0001403385-14-000051.txt : 20140724 0001403385-14-000051.hdr.sgml : 20140724 20140724161542 ACCESSION NUMBER: 0001403385-14-000051 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20140724 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140724 DATE AS OF CHANGE: 20140724 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Symetra Financial CORP CENTRAL INDEX KEY: 0001403385 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 200978027 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33808 FILM NUMBER: 14991524 BUSINESS ADDRESS: STREET 1: 777 108TH AVENUE NE STREET 2: SUITE 1200 CITY: BELLEVUE STATE: WA ZIP: 98004-5135 BUSINESS PHONE: 425-256-8000 MAIL ADDRESS: STREET 1: 777 108TH AVENUE NE STREET 2: SUITE 1200 CITY: BELLEVUE STATE: WA ZIP: 98004-5135 8-K 1 sya-201406308k.htm 8-K SYA-2014.06.30 8K


 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 24, 2014
 
 
SYMETRA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
 
 
Delaware
 
001-33808
 
20-0978027
(State or other jurisdiction
 
(Commission File Number)
 
(IRS Employer
of incorporation)
 
 
 
Identification Number)
 
 
 
 
777 108th Avenue NE, Suite 1200
Bellevue, Washington
 
98004
(Address of principal executive offices)
 
(zip code)
Registrant’s telephone number, including area code: (425) 256-8000 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 




Item 2.02. Results of Operations and Financial Condition
On July 24, 2014, Symetra Financial Corporation, a Delaware corporation, issued (i) a press release announcing its financial results for the fiscal quarter ended June 30, 2014, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference, and (ii) a Quarterly Financial Supplement for the fiscal quarter ended June 30, 2014, a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The information in this report, including Exhibits 99.1 and 99.2, have been “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section. The information in this report shall not be incorporated by reference into any filing or other document under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing or document.
 
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1
Press Release of Symetra Financial Corporation, dated July 24, 2014, announcing second quarter ended June 30, 2014 results.
99.2
Quarterly Financial Supplement for the quarter ended June 30, 2014.




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
SYMETRA FINANCIAL CORPORATION
 
 
 
 
By:
 
/s/ David S. Goldstein
 
Name:
 
David S. Goldstein
 
Title:
 
Senior Vice President,
 
 
 
General Counsel and Secretary
Date: July 24, 2014




EXHIBIT INDEX

Exhibit
Number
  
Description of Exhibit
99.1

  
Press Release of Symetra Financial Corporation, dated July 24, 2014, announcing second quarter ended June 30, 2014 results.
99.2

  
Quarterly Financial Supplement for the quarter ended June 30, 2014.


 EX-99.1 2 sya-20140630exhibit991pres.htm PRESS RELEASE SYA-2014.06.30 Exhibit 99.1 Press Release


    
Investor Relations Contact:
Jim Pirak
(425) 256-8284
jim.pirak@symetra.com

Media Relations Contact:
Diana McSweeney
(425) 256-6167
diana.mcsweeney@symetra.com




SYMETRA REPORTS SECOND QUARTER 2014 RESULTS

Highlights

•
Adjusted operating income1 of $55.3 million was up 5% from second quarter 2013. Adjusted operating income per diluted share1 was $0.48, up from $0.40 in second quarter 2013.
•
Net income was $71.5 million, or $0.62 per diluted share, up from $45.0 million, or $0.34 per diluted share, in second quarter 2013.
•
Benefits loss ratio improved to 62.7% from 66.2% in second quarter 2013.
•
Prepayment-related income, net of amortization, of $4.3 million was offset by $4.3 million charge for prior years' state sales and use tax expense. Net prepayment-related income was $5.8 million in second quarter 2013.
•
All business segments reported strong year-over-year growth in sales.

BELLEVUE, Wash.—(July 24, 2014)—Symetra Financial Corporation (NYSE: SYA) today reported second quarter 2014 adjusted operating income of $55.3 million, or $0.48 per diluted share, compared with $52.7 million, or $0.40 per diluted share, for the second quarter of 2013.
For the second quarter of 2014, net income was $71.5 million, or $0.62 per diluted share, compared with $45.0 million, or $0.34 per diluted share, in the same period a year ago.
Summary Financial Results
 
Three Months Ended 
 June 30
 
Six Months Ended 
 June 30
(In millions, except per share data)
 
2014
 
2013
 
2014
 
2013
Net Income
 
$
71.5

 
$
45.0

 
$
150.8

 
$
111.0

Per Diluted Share of Common Stock
 
$
0.62

 
$
0.34

 
$
1.29

 
$
0.82

Adjusted Operating Income
 
$
55.3

 
$
52.7

 
$
121.0

 
$
102.1

Per Diluted Share of Common Stock
 
$
0.48

 
$
0.40

 
$
1.04

 
$
0.75

“We are pleased to report another solid quarter of earnings and a strong underwriting result in our Benefits segment. Each of the three divisions reported excellent year-over-year sales growth. Our successful sales efforts of the past several quarters are driving meaningful earnings contributions today, particularly in fixed indexed annuities," said Tom Marra, Symetra president and CEO.

1


“In the second half of the year, we are continuing our work to expand our product offering and distribution networks. I believe that Benefits, Retirement and Individual Life are all well positioned to generate sales that will drive further profitable growth,” Marra said.
Segment Pretax Adjusted Operating Income (Loss)*
 
Three Months Ended 
 June 30
 
Six Months Ended 
 June 30
(In millions)
 
2014
 
2013
 
2014
 
2013
Benefits
 
$
19.9

 
$
16.3

 
$
47.7

 
$
29.8

Deferred Annuities
 
27.4

 
27.4

 
57.6

 
56.5

Income Annuities
 
3.5

 
10.0

 
12.9

 
18.8

Individual Life
 
13.6

 
14.5

 
25.9

 
25.7

Other
 
(6.2
)
 
(1.3
)
 
(12.7
)
 
(6.1
)
Subtotal
 
$
58.2

 
$
66.9

 
$
131.4

 
$
124.7

Less: Income Taxes**
 
2.9

 
14.2

 
10.4

 
22.6

Adjusted Operating Income
 
$
55.3

 
$
52.7

 
$
121.0

 
$
102.1

 
 
 
 
 
 
 
 
 
* 2014 results reflect charge for prior years' state sales and use tax expense, by segment: $0.9 million in Benefits, $1.5 million in Deferred Annuities, $0.6 million in Income Annuities, and $1.3 million in Individual Life.
** Represents the total provision for income taxes adjusted for the tax effect on net realized gains (losses) at the U.S. federal income tax rate of 35%.

In the business discussions that follow, results for the second quarter of 2014 are compared with the second quarter of 2013, unless otherwise noted.

Benefits
•
Pretax adjusted operating income was $19.9 million for the quarter, up from $16.3 million. The increase was driven by a lower loss ratio for medical stop-loss.
•
Loss ratio was 62.7% in the quarter, compared with 66.2% in the previous period. This favorable result reflected lower medical stop-loss claims frequency.
•
Sales of $26.1 million for the quarter were up from $21.3 million in the previous period. Medical stop-loss, limited benefit medical, and group life and disability income insurance all reported year-over-year sales growth.

Deferred Annuities
•
Pretax adjusted operating income was $27.4 million for the quarter, unchanged from the previous period. Higher fixed indexed annuity (FIA) account values contributed $7.8 million to interest margin, compared with $2.0 million in the prior-year period. This favorable impact was partially offset by higher operating expenses.
•
Earnings for the quarter included $1.9 million of investment prepayment-related income, net of related amortization, down from a net $3.3 million in the prior period.
•
Total account values were $14.3 billion at quarter-end, up from $12.2 billion a year ago. FIA account values reached nearly $2.5 billion, up from $852 million.
•
Sales for the quarter were $650.3 million, up 47% from the year-ago quarter. Strong sales of both traditional fixed annuities and FIA were driven by an improved interest rate environment and further expansion of Symetra annuity products on bank and broker-dealer distribution platforms.

Income Annuities
•
Pretax adjusted operating income was $3.5 million for the quarter, down from $10.0 million in the prior-year period, due to less favorable mortality experience and lower interest margin.
•
Mortality gains were $0.8 million for the quarter, compared with mortality gains of $4.5 million in the previous period. Mortality experience can fluctuate from period to period.

2


•
Sales were $89.0 million for the quarter, up from $45.5 million in the prior-year quarter. Effective selling strategies and a more favorable interest rate environment drove increased single premium immediate annuity (SPIA) sales.

Individual Life
•
Pretax adjusted operating income was $13.6 million for the quarter, compared with $14.5 million in the year-ago period. An increase in operating expenses was partially offset by the earnings contribution from higher Classic Universal Life (UL) account values.
•
Sales of individual life products were $9.1 million for the quarter, up threefold from $3.0 million in the prior period. The strong result was driven by Classic UL, sold through an expanded brokerage general agency distribution network.

Other
•
Pretax adjusted operating loss was $6.2 million for the quarter, compared with a loss of $1.3 million in the year-ago quarter. The increased loss was driven by lower net investment income, primarily related to private equity investments.

Investment Portfolio
•
Net realized gains were $25.3 million for the quarter, compared with net losses of $11.3 million in the prior period. These results include net gains on mark-to-market equities, which were $21.6 million for the quarter, compared with net losses of $1.7 million in the year-ago period. Gains from bond sales increased to $10.2 million from $1.9 million in the year-ago period.

Income Taxes
•
Provision for income taxes was $11.7 million for the quarter, compared with $10.0 million in the year-ago period.
•
Symetra’s effective tax rate for the second quarter was 14.1%, compared with 18.2% in the prior-year period, due to increased benefits from tax credit investments.

Stockholders’ Equity
 
 
As of
(In millions, except per share data)
 
June 30  
 2014
 
March 31  
 2014
Total Stockholders' Equity
 
$
3,428.6

 
$
3,195.3

Per Common Share
 
$
29.58

 
$
27.40

Adjusted Book Value1
 
$
2,438.0

 
$
2,391.0

Per Common Share1
 
$
21.04

 
$
20.50


•
Capital actions — During the second quarter of 2014, Symetra repurchased 0.7 million shares. As of June 30, 2014, 6.9 million shares remained available under the current repurchase authorization.
•
Risk-based capital (RBC) ratio for Symetra Life Insurance Company at the end of second quarter 2014 was estimated at 458%. Statutory capital and surplus, including asset valuation reserve (AVR), was $2.3 billion.





3


2014 Earnings Outlook
Symetra affirmed its guidance for adjusted operating income per diluted share of $1.80-$2.00 for full-year 2014. Among the factors that could drive actual results toward the upper end, middle or lower end of the guidance range are:
•
changes in the interest rate environment;
•
Benefits Division loss ratio;
•
timing and levels of life and annuity sales;
•
persistency of the inforce book of business;
•
amount of issuance and yields on commercial mortgage loans;
•
amount of prepayments in the investment portfolio;
•
returns on alternative investment portfolio;
•
mortality experience; and
•
timing and amount of common stock buybacks.

These expectations also are subject to the risks and uncertainties identified below, including the possibility that one or more factors could cause us to fall short of our expected range.

Additional Financial Information
This press release, the second quarter 2014 financial supplement and financial review slides are posted on the company's website at http://investors.symetra.com. Investors are encouraged to review all of these materials.

Management to Review Results on Conference Call and Webcast
Symetra’s senior management team will discuss the company’s second quarter 2014 performance with investors and analysts on Friday, July 25, 2014, at 11 a.m., ET (8 a.m., PT). To listen by phone, dial 1-888-713-4205. For international callers, dial 617-213-4862. The passcode is 57080217. Participants are encouraged to pre-register for the call at www.symetra.com/earnings. Pre-registrants will be issued a PIN to use when dialing into the live call, which will provide quick access to the conference by bypassing the operator.
To listen to a live webcast of the conference call, go to http://investors.symetra.com. Listeners should go to the website at least 15 minutes before the call and test the compatibility of their computer. Links will be available to download any necessary audio software.
A replay of the webcast may be accessed beginning approximately one hour after the call ends by visiting http://investors.symetra.com.

Use of Non-GAAP Measures
1 Symetra uses both U.S. generally accepted accounting principles (GAAP) and non-GAAP financial measures to track the performance of its operations and financial condition. A reconciliation between each non-GAAP measure found in this presentation and the comparable GAAP measure can be found in the Financial Supplement accompanying this press release. The supplement is available for download on the Company’s website at www.symetra.com on the Investor Relations page, under Financial Information, Quarterly Financial Results.
This press release references the following non-GAAP financial measures:
•
Adjusted operating income is defined by the company as net income, excluding after-tax net realized gains (losses) that are not reflective of the performance of the company’s insurance operations. The company excludes gains (losses) associated with the following: investment sales or disposals, other-than-temporary investment impairments, changes in the fair value of mark-to-market investments and derivative investments (except for certain S&P 500 options), and changes in the fair value of embedded derivatives related to our fixed indexed annuity product.

4


•
Adjusted operating income per diluted share is defined as adjusted operating income divided by diluted common shares outstanding.
•
Pretax adjusted operating income is defined as adjusted operating income on a pretax basis. It also represents the cumulative total of segment pretax adjusted operating income, which at the segment level is a GAAP measure.
•
Adjusted book value is defined as stockholders’ equity, less accumulated other comprehensive income (loss), or AOCI.
•
Adjusted book value per share is calculated as adjusted book value divided by common shares outstanding.

