Missouri (State or Other Jurisdiction of Incorporation) |
1-11848 (Commission File Number) |
43-1627032 (IRS Employer Identification Number) |
Exhibit No. | Exhibit | |
99.1
|
Press Release of Reinsurance Group of America, Incorporated dated April 23, 2009 | |
99.2
|
Quarterly Financial Supplement for the quarter ended March 31, 2009 |
REINSURANCE GROUP OF AMERICA, INCORPORATED |
||||
Date: April 23, 2009 | By: | /s/ Jack B. Lay | ||
Jack B. Lay | ||||
Senior Executive Vice President and Chief Financial Officer |
Exhibit Number | Description | |
99.1
|
Press Release dated April 23, 2009 | |
99.2
|
Quarterly Financial Supplement for the quarter ended March 31, 2009 |
| Net income of $0.32 per diluted share and operating income of $0.92 per diluted share adversely affected by high claims levels | ||
| Net income adversely affected by investment impairments and embedded derivatives | ||
| Liquidity and capital position remain strong despite difficult economic environment |
Quarterly Results | ||||||||
($ in thousands, except per share data) | 2009 | 2008 | ||||||
Net premiums |
$ | 1,346,047 | $ | 1,298,065 | ||||
Net income |
23,290 | 31,505 | ||||||
Net income per diluted share |
0.32 | 0.49 | ||||||
Operating income* |
67,355 | 70,957 | ||||||
Operating income per diluted share* |
0.92 | 1.10 | ||||||
Book value per share |
33.99 | 49.15 | ||||||
Book value per share (excl. AOCI)* |
43.78 | 43.32 | ||||||
Total assets |
21,634,314 | 21,812,508 |
* | See Use of Non-GAAP Financial Measures below |
Three Months Ended | ||||||||
March 31, | ||||||||
(Unaudited) | 2009 | 2008 | ||||||
GAAP net income-continuing
operations |
$ | 23,290 | $ | 36,589 | ||||
Reconciliation to
operating income: |
||||||||
Capital losses, derivatives
and other, net
included in investment
related losses, net |
44,117 | 624 | ||||||
Embedded Derivatives: |
||||||||
Included in investment
related losses, net |
3,388 | 100,633 | ||||||
Included in interest
credited |
(5,281 | ) | 41,916 | |||||
Included in policy
acquisition costs and
other insurance expenses |
848 | (7,859 | ) | |||||
DAC offset, net |
993 | (100,946 | ) | |||||
Operating income |
$ | 67,355 | $ | 70,957 |
Three Months Ended | ||||||||
March 31, | ||||||||
(Unaudited) | 2009 | 2008 | ||||||
Income from continuing operations before
income taxes |
$ | 34,206 | $ | 56,688 | ||||
Reconciliation to pre-tax
operating income: |
||||||||
Capital losses,
derivatives and other, net
included in investment
related losses, net |
68,312 | 862 | ||||||
Embedded Derivatives: |
||||||||
Included in investment
related losses, net |
5,212 | 154,820 | ||||||
Included in interest
credited |
(8,124 | ) | 64,486 | |||||
Included in policy
acquisition costs and
other insurance expenses |
1,304 | (12,090 | ) | |||||
DAC offset, net |
1,529 | (155,301 | ) | |||||
Pre-tax operating income |
$ | 102,439 | $ | 109,465 |
Three Months Ended March 31, 2009 | ||||||||||||||||
Capital | ||||||||||||||||
(gains) | Change in | |||||||||||||||
Pre-tax | losses, | value of | Pre-tax | |||||||||||||
net | derivatives | embedded | operating | |||||||||||||
income | and other, | derivatives, | income | |||||||||||||
(Unaudited) | (loss) | net | net | (loss) | ||||||||||||
U.S. Operations: |
||||||||||||||||
Traditional |
$ | 34,350 | $ | 38,228 | $ | | $ | 72,578 | ||||||||
Asset Intensive |
(27,022 | ) | (16,032 | )(1) | 39,313 | (2) | (3,741 | ) | ||||||||
Financial
Reinsurance |
5,521 | (32 | ) | | 5,489 | |||||||||||
Total U.S. |
12,849 | 22,164 | 39,313 | 74,326 | ||||||||||||
Canada Operations |
16,186 | 1,571 | | 17,757 | ||||||||||||
Europe
& South Africa |
8,535 | (422 | ) | | 8,113 | |||||||||||
Asia Pacific Operations |
3,573 | 3,567 | | 7,140 | ||||||||||||
Corporate and Other |
(6,937 | ) | 2,040 | | (4,897 | ) | ||||||||||
Consolidated |
$ | 34,206 | $ | 28,920 | $ | 39,313 | $ | 102,439 | ||||||||
(1) | Asset Intensive is net of $(39,392) DAC offset. | |
(2) | Asset Intensive is net of $40,921 DAC offset. |
Three Months Ended March 31, 2008 | ||||||||||||||||
Capital | ||||||||||||||||
(gains) | Change in | |||||||||||||||
Pre-tax | losses, | value of | Pre-tax | |||||||||||||
net | derivatives | embedded | operating | |||||||||||||
income | and other, | derivatives, | Income | |||||||||||||
(Unaudited) | (loss) | net | net | (loss) | ||||||||||||
U.S. Operations: |
||||||||||||||||
Traditional |
$ | 54,448 | $ | 2,508 | $ | | $ | 56,956 | ||||||||
Asset Intensive |
(41,102 | ) | 1,746 | (1) | 44,903 | (2) | 5,547 | |||||||||
Financial
Reinsurance |
1,939 | 1 | | 1,940 | ||||||||||||
Total U.S. |
15,285 | 4,255 | 44,903 | 64,443 | ||||||||||||
Canada Operations |
23,671 | 4,507 | | 28,178 | ||||||||||||
Europe
& South Africa |
6,043 | (745 | ) | | 5,298 | |||||||||||
Asia Pacific Operations |
18,563 | (514 | ) | | 18,049 | |||||||||||
Corporate & Other |
(6,874 | ) | 371 | | (6,503 | ) | ||||||||||
Consolidated |
$ | 56,688 | $ | 7,874 | $ | 44,903 | $ | 109,465 | ||||||||
(1) | Asset Intensive is net of $7,012 DAC offset. | |
(2) | Asset Intensive is net of $(162,313) DAC offset. |
Three Months Ended | ||||||||
(Unaudited) | March 31, | |||||||
2009 | 2008 | |||||||
Earnings per share from
continuing operations: |
||||||||
Basic earnings per share |
$ | 0.32 | $ | 0.59 | ||||
Diluted earnings per share |
$ | 0.32 | $ | 0.57 | ||||
Diluted earnings per share from
operating income |
$ | 0.92 | $ | 1.10 | ||||
Earnings per share from net income: |
||||||||
Basic earnings per share |
$ | 0.32 | $ | 0.51 | ||||
Diluted earnings per share |
$ | 0.32 | $ | 0.49 | ||||
Weighted average number of
common and common equivalent
shares outstanding |
72,884 | 64,230 |
At or For the | ||||||||
Three Months Ended | ||||||||
(Unaudited) | March 31, | |||||||
2009 | 2008 | |||||||
Treasury shares |
600 | 894 | ||||||
Common shares outstanding |
72,763 | 62,235 | ||||||
Book value per share outstanding |
$ | 33.99 | $ | 49.15 | ||||
Book value per share outstanding, before
impact of AOCI* |
$ | 43.78 | $ | 43.32 |
* | Book value per share outstanding before impact of AOCI is a non-GAAP financial measure that management believes is important in evaluating the balance sheet in order to ignore the effects of unrealized amounts primarily associated with mark-to-market adjustments on investments and foreign currency translation. |
Three Months Ended | ||||||||
(Unaudited) | March 31, | |||||||
2009 | 2008 | |||||||
Revenues: |
||||||||
Net premiums |
$ | 1,346,047 | $ | 1,298,065 | ||||
Investment income, net
of related expenses |
223,196 | 199,526 | ||||||
Investment related
losses, net |
(72,262 | ) | (155,260 | ) | ||||
Other revenues |
33,859 | 17,936 | ||||||
Total revenues |
1,530,840 | 1,360,267 | ||||||
Benefits and expenses: |
||||||||
Claims and other
policy benefits |
1,169,744 | 1,119,512 | ||||||
Interest credited |
36,909 | 73,897 | ||||||
Policy acquisition
costs and other
insurance expenses |
198,801 | 16,262 | ||||||
Other operating expenses |
66,749 | 63,340 | ||||||
Interest expense |
22,117 | 23,094 | ||||||
Collateral finance
facility expense |
2,314 | 7,474 | ||||||
Total benefits and
expenses |
1,496,634 | 1,303,579 | ||||||
Income from continuing
operations before
income taxes |
34,206 | 56,688 | ||||||
Provision for income
taxes |
10,916 | 20,099 | ||||||
Income from continuing
operations |
23,290 | 36,589 | ||||||
Discontinued operations: |
||||||||
Loss from discontinued
accident and health
operations, net of
income taxes |
| (5,084 | ) | |||||
Net income |
$ | 23,290 | $ | 31,505 | ||||
World Headquarters
|
Internet address | Contacts: | ||
1370 Timberlake Manor Parkway
|
www.rgare.com | Jack B. Lay | ||
Chesterfield, Missouri 63017
|
Senior Executive Vice President | |||
U.S.A.
