Dividends in 2013 include a special $2.00 per share cash dividend to Class A and B common shareholders.
Amounts are impacted by accumulated other comprehensive income (loss) totaling $119.1 million in 2013, $289.9 million in 2012, $177.8 million in 2011, $51.6 million in 2010 and ($127.4) million in 2009. These amounts are net of deferred income taxes and other adjustments for assumed changes in deferred acquisition costs, unearned revenue reserve, value of insurance in force acquired and policyholder liabilities.
We analyze operations by reviewing financial information regarding our primary products that are aggregated in Annuity and Life Insurance product segments. In addition, our Corporate and Other segment includes various support operations, corporate capital and other product lines that are not currently underwritten by the Company. We analyze our segment results based on pre-tax operating income, which excludes the impact of certain items that are included in net income. See Note 13 to our consolidated financial statements for further information regarding how we define our segments and operating income.
Gross Domestic Product increased approximately 1.9% during 2013 based on early estimates.
An increase in market interest rates during 2013 has reduced the fair value of our fixed maturity investment portfolio. The benchmark 10-year U.S. Treasury yield rose during 2013, while credit spreads decreased. Strong liquidity and favorable corporate profitability continue to support fundamental credit quality. In the securitized markets, spreads on agency residential mortgage-backed securities and commercial mortgage-backed securities declined but rose for asset-backed securities. The yield curve remained moderately steep at year end, but low current interest rates create a challenging environment for sales of new money fixed annuity products.
Our operating income increased in 2013, compared to 2012, primarily due to the impact of an increase in the volume of business in force, higher corporate segment net investment income and the impact of unlocking assumptions used in the calculation of amortization of deferred acquisition costs and the value of insurance in force. These increases were partially offset by an increase in death benefits. Operating income increased in 2012, compared to 2011, primarily due to the impact of an increase in the volume of business in force, partially offset by increases in the amortization of deferred acquisition costs and the value of insurance in force. Earnings in 2011benefited from refining actuarial estimates that reduced the value of insurance in force and deferred acquisition costs by $7.4 million.
The increase in operating income during 2013, along with increased realized gains from investment sales and a reduction in losses from discontinued operations, contributed to higher net income compared to 2012. The increase in operating income during 2012,
along with a reduction in losses from discontinued operations and the loss on debt redemption, contributed to higher net income compared to 2011.
Amortization of deferred acquisition costs and the value of insurance in force changed over the three year period primarily due to changes in actual profits on the underlying business and the impact of unlocking from updating the withdrawal rate and earned spread assumptions within our amortization models. During 2012, the increase to amortization was more significant as a result of adjusting our assumptions based on an analysis of the possible impact of a continued low interest rate environment, as well as the impact of refining our projected credited rate assumption.
The Annuity segment also includes advances on our funding agreements with the Federal Home Loan Bank (FHLB). Outstanding funding agreements totaled $322.3 million at December 31, 2013, $328.5 million at December 31, 2012 and $268.0 million at December 30, 2011.
Includes prepayment fee income and net discount accretion on mortgage and asset-backed securities resulting from changing payment speed assumptions at the end of the period.
Pre-tax operating income for the Life Insurance segment increased in 2013 and decreased in 2012 compared to prior periods. The increase in 2013 was primarily due to an increase in the volume of business in force and the impact of unlocking, partially offset by increased death benefits. The decrease in 2012 was primarily due to the impact of refinements to valuation estimates during 2011 and an increase in expense allocations as discussed in the Corporate and Other segment, partially offset by increases in the volume of business in force and investment fee income.
Death benefits, net of reinsurance and reserves released, increased in 2013 primarily due to an increase in the average size of claims.
The weighted average yield on cash and invested assets for interest sensitive life insurance products decreased in 2013 and 2012 due to lower yields on new investment acquisitions from premium receipts and reinvestment of the proceeds from maturing investments, compared with the average existing portfolio yield, partially offset by an increase in investment fee income in 2012. See the "Financial Condition" section which follows for additional information regarding the yields obtained on investment acquisitions. Weighted average interest crediting rates on our interest sensitive life insurance products were impacted by crediting rate decreases taken on various products in 2013, 2012 and 2011 in response to the declining portfolio yield, partially offset by sales of products with higher crediting rates.
Other underwriting expenses decreased in 2012 due to a reallocation of certain expenses from the Corporate and Other segment to the Annuity and Life Insurance segments due to our decision to discontinue sales of variable products, resulting in a shift of corporate overhead to the product segments. In total, other underwriting expenses increased 1.2% in 2012.
Amortization of deferred acquisition costs and unearned revenue reserves changed over the three year period primarily due to the impact of market performance in the separate accounts.
Death benefits net of reinsurance and reserves released decreased in 2013 primarily due to a decrease in the average claim size.
Net investment income increased during 2013 and 2012 due to an increase in investments, including funds received from the sale of EquiTrust Life as discussed in Note 15 to our consolidated financial statements, as well as the impact of higher yielding securities held in the portfolio.
As a result of the sale of EquiTrust Life, the operations of the component sold and the related loss on sale are reflected as discontinued operations for all periods presented. See Note 15 to our consolidated financial statements for additional details on income (loss) from discontinued operations.
Our investment portfolio decreased 1.7% to $7,040.0 million at December 31, 2013 compared to $7,160.7 million at December 31, 2012. The portfolio decreased due to a reduction of $374.9 million of net unrealized appreciation of fixed maturities during 2013 and the execution of capital management transactions as outlined in Note 7 to the consolidated financial statements, partially offset by an increase due to positive cash flows from operating and financing activities. The reduction in net unrealized appreciation of fixed maturities is primarily attributable to an increase in market interest rates. Additional details regarding securities in an unrealized loss position at December 31, 2013 are included in the discussion that follows and in Note 2 to our consolidated financial statements included in Item 8. Details regarding investment impairments are discussed above in the "Realized Gains (Losses) on Investments" section under "Results of Operations."
We manage the investment portfolio to optimize risk-adjusted yield within the context of prudent asset-liability management. We evaluate multiple cash flow testing scenarios as part of this process. The Company's investment policy calls for investing primarily in high quality fixed maturities and commercial mortgage loans.
