Indiana
|
1-6028
|
35-1140070
|
(State or other jurisdiction
|
(Commission
|
(IRS Employer
|
of incorporation)
|
File Number)
|
Identification No.)
|
[ ]
|
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))
|
(c)
|
Exhibits.
|
Exhibit
Number
|
Description
|
99.1
|
Press release dated February 7, 2012, announcing Lincoln National Corporation’s financial results for the quarter ended December 31, 2011.
|
99.2
|
Lincoln National Corporation Statistical Supplement for the quarter ended December 31, 2011.
|
Exhibit
Number
|
Description
|
99.1
|
Press release dated February 7, 2012, announcing Lincoln National Corporation’s financial results for the quarter ended December 31, 2011.
|
99.2
|
Lincoln National Corporation Statistical Supplement for the quarter ended December 31, 2011.
|
Lincoln Financial Group Reports Fourth Quarter and Full Year 2011 Results
|
For the Quarter Ended
|
For the Year Ended
|
|||||||||||||
($ in millions except per share data)
|
2011
|
2010
|
2011
|
2010
|
||||||||||
Net Income (Loss)
|
$ | (514 | ) | $ | 196 | $ | 294 | $ | 980 | |||||
Net Income (Loss) Available to Common Stockholders
|
(514 | ) | 196 | 290 | 812 | |||||||||
Net Income (Loss) Per Diluted Share Available to Common Stockholders
|
(1.73 | ) | 0.60 | 0.92 | 2.54 | |||||||||
Income (Loss) from Operations
|
303 | 266 | 1,318 | 1,038 | ||||||||||
Income (Loss) from Operations Per Diluted Share Available to Common Stockholders
|
1.00 | 0.82 | 4.17 | 3.13 | ||||||||||
Average Diluted Shares
|
304.4 | 323.4 | 315.0 | 319.2 |
·
|
Consolidated deposits of $5.5 billion
|
·
|
Consolidated net flows of $1.6 billion up 21%
|
·
|
Total account balances of $160 billion
|
·
|
Life Insurance sales of $229 million up 11%
|
·
|
Retirement Plan Services net flows of $219 million
|
·
|
Group Protection sales of $207 million up 33%
|
·
|
Consolidated deposits of $21.6 billion
|
·
|
Variable annuity deposits of $8.7 billion up 6%
|
·
|
Retirement Plan Services net flows of $0.5 billion versus $(0.3) billion in 2010
|
·
|
Life Insurance sales of $0.7 billion up 10%
|
·
|
Group Protection loss ratio of 72.9% versus 76.2% in 2010
|
§
|
A net loss from the sale and impairment of general account investments of $37 million, as compared to a $61 million loss in the prior-year quarter
|
§
|
A $42 million variable annuity net derivatives loss including a $47 million negative non-performance risk factor adjustment due to narrowing credit default spreads
|
·
|
Raised the quarterly common stock dividend 60% to $0.08 per share
|
·
|
Repurchased 10.4 million shares of stock at a cost of $200 million. As a result of cumulative 2011 share repurchases of $575 million, fourth quarter 2011 average diluted share count was down 6% from fourth quarter 2010.
|
·
|
Repaid $250 million of 6.20% Senior Notes that matured on December 15, 2011
|
($ in millions, except per share data)
|
|||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||
December 31,
|
December 31,
|
||||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||
Total Revenues
|
$ | 2,570.2 | $ | 2,661.8 | $ | 10,635.6 | $ | 10,406.5 | |||||
Less:
|
|||||||||||||
Excluded realized gain (loss), pre-tax
|
(145.3 | ) | (119.8 | ) | (387.9 | ) | (146.3 | ) | |||||
Amortization of DFEL associated with benefit ratio unlocking, pre-tax
|
1.0 | 0.5 | (0.4 | ) | (0.1 | ) | |||||||
Amortization of deferred gains arising from reserve changes on business sold through reinsurance, pre-tax
|
0.7 | 0.6 | 2.7 | 2.6 | |||||||||
Total Operating Revenues
|
$ | 2,713.8 | $ | 2,780.5 | $ | 11,021.2 | $ | 10,550.3 | |||||
Net Income (Loss) Available to Common Stockholders - Diluted
|
$ | (513.7 | ) | $ | 195.6 | $ | 289.7 | $ | 811.7 | ||||
Less:
|
|||||||||||||
Preferred stock dividends and accretion of discount (1)
|
- | - | - | (36.7 | ) | ||||||||
Write-off of unamortized discount on preferred stock at redemption (1)
|
- | - | - | (130.6 | ) | ||||||||
Adjustment for deferred units of LNC stock in our non-director deferred compensation plans (2)
|
0.6 | - | (4.1 | ) | (1.3 | ) | |||||||
Net Income (Loss)
|
$ | (514.3 | ) | $ | 195.6 | $ | 293.8 | $ | 980.3 | ||||
Less:
|
|||||||||||||
Excluded realized gain (loss), after-tax
|
(94.4 | ) | (77.8 | ) | (252.1 | ) | (95.1 | ) | |||||
Benefit ratio unlocking, after-tax
|
23.7 | 10.7 | (13.5 | ) | 10.4 | ||||||||
Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance, after-tax
|
0.5 | 0.3 | 1.8 | 1.7 | |||||||||
Gain (loss) on early extinguishment of debt, after tax
|
- | (3.1 | ) | (5.5 | ) | (3.1 | ) | ||||||
Income (loss) from discontinued operations, after-tax
|
- | - | (8.4 | ) | 28.9 | ||||||||
Income (Loss) from Operations
|
$ | 302.6 | $ | 265.5 | $ | 1,318.2 | $ | 1,037.5 | |||||
Earnings (Loss) Per Share (Diluted)
|
|||||||||||||
Income (loss) from operations
|
$ | 1.00 | $ | 0.82 | $ | 4.17 | $ | 3.13 | |||||
Net income (loss)
|
(1.73 | ) | 0.60 | 0.92 | 2.54 | ||||||||
Average Stockholders' Equity
|
|||||||||||||
Average equity, including average AOCI
|
$ | 14,541.4 | $ | 13,181.7 | $ | 13,769.8 | $ | 12,704.1 | |||||
Average AOCI
|
2,455.3 | 1,204.6 | 1,488.9 | 786.2 | |||||||||
Average equity, excluding AOCI
|
12,086.1 | 11,977.1 | 12,281.0 | 11,917.9 | |||||||||
Average goodwill
|
2,646.1 | 3,019.4 | 2,926.1 | 3,015.7 | |||||||||
Average equity, excluding AOCI and goodwill
|
$ | 9,440.0 | $ | 8,957.7 | $ | 9,354.9 | $ | 8,902.2 | |||||
Return on Equity, Excluding AOCI
|
|||||||||||||
Net income (loss) with average equity including goodwill
|
-17.0 | % | 6.5 | % | 2.4 | % | 8.2 | % | |||||
Income (loss) from operations with average equity including goodwill
|
10.0 | % | 8.9 | % | 10.7 | % | 8.7 | % | |||||
Income (loss) from operations with average equity excluding goodwill
|
12.8 | % | 11.9 | % | 14.1 | % | 11.7 | % |
(1) When arriving at income (loss) or income (loss) from operations available to common stockholders, which is the numerator used in earnings (loss) per share, we have included the Series B preferred stock dividends and accretion of discount, but have excluded the acceleration of the discount as a result of redemption prior to five years from date of issuance.
|
|||||||
(2) The numerator used in the calculation of our diluted EPS is adjusted to remove the mark-to-market adjustment for deferred units of LNC stock in our non-director deferred compensation plans if the effect of equity classification would be more dilutive to our diluted EPS.
|
As of December 31,
|
||||||
2011
|
2010
|
|||||
Book value per share, including AOCI
|
$ | 48.59 | $ | 40.54 | ||
Per share impact of AOCI
|
8.40 | 2.37 | ||||
Book value per share, excluding AOCI
|
$ | 40.19 | $ | 38.17 |
($ in millions, except per share data)
|
||||||
For the Three Months Ended
|
||||||
December 31,
|
||||||
2011
|
2010
|
|||||
Revenues
|
$ | 2,570.2 | $ | 2,661.8 | ||
Net Income (Loss)
|
$ | (514.3 | ) | $ | 195.6 | |
Preferred stock dividends and accretion of discount
|
- | - | ||||
Write-off of unamortized discount on preferred stock at redemption
|
- | - | ||||
Adjustment for deferred units of LNC stock in our non-director deferred compensation plans (1)
|
0.6 | - | ||||
Net Income (Loss) Available to Common Stockholders - Diluted
|
$ | (513.7 | ) | $ | 195.6 | |
Earnings (Loss) Per Common Share - Basic
|
$ | (1.73 | ) | $ | 0.62 | |
Earnings (Loss) Per Common Share - Diluted
|
(1.73 | ) | 0.60 | |||
Average Shares - Basic
|
297,894,635 | 316,360,151 | ||||
Average Shares - Diluted
|
304,435,123 | 323,378,708 |
For the Years Ended
|
||||||
December 31,
|
||||||
2011 | 2010 | |||||
Revenues
|
$ | 10,635.6 | $ | 10,406.5 | ||
Net Income (Loss)
|
$ | 293.8 | $ | 980.3 | ||
Preferred stock dividends and accretion of discount
|
- | (36.7 | ) | |||
Write-off of unamortized discount on preferred stock at redemption
|
- | (130.6 | ) | |||
Adjustment for deferred units of LNC stock in our non-director deferred compensation plans (1)
|
(4.1 | ) | (1.3 | ) | ||
Net Income (Loss) Available to Common Stockholders - Diluted
|
$ | 289.7 | $ | 811.7 | ||
Earnings (Loss) Per Common Share - Basic
|
$ | 0.96 | $ | 2.62 | ||
Earnings (Loss) Per Common Share - Diluted (2)
|
0.92 | 2.54 | ||||
Average Shares - Basic
|
307,216,181 | 310,005,264 | ||||
Average Shares - Diluted
|
314,950,051 | 319,213,748 |
(1) The numerator used in the calculation of our diluted EPS is adjusted to remove the mark-to-market adjustment for
|
deferred units of LNC stock in our non-director deferred compensation plans if the effect of equity classification would
|
be more dilutive to our diluted EPS.
|
(2) For any period where a loss from continuing operations is experienced, shares used in the diluted EPS calculation
|
|||
represent basic shares since using diluted shares would be anti-dilutive to the calculation. In these periods we would
|
|||
also exclude the adjustment discussed in footnote (1) above when arriving at EPS.
|
·
|
Deterioration in general economic and business conditions that may affect account values, investment results, guaranteed benefit liabilities, premium levels, claims experience and the level of pension benefit costs, funding and investment results;
|
·
|
Adverse global capital and credit market conditions could affect our ability to raise capital, if necessary, and may cause us to realize impairments on investments and certain intangible assets, including goodwill and the valuation allowance against deferred tax assets, which may reduce future earnings and/or affect our financial condition and ability to raise additional capital or refinance existing debt as it matures;
|
·
|
Because of our holding company structure, the inability of our subsidiaries to pay dividends to the holding company in sufficient amounts could harm the holding Company’s ability to meet its obligations;
|
·
|
Legislative, regulatory or tax changes, both domestic and foreign, that affect the cost of, or demand for, our subsidiaries' products, the required amount of reserves and/or surplus, or otherwise affect our ability to conduct business, including changes to statutory reserve requirements related to secondary guarantees under universal life such as a change to reserve calculations under Actuarial Guideline 38, or “AG38” (also known as “The Application of the Valuation of Life Insurance Policies Model Regulation) and variable annuity products such as Actuarial Guideline 43, or "AG43" (also known as Commissioners Annuity Reserve Valuation Method for Variable Annuities or "VACARVM"); restrictions on revenue sharing and 12b-1 payments; and the potential for U.S. Federal tax reform;
|
·
|
Uncertainty about the effect of rules and regulations to be promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act on us and the economy and financial services sector in particular;
|
·
|
The initiation of legal or regulatory proceedings against us, and the outcome of any legal or regulatory proceedings, such as: adverse actions related to present or past business practices common in businesses in which we compete; adverse decisions in significant actions including, but not limited to, actions brought by federal and state authorities and class action cases; new decisions that result in changes in law; and unexpected trial court rulings;
|
·
|
Changes in or sustained low interest rates causing a reduction in investment income, the interest margins of our businesses, estimated gross profits and demand for our products;
|
·
|
A decline in the equity markets causing a reduction in the sales of our subsidiaries' products, a reduction of asset-based fees that our subsidiaries charge on various investment and insurance products, an acceleration of amortization of deferred acquisition costs, or "DAC," value of business acquired, or "VOBA," deferred sales inducements, or "DSI," and deferred front end sales loads, or "DFEL," and an increase in liabilities related to guaranteed benefit features of our subsidiaries' variable annuity products;
|
·
|
Ineffectiveness of our risk management policies and procedures, including various hedging strategies used to offset the effect of changes in the value of liabilities due to changes in the level and volatility of the equity markets and interest rates;
|
·
|
A deviation in actual experience regarding future persistency, mortality, morbidity, interest rates or equity market returns from the assumptions used in pricing our subsidiaries' products, in establishing related insurance reserves and in the amortization of DAC, VOBA, DSI and DFEL, which may reduce future earnings;
|
·
|
Changes in accounting principles generally accepted in the United States, or "GAAP," including moving to International Financial Reporting Standards that may result in unanticipated changes to our net income;
|
·
|
Lowering of one or more of our debt ratings issued by nationally recognized statistical rating organizations and the adverse effect such action may have on our ability to raise capital and on our liquidity and financial condition;
|
·
|
Lowering of one or more of the insurer financial strength ratings of our insurance subsidiaries and the adverse effect such action may have on the premium writings, policy retention, profitability of our insurance subsidiaries and liquidity;
|
·
|
Significant credit, accounting, fraud, corporate governance or other issues that may adversely affect the value of certain investments in our portfolios as well as counterparties to which we are exposed to credit risk requiring that we realize losses on investments;
|
·
|
The effect of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including our ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;
|
·
|
The adequacy and collectibility of reinsurance that we have purchased;
|
·
|
Acts of terrorism, a pandemic, war or other man-made and natural catastrophes that may adversely affect our businesses and the cost and availability of reinsurance;
|
·
|
Competitive conditions, including pricing pressures, new product offerings and the emergence of new competitors, that may affect the level of premiums and fees that our subsidiaries can charge for their products;
|
·
|
The unknown effect on our subsidiaries' businesses resulting from changes in the demographics of their client base, as aging baby-boomers move from the asset-accumulation stage to the asset-distribution stage of life; and
|
·
|
Loss of key management, financial planners or wholesalers.
|
Lincoln Financial Group
|
|
Table of Contents
|
|
Fourth Quarter 2011
|
|
Lincoln Financial Group Analyst Coverage
|
i
|
Notes
|
ii-iii
|
Financial Highlights
|
1 - 3
|
Consolidated Operating Expense Detail
|
4
|
Selected Financial Results Summary
|
5
|
Details Underlying Realized Gain (Loss), After-DAC and Benefit Ratio Unlocking
|
6
|
Consolidated Statements of Income (Loss)
|
7
|
Consolidated Roll Forwards of DAC, VOBA, DSI and DFEL
|
8
|
Consolidating Statements of Income (Loss) from Operations - Current Year - Quarter
|
9
|
Consolidating Statements of Income (Loss) from Operations - Prior Year - Quarter
|
10
|
Consolidating Statements of Income (Loss) from Operations - Current Year - Year-to-Date
|
11
|
Consolidating Statements of Income (Loss) from Operations - Prior Year - Year-to-Date
|
12
|
Consolidated Balance Sheets and Selected Share Data
|
13
|
Balance Sheet Data - Segment Highlights
|
14
|
Annuities:
|
|
Income (Loss) from Operations and Operational Data
|
15
|
DAC, VOBA, DSI and DFEL Roll Forwards
|
16
|
Account Value Roll Forwards and Information
|
17
|
Account Value Information
|
18
|
Interest Rate Spread Information, GLB Expense Assessments, GLB Attributed Fee
|
|
and GLB Account Values by Type
|
19
|
Retirement Plan Services (formerly known as the "Defined Contribution Segment"):
|
|
Income (Loss) from Operations, Operational Data and DAC, VOBA and DSI Roll Forwards
|
20
|
Account Value Roll Forwards and Information
|
21
|
Account Value Roll Forwards by Product
|
22
|
Account Value and Interest Rate Spread Information
|
23
|
Life Insurance:
|
|
Income (Loss) from Operations, Operational Data and DAC, VOBA and DFEL Roll Forwards
|
24
|
Additional Operational Data
|
25
|
Account Value Roll Forwards
|
26
|
Group Protection:
|
|
Income (Loss) from Operations and Operational Data
|
27
|
Other Operations
|
28
|
Discontinued Operations
|
28
|
Consolidated Deposits, Net Flows and Account Balances
|
29
|
Consolidated Investment Data
|
30
|
12/31/2011
|
i
|
||
Lincoln Financial Group Analyst Coverage
|
|||
Fourth Quarter 2011
|
|||
Firm
|
Analyst
|
Phone Number
|
|
Barclays Capital
|
Jay Gelb
|
212-526-1561
|
|
Bank of America - Merrill Lynch |
Ed Spehar
|
212-449-4245
|
|
Credit Suisse
|
Tom Gallagher
|
212-538-2010
|
|
Dowling and Partners
|
Ryan Krueger
|
860-676-8600
|
|
Evercore Partners
|
Mark Finkelstein
|
312-445-6440
|
|
FBR Capital Markets
|
Randy Binner
|
703-312-1890
|
|
Goldman Sachs and Company
|
Christopher Giovanni
|
212-357-3560
|
|
JP Morgan Securities
|
Jimmy Bhullar
|
212-622-6397
|
|
Keefe, Bruyette and Woods
|
Jeff Schuman
|
860-722-5902
|
|
Langen McAlenney
|
Bob Glasspiegel
|
860-724-1203
|
|
Morgan Stanley
|
Nigel Dally
|
212-761-4132
|
|
Raymond James and Associates
|
Steven Schwartz
|
312-612-7686
|
|
RBC Capital
|
Eric Berg
|
212-618-7593
|
|
Sandler O'Neil and Partners
|
Edward Shields
|
312-281-3487
|
|
Sanford C. Bernstein & Co.
|
Suneet Kamath
|
212-756-4587
|
|
Scotia Capital
|
Joanne Smith
|
212-225-5071
|
|
Sterne, Agee and Leach, Inc.
|
John Nadel
|
212-338-4717
|
|
UBS
|
Andrew Kligerman
|
212-713-2492
|
|
Wells Fargo Securities
|
John Hall
|
212-214-8032
|
|
Investor Inquiries May Be Directed To
|
|||
Jim Sjoreen, Senior Vice President, Investor Relations
|
|||
Email: Jim.Sjoreen@lfg.com
|
|||
Voice: (484) 583-1420
|
|||
Fax: (484) 583-3962
|
|||
Notes
|
|||
This list is provided for informational purposes only. Lincoln Financial Group does not endorse the analyses, conclusions, or recommendations contained in any report issued by these or any other analysts.
|
|||
Lincoln Financial Group's Statistical Report will be available immediately after the release of earnings for each quarter through our Investor Relations website: www.LincolnFinancial.com/investor
|
12/31/2011
|
ii
|
|||
NOTES
|
||||
Definitions and Presentation | ||||
"Income (loss) from operations," "operating revenues" and "return on capital" are non-GAAP financial measures and do not replace GAAP
|
||||
revenues, net income (loss) and return on stockholders' equity. Detailed reconciliations of these non-GAAP financial measures to the most directly
|
||||
comparable GAAP financial measure are included in this statistical supplement.
|
||||
•
|
We exclude the after-tax effects of the following items from GAAP net income (loss) to arrive at income (loss) from operations:
|
|||
•
|
Realized gains and losses associated with the following ("excluded realized gain (loss)"):
|
|||
•
|
Sale or disposal of securities;
|
|||
•
|
Impairments of securities;
|
|||
•
|
Change in the fair value of derivative investments, embedded derivatives within certain reinsurance arrangements and our trading securities;
|
|||
•
|
Change in the fair value of the derivatives we own to hedge our guaranteed death benefit ("GDB") riders within our variable annuities, which
|
|||
is referred to as "GDB derivatives results;"
|
||||
•
|
Change in the fair value of the embedded derivatives of our guaranteed living benefit (“GLB”) riders within our variable annuities accounted
|
|||
for under the Derivatives and Hedging and the Fair Value Measurements and Disclosures Topics of the Financial Accounting Standards Board
|
||||
("FASB") Accounting Standards Codification ("ASC") (“embedded derivative reserves”), net of the change in the fair value of the derivatives
|
||||
we own to hedge the changes in the embedded derivative reserves, the net of which is referred to as “GLB net derivative results;” and
|
||||
•
|
Changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract
|
|||
holder index allocations applicable to future reset periods for our indexed annuity products accounted for under the Derivatives and Hedging
|
||||
and the Fair Value Measurements and Disclosures Topics of the FASB ASC (“indexed annuity forward-starting option”).
|
||||
•
|
Change in reserves accounted for under the Financial Services - Insurance - Claim Costs and Liabilities for Future Policy Benefits Subtopic of
|
|||
the FASB ASC resulting from benefit ratio unlocking on our GDB and GLB riders ("benefit ratio unlocking");
|
||||
•
|
Income (loss) from the initial adoption of new accounting standards;
|
|||
•
|
Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance;
|
|||
•
|
Gain (loss) on early extinguishment of debt;
|
|||
•
|
Losses from the impairment of intangible assets; and
|
|||
•
|
Income (loss) from discontinued operations.
|
|||
Income (loss) from operations available to common stockholders is net income (loss) available to common stockholders (used in the calculation of
|
||||
earnings (loss) per share) in accordance with GAAP, excluding the after-tax effects of the items above and the acceleration of our Series B preferred
|
||||
stock discount as a result of redemption prior to five years from the date of issuance.
|
||||
•
|
Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable:
|
|||
•
|
Excluded realized gain (loss);
|
|||
•
|
Amortization of deferred front-end loads ("DFEL") arising from changes in GDB and GLB benefit ratio unlocking;
|
|||
•
|
Amortization of deferred gains arising from the reserve changes on business sold through reinsurance; and
|
|||
•
|
Revenue adjustments from the initial adoption of new accounting standards.
|
|||
•
|
Return on equity measures how efficiently we generate profits from the resources provided by our net assets. Return on equity is calculated
|
|||
by dividing annualized net income (loss) by average equity, excluding accumulated other comprehensive income (loss) ("AOCI"). Management
|
||||
evaluates return on equity by both including and excluding average goodwill within average equity.
|
||||
•
|
Return on capital measures the effectiveness of our use of total capital, which includes equity (excluding accumulated other
|
|||
comprehensive income), debt, capital securities and junior subordinated debentures issued to affiliated trusts. Return on capital is
|
||||
calculated by dividing annualized income (loss) from operations (after adding back interest expense) by average capital. The difference
|
||||
between return on capital and return on stockholders' equity represents the effect of leveraging on our consolidated results.
|
||||
Income (loss) from operations, operating revenues, return on equity (including and excluding average goodwill within average equity), excluding AOCI,
|
||||
using annualized income (loss) from operations and return on capital are financial measures we use to evaluate and assess our results. Our management
|
||||
and Board of Directors believe that these performance measures explain the results of our ongoing businesses in a manner that allows for a better
|
||||
understanding of the underlying trends in our current business because the excluded items are unpredictable and not necessarily indicative of current
|
||||
operating fundamentals or future performance of the business segments, and, in most instances, decisions regarding these items do not necessarily relate
|
||||
to the operations of the individual segments. In addition, we believe that our definitions of operating revenues and income (loss) from operations
|
||||
will provide investors with a more valuable measure of our performance because it better reveals trends in our business.
|
||||
•
|
Certain operating and statistical measures are included in this report to provide supplemental data regarding the performance of our
|
|||
current business. These measures include deposits, sales, net flows, first-year premiums, in force and spreads.
|
||||
•
|
Sales as reported consist of the following:
|
|||
•
|
Universal life ("UL") (excluding linked-benefit products) and variable universal life ("VUL"), including corporate-owned life
|
|||
insurance ("COLI") and bank-owned life insurance ("BOLI") - first year commissionable premiums plus 5% of excess premiums
|
||||
received, including an adjustment for internal replacements at approximately 50% of target;
|
||||
•
|
Whole life and term - 100% of first year paid premiums;
|
|||
•
|
Linked-benefit - 15% of premium deposits;
|
|||
•
|
Annuities - deposits from new and existing customers; and
|
|||
•
|
Group Protection - annualized first year premiums from new policies;
|
|||
Our roll forwards of deferred acquisition costs ("DAC") and value of business acquired ("VOBA"), deferred sales inducements ("DSI") and DFEL
|
||||
disclose the net impact of prospective and retrospective unlocking on amortization for these items. This information helps explain a
|
||||
source of volatility in amortization.
|
iii
|
|||
•
|
Prospective unlocking - In the third quarter of each year, we review and update our assumptions used in projecting our future estimated
|
||
gross profits ("EGPs") used to amortize DAC, VOBA, DSI, DFEL and the calculations of embedded derivatives and reserves for
|
|||
annuity and life insurance products with certain guarantees. We may also have prospective unlocking if we experience long-term
|
|||
or significant deviations from expected equity market returns requiring a change to best estimate projections of EGPs and reversion
|
|||
to the mean ("RTM") prospective unlocking of DAC, VOBA, DSI, DFEL and other contract holder funds. We may also have prospective
|
|||
unlocking in other quarters as we become aware of information that warrants updating prospective assumptions outside of our annual
|
|||
comprehensive review. These updates to assumptions result in unlocking that represent an increase or decrease to our carrying value of DAC,
|
|||
VOBA, DSI and DFEL based upon our updated view of future EGPs. The various assumptions that are reviewed include investment margins,
|
|||
mortality, retention and rider utilization. In addition, in the third quarter of each year during our annual prospective unlocking review, we may
|
|||
identify and implement actuarial modeling refinements which can result in prospective and retrospective unlocking impacts that impact DAC,
|
|||
VOBA, DSI, DFEL and embedded derivatives and reserves for annuity and life products with living and death benefit guarantee reserves.
|
|||
•
|
Retrospective unlocking - On a quarterly basis, we “true-up” our models for actual gross profits and in-force experience for the period.
|
||
To the extent that actual experience differs from previously expected, a positive or negative retrospective adjustment to the
|
|||
amortization of DAC, VOBA, DSI and DFEL is recorded. This update to the models may generate a change in the amortization rate
|
|||
which results in a catch-up to the cumulative amortization, by recalculating the DAC, VOBA, DSI and DFEL balances assuming that
|
|||
the revised amortization rate had been used since issue.
|
|||
Book value per share excluding AOCI is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a) stockholders' equity
|
|||
excluding AOCI , by (b) common shares outstanding, assuming conversion of Series A preferred shares. We provide book value per share excluding
|
|||
AOCI to enable investors to analyze the amount of our net worth that is attributable primarily to our business operations. We believe book value per
|
|||
share excluding AOCI is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily
|
|||
based on changes in interest rates. Book value per share is the most directly comparable GAAP measure.
|
|||
Pre-tax operating margin is calculated as income (loss) from operations before federal income taxes divided by operating revenues. After-tax operating
|
|||
margin is calculated as income (loss) from operations divided by operating revenues.
|
|||
We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently
|
|||
in our financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure.
|
|||
Effective April 30, 2010, we amended our non-director deferred compensation plans to allow participants the option to diversify from LNC stock to
|
|||
other investment alternatives and to be settled in shares or cash at the participant’s discretion. As a result of the amendment, we reclassified the cost
|
|||
basis of deferred units of LNC stock from common stock to other liabilities on our Consolidated Balance Sheet. Consequently changes in the value of
|
|||
our stock are recorded in underwriting, acquisition, insurance and other expenses on our Consolidated Statement of Income (Loss). When calculating
|
|||
our weighted-average dilutive shares, we presume the investment option will be settled in cash and exclude the shares from our calculation, unless the
|
|||
effect of assuming it will be settled in shares ("equity classification") would be more dilutive to our diluted EPS. The numerator used in the calculation
|
|||
of our diluted EPS is adjusted to remove the mark-to-market adjustment for deferred units of LNC stock in our non-director deferred compensation
|
|||
plans if the effect of equity classification would be more dilutive to our diluted EPS.
|
|||
Effective November 9, 2011, we amended our non-employee directors' deferred compensation plans to allow participants the option to diversify from
|
|||
LNC stock to other investment alternatives and to be settled in shares or cash at the participant’s discretion. As a result of the amendment, the
|
|||
non-employee directors' deferred compensation plans now receive the same treatment discussed above.
|
|||
Throughout the document, "after-DAC" refers to the associated amortization expense of DAC, VOBA, DSI and DFEL and changes in other contract
|
|||
holder funds and funds withheld reinsurance liabilities.
|
|||
Reclassifications
|
|||
In addition to the items discussed above, certain amounts reported in prior periods have been reclassed to the presentation adopted in the current period.
|
|||
These reclassifications had no effect on net income, income from operations or stockholders' equity in the prior period.