|
and Chief Financial Officer | |||
Phone: (636) 736-7000 | ||||
John Hayden | ||||
Vice President | ||||
Investor Relations | ||||
Phone: (636) 736-7243 |
Standard & Poors | A.M. Best | Moodys | ||||
Financial Strength Ratings |
||||||
RGA Reinsurance Company |
AA- | A+ | A1 | |||
RGA Life Reinsurance Company of Canada |
AA- | A+ | NR | |||
RGA International Reinsurance Company
Limited |
AA- | NR | NR | |||
RGA Global Reinsurance Company Limited |
AA- | NR | NR | |||
Senior Debt Ratings |
||||||
Reinsurance Group of America, Incorporated |
A- | a- | Baa1 |
Page | ||||
Non-GAAP Disclosure |
1 | |||
Consolidated |
||||
Financial Highlights |
2 | |||
Consolidated Operating Income Statement |
3 | |||
Consolidated Income Statement (incl. Operating Income Reconciliation) |
4 | |||
Consolidated Balance Sheets |
5 | |||
Segment Pre-tax Operating Income Summaries |
||||
U.S. Operations |
6 | |||
Canada Operations |
10 | |||
Europe & South Africa Operations |
11 | |||
Asia Pacific Operations |
12 | |||
Corporate and Other |
13 | |||
Summary of Pre-tax Segment Operating Income |
14 | |||
Investments |
||||
Cash and Invested Assets, Yield Summary |
15 | |||
Amortized cost, Gross Unrealized Gains and Losses, Estimated Fair Values of Fixed Maturity and Equity Securities |
16 | |||
Corporate Securities by Sector (Fixed Maturities and Equities) |
17 | |||
Quality of Fixed Maturity Securities and Structured Fixed Maturity Securities |
18 | |||
Subprime Mortgage Exposure |
19 | |||
CMBS Exposure |
20 | |||
Gross Unrealized Losses Aging |
21 | |||
Fixed Maturity and Equity Securities Below Amortized Cost |
22 | |||
Consolidated Gross Gains and Losses |
23 |
Page 1
Three Months Ended or As of | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands, except inforce & per share data) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Net premiums |
$ | 1,346,047 | $ | 1,389,091 | $ | 1,303,590 | $ | 1,358,555 | $ | 1,298,065 | $ | 47,982 | ||||||||||||
Net income continuing operations |
23,290 | 15,170 | 25,250 | 110,806 | 36,589 | (13,299 | ) | |||||||||||||||||
Operating income |
67,355 | 99,966 | 118,542 | 109,688 | 70,957 | (3,602 | ) | |||||||||||||||||
Total assets |
21,634,314 | 21,658,818 | 21,844,347 | 22,410,167 | 21,812,508 | (178,194 | ) | |||||||||||||||||
Assumed Ordinary Life Reinsurance in Force (in billions) |
||||||||||||||||||||||||
U.S. |
$ | 1,285.6 | $ | 1,274.5 | $ | 1,265.6 | $ | 1,258.6 | $ | 1,247.0 | $ | 38.6 | ||||||||||||
Canada |
209.9 | 209.5 | 231.4 | 230.9 | 221.2 | (11.3 | ) | |||||||||||||||||
Europe & South Africa |
332.8 | 325.2 | 368.9 | 419.4 | 383.0 | (50.2 | ) | |||||||||||||||||
Asia Pacific |
293.0 | 298.9 | 310.6 | 330.6 | 351.6 | (58.6 | ) | |||||||||||||||||
Assumed New Business Production (in billions) |
||||||||||||||||||||||||
U.S. |
$ | 35.5 | $ | 33.7 | $ | 30.5 | $ | 35.5 | $ | 34.7 | $ | 0.8 | ||||||||||||
Canada |
9.9 | 12.1 | 14.5 | 11.7 | 12.9 | (3.0 | ) | |||||||||||||||||
Europe & South Africa |
36.0 | 28.2 | 21.4 | 19.4 | 18.5 | 17.5 | ||||||||||||||||||
Asia Pacific |
3.8 | 9.2 | 7.5 | 4.9 | 10.3 | (6.5 | ) | |||||||||||||||||
Per Share and Shares Data |
||||||||||||||||||||||||
Basic earnings per share from continuing operations |
||||||||||||||||||||||||
Net income |
$ | 0.32 | $ | 0.22 | $ | 0.41 | $ | 1.78 | $ | 0.59 | $ | (0.27 | ) | |||||||||||
Operating income |
$ | 0.93 | $ | 1.45 | $ | 1.90 | $ | 1.76 | $ | 1.14 | $ | (0.21 | ) | |||||||||||
Diluted earnings per share from continuing operations |
||||||||||||||||||||||||
Net income |
$ | 0.32 | $ | 0.22 | $ | 0.40 | $ | 1.73 | $ | 0.57 | $ | (0.25 | ) | |||||||||||
Operating income |
$ | 0.92 | $ | 1.45 | $ | 1.86 | $ | 1.71 | $ | 1.10 | $ | (0.18 | ) | |||||||||||
Wgt. average common shares outstanding (basic) |
72,710 | 68,831 | 62,323 | 62,284 | 62,146 | 10,564 | ||||||||||||||||||
Wgt. average common shares outstanding (diluted) |
72,884 | 69,176 | 63,607 | 63,982 | 64,230 | 8,654 | ||||||||||||||||||
Common shares issued |
73,363 | 73,363 | 63,128 | 63,128 | 63,128 | 10,235 | ||||||||||||||||||
Treasury shares |
600 | 741 | 803 | 813 | 894 | (294 | ) | |||||||||||||||||
Common shares outstanding |
72,763 | 72,622 | 62,325 | 62,315 | 62,234 | 10,529 | ||||||||||||||||||
Book value per share |
$ | 33.99 | $ | 36.03 | $ | 41.83 | $ | 49.13 | $ | 49.15 | ||||||||||||||
Per share effect of accumulated other comprehensive income
(AOCI) |
$ | (9.79 | ) | $ | (7.55 | ) | $ | (3.56 | ) | $ | 4.09 | $ | 5.83 | |||||||||||
Book value per share, excluding AOCI |
$ | 43.78 | $ | 43.58 | $ | 45.39 | $ | 45.04 | $ | 43.32 |
Page 2
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands, except per share data) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net premiums |
$ | 1,346,047 | $ | 1,389,091 | $ | 1,303,590 | $ | 1,358,555 | $ | 1,298,065 | $ | 47,982 | ||||||||||||
Investment income, net of related expenses |
223,196 | 196,634 | 220,248 | 254,868 | 199,526 | 23,670 | ||||||||||||||||||
Investment related gains (losses), net |
1,262 | 1,419 | 1,063 | 978 | 422 | 840 | ||||||||||||||||||
Other revenue |
33,859 | 25,869 | 27,764 | 36,262 | 17,936 | 15,923 | ||||||||||||||||||
Total revenues |
1,604,364 | 1,613,013 | 1,552,665 | 1,650,663 | 1,515,949 | 88,415 | ||||||||||||||||||
Benefits and expenses: |
||||||||||||||||||||||||
Claims and other policy benefits |
1,169,744 | 1,150,645 | 1,062,948 | 1,128,827 | 1,119,512 | 50,232 | ||||||||||||||||||
Interest credited |
45,033 | 38,093 | 53,164 | 72,248 | 9,411 | 35,622 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses |
195,968 | 191,167 | 179,956 | 189,699 | 183,653 | 12,315 | ||||||||||||||||||
Other operating expenses |
66,749 | 53,694 | 63,886 | 61,997 | 63,340 | 3,409 | ||||||||||||||||||
Interest expense |
22,117 | 21,552 | 9,935 | 21,580 | 23,094 | (977 | ) | |||||||||||||||||
Collateral finance facility expense |
2,314 | 7,432 | 6,851 | 6,966 | 7,474 | (5,160 | ) | |||||||||||||||||
Total benefits and expenses |
1,501,925 | 1,462,583 | 1,376,740 | 1,481,317 | 1,406,484 | 95,441 | ||||||||||||||||||
Operating income before income taxes |
102,439 | 150,430 | 175,925 | 169,346 | 109,465 | (7,026 | ) | |||||||||||||||||
Operating income tax expense |
35,084 | 50,464 | 57,383 | 59,658 | 38,508 | (3,424 | ) | |||||||||||||||||
Operating income |
$ | 67,355 | $ | 99,966 | $ | 118,542 | $ | 109,688 | $ | 70,957 | $ | (3,602 | ) | |||||||||||
Wgt. Average Common Shares Outstanding (Diluted) |
72,884 | 69,176 | 63,607 | 63,982 | 64,230 | 8,654 | ||||||||||||||||||
Diluted Earnings Per Share Operating Income |
$ | 0.92 | $ | 1.45 | $ | 1.86 | $ | 1.71 | $ | 1.10 | $ | (0.18 | ) | |||||||||||
Foreign currency effect on*: |
||||||||||||||||||||||||
Net premiums |
$ | (144,690 | ) | $ | (111,668 | ) | $ | (5,676 | ) | $ | 20,565 | $ | 46,462 | $ | (191,152 | ) | ||||||||
Operating income before income taxes |
$ | (11,202 | ) | $ | (17,349 | ) | $ | (1,337 | ) | $ | 5,608 | $ | 7,871 | $ | (19,073 | ) |
* | Represents effect as compared to comparable prior year period |
Page 3
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net premiums |
$ | 1,346,047 | $ | 1,389,091 | $ | 1,303,590 | $ | 1,358,555 | $ | 1,298,065 | $ | 47,982 | ||||||||||||
Investment income, net of related expenses |
223,196 | 196,634 | 220,248 | 254,868 | 199,526 | 23,670 | ||||||||||||||||||
Investment related gains (losses), net |
(72,262 | ) | (243,559 | ) | (241,307 | ) | (7,079 | ) | (155,260 | ) | 82,998 | |||||||||||||
Other revenue |
33,859 | 25,869 | 27,764 | 36,262 | 17,936 | 15,923 | ||||||||||||||||||
Total revenues |
1,530,840 | 1,368,035 | 1,310,295 | 1,642,606 | 1,360,267 | 170,573 | ||||||||||||||||||
Benefits and expenses: |
||||||||||||||||||||||||
Claims and other policy benefits |
1,169,744 | 1,150,645 | 1,062,948 | 1,128,827 | 1,119,512 | 50,232 | ||||||||||||||||||
Interest credited |
36,909 | 86,989 | 9,293 | 63,000 | 73,897 | (36,988 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses |
198,801 | 27,529 | 124,836 | 189,272 | 16,262 | 182,539 | ||||||||||||||||||
Other operating expenses |
66,749 | 53,694 | 63,886 | 61,997 | 63,340 | 3,409 | ||||||||||||||||||
Interest expense |
22,117 | 21,552 | 9,935 | 21,580 | 23,094 | (977 | ) | |||||||||||||||||
Collateral finance facility expense |
2,314 | 7,432 | 6,851 | 6,966 | 7,474 | (5,160 | ) | |||||||||||||||||
Total benefits and expenses |
1,496,634 | 1,347,841 | 1,277,749 | 1,471,642 | 1,303,579 | 193,055 | ||||||||||||||||||
Income before income taxes continuing operations |
34,206 | 20,194 | 32,546 | 170,964 | 56,688 | (22,482 | ) | |||||||||||||||||