The table above reflects our exposure to non-sovereign European debt. This represents 6.9% of total fixed maturities as of December 31, 2013 and 5.5% of total fixed maturities as of December 31, 2012. The exposures are primarily in the industrial, finance and utility sectors. We do not own any securities issued by European governments.
Mortgage and other asset-backed securities are purchased when we believe these types of investments provide superior risk-adjusted returns compared to returns of more conventional investments such as corporate bonds and mortgage loans. These securities are diversified as to collateral types, cash flow characteristics and maturity.
The residential mortgage-backed portfolio includes government agency pass-through and collateralized mortgage obligation (CMO) securities. With a government agency pass-through security, we receive a pro rata share of principal payments as payments are made on the underlying mortgage loans. CMOs consist of pools of mortgages divided into sections or "tranches" which provide sequential retirement of the bonds. We primarily invest in sequential tranches which provide cash flow stability in that principal payments do not occur until the previous tranches are paid off. In addition, to provide call protection and more stable average lives, we invest in CMOs such as planned amortization class (PAC) and targeted amortization class (TAC) securities. CMOs of these types provide more predictable cash flows within a range of prepayment speeds by shifting the prepayment risks to support tranches. We generally do not purchase certain types of CMOs that we believe would subject the investment portfolio to excessive risk.
The other asset-backed securities are backed by both residential and non-residential collateral. The collateral for residential asset-backed securities primarily consists of second lien fixed-rate home equity loans. The cash flows of these securities are less subject to prepayment risk than residential mortgage-backed securities as the borrowers are less likely to refinance than those with only a first lien mortgage. The collateral for non-residential asset-backed securities primarily includes securities backed by credit card receivables, auto dealer receivables, auto installment loans, aircraft leases, middle market and syndicated business loans, timeshare receivables and trade and account receivables. These securities are high quality, short-duration assets with limited cash flow variability.
with a fair value of $17.9 million at December 31, 2013 and $24.2 million at December 31, 2012. We do not own any direct investments in subprime lenders.
2012. These bonds are used to fund the construction of multi-family homes on United States military bases. The bonds are backed by a first mortgage lien on residential military housing projects.
State, municipal and other government securities totaled $1.3 billion, or 22.2% of total fixed maturities at December 31, 2013, and include investments in general obligation, revenue and municipal housing bonds. Our investment strategy is to utilize municipal bonds in addition to corporate bonds, as we believe they provide additional diversification and have historically low default rates compared with similarly rated corporate bonds. We evaluate the credit strength of the underlying issues on both a quantitative and qualitative basis, excluding insurance, prior to acquisition. The majority of the municipal bonds we hold are investment grade credits without consideration of insurance. Our municipal bonds are well diversified by type and geography with the top exposure being water and sewer revenue bonds. We do not hold direct obligations of the City of Detroit, which filed for bankruptcy protection during July 2013. In addition, we do not hold any Puerto Rico related bonds, which has also been in the news recently given its financial issues. Exposure to the state of Illinois and municipalities within the state accounted for 1.7% of our total fixed maturities at December 31, 2013. As of December 31, 2013, Illinois related holdings held in the portfolio were A-rated or above, and were trading at 101.8% of amortized cost. Our municipal bond exposure had an average rating of AA and was trading at 102.4% of amortized cost at December 31, 2013.
Mortgage loans totaled $575.9 million at December 31, 2013 and $554.8 million at December 31, 2012. Our mortgage loans are diversified as to property type, location and loan size, and are collateralized by the related properties. The total number of commercial mortgage loans outstanding was 143 at December 31, 2013 and 142 at December 31, 2012. In 2013, new loans ranged from $1.9 million to $9.3 million in size, with an average loan size of $4.7 million, an average loan term of 14 years and an average yield of 4.43%. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and require diversification by geographic location and collateral type. The majority of our mortgage loans amortize principal, with 3.1% that are interest only loans at December 31, 2013. At December 31, 2013, the average loan-to-value of the current outstanding principal balance using the most recent appraised value was 54.9% and the weighted average debt service coverage ratio was 1.5 based on the results of our 2012 annual study. See Note 2 to our consolidated financial statements for further discussion regarding our mortgage loans.
FBL Financial Group, Inc. stockholders' equity decreased 13.8% to $1,044.7 million at December 31, 2013, compared to $1,212.2 million at December 31, 2012, primarily due to the change in unrealized appreciation of fixed maturity securities during the period and capital deployment actions, partially offset by net income. As discussed in Note 7 to our consolidated financial statements, during the year stockholders' equity was impacted by several capital deployment actions including a 36 percent increase in the quarterly cash dividend to $0.15 per share, a special cash dividend of $2.00 per share on Class A and Class B common stock and a repurchase of 1,023,948 shares of Class B common stock.
The amount by which bond calls, mortgage loan prepayments and paydowns on mortgage and asset-backed securities accelerate during periods of declining interest rates or decelerate during periods of increasing interest rates.
The following is a hypothetical illustration of the potential impact to average investment yields of a static 2.00% 10-year U.S. Treasury rate during 2014 and 2015 without any corresponding change in current spreads. The level of investments maturing
and requiring reinvestment are based on projections of the current investment portfolios supporting these blocks of business without incorporation of new business. We estimate that this scenario would decrease average investment yields supporting our annuity business by 0.10% to 0.15% and our universal life business by 0.05% to 0.10% annually over the near term. In addition to not incorporating the impact of new business, this hypothetical illustration does not reflect the potential impact of policyholder behavior. An increase in net cash flows from that modeled will accelerate the pace at which the portfolio yield will decrease and a decrease in the net cash flows from that modeled will slow down the pace at which the portfolio yield will decrease. Accordingly, actual investment yields could differ materially from those presented. Furthermore, the impact of a decline in portfolio yield on net income is dependent on our ability and willingness to adjust crediting rates.
Our exposure to interest rate risk stems largely from our annuity products as the cash flows of these products can vary significantly with changes in interest rates. We have holdings in fixed maturity and mortgage loan portfolios to offset the interest rate risk of our annuity products. We actively manage the projected cash flows and duration of these assets and liabilities by minimizing the difference between the two. While it can be difficult to maintain asset and liability durations that are perfectly matched in a dynamic environment, we have identified various strategies that can be implemented if duration mismatches exceed acceptable tolerances. The effective duration of the fixed maturity and mortgage loan portfolios backing our annuity products was 6.0 at December 31, 2013 and 5.5 at 2012. The effective duration of our annuity liabilities was approximately 6.3 at December 31, 2013 and 6.5 at December 31, 2012.
