—

 
$
(292.3
)
United States Treasury securities and obligations of United States government corporations and agencies
—

 
(.1
)
 
—

 
—

 
(.1
)
Asset-backed securities
.2

 
(4.3
)
 
—

 
—

 
(4.1
)
Collateralized debt obligations
182.2

 
(112.8
)
 
—

 
—

 
69.4

Mortgage pass-through securities
—

 
(1.3
)
 
—

 
—

 
(1.3
)
Collateralized mortgage obligations
63.6

 
(35.2
)
 
—

 
—

 
28.4

Total fixed maturities, available for sale
251.8

 
(451.8
)
 
—

 
—

 
(200.0
)
Equity securities - venture capital investments
67.0

 
—

 
—

 
—

 
67.0

Trading securities - collateralized mortgage obligations
—

 
(.4
)
 
—

 
—

 
(.4
)
Liabilities:
 
 
 
 
 
 
 
 
 
Liabilities for insurance products:
 
 
 
 
 
 
 
 
 
Interest-sensitive products
(119.8
)
 
54.5

 
(34.6
)
 
37.4

 
(62.5
)


At December 31, 2012, 91 percent of our Level 3 fixed maturities, available for sale, were investment grade and 43 percent and 47 percent of our Level 3 fixed maturities, available for sale, consisted of collateralized debt securities and corporate securities, respectively.

Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses during the time the applicable financial instruments were classified as Level 3.

Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and reinsurer accounts and other special-purpose portfolios, net realized investment gains (losses) or insurance policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders' equity based on the appropriate accounting treatment for the instrument.

The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date.
The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2012 (dollars in millions):

 
Fair value at December 31, 2012
 
Valuation technique(s)
 
Unobservable inputs
 
Range (weighted average)
Assets:
 
 
 
 
 
 
 
Corporate securities (a)
$
248.3

 
Discounted cash flow analysis
 
Discount margins
 
1.90% - 3.25% (2.78%)
Asset-backed securities (b)
33.3

 
Discounted cash flow analysis
 
Discount margins
 
2.78% - 3.14% (2.99%)
Collateralized debt obligations (c)
331.4

 
Discounted cash flow analysis
 
Recoveries
 
65% - 66%
 
 
 
 
 
Constant prepayment rate
 
20%
 
 
 
 
 
Discount margins
 
.95% - 8.75% (2.02%)
 
 
 
 
 
Annual default rate
 
.95% - 5.54% (3.01%)
 
 
 
 
 
Portfolio CCC %
 
1.18% - 21.56% (11.99%)
Venture capital investments (d)
2.8

 
Market multiples
 
EBITDA multiple
 
6.8
 
 
 
 
 
Revenue multiple
 
1.5
Other assets categorized as Level 3 (e)
162.4

 
Unadjusted third-party price source
 
Not applicable
 
Not applicable
Total
778.2

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Interest sensitive products (f)
739.5

 
Discounted projected embedded derivatives
 
Projected portfolio yields
 
5.35% - 5.61% (5.55%)
 
 
 
 
 
Discount rates
 
0.0 - 3.6% (1.4%)
 
 
 
 
 
Surrender rates
 
4% - 43% (19%)
________________________________
(a)
Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(b)
Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(c)
Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes.
(d)
Venture capital investments - The significant unobservable inputs used in the fair value measurement of our venture capital investments are the EBITDA multiple and revenue multiple. Generally, a significant increase (decrease) in the EBITDA or revenue multiples in isolation would result in a significantly higher (lower) fair value measurement.
(e)
Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.
(f)
Interest sensitive products - The significant unobservable inputs used in the fair value measurement of our interest sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

Sales Inducements 
Sales Inducements

Certain of our annuity products offer sales inducements to contract holders in the form of enhanced crediting rates or bonus payments in the initial period of the contract.  Certain of our life insurance products offer persistency bonuses credited to the contract holders balance after the policy has been outstanding for a specified period of time.  These enhanced rates and persistency bonuses are considered sales inducements in accordance with GAAP.  Such amounts are deferred and amortized in the same manner as deferred acquisition costs. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (TABLES)
Schedule of Terms of Federal Home Loan Bank Borrowing [Table Text Block] 
The following summarizes the terms of the borrowings (dollars in millions):

Amount
 
Maturity
 
Interest rate at
borrowed
 
date
 
December 31, 2012
$
67.0

 
February 2014
 
Fixed rate – 1.830%
50.0

 
August 2014
 
Variable rate – 0.440%
100.0

 
August 2014
 
Variable rate – 0.470%
50.0

 
September 2015
 
Variable rate – 0.613%
150.0

 
October 2015
 
Variable rate – 0.559%
100.0

 
November 2015
 
Variable rate – 0.390%
146.0

 
November 2015
 
Fixed rate – 5.300%
100.0

 
December 2015
 
Fixed rate – 4.710%
100.0

 
June 2016
 
Variable rate – 0.650%
75.0

 
June 2016
 
Variable rate – 0.471%
100.0

 
October 2016
 
Variable rate – 0.535%
50.0

 
November 2016
 
Variable rate – 0.581%
50.0

 
November 2016
 
Variable rate – 0.680%
100.0

 
June 2017
 
Variable rate – 0.735%
100.0

 
July 2017
 
Fixed rate – 3.900%
50.0

 
August 2017
 
Variable rate – 0.510%
75.0

 
August 2017
 
Variable rate – 0.462%
100.0

 
October 2017
 
Variable rate – 0.770%
37.0

 
November 2017
 
Fixed rate – 3.750%
50.0

 
July 2018
 
Variable rate – 0.783%
$
1,650.0

 
 
 
 
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] 

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2012 is as follows (dollars in millions):

 
Quoted prices in active markets
 for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
16,498.6

 
$
355.5

 
$
16,854.1

United States Treasury securities and obligations of United States government corporations and agencies
—

 
99.5

 
—

 
99.5

States and political subdivisions
—

 
2,115.0

 
13.1

 
2,128.1

Debt securities issued by foreign governments
—

 
.8

 
—

 
.8

Asset-backed securities
—

 
1,416.9

 
44.0

 
1,460.9

Collateralized debt obligations
—

 
—

 
324.0

 
324.0

Commercial mortgage-backed securities
—

 
1,471.2

 
6.2

 
1,477.4

Mortgage pass-through securities
—

 
19.9

 
1.9

 
21.8

Collateralized mortgage obligations
—

 
2,230.6

 
16.9

 
2,247.5

Total fixed maturities, available for sale
—

 
23,852.5

 
761.6

 
24,614.1

Equity securities:
 
 
 
 
 
 
 
Corporate securities
49.7

 
118.8

 
.1

 
168.6

Venture capital investments
—

 
—

 
2.8

 
2.8

Total equity securities
49.7

 
118.8

 
2.9

 
171.4

Trading securities:
 

 
 

 
 

 
 

Corporate securities
—

 
46.6

 
—

 
46.6

United States Treasury securities and obligations of United States government corporations and agencies
—

 
4.8

 
—

 
4.8

States and political subdivisions
—

 
14.0

 
.6

 
14.6

Asset-backed securities
—

 
50.1

 
—

 
50.1

Collateralized debt obligations
—

 
—

 
7.3

 
7.3

Commercial mortgage-backed securities
—

 
93.3

 
—

 
93.3

Mortgage pass-through securities
—

 
.1

 
—

 
.1

Collateralized mortgage obligations
—

 
41.2

 
5.8

 
47.0

Equity securities
.9

 
1.5

 
—

 
2.4

Total trading securities
.9

 
251.6

 
13.7

 
266.2

Investments held by variable interest entities - corporate securities
—

 
814.3

 
—

 
814.3

Other invested assets - derivatives
—

 
54.4

 
—

 
54.4

Assets held in separate accounts
—

 
14.9

 
—

 
14.9

Total assets carried at fair value by category
$
50.6

 
$
25,106.5

 
$
778.2

 
$
25,935.3

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

Liabilities for insurance products:
 

 
 

 
 

 
 

Interest-sensitive products - embedded derivatives associated with fixed index annuity products
—

 
—

 
734.0

 
734.0

Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement
—

 
—

 
5.5

 
5.5

Total liabilities for insurance products
—

 
—

 
739.5

 
739.5

Total liabilities carried at fair value by category
$
—

 
$
—

 
$
739.5

 
$
739.5



For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values:

Mortgage loans and policy loans.  We discount future expected cash flows for loans included in our investment portfolio based on interest rates currently being offered for similar loans to borrowers with similar credit ratings.  We aggregate loans with similar characteristics in our calculations.  The fair value of policy loans approximates their carrying value.

Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value.

Hedge fund investments are carried at their net asset values which approximates estimated fair value.

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.

Insurance liabilities for interest-sensitive products.  We discount future expected cash flows based on interest rates currently being offered for similar contracts with similar maturities.

Investment borrowings, notes payable and borrowings related to variable interest entities.  For publicly traded debt, we use current fair values.  For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements.

The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):

 
December 31, 2012
 
December 31, 2011
 
Quoted prices in active markets for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total estimated fair value
 
Total carrying amount
 
Total estimated fair value
 
Total carrying amount
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans
$
—

 
$
—

 
$
1,682.1

 
$
1,682.1

 
$
1,573.2

 
$
1,735.4

 
$
1,602.8

Policy loans
—

 
—

 
272.0

 
272.0

 
272.0

 
279.7

 
279.7

Other invested assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Company-owned life insurance
—

 
123.0

 
—

 
123.0

 
123.0

 
103.9

 
103.9

Hedge funds
—

 
16.1

 
—

 
16.1

 
16.1

 
18.2

 
18.2

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrestricted
432.3

 
150.2

 
—

 
582.5

 
582.5

 
436.0

 
436.0

Held by variable interest entities
54.2

 
—

 
—

 
54.2

 
54.2

 
74.4

 
74.4

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance liabilities for interest-sensitive products excluding embedded derivatives (a)
—

 
—

 
12,153.7

 
12,153.7

 
12,153.7

 
13,165.5

 
13,165.5

Investment borrowings
—

 
1,702.0

 
—

 
1,702.0

 
1,650.8

 
1,735.7

 
1,676.5

Borrowings related to variable interest entities
—

 
752.2

 
—

 
752.2

 
767.0

 
485.1

 
519.9

Notes payable – direct corporate obligations
—

 
1,100.3

 
—

 
1,100.3

 
1,004.2

 
978.3

 
857.9


____________________
(a)
The estimated fair value of insurance liabilities for interest-sensitive products was approximately equal to its carrying value at December 31, 2012.  This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year.

The categorization of fair value measurements, by input level, for our fixed maturity securities, equity securities, trading securities, certain other invested assets, assets held in separate accounts and embedded derivative instruments included in liabilities for insurance products at December 31, 2011 is as follows (dollars in millions):

 
Quoted prices in active markets for identical assets or liabilities (Level 1)
 
Significant other observable inputs
(Level 2) (a)
 
Significant unobservable inputs
 (Level 3) (a)
 
 
 
Total
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
15,594.4

 
$
278.1

 
 
 
$
15,872.5

United States Treasury securities and obligations of United States government corporations and agencies
—

 
303.8

 
1.6

 
 
 
305.4

States and political subdivisions
—

 
1,952.3

 
2.1

 
 
 
1,954.4

Debt securities issued by foreign governments
—

 
1.4

 
—

 
 
 
1.4

Asset-backed securities
—

 
1,334.3

 
79.7

 
 
 
1,414.0

Collateralized debt obligations
—

 
—

 
327.3

 
 
 
327.3

Commercial mortgage-backed securities
—

 
1,415.7

 
17.3

 
 
 
1,433.0

Mortgage pass-through securities
—

 
29.8

 
2.2

 
 
 
32.0

Collateralized mortgage obligations
—

 
2,051.2

 
124.8

 
 
 
2,176.0

Total fixed maturities, available for sale
—

 
22,682.9

 
833.1

 
 
 
23,516.0

Equity securities
17.9

 
87.3

 
69.9

 
 
 
175.1

Trading securities:
 

 
 

 
 

 
 
 
 

Corporate securities
—

 
67.6

 
—

 
 
 
67.6

United States Treasury securities and obligations of United States government corporations and agencies
—

 
4.9

 
—

 
 
 
4.9

States and political subdivisions
—

 
15.6

 
—

 
 
 
15.6

Asset-backed securities
—

 
.1

 
—

 
 
 
.1

Commercial mortgage-backed securities
—

 
—

 
.4

 
 
 
.4

Mortgage pass-through securities
—

 
.2

 
—

 
 
 
.2

Collateralized mortgage obligations
—

 
.7

 
—

 
 
 
.7

Equity securities
.7

 
1.4

 
—

 
 
 
2.1

Total trading securities
.7

 
90.5

 
.4

 
 
 
91.6

Investments held by variable interest entities
—

 
496.3

 
—

 
 
 
496.3

Other invested assets - derivatives
—

 
37.8

 
—

 
 
 
37.8

Assets held in separate accounts
—

 
15.0

 
—

 
 
 
15.0

Liabilities:
 

 
 

 
 

 
 
 
 

Liabilities for insurance products:
 

 
 

 
 

 
 
 
 

Interest-sensitive products
—

 
—

 
669.8

 
(b)
 
669.8

_____________
(a)
We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.
(b)
Includes $666.3 million of embedded derivatives associated with our fixed index annuity products and $3.5 million of embedded derivatives associated with a modified coinsurance agreement.
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] 

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2012 (dollars in millions):

 
December 31, 2012
 
 
 
Beginning balance as of December 31, 2011 (a)
 
Purchases, sales, issuances and settlements, net (c)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3
 
Transfers out of Level 3 (b)
 
Ending balance as of December 31, 2012
 
Amount of total gains (losses) for the year ended December 31, 2012 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
278.1

 
$
88.1

 
$
(.2
)
 
$
9.9

 
$
68.6

 
$
(89.0
)
 
$
355.5

 
$
—

United States Treasury securities and obligations of United States government corporations and agencies
1.6

 
(1.6
)
 
—

 
—

 
—

 
—

 
—

 
—

States and political subdivisions
2.1

 
(1.8
)
 
—

 
.9

 
11.9

 
—

 
13.1

 
—

Asset-backed securities
79.7

 
15.2

 
(.3
)
 
6.3

 
.5

 
(57.4
)
 
44.0

 
—

Collateralized debt obligations
327.3

 
(24.8
)
 
—

 
21.5

 
—

 
—

 
324.0

 
—

Commercial mortgage-backed securities
17.3

 
(2.5
)
 
—

 
.8

 
5.7

 
(15.1
)
 
6.2

 
—

Mortgage pass-through securities
2.2

 
(.3
)
 
—

 
—

 
—

 
—

 
1.9

 
—

Collateralized mortgage obligations
124.8

 
.2

 
—

 
(.1
)
 
5.0

 
(113.0
)
 
16.9

 
—

Total fixed maturities, available for sale
833.1

 
72.5

 
(.5
)
 
39.3

 
91.7

 
(274.5
)
 
761.6

 
—

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
6.4

 
(3.2
)
 
(3.8
)
 
.7

 
—

 
—

 
.1

 
(3.8
)
Venture capital investments
63.5

 
(34.3
)
 
(26.0
)
 
(.4
)
 
—

 
—

 
2.8

 
—

Total equity securities
69.9

 
(37.5
)
 
(29.8
)
 
.3

 
—

 
—

 
2.9

 
(3.8
)
Trading securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

States and political subdivisions
—

 
—

 
.1

 
—

 
.5

 
—

 
.6

 
.1

Collateralized debt obligations
—

 
6.9

 
.4

 
—

 
—

 
—

 
7.3

 
.4

Commercial mortgage-backed securities
.4

 
—

 
—

 
—

 
—

 
(.4
)
 
—

 
—

Collateralized mortgage obligations
—

 
4.5

 
1.3

 
—

 
—

 
—

 
5.8

 
1.3

Total trading securities
.4

 
11.4

 
1.8

 
—

 
.5

 
(.4
)
 
13.7

 
1.8

Liabilities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Liabilities for insurance products:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-sensitive products
(669.8
)
 
(54.5
)
 
(15.2
)
 
—

 
—

 
—

 
(739.5
)
 
(15.2
)
____________
(a)
We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.
(b)
For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period.
(c)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the year ended December 31, 2012 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
110.3

 
$
(22.2
)
 
$
—

 
$
—

 
$
88.1

United States Treasury securities and obligations of United States government corporations and agencies
—

 
(1.6
)
 
—

 
—

 
(1.6
)
States and political subdivisions
—

 
(1.8
)
 
—

 
—

 
(1.8
)
Asset-backed securities
19.0

 
(3.8
)
 
—

 
—

 
15.2

Collateralized debt obligations
35.4

 
(60.2
)
 
—

 
—

 
(24.8
)
Commercial mortgage-backed securities
—

 
(2.5
)
 
—

 
—

 
(2.5
)
Mortgage pass-through securities
—

 
(.3
)
 
—

 
—

 
(.3
)
Collateralized mortgage obligations
11.2

 
(11.0
)
 
—

 
—

 
.2

Total fixed maturities, available for sale
175.9

 
(103.4
)
 
—

 
—

 
72.5

Equity securities:
 
 
 
 
 
 
 
 
 
Corporate securities
—

 
(3.2
)
 
—

 
—

 
(3.2
)
Venture capital investments
—

 
(34.3
)
 
—

 
—

 
(34.3
)
Total equity securities
—

 
(37.5
)
 
—

 
—

 
(37.5
)
Trading securities:

 
 
 
 
 
 
 
 
Collateralized debt obligations
6.9

 
—

 
—

 
—

 
6.9

Collateralized mortgage obligations
4.5

 
—

 
—

 
—

 
4.5

Total trading securities
11.4

 
—

 
—

 
—

 
11.4

Liabilities:
 
 
 
 
 
 
 
 
 
Liabilities for insurance products:
 
 
 
 
 
 
 
 
 
Interest-sensitive products
(103.3
)
 
60.4

 
(50.9
)
 
39.3

 
(54.5
)
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2011 (dollars in millions):
 
 
December 31, 2011
 
 
 
 
Beginning balance as of December 31, 2010 (a)
 
Purchases, sales, issuances and settlements, net (c)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3
 
Transfers out of Level 3 (b)
 
Ending balance as of December 31, 2011
 
Amount of total gains (losses) for the year ended December 31, 2011 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
 
$
1,907.8

 
$
(292.3
)
 
$
(17.0
)
 
$
15.2

 
$
43.3

 
$
(1,378.9
)
 
$
278.1

 
$
(11.5
)
United States Treasury securities and obligations of United States government corporations and agencies
 
2.0

 
(.1
)
 
—

 
(.3
)
 
—

 
—

 
1.6

 
—

States and political subdivisions
 
2.5

 
—

 
—

 
.1

 
2.0

 
(2.5
)
 
2.1

 
—

Asset-backed securities
 
182.3

 
(4.1
)
 
—

 
4.8

 
39.4

 
(142.7
)
 
79.7

 
—

Collateralized debt obligations
 
256.5

 
69.4

 
1.5

 
(.1
)
 
—

 
—

 
327.3

 
—

Commercial mortgage-backed securities
 
—

 
—

 
—

 
.2

 
17.1

 
—

 
17.3

 
—

Mortgage pass-through securities
 
3.5

 
(1.3
)
 
—

 
—

 
—

 
—

 
2.2

 
—

Collateralized mortgage obligations
 
197.1

 
28.4

 
(2.1
)
 
3.7

 
3.9

 
(106.2
)
 
124.8

 
—

Total fixed maturities, available for sale
 
2,551.7

 
(200.0
)
 
(17.6
)
 
23.6

 
105.7

 
(1,630.3
)
 
833.1

 
(11.5
)
Equity securities
 
6.9

 
67.0

 
(3.8
)
 
(.2
)
 
—

 
—

 
69.9

 
—

Trading securities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial mortgage-backed securities
 
.4

 
—

 
—

 
—

 
—

 
—

 
.4

 
—

Collateralized mortgage obligations
 
.4

 
(.4
)
 
—

 
—

 
—

 
—

 
—

 
—

Total trading securities
 
.8

 
(.4
)
 
—

 
—

 
—

 
—

 
.4

 
—

Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Liabilities for insurance products:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-sensitive products
 
(553.2
)
 
(62.5
)
 
(54.1
)
 
—

 
—

 
—

 
(669.8
)
 
(54.1
)
_________
(a)
We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.
(b)
For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period.
(c)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the year ended December 31, 2011 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
5.8

 
$
(298.1
)
 
$
—

 
$
—

 
$
(292.3
)
United States Treasury securities and obligations of United States government corporations and agencies
—

 
(.1
)
 
—

 
—

 
(.1
)
Asset-backed securities
.2

 
(4.3
)
 
—

 
—

 
(4.1
)
Collateralized debt obligations
182.2

 
(112.8
)
 
—

 
—

 
69.4

Mortgage pass-through securities
—

 
(1.3
)
 
—

 
—

 
(1.3
)
Collateralized mortgage obligations
63.6

 
(35.2
)
 
—

 
—

 
28.4

Total fixed maturities, available for sale
251.8

 
(451.8
)
 
—

 
—

 
(200.0
)
Equity securities - venture capital investments
67.0

 
—

 
—

 
—

 
67.0

Trading securities - collateralized mortgage obligations
—

 
(.4
)
 
—

 
—

 
(.4
)
Liabilities:
 
 
 
 
 
 
 
 
 
Liabilities for insurance products:
 
 
 
 
 
 
 
 
 
Interest-sensitive products
(119.8
)
 
54.5

 
(34.6
)
 
37.4

 
(62.5
)
Fair Value, Measurement Inputs, Disclosure [Text Block] 
The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2012 (dollars in millions):

 
Fair value at December 31, 2012
 
Valuation technique(s)
 
Unobservable inputs
 
Range (weighted average)
Assets:
 
 
 
 
 
 
 
Corporate securities (a)
$
248.3

 
Discounted cash flow analysis
 
Discount margins
 
1.90% - 3.25% (2.78%)
Asset-backed securities (b)
33.3

 
Discounted cash flow analysis
 
Discount margins
 
2.78% - 3.14% (2.99%)
Collateralized debt obligations (c)
331.4

 
Discounted cash flow analysis
 
Recoveries
 
65% - 66%
 
 
 
 
 
Constant prepayment rate
 
20%
 
 
 
 
 
Discount margins
 
.95% - 8.75% (2.02%)
 
 
 
 
 
Annual default rate
 
.95% - 5.54% (3.01%)
 
 
 
 
 
Portfolio CCC %
 
1.18% - 21.56% (11.99%)
Venture capital investments (d)
2.8

 
Market multiples
 
EBITDA multiple
 
6.8
 
 
 
 
 
Revenue multiple
 
1.5
Other assets categorized as Level 3 (e)
162.4

 
Unadjusted third-party price source
 
Not applicable
 
Not applicable
Total
778.2

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Interest sensitive products (f)
739.5

 
Discounted projected embedded derivatives
 
Projected portfolio yields
 
5.35% - 5.61% (5.55%)
 
 
 
 
 
Discount rates
 
0.0 - 3.6% (1.4%)
 
 
 
 
 
Surrender rates
 
4% - 43% (19%)
________________________________
(a)
Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(b)
Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(c)
Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes.
(d)
Venture capital investments - The significant unobservable inputs used in the fair value measurement of our venture capital investments are the EBITDA multiple and revenue multiple. Generally, a significant increase (decrease) in the EBITDA or revenue multiples in isolation would result in a significantly higher (lower) fair value measurement.
(e)
Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.
(f)
Interest sensitive products - The significant unobservable inputs used in the fair value measurement of our interest sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

Fair Value, by Balance Sheet Grouping [Table Text Block] 

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] 
The adoption of ASU 2010-26 has been reflected in the accompanying updated financial statements. The revision of the financial statements affected prior period information as follows (dollars in millions, except per share amounts):

 
December 31, 2011
 
Amounts prior to adoption of ASU 2010-26
 
Effect of adoption of ASU 2010-26
 
As reported
Deferred acquisition costs
$
1,418.1

 
$
(621.0
)
 
$
797.1

Income tax assets, net
630.5

 
234.9

 
865.4

Other assets
316.9

 
(24.7
)
 
292.2

Total assets
33,332.7

 
(410.8
)
 
32,921.9

 
 
 
 
 
 
Other liabilities
548.3

 
8.0

 
556.3

Total liabilities
28,300.1

 
8.0

 
28,308.1

 
 
 
 
 
 
Accumulated other comprehensive income
625.5

 
156.1

 
781.6

Retained earnings (accumulated deficit)
42.8

 
(574.9
)
 
(532.1
)
Total shareholders' equity
5,032.6

 
(418.8
)
 
4,613.8

Total liabilities and shareholders' equity
33,332.7

 
(410.8
)
 
32,921.9



 
Year ended
 
December 31, 2011
 
Amounts prior to adoption of ASU 2010-26
 
Effect of adoption of ASU 2010-26
 
As reported
Amortization
$
432.4

 
$
(135.0
)
 
$
297.4

Other operating costs and expenses
496.5

 
208.0

 
704.5

Total benefits and expenses
3,745.4

 
73.0

 
3,818.4

Income before income taxes
379.2

 
(73.0
)
 
306.2

Tax expense on period income
139.7

 
(26.2
)
 
113.5

Net income
382.5

 
(46.8
)
 
335.7

 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
  Basic:
 
 
 
 
 
    Net income
$
1.54

 
$
(.19
)
 
$
1.35

  Diluted:
 
 
 
 
 
    Net income
1.31

 
(.16
)
 
1.15


 
Year ended
 
December 31, 2010
 
Amounts prior to adoption of ASU 2010-26
 
Effect of adoption of ASU 2010-26
 
As reported
Amortization
$
443.8

 
$
(118.8
)
 
$
325.0

Other operating costs and expenses
502.9

 
187.4

 
690.3

Total benefits and expenses
3,790.4

 
68.6

 
3,859.0

Income before income taxes
293.5

 
(68.6
)
 
224.9

Tax expense on period income
103.9

 
(24.6
)
 
79.3

Net income
284.6

 
(44.0
)
 
240.6

 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
  Basic:
 
 
 
 
 
    Net income
$
1.13

 
$
(.17
)
 
$
.96

  Diluted:
 
 
 
 
 
    Net income
.99

 
(.15
)
 
.84




 
Year ended
 
December 31, 2011
 
As originally reported
 
Effect of adoption of ASU 2010-26
 
As adjusted
Cash flows from operating activities:
 
 
 
 
 
  Deferrable policy acquisition costs
$
(428.7
)
 
$
212.0

 
$
(216.7
)
  Other operating costs
(472.3
)
 
(212.0
)
 
(684.3
)
Net cash used by operating activities
774.8

 
—

 
774.8


 
Year ended
 
December 31, 2010
 
As originally reported
 
Effect of adoption of ASU 2010-26
 
As adjusted
Cash flows from operating activities:
 
 
 
 
 
  Deferrable policy acquisition costs
$
(418.2
)
 
$
193.0

 
$
(225.2
)
  Other operating costs
(444.8
)
 
(193.0
)
 
(637.8
)
Net cash used by operating activities
734.0

 
—

 
734.0



Schedule of Interest Expense Related to 3.5 % Convertible Debentures [Table Text Block] 

INVESTMENTS (TABLES)
Fixed Maturities, Available-for-Sale by NAIC Designation [Table Text Block] 
A summary of our fixed maturity securities, available for sale, by NAIC designations (or for fixed maturity securities held by non-regulated entities, based on NRSRO ratings) as of December 31, 2012 is as follows (dollars in millions):

NAIC designation
 
Amortized cost
 
Estimated fair value
 
Percentage of total estimated fair value
1
 
$
10,133.6

 
$
11,586.8

 
47.1
%
2
 
10,309.4

 
11,779.5

 
47.8

3
 
849.3

 
902.6

 
3.7

4
 
300.4

 
314.9

 
1.3

5
 
33.7

 
29.8

 
.1

6
 
.4

 
.5

 
—

 
 
$
21,626.8

 
$
24,614.1

 
100.0
%
Schedule of Fixed Maturities, Available for Sale and Equity Securities [Table Text Block] 
At December 31, 2012, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions):

 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair
value
 
Other-than-temporary impairments included in accumulated other comprehensive income
Investment grade (a):
 
 
 
 
 
 
 
 
 
Corporate securities
$
13,531.8

 
$
2,221.4

 
$
(12.1
)
 
$
15,741.1

 
$
—

United States Treasury securities and obligations of United States government corporations and agencies
93.9

 
5.6

 
—

 
99.5

 
—

States and political subdivisions
1,840.7

 
277.3

 
(4.3
)
 
2,113.7

 
—

Debt securities issued by foreign governments
.8

 
—

 
—

 
.8

 
—

Asset-backed securities
1,002.9

 
70.9

 
(2.8
)
 
1,071.0

 
—

Collateralized debt obligations
311.5

 
7.5

 
(1.0
)
 
318.0

 
—

Commercial mortgage-backed securities
1,325.7

 
152.3

 
(.6
)
 
1,477.4

 
—

Mortgage pass-through securities
20.6

 
1.2

 
—

 
21.8

 
—

Collateralized mortgage obligations
1,157.7

 
107.2

 
(.7
)
 
1,264.2

 
(.8
)
Total investment grade fixed maturities, available for sale
19,285.6

 
2,843.4

 
(21.5
)
 
22,107.5

 
(.8
)
Below-investment grade (a):
 

 
 

 
 

 
 

 
 
Corporate securities
1,055.8

 
65.3

 
(8.1
)
 
1,113.0

 
—

States and political subdivisions
15.3

 
—

 
(.9
)
 
14.4

 
—

Asset-backed securities
360.9

 
31.4

 
(2.4
)
 
389.9

 
—

Collateralized debt obligations
5.5

 
.5

 
—

 
6.0

 
—

Collateralized mortgage obligations
903.7

 
79.6

 
—

 
983.3

 
(5.2
)
Total below-investment grade fixed maturities, available for sale
2,341.2

 
176.8

 
(11.4
)
 
2,506.6

 
(5.2
)
Total fixed maturities, available for sale
$
21,626.8

 
$
3,020.2

 
$
(32.9
)
 
$
24,614.1

 
$
(6.0
)
Equity securities
$
167.1

 
$
5.9

 
$
(1.6
)
 
$
171.4

 
 
_______________
(a)
Investment ratings – Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organization ("NRSROs") (Moody's Investor Services, Inc. ("Moody's"), S&P or Fitch Ratings ("Fitch")), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC").  NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch).  NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch).  References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above.
At December 31, 2011, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions):

 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair
value
 
Other-than-temporary impairments included in accumulated other comprehensive income
Investment grade:
 
 
 
 
 
 
 
 
 
Corporate securities
$
13,414.9

 
$
1,513.4

 
$
(86.4
)
 
$
14,841.9

 
$
—

United States Treasury securities and obligations of United States government corporations and agencies
298.0