Income tax expense |
10,916 | 5,024 | 7,296 | 60,158 | 20,099 | (9,183 | ) | |||||||||||||||||
Income continuing operations |
23,290 | 15,170 | 25,250 | 110,806 | 36,589 | (13,299 | ) | |||||||||||||||||
Loss from discontinued operations |
| (5,809 | ) | (22 | ) | (104 | ) | (5,084 | ) | 5,084 | ||||||||||||||
Net income |
$ | 23,290 | $ | 9,361 | $ | 25,228 | $ | 110,702 | $ | 31,505 | $ | (8,215 | ) | |||||||||||
Pre-tax Operating Income Reconciliation: |
||||||||||||||||||||||||
Income before income taxes continuing operations |
34,206 | 20,194 | 32,546 | 170,964 | 56,688 | (22,482 | ) | |||||||||||||||||
Investment and Derivative losses (gains) non-operating (1) |
68,312 | (146,818 | ) | 99,801 | 1,962 | 862 | 67,450 | |||||||||||||||||
Change in value of B36 embedded derivatives (1) |
40,425 | 161,021 | 106,797 | 11,452 | 148,528 | (108,103 | ) | |||||||||||||||||
GMXB embedded derivatives (1) |
(35,213 | ) | 230,775 | 35,772 | (5,357 | ) | 6,292 | (41,505 | ) | |||||||||||||||
EIA embedded derivatives interest credited |
(8,124 | ) | 48,896 | (43,871 | ) | (9,248 | ) | 64,486 | (72,610 | ) | ||||||||||||||
EIA embedded derivatives policy acq. costs |
1,304 | (5,697 | ) | 8,274 | 2,390 | (12,090 | ) | 13,394 | ||||||||||||||||
DAC offset, net |
1,529 | (157,941 | ) | (63,394 | ) | (2,817 | ) | (155,301 | ) | 156,830 | ||||||||||||||
Operating Income Before Income Taxes |
102,439 | 150,430 | 175,925 | 169,346 | 109,465 | (7,026 | ) | |||||||||||||||||
After-tax Operating Income Reconciliation: |
||||||||||||||||||||||||
Income continuing operations |
23,290 | 15,170 | 25,250 | 110,806 | 36,589 | (13,299 | ) | |||||||||||||||||
Investment and Derivative losses (gains) non-operating (1) |
44,117 | (95,289 | ) | 64,967 | 1,207 | 624 | 43,493 | |||||||||||||||||
Change in value of B36 embedded derivatives (1) |
26,276 | 104,664 | 69,418 | 7,444 | 96,543 | (70,267 | ) | |||||||||||||||||
GMXB embedded derivatives (1) |
(22,888 | ) | 150,003 | 23,252 | (3,482 | ) | 4,090 | (26,978 | ) | |||||||||||||||
EIA embedded derivatives interest credited |
(5,281 | ) | 31,782 | (28,516 | ) | (6,011 | ) | 41,916 | (47,197 | ) | ||||||||||||||
EIA embedded derivatives policy acq. costs |
848 | (3,703 | ) | 5,378 | 1,554 | (7,859 | ) | 8,707 | ||||||||||||||||
DAC offset, net |
993 | (102,661 | ) | (41,207 | ) | (1,830 | ) | (100,946 | ) | 101,939 | ||||||||||||||
Operating Income |
67,355 | 99,966 | 118,542 | 109,688 | 70,957 | (3,602 | ) | |||||||||||||||||
(1) | Included in Investment related gains (losses), net on Consolidated GAAP Income Statement |
Page 4
(USD thousands) | March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||||||||||
2009 | 2008 | 2008 | 2008 | 2008 | ||||||||||||||||
Assets |
||||||||||||||||||||
Fixed maturity securities (available for sale): |
$ | 8,831,920 | $ | 8,531,804 | $ | 9,121,953 | $ | 9,667,961 | $ | 9,387,094 | ||||||||||
Mortgage loans on real estate |
764,038 | 775,050 | 782,282 | 798,896 | 812,539 | |||||||||||||||
Policy loans |
1,081,030 | 1,096,713 | 1,048,517 | 1,048,517 | 1,039,464 | |||||||||||||||
Funds withheld at interest |
4,505,054 | 4,520,398 | 4,806,642 | 4,825,297 | 4,650,948 | |||||||||||||||
Short-term investments |
54,552 | 58,123 | 32,520 | 47,081 | 46,336 | |||||||||||||||
Other invested assets |
582,784 | 628,649 | 432,982 | 418,864 | 389,437 | |||||||||||||||
Total investments |
15,819,378 | 15,610,737 | 16,224,896 | 16,806,616 | 16,325,818 | |||||||||||||||
Cash and cash equivalents |
586,542 | 875,403 | 412,255 | 362,689 | 304,083 | |||||||||||||||
Accrued investment income |
118,140 | 87,424 | 138,414 | 106,679 | 103,755 | |||||||||||||||
Premiums receivable and other reinsurance balances |
657,647 | 640,235 | 691,120 | 800,404 | 766,970 | |||||||||||||||
Reinsurance ceded receivables |
746,736 | 735,155 | 746,790 | 752,203 | 758,977 | |||||||||||||||
Deferred policy acquisition costs |
3,602,857 | 3,610,334 | 3,498,152 | 3,460,294 | 3,369,316 | |||||||||||||||
Other assets |
103,014 | 99,530 | 132,720 | 121,282 | 183,589 | |||||||||||||||
Total assets |
$ | 21,634,314 | $ | 21,658,818 | $ | 21,844,347 | $ | 22,410,167 | $ | 21,812,508 | ||||||||||
Liabilities and Stockholders Equity |
||||||||||||||||||||
Future policy benefits |
$ | 6,636,919 | $ | 6,431,530 | $ | 6,552,508 | $ | 6,619,084 | $ | 6,449,039 | ||||||||||
Interest-sensitive contract liabilities |
7,613,489 | 7,690,942 | 7,517,782 | 7,220,659 | 6,657,546 | |||||||||||||||
Other policy claims and benefits |
1,956,834 | 1,923,018 | 2,064,578 | 2,239,868 | 2,196,089 | |||||||||||||||
Other reinsurance balances |
197,695 | 173,645 | 127,021 | 173,162 | 240,137 | |||||||||||||||
Deferred income taxes |
251,261 | 310,360 | 399,669 | 561,912 | 707,963 | |||||||||||||||
Other liabilities |
577,909 | 585,199 | 548,844 | 599,034 | 567,854 | |||||||||||||||
Short-term debt |
| | 95,000 | | | |||||||||||||||
Long-term debt |
917,913 | 918,246 | 922,994 | 926,095 | 925,893 | |||||||||||||||
Collateral finance facility |
850,019 | 850,035 | 850,094 | 850,000 | 850,210 | |||||||||||||||
Company-obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely junior subordinated debentures of the Company |
159,081 | 159,035 | 158,990 | 158,946 | 158,904 | |||||||||||||||
Total liabilities |
19,161,120 | 19,042,010 | 19,237,480 | 19,348,760 | 18,753,635 | |||||||||||||||
Stockholders Equity: |
||||||||||||||||||||
Common stock, at par value |
734 | 734 | 631 | 631 | 631 | |||||||||||||||
Warrants |
66,912 | 66,914 | 66,915 | 66,915 | 66,915 | |||||||||||||||
Additional paid-in-capital |
1,455,022 | 1,450,041 | 1,118,288 | 1,115,540 | 1,112,977 | |||||||||||||||
Retained earnings |
1,691,292 | 1,682,087 | 1,679,568 | 1,660,041 | 1,556,127 | |||||||||||||||
Accumulated other comprehensive income (AOCI): |
||||||||||||||||||||
Accumulated currency translation adjustment, net of income taxes |
(3,050 | ) | 19,794 | 143,729 | 215,582 | 203,662 | ||||||||||||||
Unrealized appreciation (depreciation) of securities, net of income taxes |
(695,070 | ) | (553,407 | ) | (358,273 | ) | 47,478 | 167,174 | ||||||||||||
Pension and postretirement benefits, net of income taxes |
(14,456 | ) | (14,658 | ) | (7,790 | ) | (8,082 | ) | (8,199 | ) | ||||||||||
Total stockholders equity before treasury stock |
2,501,384 | 2,651,505 | 2,643,068 | 3,098,105 | 3,099,287 | |||||||||||||||
Less treasury shares |
(28,190 | ) | (34,697 | ) | (36,201 | ) | (36,698 | ) | (40,414 | ) | ||||||||||
Total stockholders equity |
2,473,194 | 2,616,808 | 2,606,867 | 3,061,407 | 3,058,873 | |||||||||||||||
Total liabilities and stockholders equity |
$ | 21,634,314 | $ | 21,658,818 | $ | 21,844,347 | $ | 22,410,167 | $ | 21,812,508 | ||||||||||
Total stockholders equity, excluding AOCI |
$ | 3,185,770 | $ | 3,165,079 | $ | 2,829,201 | $ | 2,806,429 | $ | 2,696,236 |
Page 5
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net premiums |
$ | 786,748 | $ | 874,348 | $ | 740,502 | $ | 752,831 | $ | 725,393 | $ | 61,355 | ||||||||||||
Investment income, net of related expenses |
102,561 | 100,033 | 99,991 | 97,462 | 97,431 | 5,130 | ||||||||||||||||||
Other revenue |
570 | (193 | ) | (42 | ) | 552 | 60 | 510 | ||||||||||||||||
Total revenues |
889,879 | 974,188 | 840,451 | 850,845 | 822,884 | 66,995 | ||||||||||||||||||
Benefits and expenses: |
||||||||||||||||||||||||
Claims and other policy benefits |
695,932 | 753,545 | 632,258 | 624,310 | 651,850 | 44,082 | ||||||||||||||||||
Interest credited |
15,233 | 15,513 | 15,221 | 14,924 | 14,790 | 443 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses |
91,533 | 118,637 | 107,199 | 103,231 | 86,050 | 5,483 | ||||||||||||||||||
Other operating expenses |
14,603 | 9,828 | 12,756 | 12,121 | 13,238 | 1,365 | ||||||||||||||||||
Total benefits and expenses |
817,301 | 897,523 | 767,434 | 754,586 | 765,928 | 51,373 | ||||||||||||||||||
Operating income before income taxes |
72,578 | 76,665 | 73,017 | 96,259 | 56,956 | 15,622 | ||||||||||||||||||
Operating to GAAP Reconciliation: |
||||||||||||||||||||||||
Operating income before income taxes |
72,578 | 76,665 | 73,017 | 96,259 | 56,956 | 15,622 | ||||||||||||||||||
Investment and Derivative (losses) gains non-operating |
(38,228 | ) | (6,694 | ) | (62,065 | ) | (637 | ) | (2,508 | ) | (35,720 | ) | ||||||||||||
Income before income taxes |
$ | 34,350 | $ | 69,971 | $ | 10,952 | $ | 95,622 | $ | 54,448 | $ | (20,098 | ) | |||||||||||
Loss and Expense Ratios: |
||||||||||||||||||||||||
Claims and other policy benefits |
88.5 | % | 86.2 | % | 85.4 | % | 82.9 | % | 89.9 | % | -1.4 | % | ||||||||||||