We have equity price risk to the extent we may owe amounts under the guaranteed minimum death benefit and guaranteed minimum income benefit provisions of our variable annuity contracts. See Note 4 to our consolidated financial statements for additional discussion of these provisions.
During 2013, our operating activities generated cash flows totaling $182.3 million consisting of net income of $108.4 million adjusted for non-cash revenues and expenses netting to $73.9 million. We used cash of $278.0 million in our investing activities during 2013. The primary uses were $1,077.1 million of investment acquisitions, mostly in fixed maturity securities, partially offset by $845.2 million in sales, maturities and repayment of investments. Our financing activities provided cash of $24.0 million during 2013. The primary financing source was $565.3 million in receipts from interest sensitive products credited to policyholder account balances, which was partially offset by $384.9 million for return of policyholder account balances on interest sensitive products. Also, we used $43.7 million for the net repurchase and issuance of common stock and $50.0 million for the repayment of long-term debt.
Farm Bureau Life's ability to pay dividends to FBL Financial Group, Inc. is limited by law to earned profits (statutory unassigned surplus) as of the date the dividend is paid, as determined in accordance with accounting practices prescribed by insurance regulatory authorities of the State of Iowa. At December 31, 2013, Farm Bureau Life’s statutory unassigned surplus
We paid regular cash dividends on our common and preferred stock totaling $13.4 million in 2013, $11.1 million in 2012 and $8.9 million in 2011. In addition, we paid a special $2.00 per common share cash dividend in September 2013 of $51.4 million. It is anticipated that quarterly cash dividend requirements for 2014 will be $0.0075 per Series B redeemable preferred share and $0.35 per common share. The level of common stock dividends will be analyzed quarterly and will be dependent upon our capital and liquidity positions. In addition, alternative uses of excess capital may impact future dividend levels. Assuming a quarterly dividend rate of $0.35 per common share, the common and preferred dividends would total approximately $34.8 million in 2014. The parent company expects to have sufficient resources and cash flows to meet its interest and dividend payments throughout 2014. The parent company had available cash and investments totaling $102.6 million at December 31, 2013. FBL Financial Group, Inc. expects to rely on available cash resources and management fee income to make dividend payments to its stockholders and interest payments on its debt, as well as fund any capital initiatives such as the stock repurchases described above. As of December 31, 2013, we had no other material commitments for capital expenditures.
We do not have any off-balance sheet arrangements as of December 31, 2013 or 2012.
In the normal course of business, we enter into insurance contracts, financing transactions, lease agreements or other commitments which are necessary or beneficial to our operations. These commitments may obligate us to certain cash flows during future periods. The following table summarizes such obligations as of December 31, 2013:
traditional life reserves are computed as the present value of future benefits less the present value of future premiums while the contractual obligations table includes gross benefit payments; and
Includes our estimated future contributions to defined and postretirement benefit plans. Contributions related to the qualified pension plan are included through 2014. No amounts related to the qualified pension plan are included beyond 2014 as the contribution amounts will be re-evaluated based on actual results.
Fair values are obtained primarily from a variety of independent pricing sources, whose results we evaluate internally. Details regarding valuation techniques and processes are summarized in Notes 1 and 3 to our consolidated financial statements.
Based upon a historical analysis of fluctuations in estimated gross profits, we believe it is reasonably likely that a 10% change in estimated gross profits could occur. A 10% increase in estimated gross profits for 2013 would result in $1.6 million of additional amortization expense. Correspondingly, a 10% decrease in estimated gross profits would result in $1.6 million reduction of amortization expense. The information above is for illustrative purposes only and does not reflect our expectations regarding future changes in estimated gross profits.
Reserving for future policy benefits for traditional life insurance products requires the use of many assumptions, including the duration of the policies, mortality experience, lapse rates, surrender rates and dividend crediting rates.
The determination of net periodic pension expense and related accrued/prepaid pension cost requires the use of estimates as to the expected return on plan assets, discount rate on plan liabilities and other accrual assumptions. Pension expense for 2013 totaled $6.8 million.
The long-term rate of return may fluctuate over time based on asset mix and if investment returns over a long period of time significantly differ from historical returns. The discount rate changes annually as it is based on current yields for high quality corporate bonds with a maturity approximating the duration of our pension obligations. As fluctuations in the expected long-term rate of return and discount rate have been historically moderate and we have no current plans to change our investment strategy significantly, we believe a change of up to 100 basis points is reasonably likely. A 100 basis point decrease in the expected return on assets would result in a $0.8 million increase in pension expense and a 100 basis point increase would result in a $0.8 million decrease to pension expense. A 100 basis point decrease in the assumed discount rate would result in a $1.6 million increase in pension expense while a 100 basis point increase would result in a $1.2 million decrease to pension expense. The information above is for illustrative purposes only and does not reflect our expectations regarding future changes in the long-term rate of return or discount rates.
At December 31, 2013, we held gross deferred tax assets totaling $56.3 million, primarily related to future policy benefits, employee benefits, and loss carryforwards. Utilization of these deferred tax assets is dependent on our future earnings. No valuation allowance has been established for these deferred tax assets, as we believe future earnings will be sufficient to ensure their utilization. If future earnings are no longer expected to be sufficient, a valuation allowance will need to be established. Given the number of variables that impact the level of future earnings, it is not practicable to estimate a range of possible outcomes to the valuation of the deferred tax assets.
See Note 1 to our consolidated financial statements for a discussion of recent accounting pronouncements that have been implemented during the year and those that have been issued and will be implemented in the future.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a - 15(f). Under the supervision and the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework (1992), our management concluded that our internal control over financial reporting was effective as of December 31, 2013.
Other comprehensive income is recorded net of deferred income taxes and other adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities.
FBL Financial Group, Inc. (we or the Company) operates predominantly in the life insurance industry through its principal subsidiary, Farm Bureau Life Insurance Company (Farm Bureau Life). Farm Bureau Life markets individual life insurance policies and annuity contracts to Farm Bureau members and other individuals and businesses in the Midwestern and Western sections of the United States through an exclusive agency force. Greenfields Life Insurance Company (Greenfields), a subsidiary of Farm Bureau Life, was launched in early 2013 and offers life and annuity products in the state of Colorado. Several subsidiaries support various functional areas of Farm Bureau Life and other affiliates by providing investment advisory, marketing and distribution, and leasing services. In addition, we manage two Farm Bureau affiliated property-casualty companies.