 
7.4

 
—

 
305.4

 
—

States and political subdivisions
1,778.7

 
189.3

 
(13.6
)
 
1,954.4

 
—

Debt securities issued by foreign governments
1.3

 
.1

 
—

 
1.4

 
—

Asset-backed securities
1,227.2

 
43.3

 
(30.9
)
 
1,239.6

 
—

Collateralized debt obligations
323.1

 
1.1

 
(4.4
)
 
319.8

 
—

Commercial mortgage-backed securities
1,351.0

 
89.9

 
(7.9
)
 
1,433.0

 
—

Mortgage pass-through securities
30.5

 
1.6

 
(.1
)
 
32.0

 
—

Collateralized mortgage obligations
1,314.8

 
77.8

 
(4.0
)
 
1,388.6

 
(.3
)
Total investment grade fixed maturities, available for sale
19,739.5

 
1,923.9

 
(147.3
)
 
21,516.1

 
(.3
)
Below-investment grade:
 
 
 
 
 
 
 
 
 
Corporate securities
1,055.5

 
25.6

 
(50.5
)
 
1,030.6

 
—

Asset-backed securities
178.0

 
2.2

 
(5.8
)
 
174.4

 
—

Collateralized debt obligations
9.4

 
—

 
(1.9
)
 
7.5

 
—

Collateralized mortgage obligations
796.7

 
8.1

 
(17.4
)
 
787.4

 
(11.5
)
Total below-investment grade fixed maturities, available for sale
2,039.6

 
35.9

 
(75.6
)
 
1,999.9

 
(11.5
)
Total fixed maturities, available for sale
$
21,779.1

 
$
1,959.8

 
$
(222.9
)
 
$
23,516.0

 
$
(11.8
)
Equity securities
$
177.0

 
$
1.2

 
$
(3.1
)
 
$
175.1

 
 

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] 
Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments.  These amounts, included in shareholders' equity as of December 31, 2012 and 2011, were as follows (dollars in millions):

 
2012
 
2011
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized
$
9.8

 
$
(4.4
)
Net unrealized gains on all other investments
2,986.5

 
1,733.2

Adjustment to present value of future profits (a)
(193.0
)
 
(214.8
)
Adjustment to deferred acquisition costs
(452.9
)
 
(289.3
)
Adjustment to insurance liabilities
(489.8
)
 
—

Unrecognized net loss related to deferred compensation plan
(7.9
)
 
(8.3
)
Deferred income tax liabilities
(655.3
)
 
(434.8
)
Accumulated other comprehensive income
$
1,197.4

 
$
781.6

_________
(a)
The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003 (the date our Predecessor emerged from bankruptcy).
Fixed Maturities Available for Sale, Carrying Values and Gross Unrealized Losses [Table Text Block] 

Investments Classified by Contractual Maturity Date [Table Text Block] 
The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2012, by contractual maturity.  Actual maturities will differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.  In addition, structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
167.6

 
$
170.2

Due after one year through five years
1,605.0

 
1,754.5

Due after five years through ten years
4,375.0

 
4,932.7

Due after ten years
10,390.7

 
12,225.1

Subtotal
16,538.3

 
19,082.5

Structured securities
5,088.5

 
5,531.6

Total fixed maturities, available for sale
$
21,626.8

 
$
24,614.1

Investment Income [Table Text Block] 
Net investment income consisted of the following (dollars in millions):

 
2012
 
2011
 
2010
 
 
 
 
 
 
Fixed maturities
$
1,280.9

 
$
1,233.8

 
$
1,162.6

Trading income related to policyholder and reinsurer accounts and other special-purpose portfolios
62.4

 
14.6

 
43.7

Equity securities
4.4

 
1.7

 
.8

Mortgage loans
99.8

 
111.7

 
121.7

Policy loans
17.1

 
17.6

 
18.2

Options related to fixed index products:
 
 
 
 
 
Option income
.4

 
36.5

 
57.3

Change in value of options
25.1

 
(57.7
)
 
(29.1
)
Other invested assets
14.4

 
14.5

 
9.1

Cash and cash equivalents
.6

 
.4

 
.5

Gross investment income
1,505.1

 
1,373.1

 
1,384.8

Less investment expenses
18.7

 
19.0

 
17.9

Net investment income
$
1,486.4

 
$
1,354.1

 
$
1,366.9

Realized Gain (Loss) on Investments [Table Text Block] 
The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions):

 
2012
 
2011
 
2010
Fixed maturity securities, available for sale:
 
 
 
 
 
Realized gains on sale
$
115.4

 
$
183.1

 
$
347.1

Realized losses on sale
(15.4
)
 
(59.9
)
 
(147.7
)
Impairments:
 
 
 
 
 
Total other-than-temporary impairment losses
(1.0
)
 
(19.2
)
 
(94.8
)
Other-than-temporary impairment losses recognized in accumulated other comprehensive income (loss)
—

 
5.3

 
(4.7
)
Net impairment losses recognized
(1.0
)
 
(13.9
)
 
(99.5
)
Net realized investment gains from fixed maturities
99.0

 
109.3

 
99.9

Equity securities
.1

 
(.2
)
 
.1

Commercial mortgage loans
(3.7
)
 
(29.3
)
 
(16.9
)
Impairments of mortgage loans and other investments
(36.8
)
 
(20.7
)
 
(50.3
)
Other
22.5

 
2.7

 
(2.6
)
Net realized investment gains
$
81.1

 
$
61.8

 
$
30.2

Other than Temporary Impairment, Credit Losses Recognized in Earnings [Table Text Block] 
The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for the years ended December 31, 2012, 2011 and 2010 (dollars in millions):

 
Year ended
 
December 31,
 
2012
 
2011
 
2010
Credit losses on fixed maturity securities, available for sale, beginning of period
$
(2.0
)
 
$
(6.1
)
 
$
(27.2
)
Add:  credit losses on other-than-temporary impairments not previously recognized
—

 
(1.1
)
 
(1.7
)
Less:  credit losses on securities sold
.4

 
5.2

 
33.3

Less:  credit losses on securities impaired due to intent to sell (a)
—

 
—

 
1.9

Add:  credit losses on previously impaired securities
—

 
—

 
(12.4
)
Less:  increases in cash flows expected on previously impaired securities
—

 
—

 
—

Credit losses on fixed maturity securities, available for sale, end of period
$
(1.6
)
 
$
(2.0
)
 
$
(6.1
)
__________
(a)
Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis.

Investments With Unrealized Losses Classified by Contractual Maturity Date [Table Text Block] 
The following table sets forth the amortized cost and estimated fair value of those fixed maturities, available for sale, with unrealized losses at December 31, 2012, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.  Structured securities frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
—

 
$
—

Due after one year through five years
35.5

 
35.2

Due after five years through ten years
106.5

 
103.1

Due after ten years
513.0

 
491.3

Subtotal
655.0

 
629.6

Structured securities
286.5

 
279.0

Total
$
941.5

 
$
908.6

Schedule of Unrealized Loss on Investments By Category and Rating [Table Text Block] 


Schedule of Unrealized Loss on Investments [Table Text Block] 
The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2012 (dollars in millions):

 
 
Less than 12 months
 
12 months or greater
 
Total
Description of securities
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
States and political subdivisions
 
$
48.3

 
$
(1.8
)
 
$
68.7

 
$
(3.4
)
 
$
117.0

 
$
(5.2
)
Corporate securities
 
338.1

 
(11.2
)
 
174.5

 
(9.0
)
 
512.6

 
(20.2
)
Asset-backed securities
 
41.7

 
(.3
)
 
111.6

 
(4.9
)
 
153.3

 
(5.2
)
Collateralized debt obligations
 
19.4

 
(.4
)
 
32.5

 
(.6
)
 
51.9

 
(1.0
)
Commercial mortgage-backed securities
 
4.9

 
(.1
)
 
6.2

 
(.5
)
 
11.1

 
(.6
)
Mortgage pass-through securities
 
—

 
—

 
1.9

 
—

 
1.9

 
—

Collateralized mortgage obligations
 
27.0

 
(.4
)
 
33.8

 
(.3
)
 
60.8

 
(.7
)
Total fixed maturities, available for sale
 
$
479.4

 
$
(14.2
)
 
$
429.2

 
$
(18.7
)
 
$
908.6

 
$
(32.9
)
Equity securities
 
$
17.8

 
$
(1.6
)
 
$
—

 
$
—

 
$
17.8

 
$
(1.6
)

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2011 (dollars in millions):

 
 
Less than 12 months
 
12 months or greater
 
Total
Description of securities
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
United States Treasury securities and obligations of United States government corporations and agencies
 
$
9.1

 
$
—

 
$
.2

 
$
—

 
$
9.3

 
$
—

States and political subdivisions
 
6.9

 
(.2
)
 
155.4

 
(13.4
)
 
162.3

 
(13.6
)
Debt securities issued by foreign governments
 
.5

 
—

 
—

 
—

 
.5

 
—

Corporate securities
 
1,394.7

 
(57.0
)
 
466.2

 
(79.9
)
 
1,860.9

 
(136.9
)
Asset-backed securities
 
437.6

 
(14.5
)
 
147.5

 
(22.2
)
 
585.1

 
(36.7
)
Collateralized debt obligations
 
268.8

 
(6.3
)
 
1.7

 
—

 
270.5

 
(6.3
)
Commercial mortgage-backed securities
 
168.8

 
(5.2
)
 
33.0

 
(2.7
)
 
201.8

 
(7.9
)
Mortgage pass-through securities
 
1.2

 
—

 
2.2

 
(.1
)
 
3.4

 
(.1
)
Collateralized mortgage obligations
 
645.0

 
(20.8
)
 
29.7

 
(.6
)
 
674.7

 
(21.4
)
Total fixed maturities, available for sale
 
$
2,932.6

 
$
(104.0
)
 
$
835.9

 
$
(118.9
)
 
$
3,768.5

 
$
(222.9
)
Equity securities
 
$
41.6

 
$
(3.0
)
 
$
.4

 
$
—

 
$
42.0

 
$
(3.0
)
Schedule of Structured Securities [Table Text Block] 
The following table sets forth the par value, amortized cost and estimated fair value of structured securities, summarized by interest rates on the underlying collateral, at December 31, 2012 (dollars in millions):

 
Par
value
 
Amortized
cost
 
Estimated
fair value
Below 4 percent
$
609.4

 
$
564.1

 
$
581.8

4 percent – 5 percent
793.1

 
773.7

 
850.3

5 percent – 6 percent
2,718.1

 
2,575.9

 
2,825.0

6 percent – 7 percent
941.4

 
881.4

 
967.2

7 percent – 8 percent
159.5

 
164.8

 
176.3

8 percent and above
127.7

 
128.7

 
131.0

Total structured securities
$
5,349.2

 
$
5,088.6

 
$
5,531.6


The amortized cost and estimated fair value of structured securities at December 31, 2012, summarized by type of security, were as follows (dollars in millions):

 
 
 
Estimated fair value
Type
Amortized
cost
 
Amount
 
Percent
of fixed
maturities
Pass-throughs, sequential and equivalent securities
$
1,376.6

 
$
1,492.7

 
6.1
%
Planned amortization classes, target amortization classes and accretion-directed bonds
678.9

 
746.8

 
3.0

Commercial mortgage-backed securities
1,325.7

 
1,477.4

 
6.0

Asset-backed securities
1,363.9

 
1,460.9

 
6.0

Collateralized debt obligations
317.0

 
324.1

 
1.3

Other
26.5

 
29.7

 
.1

Total structured securities
$
5,088.6

 
$
5,531.6

 
22.5
%
Weighted Average Loan-To-Value Ratio for Outstanding Mortgage Loans [Table Text Block] 
The following table provides the carrying value and estimated fair value of our outstanding mortgage loans and the underlying collateral as of December 31, 2012 (dollars in millions):

 
 
 
Estimated fair
value
Loan-to-value ratio (a)
Carrying value
 
Mortgage loans
 
Collateral
Less than 60%
$
758.9

 
$
838.7

 
$
2,172.6

60% to 70%
323.1

 
342.7

 
498.2

Greater than 70% to 80%
266.9

 
281.5

 
358.7

Greater than 80% to 90%
114.1

 
118.5

 
135.0

Greater than 90%
110.2

 
100.7

 
117.3

Total
$
1,573.2

 
$
1,682.1

 
$
3,281.8

________________
(a)
Loan-to-value ratios are calculated as the ratio of:  (i) the carrying value of the commercial mortgage loans; to (ii) the estimated fair value of the underlying collateral.

LIABILITIES FOR INSURANCE PRODUCTS (TABLES)
Schedule of Insurance Liabilities, by Product Segment [Table Text Block] 
These liabilities consisted of the following (dollars in millions):

 
Withdrawal assumption
 
Mortality assumption
 
Interest rate assumption
 
2012
 
2011
 
 
 
 
 
 
 
 
 
 
Future policy benefits:
 
 
 
 
 
 
 
 
 
Interest-sensitive products:
 
 
 
 
 
 
 
 
 
Investment contracts
N/A
 
N/A
 
(c)
 
$
9,648.9

 
$
9,832.9

Universal life contracts
N/A
 
N/A
 
N/A
 
3,244.3

 
3,332.6

Total interest-sensitive products
 
 
 
 
 
 
12,893.2

 
13,165.5

Traditional products:
 
 
 
 
 
 
 
 
 
Traditional life insurance contracts
Company experience
 
(a)
 
5%
 
2,389.6

 
2,396.2

Limited-payment annuities
Company experience, if applicable
 
(b)
 
4%
 
903.5

 
848.8

Individual and group accident and health
Company experience
 
Company experience
 
6%
 
7,903.2

 
7,237.7

Total traditional products
 
 
 
 
 
 
11,196.3

 
10,482.7

Claims payable and other policyholder funds
N/A
 
N/A
 
N/A
 
985.1

 
1,034.3

Liabilities related to separate accounts
N/A
 
N/A
 
N/A
 
14.9

 
15.0

Total
 
 
 
 
 
 
$
25,089.5

 
$
24,697.5

____________________
(a)
Principally, modifications of the 1965 ‑ 70 and 1975 - 80 Basic, Select and Ultimate Tables.
(b)
Principally, the 1984 United States Population Table and the NAIC 1983 Individual Annuitant Mortality Table.
(c)
In 2012 and 2011, all of this liability represented account balances where future benefits are not guaranteed.
Liability for Unpaid Claims Adjustment Expense by Expense Type [Table Text Block] 
Changes in the unpaid claims reserve (included in claims payable) and disabled life reserves related to accident and health insurance (included in individual and group accident and health liabilities) were as follows (dollars in millions):

 
2012
 
2011
 
2010
Balance, beginning of the year
$
1,637.3

 
$
1,543.7

 
$
1,444.0

Incurred claims (net of reinsurance) related to:
 
 
 
 
 
Current year
1,570.1

 
1,545.8

 
1,505.8

Prior years (a)
(56.4
)
 
(41.7
)
 
(15.6
)
Total incurred
1,513.7

 
1,504.1

 
1,490.2

Interest on claim reserves
77.8

 
78.4

 
73.4

Paid claims (net of reinsurance) related to:
 
 
 
 
 
Current year
891.3

 
866.5

 
827.0

Prior years
663.9

 
626.2

 
694.1

Total paid
1,555.2

 
1,492.7

 
1,521.1

Net change in balance for reinsurance assumed and ceded
5.7

 
3.8

 
57.2

Balance, end of the year
$
1,679.3

 
$
1,637.3

 
$
1,543.7

___________
(a)
The reserves and liabilities we establish are necessarily based on estimates, assumptions and prior years' statistics. Such amounts will fluctuate based upon the estimation procedures used to determine the amount of unpaid losses. It is possible that actual claims will exceed our reserves and have a material adverse effect on our results of operations and financial condition.
INCOME TAXES (TABLES)
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] 
The components of income tax expense were as follows (dollars in millions):

 
2012
 
2011
 
2010
Current tax expense
$
12.5

 
$
11.9

 
$
9.7

Deferred tax expense
117.4

 
101.6

 
69.6

Valuation allowance applicable to current year income
(60.3
)
 
—

 
—

Income tax expense calculated based on annual effective tax rate
69.6

 
113.5

 
79.3

Valuation allowance reduction applicable to income in future years
(111.2
)
 
(143.0
)
 
(95.0
)
Deferred tax benefit related to loss on extinguishment of debt and other items
(23.7
)
 
—

 
—

Total income tax benefit
$
(65.3
)
 
$
(29.5
)
 
$
(15.7
)
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] 
A reconciliation of the U.S. statutory corporate tax rate to the effective rate reflected in the consolidated statement of operations is as follows:
 
 
2012
 
2011
 
2010
U.S. statutory corporate rate
35.0
 %
 
35.0
 %
 
35.0
 %
Valuation allowance
(110.1
)
 
(46.7
)
 
(42.2
)
Other nondeductible benefits
32.3

 
.7

 
(.6
)
State taxes
1.4

 
.9

 
.9

Provision for tax issues, tax credits and other
(.5
)
 
.5

 
(.1
)
Effective tax rate
(41.9
)%
 
(9.6
)%
 
(7.0
)%
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] 
The components of the Company's income tax assets and liabilities were as follows (dollars in millions):

 
2012
 
2011
Deferred tax assets:
 
 
 
Net federal operating loss carryforwards
$
1,330.2

 
$
1,445.2

Net state operating loss carryforwards
16.2

 
16.8

Tax credits
39.2

 
32.6

Capital loss carryforwards
296.2

 
342.3

Deductible temporary differences:
 

 
 

Insurance liabilities
746.3

 
744.4

Other
86.0

 
64.8

Gross deferred tax assets
2,514.1

 
2,646.1

Deferred tax liabilities:
 

 
 

Investments
(24.1
)
 
(24.2
)
Present value of future profits and deferred acquisition costs
(325.2
)
 
(363.7
)
Accumulated other comprehensive income
(655.3
)
 
(434.8
)
Gross deferred tax liabilities
(1,004.6
)
 
(822.7
)
Net deferred tax assets before valuation allowance
1,509.5

 
1,823.4

Valuation allowance
(766.9
)
 
(938.4
)
Net deferred tax assets
742.6

 
885.0

Current income taxes accrued
(25.7
)
 
(19.6
)
Income tax assets, net
$
716.9

 
$
865.4

Summary of Valuation Allowance [Table Text Block] 
Changes in our valuation allowance are summarized as follows (dollars in millions):

Balance, December 31, 2009
$
1,176.4

 
Decrease in 2010
(95.0
)
(a)
Balance, December 31, 2010
1,081.4

 
Decrease in 2011
(143.0
)
(b)
Balance, December 31, 2011
938.4

 
Decrease in 2012
(171.5
)
(c)
Balance, December 31, 2012
$
766.9

 
____________________
(a)
The $95.0 million reduction to the deferred tax valuation allowance during 2010 resulted from the utilization of NOLs and capital loss carryforwards and higher projections of future taxable income based on evidence we consider to be objective and verifiable.
(b)
The $143.0 million reduction to the deferred tax valuation allowance during 2011 resulted primarily from our recent higher levels of operating income when projecting future taxable income.
(c)
The $171.5 million reduction to the deferred tax valuation allowance during 2012 resulted primarily from: (i) higher taxable income in 2012 (including investment gains); and (ii) our recent higher levels of operating income when projecting future taxable income as further discussed above.

Summary of Operating Loss Carryforwards [Table Text Block] 

As of December 31, 2012, we had $3.8 billion of federal NOLs and $.8 billion of capital loss carryforwards. The following table summarizes the expiration dates of our loss carryforwards assuming the IRS does not ultimately agree with the positions we have taken with respect to the allocation of CODI and the loss on our investment in Senior Health, both as further described below (dollars in millions):

Year of expiration
 
Net operating loss carryforwards (a)
 
Capital loss
 
Total loss
 
 
Life
 
Non-life
 
carryforwards
 
carryforwards
2013
 
$
—

 
 
 
$
—

 
 
 
$
808.6

(b)
$
808.6

2014
 
—

 
 
 
—

 
 
 
28.6

 
28.6

2015
 
—

 
 
 
—

 
 
 
9.1

 
9.1

2018
 
475.0

 
(a)
 
—

 
 
 
—

 
475.0

2021
 
29.5

 
 
 
—

 
 
 
—

 
29.5

2022
 
204.1

 
 
 
—

 
 
 
—

 
204.1

2023
 
—

 
(b)
 
2,603.1

 
(a)
 
—

 
2,603.1

2024
 
—

 
 
 
3.2

 
 
 
—

 
3.2

2025
 
—

 
 
 
118.8

 
 
 
—

 
118.8

2027
 
—

 
 
 
216.8

 
 
 
—

 
216.8

2028
 
—

 
 
 
.5

 
 
 
—

 
.5

2029
 
—

 
 
 
148.9

 
 
 
—

 
148.9

2032
 
—

 
 
 
.8

 
 
 
—

 
.8

Total
 
$
708.6

 
 
 
$
3,092.1

 
 
 
$
846.3

 
$
4,647.0

_________________________
(a)
The life/non-life allocation summarized above assumes the IRS does not ultimately agree with the tax position we have taken in our tax returns with respect to the allocation of CODI.  If the IRS ultimately agrees with our tax position, approximately $631 million of the non-life NOLs expiring in 2023 would be characterized as life NOLs expiring in 2018.
(b)
The allocation of the capital loss carryforwards summarized above assumes the IRS does not ultimately agree with the tax position we have taken with respect to our investment in Senior Health, which was worthless when it was transferred to the Independent Trust in 2008. If the IRS ultimately agrees with our tax position of classifying this loss as ordinary, capital loss carryforwards expiring in 2013 would decrease and life NOLs expiring in 2023 would increase by $742.0 million.
Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block] 
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2012 and 2011 is as follows (dollars in millions):

 
Years ended December 31,
 
2012
 
2011
 
 
 
 
Balance at beginning of year
$
318.2

 
$
311.1

Increase based on tax positions taken in prior years
7.3

 
7.1

Decrease based on tax positions taken in prior years
(15.0
)
 
—

Balance at end of year
$
310.5

 
$
318.2

NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (TABLES)
Schedule of Long-term Debt Instruments [Table Text Block] 
The following notes payable were direct corporate obligations of the Company as of December 31, 2012 and 2011 (dollars in millions):

 
2012
 
2011
New Senior Secured Credit Agreement (as defined below)
$
644.6

 
$
—

7.0% Debentures
93.0

 
293.0

Previous Senior Secured Credit Agreement (as defined below)
—

 
255.2

6.375% Senior Secured Notes due October 2020 (the "6.375% Notes")
275.0

 
—

9.0% Senior Secured Notes due January 2018 (the "9.0% Notes")
—

 
275.0

Senior Health Note due November 12, 2013 (the "Senior Health Note")
—

 
50.0

Unamortized discount on New Senior Secured Credit Agreement
(5.0
)
 
—

Unamortized discount on 7.0% Debentures
(3.4
)
 
(12.9
)
Unamortized discount on Previous Senior Secured Credit Agreement
—

 
(2.4
)
Direct corporate obligations
$
1,004.2

 
$
857.9

Schedule of Maturities of Long-term Debt [Table Text Block] 

Scheduled Repayment of our Direct Corporate Obligations

The scheduled repayment of our direct corporate obligations was as follows at December 31, 2012 (dollars in millions):

Year ending December 31,
 
2013
$
51.1

2014
60.5

2015
79.2

2016
153.5

2017
4.2

Thereafter
664.1

 
$
1,012.6

Sources and uses of recapitalization transactions [Table Text Block] 
In the third quarter of 2012, as further discussed below, we completed a comprehensive recapitalization plan. The following table sets forth the sources and uses of cash from the recapitalization transactions (dollars in millions):

Sources:
 
 
New Senior Secured Credit Agreement
$
669.5

 
Issuance of 6.375% Notes
275.0

 
   Total sources
$
944.5

 
 
 
Uses:
 
 
Cash on hand for general corporate purposes
$
13.7

 
Repurchase of $200 million principal amount of 7.0% Debentures pursuant to Debenture Repurchase Agreement
355.1

 
Repayment of Previous Senior Secured Credit Agreement
223.8

 
Repayment of $275.0 million principal amount of 9.0% Notes, including redemption premium
322.7

 
Debt issuance costs
23.1

 
Accrued interest
6.1

 
   Total uses
$
944.5



COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES (TABLES)
Operating Leases and Sponsorship Agreements, Future Required Minimum Payments [Table Text Block]
Future required minimum payments as of December 31, 2012, were as follows (dollars in millions):

2013
$
44.3

2014
31.4

2015
21.1

2016
17.8

2017
15.2

Thereafter
25.3

Total
$
155.1

AGENT DEFERRED COMPENSATION PLAN (TABLES)
Schedule of Assumptions Used [Table Text Block] 
We used the following assumptions for the deferred compensation plan to calculate:

 
2012
 
2011
Benefit obligations:
 
 
 
Discount rate
4.00
%
 
4.50
%
Net periodic cost:
 
 
 
Discount rate
4.50
%
 
5.50
%
Schedule of Expected Benefit Payments [Table Text Block] 
The benefits expected to be paid pursuant to our agent deferred compensation plan as of December 31, 2012 were as follows (dollars in millions):

2013
$
5.5

2014
6.0

2015
6.2

2016
6.4

2017
6.7

2018 - 2022
39.1

SHAREHOLDERS' EQUITY (TABLES)
Schedule of Common Stock Outstanding Roll Forward [Table Text Block] 
Changes in the number of shares of common stock outstanding were as follows (shares in thousands):

 
2012
 
2011
 
2010
 
Balance, beginning of year
241,305

 
251,084

 
250,786

 
Treasury stock purchased and retired
(21,533
)
 
(11,120
)
 
—

 
Stock options exercised
1,191

 
862

 
33

 
Restricted stock vested
539

(a)
479

(a)
265

(a)
Balance, end of year
221,502

 
241,305

 
251,084

 

____________________
(a)
In 2012, 2011 and 2010, such amount was reduced by 237 thousand shares, 200 thousand shares and 74 thousand shares, respectively, which were tendered for the payment of federal and state taxes owed on the vesting of restricted stock.
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] 
A summary of the Company's stock option activity and related information for 2012 is presented below (shares in thousands; dollars in millions, except per share amounts):

 
Shares
 
Weighted average exercise price
 
Weighted average remaining life (in years)
 
Aggregate intrinsic value
Outstanding at the beginning of the year
7,712

 
$
10.13

 
 
 
 
Options granted
1,389

 
7.55

 
 
 
 
Exercised
(1,191
)
 
3.14

 
 
 
$
2.7

Forfeited or terminated
(1,255
)
 
16.13

 
 
 
 
Outstanding at the end of the year
6,655

 
9.72

 
3.4
 
$
30.2

Options exercisable at the end of the year
3,715

 
 
 
1.7
 
$
15.5

Available for future grant
9,713

 
 
 
 
 
 

A summary of the Company's stock option activity and related information for 2011 is presented below (shares in thousands; dollars in millions, except per share amounts):

 
Shares
 
Weighted average exercise price
 
Weighted average remaining life (in years)
 
Aggregate intrinsic value
Outstanding at the beginning of the year
9,754

 
$
10.87

 
 
 
 
Options granted
1,262

 
7.38

 
 
 
 
Exercised
(862
)
 
2.52

 
 
 
$
1.3

Forfeited or terminated
(2,442
)
 
14.35

 
 
 
 
Outstanding at the end of the year
7,712

 
10.13

 
3.1
 
$
31.3

Options exercisable at the end of the year
4,135

 
 
 
1.8
 
$
18.0

Available for future grant
11,044

 
 
 
 
 
 

A summary of the Company's stock option activity and related information for 2010 is presented below (shares in thousands; dollars in millions, except per share amounts):

 
Shares
 
Weighted average exercise price
 
Weighted average remaining life (in years)
 
Aggregate intrinsic value
Outstanding at the beginning of the year
8,560

 
$
11.65

 
 
 
 
Options granted
1,849

 
6.43

 
 
 
 
Exercised
(33
)
 
2.83

 
 
 
$
—

Forfeited or terminated
(622
)
 
8.81

 
 
 
 
Outstanding at the end of the year
9,754

 
10.87

 
3.6
 
$
38.3

Options exercisable at the end of the year
4,374

 
 
 
2.9
 
$
24.1

Available for future grant
9,326

 
 
 
 
 
 
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] 
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions:

 
2012
 
2011
 
2010
 
Grants
 
Grants
 
Grants
Weighted average risk-free interest rates
.9
%
 
2.2
%
 
2.5
%
Weighted average dividend yields
—
%
 
—
%
 
—
%
Volatility factors
108
%
 
107
%
 
105
%
Weighted average expected life (in years)
4.7

 
4.8

 
4.7

Weighted average fair value per share
$
5.76

 
$
5.68

 
$
4.90

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block] 
The following table summarizes information about stock options outstanding at December 31, 2012 (shares in thousands):

 
 
 
 
Options outstanding
 
Options exercisable
Range of exercise prices
 
Number outstanding
 
Remaining life (in years)
 
Average exercise price
 
Number exercisable
 
Average exercise price
$1.13
 
171

 
1.3
 
$
1.13

 
171

 
$
1.13

$3.05 - $3.11
 
781

 
1.4
 
3.05

 
781

 
3.05

$4.79 - $6.77
 
1,150

 
4.2
 
6.40

 
527

 
6.36

$7.38 - $7.74
 
2,247

 
5.7
 
7.45

 
—

 
—

$8.29 - $11.20
 
1,054

 
0.7
 
10.38

 
984

 
10.53

$17.87 - $21.67
 
849

 
1.7
 
20.82

 
849

 
20.82

$22.42 - $25.45
 
403

 
3.1
 
23.20

 
403

 
23.20

 
 
6,655

 
 
 
 
 
3,715

 
 
Schedule of Nonvested Share Activity [Table Text Block] 
A summary of the Company's non-vested restricted stock activity for 2012 is presented below (shares in thousands):
 
Shares
 
Weighted average grant date fair value
Non-vested shares, beginning of year
1,318

 
$
6.09

Granted
686

 
7.35

Vested
(777
)
 
5.64

Forfeited
(65
)
 
7.05

Non-vested shares, end of year
1,162

 
7.08

Schedule of Earnings Per Share Reconciliation 
A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands):

 
2012
 
2011
 
2010
Net income for basic earnings per share
$
221.0

 
$
335.7

 
$
240.6

Add:  interest expense on 7.0% Debentures, net of income taxes
12.2

 
14.7

 
13.3

Net income for diluted earnings per share
$
233.2

 
$
350.4

 
$
253.9

Shares:
 

 
 

 
 
Weighted average shares outstanding for basic earnings per share
233,685

 
247,952

 
250,973

Effect of dilutive securities on weighted average shares:
 

 
 

 
 