About Symetra
Symetra Financial Corporation (NYSE: SYA) is a diversified financial services company based in Bellevue, Wash. In business since 1957, Symetra provides employee benefits, annuities and life insurance through a national network of benefit consultants, financial institutions, and independent agents and advisors. For more information, visit www.symetra.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of current or historical facts, included or referenced in this release that address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements. The words “may,” “will,” “believe,” “intend,” “plan,” “expect,” “anticipate,” “project,” “estimate,” “predict,” “potential” and similar expressions also are intended to identify forward-looking statements. These forward-looking statements may include, among others, statements with respect to Symetra's:
•
estimates or projections of revenues, net income (loss), net income (loss) per share, adjusted operating income (loss), adjusted operating income (loss) per share, market share or other financial forecasts, as well as statements describing factors and conditions that might affect those forecasts;
•
trends in operations, financial performance and financial condition;
•
financial and operating targets or plans;
•
business and growth strategy, including prospective products, services and distribution partners, including statements about management’s intentions regarding those strategies; and
•
initiatives such as our previously announced stock repurchase program that are intended or expected to have various impacts upon our financial condition, results of operations, and liquidity and capital resources.
These statements are based on various assumptions and analyses made by Symetra in light of information presently known to management, and considering management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate under the circumstances. Whether actual results and developments will conform to Symetra's expectations and predictions is subject to a number of risks, uncertainties and contingencies that could cause actual results to differ materially from expectations, or that could cause management to deviate from currently expected or intended courses of actions, including, among others:
•
the effects of fluctuations in interest rates, including a prolonged low interest rate environment or a rapidly rising interest rate environment, as well as management’s ability to anticipate and timely respond to any such fluctuations;
•
general economic, market or business conditions, including economic downturns or other adverse conditions in the global and domestic capital and credit markets;

5


•
the effects of significant increases in corporate refinance activity, including bond prepayments;
•
the performance of Symetra’s investment portfolio;
•
the continued availability of quality commercial mortgage loan investments and Symetra’s continued capacity to invest in commercial mortgage loans;
•
Symetra’s ability to successfully execute on its strategies;
•
the accuracy and adequacy of our recorded reserves;
•
the persistency of our inforce blocks of business;
•
deviations from assumptions used in setting prices for insurance and annuity products or establishing cash flow testing reserves;
•
continued viability of certain products under various economic, regulatory and other conditions;
•
market pricing and competitive trends related to insurance products and services;
•
the effects of implementation of the Patient Protection and Affordable Care Act, including the direct effects upon our business, but also including the effects upon our competitors and our customers;
•
changes in amortization of deferred policy acquisition costs and deferred sales inducements;
•
financial strength or credit ratings changes, particularly of Symetra but also of other companies in our industry sector;
•
retention of our key personnel and distribution partners;
•
the availability and cost of capital and financing;
•
the adequacy and collectibility of reinsurance that we have purchased, as well as the continued availability and cost of reinsurance coverage;
•
the continued availability of tax credit investments, and the continuation of current tax treatment of such investments;
•
changes in laws or regulations, or their interpretation, including those that could increase Symetra's business costs, reserve levels and required capital levels, or that could restrict the manner in which we do business;
•
the ability of Symetra's subsidiaries to pay dividends to Symetra;
•
Symetra’s ability to implement effective risk management policies and procedures, including hedging strategies;
•
our ability to maintain adequate telecommunications, information technology, or other operational systems, including our ability to prevent or timely detect and remediate any unauthorized access to or disclosure of our customer information and other sensitive business data;
•
the initiation of regulatory investigations or litigation against Symetra and the results of any regulatory proceedings;
•
the effects of changes in national monetary and fiscal policy;
•
the effects of implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010;
•
the effects of redomestication of our principal insurance company subsidiary and whether redomestication will convey the intended benefits; and
•
the risks that are described from time to time in Symetra's filings with the U.S. Securities and Exchange Commission, including those in Symetra's Annual Report on Form 10-K for the period ended December 31, 2013, and Quarterly Report on Form 10-Q for the period ended March 31, 2014.

6


Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Symetra will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Symetra or its business or operations. Symetra assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.
###

7



Symetra Financial Corporation
Consolidated Income Statement Data
(in millions, except per share data)
(unaudited)
 
 
Three Months Ended 
 June 30
 
Six Months Ended 
 June 30
 
 
2014
 
2013
 
2014
 
2013
Revenues
 
 
 
 
 
 
 
 
Premiums
 
$
154.7

 
$
157.4

 
$
308.5

 
$
314.4

Net investment income
 
319.0

 
318.6

 
643.4

 
642.3

Policy fees, contract charges and other
 
48.1

 
48.5

 
94.7

 
98.4

Net realized gains (losses):
 
 
 
 
 
 
 
 
Total other-than-temporary impairment losses on securities
 
(1.4
)
 
(7.8
)
 
(2.5
)
 
(10.4
)
Less: portion recognized in other comprehensive income
 
—

 
0.6

 
—

 
1.2

Net impairment losses recognized in earnings
 
(1.4
)
 
(7.2
)
 
(2.5
)
 
(9.2
)
Other net realized gains (losses)
 
26.7

 
(4.1
)
 
48.5

 
24.4

Total net realized gains (losses)
 
25.3

 
(11.3
)
 
46.0

 
15.2

Total revenues
 
547.1

 
513.2

 
1,092.6

 
1,070.3

Benefits and expenses
 
 
 
 
 
 
 
 
Policyholder benefits and claims
 
110.1

 
115.2

 
211.3

 
234.7

Interest credited
 
236.3

 
225.7

 
470.5

 
461.0

Other underwriting and operating expenses
 
92.6

 
91.9

 
180.5

 
183.7

Interest expense
 
8.3

 
8.2

 
16.5

 
16.4

Amortization of deferred policy acquisition costs
 
16.6

 
17.2

 
36.5

 
36.1

Total benefits and expenses
 
463.9

 
458.2

 
915.3

 
931.9

Income from operations before income taxes
 
83.2

 
55.0

 
177.3

 
138.4

Provision (benefit) for income taxes
 
 
 
 
 
 
 
 
Current
 
17.4

 
19.6

 
27.5

 
35.3

Deferred
 
(5.7
)
 
(9.6
)
 
(1.0
)
 
(7.9
)
Total provision for income taxes
 
11.7

 
10.0

 
26.5

 
27.4

Net income
 
$
71.5

 
$
45.0

 
$
150.8

 
$
111.0

Net income per common share
 
 
 
 
 
 
 
 
Basic
 
$
0.62

 
$
0.34

 
$
1.29

 
$
0.82

Diluted
 
$
0.62

 
$
0.34

 
$
1.29

 
$
0.82

Weighted-average number of common shares outstanding
 
 
 
 
 
 
 
 
Basic
 
115.961

 
133.050

 
116.706

 
135.558

Diluted
 
115.964

 
133.056

 
116.710

 
135.564

Cash dividends declared per common share
 
$
0.10

 
$
0.08

 
$
0.20

 
$
0.16

Non-GAAP financial measures
 
 
 
 
 
 
 
 
Adjusted operating income
 
$
55.3

 
$
52.7

 
$
121.0

 
$
102.1

Reconciliation to net income
 
 
 
 
 
 
 
 
Net income
 
$
71.5

 
$
45.0

 
$
150.8

 
$
111.0

Less: Excluded realized gains (losses) (net of taxes)*
 
16.2

 
(7.7
)
 
29.8

 
8.9

Adjusted operating income
 
$
55.3

 
$
52.7

 
$
121.0

 
$
102.1


* Excluded realized gains (losses) are reported net of taxes of $8.8 and $(4.2) for the three months ended June 30, 2014 and 2013, respectively, and $16.1 and $4.8 for the six months ended June 30, 2014 and 2013, respectively.


8



Symetra Financial Corporation
Consolidated Balance Sheet Data
(in millions, except per share data)
(unaudited)
 
 
June 30  
 2014
 
December 31  
 2013
Assets
 
 
 
 
Total investments
 
$
29,632.2

 
$
27,901.1

Other assets
 
1,317.2

 
1,250.0

Separate account assets
 
994.2

 
978.4

Total assets
 
$
31,943.6

 
$
30,129.5

Liabilities and stockholders’ equity
 
 
 
 
Policyholder liabilities
 
$
26,282.9

 
$
25,328.8

Notes payable
 
449.6

 
449.5

Other liabilities
 
788.3

 
430.9

Separate account liabilities
 
994.2

 
978.4

Total liabilities
 
28,515.0

 
27,187.6

Common stock and additional paid-in capital
 
1,469.2

 
1,465.8

Treasury stock
 
(134.6
)
 
(93.4
)
Retained earnings
 
1,103.4

 
975.9

Accumulated other comprehensive income, net of taxes
 
990.6

 
593.6

Total stockholders' equity
 
3,428.6

 
2,941.9

Total liabilities and stockholders’ equity
 
$
31,943.6

 
$
30,129.5

Book value per common share*
 
$
29.58

 
$
24.99

Non-GAAP financial measures
 
 
 
 
Adjusted book value
 
$
2,438.0

 
$
2,348.3

Reconciliation to stockholders’ equity
 
 
 
 
Total stockholders’ equity
 
$
3,428.6

 
$
2,941.9

Less: AOCI
 
990.6

 
593.6

Adjusted book value
 
$
2,438.0

 
$
2,348.3

Adjusted book value per common share **
 
$
21.04

 
$
19.95


* Book value per common share is calculated as stockholders’ equity divided by common shares outstanding. These shares totaled 115.895 and 117.731 as of June 30, 2014 and December 31, 2013, respectively.

** Adjusted book value per common share, is calculated as adjusted book value divided by common shares outstanding. These shares totaled 115.895 and 117.731 as of June 30, 2014 and December 31, 2013, respectively.


9

 EX-99.2 3 sya-20140630exhibit992supp.htm FINANCIAL SUPPLEMENT SYA-2014.06.30 Exhibit 99.2 Supplement


Exhibit 99.2
 
 
 
 
 
  
July 24, 2014
 
SECOND QUARTER 2014
 
Symetra Financial Corporation (SYA)
Financial Supplement
All financial information in this document is unaudited

































Symetra Financial Corporation
Financial Supplement
Table of Contents
June 30, 2014
 
 
 
 
Page        
Financial Highlights
1
 
 
Consolidated Results
 
Consolidated Income Statement Data
2
Consolidated Balance Sheet Data
3
Segment Income Statement Data
4
 
 
Segment Results
 
Benefits Division
5
Retirement Division:
 
Deferred Annuities
6
Income Annuities
7
Individual Life Division
8
Other
9
 
 
Additional Financial Data
 
Deferred Policy Acquisition Costs (DAC) Roll Forward
10
Deferred Sales Inducements (DSI) Roll Forward
11
Account Values and Reserves Roll Forwards
12
Overview of Liabilities and Associated Unrealized Gains
13
Investments Summary
14
Investments Income Statement Data (including new addition of prepayment-related income, net of DAC and DSI amortization)
15
Sales by Segment and Product
16
Book Value, Adjusted Book Value and Statutory Book Value per Share
17
ROE and Operating ROAE
18
 
 




Symetra Financial Corporation
2Q 2014 Financial Supplement
Financial Highlights
(In millions, except per share or percentage data)
 
  
 
For the Three Months Ended
For the Six Months Ended
  
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
Jun 30,
2014
 
Jun 30,
2013
Net income
$
71.5

 
$
79.3

 
$
64.4

 
$
45.3

 
$
45.0

$
150.8

 
$
111.0

Net income per common share 1
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.62

 
$
0.68

 
$
0.55

 
$
0.38

 
$
0.34

$
1.29

 
$
0.82

 
Diluted
$
0.62

 
$
0.68

 
$
0.55

 
$
0.38

 
$
0.34

$
1.29

 
$
0.82

Weighted-average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
115.961

 
117.460

 
117.812

 
117.802

 
133.050

116.706

 
135.558

 
Diluted
115.964

 
117.466

 
117.815

 
117.804

 
133.056

116.710

 
135.564

Non-GAAP Financial Measures 2
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted operating income
$
55.3

 
$
65.7

 
$
50.0

 
$
48.8

 
$
52.7

$
121.0

 
$
102.1

Adjusted operating income per common share: 1
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.48

 
$
0.56

 
$
0.42

 
$
0.41

 
$
0.40

$
1.04

 
$
0.75

 
Diluted
$
0.48

 
$
0.56

 
$
0.42

 
$
0.41

 
$
0.40

$
1.04

 
$
0.75

  
 
As of
  
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
Consolidated Balance Sheet Data
 
 
 
 
 
 
 
 
 
Total investments
$
29,632.2

 
$
28,940.0

 
$
27,901.1

 
$
27,641.1

 
$
26,915.0

Total assets
31,943.6

 
31,164.3

 
30,129.5

 
29,784.6

 
29,040.4

Notes payable
449.6

 
449.6

 
449.5

 
449.5

 
449.4

Accumulated other comprehensive income (net of taxes) (AOCI)
990.6

 
804.3

 
593.6

 
719.0

 
782.6

Total stockholders' equity
3,428.6

 
3,195.3

 
2,941.9

 
3,012.8

 
3,040.1

U.S. Statutory Financial Information:
 