In January 2014, the Financial Accounting Standards Board (FASB) issued guidance related to accounting for investments in low income housing tax credit limited partnerships. Presently, we account for these investments under the equity method and include related tax benefits as a component of equity income. The new guidance requires us to account for these partnerships using the proportional amortization method, which amortizes the acquisition cost of the partnership in proportion to the recognition of the tax credits associated with these projects. The tax credits, net of the amortization of the partnership interest, will be recognized as a component of income taxes. This guidance must be applied retrospectively and will be effective for fiscal years beginning after December 15, 2014, with early adoption permitted. We are currently evaluating the impact of this new guidance.
Fixed maturities, comprised of bonds, redeemable preferred stock and certain non-redeemable preferred stock, which may be sold, are designated as "available for sale." Available-for-sale securities are reported at fair value and unrealized gains and losses on these securities, with the exception of unrealized gains and losses relating to synthetic collateralized debt obligations, are included directly in stockholders' equity as a component of accumulated other comprehensive income. Unrealized gains and losses relating to synthetic collateralized debt obligations are recorded as a component of net investment income in the consolidated statements of operations. The unrealized gains and losses are reduced by a provision for deferred income taxes and adjustments to deferred acquisition costs, value of insurance in force acquired and unearned revenue reserve that would have been required as a charge or credit to income had such amounts been realized.
Securities and indebtedness of related parties include investments in corporations and partnerships over which we may exercise significant influence and those investments for which we are required to use the equity method of accounting. These corporations and partnerships operate predominately in the investment company, insurance, broker/dealer and real estate industries and include low income housing tax credit generating partnerships. Such investments are accounted for using the equity method. In applying the equity method, we record our share of income or loss reported by the equity investees. For partnerships operating in the investment company industry, this income or loss includes changes in unrealized gains and losses in the partnerships' investment portfolios.
After an other-than-temporary write down of all equity securities and any fixed maturities with a credit-only impairment, the cost basis is not adjusted for subsequent recoveries in fair value. For fixed maturities for which we can reasonably estimate future cash flows after a write down, the discount or reduced premium recorded, based on the new cost basis, is amortized over the remaining life of the security. Amortization in this instance is computed using the prospective method and the current estimate of the amount and timing of future cash flows.
Deferred acquisition costs include certain costs of successfully acquiring new insurance business, including commissions and other expenses related to the production of new business, to the extent recoverable from future policy revenues and gross profits. Also included are premium bonuses and bonus interest credited to contracts during the first contract year only. The value of insurance in force acquired represents the cost assigned to insurance contracts when an insurance company is acquired. The initial value is determined by an actuarial study using expected future gross profits as a measurement of the net present value of the insurance acquired. Interest accrued on the unamortized balance at a weighted average rate of 4.56% in 2013, 4.70% in 2012 and 4.72% in 2011.
For participating traditional life insurance and interest sensitive products, these costs are being amortized generally in proportion to expected gross margins or gross profits. That amortization is adjusted retrospectively through an unlocking process when estimates of current or future gross profits/margins (including the impact of investment gains and losses) to be realized from a group of products are revised. For nonparticipating traditional life products, these costs are amortized over the premium paying period of the related policies, in proportion to the ratio of annual premium revenues to total anticipated premium revenues. Such anticipated premium revenues are estimated using the same assumptions used for computing liabilities for future policy benefits.
Effective January 1, 2012, we retroactively adopted guidance issued by the FASB that narrowed the definition of deferrable acquisition costs associated with acquiring or renewing insurance contracts. In addition, during 2011, refinements were made to the methods and assumptions used to calculate the amortization of value of insurance in force and deferred acquisition costs, which increased net income from continuing operations $4.8 million ($0.15 per basic and diluted common share).
Other assets include property and equipment, primarily comprised of capitalized software costs and furniture and equipment, which are reported at cost less allowances for depreciation and amortization. We expense costs incurred in the preliminary stages of developing internal-use software as well as costs incurred post-implementation for maintenance. Capitalization of internal-use software costs occurs after management has authorized the project and it is probable that the software will be used as intended. Amortization of software costs begins after the software has been placed in production. Depreciation and amortization expense is computed primarily using the straight-line method over the estimated useful lives of the assets, which range from two to twenty years. Property and equipment had a carrying value of $25.8 million at December 31, 2013 and $18.6 million at December 31, 2012, and accumulated depreciation and amortization of $50.3 million at December 31, 2013 and $65.9 million at December 31, 2012. Depreciation and amortization expense for property and equipment was $4.6 million in 2013, $4.8 million in 2012 and $3.5 million in 2011.
our goodwill than a market capitalization approach. A number of significant assumptions and estimates are involved in the application of the discounted cash flow model to forecast operating cash flows, including future premiums, product lapses, investment yields and discount rate. Underlying assumptions are based on historical experience and our best estimates given information available at the time of testing. As a result of our impairment review, we have determined our goodwill was not impaired as of December 31, 2013 or 2012.
Other income and other expenses primarily consist of revenue and expenses generated by our various non-insurance subsidiaries for investment advisory, marketing and distribution, and leasing services. They also include revenues and expenses generated by our parent company for management services. Certain of these activities are performed on behalf of our affiliates. Lease income from leases with affiliates totaled $2.2 million in 2013, $2.4 million in 2012 and $1.8 million in 2011. Investment advisory fee income from affiliates totaled $1.7 million in 2013, $1.5 million in 2012 and $1.2 million in 2011. In addition, Farm Bureau Life has certain items reported as other income and other expense, which netted to $3.0 million in 2013, $3.3 million in 2012 and $3.2 million in 2011. During 2012, we also received fees of $3.5 million from the acquirer of EquiTrust Life to provide administrative support and transition services. We expense legal costs associated with a loss contingency as incurred.
