"The yield on debt security purchases to fund insurance operations rebounded somewhat to 3.53% in 2013 from 3.37% in 2012 but was still below the 4.18% yield attained in 2011."
So, investment yields improved, but are still down. Their unrealized gains in securities dropped from $541 million to $146 because of this, so this part of the "hidden value" in the shares went down.
But if rates can get back up to that 4.18%, a quick calc says that would cause annual earnings on their $9 billion investment portfolio to increase $58 million. If 2/3's of this is creditted to annuity holders, it leaves $19.5 million before tax for shareholders. 32% tax from 2013 gives after tax earnings increase of $13 million or $3.57 increase in earnings per share.
If we could get yields back up to 5.5% like they were a few years ago, using the same calc would give an incerase in EPS of $9.38, or a 1/3 increase in earnings.
None. All I did was look at investment income for the year and pro-rate it to annuity payout. It is a very gross approximation, but I would expect that the income from the call options should basically offset payouts due to increasing markets.
I could be way off on this, but it does show the leverage they have to higher rates.