 
 
 
 
 
 
 
 
Statutory capital and surplus
$
1,944.7

 
$
1,949.4

 
$
1,869.7

 
$
1,940.6

 
$
1,921.3

Asset valuation reserve (AVR)
312.3

 
304.1

 
307.0

 
282.5

 
275.7

Statutory book value
$
2,257.0

 
$
2,253.5

 
$
2,176.7

 
$
2,223.1

 
$
2,197.0

Common shares outstanding, end of period
115.895

 
116.619

 
117.731

 
117.800

 
117.792

Book value per common share
$
29.58

 
$
27.40

 
$
24.99

 
$
25.58

 
$
25.81

Debt to capital ratio
11.6
%
 
12.3
%
 
13.3
%
 
13.0
%
 
12.9
%
Non-GAAP Financial Measures 2
 
 
 
 
 
 
 
 
 
Adjusted book value (stockholders' equity excluding AOCI)
$
2,438.0

 
$
2,391.0

 
$
2,348.3

 
$
2,293.8

 
$
2,257.5

Adjusted book value per common share 3
21.04

 
20.50

 
19.95

 
19.47

 
19.17

Statutory book value per common share 4
19.47

 
19.32

 
18.49

 
18.87

 
18.65

Debt to capital ratio, excluding AOCI 5
15.6
%
 
15.8
%
 
16.1
%
 
16.4
%
 
16.6
%
  
 
For the Twelve Months Ended
  
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
ROE
8.3
%
 
7.4
%
 
6.8
%
 
5.5
%
 
5.7
%
Non-GAAP Financial Measure 2
 
 
 
 
 
 
 
 
 
Operating ROAE 6
9.4
%
 
9.4
%
 
8.8
%
 
8.1
%
 
8.0
%
1

Basic net income and adjusted operating income per common share include all participating securities using the two-class method. Diluted net income and adjusted operating income per common share include the dilutive impact of non-participating securities, based on the application of the treasury stock method. Shares included in these calculations are weighted for the portion of the period they were outstanding. Antidilutive awards were excluded from the computation of diluted earnings per share.
2

Management considers these non-GAAP measures to be a useful supplement to their most comparable GAAP measure in evaluating financial performance and condition. Non-GAAP measures including adjusted operating income and the corresponding basic and diluted per share amounts, adjusted book value and the corresponding per share amounts, statutory book value per share amounts and operating ROAE have been reconciled to their most directly comparable GAAP measures on pages 2, 17, and 18, respectively.
3

Adjusted book value per common share is calculated as adjusted book value divided by common shares outstanding.
4

Statutory book value per common share is calculated based on statutory book value divided by common shares outstanding.
5

Debt to capital ratio, excluding AOCI is calculated as notes payable divided by the sum of notes payable and adjusted book value.
6

Operating ROAE (return on average equity) is calculated based on adjusted operating income divided by average adjusted book value. The numerator and denominator of this measure have been reconciled to net income and stockholders' equity, respectively, their most comparable GAAP measures.



1



Symetra Financial Corporation
2Q 2014 Financial Supplement
Consolidated Income Statement Data
(In millions, except per share data)
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
$
154.7

 
$
153.8

 
$
156.8

 
$
156.0

 
$
157.4

 
$
308.5

 
$
314.4

 
Net investment income
319.0

 
324.4

 
316.3

 
326.4

 
318.6

 
643.4

 
642.3

 
Policy fees, contract charges and other
48.1

 
46.6

 
45.0

 
48.3

 
48.5

 
94.7

 
98.4

 
Net realized gains (losses):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other-than-temporary impairment losses on securities
(1.4
)
 
(1.1
)
 
(3.8
)
 
(6.6
)
 
(7.8
)
 
(2.5
)
 
(10.4
)
 
 
Less: portion recognized in other comprehensive income
—

 
—

 
0.9

 
0.4

 
0.6

 
—

 
1.2

 
 
Net impairment losses recognized in earnings
(1.4
)
 
(1.1
)
 
(2.9
)
 
(6.2
)
 
(7.2
)
 
(2.5
)
 
(9.2
)
 
Other net realized gains (losses)
26.7

 
21.8

 
27.9

 
1.6

 
(4.1
)
 
48.5

 
24.4

 
Total net realized gains (losses)
25.3

 
20.7

 
25.0

 
(4.6
)
 
(11.3
)
 
46.0

 
15.2

Total revenues
547.1

 
545.5

 
543.1

 
526.1

 
513.2

 
1,092.6

 
1,070.3

Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims
110.1

 
101.2

 
109.7

 
118.5

 
115.2

 
211.3

 
234.7

 
Interest credited
236.3

 
234.2

 
235.7

 
235.3

 
225.7

 
470.5

 
461.0

 
Other underwriting and operating expenses
92.6

 
87.9

 
90.8

 
90.6

 
91.9

 
180.5

 
183.7

 
Interest expense
8.3

 
8.2

 
8.3

 
8.3

 
8.2

 
16.5

 
16.4

 
Amortization of deferred policy acquisition costs
16.6

 
19.9

 
16.1

 
20.2

 
17.2

 
36.5

 
36.1

Total benefits and expenses
463.9

 
451.4

 
460.6

 
472.9

 
458.2

 
915.3

 
931.9

Income from operations before income taxes
83.2

 
94.1

 
82.5

 
53.2

 
55.0

 
177.3

 
138.4

Provision (benefit) for income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
17.4

 
10.1

 
15.1

 
11.3

 
19.6

 
27.5

 
35.3

 
Deferred
(5.7
)
 
4.7

 
3.0

 
(3.4
)
 
(9.6
)
 
(1.0
)
 
(7.9
)
Total provision for income taxes
11.7

 
14.8

 
18.1

 
7.9

 
10.0

 
26.5

 
27.4

Net income
$
71.5

 
$
79.3

 
$
64.4

 
$
45.3

 
$
45.0

 
$
150.8

 
$
111.0

Net income per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.62

 
$
0.68

 
$
0.55

 
$
0.38

 
$
0.34

 
$
1.29

 
$
0.82

 
Diluted
$
0.62

 
$
0.68

 
$
0.55

 
$
0.38

 
$
0.34

 
$
1.29

 
$
0.82

Weighted-average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
115.961

 
117.460

 
117.812

 
117.802

 
133.050

 
116.706

 
135.558

 
Diluted
115.964

 
117.466

 
117.815

 
117.804

 
133.056

 
116.710

 
135.564

Cash dividends declared per common share
$
0.10

 
$
0.10

 
$
0.09

 
$
0.09

 
$
0.08

 
$
0.20

 
$
0.16

Non-GAAP Financial Measures:
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted operating income 1
$
55.3

 
$
65.7

 
$
50.0

 
$
48.8

 
$
52.7

 
$
121.0

 
$
102.1

Adjusted operating income per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.48

 
$
0.56

 
$
0.42

 
$
0.41

 
$
0.40

 
$
1.04

 
$
0.75

 
Diluted
$
0.48

 
$
0.56

 
$
0.42

 
$
0.41

 
$
0.40

 
$
1.04

 
$
0.75

Reconciliation to net income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
71.5

 
$
79.3

 
$
64.4

 
$
45.3

 
$
45.0

 
$
150.8

 
$
111.0

 
Less: Excluded realized gains (losses) (net of taxes)
16.2

 
13.6

 
14.4

 
(3.5
)
 
(7.7
)
 
29.8

 
8.9

Adjusted operating income 1
$
55.3

 
$
65.7

 
$
50.0

 
$
48.8

 
$
52.7

 
$
121.0

 
$
102.1


1

Adjusted operating income is calculated as net income, excluding after-tax net realized gains (losses) that are not reflective of the performance of the company’s insurance operations. The company excludes gains (losses) associated with the following: investment sales or disposals, other-than-temporary investment impairments, changes in the fair value of mark-to-market investments and derivative investments (except for certain S&P 500 options), and changes in the fair value of embedded derivatives related to our fixed indexed annuity product.




2


Symetra Financial Corporation
2Q 2014 Financial Supplement
Consolidated Balance Sheet Data
(In millions)
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
Assets
 
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, at fair value
$
24,849.2

 
$
24,329.0

 
$
23,337.7

 
$
23,306.5

 
$
22,697.0

 
 
Marketable equity securities, at fair value
126.6

 
126.8

 
134.3

 
87.1

 
53.7

 
Trading securities:
 
 
 
 
 
 
 
 
 
 
 
Marketable equity securities, at fair value
483.0

 
460.3

 
474.4

 
509.4

 
512.0

 
Mortgage loans, net
3,747.8

 
3,603.2

 
3,541.0

 
3,376.8

 
3,303.1

 
Policy loans
62.0

 
62.4

 
63.3

 
64.2

 
64.4

 
Investments in limited partnerships
291.8

 
299.3

 
296.3

 
253.1

 
236.8

 
Other invested assets
71.8

 
59.0

 
54.1

 
44.0

 
48.0

Total investments
29,632.2

 
28,940.0

 
27,901.1

 
27,641.1

 
26,915.0

Cash and cash equivalents
118.0

 
108.5

 
76.0

 
121.1

 
171.6

Accrued investment income
298.3

 
295.0

 
298.0

 
293.2

 
287.6

Reinsurance recoverables
312.9

 
313.0

 
310.8

 
306.1

 
300.1

Deferred policy acquisition costs
311.2

 
320.1

 
322.5

 
271.7

 
249.6

Receivables and other assets
276.8

 
213.9

 
242.7

 
229.4

 
243.7

Separate account assets
994.2

 
973.8

 
978.4

 
922.0

 
872.8

Total assets
$
31,943.6

 
$
31,164.3

 
$
30,129.5

 
$
29,784.6

 
$
29,040.4

Liabilities and stockholders' equity
 
 
 
 
 
 
 
 
 
 
Funds held under deposit contracts
$
25,603.3

 
$
25,140.5

 
$
24,642.9

 
$
24,074.7

 
$
23,485.7

 
Future policy benefits
405.3

 
399.8

 
397.9

 
394.6

 
390.9

 
Policy and contract claims
156.7

 
150.1

 
159.9

 
165.4

 
163.9

 
Other policyholders' funds
117.6

 
143.9

 
128.1

 
171.9

 
129.4

 
Notes payable
449.6

 
449.6

 
449.5

 
449.5

 
449.4

 
Deferred income tax liabilities, net
414.7

 
320.1

 
201.9

 
266.5

 
304.1

 
Other liabilities
373.6

 
391.2

 
229.0

 
327.2

 
204.1

 
Separate account liabilities
994.2

 
973.8

 
978.4

 
922.0

 
872.8

Total liabilities
28,515.0

 
27,969.0

 
27,187.6

 
26,771.8

 
26,000.3

Preferred stock
—

 
—

 
—

 
—

 
—

Common stock
1.2

 
1.2

 
1.2

 
1.2

 
1.2

Additional paid-in-capital
1,468.0

 
1,466.3

 
1,464.6

 
1,463.9

 
1,462.4

Treasury stock
(134.6
)
 
(119.9
)
 
(93.4
)
 
(93.4
)
 
(93.4
)
Retained earnings
1,103.4

 
1,043.4

 
975.9

 
922.1

 
887.3

Accumulated other comprehensive income, net of taxes
990.6

 
804.3

 
593.6

 
719.0

 
782.6

Total stockholders' equity
3,428.6

 
3,195.3

 
2,941.9

 
3,012.8

 
3,040.1

Total liabilities and stockholders' equity
$
31,943.6

 
$
31,164.3

 
$
30,129.5

 
$
29,784.6

 
$
29,040.4




3


Symetra Financial Corporation
2Q 2014 Financial Supplement
Segment Income Statement Data
(In millions)
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits Division
$
155.8

 
$
153.9

 
$
156.5

 
$
156.1

 
$
157.2

 
$
309.7

 
$
313.8

 
Retirement Division:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Annuities
152.0

 
155.8

 
149.0

 
151.6

 
142.1

 
307.8

 
292.0

 
 
Income Annuities
96.0

 
97.2

 
99.2

 
98.6

 
99.1

 
193.2

 
202.7

 
Individual Life Division
115.6

 
115.9

 
113.5

 
115.3

 
112.4

 
231.5

 
223.7

 
Other
2.7

 
1.8

 
2.7

 
9.9

 
14.3

 
4.5

 
24.4

Operating revenues 1
522.1

 
524.6

 
520.9

 
531.5

 
525.1

 
1,046.7

 
1,056.6

 
Add: Excluded realized gains (losses)
25.0

 
20.9

 
22.2

 
(5.4
)
 
(11.9
)
 
45.9

 
13.7

Revenues
$
547.1

 
$
545.5

 
$
543.1

 
$
526.1

 
$
513.2

 
$
1,092.6

 
$
1,070.3

Segment pre-tax adjusted operating income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits Division
$
19.9

 
$
27.8

 
$
19.2

 
$
15.2

 
$
16.3

 
$
47.7

 
$
29.8

 
Retirement Division:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Annuities
27.4

 
30.2

 
27.0

 
23.8

 
27.4

 
57.6

 
56.5

 
 
Income Annuities
3.5

 
9.4

 
6.4

 
7.1

 
10.0

 
12.9

 
18.8

 
Individual Life Division
13.6

 
12.3

 
13.8

 
15.8

 
14.5

 
25.9

 
25.7

 
Other
(6.2
)
 
(6.5
)
 
(6.1
)
 
(3.3
)
 
(1.3
)
 
(12.7
)
 
(6.1
)
Pre-tax adjusted operating income 2
58.2

 
73.2

 
60.3

 
58.6

 
66.9

 
131.4

 
124.7

 
Add: Excluded realized gains (losses)
25.0

 
20.9

 
22.2

 
(5.4
)
 
(11.9
)
 
45.9

 
13.7

Income from operations before income taxes
$
83.2

 
$
94.1

 
$
82.5

 
$
53.2

 
$
55.0

 
$
177.3

 
$
138.4

1

 Operating revenues is a non-GAAP measure, calculated as total revenues less excluded realized gains (losses). It also represents the cumulative total of segment operating revenue, which at the segment level is a GAAP measure. Total revenues is the most directly comparable measure to operating revenues.
2

 Pre-tax adjusted operating income is a non-GAAP measure, calculated as adjusted operating income on a pre-tax basis. It also represents the cumulative total of segment pre-tax adjusted operating income, which at the segment level is a GAAP measure. Income from operations before income taxes is the most directly comparable measure to pre-tax adjusted operating income.