Upon the sale of EquiTrust Life our independent distribution business segment was discontinued. Discontinued operations are those in which we no longer have any significant continuing involvement in the operations after the disposal transaction. The results of discontinued operations are segregated from our continuing operations and reported as income (loss) from discontinued operations in the consolidated statements of operations for current and prior periods. The loss recognized on the disposal is also reported as a component of discontinued operations. Components of the income (loss) from discontinued operations are separately disclosed in Note 15.
Significant accounting policies related to the results from discontinued operations which are not discussed above include:
Derivative instruments, which include call options used to fund index credits on index annuities, are measured at fair value, with changes in fair value reflected in our results of discontinued operations.
We participate with several affiliates in several defined benefit pension plans, including a multiemployer plan. We employ a long-term investment strategy of maintaining diversified plan assets. The expected return on plan assets is set at the long-term rate expected to be earned based on the long-term investment strategy of the plans for assets at the end of the reporting period.
Comprehensive income includes net income, as well as other comprehensive income items not recognized through net income. Other comprehensive income includes unrealized gains and losses on our available-for-sale securities and certain interest rate swaps held in prior years, as well as the unfunded obligation for postretirement benefit plans. These items are included in accumulated other comprehensive income, net of tax and other offsets, in stockholders' equity. The changes in unrealized gains and losses reported in our Statement of Comprehensive Income, excludes net investment gains and losses included in net income which represent transfers from unrealized to realized gains and losses. These transfers are further discussed in Note 7. The components of the unfunded obligation for postretirement benefit plans are provided in Note 8.
We have agreed that we will not pay dividends on the Class A or Class B Common Stock, nor on the Series B Preferred Stock, if we are in default of the Subordinated Deferrable Interest Note Agreement dated May 30, 1997 with FBL Financial Group Capital Trust. We are compliant with all terms of this agreement at December 31, 2013. See Note 6 for additional information regarding this agreement.
Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Fixed maturities not due at a single maturity date have been included in the above table in the year of final contractual maturity.
The changes in net unrealized investment gains and losses are recorded net of deferred income taxes and other adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities. Subsequent changes in fair value of securities for which a previous non-credit other-than-temporary impairment loss was recognized in accumulated other comprehensive income are reported along with changes in fair value for which no other-than-temporary impairment losses were previously recognized.
Residential mortgage-backed securities: The unrealized losses on residential mortgage-backed securities were primarily due to continued uncertainty regarding mortgage defaults on Alt-A loans. We purchased most of these investments at a discount to their face amount and the contractual cash flows of these investments are based on mortgages and other assets backing the securities.
Commercial mortgage-backed securities: The unrealized losses on commercial mortgage-backed securities were primarily due to spread widening and concerns regarding the potential for future defaults. The contractual cash flows of these investments are
State, municipal and other governments: The unrealized losses on state, municipal and other governments were primarily due to general spread widening relative to spreads at which we acquired the bonds.
Amount represents the credit-related losses recognized for fixed maturities which were not written down to fair value. As discussed above the non-credit portion of the losses have been recognized in other comprehensive income (loss).
Proceeds from sales of fixed maturities were $138.4 million in 2013, $156.3 million in 2012 and $70.7 million in 2011.
Realized losses on sales were on securities that we did not intend to sell at the prior balance sheet date or on securities that were impaired in a prior period, but decreased in value during the year. Realized gains and losses on sales of investments are determined on the basis of specific identification.
We evaluate our variable interest entity (VIE) investees to determine whether the level of our direct ownership interest, our rights to manage operations or our obligation to provide ongoing financial support are such that we are the primary beneficiary of the entity, and are then required to consolidate it for financial reporting purposes. None of our VIE investees were required to be consolidated during 2013, 2012 or 2011. Our VIE investments are as follows:
The real estate limited partnerships had revenues totaling $4.3 million for 2013, $4.1 million for 2012 and $4.9 million for 2011. We may make commitments to fund partnership investments in the normal course of business. We did not have any other commitments to investees designated as VIE's during the years ended December 31, 2013, 2012 or 2011.
We are not significantly involved in hedging activities and have limited exposure to derivatives. We do not apply hedge accounting to any of our derivative positions. Derivative assets, which are primarily reported in reinsurance recoverable and other investments, totaled $3.7 million at December 31, 2013 and $5.6 million at December 31, 2012. Our derivative assets consist of derivatives embedded within our modified coinsurance agreements and call options which provide an economic hedge for a small block of index annuity contracts. Derivative liabilities totaled $0.3 million at December 31, 2013 and $0.5 million at December 31, 2012 and include derivatives embedded within our index annuity contracts and derivatives embedded within our modified coinsurance agreements. The net gain (loss) recognized on these derivatives was included in net investment income and interest sensitive benefits and totaled ($1.5) million in 2013, $1.6 million in 2012 and ($0.5) million in 2011.
At December 31, 2013, affidavits of deposits covering investments with a carrying value totaling $6,480.9 million were on deposit with state agencies to meet regulatory requirements. Fixed maturities with a carrying value of $356.0 million were on deposit with the Federal Home Loan Bank (FHLB) as collateral for funding agreements.
The carrying value of investments which have been non-income producing for the twelve months preceding December 31, 2013 includes fixed maturities, real estate, short-term and equity securities totaling $3.8 million.
No investment in any entity or its affiliates (other than bonds issued by agencies of the United States Government) exceeded 10.0% of stockholders' equity at December 31, 2013.
In the discussion that follows, we have ranked our financial instruments by the level of judgment used in the determination of the fair values presented above. The levels are defined as follows:
Level 3 fixed maturities include private placements as well as corporate, mortgage and other asset-backed and state and municipal securities for which there is little or no current market data available. We use external pricing sources, or if prices are not available, we will estimate fair value internally. Fair values of private investments in Level 3 are determined by reference to public market, private transactions or valuations for comparable companies or assets in the relevant asset class when such amounts are available. For other securities where an exit price based on relevant observable inputs is not obtained, the fair value is determined using a matrix calculation. Fair values estimated through use of matrix pricing methods rely on an estimate of credit spreads to a risk free U.S. Treasury yield. Selecting the credit spread requires judgment based on an understanding of the security and may include a market liquidity premium. Our selection of comparable companies as well as the level of spread requires significant judgment. Increases in spreads used in our matrix models, or those used to value comparable companies, will result in a decrease in discounted cash flows used, and accordingly in the estimated fair value of the security.
Level 1 equity securities consist of listed common stocks and mutual funds that are actively traded, allowing us to use current market prices as an estimate of their fair value.