7% Debentures
44,037

 
53,367

 
49,014

Stock options, restricted stock and performance units
2,762

 
2,513

 
1,871

Warrants
943

 
249

 
—

Dilutive potential common shares
47,742

 
56,129

 
50,885

Weighted average shares outstanding for diluted earnings per share
281,427

 
304,081

 
301,858

Schedule of Share-based Compensation, Performance Shares, Activity [Table Text Block] 
A summary of the Company's performance units is presented below (shares in thousands):

 
Total shareholder return awards
 
Operating return on equity awards
 
Pre-tax operating income awards
Awards outstanding at December 31, 2009
331

 
825

 
—

Granted in 2010
—

 
—

 
687

Forfeited
(331
)
 
(270
)
 
(35
)
Awards outstanding at December 31, 2010
—

 
555

 
652

Granted in 2011
—

 
—

 
417

Forfeited
—

 
(555
)
 
(233
)
Awards outstanding at December 31, 2011
—

 
—

 
836

Granted in 2012
203

 
—

 
203

Forfeited
(10
)
 
—

 
(62
)
Awards outstanding at December 31, 2012
193

 
—

 
977

OTHER OPERATING STATEMENT DATA (TABLES)
Schedule of Insurance Policy Income [Table Text Block] 
Insurance policy income consisted of the following (dollars in millions):

 
2012
 
2011
 
2010
Direct premiums collected
$
3,883.1

 
$
4,214.7

 
$
4,252.0

Reinsurance assumed
70.4

 
87.7

 
99.4

Reinsurance ceded
(237.1
)
 
(243.2
)
 
(264.7
)
Premiums collected, net of reinsurance
3,716.4

 
4,059.2

 
4,086.7

Change in unearned premiums
20.8

 
17.2

 
2.9

Less premiums on universal life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities
(1,296.7
)
 
(1,693.5
)
 
(1,730.1
)
Premiums on traditional products with mortality or morbidity risk
2,440.5

 
2,382.9

 
2,359.5

Fees and surrender charges on interest-sensitive products
314.9

 
307.6

 
310.5

Insurance policy income
$
2,755.4

 
$
2,690.5

 
$
2,670.0

Schedule of Other Operating Cost and Expense, by Component [Table Text Block] 
Other operating costs and expenses were as follows (dollars in millions):

 
2012
 
2011
 
2010
Commission expense
$
115.8

 
$
131.7

 
$
130.9

Salaries and wages
226.6

 
212.2

 
216.1

Other
476.9

 
360.6

 
343.3

Total other operating costs and expenses
$
819.3

 
$
704.5

 
$
690.3

Schedule of Changes In Present Value of Future Insuance Profits [Table Text Block] 
Changes in the present value of future profits were as follows (dollars in millions):

 
2012
 
2011
 
2010
Balance, beginning of year
$
697.7

 
$
1,008.6

 
$
1,175.9

Amortization
(93.5
)
 
(113.7
)
 
(139.0
)
Amounts related to fair value adjustment of fixed maturities, available for sale
21.8

 
(197.2
)
 
(28.3
)
Balance, end of year
$
626.0

 
$
697.7

 
$
1,008.6

Schedule of Changes in Deferred Acquisition Costs [Table Text Block] 
Changes in deferred acquisition costs were as follows (dollars in millions):

 
2012
 
2011
 
2010
Balance, beginning of year
$
797.1

 
$
999.6

 
$
1,063.0

Additions
191.7

 
216.7

 
231.8

Amortization
(195.5
)
 
(183.7
)
 
(186.0
)
Amounts related to fair value adjustment of fixed maturities, available for sale
(163.6
)
 
(235.5
)
 
(98.5
)
Other adjustments
—

 
—

 
(10.7
)
Balance, end of year
$
629.7

 
$
797.1

 
$
999.6

CONSOLIDATED STATEMENT CASH FLOWS (TABLES)
Reconciliation Of Net Income To Net Cash Provided By Operating Activities [Table Text Block] 
The following reconciles net income to net cash provided by operating activities (dollars in millions):

 
2012
 
2011
 
2010
Cash flows from operating activities:
 
 
 
 
 
Net income
$
221.0

 
$
335.7

 
$
240.6

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 

 
 
Amortization and depreciation
315.0

 
323.6

 
346.5

Income taxes
(71.8
)
 
(32.9
)
 
(16.1
)
Insurance liabilities
330.0

 
346.4

 
437.6

Accrual and amortization of investment income
(100.7
)
 
64.5

 
(62.0
)
Deferral of policy acquisition costs
(191.7
)
 
(216.7
)
 
(225.2
)
Net realized investment gains
(81.1
)
 
(61.8
)
 
(30.2
)
Loss on extinguishment of debt
200.2

 
3.4

 
6.8

Other
14.0

 
12.6

 
36.0

Net cash provided by operating activities
$
634.9

 
$
774.8

 
$
734.0

Schedule of Other Significant Noncash Transactions [Table Text Block] 
Non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions):

 
2012
 
2011
 
2010
Stock options, restricted stock and performance units
$
13.7

 
$
5.2

 
$
11.4

Change in securities lending collateral
—

 
—

 
103.7

Change in securities lending payable
—

 
—

 
(103.7
)
STATUTORY INFORMATION (TABLES)
Statutory Accounting Practices Disclosure [Table Text Block]
The Company's insurance subsidiaries reported the following amounts to regulatory agencies, after appropriate elimination of intercompany accounts among such subsidiaries (dollars in millions):

 
2012
 
2011
Statutory capital and surplus
$
1,560.4

 
$
1,578.1

Asset valuation reserve
222.2

 
168.4

Interest maintenance reserve
585.8

 
552.0

Total
$
2,368.4

 
$
2,298.5

BUSINESS SEGMENTS (TABLES)
Schedule of Segment Reporting Information, by Segment [Table Text Block] 
Operating information by segment was as follows (dollars in millions):

 
2012
 
2011
 
2010
Revenues:
 
 
 
 
 
Bankers Life:
 
 
 
 
 
Insurance policy income:
 
 
 
 
 
Annuities
$
28.4

 
$
33.4

 
$
39.5

Health
1,342.7

 
1,347.3

 
1,366.0

Life
286.3

 
231.7

 
190.7

Net investment income (a)
838.9

 
766.3

 
758.9

Fee revenue and other income (a)
15.2

 
13.8

 
12.8

Total Bankers Life revenues
2,511.5

 
2,392.5

 
2,367.9

Washington National:
 

 
 

 
 
Insurance policy income:
 

 
 

 
 
Health
572.4

 
565.7

 
559.3

Life
15.2

 
15.6

 
16.8

Other
2.8

 
3.8

 
4.9

Net investment income (a)
204.1

 
189.5

 
185.4

Fee revenue and other income (a)
1.1

 
1.0

 
1.1

Total Washington National revenues
795.6

 
775.6

 
767.5

Colonial Penn:
 

 
 

 
 
Insurance policy income:
 

 
 

 
 
Health
5.2

 
5.9

 
6.8

Life
212.6

 
197.1

 
188.1

Net investment income (a)
40.4

 
41.1

 
39.3

Fee revenue and other income (a)
.7

 
.9

 
.7

Total Colonial Penn revenues
258.9

 
245.0

 
234.9

Other CNO Business:
 

 
 

 
 
Insurance policy income:
 

 
 

 
 
Annuities
10.6

 
12.2

 
12.9

Health
25.7

 
27.7

 
29.9

Life
252.9

 
248.4

 
252.5

Other
.6

 
1.7

 
2.6

Net investment income (a)
340.6

 
344.1

 
364.6

Total Other CNO Business revenues
630.4

 
634.1

 
662.5

Corporate operations:
 

 
 

 
 
Net investment income
62.4

 
13.1

 
18.7

Fee and other income
2.8

 
2.5

 
2.2

Total corporate revenues
65.2

 
15.6

 
20.9

Total revenues
4,261.6

 
4,062.8

 
4,053.7


(continued on next page)

(continued from previous page)
 
2012
 
2011
 
2010
Expenses:
 
 
 
 
 
Bankers Life:
 
 
 
 
 
Insurance policy benefits
$
1,642.9

 
$
1,570.1

 
$
1,607.3

Amortization
187.6

 
206.3

 
207.9

Interest expense on investment borrowings
5.3

 
4.8

 
1.0

Other operating costs and expenses
374.8

 
320.4

 
314.2

Total Bankers Life expenses
2,210.6

 
2,101.6

 
2,130.4

Washington National:
 

 
 

 
 
Insurance policy benefits
447.1

 
464.5

 
450.6

Amortization
47.7

 
44.9

 
46.6

Interest expense on investment borrowings
2.8

 
.7

 
—

Other operating costs and expenses
170.9

 
169.4

 
169.9

Total Washington National expenses
668.5

 
679.5

 
667.1

Colonial Penn:
 

 
 

 
 
Insurance policy benefits
161.1

 
150.1

 
144.8

Amortization
15.0

 
15.0

 
12.5

Other operating costs and expenses
91.4

 
84.6

 
73.4

Total Colonial Penn expenses
267.5

 
249.7

 
230.7

Other CNO Business:
 

 
 

 
 
Insurance policy benefits
508.4

 
479.9

 
521.0

Amortization
33.8

 
39.8

 
48.7

Interest expense on investment borrowings
19.9

 
20.3

 
20.0

Other operating costs and expenses
117.1

 
78.8

 
82.0

Total Other CNO Business expenses
679.2

 
618.8

 
671.7

Corporate operations:
 

 
 

 
 
Interest expense on corporate debt
66.2

 
76.3

 
79.3

Interest expense on borrowings of variable interest entities
20.0

 
11.8

 
12.9

Interest expense on investment borrowings
.4

 
.2

 
—

Loss on extinguishment of debt
200.2

 
3.4

 
6.8

Other operating costs and expenses
65.1

 
51.3

 
50.8

Total corporate expenses
351.9

 
143.0

 
149.8

Total expenses
4,177.7

 
3,792.6

 
3,849.7

Income (loss) before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes:
 

 
 

 
 
Bankers Life
300.9

 
290.9

 
237.5

Washington National
127.1

 
96.1

 
100.4

Colonial Penn
(8.6
)
 
(4.7
)
 
4.2

Other CNO Business
(48.8
)
 
15.3

 
(9.2
)
Corporate operations
(286.7
)
 
(127.4
)
 
(128.9
)
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes
$
83.9

 
$
270.2

 
$
204.0

___________________
(a)
It is not practicable to provide additional components of revenue by product or services.

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block] 
A reconciliation of segment revenues and expenses to consolidated revenues and expenses is as follows (dollars in millions):

 
2012
 
2011
 
2010
Total segment revenues                                                                                            
$
4,261.6

 
$
4,062.8

 
$
4,053.7

Net realized investment gains (losses)                                                                                            
81.1

 
61.8

 
30.2

Consolidated revenues                                                                                       
$
4,342.7

 
$
4,124.6

 
$
4,083.9

 
 
 
 
 
 
Total segment expenses                                                                                            
$
4,177.7

 
$
3,792.6

 
$
3,849.7

Insurance policy benefits - fair value changes in embedded derivative liabilities (a)
4.4

 
34.4

 
—

Amortization related to fair value changes in embedded derivative liabilities (a)
(1.6
)
 
(14.0
)
 
—

Amortization related to net realized investment gains (losses)
6.5

 
5.4

 
9.3

Consolidated expenses                                                                                       
$
4,187.0

 
$
3,818.4

 
$
3,859.0



____________
(a)
Prior to June 30, 2011, we maintained a specific block of investments in our trading securities account (which we carried at estimated fair value with changes in such value recognized as investment income from policyholder and reinsurer accounts and other special-purpose portfolios) to offset the income statement volatility caused by the effect of interest rate fluctuations on the value of embedded derivatives related to our fixed index annuity products.  During the second quarter of 2011, we sold this trading portfolio, which resulted in $2.8 million and $20.4 million of decreased earnings in 2012 and 2011, respectively, since the volatility caused by the accounting requirements to record embedded options at fair value was no longer being offset.
Schedule of Balance Sheet Information, by Segment [Table Text Block] 
Segment balance sheet information was as follows (dollars in millions):

 
2012
 
2011
Assets:
 
 
 
Bankers Life
$
17,637.7

 
$
16,800.0

Washington National
4,499.5

 
4,360.4

Colonial Penn
917.8

 
879.2

Other CNO Business
8,679.5

 
8,964.9

Corporate operations
2,396.9

 
1,917.4

Total assets
$
34,131.4

 
$
32,921.9

Liabilities:
 
 
 
Bankers Life
$
15,590.1

 
$
14,757.1

Washington National
3,425.6

 
3,449.1

Colonial Penn
749.6

 
742.4

Other CNO Business
7,451.1

 
7,857.8

Corporate operations
1,865.7

 
1,501.7

Total liabilities
$
29,082.1

 
$
28,308.1

Schedule of Selected Financial Information, by Segment [Table Text Block] 
The following table presents selected financial information of our segments (dollars in millions):

Segment
Present value of future profits
 
Deferred acquisition costs
 
Insurance liabilities
2012
 
 
 
 
 
Bankers Life
$
168.8

 
$
332.8

 
$
14,548.0

Washington National
375.8

 
157.3

 
2,911.7

Colonial Penn
63.6

 
57.5

 
763.1

Other CNO Business
17.8

 
82.1

 
6,866.7

Total
$
626.0

 
$
629.7

 
$
25,089.5

2011
 
 
 
 
 
Bankers Life
$
201.8

 
$
491.0

 
$
13,720.4

Washington National
402.0

 
142.3

 
2,954.7

Colonial Penn
72.6

 
51.5

 
725.5

Other CNO Business
21.3

 
112.3

 
7,296.9

Total
$
697.7

 
$
797.1

 
$
24,697.5

QUARTERLY FINANCIAL DATA (TABLES)
Schedule of Quarterly Financial Information [Table Text Block]
Quarterly financial data (unaudited) were as follows (dollars in millions, except per share data):

2012
1st Qtr.
 
2nd Qtr.
 
3rd Qtr.
 
4th Qtr.
Revenues
$
1,123.9

 
$
1,065.0

 
$
1,093.0

 
$
1,060.8

Income (loss) before income taxes
$
92.3

 
$
104.5

 
$
(158.8
)
 
$
117.7

Income tax expense (benefit)
33.2

 
38.8

 
(153.8
)
 
16.5

Net income (loss)
$
59.1

 
$
65.7

 
$
(5.0
)
 
$
101.2

Earnings per common share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Net income (loss)
$
.25

 
$
.28

 
$
(.02
)
 
$
.45

Diluted:
 
 
 
 
 
 
 
Net income (loss)
$
.21

 
$
.24

 
$
(.02
)
 
$
.41

 
 
 
 
 
 
 
 
2011
1st Qtr.
 
2nd Qtr.
 
3rd Qtr.
 
4th Qtr.
Revenues
$
1,049.2

 
$
1,032.0

 
$
992.3

 
$
1,051.1

Income before income taxes
$
70.4

 
$
71.8

 
$
61.7

 
$
102.3

Income tax expense (benefit)
25.0

 
25.4

 
(117.8
)
 
37.9

Net income
$
45.4

 
$
46.4

 
$
179.5

 
$
64.4

Earnings per common share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Net income
$
.18

 
$
.18

 
$
.73

 
$
.27

Diluted:
 
 
 
 
 
 
 
Net income
$
.16

 
$
.16

 
$
.61

 
$
.23

INVESTMENTS IN VARIABLE INTEREST ENTITIES (TABLES)
Schedule of Impact On Balance Sheet of Consolidating Variable Interest Entities [Table Text Block] 
The following table provides supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions):
 
December 31, 2012
 
VIEs
 
Eliminations
 
Net effect on
consolidated
balance sheet
Assets:
 
 
 
 
 
Investments held by variable interest entities
$
814.3

 
$
—

 
$
814.3

Notes receivable of VIEs held by insurance subsidiaries
—

 
(78.5
)
 
(78.5
)
Cash and cash equivalents held by variable interest entities
54.2

 
—

 
54.2

Accrued investment income
1.8

 
—

 
1.8

Income tax assets, net
3.3

 
(2.6
)
 
.7

Other assets
9.6

 
—

 
9.6

Total assets
$
883.2

 
$
(81.1
)
 
$
802.1

Liabilities:
 

 
 

 
 

Other liabilities
$
39.9

 
$
(3.3
)
 
$
36.6

Borrowings related to variable interest entities
767.0

 
—

 
767.0

Notes payable of VIEs held by insurance subsidiaries
82.5

 
(82.5
)
 
—

Total liabilities
$
889.4

 
$
(85.8
)
 
$
803.6


 
December 31, 2011
 
VIEs
 
Eliminations
 
Net effect on
consolidated
balance sheet
Assets:
 
 
 
 
 
Investments held by variable interest entities
$
496.3

 
$
—

 
$
496.3

Notes receivable of VIEs held by insurance subsidiaries
—

 
(45.3
)
 
(45.3
)
Cash and cash equivalents held by variable interest entities
74.4

 
—

 
74.4

Accrued investment income
1.7

 
—

 
1.7

Income tax assets, net
6.8

 
(1.4
)
 
5.4

Other assets
7.7

 
—

 
7.7

Total assets
$
586.9

 
$
(46.7
)
 
$
540.2

Liabilities:
 

 
 

 
 

Other liabilities
$
30.3

 
$
(.1
)
 
$
30.2

Borrowings related to variable interest entities
519.9

 
—

 
519.9

Notes payable of VIEs held by insurance subsidiaries
49.3

 
(49.3
)
 
—

Total liabilities
$
599.5

 
$
(49.4
)
 
$
550.1

Supplemental Information, Revenues and Expenses of Variable Interest Entities [Table Text Block] 
The following table provides supplemental information about the revenues and expenses of the VIEs which have been consolidated in accordance with authoritative guidance, after giving effect to the elimination of our investment in the VIEs and investment management fees earned by a subsidiary of the Company (dollars in millions):

 
2012
 
2011
 
2010
Revenues:
 
 
 
 
 
Net investment income – policyholder and reinsurer accounts and other special-purpose portfolios
$
31.3

 
$
18.8

 
$
20.1

Fee revenue and other income
1.6

 
1.2

 
.6

Total revenues
32.9

 
20.0

 
20.7

Expenses:
 
 
 
 
 
Interest expense
20.0

 
11.8

 
12.9

Other operating expenses
.6

 
.7

 
.6

Total expenses
20.6

 
12.5

 
13.5

Income before net realized investment losses and income taxes
12.3

 
7.5

 
7.2

Net realized investment losses
(.4
)
 
(1.3
)
 
(3.7
)
Income before income taxes
$
11.9

 
$
6.2

 
$
3.5

Variable Interest Entities, Fair Value by Contractual Maturity [Table Text Block] 
The following table sets forth the amortized cost and estimated fair value of those investments held by the VIEs with unrealized losses at December 31, 2012, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
1.8

 
$
1.8

Due after one year through five years
118.6

 
117.1

Due after five years through ten years
54.4

 
54.3

Total
$
174.8

 
$
173.2

The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at December 31, 2012, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
3.8

 
$
3.8

Due after one year through five years
400.7

 
402.3

Due after five years through ten years
404.8

 
408.2

Total
$
809.3

 
$
814.3

Carrying Values of Investments Held by Variable Interest Entities [Table Text Block] 


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CASH AND CASH EQUIVALENTS (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Trading Securities
$ 266.2 
$ 91.6 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - PRESENT VALUE OF FUTURE PROFITS (DETAILS)
12 Months Ended
Dec. 31, 2012
Present Value of Future Insurance Profits [Abstract]
 
Discount Rate Used To Determine Present Value of Future Insurance Profits
12.00% 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ACCOUNTING FOR LONG-TERM CARE PREMIUM RATE INCREASES (DETAILS)
12 Months Ended
Dec. 31, 2012
Insurance [Abstract]
 
Long-Term Care Policy, Retention of Current Policy, Rate Increase in First Year
50.00% 
Long-Term Care Policy, Receipt of Replacement Policy With Reduced Benefits, Rate Increase in First Year
25.00% 
Long-Term Care Policy, Receipt of Replacement Policy With Reduced Benefits, Rate Increase Maximum in Subsequent Years
15.00% 
Long-Term Care Policy, Receipt of Paid-Up Policy, Future Claims Allowable, Percentage of Premiums Paid
100.00% 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ACCOUNTING FOR MARKETING AND REINSURANCE AGREEMENTS WITH COVENTRY (DETAILS) (Collaborative Arrangement, Coventry Prescription Drug Plan [Member])
12 Months Ended
Dec. 31, 2012
Collaborative Arrangement, Coventry Prescription Drug Plan [Member]
 
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
 
Quota-Share Reinsurance Agreement, Percentage of Net Premiums And Related Policy Benefits
50.00% 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - REINSURANCE (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
Ceded Premiums Written
$ 220.0 
$ 238.1 
$ 258.6 
Reinsurance Effect on Claims and Benefits Incurred, Amount Ceded
210.2 
204.9 
471.6 
Assumed Premiums Written
69.4 
80.4 
92.6 
Coventry Health Care Marketing and Quota Share Agreements [Member]
 
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
Assumed Premiums Written
49.9 
58.1 
67.2 
Maximum [Member]
 
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
Retained Mortality Risk On Any Policy
$ 0.8 
 
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - INCOME TAXES (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Valuation Allowance [Line Items]
 
 
Deferred Tax Assets, Valuation Allowance
$ 766.9 
$ 938.4 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - INVESTMENT BORROWINGS (DETAILS) (USD $)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
$ 1,650,800,000 
$ 1,676,500,000 
 
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
1,650,000,000 
1,700,000,000 
 
Federal Home Loan Bank Stock
82,500,000 
 
 
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged
2,000,000,000 
 
 
Interest Expense on FHLB Borrowings
28,000,000 
25,700,000 
20,800,000 
Aggregate Fee to Prepay All Fixed Rate FHLB Borrowings
51,200,000 
 
 
Repurchase Agreements [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Assets Sold under Agreements to Repurchase, Repurchase Liability
0 
 
 
Other Borrowings [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
800,000 
1,700,000 
 
Borrowings Due February 2014 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
67,000,000 
 
 
Debt Instrument, Maturity Date
Feb. 28, 2014 
 
 
Debt Instrument, Interest Rate, Stated Percentage
1.83% 
 
 
Borrowings Due August 2014 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
50,000,000 
 
 
Debt Instrument, Maturity Date
Aug. 31, 2014 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.44% 
 
 
Borrowings Due September 2015 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
50,000,000 
 
 
Debt Instrument, Maturity Date
Sep. 30, 2015 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.613% 
 
 
Borrowings Due October 2015 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
150,000,000 
 
 
Debt Instrument, Maturity Date
Oct. 31, 2015 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.559% 
 
 
Borrowings Due November 2015 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
100,000,000 
 
 
Debt Instrument, Maturity Date
Nov. 30, 2015 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.39% 
 
 
Borrowings Due November 2015 Rate Two [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
146,000,000 
 
 
Debt Instrument, Maturity Date
Nov. 30, 2015 
 
 
Debt Instrument, Interest Rate, Stated Percentage
5.30% 
 
 
Borrowings Due December 2015 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
100,000,000 
 
 
Debt Instrument, Maturity Date
Dec. 31, 2015 
 
 
Debt Instrument, Interest Rate, Stated Percentage
4.71% 
 
 
Borrowings Due June 2016 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
100,000,000 
 
 
Debt Instrument, Maturity Date
Jun. 30, 2016 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.65% 
 
 
Borrowings Due June 2016 Rate Two [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
75,000,000 
 
 
Debt Instrument, Maturity Date
Jun. 30, 2016 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.471% 
 
 
Borrowings Due October 2016 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
100,000,000 
 
 
Debt Instrument, Maturity Date
Oct. 31, 2016 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.535% 
 
 
Borrowings Due November 2016 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
50,000,000 
 
 
Debt Instrument, Maturity Date
Nov. 30, 2016 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.581% 
 
 
Borrowings Due November 2016 Rate Two [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
50,000,000 
 
 
Debt Instrument, Maturity Date
Nov. 30, 2016 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.68% 
 
 
Borrowings Due June 2017 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
100,000,000 
 
 
Debt Instrument, Maturity Date
Jun. 30, 2017 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.735% 
 
 
Borrowings Due August 2017 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
50,000,000 
 
 
Debt Instrument, Maturity Date
Aug. 31, 2017 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.51% 
 
 
Borrowings Due October 2017 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
100,000,000 
 
 
Debt Instrument, Maturity Date
Oct. 31, 2017 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.77% 
 
 
Borrowings Due November 2017 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
37,000,000 
 
 
Debt Instrument, Maturity Date
Nov. 30, 2017 
 
 
Debt Instrument, Interest Rate, Stated Percentage
3.75% 
 
 
Borrowings Due August 2014 Rate 2 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
100,000,000 
 
 
Debt Instrument, Maturity Date
Aug. 31, 2014 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.47% 
 
 
Borrowings Due July 2017 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
100,000,000 
 
 
Debt Instrument, Maturity Date
Jul. 31, 2017 
 
 
Debt Instrument, Interest Rate, Stated Percentage
3.90% 
 
 
Borrowings Due August 2017 Rate 2 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
75,000,000 
 
 
Debt Instrument, Maturity Date
Aug. 31, 2017 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.462% 
 
 
Borrowings Due July 2018 [Member] |
Federal Home Loan Bank Advances [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Investment borrowings
50,000,000 
 
 
Debt Instrument, Maturity Date
Jul. 31, 2018 
 
 
Debt Instrument, Interest Rate, Stated Percentage
0.783% 
 
 
Maturity 30 to 90 Days [Member] |
Other Borrowings [Member]
 
 
 
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
 
 
 
Assets Sold under Agreements to Repurchase, Repurchase Liability
 
$ 24,800,000 
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ACCOUNTING FOR DERIVATIVES (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Equity Swap [Member]
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Other Derivatives Not Designated as Hedging Instruments Assets at Fair Value
$ 54.4 
$ 37.9 
 
Equity Swap [Member] |
Investment Income [Member]
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Net
25.5 
(21.2)
28.2 
Embedded Derivative Financial Instruments [Member]
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Net
2.8 
20.4 
 
Other Derivatives Not Designated as Hedging Instruments Liabilities at Fair Value
734.0 
666.3 
 
Embedded Derivative Associated With Modified Coinsurance Agreement [Member]
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Other Derivatives Not Designated as Hedging Instruments Liabilities at Fair Value
$ 5.5 
$ 3.5 
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - MULTIBUCKET ANNUITY PRODUCT (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Insurance [Abstract]
 
 
Return Of Premium Annual Percentage, Multibucket Annuity
3.00% 
 
Insurance Liabilities Held, Related to Multibucket Annuity Products
$ 47.8 
$ 52.6 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - FAIR VALUE MEASUREMENTS - NARRATIVE (DETAILS)
12 Months Ended
Dec. 31, 2012
Fair Value Disclosures [Abstract]
 
Available for sale fixed maturities classified as level 3, investment grade, percent
91.00% 
Available for Sale Maturities with Significant Unobservable Inputs, Collateralized Debt Obligations, Percent
43.00% 
Fair value of level 3 fixed maturity securities valued using broker quotes, percentage
20.00% 
Available for sale fixed maturities classified as level 3, corporate securities, percent
47.00% 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - FAIR VALUE MEASUREMENTS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
$ 24,614.1 
$ 23,516.0 
 
Trading securities
266.2 
91.6 
 
Investments held by variable interest entities
814.3 
496.3 
 
Assets held in separate accounts
14.9 
15.0 
 
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
49.7 
 
 
Trading securities
0.9 
0.7 
 
Investments held by variable interest entities
0 
0 
 
Assets held in separate accounts
0 
0 
 
Assets, Fair Value Disclosure
50.6 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
0 
0 
 
Liabilities, Fair Value Disclosure
0 
 
 
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
118.8 
 
 
Trading securities
251.6 
90.5 
 
Investments held by variable interest entities
814.3 
496.3 
 
Assets held in separate accounts
14.9 
15.0 
 
Assets, Fair Value Disclosure
25,106.5 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
0 
0 
 
Liabilities, Fair Value Disclosure
0 
 
 
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
2.9 
 
 
Trading securities
13.7 
0.4 
 
Investments held by variable interest entities
0 
0 
 
Assets held in separate accounts
0 
0 
 
Assets, Fair Value Disclosure
778.2 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
739.5 
669.8 
 
Liabilities, Fair Value Disclosure
739.5 
 
 
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
171.4 
 
 
Trading securities
266.2 
91.6 
 
Investments held by variable interest entities
814.3 
496.3 
 
Assets held in separate accounts
14.9 
15.0 
 
Assets, Fair Value Disclosure
25,935.3 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
739.5 
669.8 
 
Liabilities, Fair Value Disclosure
739.5 
 
 
Corporate Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Equity Securities, Fair Value Disclosure
49.7 
 
 
Trading securities
0 
0 
 
Corporate Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
16,498.6 
15,594.4 
 
Equity Securities, Fair Value Disclosure
118.8 
 
 
Trading securities
46.6 
67.6 
 
Corporate Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
355.5 
278.1 
 
Equity Securities, Fair Value Disclosure
0.1 
 
 
Trading securities
0 
0 
 
Corporate Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
16,854.1 
15,872.5 
 
Equity Securities, Fair Value Disclosure
168.6 
 
 
Trading securities
46.6 
67.6 
 
Venture Capital Funds [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
0 
 
 
Venture Capital Funds [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
0 
 
 
Venture Capital Funds [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
2.8 
 
 
Venture Capital Funds [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
2.8 
 
 
Collateralized Mortgage Obligations [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Trading securities
0 
0 
 
Collateralized Mortgage Obligations [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
2,230.6 
2,051.2 
 
Trading securities
41.2 
0.7 
 
Collateralized Mortgage Obligations [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
16.9 
124.8 
 
Trading securities
5.8 
0 
 
Collateralized Mortgage Obligations [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
2,247.5 
2,176.0 
 
Trading securities
47.0 
0.7 
 
Total Fixed Maturities, Available For Sale [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Total Fixed Maturities, Available For Sale [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
23,852.5 
22,682.9 
 
Total Fixed Maturities, Available For Sale [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
761.6 
833.1 
 
Total Fixed Maturities, Available For Sale [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
24,614.1 
23,516.0 
 
US Treasury and Government [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Trading securities
0 
0 
 
US Treasury and Government [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
99.5 
303.8 
 
Trading securities
4.8 
4.9 
 
US Treasury and Government [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
1.6 
 
Trading securities
0 
0 
 
US Treasury and Government [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
99.5 
305.4 
 
Trading securities
4.8 
4.9 
 
US States and Political Subdivisions Debt Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Trading securities
0 
0 
 
US States and Political Subdivisions Debt Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
2,115.0 
1,952.3 
 
Trading securities
14.0 
15.6 
 
US States and Political Subdivisions Debt Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
13.1 
2.1 
 
Trading securities
0.6 
0 
 
US States and Political Subdivisions Debt Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
2,128.1 
1,954.4 
 