4



Symetra Financial Corporation
2Q 2014 Financial Supplement
Benefits Division
(In millions)
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
146.3

 
$
145.0

 
$
147.4

 
$
147.4

 
$
148.6

 
$
291.3

 
$
296.6

 
Net investment income
 
5.2

 
5.0

 
5.4

 
5.2

 
5.2

 
10.2

 
10.3

 
Policy fees, contract charges and other
 
4.3

 
3.9

 
3.7

 
3.5

 
3.4

 
8.2

 
6.9

Total operating revenues
 
155.8

 
153.9

 
156.5

 
156.1

 
157.2

 
309.7

 
313.8

Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims
 
91.7

 
82.8

 
94.3

 
99.2

 
98.5

 
174.5

 
199.9

 
Other underwriting and operating expenses
 
44.0

 
43.2

 
43.0

 
41.7

 
42.4

 
87.2

 
84.1

 
Amortization of deferred policy acquisition costs
 
0.2

 
0.1

 
—

 
—

 
—

 
0.3

 
—

Total benefits and expenses
 
135.9

 
126.1

 
137.3

 
140.9

 
140.9

 
262.0

 
284.0

Segment pre-tax adjusted operating income
 
$
19.9

 
$
27.8

 
$
19.2

 
$
15.2

 
$
16.3

 
$
47.7

 
$
29.8

Operating Metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss ratio 1
 
62.7
%
 
57.1
%
 
64.0
%
 
67.3
%
 
66.2
%
 
59.9
%
 
67.4
%
Expense ratio 2
 
30.0
%
 
29.6
%
 
28.8
%
 
28.1
%
 
28.5
%
 
29.8
%
 
28.3
%
Combined ratio 3
 
92.7
%
 
86.7
%
 
92.8
%
 
95.4
%
 
94.7
%
 
89.7
%
 
95.7
%
Medical stop-loss - loss ratio 4
 
60.9
%
 
55.7
%
 
63.8
%
 
67.2
%
 
66.0
%
 
58.4
%
 
67.6
%
Total sales 5
 
$
26.1

 
$
71.9

 
$
24.1

 
$
19.0

 
$
21.3

 
$
98.0

 
$
87.8

Premiums:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medical stop-loss
 
$
122.9

 
$
121.7

 
$
127.0

 
$
127.2

 
$
129.2

 
$
244.6

 
$
258.2

 
Limited benefit medical
 
12.3

 
13.3

 
12.6

 
13.3

 
13.0

 
25.6

 
26.0

 
Group life & disability and other
 
11.1

 
10.0

 
7.8

 
6.9

 
6.4

 
21.1

 
12.4

Total premiums earned
 
$
146.3

 
$
145.0

 
$
147.4

 
$
147.4

 
$
148.6

 
$
291.3

 
$
296.6

 
5 Year Historical Loss Ratio: 1
 
For the Three Months Ended
 
For the Year
Ended
 
 
1Q
 
2Q
 
3Q
 
4Q
 
 
2013
 
68.5
%
 
66.2
%
 
67.3
%
 
64.0
%
 
66.5
%
2012
 
61.6
%
 
65.5
%
 
65.5
%
 
67.7
%
 
65.1
%
2011
 
67.6
%
 
62.4
%
 
63.6
%
 
59.6
%
 
63.1
%
2010
 
68.9
%
 
63.8
%
 
66.5
%
 
60.5
%
 
64.9
%
2009
 
70.1
%
 
66.1
%
 
67.3
%
 
69.9
%
 
68.3
%

1

 Loss ratio represents policyholder benefits and claims incurred divided by premiums earned.
2

Expense ratio is equal to other underwriting and operating expenses of our insurance operations divided by premiums earned.
3

Combined ratio is equal to the sum of the loss ratio and the expense ratio.
4

Medical stop-loss loss ratio represents medical stop-loss policyholder benefits and claims incurred divided by medical stop-loss premiums earned.
5

Total sales represents annualized first-year premiums net of first year policy lapses.




5



Symetra Financial Corporation
2Q 2014 Financial Supplement
Retirement Division — Deferred Annuities
(In millions)
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income
$
145.8

 
$
150.1

 
$
140.9

 
$
145.0

 
$
136.2

 
$
295.9

 
$
279.4

 
Policy fees, contract charges and other
5.9

 
5.9

 
5.3

 
5.8

 
5.3

 
11.8

 
11.1

 
Certain realized gains (losses)
0.3

 
(0.2
)
 
2.8

 
0.8

 
0.6

 
0.1

 
1.5

Total operating revenues
152.0

 
155.8

 
149.0

 
151.6

 
142.1

 
307.8

 
292.0

Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims
0.1

 
0.1

 
(0.2
)
 
0.2

 
0.2

 
0.2

 
0.2

 
Interest credited
86.9

 
87.5

 
87.4

 
86.6

 
80.8

 
174.4

 
163.7

 
Other underwriting and operating expenses
22.9

 
21.1

 
22.0

 
23.3

 
19.6

 
44.0

 
41.3

 
Amortization of deferred policy acquisition costs
14.7

 
16.9

 
12.8

 
17.7

 
14.1

 
31.6

 
30.3

Total benefits and expenses
124.6

 
125.6

 
122.0

 
127.8

 
114.7

 
250.2

 
235.5

Segment pre-tax adjusted operating income
$
27.4

 
$
30.2

 
$
27.0

 
$
23.8

 
$
27.4

 
$
57.6

 
$
56.5

Operating Metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed account values, excluding FIA - General account
$
10,992.8

 
$
10,951.2

 
$
10,874.7

 
$
10,790.0

 
$
10,631.1

 
$
10,992.8

 
$
10,631.1

 
Interest spread 1
1.81
%
 
1.98
%
 
1.83
%
 
2.05
%
 
1.97
%
 
1.90
%
 
2.10
%
 
Base earned yield 2
4.44
%
 
4.50
%
 
4.59
%
 
4.60
%
 
4.67
%
 
4.48
%
 
4.68
%
 
Base credited rate 2
2.73
%
 
2.75
%
 
2.85
%
 
2.88
%
 
2.87
%
 
2.74
%
 
2.87
%
 
Base interest spread 2
1.71
%
 
1.75
%
 
1.74
%
 
1.72
%
 
1.80
%
 
1.74
%
 
1.81
%
Fixed account values, FIA - General account
$
2,463.3

 
$
2,084.4

 
$
1,712.0

 
$
1,321.8

 
$
852.0

 
$
2,463.3

 
$
852.0

 
FIA interest spread 3
1.24
%
 
1.23
%
 
*
 
*
 
*
 
1.23
%
 
*
 
FIA base earned yield 4
3.33
%
 
3.29
%
 
*
 
*
 
*
 
3.31
%
 
*
 
FIA base credited rate 4
2.09
%
 
2.05
%
 
*
 
*
 
*
 
2.07
%
 
*
 
FIA base interest spread 4
1.24
%
 
1.24
%
 
*
 
*
 
*
 
1.24
%
 
*
Variable account values - Separate account
$
843.7

 
$
831.3

 
$
836.2

 
$
792.3

 
$
758.8

 
$
843.7

 
$
758.8

Total sales 5
650.3

 
627.5

 
732.9

 
747.1

 
441.5

 
1,277.8

 
763.5

1

Interest spread excludes FIA and is the difference between the net investment yield and the credited rate to policyholders. The net investment yield is the approximate yield on invested assets. The credited rate is the approximate rate credited on policyholder fixed account values. Interest credited is subject to contractual terms, including minimum guarantees. Interest is credited on a daily basis and therefore quarters with more/less days of interest reduces/increases interest spread and base interest spread.
2

Base interest spread excludes FIA and is the interest spread adjusted to exclude items that can vary significantly from period to period due to a number of factors and, therefore, may contribute to results that are not indicative of the underlying trends. This is primarily the impact of asset prepayments, such as bond make-whole premiums net of related deferred sales inducement amortization and the MBS prepayment speed adjustment. Interest is credited on a daily basis and therefore quarters with more/less days of interest reduces/increases interest spread and base interest spread.
3

FIA interest spread is the difference between the net investment yield and the credited rate to policyholders. The net investment yield is the approximate yield on invested assets, excluding derivative assets. The credited rate represents amounts recorded in interest credited related to FIA contracts.
4

FIA base interest spread is the FIA interest spread adjusted  to exclude items that can vary significantly from  period to period due to a number of factors and, therefore, may contribute to results that are not indicative of the underlying trends. This is primarily the impact of asset prepayments, such as bond make-whole premiums and the MBS prepayment speed adjustment. The credited rate represents amounts recorded in interest credited related to FIA contracts.
5

Total sales represent deposits for new policies net of first year policy lapses and/or surrenders.
*

Not meaningful.




6


Symetra Financial Corporation
2Q 2014 Financial Supplement
Retirement Division—Income Annuities
(In millions)
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income
 
$
95.8

 
$
97.0

 
$
98.9

 
$
98.4

 
$
98.9

 
$
192.8

 
$
200.6

 
Policy fees, contract charges and other
 
0.2

 
0.2

 
0.3

 
0.2

 
0.2

 
0.4

 
2.1

Total operating revenues
 
96.0

 
97.2

 
99.2

 
98.6

 
99.1

 
193.2

 
202.7

Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited
 
85.9

 
82.0

 
86.1

 
85.7

 
82.7

 
167.9

 
171.2

 
Other underwriting and operating expenses
 
5.5

 
4.8

 
5.6

 
4.9

 
5.4

 
10.3

 
10.8

 
Amortization of deferred policy acquisition costs
 
1.1

 
1.0

 
1.1

 
0.9

 
1.0

 
2.1

 
1.9

Total benefits and expenses
 
92.5

 
87.8

 
92.8

 
91.5

 
89.1

 
180.3

 
183.9

Segment pre-tax adjusted operating income
 
$
3.5

 
$
9.4

 
$
6.4

 
$
7.1

 
$
10.0

 
$
12.9

 
$
18.8

Operating Metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserves 1
 
$
6,516.6

 
$
6,509.9

 
$
6,489.9

 
$
6,484.6

 
$
6,512.7

 
$
6,516.6

 
$
6,512.7

Interest spread 2
 
0.48
%
 
0.52
%
 
0.63
%
 
0.61
%
 
0.60
%
 
0.50
%
 
0.63
%
Base earned yield 3
 
5.89
%
 
5.89
%
 
6.02
%
 
6.02
%
 
6.06
%
 
5.89
%
 
6.04
%
Base credited rate 3
 
5.44
%
 
5.48
%
 
5.50
%
 
5.49
%
 
5.49
%
 
5.46
%
 
5.52
%
Base interest spread 3
 
0.45
%
 
0.41
%
 
0.52
%
 
0.53
%
 
0.57
%
 
0.43
%
 
0.52
%
Mortality gains (losses) 4
 
$
0.8

 
$
5.3

 
$
1.5

 
$
1.1

 
$
4.5

 
$
6.1

 
$
5.5

Total sales 5
 
89.0

 
87.5

 
85.4

 
38.9

 
45.5

 
176.5

 
86.2


 
5 Year Historical Mortality Gains (Losses): 4
 
For the Three Months Ended
 
For the Year Ended
 
 
1Q
 
2Q
 
3Q
 
4Q
 
 
2013
 
$
1.0

 
$
4.5

 
$
1.1

 
$
1.5

 
$
8.1

2012
 
5.4

 
6.4

 
2.0

 
(0.9
)
 
12.9

2011
 
0.7

 
4.9

 
(1.4
)
 
(3.9
)
 
0.3

2010
 
(0.1
)
 
(1.8
)
 
(0.1
)
 
(0.6
)
 
(2.6
)
2009
 
4.3

 
(0.5
)
 
—

 
1.3

 
5.1


1

Reserves represent the present value of future income annuity benefits and assumed expenses, discounted by the assumed interest rate. This metric represents the amount of our in-force book of business.
2

Interest spread is the difference between the net investment yield and the credited rate to policyholders. The net investment yield is the approximate yield on invested assets, excluding equities, attributed to the segment. The credited rate is the approximate rate credited on policyholder reserves.
3

Base interest spread is the interest spread adjusted to exclude items that can vary significantly from period to period due to a number of factors and, therefore, may contribute to yields that are not indicative of the underlying trends. This is primarily the impact of asset prepayments, such as bond make-whole premiums and the MBS prepayment speed adjustment.
4

Mortality gains (losses) represent the difference between actual and expected reserves released on our life contingent annuities.
5

Total sales represent deposits for new policies net of first year policy lapses and/or surrenders.