Level 3 policy related financial instruments of investment-type contracts are those not involving significant mortality or morbidity risks. No active market exists for these contracts and they are not measured at fair value on a recurring basis. Fair values for our insurance contracts, other than investment-type contracts, are not required to be disclosed. Fair values for our investment-type contracts with expected maturities, including deferred annuities, funding agreements and supplementary contracts, are determined using discounted cash flow valuation techniques based on current interest rates adjusted to reflect our credit risk and an additional provision for adverse deviation. For certain deposit liabilities with no defined maturities and no surrender charges, including pension related deposit administration funds, advance premiums and other deposits, fair value is the account value or amount payable on demand. Significant judgment is required in selecting the assumptions used to estimate the fair values of these financial instruments. For contracts with known maturities, increases in current rates will result in a decrease in discounted cash flows and a decrease in the estimated fair value of the policy obligation.
Transfers into Level 3 represent assets previously priced using an external pricing service with access to observable inputs no longer available and therefore, were priced using non-binding broker quotes. Transfers out of Level 3 include those assets that we are now able to obtain pricing from a third party pricing vendor that uses observable inputs. There were no transfers between Level 1 and Level 2 during 2013.
Transfers into Level 3 represent assets previously priced using an external pricing service with access to observable inputs no longer available and therefore, were priced using non-binding broker quotes. During 2012, we began using an external pricing service with access to observable inputs for a portion of our Level 3 investments for which non-binding broker quotes were previously used to estimate fair value. We believe the change in pricing sources is appropriate and consistent with our pricing waterfall policy to use higher level valuation methods when available. There were no transfers between Level 1 and Level 2 during 2012.
Life insurance in force ceded totaled $13,220.0 million (24.2% of life insurance in force) at December 31, 2013 and $11,999.3 million (23.1% of life insurance in force) at December 31, 2012. Insurance premiums and product charges have been reduced by $29.4 million in 2013, $28.9 million in 2012 and $30.8 million in 2011 and insurance benefits have been reduced by $21.7 million in 2013, $20.5 million in 2012 and $15.5 million in 2011 as a result of cession agreements.
We periodically revise key assumptions used in the calculation of the value of insurance in force acquired through an “unlocking” process, which increased amortization $2.6 million in 2012. As described in Note 1, during 2011 refinements were made to the methods and assumptions used to calculate the amortization of value of insurance in force acquired, resulting in a $6.9 million reduction in amortization. Net amortization, based on expected future gross profits/margins, for the next five years is expected to be as follows: 2014 - $2.8 million; 2015 - $2.8 million; 2016 - $2.5 million; 2017 - $2.5 million; and 2018 - $2.4 million.
The separate account assets are principally comprised of stock and bond mutual funds. The net amount at risk for these contracts is based on the amount by which GMDB, IDB or GMIB exceeds account value. The reserve for GMDBs, IDBs or GMIBs, determined using modeling techniques and industry mortality assumptions, that is included in future policy benefits, totaled $2.4 million at December 31, 2013 and $1.9 million at December 31, 2012. The weighted average age of the contract holders with GMDB, IDB or GMIB rider exposure was 63 years at December 31, 2013 and 60 years at December 31, 2012. Benefits paid for GMDBs, IDBs and GMIBs totaled $0.3 million for 2013, $0.2 million for 2012 and $0.3 million for 2011.
Deferred income taxes have been established based upon the temporary differences between the financial statement and income tax bases of assets and liabilities. The reversal of the temporary differences will result in taxable or deductible amounts in future years when the related asset or liability is recovered or settled. A valuation allowance is required if it is more likely than not that a deferred tax asset will not be realized. In assessing the need for a valuation allowance we considered the scheduled reversal of deferred tax assets, projected future taxable income, taxable income from prior years available for recovery and tax planning strategies. Our tax planning strategies assume deferred tax assets related to unrealized losses on our investments are temporary as we have the ability to hold the investments until maturity, at which time, the existing temporary difference is expected to reverse. As such, we have determined that the establishment of a valuation allowance was not necessary at December 31, 2013 and 2012.
As described in Note 15, during the first quarter of 2012 we completed the required redemption of $175.0 million of our long term debt in accordance with the mandatory redemption provisions of the underlying notes at the make-whole redemption price of $210.9 million.
December 31, 2013, and having the ability to control the Company. Holders of Class A common stock and Class B common stock receive equal per-share common stock dividends.
During 2011 and 2012, the Board of Directors approved a plan to repurchase up to $230.0 million of Class A common stock. These repurchase plans authorize us to make repurchases in the open market or through privately negotiated transactions, with the timing and terms of the purchases to be determined by management based on market conditions. In connection with the Class A repurchase plans, we repurchased 0.4 million shares of stock for $14.2 million in 2013, 5.5 million shares of stock for $181.9 million in 2012 and 0.4 million shares of stock for $13.6 million in 2011. Completion of this program is dependent on market conditions and other factors. There is no guarantee as to the exact timing of any repurchases or the number of shares, if any, that we will repurchase. The share repurchase program may be modified or terminated at any time without prior notice.
During February 2014, the Board of Directors approved a plan to repurchase up to $50.0 million of Class A common stock. This repurchase plan will commence upon the earlier of the completion of the current repurchase plan or its expiration on March 31, 2014.
On August 21, 2013, the Board of Directors approved a special $2.00 per share cash dividend to Class A and B common shareholders of record as of September 6, 2013. The aggregate dividend totaling $51.4 million was paid on September 13, 2013.
We participate in various defined benefit pension plans (the Plans), including a multiemployer plan. The multiemployer plan is considered qualified under Internal Revenue Service regulations, and covers our employees and the employees of the other participating companies who have attained age 21, have one year of service, and were employed prior to January 1, 2013. We also have a plan which provides supplemental pension benefits to employees with salaries and/or pension benefits in excess of the qualified limits imposed by federal law and started prior to January 1, 2013. Benefits of these plans are based on years of service and the employee's compensation. The plans are discussed below.