Policy acquisition costs and other insurance expenses |
11.6 | % | 13.6 | % | 14.5 | % | 13.7 | % | 11.9 | % | -0.3 | % | ||||||||||||
Other operating expenses |
1.9 | % | 1.1 | % | 1.7 | % | 1.6 | % | 1.8 | % | 0.1 | % |
Page 6
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands except account values) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net premiums |
$ | 1,709 | $ | 1,584 | $ | 1,719 | $ | 1,592 | $ | 1,663 | $ | 46 | ||||||||||||
Investment income, net of related expenses |
55,827 | 26,428 | 43,727 | 80,920 | 25,031 | 30,796 | ||||||||||||||||||
Other revenue |
15,123 | 16,018 | 15,051 | 14,211 | 11,495 | 3,628 | ||||||||||||||||||
Total revenues |
72,659 | 44,030 | 60,497 | 96,723 | 38,189 | 34,470 | ||||||||||||||||||
Benefits and expenses: |
||||||||||||||||||||||||
Claims and other policy benefits |
1,274 | 8,151 | 2,040 | 865 | 185 | 1,089 | ||||||||||||||||||
Interest credited |
29,752 | 22,512 | 37,866 | 57,243 | (5,518 | ) | 35,270 | |||||||||||||||||
Policy acquisition costs and other insurance expenses |
42,476 | 14,535 | 10,077 | 27,513 | 35,641 | 6,835 | ||||||||||||||||||
Other operating expenses |
2,898 | 1,649 | 2,167 | 1,840 | 2,334 | 564 | ||||||||||||||||||
Total benefits and expenses |
76,400 | 46,847 | 52,150 | 87,461 | 32,642 | 43,758 | ||||||||||||||||||
Operating income before income taxes |
(3,741 | ) | (2,817 | ) | 8,347 | 9,262 | 5,547 | (9,288 | ) | |||||||||||||||
Operating to GAAP Reconciliation: |
||||||||||||||||||||||||
Operating income before income taxes |
(3,741 | ) | (2,817 | ) | 8,347 | 9,262 | 5,547 | (9,288 | ) | |||||||||||||||
Investment and Derivative (losses) gains non-operating (1) |
(23,360 | ) | 159,276 | 10,289 | (2,949 | ) | 5,266 | (28,626 | ) | |||||||||||||||
Change in value of B36 embedded derivatives (1) |
(40,425 | ) | (161,021 | ) | (106,797 | ) | (11,452 | ) | (148,528 | ) | 108,103 | |||||||||||||
GMXB embedded derivatives (1) |
35,213 | (230,775 | ) | (35,772 | ) | 5,357 | (6,292 | ) | 41,505 | |||||||||||||||
EIA embedded derivatives interest credited |
8,124 | (48,896 | ) | 43,871 | 9,248 | (64,486 | ) | 72,610 | ||||||||||||||||
EIA embedded derivatives policy acq. costs |
(1,304 | ) | 5,697 | (8,274 | ) | (2,390 | ) | 12,090 | (13,394 | ) | ||||||||||||||
DAC offset, net |
(1,529 | ) | 157,941 | 63,394 | 2,817 | 155,301 | (156,830 | ) | ||||||||||||||||
Income before income taxes |
$ | (27,022 | ) | $ | (120,595 | ) | $ | (24,942 | ) | $ | 9,893 | $ | (41,102 | ) | $ | 14,080 | ||||||||
(1) | Included in Investment related gains (losses), net on Consolidated GAAP Income Statement |
Page 7
Three Months Ended | ||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||
2009 | 2008 | 2008 | 2008 | 2008 | ||||||||||||||||
Annuity account values (in millions): |
||||||||||||||||||||
Fixed annuities (deferred) |
$ | 1,406 | $ | 1,625 | $ | 1,670 | $ | 1,527 | $ | 1,140 | ||||||||||
Net interest spread (fixed annuities): |
2.4 | % | 1.9 | % | 1.9 | % | 2.0 | % | 2.1 | % | ||||||||||
Equity-indexed annuities |
$ | 3,813 | $ | 3,806 | $ | 3,677 | $ | 3,645 | $ | 3,540 | ||||||||||
Variable annuities: |
||||||||||||||||||||
No riders |
$ | 1,041 | $ | 1,063 | $ | 1,251 | $ | 1,359 | $ | 1,355 | ||||||||||
GMDB only |
58 | 54 | 49 | 32 | 25 | |||||||||||||||
GMIB only |
4 | 4 | 4 | 4 | 3 | |||||||||||||||
GMAB only |
48 | 44 | 45 | 44 | 35 | |||||||||||||||
GMWB only |
1,180 | 795 | 708 | 537 | 379 | |||||||||||||||
GMDB / WB |
316 | 287 | 257 | 170 | 124 | |||||||||||||||
Other |
26 | 24 | 26 | 23 | 20 | |||||||||||||||
Total VA account values |
$ | 2,673 | $ | 2,271 | $ | 2,340 | $ | 2,169 | $ | 1,941 | ||||||||||
Fair value of living benefit riders |
$ | 241 | $ | 276 | $ | 46 | $ | 10 | $ | 16 | ||||||||||
Other annuities: |
$ | 199 | $ | 199 | $ | 199 | $ | | $ | |
Page 8
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Investment income, net of related expenses |
$ | (65 | ) | $ | | $ | 192 | $ | 356 | $ | 40 | $ | (105 | ) | ||||||||||
Other revenue |
6,571 | 4,578 | 3,644 | 4,314 | 2,744 | 3,827 | ||||||||||||||||||
Total revenues |
6,506 | 4,578 | 3,836 | 4,670 | 2,784 | 3,722 | ||||||||||||||||||
Benefits and expenses: |
||||||||||||||||||||||||
Claims and other policy benefits |
| | | | | | ||||||||||||||||||
Policy acquisition costs and other insurance expenses |
338 | 341 | 252 | 250 | 198 | 140 | ||||||||||||||||||
Other operating expenses |
679 | 577 | 747 | 767 | 646 | 33 | ||||||||||||||||||
Total benefits and expenses |
1,017 | 918 | 999 | 1,017 | 844 | 173 | ||||||||||||||||||
Operating income before income taxes |
5,489 | 3,660 | 2,837 | 3,653 | 1,940 | 3,549 | ||||||||||||||||||
Operating to GAAP Reconciliation: |
||||||||||||||||||||||||
Operating income before income taxes |
5,489 | 3,660 | 2,837 | 3,653 | 1,940 | 3,549 | ||||||||||||||||||
Investment and Derivative (losses) gains non-operating |
32 | (110 | ) | (136 | ) | (2 | ) | (1 | ) | 33 | ||||||||||||||
Income before income taxes |
$ | 5,521 | $ | 3,550 | $ | 2,701 | $ | 3,651 | $ | 1,939 | $ | 3,582 | ||||||||||||
Page 9
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net premiums |
$ | 138,056 | $ | 126,819 | $ | 128,930 | $ | 139,530 | $ | 138,992 | $ | (936 | ) | |||||||||||
Investment income, net of related expenses |
30,360 | 32,873 | 35,836 | 35,692 | 36,033 | (5,673 | ) | |||||||||||||||||
Investment related gains (losses), net |
1,262 | 1,419 | 1,063 | 978 | 422 | 840 | ||||||||||||||||||
Other revenue |
1,697 | 826 | 4,289 | 13,204 | 13 | 1,684 | ||||||||||||||||||
Total revenues |
171,375 | 161,937 | 170,118 | 189,404 | 175,460 | (4,085 | ) | |||||||||||||||||
Benefits and expenses: |
||||||||||||||||||||||||
Claims and other policy benefits |
115,635 | 102,316 | 104,339 | 134,146 | 115,271 | 364 | ||||||||||||||||||
Interest credited |
48 | 68 | 77 | 81 | 139 | (91 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses |
33,067 | 30,634 | 27,591 | 25,526 | 26,426 | 6,641 | ||||||||||||||||||
Other operating expenses |
4,868 | 5,591 | 6,132 | 5,899 | 5,446 | (578 | ) | |||||||||||||||||
Total benefits and expenses |
153,618 | 138,609 | 138,139 | 165,652 | 147,282 | 6,336 | ||||||||||||||||||
Operating income before income taxes |
17,757 | 23,328 | 31,979 | 23,752 | 28,178 | (10,421 | ) | |||||||||||||||||
Operating to GAAP Reconciliation: |
||||||||||||||||||||||||
Operating income before income taxes |
17,757 | 23,328 | 31,979 | 23,752 | 28,178 | (10,421 | ) | |||||||||||||||||
Investment and Derivative (losses) gains non-operating |
(1,571 | ) | (1,244 | ) | (2,246 | ) | 3,026 | (4,507 | ) | 2,936 | ||||||||||||||
Income before income taxes |
$ | 16,186 | $ | 22,084 | $ | 29,733 | $ | 26,778 | $ | 23,671 | $ | (7,485 | ) | |||||||||||
Loss and Expense Ratios: |
||||||||||||||||||||||||
Loss ratios (creditor business) |
41.2 | % | 35.5 | % | 42.3 | % | 90.4 | % | 40.7 | % | 0.5 | % | ||||||||||||
Loss ratios (excluding creditor business) |
99.4 | % | 91.4 | % | 89.1 | % | 97.3 | % | 93.2 | % | 6.2 | % | ||||||||||||
Claims and other policy benefits / (net premiums + investment income) |
68.7 | % | 64.1 | % | 63.3 | % | 76.6 | % | 65.9 | % | 2.8 | % | ||||||||||||
Policy acquisition costs and other insurance expenses |
24.0 | % | 24.2 | % | 21.4 | % | 18.3 | % | 19.0 | % | 5.0 | % | ||||||||||||
Other operating expenses |
3.5 | % | 4.4 | % | 4.8 | % | 4.2 | % | 3.9 | % | -0.4 | % | ||||||||||||
Note: The loss ratios on creditor reinsurance business are normally lower than traditional reinsurance, while allowances are normally higher as a percentage of premiums. | ||||||||||||||||||||||||
Foreign currency effect on*: |
||||||||||||||||||||||||
Net premiums |
$ | (32,673 | ) | $ | (29,546 | ) | $ | 626 | $ | 11,315 | $ | 19,837 | $ | (52,510 | ) | |||||||||
Operating income before income taxes |
$ | (5,477 | ) | $ | (6,164 | ) | $ | (264 | ) | $ | 2,397 | $ | 4,715 | $ | (10,192 | ) |
* | Represents effect as compared to comparable prior year period |
Page 10
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net premiums |
$ | 173,256 | $ | 156,898 | $ | 176,184 | $ | 185,490 | $ | 189,196 | $ | (15,940 | ) | |||||||||||
Investment income, net of related expenses |
6,749 | 7,599 | 9,065 | 8,778 | 7,551 | (802 | ) | |||||||||||||||||
Other revenue |
260 | 240 | 33 | 68 | 60 | 200 | ||||||||||||||||||
Total revenues |
180,265 | 164,737 | 185,282 | 194,336 | 196,807 | (16,542 | ) | |||||||||||||||||
Benefits and expenses: |
||||||||||||||||||||||||
Claims and other policy benefits |
144,218 | 106,776 | 122,521 | 144,460 | 158,535 | (14,317 | ) | |||||||||||||||||
Interest credited |
| | | | | | ||||||||||||||||||