|
12/31/2011
|
PAGE 1 | |||||||||||||||||||||||||
Financial Highlights
|
||||||||||||||||||||||||||
Unaudited (in millions, except per share data)
|
||||||||||||||||||||||||||
For the Three Months Ended December 31,
|
For the Years Ended December 31, | |||||||||||||||||||||||||
Change
|
Change
|
|||||||||||||||||||||||||
2011
|
2010
|
Amount
|
%
|
2011
|
2010
|
Amount
|
%
|
|||||||||||||||||||
Income (Loss) from Operations - By Segment
|
||||||||||||||||||||||||||
Annuities
|
$ | 133.5 | $ | 123.2 | $ | 10.3 | 8.4 | % | $ | 592.5 | $ | 484.4 | $ | 108.1 | 22.3 | % | ||||||||||
Retirement Plan Services
|
35.4 | 32.5 | 2.9 | 8.9 | % | 166.9 | 154.3 | 12.6 | 8.2 | % | ||||||||||||||||
Life Insurance
|
154.0 | 165.5 | (11.5 | ) | -6.9 | % | 604.3 | 513.3 | 91.0 | 17.7 | % | |||||||||||||||
Group Protection
|
22.5 | 18.0 | 4.5 | 25.0 | % | 100.8 | 71.6 | 29.2 | 40.8 | % | ||||||||||||||||
Other Operations
|
(42.8 | ) | (73.7 | ) | 30.9 | 41.9 | % | (146.3 | ) | (186.1 | ) | 39.8 | 21.4 | % | ||||||||||||
Income (Loss) from Operations (1)
|
302.6 | 265.5 | 37.1 | 14.0 | % | 1,318.2 | 1,037.5 | 280.7 | 27.1 | % | ||||||||||||||||
Excluded realized gain (loss), after-tax (2) (3)
|
(94.4 | ) | (77.8 | ) | (16.6 | ) | -21.3 | % | (252.1 | ) | (95.1 | ) | (157.0 | ) |
NM
|
|||||||||||
Benefit ratio unlocking, after-tax (2) (3)
|
23.7 | 10.7 | 13.0 | 121.5 | % | (13.5 | ) | 10.4 | (23.9 | ) |
NM
|
|||||||||||||||
Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance, after-tax (3)
|
0.5 | 0.3 | 0.2 | 67 | % | 1.8 | 1.7 | 0.1 | 5.9 | % | ||||||||||||||||
Gain (loss) on early extinguishment of debt, after-tax (3)
|
- | (3.1 | ) | 3.1 | 100.0 | % | (5.5 | ) | (3.1 | ) | (2.4 | ) | -77.4 | % | ||||||||||||
Impairment of intangibles, after-tax (3)
|
(746.7 | ) | - | (746.7 | ) |
NM
|
(746.7 | ) | - | (746.7 | ) |
NM
|
||||||||||||||
Income (loss) from discontinued operations, after-tax (4)
|
- | - | - |
NM
|
(8.4 | ) | 28.9 | (37.3 | ) |
NM
|
||||||||||||||||
Net Income (Loss) | (514.3 | ) | 195.6 | (709.9 | ) |
NM
|
293.8 | 980.3 | (686.5 | ) | -70.0 | % | ||||||||||||||
Preferred stock dividends and accretion of discount
|
- | - | - |
NM
|
- | (36.7 | ) | 36.7 | 100.0 | % | ||||||||||||||||
Write-off of unamortized discount on preferred stock at liquidation
|
- | - | - |
NM
|
- | (130.6 | ) | 130.6 | 100.0 | % | ||||||||||||||||
Adjustment for deferred units of LNC stock in our non-director deferred compensation plans (5)
|
0.6 | - | 0.6 |
NM
|
(4.1 | ) | (1.3 | ) | (2.8 | ) |
NM
|
|||||||||||||||
Net Income (Loss) Available to Common Stockholders - Diluted | $ | (513.7 | ) | $ | 195.6 | $ | (709.3 | ) |
NM
|
$ | 289.7 | $ | 811.7 | $ | (522.0 | ) | -64.3 | % | ||||||||
Earnings Per Common Share - Diluted
|
||||||||||||||||||||||||||
Income (loss) from operations (1) (5) (6)
|
$ | 1.00 | $ | 0.82 | $ | 0.18 | 22.0 | % | $ | 4.17 | $ | 3.13 | $ | 1.04 | 33.2 | % | ||||||||||
Excluded realized gain (loss), after-tax (2) (3)
|
(0.32 | ) | (0.24 | ) | (0.08 | ) | -33.3 | % | (0.80 | ) | (0.30 | ) | (0.50 | ) |
NM
|
|||||||||||
Benefit ratio unlocking, after-tax (2) (3)
|
0.08 | 0.03 | 0.05 | 166.7 | % | (0.04 | ) | 0.03 | (0.07 | ) |
NM
|
|||||||||||||||
Income from reserve changes (net of related amortization) on business sold through reinsurance, after-tax (3)
|
- | - | - |
NM
|
0.01 | 0.01 | - | - | ||||||||||||||||||
Gain (loss) on early extinguishment of debt, after-tax (3)
|
- | (0.01 | ) | 0.01 | 100.0 | % | (0.02 | ) | (0.01 | ) | (0.01 | ) | -100.0 | % | ||||||||||||
Impairment of intangibles, after-tax (3)
|
(2.51 | ) | - | (2.51 | ) |
NM
|
(2.37 | ) | - | (2.37 | ) |
NM
|
||||||||||||||
Write-off of unamortized discount on preferred stock at liquidation
|
- | - | - |
NM
|
- | (0.41 | ) | 0.41 | 100.0 | % | ||||||||||||||||
Income (loss) from discontinued operations, after-tax (4)
|
- | - | - |
NM
|
(0.03 | ) | 0.09 | (0.12 | ) |
NM
|
||||||||||||||||
Adjustment attributable to using different average diluted shares for income from operations as compared to net income | 0.02 | - | 0.03 |
NM
|
- | - | - |
NM
|
||||||||||||||||||
Net Income (Loss) (5) (6) | $ | (1.73 | ) | $ | 0.60 | $ | (2.32 | ) |
NM
|
$ | 0.92 | $ | 2.54 | $ | (1.62 | ) | -63.8 | % | ||||||||
Operating Revenues - By Segment
|
||||||||||||||||||||||||||
Annuities
|
$ | 690.3 | $ | 719.9 | $ | (29.6 | ) | -4.1 | % | $ | 2,865.3 | $ | 2,654.7 | $ | 210.6 | 7.9 | % | |||||||||
Retirement Plan Services
|
246.3 | 257.3 | (11.0 | ) | -4.3 | % | 1,017.1 | 987.7 | 29.4 | 3.0 | % | |||||||||||||||
Life Insurance
|
1,186.8 | 1,217.4 | (30.6 | ) | -2.5 | % | 4,738.8 | 4,589.6 | 149.2 | 3.3 | % | |||||||||||||||
Group Protection
|
481.0 | 464.3 | 16.7 | 3.6 | % | 1,938.9 | 1,831.1 | 107.8 | 5.9 | % | ||||||||||||||||
Other Operations
|
109.4 | 121.6 | (12.2 | ) | -10.0 | % | 461.1 | 487.2 | (26.1 | ) | -5.4 | % | ||||||||||||||
Total Operating Revenues
|
2,713.8 | 2,780.5 | (66.7 | ) | -2.4 | % | 11,021.2 | 10,550.3 | 470.9 | 4.5 | % | |||||||||||||||
Excluded realized gain (loss), pre-tax (2)
|
(145.3 | ) | (119.8 | ) | (25.5 | ) | -21.3 | % | (387.9 | ) | (146.3 | ) | (241.6 | ) |
NM
|
|||||||||||
Amortization income of DFEL associated with benefit ratio unlocking, pre-tax | 1.0 | 0.5 | 0.5 | 100.0 | % | (0.4 | ) | (0.1 | ) | (0.3 | ) |
NM
|
||||||||||||||
Amortization of deferred gains arising from reserve changes on business sold through reinsurance, pre-tax | 0.7 | 0.6 | 0.1 | 16.7 | % | 2.7 | 2.6 | 0.1 | 3.8 | % | ||||||||||||||||
Total Revenues | $ | 2,570.2 | $ | 2,661.8 | $ | (91.6 | ) | -3.4 | % | $ | 10,635.6 | $ | 10,406.5 | $ | 229.1 | 2.2 | % | |||||||||
(1)
|
Income (loss) from operations includes restructuring charges. See page 5 for detail.
|
|||||||||||||||||||||||||
(2)
|
See page 6 for detail.
|
|||||||||||||||||||||||||
(3)
|
We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our
|
|||||||||||||||||||||||||
financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure.
|
||||||||||||||||||||||||||
(4)
|
Includes discontinued operations and the gain (loss) on disposal. See Discontinued Operations on page 28 for details.
|
|||||||||||||||||||||||||
(5)
|
The numerator used in the calculation of our diluted EPS is adjusted to remove the mark-to-market adjustment for deferred units of LNC stock in our non-director
|
|||||||||||||||||||||||||
deferred compensation plans if the effect of equity classification would be more dilutive to our diluted EPS.
|
||||||||||||||||||||||||||
(6)
|
For any period where a loss from continuing operations is experienced, shares used in the diluted EPS calculation represent basic shares since using diluted
|
|||||||||||||||||||||||||
shares would be anti-dilutive to the calculation. In these periods we would also exclude the adjustment discussed in footnote (5) above when arriving at EPS.
|
12/31/2011
|
PAGE 2 | |||||||||||||||||||||||||
Financial Highlights (Continued)
|
||||||||||||||||||||||||||
Unaudited (in billions)
|
||||||||||||||||||||||||||
For the Three Months Ended December 31,
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||
Change
|
Change
|
|||||||||||||||||||||||||
2011
|
2010
|
Amount
|
%
|
2011
|
2010
|
Amount
|
%
|
|||||||||||||||||||
Annuities
|
||||||||||||||||||||||||||
Gross deposits
|
$ | 2.375 | $ | 2.590 | $ | (0.215 | ) | -8.3 | % | $ | 10.650 | $ | 10.667 | $ | (0.017 | ) | -0.2 | % | ||||||||
Net flows
|
0.345 | 0.543 | (0.198 | ) | -36.5 | % | 2.191 | 3.555 | (1.364 | ) | -38.4 | % | ||||||||||||||
Account values (gross)
|
86.436 | 85.810 | 0.626 | 0.7 | % | 86.436 | 85.810 | 0.626 | 0.7 | % | ||||||||||||||||
Account values (net of reinsurance)
|
85.534 | 84.848 | 0.686 | 0.8 | % | 85.534 | 84.848 | 0.686 | 0.8 | % | ||||||||||||||||
Retirement Plan Services
|
||||||||||||||||||||||||||
Gross deposits (1)
|
$ | 1.570 | $ | 1.358 | $ | 0.212 | 15.6 | % | $ | 5.566 | $ | 5.301 | $ | 0.265 | 5.0 | % | ||||||||||
Net flows
|
0.219 | (0.304 | ) | 0.523 | 172.0 | % | 0.504 | (0.291 | ) | 0.795 | 273.2 | % | ||||||||||||||
Account values - annuities
|
26.497 | 26.706 | (0.209 | ) | -0.8 | % | 26.497 | 26.706 | (0.209 | ) | -0.8 | % | ||||||||||||||
Alliance and Smart Future mutual funds
|
12.636 | 12.118 | 0.518 | 4.3 | % | 12.636 | 12.118 | 0.518 | 4.3 | % | ||||||||||||||||
Total annuities and mutual fund account values
|
39.133 | 38.824 | 0.309 | 0.8 | % | 39.133 | 38.824 | 0.309 | 0.8 | % | ||||||||||||||||
Life Insurance
|
||||||||||||||||||||||||||
Sales (in millions)
|
$ | 228.8 | $ | 205.8 | $ | 23.0 | 11.2 | % | $ | 699.6 | $ | 636.6 | $ | 63.0 | 9.9 | % | ||||||||||
Life insurance in force
|
579.831 | 562.991 | 16.840 | 3.0 | % | 579.831 | 562.991 | 16.840 | 3.0 | % | ||||||||||||||||
Gross deposits
|
1.506 | 1.564 | (0.058 | ) | -3.7 | % | 5.393 | 4.934 | 0.459 | 9.3 | % | |||||||||||||||
Net flows
|
1.031 | 1.080 | (0.049 | ) | -4.5 | % | 3.683 | 3.057 | 0.626 | 20.5 | % | |||||||||||||||
Account values (net of reinsurance)
|
35.278 | 33.585 | 1.693 | 5.0 | % | 35.278 | 33.585 | 1.693 | 5.0 | % | ||||||||||||||||
Group Protection
|
||||||||||||||||||||||||||
Annualized sales (in millions)
|
$ | 207.4 | $ | 156.0 | $ | 51.4 | 32.9 | % | $ | 394.6 | $ | 352.7 | $ | 41.9 | 11.9 | % | ||||||||||
Loss ratio (2)
|
72.2 | % | 75.5 | % |
NM
|
NM
|
72.9 | % | 76.2 | % |
NM
|
NM
|
||||||||||||||
Consolidated
|
||||||||||||||||||||||||||
Total deposits
|
$ | 5.451 | $ | 5.512 | $ | (0.061 | ) | -1.1 | % | $ | 21.609 | $ | 20.902 | $ | 0.707 | 3.4 | % | |||||||||
Total account balances
|
159.945 | 157.257 | 2.688 | 1.7 | % | 159.945 | 157.257 | 2.688 | 1.7 | % | ||||||||||||||||
Total net flows
|
1.595 | 1.319 | 0.276 | 20.9 | % | 6.378 | 6.321 | 0.057 | 0.9 | % | ||||||||||||||||
(1)
|
Includes deposits for mutual funds. Mutual fund account values are not included in the separate accounts reported on our Consolidated Balance Sheets,
|
|||||||||||||||||||||||||
as we do not have any ownership interest in them.
|
||||||||||||||||||||||||||
(2)
|
Represents combined loss ratio for life, disability and dental businesses.
|
12/31/2011
|
|
PAGE 3
|
||||||||||||||||||||||||
Financial Highlights (Continued)
|
||||||||||||||||||||||||||
Unaudited (in millions)
|
||||||||||||||||||||||||||
For the Three Months Ended December 31,
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||
Change
|
Change
|
|||||||||||||||||||||||||
2011
|
2010
|
Amount
|
%
|
2011
|
2010
|
Amount
|
%
|
|||||||||||||||||||
Balance Sheet Assets - End-of-Period
|
$ | 202,905.5 | $ | 193,823.7 | $ | 9,081.8 | 4.7 | % | $ | 202,905.5 | $ | 193,823.7 | $ | 9,081.8 | 4.7 | % | ||||||||||
Stockholders' Equity
|
||||||||||||||||||||||||||
Beginning-of-period, including AOCI
|
$ | 14,919.1 | $ | 13,557.5 | $ | 1,361.6 | 10.0 | % | $ | 12,805.8 | $ | 11,700.2 | $ | 1,105.6 | 9.4 | % | ||||||||||
End-of-period, including AOCI
|
14,163.7 | 12,805.8 | 1,357.9 | 10.6 | % | 14,163.7 | 12,805.8 | 1,357.9 | 10.6 | % | ||||||||||||||||
End-of-period, excluding AOCI
|
11,716.3 | 12,058.1 | (341.8 | ) | -2.8 | % | 11,716.3 | 12,058.1 | (341.8 | ) | -2.8 | % | ||||||||||||||
Average equity, excluding AOCI
|
12,086.1 | 11,977.1 | 109.0 | 0.9 | % | 12,281.0 | 11,917.9 | 363.1 | 3.0 | % | ||||||||||||||||
Return on Equity, Excluding AOCI
|
||||||||||||||||||||||||||
Income (loss) from operations with average equity:
|
||||||||||||||||||||||||||
Including goodwill
|
10.0 | % | 8.9 | % | 10.7 | % | 8.7 | % | ||||||||||||||||||
Excluding goodwill
|
12.8 | % | 11.9 | % | 14.1 | % | 11.7 | % | ||||||||||||||||||
Return on Capital
|
||||||||||||||||||||||||||
Income (loss) from operations/average capital
|
7.8 | % | 7.0 | % | 8.3 | % | 6.9 | % | ||||||||||||||||||
Common Shares Outstanding
|
||||||||||||||||||||||||||
Average for the period - basic
|
297.9 | 316.4 | (18.5 | ) | -5.8 | % | 307.2 | 310.0 | (2.8 | ) | -0.9 | % | ||||||||||||||
Average for the period - diluted
|
304.4 | 323.4 | (19.0 | ) | -5.9 | % | 315.0 | 319.2 | (4.2 | ) | -1.3 | % | ||||||||||||||
End-of-period - assuming conversion of preferreds
|
291.5 | 315.9 | (24.4 | ) | -7.7 | % | 291.5 | 315.9 | (24.4 | ) | -7.7 | % | ||||||||||||||
End-of-period - diluted
|
298.2 | 324.0 | (25.8 | ) | -8.0 | % | 298.2 | 324.0 | (25.8 | ) | -8.0 | % | ||||||||||||||
Book value per common share, including AOCI
|
$ | 48.59 | $ | 40.54 | $ | 8.05 | 19.9 | % | $ | 48.59 | $ | 40.54 | $ | 8.05 | 19.9 | % | ||||||||||
Book value per common share, excluding AOCI
|
40.19 | 38.17 | 2.02 | 5.3 | % | 40.19 | 38.17 | 2.02 | 5.3 | % | ||||||||||||||||
Cash Returned to Common Stockholders
|
||||||||||||||||||||||||||
Warrant repurchase - dollar amount
|
$ | - | $ | - | $ | - |
NM
|
$ | - | $ | 48.13 | $ | (48.13 | ) | -100.0 | % | ||||||||||
Share repurchase - dollar amount
|
200.00 | 25.00 | 175.00 |
NM
|
575.30 | 25.00 | 550.30 |
NM
|
||||||||||||||||||
Common dividends declared
|
23.30 | 15.80 | 7.50 | 47.5 | % | 69.50 | 25.20 | 44.30 | 175.8 | % | ||||||||||||||||
Total cash returned to common stockholders | $ | 223.30 | $ | 40.80 | $ | 182.50 |
NM
|
$ | 644.80 | $ | 98.33 | $ | 546.47 |
NM
|
||||||||||||
Stock issuance - number of shares
|
- | - | - |
NM
|
- | 14.14 | (14.14 | ) | -100.0 | % | ||||||||||||||||
Share repurchase - number of shares
|
10.39 | 1.05 | 9.34 |
NM
|
24.66 | 1.05 | 23.61 |
NM
|
||||||||||||||||||
Dividend declared on common stock - per share
|
$ | 0.080 | $ | 0.050 | $ | 0.030 | 60.0 | % | $ | 0.230 | $ | 0.080 | $ | 0.150 | 187.5 | % | ||||||||||
Dividend payout ratio
|
-4.6 | % | 8.3 | % | 25.0 | % | 3.1 | % | ||||||||||||||||||
Annualized yield (1)
|
1.6 | % | 0.7 | % | 1.2 | % | 0.3 | % | ||||||||||||||||||
Comprehensive Income (Loss)
|
||||||||||||||||||||||||||
Net income (loss)
|
$ | (514.3 | ) | $ | 195.6 | $ | (709.9 | ) |
NM
|
$ | 293.8 | $ | 980.3 | $ | (686.5 | ) | -70.0 | % | ||||||||
Net unrealized gain (loss) on available-for-sale securities
|
73.3 | (988.3 | ) | 1,061.6 | 107.4 | % | 1,644.0 | 1,022.4 | 621.6 | 60.8 | % | |||||||||||||||
Unrealized other-than-temporary impairment on available-for-sale securities
|
0.3 | 2.8 | (2.5 | ) | -89.3 | % | 22.2 | (13.8 | ) | 36.0 | 260.9 | % | ||||||||||||||
Net unrealized gain (loss) on derivative instruments
|
7.6 | 46.0 | (38.4 | ) | -83.5 | % | 130.1 | (25.9 | ) | 156.0 |
NM
|
|||||||||||||||
Foreign currency translation adjustment
|
(2.2 | ) | (1.8 | ) | (0.4 | ) | -22.2 | % | (0.2 | ) | (2.3 | ) | 2.1 | 91.3 | % | |||||||||||
Funded status of employee benefit plans
|
(94.8 | ) | 27.5 | (122.3 | ) |
NM
|
(96.5 | ) | 28.7 | (125.2 | ) |
NM
|
||||||||||||||
Comprehensive income (loss) | $ | (530.1 | ) | $ | (718.2 | ) | $ | 188.1 | 26.2 | % | $ | 1,993.4 | $ | 1,989.4 | $ | 4.0 | 0.2 | % | ||||||||
As of December 31,
|
||||||||||||||||||||||||||
Change
|
||||||||||||||||||||||||||
2011 | 2010 |
Amount
|
%
|
|||||||||||||||||||||||
Leverage Ratio
|
||||||||||||||||||||||||||
Short-term debt
|
$ | 299.9 | $ | 351.4 | $ | (51.5 | ) | -14.7 | % | |||||||||||||||||
Long-term debt
|
5,391.4 | 5,399.0 | (7.6 | ) | -0.1 | % | ||||||||||||||||||||
Total debt
|
5,691.3 | 5,750.4 | (59.1 | ) | -1.0 | % | ||||||||||||||||||||
Less:
|
||||||||||||||||||||||||||
Long-term operating debt (2)
|
1,122.3 | 1,122.2 | 0.1 | 0.0 | % | |||||||||||||||||||||
75% of capital securities
|
908.0 | 1,114.1 | (206.1 | ) | -18.5 | % | ||||||||||||||||||||
Carrying value of fair value hedge
|
319.7 | 55.3 | 264.4 |
NM
|
||||||||||||||||||||||
Total numerator
|
$ | 3,341.3 | $ | 3,458.8 | $ | (117.5 | ) | -3.4 | % | |||||||||||||||||
Stockholders' equity, excluding AOCI
|
$ | 11,716.3 | $ | 12,058.1 | $ | (341.8 | ) | -2.8 | % | |||||||||||||||||
Total debt
|
5,691.3 | 5,750.4 | (59.1 | ) | -1.0 | % | ||||||||||||||||||||
Total denominator
|
$ | 17,407.6 | $ | 17,808.5 | $ | (400.9 | ) | -2.3 | % | |||||||||||||||||
Leverage Ratio
|
19.2 | % | 19.4 | % | ||||||||||||||||||||||
Ratings as of February 7, 2012
|
||||||||||||||||||||||||||
Standard & | ||||||||||||||||||||||||||
A.M. Best
|
Fitch
|
Moody's
|
Poor's
|
|||||||||||||||||||||||
Senior Debt Ratings
|
a- |
BBB+
|
Baa2
|
A- | ||||||||||||||||||||||
Financial Strength Ratings
|
||||||||||||||||||||||||||
Lincoln National Life Insurance Company
|
A+ | A+ | A2 |
AA-
|
||||||||||||||||||||||
First Penn-Pacific Life Insurance Company
|
A+ | A+ | A2 | A- | ||||||||||||||||||||||
Lincoln Life & Annuity Company of New York
|
A+ | A+ | A2 |
AA-
|
||||||||||||||||||||||
(1)
|
Indicated dividend divided by the closing price.
|
|||||||||||||||||||||||||
(2)
|
We have categorized as operating debt the senior notes issued in October 2007 and June 2010 because the proceeds were used as a long-term structured solution to reduce the strain on increasing
|
|||||||||||||||||||||||||
statutory reserves associated with secondary guarantee UL and term policies and the senior note issued in September 2008 by our primary insurance subsidiary.