The FBL Financial Group Retirement Plan (the Multiemployer Plan) is considered a multiemployer plan, with the participation of unaffiliated and affiliated organizations along with FBL Financial Group, Inc. and its subsidiaries. Under the multiemployer plan structure, our contributions are commingled with those of the other employers to fund the plan benefit obligations. Should a participating employer be unable to provide funding, the remaining employers would be required to continue funding all future obligations. If an employer elects to discontinue participation, prior to departure they will be required to contribute their portion of the unfunded pension obligation associated with their employees. This required contribution will be based on an actuarial estimate of future benefit obligations, which as an estimate may not ultimately be sufficient to fund future actual benefits. None of the participating employers have provided notice that they would be discontinuing participation in the Multiemployer Plan or would otherwise be unable to continue providing their share of required funding as of December 31, 2013.
Net periodic pension cost of the Multiemployer Plan is allocated between participating employers on a basis of time incurred by the respective employees for each employer. Such allocations are reviewed annually. This Multiemployer Plan was not subject to collective bargaining agreements, a financial improvement plan or a rehabilitation plan. No surcharges were required to be paid to the Multiemployer Plan during 2013, 2012 or 2011. We are the primary employer in the Multiemployer Plan, providing more than 5 percent of the total contributions during 2013, 2012 or 2011.
The Plans' prior service costs are amortized using a straight-line amortization method over the average remaining service period of the employees. For actuarial gains and losses, we use a corridor to determine the amounts to amortize. For the Multiemployer Plan it is expected that net periodic pension cost in 2014 will include $5.4 million for amortization of the actuarial loss and $0.1 million of prior service cost amortization. For the Other Plans it is expected that net periodic pension cost in 2014, included in accumulated other comprehensive income at December 31, 2013, will include $1.1 million for amortization of the actuarial loss and less than ($0.1) million of prior service cost (credit) amortization.
We expect contributions to be paid to the Multiemployer Plan by us and affiliates for 2014 to be approximately $15.0 million, of which $4.9 million is expected to be contributed by us. We expect contributions to be paid to the Other Plans by us and affiliates for 2014 to be approximately $3.4 million, of which $1.7 million is expected to be contributed by us. Expected benefits to be paid under the Multiemployer Plan are as follows: 2014 - $23.0 million, 2015 - $24.1 million, 2016 - $23.1 million, 2017 - $19.7 million, 2018 - $21.4 million and 2019 through 2023 - $102.5 million. Expected benefits to be paid under the Other Plans are as follows: 2014 - $3.4 million, 2015 - $3.6 million, 2016 - $3.1 million, 2017 - $2.0 million, 2018 - $2.0 million and 2019 through 2023 - $9.1 million.
The Multiemployer Plan assets are primarily invested in annuity products and insurance company pooled separate accounts that invest predominately in equity securities and real estate. We have certain pension obligations that are fully funded through annuity contracts with Farm Bureau Life which are presented as funded annuity contracts below. For 2013, excluding the funded annuity contracts, we employed a long-term investment strategy of diversifying the Multiemployer Plan assets with 55% in fixed income investments, 40% in equities and 5% in alternative investments. At December 31, 2013, the Multiemployer Plan assets were invested approximately 57% in fixed income investments, 42% in diversified equities and 1% in alternative investments. The fixed income investments consist primarily of the group annuity contract and fixed income securities held in pooled separate accounts. The equity securities are in pooled separate accounts and mutual funds. The alternative investments consist of interests in limited partnerships that own various liquid and illiquid assets. Our investment strategy is to (1) achieve a long-term return sufficient to satisfy all Multiemployer Plan obligations, (2) assume a prudent level of risk and (3) maintain adequate liquidity. The expected return on Multiemployer Plan assets is set at the long-term rate expected to be earned based on the long-term investment strategy of the Multiemployer Plan. In estimating the expected rate of return for each asset class, we take into account factors such as historical rates of return, expected future risk free rates of return and anticipated returns expected given the risk profile of each asset class.
We participate with several affiliates in a 401(k) defined contribution plan which covers substantially all employees. We contributed cash in an amount equal to 100% of an employee's contributions up to 2% or 4% of the eligible compensation contributed by the employee and an amount equal to 50% of an employee's contributions on the next 2% of the eligible compensation contributed by the employee. As shown in the table below, certain employees will also receive an annual discretionary employer contribution based on age plus years of service ranging from 2.75% to 5.75% as a percent of pay. Costs are allocated among the affiliates on a basis of time incurred by the respective employees for each company. Our expense related to the plan totaled $1.8 million in 2013 and $0.9 million in 2012 and in 2011.
In addition to benefits offered under the aforementioned benefit plans, we and several other affiliates sponsor a plan that provides group term life insurance benefits to retirees who have worked full-time for ten years and attained age 55 while in service. Postretirement benefit expense for this plan is allocated in a manner consistent with pension expense discussed above. We also have two single employer plans that provide health and medical benefits to a small group of retirees. Postretirement benefit expense totaled $0.1 million in 2013, 2012 and 2011. Changes in the underfunded status of these plans, reported in other comprehensive income, aggregated $0.2 million in 2013, ($0.1) million in 2012 and less than ($0.1) million in 2011.
We have three share-based payment arrangements under our Class A Common Stock Compensation Plan, which are described below. Compensation expense for these arrangements totaled $0.3 million for 2013, $2.1 million for 2012 and $5.0 million for 2011. The income tax benefit recognized in the statements of operations for these arrangements totaled less than $0.1 million for 2013, $0.9 million for 2012 and $1.9 million for 2011.
In 2011, we introduced a Cash-Based Restricted Stock Unit Plan. Compensation expense for arrangements under this plan totaled $1.0 million for 2013, $0.2 million for 2012 and $0.6 million for 2011. The income tax benefit recognized in the statements of operations for this arrangement totaled $0.6 million in 2013, $0.1 million in 2012 and $0.3 million in 2011.
Represents the difference between the share price and exercise price for each option, excluding options where the exercise price is above the share price, at December 31, 2013.
The weighted average grant-date fair value of options granted per common share was $14.90 for 2011. The intrinsic value of options exercised during the year totaled $6.6 million for 2013, $5.4 million for 2012 and $3.5 million for 2011.