Policy acquisition costs and other insurance expenses |
10,817 | 14,607 | 21,559 | 16,026 | 17,230 | (6,413 | ) | |||||||||||||||||
Other operating expenses |
17,117 | 16,945 | 15,708 | 16,678 | 15,744 | 1,373 | ||||||||||||||||||
Total benefits and expenses |
172,152 | 138,328 | 159,788 | 177,164 | 191,509 | (19,357 | ) | |||||||||||||||||
Operating income before income taxes |
8,113 | 26,409 | 25,494 | 17,172 | 5,298 | 2,815 | ||||||||||||||||||
Operating to GAAP Reconciliation: |
||||||||||||||||||||||||
Operating income before income taxes |
8,113 | 26,409 | 25,494 | 17,172 | 5,298 | 2,815 | ||||||||||||||||||
Investment and Derivative (losses) gains non-operating |
422 | (4,598 | ) | (4,703 | ) | (131 | ) | 745 | (323 | ) | ||||||||||||||
Income before income taxes |
$ | 8,535 | $ | 21,811 | $ | 20,791 | $ | 17,041 | $ | 6,043 | $ | 2,492 | ||||||||||||
Loss and Expense Ratios: |
||||||||||||||||||||||||
Claims and other policy benefits |
83.2 | % | 68.1 | % | 69.5 | % | 77.9 | % | 83.8 | % | -0.6 | % | ||||||||||||
Policy acquisition costs and other insurance expenses |
6.2 | % | 9.3 | % | 12.2 | % | 8.6 | % | 9.1 | % | -2.9 | % | ||||||||||||
Other operating expenses |
9.9 | % | 10.8 | % | 8.9 | % | 9.0 | % | 8.3 | % | 1.6 | % | ||||||||||||
Foreign currency effect on*: |
||||||||||||||||||||||||
Net premiums |
$ | (56,890 | ) | $ | (43,150 | ) | $ | (9,380 | ) | $ | 588 | $ | 4,247 | $ | (61,137 | ) | ||||||||
Operating income before income taxes |
$ | (3,991 | ) | $ | (7,816 | ) | $ | (2,015 | ) | $ | 606 | $ | 671 | $ | (4,662 | ) | ||||||||
Critical illness net premiums |
$ | 46,323 | $ | 49,471 | $ | 59,227 | $ | 67,284 | $ | 60,442 | $ | (14,119 | ) |
* | Represents effect as compared to comparable prior year period |
Page 11
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net premiums |
$ | 243,728 | $ | 227,666 | $ | 254,497 | $ | 277,716 | $ | 240,935 | $ | 2,793 | ||||||||||||
Investment income, net of related expenses |
12,697 | 11,317 | 12,272 | 12,397 | 11,414 | 1,283 | ||||||||||||||||||
Other revenue |
9,729 | 5,106 | 2,811 | 1,851 | 2,552 | 7,177 | ||||||||||||||||||
Total revenues |
266,154 | 244,089 | 269,580 | 291,964 | 254,901 | 11,253 | ||||||||||||||||||
Benefits and expenses: |
||||||||||||||||||||||||
Claims and other policy benefits |
212,414 | 178,989 | 201,707 | 225,011 | 193,669 | 18,745 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses |
30,429 | 25,556 | 25,053 | 28,386 | 28,081 | 2,348 | ||||||||||||||||||
Other operating expenses |
16,171 | 17,235 | 17,774 | 15,801 | 15,102 | 1,069 | ||||||||||||||||||
Total benefits and expenses |
259,014 | 221,780 | 244,534 | 269,198 | 236,852 | 22,162 | ||||||||||||||||||
Operating income before income taxes |
7,140 | 22,309 | 25,046 | 22,766 | 18,049 | (10,909 | ) | |||||||||||||||||
Operating to GAAP Reconciliation: |
||||||||||||||||||||||||
Operating income before income taxes |
7,140 | 22,309 | 25,046 | 22,766 | 18,049 | (10,909 | ) | |||||||||||||||||
Investment and Derivative (losses) gains non-operating |
(3,567 | ) | 2,156 | (3,821 | ) | (1,510 | ) | 514 | (4,081 | ) | ||||||||||||||
Income before income taxes |
$ | 3,573 | $ | 24,465 | $ | 21,225 | $ | 21,256 | $ | 18,563 | $ | (14,990 | ) | |||||||||||
Loss and Expense Ratios: |
||||||||||||||||||||||||
Claims and other policy benefits |
87.2 | % | 78.6 | % | 79.3 | % | 81.0 | % | 80.4 | % | 6.8 | % | ||||||||||||
Policy acquisition costs and other insurance expenses |
12.5 | % | 11.2 | % | 9.8 | % | 10.2 | % | 11.7 | % | 0.8 | % | ||||||||||||
Other operating expenses |
6.6 | % | 7.6 | % | 7.0 | % | 5.7 | % | 6.3 | % | 0.3 | % | ||||||||||||
Foreign currency effect on*: |
||||||||||||||||||||||||
Net premiums |
$ | (55,173 | ) | $ | (39,028 | ) | $ | 3,036 | $ | 8,629 | $ | 22,356 | $ | (77,529 | ) | |||||||||
Operating income before income taxes |
$ | (246 | ) | $ | (1,972 | ) | $ | 1,078 | $ | 2,307 | $ | 2,116 | $ | (2,362 | ) | |||||||||
Critical illness net premiums |
$ | 54,152 | $ | 48,591 | $ | 51,979 | $ | 67,348 | $ | 45,863 | $ | 8,289 |
* | Represents effect as compared to comparable prior year period |
Page 12
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net premiums |
$ | 2,550 | $ | 1,776 | $ | 1,758 | $ | 1,396 | $ | 1,886 | $ | 664 | ||||||||||||
Investment income, net of related expenses |
15,067 | 18,384 | 19,165 | 19,263 | 22,026 | (6,959 | ) | |||||||||||||||||
Other revenue |
(91 | ) | (706 | ) | 1,978 | 2,062 | 1,012 | (1,103 | ) | |||||||||||||||
Total revenues |
17,526 | 19,454 | 22,901 | 22,721 | 24,924 | (7,398 | ) | |||||||||||||||||
Benefits and expenses: |
||||||||||||||||||||||||
Claims and other policy benefits |
271 | 868 | 83 | 35 | 2 | 269 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses |
(12,692 | ) | (13,143 | ) | (11,775 | ) | (11,233 | ) | (9,973 | ) | (2,719 | ) | ||||||||||||
Other operating expenses |
10,413 | 1,869 | 8,602 | 8,891 | 10,830 | (417 | ) | |||||||||||||||||
Interest expense |
22,117 | 21,552 | 9,935 | 21,580 | 23,094 | (977 | ) | |||||||||||||||||
Collateral finance facility expense |
2,314 | 7,432 | 6,851 | 6,966 | 7,474 | (5,160 | ) | |||||||||||||||||
Total benefits and expenses |
22,423 | 18,578 | 13,696 | 26,239 | 31,427 | (9,004 | ) | |||||||||||||||||
Operating income before income taxes |
(4,897 | ) | 876 | 9,205 | (3,518 | ) | (6,503 | ) | 1,606 | |||||||||||||||
Operating to GAAP Reconciliation: |
||||||||||||||||||||||||
Operating income before income taxes |
(4,897 | ) | 876 | 9,205 | (3,518 | ) | (6,503 | ) | 1,606 | |||||||||||||||
Investment and Derivative (losses) gains non-operating |
(2,040 | ) | (1,968 | ) | (37,119 | ) | 241 | (371 | ) | (1,669 | ) | |||||||||||||
Income before income taxes |
$ | (6,937 | ) | $ | (1,092 | ) | $ | (27,914 | ) | $ | (3,277 | ) | $ | (6,874 | ) | $ | (63 | ) | ||||||
Foreign currency effect on*: |
||||||||||||||||||||||||
Net premiums |
$ | 46 | $ | 55 | $ | 42 | $ | 33 | $ | 23 | $ | 23 | ||||||||||||
Operating income before income taxes |
$ | (1,279 | ) | $ | (1,396 | ) | $ | (136 | ) | $ | 298 | $ | 369 | $ | (1,648 | ) |
* | Represents effect as compared to comparable prior year period |
Page 13
Current | ||||||||||||||||||||||||
Three Months Ended | Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
U.S. Traditional |
$ | 72,578 | $ | 76,665 | $ | 73,017 | $ | 96,259 | $ | 56,956 | $ | 15,622 | ||||||||||||
U.S. Asset Intensive |
(3,741 | ) | (2,817 | ) | 8,347 | 9,262 | 5,547 | (9,288 | ) | |||||||||||||||
U.S. Financial Reinsurance |
5,489 | 3,660 | 2,837 | 3,653 | 1,940 | 3,549 | ||||||||||||||||||
Total U.S. Segment |
74,326 | 77,508 | 84,201 | 109,174 | 64,443 | 9,883 | ||||||||||||||||||
Canadian Segment |
17,757 | 23,328 | 31,979 | 23,752 | 28,178 | (10,421 | ) | |||||||||||||||||
Europe & South Africa Segment |
8,113 | 26,409 | 25,494 | 17,172 | 5,298 | 2,815 | ||||||||||||||||||
Asia Pacific Segment |
7,140 | 22,309 | 25,046 | 22,766 | 18,049 | (10,909 | ) | |||||||||||||||||
Corporate and Other |
(4,897 | ) | 876 | 9,205 | (3,518 | ) | (6,503 | ) | 1,606 | |||||||||||||||
Consolidated |
$ | 102,439 | $ | 150,430 | $ | 175,925 | $ | 169,346 | $ | 109,465 | $ | (7,026 | ) | |||||||||||
Page 14
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | |||||||||||||||
Fixed maturity securities, available-for-sale |
$ | 8,831,920 | $ | 8,531,804 | $ | 9,121,953 | $ | 9,667,961 | $ | 9,387,094 | ||||||||||
Mortgage loans on real estate |
764,038 | 775,050 | 782,282 | 798,896 | 812,539 | |||||||||||||||
Policy loans |
1,081,030 | 1,096,713 | 1,048,517 | 1,048,517 | 1,039,464 | |||||||||||||||
Funds withheld at interest |
4,505,054 | 4,520,398 | 4,806,642 | 4,825,297 | 4,650,948 | |||||||||||||||
Short-term investments |
54,552 | 58,123 | 32,520 | 47,081 | 46,336 | |||||||||||||||
Other invested assets |
582,784 | 628,649 | 432,982 | 418,864 | 389,437 | |||||||||||||||
Cash and cash equivalents |
586,542 | 875,403 | 412,255 | 362,689 | 304,083 | |||||||||||||||
Total cash and invested assets |
$ | 16,405,920 | $ | 16,486,140 | $ | 16,637,151 | $ | 17,169,305 | $ | 16,629,901 | ||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
(USD thousands) | 2009 | 2008 | 2008 | 2008 | 2008 | Quarter | ||||||||||||||||||
Average invested assets
at amortized cost (1) |
$ | 12,776,598 | $ | 12,245,727 | $ | 12,185,216 | $ | 11,696,386 | $ | 11,539,433 | $ | 1,237,165 | ||||||||||||
Net investment income (1) |
$ | 174,300 | $ | 177,358 | $ | 179,193 | $ | 173,587 | $ | 170,899 | $ | 3,401 | ||||||||||||
Investment yield (ratio
of net investment income
to average invested
assets) |