Trading securities
14.6 
15.6 
 
Foreign Government Debt Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Foreign Government Debt Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0.8 
1.4 
 
Foreign Government Debt Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Foreign Government Debt Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0.8 
1.4 
 
Asset-backed Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Trading securities
0 
0 
 
Asset-backed Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
1,416.9 
1,334.3 
 
Trading securities
50.1 
0.1 
 
Asset-backed Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
44.0 
79.7 
 
Trading securities
0 
0 
 
Asset-backed Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
1,460.9 
1,414.0 
 
Trading securities
50.1 
0.1 
 
Collateralized Debt Obligations [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Trading securities
0 
 
 
Collateralized Debt Obligations [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Trading securities
0 
 
 
Collateralized Debt Obligations [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
324.0 
327.3 
 
Trading securities
7.3 
 
 
Collateralized Debt Obligations [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
324.0 
327.3 
 
Trading securities
7.3 
 
 
Commercial Mortgage Backed Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Trading securities
0 
0 
 
Commercial Mortgage Backed Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
1,471.2 
1,415.7 
 
Trading securities
93.3 
0 
 
Commercial Mortgage Backed Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
6.2 
17.3 
 
Trading securities
0 
0.4 
 
Commercial Mortgage Backed Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
1,477.4 
1,433.0 
 
Trading securities
93.3 
0.4 
 
Mortgage Pass Through Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
0 
0 
 
Trading securities
0 
0 
 
Mortgage Pass Through Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
19.9 
29.8 
 
Trading securities
0.1 
0.2 
 
Mortgage Pass Through Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
1.9 
2.2 
 
Trading securities
0 
0 
 
Mortgage Pass Through Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fixed maturities, available for sale
21.8 
32.0 
 
Trading securities
0.1 
0.2 
 
Equity Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
 
17.9 
 
Trading securities
0.9 
0.7 
 
Equity Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
 
87.3 
 
Trading securities
1.5 
1.4 
 
Equity Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
 
69.9 
 
Trading securities
0 
0 
 
Equity Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Equity Securities, Fair Value Disclosure
 
175.1 
 
Trading securities
2.4 
2.1 
 
Derivatives [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Other Investments, Fair Value Disclosure
0 
0 
 
Derivatives [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Other Investments, Fair Value Disclosure
54.4 
37.8 
 
Derivatives [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Other Investments, Fair Value Disclosure
0 
0 
 
Derivatives [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Other Investments, Fair Value Disclosure
54.4 
37.8 
 
Embedded Derivative Associated With Modified Coinsurance Agreement [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
0 
 
 
Embedded Derivative Associated With Modified Coinsurance Agreement [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
0 
 
 
Embedded Derivative Associated With Modified Coinsurance Agreement [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
5.5 
 
 
Embedded Derivative Associated With Modified Coinsurance Agreement [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
5.5 
 
 
Embedded Derivatives Associated with Fixed Index Annuity Products [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
0 
 
 
Embedded Derivatives Associated with Fixed Index Annuity Products [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
0 
 
 
Embedded Derivatives Associated with Fixed Index Annuity Products [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
734.0 
 
 
Embedded Derivatives Associated with Fixed Index Annuity Products [Member] |
Fair Value, Measurements, Recurring [Member] |
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Liabilities For Interest Sensitive Products, Fair Value Disclosure
734.0 
 
 
Trading Securities [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Purchases, sales, issuances and settlements, net
11.4 
 
 
Trading Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
13.7 
0.4 
0.8 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
1.8 
0 
 
Purchases, sales, issuances and settlements, net
11.4 1
(0.4)
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings
1.8 
0 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)
0 
0 
 
Transfers into level 3
0.5 1
0 2
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
0.4 1
0 2
 
Trading Securities [Member] |
Collateralized Mortgage Obligations [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Purchases, sales, issuances and settlements, net
 
(0.4)
 
Trading Securities [Member] |
Collateralized Mortgage Obligations [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
5.8 
0 
0.4 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
1.3 
0 
 
Purchases, sales, issuances and settlements, net
4.5 1
(0.4)
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings
1.3 
0 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)
0 
0 
 
Transfers into level 3
0 1
0 2
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
0 1
0 2
 
Trading Securities [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
0.6 
0 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0.1 
 
 
Purchases, sales, issuances and settlements, net
0 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings
0.1 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)
0 
 
 
Transfers into level 3
0.5 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
0 
 
 
Trading Securities [Member] |
Collateralized Debt Obligations [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
7.3 
0 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0.4 
 
 
Purchases, sales, issuances and settlements, net
6.9 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings
0.4 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)
0 
 
 
Transfers into level 3
0 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
0 
 
 
Trading Securities [Member] |
Commercial Mortgage Backed Securities [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
0 
0.4 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
 
 
Purchases, sales, issuances and settlements, net
0 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings
0 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)
0 
 
 
Transfers into level 3
0 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
(0.4)
 
 
Trading Securities [Member] |
Commercial Mortgage Backed Securities [Member] |
Fair Value, Measurements, Recurring [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
0.4 
0.4 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
 
0 
 
Purchases, sales, issuances and settlements, net
 
0 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings
 
0 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)
 
0 
 
Transfers into level 3
 
0 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
 
0 
 
Equity Securities Classification [Member] |
Venture Capital Funds [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
2.8 
63.5 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
 
 
Purchases, sales, issuances and settlements, net
(34.3)
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings
(26.0)
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)
(0.4)
 
 
Transfers into level 3
0 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
0 
 
 
Equity Securities Classification [Member] |
Equity Securities [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
2.9 
69.9 
6.9 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
(3.8)
0 
 
Purchases, sales, issuances and settlements, net
(37.5)
67.0 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings
(29.8)
(3.8)
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)
0.3 
(0.2)
 
Transfers into level 3
0 
0 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
0 
0 
 
Equity Securities Classification [Member] |
Corporate Securities [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
0.1 
6.4 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
(3.8)
 
 
Purchases, sales, issuances and settlements, net
(3.2)
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings
(3.8)
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)
0.7 
 
 
Transfers into level 3
0 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
$ 0 
 
 
[2] (a)We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.(b)For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period.(c)Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2011 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$5.8 $(298.1) $— $— $(292.3)United States Treasury securities and obligations of United States government corporations and agencies— (.1) — — (.1)Asset-backed securities.2 (4.3) — — (4.1)Collateralized debt obligations182.2 (112.8) — — 69.4Mortgage pass-through securities— (1.3) — — (1.3)Collateralized mortgage obligations63.6 (35.2) — — 28.4Total fixed maturities, available for sale251.8 (451.8) — — (200.0)Equity securities - venture capital investments67.0 — — — 67.0Trading securities - collateralized mortgage obligations— (.4) — — (.4)Liabilities: Liabilities for insurance products: Interest-sensitive products(119.8) 54.5 (34.6) 37.4 (62.5)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - FAIR VALUE MEASUREMENTS - UNOBSERVABLE INPUT RECONCILIATION (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Liabilities, Fair Value Disclosure, Significant Assumptions, Weighted Average Discount Rates
1.40% 
 
Liabilities, Fair Value Disclosure, Significant Assumptions, Weighted Average Surrender Rates
19.00% 
 
Available-for-sale Securities [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
$ 88.1 
$ (292.3)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
110.3 
5.8 
Sales
(22.2)
(298.1)
Issuances
0 
0 
Settlements
0 
0 
Available-for-sale Securities [Member] |
Corporate Debt Securities [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
278.1 
1,907.8 
Purchases, sales, issuances and settlements, net
88.1 1
(292.3)
Total realized and unrealized gains (losses) included in net income
(0.2)
(17.0)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
9.9 
15.2 
Transfers into level 3
68.6 1
43.3 2
Transfers out of level 3
(89.0)1
(1,378.9)2
Fair value, measurement with unobservable inputs reconciliation, ending balance
355.5 
278.1 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
(11.5)
Available-for-sale Securities [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
(1.6)
(0.1)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
0 
0 
Sales
(1.6)
(0.1)
Issuances
0 
0 
Settlements
0 
0 
Available-for-sale Securities [Member] |
US Treasury and Government [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
1.6 
2.0 
Purchases, sales, issuances and settlements, net
(1.6)1
(0.1)
Total realized and unrealized gains (losses) included in net income
0 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
(0.3)
Transfers into level 3
0 1
0 2
Transfers out of level 3
0 1
0 2
Fair value, measurement with unobservable inputs reconciliation, ending balance
0 
1.6 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
0 
Available-for-sale Securities [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
(1.8)
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
0 
 
Sales
(1.8)
 
Issuances
0 
 
Settlements
0 
 
Available-for-sale Securities [Member] |
US States and Political Subdivisions Debt Securities [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
2.1 
2.5 
Purchases, sales, issuances and settlements, net
(1.8)1
0 
Total realized and unrealized gains (losses) included in net income
0 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0.9 
0.1 
Transfers into level 3
11.9 1
2.0 2
Transfers out of level 3
0 1
(2.5)2
Fair value, measurement with unobservable inputs reconciliation, ending balance
13.1 
2.1 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
0 
Available-for-sale Securities [Member] |
Asset-backed Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
15.2 
(4.1)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
19.0 
0.2 
Sales
(3.8)
(4.3)
Issuances
0 
0 
Settlements
0 
0 
Available-for-sale Securities [Member] |
Asset-backed Securities [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
79.7 
182.3 
Purchases, sales, issuances and settlements, net
15.2 1
(4.1)
Total realized and unrealized gains (losses) included in net income
(0.3)
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
6.3 
4.8 
Transfers into level 3
0.5 1
39.4 2
Transfers out of level 3
(57.4)1
(142.7)2
Fair value, measurement with unobservable inputs reconciliation, ending balance
44.0 
79.7 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
0 
Available-for-sale Securities [Member] |
Collateralized Debt Obligations [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
(24.8)
69.4 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
35.4 
182.2 
Sales
(60.2)
(112.8)
Issuances
0 
0 
Settlements
0 
0 
Available-for-sale Securities [Member] |
Collateralized Debt Obligations [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
327.3 
256.5 
Purchases, sales, issuances and settlements, net
(24.8)1
69.4 
Total realized and unrealized gains (losses) included in net income
0 
1.5 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
21.5 
(0.1)
Transfers into level 3
0 1
0 2
Transfers out of level 3
0 1
0 2
Fair value, measurement with unobservable inputs reconciliation, ending balance
324.0 
327.3 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
0 
Available-for-sale Securities [Member] |
Commercial Mortgage Backed Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
(2.5)
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
0 
 
Sales
(2.5)
 
Issuances
0 
 
Settlements
0 
 
Available-for-sale Securities [Member] |
Commercial Mortgage Backed Securities [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
17.3 
0 
Purchases, sales, issuances and settlements, net
(2.5)1
0 
Total realized and unrealized gains (losses) included in net income
0 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0.8 
0.2 
Transfers into level 3
5.7 1
17.1 2
Transfers out of level 3
(15.1)1
0 2
Fair value, measurement with unobservable inputs reconciliation, ending balance
6.2 
17.3 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
0 
Available-for-sale Securities [Member] |
Mortgage Pass Through Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
(0.3)
(1.3)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
0 
0 
Sales
(0.3)
(1.3)
Issuances
0 
0 
Settlements
0 
0 
Available-for-sale Securities [Member] |
Mortgage Pass Through Securities [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
2.2 
3.5 
Purchases, sales, issuances and settlements, net
(0.3)1
(1.3)
Total realized and unrealized gains (losses) included in net income
0 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
0 
Transfers into level 3
0 1
0 2
Transfers out of level 3
0 1
0 2
Fair value, measurement with unobservable inputs reconciliation, ending balance
1.9 
2.2 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
0 
Available-for-sale Securities [Member] |
Collateralized Mortgage Obligations [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
0.2 
28.4 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
11.2 
63.6 
Sales
(11.0)
(35.2)
Issuances
0 
0 
Settlements
0 
0 
Available-for-sale Securities [Member] |
Collateralized Mortgage Obligations [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
124.8 
197.1 
Purchases, sales, issuances and settlements, net
0.2 1
28.4 
Total realized and unrealized gains (losses) included in net income
0 
(2.1)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
(0.1)
3.7 
Transfers into level 3
5.0 1
3.9 2
Transfers out of level 3
(113.0)1
(106.2)2
Fair value, measurement with unobservable inputs reconciliation, ending balance
16.9 
124.8 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
0 
Available-for-sale Securities [Member] |
Total Fixed Maturities, Available For Sale [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
72.5 
(200.0)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
175.9 
251.8 
Sales
(103.4)
(451.8)
Issuances
0 
0 
Settlements
0 
0 
Available-for-sale Securities [Member] |
Total Fixed Maturities, Available For Sale [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
833.1 
2,551.7 
Purchases, sales, issuances and settlements, net
72.5 1
(200.0)
Total realized and unrealized gains (losses) included in net income
(0.5)
(17.6)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
39.3 
23.6 
Transfers into level 3
91.7 1
105.7 2
Transfers out of level 3
(274.5)1
(1,630.3)2
Fair value, measurement with unobservable inputs reconciliation, ending balance
761.6 
833.1 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
(11.5)
Equity Securities Classification [Member] |
Venture Capital Funds [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
63.5 
 
Purchases, sales, issuances and settlements, net
(34.3)
 
Total realized and unrealized gains (losses) included in net income
(26.0)
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
(0.4)
 
Transfers into level 3
0 
 
Transfers out of level 3
0 
 
Fair value, measurement with unobservable inputs reconciliation, ending balance
2.8 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
0 
 
Sales
(34.3)
 
Issuances
0 
 
Settlements
0 
 
Equity Securities Classification [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
6.4 
 
Purchases, sales, issuances and settlements, net
(3.2)
 
Total realized and unrealized gains (losses) included in net income
(3.8)
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0.7 
 
Transfers into level 3
0 
 
Transfers out of level 3
0 
 
Fair value, measurement with unobservable inputs reconciliation, ending balance
0.1 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
(3.8)
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
0 
 
Sales
(3.2)
 
Issuances
0 
 
Settlements
0 
 
Equity Securities Classification [Member] |
Equity Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
69.9 
6.9 
Purchases, sales, issuances and settlements, net
(37.5)
67.0 
Total realized and unrealized gains (losses) included in net income
(29.8)
(3.8)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0.3 
(0.2)
Transfers into level 3
0 
0 
Transfers out of level 3
0 
0 
Fair value, measurement with unobservable inputs reconciliation, ending balance
2.9 
69.9 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
(3.8)
0 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
0 
67.0 
Sales
(37.5)
0 
Issuances
0 
0 
Settlements
0 
0 
Trading Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
11.4 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
11.4 
 
Sales
0 
 
Issuances
0 
 
Settlements
0 
 
Trading Securities [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
0.4 
0.8 
Purchases, sales, issuances and settlements, net
11.4 1
(0.4)
Total realized and unrealized gains (losses) included in net income
1.8 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
0 
Transfers into level 3
0.5 1
0 2
Transfers out of level 3
(0.4)1
0 2
Fair value, measurement with unobservable inputs reconciliation, ending balance
13.7 
0.4 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
1.8 
0 
Trading Securities [Member] |
Collateralized Debt Obligations [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
6.9 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
6.9 
 
Sales
0 
 
Issuances
0 
 
Settlements
0 
 
Trading Securities [Member] |
Collateralized Mortgage Obligations [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
4.5 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
4.5 
 
Sales
0 
 
Issuances
0 
 
Settlements
0 
 
Commercial Mortgage Backed Securities [Member] |
Trading Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
0.4 
 
Purchases, sales, issuances and settlements, net
0 
 
Total realized and unrealized gains (losses) included in net income
0 
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
 
Transfers into level 3
0 
 
Transfers out of level 3
0.4 
 
Fair value, measurement with unobservable inputs reconciliation, ending balance
0 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0 
 
Commercial Mortgage Backed Securities [Member] |
Trading Securities [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
 
0 
Total realized and unrealized gains (losses) included in net income
 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
0 
Transfers into level 3
 
0 
Transfers out of level 3
 
0 
Fair value, measurement with unobservable inputs reconciliation, ending balance
0.4 
0.4 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
 
0 
Collateralized Debt Obligations [Member] |
Trading Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
0 
 
Purchases, sales, issuances and settlements, net
6.9 
 
Total realized and unrealized gains (losses) included in net income
0.4 
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
 
Transfers into level 3
0 
 
Transfers out of level 3
0 
 
Fair value, measurement with unobservable inputs reconciliation, ending balance
7.3 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0.4 
 
US States and Political Subdivisions Debt Securities [Member] |
Trading Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
0 
 
Purchases, sales, issuances and settlements, net
0 
 
Total realized and unrealized gains (losses) included in net income
0.1 
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
 
Transfers into level 3
0.5 
 
Transfers out of level 3
0 
 
Fair value, measurement with unobservable inputs reconciliation, ending balance
0.6 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
0.1 
 
Collateralized Mortgage Obligations [Member] |
Trading Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
 
(0.4)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
 
0 
Sales
 
(0.4)
Issuances
 
0 
Settlements
 
0 
Collateralized Mortgage Obligations [Member] |
Trading Securities [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
0 
0.4 
Purchases, sales, issuances and settlements, net
4.5 1
(0.4)
Total realized and unrealized gains (losses) included in net income
1.3 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
0 
Transfers into level 3
0 1
0 2
Transfers out of level 3
0 1
0 2
Fair value, measurement with unobservable inputs reconciliation, ending balance
5.8 
0 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
1.3 
0 
Interest Sensitive Products [Member]
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Purchases, sales, issuances and settlements, net
54.5 
62.5 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Purchases
(103.3)
(119.8)
Sales
60.4 
54.5 
Issues
(50.9)
(34.6)
Settlements
39.3 
37.4 
Interest Sensitive Products [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Liabilities, Fair Value Disclosure, Significant Assumptions, Weighted Average Projected Portfolio Yields
5.55% 
 
Interest Sensitive Products [Member] |
Fair Value, Inputs, Level 3 [Member] |
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
(669.8)
(553.2)
Purchases, sales, issuances and settlements, net
(54.5)1
(62.5)
Total realized and unrealized gains (losses) included in net income
(15.2)
(54.1)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
0 
Transfers into level 3
0 1
0 2
Transfers out of level 3
0 1
0 2
Fair value, measurement with unobservable inputs reconciliation, ending balance
(739.5)
(669.8)
Amount of Total Gains Losses Included in Net Income Related to Assets Liabilities Still Held at the Reporting Date
$ (15.2)
$ (54.1)
Venture Capital Funds [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average EBITDA Multiple
   
 
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Revenue Multiple
   
 
Collateralized Debt Obligations [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Discount Rate
2.02% 
 
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Constant Prepayment Rate
20.00% 
 
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Annual Default Rate
3.01% 
 
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Portfolio CCC Percent
11.99% 
 
Asset-backed Securities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Discount Rate
2.99% 
 
Corporate Debt Securities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Discount Rate
2.78% 
 
Maximum [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Liabilities, Fair Value Disclosure, Significant Assumptions, Discount Rates
3.60% 
 
Liabilities, Fair Value Disclosure, Significant Assumptions, Surrender Rates
43.00% 
 
Maximum [Member] |
Interest Sensitive Products [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Liabilities, Fair Value Disclosure, Significant Assumptions, Projected Portfolio Yields
5.61% 
 
Maximum [Member] |
Venture Capital Funds [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, EBITDA Multiple
   
 
Investments, Fair Value Disclosure, Significant Assumptions, Revenue Multiple
   
 
Maximum [Member] |
Collateralized Debt Obligations [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Discount Rate
8.75% 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Recoveries
66.00% 
 
Investments, Fair Value Disclosure, Significant Assumptions, Annual Default Rate
5.54% 
 
Investments, Fair Value Disclosure, Significant Assumptions, Portfolio CCC Percent
21.56% 
 
Maximum [Member] |
Asset-backed Securities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Discount Rate
3.14% 
 
Maximum [Member] |
Corporate Debt Securities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Discount Rate
3.25% 
 
Minimum [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Liabilities, Fair Value Disclosure, Significant Assumptions, Discount Rates
0.00% 
 
Liabilities, Fair Value Disclosure, Significant Assumptions, Surrender Rates
4.00% 
 
Minimum [Member] |
Interest Sensitive Products [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Liabilities, Fair Value Disclosure, Significant Assumptions, Projected Portfolio Yields
5.35% 
 
Minimum [Member] |
Venture Capital Funds [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, EBITDA Multiple
6.8 
 
Investments, Fair Value Disclosure, Significant Assumptions, Revenue Multiple
1.5 
 
Minimum [Member] |
Collateralized Debt Obligations [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Discount Rate
0.95% 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, Sales, Issuances, Settlements [Abstract]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Recoveries
65.00% 
 
Investments, Fair Value Disclosure, Significant Assumptions, Annual Default Rate
0.95% 
 
Investments, Fair Value Disclosure, Significant Assumptions, Portfolio CCC Percent
1.18% 
 
Minimum [Member] |
Asset-backed Securities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Discount Rate
2.78% 
 
Minimum [Member] |
Corporate Debt Securities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments, Fair Value Disclosure, Significant Assumptions, Discount Rate
1.90% 
 
[2] (a)We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations.(b)For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period.(c)Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2011 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$5.8 $(298.1) $— $— $(292.3)United States Treasury securities and obligations of United States government corporations and agencies— (.1) — — (.1)Asset-backed securities.2 (4.3) — — (4.1)Collateralized debt obligations182.2 (112.8) — — 69.4Mortgage pass-through securities— (1.3) — — (1.3)Collateralized mortgage obligations63.6 (35.2) — — 28.4Total fixed maturities, available for sale251.8 (451.8) — — (200.0)Equity securities - venture capital investments67.0 — — — 67.0Trading securities - collateralized mortgage obligations— (.4) — — (.4)Liabilities: Liabilities for insurance products: Interest-sensitive products(119.8) 54.5 (34.6) 37.4 (62.5)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - FAIR VALUE MEASUREMENTS - FINANCIAL ASSETS AND LIABILITIES (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2012
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Fair Value, Inputs, Level 2 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Fair Value, Inputs, Level 2 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
Dec. 31, 2012
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Fair Value, Inputs, Level 1 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Fair Value, Inputs, Level 1 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Equity Securities Classification [Member]
Corporate Debt Securities [Member]
Dec. 31, 2012
Equity Securities Classification [Member]
Equity Securities [Member]
Dec. 31, 2011
Equity Securities Classification [Member]
Equity Securities [Member]
Dec. 31, 2012
Trading Securities [Member]
Dec. 31, 2012
Trading Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Trading Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Trading Securities [Member]
Collateralized Debt Obligations [Member]
Dec. 31, 2012
Trading Securities [Member]
Collateralized Mortgage Obligations [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Corporate Debt Securities [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Corporate Debt Securities [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Corporate Debt Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Corporate Debt Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
US Treasury and Government [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
US Treasury and Government [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
US Treasury and Government [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
US Treasury and Government [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Asset-backed Securities [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Asset-backed Securities [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Asset-backed Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Asset-backed Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Collateralized Debt Obligations [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Collateralized Debt Obligations [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Collateralized Debt Obligations [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Collateralized Debt Obligations [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Mortgage Pass Through Securities [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Mortgage Pass Through Securities [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Mortgage Pass Through Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Mortgage Pass Through Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Collateralized Mortgage Obligations [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Collateralized Mortgage Obligations [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Collateralized Mortgage Obligations [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Collateralized Mortgage Obligations [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Total Fixed Maturities, Available For Sale [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Total Fixed Maturities, Available For Sale [Member]
Dec. 31, 2012
Available-for-sale Securities [Member]
Total Fixed Maturities, Available For Sale [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Available-for-sale Securities [Member]
Total Fixed Maturities, Available For Sale [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Collateralized Mortgage Obligations [Member]
Fair Value, Inputs, Level 2 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Collateralized Mortgage Obligations [Member]
Fair Value, Inputs, Level 2 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Collateralized Mortgage Obligations [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Collateralized Mortgage Obligations [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Collateralized Mortgage Obligations [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Collateralized Mortgage Obligations [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Collateralized Mortgage Obligations [Member]
Fair Value, Inputs, Level 1 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Collateralized Mortgage Obligations [Member]
Fair Value, Inputs, Level 1 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Collateralized Mortgage Obligations [Member]
Trading Securities [Member]
Dec. 31, 2012
Collateralized Mortgage Obligations [Member]
Trading Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Collateralized Mortgage Obligations [Member]
Trading Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Interest Sensitive Products [Member]
Dec. 31, 2011
Interest Sensitive Products [Member]
Dec. 31, 2012
Interest Sensitive Products [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2011
Interest Sensitive Products [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Dec. 31, 2012
Collateralized Debt Obligations [Member]
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
Dec. 31, 2012
Asset-backed Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
Dec. 31, 2012
Corporate Debt Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
Dec. 31, 2012
Venture Capital Funds [Member]
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
$ 27,959.3 
$ 26,364.3 
 
 
 
 
 
 
$ 778.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 331.4 
$ 33.3 
$ 248.3 
$ 2.8 
Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3.2)
(37.5)
0 
0 
 
 
0 
0 
(22.2)
(298.1)
 
 
(1.6)
(0.1)
 
 
(3.8)
(4.3)
 
 
(60.2)
(112.8)
 
 
(0.3)
(1.3)
 
 
(11.0)
(35.2)
 
 
(103.4)
(451.8)
 
 
 
 
 
 
 
 
 
 
(0.4)
 
 
 
 
 
 
 
 
 
 
Settlements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
0 
0 
 
 
0 
0 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
Purchases, sales, issuances and settlements, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3.2)
(37.5)
67.0 
11.4 
11.4 1
(0.4)
6.9 
4.5 
88.1 
(292.3)
88.1 1
(292.3)
(1.6)
(0.1)
(1.6)1
(0.1)
15.2 
(4.1)
15.2 1
(4.1)
(24.8)
69.4 
(24.8)1
69.4 
(0.3)
(1.3)
(0.3)1
(1.3)
0.2 
28.4 
0.2 1
28.4 
72.5 
(200.0)
72.5 1
(200.0)
 
 
 
 
 
 
 
 
(0.4)
4.5 1
(0.4)
 
 
 
 
 
 
 
 
Purchases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
67.0 
11.4 
 
 
6.9 
4.5 
110.3 
5.8 
 
 
0 
0 
 
 
19.0 
0.2 
 
 
35.4 
182.2 
 
 
0 
0 
 
 
11.2 
63.6 
 
 
175.9 
251.8 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
Issuances
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
0 
0 
 
 
0 
0 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
0 
0 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed Securities Available-for-sale, Fair Value Disclosure
 
 
 
 
1,573.2 
1,602.8 
0 
 
 
1,682.1 
 
1,682.1 
1,735.4 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans Receivable, Fair Value Disclosure
 
 
 
 
272.0 
279.7 
0 
 
 
272.0 
 
272.0 
279.7 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life Insurance, Corporate or Bank Owned, Amount
 
 
 
 
123.0 
103.9 
123.0 
 
 
0 
 
123.0 
103.9 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hedge funds
 
 
 
 
16.1 
18.2 
16.1 
 
 
0 
 
16.1 
18.2 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents - unrestricted
582.5 
436.0 
571.9 
523.4 
582.5 
436.0 
150.2 
 
 
0 
 
582.5 
436.0 
432.3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents held by variable interest entities
54.2 
74.4 
 
 
54.2 
74.4 
0 
 
 
0 
 
54.2 
74.4 
54.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities For Interest Sensitive Products, Excluding Embedded Derivatives
 
 
 
 
12,153.7 
13,165.5 
0 
 
 
12,153.7 
 
12,153.7 
13,165.5 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Borrowings, Fair Value Disclosure
 
 
 
 
1,650.8 
1,676.5 
1,702.0 
 
 
0 
 
1,702.0 
1,735.7 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings Related To Variable Interest Entities, Fair Value Disclosure
 
 
 
 
767.0 
519.9 
752.2 
 
 
0 
 
752.2 
485.1 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes Payable, Fair Value Disclosure
 
 
 
 
1,004.2 
857.9 
1,100.3 
 
 
0 
 
1,100.3 
978.3 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale
24,614.1 
23,516.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,230.6 
2,051.2 
16.9 
124.8 
2,247.5 
2,176.0 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
Equity securities
171.4 
175.1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trading securities
266.2 
91.6 
 
 
 
 
251.6 
90.5 
 
13.7 
0.4 
266.2 
91.6 
0.9 
0.7 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
41.2 
0.7 
5.8 
0 
47.0 
0.7 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
Investments held by variable interest entities
814.3 
496.3 
 
 
 
 
814.3 
496.3 
 
0 
0 
814.3 
496.3 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other invested assets
248.1 
202.8 
 
 
 
 
 
 
162.4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings related to variable interest entities
767.0 
519.9 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes payable - direct corporate obligations
1,004.2 
857.9 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(103.3)
(119.8)
 
 
 
 
 
 
Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60.4 
54.5 
 
 
 
 
 
 
Issues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(50.9)
(34.6)
 
 
 
 
 
 
Settlements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
39.3 
37.4 
 
 
 
 
 
 
Purchases, sales, issuances and settlements, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(54.5)
(62.5)
54.5 1
62.5 
 
 
 
 
Interest-sensitive products
$ 12,893.2 
$ 13,165.5 
 
 
 
 
 
 
$ 739.5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SALES INDUCEMENTS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Deferred Sales Inducements [Abstract]
 
 
 
Deferred Sales Inducements, Additions
$ 4.4 
$ 11.5 
$ 20.0 
Deferred Sales Inducements, Amortization Expense
27.1 
28.7 
31.2 
Deferred Sales Inducements, Net
126.5 
149.2 
 
Persistency Bonus Benefits Included in Insurance Liabilities
$ 34.6 
$ 50.0 
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - OUT-OF-PERIOD ADJUSTMENT (DETAILS) (Out of Period Adjustment [Member], USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Out of Period Adjustment [Member]
 
Out of Period Adjustment, Effect on Insurance Policy Benefits
$ 12.1 
Out of Period Adjustment, Effect on Net Realized Gain
4.3 
Out of Period Adjustment, Effect on Other Expenses
1.8 
Out of Period Adjustment, Effect on Net Investment Income
0.6 
Out of Period Adjustment, Reduction on Income Tax Expense
3.6 
Out Of Period Adjustment, Effect on Net Income
$ (6.6)
Adjustment to Earnings Per Diluted Share
$ 0.02 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - RECENTLY ISSUED ACCOUNTING STANDARDS (DETAILS) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Balance Sheet Related Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Deferred acquisition costs
$ 629.7 
 
 
 
$ 797.1 
 
 
 
$ 629.7 
$ 797.1 
 
 
Income tax assets, net
716.9 
 
 
 
865.4 
 
 
 
716.9 
865.4 
 
 
Other assets
334.0 
 
 
 
292.2 
 
 
 
334.0 
292.2 
 
 
Total assets
34,131.4 
 
 
 
32,921.9 
 
 
 
34,131.4 
32,921.9 
 
 
Other liabilities
570.6 
 
 
 