|
||||||||||||||||||||||||||
12/31/2011
|
PAGE 4 | |||||||||||||||||||||||||||
Consolidated Operating Expense Detail
|
||||||||||||||||||||||||||||
Unaudited (in millions)
|
||||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
|||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
||||||||||||||||||||
Commissions and Expenses Incurred
|
||||||||||||||||||||||||||||
General and administrative expenses
|
$ | 464.6 | $ | 365.0 | $ | 366.1 | $ | 368.4 | $ | 409.4 | -11.9 | % | $ | 1,503.8 | $ | 1,508.9 | 0.3 | % | ||||||||||
Commissions
|
500.4 | 484.3 | 491.9 | 474.2 | 482.8 | -3.5 | % | 1,847.9 | 1,933.2 | 4.6 | % | |||||||||||||||||
Media expenses
|
16.0 | 16.7 | 16.9 | 17.3 | 18.3 | 14.4 | % | 59.2 | 69.2 | 16.9 | % | |||||||||||||||||
Taxes, licenses and fees
|
53.3 | 61.8 | 52.8 | 75.2 | 62.3 | 16.9 | % | 200.3 | 252.1 | 25.9 | % | |||||||||||||||||
Interest and debt expense
|
74.3 | 71.6 | 72.0 | 71.0 | 70.5 | -5.1 | % | 285.9 | 285.1 | -0.3 | % | |||||||||||||||||
Expenses associated with reserve financing and unrelated letters of credit ("LOCs")
|
9.7 | 11.4 | 12.4 | 10.7 | 12.9 | 33.0 | % | 34.0 | 47.4 | 39.4 | % | |||||||||||||||||
Total Commissions and Expenses Incurred | 1,118.3 | 1,010.8 | 1,012.1 | 1,016.8 | 1,056.2 | -5.6 | % | 3,931.1 | 4,095.9 | 4.2 | % | |||||||||||||||||
Less: Commissions and Expenses Capitalized
|
||||||||||||||||||||||||||||
General and administrative expenses capitalized
|
(130.0 | ) | (103.6 | ) | (112.0 | ) | (113.4 | ) | (134.1 | ) | -3.2 | % | (440.0 | ) | (463.1 | ) | -5.3 | % | ||||||||||
Commissions capitalized
|
(318.4 | ) | (290.7 | ) | (301.8 | ) | (287.1 | ) | (296.2 | ) | 7.0 | % | (1,173.3 | ) | (1,175.8 | ) | -0.2 | % | ||||||||||
Taxes, licenses and fees capitalized
|
(19.9 | ) | (17.3 | ) | (15.0 | ) | (14.6 | ) | (14.8 | ) | 25.6 | % | (53.4 | ) | (61.7 | ) | -15.5 | % | ||||||||||
Total Commissions and Expenses Capitalized
|
(468.3 | ) | (411.6 | ) | (428.8 | ) | (415.1 | ) | (445.1 | ) | 5.0 | % | (1,666.7 | ) | (1,700.6 | ) | -2.0 | % | ||||||||||
Total Expenses Incurred, Net of Amounts Capitalized, Excluding Amortization | 650.0 | 599.2 | 583.3 | 601.7 | 611.1 | -6.0 | % | 2,264.4 | 2,395.3 | 5.8 | % | |||||||||||||||||
Amortization
|
||||||||||||||||||||||||||||
Amortization of DAC and VOBA, net of interest
|
332.5 | 195.6 | 125.0 | 515.6 | 214.3 | -35.5 | % | 1,081.8 | 1,050.5 | -2.9 | % | |||||||||||||||||
Amortization of intangibles
|
1.1 | 1.0 | 1.1 | 1.0 | 1.0 | -9.1 | % | 4.2 | 4.1 | -2.4 | % | |||||||||||||||||
Total Amortization | 333.6 | 196.6 | 126.1 | 516.6 | 215.3 | -35.5 | % | 1,086.0 | 1,054.6 | -2.9 | % | |||||||||||||||||
Total | $ | 983.6 | $ | 795.8 | $ | 709.4 | $ | 1,118.3 | $ | 826.4 | -16.0 | % | $ | 3,350.4 | $ | 3,449.9 | 3.0 | % | ||||||||||
General and Administrative Expenses, Net of Amounts Capitalized - As a Percentage of Operating Revenues
|
12.0 | % | 9.6 | % | 9.0 | % | 9.3 | % | 10.1 | % | 10.1 | % | 9.5 | % | ||||||||||||||
12/31/2011
|
|
PAGE 5 | |||||||||||||||||||||||||||
Selected Financial Results Summary
|
|||||||||||||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Operating Revenues
|
|||||||||||||||||||||||||||||
Annuities
|
$ | 719.9 | $ | 731.9 | $ | 733.5 | $ | 709.6 | $ | 690.3 | -4.1 | % | $ | 2,654.7 | $ | 2,865.3 | 7.9 | % | |||||||||||
Retirement Plan Services
|
257.3 | 263.3 | 259.7 | 247.8 | 246.3 | -4.3 | % | 987.7 | 1,017.1 | 3.0 | % | ||||||||||||||||||
Life Insurance
|
1,217.4 | 1,147.0 | 1,228.9 | 1,176.1 | 1,186.8 | -2.5 | % | 4,589.6 | 4,738.8 | 3.3 | % | ||||||||||||||||||
Group Protection
|
464.3 | 477.9 | 500.6 | 479.4 | 481.0 | 3.6 | % | 1,831.1 | 1,938.9 | 5.9 | % | ||||||||||||||||||
Other Operations
|
121.6 | 116.4 | 115.2 | 120.1 | 109.4 | -10.0 | % | 487.2 | 461.1 | -5.4 | % | ||||||||||||||||||
Total Operating Revenues | 2,780.5 | 2,736.5 | 2,837.9 | 2,733.0 | 2,713.8 | -2.4 | % | 10,550.3 | 11,021.2 | 4.5 | % | ||||||||||||||||||
Excluded realized gain (loss), pre-tax (1)
|
(119.8 | ) | (23.5 | ) | (34.7 | ) | (184.4 | ) | (145.3 | ) | -21.3 | % | (146.3 | ) | (387.9 | ) |
NM
|
||||||||||||
Amortization of DFEL associated with benefit ratio unlocking, pre-tax
|
0.5 | 0.2 | - | (1.6 | ) | 1.0 | 100.0 | % | (0.1 | ) | (0.4 | ) |
NM
|
||||||||||||||||
Amortization of deferred gains arising from reserve changes on business sold through reinsurance, pre-tax
|
0.6 | 0.7 | 0.6 | 0.7 | 0.7 | 16.7 | % | 2.6 | 2.7 | 3.8 | % | ||||||||||||||||||
Total Revenues | $ | 2,661.8 | $ | 2,713.9 | $ | 2,803.8 | $ | 2,547.7 | $ | 2,570.2 | -3.4 | % | $ | 10,406.5 | $ | 10,635.6 | 2.2 | % | |||||||||||
Income (Loss) from Operations
|
|||||||||||||||||||||||||||||
Annuities
|
$ | 123.2 | $ | 147.0 | $ | 150.4 | $ | 161.6 | $ | 133.5 | 8.4 | % | $ | 484.4 | $ | 592.5 | 22.3 | % | |||||||||||
Retirement Plan Services
|
32.5 | 48.7 | 42.3 | 40.5 | 35.4 | 8.9 | % | 154.3 | 166.9 | 8.2 | % | ||||||||||||||||||
Life Insurance
|
165.5 | 166.3 | 152.4 | 131.6 | 154.0 | -6.9 | % | 513.3 | 604.3 | 17.7 | % | ||||||||||||||||||
Group Protection
|
18.0 | 24.4 | 26.1 | 27.8 | 22.5 | 25.0 | % | 71.6 | 100.8 | 40.8 | % | ||||||||||||||||||
Other Operations
|
(73.7 | ) | (36.9 | ) | (22.4 | ) | (44.2 | ) | (42.8 | ) | 41.9 | % | (186.1 | ) | (146.3 | ) | 21.4 | % | |||||||||||
Income (Loss) from Operations | 265.5 | 349.5 | 348.8 | 317.3 | 302.6 | 14.0 | % | 1,037.5 | 1,318.2 | 27.1 | % | ||||||||||||||||||
Excluded realized gain (loss), after-tax (1) (2)
|
(77.8 | ) | (15.3 | ) | (22.5 | ) | (119.9 | ) | (94.4 | ) | -21.3 | % | (95.1 | ) | (252.1 | ) |
NM
|
||||||||||||
Benefit ratio unlocking, after-tax (1) (2)
|
10.7 | 4.8 | (1.3 | ) | (40.7 | ) | 23.7 | 121.5 | % | 10.4 | (13.5 | ) |
NM
|
||||||||||||||||
Income (loss) from reserve changes (net of related amortization) on business
|
|||||||||||||||||||||||||||||
sold through reinsurance, after-tax (2) | 0.3 | 0.4 | 0.4 | 0.5 | 0.5 | 66.7 | % | 1.7 | 1.8 | 5.9 | % | ||||||||||||||||||
Gain (loss) on early extinguishment of debt, after-tax (2)
|
(3.1 | ) | - | - | (5.5 | ) | - | 100.0 | % | (3.1 | ) | (5.5 | ) | -77.4 | % | ||||||||||||||
Impairment of intangibles, after-tax (2)
|
- | - | - | - | (746.7 | ) |
NM
|
- | (746.7 | ) |
NM
|
||||||||||||||||||
Income (loss) from discontinued operations, after-tax (3)
|
- | - | - | (8.4 | ) | - |
NM
|
28.9 | (8.4 | ) |
NM
|
||||||||||||||||||
Net Income (Loss) | 195.6 | 339.4 | 325.4 | 143.3 | (514.3 | ) |
NM
|
980.3 | 293.8 | -70.0 | % | ||||||||||||||||||
Preferred stock dividends and accretion of discount
|
- | - | - | - | - |
NM
|
(36.7 | ) | - | 100.0 | % | ||||||||||||||||||
Write-off of unamortized discount on preferred stock at redemption
|
- | - | - | - | - |
NM
|
(130.6 | ) | - | 100.0 | % | ||||||||||||||||||
Adjustment for deferred units of LNC stock in our non-director deferred compensation plans (4)
|
- | - | (1.0 | ) | (4.8 | ) | 0.6 |
NM
|
(1.3 | ) | (4.1 | ) |
NM
|
||||||||||||||||
Net Income (Loss) Available to Common Stockholders - Diluted | $ | 195.6 | $ | 339.4 | $ | 324.4 | $ | 138.5 | $ | (513.7 | ) |
NM
|
$ | 811.7 | $ | 289.7 | -64.3 | % | |||||||||||
Stockholders' Equity
|
|||||||||||||||||||||||||||||
Beginning-of-period, including AOCI
|
$ | 13,557.5 | $ | 12,805.8 | $ | 13,089.7 | $ | 13,585.7 | $ | 14,919.1 | $ | 11,700.2 | $ | 12,805.8 | |||||||||||||||
End-of-period, including AOCI
|
12,805.8 | 13,089.7 | 13,585.7 | 14,919.1 | 14,163.7 | 12,805.8 | 14,163.7 | ||||||||||||||||||||||
End-of-period, excluding AOCI
|
12,058.1 | 12,307.1 | 12,473.7 | 12,455.9 | 11,716.3 | 12,058.1 | 11,716.3 | ||||||||||||||||||||||
Average Stockholders' Equity
|
|||||||||||||||||||||||||||||
Average equity, including average AOCI
|
$ | 13,181.7 | $ | 12,947.8 | $ | 13,337.7 | $ | 14,252.4 | $ | 14,541.4 | $ | 12,704.1 | $ | 13,769.8 | |||||||||||||||
Average AOCI
|
1,204.6 | 765.2 | 947.3 | 1,787.6 | 2,455.3 | 786.2 | 1,488.9 | ||||||||||||||||||||||
Average equity, excluding AOCI
|
11,977.1 | 12,182.6 | 12,390.4 | 12,464.8 | 12,086.1 | 11,917.9 | 12,281.0 | ||||||||||||||||||||||
Average goodwill
|
3,019.4 | 3,019.4 | 3,019.4 | 3,019.4 | 2,646.1 | 3,015.7 | 2,926.1 | ||||||||||||||||||||||
Average equity, excluding AOCI and goodwill
|
$ | 8,957.7 | $ | 9,163.2 | $ | 9,371.0 | $ | 9,445.4 | $ | 9,440.0 | $ | 8,902.2 | $ | 9,354.9 | |||||||||||||||
Restructuring Charges (Recoveries), After-Tax
|
$ | (0.8 | ) | $ | - | $ | - | $ | - | $ | - | $ | (0.8 | ) | $ | - | |||||||||||||
Common Shares Outstanding
|
|||||||||||||||||||||||||||||
Average for the period - basic
|
316.4 | 315.0 | 311.4 | 304.8 | 297.9 | 310.0 | 307.2 | ||||||||||||||||||||||
Average for the period - diluted
|
323.4 | 322.9 | 319.9 | 312.0 | 304.4 | 319.2 | 315.0 | ||||||||||||||||||||||
End-of-period - diluted
|
324.0 | 321.3 | 316.8 | 306.9 | 298.2 | 324.0 | 298.2 | ||||||||||||||||||||||
Earnings (Loss) Per Common Share - Diluted
|
|||||||||||||||||||||||||||||
Income (loss) from operations (5)
|
$ | 0.82 | $ | 1.08 | $ | 1.09 | $ | 1.00 | $ | 1.00 | $ | 3.13 | $ | 4.17 | |||||||||||||||
Net income (loss) (5)
|
0.60 | 1.05 | 1.01 | 0.44 | (1.73 | ) | 2.54 | 0.92 | |||||||||||||||||||||
Stockholders' Equity Per Common Share
|
|||||||||||||||||||||||||||||
Stockholders' equity, including AOCI
|
$ | 40.54 | $ | 41.74 | $ | 44.04 | $ | 49.43 | $ | 48.59 | $ | 40.54 | $ | 48.59 | |||||||||||||||
Stockholders' equity, excluding AOCI
|
38.17 | 39.24 | 40.43 | 41.27 | 40.19 | 38.17 | 40.19 | ||||||||||||||||||||||
Dividends declared (common stock)
|
0.050 | 0.050 | 0.050 | 0.050 | 0.080 | 0.080 | 0.230 | ||||||||||||||||||||||
Return on Equity, Excluding AOCI
|
|||||||||||||||||||||||||||||
Net income (loss) with average equity including goodwill
|
6.5 | % | 11.1 | % | 10.5 | % | 4.6 | % | -17.0 | % | 8.2 | % | 2.4 | % | |||||||||||||||
Income (loss) from operations with average equity including goodwill
|
8.9 | % | 11.5 | % | 11.3 | % | 10.2 | % | 10.0 | % | 8.7 | % | 10.7 | % | |||||||||||||||
Income (loss) from operations with average equity excluding goodwill
|
11.9 | % | 15.3 | % | 14.9 | % | 13.4 | % | 12.8 | % | 11.7 | % | 14.1 | % | |||||||||||||||
Market Value of Common Shares
|
|||||||||||||||||||||||||||||
Highest price
|
$ | 29.12 | $ | 32.68 | $ | 32.39 | $ | 29.67 | $ | 21.88 | $ | 33.55 | $ | 32.68 | |||||||||||||||
Lowest price
|
23.17 | 28.00 | 25.97 | 15.00 | 13.75 | 20.65 | 13.75 | ||||||||||||||||||||||
Closing price
|
27.81 | 30.04 | 28.49 | 15.63 | 19.42 | 27.81 | 19.42 | ||||||||||||||||||||||
(1)
|
See page 6 for detail.
|
||||||||||||||||||||||||||||
(2)
|
We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and federal income
|
||||||||||||||||||||||||||||
tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure.
|
|||||||||||||||||||||||||||||
(3)
|
Includes discontinued operations and the gain (loss) on disposal. See Discontinued Operations on page 28 for details.
|
||||||||||||||||||||||||||||
(4)
|
The numerator used in the calculation of our diluted EPS is adjusted to remove the mark-to-market adjustment for deferred units of LNC stock in our non-director deferred compensation plans if
|
||||||||||||||||||||||||||||
the effect of equity classification would be more dilutive to our diluted EPS.
|
|||||||||||||||||||||||||||||
(5)
|
For any period where a loss from continuing operations is experienced, shares used in the diluted EPS calculation represent basic shares since using diluted shares would be anti-dilutive to the
|
||||||||||||||||||||||||||||
calculation. In these periods we would also exclude the adjustment discussed in footnote (4) above when arriving at EPS.
|
12/31/2011
|
PAGE 6 | ||||||||||||||||||||||||||||
Details Underlying Realized Gain (Loss), After-DAC and Benefit Ratio Unlocking
|
|||||||||||||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Components of Realized Gain (Loss), Pre-Tax
|
|||||||||||||||||||||||||||||
Total operating realized gain (loss) (1)(2)
|
$ | 20.0 | $ | 21.6 | $ | 22.1 | $ | 21.8 | $ | 23.5 | 17.5 | % | $ | 69.2 | $ | 89.0 | 28.6 | % | |||||||||||
Total excluded realized gain (loss) (3)(4)(5)(6)(7)
|
(119.8 | ) | (23.5 | ) | (34.7 | ) | (184.4 | ) | (145.3 | ) | -21.3 | % | (146.3 | ) | (387.9 | ) |
NM
|
||||||||||||
Total realized gain (loss), pre-tax | $ | (99.8 | ) | $ | (1.9 | ) | $ | (12.6 | ) | $ | (162.6 | ) | $ | (121.8 | ) | -22.0 | % | $ | (77.1 | ) | $ | (298.9 | ) |
NM
|
|||||
Reconciliation of Excluded Realized Gain (Loss) Net of Benefit Ratio Unlocking, After-Tax (8)
|
|||||||||||||||||||||||||||||
Total excluded realized gain (loss) (3)(4)(5)(6)(7)
|
$ | (77.8 | ) | $ | (15.3 | ) | $ | (22.5 | ) | $ | (119.9 | ) | $ | (94.4 | ) | -21.3 | % | $ | (95.1 | ) | $ | (252.1 | ) |
NM
|
|||||
Benefit ratio unlocking (9)
|
10.7 | 4.8 | (1.3 | ) | (40.7 | ) | 23.7 | 121.5 | % | 10.4 | (13.5 | ) |
NM
|
||||||||||||||||
Excluded realized gain (loss) net of benefit ratio unlocking, after-tax | $ | (67.1 | ) | $ | (10.5 | ) | $ | (23.8 | ) | $ | (160.6 | ) | $ | (70.7 | ) | -5.4 | % | $ | (84.7 | ) | $ | (265.6 | ) |
NM
|
|||||
Components of Excluded Realized Gain (Loss) Net of Benefit Ratio Unlocking, After-Tax (8)
|
|||||||||||||||||||||||||||||
Realized gain (loss) related to certain investments (3)
|
$ | (61.2 | ) | $ | (11.1 | ) | $ | (22.2 | ) | $ | (28.3 | ) | $ | (37.1 | ) | 39.4 | % | $ | (117.2 | ) | $ | (98.7 | ) | 15.8 | % | ||||
Gain (loss) on the mark-to-market on certain instruments (4)
|
1.6 | 6.7 | (0.6 | ) | (68.7 | ) | 8.7 |
NM
|
48.7 | (53.9 | ) |
NM
|
|||||||||||||||||
Variable annuity net derivatives results: (5)(6)(9)
|
|||||||||||||||||||||||||||||
Hedge program performance | 13.4 | (19.0 | ) | (9.8 | ) | (82.6 | ) | 5.1 | -61.9 | % | (26.7 | ) | (106.3 | ) |
NM
|
||||||||||||||
Unlocking for GLB reserves hedged | 18.1 | - | - | (71.6 | ) | - | -100.0 | % | 18.2 | (71.6 | ) |
NM
|
|||||||||||||||||
GLB NPR component | (47.3 | ) | 11.3 | 8.5 | 92.2 | (46.9 | ) | 0.8 | % | (19.4 | ) | 65.1 |
NM
|
||||||||||||||||
Total variable annuity net derivatives results | (15.8 | ) | (7.7 | ) | (1.3 | ) | (62.0 | ) | (41.8 | ) |
NM
|
(27.9 | ) | (112.8 | ) |
NM
|
|||||||||||||
Indexed annuity forward-starting option (7)
|
8.3 | 1.6 | 0.3 | (1.6 | ) | (0.5 | ) |
NM
|
11.8 | (0.2 | ) |
NM
|
|||||||||||||||||
Excluded realized gain (loss) net of benefit ratio unlocking, after-tax | $ | (67.1 | ) | $ | (10.5 | ) | $ | (23.8 | ) | $ | (160.6 | ) | $ | (70.7 | ) | -5.4 | % | $ | (84.6 | ) | $ | (265.6 | ) |
NM
|
|||||
(1) |
Includes the net difference between the change in the fair value of the S&P 500 Index® call options that we hold and the change in the fair value of the
|
||||||||||||||||||||||||||||
embedded derivative liabilities of our indexed annuity products. The change in the fair value of the liability for the embedded derivative represents the
|
|||||||||||||||||||||||||||||
amount that is credited to the indexed annuity contract.
|
|||||||||||||||||||||||||||||
(2) |
Includes the "risk/profit margin" portion of the attributed GLB rider fees. We have certain GLB variable annuity riders with GWB and GIB features that
|
||||||||||||||||||||||||||||
are embedded derivatives. We attribute to the embedded derivative the portion of total fees collected from the contract holder that relates to the GLB
|
|||||||||||||||||||||||||||||
riders (the “attributed fees”). These attributed fees represent the present value of future claims expected to be paid for the GLB at the inception of the
|
|||||||||||||||||||||||||||||
contract (the “net valuation premium”) plus a margin that a theoretical market participant would include for risk/profit (the “risk/profit margin”). We
|
|||||||||||||||||||||||||||||
include the net valuation premium of the GLB attributed rider fees in excluded realized gain (loss). For our Annuities and Retirement Plan Services
|
|||||||||||||||||||||||||||||
segments, the total fees collected from the contract holders in excess of the GLB attributed fees are reported in insurance fees.
|
|||||||||||||||||||||||||||||
(3) |
See page 30 for detail.
|
||||||||||||||||||||||||||||
(4) |
Includes changes in the fair values of certain derivative investments (including the credit default swaps and contingent forwards associated with consolidated
|
||||||||||||||||||||||||||||
VIEs), total return swaps (embedded derivatives that are theoretically included in our various modified coinsurance and coinsurance with funds withheld
|
|||||||||||||||||||||||||||||
reinsurance arrangements that have contractual returns related to various assets and liabilities associated with these arrangements) and trading securities.
|
|||||||||||||||||||||||||||||
(5) |
Includes the net valuation premium, the change in GLB embedded derivative reserves and the change in the fair value of the derivative instruments we
|
||||||||||||||||||||||||||||
own to hedge them, including the cost of purchasing the hedging instruments. In addition, these results include the changes in reserves not accounted
|
|||||||||||||||||||||||||||||
for at fair value and resulting benefit ration unlocking on our GDB and GLB riders and the change in the fair value of the derivative instruments we
|
|||||||||||||||||||||||||||||
own to hedge them.
|
|||||||||||||||||||||||||||||
(6) |
Includes the change in the fair value of the derivatives we own to hedge the change in the GDB riders.
|
||||||||||||||||||||||||||||
(7) |
Includes changes in the fair value of embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder
|
||||||||||||||||||||||||||||
index allocations applicable to future reset periods for our indexed annuity products.
|
|||||||||||||||||||||||||||||
(8) |
We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in
|
||||||||||||||||||||||||||||
our financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure.
|
|||||||||||||||||||||||||||||
(9) |
Represents or includes changes in reserves not accounted for at fair value and resulting from benefit ratio unlocking on our GDB and GLB riders.
|
12/31/2011
|
|
PAGE 7 | |||||||||||||||||||||||||||
Consolidated Statements of Income (Loss)
|
|||||||||||||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Revenues
|
|||||||||||||||||||||||||||||
Insurance premiums
|
$ | 555.4 | $ | 567.8 | $ | 594.1 | $ | 559.0 | $ | 573.1 | 3.2 | % | $ | 2,176.3 | $ | 2,294.0 | 5.4 | % | |||||||||||
Surrender charges
|
30.6 | 34.2 | 40.2 | 29.5 | 29.2 | -4.6 | % | 139.9 | 133.1 | -4.9 | % | ||||||||||||||||||
Mortality assessments
|
324.4 | 324.7 | 326.7 | 335.1 | 325.1 | 0.2 | % | 1,287.5 | 1,311.6 | 1.9 | % | ||||||||||||||||||
Expense assessments
|
528.1 | 458.8 | 533.2 | 499.8 | 500.0 | -5.3 | % | 1,806.5 | 1,991.8 | 10.3 | % | ||||||||||||||||||
Net investment income
|
1,182.7 | 1,191.2 | 1,180.6 | 1,150.7 | 1,129.2 | -4.5 | % | 4,540.9 | 4,651.7 | 2.4 | % | ||||||||||||||||||
Realized gain (loss):
|
|||||||||||||||||||||||||||||
Total other-than-temporary impairment losses on securities | (53.7 | ) | (44.8 | ) | (45.1 | ) | (42.3 | ) | (32.8 | ) | 38.9 | % | (239.7 | ) | (165.0 | ) | 31.2 | % | |||||||||||
Portion of loss recognized in other comprehensive income | 11.6 | 6.0 | 15.4 | 17.1 | 8.2 | -29.3 | % | 88.1 | 46.7 | -47.0 | % | ||||||||||||||||||
Net other-than-temporary impairment losses on securities recognized in earnings | (42.1 | ) | (38.8 | ) | (29.7 | ) | (25.2 | ) | (24.6 | ) | 41.6 | % | (151.6 | ) | (118.3 | ) | 22.0 | % | |||||||||||
Realized gain (loss), excluding other-than-temporary impairment losses on securities | (57.7 | ) | 36.9 | 17.1 | (137.4 | ) | (97.2 | ) |
NM
|
74.5 | (180.6 | ) |
NM
|
||||||||||||||||
Total realized gain (loss) (1) | (99.8 | ) | (1.9 | ) | (12.6 | ) | (162.6 | ) | (121.8 | ) | -22.0 | % | (77.1 | ) | (298.9 | ) |
NM
|
||||||||||||
Amortization of deferred gains on business sold through reinsurance
|
18.8 | 18.7 | 18.7 | 18.7 | 18.7 | -0.5 | % | 75.1 | 74.8 | -0.4 | % | ||||||||||||||||||
Other revenues and fees
|
121.7 | 120.4 | 122.9 | 117.5 | 116.7 | -4.1 | % | 457.5 | 477.5 | 4.4 | % | ||||||||||||||||||
Total Revenues | 2,661.9 | 2,713.9 | 2,803.8 | 2,547.7 | 2,570.2 | -3.4 | % | 10,406.6 | 10,635.6 | 2.2 | % | ||||||||||||||||||
Benefits and Expenses
|
|||||||||||||||||||||||||||||
Interest credited
|
632.9 | 614.7 | 624.7 | 624.8 | 623.6 | -1.5 | % | 2,487.8 | 2,487.8 | 0.0 | % | ||||||||||||||||||
Benefits
|
786.2 | 833.5 | 1,028.2 | 664.8 | 819.0 | 4.2 | % | 3,327.2 | 3,345.5 | 0.6 | % | ||||||||||||||||||
Underwriting, acquisition, insurance and other expenses
|
911.4 | 725.4 | 637.1 | 1,038.6 | 761.9 | -16.4 | % | 3,066.7 | 3,163.0 | 3.1 | % | ||||||||||||||||||
Interest and debt expense
|
79.1 | 71.6 | 72.0 | 79.4 | 70.5 | -10.9 | % | 290.7 | 293.5 | 1.0 | % | ||||||||||||||||||
Impairment of intangibles
|
- | - | - | - | 746.7 |
NM
|
- | 746.7 |
NM
|
||||||||||||||||||||
Total Benefits and Expenses | 2,409.6 | 2,245.2 | 2,362.0 | 2,407.6 | 3,021.7 | 25.4 | % | 9,172.4 | 10,036.5 | 9.4 | % | ||||||||||||||||||
Income (loss) from continuing operations before taxes
|
252.3 | 468.7 | 441.8 | 140.1 | (451.5 | ) |
NM
|
1,234.2 | 599.1 | -51.5 | % | ||||||||||||||||||
Federal income tax expense (benefit)
|
56.7 | 129.3 | 116.4 | (11.6 | ) | 62.8 | 10.8 | % | 282.8 | 296.9 | 5.0 | % | |||||||||||||||||
Income (Loss) from Continuing Operations | 195.6 | 339.4 | 325.4 | 151.7 | (514.3 | ) |
NM
|
951.4 | 302.2 | -68.2 | % | ||||||||||||||||||
Income (loss) from discontinued operations, net of federal income taxes (2)
|
- | - | - | (8.4 | ) | - |
NM
|
28.9 | (8.4 | ) |
NM
|
||||||||||||||||||
Net Income (Loss) | 195.6 | 339.4 | 325.4 | 143.3 | (514.3 | ) |
NM
|
980.3 | 293.8 | -70.0 | % | ||||||||||||||||||
Preferred stock dividends and accretion of discount
|
- | - | - | - | - |
NM
|
(36.7 | ) | - | 100.0 | % | ||||||||||||||||||
Write-off of unamortized discount on preferred stock at liquidation
|
- | - | - | - | - |
NM
|
(130.6 | ) | - | 100.0 | % | ||||||||||||||||||
Adjustment for deferred units of LNC stock in our non-director deferred compensation plans (3)
|
- | - | (1.0 | ) | (4.8 | ) | 0.6 |
NM
|
(1.3 | ) | (4.1 | ) |
NM
|
||||||||||||||||
Net Income (Loss) Available to Common Stockholders - Diluted | $ | 195.6 | $ | 339.4 | $ | 324.4 | $ | 138.5 | $ | (513.7 | ) |
NM
|
$ | 811.7 | $ | 289.7 | 156.4 | % | |||||||||||
Earnings (Loss) Per Common Share (Diluted)
|
|||||||||||||||||||||||||||||
Income (loss) from continuing operations (4)
|
$ | 0.60 | $ | 1.05 | $ | 1.01 | $ | 0.47 | $ | (1.73 | ) |
NM
|
$ | 2.45 | $ | 0.95 | -61.3 | % | |||||||||||
Income (loss) from discontinued operations, net of federal income taxes (2)
|
- | - | - | (0.03 | ) | - |
NM
|
0.09 | (0.03 | ) |
NM
|
||||||||||||||||||
Net Income (Loss) (4) | $ | 0.60 | $ | 1.05 | $ | 1.01 | $ | 0.44 | $ | (1.73 | ) |
NM
|
$ | 2.54 | $ | 0.92 | -63.8 | % | |||||||||||
(1)
|
See page 6 for detail.
|
||||||||||||||||||||||||||||
(2)
|
Includes discontinued operations and the gain (loss) on disposal. See Discontinued Operations on page 28 for details.
|
||||||||||||||||||||||||||||
(3)
|
The numerator used in the calculation of our diluted EPS is adjusted to remove the mark-to-market adjustment for deferred units of LNC stock in our non-director deferred
|
||||||||||||||||||||||||||||
compensation plans if the effect of equity classification would be more dilutive to our diluted EPS.
|
|||||||||||||||||||||||||||||
(4)
|
For any period where a loss from continuing operations is experienced, shares used in the diluted EPS calculation represent basic shares since using diluted shares would be
|
||||||||||||||||||||||||||||
anti-dilutive to the calculation. In these periods we would also exclude the adjustment discussed in footnote (3) above when arriving at EPS.
|
12/31/2011
|
|
PAGE 8 | ||||||||||||||||||||
Consolidated Roll Forwards of DAC, VOBA, DSI and DFEL
|
||||||||||||||||||||||
Unaudited (in millions)
|
||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
|||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
Dec.
|
Dec.