5.57 | % | 5.92 | % | 6.01 | % | 6.07 | % | 6.06 | % | -0.49 | % |
(1) | Excludes funds withheld |
Page 15 |
Estimated | ||||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | % of | ||||||||||||||||
(USD thousands) | Cost | Gains | Losses | Value | Total | |||||||||||||||
Available-for-sale: |
||||||||||||||||||||
U.S. corporate securities |
$ | 3,779,317 | $ | 18,970 | $ | 696,017 | $ | 3,102,270 | 35.1 | % | ||||||||||
Canadian and Canadian provincial governments |
1,498,249 | 326,243 | 17,230 | 1,807,262 | 20.5 | % | ||||||||||||||
Residential mortgage-backed securities |
1,244,713 | 36,791 | 74,215 | 1,207,289 | 13.7 | % | ||||||||||||||
Foreign corporate securities |
1,293,068 | 15,836 | 160,432 | 1,148,472 | 13.0 | % | ||||||||||||||
Asset-backed securities |
511,088 | 4,538 | 130,421 | 385,205 | 4.3 | % | ||||||||||||||
Commercial mortgage-backed securities |
1,087,722 | 4,621 | 370,351 | 721,992 | 8.2 | % | ||||||||||||||
U.S. government and agencies |
3,306 | 465 | | 3,771 | 0.0 | % | ||||||||||||||
State and political subdivisions |
46,440 | | 11,859 | 34,581 | 0.4 | % | ||||||||||||||
Other foreign government securities |
409,546 | 14,019 | 2,487 | 421,078 | 4.8 | % | ||||||||||||||
Total fixed maturity securities |
9,873,449 | 421,483 | 1,463,012 | 8,831,920 | 100.0 | % | ||||||||||||||
Non-redeemable preferred stock |
175,594 | 94 | 86,463 | 89,225 | 70.7 | % | ||||||||||||||
Common stock |
40,200 | 75 | 3,344 | 36,931 | 29.3 | % | ||||||||||||||
Total equity securities |
$ | 215,794 | $ | 169 | $ | 89,807 | $ | 126,156 | 100.0 | % | ||||||||||
Estimated | ||||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | % of | ||||||||||||||||
(USD thousands) | Cost | Gains | Losses | Value | Total | |||||||||||||||
Available-for-sale: |
||||||||||||||||||||
U.S. corporate securities |
$ | 3,577,116 | $ | 34,262 | $ | 598,745 | $ | 3,012,633 | 35.3 | % | ||||||||||
Canadian and Canadian provincial governments |
1,500,511 | 397,899 | 7,171 | 1,891,239 | 22.2 | % | ||||||||||||||
Residential mortgage-backed securities |
1,231,123 | 24,838 | 106,776 | 1,149,185 | 13.5 | % | ||||||||||||||
Foreign corporate securities |
1,112,018 | 14,335 | 152,920 | 973,433 | 11.4 | % | ||||||||||||||
Asset-backed securities |
484,577 | 2,098 | 147,297 | 339,378 | 4.0 | % | ||||||||||||||
Commercial mortgage-backed securities |
1,085,062 | 2,258 | 326,730 | 760,590 | 8.9 | % | ||||||||||||||
U.S. government and agencies |
7,555 | 876 | | 8,431 | 0.1 | % | ||||||||||||||
State and political subdivisions |
46,537 | | 7,883 | 38,654 | 0.4 | % | ||||||||||||||
Other foreign government securities |
338,349 | 20,062 | 150 | 358,261 | 4.2 | % | ||||||||||||||
Total fixed maturity securities |
9,382,848 | 496,628 | 1,347,672 | 8,531,804 | 100.0 | % | ||||||||||||||
Non-redeemable preferred stock |
187,510 | 49 | 64,160 | 123,399 | 77.4 | % | ||||||||||||||
Common stock |
40,582 | | 4,607 | 35,975 | 22.6 | % | ||||||||||||||
Total equity securities |
$ | 228,092 | $ | 49 | $ | 68,767 | $ | 159,374 | 100.0 | % | ||||||||||
Page 16 |
March 31, 2009 | December 31, 2008 | |||||||||||||||||||||||||||||||
Estimated Fair | Average Credit | Estimated | Average Credit | |||||||||||||||||||||||||||||
(USD thousands) | Amortized Cost | Value | % of Total | Ratings | Amortized Cost | Fair Value | % of Total | Ratings | ||||||||||||||||||||||||
Financial Institutions |
||||||||||||||||||||||||||||||||
Banking |
$ | 1,154,761 | $ | 851,182 | 19.4 | % | A | $ | 1,138,663 | $ | 924,098 | 22.2 | % | A | ||||||||||||||||||
Brokerage |
88,727 | 68,618 | 1.6 | % | A- | 104,169 | 96,516 | 2.3 | % | A | ||||||||||||||||||||||
Finance Comp. |
282,021 | 210,325 | 4.8 | % | A+ | 278,132 | 228,659 | 5.5 | % | A+ | ||||||||||||||||||||||
Insurance |
312,709 | 204,335 | 4.7 | % | A- | 309,703 | 222,116 | 5.4 | % | A- | ||||||||||||||||||||||
REITs |
145,818 | 103,952 | 2.4 | % | BBB+ | 153,626 | 110,172 | 2.7 | % | BBB+ | ||||||||||||||||||||||
Other Finance |
213,542 | 163,881 | 3.7 | % | A | 191,650 | 140,161 | 3.4 | % | A | ||||||||||||||||||||||
Industrials |
||||||||||||||||||||||||||||||||
Basic |
225,742 | 188,080 | 4.3 | % | BBB+ | 213,540 | 173,826 | 4.2 | % | BBB+ | ||||||||||||||||||||||
Capital Goods |
200,870 | 183,968 | 4.2 | % | A- | 187,041 | 172,958 | 4.2 | % | A- | ||||||||||||||||||||||
Communications |
518,129 | 484,849 | 11.1 | % | BBB+ | 449,334 | 425,633 | 10.3 | % | BBB+ | ||||||||||||||||||||||
Consumer Cyclical |
248,146 | 202,625 | 4.6 | % | BBB+ | 244,476 | 198,485 | 4.8 | % | BBB+ | ||||||||||||||||||||||
Consumer Noncyclical |
399,034 | 383,053 | 8.8 | % | BBB+ | 341,126 | 323,239 | 7.8 | % | BBB+ | ||||||||||||||||||||||
Energy |
325,811 | 294,876 | 6.7 | % | BBB+ | 248,579 | 215,634 | 5.2 | % | BBB+ | ||||||||||||||||||||||
Technology |
95,458 | 86,304 | 2.0 | % | BBB+ | 55,043 | 43,998 | 1.1 | % | BBB+ | ||||||||||||||||||||||
Transportation |
223,448 | 192,655 | 4.4 | % | BBB+ | 217,515 | 190,303 | 4.6 | % | BBB+ | ||||||||||||||||||||||
Other Industrial |
60,337 | 32,542 | 0.7 | % | BBB+ | 55,898 | 28,314 | 0.7 | % | BBB+ | ||||||||||||||||||||||
Utilities |
||||||||||||||||||||||||||||||||
Electric |
486,831 | 447,186 | 10.2 | % | BBB+ | 446,048 | 399,235 | 9.6 | % | BBB+ | ||||||||||||||||||||||
Natural Gas |
224,739 | 205,849 | 4.7 | % | BBB+ | 200,636 | 174,308 | 4.2 | % | BBB+ | ||||||||||||||||||||||
Other Utility |
23,730 | 21,633 | 0.5 | % | A- | 22,320 | 20,447 | 0.5 | % | A- | ||||||||||||||||||||||
Other Sectors |
58,326 | 50,985 | 1.2 | % | AA | 59,728 | 57,338 | 1.3 | % | AA | ||||||||||||||||||||||
Total |
$ | 5,288,179 | $ | 4,376,898 | 100.0 | % | $ | 4,917,227 | $ | 4,145,440 | 100.0 | % | ||||||||||||||||||||
Page 17 |
(USD thousands) | March 31, 2009 | December 31, 2008 | September 30, 2008 | June 30, 2008 | March 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rating Agency | Amortized | Estimated | Amortized | Estimated | Amortized | Estimated | Amortized | Estimated | % of | Amortized | Estimated | % of | ||||||||||||||||||||||||||||||||||||||||||||||||||||
NAIC Designation | Designation | Cost | Fair Value | % of Total | Cost | Fair Value | % of Total | Cost | Fair Value | % of Total | Cost | Fair Value | Total | Cost | Fair Value | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
1 | AAA |
$ | 2,887,693 | $ | 2,631,984 | 29.8 | % | $ | 2,851,818 | $ | 2,594,429 | 30.4 | % | $ | 2,931,176 | $ | 2,780,454 | 30.5 | % | $ | 2,856,457 | $ | 2,777,642 | 28.7 | % | $ | 2,752,988 | $ | 2,710,839 | 28.9 | % | |||||||||||||||||||||||||||||||||
1 | AA |
2,205,621 | 2,188,305 | 24.8 | % | 2,147,187 | 2,161,537 | 25.3 | % | 2,601,007 | 2,624,357 | 28.8 | % | 2,572,375 | 2,809,406 | 29.1 | % | 2,447,193 | 2,754,675 | 29.3 | % | |||||||||||||||||||||||||||||||||||||||||||
1 | A |
1,952,386 | 1,777,195 | 20.1 | % | 2,002,963 | 1,851,764 | 21.7 | % | 1,947,355 | 1,779,129 | 19.5 | % | 2,012,559 | 2,028,840 | 21.0 | % | 1,926,854 | 1,970,574 | 21.0 | % | |||||||||||||||||||||||||||||||||||||||||||
2 | BBB |
2,284,836 | 1,877,063 | 21.3 | % | 1,991,276 | 1,649,513 | 19.3 | % | 1,817,281 | 1,632,806 | 17.9 | % | 1,812,894 | 1,730,612 | 17.9 | % | 1,725,432 | 1,676,870 | 17.8 | % | |||||||||||||||||||||||||||||||||||||||||||
3 | BB |
386,137 | 260,276 | 2.9 | % | 268,276 | 195,088 | 2.3 | % | 253,665 | 231,706 | 2.5 | % | 267,856 | 253,695 | 2.6 | % | 222,209 | 214,105 | 2.3 | % | |||||||||||||||||||||||||||||||||||||||||||
4 | B |
88,213 | 53,946 | 0.6 | % | 77,830 | 50,064 | 0.6 | % | 58,868 | 43,503 | 0.5 | % | 51,320 | 46,722 | 0.5 | % | 48,225 | 43,989 | 0.5 | % | |||||||||||||||||||||||||||||||||||||||||||
5 | CCC and lower |
61,502 | 36,804 | 0.4 | % | 33,945 | 22,538 | 0.3 | % | 31,336 | 27,361 | 0.3 | % | 18,375 | 17,250 | 0.2 | % | 16,860 | 15,987 | 0.2 | % | |||||||||||||||||||||||||||||||||||||||||||
6 | In or near default |
7,061 | 6,347 | 0.1 | % | 9,553 | 6,871 | 0.1 | % | 2,636 | 2,637 | 0.0 | % | 3,074 | 3,794 | 0.0 | % | 53 | 55 | 0.0 | % | |||||||||||||||||||||||||||||||||||||||||||
Total |
$ | 9,873,449 | $ | 8,831,920 | $ | 9,382,848 | $ | 8,531,804 | $ | 9,643,324 | $ | 9,121,953 | $ | 9,594,910 | $ | 9,667,961 | $ | 9,139,814 | $ | 9,387,094 | ||||||||||||||||||||||||||||||||||||||||||||
March 31, 2009 | December 31, 2008 | September 30, 2008 | June 30, 2008 | March 31, 2008 | ||||||||||||||||||||||||||||||||||||
Estimated Fair | Estimated Fair | Estimated Fair | Amortized | Estimated Fair | Amortized | Estimated Fair | ||||||||||||||||||||||||||||||||||
(USD thousands) | Amortized Cost | Value | Amortized Cost | Value | Amortized Cost | Value | Cost | Value | Cost | Value | ||||||||||||||||||||||||||||||