556.3 
 
 
 
570.6 
556.3 
 
 
Borrowings related to variable interest entities
767.0 
 
 
 
519.9 
 
 
 
767.0 
519.9 
 
 
Total liabilities
29,082.1 
 
 
 
28,308.1 
 
 
 
29,082.1 
28,308.1 
 
 
Accumulated other comprehensive income
1,197.4 
 
 
 
781.6 
 
 
 
1,197.4 
781.6 
 
 
Retained earnings (accumulated deficit)
(325.0)
 
 
 
(532.1)
 
 
 
(325.0)
(532.1)
 
 
Total shareholders' equity
5,049.3 
 
 
 
4,613.8 
 
 
 
5,049.3 
4,613.8 
3,811.6 
3,038.6 
Total liabilities and shareholders' equity
34,131.4 
 
 
 
32,921.9 
 
 
 
34,131.4 
32,921.9 
 
 
Income Statement Related Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Amortization
 
 
 
 
 
 
 
 
289.0 
297.4 
325.0 
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
819.3 
704.5 
690.3 
 
Total benefits and expenses
 
 
 
 
 
 
 
 
4,187.0 
3,818.4 
3,859.0 
 
Income before income taxes
117.7 
(158.8)
104.5 
92.3 
102.3 
61.7 
71.8 
70.4 
155.7 
306.2 
224.9 
 
Tax expense on period income
 
 
 
 
 
 
 
 
106.2 
113.5 
79.3 
 
Net income
101.2 
(5.0)
65.7 
59.1 
64.4 
179.5 
46.4 
45.4 
221.0 
335.7 
240.6 
 
Earnings per common share, Net income, Basic
$ 0.45 
$ (0.02)
$ 0.28 
$ 0.25 
$ 0.27 
$ 0.73 
$ 0.18 
$ 0.18 
$ 0.95 
$ 1.35 
$ 0.96 
 
Earnings per common share, Net income, Diluted
$ 0.41 
$ (0.02)
$ 0.24 
$ 0.21 
$ 0.23 
$ 0.61 
$ 0.16 
$ 0.16 
$ 0.83 
$ 1.15 
$ 0.84 
 
Supplemental Cash Flow Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Deferrable policy acquisition costs
 
 
 
 
 
 
 
 
191.7 
216.7 
225.2 
 
Other operating costs
 
 
 
 
 
 
 
 
786.7 
684.3 
637.8 
 
Cash flows used by operating activities
 
 
 
 
 
 
 
 
634.9 
774.8 
734.0 
 
Balance Sheet Related Disclosures, Other [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total investments
27,959.3 
 
 
 
26,364.3 
 
 
 
27,959.3 
26,364.3 
 
 
Cash And Cash Equivalents Held By Variable Interest Entities
54.2 
 
 
 
74.4 
 
 
 
54.2 
74.4 
 
 
Accrued investment income
286.2 
 
 
 
288.7 
 
 
 
286.2 
288.7 
 
 
Income tax assets, net
716.9 
 
 
 
865.4 
 
 
 
716.9 
865.4 
 
 
Previously Reported [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Related Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Deferred acquisition costs
 
 
 
 
1,418.1 
 
 
 
 
1,418.1 
 
 
Income tax assets, net
 
 
 
 
630.5 
 
 
 
 
630.5 
 
 
Other assets
 
 
 
 
316.9 
 
 
 
 
316.9 
 
 
Total assets
 
 
 
 
33,332.7 
 
 
 
 
33,332.7 
 
 
Other liabilities
 
 
 
 
548.3 
 
 
 
 
548.3 
 
 
Total liabilities
 
 
 
 
28,300.1 
 
 
 
 
28,300.1 
 
 
Accumulated other comprehensive income
 
 
 
 
625.5 
 
 
 
 
625.5 
 
 
Retained earnings (accumulated deficit)
 
 
 
 
42.8 
 
 
 
 
42.8 
 
 
Total shareholders' equity
 
 
 
 
5,032.6 
 
 
 
 
5,032.6 
 
 
Total liabilities and shareholders' equity
 
 
 
 
33,332.7 
 
 
 
 
33,332.7 
 
 
Income Statement Related Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Amortization
 
 
 
 
 
 
 
 
 
432.4 
443.8 
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
 
496.5 
502.9 
 
Total benefits and expenses
 
 
 
 
 
 
 
 
 
3,745.4 
3,790.4 
 
Income before income taxes
 
 
 
 
 
 
 
 
 
379.2 
293.5 
 
Tax expense on period income
 
 
 
 
 
 
 
 
 
139.7 
103.9 
 
Net income
 
 
 
 
 
 
 
 
 
382.5 
284.6 
 
Earnings per common share, Net income, Basic
 
 
 
 
 
 
 
 
 
$ 1.54 
$ 1.13 
 
Earnings per common share, Net income, Diluted
 
 
 
 
 
 
 
 
 
$ 1.31 
$ 0.99 
 
Supplemental Cash Flow Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Deferrable policy acquisition costs
 
 
 
 
 
 
 
 
 
(428.7)
(418.2)
 
Other operating costs
 
 
 
 
 
 
 
 
 
(472.3)
(444.8)
 
Cash flows used by operating activities
 
 
 
 
 
 
 
 
 
774.8 
734.0 
 
Adjustments for New Accounting Pronouncement [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Related Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Deferred acquisition costs
 
 
 
 
(621.0)
 
 
 
 
(621.0)
 
 
Income tax assets, net
 
 
 
 
234.9 
 
 
 
 
234.9 
 
 
Other assets
 
 
 
 
(24.7)
 
 
 
 
(24.7)
 
 
Total assets
 
 
 
 
(410.8)
 
 
 
 
(410.8)
 
 
Other liabilities
 
 
 
 
8.0 
 
 
 
 
8.0 
 
 
Total liabilities
 
 
 
 
8.0 
 
 
 
 
8.0 
 
 
Accumulated other comprehensive income
 
 
 
 
156.1 
 
 
 
 
156.1 
 
 
Retained earnings (accumulated deficit)
 
 
 
 
(574.9)
 
 
 
 
(574.9)
 
 
Total shareholders' equity
 
 
 
 
(418.8)
 
 
 
 
(418.8)
 
 
Total liabilities and shareholders' equity
 
 
 
 
(410.8)
 
 
 
 
(410.8)
 
 
Income Statement Related Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Amortization
 
 
 
 
 
 
 
 
 
(135.0)
(118.8)
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
 
208.0 
187.4 
 
Total benefits and expenses
 
 
 
 
 
 
 
 
 
73.0 
68.6 
 
Income before income taxes
 
 
 
 
 
 
 
 
 
(73.0)
(68.6)
 
Tax expense on period income
 
 
 
 
 
 
 
 
 
(26.2)
(24.6)
 
Net income
 
 
 
 
 
 
 
 
 
(46.8)
(44.0)
 
Earnings per common share, Net income, Basic
 
 
 
 
 
 
 
 
 
$ (0.19)
$ (0.17)
 
Earnings per common share, Net income, Diluted
 
 
 
 
 
 
 
 
 
$ (0.16)
$ (0.15)
 
Supplemental Cash Flow Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Deferrable policy acquisition costs
 
 
 
 
 
 
 
 
 
212.0 
193.0 
 
Other operating costs
 
 
 
 
 
 
 
 
 
(212.0)
(193.0)
 
Cash flows used by operating activities
 
 
 
 
 
 
 
 
 
0 
0 
 
Actual [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Related Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Deferred acquisition costs
 
 
 
 
797.1 
 
 
 
 
797.1 
 
 
Income tax assets, net
 
 
 
 
865.4 
 
 
 
 
865.4 
 
 
Other assets
 
 
 
 
292.2 
 
 
 
 
292.2 
 
 
Total assets
 
 
 
 
32,921.9 
 
 
 
 
32,921.9 
 
 
Other liabilities
 
 
 
 
556.3 
 
 
 
 
556.3 
 
 
Total liabilities
 
 
 
 
28,308.1 
 
 
 
 
28,308.1 
 
 
Accumulated other comprehensive income
 
 
 
 
781.6 
 
 
 
 
781.6 
 
 
Retained earnings (accumulated deficit)
 
 
 
 
(532.1)
 
 
 
 
(532.1)
 
 
Total shareholders' equity
 
 
 
 
4,613.8 
 
 
 
 
4,613.8 
 
 
Total liabilities and shareholders' equity
 
 
 
 
32,921.9 
 
 
 
 
32,921.9 
 
 
Income Statement Related Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Amortization
 
 
 
 
 
 
 
 
 
297.4 
325.0 
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
 
704.5 
690.3 
 
Total benefits and expenses
 
 
 
 
 
 
 
 
 
3,818.4 
3,859.0 
 
Income before income taxes
 
 
 
 
 
 
 
 
 
306.2 
224.9 
 
Tax expense on period income
 
 
 
 
 
 
 
 
 
113.5 
79.3 
 
Net income
 
 
 
 
 
 
 
 
 
335.7 
240.6 
 
Earnings per common share, Net income, Basic
 
 
 
 
 
 
 
 
 
$ 1.35 
$ 0.96 
 
Earnings per common share, Net income, Diluted
 
 
 
 
 
 
 
 
 
$ 1.15 
$ 0.84 
 
Supplemental Cash Flow Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Deferrable policy acquisition costs
 
 
 
 
 
 
 
 
 
(216.7)
(225.2)
 
Other operating costs
 
 
 
 
 
 
 
 
 
(684.3)
(637.8)
 
Cash flows used by operating activities
 
 
 
 
 
 
 
 
 
$ 774.8 
$ 734.0 
 
INVESTMENTS - NARRATIVE (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
security
states
Dec. 31, 2011
Dec. 31, 2010
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Available For Sale Securities, Number of Securities Sold from Previous Unrealized Loss Position
0 
 
 
Available-for-sale Securities, Structured Securities, Fair Value
$ 5,531.6 
 
 
Net realized investment gains (losses)
81.1 
61.8 
30.2 
Amortized cost
21,626.8 
21,779.1 
 
Reduction to Present Value of Future Profits Due to Unrealized Gains That Would Result in Premium Deficiency if Unrealized Gains Were Realized
(162.3)
 
 
Reduction to Deferred Acquisition Costs Due to Unrealized Gains That Would Result in Premium Deficiency if Unrealized Gains Were Realized
(149.9)
 
 
Increase to insurance liabilities due to unrealized gains that would result in premium deficiency if unrealized gains were realized
489.8 
0 
 
Increase to Deferred Tax Assets Due to Unrealized Gains That Would Result in Premium Deficiency if Unrealized Gains Were Realized
288.7 
 
 
Estimated fair value
24,614.1 1
23,516.0 
 
Fair Value of Fixed Maturity Investments and Mortgage Loans Not Accruing Investment Income
0.5 
10.0 
 
Gain (Loss) on Investments, Excluding Other than Temporary Impairments
118.9 
96.4 
180.0 
Sales of investments
2,057.6 
5,504.5 
8,632.6 
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net
(37.8)
(34.6)
(149.8)
Other than Temporary Impairment Losses, Investments
37.8 
39.9 
146.8 
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Including Portion Attributable to Noncontrolling Interest, Available-for-sale Securities
0 
(5.3)
3.0 
Available For Sale Securities, Nonperforming, Aggregate Amortized Cost
0.4 
 
 
Available For Sale Securities, Nonperforming, Carrying Value
0.5 
 
 
Investment Impairment Charges on Guaranteed Investment Contract
 
 
70.6 
Investment, Guaranteed Investment Contract, Interest Rate Assumptions, Low End
 
 
1.33% 
Investments, Fair Value Disclosure, Guaranteed Investment Contract
 
 
213 
Book Value of Investment in Guaranteed Investment Contract
 
201.5 
 
Net Realized Loss on Guaranteed Investment Contract Commutation
 
(4.0)
 
Impairment Charges on Underlying Invested Assets from Commutation of Investment in Guaranteed Investment Contract
 
11.5 
 
Realized losses on sale
15.4 
59.9 
147.7 
Available For Sale Securities, Value Of Securities Sold
402.5 
1,000.0 
1,400.0 
Available-for-sale Securities, Structured Securities Fair Value, Percentage of All Fixed Maturity Securities
22.50% 
 
 
Number of Additional States Greater Than Specified Percentage of Mortgage Loan Balance
0 
 
 
Assets Held by Insurance Regulators
67.8 
74.5 
 
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Net of Tax
5.0 
38.0 
(114.0)
Non Investment Grade [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Amortized cost
2,341.2 1
2,039.6 
 
Percentage of Available-for-sale Debt Securities, Fair Value
11.00% 
 
 
Estimated fair value
2,506.6 1
1,999.9 
 
Available-for-sale Securities, Fair Value Disclosure, Percentage of Amortized Cost
107.00% 
 
 
Available for Sale Securities, Continuous Unrealized Loss Position Exceeding Cost Basis, Percent
20.00% 
 
 
Equity Securities [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Net realized investment gains (losses)
0.1 
(0.2)
0.1 
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net
29.9 
 
 
Mortgage-backed and Asset-backed Securities [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net
 
 
23.6 
Realized losses on sale
5.2 
24.1 
125.4 
Real Estate Available For Sale [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net
 
 
1.6 
Corporate Securities and Other Invested Assets [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net
 
 
13.2 
Government Agency Securities and Equity Interests in Corporate Investments [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Investments, Fair Value Disclosure
 
197.5 
 
Mortgage Loan [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Net realized investment gains (losses)
(3.7)
(29.3)
(16.9)
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net
5.4 
11.8 
40.8 
Investments Held By Variable Interest Entities [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net
 
4.3 
 
Other Securities [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Net realized investment gains (losses)
22.5 
2.7 
(2.6)
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net
2.5 
7.0 
 
US States and Political Subdivisions Debt Securities [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Realized losses on sale
 
13.4 
 
Partial Commutations of Guaranteed Investment Contract [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Realized losses on sale
 
8.9 
 
Corporate Debt Securities [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Realized losses on sale
10.2 
13.5 
22.3 
CALIFORNIA
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Percentage of Mortgage Loan Balance
8.00% 
 
 
MINNESOTA
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Percentage of Mortgage Loan Balance
7.00% 
 
 
ARIZONA
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Percentage of Mortgage Loan Balance
6.00% 
 
 
FLORIDA
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Percentage of Mortgage Loan Balance
5.00% 
 
 
INDIANA
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Percentage of Mortgage Loan Balance
6.00% 
 
 
MARYLAND
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Percentage of Mortgage Loan Balance
5.00% 
 
 
TEXAS
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Percentage of Mortgage Loan Balance
5.00% 
 
 
Minimum [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Percentage of Mortgage Loan Balance
5.00% 
 
 
Maximum [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Percentage of Commercial Loan Balance, Noncurrent
0.00% 
 
 
Embedded Derivative Financial Instruments [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Embedded Derivative, Gain on Embedded Derivative
20.1 
 
 
Marketable Securities [Member]
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Gain (Loss) on Investments, Excluding Other than Temporary Impairments
$ 98.8 
 
 
[1] Investment ratings – Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organization ("NRSROs") (Moody's Investor Services, Inc. ("Moody's"), S&P or Fitch Ratings ("Fitch")), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC"). NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch). NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch). References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above.
INVESTMENTS - SCHEDULE OF AMORTIZED COST, GROSS UNREALIZED GAINS AND LOSSES, ESTIMATED FAIR VALUE, AND OTHER-THAN-TEMPORARY IMPAIRMENTS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
$ 21,626.8 
$ 21,779.1 
Gross unrealized gains
3,020.2 1
1,959.8 
Gross unrealized losses
(32.9)1
(222.9)
Estimated fair value
24,614.1 1
23,516.0 
Other-than-temporary impairments included in accumulated other comprehensive income
6.0 
(11.8)
Equity Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
167.1 
177.0 
Gross unrealized gains
5.9 
1.2 
Gross unrealized losses
(1.6)
(3.1)
Estimated fair value
171.4 
175.1 
Investment Grade [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
19,285.6 1
19,739.5 
Gross unrealized gains
2,843.4 1
1,923.9 
Gross unrealized losses
(21.5)1
(147.3)
Estimated fair value
22,107.5 1
21,516.1 
Other-than-temporary impairments included in accumulated other comprehensive income
(0.8)
(0.3)
Investment Grade [Member] |
Corporate Debt Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
13,531.8 1
13,414.9 
Gross unrealized gains
2,221.4 1
1,513.4 
Gross unrealized losses
(12.1)1
(86.4)
Estimated fair value
15,741.1 1
14,841.9 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Investment Grade [Member] |
US Treasury and Government [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
93.9 1
298.0 
Gross unrealized gains
5.6 1
7.4 
Gross unrealized losses
0 1
0 
Estimated fair value
99.5 1
305.4 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Investment Grade [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
1,840.7 1
1,778.7 
Gross unrealized gains
277.3 1
189.3 
Gross unrealized losses
(4.3)1
(13.6)
Estimated fair value
2,113.7 1
1,954.4 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Investment Grade [Member] |
Foreign Government Debt Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
0.8 1
1.3 
Gross unrealized gains
0 1
0.1 
Gross unrealized losses
0 1
0 
Estimated fair value
0.8 1
1.4 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Investment Grade [Member] |
Asset-backed Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
1,002.9 1
1,227.2 
Gross unrealized gains
70.9 1
43.3 
Gross unrealized losses
(2.8)1
(30.9)
Estimated fair value
1,071.0 1
1,239.6 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Investment Grade [Member] |
Collateralized Debt Obligations [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
311.5 1
323.1 
Gross unrealized gains
7.5 1
1.1 
Gross unrealized losses
(1.0)1
(4.4)
Estimated fair value
318.0 1
319.8 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Investment Grade [Member] |
Commercial Mortgage Backed Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
1,325.7 1
1,351.0 
Gross unrealized gains
152.3 1
89.9 
Gross unrealized losses
(0.6)1
(7.9)
Estimated fair value
1,477.4 1
1,433.0 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Investment Grade [Member] |
Mortgage Pass Through Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
20.6 1
30.5 
Gross unrealized gains
1.2 1
1.6 
Gross unrealized losses
0 1
(0.1)
Estimated fair value
21.8 1
32.0 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Investment Grade [Member] |
Collateralized Mortgage Obligations [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
1,157.7 1
1,314.8 
Gross unrealized gains
107.2 1
77.8 
Gross unrealized losses
(0.7)1
(4.0)
Estimated fair value
1,264.2 1
1,388.6 
Other-than-temporary impairments included in accumulated other comprehensive income
(0.8)
(0.3)
Non Investment Grade [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
2,341.2 1
2,039.6 
Gross unrealized gains
176.8 1
35.9 
Gross unrealized losses
(11.4)1
(75.6)
Estimated fair value
2,506.6 1
1,999.9 
Other-than-temporary impairments included in accumulated other comprehensive income
(5.2)
(11.5)
Non Investment Grade [Member] |
Corporate Debt Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
1,055.8 1
1,055.5 
Gross unrealized gains
65.3 1
25.6 
Gross unrealized losses
(8.1)1
(50.5)
Estimated fair value
1,113.0 1
1,030.6 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Non Investment Grade [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
15.3 1
 
Gross unrealized gains
0 1
 
Gross unrealized losses
(0.9)1
 
Estimated fair value
14.4 1
 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
 
Non Investment Grade [Member] |
Asset-backed Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
360.9 1
178.0 
Gross unrealized gains
31.4 1
2.2 
Gross unrealized losses
(2.4)1
(5.8)
Estimated fair value
389.9 1
174.4 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Non Investment Grade [Member] |
Collateralized Debt Obligations [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
5.5 1
9.4 
Gross unrealized gains
0.5 1
0 
Gross unrealized losses
0 1
(1.9)
Estimated fair value
6.0 1
7.5 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Non Investment Grade [Member] |
Collateralized Mortgage Obligations [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
903.7 1
796.7 
Gross unrealized gains
79.6 1
8.1 
Gross unrealized losses
0 1
(17.4)
Estimated fair value
983.3 1
787.4 
Other-than-temporary impairments included in accumulated other comprehensive income
$ (5.2)
$ (11.5)
[1] Investment ratings – Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organization ("NRSROs") (Moody's Investor Services, Inc. ("Moody's"), S&P or Fitch Ratings ("Fitch")), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC"). NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch). NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch). References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above.
INVESTMENTS - SUMMARY OF INVESTMENTS BY NAIC DESIGNATIONS (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
$ 21,626.8 
$ 21,779.1 
Estimated fair value
24,614.1 1
23,516.0 
Percentage of total estimated fair value
100.00% 
 
Designation 1 [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
NAIC designation
1 
 
Amortized cost
10,133.6 
 
Estimated fair value
11,586.8 
 
Percentage of total estimated fair value
47.10% 
 
Designation 2 [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
NAIC designation
2 
 
Amortized cost
10,309.4 
 
Estimated fair value
11,779.5 
 
Percentage of total estimated fair value
47.80% 
 
Designation 3 [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
NAIC designation
3 
 
Amortized cost
849.3 
 
Estimated fair value
902.6 
 
Percentage of total estimated fair value
3.70% 
 
Designation 4 [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
NAIC designation
4 
 
Amortized cost
300.4 
 
Estimated fair value
314.9 
 
Percentage of total estimated fair value
1.30% 
 
Designation 5 [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
NAIC designation
5 
 
Amortized cost
33.7 
 
Estimated fair value
29.8 
 
Percentage of total estimated fair value
0.10% 
 
Designation 6 [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
NAIC designation
6 
 
Amortized cost
0.4 
 
Estimated fair value
$ 0.5 
 
Percentage of total estimated fair value
0.00% 
 
[1] Investment ratings – Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organization ("NRSROs") (Moody's Investor Services, Inc. ("Moody's"), S&P or Fitch Ratings ("Fitch")), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC"). NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch). NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch). References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above.
INVESTMENTS - SCHEDULE OF UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Investments, Debt and Equity Securities [Abstract]
 
 
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized
$ 9.8 
$ (4.4)
Net unrealized gains on all other investments
2,986.5 
1,733.2 
Adjustment to present value of future profits (a)
(193.0)1
(214.8)1
Adjustment to deferred acquisition costs
(452.9)
(289.3)
Adjustment to insurance liabilities
(489.8)
0 
Unrecognized net loss related to deferred compensation plan
(7.9)
(8.3)
Deferred income tax liabilities
(655.3)
(434.8)
Accumulated other comprehensive income
$ 1,197.4 
$ 781.6 
INVESTMENTS - SUMMARY OF INVESTMENTS BY CONTRACTUAL MATURITY (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Amortized Cost
 
 
Due in one year or less
$ 167.6 
 
Due after one year through five years
1,605.0 
 
Due after five years through ten years
4,375.0 
 
Due after ten years
10,390.7 
 
Subtotal
16,538.3 
 
Structured securities
5,088.5 
 
Total fixed maturities, available for sale
21,626.8 
21,779.1 
Estimated Fair Value
 
 
Due in one year or less
170.2 
 
Due after one year through five years
1,754.5 
 
Due after five years through ten years
4,932.7 
 
Due after ten years
12,225.1 
 
Subtotal
19,082.5 
 
Structured securities
5,531.6 
 
Total fixed maturities, available for sale
$ 24,614.1 
$ 23,516.0 
INVESTMENTS - SCHEDULE OF NET INVESTMENT INCOME (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Investments, Debt and Equity Securities [Abstract]
 
 
 
Fixed maturities
$ 1,280.9 
$ 1,233.8 
$ 1,162.6 
Trading income related to policyholder and reinsurer accounts and other special-purpose portfolios
62.4 
14.6 
43.7 
Equity securities
4.4 
1.7 
0.8 
Mortgage loans
99.8 
111.7 
121.7 
Policy loans
17.1 
17.6 
18.2 
Option income
0.4 
36.5 
57.3 
Change in value of options
25.1 
(57.7)
(29.1)
Other invested assets
14.4 
14.5 
9.1 
Cash and cash equivalents
0.6 
0.4 
0.5 
Gross investment income
1,505.1 
1,373.1 
1,384.8 
Less investment expenses
18.7 
19.0 
17.9 
Net investment income
$ 1,486.4 
$ 1,354.1 
$ 1,366.9 
INVESTMENTS - NET REALIZED INVESTMENT GAINS (LOSSES) (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Gain (Loss) on Investments [Line Items]
 
 
 
Realized gains on sale
$ 115.4 
$ 183.1 
$ 347.1 
Realized losses on sale
(15.4)
(59.9)
(147.7)
Total other-than-temporary impairment losses
(1.0)
(19.2)
(94.8)
Other-than-temporary impairment losses recognized in accumulated other comprehensive income (loss)
0 
5.3 
(4.7)
Net impairment losses recognized
37.8 
34.6 
149.8 
Total realized gains
81.1 
61.8 
30.2 
Total Fixed Maturities, Available For Sale [Member]
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
Net impairment losses recognized
1.0 
13.9 
99.5 
Total realized gains
99.0 
109.3 
99.9 
Equity Securities [Member]
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
Total realized gains
0.1 
(0.2)
0.1 
Mortgage Loan [Member]
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
Total realized gains
(3.7)
(29.3)
(16.9)
Impairments of Mortgage Loans And Other Investments [Member]
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
Total realized gains
(36.8)
(20.7)
(50.3)
Other Securities [Member]
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
Total realized gains
$ 22.5 
$ 2.7 
$ (2.6)
INVESTMENTS - SCHEDULE OF OTHER THAN TEMPORARY IMPAIRMENT (DETAILS) (Available-for-sale Securities [Member], USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Available-for-sale Securities [Member]
 
 
 
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
 
 
 
Credit losses on fixed maturity securities, available for sale, beginning of period
$ (2.0)
$ (6.1)
$ (27.2)
Add: credit losses on other-than-temporary impairments not previously recognized
0 
(1.1)
(1.7)
Less: credit losses on securities sold
0.4 
5.2 
33.3 
Less: credit losses on securities impaired due to intent to sell
0 1
0 1
1.9 1
Add: credit losses on previously impaired securities
0 
0 
(12.4)
Less: increases in cash flows expected on previously impaired securities
0 
0 
0 
Credit losses on fixed maturity securities, available for sale, end of period
$ (1.6)
$ (2.0)
$ (6.1)
INVESTMENTS - SUMMARY OF INVESTMENTS WITH UNREALIZED LOSSES BY CONTRACTUAL MATURITY (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Amortized Cost
 
Due in one year or less
$ 0 
Due after one year through five years
35.5 
Due after five years through ten years
106.5 
Due after ten years
513.0 
Subtotal
655.0 
Structured securities
286.5 
Total
941.5 
Estimated Fair Value
 
Due in one year or less
0 
Due after one year through five years
35.2 
Due after five years through ten years
103.1 
Due after ten years
491.3 
Subtotal
629.6 
Structured securities
279.0 
Total
$ 908.6 
INVESTMENTS - SUMMARY OF INVESTMENTS WITH UNREALIZED LOSSES BY INVESTMENT CATEGORY (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
$ 479.4 
$ 2,932.6 
Unrealized Losses, Less than 12 Months
(14.2)
(104.0)
Fair Value, Twelve Months or Longer
429.2 
835.9 
Unrealized Losses, 12 Months or Longer
(18.7)
(118.9)
Fair Value, Total
908.6 
3,768.5 
Unrealized Losses, Total
(32.9)
(222.9)
US Treasury and Government [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
 
9.1 
Unrealized Losses, Less than 12 Months
 
0 
Fair Value, Twelve Months or Longer
 
0.2 
Unrealized Losses, 12 Months or Longer
 
0 
Fair Value, Total
 
9.3 
Unrealized Losses, Total
 
0 
US States and Political Subdivisions Debt Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
48.3 
6.9 
Unrealized Losses, Less than 12 Months
(1.8)
(0.2)
Fair Value, Twelve Months or Longer
68.7 
155.4 
Unrealized Losses, 12 Months or Longer
(3.4)
(13.4)
Fair Value, Total
117.0 
162.3 
Unrealized Losses, Total
(5.2)
(13.6)
Foreign Government Debt Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
 
0.5 
Unrealized Losses, Less than 12 Months
 
0 
Fair Value, Twelve Months or Longer
 
0 
Unrealized Losses, 12 Months or Longer
 
0 
Fair Value, Total
 
0.5 
Unrealized Losses, Total
 
0 
Corporate Debt Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
338.1 
1,394.7 
Unrealized Losses, Less than 12 Months
(11.2)
(57.0)
Fair Value, Twelve Months or Longer
174.5 
466.2 
Unrealized Losses, 12 Months or Longer
(9.0)
(79.9)
Fair Value, Total
512.6 
1,860.9 
Unrealized Losses, Total
(20.2)
(136.9)
Asset-backed Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
41.7 
437.6 
Unrealized Losses, Less than 12 Months
(0.3)
(14.5)
Fair Value, Twelve Months or Longer
111.6 
147.5 
Unrealized Losses, 12 Months or Longer
(4.9)
(22.2)
Fair Value, Total
153.3 
585.1 
Unrealized Losses, Total
(5.2)
(36.7)
Collateralized Debt Obligations [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
19.4 
268.8 
Unrealized Losses, Less than 12 Months
(0.4)
(6.3)
Fair Value, Twelve Months or Longer
32.5 
1.7 
Unrealized Losses, 12 Months or Longer
(0.6)
0 
Fair Value, Total
51.9 
270.5 
Unrealized Losses, Total
(1.0)
(6.3)
Commercial Mortgage Backed Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
4.9 
168.8 
Unrealized Losses, Less than 12 Months
(0.1)
(5.2)
Fair Value, Twelve Months or Longer
6.2 
33.0 
Unrealized Losses, 12 Months or Longer
(0.5)
(2.7)
Fair Value, Total
11.1 
201.8 
Unrealized Losses, Total
(0.6)
(7.9)
Mortgage Pass Through Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
0 
1.2 
Unrealized Losses, Less than 12 Months
0 
0 
Fair Value, Twelve Months or Longer
1.9 
2.2 
Unrealized Losses, 12 Months or Longer
0 
(0.1)
Fair Value, Total
1.9 
3.4 
Unrealized Losses, Total
0 
(0.1)
Collateralized Mortgage Backed Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
27.0 
645.0 
Unrealized Losses, Less than 12 Months
(0.4)
(20.8)
Fair Value, Twelve Months or Longer
33.8 
29.7 
Unrealized Losses, 12 Months or Longer
(0.3)
(0.6)
Fair Value, Total
60.8 
674.7 
Unrealized Losses, Total
(0.7)
(21.4)
Equity Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair Value, Less than Twelve Months
17.8 
41.6 
Unrealized Losses, Less than 12 Months
(1.6)
(3.0)
Fair Value, Twelve Months or Longer
0 
0.4 
Unrealized Losses, 12 Months or Longer
0 
0 
Fair Value, Total
17.8 
42.0 
Unrealized Losses, Total
$ (1.6)
$ (3.0)
INVESTMENTS - SCHEDULE OF PAR VALUE, AMORTIZED COST, AND ESTIMATED FAIR VALUE ON UNDERLYING COLLATERAL (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
 