|
||||||||||||||||
DAC and VOBA
|
2010
|
2011
|
2011
|
2011
|
2011
|
2010
|
2011
|
|||||||||||||||
Balance as of beginning-of-period
|
$ | 7,918.5 | $ | 8,930.3 | $ | 9,272.2 | $ | 9,271.1 | $ | 8,129.5 | $ | 9,509.6 | $ | 8,930.3 | ||||||||
Business acquired through reinsurance
|
- | - | - | 1.7 | 10.6 | - | 12.3 | |||||||||||||||
Deferrals
|
468.3 | 411.6 | 428.8 | 415.1 | 445.1 | 1,666.7 | 1,700.6 | |||||||||||||||
Amortization, net of interest:
|
||||||||||||||||||||||
Unlocking | (9.7 | ) | 109.7 | 179.3 | (236.3 | ) | 77.8 | 118.1 | 130.5 | |||||||||||||
Amortization, net of interest, excluding unlocking | (322.8 | ) | (305.3 | ) | (304.3 | ) | (279.3 | ) | (292.1 | ) | (1,199.9 | ) | (1,181.0 | ) | ||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | 135.8 | 216.0 | 303.8 | (100.5 | ) | 230.8 | 584.9 | 650.1 | ||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking
|
(2.2 | ) | (1.1 | ) | 0.2 | 8.6 | (5.9 | ) | (2.1 | ) | 1.8 | |||||||||||
Adjustment related to realized (gains) losses
|
(27.1 | ) | (25.7 | ) | (21.5 | ) | 3.8 | 14.8 | (57.5 | ) | (28.6 | ) | ||||||||||
Adjustment related to unrealized (gains) losses
|
905.3 | 152.7 | (283.6 | ) | (1,055.2 | ) | (188.7 | ) | (1,104.6 | ) | (1,374.8 | ) | ||||||||||
Balance as of End-of-Period | $ | 8,930.3 | $ | 9,272.2 | $ | 9,271.1 | $ | 8,129.5 | $ | 8,191.1 | $ | 8,930.3 | $ | 8,191.1 | ||||||||
DSI
|
||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 268.7 | $ | 285.6 | $ | 285.9 | $ | 276.1 | $ | 267.6 | $ | 323.3 | $ | 285.6 | ||||||||
Deferrals
|
12.1 | 9.8 | 8.6 | 10.5 | 10.5 | 65.5 | 39.4 | |||||||||||||||
Amortization, net of interest:
|
||||||||||||||||||||||
Unlocking | (3.8 | ) | 2.8 | 3.7 | 2.9 | 6.5 | 4.0 | 15.9 | ||||||||||||||
Amortization, net of interest, excluding unlocking | (14.4 | ) | (15.6 | ) | (14.8 | ) | (13.5 | ) | (11.8 | ) | (57.5 | ) | (55.7 | ) | ||||||||
Deferrals, net of amortization included in operating insurance benefits or interest credited | (6.1 | ) | (3.0 | ) | (2.5 | ) | (0.1 | ) | 5.2 | 12.0 | (0.4 | ) | ||||||||||
Amortization, net of interest, associated with benefit ratio unlocking
|
(0.3 | ) | (0.2 | ) | - | 1.2 | (0.9 | ) | (0.4 | ) | 0.1 | |||||||||||
Adjustment related to realized (gains) losses
|
(0.3 | ) | (0.7 | ) | (1.4 | ) | (0.7 | ) | 1.5 | (8.7 | ) | (1.3 | ) | |||||||||
Adjustment related to unrealized (gains) losses
|
23.6 | 4.2 | (5.9 | ) | (8.9 | ) | (2.2 | ) | (40.6 | ) | (12.8 | ) | ||||||||||
Balance as of End-of-Period | $ | 285.6 | $ | 285.9 | $ | 276.1 | $ | 267.6 | $ | 271.2 | $ | 285.6 | $ | 271.2 | ||||||||
DFEL
|
||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 1,301.7 | $ | 1,502.1 | $ | 1,640.1 | $ | 1,694.1 | $ | 1,337.9 | $ | 1,337.6 | $ | 1,502.1 | ||||||||
Deferrals
|
135.6 | 142.7 | 134.2 | 134.4 | 132.3 | 546.3 | 543.6 | |||||||||||||||
Amortization, net of interest:
|
||||||||||||||||||||||
Unlocking | (19.3 | ) | 31.1 | (9.4 | ) | 7.1 | 16.3 | (24.3 | ) | 45.1 | ||||||||||||
Amortization, net of interest, excluding unlocking | (46.3 | ) | (36.4 | ) | (44.8 | ) | (47.2 | ) | (52.1 | ) | (173.0 | ) | (180.5 | ) | ||||||||
Deferrals, net of amortization included in operating expense assessments | 70.0 | 137.4 | 80.0 | 94.3 | 96.5 | 349.0 | 408.2 | |||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking
|
(0.5 | ) | (0.2 | ) | - | 1.6 | (1.0 | ) | 0.1 | 0.4 | ||||||||||||
Adjustment related to realized (gains) losses
|
(3.6 | ) | (3.7 | ) | (2.0 | ) | (4.2 | ) | 1.4 | (7.5 | ) | (8.5 | ) | |||||||||
Adjustment related to unrealized (gains) losses
|
134.5 | 4.5 | (24.0 | ) | (447.9 | ) | (66.2 | ) | (177.1 | ) | (533.6 | ) | ||||||||||
Balance as of End-of-Period | $ | 1,502.1 | $ | 1,640.1 | $ | 1,694.1 | $ | 1,337.9 | $ | 1,368.6 | $ | 1,502.1 | $ | 1,368.6 | ||||||||
12/31/2011
|
|
PAGE 9 | |||||||||||||||||
Consolidating Statements of Income (Loss) From Operations
|
|||||||||||||||||||
For the Quarter Ended December 31, 2011
|
|||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||
Retirement
|
|||||||||||||||||||
Plan
|
Life
|
Group
|
Other
|
||||||||||||||||
Annuities
|
Services
|
Insurance
|
Protection
|
Operations (1)
|
Consolidated
|
||||||||||||||
Operating Revenues
|
|||||||||||||||||||
Insurance premiums
|
$ | 14.2 | $ | - | $ | 117.1 | $ | 441.8 | $ | - | $ | 573.1 | |||||||
Surrender charges
|
5.9 | 0.4 | 22.8 | - | - | 29.1 | |||||||||||||
Mortality assessments
|
- | - | 325.1 | - | - | 325.1 | |||||||||||||
Expense assessments
|
293.0 | 48.7 | 157.1 | - | - | 498.8 | |||||||||||||
Net investment income
|
269.6 | 194.1 | 558.1 | 36.7 | 70.7 | 1,129.2 | |||||||||||||
Operating realized gain (loss) (2)
|
23.4 | 0.1 | - | - | - | 23.5 | |||||||||||||
Amortization of deferred gain on business sold through reinsurance
|
- | - | - | - | 18.1 | 18.1 | |||||||||||||
Other revenues and fees
|
84.2 | 3.0 | 6.6 | 2.5 | 20.6 | 116.9 | |||||||||||||
Total Operating Revenues | 690.3 | 246.3 | 1,186.8 | 481.0 | 109.4 | 2,713.8 | |||||||||||||
Operating Expenses
|
|||||||||||||||||||
Interest credited
|
168.9 | 111.0 | 313.5 | 0.9 | 28.5 | 622.8 | |||||||||||||
Benefits
|
47.1 | - | 460.1 | 322.8 | 31.1 | 861.1 | |||||||||||||
Underwriting, acquisition, insurance and other expenses
|
315.9 | 86.8 | 184.6 | 122.7 | 46.0 | 756.0 | |||||||||||||
Interest and debt expense
|
- | - | - | - | 70.5 | 70.5 | |||||||||||||
Total Operating Expenses | 531.9 | 197.8 | 958.2 | 446.4 | 176.1 | 2,310.4 | |||||||||||||
Income (loss) from operations before federal income taxes
|
158.4 | 48.5 | 228.6 | 34.6 | (66.7 | ) | 403.4 | ||||||||||||
Federal income tax expense (benefit)
|
24.9 | 13.1 | 74.6 | 12.1 | (23.9 | ) | 100.8 | ||||||||||||
Income (Loss) from Operations | $ | 133.5 | $ | 35.4 | $ | 154.0 | $ | 22.5 | $ | (42.8 | ) | $ | 302.6 | ||||||
(1)
|
Includes inter-segment eliminations.
|
||||||||||||||||||
(2)
|
For detail, see pages 15 and 20.
|
12/31/2011
|
|
PAGE 10 | |||||||||||||||||
Consolidating Statements of Income (Loss) From Operations
|
|||||||||||||||||||
For the Quarter Ended December 31, 2010
|
|||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||
Retirement
|
|||||||||||||||||||
Plan
|
Life
|
Group
|
Other
|
||||||||||||||||
Annuities
|
Services
|
Insurance
|
Protection
|
Operations (1)
|
Consolidated
|
||||||||||||||
Operating Revenues
|
|||||||||||||||||||
Insurance premiums
|
$ | 17.6 | $ | - | $ | 112.1 | $ | 424.2 | $ | 1.4 | $ | 555.3 | |||||||
Surrender charges
|
7.2 | 0.7 | 22.6 | - | - | 30.5 | |||||||||||||
Mortality assessments
|
- | - | 324.3 | - | - | 324.3 | |||||||||||||
Expense assessments
|
292.2 | 52.3 | 183.1 | - | - | 527.6 | |||||||||||||
Net investment income
|
295.1 | 199.9 | 567.9 | 38.1 | 81.7 | 1,182.7 | |||||||||||||
Operating realized gain (loss) (2)
|
19.9 | 0.1 | - | - | - | 20.0 | |||||||||||||
Amortization of deferred gain on business sold through reinsurance
|
- | - | - | - | 18.2 | 18.2 | |||||||||||||
Other revenues and fees
|
87.9 | 4.3 | 7.4 | 2.0 | 20.3 | 121.9 | |||||||||||||
Total Operating Revenues | 719.9 | 257.3 | 1,217.4 | 464.3 | 121.6 | 2,780.5 | |||||||||||||
Operating Expenses
|
|||||||||||||||||||
Interest credited
|
188.9 | 109.4 | 302.9 | 0.9 | 30.3 | 632.4 | |||||||||||||
Benefits
|
47.2 | 0.1 | 400.7 | 322.9 | 34.0 | 804.9 | |||||||||||||
Underwriting, acquisition, insurance and other expenses
|
328.9 | 102.9 | 267.8 | 112.8 | 96.7 | 909.1 | |||||||||||||
Interest and debt expense
|
- | - | - | - | 74.3 | 74.3 | |||||||||||||
Total Operating Expenses | 565.0 | 212.4 | 971.4 | 436.6 | 235.3 | 2,420.7 | |||||||||||||
Income (loss) from operations before federal income taxes
|
154.9 | 44.9 | 246.0 | 27.7 | (113.7 | ) | 359.8 | ||||||||||||
Federal income tax expense (benefit)
|
31.7 | 12.4 | 80.5 | 9.7 | (40.0 | ) | 94.3 | ||||||||||||
Income (Loss) from Operations | $ | 123.2 | $ | 32.5 | $ | 165.5 | $ | 18.0 | $ | (73.7 | ) | $ | 265.5 | ||||||
(1)
|
Includes inter-segment eliminations.
|
||||||||||||||||||
(2)
|
For detail, see pages 15 and 20.
|
12/31/2011
|
|
PAGE 11 | |||||||||||||||||
Consolidating Statements of Income (Loss) From Operations
|
|||||||||||||||||||
For the Year Ended December 31, 2011
|
|||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||
Retirement
|
|||||||||||||||||||
Plan
|
Life
|
Group
|
Other
|
||||||||||||||||
Annuities
|
Services
|
Insurance
|
Protection
|
Operations (1)
|
Consolidated
|
||||||||||||||
Operating Revenues
|
|||||||||||||||||||
Insurance premiums
|
$ | 73.7 | $ | - | $ | 441.1 | $ | 1,778.3 | $ | 0.9 | $ | 2,294.0 | |||||||
Surrender charges
|
34.5 | 2.3 | 96.3 | - | - | 133.1 | |||||||||||||
Mortality assessments
|
- | - | 1,311.5 | - | - | 1,311.5 | |||||||||||||
Expense assessments
|
1,212.6 | 207.8 | 570.7 | - | - | 1,991.1 | |||||||||||||
Net investment income
|
1,106.4 | 792.2 | 2,293.9 | 152.1 | 307.1 | 4,651.7 | |||||||||||||
Operating realized gain (loss) (2)
|
88.6 | 0.4 | - | - | - | 89.0 | |||||||||||||
Amortization of deferred gain on business sold through reinsurance
|
- | - | - | - | 72.2 | 72.2 | |||||||||||||
Other revenues and fees
|
349.5 | 14.4 | 25.3 | 8.5 | 80.9 | 478.6 | |||||||||||||
Total Operating Revenues | 2,865.3 | 1,017.1 | 4,738.8 | 1,938.9 | 461.1 | 11,021.2 | |||||||||||||
Operating Expenses
|
|||||||||||||||||||
Interest credited
|
698.5 | 437.5 | 1,235.0 | 3.4 | 113.6 | 2,488.0 | |||||||||||||
Benefits
|
212.1 | 1.6 | 1,669.2 | 1,313.9 | 126.4 | 3,323.2 | |||||||||||||
Underwriting, acquisition, insurance and other expenses
|
1,247.7 | 344.0 | 947.6 | 466.5 | 158.8 | 3,164.6 | |||||||||||||
Interest and debt expense
|
- | - | - | - | 285.1 | 285.1 | |||||||||||||
Total Operating Expenses | 2,158.3 | 783.1 | 3,851.8 | 1,783.8 | 683.9 | 9,260.9 | |||||||||||||
Income (loss) from operations before federal income taxes
|
707.0 | 234.0 | 887.0 | 155.1 | (222.8 | ) | 1,760.3 | ||||||||||||
Federal income tax expense (benefit)
|
114.5 | 67.1 | 282.7 | 54.3 | (76.5 | ) | 442.1 | ||||||||||||
Income (Loss) from Operations | $ | 592.5 | $ | 166.9 | $ | 604.3 | $ | 100.8 | $ | (146.3 | ) | $ | 1,318.2 | ||||||
(1)
|
Includes inter-segment eliminations.
|
||||||||||||||||||
(2)
|
For detail, see pages 15 and 20.
|
12/31/2011
|
|
PAGE 12 | |||||||||||||||||
Consolidating Statements of Income (Loss) From Operations
|
|||||||||||||||||||
For the Year Ended December 31, 2010
|
|||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||
Retirement
|
|||||||||||||||||||
Plan
|
Life
|
Group
|
Other
|
||||||||||||||||
Annuities
|
Services
|
Insurance
|
Protection
|
Operations (1)
|
Consolidated
|
||||||||||||||
Operating Revenues
|
|||||||||||||||||||
Insurance premiums
|
$ | 53.0 | $ | - | $ | 439.4 | $ | 1,682.3 | $ | 1.5 | $ | 2,176.2 | |||||||
Surrender charges
|
36.7 | 3.2 | 100.0 | - | - | 139.9 | |||||||||||||
Mortality assessments
|
- | - | 1,287.4 | - | - | 1,287.4 | |||||||||||||
Expense assessments
|
1,061.4 | 197.5 | 546.7 | - | - | 1,805.6 | |||||||||||||
Net investment income
|
1,119.3 | 769.2 | 2,185.8 | 141.0 | 325.6 | 4,540.9 | |||||||||||||
Operating realized gain (loss) (2)
|
68.8 | 0.4 | - | - | - | 69.2 | |||||||||||||
Amortization of deferred gain on business sold through reinsurance
|
- | - | - | - | 72.5 | 72.5 | |||||||||||||
Other revenues and fees
|
315.5 | 17.4 | 30.3 | 7.8 | 87.6 | 458.6 | |||||||||||||
Total Operating Revenues | 2,654.7 | 987.7 | 4,589.6 | 1,831.1 | 487.2 | 10,550.3 | |||||||||||||
Operating Expenses
|
|||||||||||||||||||
Interest credited
|
725.5 | 440.0 | 1,198.8 | 3.3 | 119.8 | 2,487.4 | |||||||||||||
Benefits
|
174.7 | 2.1 | 1,734.1 | 1,296.3 | 138.6 | 3,345.8 | |||||||||||||
Underwriting, acquisition, insurance and other expenses
|
1,168.2 | 331.4 | 907.7 | 421.6 | 235.6 | 3,064.5 | |||||||||||||
Interest and debt expense
|
- | - | - | - | 285.9 | 285.9 | |||||||||||||
Total Operating Expenses | 2,068.4 | 773.5 | 3,840.6 | 1,721.2 | 779.9 | 9,183.6 | |||||||||||||
Income (loss) from operations before federal income taxes
|
586.3 | 214.2 | 749.0 | 109.9 | (292.7 | ) | 1,366.7 | ||||||||||||
Federal income tax expense (benefit)
|
101.9 | 59.9 | 235.7 | 38.3 | (106.6 | ) | 329.2 | ||||||||||||
Income (Loss) from Operations | $ | 484.4 | $ | 154.3 | $ | 513.3 | $ | 71.6 | $ | (186.1 | ) | $ | 1,037.5 | ||||||
(1)
|
Includes inter-segment eliminations.
|
||||||||||||||||||
(2)
|
For detail, see pages 15 and 20.
|
12/31/2011
|
PAGE 13 | ||||||||||||||
Consolidated Balance Sheets and Selected Share Data
|
|||||||||||||||
Unaudited (in millions)
|
|||||||||||||||
As of
|
|||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
|||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
|||||||||||
ASSETS
|
|||||||||||||||
Investments:
|
|||||||||||||||
Corporate bonds | $ | 51,740.5 | $ | 53,174.8 | $ | 54,830.4 | $ | 58,262.0 | $ | 59,261.1 | |||||
U.S. Government bonds | 164.8 | 161.8 | 239.7 | 286.0 | 494.6 | ||||||||||
Foreign government bonds | 508.3 | 516.0 | 592.6 | 641.9 | 732.4 | ||||||||||
Mortgage-backed securities | 10,890.4 | 10,541.6 | 10,334.3 | 10,119.5 | 9,638.7 | ||||||||||
Asset-backed securities | 173.8 | 136.8 | 126.1 | 110.4 | 101.6 | ||||||||||
State and municipal bonds | 3,155.4 | 3,280.0 | 3,479.3 | 3,969.7 | 4,047.2 | ||||||||||
Hybrid and redeemable preferred securities | 1,397.0 | 1,420.0 | 1,317.8 | 1,202.0 | 1,157.2 | ||||||||||
VIEs' fixed maturity securities | 583.7 | 586.8 | 592.6 | 699.5 | 700.1 | ||||||||||
Equity securities | 197.2 | 144.6 | 143.7 | 137.4 | 138.8 | ||||||||||
Total available-for-sale securities | 68,811.1 | 69,962.4 | 71,656.5 | 75,428.4 | 76,271.7 | ||||||||||
Trading securities | 2,596.4 | 2,598.0 | 2,624.7 | 2,726.2 | 2,674.7 | ||||||||||
Mortgage loans on real estate | 6,752.1 | 6,748.7 | 6,870.5 | 6,893.3 | 6,942.6 | ||||||||||
Real estate | 202.1 | 188.9 | 149.9 | 135.8 | 136.8 | ||||||||||
Policy loans | 2,864.7 | 2,837.1 | 2,877.1 | 2,873.5 | 2,884.6 | ||||||||||
Derivative investments | 1,076.0 | 945.7 | 1,097.0 | 3,028.7 | 3,151.0 | ||||||||||
Other investments | 1,037.7 | 1,029.4 | 1,002.3 | 1,104.7 | 1,068.6 | ||||||||||
Total investments | 83,340.1 | 84,310.2 | 86,278.0 | 92,190.6 | 93,130.0 | ||||||||||
Cash and invested cash
|
2,741.4 | 2,216.4 | 2,911.8 | 4,832.7 | 4,510.2 | ||||||||||
DAC and VOBA
|
8,930.3 | 9,272.2 | 9,271.1 | 8,129.5 | 8,191.1 | ||||||||||
Premiums and fees receivable
|
334.6 | 400.8 | 370.3 | 383.4 | 407.5 | ||||||||||
Accrued investment income
|
932.8 | 988.9 | 994.2 | 1,023.3 | 981.4 | ||||||||||
Reinsurance recoverables
|
6,526.8 | 6,580.0 | 6,556.2 | 6,658.8 | 6,526.0 | ||||||||||
Funds withheld reinsurance assets
|
910.9 | 889.0 | 884.9 | 881.2 | 874.1 | ||||||||||
Goodwill
|
3,019.4 | 3,019.4 | 3,019.4 | 3,019.4 | 2,272.8 | ||||||||||
Other assets
|
2,457.3 | 2,403.9 | 2,422.5 | 2,433.3 | 2,535.9 | ||||||||||
Separate account assets
|
84,630.1 | 88,236.3 | 88,845.6 | 78,194.6 | 83,476.5 | ||||||||||
Total Assets | $ | 193,823.7 | $ | 198,317.1 | $ | 201,554.0 | $ | 197,746.8 | $ | 202,905.5 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||||||||||
Liabilities
|
|||||||||||||||
Future contract benefits
|
$ | 17,526.6 | $ | 17,333.3 | $ | 17,873.9 | $ | 19,988.5 | $ | 19,813.4 | |||||
Other contract holder funds
|
66,406.8 | 67,098.8 | 67,838.1 | 68,552.3 | 69,465.5 | ||||||||||
Short-term debt
|
351.4 | 351.6 | 251.3 | 549.9 | 299.9 | ||||||||||
Long-term debt categorized by standard rating agency leverage definitions:
|
|||||||||||||||
Operating (see note (4) on page 3 for details)
|
1,122.2 | 1,122.2 | 1,122.2 | 1,122.3 | 1,122.3 | ||||||||||
Financial
|
4,276.8 | 4,247.4 | 4,606.5 | 4,226.1 | 4,269.1 | ||||||||||
Reinsurance related embedded derivatives
|
101.5 | 91.0 | 119.1 | 177.3 | 167.5 | ||||||||||
Funds withheld reinsurance liabilities
|
1,149.5 | 1,134.7 | 1,107.1 | 1,072.0 | 1,044.8 | ||||||||||
Deferred gain on indemnity reinsurance
|
468.3 | 449.6 | 430.9 | 412.2 | 393.5 | ||||||||||
Payables for collateral on investments
|
1,659.0 | 1,554.2 | 1,805.5 | 3,855.1 | 3,733.3 | ||||||||||
VIEs' liabilities
|
132.1 | 130.0 | 129.5 | 203.0 | 193.4 | ||||||||||
Other liabilities
|
3,193.6 | 3,478.3 | 3,838.6 | 4,474.4 | 4,762.6 | ||||||||||
Separate account liabilities
|
84,630.1 | 88,236.3 | 88,845.6 | 78,194.6 | 83,476.5 | ||||||||||
Total liabilities | 181,017.9 | 185,227.4 | 187,968.3 | 182,827.7 | 188,741.8 | ||||||||||
Stockholders' Equity
|
|||||||||||||||
Series A preferred stock
|
0.4 | 0.4 | 0.4 | 0.4 | 0.4 | ||||||||||
Common stock
|
8,124.2 | 8,063.5 | 7,937.6 | 7,791.5 | 7,589.6 | ||||||||||
Retained earnings
|
3,933.5 | 4,243.2 | 4,535.7 | 4,664.0 | 4,126.3 | ||||||||||
AOCI:
|
|||||||||||||||
Net unrealized gain (loss) on available-for-sale securities | 1,071.8 | 1,093.8 | 1,440.7 | 2,642.5 | 2,715.8 | ||||||||||
Unrealized other-than-temporary impairment on available-for-sale securities | (128.9 | ) | (108.5 | ) | (107.7 | ) | (107.0 | ) | (106.7 | ) | |||||
Net unrealized gain (loss) on derivative instruments | (14.5 | ) | (22.2 | ) | (40.0 | ) | 108.0 | 115.6 | |||||||
Foreign currency translation adjustment | 0.6 | 1.6 | (2.6 | ) | 2.7 | 0.5 | |||||||||
Funded status of employee benefit plans | (181.3 | ) | (182.1 | ) | (178.4 | ) | (183.0 | ) | (277.8 | ) | |||||
Total accumulated other comprehensive income (loss) | 747.7 | 782.6 | 1,112.0 | 2,463.2 | 2,447.4 | ||||||||||
Total stockholders' equity | 12,805.8 | 13,089.7 | 13,585.7 | 14,919.1 | 14,163.7 | ||||||||||
Total Liabilities and Stockholders' Equity | $ | 193,823.7 | $ | 198,317.1 | $ | 201,554.0 | $ | 197,746.8 | $ | 202,905.5 | |||||
Share Data Per Common Share
|
|||||||||||||||
Stockholders' equity per share
|
$ | 40.54 | $ | 41.74 | $ | 44.04 | $ | 49.43 | $ | 48.59 | |||||
Book value, excluding AOCI
|
38.17 | 39.24 | 40.43 | 41.27 | 40.19 | ||||||||||
Common shares outstanding - assuming conversion of Series A preferred shares
|
315.9 | 313.6 | 308.5 | 301.8 | 291.5 |
12/31/2011
|
|
PAGE 14 | |||||||||||||||||
Balance Sheet Data - Segment Highlights
|
|||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||
As of December 31, 2011
|
Retirement
|
||||||||||||||||||
Plan
|
Life
|
Group
|
Other
|
||||||||||||||||
Annuities
|
Services
|
Insurance
|
Protection
|
Operations (1)
|
Consolidated
|
||||||||||||||
Assets
|
|||||||||||||||||||
Allocated investments and cash and invested cash (2)
|
$ | 28,466.8 | $ | 15,395.1 | $ | 43,628.0 | $ | 2,854.9 | $ | 7,295.4 | $ | 97,640.2 | |||||||
DAC and VOBA
|
2,318.0 | 330.8 | 5,347.8 | 194.5 | - | 8,191.1 | |||||||||||||
Goodwill
|
439.8 | 20.2 | 1,538.5 | 274.3 | - | 2,272.8 | |||||||||||||
DSI and other intangibles
|
269.5 | 3.6 | 77.0 | - | 118.3 | 468.4 | |||||||||||||
Reinsurance recoverables
|
560.5 | - | 2,069.6 | 48.8 | 3,847.1 | 6,526.0 | |||||||||||||
Separate account assets
|
64,946.5 | 12,858.3 | 5,508.6 | - | 163.1 | 83,476.5 | |||||||||||||
Liabilities and Capital
|
|||||||||||||||||||
Future contract benefits
|
3,642.4 | 7.4 | 7,983.8 | 1,741.7 | 6,438.1 | 19,813.4 | |||||||||||||
Other contract holder funds
|
20,701.3 | 13,623.8 | 34,065.6 | 236.1 | 838.7 | 69,465.5 | |||||||||||||
Allocated capital (3)
|
3,549.0 | 1,040.8 | 7,885.6 | 1,191.7 | (1,950.8 | ) | 11,716.3 | ||||||||||||
As of December 31, 2010
|
|||||||||||||||||||
Assets
|
|||||||||||||||||||
Allocated investments and cash and invested cash (2)
|
$ | 22,957.0 | $ | 14,131.6 | $ | 38,248.2 | $ | 2,684.3 | $ | 8,060.4 | $ | 86,081.5 | |||||||
DAC and VOBA
|
2,250.5 | 359.9 | 6,144.8 | 175.0 | 0.1 | 8,930.3 | |||||||||||||
Goodwill
|
439.8 | 20.2 | 2,188.5 | 274.3 | 96.6 | 3,019.4 | |||||||||||||
DSI and other intangibles
|
283.6 | 3.9 | 81.0 | - | 118.1 | 486.6 | |||||||||||||
Reinsurance recoverables
|
495.7 | - | 2,014.0 | 45.1 | 3,972.0 | 6,526.8 | |||||||||||||
Separate account assets
|
64,782.4 | 13,916.9 | 5,749.3 | - | 181.5 | 84,630.1 | |||||||||||||
Liabilities and Capital
|
|||||||||||||||||||
Future contract benefits
|
1,707.2 | 1.5 | 7,605.7 | 1,620.0 | 6,592.3 | 17,526.7 | |||||||||||||
Other contract holder funds
|
20,134.3 | 12,773.1 | 32,386.0 | 255.9 | 857.5 | 66,406.8 | |||||||||||||
Allocated capital (3)
|
2,989.7 | 1,076.6 | 8,385.0 | 1,180.3 | (1,573.5 | ) | 12,058.1 | ||||||||||||
(1)
|
Includes inter-segment eliminations.
|
||||||||||||||||||
(2)
|
Includes inter-segment cash management balances our segments utilize to borrow money to meet their short-term needs and also to invest short-term funds with
|
||||||||||||||||||
other segments. These balances eliminate in consolidation.
|
|||||||||||||||||||
(3)
|
Allocated capital is based on internal economic capital models plus certain other items (principally intangibles, including DAC and VOBA, goodwill and other items).