7


Symetra Financial Corporation
2Q 2014 Financial Supplement
Individual Life Division
(In millions)
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
8.4

 
$
8.8

 
$
9.4

 
$
8.6

 
$
8.8

 
$
17.2

 
$
17.8

 
Net investment income
 
70.1

 
70.9

 
68.9

 
72.6

 
69.7

 
141.0

 
138.9

 
Policy fees, contract charges and other
 
37.1

 
36.2

 
35.2

 
34.1

 
33.9

 
73.3

 
67.0

Total operating revenues
 
115.6

 
115.9

 
113.5

 
115.3

 
112.4

 
231.5

 
223.7

Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims
 
18.3

 
18.3

 
15.6

 
19.1

 
16.5

 
36.6

 
34.6

 
Interest credited
 
63.9

 
65.2

 
62.6

 
63.4

 
62.8

 
129.1

 
127.0

 
Other underwriting and operating expenses
 
19.2

 
18.2

 
19.3

 
15.4

 
16.5

 
37.4

 
32.5

 
Amortization of deferred policy acquisition costs
 
0.6

 
1.9

 
2.2

 
1.6

 
2.1

 
2.5

 
3.9

Total benefits and expenses
 
102.0

 
103.6

 
99.7

 
99.5

 
97.9

 
205.6

 
198.0

Segment pre-tax adjusted operating income
 
$
13.6

 
$
12.3

 
$
13.8

 
$
15.8

 
$
14.5

 
$
25.9

 
$
25.7

Operating Metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individual Insurance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance in force 1
 
$
35,125.5

 
$
35,001.0

 
$
34,935.1

 
$
35,070.4

 
$
35,215.5

 
$
35,125.5

 
$
35,215.5

 
Claims 2
 
12.7

 
14.8

 
11.3

 
14.0

 
13.7

 
27.5

 
29.4

 
Annualized mortality rate 3
 
0.14
%
 
0.17
%
 
0.13
%
 
0.16
%
 
0.16
%
 
0.16
%
 
0.17
%
 
UL account values 4
 
$
741.5

 
$
734.1

 
$
726.2

 
$
717.6

 
$
714.5

 
$
741.5

 
$
714.5

 
UL interest spread 5
 
1.35
%
 
1.51
%
 
1.22
%
 
2.44
%
 
1.93
%
 
1.42
%
 
1.95
%
 
UL base interest spread 6
 
1.25
%
 
1.29
%
 
1.24
%
 
1.41
%
 
1.43
%
 
1.28
%
 
1.46
%
 
Sales 7
 
$
9.1

 
$
7.9

 
$
9.4

 
$
3.9

 
$
3.0

 
$
17.0

 
$
5.3

Institutional Markets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance in force 1
 
$
12,844.8

 
$
12,926.1

 
$
12,926.2

 
$
12,799.8

 
$
12,715.4

 
$
12,844.8

 
$
12,715.4

 
BOLI account values 4
 
4,834.2

 
4,834.6

 
4,798.1

 
4,764.8

 
4,732.8

 
4,834.2

 
4,732.8

 
BOLI ROA 8
 
1.10
%
 
0.97
%
 
0.87
%
 
0.78
%
 
0.90
%
 
1.04
%
 
0.87
%
 
BOLI base ROA 9
 
0.79
%
 
0.90
%
 
0.87
%
 
0.64
%
 
0.85
%
 
0.85
%
 
0.84
%
 
COLI sales 10
 
$
—

 
$
—

 
$
8.0

 
$
10.2

 
$
3.0

 
$
—

 
$
26.8

5 Year Historical Individual Claims:
For the Three Months Ended
 
For the Year Ended
 
 
1Q
 
2Q
 
3Q
 
4Q
 
 
2013
 
15.7

 
13.7

 
14.0

 
11.3

 
54.7

2012
 
15.7

 
15.1

 
13.9

 
16.3

 
61.0

2011
 
15.7

 
12.1

 
13.0

 
13.5

 
54.3

2010
 
13.9

 
13.5

 
12.0

 
11.3

 
50.7

2009
 
14.7

 
13.4

 
12.8

 
12.6

 
53.5

1

Insurance in force represents dollar face amounts of policies without adjustment for reinsurance.
2

Individual claims represents incurred claims, net of reinsurance, on our term and universal life policies.
3

Annualized mortality rate is defined as annualized individual claims divided by insurance in force.
4

UL account values and BOLI account values represent our liabilities to our policyholders.
5

UL interest spread excludes SPL and is the difference between the net investment yield and the credited rate to policyholders. The net investment yield is the approximate yield on invested assets in the general account attributed to UL policies. The credited rate is the approximate rate credited on UL policyholder account values. Interest credited is subject to contractual terms, including minimum guarantees.
6

UL base interest spread excludes SPL and is UL interest spread adjusted to exclude items that can vary significantly from period to period due to a number of factors and, therefore, may contribute to results that are not indicative of the underlying trends. This is primarily the impact of asset prepayments, such as bond make-whole premiums net of related bonus interest amortization, the MBS prepayment speed adjustment, and reserve adjustments.
7

Individual sales represents annualized first year premiums for recurring premium products and 10% of new single premium deposits, net of first year policy lapses and/or surrenders.
8

BOLI ROA is a measure of the gross margin on our BOLI book of business. This metric is calculated as the difference between our BOLI revenue earnings rate and our BOLI policy benefits rate. The revenue earnings rate is calculated as revenues divided by average invested assets. The policy benefits rate is calculated as total policy benefits divided by average account values. The policy benefits used in this metric do not include expenses.
9

BOLI base ROA is BOLI ROA adjusted to exclude items that can vary significantly from period to period due to a number of factors and, therefore, may contribute to yields that are not indicative of the underlying trends. This is primarily the impact of asset prepayments, such as bond make-whole premiums, the MBS prepayment speed adjustment, and reserve adjustments.
10

Represents deposits for new policies.


8


Symetra Financial Corporation
2Q 2014 Financial Supplement
Other
(In millions)
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss) 1
 
$
2.1

 
$
1.4

 
$
2.2

 
$
5.2

 
$
8.6

 
$
3.5

 
$
13.1

 
Policy fees, contract charges and other
 
0.6

 
0.4

 
0.5

 
4.7

 
5.7

 
1.0

 
11.3

Total operating revenues
 
2.7

 
1.8

 
2.7

 
9.9

 
14.3

 
4.5

 
24.4

Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited
 
(0.4
)
 
(0.5
)
 
(0.4
)
 
(0.4
)
 
(0.6
)
 
(0.9
)
 
(0.9
)
 
Other underwriting and operating expenses
 
1.0

 
0.6

 
0.9

 
5.3

 
8.0

 
1.6

 
15.0

 
Interest expense
 
8.3

 
8.2

 
8.3

 
8.3

 
8.2

 
16.5

 
16.4

Total benefits and expenses
 
8.9

 
8.3

 
8.8

 
13.2

 
15.6

 
17.2

 
30.5

Segment pre-tax adjusted operating loss
 
$
(6.2
)
 
$
(6.5
)
 
$
(6.1
)
 
$
(3.3
)
 
$
(1.3
)
 
$
(12.7
)
 
$
(6.1
)

 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
1

Detail of net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of tax credit investments
 
$
(6.3
)
 
$
(6.7
)
 
$
(5.8
)
 
$
(5.1
)
 
$
(4.7
)
 
$
(13.0
)
 
$
(9.6
)
 
Private equity funds
 
(0.3
)
 
—

 
(0.9
)
 
0.8

 
3.6

 
(0.3
)
 
4.1

 
Investment income on fixed maturities and other investments
 
8.7

 
8.1

 
8.9

 
9.5

 
9.7

 
16.8

 
18.6

 
Net investment income (loss)
 
$
2.1

 
$
1.4

 
$
2.2

 
$
5.2

 
$
8.6

 
$
3.5

 
$
13.1




9



Symetra Financial Corporation
2Q 2014 Financial Supplement
Deferred Policy Acquisition Costs (DAC) Roll Forward
(In millions) 
 
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
 
 
 
 
 
 
 
 
 
 
 
Summary -- Total Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized balance, beginning of period
 
$
441.3

 
$
419.9

 
$
390.1

 
$
373.1

 
$
367.1

 
$
419.9

 
$
367.9

 
 
Deferral of acquisition costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions and premium-based taxes and fees
 
37.4

 
34.8

 
40.4

 
33.2

 
20.8

 
72.2

 
37.0

 
 
 
Other acquisition expenses
 
3.1

 
5.4

 
4.5

 
3.2

 
2.3

 
8.5

 
4.0

 
 
Total deferral of acquisition costs
 
40.5

 
40.2

 
44.9

 
36.4

 
23.1

 
80.7

 
41.0

 
 
Adjustments related to realized (gains) losses
 
(1.0
)
 
1.1

 
1.0

 
0.8

 
0.1

 
0.1

 
0.3

 
 
 
Amortization
 
(15.9
)
 
(15.5
)
 
(15.6
)
 
(14.9
)
 
(15.6
)
 
(31.4
)
 
(31.1
)
 
 
 
Amortization related to prepayments
 
(0.7
)
 
(4.4
)
 
(0.5
)
 
(2.7
)
 
(1.6
)
 
(5.1
)
 
(5.0
)
 
 
 
Unlocking
 
—

 
—

 
—

 
(2.6
)
 
—

 
—

 
—

 
 
Total amortization
 
(16.6
)
 
(19.9
)
 
(16.1
)
 
(20.2
)
 
(17.2
)
 
(36.5
)
 
(36.1
)
 
 
Unamortized balance, end of period
 
464.2

 
441.3

 
419.9

 
390.1

 
373.1

 
464.2

 
373.1

 
 
Accum effect of net unrealized gains
 
(153.0
)
 
(121.2
)
 
(97.4
)
 
(118.4
)
 
(123.5
)
 
(153.0
)
 
(123.5
)
 
DAC balance, end of period
 
$
311.2

 
$
320.1

 
$
322.5

 
$
271.7

 
$
249.6

 
$
311.2

 
$
249.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized balance, beginning of period
 
$
1.5

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
 
Deferral of acquisition costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other acquisition expenses
 
—

 
1.6

 
—

 
—

 
—

 
1.6

 
—

 
 
Total deferral of acquisition costs
 
—

 
1.6

 
—

 
—

 
—

 
1.6

 
—

 
 
Amortization
 
(0.2
)
 
(0.1
)
 
—

 
—

 
—

 
(0.3
)
 
—

 
 
Unamortized balance, end of period
 
1.3

 
1.5

 
—

 
—

 
—

 
1.3

 
—

 
DAC balance, end of period
 
$
1.3

 
$
1.5

 
$
—

 
$
—

 
$
—

 
$
1.3

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Division - Deferred Annuities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized balance, beginning of period
 
$
295.5

 
$
285.9

 
$
268.8

 
$
256.9

 
$
253.4

 
$
285.9

 
$
256.7

 
 
Deferral of acquisition costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions and premium-based taxes and fees
 
23.8

 
23.2

 
25.9

 
26.7

 
16.0

 
47.0

 
27.7

 
 
 
Other acquisition expenses
 
1.6

 
2.2

 
3.0

 
2.1

 
1.5

 
3.8

 
2.5

 
 
Total deferral of acquisition costs
 
25.4

 
25.4

 
28.9

 
28.8

 
17.5

 
50.8

 
30.2

 
 
Adjustments related to realized (gains) losses
 
(0.4
)
 
1.1

 
1.0

 
0.8

 
0.1

 
0.7

 
0.3

 
 
 
Amortization
 
(14.0
)
 
(12.6
)
 
(12.3
)
 
(12.3
)
 
(12.6
)
 
(26.6
)
 
(25.4
)
 
 
 
Amortization related to prepayments
 
(0.7
)
 
(4.3
)
 
(0.5
)
 
(2.5
)
 
(1.5
)
 
(5.0
)
 
(4.9
)
 
 
 
Unlocking
 
—

 
—

 
—

 
(2.9
)
 
—

 
—

 
—

 
 
Total amortization
 
(14.7
)
 
(16.9
)
 
(12.8
)
 
(17.7
)
 
(14.1
)
 
(31.6
)
 
(30.3
)
 
 
Unamortized balance, end of period
 
305.8

 
295.5

 
285.9

 
268.8

 
256.9

 
305.8

 
256.9

 
 
Accum effect of net unrealized gains
 
(143.0
)
 
(112.9
)
 