Par Value
$ 5,349.2 
Amortized cost
5,088.6 
Estimated fair value
5,531.6 
Below 4 Percent [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Par Value
609.4 
Amortized cost
564.1 
Estimated fair value
581.8 
4 Percent - 5 Percent [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Par Value
793.1 
Amortized cost
773.7 
Estimated fair value
850.3 
5 Percent - 6 Percent [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Par Value
2,718.1 
Amortized cost
2,575.9 
Estimated fair value
2,825.0 
6 Percent - 7 Percent [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Par Value
941.4 
Amortized cost
881.4 
Estimated fair value
967.2 
7 Percent - 8 Percent [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Par Value
159.5 
Amortized cost
164.8 
Estimated fair value
176.3 
8 Percent and Above [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Par Value
127.7 
Amortized cost
128.7 
Estimated fair value
$ 131.0 
INVESTMENTS - SCHEDULE OF AMORTIZED COST AND ESTIMATED FAIR VALUE OF STRUCTURED SECURITIES (DETAILS) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
 
Amortized cost
$ 5,088.6 
Amount
5,531.6 
Percent of fixed maturities
22.50% 
Pass Throughs, Sequential and Equivalent Securities [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Amortized cost
1,376.6 
Amount
1,492.7 
Percent of fixed maturities
6.10% 
Planned Amortization Classes, Target Amortization Classes and Accretion Directed Bonds [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Amortized cost
678.9 
Amount
746.8 
Percent of fixed maturities
3.00% 
Commercial Mortgage Backed Securities [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Amortized cost
1,325.7 
Amount
1,477.4 
Percent of fixed maturities
6.00% 
Asset-backed Securities [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Amortized cost
1,363.9 
Amount
1,460.9 
Percent of fixed maturities
6.00% 
Collateralized Debt Obligations [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Amortized cost
317.0 
Amount
324.1 
Percent of fixed maturities
1.30% 
Other Type of Security [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Amortized cost
26.5 
Amount
$ 29.7 
Percent of fixed maturities
0.10% 
INVESTMENTS - SCHEDULE OF CARRYING VALUE AND ESTIMATED FAIR VALUE OF OUTSTANDING MORTGAGE LOANS (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
$ 1,573.2 
$ 1,602.8 
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
1,682.1 1
 
Collateral
3,281.8 1
 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Less Than 60% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
838.7 1
 
Collateral
2,172.6 1
 
Estimate of Fair Value, Fair Value Disclosure [Member] |
60% to 70% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
342.7 1
 
Collateral
498.2 1
 
Estimate of Fair Value, Fair Value Disclosure [Member] |
70% to 80% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
281.5 1
 
Collateral
358.7 1
 
Estimate of Fair Value, Fair Value Disclosure [Member] |
80% to 90% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
118.5 1
 
Collateral
135.0 1
 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Greater Than 90% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
100.7 1
 
Collateral
117.3 1
 
Carrying (Reported) Amount, Fair Value Disclosure [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
1,573.2 
 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Less Than 60% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
758.9 1
 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
60% to 70% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
323.1 1
 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
70% to 80% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
266.9 1
 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
80% to 90% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
114.1 1
 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Greater Than 90% [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Mortgage Loans on Real Estate
$ 110.2 1
 
LIABILITIES FOR INSURANCE PRODUCTS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
Liabilities For Interest Sensitive Products
$ 12,893.2 
$ 13,165.5 
 
Traditional Life, Interest Rate Assumption
5.00% 1
 
 
Limited Payment Annuities, Interest Rate Assumption
4.00% 2
 
 
Accident and Health Insurance, Interest Rate Assumption
6.00% 
 
 
Liabilities For Traditional Products
11,196.3 
10,482.7 
 
Claims payable and other policyholder funds
985.1 
1,034.3 
 
Liabilities related to separate accounts
14.9 
15.0 
 
Total
25,089.5 
24,697.5 
 
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward]
 
 
 
Balance, beginning of the year
1,637.3 
1,543.7 
1,444.0 
Incurred claims (net of reinsurance) related to:
 
 
 
Current year
1,570.1 
1,545.8 
1,505.8 
Prior years (a)
(56.4)3
(41.7)3
(15.6)3
Total incurred
1,513.7 
1,504.1 
1,490.2 
Interest on claim reserves
77.8 
78.4 
73.4 
Paid claims (net of reinsurance) related to:
 
 
 
Current year
891.3 
866.5 
827.0 
Prior years
663.9 
626.2 
694.1 
Total paid
1,555.2 
1,492.7 
1,521.1 
Net change in balance for reinsurance assumed and ceded
5.7 
3.8 
57.2 
Balance, end of the year
1,679.3 
1,637.3 
1,543.7 
Investment contracts [Member]
 
 
 
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
Liabilities For Interest Sensitive Products
9,648.9 4
9,832.9 4
 
Universal life contracts [Member]
 
 
 
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
Liabilities For Interest Sensitive Products
3,244.3 
3,332.6 
 
Traditional life insurance contracts [Member]
 
 
 
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
Liabilities For Traditional Products
2,389.6 1
2,396.2 1
 
Limited-payment annuities [Member]
 
 
 
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
Liabilities For Traditional Products
903.5 2
848.8 2
 
Individual and group accident and health [Member]
 
 
 
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
Liabilities For Traditional Products
$ 7,903.2 
$ 7,237.7 
 
INCOME TAXES (DETAILS) (USD $)
In Millions, unless otherwise specified
1 Months Ended 3 Months Ended 12 Months Ended
Oct. 31, 2008
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Income Tax [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
 
 
$ 200.2 
$ 3.4 
$ 6.8 
Income Tax Expense (Benefit) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Current tax expense
 
 
 
 
 
 
 
 
 
12.5 
11.9 
9.7 
Deferred tax expense
 
 
 
 
 
 
 
 
 
117.4 
101.6 
69.6 
Valuation allowance applicable to current year income
 
 
 
 
 
 
 
 
 
(60.3)
0 
0 
Income tax expense calculated based on annual effective tax rate
 
 
 
 
 
 
 
 
 
69.6 
113.5 
79.3 
Valuation allowance reduction applicable to income in future years
 
 
 
 
 
 
 
 
 
111.2 
143.0 
95.0 
Deferred tax benefit related to loss on extinguishment of debt and other items
 
 
 
 
 
 
 
 
 
(23.7)
0 
0 
Total income tax expense (benefit)
 
(16.5)
153.8 
(38.8)
(33.2)
(37.9)
117.8 
(25.4)
(25.0)
(65.3)
(29.5)
(15.7)
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
U.S. statutory corporate rate
 
 
 
 
 
 
 
 
 
35.00% 
35.00% 
35.00% 
Valuation allowance
 
 
 
 
 
 
 
 
 
(110.10%)
(46.70%)
(42.20%)
Other nondeductible benefits
 
 
 
 
 
 
 
 
 
32.30% 
0.70% 
(0.60%)
State taxes
 
 
 
 
 
 
 
 
 
1.40% 
0.90% 
0.90% 
Provision for tax issues, tax credits and other
 
 
 
 
 
 
 
 
 
(0.50%)
0.50% 
(0.10%)
Effective tax rate
 
 
 
 
 
 
 
 
 
(41.90%)
(9.60%)
(7.00%)
Deferred tax assets:
 
 
 
 
 
 
 
 
 
 
 
 
Net federal operating loss carryforwards
 
1,330.2 
 
 
 
1,445.2 
 
 
 
1,330.2 
1,445.2 
 
Net state operating loss carryforwards
 
16.2 
 
 
 
16.8 
 
 
 
16.2 
16.8 
 
Tax credits
 
39.2 
 
 
 
32.6 
 
 
 
39.2 
32.6 
 
Capital loss carryforwards
 
296.2 
 
 
 
342.3 
 
 
 
296.2 
342.3 
 
Insurance liabilities
 
746.3 
 
 
 
744.4 
 
 
 
746.3 
744.4 
 
Other
 
86.0 
 
 
 
64.8 
 
 
 
86.0 
64.8 
 
Gross deferred tax assets
 
2,514.1 
 
 
 
2,646.1 
 
 
 
2,514.1 
2,646.1 
 
Deferred tax liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Investments
 
(24.1)
 
 
 
(24.2)
 
 
 
(24.1)
(24.2)
 
Present value of future profits and deferred acquisition costs
 
(325.2)
 
 
 
(363.7)
 
 
 
(325.2)
(363.7)
 
Accumulated other comprehensive income
 
(655.3)
 
 
 
(434.8)
 
 
 
(655.3)
(434.8)
 
Gross deferred tax liabilities
 
(1,004.6)
 
 
 
(822.7)
 
 
 
(1,004.6)
(822.7)
 
Net deferred tax assets before valuation allowance
 
1,509.5 
 
 
 
1,823.4 
 
 
 
1,509.5 
1,823.4 
 
Valuation allowance
 
(766.9)
 
 
 
(938.4)
 
 
 
(766.9)
(938.4)
 
Net deferred tax assets
 
742.6 
 
 
 
885.0 
 
 
 
742.6 
885.0 
 
Current income taxes accrued
 
(25.7)
 
 
 
(19.6)
 
 
 
(25.7)
(19.6)
 
Income tax assets, net
 
716.9 
 
 
 
865.4 
 
 
 
716.9 
865.4 
 
Loss Limitation Based On Income Of Life Insurance Company
 
35.00% 
 
 
 
 
 
 
 
35.00% 
 
 
Loss Limitation Based On Loss Of Non Life Entities
 
35.00% 
 
 
 
 
 
 
 
35.00% 
 
 
Federal Long Term Tax Exempt Rate
 
2.87% 
 
 
 
 
 
 
 
2.87% 
 
 
Ownership Change Threshold Restricting Nol Useage
 
50.00% 
 
 
 
 
 
 
 
50.00% 
 
 
Loss on investment in Senior Health
742 
 
 
 
 
 
 
 
 
 
 
 
Valuation Allowance, Deferred Tax Asset, Change in Amount Due to Classifying Loss as Ordinary
 
 
 
 
 
 
 
 
 
145 
 
 
Convertible Subordinated Debt [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Income Tax [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
 
 
$ 136.5 
 
 
Deferred tax liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
 
7.00% 
7.00% 
 
 
 
 
 
 
7.00% 
 
 
INCOME TAXES - OPERATING LOSS CARRYFORWARDS (DETAILS) (USD $)
1 Months Ended 12 Months Ended
Oct. 31, 2008
Jul. 31, 2006
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Jan. 20, 2009
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Valuation Allowance, Deferred Taxes, Change in Amount Impacting Future Periods
 
 
$ (111,200,000)
$ (143,000,000)
$ (95,000,000)
 
Deferred Tax Assets, Tax Loss Carryforwards, Subject to Expiration, Net of Valuation Allowance
 
 
876,000,000 
 
 
 
Assumed Growth Rate For the Next Five Years, Included in Deferred Tax Valuation Analysis
 
 
5.00% 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
846,300,000 
 
 
 
Total loss carryforwards
 
 
4,647,000,000 
 
 
 
Net operating loss carryforward to be reclassified as non life net operating loss carryforwards
 
 
631,000,000 
 
 
 
Loss on investment in Senior Health
742,000,000 
 
 
 
 
 
Net state operating loss carryforwards
 
 
16,200,000 
16,800,000 
 
 
Ownership Change Threshold Restricting Nol Useage
 
 
50.00% 
 
 
 
Percentage of Stockholders Related to Section 382 Rights Agreement
 
 
 
 
 
5.00% 
Ownership Percentage Threshold Relating To Section 382 Rights Agreement
 
 
 
 
 
4.99% 
Cancellation of Debt Income Realized
 
2,500,000,000 
 
 
 
 
Operating Loss Carryforwards, Related to Deductions for Stock Options and Restricted Stock
 
 
2,900,000 
 
 
 
Normalized Average Annual Taxable Income For Last Three Years
 
 
292,000,000 
 
 
 
Normalized Average Annual Taxable Income For Last Three Years in Prior Projection
 
 
260,000,000 
 
 
 
Carryforward Expiration 2013 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
808,600,000 1
 
 
 
Total loss carryforwards
 
 
808,600,000 
 
 
 
Other Tax Carryforward, Expiration Dates
 
 
2013 
 
 
 
Carryforward Expiration 2014 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
28,600,000 
 
 
 
Total loss carryforwards
 
 
28,600,000 
 
 
 
Other Tax Carryforward, Expiration Dates
 
 
2014 
 
 
 
Carryforward Expiration 2015 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
9,100,000 
 
 
 
Total loss carryforwards
 
 
9,100,000 
 
 
 
Other Tax Carryforward, Expiration Dates
 
 
2015 
 
 
 
Carryforward Expiration 2018 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2018 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
475,000,000 
 
 
 
Carryforward Expiration 2021 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2021 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
29,500,000 
 
 
 
Carryforward Expiration 2022 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2022 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
204,100,000 
 
 
 
Carryforward Expiration 2023 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2023 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
2,603,100,000 
 
 
 
Carryforward Expiration 2024 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2024 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
3,200,000 
 
 
 
Carryforward Expiration 2025 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2025 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
118,800,000 
 
 
 
Carryforward Expiration 2027 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2027 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
216,800,000 
 
 
 
Carryforward Expiration 2028 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2028 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
500,000 
 
 
 
Carryforward Expiration 2029 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2029 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
148,900,000 
 
 
 
Carryforward Expiration 2032 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards, expiration dates
 
 
2032 
 
 
 
Other Tax Carryforward, Gross Amount
 
 
0 
 
 
 
Total loss carryforwards
 
 
800,000 
 
 
 
Internal Revenue Service (IRS) [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
3,800,000,000 
 
 
 
Non Life Insurance Companies [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
3,092,100,000 
 
 
 
Amount of tax losses on investment in Conseco Finance Group
 
3,800,000,000 
 
 
 
 
Valuation Allowance, Deferred Tax Asset, Change in Amount Due to Cancellation of Debt Income Issue
 
 
140,000,000 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2013 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2014 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2015 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2018 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2021 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2022 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2023 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
2,603,100,000 2
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2024 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
3,200,000 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2025 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
118,800,000 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2027 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
216,800,000 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2028 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
500,000 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2029 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
148,900,000 
 
 
 
Non Life Insurance Companies [Member] |
Carryforward Expiration 2032 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
800,000 
 
 
 
Life Insurance Companies [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
708,600,000 
 
 
 
Amount of tax losses on investment in Conseco Finance Group
 
2,100,000,000 
 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2013 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2014 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2015 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2018 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
475,000,000 2
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2021 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
29,500,000 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2022 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
204,100,000 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2023 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 1
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2024 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2025 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2027 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2028 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2029 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
0 
 
 
 
Life Insurance Companies [Member] |
Carryforward Expiration 2032 [Member]
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Operating loss carryforwards
 
 
$ 0 
 
 
 
INCOME TAXES - VALUATION ALLOWANCE (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Increase (Decrease) in Valuation Allowance [Roll Forward]
 
 
 
Begininng Balance, Valuation Allowance
$ 938.4 
$ 1,081.4 
$ 1,176.4 
Valuation Allowance, Deferred Tax Asset, Change in Amount
(171.5)1
(143.0)2
(95.0)3
Ending Balance, Valuation Allowance
766.9 
938.4 
1,081.4 
Valuation allowance applicable to current year income
(60.3)
0 
0 
Taxable Operating Income Exceeds Deferred Tax Valuation [Member]
 
 
 
Increase (Decrease) in Valuation Allowance [Roll Forward]
 
 
 
Valuation Allowance, Deferred Tax Asset, Change in Amount
13.7 
 
 
Taxable Investment Gains Realized [Member]
 
 
 
Increase (Decrease) in Valuation Allowance [Roll Forward]
 
 
 
Valuation Allowance, Deferred Tax Asset, Change in Amount
$ 46.6 
 
 
INCOME TAXES - UNRECOGNIZED TAX BENEFITS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Income Tax Contingency [Line Items]
 
 
 
Unrecognized Tax Benefits that Would Impact Effective Tax Rate
$ 285 
$ 300 
 
Unrecognized Tax Benefits, Interest on Income Taxes Expense
0.7 
1.1 
0 
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued
1.8 
1.1 
 
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Balance at beginning of year
318.2 
311.1 
 
Increase based on tax positions taken in prior years
7.3 
7.1 
 
Decrease based on tax positions taken in prior years
(15.0)
0 
 
Balance at end of year
$ 310.5 
$ 318.2 
$ 311.1 
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS OUTSTANDING (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
New Senior Secured Credit Agreement [Member]
Dec. 31, 2011
New Senior Secured Credit Agreement [Member]
Dec. 31, 2012
Convertible Subordinated, 7.0 Percent Debentures [Member]
Sep. 30, 2012
Convertible Subordinated, 7.0 Percent Debentures [Member]
Dec. 31, 2011
Convertible Subordinated, 7.0 Percent Debentures [Member]
Dec. 31, 2012
Senior Secured Credit Agreement
Dec. 31, 2011
Senior Secured Credit Agreement
Dec. 31, 2012
Senior Secured Notes 9 Percent [Member]
Dec. 31, 2011
Senior Secured Notes 9 Percent [Member]
Dec. 31, 2012
Other Notes Payable [Member]
Dec. 31, 2011
Other Notes Payable [Member]
Dec. 31, 2012
Senior Secured Note 6.375 Percent [Member]
Dec. 31, 2011
Senior Secured Note 6.375 Percent [Member]
Sep. 28, 2012
Senior Notes [Member]
Senior Secured Notes 9 Percent [Member]
Dec. 31, 2012
Senior Notes [Member]
Senior Secured Note 6.375 Percent [Member]
Debt Instruments [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct corporate obligations
$ 1,004.2 
$ 857.9 
$ 644.6 
$ 0 
$ 93.0 
 
$ 293.0 
$ 0 
$ 255.2 
$ 0 
$ 275.0 
$ 0 
$ 50.0 
 
$ 0 
$ 1.2 
$ 275.0 
Unamortized Discount
 
 
$ (5.0)
$ 0 
$ (3.4)
 
$ (12.9)
$ 0 
$ (2.4)
 
 
 
 
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
 
 
 
 
7.00% 
7.00% 
 
 
 
9.00% 
 
6.00% 
 
6.375% 
 
9.00% 
6.375% 
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - RECAPITALIZATION PLAN (DETAILS) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended
Sep. 30, 2012
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Sep. 30, 2012
New Senior Secured Credit Agreement [Member]
Sep. 30, 2012
New Senior Secured Credit Agreement And Senior Secured Note 6.375 Percent [Member]
Sep. 30, 2012
Convertible Subordinated Debt [Member]
Dec. 21, 2010
Senior Secured Credit Agreement
Sep. 30, 2012
Senior Secured Credit Agreement
Sep. 30, 2012
Senior Secured Notes 9 Percent [Member]
Sep. 30, 2012
Convertible Subordinated And Senior And Senior Secured Notes 9 Percent [Member]
Sep. 30, 2012
Senior Notes [Member]
Senior Secured Note 6.375 Percent [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Total sources
$ 944.5 
$ 944.5 
$ 0 
$ 756.1 
$ 669.5 
 
 
$ 363.6 
 
 
 
$ 275.0 
Cash on hand for general corporate purposes
 
 
 
 
 
13.7 
 
 
 
 
 
 
Repurchase and repayment of debt
 
810.6 
144.8 
793.6 
 
 
355.1 
 
223.8 
322.7 
 
 
Debt issuance costs
 
 
 
 
 
 
 
 
 
 
23.1 
 
Accrued interest
 
109.0 
95.5 
108.2 
 
 
 
 
 
 
6.1 
 
Uses of Cash from Recapitalization Transaction
$ 944.5 
 
 
 
 
 
 
 
 
 
 
 
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (DETAILS) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended
Sep. 30, 2012
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2012
Senior Secured Note 6.375 Percent [Member]
Dec. 31, 2011
Senior Secured Note 6.375 Percent [Member]
Dec. 21, 2010
Senior Secured Notes 9 Percent [Member]
Dec. 31, 2012
Senior Secured Notes 9 Percent [Member]
Dec. 31, 2011
Senior Secured Notes 9 Percent [Member]
Sep. 30, 2012
Senior Notes [Member]
Senior Secured Note 6.375 Percent [Member]
Dec. 31, 2012
Senior Notes [Member]
Senior Secured Note 6.375 Percent [Member]
Sep. 28, 2012
Senior Notes [Member]
Pari Passu Intercreditor Agreement [Member]
Sep. 28, 2012
Senior Notes [Member]
Senior Secured Notes 9 Percent [Member]
Dec. 21, 2010
Senior Notes [Member]
Senior Secured Notes 9 Percent [Member]
Dec. 31, 2012
Maximum [Member]
Senior Notes [Member]
Senior Secured Note 6.375 Percent [Member]
Sep. 30, 2012
Maximum [Member]
Senior Notes [Member]
Senior Secured Note 6.375 Percent [Member]
Sep. 28, 2012
Maximum [Member]
Senior Notes [Member]
Pari Passu Intercreditor Agreement [Member]
Dec. 31, 2012
Minimum [Member]
Senior Notes [Member]
Senior Secured Note 6.375 Percent [Member]
Sep. 30, 2012
Minimum [Member]
Senior Notes [Member]
Senior Secured Note 6.375 Percent [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes payable - direct corporate obligations
 
$ 1,004.2 
$ 857.9 
 
 
$ 0 
 
$ 0 
$ 275.0 
 
$ 275.0 
 
$ 1.2 
 
 
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
 
 
 
 
6.375% 
 
 
9.00% 
 
 
6.375% 
 
9.00% 
 
 
 
 
 
 
Repayments of Long-term Debt
 
 
 
 
 
 
 
 
 
 
 
 
326.3 
 
 
 
 
 
 
Debt Instrument, Terms, Percentage of Trustees or Holders
 
 
 
 
 
 
 
 
 
 
25.00% 
 
 
 
 
 
 
 
 
Debt Instrument, Terms, Mandatory Accelerated Repurchase, Percentage of Aggregate Principal Amount
 
 
 
 
 
 
 
 
 
 
101.00% 
 
 
 
 
 
 
 
 
Debt Instrument, Redemption Percentage of Aggregate Principal Amount
 
 
 
 
 
 
 
 
 
100.00% 
 
 
 
100.00% 
 
 
 
 
 
Debt Instrument, Redemption Percentage of Aggregate Principal Amount with Cash from Equity Offerings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
Debt Instrument, Price Percentage of Aggregate Principal Amount
 
 
 
 
 
 
 
 
 
 
106.375% 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
 
 
 
 
 
 
275.0 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of notes payable, net
944.5 
944.5 
0 
756.1 
 
 
 
 
 
275.0 
 
 
 
 
 
 
 
 
 
Debt Instrument, Terms, Removal of Collateral Restrictions, Amount of Outstanding Borrowings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25.0 
 
 
Debt Instrument, Terms, Removal of Collateral Restrictions, Period of Time After Default and Holders Make Certain Representations
 
 
 
 
 
 
 
 
 
 
 
180 days 
 
 
 
 
 
 
 
Proceeds from Issuance of Secured Debt
 
 
 
 
 
 
267.0 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Cash Tender Offer to Repay Long-term Debt
 
 
 
 
 
 
 
 
 
 
 
 
273.8 
 
 
 
 
 
 
Repayments of Long-term Debt, Portion Related to Tender Offer
 
 
 
 
 
 
 
 
 
 
 
 
313.1 
 
 
 
 
 
 
Repayments of Long-term Debt, Portion Related to Consent Payments
 
 
 
 
 
 
 
 
 
 
 
 
8.2 
 
 
 
 
 
 
Repayments of Long-term Debt, Portion Related to Accrued and Unpaid Interest
 
 
 
 
 
 
 
 
 
 
 
 
5.0 
 
 
 
 
 
 
Debt Instrument, Terms, Minimum Pro Forma Risk-Based Capital Ratio for Restricted Payments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225.00% 
 
Debt Instrument, Limit of Restricted Payments Permitted, Cash Dividends on Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
Debt Instrument, Limit of Restricted Payments Permitted, Percent of Net Excess Cash Flow
 
 
 
 
 
 
 
 
 
50.00% 
 
 
 
 
 
 
 
 
 
Debt Instrument, Limit of Restricted Payments Permitted, Amount
 
 
 
 
 
 
 
 
 
 
175.0 
 
 
 
 
 
 
 
 
Debt Instrument, Limit of Restricted Payments Permitted, Amount of Allowed Additional Payments
 
 
 
 
 
 
 
 
 
 
$ 212 
 
 
 
 
 
 
 
 
Debt Instrument, Limit of Restricted Payments Permitted, Debt to Total Capitalization Ratio Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17.50% 
 
 
 
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - NEW SENIOR SECURED CREDIT AGREEMENT (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
New Senior Secured Credit Agreement [Member]
Dec. 31, 2011
New Senior Secured Credit Agreement [Member]
Dec. 31, 2012
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Term Loan Facility, Six-Year [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Term Loan Facility, Four-Year [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Revolving Credit Facility [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Revolving Credit Facility [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Maximum [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Maximum [Member]
Letter of Credit [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Maximum [Member]
Uncommitted Subfacility [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Minimum [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Eurodollar Rate [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Eurodollar Rate [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Base Rate [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Base Rate [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Base Rate [Member]
Revolving Credit Facility [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Base Rate Subject to Eurodollar Floor [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Base Rate Subject to Eurodollar Floor [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Dec. 31, 2012
Base Rate Floor [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Base Rate Floor [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Dec. 31, 2012
Base Rate Floor [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Sep. 28, 2012
Base Rate Floor [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes payable - direct corporate obligations
$ 1,004.2 
$ 857.9 
$ 644.6 
$ 0 
 
 
 
$ 425.0 
 
$ 250.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Term
 
 
 
 
 
 
6 years 
 
4 years 
 
3 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of Credit Facility, Maximum Borrowing Capacity
 
 
 
 
 
 
 
 
 
 
 
50.0 
 
5.0 
5.0 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Annual Amortization Percentage of Loan
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Annual Amortization Percentage of Loan in First and Second Year
 
 
 
 
 
 
 
 
 
20.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Annual Amortization Percentage of Loan in Third and Fourth Year
 
 
 
 
 
 
 
 
 
30.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Increase, Additional Borrowings
 
 
 
 
 
 
 
 
 
 
 
 
250.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Net Cash Proceeds from Asset Sales and Casualty Events
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Net Cash Proceeds Received for Restricted Subsidiaries from Debt Issuances
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Restricted Payments
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt to Capitalization Ratio, Threshold Requiring Equal Debt Repayment
 
 
 
 
 
 
 
 
 
 
 
 
22.50% 
 
 
17.50% 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Terms, Mandatory Prepayments, Reduced Percentage
 
 
 
 
 
33.33% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt to Capitalization Ratio, Maximum Threshold for Repayment Requirement
 
 
 
 
 
17.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Debt to Capitalization Ratio, Percentage Required No Mandatory Prepayment
 
 
 
 
 
 
 
 
 
 
 
 
20.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mandatory Debt Repayment
 
 
 
 
28.4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional Debt Repayment
 
 
 
 
2.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Basis Spread on Variable Rate
 
 
 
 
 
 
 
 
 
 
 
3.50% 
 
 
 
 
3.75% 
3.25% 
2.75% 
2.25% 
2.50% 
1.25% 
1.00% 
5.00% 
2.25% 
4.25% 
2.00% 
Debt to Capitalization Ratio Required
 
 
 
 
 
 
 
 
 
 
 
 
27.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt to Capitalization Ratio at Period End
 
 
 
 
20.90% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Coverage Ratio Required
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.50 
 
 
 
 
 
 
 
 
 
 
 
Lesser Of Interest Coverage Ratio Required
 
 
 
 
 
8.08 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate Adjusted Capital to Company Action Level Risk-Based Capital Ratio, After Stated Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
250.00% 
 
 
 
 
 
 
 
 
 
 
 
Aggregate Adjusted Capital to Company Action Level Risk Based Capital Ratio at Period End
 
 
 
 
367.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum Combined Statutory Capital and Surplus
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,300.0 
 
 
 
 
 
 
 
 
 
 
 
Combined Statutory Capital and Surplus at Period End
 
 
 
 
$ 1,782.6 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - 7.0% DEBENTURES (DETAILS) (USD $)
12 Months Ended 0 Months Ended 1 Months Ended 0 Months Ended
Dec. 31, 2010
Dec. 31, 2012
Dec. 31, 2011
May 4, 2010
May 4, 2010
Convertible Subordinated Debt [Member]
Nov. 13, 2009
Convertible Subordinated Debt [Member]
May 31, 2010
Convertible Subordinated Debt [Member]
Feb. 28, 2010
Convertible Subordinated Debt [Member]
Dec. 31, 2012
Convertible Subordinated Debt [Member]
Sep. 30, 2012
Convertible Subordinated Debt [Member]
Dec. 31, 2011
Convertible Subordinated Debt [Member]
Sep. 4, 2012
Notes Payable, Other Payables [Member]
Convertible Subordinated Debt [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
 
 
 
 
 
 
 
 
7.00% 
7.00% 
 
 
Debt Instrument, Face Amount
 
 
 
 
 
$ 176,500,000 
$ 52,500,000 
$ 64,000,000 
 
 
 
 
Proceeds from Convertible Debt
 
 
 
 
 
172,000,000 
49,400,000 
61,400,000 
 
 
 
 
Notes payable - direct corporate obligations
 
1,004,200,000 
857,900,000 
 
 
 
 
 
93,000,000 
 
293,000,000 
 
Unamortized Debt Issuance Expense
 
 
 
 
 
 
 
 
400,000 
 
1,600,000 
 
Conversion Rate for Convertible Senior Debentures
 
 
 
 
 
 
 
 
182.1494 
 
 
 
Par Value of Each Convertible Senior Debenture
 
 
 
 
 
 
 
 
1,000 
 
 
 
Conversion Price for Convertible Senior Debentures
 
 
 
 
 
 
 
 
$ 5.49 
 
 
 
Convertible Senior Debenture Event of Default Holders of Principal Amount Percent That Can Declare Debenture to be Immediately Due
 
 
 
 
 
 
 
 
50.00% 
 
 
 
Share Price
 
 
 
$ 5.81 
 
 
 
 
 
 
 
 
Debt Instrument, Convertible, Stock Price Trigger
 
 
 
 
$ 5.17 
 
 
 
 
 
 
 
Beneficial conversion feature related to the issuance of convertible debentures
4,000,000 
 
 
 
 
 
 
 
 
 
 
 
Repayments of Long-term Debt
 
 
 
 
 
 
 
 
 
 
 
$ 355,100,000 
Discount Rate on Estimated Fair Market Value of Convertible Debentures
 
 
 
 
 
 
 
 
 
 
 