|
12/31/2011
|
|
PAGE 15 | |||||||||||||||||||||||||||
Annuities
|
|||||||||||||||||||||||||||||
Income (Loss) from Operations and Operational Data
|
|||||||||||||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Operating Revenues
|
|||||||||||||||||||||||||||||
Insurance premiums (1)
|
$ | 17.6 | $ | 23.1 | $ | 21.8 | $ | 14.6 | $ | 14.2 | -19.3 | % | $ | 53.0 | $ | 73.7 | 39.1 | % | |||||||||||
Surrender charges
|
7.2 | 10.5 | 10.0 | 8.1 | 5.9 | -18.1 | % | 36.7 | 34.5 | -6.0 | % | ||||||||||||||||||
Expense assessments
|
292.2 | 299.4 | 311.5 | 308.7 | 293.0 | 0.3 | % | 1,061.4 | 1,212.6 | 14.2 | % | ||||||||||||||||||
Net investment income
|
295.1 | 288.1 | 277.7 | 271.0 | 269.6 | -8.6 | % | 1,119.3 | 1,106.4 | -1.2 | % | ||||||||||||||||||
Operating realized gain (loss) (2)
|
19.9 | 21.5 | 22.1 | 21.6 | 23.4 | 17.6 | % | 68.8 | 88.6 | 28.8 | % | ||||||||||||||||||
Other revenues and fees (3)
|
87.9 | 89.3 | 90.4 | 85.6 | 84.2 | -4.2 | % | 315.5 | 349.5 | 10.8 | % | ||||||||||||||||||
Total Operating Revenues | 719.9 | 731.9 | 733.5 | 709.6 | 690.3 | -4.1 | % | 2,654.7 | 2,865.3 | 7.9 | % | ||||||||||||||||||
Operating Expenses
|
|||||||||||||||||||||||||||||
Interest credited
|
188.9 | 174.5 | 178.0 | 177.1 | 168.9 | -10.6 | % | 725.5 | 698.5 | -3.7 | % | ||||||||||||||||||
Benefits (1)
|
47.2 | 35.4 | 42.6 | 87.0 | 47.1 | -0.2 | % | 174.7 | 212.1 | 21.4 | % | ||||||||||||||||||
Underwriting, acquisition, insurance and other expenses
|
328.9 | 333.4 | 325.6 | 272.8 | 315.9 | -4.0 | % | 1,168.2 | 1,247.7 | 6.8 | % | ||||||||||||||||||
Total Operating Expenses | 565.0 | 543.3 | 546.2 | 536.9 | 531.9 | -5.9 | % | 2,068.4 | 2,158.3 | 4.3 | % | ||||||||||||||||||
Income (loss) from operations before federal income taxes
|
154.9 | 188.6 | 187.3 | 172.7 | 158.4 | 2.3 | % | 586.3 | 707.0 | 20.6 | % | ||||||||||||||||||
Federal income tax expense (benefit)
|
31.7 | 41.6 | 36.9 | 11.1 | 24.9 | -21.5 | % | 101.9 | 114.5 | 12.4 | % | ||||||||||||||||||
Income (Loss) from Operations | $ | 123.2 | $ | 147.0 | $ | 150.4 | $ | 161.6 | $ | 133.5 | 8.4 | % | $ | 484.4 | $ | 592.5 | 22.3 | % | |||||||||||
Effective Tax Rate
|
20.5 | % | 22.1 | % | 19.7 | % | 6.4 | % | 15.7 | % | 17.4 | % | 16.2 | % | |||||||||||||||
Average Stockholders' Equity, Excluding AOCI
|
|||||||||||||||||||||||||||||
Average equity, including goodwill
|
$ | 2,949.9 | $ | 2,987.6 | $ | 3,012.3 | $ | 3,255.6 | $ | 3,510.4 | $ | 2,939.2 | $ | 3,191.5 | |||||||||||||||
Average goodwill
|
439.8 | 439.8 | 439.8 | 439.8 | 439.8 | 439.8 | 439.8 | ||||||||||||||||||||||
Average equity, excluding goodwill
|
$ | 2,510.1 | $ | 2,547.8 | $ | 2,572.5 | $ | 2,815.8 | $ | 3,070.6 | $ | 2,499.4 | $ | 2,751.7 | |||||||||||||||
Return on Equity, Excluding AOCI
|
|||||||||||||||||||||||||||||
Including goodwill
|
16.7 | % | 19.7 | % | 20.0 | % | 19.9 | % | 15.2 | % | 16.5 | % | 18.6 | % | |||||||||||||||
Excluding goodwill
|
19.6 | % | 23.1 | % | 23.4 | % | 23.0 | % | 17.4 | % | 19.4 | % | 21.5 | % | |||||||||||||||
Income (Loss) from Operations - Basis Points on Average Account Values - Annualized | 59 | 68 | 68 | 75 | 63 | 4 | 62 | 69 | 7 | ||||||||||||||||||||
Operating Realized Gain (Loss) (2)
|
|||||||||||||||||||||||||||||
Indexed annuity net derivatives results (4)
|
$ | 0.8 | $ | 1.1 | $ | 0.4 | $ | (1.0 | ) | $ | 0.5 | -37.5 | % | $ | 1.2 | $ | 1.0 | -16.7 | % | ||||||||||
GLB (5)
|
19.1 | 20.4 | 21.7 | 22.6 | 22.9 | 19.9 | % | 67.6 | 87.6 | 29.6 | % | ||||||||||||||||||
Total Operating Realized Gain (Loss) | $ | 19.9 | $ | 21.5 | $ | 22.1 | $ | 21.6 | $ | 23.4 | 17.6 | % | $ | 68.8 | $ | 88.6 | 28.8 | % | |||||||||||
Underwriting, Acquisition, Insurance and Other Expenses
|
|||||||||||||||||||||||||||||
Commissions
|
$ | 180.9 | $ | 176.6 | $ | 193.4 | $ | 182.3 | $ | 173.2 | -4.3 | % | $ | 696.7 | $ | 725.5 | 4.1 | % | |||||||||||
General and administrative expenses
|
90.8 | 86.9 | 93.1 | 85.5 | 94.6 | 4.2 | % | 336.5 | 360.1 | 7.0 | % | ||||||||||||||||||
Inter-segment reimbursement associated with reserve financing and LOC expenses (6)
|
(1.0 | ) | (0.5 | ) | 0.4 | (0.9 | ) | 0.2 | 120.0 | % | (0.8 | ) | (0.8 | ) | 0.0 | % | |||||||||||||
Broker-dealer commissions and general and administrative expenses
|
87.2 | 90.8 | 88.5 | 85.0 | 83.2 | -4.6 | % | 315.7 | 347.5 | 10.1 | % | ||||||||||||||||||
Taxes, licenses and fees
|
5.6 | 9.4 | 8.2 | 6.7 | 2.7 | -51.8 | % | 24.2 | 27.0 | 11.6 | % | ||||||||||||||||||
Total commissions and expenses incurred | 363.5 | 363.2 | 383.6 | 358.6 | 353.9 | -2.6 | % | 1,372.3 | 1,459.3 | 6.3 | % | ||||||||||||||||||
Less: commissions and expenses capitalized
|
(156.1 | ) | (149.8 | ) | (165.5 | ) | (160.5 | ) | (142.5 | ) | 8.7 | % | (623.5 | ) | (618.3 | ) | 0.8 | % | |||||||||||
Amortization of DAC and VOBA, net of interest
|
121.5 | 120.0 | 107.5 | 74.7 | 104.5 | -14.0 | % | 419.4 | 406.7 | -3.0 | % | ||||||||||||||||||
Total Underwriting, Acquisition, Insurance and Other Expenses | $ | 328.9 | $ | 333.4 | $ | 325.6 | $ | 272.8 | $ | 315.9 | -4.0 | % | $ | 1,168.2 | $ | 1,247.7 | 6.8 | % | |||||||||||
General and Administrative Expenses - Basis Points on Average Account Values - Annualized (7)
|
44 | 40 | 42 | 40 | 44 | - | 43 | 41 | (2 | ) | |||||||||||||||||||
(1)
|
Includes our single premium immediate annuities, which have a corresponding offset to benefits for changes in reserves.
|
||||||||||||||||||||||||||||
(2)
|
Included in income (loss) from operations.
|
||||||||||||||||||||||||||||
(3)
|
Other revenues and fees consists primarily of fees attributable to broker-dealer services that are subject to market volatility.
|
||||||||||||||||||||||||||||
(4)
|
See note (1) on page 6 for details.
|
||||||||||||||||||||||||||||
(5)
|
See note (2) on page 6 for details.
|
||||||||||||||||||||||||||||
(6)
|
Represents reimbursements to Annuities from the Life Insurance segment for reserve financing, net of expenses incurred by Annuities for its use of LOCs. The inter-segment amounts are not
|
||||||||||||||||||||||||||||
reported on our Consolidated Statements of Income (Loss).
|
|||||||||||||||||||||||||||||
(7)
|
Includes distribution costs.
|
12/31/2011
|
|
PAGE 16 | ||||||||||||||||||||
Annuities
|
||||||||||||||||||||||
DAC, VOBA, DSI and DFEL Roll Forwards
|
||||||||||||||||||||||
Unaudited (in millions)
|
||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
|||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
Dec.
|
Dec.
|
||||||||||||||||
DAC and VOBA
|
2010
|
2011
|
2011
|
2011
|
2011
|
2010
|
2011
|
|||||||||||||||
Balance as of beginning-of-period
|
$ | 1,934.2 | $ | 2,250.5 | $ | 2,327.9 | $ | 2,299.2 | $ | 2,276.6 | $ | 2,381.0 | $ | 2,250.5 | ||||||||
Deferrals
|
156.1 | 149.8 | 165.5 | 160.5 | 142.5 | 623.5 | 618.3 | |||||||||||||||
Amortization, net of interest:
|
||||||||||||||||||||||
Unlocking | 12.8 | 29.0 | 33.0 | 53.9 | 11.5 | 115.9 | 127.4 | |||||||||||||||
Amortization, net of interest, excluding unlocking | (134.3 | ) | (149.0 | ) | (140.5 | ) | (128.6 | ) | (116.0 | ) | (535.3 | ) | (534.1 | ) | ||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | 34.6 | 29.8 | 58.0 | 85.8 | 38.0 | 204.1 | 211.6 | |||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking | (2.2 | ) | (1.1 | ) | 0.1 | 8.4 | (5.6 | ) | (1.6 | ) | 1.8 | |||||||||||
Adjustment related to realized (gains) losses
|
(4.9 | ) | (8.4 | ) | (10.1 | ) | 0.8 | 15.3 | (55.7 | ) | (2.4 | ) | ||||||||||
Adjustment related to unrealized (gains) losses
|
288.8 | 57.1 | (76.7 | ) | (117.6 | ) | (6.3 | ) | (277.3 | ) | (143.5 | ) | ||||||||||
Balance as of End-of-Period | $ | 2,250.5 | $ | 2,327.9 | $ | 2,299.2 | $ | 2,276.6 | $ | 2,318.0 | $ | 2,250.5 | $ | 2,318.0 | ||||||||
DSI
|
||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 266.7 | $ | 283.6 | $ | 283.8 | $ | 274.2 | $ | 265.7 | $ | 320.6 | $ | 283.6 | ||||||||
Deferrals
|
12.0 | 9.7 | 8.7 | 10.5 | 10.4 | 65.2 | 39.3 | |||||||||||||||
Amortization, net of interest:
|
||||||||||||||||||||||
Unlocking | (3.7 | ) | 2.8 | 3.6 | 2.7 | 6.5 | 4.1 | 15.6 | ||||||||||||||
Amortization, net of interest, excluding unlocking | (14.1 | ) | (15.5 | ) | (14.7 | ) | (13.3 | ) | (11.7 | ) | (57.0 | ) | (55.2 | ) | ||||||||
Deferrals, net of amortization included in operating interest credited | (5.8 | ) | (3.0 | ) | (2.4 | ) | (0.1 | ) | 5.2 | 12.3 | (0.3 | ) | ||||||||||
Amortization, net of interest, associated with benefit ratio unlocking
|
(0.3 | ) | (0.2 | ) | - | 1.2 | (0.9 | ) | (0.4 | ) | 0.1 | |||||||||||
Adjustment related to realized (gains) losses
|
(0.4 | ) | (0.7 | ) | (1.4 | ) | (0.7 | ) | 1.5 | (8.7 | ) | (1.3 | ) | |||||||||
Adjustment related to unrealized (gains) losses
|
23.4 | 4.1 | (5.8 | ) | (8.9 | ) | (2.0 | ) | (40.2 | ) | (12.6 | ) | ||||||||||
Balance as of End-of-Period | $ | 283.6 | $ | 283.8 | $ | 274.2 | $ | 265.7 | $ | 269.5 | $ | 283.6 | $ | 269.5 | ||||||||
DFEL
|
||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 210.0 | $ | 222.0 | $ | 234.2 | $ | 246.9 | $ | 249.2 | $ | 182.1 | $ | 222.0 | ||||||||
Deferrals
|
18.9 | 16.8 | 18.6 | 15.7 | 9.9 | 74.6 | 61.0 | |||||||||||||||
Amortization, net of interest:
|
||||||||||||||||||||||
Unlocking | (3.8 | ) | 0.2 | 1.0 | (3.7 | ) | 8.0 | 0.1 | 5.5 | |||||||||||||
Amortization, net of interest, excluding unlocking | (5.7 | ) | (5.9 | ) | (5.7 | ) | (5.4 | ) | (4.5 | ) | (22.7 | ) | (21.5 | ) | ||||||||
Deferrals, net of amortization included in operating expense assessments | 9.4 | 11.1 | 13.9 | 6.6 | 13.4 | 52.0 | 45.0 | |||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking
|
(0.5 | ) | (0.2 | ) | - | 1.6 | (1.0 | ) | 0.1 | 0.4 | ||||||||||||
Adjustment related to realized (gains) losses
|
1.8 | (1.7 | ) | (0.7 | ) | (4.7 | ) | 1.6 | (7.3 | ) | (5.5 | ) | ||||||||||
Adjustment related to unrealized (gains) losses
|
1.3 | 3.0 | (0.5 | ) | (1.2 | ) | (0.6 | ) | (4.9 | ) | 0.7 | |||||||||||
Balance as of End-of-Period | $ | 222.0 | $ | 234.2 | $ | 246.9 | $ | 249.2 | $ | 262.6 | $ | 222.0 | $ | 262.6 |
12/31/2011
|
|
PAGE 17 | |||||||||||||||||||||||||||
Annuities
|
|||||||||||||||||||||||||||||
Account Value Roll Forwards and Information
|
|||||||||||||||||||||||||||||
Unaudited (in billions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Fixed Annuities (1)
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 21.075 | $ | 20.952 | $ | 20.947 | $ | 21.224 | $ | 21.375 | 1.4 | % | $ | 19.940 | $ | 20.952 | 5.1 | % | |||||||||||
Gross deposits
|
1.155 | 1.116 | 1.307 | 1.294 | 1.062 | -8.1 | % | 5.568 | 4.779 | -14.2 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.593 | ) | (0.513 | ) | (0.525 | ) | (0.590 | ) | (0.564 | ) | 4.9 | % | (2.020 | ) | (2.192 | ) | -8.5 | % | |||||||||||
Net flows | 0.562 | 0.603 | 0.782 | 0.704 | 0.498 | -11.4 | % | 3.548 | 2.587 | -27.1 | % | ||||||||||||||||||
Transfers to variable annuities
|
(0.942 | ) | (0.832 | ) | (0.699 | ) | (0.609 | ) | (0.704 | ) | 25.3 | % | (3.397 | ) | (2.844 | ) | 16.3 | % | |||||||||||
Interest credited
|
0.245 | 0.214 | 0.186 | 0.046 | 0.247 | 0.8 | % | 0.796 | 0.693 | -12.9 | % | ||||||||||||||||||
Sales inducements deferred
|
0.012 | 0.010 | 0.008 | 0.010 | 0.010 | -16.7 | % | 0.065 | 0.038 | -41.5 | % | ||||||||||||||||||
Balance as of End-of-Period (Gross) | 20.952 | 20.947 | 21.224 | 21.375 | 21.426 | 2.3 | % | 20.952 | 21.426 | 2.3 | % | ||||||||||||||||||
Reinsurance ceded
|
(0.962 | ) | (0.949 | ) | (0.935 | ) | (0.920 | ) | (0.902 | ) | 6.2 | % | (0.962 | ) | (0.902 | ) | 6.2 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 19.990 | $ | 19.998 | $ | 20.289 | $ | 20.455 | $ | 20.524 | 2.7 | % | $ | 19.990 | $ | 20.524 | 2.7 | % | |||||||||||
Variable Annuities (2)
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 60.132 | $ | 64.858 | $ | 67.787 | $ | 68.551 | $ | 60.774 | 1.1 | % | $ | 55.368 | $ | 64.858 | 17.1 | % | |||||||||||
Gross deposits
|
1.435 | 1.523 | 1.620 | 1.415 | 1.313 | -8.5 | % | 5.099 | 5.871 | 15.1 | % | ||||||||||||||||||
Withdrawals and deaths
|
(1.454 | ) | (1.643 | ) | (1.702 | ) | (1.456 | ) | (1.466 | ) | -0.8 | % | (5.092 | ) | (6.267 | ) | -23.1 | % | |||||||||||
Net flows | (0.019 | ) | (0.120 | ) | (0.082 | ) | (0.041 | ) | (0.153 | ) |
NM
|
0.007 | (0.396 | ) |
NM
|
||||||||||||||
Transfers from fixed annuities
|
0.942 | 0.832 | 0.699 | 0.609 | 0.704 | -25.3 | % | 3.396 | 2.844 | -16.3 | % | ||||||||||||||||||
Investment increase and change in market value
|
3.803 | 2.217 | 0.147 | (8.345 | ) | 3.685 | -3.1 | % | 6.087 | (2.296 | ) |
NM
|
|||||||||||||||||
Balance as of End-of-Period | $ | 64.858 | $ | 67.787 | $ | 68.551 | $ | 60.774 | $ | 65.010 | 0.2 | % | $ | 64.858 | $ | 65.010 | 0.2 | % | |||||||||||
Total Annuities
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 81.207 | $ | 85.810 | $ | 88.734 | $ | 89.775 | $ | 82.149 | 1.2 | % | $ | 75.308 | $ | 85.810 | 13.9 | % | |||||||||||
Gross deposits
|
2.590 | 2.639 | 2.927 | 2.709 | 2.375 | -8.3 | % | 10.667 | 10.650 | -0.2 | % | ||||||||||||||||||
Withdrawals and deaths
|
(2.047 | ) | (2.156 | ) | (2.227 | ) | (2.046 | ) | (2.030 | ) | 0.8 | % | (7.112 | ) | (8.459 | ) | -18.9 | % | |||||||||||
Net flows | 0.543 | 0.483 | 0.700 | 0.663 | 0.345 | -36.5 | % | 3.555 | 2.191 | -38.4 | % | ||||||||||||||||||
Transfers between fixed and variable accounts
|
- | - | - | - | - |
NM
|
(0.001 | ) | - | 100.0 | % | ||||||||||||||||||
Interest credited and change in market value
|
4.048 | 2.431 | 0.333 | (8.299 | ) | 3.932 | -2.9 | % | 6.883 | (1.603 | ) |
NM
|
|||||||||||||||||
Sales inducements deferred
|
0.012 | 0.010 | 0.008 | 0.010 | 0.010 | -16.7 | % | 0.065 | 0.038 | -41.5 | % | ||||||||||||||||||
Balance as of End-of-Period (Gross) | 85.810 | 88.734 | 89.775 | 82.149 | 86.436 | 0.7 | % | 85.810 | 86.436 | 0.7 | % | ||||||||||||||||||
Reinsurance ceded
|
(0.962 | ) | (0.949 | ) | (0.935 | ) | (0.920 | ) | (0.902 | ) | 6.2 | % | (0.962 | ) | (0.902 | ) | 6.2 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 84.848 | $ | 87.785 | $ | 88.840 | $ | 81.229 | $ | 85.534 | 0.8 | % | $ | 84.848 | $ | 85.534 | 0.8 | % | |||||||||||
Variable Annuities Under Agreement - Included Above
|
$ | 0.076 | $ | 0.076 | $ | 0.073 | $ | 0.060 | $ | 0.062 | -18.4 | % | $ | 0.076 | $ | 0.062 | -18.4 | % | |||||||||||
Incremental Deposits (3)
|
|||||||||||||||||||||||||||||
Fixed annuities
|
$ | 1.154 | $ | 1.114 | $ | 1.306 | $ | 1.292 | $ | 1.062 | -8.0 | % | $ | 5.563 | $ | 4.774 | -14.2 | % | |||||||||||
Variable annuities
|
1.431 | 1.515 | 1.614 | 1.411 | 1.309 | -8.5 | % | 5.082 | 5.849 | 15.1 | % | ||||||||||||||||||
Total Incremental Deposits | $ | 2.585 | $ | 2.629 | $ | 2.920 | $ | 2.703 | $ | 2.371 | -8.3 | % | $ | 10.645 | $ | 10.623 | -0.2 | % | |||||||||||
(1)
|
Includes the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
(2)
|
Excludes the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
(3)
|
Represents gross deposits reduced by transfers from other Lincoln products. |
12/31/2011
|
PAGE 18 | ||||||||||||||||||||||||||||
Annuities
|
|||||||||||||||||||||||||||||
Account Value Information
|
|||||||||||||||||||||||||||||
Unaudited (in billions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Fixed Annuities, Excluding Fixed Portion of Variable Contracts
|
|||||||||||||||||||||||||||||
Deposits
|
$ | 0.068 | $ | 0.077 | $ | 0.091 | $ | 0.092 | $ | 0.052 | -23.5 | % | $ | 0.374 | $ | 0.312 | -16.6 | % | |||||||||||
Withdrawals and deaths
|
(0.336 | ) | (0.266 | ) | (0.284 | ) | (0.318 | ) | (0.272 | ) | 19.0 | % | (1.099 | ) | (1.140 | ) | -3.7 | % | |||||||||||
Net flows | $ | (0.268 | ) | $ | (0.189 | ) | $ | (0.193 | ) | $ | (0.226 | ) | $ | (0.220 | ) | 17.9 | % | $ | (0.725 | ) | $ | (0.828 | ) | -14.2 | % | ||||
Gross fixed contract account values
|
$ | 8.740 | $ | 8.627 | $ | 8.517 | $ | 8.375 | $ | 8.231 | -5.8 | % | $ | 8.740 | $ | 8.231 | -5.8 | % | |||||||||||
Reinsurance ceded
|
(0.962 | ) | (0.947 | ) | (0.933 | ) | (0.918 | ) | (0.899 | ) | 6.5 | % | (0.962 | ) | (0.899 | ) | 6.5 | % | |||||||||||
Net fixed contract account values | $ | 7.778 | $ | 7.680 | $ | 7.584 | $ | 7.457 | $ | 7.332 | -5.7 | % | $ | 7.778 | $ | 7.332 | -5.7 | % | |||||||||||
Indexed Annuities
|
|||||||||||||||||||||||||||||
Deposits
|
$ | 0.327 | $ | 0.378 | $ | 0.480 | $ | 0.462 | $ | 0.295 | -9.8 | % | $ | 2.027 | $ | 1.615 | -20.3 | % | |||||||||||
Withdrawals and deaths
|
(0.167 | ) | (0.158 | ) | (0.153 | ) | (0.190 | ) | (0.203 | ) | -21.6 | % | (0.532 | ) | (0.704 | ) | -32.3 | % | |||||||||||
Net flows | $ | 0.160 | $ | 0.220 | $ | 0.327 | $ | 0.272 | $ | 0.092 | -42.5 | % | $ | 1.495 | $ | 0.911 | -39.1 | % | |||||||||||
Gross indexed contract account values
|
$ | 8.680 | $ | 9.016 | $ | 9.421 | $ | 9.634 | $ | 9.875 | 13.8 | % | $ | 8.680 | $ | 9.875 | 13.8 | % | |||||||||||
Reinsurance ceded
|
- | (0.002 | ) | (0.002 | ) | (0.002 | ) | (0.002 | ) |
NM
|
- | (0.002 | ) |
NM
|
|||||||||||||||
Net indexed contract account values | $ | 8.680 | $ | 9.014 | $ | 9.419 | $ | 9.632 | $ | 9.873 | 13.7 | % | $ | 8.680 | $ | 9.873 | 13.7 | % | |||||||||||
Fixed Portion of Variable Contracts
|
|||||||||||||||||||||||||||||
Deposits
|
$ | 0.759 | $ | 0.661 | $ | 0.736 | $ | 0.740 | $ | 0.715 | -5.8 | % | $ | 3.167 | $ | 2.852 | -9.9 | % | |||||||||||
Withdrawals and deaths
|
(0.090 | ) | (0.089 | ) | (0.088 | ) | (0.082 | ) | (0.089 | ) | 1.1 | % | (0.389 | ) | (0.348 | ) | 10.5 | % | |||||||||||
Net flows | $ | 0.669 | $ | 0.572 | $ | 0.648 | $ | 0.658 | $ | 0.626 | -6.4 | % | $ | 2.778 | $ | 2.504 | -9.9 | % | |||||||||||
Gross fixed portion of variable contract account values
|
$ | 3.532 | $ | 3.304 | $ | 3.286 | $ | 3.366 | $ | 3.320 | -6.0 | % | $ | 3.532 | $ | 3.320 | -6.0 | % | |||||||||||
Reinsurance ceded
|
- | - | - | - | (0.001 | ) |
NM
|
- | (0.001 | ) |
NM
|
||||||||||||||||||
Net fixed portion of variable contract account values | $ | 3.532 | $ | 3.304 | $ | 3.286 | $ | 3.366 | $ | 3.319 | -6.0 | % | $ | 3.532 | $ | 3.319 | -6.0 | % | |||||||||||
Variable Annuities, Including Fixed Portion of Variable Contracts
|
|||||||||||||||||||||||||||||
Deposits
|
$ | 2.194 | $ | 2.184 | $ | 2.356 | $ | 2.155 | $ | 2.028 | -7.6 | % | $ | 8.266 | $ | 8.723 | 5.5 | % | |||||||||||
Withdrawals and deaths
|
(1.544 | ) | (1.732 | ) | (1.790 | ) | (1.538 | ) | (1.555 | ) | -0.7 | % | (5.481 | ) | (6.615 | ) | -20.7 | % | |||||||||||
Net flows | $ | 0.650 | $ | 0.452 | $ | 0.566 | $ | 0.617 | $ | 0.473 | -27.2 | % | $ | 2.785 | $ | 2.108 | -24.3 | % | |||||||||||
Variable Contract Account Values
|
$ | 68.390 | $ | 71.091 | $ | 71.837 | $ | 64.140 | $ | 68.329 | -0.1 | % | $ | 68.390 | $ | 68.329 | -0.1 | % | |||||||||||
Average Daily Variable Annuity Separate Account Values
|
$ | 62.832 | $ | 66.459 | $ | 68.262 | $ | 65.169 | $ | 64.173 | 2.1 | % | $ | 58.188 | $ | 66.007 | 13.4 | % |
12/31/2011
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PAGE 19 | ||||||||||||||||||||||||||||
Annuities
|
|||||||||||||||||||||||||||||
Interest Rate Spread Information, GLB Expense Assessments,
|
|||||||||||||||||||||||||||||
GLB Attributed Fee and GLB Account Values by Type
|
|||||||||||||||||||||||||||||
Unaudited (in billions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
(Basis Point) |
(Basis Point)
|
||||||||||||||||||||||||||||
Interest Rate Spread (1)
|
Change
|
Change
|
|||||||||||||||||||||||||||
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses
|
5.46 | % | 5.27 | % | 5.19 | % | 5.08 | % | 4.98 | % | (48 | ) | 5.50 | % | 5.13 | % | (37 | ) | |||||||||||
Commercial mortgage loan prepayment and bond make whole premiums
|
0.26 | % | 0.26 | % | 0.11 | % | 0.12 | % | 0.09 | % | (17 | ) | 0.13 | % | 0.14 | % | 1 | ||||||||||||
Alternative investments
|
0.01 | % | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | (1 | ) | 0.01 | % | 0.00 | % | (1 | ) | |||||||||||
Net investment income yield on reserves | 5.73 | % | 5.54 | % | 5.30 | % | 5.20 | % | 5.07 | % | (66 | ) | 5.64 | % | 5.27 | % | (37 | ) | |||||||||||
Interest rate credited to contract holders | 3.47 | % | 3.31 | % | 3.38 | % | 3.33 | % | 3.26 | % | (21 | ) | 3.52 | % | 3.33 | % | (19 | ) | |||||||||||
Interest rate spread | 2.26 | % | 2.23 | % | 1.92 | % | 1.87 | % | 1.81 | % | (45 | ) | 2.12 | % | 1.94 | % | (18 | ) | |||||||||||
Variable Annuity Expense Assessments (in millions) (2)
|
$ | 354.4 | $ | 365.7 | $ | 380.9 | $ | 381.2 | $ | 367.9 | 3.8 | % | $ | 1,288.0 | $ | 1,495.7 | 16.1 | % | |||||||||||
GLB Expense Assessments (in millions) (3)
|
$ | 76.5 | $ | 81.7 | $ | 86.8 | $ | 91.0 | $ | 94.2 | 23.1 | % | $ | 279.3 | $ | 353.7 | 26.6 | % | |||||||||||
Components of Attributed Fees on GLB (in millions)
|
|||||||||||||||||||||||||||||
Attributed fee included in operating revenues and income from operations (4)
|
$ | 26.6 | $ | 28.1 | $ | 29.4 | $ | 30.6 | $ | 31.2 | 17.3 | % | $ | 98.7 | $ | 119.3 | 20.9 | % | |||||||||||
Attributed fee excluded from operating revenues and income from operations (5)
|
35.7 | 38.3 | 40.1 | 42.0 | 43.9 | 23.0 | % | 128.2 | 164.3 | 28.2 | % | ||||||||||||||||||
Total Attributed Fees on GLB | $ | 62.3 | $ | 66.4 | $ | 69.5 | $ | 72.6 | $ | 75.1 | 20.5 | % | $ | 226.9 | $ | 283.6 | 25.0 | % | |||||||||||
GLB Account Values by Type
|
|||||||||||||||||||||||||||||
Guaranteed withdrawal benefits (6)
|
$ | 30.339 | $ | 31.920 | $ | 32.606 | $ | 29.554 | $ | 31.786 | 4.8 | % | $ | 30.339 | $ | 31.786 | 4.8 | % | |||||||||||
Guaranteed income benefits (7)
|
11.379 | 12.131 | 12.605 | 11.513 | 12.450 | 9.4 | % | 11.379 | 12.450 | 9.4 | % | ||||||||||||||||||
Total GLB Account Values | $ | 41.718 | $ | 44.051 | $ | 45.211 | $ | 41.067 | $ | 44.237 | 6.0 | % | $ | 41.718 | $ | 44.237 | 6.0 | % | |||||||||||
(1) |
For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average invested
|
||||||||||||||||||||||||||||
assets on reserves. We exclude net investment income earned on investments supporting statutory surplus, reverse repurchase agreement interest expense and inter-
|
|||||||||||||||||||||||||||||
segment cash management account interest expense from our yield and spread calculations. The average crediting rate is calculated using interest credited before DSI
|
|||||||||||||||||||||||||||||
amortization, plus the immediate annuity reserve change (included within benefits), divided by average fixed account values net of co-insured account values. Fixed
|
|||||||||||||||||||||||||||||
account values reinsured under modified co-insurance agreements are included in account values for this calculation since assets (and therefore margin) are retained
|
|||||||||||||||||||||||||||||
under these agreements.
|
|||||||||||||||||||||||||||||
(2) |
Comprised of the variable annuity expense assessments included in the expense assessments line item on page 15 and the amounts presented in the components of
|
||||||||||||||||||||||||||||
attributed fees on GLB, as described in note (4) and note (5) and disclosed above.
|
|||||||||||||||||||||||||||||
(3) |
Comprised of the GLB expense assessments included in the expense assessments line item on page 15 and the amounts presented in the components of attributed fees
|
||||||||||||||||||||||||||||
on GLB, as described in note (4) and note (5) and disclosed above.
|
|||||||||||||||||||||||||||||
(4) |
Includes the risk/profit margin portion of the GLB attributed rider fees in operating realized gain (loss) and the amount reported in expense assessments. See note (2) on
|
||||||||||||||||||||||||||||
page 6 for further discussion.
|
|||||||||||||||||||||||||||||
(5) |
Includes the net valuation premium of the GLB attributed rider fees in excluded realized gain (loss). See note (6) on page 6 for further discussion.
|
||||||||||||||||||||||||||||
(6) |
Guaranteed withdrawal benefits include features that offer the contract holder a guarantee equal to the initial deposit (or contract value, if elected after issue), adjusted
|
||||||||||||||||||||||||||||
for any subsequent purchase payments or withdrawals.
|
|||||||||||||||||||||||||||||
(7) |
For our guaranteed income benefits, we offer other product riders allowing variable annuity contract holders access and control during the income distribution phase
|
||||||||||||||||||||||||||||
of their contract. This added flexibility allows the contract holder to access the account value for transfers, additional withdrawals and other service features, such as
|
|||||||||||||||||||||||||||||
portfolio rebalancing.