(91.4
)
 
(110.6
)
 
(113.5
)
 
(143.0
)
 
(113.5
)
 
DAC balance, end of period
 
$
162.8

 
$
182.6

 
$
194.5

 
$
158.2

 
$
143.4

 
$
162.8

 
$
143.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Division - Income Annuities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized balance, beginning of period
 
$
52.1

 
$
49.2

 
$
47.0

 
$
46.3

 
$
45.6

 
$
49.2

 
$
45.0

 
 
Deferral of acquisition costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions and premium-based taxes and fees
 
3.5

 
3.7

 
3.2

 
1.5

 
1.5

 
7.2

 
2.9

 
 
 
Other acquisition expenses
 
0.1

 
0.2

 
0.1

 
0.1

 
0.2

 
0.3

 
0.3

 
 
Total deferral of acquisition costs
 
3.6

 
3.9

 
3.3

 
1.6

 
1.7

 
7.5

 
3.2

 
 
Amortization
 
(1.1
)
 
(1.0
)
 
(1.1
)
 
(0.9
)
 
(1.0
)
 
(2.1
)
 
(1.9
)
 
 
Unamortized balance, end of period
 
54.6

 
52.1

 
49.2

 
47.0

 
46.3

 
54.6

 
46.3

 
DAC balance, end of period
 
$
54.6

 
$
52.1

 
$
49.2

 
$
47.0

 
$
46.3

 
$
54.6

 
$
46.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individual Life Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized balance, beginning of period
 
$
92.2

 
$
84.8

 
$
74.3

 
$
69.9

 
$
68.1

 
$
84.8

 
$
66.2

 
 
Deferral of acquisition costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions and premium-based taxes and fees
 
10.1

 
7.9

 
11.3

 
5.0

 
3.3

 
18.0

 
6.4

 
 
 
Other acquisition expenses
 
1.4

 
1.4

 
1.4

 
1.0

 
0.6

 
2.8

 
1.2

 
 
Total deferral of acquisition costs
 
11.5

 
9.3

 
12.7

 
6.0

 
3.9

 
20.8

 
7.6

 
 
Adjustments related to realized (gains) losses
 
(0.6
)
 
—

 
—

 
—

 
—

 
(0.6
)
 
—

 
 
 
Amortization
 
(0.6
)
 
(1.8
)
 
(2.2
)
 
(1.7
)
 
(2.0
)
 
(2.4
)
 
(3.8
)
 
 
 
Amortization related to prepayments
 
—

 
(0.1
)
 
—

 
(0.2
)
 
(0.1
)
 
(0.1
)
 
(0.1
)
 
 
 
Unlocking
 
—

 
—

 
—

 
0.3

 
—

 
—

 
—

 
 
Total amortization
 
(0.6
)
 
(1.9
)
 
(2.2
)
 
(1.6
)
 
(2.1
)
 
(2.5
)
 
(3.9
)
 
 
Unamortized balance, end of period
 
102.5

 
92.2

 
84.8

 
74.3

 
69.9

 
102.5

 
69.9

 
 
Accum effect of net unrealized gains
 
(10.0
)
 
(8.3
)
 
(6.0
)
 
(7.8
)
 
(10.0
)
 
(10.0
)
 
(10.0
)
 
DAC balance, end of period
 
$
92.5

 
$
83.9

 
$
78.8

 
$
66.5

 
$
59.9

 
$
92.5

 
$
59.9



10


Symetra Financial Corporation
2Q 2014 Financial Supplement
Deferred Sales Inducements (DSI) Roll Forward
(In millions) 

 
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
 
 
 
 
 
 
 
 
 
 
 
Total Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized balance, beginning of period
 
$
150.3

 
$
154.8

 
$
154.0

 
$
155.1

 
$
154.1

 
$
154.8

 
$
153.4

 
 
Capitalizations
 
7.6

 
9.6

 
11.9

 
12.1

 
12.2

 
17.2

 
25.5

 
 
Adjustments related to realized (gains) losses
 
(0.2
)
 
0.3

 
—

 
0.3

 
0.1

 
0.1

 
0.3

 
 
 
Amortization
 
(10.5
)
 
(10.6
)
 
(10.7
)
 
(10.1
)
 
(10.1
)
 
(21.1
)
 
(20.4
)
 
 
 
Amortization related to prepayments
 
(0.7
)
 
(3.8
)
 
(0.4
)
 
(2.7
)
 
(1.2
)
 
(4.5
)
 
(3.7
)
 
 
 
Unlocking
 
—

 
—

 
—

 
(0.7
)
 
—

 
—

 
—

 
 
Total amortization
 
(11.2
)
 
(14.4
)
 
(11.1
)
 
(13.5
)
 
(11.3
)
 
(25.6
)
 
(24.1
)
 
 
Unamortized balance, end of period
 
146.5

 
150.3

 
154.8

 
154.0

 
155.1

 
146.5

 
155.1

 
 
Accum effect of net unrealized gains
 
(99.9
)
 
(86.5
)
 
(76.7
)
 
(84.1
)
 
(82.3
)
 
(99.9
)
 
(82.3
)
 
DSI balance, end of period 1
 
$
46.6

 
$
63.8

 
$
78.1

 
$
69.9

 
$
72.8

 
$
46.6

 
$
72.8

1
DSI balance is included in receivables and other assets on the consolidated balance sheet.




11


Symetra Financial Corporation
2Q 2014 Financial Supplement
Account Values and Reserves Roll Forwards
(In millions)
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Retirement Division:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Annuities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Account Values, excluding FIA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Account values, beginning of period
 
$
10,951.2

 
$
10,874.7

 
$
10,790.0

 
$
10,631.1

 
$
10,681.4

 
$
10,874.7

 
$
10,688.5

 
 
 
 
Deposits
 
287.9

 
280.6

 
346.7

 
307.7

 
139.1

 
568.5

 
318.4

 
 
 
 
Withdrawals
 
(306.7
)
 
(286.1
)
 
(320.5
)
 
(247.4
)
 
(275.7
)
 
(592.8
)
 
(547.0
)
 
 
 
 
Net transfers
 
1.9

 
(1.6
)
 
—

 
(0.2
)
 
0.5

 
0.3

 
1.8

 
 
 
 
 
Net flows
 
(16.9
)
 
(7.1
)
 
26.2

 
60.1

 
(136.1
)
 
(24.0
)
 
(226.8
)
 
 
 
 
Interest credited
 
71.2

 
73.4

 
77.8

 
78.2

 
78.1

 
144.6

 
157.2

 
 
 
 
Other
 
(12.7
)
 
10.2

 
(19.3
)
 
20.6

 
7.7

 
(2.5
)
 
12.2

 
 
 
Account values, end of period
 
$
10,992.8

 
$
10,951.2

 
$
10,874.7

 
$
10,790.0

 
$
10,631.1

 
$
10,992.8

 
$
10,631.1

 
 
Fixed Account Values, FIA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Account values, beginning of period
 
$
2,084.4

 
$
1,712.0

 
$
1,321.8

 
$
852.0

 
$
539.1

 
$
1,712.0

 
$
374.9

 
 
 
 
Deposits
 
375.7

 
359.6

 
392.6

 
449.1

 
310.5

 
735.3

 
459.0

 
 
 
 
Withdrawals
 
(15.7
)
 
(10.8
)
 
(9.2
)
 
(5.7
)
 
(5.8
)
 
(26.5
)
 
(8.8
)
 
 
 
 
Net transfers
 
0.4

 
1.2

 
0.8

 
0.6

 
1.2

 
1.6

 
1.5

 
 
 
 
 
Net flows
 
360.4

 
350.0

 
384.2

 
444.0

 
305.9

 
710.4

 
451.7

 
 
 
 
Interest credited
 
14.1

 
9.2

 
12.4

 
3.9

 
3.1

 
23.3

 
5.5

 
 
 
 
Other
 
4.4

 
13.2

 
(6.4
)
 
21.9

 
3.9

 
17.6

 
19.9

 
 
 
Account values, end of period
 
$
2,463.3

 
$
2,084.4

 
$
1,712.0

 
$
1,321.8

 
$
852.0

 
$
2,463.3

 
$
852.0

 
Income Annuities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserves
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserves, beginning of period
 
$
6,509.9

 
$
6,489.9

 
$
6,484.6

 
$
6,512.7

 
$
6,546.6

 
$
6,489.9

 
$
6,566.5

 
 
 
 
Deposits
 
88.2

 
82.2

 
82.2

 
37.8

 
45.1

 
170.4

 
85.4

 
 
 
 
Benefit payments
 
(162.0
)
 
(145.3
)
 
(157.9
)
 
(165.3
)
 
(157.1
)
 
(307.3
)
 
(302.2
)
 
 
 
 
 
Net flows
 
(73.8
)
 
(63.1
)
 
(75.7
)
 
(127.5
)
 
(112.0
)
 
(136.9
)
 
(216.8
)
 
 
 
 
Interest credited
 
91.6

 
91.9

 
91.9

 
92.0

 
92.5

 
183.5

 
185.8

 
 
 
 
Other
 
(11.1
)
 
(8.8
)
 
(10.9
)
 
7.4

 
(14.4
)
 
(19.9
)
 
(22.8
)
 
 
 
Reserves, end of period
 
$
6,516.6

 
$
6,509.9

 
$
6,489.9

 
$
6,484.6

 
$
6,512.7

 
$
6,516.6

 
$
6,512.7

 
Individual Life Division:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BOLI Account Values
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Account values, beginning of period
 
$
4,834.6

 
$
4,798.1

 
$
4,764.8

 
$
4,732.8

 
$
4,696.4

 
$
4,798.1

 
$
4,659.8

 
 
 
 
Deposits
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
 
 
Surrenders/claims
 
(38.8
)
 
(3.7
)
 
(5.1
)
 
(7.0
)
 
(2.2
)
 
(42.5
)
 
(5.9
)
 
 
 
 
 
Net flows
 
(38.8
)
 
(3.7
)
 
(5.1
)
 
(7.0
)
 
(2.2
)
 
(42.5
)
 
(5.9
)
 
 
 
 
Interest credited
 
55.3

 
56.4

 
53.8

 
54.6

 
54.6

 
111.7

 
110.3

 
 
 
 
Administrative charges and other
 
(16.9
)
 
(16.2
)
 
(15.4
)
 
(15.6
)
 
(16.0
)
 
(33.1
)
 
(31.4
)
 
 
 
Account values, end of period
 
$
4,834.2

 
$
4,834.6

 
$
4,798.1

 
$
4,764.8

 
$
4,732.8

 
$
4,834.2

 
$
4,732.8

 
 
UL Account Values
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Account values, beginning of period
 
$
734.1

 
$
726.2

 
$
717.6

 
$
714.5

 
$
716.2

 
$
726.2

 
$
716.0

 
 
 
 
Deposits
 
28.4

 
24.3

 
27.9

 
19.6

 
16.9

 
52.7

 
33.2

 
 
 
 
Surrenders/claims
 
(10.5
)
 
(7.6
)
 
(9.5
)
 
(8.5
)
 
(11.1
)
 
(18.1
)
 
(19.5
)
 
 
 
 
 
Net flows
 
17.9

 
16.7

 
18.4

 
11.1

 
5.8

 
34.6

 
13.7

 
 
 
 
Interest credited
 
7.8

 
7.8

 
7.8

 
7.5

 
7.6

 
15.6

 
15.3

 
 
 
 
Administrative charges and other
 
(18.3
)
 
(16.6
)
 
(17.6
)
 
(15.5
)
 
(15.1
)
 
(34.9
)
 
(30.5
)
 
 
 
Account values, end of period
 
$
741.5

 
$
734.1

 
$
726.2

 
$
717.6

 
$
714.5

 
$
741.5

 
$
714.5




12


Symetra Financial Corporation
2Q 2014 Financial Supplement
Overview of Liabilities and Associated Unrealized Gains
(In millions)
 
 
 
 
 
As of Jun 30, 2014
 
 
 
 
Policyholder Liability
 
% of Total
 
Unrealized gains 8
Illiquid: cannot be surrendered
 
 
 
 
 
 
Structured settlements & other single premium immediate annuities 1
 
$
6,550.9

 
25.3
%
 
$
732.3

 
 
 
 
 
 
 
 
 
Somewhat Liquid: can be surrendered with adjustments or charges of 3% or more
 
 
 
 
 
 
Deferred Annuities:
 
 
 
 
 
 
 
Surrender charges of 5% or higher
 
5,805.6

 
 
 
271.1

 
Surrender charges of 3 to 5%
 
1,586.8

 
 
 
74.1

 
MVA and surrender charges of 5% or higher 2
 
2,211.0

 
 
 
103.2

 
5 year payout provision or MVA 3
 
284.7

 
 
 
13.3

BOLI 4
 
4,931.6

 
 
 
292.3

Universal life
 
305.4

 
 
 
17.2

 
Total somewhat liquid
 
15,125.1

 
58.3
%
 
771.2

 
 
 
 
 
 
 
 
 
Liquid: can be surrendered with no adjustment or charges of less than 3%
 
 
 
 
 
 
Deferred Annuities:
 
 
 
 
 
 
 
No surrender charges 5
 
2,905.4

 
 