2.80% 
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - LOSS ON EXTINGUISHMENT OR MODIFICATION OF DEBT (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2012
Convertible Subordinated Debt [Member]
Sep. 30, 2012
Convertible Subordinated Debt [Member]
Dec. 31, 2011
Convertible Subordinated Debt [Member]
Dec. 31, 2012
Senior Secured Notes 9 Percent [Member]
Dec. 31, 2011
Senior Secured Notes 9 Percent [Member]
Dec. 31, 2012
Senior Secured Credit Agreement
Dec. 31, 2011
Senior Secured Credit Agreement
Dec. 31, 2012
New Senior Secured Credit Agreement [Member]
Dec. 31, 2011
New Senior Secured Credit Agreement [Member]
Sep. 4, 2012
Paulson & Co. Inc. [Member]
Notes Payable, Other Payables [Member]
Convertible Subordinated Debt [Member]
Dec. 31, 2012
Common stock and additional paid-in capital
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains (Losses) on Extinguishment of Debt
$ (200.2)
$ (3.4)
$ (6.8)
$ (136.5)
 
 
$ (58.2)
 
$ (5.1)
 
$ (0.4)
 
 
 
Notes payable - direct corporate obligations
1,004.2 
857.9 
 
93.0 
 
293.0 
0 
275.0 
0 
255.2 
644.6 
0 
200.0 
 
Debt Instrument, Interest Rate, Stated Percentage
 
 
 
7.00% 
7.00% 
 
9.00% 
 
 
 
 
 
 
 
Extinguishment of beneficial conversion feature related to repurchase of convertible debentures
$ (24.0)
 
 
 
 
 
 
 
 
 
 
 
 
$ (24.0)
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - SCHEDULED REPAYMENT (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Debt Disclosure [Abstract]
 
2012
$ 51.1 
2013
60.5 
2014
79.2 
2015
153.5 
2016
4.2 
Thereafter
664.1 
Long-term Debt
$ 1,012.6 
COMMITMENTS AND CONTINGENCIES (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended 3 Months Ended 0 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2012
states
Dec. 31, 2011
Dec. 31, 2010
Sep. 30, 2012
Conseco Life Insurance Company Litigation [Member]
Mar. 31, 2012
Conseco Life Insurance Company Litigation [Member]
Nov. 9, 2012
Multistate Examination, Senior Health and Bankers Life [Member]
Dec. 31, 2012
Multistate Examination, Senior Health and Bankers Life [Member]
Dec. 31, 2012
Regulatory Settlement For Certain Lifetrend Life Insurance Products [Member]
Oct. 31, 2008
Regulatory Settlement For Certain Lifetrend Life Insurance Products [Member]
holders
Dec. 31, 2008
CIUL Universal Life Member [Member]
holders
Dec. 31, 2012
Minimum [Member]
Multistate Examination, Senior Health and Bankers Life [Member]
states
Dec. 31, 2012
Former Chief Executive Officers [Member]
Dec. 31, 2011
Former Chief Executive Officers [Member]
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss Contingency Accrual, Carrying Value, Provision
 
 
 
$ 21 
$ 20 
 
 
 
 
 
 
 
 
Number of States Involved In Multistate Examination
 
 
 
 
 
 
 
 
 
 
40 
 
 
Loss Contingency, Maximum Senior Health
 
 
 
 
 
 
2.3 
 
 
 
 
 
 
Potential Additional Amount Payable If Improvement Benchmarks Are Not Met
 
 
 
 
 
 
10 
 
 
 
 
 
 
Litigation Settlement, Amount
 
 
 
 
 
3.2 
 
 
 
 
 
 
 
Lifetrend Policy Holders That Were Mailed a Notice
 
 
 
 
 
 
 
 
12,000 
 
 
 
 
CIUL Universal Life Policy Holders Which Were Mailed a Notice
 
 
 
 
 
 
 
 
 
16,000 
 
 
 
Fund Established For Certain Lifetrend Life Insurance Product Owners
 
 
 
 
 
 
 
10 
 
 
 
 
 
Assesment To Be Paid To Participating Lifetrend Jurisdictions
 
 
 
 
 
 
 
1 
 
 
 
 
 
Percentage of Lifetrend Policy Holders Represented by Jurisdictions That Have Signed Agreement
 
 
 
 
 
 
 
98.00% 
 
 
 
 
 
Number of States Participating in Examination of Compliance with Unclaimed Property Laws
38 
 
 
 
 
 
 
 
 
 
 
 
 
Loss Contingency, Undiscounted Amount of Insurance-related Assessment Liability
30.5 
25.2 
 
 
 
 
 
 
 
 
 
 
 
Loss Contingency Accrual, Insurance-related Assessment, Premium Tax Offset
24.0 
19.6 
 
 
 
 
 
 
 
 
 
 
 
Loss Contingency, Insurance-related Assessment, Expense Recognized
4.3 
2.3 
2.4 
 
 
 
 
 
 
 
 
 
 
Deferred Compensation Arrangement with Individual, Recorded Liability
 
 
 
 
 
 
 
 
 
 
 
26.0 
24.8 
Operating Leases and Sponsorship Agreements, Expense
47.5 
43.5 
42.8 
 
 
 
 
 
 
 
 
 
 
2013
44.3 
 
 
 
 
 
 
 
 
 
 
 
 
2014
31.4 
 
 
 
 
 
 
 
 
 
 
 
 
2015
21.1 
 
 
 
 
 
 
 
 
 
 
 
 
2016
17.8 
 
 
 
 
 
 
 
 
 
 
 
 
2017
15.2 
 
 
 
 
 
 
 
 
 
 
 
 
Therafter
25.3 
 
 
 
 
 
 
 
 
 
 
 
 
Total
$ 155.1 
 
 
 
 
 
 
 
 
 
 
 
 
AGENT DEFERRED COMPENSATION PLAN (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Defined Contribution Plan, Cost Recognized
$ 4.5 
$ 4.5 
$ 4.1 
Agent Deferred Compensation Plan [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Pension and Other Postretirement Defined Benefit Plans, Liabilities
151.7 
136.4 
 
Defined Benefit Plan, Net Periodic Benefit Cost
20.5 
26.3 
13.0 
Defined Benefit Plan, Actuarial Net (Gains) Losses
7.5 
16.2 
3.6 
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year
4.0 
 
 
Life Insurance, Corporate or Bank Owned, Amount
123.0 
103.9 
 
Life Insurance, Corporate or Bank Owned, Change in Value
9.0 
(3.8)
5.0 
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
 
 
 
Discount rate
4.00% 
4.50% 
 
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract]
 
 
 
Discount rate
4.50% 
5.50% 
 
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Rate of Compensation Increase
4.00% 
 
 
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract]
 
 
 
2013
5.5 
 
 
2014
6.0 
 
 
2015
6.2 
 
 
2016
6.4 
 
 
2017
6.7 
 
 
2018 - 2022
$ 39.1 
 
 
SHAREHOLDERS' EQUITY (DETAILS) (USD $)
In Millions, except Share data, unless otherwise specified
1 Months Ended 12 Months Ended
Nov. 30, 2009
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Issuance of common stock
 
$ 3.1 
$ 2.2 
$ 0 
Sale of Stock, Number of Warrants to Purchase Stock, Private Placement
5,000,000 
 
 
 
Class of Warrant or Right, Exercise Price of Warrants or Rights
 
6.50 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant
 
9,713,000 
11,044,000 
9,326,000 
Price of Junior Preferred Stock (per 1/1000 of a share)
 
25.00 
 
 
Private Placement [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Stock Issued During Period, Shares, New Issues
16,400,000 
 
 
 
Restricted Stock [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share based compensation, vesting period
 
3 years 
 
 
Long-Term Incentive Plan [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant
 
9,700,000 
 
 
2006 and Prior Years [Member] |
Stock Options [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share based compensation, vesting period
 
4 years 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period
 
10 years 
 
 
Years 2007 Through 2009 [Member] |
Stock Options [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share based compensation, vesting period
 
3 years 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period
 
5 years 
 
 
Series B Junior Participating Preferred Stock [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Series B Junior Participating Preferred Stock Par Value
 
$ 0.01 
 
 
SHAREHOLDERS' EQUITY - CHANGES IN COMMON STOCK OUTSTANDING (DETAILS) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
May 31, 2011
Common Share Repurchase Program [Member]
Dec. 31, 2012
Common Share Repurchase Program [Member]
Dec. 31, 2012
Restricted Stock [Member]
Dec. 31, 2012
Common stock and additional paid-in capital
Dec. 31, 2011
Common stock and additional paid-in capital
Dec. 31, 2012
Common Stock [Member]
Dec. 31, 2011
Common Stock [Member]
Dec. 31, 2010
Common Stock [Member]
Dec. 31, 2012
Common Stock [Member]
Stock Options [Member]
Dec. 31, 2011
Common Stock [Member]
Stock Options [Member]
Dec. 31, 2010
Common Stock [Member]
Stock Options [Member]
Dec. 31, 2012
Common Stock [Member]
Restricted Stock [Member]
Dec. 31, 2011
Common Stock [Member]
Restricted Stock [Member]
Dec. 31, 2010
Common Stock [Member]
Restricted Stock [Member]
Dec. 31, 2012
Retained earnings (accumulated deficit)
Dec. 31, 2011
Retained earnings (accumulated deficit)
Dec. 31, 2012
2006 and Prior Years [Member]
Stock Options [Member]
Dec. 31, 2012
Years 2007 Through 2009 [Member]
Stock Options [Member]
Dec. 31, 2012
Years 2010 and Thereafter [Member]
Stock Options [Member]
Common Stock Disclosures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year
 
241,304,503 
 
 
 
 
 
 
 
241,305,000 
251,084,000 
250,786,000 
 
 
 
 
 
 
 
 
 
 
 
Treasury stock purchased and retired
 
 
 
 
 
(21,500,000)
 
 
 
(21,533,000)
(11,120,000)
0 
 
 
 
 
 
 
 
 
 
 
 
Shares issued under employee benefit compensation plans
 
 
 
 
 
 
 
 
 
 
 
 
1,191,000 
862,000 
33,000 
539,000 1
479,000 1
265,000 
 
 
 
 
 
Balance, end of year
221,502,371 
221,502,371 
241,304,503 
 
 
 
 
 
 
221,502,000 
241,305,000 
251,084,000 
 
 
 
 
 
 
 
 
 
 
 
Shares Paid for Tax Withholding for Share Based Compensation
 
237,000 
200,000 
74,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchase Program, Authorized Amount
 
 
 
 
$ 100.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchase Program, Increase in Authorized Amount
 
500.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchased and Retired During Period, Shares
 
 
 
 
 
21,500,000 
 
 
 
21,533,000 
11,120,000 
0 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchased and Retired During Period, Value
 
180.2 
69.8 
 
 
 
 
180.2 
69.8 
 
 
 
 
 
 
 
 
 
0 
   
 
 
 
Stock Repurchase Program, Remaining Repurchase Authorized Amount
350.0 
350.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock, Dividends, Per Share, Cash Paid
$ 0.02 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends, Common Stock
 
$ 13.9 
 
 
 
 
 
$ 0 
 
 
 
 
 
 
 
 
 
 
$ 13.9 
 
 
 
 
Share based compensation, vesting period
 
 
 
 
 
 
3 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 years 
3 years 
3 years 
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 years 
5 years 
7 years 
SHAREHOLDERS' EQUITY - STOCK OPTION ACTIVITY (DETAILS) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
Outstanding at the beginning of the year
7,712 
9,754 
8,560 
Options granted
1,389 
1,262 
1,849 
Exercised
(1,191)
(862)
(33)
Forfeited or terminated
(1,255)
(2,442)
(622)
Outstanding at the end of the year
6,655 
7,712 
9,754 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number
3,715 
4,135 
4,374 
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant
9,713 
11,044 
9,326 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term
3 years 4 months 24 days 
3 years 1 month 24 days 
3 years 7 months 24 days 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term
1 year 8 months 24 days 
1 year 9 months 24 days 
2 years 10 months 24 days 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Total Intrinsic Value
$ 2.7 
$ 1.3 
$ 0 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value
30.2 
31.3 
38.3 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value
15.5 
18.0 
24.1 
Proceeds from Stock Options Exercised
3.1 
2.2 
0.1 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
 
 
 
Outstanding at the beginning of the year
$ 10.13 
$ 10.87 
$ 11.65 
Options granted
$ 7.55 
$ 7.38 
$ 6.43 
Exercised
$ 3.14 
$ 2.52 
$ 2.83 
Forfeited or terminated
$ 16.13 
$ 14.35 
$ 8.81 
Outstanding at the end of the year
$ 9.72 
$ 10.13 
$ 10.87 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, End of Period [Abstract]
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options
6,655 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options
3,715 
 
 
$1.13
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, End of Period [Abstract]
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options
171 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term
1 year 3 months 24 days 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price, Beginning Balance
$ 1.13 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options
171 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price
$ 1.13 
 
 
$3.05 - $3.11
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, End of Period [Abstract]
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options
781 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term
1 year 4 months 24 days 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price, Beginning Balance
$ 3.05 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options
781 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price
$ 3.05 
 
 
$4.79 - $6.77
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, End of Period [Abstract]
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options
1,150 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term
4 years 2 months 24 days 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price, Beginning Balance
$ 6.40 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options
527 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price
$ 6.36 
 
 
$7.38 - $7.74
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, End of Period [Abstract]
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options
2,247 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term
5 years 8 months 24 days 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price, Beginning Balance
$ 7.45 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options
0 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price
$ 0.00 
 
 
$8.29 - $11.20
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, End of Period [Abstract]
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options
1,054 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term
8 months 24 days 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price, Beginning Balance
$ 10.38 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options
984 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price
$ 10.53 
 
 
$17.87 - $21.67
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, End of Period [Abstract]
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options
849 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term
1 year 8 months 24 days 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price, Beginning Balance
$ 20.82 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options
849 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price
$ 20.82 
 
 
$22.42 - $25.45
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, End of Period [Abstract]
 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options
403 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term
3 years 1 month 24 days 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price, Beginning Balance
$ 23.20 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options
403 
 
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price
$ 23.20 
 
 
Stock Options [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
Dilutive Securities, Effect on Basic and Diluted Earnings Per Share
$ 0.02 
$ 0.00 
$ 0.02 
Share-based Arrangements with Employees and Nonemployees [Abstract]
 
 
 
Allocated Share-based Compensation Expense
6.7 
0.2 
7.1 
Allocated Share-based Compensation Expense, Net of Tax
4.4 
0.1 
4.6 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized
7.6 
 
 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition
1 year 10 months 24 days 
 
 
Reduction in Stock Based Compensation to Reflect True up of Forfeiture Assumptions
$ 7.4 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
 
 
Weighted average risk-free interest rates
0.90% 
2.20% 
2.50% 
Weighted average dividend yields
0.00% 
0.00% 
0.00% 
Volatility factors
108.00% 
107.00% 
105.00% 
Weighted average expected life (in years)
4 years 8 months 24 days 
4 years 9 months 24 days 
4 years 8 months 24 days 
Weighted average fair value per share
$ 5.76 
$ 5.68 
$ 4.90 
SHAREHOLDERS' EQUITY - RESTRICTED STOCK ACTIVITY (DETAILS) (Restricted Stock [Member], USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Restricted Stock [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Fair Value
$ 5.0 
$ 6.0 
$ 6.2 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized
5.4 
5.4 
 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition
1 year 8 months 24 days 
 
 
Allocated Share-based Compensation Expense
4.5 
4.3 
2.5 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value
$ 4.4 
$ 3.2 
$ 1.3 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Non-vested shares, beginning of year
1,318,000 
 
 
Granted
686,000 
900,000 
1,000,000 
Vested
(777,000)
 
 
Forfeited
(65,000)
 
 
Non-vested shares, end of year
1,162,000 
1,318,000 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
 
 
 
Non-vested shares, beginning of year
$ 6.09 
 
 
Granted
$ 7.35 
$ 6.97 
$ 6.28 
Vested
$ 5.64 
 
 
Forfeited
$ 7.05 
 
 
Non-vested shares, end of year
$ 7.08 
$ 6.09 
 
SHAREHOLDERS' EQUITY - BASIC AND DILUTED EARNINGS PER SHARE (DETAILS) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net income for basic earnings per share
$ 101,200,000 
$ (5,000,000)
$ 65,700,000 
$ 59,100,000 
$ 64,400,000 
$ 179,500,000 
$ 46,400,000 
$ 45,400,000 
$ 221,000,000 
$ 335,700,000 
$ 240,600,000 
Add: interest expense on 7.0% Debentures, net of income taxes
 
 
 
 
 
 
 
 
12,200,000 
14,700,000 
13,300,000 
Net income for diluted earnings per share
 
 
 
 
 
 
 
 
233,200,000 
350,400,000 
253,900,000 
Shares:
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding for basic earnings per share
 
 
 
 
 
 
 
 
233,685,000 
247,952,000 
250,973,000 
Effect of dilutive securities on weighted average shares:
 
 
 
 
 
 
 
 
 
 
 
7% Debentures
 
 
 
 
 
 
 
 
44,037,000 
53,367,000 
49,014,000 
Stock option and restricted stock plans
 
 
 
 
 
 
 
 
2,762,000 
2,513,000 
1,871,000 
Warrants
 
 
 
 
 
 
 
 
943,000 
249,000 
0 
Dilutive potential common shares
 
 
 
 
 
 
 
 
47,742,000 
56,129,000 
50,885,000 
Weighted average shares outstanding for diluted earnings per share
 
 
 
 
 
 
 
 
281,427,000 
304,081,000 
301,858,000 
Conversion Rate Per $1000 Principal Amount of 7.0% Convertible Debentures, Shares
182.1494 
 
 
 
 
 
 
 
182.1494 
 
 
Par Value of Each 7.0% Convertible Debenture
$ 1,000 
 
 
 
 
 
 
 
$ 1,000 
 
 
Debt Instrument, Convertible, Conversion Price
$ 5.49 
 
 
 
 
 
 
 
$ 5.49 
 
 
Convertible Subordinated, 3.5 Percent Debentures [Member]
 
 
 
 
 
 
 
 
 
 
 
Effect of dilutive securities on weighted average shares:
 
 
 
 
 
 
 
 
 
 
 
Conversion Price for 3.5% Convertible Debentures
$ 26.66 
 
 
 
 
 
 
 
$ 26.66 
 
 
SHAREHOLDERS' EQUITY - PERFORMANCE SHARE ACTIVITY (DETAILS) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Performance Shares [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period
406,500 
416,700 
686,900 
Allocated Share-based Compensation Expense
$ 3.8 
$ 2.0 
$ 2.2 
Shareholder Return Awards [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
 
 
 
Awards outstanding, beginning of period
0 
0 
331,000 
Granted
203,000 
0 
0 
Forfeited
(10,000)
0 
(331,000)
Awards outstanding, end of period
193,000 
0 
0 
Operating Return on Equity Awards [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
 
 
 
Awards outstanding, beginning of period
0 
555,000 
825,000 
Granted
0 
0 
0 
Forfeited
0 
(555,000)
(270,000)
Awards outstanding, end of period
0 
0 
555,000 
Pre-Tax Operating Income Awards [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Fair Value
$ 3.1 
$ 3.1 
 
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
 
 
 
Awards outstanding, beginning of period
836,000 
652,000 
0 
Granted
203,000 
417,000 
687,000 
Forfeited
(62,000)
(233,000)
(35,000)
Awards outstanding, end of period
977,000 
836,000 
652,000 
OTHER OPERATING STATEMENT DATA - INSURANCE POLICY INCOME (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
states
Dec. 31, 2011
Dec. 31, 2010
Premiums Written and Earned [Abstract]
 
 
 
Direct premiums collected
$ 3,883.1 
$ 4,214.7 
$ 4,252.0 
Reinsurance assumed
70.4 
87.7 
99.4 
Reinsurance ceded
(237.1)
(243.2)
(264.7)
Premiums collected, net of reinsurance
3,716.4 
4,059.2 
4,086.7 
Change in unearned premiums
20.8 
17.2 
2.9 
Less premiums on universal life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities
(1,296.7)
(1,693.5)
(1,730.1)
Premiums on traditional products with mortality or morbidity risk
2,440.5 
2,382.9 
2,359.5 
Fees and surrender charges on interest-sensitive products
314.9 
307.6 
310.5 
Insurance policy income
$ 2,755.4 
$ 2,690.5 
$ 2,670.0 
Number of States With Largest Share of Collected Premiums
4 
 
 
Percentage of Total Collected Premiums
5.00% 
 
 
Number of Additional States Greater Than Specified Percentage of Total Collected Premiums
0 
 
 
FLORIDA
 
 
 
Premiums Written and Earned [Abstract]
 
 
 
Percentage of Total Collected Premiums
7.70% 
 
 
CALIFORNIA
 
 
 
Premiums Written and Earned [Abstract]
 
 
 
Percentage of Total Collected Premiums
6.50% 
 
 
TEXAS
 
 
 
Premiums Written and Earned [Abstract]
 
 
 
Percentage of Total Collected Premiums
6.40% 
 
 
PENNSYLVANIA
 
 
 
Premiums Written and Earned [Abstract]
 
 
 
Percentage of Total Collected Premiums
6.20% 
 
 
OTHER OPERATING STATEMENT DATA - OTHER OPERATING COSTS AND EXPENSES (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Operating Expenses [Abstract]
 
 
 
Commission expense
$ 115.8 
$ 131.7 
$ 130.9 
Salaries and wages
226.6 
212.2 
216.1 
Other
476.9 
360.6 
343.3 
Total other operating costs and expenses
$ 819.3 
$ 704.5 
$ 690.3 
OTHER OPERATING STATEMENT DATA - PRESENT VALUE OF FUTURE PROFITS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Movement in Present Value of Future Insurance Profits [Roll Forward]
 
 
 
Balance, beginning of year
$ 697.7 
$ 1,008.6 
$ 1,175.9 
Amortization
(93.5)
(113.7)
(139.0)
Amounts related to fair value adjustment of fixed maturities, available for sale
21.8 
(197.2)
(28.3)
Balance, end of year
$ 626.0 
$ 697.7 
$ 1,008.6 
2013
9.00% 
 
 
2014
8.00% 
 
 
2015
7.00% 
 
 
2016
7.00% 
 
 
2017
6.00% 
 
 
Average Interest Accrual Rate Associated with Amortization Method of Present Value of Future Insurance Profits
5.00% 
 
 
OTHER OPERATING STATEMENT DATA - DEFERRED ACQUISITION COSTS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward]
 
 
 
Balance, beginning of year
$ 797.1 
$ 999.6 
$ 1,063.0 
Additions
191.7 
216.7 
231.8 
Amortization
(195.5)
(183.7)
(186.0)
Amounts related to fair value adjustment of fixed maturities, available for sale
(163.6)
(235.5)
(98.5)
Other adjustments
0 
0 
(10.7)
Balance, end of year
$ 629.7 
$ 797.1 
$ 999.6 
CONSOLIDATED STATEMENT CASH FLOWS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Cash flows from operating activities:
 
 
 
Net income
$ 221.0 
$ 335.7 
$ 240.6 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Amortization and depreciation
315.0 
323.6 
346.5 
Income taxes
(71.8)
(32.9)
(16.1)
Insurance liabilities
330.0 
346.4 
437.6 
Accrual and amortization of investment income
(100.7)
64.5 
(62.0)
Deferral of policy acquisition costs
(191.7)
(216.7)
(225.2)
Net realized investment (gains) losses
(81.1)
(61.8)
(30.2)
Loss on extinguishment of debt
200.2 
3.4 
6.8 
Other
14.0 
12.6 
36.0 
Net cash provided by operating activities
634.9 
774.8 
734.0 
Other Noncash Investing and Financing Items [Abstract]
 
 
 
Stock option and restricted stock plans
13.7 
5.2 
11.4 
Change in securities lending collateral
0 
0 
103.7 
Change in securities lending payable
$ 0 
$ 0 
$ (103.7)
STATUTORY INFORMATION (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Statutory Accounting Practices [Line Items]
 
 
 
Statutory capital and surplus
$ 1,560.4 
$ 1,578.1 
 
Asset valuation reserve
222.2 
168.4 
 
Interest maintenance reserve
585.8 
552.0 
 
Total
2,368.4 
2,298.5 
 
Investments in Upstream Affiliates Included in Statutory Capital and Surplus
52.4 
 
 
Statutory Accounting Practices, Statutory Net Income Amount
350.4 
366.8 
181.9 
Statutory Accounting Practices, Net Realized Capital (Losses), Net of Tax, Included in Statutory Net Income
13.0 
3.7 
(79.6)
Statutory Accounting Practices, PreTax Fees and Interest Payable To CNO Or Its Nonlife Subsidiaries, Included in Statutory Net Income
155.3 
147.7 
132.4 
Percentage of Statutory Capital and Surplus, Available for Dividend Distribution without Prior Approval from Regulatory Agency
10.00% 
 
 
Amount of Extraordinary Dividends Paid by Insurance Subsidiaries
265.0 
 
 
Capital Contributions to Insurance Subsidiaries from Parent
$ 26.0 
 
 
Risk Based Ratios [Abstract]
 
 
 
Risk Based Capital That Would Trigger A Comprehensive Plan to Be Submitted To The Regulator
95.00% 
 
 
Minimum [Member]
 
 
 
Risk Based Ratios [Abstract]
 
 
 
Trend Test, Capital to Risk Weighted Assets, End of Year
100.00% 
 
 
Minimum [Member] |
Company Plan for Improving Capital Position [Member]
 
 
 
Risk Based Ratios [Abstract]
 
 
 
Capital to Risk Weighted Assets
75.00% 
 
 
Minimum [Member] |
Regulatory Authority Special Examination [Member]
 
 
 
Risk Based Ratios [Abstract]
 
 
 
Capital to Risk Weighted Assets
50.00% 
 
 
Minimum [Member] |
Regulatory Authority, Any Action Deemed Necessary [Member]
 
 
 
Risk Based Ratios [Abstract]
 
 
 
Capital to Risk Weighted Assets
35.00% 
 
 
Maximum [Member]
 
 
 
Risk Based Ratios [Abstract]
 
 
 
Trend Test, Capital to Risk Weighted Assets, End of Year
125.00% 
 
 
Trend Test, Increased Capital to Risk Weighted Assets, End of Year
150.00% 
 
 
Maximum [Member] |
Company Plan for Improving Capital Position [Member]
 
 
 
Risk Based Ratios [Abstract]
 
 
 
Capital to Risk Weighted Assets
100.00% 
 
 
Maximum [Member] |
Regulatory Authority Special Examination [Member]
 
 
 
Risk Based Ratios [Abstract]
 
 
 
Capital to Risk Weighted Assets
75.00% 
 
 
Maximum [Member] |
Regulatory Authority, Any Action Deemed Necessary [Member]
 
 
 
Risk Based Ratios [Abstract]
 
 
 
Capital to Risk Weighted Assets
50.00% 
 
 
Maximum [Member] |
Regulatory Authority Control [Member]
 
 
 
Risk Based Ratios [Abstract]
 
 
 
Capital to Risk Weighted Assets
35.00% 
 
 
BUSINESS SEGMENTS (DETAILS) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (a)
 
 
 
 
 
 
 
 
$ 1,486.4 
$ 1,354.1 
$ 1,366.9 
 
Fee revenue and other income (a)
 
 
 
 
 
 
 
 
19.8 
18.2 
16.8 
 
Total revenues
 
 
 
 
 
 
 
 
4,261.6 
4,062.8 
4,053.7 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance policy benefits
 
 
 
 
 
 
 
 
2,763.9 
2,699.0 
2,723.7 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
 
200.2 
3.4 
6.8 
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
819.3 
704.5 
690.3 
 
Total expenses
 
 
 
 
 
 
 
 
4,177.7 
3,792.6 
3,849.7 
 
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes
 
 
 
 
 
 
 
 
83.9 
270.2 
204.0 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total segment revenues
 
 
 
 
 
 
 
 
4,261.6 
4,062.8 
4,053.7 
 
Net realized investment gains (losses)
 
 
 
 
 
 
 
 
81.1 
61.8 
30.2 
 
Consolidated revenues
1,060.8 
1,093.0 
1,065.0 
1,123.9 
1,051.1 
992.3 
1,032.0 
1,049.2 
4,342.7 
4,124.6 
4,083.9 
 
Insurance policy benefits - fair value changes in embedded derivative liabilities (a)
 
 
 
 
 
 
 
 
4.4 1
34.4 1
0 1
 
Amortization related to fair value changes in embedded derivative liabilities (a)
 
 
 
 
 
 
 
 
(1.6)1
(14.0)1
0 1
 
Amortization related to net realized investment gains (losses)
 
 
 
 
 
 
 
 
6.5 
5.4 
9.3 
 
Consolidated expenses
 
 
 
 
 
 
 
 
4,187.0 
3,818.4 
3,859.0 
 
Segment Balance Sheet Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Assets
34,131.4 
 
 
 
32,921.9 
 
 
 
34,131.4 
32,921.9 
 
 
Liabilities
29,082.1 
 
 
 
28,308.1 
 
 
 
29,082.1 
28,308.1 
 
 
Selected Financial Information by Segment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Present value of future profits
626.0 
 
 
 
697.7 
 
 
 
626.0 
697.7 
1,008.6 
1,175.9 
Deferred acquisition costs
629.7 
 
 
 
797.1 
 
 
 
629.7 
797.1 
 
 
Insurance liabilities
25,089.5 
 
 
 
24,697.5 
 
 
 
25,089.5 
24,697.5 
 
 
Bankers Life [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Annuities
 
 
 
 
 
 
 
 
28.4 
33.4 
39.5 
 
Health
 
 
 
 
 
 
 
 
1,342.7 
1,347.3 
1,366.0 
 
Life
 
 
 
 
 
 
 
 
286.3 
231.7 
190.7 
 
Net investment income (a)
 
 
 
 
 
 
 
 
838.9 2
766.3 2
758.9 2
 
Fee revenue and other income (a)
 
 
 
 
 
 
 
 
15.2 2
13.8 2
12.8 2
 
Total revenues
 
 
 
 
 
 
 
 
2,511.5 
2,392.5 
2,367.9 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance policy benefits
 
 
 
 
 
 
 
 
1,642.9 
1,570.1 
1,607.3 
 
Amortization
 
 
 
 
 
 
 
 
187.6 
206.3 
207.9 
 
Interest expense on investment borrowings
 
 
 
 
 
 
 
 
5.3 
4.8 
1.0 
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
374.8 
320.4 
314.2 
 
Total expenses
 
 
 
 
 
 
 
 
2,210.6 
2,101.6 
2,130.4 
 
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes
 
 
 
 
 
 
 
 
300.9 
290.9 
237.5 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total segment revenues
 
 
 
 
 
 
 
 
2,511.5 
2,392.5 
2,367.9 
 
Segment Balance Sheet Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Assets
17,637.7 
 
 
 
