##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 001-33808
 SYMETRA FINANCIAL CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-0978027(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 777 108th Avenue NE, Suite 1200
Bellevue, Washington 98004  (Address of principal executive offices, including zip code)  (425) 256-8000  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1: Financial Statements:Consolidated Balance Sheets
    
    
    5Consolidated Statements of Income
    
    
    6Consolidated Statements of Changes in Stockholders Equity
    
    
    7Consolidated Statements of Cash Flows
    
    
    8Condensed Notes to Consolidated Financial Statements
    
    
    9Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 3: Quantitative and Qualitative Disclosures about Market Risk
    
    
    54Item 4: Controls and Procedures
    
    
    54PART II  OTHER INFORMATIONItem 1: Legal Proceedings
    
    
    55Item 1A: Risk Factors
    
    
    55Item 6: Exhibits
    
    
    55Signatures
    
    
    56EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



Unless the context otherwise requires, references in this quarterly report on Form 10-Q to
we, our, us and the Company are to Symetra Financial Corporation together with its
subsidiaries. References to Symetra refer to Symetra Financial Corporation on a stand-alone,
non-consolidated basis.
 Forward-Looking Statements
  
    
    estimates or projections of revenues, net income, net income per share, adjusted
operating income, adjusted operating income per share, market share or other financial
forecasts;
    
    trends in operations, financial performance and financial condition;
    
    financial and operating targets or plans; and
    
    business and growth strategy.
  
    
    general economic, market or business conditions, including further economic downturns
or other adverse conditions in the global and domestic capital and credit markets;
    
    the availability of capital and financing;
    
    potential investment losses;
    
    the effects of fluctuations in interest rates and a prolonged low interest rate
environment;
    
    recorded reserves for future policy benefits and claims subsequently proving to be
inadequate or inaccurate;
    
    deviations from assumptions used in setting prices for insurance and annuity products;
    
    continued viability of certain products under various economic and other conditions;
    
    market pricing and competitive trends related to insurance products and services;
    
    changes in amortization of deferred policy acquisition costs or deferred sales
inducements;
    
    financial strength or credit ratings downgrades;
    
    the continued availability and cost of reinsurance coverage;
    
    changes in laws or regulations, or their interpretation, including those that could
increase Symetras business costs and required capital levels;
    
    the ability of subsidiaries to pay dividends to Symetra;
    
    the ability of the new executive leadership team to successfully implement business
strategies;
    
    the effects of implementation of the Patient Protection and Affordable Care Act
(PPACA);
    
    the effects of implementation of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the
Dodd Frank Act); and
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##### Table of Contents




    
    the risks that are described in Part II, Item 1A  Risk Factors in this report; and
Part I, Item 1A  Risk Factors in our Annual Report on Form 10-K for the year ended
December 31, 2010.
  4




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##### Table of Contents



PART I  Financial Information
 
 Item 1.
    
    Financial Statements
 
 CONSOLIDATED BALANCE SHEETS(In millions, except share and per share data)
 As of
    
    
    As ofMarch 31, 2011
    
    
    December 31, 2010(Unaudited)ASSETSInvestments:Available-for-sale securities:Fixed maturities, at fair value (amortized cost: $20,911.1and $20,416.5, respectively)
    
    $
    21,785.4
    
    
    $
    21,281.8Marketable equity securities, at fair value (cost: $52.8and $52.8, respectively)
    
    
    46.4
    
    
    
    45.1Trading securities:Marketable equity securities, at fair value (cost: $192.2and $168.0, respectively)
    
    
    224.7
    
    
    
    189.3Mortgage loans, net
    
    
    1,862.0
    
    
    
    1,713.0Policy loans
    
    
    70.4
    
    
    
    71.5Investments in limited partnerships (includes $34.9and $36.5 measured at fair value,
respectively)
    
    
    198.8
    
    
    
    186.9Other invested assets
    
    
    12.8
    
    
    
    12.6Total investments
    
    
    24,200.5
    
    
    
    23,500.2Cash and cash equivalents
    
    
    307.9
    
    
    
    274.6Accrued investment income
    
    
    267.3
    
    
    
    257.6Accounts receivable and other receivables
    
    
    63.6
    
    
    
    65.6Reinsurance recoverables
    
    
    283.9
    
    
    
    280.8Deferred policy acquisition costs
    
    
    262.5
    
    
    
    250.0Goodwill
    
    
    28.9
    
    
    
    28.4Other assets
    
    
    106.2
    
    
    
    98.0Separate account assets
    
    
    901.5
    
    
    
    881.7Total assets
    
    $
    26,422.3
    
    
    $
    25,636.9LIABILITIES AND STOCKHOLDERS EQUITYFunds held under deposit contracts
    
    $
    21,553.4
    
    
    $
    20,953.3Future policy benefits
    
    
    399.3
    
    
    
    398.4Policy and contract claims
    
    
    108.2
    
    
    
    116.6Unearned premiums
    
    
    12.5
    
    
    
    12.2Other policyholders funds
    
    
    112.9
    
    
    
    111.0Notes payable
    
    
    449.1
    
    
    
    449.0Deferred income tax liabilities, net
    
    
    110.2
    
    
    
    99.0Other liabilities
    
    
    344.2
    
    
    
    235.1Separate account liabilities
    
    
    901.5
    
    
    