|
12/31/2011
|
|
PAGE 20 | |||||||||||||||||||||||||||
Retirement Plan Services
|
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Income (Loss) from Operations, Operational Data and DAC, VOBA and DSI Roll Forwards
|
|||||||||||||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Operating Revenues
|
|||||||||||||||||||||||||||||
Surrender charges
|
$ | 0.7 | $ | 0.7 | $ | 0.7 | $ | 0.5 | $ | 0.4 | -42.9 | % | $ | 3.2 | $ | 2.3 | -28.1 | % | |||||||||||
Expense assessments
|
52.3 | 53.9 | 54.7 | 50.5 | 48.7 | -6.9 | % | 197.5 | 207.8 | 5.2 | % | ||||||||||||||||||
Net investment income
|
199.9 | 204.9 | 199.9 | 193.3 | 194.1 | -2.9 | % | 769.2 | 792.2 | 3.0 | % | ||||||||||||||||||
Operating realized gain (loss) (1)
|
0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.0 | % | 0.4 | 0.4 | 0.0 | % | ||||||||||||||||||
Other revenues and fees (2)
|
4.3 | 3.7 | 4.3 | 3.4 | 3.0 | -30.2 | % | 17.4 | 14.4 | -17.2 | % | ||||||||||||||||||
Total Operating Revenues | 257.3 | 263.3 | 259.7 | 247.8 | 246.3 | -4.3 | % | 987.7 | 1,017.1 | 3.0 | % | ||||||||||||||||||
Operating Expenses
|
|||||||||||||||||||||||||||||
Interest credited
|
109.4 | 108.3 | 108.7 | 109.5 | 111.0 | 1.5 | % | 440.0 | 437.5 | -0.6 | % | ||||||||||||||||||
Benefits
|
0.1 | - | - | 1.6 | - | -100.0 | % | 2.1 | 1.6 | -23.8 | % | ||||||||||||||||||
Underwriting, acquisition, insurance and other expenses
|
102.9 | 84.8 | 91.3 | 81.1 | 86.8 | -15.6 | % | 331.4 | 344.0 | 3.8 | % | ||||||||||||||||||
Total Operating Expenses | 212.4 | 193.1 | 200.0 | 192.2 | 197.8 | -6.9 | % | 773.5 | 783.1 | 1.2 | % | ||||||||||||||||||
Income (loss) from operations before federal income taxes
|
44.9 | 70.2 | 59.7 | 55.6 | 48.5 | 8.0 | % | 214.2 | 234.0 | 9.2 | % | ||||||||||||||||||
Federal income tax expense (benefit)
|
12.4 | 21.5 | 17.4 | 15.1 | 13.1 | 5.6 | % | 59.9 | 67.1 | 12.0 | % | ||||||||||||||||||
Income (Loss) from Operations | $ | 32.5 | $ | 48.7 | $ | 42.3 | $ | 40.5 | $ | 35.4 | 8.9 | % | $ | 154.3 | $ | 166.9 | 8.2 | % | |||||||||||
Effective Tax Rate
|
27.6 | % | 30.6 | % | 29.1 | % | 27.2 | % | 27.0 | % | 28.0 | % | 28.7 | % | |||||||||||||||
Average Stockholders' Equity, Excluding AOCI
|
|||||||||||||||||||||||||||||
Average equity, including goodwill
|
$ | 1,047.8 | $ | 1,073.7 | $ | 1,060.8 | $ | 1,041.0 | $ | 1,035.9 | $ | 1,046.0 | $ | 1,052.9 | |||||||||||||||
Average goodwill
|
20.2 | 20.2 | 20.2 | 20.2 | 20.2 | 20.2 | 20.2 | ||||||||||||||||||||||
Average equity, excluding goodwill
|
$ | 1,027.6 | $ | 1,053.5 | $ | 1,040.6 | $ | 1,020.8 | $ | 1,015.7 | $ | 1,025.8 | $ | 1,032.7 | |||||||||||||||
Return on Equity, Excluding AOCI
|
|||||||||||||||||||||||||||||
Including goodwill
|
12.4 | % | 18.1 | % | 16.0 | % | 15.6 | % | 13.7 | % | 14.8 | % | 15.9 | % | |||||||||||||||
Excluding goodwill
|
12.7 | % | 18.5 | % | 16.3 | % | 15.9 | % | 13.9 | % | 15.0 | % | 16.2 | % | |||||||||||||||
Income (Loss) from Operations - Basis Points on Average Account Values - Annualized
|
34 | 49 | 42 | 42 | 37 | 3 | 42 | 43 | 1 | ||||||||||||||||||||
Operating Realized Gain (Loss) (1)
|
|||||||||||||||||||||||||||||
GLB (3)
|
$ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | 0.0 | % | $ | 0.4 | $ | 0.4 | 0.0 | % | |||||||||||
Total Operating Realized Gain (Loss) | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | 0.0 | % | $ | 0.4 | $ | 0.4 | 0.0 | % | |||||||||||
Underwriting, Acquisition, Insurance and Other Expenses
|
|||||||||||||||||||||||||||||
Commissions
|
$ | 17.2 | $ | 17.0 | $ | 16.9 | $ | 15.8 | $ | 17.4 | 1.2 | % | $ | 64.5 | $ | 67.1 | 4.0 | % | |||||||||||
General and administrative expenses
|
71.3 | 63.3 | 71.4 | 65.4 | 73.3 | 2.8 | % | 241.9 | 273.4 | 13.0 | % | ||||||||||||||||||
Taxes, licenses and fees
|
3.2 | 4.8 | 3.8 | 3.4 | 1.2 | -62.5 | % | 13.0 | 13.2 | 1.5 | % | ||||||||||||||||||
Total commissions and expenses incurred | 91.7 | 85.1 | 92.1 | 84.6 | 91.9 | 0.2 | % | 319.4 | 353.7 | 10.7 | % | ||||||||||||||||||
Less: commissions and expenses capitalized
|
(20.8 | ) | (16.5 | ) | (18.8 | ) | (15.6 | ) | (18.5 | ) | 11.1 | % | (66.8 | ) | (69.4 | ) | -3.9 | % | |||||||||||
Amortization of DAC and VOBA, net of interest
|
32.0 | 16.2 | 18.0 | 12.1 | 13.4 | -58.1 | % | 78.8 | 59.7 | -24.2 | % | ||||||||||||||||||
Total Underwriting, Acquisition, Insurance and Other Expenses | $ | 102.9 | $ | 84.8 | $ | 91.3 | $ | 81.1 | $ | 86.8 | -15.6 | % | $ | 331.4 | $ | 344.0 | 3.8 | % | |||||||||||
General and Administrative Expenses - Basis Points on Average Account Values - Annualized (4)
|
75 | 64 | 71 | 68 | 76 | 1 | 66 | 70 | 4 | ||||||||||||||||||||
DAC and VOBA
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 277.4 | $ | 359.9 | $ | 420.1 | $ | 394.5 | $ | 339.3 | $ | 537.7 | $ | 359.9 | |||||||||||||||
Deferrals
|
20.8 | 16.5 | 18.8 | 15.6 | 18.5 | 66.8 | 69.4 | ||||||||||||||||||||||
Amortization, net of interest:
|
|||||||||||||||||||||||||||||
Unlocking | (8.2 | ) | 3.3 | (0.3 | ) | 5.6 | 2.6 | 4.1 | 11.2 | ||||||||||||||||||||
Amortization, net of interest, excluding unlocking | (23.8 | ) | (19.5 | ) | (17.7 | ) | (17.7 | ) | (16.0 | ) | (82.9 | ) | (70.9 | ) | |||||||||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | (11.2 | ) | 0.3 | 0.8 | 3.5 | 5.1 | (12.0 | ) | 9.7 | ||||||||||||||||||||
Amortization, net of interest, associated with benefit ratio unlocking
|
- | - | - | 0.2 | (0.3 | ) | (0.4 | ) | (0.1 | ) | |||||||||||||||||||
Adjustment related to realized (gains) losses
|
0.9 | - | (0.5 | ) | (0.6 | ) | 0.2 | 0.2 | (0.9 | ) | |||||||||||||||||||
Adjustment related to unrealized (gains) losses
|
92.8 | 59.9 | (25.9 | ) | (58.3 | ) | (13.5 | ) | (165.6 | ) | (37.8 | ) | |||||||||||||||||
Balance as of End-of-Period | $ | 359.9 | $ | 420.1 | $ | 394.5 | $ | 339.3 | $ | 330.8 | $ | 359.9 | $ | 330.8 | |||||||||||||||
DSI
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 1.9 | $ | 2.0 | $ | 2.1 | $ | 2.0 | $ | 2.0 | $ | 2.7 | $ | 2.0 | |||||||||||||||
Deferrals
|
0.1 | - | - | - | - | 0.2 | - | ||||||||||||||||||||||
Amortization, net of interest:
|
|||||||||||||||||||||||||||||
Unlocking | (0.2 | ) | 0.1 | - | 0.2 | - | (0.2 | ) | 0.3 | ||||||||||||||||||||
Amortization, net of interest, excluding unlocking | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.4 | ) | (0.4 | ) | |||||||||||||||
Deferrals, net of amortization included in operating interest credited | (0.2 | ) | - | (0.1 | ) | 0.1 | (0.1 | ) | (0.4 | ) | (0.1 | ) | |||||||||||||||||
Adjustment related to unrealized (gains) losses
|
0.3 | 0.1 | - | (0.1 | ) | (0.2 | ) | (0.3 | ) | (0.2 | ) | ||||||||||||||||||
Balance as of End-of-Period | $ | 2.0 | $ | 2.1 | $ | 2.0 | $ | 2.0 | $ | 1.7 | $ | 2.0 | $ | 1.7 | |||||||||||||||
(1)
|
Included in income (loss) from operations.
|
||||||||||||||||||||||||||||
(2)
|
Other revenues and fees consist primarily of mutual fund account program fees for mid-to-large employers.
|
||||||||||||||||||||||||||||
(3)
|
See note (2) on page 6 for details.
|
||||||||||||||||||||||||||||
(4)
|
Includes distribution costs.
|
12/31/2011
|
|
PAGE 21 | |||||||||||||||||||||||||||
Retirement Plan Services
|
|||||||||||||||||||||||||||||
Account Value Roll Forwards and Information
|
|||||||||||||||||||||||||||||
Unaudited (in billions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Fixed Annuities (1)
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 12.734 | $ | 12.779 | $ | 12.956 | $ | 13.025 | $ | 13.395 | 5.2 | % | $ | 12.246 | $ | 12.779 | 4.4 | % | |||||||||||
Gross deposits
|
0.340 | 0.346 | 0.318 | 0.378 | 0.394 | 15.9 | % | 1.332 | 1.436 | 7.8 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.477 | ) | (0.336 | ) | (0.437 | ) | (0.356 | ) | (0.413 | ) | 13.4 | % | (1.679 | ) | (1.542 | ) | 8.2 | % | |||||||||||
Net flows | (0.137 | ) | 0.010 | (0.119 | ) | 0.022 | (0.019 | ) | 86.1 | % | (0.347 | ) | (0.106 | ) | 69.5 | % | |||||||||||||
Transfers from variable annuities
|
0.072 | 0.060 | 0.080 | 0.237 | 0.142 | 97.2 | % | 0.440 | 0.519 | 18.0 | % | ||||||||||||||||||
Interest credited
|
0.110 | 0.107 | 0.108 | 0.111 | 0.112 | 1.8 | % | 0.440 | 0.438 | -0.5 | % | ||||||||||||||||||
Balance as of End-of-Period | $ | 12.779 | $ | 12.956 | $ | 13.025 | $ | 13.395 | $ | 13.630 | 6.7 | % | $ | 12.779 | $ | 13.630 | 6.7 | % | |||||||||||
Variable Annuities (2)
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 12.956 | $ | 13.927 | $ | 14.400 | $ | 14.254 | $ | 12.122 | -6.4 | % | $ | 12.953 | $ | 13.927 | 7.5 | % | |||||||||||
Gross deposits
|
0.443 | 0.415 | 0.393 | 0.391 | 0.416 | -6.1 | % | 1.614 | 1.615 | 0.1 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.521 | ) | (0.587 | ) | (0.516 | ) | (0.511 | ) | (0.498 | ) | 4.4 | % | (2.158 | ) | (2.112 | ) | 2.1 | % | |||||||||||
Net flows | (0.078 | ) | (0.172 | ) | (0.123 | ) | (0.120 | ) | (0.082 | ) | -5.1 | % | (0.544 | ) | (0.497 | ) | 8.6 | % | |||||||||||
Transfers to fixed annuities
|
(0.021 | ) | (0.050 | ) | (0.040 | ) | (0.124 | ) | (0.069 | ) |
NM
|
(0.169 | ) | (0.283 | ) | -67.5 | % | ||||||||||||
Investment increase and change in market value
|
1.070 | 0.695 | 0.017 | (1.888 | ) | 0.896 | -16.3 | % | 1.687 | (0.280 | ) |
NM
|
|||||||||||||||||
Balance as of End-of-Period | $ | 13.927 | $ | 14.400 | $ | 14.254 | $ | 12.122 | $ | 12.867 | -7.6 | % | $ | 13.927 | $ | 12.867 | -7.6 | % | |||||||||||
Total Annuities
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 25.690 | $ | 26.706 | $ | 27.356 | $ | 27.279 | $ | 25.517 | -0.7 | % | $ | 25.199 | $ | 26.706 | 6.0 | % | |||||||||||
Gross deposits
|
0.783 | 0.761 | 0.711 | 0.769 | 0.810 | 3.4 | % | 2.946 | 3.051 | 3.6 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.998 | ) | (0.923 | ) | (0.953 | ) | (0.867 | ) | (0.911 | ) | 8.7 | % | (3.837 | ) | (3.654 | ) | 4.8 | % | |||||||||||
Net flows | (0.215 | ) | (0.162 | ) | (0.242 | ) | (0.098 | ) | (0.101 | ) | 53.0 | % | (0.891 | ) | (0.603 | ) | 32.3 | % | |||||||||||
Transfers between fixed and variable accounts
|
0.051 | 0.010 | 0.040 | 0.113 | 0.073 | 43.1 | % | 0.271 | 0.236 | -12.9 | % | ||||||||||||||||||
Interest credited and change in market value
|
1.180 | 0.802 | 0.125 | (1.777 | ) | 1.008 | -14.6 | % | 2.127 | 0.158 | -92.6 | % | |||||||||||||||||
Balance as of End-of-Period | $ | 26.706 | $ | 27.356 | $ | 27.279 | $ | 25.517 | $ | 26.497 | -0.8 | % | $ | 26.706 | $ | 26.497 | -0.8 | % | |||||||||||
Alliance and Smart Future Mutual Funds (3)
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 11.398 | $ | 12.118 | $ | 12.952 | $ | 13.008 | $ | 11.503 | 0.9 | % | $ | 10.103 | $ | 12.118 | 19.9 | % | |||||||||||
Plan/participant rollovers
|
0.188 | 0.097 | 0.061 | 0.277 | 0.369 | 96.3 | % | 0.705 | 0.804 | 14.0 | % | ||||||||||||||||||
Additional contributions
|
0.387 | 0.483 | 0.427 | 0.410 | 0.391 | 1.0 | % | 1.650 | 1.711 | 3.7 | % | ||||||||||||||||||
Gross deposits | 0.575 | 0.580 | 0.488 | 0.687 | 0.760 | 32.2 | % | 2.355 | 2.515 | 6.8 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.664 | ) | (0.284 | ) | (0.424 | ) | (0.260 | ) | (0.440 | ) | 33.7 | % | (1.755 | ) | (1.408 | ) | 19.8 | % | |||||||||||
Net flows | (0.089 | ) | 0.296 | 0.064 | 0.427 | 0.320 |
NM
|
0.600 | 1.107 | 84.5 | % | ||||||||||||||||||
Transfers
|
(0.058 | ) | (0.037 | ) | (0.057 | ) | (0.132 | ) | (0.073 | ) | -25.9 | % | (0.251 | ) | (0.299 | ) | -19.1 | % | |||||||||||
Other (4)
|
- | - | - | - | - |
NM
|
0.186 | - | -100.0 | % | |||||||||||||||||||
Interest credited and change in market value
|
0.867 | 0.575 | 0.049 | (1.800 | ) | 0.886 | 2.2 | % | 1.480 | (0.290 | ) |
NM
|
|||||||||||||||||
Balance as of End-of-Period | $ | 12.118 | $ | 12.952 | $ | 13.008 | $ | 11.503 | $ | 12.636 | 4.3 | % | $ | 12.118 | $ | 12.636 | 4.3 | % | |||||||||||
Total Annuities and Mutual Funds
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 37.088 | $ | 38.824 | $ | 40.308 | $ | 40.287 | $ | 37.020 | -0.2 | % | $ | 35.302 | $ | 38.824 | 10.0 | % | |||||||||||
Gross deposits
|
1.358 | 1.341 | 1.199 | 1.456 | 1.570 | 15.6 | % | 5.301 | 5.566 | 5.0 | % | ||||||||||||||||||
Withdrawals and deaths
|
(1.662 | ) | (1.207 | ) | (1.377 | ) | (1.127 | ) | (1.351 | ) | 18.7 | % | (5.592 | ) | (5.062 | ) | 9.5 | % | |||||||||||
Net flows | (0.304 | ) | 0.134 | (0.178 | ) | 0.329 | 0.219 | 172.0 | % | (0.291 | ) | 0.504 | 273.2 | % | |||||||||||||||
Transfers
|
(0.007 | ) | (0.027 | ) | (0.017 | ) | (0.019 | ) | - | 100.0 | % | 0.020 | (0.063 | ) |
NM
|
||||||||||||||
Other (4)
|
- | - | - | - | - |
NM
|
0.186 | - | -100.0 | % | |||||||||||||||||||
Interest credited and change in market value
|
2.047 | 1.377 | 0.174 | (3.577 | ) | 1.894 | -7.5 | % | 3.607 | (0.132 | ) |
NM
|
|||||||||||||||||
Balance as of End-of-Period | $ | 38.824 | $ | 40.308 | $ | 40.287 | $ | 37.020 | $ | 39.133 | 0.8 | % | $ | 38.824 | $ | 39.133 | 0.8 | % | |||||||||||
Variable Annuities Under Agreement - Included Above
|
$ | 0.010 | $ | 0.010 | $ | 0.010 | $ | 0.008 | $ | 0.009 | -10.0 | % | $ | 0.010 | $ | 0.009 | -10.0 | % | |||||||||||
(1)
|
Includes fixed annuity products offered under our mutual fund products and the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
(2)
|
Excludes the fixed portion of variable annuities. | ||||||||||||||||||||||||||||
(3)
|
Includes mutual fund account values and other third party trustee-held assets. These items are not included in the separate accounts reported on our Consolidated | ||||||||||||||||||||||||||||
Balance Sheets, as we do not have any ownership interest in them. | |||||||||||||||||||||||||||||
(4)
|
Represents LINCOLN ALLIANCE® program assets held by a third-party trustee that were not previously included in the account value roll forward. Effective | ||||||||||||||||||||||||||||
January 1, 2010, all such LINCOLN ALLIANCE® program activity was included in the account value roll forward. |
12/31/2011
|
PAGE 22 | ||||||||||||||||||||||||||||
Retirement Plan Services
|
|||||||||||||||||||||||||||||
Account Value Roll Forwards by Product
|
|||||||||||||||||||||||||||||
Unaudited (in billions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Total Micro - Small Segment
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 5.954 | $ | 6.396 | $ | 6.594 | $ | 6.566 | $ | 5.856 | -1.6 | % | $ | 5.863 | $ | 6.396 | 9.1 | % | |||||||||||
Gross deposits
|
0.358 | 0.326 | 0.315 | 0.312 | 0.348 | -2.8 | % | 1.242 | 1.301 | 4.8 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.330 | ) | (0.384 | ) | (0.325 | ) | (0.336 | ) | (0.357 | ) | -8.2 | % | (1.377 | ) | (1.402 | ) | -1.8 | % | |||||||||||
Net flows | 0.028 | (0.058 | ) | (0.010 | ) | (0.024 | ) | (0.009 | ) |
NM
|
(0.135 | ) | (0.101 | ) | 25.2 | % | |||||||||||||
Transfers between fixed and variable accounts
|
0.006 | (0.006 | ) | - | - | 0.011 | 83.3 | % | 0.004 | 0.005 | 25.0 | % | |||||||||||||||||
Investment increase and change in market value
|
0.408 | 0.262 | (0.018 | ) | (0.686 | ) | 0.303 | -25.7 | % | 0.664 | (0.139 | ) |
NM
|
||||||||||||||||
Balance as of End-of-Period | $ | 6.396 | $ | 6.594 | $ | 6.566 | $ | 5.856 | $ | 6.161 | -3.7 | % | $ | 6.396 | $ | 6.161 | -3.7 | % | |||||||||||
Total Mid - Large Segment
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 15.398 | $ | 16.207 | $ | 17.224 | $ | 17.333 | $ | 16.106 | 4.6 | % | $ | 13.653 | $ | 16.207 | 18.7 | % | |||||||||||
Gross deposits
|
0.819 | 0.831 | 0.704 | 0.969 | 1.059 | 29.3 | % | 3.308 | 3.563 | 7.7 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.895 | ) | (0.398 | ) | (0.657 | ) | (0.408 | ) | (0.632 | ) | 29.4 | % | (2.558 | ) | (2.095 | ) | 18.1 | % | |||||||||||
Net flows | (0.076 | ) | 0.433 | 0.047 | 0.561 | 0.427 |
NM
|
0.750 | 1.468 | 95.7 | % | ||||||||||||||||||
Transfers between fixed and variable accounts
|
(0.013 | ) | (0.021 | ) | (0.017 | ) | (0.019 | ) | (0.011 | ) | 15.4 | % | 0.016 | (0.068 | ) |
NM
|
|||||||||||||
Other (1)
|
- | - | - | - | - |
NM
|
0.186 | - | -100.0 | % | |||||||||||||||||||
Investment increase and change in market value
|
0.898 | 0.605 | 0.079 | (1.769 | ) | 0.919 | 2.3 | % | 1.602 | (0.166 | ) |
NM
|
|||||||||||||||||
Balance as of End-of-Period | $ | 16.207 | $ | 17.224 | $ | 17.333 | $ | 16.106 | $ | 17.441 | 7.6 | % | $ | 16.207 | $ | 17.441 | 7.6 | % | |||||||||||
Total Multi-Fund® and Other Variable Annuities
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 15.736 | $ | 16.221 | $ | 16.490 | $ | 16.388 | $ | 15.058 | -4.3 | % | $ | 15.786 | $ | 16.221 | 2.8 | % | |||||||||||
Gross deposits
|
0.181 | 0.184 | 0.180 | 0.175 | 0.163 | -9.9 | % | 0.751 | 0.702 | -6.5 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.437 | ) | (0.425 | ) | (0.395 | ) | (0.383 | ) | (0.362 | ) | 17.2 | % | (1.657 | ) | (1.565 | ) | 5.6 | % | |||||||||||
Net flows | (0.256 | ) | (0.241 | ) | (0.215 | ) | (0.208 | ) | (0.199 | ) | 22.3 | % | (0.906 | ) | (0.863 | ) | 4.7 | % | |||||||||||
Investment increase and change in market value
|
0.741 | 0.510 | 0.113 | (1.122 | ) | 0.672 | -9.3 | % | 1.341 | 0.173 | -87.1 | % | |||||||||||||||||
Balance as of End-of-Period | $ | 16.221 | $ | 16.490 | $ | 16.388 | $ | 15.058 | $ | 15.531 | -4.3 | % | $ | 16.221 | $ | 15.531 | -4.3 | % | |||||||||||
Total Annuities and Mutual Funds (2)
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 37.088 | $ | 38.824 | $ | 40.308 | $ | 40.287 | $ | 37.020 | -0.2 | % | $ | 35.302 | $ | 38.824 | 10.0 | % | |||||||||||
Gross deposits
|
1.358 | 1.341 | 1.199 | 1.456 | 1.570 | 15.6 | % | 5.301 | 5.566 | 5.0 | % | ||||||||||||||||||
Withdrawals and deaths
|
(1.662 | ) | (1.207 | ) | (1.377 | ) | (1.127 | ) | (1.351 | ) | 18.7 | % | (5.592 | ) | (5.062 | ) | 9.5 | % | |||||||||||
Net flows | (0.304 | ) | 0.134 | (0.178 | ) | 0.329 | 0.219 | 172.0 | % | (0.291 | ) | 0.504 | 273.2 | % | |||||||||||||||
Transfers between fixed and variable accounts
|
(0.007 | ) | (0.027 | ) | (0.017 | ) | (0.019 | ) | - | 100.0 | % | 0.020 | (0.063 | ) |
NM
|
||||||||||||||
Other (1)
|
- | - | - | - | - |
NM
|
0.186 | - | -100.0 | % | |||||||||||||||||||
Investment increase and change in market value
|
2.047 | 1.377 | 0.174 | (3.577 | ) | 1.894 | -7.5 | % | 3.607 | (0.132 | ) |
NM
|
|||||||||||||||||
Balance as of End-of-Period | $ | 38.824 | $ | 40.308 | $ | 40.287 | $ | 37.020 | $ | 39.133 | 0.8 | % | $ | 38.824 | $ | 39.133 | 0.8 | % | |||||||||||
(1)
|
Represents LINCOLN ALLIANCE® program assets held by a third-party trustee that were not previously included in the account value roll forward.
|
||||||||||||||||||||||||||||
Effective January 1, 2010, all such LINCOLN ALLIANCE® program activity was included in the account value roll forward.
|
|||||||||||||||||||||||||||||
(2)
|
Includes mutual fund account values and other third party trustee-held assets. These items are not included in the separate accounts reported on our
|
||||||||||||||||||||||||||||
Consolidated Balance Sheets, as we do not have any ownership interest in them.
|
12/31/2011
|
PAGE 23 | ||||||||||||||||||||||||||||
Retirement Plan Services
|
|||||||||||||||||||||||||||||
Account Value and Interest Rate Spread Information
|
|||||||||||||||||||||||||||||
Unaudited (in billions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Fixed Annuities, Excluding Fixed Portion of Variable Contracts
|
|||||||||||||||||||||||||||||
Deposits
|
$ | 0.259 | $ | 0.269 | $ | 0.233 | $ | 0.301 | $ | 0.314 | 21.2 | % | $ | 1.017 | $ | 1.117 | 9.8 | % | |||||||||||
Withdrawals and deaths
|
(0.300 | ) | (0.160 | ) | (0.285 | ) | (0.194 | ) | (0.251 | ) | 16.3 | % | (1.010 | ) | (0.890 | ) | 11.9 | % | |||||||||||
Net flows | $ | (0.041 | ) | $ | 0.109 | $ | (0.052 | ) | $ | 0.107 | $ | 0.063 | 253.7 | % | $ | 0.007 | $ | 0.227 |
NM
|
||||||||||
Fixed Contract Account Values
|
$ | 6.629 | $ | 6.807 | $ | 6.847 | $ | 7.122 | $ | 7.301 | 10.1 | % | $ | 6.629 | $ | 7.301 | 10.1 | % | |||||||||||
Fixed Portion of Variable Contracts
|
|||||||||||||||||||||||||||||
Deposits
|
$ | 0.081 | $ | 0.077 | $ | 0.085 | $ | 0.077 | $ | 0.080 | -1.2 | % | $ | 0.315 | $ | 0.319 | 1.3 | % | |||||||||||
Withdrawals and deaths
|
(0.177 | ) | (0.176 | ) | (0.152 | ) | (0.162 | ) | (0.162 | ) | 8.5 | % | (0.669 | ) | (0.652 | ) | 2.5 | % | |||||||||||
Net flows | $ | (0.096 | ) | $ | (0.099 | ) | $ | (0.067 | ) | $ | (0.085 | ) | $ | (0.082 | ) | 14.6 | % | $ | (0.354 | ) | $ | (0.333 | ) | 5.9 | % | ||||
Fixed Portion of Variable Contract Account Values
|
$ | 6.150 | $ | 6.149 | $ | 6.178 | $ | 6.273 | $ | 6.329 | 2.9 | % | $ | 6.150 | $ | 6.329 | 2.9 | % | |||||||||||
Variable Annuities, Including Fixed Portion of Variable Contracts
|
|||||||||||||||||||||||||||||
Deposits
|
$ | 0.524 | $ | 0.492 | $ | 0.478 | $ | 0.468 | $ | 0.496 | -5.3 | % | $ | 1.929 | $ | 1.934 | 0.3 | % | |||||||||||
Withdrawals and deaths
|
(0.698 | ) | (0.763 | ) | (0.668 | ) | (0.673 | ) | (0.660 | ) | 5.4 | % | (2.827 | ) | (2.764 | ) | 2.2 | % | |||||||||||
Net flows | $ | (0.174 | ) | $ | (0.271 | ) | $ | (0.190 | ) | $ | (0.205 | ) | $ | (0.164 | ) | 5.7 | % | $ | (0.898 | ) | $ | (0.830 | ) | 7.6 | % | ||||
Variable Contract Account Values
|
$ | 20.077 | $ | 20.549 | $ | 20.432 | $ | 18.395 | $ | 19.196 | -4.4 | % | $ | 20.077 | $ | 19.196 | -4.4 | % | |||||||||||
Average Daily Variable Annuity Separate Account Values
|
$ | 13.485 | $ | 14.178 | $ | 14.284 | $ | 13.217 | $ | 12.783 | -5.2 | % | $ | 12.930 | $ | 13.611 | 5.3 | % | |||||||||||
(Basis Point) | (Basis Point) | ||||||||||||||||||||||||||||
Interest Rate Spread (1)
|
Change
|
Change
|
|||||||||||||||||||||||||||
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses
|
5.68 | % | 5.61 | % | 5.55 | % | 5.53 | % | 5.40 | % | (28 | ) | 5.70 | % | 5.53 | % | (17 | ) | |||||||||||
Commercial mortgage loan prepayment and bond make whole premiums
|
0.20 | % | 0.35 | % | 0.23 | % | 0.04 | % | 0.05 | % | (15 | ) | 0.08 | % | 0.16 | % | 8 | ||||||||||||
Alternative investments
|
0.04 | % | 0.03 | % | 0.01 | % | 0.00 | % | 0.01 | % | (3 | ) | 0.02 | % | 0.01 | % | (1 | ) | |||||||||||
Net investment income yield on reserves | 5.92 | % | 5.99 | % | 5.79 | % | 5.57 | % | 5.46 | % | (46 | ) | 5.80 | % | 5.70 | % | (10 | ) | |||||||||||
Interest rate credited to contract holders
|
3.42 | % | 3.36 | % | 3.34 | % | 3.31 | % | 3.28 | % | (14 | ) | 3.49 | % | 3.32 | % | (17 | ) | |||||||||||
Interest rate spread | 2.50 | % | 2.63 | % | 2.45 | % | 2.26 | % | 2.18 | % | (32 | ) | 2.31 | % | 2.38 | % | 7 | ||||||||||||
(1)
|
For the annuity products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average
|
||||||||||||||||||||||||||||
invested assets on reserves. We exclude net investment income earned on investments supporting statutory surplus from our spread calculations. The
|
|||||||||||||||||||||||||||||
average crediting rate is calculated as interest credited before DSI amortization, plus the immediate annuity reserve change (included within benefits), divided
|
|||||||||||||||||||||||||||||
by the average fixed account values, including the fixed portion of variable annuities.