In 2011 and prior years, we granted nonvested Class A common shares to certain executives. The restrictions on these shares lapsed and the shares vested if we met or exceeded operating goals, such as earnings per share, book value and expense targets, within or during a three year period. Depending on performance, the actual amount of shares issued could range from zero to 100% of the granted amount. The value of the awards was based on the grant date fair value of the nonvested stock adjusted for expected forfeitures and an estimate of the number of shares expected to vest. The estimate for the number of shares to vest was reviewed each period and the impact of any changes in the estimate on expense was recorded in the current period. These awards were charged to expense using the straight-line method over the required service period. Dividends on the restricted stock during the restriction period were contingent upon vesting.
Shares of Class A common stock available for grant as additional awards under the Class A Common Stock Compensation Plan totaled 3,430,142 at December 31, 2013.
The weighted average grant-date fair value per common share of restricted stock units granted was $34.94 in 2013 and $35.10 in 2012. Unrecognized compensation expense related to unvested restricted stock units based on the stock price at December 31, 2013 totaled $3.5 million. This expense is expected to be recognized over a weighted-average period of 2.31 years. Dividends are paid on restricted stock units upon vesting. Cash payments including dividends for restricted stock units totaled $0.5 million in 2013.
We have a Director Compensation Plan under which non-employee directors on our Board may elect to receive a portion of their compensation in the form of cash or deferred cash-based stock units. Cash-based stock units outstanding total 17,295 at December 31, 2013 and 12,073 at December 31, 2012. Prior to 2012, deferred stock units were used instead of deferred cash-based stock units. Under this plan, we have deferred stock units outstanding totaling 58,159 at December 31, 2013 and 110,971 at December 31, 2012. At December 31, 2013, there were 119,234 shares of Class A common stock available for future issuance under the Director Compensation Plan. We also have an Executive Salary and Bonus Deferred Compensation Plan under which certain officers of the Company are allowed to use their base salary and annual cash bonus to purchase deferred cash-based stock units. Cash-based stock units outstanding total 13,308 at December 31, 2013 and 3,189 at December 31, 2012. Prior to 2012, deferred stock units were used instead of deferred cash-based stock units. Under this plan, we have deferred stock units outstanding totaling 98,630 at December 31, 2013 and 97,903 at December 31, 2012. At December 31, 2013, shares of Class A common stock available for future issuance under this plan totaled 111,047. This plan was frozen to future deferrals on December 31, 2013. We also have an Executive Excess 401(k) Plan under which officers of the Company who meet salary guidelines and 401(k) contribution guidelines are allowed to purchase unregistered deferred cash-based stock units. Cash based stock units outstanding total 93 at December 31, 2013 and 44 at December 31, 2012. Prior to 2012, deferred stock units were used instead of deferred cash-based stock units. Under this plan, we have deferred stock units outstanding totaling 4,355 at December 31, 2013 and 4,122 at December 31, 2012. This plan was frozen to future deferrals on December 31, 2013.
We have management agreements, which include Farm Bureau Property & Casualty and other affiliates, under which we provide general business, administrative and management services. Fee income for these services totaled $1.8 million in 2013, $1.9 million in 2012 and $3.7 million in 2011. In addition, Farm Bureau Management Corporation, a wholly-owned subsidiary of the IFBF, provides certain services to us under a separate arrangement. We incurred related expenses totaling $0.9 million in 2013, and $1.0 million in 2012 and 2011.
$1.8 million in 2013, $1.4 million in 2012 and $1.5 million in 2011. The royalty agreement with the IFBF provides them an option to terminate the agreement when the quarterly common stock dividend is below $0.10 per share.
From time to time, assessments are levied on our insurance subsidiaries by guaranty associations in most states in which the subsidiaries are licensed. These assessments, which are accrued for, are to cover losses of policyholders of insolvent or rehabilitated companies. In some states, these assessments can be partially recovered through a reduction in future premium taxes. Recoveries (expenses) for guaranty fund assessments, net of related premium tax offsets, totaled less than ($0.1) million in 2013, less than $0.1 million in 2012 and $0.1 million in 2011.
Farm Bureau Life has a subsidiary, Greenfields, which launched in 2013 and regulated by the Colorado Division of Insurance. Greenfields' operations are immaterial and implicitly included in the financial results of Farm Bureau Life below.
State laws specify regulatory actions if an insurer's risk-based capital (RBC) ratio, a measure of solvency, falls below certain levels. The NAIC has a standard formula for annually assessing RBC based on the various risk factors related to an insurance company's capital and surplus, including insurance, business, asset and interest rate risks. The insurance regulators monitor the level of RBC against a statutory "authorized control level" RBC at which point regulators have the option to assume control of the insurance company. The company action level RBC is 200% of the authorized control level and is the first point at which any action would be triggered. As of December 31, 2013, our total adjusted capital was $558.4 million, resulting in a RBC ratio of 499%, based on company action level capital of $111.8 million.
Amounts are net of adjustments, as applicable, to amortization of unearned revenue reserves, deferred acquisition costs, value of insurance in force acquired and income taxes attributable to these items.
Premiums collected, which is not a measure used in financial statements prepared according to GAAP, include premiums received on life insurance policies and deposits on annuities and universal life-type products. Net premiums collected totaled $635.6 million in 2013, $646.3 million in 2012 and $678.9 million in 2011.
EquiTrust Life retains all of its contingent liabilities after the sale. The Agreement contains customary representations, warranties and covenants of the parties, as well as post-closing indemnification obligations. The post-closing indemnification obligations may be triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. Certain of these obligations are subject to various time limitations and monetary thresholds and caps.
Expenses are reduced for estimated corporate overhead absorbed by the Company after the sale. In addition, as described below, the sale of EquiTrust Life required us to redeem a majority of our senior notes; therefore the related interest expense is allocated to the EquiTrust Life Business.
In connection with the EquiTrust Life Sale, we redeemed $225.0 million of our long-term debt in accordance with the mandatory redemption provisions of the underlying notes. This includes $50.0 million Senior Notes with our affiliate, Farm Bureau Property & Casualty, which was extinguished on December 30, 2011. The remaining $175.0 million of unaffiliated debt was extinguished on January 30, 2012, at the make-whole redemption price of $210.9 million. On December 30, 2011, we exercised the provisions of the trust indentures and deposited $211.6 million into two irrevocable defeasance trusts for the principal, accrued interest and estimated make-whole premium. The trust funds were not withdrawable by us, and consisted of $126.4 million in cash and $85.2 million in short-term investments at December 31, 2011. The note holders were paid from assets in the trusts on January 30, 2012.