 
135.7

 
Surrender charges less than 3%
 
568.7

 
 
 
26.6

Universal life
 
452.7

 
 
 
25.2

 
Total liquid
 
3,926.8

 
15.1
%
 
187.5

 
 
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
 
Other (net of reinsurance) 6
 
328.3

 
1.3
%
 
16.3

 
 
 
 
 
 
 
 
 
Assets supporting surplus portfolio
 
 
 
 
 
$
109.6

 
 
 
 
 
 
 
 
 
Total 7
 
$
25,931.1

 
100.0
%
 
$
1,816.9

 
 
 
 
 
 
 
 
 
Reconciliation of unrealized gains to AOCI:
 
 
 
 
 
 
Unrealized gains from above
 
 
 
 
 
$
1,816.9

Taxes on unrealized gains and losses on available-for-sale securities
 
 
 
 
 
(635.9
)
Adjustment for DAC and DSI valuation allowance, net of taxes
 
 
 
 
 
(166.7
)
Other
 
 
 
 
 
(23.7
)
AOCI
 
 
 
 
 
$
990.6


The liabilities presented above have been aggregated based on contractual surrender charge schedules without adjustment for free partial withdrawals and guaranteed return of premium provisions, if applicable. The following footnotes may also be useful in evaluating the withdrawal characteristics of our liabilities:
1

The benefits are specified in the contracts as fixed amounts, primarily to be paid over the next several decades. Certain single premium immediate annuity contracts contain a liquidity feature that permits contract owners to make partial withdrawals once every 36 months within the life expectancy period. The withdrawals are based on prevailing market rates which limits our exposure to liquidity and interest rate risk.
2

The market value adjustment (MVA) adjusts the value of the contract at surrender based on current interest rates, subject to a guaranteed minimum account value specified in the contract.
3

The MVA adjusts the value of the contract at surrender based on current interest rates, subject to a guaranteed minimum account value specified in the contract. In a liquidity crisis situation, we could invoke the five-year payout provision so that the contract value with interest is paid out ratably over five years.
4

The biggest deterrent to surrender is the taxation on the gain within these contracts, which includes a 10% non-deductible penalty tax. Banks can exchange certain of these contracts with other carriers, tax-free. However, a significant portion of this business does not qualify for this tax-free treatment due to the employment status of the original covered employees and charges may be applicable.
5

Approximately half of the account value has been with us for many years, due to guaranteed minimum interest rates of 4.0 – 4.5% that are significantly higher than those currently offered on new business. Given the current interest rate environment, we do not expect significant changes in the persistency of this business.
6

Other represents the sum of the following: (a) our term life insurance policyholder liabilities, net of reinsurance recoverables. There is no surrender value related to these contracts; (b) incurred but not reported claim liabilities mainly related to our medical stop-loss business. The precise timing and amount of payment is unknown; and (c) reported claim liabilities for BOLI, term life insurance, medical stop-loss and group life policies.
7

 Represents the sum of funds held under deposit contracts, future policy benefits and policy and contract claims on the consolidated balance sheets, excluding other policyholder related liabilities and reinsurance recoverables of $234.2 as of June 30, 2014.
8

Represents the pre-tax unrealized gains of the investment portfolio supporting the related policyholder liability.



13


Symetra Financial Corporation
2Q 2014 Financial Supplement
Investments Summary
(In millions)
 
 
 
 
As of
 
 
 
 
Jun 30,
2014
 
%
 
Mar 31,
2014
 
%
 
Dec 31,
2013
 
%
 
Sep 30,
2013
 
%
 
Jun 30,
2013
 
%
Portfolio Composition:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, at fair value
 
$
24,849.2

 
83.9
 %
 
$
24,329.0

 
84.1
 %
 
$
23,337.7

 
83.6
 %
 
$
23,306.5

 
84.3
%
 
$
22,697.0

 
84.3
%
 
Marketable equity securities, at fair value
 
126.6

 
0.4
 %
 
126.8

 
0.4
 %
 
134.3

 
0.5
 %
 
87.1

 
0.3
%
 
53.7

 
0.2
%
Trading securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Marketable equity securities, at fair value
 
483.0

 
1.6
 %
 
460.3

 
1.6
 %
 
474.4

 
1.7
 %
 
509.4

 
1.9
%
 
512.0

 
1.9
%
Mortgage loans, net
 
3,747.8

 
12.6
 %
 
3,603.2

 
12.5
 %
 
3,541.0

 
12.7
 %
 
3,376.8

 
12.2
%
 
3,303.1

 
12.3
%
Policy loans
 
62.0

 
0.2
 %
 
62.4

 
0.2
 %
 
63.3

 
0.2
 %
 
64.2

 
0.2
%
 
64.4

 
0.2
%
Investments in limited partnerships
 
291.8

 
1.0
 %
 
299.3

 
1.0
 %
 
296.3

 
1.1
 %
 
253.1

 
0.9
%
 
236.8

 
0.9
%
Other invested assets
 
71.8

 
0.3
 %
 
59.0

 
0.2
 %
 
54.1

 
0.2
 %
 
44.0

 
0.2
%
 
48.0

 
0.2
%
 
 
Total investments
 
29,632.2

 
100.0
 %
 
28,940.0

 
100.0
 %
 
27,901.1

 
100.0
 %
 
27,641.1

 
100.0
%
 
26,915.0

 
100.0
%
Cash and cash equivalents
 
118.0

 
 
 
108.5

 
 
 
76.0

 
 
 
121.1

 
 
 
171.6

 
 
 
 
Total investments, cash and cash equivalents
 
$
29,750.2

 
 
 
$
29,048.5

 
 
 
$
27,977.1

 
 
 
$
27,762.2

 
 
 
$
27,086.6

 
 
Fixed Maturities Securities by Credit Quality: 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1: AAA, AA, A
 
$
14,208.9

 
57.2
 %
 
$
14,153.5

 
58.2
 %
 
$
13,403.1

 
57.4
 %
 
$
13,594.4

 
58.3
%
 
$
13,205.7

 
58.2
%
2: BBB
 
9,389.2

 
37.8
 %
 
8,957.9

 
36.8
 %
 
8,667.1

 
37.1
 %
 
8,494.1

 
36.5
%
 
8,267.0

 
36.4
%
 
Total investment grade
 
23,598.1

 
95.0
 %
 
23,111.4

 
95.0
 %
 
22,070.2

 
94.5
 %
 
22,088.5

 
94.8
%
 
21,472.7

 
94.6
%
3: BB
 
643.2

 
2.6
 %
 
611.3

 
2.5
 %
 
666.6

 
2.9
 %
 
637.3

 
2.7
%
 
635.7

 
2.8
%
4: B
 
514.4

 
2.1
 %
 
515.2

 
2.1
 %
 
515.8

 
2.2
 %
 
491.7

 
2.1
%
 
492.0

 
2.2
%
5: CCC & lower
 
91.4

 
0.3
 %
 
88.8

 
0.4
 %
 
78.3

 
0.4
 %
 
87.9

 
0.4
%
 
78.5

 
0.3
%
6: In or near default
 
2.1

 
0.0
 %
 
2.3

 
0.0
 %
 
6.8

 
0.0
 %
 
1.1

 
0.0
%
 
18.1

 
0.1
%
 
Total below investment grade
 
1,251.1

 
5.0
 %
 
1,217.6

 
5.0
 %
 
1,267.5

 
5.5
 %
 
1,218.0

 
5.2
%
 
1,224.3

 
5.4
%
 
 
Total fixed maturities
 
$
24,849.2

 
100.0
 %
 
$
24,329.0

 
100.0
 %
 
$
23,337.7

 
100.0
 %
 
$
23,306.5

 
100.0
%
 
$
22,697.0

 
100.0
%
Fixed Maturities by Issuer Type:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
 
$
372.0

 
1.5
 %
 
$
812.9

 
3.3
 %
 
$
344.4

 
1.5
 %
 
$
510.7

 
2.2
%
 
$
167.8

 
0.7
%
State and political subdivisions
 
775.6

 
3.1
 %
 
751.2

 
3.1
 %
 
751.5

 
3.2
 %
 
754.5

 
3.2
%
 
808.3

 
3.6
%
Foreign governments
 
98.5

 
0.4
 %
 
99.0

 
0.4
 %
 
99.7

 
0.4
 %
 
15.9

 
0.0
%
 
17.1

 
0.1
%
Corporate securities
 
18,764.1

 
75.5
 %
 
17,853.7

 
73.4
 %
 
17,352.4

 
74.4
 %
 
17,165.7

 
73.7
%
 
16,861.0

 
74.3
%
Residential mortgage-backed securities
 
2,857.9

 
11.5
 %
 
2,789.1

 
11.5
 %
 
2,756.0

 
11.8
 %
 
2,796.5

 
12.0
%
 
2,802.6

 
12.3
%
Commercial mortgage-backed securities
 
1,484.5

 
6.0
 %
 
1,514.5

 
6.2
 %
 
1,518.4

 
6.5
 %
 
1,536.1

 
6.6
%
 
1,552.1

 
6.8
%
Other debt obligations
496.6

 
2.0
 %
 
508.6

 
2.1
 %
 
515.3

 
2.2
 %
 
527.1

 
2.3
%
 
488.1

 
2.2
%
 
 
Total fixed maturities
 
$
24,849.2

 
100.0
 %
 
$
24,329.0

 
100.0
 %
 
$
23,337.7

 
100.0
 %
 
$
23,306.5

 
100.0
%
 
$
22,697.0

 
100.0
%
Effective Duration
 
5.5

 
 
 
5.5

 
 
 
5.5

 
 
 
5.5

 
 
 
5.6

 
 
Weighted-average Investment Yield
 
4.67
%
 
 

 
4.75
%
 
 

 
4.94
%
 
 
 
5.01
%
 
 
 
5.02
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
 
 
 
Jun 30,
2014
 
%
 
Mar 31,
2014
 
%
 
Dec 31,
2013
 
%
 
Sep 30,
2013
 
%
 
Jun 30,
2013
 
%
Average Daily Cash and Cash Equivalent Balances:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits Division
 
$
5.1

 
4.3
 %
 
$
2.7

 
2.2
 %
 
$
4.1

 
4.4
 %
 
$
4.6

 
2.4
%
 
$
4.9

 
2.4
%
Retirement Division:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Annuities
 
82.5

 
69.3
 %
 
126.9

 
101.8
 %
 
119.6

 
128.8
 %
 
134.0

 
70.7
%
 
115.3

 
57.4
%
 
Income Annuities
 
97.7

 
82.0
 %
 
41.9

 
33.6
 %
 
7.4

 
8.0
 %
 
2.6

 
1.4
%
 
23.7

 
11.8
%
Individual Life Division
 
24.8

 
20.8
 %
 
21.4

 
17.2
 %
 
8.3

 
8.9
 %
 
26.3

 
13.9
%
 
15.0

 
7.5
%
Other
 
(91.0
)
 
(76.4
)%
 
(68.3
)
 
(54.8
)%
 
(46.5
)
 
(50.1
)%
 
22.0

 
11.6
%
 
41.9

 
20.9
%
 
 
Total
 
$
119.1

 
100.0
 %
 
$
124.6

 
100.0
 %
 
$
92.9

 
100.0
 %
 
$
189.5

 
100.0
%
 
$
200.8

 
100.0
%

1

Credit quality is based on NAIC (National Association of Insurance Commissioners) designation with presentation of the S&P equivalent credit ratings.