Residential mortgage-backed securities: |
||||||||||||||||||||||||||||||||||||||||
Agency |
$ | 796,869 | $ | 829,447 | $ | 851,507 | $ | 868,479 | $ | 859,530 | $ | 857,249 | $ | 872,914 | $ | 871,337 | $ | 930,612 | $ | 942,931 | ||||||||||||||||||||
Non-agency |
447,844 | 377,842 | 379,616 | 280,706 | 443,461 | 405,466 | 428,089 | 401,199 | 401,824 | 382,700 | ||||||||||||||||||||||||||||||
Total residential mortgage-backed securities |
1,244,713 | 1,207,289 | 1,231,123 | 1,149,185 | 1,302,991 | 1,262,715 | 1,301,003 | 1,272,536 | 1,332,436 | 1,325,631 | ||||||||||||||||||||||||||||||
Commercial mortgage-backed securities |
1,087,722 | 721,992 | 1,085,062 | 760,590 | 1,029,457 | 905,431 | 889,792 | 842,140 | 727,492 | 686,678 | ||||||||||||||||||||||||||||||
Asset-backed securities |
511,088 | 385,205 | 484,577 | 339,378 | 483,308 | 395,907 | 505,193 | 452,347 | 493,293 | 446,031 | ||||||||||||||||||||||||||||||
Total |
$ | 2,843,523 | $ | 2,314,486 | $ | 2,800,762 | $ | 2,249,153 | $ | 2,815,756 | $ | 2,564,053 | $ | 2,695,988 | $ | 2,567,023 | $ | 2,553,221 | $ | 2,458,340 | ||||||||||||||||||||
Page 18
March 31, 2009 | ||||||||||||||||||||||||
(USD thousands) | AAA | AA | A | |||||||||||||||||||||
Estimated | ||||||||||||||||||||||||
Amortized | Estimated | Amortized | Fair | Amortized | Estimated | |||||||||||||||||||
Underwriting Year | Cost | Fair Value | Cost | Value | Cost | Fair Value | ||||||||||||||||||
2003 & Prior |
$ | 10,616 | $ | 7,543 | $ | 1,102 | $ | 570 | $ | 1,748 | $ | 696 | ||||||||||||
2004 |
| | 14,945 | 9,884 | 32,593 | 25,223 | ||||||||||||||||||
2005 |
25,386 | 19,843 | 32,779 | 23,779 | 13,972 | 7,730 | ||||||||||||||||||
2006 |
| | | | 3,370 | 1,638 | ||||||||||||||||||
2007 |
| | | | | | ||||||||||||||||||
2008 |
| | | | | | ||||||||||||||||||
2009 |
| | | | | | ||||||||||||||||||
Total |
$ | 36,002 | $ | 27,386 | $ | 48,826 | $ | 34,233 | $ | 51,683 | $ | 35,287 | ||||||||||||
BBB | Below Investment Grade | Total | ||||||||||||||||||||||
Estimated | ||||||||||||||||||||||||
Amortized | Estimated | Amortized | Fair | Amortized | Estimated | |||||||||||||||||||
Underwriting Year | Cost | Fair Value | Cost | Value | Cost | Fair Value | ||||||||||||||||||
2003 & Prior |
$ | 5,623 | $ | 3,230 | $ | 798 | $ | 80 | $ | 19,887 | $ | 12,119 | ||||||||||||
2004 |
| | 3,371 | 3,367 | 50,909 | 38,474 | ||||||||||||||||||
2005 |
18,362 | 9,239 | 18,086 | 1,696 | 108,585 | 62,287 | ||||||||||||||||||
2006 |
4,500 | 2,081 | 579 | 575 | 8,449 | 4,294 | ||||||||||||||||||
2007 |
888 | 318 | 13,819 | 9,141 | 14,707 | 9,459 | ||||||||||||||||||
2008 |
| | | | | | ||||||||||||||||||
2009 |
| | | | | | ||||||||||||||||||
Total |
$ | 29,373 | $ | 14,868 | $ | 36,653 | $ | 14,859 | $ | 202,537 | $ | 126,633 | ||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
(USD thousands) | AAA | AA | A | |||||||||||||||||||||
Estimated | ||||||||||||||||||||||||
Amortized | Estimated | Amortized | Fair | Amortized | Estimated | |||||||||||||||||||
Underwriting Year | Cost | Fair Value | Cost | Value | Cost | Fair Value | ||||||||||||||||||
2003 & Prior |
$ | 11,007 | $ | 9,116 | $ | 6,509 | $ | 4,320 | $ | 1,813 | $ | 1,227 | ||||||||||||
2004 |
| | 21,220 | 13,437 | 33,728 | 26,228 | ||||||||||||||||||
2005 |
37,134 | 27,793 | 36,424 | 26,471 | 6,514 | 2,582 | ||||||||||||||||||
2006 |
135 | 134 | 4,500 | 2,076 | 4,998 | 1,991 | ||||||||||||||||||
2007 |
| | 888 | 283 | | | ||||||||||||||||||
2008 |
| | | | | | ||||||||||||||||||
Total |
$ | 48,276 | $ | 37,043 | $ | 69,541 | $ | 46,587 | $ | 47,053 | $ | 32,028 | ||||||||||||
BBB | Below Investment Grade | Total | ||||||||||||||||||||||
Estimated | ||||||||||||||||||||||||
Amortized | Estimated | Amortized | Fair | Amortized | Estimated | |||||||||||||||||||
Underwriting Year | Cost | Fair Value | Cost | Value | Cost | Fair Value | ||||||||||||||||||
2003 & Prior |
$ | 413 | $ | 77 | $ | 807 | $ | 106 | $ | 20,549 | $ | 14,846 | ||||||||||||
2004 |
| | 7,900 | 5,727 | 62,848 | 45,392 | ||||||||||||||||||
2005 |
11,908 | 6,529 | 17,905 | 5,739 | 109,885 | 69,114 | ||||||||||||||||||
2006 |
3,442 | 2,618 | 3,287 | 449 | 16,362 | 7,268 | ||||||||||||||||||
2007 |
| | 19,588 | 10,880 | 20,476 | 11,163 | ||||||||||||||||||
2008 |
| | | | | | ||||||||||||||||||
Total |
$ | 15,763 | $ | 9,224 | $ | 49,487 | $ | 22,901 | $ | 230,120 | $ | 147,783 | ||||||||||||
Page 19
March 31, 2009 | ||||||||||||||||||||||||
(USD thousands) | AAA | AA | A | |||||||||||||||||||||
Estimated | Estimated | Estimated | ||||||||||||||||||||||
Fair | Fair | Fair | ||||||||||||||||||||||
Underwriting Year | Amortized Cost | Value | Amortized Cost | Value | Amortized Cost | Value | ||||||||||||||||||
2003 & Prior |
$ | 236,597 | $ | 241,379 | $ | 24,642 | $ | 19,591 | $ | 23,571 | $ | 14,142 | ||||||||||||
2004 |
50,560 | 45,563 | 2,352 | 1,124 | 11,528 | 4,296 | ||||||||||||||||||
2005 |
210,372 | 135,564 | 2,533 | 755 | 54,179 | 29,328 | ||||||||||||||||||
2006 |
292,923 | 210,546 | 21,888 | 10,352 | 32,905 | 21,502 | ||||||||||||||||||
2007 |
370,613 | 241,694 | 50,753 | 12,593 | 59,212 | 19,074 | ||||||||||||||||||
2008 |
38,522 | 36,068 | 19,108 | 8,919 | 16,570 | 8,943 | ||||||||||||||||||
2009 |
5,228 | 5,255 | | | | | ||||||||||||||||||
Total |
$ | 1,204,815 | $ | 916,069 | $ | 121,276 | $ | 53,334 | $ | 197,965 | $ | 97,285 | ||||||||||||
BBB | Below Investment Grade | Total | ||||||||||||||||||||||
Estimated | Estimated | Estimated | ||||||||||||||||||||||
Fair | Fair | Fair | ||||||||||||||||||||||
Underwriting Year | Amortized Cost | Value | Amortized Cost | Value | Amortized Cost | Value | ||||||||||||||||||
2003 & Prior |
$ | 24,124 | $ | 13,836 | $ | | $ | | $ | 308,934 | $ | 288,948 | ||||||||||||
2004 |
| | | | 64,440 | 50,983 | ||||||||||||||||||
2005 |
3,690 | 1,465 | | | 270,774 | 167,112 | ||||||||||||||||||
2006 |
13,824 | 7,768 | 18,130 | 10,379 | 379,670 | 260,547 | ||||||||||||||||||
2007 |
| | | | 480,578 | 273,361 | ||||||||||||||||||
2008 |
12,842 | 7,777 | | | 87,042 | 61,707 | ||||||||||||||||||
2009 |
| | | | 5,228 | 5,255 | ||||||||||||||||||
Total |
$ | 54,480 | $ | 30,846 | $ | 18,130 | $ | 10,379 | $ | 1,596,666 | $ | 1,107,913 | ||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
(USD thousands) | AAA | AA | A | |||||||||||||||||||||
Estimated | Estimated | Estimated | ||||||||||||||||||||||
Fair | Fair | Fair | ||||||||||||||||||||||
Underwriting Year | Amortized Cost | Value | Amortized Cost | Value | Amortized Cost | Value | ||||||||||||||||||
2003 & Prior |
$ | 250,720 | $ | 254,690 | $ | 24,276 | $ | 17,518 | $ | 28,432 | $ | 16,744 | ||||||||||||
2004 |
50,245 | 46,737 | 2,147 | 999 | 10,603 | 3,835 | ||||||||||||||||||
2005 |
200,140 | 136,101 | 2,530 | 682 | 54,173 | 30,079 | ||||||||||||||||||
2006 |
306,478 | 234,575 | 16,219 | 6,074 | 45,346 | 31,379 | ||||||||||||||||||
2007 |
362,226 | 256,163 | 50,648 | 14,343 | 59,013 | 20,636 | ||||||||||||||||||
2008 |
30,017 | 28,501 | 23,387 | 10,698 | 18,342 | 11,186 | ||||||||||||||||||
Total |
$ | 1,199,826 | $ | 956,767 | $ | 119,207 | $ | 50,314 | $ | 215,909 | $ | 113,859 | ||||||||||||
BBB | Below Investment Grade | Total | ||||||||||||||||||||||
Estimated | Estimated | Estimated | ||||||||||||||||||||||
Fair | Fair | Fair | ||||||||||||||||||||||
Underwriting Year | Amortized Cost | Value | Amortized Cost | Value | Amortized Cost | Value | ||||||||||||||||||
2003 & Prior |
$ | 18,144 | $ | 11,938 | $ | | $ | | $ | 321,572 | $ | 300,890 | ||||||||||||
2004 |
| | | | 62,995 | 51,571 | ||||||||||||||||||
2005 |
3,679 | 776 | | | 260,522 | 167,638 | ||||||||||||||||||
2006 |
15,283 | 8,709 | 1,305 | 941 | 384,631 | 281,678 | ||||||||||||||||||
2007 |
| | | | 471,887 | 291,142 | ||||||||||||||||||
2008 |
| | | | 71,746 | 50,385 | ||||||||||||||||||
Total |
$ | 37,106 | $ | 21,423 | $ | 1,305 | $ | 941 | $ | 1,573,353 | $ | 1,143,304 | ||||||||||||
Page 20
(USD thousands) | March 31, 2009 | December 31, 2008 | September 30, 2008 | June 30, 2008 | March 31, 2008 | |||||||||||||||||||||||||||||||||||
Gross Unrealized | Gross Unrealized | Gross Unrealized | Gross Unrealized | Gross Unrealized | ||||||||||||||||||||||||||||||||||||
Losses | % of Total | Losses | % of Total | Losses | % of Total | Losses | % of Total | Losses | % of Total | |||||||||||||||||||||||||||||||
Less than 20% |
$ | 320,296 | 20.6 | % | $ | 322,159 | 22.7 | % | $ | 466,855 | 48.5 | % | $ | 315,350 | 64.7 | % | $ | 218,655 | 58.8 | % | ||||||||||||||||||||
20% or more for less
than six months |