16,800.0 
 
 
 
17,637.7 
16,800.0 
 
 
Liabilities
15,590.1 
 
 
 
14,757.1 
 
 
 
15,590.1 
14,757.1 
 
 
Selected Financial Information by Segment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Present value of future profits
168.8 
 
 
 
201.8 
 
 
 
168.8 
201.8 
 
 
Deferred acquisition costs
332.8 
 
 
 
491.0 
 
 
 
332.8 
491.0 
 
 
Insurance liabilities
14,548.0 
 
 
 
13,720.4 
 
 
 
14,548.0 
13,720.4 
 
 
Washington National [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Health
 
 
 
 
 
 
 
 
572.4 
565.7 
559.3 
 
Life
 
 
 
 
 
 
 
 
15.2 
15.6 
16.8 
 
Other
 
 
 
 
 
 
 
 
2.8 
3.8 
4.9 
 
Net investment income (a)
 
 
 
 
 
 
 
 
204.1 2
189.5 2
185.4 2
 
Fee revenue and other income (a)
 
 
 
 
 
 
 
 
1.1 2
1.0 2
1.1 2
 
Total revenues
 
 
 
 
 
 
 
 
795.6 
775.6 
767.5 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance policy benefits
 
 
 
 
 
 
 
 
447.1 
464.5 
450.6 
 
Amortization
 
 
 
 
 
 
 
 
47.7 
44.9 
46.6 
 
Interest expense on investment borrowings
 
 
 
 
 
 
 
 
2.8 
0.7 
0 
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
170.9 
169.4 
169.9 
 
Total expenses
 
 
 
 
 
 
 
 
668.5 
679.5 
667.1 
 
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes
 
 
 
 
 
 
 
 
127.1 
96.1 
100.4 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total segment revenues
 
 
 
 
 
 
 
 
795.6 
775.6 
767.5 
 
Segment Balance Sheet Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Assets
4,499.5 
 
 
 
4,360.4 
 
 
 
4,499.5 
4,360.4 
 
 
Liabilities
3,425.6 
 
 
 
3,449.1 
 
 
 
3,425.6 
3,449.1 
 
 
Selected Financial Information by Segment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Present value of future profits
375.8 
 
 
 
402.0 
 
 
 
375.8 
402.0 
 
 
Deferred acquisition costs
157.3 
 
 
 
142.3 
 
 
 
157.3 
142.3 
 
 
Insurance liabilities
2,911.7 
 
 
 
2,954.7 
 
 
 
2,911.7 
2,954.7 
 
 
Colonial Penn [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Health
 
 
 
 
 
 
 
 
5.2 
5.9 
6.8 
 
Life
 
 
 
 
 
 
 
 
212.6 
197.1 
188.1 
 
Net investment income (a)
 
 
 
 
 
 
 
 
40.4 2
41.1 2
39.3 2
 
Fee revenue and other income (a)
 
 
 
 
 
 
 
 
0.7 2
0.9 2
0.7 2
 
Total revenues
 
 
 
 
 
 
 
 
258.9 
245.0 
234.9 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance policy benefits
 
 
 
 
 
 
 
 
161.1 
150.1 
144.8 
 
Amortization
 
 
 
 
 
 
 
 
15.0 
15.0 
12.5 
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
91.4 
84.6 
73.4 
 
Total expenses
 
 
 
 
 
 
 
 
267.5 
249.7 
230.7 
 
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes
 
 
 
 
 
 
 
 
(8.6)
(4.7)
4.2 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total segment revenues
 
 
 
 
 
 
 
 
258.9 
245.0 
234.9 
 
Segment Balance Sheet Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Assets
917.8 
 
 
 
879.2 
 
 
 
917.8 
879.2 
 
 
Liabilities
749.6 
 
 
 
742.4 
 
 
 
749.6 
742.4 
 
 
Selected Financial Information by Segment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Present value of future profits
63.6 
 
 
 
72.6 
 
 
 
63.6 
72.6 
 
 
Deferred acquisition costs
57.5 
 
 
 
51.5 
 
 
 
57.5 
51.5 
 
 
Insurance liabilities
763.1 
 
 
 
725.5 
 
 
 
763.1 
725.5 
 
 
Other CNO Business [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Annuities
 
 
 
 
 
 
 
 
10.6 
12.2 
12.9 
 
Health
 
 
 
 
 
 
 
 
25.7 
27.7 
29.9 
 
Life
 
 
 
 
 
 
 
 
252.9 
248.4 
252.5 
 
Other
 
 
 
 
 
 
 
 
0.6 
1.7 
2.6 
 
Net investment income (a)
 
 
 
 
 
 
 
 
340.6 2
344.1 2
364.6 2
 
Total revenues
 
 
 
 
 
 
 
 
630.4 
634.1 
662.5 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance policy benefits
 
 
 
 
 
 
 
 
508.4 
479.9 
521.0 
 
Amortization
 
 
 
 
 
 
 
 
33.8 
39.8 
48.7 
 
Interest expense on investment borrowings
 
 
 
 
 
 
 
 
19.9 
20.3 
20.0 
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
117.1 
78.8 
82.0 
 
Total expenses
 
 
 
 
 
 
 
 
679.2 
618.8 
671.7 
 
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes
 
 
 
 
 
 
 
 
(48.8)
15.3 
(9.2)
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total segment revenues
 
 
 
 
 
 
 
 
630.4 
634.1 
662.5 
 
Segment Balance Sheet Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Assets
8,679.5 
 
 
 
8,964.9 
 
 
 
8,679.5 
8,964.9 
 
 
Liabilities
7,451.1 
 
 
 
7,857.8 
 
 
 
7,451.1 
7,857.8 
 
 
Selected Financial Information by Segment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Present value of future profits
17.8 
 
 
 
21.3 
 
 
 
17.8 
21.3 
 
 
Deferred acquisition costs
82.1 
 
 
 
112.3 
 
 
 
82.1 
112.3 
 
 
Insurance liabilities
6,866.7 
 
 
 
7,296.9 
 
 
 
6,866.7 
7,296.9 
 
 
Corporate Operations [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (a)
 
 
 
 
 
 
 
 
62.4 
13.1 
18.7 
 
Fee revenue and other income (a)
 
 
 
 
 
 
 
 
2.8 
2.5 
2.2 
 
Total revenues
 
 
 
 
 
 
 
 
65.2 
15.6 
20.9 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense on investment borrowings
 
 
 
 
 
 
 
 
0.4 
0.2 
0 
 
Interest expense on corporate debt
 
 
 
 
 
 
 
 
66.2 
76.3 
79.3 
 
Interest expense on borrowings of variable interest entities
 
 
 
 
 
 
 
 
20.0 
11.8 
12.9 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
 
200.2 
3.4 
6.8 
 
Other operating costs and expenses
 
 
 
 
 
 
 
 
65.1 
51.3 
50.8 
 
Total expenses
 
 
 
 
 
 
 
 
351.9 
143.0 
149.8 
 
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes
 
 
 
 
 
 
 
 
(286.7)
(127.4)
(128.9)
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total segment revenues
 
 
 
 
 
 
 
 
65.2 
15.6 
20.9 
 
Segment Balance Sheet Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Assets
2,396.9 
 
 
 
1,917.4 
 
 
 
2,396.9 
1,917.4 
 
 
Liabilities
1,865.7 
 
 
 
1,501.7 
 
 
 
1,865.7 
1,501.7 
 
 
Embedded Derivative Financial Instruments [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Net
 
 
 
 
 
 
 
 
$ 2.8 
$ 20.4 
 
 
QUARTERLY FINANCIAL DATA (DETAILS) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Quarterly Financial Data [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenues
$ 1,060.8 
$ 1,093.0 
$ 1,065.0 
$ 1,123.9 
$ 1,051.1 
$ 992.3 
$ 1,032.0 
$ 1,049.2 
$ 4,342.7 
$ 4,124.6 
$ 4,083.9 
Income before income taxes
117.7 
(158.8)
104.5 
92.3 
102.3 
61.7 
71.8 
70.4 
155.7 
306.2 
224.9 
Income tax expense (benefit)
16.5 
(153.8)
38.8 
33.2 
37.9 
(117.8)
25.4 
25.0 
65.3 
29.5 
15.7 
Net income
$ 101.2 
$ (5.0)
$ 65.7 
$ 59.1 
$ 64.4 
$ 179.5 
$ 46.4 
$ 45.4 
$ 221.0 
$ 335.7 
$ 240.6 
Basic:
 
 
 
 
 
 
 
 
 
 
 
Net income
$ 0.45 
$ (0.02)
$ 0.28 
$ 0.25 
$ 0.27 
$ 0.73 
$ 0.18 
$ 0.18 
$ 0.95 
$ 1.35 
$ 0.96 
Diluted:
 
 
 
 
 
 
 
 
 
 
 
Net income
$ 0.41 
$ (0.02)
$ 0.24 
$ 0.21 
$ 0.23 
$ 0.61 
$ 0.16 
$ 0.16 
$ 0.83 
$ 1.15 
$ 0.84 
INVESTMENTS IN VARIABLE INTEREST ENTITIES (DETAILS) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Jun. 30, 2012
VIEs
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Variable Interest Entity [Line Items]
 
 
 
 
Investments held by variable interest entities
 
$ 814.3 
$ 496.3 
 
Cash and cash equivalents held by variable interest entities
 
54.2 
74.4 
 
Borrowings related to variable interest entities
 
767.0 
519.9 
 
Number of Variable Interest Entities Liquidated
1 
 
 
 
Variable interest entity amortized cost securities held
 
809.3 
 
 
Variable interest entity, gross unrealized gains fixed maturity securities
 
6.6 
 
 
Variable interest entity gross unrealized losses fixed maturity securities
 
(1.6)
 
 
Variable interest entities net realized gain (loss) on investments
 
(0.4)
(1.3)
(3.7)
Variable Interest Entities Net Gains Losses From Sale Of Fixed Maturity Investments
 
0.4 
3.0 
(0.4)
Total other-than-temporary impairment losses on investments held by variable interest entities
 
(0.8)
(4.3)
(3.3)
Variable Interest Entities, Investments Sold
 
34.9 
27.5 
 
Variable Interest Entity, Available For Sale Securities, Gross Investment Losses From Sale, Before Tax
 
0.3 
2.7 
 
Investments held in limited partnerships
 
28.4 
 
 
Unfunded committments to limited partnerships
 
40.5 
 
 
Variable Interest Entity, Primary Beneficiary [Member]
 
 
 
 
Variable Interest Entity [Line Items]
 
 
 
 
Investments held by variable interest entities
 
814.3 
496.3 
 
Notes receivable of VIEs held by insurance subsidiaries
 
(78.5)
(45.3)
 
Cash and cash equivalents held by variable interest entities
 
54.2 
74.4 
 
Accrued investment income
 
1.8 
1.7 
 
Income tax assets, net
 
0.7 
5.4 
 
Other assets
 
9.6 
7.7 
 
Total assets
 
802.1 
540.2 
 
Other liabilities
 
36.6 
30.2 
 
Borrowings related to variable interest entities
 
767.0 
519.9 
 
Notes payable of VIEs held by insurance subsidiaries
 
0 
0 
 
Total liabilities
 
803.6 
550.1 
 
VIEs [Member]
 
 
 
 
Variable Interest Entity [Line Items]
 
 
 
 
Investments held by variable interest entities
 
814.3 
496.3 
 
Notes receivable of VIEs held by insurance subsidiaries
 
0 
0 
 
Cash and cash equivalents held by variable interest entities
 
54.2 
74.4 
 
Accrued investment income
 
1.8 
1.7 
 
Income tax assets, net
 
3.3 
6.8 
 
Other assets
 
9.6 
7.7 
 
Total assets
 
883.2 
586.9 
 
Other liabilities
 
39.9 
30.3 
 
Borrowings related to variable interest entities
 
767.0 
519.9 
 
Notes payable of VIEs held by insurance subsidiaries
 
82.5 
49.3 
 
Total liabilities
 
889.4 
599.5 
 
Eliminations [Member]
 
 
 
 
Variable Interest Entity [Line Items]
 
 
 
 
Investments held by variable interest entities
 
0 
0 
 
Notes receivable of VIEs held by insurance subsidiaries
 
(78.5)
(45.3)
 
Cash and cash equivalents held by variable interest entities
 
0 
0 
 
Accrued investment income
 
0 
0 
 
Income tax assets, net
 
(2.6)
(1.4)
 
Other assets
 
0 
0 
 
Total assets
 
(81.1)
(46.7)
 
Other liabilities
 
(3.3)
(0.1)
 
Borrowings related to variable interest entities
 
0 
0 
 
Notes payable of VIEs held by insurance subsidiaries
 
(82.5)
(49.3)
 
Total liabilities
 
(85.8)
(49.4)
 
Less Than Twelve Months [Member]
 
 
 
 
Variable Interest Entity [Line Items]
 
 
 
 
Fair value investments held by variable interest entity that had been in an unrealized loss position
 
114.1 
349.9 
 
Gross unrealized losses on investments held by variable interest entity
 
0.7 
6.0 
 
Greater Than Twelve Months [Member]
 
 
 
 
Variable Interest Entity [Line Items]
 
 
 
 
Fair value investments held by variable interest entity that had been in an unrealized loss position
 
59.1 
33.0 
 
Gross unrealized losses on investments held by variable interest entity
 
$ 0.9 
$ 1.7 
 
INVESTMENTS IN VARIABLE INTEREST ENTITIES - SCHEDULE OF VIEs (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Investment Holdings [Line Items]
 
Total amortized cost
$ 809.3 
Total fair value
814.3 
Amortized Cost [Member]
 
Investment Holdings [Line Items]
 
Due in one year or less
3.8 
Due after one year through five years
400.7 
Due after five years through ten years
404.8 
Total amortized cost
809.3 
Due in one year or less
1.8 
Due after one year through five years
118.6 
Due after five years through ten years
54.4 
Total amortized cost
174.8 
Estimated Fair Value [Member]
 
Investment Holdings [Line Items]
 
Due in one year or less
3.8 
Due after one year through five years
402.3 
Due after five years through ten years
408.2 
Total fair value
814.3 
Due in one year or less
1.8 
Due after one year through five years
117.1 
Due after five years through ten years
54.3 
Total fair value
$ 173.2 
INVESTMENTS IN VARIABLE INTEREST ENTITIES - REVENUES AND EXPENSES (DETAILS) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Variable Interest Entity [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net investment income - policyholder and reinsurer accounts and other special-purpose portfolios
 
 
 
 
 
 
 
 
$ 87.9 
$ (6.6)
$ 71.9 
Fee revenue and other income
 
 
 
 
 
 
 
 
19.8 
18.2 
16.8 
Total revenues
1,060.8 
1,093.0 
1,065.0 
1,123.9 
1,051.1 
992.3 
1,032.0 
1,049.2 
4,342.7 
4,124.6 
4,083.9 
Interest expense
 
 
 
 
 
 
 
 
114.6 
114.1 
113.2 
Other operating expenses
 
 
 
 
 
 
 
 
819.3 
704.5 
690.3 
Total expenses
 
 
 
 
 
 
 
 
4,187.0 
3,818.4 
3,859.0 
Income before income taxes
117.7 
(158.8)
104.5 
92.3 
102.3 
61.7 
71.8 
70.4 
155.7 
306.2 
224.9 
Variable Interest Entity, Primary Beneficiary [Member]
 
 
 
 
 
 
 
 
 
 
 
Variable Interest Entity [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net investment income - policyholder and reinsurer accounts and other special-purpose portfolios
 
 
 
 
 
 
 
 
31.3 
18.8 
20.1 
Fee revenue and other income
 
 
 
 
 
 
 
 
1.6 
1.2 
0.6 
Total revenues
 
 
 
 
 
 
 
 
32.9 
20.0 
20.7 
Interest expense
 
 
 
 
 
 
 
 
20.0 
11.8 
12.9 
Other operating expenses
 
 
 
 
 
 
 
 
0.6 
0.7 
0.6 
Total expenses
 
 
 
 
 
 
 
 
20.6 
12.5 
13.5 
Income before net realized investment losses and income taxes
 
 
 
 
 
 
 
 
12.3 
7.5 
7.2 
Net realized investment losses
 
 
 
 
 
 
 
 
(0.4)
(1.3)
(3.7)
Income before income taxes
 
 
 
 
 
 
 
 
$ 11.9 
$ 6.2 
$ 3.5 
SUBSEQUENT EVENT (DETAILS) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Feb. 8, 2013
Repayment of Debt [Member]
Dec. 31, 2012
Convertible Subordinated Debt [Member]
Sep. 30, 2012
Convertible Subordinated Debt [Member]
Dec. 31, 2011
Convertible Subordinated Debt [Member]
Feb. 8, 2013
Convertible Subordinated Debt [Member]
Repayment of Debt [Member]
Rate
Subsequent Event [Line Items]
 
 
 
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
 
 
 
7.00% 
7.00% 
 
7.00% 
Stock Repurchase Program, Remaining Repurchase Authorized Amount
$ 350,000,000 
 
$ 350,000,000 
 
 
 
 
Notes payable - direct corporate obligations
1,004,200,000 
857,900,000 
 
93,000,000 
 
293,000,000 
93,000,000 
Par Value of Each Convertible Senior Debenture
 
 
 
1,000 
 
 
1,000 
Convertible Debt Repurchase Tender Offer Weighted Average Common Stock Price Multiplier Before Additions
 
 
 
 
 
 
183.5145 
Convertible Debt Repurchase Tender Offer Addition to Multiplier, Amount Per Share
 
 
 
 
 
 
$ 61.25 
Convertible Debt Repurchase Tender Offer, Minimum Price To Be Paid Per One Thousand Principal Amount
 
 
 
 
 
 
$ 1,454.13 
SCHEDULE II - BALANCE SHEET (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
ASSETS
 
 
 
 
Fixed maturities, available for sale, at fair value (amortized cost: 2012 - $66.3; 2011 - $93.3; 2010)
$ 24,614.1 
$ 23,516.0 
 
 
Fixed maturities, available for sale, amortized cost
21,626.8 
21,779.1 
 
 
Cash and cash equivalents - unrestricted
582.5 
436.0 
571.9 
523.4 
Equity securities at fair value (cost: 2012 - $28.5; 2011 - $18.7)
171.4 
175.1 
 
 
Equity securities at cost
167.1 
177.0 
 
 
Trading securities
266.2 
91.6 
 
 
Other invested assets
248.1 
202.8 
 
 
Other assets
334.0 
292.2 
 
 
Total assets
34,131.4 
32,921.9 
 
 
Liabilities:
 
 
 
 
Notes payable
1,004.2 
857.9 
 
 
Investment borrowings
1,650.8 
1,676.5 
 
 
Other liabilities
570.6 
556.3 
 
 
Total liabilities
29,082.1 
28,308.1 
 
 
Commitments and Contingencies
   
   
 
 
Shareholders' equity:
 
 
 
 
Accumulated other comprehensive income (loss)
1,197.4 
781.6 
 
 
Accumulated deficit
(325.0)
(532.1)
 
 
Total shareholders' equity
5,049.3 
4,613.8 
3,811.6 
3,038.6 
Total liabilities and shareholders' equity
34,131.4 
32,921.9 
 
 
Parent Company [Member]
 
 
 
 
ASSETS
 
 
 
 
Fixed maturities, available for sale, at fair value (amortized cost: 2012 - $66.3; 2011 - $93.3; 2010)
68.5 
93.5 
 
 
Cash and cash equivalents - unrestricted
165.7 
70.2 
160.0 
145.3 
Cash and cash equivalents - restricted
0 
26.0 
 
 
Equity securities at fair value (cost: 2012 - $28.5; 2011 - $18.7)
30.0 
17.9 
 
 
Trading securities
2.3 
16.5 
 
 
Other invested assets
26.3 
28.6 
 
 
Investment in wholly-owned subsidiaries (eliminated in consolidation)
6,034.5 
5,488.6 
 
 
Receivable from subsidiaries (eliminated in consolidation)
1.4 
4.1 
 
 
Other assets
22.7 
19.1 
 
 
Total assets
6,351.4 
5,764.5 
 
 
Liabilities:
 
 
 
 
Notes payable
1,004.2 
857.9 
 
 
Payable to subsidiaries (eliminated in consolidation)
110.9 
84.6 
 
 
Income tax liabilities, net
105.6 
100.2 
 
 
Investment borrowings
0 
24.8 
 
 
Other liabilities
81.4 
83.2 
 
 
Total liabilities
1,302.1 
1,150.7 
 
 
Commitments and Contingencies
   
   
 
 
Shareholders' equity:
 
 
 
 
Common stock and additional paid-in capital ($.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: 2012 - 221,502,371; 2011 - 241,304,503)
4,176.9 
4,364.3 
 
 
Accumulated other comprehensive income (loss)
1,197.4 
781.6 
 
 
Accumulated deficit
(325.0)
(532.1)
 
 
Total shareholders' equity
5,049.3 
4,613.8 
 
 
Total liabilities and shareholders' equity
$ 6,351.4 
$ 5,764.5 
 
 
SCHEDULE II - STATEMENT OF OPERATIONS (DETAILS) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$ 1,060.8 
$ 1,093.0 
$ 1,065.0 
$ 1,123.9 
$ 1,051.1 
$ 992.3 
$ 1,032.0 
$ 1,049.2 
$ 4,342.7 
$ 4,124.6 
$ 4,083.9 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
Interest expense on notes payable
 
 
 
 
 
 
 
 
114.6 
114.1 
113.2 
Loss on extinguishment of debt
 
 
 
 
 
 
 
 
200.2 
3.4 
6.8 
Income before income taxes
117.7 
(158.8)
104.5 
92.3 
102.3 
61.7 
71.8 
70.4 
155.7 
306.2 
224.9 
Income tax benefit on period income
(16.5)
153.8 
(38.8)
(33.2)
(37.9)
117.8 
(25.4)
(25.0)
(65.3)
(29.5)
(15.7)
Net income
101.2 
(5.0)
65.7 
59.1 
64.4 
179.5 
46.4 
45.4 
221.0 
335.7 
240.6 
Parent Company [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
22.3 
(4.0)
0 
Net realized investment gains
 
 
 
 
 
 
 
 
1.9 
1.0 
0 
Investment income from subsidiaries (eliminated in consolidation)
 
 
 
 
 
 
 
 
0 
0.2 
0 
Total revenues
 
 
 
 
 
 
 
 
24.2 
(2.8)
0 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
Interest expense on notes payable
 
 
 
 
 
 
 
 
66.6 
76.3 
79.3 
Intercompany expenses (eliminated in consolidation)
 
 
 
 
 
 
 
 
0.4 
0.3 
1.3 
Operating costs and expenses
 
 
 
 
 
 
 
 
50.9 
53.8 
49.3 
Loss on extinguishment of debt
 
 
 
 
 
 
 
 
200.2 
3.4 
6.8 
Total expenses
 
 
 
 
 
 
 
 
318.1 
133.8 
136.7 
Income before income taxes
 
 
 
 
 
 
 
 
(293.9)
(136.6)
(136.7)
Income tax benefit on period income
 
 
 
 
 
 
 
 
(59.8)
(42.2)
(50.8)
Loss before equity in undistributed earnings of subsidiaries
 
 
 
 
 
 
 
 
(234.1)
(94.4)
(85.9)
Equity in undistributed earnings of subsidiaries (eliminated in consolidation)
 
 
 
 
 
 
 
 
455.1 
430.1 
326.5 
Net income
 
 
 
 
 
 
 
 
$ 221.0 
$ 335.7 
$ 240.6 
SCHEDULE II - STATEMENT OF CASH FLOWS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Condensed Financial Statements, Captions [Line Items]
 
 
 
Cash flows used by operating activities
$ 634.9 
$ 774.8 
$ 734.0 
Cash flows from investing activities:
 
 
 
Sales of investments
2,057.6 
5,504.5 
8,632.6 
Purchases of investments
(4,271.1)
(8,156.1)
(10,739.2)
Net purchases of trading securities
60.4 
300.2 
(51.7)
Net cash provided by investing activities
(197.1)
(1,338.0)
(1,298.6)
Cash flows from financing activities:
 
 
 
Issuance of notes payable, net
944.5 
0 
756.1 
Payments on notes payable
(810.6)
(144.8)
(793.6)
Issuance of common stock
3.1 
2.2 
0.1 
Payments to repurchase common stock
(180.2)
(69.8)
0 
Expenses related to extinguishment of debt
(183.0)
0 
0 
Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures
(24.0)
0 
0 
Investment borrowings - repurchase agreements, net
(24.8)
24.8 
0 
Net cash provided (used) by financing activities
(291.3)
427.3 
613.1 
Net increase (decrease) in cash and cash equivalents
146.5 
(135.9)
48.5 
Cash and cash equivalents, beginning of year
436.0 
571.9 
523.4 
Cash and cash equivalents, end of year
582.5 
436.0 
571.9 
Parent Company [Member]
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Cash flows used by operating activities
(95.3)
(85.5)
(119.1)
Cash flows from investing activities:
 
 
 
Sales of investments
159.7 
1,422.9 
0 
Sales of investments - affiliated
0 1
10.0 1
0 1
Purchases of investments
(145.0)
(1,569.5)
0 
Purchases of investments - affiliated
0 1
(10.0)1
0 1
Net purchases of trading securities
37.4 
(16.5)
0 
Dividends received from consolidated subsidiary, net of capital ontributions
245.0 1
236.0 1
26.6 1
Change in restricted cash
26.0 
(26.0)
0 
Net cash provided by investing activities
323.1 
46.9 
26.6 
Cash flows from financing activities:
 
 
 
Issuance of notes payable, net
944.5 
0 
756.1 
Payments on notes payable
(810.6)
(144.8)
(793.6)
Issuance of common stock
3.1 
2.2 
0 
Payments to repurchase common stock
(180.2)
(69.8)
0 
Common stock dividends paid
(13.9)
0 
0 
Expenses related to extinguishment of debt
(183.0)
0 
0 
Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures
(24.0)
0 
0 
Investment borrowings - repurchase agreements, net
24.8 
(24.8)
0 
Issuance of notes payable to affiliates
208.6 1
169.7 1
177.0 1
Payments on notes payable to affiliates
(52.0)1
(33.3)1
(32.3)1
Net cash provided (used) by financing activities
(132.3)
(51.2)
107.2 
Net increase (decrease) in cash and cash equivalents
95.5 
(89.8)
14.7 
Cash and cash equivalents, beginning of year
70.2 
160.0 
145.3 
Cash and cash equivalents, end of year
$ 165.7 
$ 70.2 
$ 160.0 
SCHEDULE II - BASIS OF PRESENTATION - BALANCE SHEET (DETAILS) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Total assets
$ 34,131.4 
$ 32,921.9 
 
 
Accumulated other comprehensive income (loss)
1,197.4 
781.6 
 
 
Retained earnings (accumulated deficit)
(325.0)
(532.1)
 
 
Total shareholders' equity
5,049.3 
4,613.8 
3,811.6 
3,038.6 
Total liabilities and shareholders' equity
34,131.4 
32,921.9 
 
 
Parent Company [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investment in wholly-owned subsidiaries
6,034.5 
5,488.6 
 
 
Total assets
6,351.4 
5,764.5 
 
 
Accumulated other comprehensive income (loss)
1,197.4 
781.6 
 
 
Retained earnings (accumulated deficit)
(325.0)
(532.1)
 
 
Total shareholders' equity
5,049.3 
4,613.8 
 
 
Total liabilities and shareholders' equity
6,351.4 
5,764.5 
 
 
Previously Reported [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Total assets
 
33,332.7 
 
 
Accumulated other comprehensive income (loss)
 
625.5 
 
 
Retained earnings (accumulated deficit)
 
42.8 
 
 
Total shareholders' equity
 
5,032.6 
 
 
Total liabilities and shareholders' equity
 
33,332.7 
 
 
Previously Reported [Member] |
Parent Company [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investment in wholly-owned subsidiaries
 
5,907.4 
 
 
Total assets
 
6,183.3 
 
 
Accumulated other comprehensive income (loss)
 
625.5 
 
 
Retained earnings (accumulated deficit)
 
42.8 
 
 
Total shareholders' equity
 
5,032.6 
 
 
Total liabilities and shareholders' equity
 
6,183.3 
 
 
Adjustments for New Accounting Pronouncement [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Total assets
 
(410.8)
 
 
Accumulated other comprehensive income (loss)
 
156.1 
 
 
Retained earnings (accumulated deficit)
 
(574.9)
 
 
Total shareholders' equity
 
(418.8)
 
 
Total liabilities and shareholders' equity
 
(410.8)
 
 
Adjustments for New Accounting Pronouncement [Member] |
Parent Company [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investment in wholly-owned subsidiaries
 
(418.8)
 
 
Total assets
 
(418.8)
 
 
Accumulated other comprehensive income (loss)
 
156.1 
 
 
Retained earnings (accumulated deficit)
 
(574.9)
 
 
Total shareholders' equity
 
(418.8)
 
 
Total liabilities and shareholders' equity
 
$ (418.8)
 
 
SCHEDULE II SCHEDULE II - BASIS OF PRESENTATION - STATEMENTS OF OPERATION AND CASH FLOWS (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Condensed Financial Statements, Captions [Line Items]
 
 
 
Net income
$ 221.0 
$ 335.7 
$ 240.6 
Parent Company [Member]
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Equity in undistributed earnings of subsidiaries
455.1 
430.1 
326.5 
Net income
221.0 
335.7 
240.6 
Adjustments for New Accounting Pronouncement [Member]
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Net income
 
(46.8)
(44.0)
Adjustments for New Accounting Pronouncement [Member] |
Parent Company [Member]
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Equity in undistributed earnings of subsidiaries
 
(46.8)
(44.0)
Net income
 
(46.8)
(44.0)
Previously Reported [Member]
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Net income
 
382.5 
284.6 
Previously Reported [Member] |
Parent Company [Member]
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Equity in undistributed earnings of subsidiaries
 
476.9 
370.5 
Net income
 
$ 382.5 
$ 284.6 
SCHEDULE IV (DETAILS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
Assumed
$ 70.4 
$ 87.7 
$ 99.4 
Ceded
(237.1)
(243.2)
(264.7)
Life Insurance in Force [Member]
 
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
Direct
53,750.8 
56,540.1 
59,388.5 
Assumed
325.7 
349.3 
374.2 
Ceded
(12,392.4)
(13,616.9)
(14,800.9)
Net
41,684.1 
43,272.5 
44,961.8 
Percentage of assumed to net
0.80% 
0.80% 
0.80% 
Insurance Policy Income [Member]
 
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
Direct
2,591.1 
2,540.6 
2,525.5 
Assumed
69.4 
80.4 
92.6 
Ceded
(220.0)
(238.1)
(258.6)
Net
$ 2,440.5 
$ 2,382.9 
$ 2,359.5 
Percentage of assumed to net
2.80% 
3.40% 
3.90%