|
12/31/2011
|
|
PAGE 24 | ||||||||||||||||||||||||||
Life Insurance
|
||||||||||||||||||||||||||||
Income (Loss) from Operations, Operational Data and DAC, VOBA and DFEL Roll Forwards
|
||||||||||||||||||||||||||||
Unaudited (in millions)
|
||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
|||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
||||||||||||||||||||
Operating Revenues
|
||||||||||||||||||||||||||||
Insurance premiums
|
$ | 112.1 | $ | 108.1 | $ | 112.0 | $ | 103.9 | $ | 117.1 | 4.5 | % | $ | 439.4 | $ | 441.1 | 0.4 | % | ||||||||||
Surrender charges
|
22.6 | 23.0 | 29.6 | 20.9 | 22.8 | 0.9 | % | 100.0 | 96.3 | -3.7 | % | |||||||||||||||||
Mortality assessments
|
324.3 | 324.7 | 326.7 | 335.0 | 325.1 | 0.2 | % | 1,287.4 | 1,311.5 | 1.9 | % | |||||||||||||||||
Expense assessments
|
183.1 | 104.7 | 166.7 | 142.2 | 157.1 | -14.2 | % | 546.7 | 570.7 | 4.4 | % | |||||||||||||||||
Net investment income
|
567.9 | 579.1 | 588.0 | 568.7 | 558.1 | -1.7 | % | 2,185.8 | 2,293.9 | 4.9 | % | |||||||||||||||||
Other revenues and fees
|
7.4 | 7.4 | 5.9 | 5.4 | 6.6 | -10.8 | % | 30.3 | 25.3 | -16.5 | % | |||||||||||||||||
Total Operating Revenues | 1,217.4 | 1,147.0 | 1,228.9 | 1,176.1 | 1,186.8 | -2.5 | % | 4,589.6 | 4,738.8 | 3.3 | % | |||||||||||||||||
Operating Expenses
|
||||||||||||||||||||||||||||
Interest credited
|
302.9 | 302.1 | 307.5 | 311.9 | 313.5 | 3.5 | % | 1,198.8 | 1,235.0 | 3.0 | % | |||||||||||||||||
Benefits
|
400.7 | 447.2 | 609.4 | 152.5 | 460.1 | 14.8 | % | 1,734.1 | 1,669.2 | -3.7 | % | |||||||||||||||||
Underwriting, acquisition, insurance and other expenses
|
267.8 | 150.3 | 86.0 | 526.7 | 184.6 | -31.1 | % | 907.7 | 947.6 | 4.4 | % | |||||||||||||||||
Total Operating Expenses | 971.4 | 899.6 | 1,002.9 | 991.1 | 958.2 | -1.4 | % | 3,840.6 | 3,851.8 | 0.3 | % | |||||||||||||||||
Income (loss) from operations before federal income taxes
|
246.0 | 247.4 | 226.0 | 185.0 | 228.6 | -7.1 | % | 749.0 | 887.0 | 18.4 | % | |||||||||||||||||
Federal income tax expense (benefit)
|
80.5 | 81.1 | 73.6 | 53.4 | 74.6 | -7.3 | % | 235.7 | 282.7 | 19.9 | % | |||||||||||||||||
Income (Loss) from Operations | $ | 165.5 | $ | 166.3 | $ | 152.4 | $ | 131.6 | $ | 154.0 | -6.9 | % | $ | 513.3 | $ | 604.3 | 17.7 | % | ||||||||||
Effective Tax Rate
|
32.7 | % | 32.8 | % | 32.6 | % | 28.9 | % | 32.6 | % | 31.5 | % | 31.9 | % | ||||||||||||||
Average Stockholders' Equity, Excluding AOCI
|
||||||||||||||||||||||||||||
Average equity, including goodwill
|
$ | 8,403.4 | $ | 8,445.6 | $ | 8,557.8 | $ | 8,550.1 | $ | 8,188.3 | $ | 8,374.1 | $ | 8,435.5 | ||||||||||||||
Average goodwill
|
2,188.5 | 2,188.5 | 2,188.5 | 2,188.5 | 1,863.5 | 2,188.5 | 2,107.3 | |||||||||||||||||||||
Average equity, excluding goodwill
|
$ | 6,214.9 | $ | 6,257.1 | $ | 6,369.3 | $ | 6,361.6 | $ | 6,324.8 | $ | 6,185.6 | $ | 6,328.2 | ||||||||||||||
Return on Equity, Excluding AOCI
|
||||||||||||||||||||||||||||
Including goodwill
|
7.9 | % | 7.9 | % | 7.1 | % | 6.2 | % | 7.5 | % | 6.1 | % | 7.2 | % | ||||||||||||||
Excluding goodwill
|
10.7 | % | 10.6 | % | 9.6 | % | 8.3 | % | 9.7 | % | 8.3 | % | 9.5 | % | ||||||||||||||
Underwriting, Acquisition, Insurance and Other Expenses
|
||||||||||||||||||||||||||||
Commissions
|
$ | 190.4 | $ | 172.7 | $ | 166.4 | $ | 160.7 | $ | 178.7 | -6.1 | % | $ | 664.2 | $ | 678.5 | 2.2 | % | ||||||||||
General and administrative expenses
|
132.4 | 112.8 | 114.1 | 116.3 | 130.2 | -1.7 | % | 451.3 | 473.4 | 4.9 | % | |||||||||||||||||
Expenses associated with reserve financing
|
12.1 | 13.8 | 14.4 | 13.9 | 15.3 | 26.4 | % | 37.2 | 57.4 | 54.3 | % | |||||||||||||||||
Taxes, licenses and fees
|
37.6 | 36.1 | 34.0 | 39.7 | 34.0 | -9.6 | % | 128.1 | 143.8 | 12.3 | % | |||||||||||||||||
Amortization of sales force intangibles
|
1.0 | 1.0 | 1.0 | 1.0 | 1.0 | 0.0 | % | 4.0 | 4.0 | 0.0 | % | |||||||||||||||||
Total commissions and expenses incurred | 373.5 | 336.4 | 329.9 | 331.6 | 359.2 | -3.8 | % | 1,284.8 | 1,357.1 | 5.6 | % | |||||||||||||||||
Less: commissions and expenses capitalized
|
(270.7 | ) | (234.4 | ) | (232.3 | ) | (223.3 | ) | (257.6 | ) | 4.8 | % | (914.9 | ) | (947.6 | ) | -3.6 | % | ||||||||||
Amortization of DAC and VOBA, net of interest
|
165.0 | 48.3 | (11.6 | ) | 418.4 | 83.0 | -49.7 | % | 537.8 | 538.1 | 0.1 | % | ||||||||||||||||
Total Underwriting, Acquisition, Insurance and Other Expenses | $ | 267.8 | $ | 150.3 | $ | 86.0 | $ | 526.7 | $ | 184.6 | -31.1 | % | $ | 907.7 | $ | 947.6 | 4.4 | % | ||||||||||
General and Administrative Expenses - Basis Points on Average Account Values - Annualized
|
160 | 133 | 134 | 135 | 149 | (10 | ) | 140 | 138 | (2 | ) | |||||||||||||||||
DAC and VOBA
|
||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 5,538.6 | $ | 6,144.8 | $ | 6,349.3 | $ | 6,401.3 | $ | 5,332.3 | $ | 6,427.9 | $ | 6,144.8 | ||||||||||||||
Business acquired through reinsurance
|
- | - | - | 1.7 | 10.6 | - | 12.3 | |||||||||||||||||||||
Deferrals
|
270.7 | 234.4 | 232.3 | 223.3 | 257.6 | 914.9 | 947.6 | |||||||||||||||||||||
Amortization, net of interest:
|
||||||||||||||||||||||||||||
Unlocking | (14.2 | ) | 77.5 | 146.5 | (295.8 | ) | 63.7 | (1.8 | ) | (8.1 | ) | |||||||||||||||||
Other amortization, net of interest, excluding unlocking | (150.8 | ) | (125.8 | ) | (134.9 | ) | (122.6 | ) | (146.7 | ) | (536.0 | ) | (530.0 | ) | ||||||||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | 105.7 | 186.1 | 243.9 | (195.1 | ) | 174.6 | 377.1 | 409.5 | ||||||||||||||||||||
Adjustment related to realized (gains) losses
|
(23.0 | ) | (17.3 | ) | (10.9 | ) | 3.5 | (0.7 | ) | (1.9 | ) | (25.4 | ) | |||||||||||||||
Adjustment related to unrealized (gains) losses
|
523.5 | 35.7 | (181.0 | ) | (879.1 | ) | (169.0 | ) | (658.3 | ) | (1,193.4 | ) | ||||||||||||||||
Balance as of End-of-Period | $ | 6,144.8 | $ | 6,349.3 | $ | 6,401.3 | $ | 5,332.3 | $ | 5,347.8 | $ | 6,144.8 | $ | 5,347.8 | ||||||||||||||
DFEL
|
||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 1,091.4 | $ | 1,279.9 | $ | 1,405.6 | $ | 1,446.9 | $ | 1,088.4 | $ | 1,155.2 | $ | 1,279.9 | ||||||||||||||
Deferrals
|
116.6 | 125.9 | 115.7 | 118.7 | 122.3 | 471.7 | 482.6 | |||||||||||||||||||||
Amortization, net of interest:
|
||||||||||||||||||||||||||||
Unlocking | (15.4 | ) | 30.9 | (10.3 | ) | 10.7 | 8.3 | (24.3 | ) | 39.6 | ||||||||||||||||||
Other amortization, net of interest, excluding unlocking | (40.7 | ) | (30.5 | ) | (39.1 | ) | (41.8 | ) | (47.6 | ) | (150.4 | ) | (159.0 | ) | ||||||||||||||
Deferrals, net of amortization included in operating expense assessments | 60.5 | 126.3 | 66.3 | 87.6 | 83.0 | 297.0 | 363.2 | |||||||||||||||||||||
Adjustment related to realized (gains) losses
|
(5.3 | ) | (2.0 | ) | (1.4 | ) | 0.5 | (0.2 | ) | (0.3 | ) | (3.1 | ) | |||||||||||||||
Adjustment related to unrealized (gains) losses
|
133.3 | 1.4 | (23.6 | ) | (446.6 | ) | (65.5 | ) | (172.0 | ) | (534.3 | ) | ||||||||||||||||
Balance as of End-of-Period | $ | 1,279.9 | $ | 1,405.6 | $ | 1,446.9 | $ | 1,088.4 | $ | 1,105.7 | $ | 1,279.9 | $ | 1,105.7 |
12/31/2011
|
PAGE 25 | ||||||||||||||||||||||||||||
Life Insurance
|
|||||||||||||||||||||||||||||
Additional Operational Data
|
|||||||||||||||||||||||||||||
Unaudited (in billions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Sales by Product (in millions)
|
|||||||||||||||||||||||||||||
UL
|
|||||||||||||||||||||||||||||
Excluding MoneyGuard® | $ | 107.1 | $ | 84.9 | $ | 82.9 | $ | 74.2 | $ | 74.9 | -30.1 | % | $ | 352.7 | $ | 316.9 | -10.2 | % | |||||||||||
MoneyGuard® | 40.5 | 34.3 | 38.5 | 48.0 | 65.4 | 61.5 | % | 108.5 | 186.2 | 71.6 | % | ||||||||||||||||||
Total | 147.6 | 119.2 | 121.4 | 122.2 | 140.3 | -4.9 | % | 461.2 | 503.1 | 9.1 | % | ||||||||||||||||||
VUL
|
14.8 | 10.0 | 11.4 | 12.8 | 16.2 | 9.5 | % | 43.0 | 50.4 | 17.2 | % | ||||||||||||||||||
COLI and BOLI (1)
|
28.0 | 17.0 | 10.0 | 7.5 | 57.1 | 103.9 | % | 62.9 | 91.6 | 45.6 | % | ||||||||||||||||||
Term
|
15.4 | 12.8 | 14.1 | 12.4 | 15.2 | -1.3 | % | 69.5 | 54.5 | -21.6 | % | ||||||||||||||||||
Total | $ | 205.8 | $ | 159.0 | $ | 156.9 | $ | 154.9 | $ | 228.8 | 11.2 | % | $ | 636.6 | $ | 699.6 | 9.9 | % | |||||||||||
First Year Paid Premiums (in millions)
|
|||||||||||||||||||||||||||||
UL
|
|||||||||||||||||||||||||||||
Excluding MoneyGuard® | $ | 339.2 | $ | 301.8 | $ | 300.9 | $ | 286.0 | $ | 251.0 | -26.0 | % | $ | 1,068.7 | $ | 1,139.7 | 6.6 | % | |||||||||||
MoneyGuard® | 259.9 | 225.8 | 251.2 | 313.0 | 427.0 | 64.3 | % | 713.6 | 1,217.0 | 70.5 | % | ||||||||||||||||||
Total | 599.1 | 527.6 | 552.1 | 599.0 | 678.0 | 13.2 | % | 1,782.3 | 2,356.7 | 32.2 | % | ||||||||||||||||||
VUL
|
37.5 | 24.2 | 32.0 | 33.0 | 37.9 | 1.1 | % | 108.2 | 127.1 | 17.5 | % | ||||||||||||||||||
COLI and BOLI (1)
|
164.0 | 40.3 | 21.5 | 27.5 | 62.9 | -61.6 | % | 259.5 | 152.2 | -41.3 | % | ||||||||||||||||||
Term
|
15.4 | 12.8 | 14.1 | 12.4 | 15.2 | -1.3 | % | 69.5 | 54.5 | -21.6 | % | ||||||||||||||||||
Total | $ | 816.0 | $ | 604.9 | $ | 619.7 | $ | 671.9 | $ | 794.0 | -2.7 | % | $ | 2,219.5 | $ | 2,690.5 | 21.2 | % | |||||||||||
Life Insurance In Force
|
|||||||||||||||||||||||||||||
UL and other
|
$ | 297.837 | $ | 299.920 | $ | 302.205 | $ | 304.475 | $ | 307.900 | 3.4 | % | $ | 297.837 | $ | 307.900 | 3.4 | % | |||||||||||
Term insurance
|
265.154 | 266.764 | 268.520 | 269.969 | 271.931 | 2.6 | % | 265.154 | 271.931 | 2.6 | % | ||||||||||||||||||
Total | $ | 562.991 | $ | 566.684 | $ | 570.725 | $ | 574.444 | $ | 579.831 | 3.0 | % | $ | 562.991 | $ | 579.831 | 3.0 | % | |||||||||||
(Basis Point) | (Basis Point) | ||||||||||||||||||||||||||||
Interest-Sensitive Products Interest Rate Spreads(2)
|
Change
|
Change
|
|||||||||||||||||||||||||||
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses (3)
|
5.84 | % | 5.91 | % | 5.82 | % | 5.74 | % | 5.71 | % | (13 | ) | 5.87 | % | 5.79 | % | (8 | ) | |||||||||||
Commercial mortgage loan prepayment and bond make-whole premiums
|
0.21 | % | 0.04 | % | 0.14 | % | 0.06 | % | 0.03 | % | (18 | ) | 0.09 | % | 0.07 | % | (2 | ) | |||||||||||
Alternative investments
|
0.18 | % | 0.32 | % | 0.29 | % | 0.16 | % | 0.00 | % | (18 | ) | 0.17 | % | 0.19 | % | 2 | ||||||||||||
Net investment income yield on reserves | 6.23 | % | 6.27 | % | 6.25 | % | 5.96 | % | 5.74 | % | (49 | ) | 6.13 | % | 6.05 | % | (8 | ) | |||||||||||
Interest rate credited to contract holders
|
4.14 | % | 4.09 | % | 4.09 | % | 4.10 | % | 4.05 | % | (9 | ) | 4.16 | % | 4.08 | % | (8 | ) | |||||||||||
Interest rate spread | 2.09 | % | 2.18 | % | 2.16 | % | 1.86 | % | 1.69 | % | (40 | ) | 1.97 | % | 1.97 | % | - | ||||||||||||
Traditional Products Interest Rate Spreads(4)
|
|||||||||||||||||||||||||||||
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses
|
6.17 | % | 5.89 | % | 6.00 | % | 5.90 | % | 5.81 | % | (36 | ) | 6.12 | % | 5.90 | % | (22 | ) | |||||||||||
Commercial mortgage loan prepayment and bond make-whole premiums
|
0.12 | % | 0.10 | % | 0.00 | % | 0.03 | % | 0.01 | % | (11 | ) | 0.07 | % | 0.03 | % | (4 | ) | |||||||||||
Alternative investments
|
0.03 | % | 0.02 | % | 0.00 | % | 0.00 | % | 0.01 | % | (2 | ) | 0.02 | % | 0.01 | % | (1 | ) | |||||||||||
Net investment income yield on reserves | 6.32 | % | 6.01 | % | 6.00 | % | 5.93 | % | 5.83 | % | (49 | ) | 6.21 | % | 5.94 | % | (27 | ) | |||||||||||
(1)
|
COLI and BOLI are interest-sensitive and contain both UL and VUL products.
|
||||||||||||||||||||||||||||
(2)
|
For the interest-sensitive life products spread, the yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets.
|
||||||||||||||||||||||||||||
We exclude net investment income earned on investments supporting statutory surplus and reverse repurchase agreement interest expense from our yield and spread calculations. The
|
|||||||||||||||||||||||||||||
average crediting rate is calculated using interest credited on life products divided by average fixed account values.
|
|||||||||||||||||||||||||||||
(3)
|
Our yields on net investment income have been lowered due to holding higher cash balances related to our short-term liquidity strategy during recent volatile markets. The increased
|
||||||||||||||||||||||||||||
cash and short-term investment balances for the three months ended December 31, 2010 and March 31, 2011 reduced our yields by approximately 1 bp and 2 bps, respectively.
|
|||||||||||||||||||||||||||||
There was no impact for the three months ended June 30, 2011, September 30, 2011 and December 31, 2011, or the year ended December 31, 2011.
|
|||||||||||||||||||||||||||||
(4)
|
For the traditional life products, the yield on earning assets is calculated as net investment income on traditional investment portfolios divided by average earning assets. As of December
|
||||||||||||||||||||||||||||
31, 2011, interest-sensitive products represented approximately 89% of total interest-sensitive and traditional earning assets.
|
12/31/2011
|
PAGE 26 | ||||||||||||||||||||||||||||
Life Insurance
|
|||||||||||||||||||||||||||||
Account Value Roll Forwards
|
|||||||||||||||||||||||||||||
Unaudited (in billions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Interest-Sensitive Life (1)
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 28.794 | $ | 29.365 | $ | 29.739 | $ | 30.148 | $ | 30.638 | 6.4 | % | $ | 28.192 | $ | 29.365 | 4.2 | % | |||||||||||
Deposits
|
1.324 | 1.085 | 1.126 | 1.165 | 1.297 | -2.0 | % | 4.128 | 4.673 | 13.2 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.318 | ) | (0.295 | ) | (0.296 | ) | (0.232 | ) | (0.268 | ) | 15.7 | % | (1.383 | ) | (1.091 | ) | 21.1 | % | |||||||||||
Net flows | 1.006 | 0.790 | 0.830 | 0.933 | 1.029 | 2.3 | % | 2.745 | 3.582 | 30.5 | % | ||||||||||||||||||
Contract holder assessments
|
(0.734 | ) | (0.715 | ) | (0.724 | ) | (0.726 | ) | (0.751 | ) | -2.3 | % | (2.757 | ) | (2.916 | ) | -5.8 | % | |||||||||||
Interest credited
|
0.299 | 0.299 | 0.303 | 0.283 | 0.303 | 1.3 | % | 1.185 | 1.188 | 0.3 | % | ||||||||||||||||||
Balance as of End-of-Period (Gross) | 29.365 | 29.739 | 30.148 | 30.638 | 31.219 | 6.3 | % | 29.365 | 31.219 | 6.3 | % | ||||||||||||||||||
Reinsurance ceded
|
(0.888 | ) | (0.885 | ) | (0.881 | ) | (0.877 | ) | (0.870 | ) | 2.0 | % | (0.888 | ) | (0.870 | ) | 2.0 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 28.477 | $ | 28.854 | $ | 29.267 | $ | 29.761 | $ | 30.349 | 6.6 | % | $ | 28.477 | $ | 30.349 | 6.6 | % | |||||||||||
VUL
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 5.562 | $ | 5.962 | $ | 6.171 | $ | 6.157 | $ | 5.375 | -3.4 | % | $ | 5.287 | $ | 5.962 | 12.8 | % | |||||||||||
Deposits
|
0.240 | 0.185 | 0.148 | 0.178 | 0.209 | -12.9 | % | 0.806 | 0.720 | -10.7 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.166 | ) | (0.154 | ) | (0.110 | ) | (0.148 | ) | (0.207 | ) | -24.7 | % | (0.494 | ) | (0.619 | ) | -25.3 | % | |||||||||||
Net flows | 0.074 | 0.031 | 0.038 | 0.030 | 0.002 | -97.3 | % | 0.312 | 0.101 | -67.6 | % | ||||||||||||||||||
Contract holder assessments
|
(0.092 | ) | (0.092 | ) | (0.091 | ) | (0.093 | ) | (0.093 | ) | -1.1 | % | (0.361 | ) | (0.369 | ) | -2.2 | % | |||||||||||
Investment income and change in market value
|
0.418 | 0.270 | 0.039 | (0.719 | ) | 0.403 | -3.6 | % | 0.724 | (0.007 | ) |
NM
|
|||||||||||||||||
Balance as of End-of-Period (Gross) | 5.962 | 6.171 | 6.157 | 5.375 | 5.687 | -4.6 | % | 5.962 | 5.687 | -4.6 | % | ||||||||||||||||||
Reinsurance ceded
|
(0.854 | ) | (0.876 | ) | (0.857 | ) | (0.717 | ) | (0.758 | ) | 11.2 | % | (0.854 | ) | (0.758 | ) | 11.2 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 5.108 | $ | 5.295 | $ | 5.300 | $ | 4.658 | $ | 4.929 | -3.5 | % | $ | 5.108 | $ | 4.929 | -3.5 | % | |||||||||||
Total Life Insurance
|
|||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 34.356 | $ | 35.327 | $ | 35.910 | $ | 36.305 | $ | 36.013 | 4.8 | % | $ | 33.479 | $ | 35.327 | 5.5 | % | |||||||||||
Deposits
|
1.564 | 1.270 | 1.274 | 1.343 | 1.506 | -3.7 | % | 4.934 | 5.393 | 9.3 | % | ||||||||||||||||||
Withdrawals and deaths
|
(0.484 | ) | (0.449 | ) | (0.406 | ) | (0.380 | ) | (0.475 | ) | 1.9 | % | (1.877 | ) | (1.710 | ) | 8.9 | % | |||||||||||
Net flows | 1.080 | 0.821 | 0.868 | 0.963 | 1.031 | -4.5 | % | 3.057 | 3.683 | 20.5 | % | ||||||||||||||||||
Contract holder assessments
|
(0.826 | ) | (0.807 | ) | (0.815 | ) | (0.819 | ) | (0.844 | ) | -2.2 | % | (3.118 | ) | (3.285 | ) | -5.4 | % | |||||||||||
Investment income and change in market value
|
0.717 | 0.569 | 0.342 | (0.436 | ) | 0.706 | -1.5 | % | 1.909 | 1.181 | -38.1 | % | |||||||||||||||||
Balance as of End-of-Period (Gross) | 35.327 | 35.910 | 36.305 | 36.013 | 36.906 | 4.5 | % | 35.327 | 36.906 | 4.5 | % | ||||||||||||||||||
Reinsurance ceded
|
(1.742 | ) | (1.761 | ) | (1.738 | ) | (1.594 | ) | (1.628 | ) | 6.5 | % | (1.742 | ) | (1.628 | ) | 6.5 | % | |||||||||||
Balance as of End-of-Period (Net of Ceded) | $ | 33.585 | $ | 34.149 | $ | 34.567 | $ | 34.419 | $ | 35.278 | 5.0 | % | $ | 33.585 | $ | 35.278 | 5.0 | % | |||||||||||
(1)
|
Includes UL, interest-sensitive whole life and the fixed investment option of VUL products.