14


Symetra Financial Corporation
2Q 2014 Financial Supplement
Investments Income Statement Data
(In millions)
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepayment-related income: 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Division - Deferred Annuities
 
$
3.3

 
$
10.2

 
$
2.8

 
$
12.6

 
$
6.0

 
$
13.5

 
$
19.3

 
Retirement Division - Income Annuities
 
0.7

 
1.6

 
1.7

 
1.2

 
0.5

 
2.3

 
3.7

 
Individual Life Division
 
1.3

 
1.9

 
—

 
3.6

 
1.6

 
3.2

 
2.7

 
Other
 
0.4

 
(0.2
)
 
0.6

 
1.2

 
0.5

 
0.2

 
0.6

Total
 
$
5.7

 
$
13.5

 
$
5.1

 
$
18.6

 
$
8.6

 
$
19.2

 
$
26.3

Prepayment-related income, net of DAC and DSI amortization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Division - Deferred Annuities
 
$
1.9

 
$
2.1

 
$
1.9

 
$
7.4

 
$
3.3

 
$
4.0

 
$
10.7

 
Retirement Division - Income Annuities
 
0.7

 
1.6

 
1.7

 
1.2

 
0.5

 
2.3

 
3.7

 
Individual Life Division
 
1.3

 
1.8

 
—

 
3.4

 
1.5

 
3.1

 
2.6

 
Other
 
0.4

 
(0.2
)
 
0.6

 
1.2

 
0.5

 
0.2

 
0.6

Total
 
$
4.3

 
$
5.3

 
$
4.2

 
$
13.2

 
$
5.8

 
$
9.6

 
$
17.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Net Realized Gains (Losses):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross gains on sales
 
$
10.8

 
$
8.7

 
$
3.7

 
$
2.4

 
$
3.8

 
$
19.5

 
$
5.6

 
 
Gross losses on sales
 
(0.6
)
 
(1.8
)
 
(2.5
)
 
(7.4
)
 
(1.9
)
 
(2.4
)
 
(10.0
)
 
 
Other-than-temporary impairments
 
(1.4
)
 
(1.1
)
 
(2.9
)
 
(6.2
)
 
(7.2
)
 
(2.5
)
 
(9.2
)
 
 
Other 2
 
(1.2
)
 
(1.2
)
 
1.4

 
0.5

 
(3.7
)
 
(2.4
)
 
(4.4
)
 
Total fixed maturities
 
7.6

 
4.6

 
(0.3
)
 
(10.7
)
 
(9.0
)
 
12.2

 
(18.0
)
 
 
Marketable equity securities, trading 3
 
21.6

 
19.7

 
22.7

 
12.0

 
(1.7
)
 
41.3

 
31.3

 
Other 4
 
(2.7
)
 
(5.0
)
 
1.6

 
(7.0
)
 
(0.8
)
 
(7.7
)
 
1.3

 
DAC/DSI adjustment
 
(1.2
)
 
1.4

 
1.0

 
1.1

 
0.2

 
0.2

 
0.6

 
Net realized gains (losses)
 
$
25.3

 
$
20.7

 
$
25.0

 
$
(4.6
)
 
$
(11.3
)
 
$
46.0

 
$
15.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Tax Credit Investments Impact on Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Historical and estimated future impact
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization related to tax credit investments, net of taxes
 
$
(4.2
)
 
$
(4.3
)
 
$
(3.7
)
 
$
(3.3
)
 
$
(3.1
)
 
$
(8.5
)
 
$
(6.3
)
 
 
Realized losses related to tax credit investments, net of taxes
 
(2.0
)
 
(2.3
)
 
(1.3
)
 
(2.1
)
 
(0.7
)
 
(4.3
)
 
(1.0
)
 
 
Tax credits
 
13.9

 
13.9

 
10.4

 
11.8

 
9.5

 
27.8

 
19.0

 
 
Impact to net income
 
$
7.7

 
$
7.3

 
$
5.4

 
$
6.4

 
$
5.7

 
$
15.0

 
$
11.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrying value of invested asset
 
$
249.8

 
$
257.8

 
$
265.1

 
$
217.2

 
$
202.1

 
$
249.8

 
$
202.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future estimated impact to net income:
 
 
 
 
 
 
 
 
2014
 
$
17.6

 
 
 
 
 
 
 
 
 
 
 
2015
 
24.5

 
 
 
 
 
 
 
 
 
 
 
2016 & beyond
 
43.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
85.3

 
Historical information
 
For the Years Ended
 
 
2013
 
2012
 
2011
 
2010
 
2009
Amortization related to tax credit investments, net of taxes
 
$
(13.3
)
 
$
(13.9
)
 
$
(9.2
)
 
$
(6.3
)
 
$
(5.9
)
Realized losses related to tax credit investments, net of taxes
 
(4.4
)
 
(2.6
)
 
(2.0
)
 
—

 
—

Tax credits
 
41.2

 
33.5

 
17.4

 
10.9

 
9.6

Impact to net income
 
$
23.5

 
$
17.0

 
$
6.2

 
$
4.6

 
$
3.7

1

Prepayment-related income includes make-whole premiums and consent fees on early calls or tenders of fixed maturities, prepayment speed adjustments on structured securities, and prepayment fees on our commercial mortgage loans.
2

Includes net gains (losses) on calls and redemptions, and changes in the fair value of convertible fixed maturities.
3

Marketable equity securities, trading includes net gains (losses) on changes in fair value.
4

Includes net gains (losses) on derivatives not designated for hedge accounting and other instruments.


15


Symetra Financial Corporation
2Q 2014 Financial Supplement
Sales by Segment and Product
(In millions)
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Jun 30,
2014
 
Jun 30,
2013
Benefits Division 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medical stop-loss
 
$
19.7

 
$
45.6

 
$
14.4

 
$
12.0

 
$
16.7

 
$
65.3

 
$
68.6

 
Limited benefit medical
 
1.9

 
11.1

 
3.3

 
2.2

 
1.0

 
13.0

 
2.7

 
Group life & disability income
 
4.5

 
15.2

 
6.4

 
4.8

 
3.6

 
19.7

 
16.5

Total Benefits Division
 
$
26.1

 
$
71.9

 
$
24.1

 
$
19.0

 
$
21.3

 
$
98.0

 
$
87.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Division - Deferred Annuities 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed annuities
 
$
271.9

 
$
264.3

 
$
328.5

 
$
292.1

 
$
121.2

 
$
536.2

 
$
282.5

 
Fixed indexed annuities
 
373.4

 
357.9

 
391.3

 
448.2

 
309.8

 
731.3

 
458.5

 
Variable annuities
 
5.0

 
5.3

 
13.1

 
6.8

 
10.5

 
10.3

 
22.5

Total
 
$
650.3

 
$
627.5

 
$
732.9

 
$
747.1

 
$
441.5

 
$
1,277.8

 
$
763.5

Retirement Division - Income Annuities 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SPIA
 
$
89.0

 
$
87.5

 
$
85.4

 
$
37.1

 
$
42.1

 
$
176.5

 
$
80.5

 
Structured settlements
 
—

 
—

 
—

 
1.8

 
3.4

 
—

 
5.7

Total
 
$
89.0

 
$
87.5

 
$
85.4

 
$
38.9

 
$
45.5

 
$
176.5

 
$
86.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Retirement Division
 
$
739.3

 
$
715.0

 
$
818.3

 
$
786.0

 
$
487.0

 
$
1,454.3

 
$
849.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individual Life Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Term life 1
 
$
1.0

 
$
0.9

 
$
1.0

 
$
0.5

 
$
0.7

 
$
1.9

 
$
1.2

 
Universal life 1
 
7.6

 
6.8

 
8.1

 
3.3

 
2.2

 
14.4

 
3.8

 
Single premium life 3
 
0.5

 
0.2

 
0.3

 
0.1

 
0.1

 
0.7

 
0.3

Individual sales
 
9.1

 
7.9

 
9.4

 
3.9

 
3.0

 
17.0

 
5.3

 
COLI 4
 
—

 
—

 
8.0

 
10.2

 
3.0

 
—

 
26.8

Institutional markets
 
$
—

 
$
—

 
$
8.0

 
$
10.2

 
$
3.0

 
$
—

 
$
26.8


1

Represents annualized first-year premiums net of first year policy lapses.
2

Represents deposits for new policies net of first year policy lapses and/or surrenders.
3

Represents 10% of new deposits net of first year policy lapses and/or surrenders.
4

Represents deposits for new policies.




16


Symetra Financial Corporation
2Q 2014 Financial Supplement
Book Value, Adjusted Book Value and Statutory Book Value per Share
(In millions, except per share amounts)
 
 
 
 
 
As of
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
Book value per common share 1
$
29.58

 
$
27.40

 
$
24.99

 
$
25.58

 
$
25.81

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Financial Measures:
 
 
 
 
 
 
 
 
 
 
 Adjusted book value per common share 2
$
21.04

 
$
20.50

 
$
19.95

 
$
19.47

 
$
19.17

 
 Statutory book value per common share 3
$
19.47

 
$
19.32

 
$
18.49

 
$
18.87

 
$
18.65

 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
 
Total stockholders' equity
$
3,428.6

 
$
3,195.3

 
$
2,941.9

 
$
3,012.8

 
$
3,040.1

AOCI
990.6

 
804.3

 
593.6

 
719.0

 
782.6

Adjusted book value
$
2,438.0

 
$
2,391.0

 
$
2,348.3

 
$
2,293.8

 
$
2,257.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders' equity
$
3,428.6

 
$
3,195.3

 
$
2,941.9

 
$
3,012.8

 
$
3,040.1

Stockholders' equity of non-insurance entities
(360.0
)
 
(344.4
)
 
(381.4
)
 
(319.4
)
 
(301.6
)
Statutory and other adjustments
(1,123.9
)
 
(901.5
)
 
(690.8
)
 
(752.8
)
 
(817.2
)
Asset valuation reserve (AVR)
312.3

 
304.1

 
307.0

 
282.5

 
275.7

Statutory book value
$
2,257.0

 
$
2,253.5

 
$
2,176.7

 
$
2,223.1

 
$
2,197.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
 
Common shares outstanding
115.895

 
116.619

 
117.731

 
117.800

 
117.792

 
 
 
 
For the Three Months Ended
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
Share repurchases:
 
 
 
 
 
 
 
 
 
 
Shares purchased as part of publicly announced plans or programs 4
0.749

 
1.352

 
—

 
—

 
6.644

 
Other shares repurchased 5
0.001

 
0.002

 
—

 
—

 
—

 
Total shares repurchased
0.750

 
1.354

 
—

 
—

 
6.644

 
 Average price paid per share
$
19.66

 
$
19.56

 
$
—

 
$
—

 
$
13.43

 
Total cost of share repurchases
$
14.7

 
$
26.5

 
$
—

 
$
—

 
$
89.2

 
 
 
 
As of
 
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
Tangible book value:
 
 
 
 
 
 
 
 
 
 
Total stockholders' equity
$
3,428.6

 
$
3,195.3

 
$
2,941.9

 
$
3,012.8

 
$
3,040.1

 
 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
Deferred policy acquisition costs
311.2

 
320.1

 
322.5

 
271.7

 
249.6

 
 
 
Goodwill and other
99.4

 
117.7

 
131.5

 
125.8

 
132.0

 
Tangible book value 6
$
3,018.0

 
$
2,757.5

 
$
2,487.9

 
$
2,615.3

 
$
2,658.5


1

Book value per common share is calculated as stockholders’ equity divided by common shares outstanding.
2

Adjusted book value per common share is calculated as adjusted book value divided by common shares outstanding.
3

Statutory book value per common share is calculated based on statutory book value divided by common shares outstanding.
4

As of June 30, 2014, 6.947 shares remained available under the current repurchase authorization.
5

Shares repurchased to satisfy employee income tax withholding.
6

Tangible book value is a non-GAAP financial measure calculated as stockholders’ equity excluding deferred policy acquisition costs, goodwill, intangible assets and certain other non-tangible assets. Stockholders’ equity is the most directly comparable GAAP measure to tangible book value.



17


Symetra Financial Corporation
2Q 2014 Financial Supplement
ROE and Operating ROAE
(In millions)
 
 
 
 
Twelve Months Ended
 
 
 
Jun 30,
2014
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
ROE:
 
 
 
 
 
 
 
 
 
 
Net income for the twelve months ended 1
 
$
260.5

 
$
234.0

 
$
220.7

 
$
187.3

 
$
197.2

Average stockholders' equity 2
 
$
3,123.7

 
$
3,158.9

 
$
3,245.8

 
$
3,385.7

 
$
3,458.8

ROE
 
8.3
%
 
7.4
%
 
6.8
%
 
5.5
%
 
5.7
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating ROAE:
 
 
 
 
 
 
 
 
 
 
Adjusted operating income for the twelve months ended 1
 
$
219.8

 
$
217.2

 
$
200.9

 
$
183.8

 
$
180.9

Average adjusted book value 3
 
$
2,345.7

 
$
2,320.3

 
$
2,293.9

 
$
2,271.6

 
$
2,251.0

Operating ROAE
 
9.4
%
 
9.4
%
 
8.8
%
 
8.1
%
 
8.0
%

Calculation of average stockholders' equity:
The following data can be used to recalculate the average stockholders' equity and average adjusted book value amounts used in the calculation of ROE and operating ROAE.
 
 
 
As of
 
 
2014
 
2013
 
2012
Stockholders' Equity
 
 
 
 
 
 
 
Dec. 31
$
—

 
$
2,941.9

 
$
3,630.1

 
Sep. 30
—

 
3,012.8

 
3,641.2

 
Jun. 30
3,428.6

 
3,040.1

 
3,378.4

 
Mar. 31
3,195.3

 
3,604.2

 
3,154.7

AOCI
 
 
 
 
 
 
 
Dec. 31
$
—

 
$
593.6

 
$
1,371.2

 
Sep. 30
—

 
719.0

 
1,404.3

 
Jun. 30
990.6

 
782.6

 
1,188.0

 
Mar. 31
804.3

 
1,293.1

 
1,000.1

Reconciliation of adjusted operating income:
The following data together with other data found throughout the supplement can be used to recalculate adjusted operating income for the twelve months ended December 31, 2013, September 30, 2013, and June 30, 2013.
 
 
 
 
Three Months Ended
 
 
 
Mar. 31,
2013
 
Dec. 31,
2012
 
Sep. 30
2012
Net income
 
$
66.0

 
$
31.0

 
$
55.2

 
Less: Excluded realized gains (losses) (net of taxes)
 
16.6

 
(1.9
)
 
9.3

Adjusted operating income
 
$
49.4

 
$
32.9

 
$
45.9



1

The twelve months ended information is derived by adding the four most recent quarters of net income or adjusted operating income.
2

Average stockholders’ equity is derived by averaging ending stockholders' equity for the most recent five quarters.
3

Average adjusted book value is derived by averaging ending stockholders' equity less AOCI, for the most recent five quarters.



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