406,885 | 26.2 | % | 766,789 | 54.1 | % | 323,511 | 33.7 | % | 97,591 | 20.1 | % | 120,680 | 32.5 | % | |||||||||||||||||||||||||
20% or more for six
months or greater |
735,831 | 47.4 | % | 258,724 | 18.3 | % | 94,982 | 9.9 | % | 38,715 | 8.0 | % | 10,222 | 2.8 | % | |||||||||||||||||||||||||
Total |
$ | 1,463,012 | 94.2 | % | $ | 1,347,672 | 95.1 | % | $ | 885,348 | 92.1 | % | $ | 451,656 | 92.8 | % | $ | 349,557 | 94.1 | % | ||||||||||||||||||||
(USD thousands) | March 31, 2009 | December 31, 2008 | September 30, 2008 | June 30, 2008 | March 31, 2008 | |||||||||||||||||||||||||||||||||||
Gross Unrealized | Gross Unrealized | Gross Unrealized | Gross Unrealized | Gross Unrealized | ||||||||||||||||||||||||||||||||||||
Losses | % of Total | Losses | % of Total | Losses | % of Total | Losses | % of Total | Losses | % of Total | |||||||||||||||||||||||||||||||
Less than 20% |
$ | 1,070 | 0.1 | % | $ | 2,231 | 0.2 | % | $ | 5,293 | 0.6 | % | $ | 10,562 | 2.2 | % | $ | 11,470 | 3.1 | % | ||||||||||||||||||||
20% or more for less
than six months |
10,675 | 0.7 | % | 29,958 | 2.1 | % | 57,710 | 6.0 | % | 21,904 | 4.5 | % | 10,274 | 2.8 | % | |||||||||||||||||||||||||
20% or more for six
months or greater |
78,062 | 5.0 | % | 36,578 | 2.6 | % | 12,291 | 1.3 | % | 2,550 | 0.5 | % | 0 | 0.0 | % | |||||||||||||||||||||||||
Total |
$ | 89,807 | 5.8 | % | $ | 68,767 | 4.9 | % | $ | 75,294 | 7.9 | % | $ | 35,016 | 7.2 | % | $ | 21,744 | 5.9 | % | ||||||||||||||||||||
Page 21
As of March 31, 2009 | ||||||||||||||||||||||||
(USD thousands) | Less than 12 months | Equal to or greater than 12 months | Total | |||||||||||||||||||||
Gross Unrealized | Gross Unrealized | Gross Unrealized | ||||||||||||||||||||||
Estimated Fair Value | Losses | Estimated Fair Value | Losses | Estimated Fair Value | Losses | |||||||||||||||||||
Investment
grade securities: |
||||||||||||||||||||||||
U.S. corporate securities |
$ | 1,137,224 | $ | 172,194 | $ | 1,141,332 | $ | 399,942 | $ | 2,278,556 | $ | 572,136 | ||||||||||||
Canadian and Canadian provincial governments |
242,153 | 8,484 | 106,505 | 8,746 | 348,658 | 17,230 | ||||||||||||||||||
Residential mortgage-backed securities |
105,818 | 21,388 | 275,684 | 37,384 | 381,502 | 58,772 | ||||||||||||||||||
Foreign corporate securities |
486,332 | 53,748 | 219,760 | 89,413 | 706,092 | 143,161 | ||||||||||||||||||
Asset-backed securities |
90,759 | 20,779 | 189,007 | 86,683 | 279,766 | 107,462 | ||||||||||||||||||
Commercial mortgage-backed securities |
419,538 | 212,518 | 234,307 | 156,252 | 653,845 | 368,770 | ||||||||||||||||||
U.S. government and agencies |
| | | | | | ||||||||||||||||||
State and political subdivisions |
5,945 | 547 | 25,637 | 6,288 | 31,582 | 6,835 | ||||||||||||||||||
Other foreign government securities |
97,393 | 2,195 | 3,524 | 292 | 100,917 | 2,487 | ||||||||||||||||||
Investment grade securities |
2,585,162 | 491,853 | 2,195,756 | 785,000 | 4,780,918 | 1,276,853 | ||||||||||||||||||
Non-investment
grade securities: |
||||||||||||||||||||||||
U.S. corporate securities |
128,276 | 36,070 | 120,981 | 87,811 | 249,257 | 123,881 | ||||||||||||||||||
Asset-backed securities |
7,853 | 5,788 | 10,407 | 17,171 | 18,260 | 22,959 | ||||||||||||||||||
Foreign corporate securities |
20,208 | 7,090 | 12,383 | 10,181 | 32,591 | 17,271 | ||||||||||||||||||
Residential mortgage-backed securities |
16,312 | 4,411 | 11,301 | 11,032 | 27,613 | 15,443 | ||||||||||||||||||
Commercial mortgage-backed securities |
| | 213 | 1,581 | 213 | 1,581 | ||||||||||||||||||
State and political subdivisions |
| | 3,000 | 5,024 | 3,000 | 5,024 | ||||||||||||||||||
Non-investment grade securities |
172,649 | 53,359 | 158,285 | 132,800 | 330,934 | 186,159 | ||||||||||||||||||
Total fixed maturity securities |
$ | 2,757,811 | $ | 545,212 | $ | 2,354,041 | $ | 917,800 | $ | 5,111,852 | $ | 1,463,012 | ||||||||||||
Equity securities |
$ | 49,880 | $ | 30,666 | $ | 48,636 | $ | 59,141 | $ | 98,516 | $ | 89,807 | ||||||||||||
Total number of securities in an unrealized
loss position |
929 | 865 | 1,794 | |||||||||||||||||||||
As of December 31, 2008 | ||||||||||||||||||||||||
(USD thousands) | Less than 12 months | Equal to or greater than 12 months | Total | |||||||||||||||||||||
Gross Unrealized | Gross Unrealized | Gross Unrealized | ||||||||||||||||||||||
Estimated Fair Value | Losses | Estimated Fair Value | Losses | Estimated Fair Value | Losses | |||||||||||||||||||
Investment grade securities: |
||||||||||||||||||||||||
U.S. corporate securities |
$ | 1,407,547 | $ | 240,299 | $ | 810,115 | $ | 281,947 | $ | 2,217,662 | $ | 522,246 | ||||||||||||
Canadian and Canadian provincial governments |
114,754 | 2,751 | 89,956 | 4,420 | 204,710 | 7,171 | ||||||||||||||||||
Residential mortgage-backed securities |
190,525 | 58,026 | 213,310 | 39,794 | 403,835 | 97,820 | ||||||||||||||||||
Foreign corporate securities |
508,102 | 82,490 | 140,073 | 59,816 | 648,175 | 142,306 | ||||||||||||||||||
Asset-backed securities |
118,608 | 40,139 | 173,505 | 99,147 | 292,113 | 139,286 | ||||||||||||||||||
Commercial mortgage-backed securities |
523,475 | 200,567 | 188,638 | 126,163 | 712,113 | 326,730 | ||||||||||||||||||
U.S. government and agencies |
| | | | | | ||||||||||||||||||
State and political subdivisions |
20,403 | 1,947 | 18,250 | 5,936 | 38,653 | 7,883 | ||||||||||||||||||
Other foreign government securities |
16,419 | 33 | 4,125 | 117 | 20,544 | 150 | ||||||||||||||||||
Investment
grade securities |
2,899,833 | 626,252 | 1,637,972 | 617,340 | 4,537,805 | 1,243,592 | ||||||||||||||||||
Non-investment grade securities: |
||||||||||||||||||||||||
U.S. corporate securities |
140,426 | 36,615 | 60,378 | 39,884 | 200,804 | 76,499 | ||||||||||||||||||
Asset-backed securities |
3,465 | 2,060 | 11,156 | 5,951 | 14,621 | 8,011 | ||||||||||||||||||
Foreign corporate securities |
24,637 | 7,227 | 2,032 | 3,387 | 26,669 | 10,614 | ||||||||||||||||||
Residential mortgage-backed securities |
8,089 | 5,944 | 4,496 | 3,012 | 12,585 | 8,956 | ||||||||||||||||||
Non-investment grade securities |
176,617 | 51,846 | 78,062 | 52,234 | 254,679 | 104,080 | ||||||||||||||||||
Total fixed maturity securities |
$ | 3,076,450 | $ | 678,098 | $ | 1,716,034 | $ | 669,574 | $ | 4,792,484 | $ | 1,347,672 | ||||||||||||
Equity securities |
$ | 61,180 | $ | 26,923 | $ | 61,249 | $ | 41,844 | $ | 122,429 | $ | 68,767 | ||||||||||||
Total number of securities in an unrealized
loss position |
1,039 | 677 | 1,716 |
Page 22
(USD thousands) | Three Months Ended | Current Qtr | ||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2009 | 2008 | 2008 | 2008 | 2008 | Quarter | |||||||||||||||||||
Fixed Maturity and Equity Securities: |
||||||||||||||||||||||||
Gain on investment activity |
$ | 12,230 | $ | 10,204 | $ | 6,169 | $ | 5,928 | $ | 10,080 | $ | 2,150 | ||||||||||||
Loss on investment activity |
(19,649 | ) | (5,759 | ) | (8,564 | ) | (4,378 | ) | (5,360 | ) | (14,289 | ) | ||||||||||||
Impairments |
(39,825 | ) | (15,563 | ) | (109,283 | ) | (548 | ) | (5,150 | ) | (34,675 | ) | ||||||||||||
Net gain/(loss) on fixed maturity and equity securities |
(47,244 | ) | (11,118 | ) | (111,678 | ) | 1,002 | (430 | ) | (46,814 | ) | |||||||||||||
Other non-derivative gain/(loss), net |
(2,409 | ) | (672 | ) | (64 | ) | (344 | ) | 369 | (2,778 | ) | |||||||||||||
Free-standing Derivatives: |
||||||||||||||||||||||||
Credit Default Swaps |
(1,911 | ) | (6,732 | ) | (2,526 | ) | 1,413 | (6,486 | ) | 4,575 | ||||||||||||||
Interest Rate Swaps |
(38,864 | ) | 152,098 | 7,681 | (6,462 | ) | 5,515 | (44,379 | ) | |||||||||||||||
Futures |
22,311 | 10,870 | 6,120 | 2,294 | (185 | ) | 22,496 | |||||||||||||||||
Other |
3,109 | 2,153 | 1,440 | 1,877 | | 3,109 | ||||||||||||||||||
Currency Forwards |
(2,042 | ) | 1,638 | 289 | (764 | ) | 777 | (2,819 | ) | |||||||||||||||
Total free-standing derivatives |
(17,397 | ) | 160,027 | 13,004 | (1,642 | ) | (379 | ) | (17,018 | ) | ||||||||||||||
Embedded Derivatives: |
||||||||||||||||||||||||
B36 |
(40,425 | ) | (161,021 | ) | (106,797 | ) | (11,452 | ) | (148,528 | ) | 108,103 | |||||||||||||
GMXB |
35,213 | (230,775 | ) | (35,772 | ) | 5,357 | (6,292 | ) | 41,505 | |||||||||||||||
Total embedded derivatives |
(5,212 | ) | (391,796 | ) | (142,569 | ) | (6,095 | ) | (154,820 | ) | 149,608 | |||||||||||||
Net gain/(loss) on total derivatives |
(22,609 | ) | (231,769 | ) | (129,565 | ) | (7,737 | ) | (155,199 | ) | 132,590 | |||||||||||||
Total investment related losses, net |
$ | (72,262 | ) | $ | (243,559 | ) | $ | (241,307 | ) | $ | (7,079 | ) | $ | (155,260 | ) | $ | 82,998 | |||||||
Page 23