|
12/31/2011
|
|
PAGE 27 | ||||||||||||||||||||||||||
Group Protection
|
||||||||||||||||||||||||||||
Income (Loss) from Operations and Operational Data
|
||||||||||||||||||||||||||||
Unaudited (in millions)
|
||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
|||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
||||||||||||||||||||
Operating Revenues
|
||||||||||||||||||||||||||||
Insurance premiums
|
$ | 424.2 | $ | 436.6 | $ | 460.2 | $ | 439.7 | $ | 441.8 | 4.1 | % | $ | 1,682.3 | $ | 1,778.3 | 5.7 | % | ||||||||||
Net investment income
|
38.1 | 39.1 | 38.5 | 37.8 | 36.7 | -3.7 | % | 141.0 | 152.1 | 7.9 | % | |||||||||||||||||
Other revenues and fees
|
2.0 | 2.2 | 1.9 | 1.9 | 2.5 | 25.0 | % | 7.8 | 8.5 | 9.0 | % | |||||||||||||||||
Total Operating Revenues | 464.3 | 477.9 | 500.6 | 479.4 | 481.0 | 3.6 | % | 1,831.1 | 1,938.9 | 5.9 | % | |||||||||||||||||
Operating Expenses
|
||||||||||||||||||||||||||||
Interest credited
|
0.9 | 0.9 | 0.8 | 0.8 | 0.9 | 0.0 | % | 3.3 | 3.4 | 0.0 | ||||||||||||||||||
Benefits
|
322.9 | 326.7 | 345.1 | 319.3 | 322.8 | 0.0 | % | 1,296.3 | 1,313.9 | 1.4 | % | |||||||||||||||||
Underwriting, acquisition, insurance and other expenses
|
112.8 | 112.7 | 114.6 | 116.5 | 122.7 | 8.8 | % | 421.6 | 466.5 | 10.6 | % | |||||||||||||||||
Total Operating Expenses | 436.6 | 440.3 | 460.5 | 436.6 | 446.4 | 2.2 | % | 1,721.2 | 1,783.8 | 3.6 | % | |||||||||||||||||
Income (loss) from operations before federal income taxes
|
27.7 | 37.6 | 40.1 | 42.8 | 34.6 | 24.9 | % | 109.9 | 155.1 | 41.1 | % | |||||||||||||||||
Federal income tax expense (benefit)
|
9.7 | 13.2 | 14.0 | 15.0 | 12.1 | 24.7 | % | 38.3 | 54.3 | 41.8 | % | |||||||||||||||||
Income (Loss) from Operations | $ | 18.0 | $ | 24.4 | $ | 26.1 | $ | 27.8 | $ | 22.5 | 25.0 | % | $ | 71.6 | $ | 100.8 | 40.8 | % | ||||||||||
Effective Tax Rate
|
35.0 | % | 35.1 | % | 34.9 | % | 35.0 | % | 35.0 | % | 34.8 | % | 35.0 | % | ||||||||||||||
Average Stockholders' Equity, Excluding AOCI
|
||||||||||||||||||||||||||||
Average equity, including goodwill
|
$ | 1,163.2 | $ | 1,177.6 | $ | 1,168.4 | $ | 1,166.2 | $ | 1,181.1 | $ | 1,121.0 | $ | 1,173.3 | ||||||||||||||
Average goodwill
|
274.3 | 274.3 | 274.3 | 274.3 | 274.3 | 274.3 | 274.3 | |||||||||||||||||||||
Average equity, excluding goodwill
|
$ | 888.9 | $ | 903.3 | $ | 894.1 | $ | 891.9 | $ | 906.8 | $ | 846.7 | $ | 899.0 | ||||||||||||||
Return on Equity, Excluding AOCI
|
||||||||||||||||||||||||||||
Including goodwill
|
6.2 | % | 8.3 | % | 8.9 | % | 9.5 | % | 7.6 | % | 6.4 | % | 8.6 | % | ||||||||||||||
Excluding goodwill
|
8.1 | % | 10.8 | % | 11.7 | % | 12.5 | % | 9.9 | % | 8.5 | % | 11.2 | % | ||||||||||||||
Underwriting, Acquisition, Insurance and Other Expenses
|
||||||||||||||||||||||||||||
Commissions
|
$ | 48.7 | $ | 50.4 | $ | 49.4 | $ | 50.0 | $ | 51.2 | 5.1 | % | $ | 190.0 | $ | 201.0 | 5.8 | % | ||||||||||
General and administrative expenses
|
61.0 | 51.4 | 56.4 | 60.1 | 75.6 | 23.9 | % | 208.3 | 243.5 | 16.9 | % | |||||||||||||||||
Taxes, licenses and fees
|
9.8 | 10.7 | 10.1 | 11.7 | 9.0 | -8.2 | % | 38.9 | 41.5 | 6.7 | % | |||||||||||||||||
Total commissions and expenses incurred | 119.5 | 112.5 | 115.9 | 121.8 | 135.8 | 13.6 | % | 437.2 | 486.0 | 11.2 | % | |||||||||||||||||
Less: commissions and expenses capitalized
|
(20.6 | ) | (11.0 | ) | (12.1 | ) | (15.7 | ) | (26.4 | ) | -28.2 | % | (61.4 | ) | (65.2 | ) | -6.2 | % | ||||||||||
Amortization of DAC and VOBA, net of interest
|
13.9 | 11.2 | 10.8 | 10.4 | 13.3 | -4.3 | % | 45.8 | 45.7 | -0.2 | % | |||||||||||||||||
Total Underwriting, Acquisition, Insurance and Other Expenses | $ | 112.8 | $ | 112.7 | $ | 114.6 | $ | 116.5 | $ | 122.7 | 8.8 | % | $ | 421.6 | $ | 466.5 | 10.6 | % | ||||||||||
General and Administrative Expenses as a Percentage of Premiums | 14.4 | % | 11.8 | % | 12.3 | % | 13.7 | % | 17.1 | % | 12.4 | % | 13.7 | % | ||||||||||||||
DAC and VOBA
|
||||||||||||||||||||||||||||
Balance as of beginning-of-period
|
$ | 168.3 | $ | 175.0 | $ | 174.8 | $ | 176.1 | $ | 181.4 | $ | 159.5 | $ | 175.0 | ||||||||||||||
Deferrals
|
20.6 | 11.0 | 12.1 | 15.7 | 26.4 | 61.4 | 65.2 | |||||||||||||||||||||
Amortization, net of interest
|
(13.9 | ) | (11.2 | ) | (10.8 | ) | (10.4 | ) | (13.3 | ) | (45.9 | ) | (45.7 | ) | ||||||||||||||
Deferrals, net of amortization included in operating underwriting, acquisition, insurance and other expenses | 6.7 | (0.2 | ) | 1.3 | 5.3 | 13.1 | 15.5 | 19.5 | ||||||||||||||||||||
Balance as of End-of-Period | $ | 175.0 | $ | 174.8 | $ | 176.1 | $ | 181.4 | $ | 194.5 | $ | 175.0 | $ | 194.5 | ||||||||||||||
Annualized Sales by Product Line
|
||||||||||||||||||||||||||||
Life
|
$ | 60.7 | $ | 17.4 | $ | 23.6 | $ | 30.8 | $ | 89.6 | 47.6 | % | $ | 132.0 | $ | 161.4 | 22.3 | % | ||||||||||
Disability
|
68.6 | 18.0 | 30.7 | 34.3 | 92.8 | 35.3 | % | 153.9 | 175.8 | 14.2 | % | |||||||||||||||||
Dental
|
26.7 | 10.0 | 12.8 | 9.6 | 25.0 | -6.4 | % | 66.8 | 57.4 | -14.1 | % | |||||||||||||||||
Total | $ | 156.0 | $ | 45.4 | $ | 67.1 | $ | 74.7 | $ | 207.4 | 32.9 | % | $ | 352.7 | $ | 394.6 | 11.9 | % | ||||||||||
Insurance Premiums by Product Line
|
||||||||||||||||||||||||||||
Life
|
$ | 163.2 | $ | 170.4 | $ | 173.6 | $ | 173.5 | $ | 175.5 | 7.5 | % | $ | 639.1 | $ | 693.0 | 8.4 | % | ||||||||||
Disability
|
184.8 | 186.2 | 189.8 | 190.5 | 190.7 | 3.2 | % | 726.7 | 757.2 | 4.2 | % | |||||||||||||||||
Dental
|
44.2 | 46.1 | 45.3 | 45.9 | 46.2 | 4.5 | % | 167.1 | 183.5 | 9.8 | % | |||||||||||||||||
Other
|
32.0 | 33.9 | 51.5 | 29.8 | 29.4 | -8.1 | % | 149.4 | 144.6 | -3.2 | % | |||||||||||||||||
Total | $ | 424.2 | $ | 436.6 | $ | 460.2 | $ | 439.7 | $ | 441.8 | 4.1 | % | $ | 1,682.3 | $ | 1,778.3 | 5.7 | % | ||||||||||
Income (Loss) from Operations by Product Line
|
||||||||||||||||||||||||||||
Life
|
$ | 12.4 | $ | 8.4 | $ | 8.9 | $ | 11.5 | $ | 5.4 | -56.5 | % | $ | 36.7 | $ | 34.2 | -6.8 | % | ||||||||||
Disability
|
4.5 | 16.5 | 17.2 | 15.1 | 14.5 | 222.2 | % | 33.7 | 63.3 | 87.8 | % | |||||||||||||||||
Dental
|
(0.2 | ) | (1.9 | ) | (1.4 | ) | 0.1 | 1.6 |
NM
|
(4.0 | ) | (1.6 | ) | 60.0 | % | |||||||||||||
Other
|
1.3 | 1.4 | 1.4 | 1.1 | 1.0 | -23.1 | % | 5.2 | 4.9 | -5.8 | % | |||||||||||||||||
Total | $ | 18.0 | $ | 24.4 | $ | 26.1 | $ | 27.8 | $ | 22.5 | 25.0 | % | $ | 71.6 | $ | 100.8 | 40.8 | % | ||||||||||
Loss Ratios by Product Line
|
||||||||||||||||||||||||||||
Life
|
72.0 | % | 75.9 | % | 76.1 | % | 72.1 | % | 75.1 | % | 75.8 | % | 74.8 | % | ||||||||||||||
Disability
|
78.2 | % | 70.1 | % | 69.4 | % | 70.4 | % | 69.6 | % | 75.4 | % | 69.9 | % | ||||||||||||||
Dental
|
76.8 | % | 83.7 | % | 79.9 | % | 76.2 | % | 71.6 | % | 81.5 | % | 77.9 | % | ||||||||||||||
Combined Loss Ratios | 75.5 | % | 74.1 | % | 73.4 | % | 71.8 | % | 72.2 | % | 76.2 | % | 72.9 | % |
12/31/2011
|
|
PAGE 28 | |||||||||||||||||||||||||||
Other Operations
|
|||||||||||||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Operating Revenues
|
|||||||||||||||||||||||||||||
Insurance premiums
|
$ | 1.4 | $ | 0.1 | $ | - | $ | 0.8 | $ | - | -100.0 | % | $ | 1.5 | $ | 0.9 | -40.0 | % | |||||||||||
Net investment income
|
81.7 | 80.1 | 76.4 | 79.9 | 70.7 | -13.5 | % | 325.6 | 307.1 | -5.7 | % | ||||||||||||||||||
Amortization of deferred gain on business sold through reinsurance (1)
|
18.2 | 18.0 | 18.0 | 18.1 | 18.1 | -0.5 | % | 72.5 | 72.2 | -0.4 | % | ||||||||||||||||||
Other revenues and fees
|
(1.4 | ) | 1.7 | 1.5 | 1.4 | (0.7 | ) | 50.0 | % | 12.7 | 3.9 | -69.3 | % | ||||||||||||||||
Media revenues
|
21.7 | 16.5 | 19.3 | 19.9 | 21.3 | -1.8 | % | 74.9 | 77.0 | 2.8 | % | ||||||||||||||||||
Total Operating Revenues | 121.6 | 116.4 | 115.2 | 120.1 | 109.4 | -10.0 | % | 487.2 | 461.1 | -5.4 | % | ||||||||||||||||||
Operating Expenses
|
|||||||||||||||||||||||||||||
Interest credited
|
30.3 | 28.8 | 29.8 | 26.5 | 28.5 | -5.9 | % | 119.8 | 113.6 | -5.2 | % | ||||||||||||||||||
Benefits
|
34.0 | 32.5 | 29.1 | 33.7 | 31.1 | -8.5 | % | 138.6 | 126.4 | -8.8 | % | ||||||||||||||||||
Underwriting, acquisition, insurance and other expenses
|
85.0 | 27.6 | 8.4 | 21.6 | 14.7 | -82.7 | % | 182.7 | 72.3 | -60.4 | % | ||||||||||||||||||
Inter-segment reimbursement associated with reserve financing and LOC expenses (2)
|
(1.4 | ) | (2.0 | ) | (2.3 | ) | (2.4 | ) | (2.5 | ) | -78.6 | % | (2.4 | ) | (9.2 | ) |
NM
|
||||||||||||
Taxes, licenses and fees
|
(2.9 | ) | 0.7 | (3.3 | ) | 13.7 | 15.5 |
NM
|
(3.9 | ) | 26.6 |
NM
|
|||||||||||||||||
Interest and debt expenses
|
74.3 | 71.6 | 72.0 | 71.0 | 70.5 | -5.1 | % | 285.9 | 285.1 | -0.3 | % | ||||||||||||||||||
Media expenses
|
16.0 | 16.7 | 16.8 | 17.3 | 18.3 | 14.4 | % | 59.2 | 69.1 | 16.7 | % | ||||||||||||||||||
Total Operating Expenses | 235.3 | 175.9 | 150.5 | 181.4 | 176.1 | -25.2 | % | 779.9 | 683.9 | -12.3 | % | ||||||||||||||||||
Income (Loss) from operations before federal income taxes
|
(113.7 | ) | (59.5 | ) | (35.3 | ) | (61.3 | ) | (66.7 | ) | 41.3 | % | (292.7 | ) | (222.8 | ) | 23.9 | % | |||||||||||
Federal income tax expense (benefit)
|
(40.0 | ) | (22.6 | ) | (12.9 | ) | (17.1 | ) | (23.9 | ) | 40.3 | % | (106.6 | ) | (76.5 | ) | 28.2 | % | |||||||||||
Income (Loss) From Operations | $ | (73.7 | ) | $ | (36.9 | ) | $ | (22.4 | ) | $ | (44.2 | ) | $ | (42.8 | ) | 41.9 | % | $ | (186.1 | ) | $ | (146.3 | ) | 21.4 | % | ||||
Run Off Institutional Pensions Account Values - Balance at End-of-Period
|
$ | 1.869 | $ | 1.867 | $ | 1.845 | $ | 1.822 | $ | 1.809 | -3.2 | % | $ | 1.869 | $ | 1.809 | -3.2 | % | |||||||||||
Discontinued Operations
|
|||||||||||||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 |
Change
|
2010 | 2011 |
Change
|
|||||||||||||||||||||
Discontinued Operations Before Disposal
|
|||||||||||||||||||||||||||||
Income (loss) from discontinued operations before federal income taxes
|
$ | - | $ | - | $ | - | $ | - | $ | - |
NM
|
$ | (12.7 | ) | $ | - | 100.0 | % | |||||||||||
Federal income tax expense (benefit)
|
- | - | - | - | - |
NM
|
(1.1 | ) | - | 100.0 | % | ||||||||||||||||||
Income (Loss) From Discontinued Operations Before Disposal | - | - | - | - | - |
NM
|
(11.6 | ) | - | 100.0 | % | ||||||||||||||||||
Disposal
|
|||||||||||||||||||||||||||||
Gain (loss) on disposal before federal income taxes
|
- | - | - | (2.9 | ) | - |
NM
|
66.0 | (2.9 | ) |
NM
|
||||||||||||||||||
Federal income tax expense (benefit)
|
- | - | - | 5.5 | - |
NM
|
25.5 | 5.5 | -78.4 | % | |||||||||||||||||||
Gain (Loss) on Disposal | - | - | - | (8.4 | ) | - |
NM
|
40.5 | (8.4 | ) |
NM
|
||||||||||||||||||
Income (Loss) From Discontinued Operations | $ | - | $ | - | $ | - | $ | (8.4 | ) | $ | - |
NM
|
$ | 28.9 | $ | (8.4 | ) |
NM
|
|||||||||||
(1)
|
Represents the amortization of deferred gain recognized on the business sold through indemnity reinsurance to Swiss Re.
|
||||||||||||||||||||||||||||
(2)
|
Represents reimbursements to Other Operations from the Life Insurance segment for the use of proceeds from certain issuances of senior notes that were used as long-term structured
|
||||||||||||||||||||||||||||
solutions, net of expenses incurred by Other Operations for its use of LOCs. The inter-segment amounts are not reported on our Consolidated Statements of Income (Loss).
|
12/31/2011
|
PAGE 29 | ||||||||||||||||||||||||||||
Consolidated Deposits, Net Flows and Account Balances
|
|||||||||||||||||||||||||||||
Unaudited (in billions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Deposits
|
|||||||||||||||||||||||||||||
Annuities - fixed annuities (1)
|
$ | 1.155 | $ | 1.116 | $ | 1.307 | $ | 1.294 | $ | 1.062 | -8.1 | % | $ | 5.568 | $ | 4.779 | -14.2 | % | |||||||||||
Retirement Plan Services - fixed annuities
|
0.340 | 0.346 | 0.318 | 0.378 | 0.394 | 15.9 | % | 1.332 | 1.436 | 7.8 | % | ||||||||||||||||||
Annuities - variable annuities
|
1.435 | 1.523 | 1.620 | 1.415 | 1.313 | -8.5 | % | 5.099 | 5.871 | 15.1 | % | ||||||||||||||||||
Retirement Plan Services - variable products (2)
|
1.018 | 0.995 | 0.881 | 1.078 | 1.176 | 15.5 | % | 3.969 | 4.130 | 4.1 | % | ||||||||||||||||||
Life Insurance:
|
|||||||||||||||||||||||||||||
Interest-Sensitive Life | 1.324 | 1.085 | 1.126 | 1.165 | 1.297 | -2.0 | % | 4.128 | 4.673 | 13.2 | % | ||||||||||||||||||
VUL | 0.240 | 0.185 | 0.148 | 0.178 | 0.209 | -12.9 | % | 0.806 | 0.720 | -10.7 | % | ||||||||||||||||||
Total Deposits | $ | 5.512 | $ | 5.250 | $ | 5.400 | $ | 5.508 | $ | 5.451 | -1.1 | % | $ | 20.902 | $ | 21.609 | 3.4 | % | |||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 |
Change
|
2010 | 2011 |
Change
|
|||||||||||||||||||||
Net Flows
|
|||||||||||||||||||||||||||||
Annuities - fixed annuities (1)
|
$ | 0.562 | $ | 0.603 | $ | 0.782 | $ | 0.704 | $ | 0.498 | -11.4 | % | $ | 3.548 | $ | 2.587 | -27.1 | % | |||||||||||
Retirement Plan Services - fixed annuities
|
(0.137 | ) | 0.010 | (0.119 | ) | 0.022 | (0.019 | ) | 86.1 | % | (0.347 | ) | (0.106 | ) | 69.5 | % | |||||||||||||
Annuities - variable annuities
|
(0.019 | ) | (0.120 | ) | (0.082 | ) | (0.041 | ) | (0.153 | ) |
NM
|
0.007 | (0.396 | ) |
NM
|
||||||||||||||
Retirement Plan Services - variable products (2)
|
(0.167 | ) | 0.124 | (0.059 | ) | 0.307 | 0.238 | 242.5 | % | 0.056 | 0.610 |
NM
|
|||||||||||||||||
Life Insurance:
|
|||||||||||||||||||||||||||||
Interest-Sensitive Life | 1.006 | 0.790 | 0.830 | 0.933 | 1.029 | 2.3 | % | 2.745 | 3.582 | 30.5 | % | ||||||||||||||||||
VUL | 0.074 | 0.031 | 0.038 | 0.030 | 0.002 | -97.3 | % | 0.312 | 0.101 | -67.6 | % | ||||||||||||||||||
Total Net Flows | $ | 1.319 | $ | 1.438 | $ | 1.390 | $ | 1.955 | $ | 1.595 | 20.9 | % | $ | 6.321 | $ | 6.378 | 0.9 | % | |||||||||||
As of
|
|||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
||||||||||||||||||||||||
2010 | 2011 | 2011 | 2011 | 2011 |
Change
|
||||||||||||||||||||||||
Account Balances
|
|||||||||||||||||||||||||||||
Annuities - fixed annuities (1)
|
$ | 19.990 | $ | 19.998 | $ | 20.289 | $ | 20.455 | $ | 20.524 | 2.7 | % | |||||||||||||||||
Retirement Plan Services - fixed annuities
|
12.779 | 12.956 | 13.025 | 13.395 | 13.630 | 6.7 | % | ||||||||||||||||||||||
Annuities - variable annuities
|
64.858 | 67.787 | 68.551 | 60.774 | 65.010 | 0.2 | % | ||||||||||||||||||||||
Retirement Plan Services - variable products (2)
|
26.045 | 27.352 | 27.262 | 23.625 | 25.503 | -2.1 | % | ||||||||||||||||||||||
Life Insurance:
|
|||||||||||||||||||||||||||||
Interest-Sensitive Life | 28.477 | 28.854 | 29.267 | 29.761 | 30.349 | 6.6 | % | ||||||||||||||||||||||
VUL | 5.108 | 5.295 | 5.300 | 4.658 | 4.929 | -3.5 | % | ||||||||||||||||||||||
Total Account Balances | $ | 157.257 | $ | 162.242 | $ | 163.694 | $ | 152.668 | $ | 159.945 | 1.7 | % | |||||||||||||||||
(1)
|
Includes fixed portion of variable annuities.
|
||||||||||||||||||||||||||||
(2)
|
Includes amounts attributable to mutual fund net flows. Mutual fund account values are not included in the separate accounts reported on our Consolidated
|
||||||||||||||||||||||||||||
Balance Sheets, as we do not have any ownership interest in them.
|
12/31/2011
|
PAGE 30 | ||||||||||||||||||||||||||||
Consolidated Investment Data
|
|||||||||||||||||||||||||||||
Unaudited (in millions)
|
|||||||||||||||||||||||||||||
For the Three Months Ended
|
For the Years Ended
|
||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
Dec.
|
Dec.
|
%
|
|||||||||||||||||||||
2010
|
2011
|
2011
|
2011
|
2011
|
Change
|
2010
|
2011
|
Change
|
|||||||||||||||||||||
Net Investment Income
|
|||||||||||||||||||||||||||||
Available-for-sale fixed maturity securities
|
$ | 972.6 | $ | 984.8 | $ | 982.5 | $ | 972.7 | $ | 972.0 | -0.1 | % | $ | 3,742.9 | $ | 3,912.0 | 4.5 | % | |||||||||||
Available-for-sale equity securities
|
1.5 | 1.2 | 1.1 | 1.2 | 1.7 | 13.3 | % | 5.7 | 5.2 | -8.8 | % | ||||||||||||||||||
Available-for-sale VIEs' fixed maturity securities
|
3.1 | 3.1 | 3.1 | 3.6 | 3.9 | 25.8 | % | 14.2 | 13.7 | -3.5 | % | ||||||||||||||||||
Trading securities
|
39.4 | 38.6 | 38.7 | 38.4 | 38.1 | -3.3 | % | 157.1 | 153.8 | -2.1 | % | ||||||||||||||||||
Mortgage loans on real estate
|
111.6 | 104.1 | 106.1 | 106.9 | 103.2 | -7.5 | % | 441.4 | 420.3 | -4.8 | % | ||||||||||||||||||
Real estate
|
6.4 | 7.7 | 5.5 | 5.0 | 4.4 | -31.3 | % | 24.6 | 22.6 | -8.1 | % | ||||||||||||||||||
Policy loans
|
42.0 | 40.6 | 43.1 | 41.7 | 40.1 | -4.5 | % | 168.9 | 165.5 | -2.0 | % | ||||||||||||||||||
Invested cash
|
1.8 | 1.4 | 0.8 | 1.0 | 0.5 | -72.2 | % | 7.3 | 3.7 | -49.3 | % | ||||||||||||||||||
Other investments
|
33.3 | 38.0 | 27.3 | 9.8 | (9.0 | ) |
NM
|
98.4 | 66.1 | -32.8 | % | ||||||||||||||||||
Investment income | 1,211.7 | 1,219.5 | 1,208.2 | 1,180.3 | 1,154.9 | -4.7 | % | 4,660.5 | 4,762.9 | 2.2 | % | ||||||||||||||||||
Investment expense
|
(29.0 | ) | (28.3 | ) | (27.6 | ) | (29.6 | ) | (25.7 | ) | 11.4 | % | (119.6 | ) | (111.2 | ) | 7.0 | % | |||||||||||
Net Investment Income | $ | 1,182.7 | $ | 1,191.2 | $ | 1,180.6 | $ | 1,150.7 | $ | 1,129.2 | -4.5 | % | $ | 4,540.9 | $ | 4,651.7 | 2.4 | % | |||||||||||
Average Invested Assets (Amortized Cost)
|
$ | 79,278.9 | $ | 79,995.7 | $ | 81,101.9 | $ | 82,253.8 | $ | 83,210.5 | $ | 77,558.2 | $ | 81,640.5 | |||||||||||||||
Net investment income yield on invested assets Invested Assets | 5.97 | % | 5.96 | % | 5.82 | % | 5.60 | % | 5.43 | % | 5.85 | % | 5.70 | % | |||||||||||||||
Realized Gain (Loss) Related to Investments
|
|||||||||||||||||||||||||||||
Available-for-sale fixed maturity securities:
|
|||||||||||||||||||||||||||||
Gross gains | $ | 10.9 | $ | 36.1 | $ | 30.6 | $ | 17.5 | $ | 1.5 | -86.2 | % | $ | 107.1 | $ | 85.7 | -20.0 | % | |||||||||||
Gross losses | (73.7 | ) | (62.7 | ) | (50.8 | ) | (63.1 | ) | (50.4 | ) | 31.6 | % | (248.0 | ) | (227.0 | ) | 8.5 | % | |||||||||||
Equity securities:
|
|||||||||||||||||||||||||||||
Gross gains | - | 8.3 | 1.1 | 0.2 | 2.1 |
NM
|
8.8 | 11.7 | 33.0 | % | |||||||||||||||||||
Gross losses | - | (0.2 | ) | - | - | (0.1 | ) |
NM
|
(3.5 | ) | (0.3 | ) | 91.4 | % | |||||||||||||||
Gain (loss) on other investments
|
(19.8 | ) | 12.8 | (8.2 | ) | (3.3 | ) | (9.9 | ) | 50.0 | % | (52.7 | ) | (8.6 | ) | 83.7 | % | ||||||||||||
Associated amortization of DAC, VOBA, DSI, DFEL and changes in other contract holder funds and funds withheld
|
|||||||||||||||||||||||||||||
reinsurance liabilities
|
(11.6 | ) | (11.4 | ) | (6.9 | ) | 5.2 | (0.3 | ) | 97.4 | % | 7.9 | (13.4 | ) |
NM
|
||||||||||||||
Total realized gain (loss) on investments, pre-tax
|
(94.2 | ) | (17.1 | ) | (34.2 | ) | (43.5 | ) | (57.1 | ) | 39.4 | % | (180.4 | ) | (151.9 | ) | 15.8 | % | |||||||||||
Federal income tax expense (benefit) (1) | (33.0 | ) | (6.0 | ) | (12.0 | ) | (15.2 | ) | (20.0 | ) | 39.4 | % | (63.2 | ) | (53.2 | ) | 15.8 | % | |||||||||||
Total, After-Tax | $ | (61.2 | ) | $ | (11.1 | ) | $ | (22.2 | ) | $ | (28.3 | ) | $ | (37.1 | ) | 39.4 | % | $ | (117.2 | ) | $ | (98.7 | ) | 15.8 | % | ||||
As of December 31, 2010
|
As of December 31, 2011
|
||||||||||||||||||||||||||||
Amount
|
% of Total |
Amount
|
% of Total | ||||||||||||||||||||||||||
Available-for-Sale and Trading Securities
|
|||||||||||||||||||||||||||||
Fixed maturity securities (fair value)
|
$ | 71,208.1 | 99.7 | % | $ | 78,805.4 | 99.8 | % | |||||||||||||||||||||
Fixed maturity securities (amortized cost)
|
68,084.2 | 99.7 | % | 71,959.8 | 99.8 | % | |||||||||||||||||||||||
Equity securities (fair value)
|
199.3 | 0.3 | % | 141.0 | 0.2 | % | |||||||||||||||||||||||
Equity securities (amortized cost)
|
180.9 | 0.3 | % | 136.9 | 0.2 | % | |||||||||||||||||||||||
% of Available-for-Sale Fixed Maturity Securities, Based on Amortized Cost
|
|||||||||||||||||||||||||||||
Investment grade
|
93.7 | % | 94.4 | % | |||||||||||||||||||||||||
Below investment grade
|
6.3 | % | 5.6 | % | |||||||||||||||||||||||||
General Account Investments at Amortized Cost
|
As of December 31, 2010
|
As of December 31, 2011
|
|||||||||||||||||||||||||||
Amount
|
% of Total |
Amount
|
% of Total | ||||||||||||||||||||||||||
Available-for-Sale Fixed Maturities Securities:
|
|||||||||||||||||||||||||||||
Corporate bonds
|
$ | 48,863.9 | 74.3 | % | $ | 53,661.5 | 77.0 | % | |||||||||||||||||||||
U.S. Government bonds
|
149.7 | 0.2 | % | 439.2 | 0.6 | % | |||||||||||||||||||||||
Foreign government bonds
|
472.8 | 0.7 | % | 667.7 | 1.0 | % | |||||||||||||||||||||||
Mortgage-backed securities
|
10,817.3 | 16.5 | % | 9,331.3 | 13.4 | % | |||||||||||||||||||||||
ABS CDOs
|
173.9 | 0.3 | % | 120.8 | 0.2 | % | |||||||||||||||||||||||
State and municipal bonds
|
3,221.8 | 4.9 | % | 3,490.0 | 5.0 | % | |||||||||||||||||||||||
Hybrid and redeemable preferred securities
|
1,476.3 | 2.2 | % | 1,277.2 | 1.8 | % | |||||||||||||||||||||||
VIEs' fixed maturity securities
|
569.8 | 0.9 | % | 673.3 | 1.0 | % | |||||||||||||||||||||||
Total | $ | 65,745.5 | 100.0 | % | $ | 69,661.0 | 100.0 | % | |||||||||||||||||||||
As of
|
|||||||||||||||||||||||||||||
Dec.
|
March
|
June
|
Sept.
|
Dec.
|
%
|
||||||||||||||||||||||||
Composition of Investment Portfolio
|
2010 | 2011 | 2011 | 2011 | 2011 |
Change
|
|||||||||||||||||||||||
Available-for-sale securities, at fair value:
|
|||||||||||||||||||||||||||||
Fixed maturity | $ | 68,030.2 | $ | 69,231.0 | $ | 70,920.2 | $ | 74,591.5 | $ | 75,432.8 | 10.9 | % | |||||||||||||||||
Equity | 197.2 | 144.6 | 143.7 | 137.4 | 138.8 | -29.6 | % | ||||||||||||||||||||||
VIEs' fixed maturity | 583.7 | 586.8 | 592.6 | 699.5 | 700.1 | 19.9 | % | ||||||||||||||||||||||
Trading securities
|
2,596.4 | 2,598.0 | 2,624.7 | 2,726.2 | 2,674.7 | 3.0 | % | ||||||||||||||||||||||
Mortgage loans on real estate and real estate
|
6,954.2 | 6,937.6 | 7,020.4 | 7,029.1 | 7,079.4 | 1.8 | % | ||||||||||||||||||||||
Policy loans
|
2,864.7 | 2,837.1 | 2,877.1 | 2,873.5 | 2,884.6 | 0.7 | % | ||||||||||||||||||||||
Derivative investments
|
1,076.0 | 945.7 | 1,097.0 | 3,028.7 | 3,151.0 | 192.8 | % | ||||||||||||||||||||||
Other investments
|
1,037.7 | 1,029.4 | 1,002.3 | 1,104.7 | 1,068.6 | 3.0 | % | ||||||||||||||||||||||
Total | $ | 83,340.1 | $ | 84,310.2 | $ | 86,278.0 | $ | 92,190.6 | $ | 93,130.0 | 11.7 | % | |||||||||||||||||
(1)
|
We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and
|
||||||||||||||||||||||||||||
federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure.
|
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