    881.7Total liabilities
    
    
    23,991.3
    
    
    
    23,256.3Commitments and contingencies (Note 10)Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, $0.01 par value; 750,000,000 shares authorized; 118,535,188issued and
outstanding as of March 31, 2011; 118,216,470 issued and 118,215,701 outstanding as of
December 31, 2010
    
    
    1.2
    
    
    
    1.2Additional paid-in capital
    
    
    1,451.1
    
    
    
    1,450.2Retained earnings
    
    
    544.7
    
    
    
    496.7Accumulated other comprehensive income, net of taxes
    
    
    434.0
    
    
    
    432.5Total stockholders equity
    
    
    2,431.0
    
    
    
    2,380.6Total liabilities and stockholders equity
    
    $
    26,422.3
    
    
    $
    25,636.9
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CONSOLIDATED STATEMENTS OF INCOME
 (In millions, except per share data)
(Unaudited)
 For the Three Months EndedMarch 31,2011
    
    
    2010Revenues:Premiums
    
    $
    120.9
    
    
    $
    119.0Net investment income
    
    
    310.0
    
    
    
    286.9Policy fees, contract charges, and other
    
    
    44.7
    
    
    
    40.5Net realized investment gains:Total other-than-temporary impairment losses on securities
    
    
    (0.9
    )
    
    
    (17.9
    )Less: portion of losses recognized in other comprehensive income
    
    
    
    
    
    
    8.2Net impairment losses recognized in earnings
    
    
    (0.9
    )
    
    
    (9.7
    )Other net realized investment gains
    
    
    16.5
    
    
    
    16.5Total net realized investment gains
    
    
    15.6
    
    
    
    6.8Total revenues
    
    
    491.2
    
    
    
    453.2Benefits and expenses:Policyholder benefits and claims
    
    
    92.3
    
    
    
    86.2Interest credited
    
    
    228.3
    
    
    
    218.5Other underwriting and operating expenses
    
    
    66.0
    
    
    
    59.6Interest expense
    
    
    8.0
    
    
    
    8.0Amortization of deferred policy acquisition costs
    
    
    20.1
    
    
    
    15.4Total benefits and expenses
    
    
    414.7
    
    
    
    387.7Income from operations before income taxes
    
    
    76.5
    
    
    
    65.5Provision for income taxes:Current
    
    
    11.2
    
    
    
    9.9Deferred
    
    
    10.4
    
    
    
    9.3Total provision for income taxes
    
    
    21.6
    
    
    
    19.2Net income
    
    $
    54.9
    
    
    $
    46.3Net income per common share:Basic
    
    $
    0.40
    
    
    $
    0.35Diluted
    
    $
    0.40
    
    
    $
    0.35Weighted-average number of common shares outstanding:Basic
    
    
    137.292
    
    
    
    131.018Diluted
    
    
    137.300
    
    
    
    131.038Cash dividends declared per common share
    
    $
    0.05
    
    
    $
    
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (In millions)
(Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    EquityBalances as of January 1, 2010
    
    $
    0.9
    
    
    $
    1,165.7
    
    
    $
    316.4
    
    
    $
    (49.7
    )
    
    $
    1,433.3Common stock issued (net of issuance costs of $20.4)
    
    
    0.3
    
    
    
    282.4
    
    
    
    
    
    
    
    
    
    
    
    282.7Comprehensive income, net of taxes:Net income
    
    
    
    
    
    
    
    
    
    
    46.3
    
    
    
    
    
    
    
    46.3Other comprehensive income (net of taxes: $112.7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    209.2
    
    
    
    209.2Total comprehensive income, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    255.5Stock-based compensation
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Balances as of March 31, 2010
    
    $
    1.2
    
    
    $
    1,448.3
    
    
    $
    362.7
    
    
    $
    159.5
    
    
    $
    1,971.7Balances as of January 1, 2011
    
    $
    1.2
    
    
    $
    1,450.2
    
    
    $
    496.7
    
    
    $
    432.5
    
    
    $
    2,380.6Comprehensive income, net of taxes:Net income
    
    
    
    
    
    
    
    
    
    
    54.9
    
    
    
    
    
    
    
    54.9Other comprehensive income (net of taxes: $0.8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.5
    
    
    
    1.5Total comprehensive income, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56.4Stock-based compensation
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    0.9Dividends declared
    
    
    
    
    
    
    
    
    
    
    (6.9
    )
    
    
    
    
    
    
    (6.9
    )Balances as of March 31, 2011
    
    $
    1.2
    
    
    $
    1,451.1
    
    
    $
    544.7
    
    
    $
    434.0
    
    
    $
    2,431.0
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CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In millions)
(Unaudited)
 For the Three Months EndedMarch 31,2011
    
    
    2010Cash flows from operating activitiesNet income
    
    $
    54.9
    
    
    $
    46.3Adjustments to reconcile net income to net cash provided by operating activities:Net realized investment gains
    
    
    (15.6
    )
    
    
    (6.8
    )Accretion and amortization of invested assets, net
    
    
    9.8
    
    
    
    8.8Accrued interest on bonds
    
    
    (7.8
    )
    
    
    (11.5
    )Amortization and depreciation
    
    
    6.0
    
    
    
    4.2Deferred income tax provision
    
    
    10.4
    
    
    
    9.3Interest credited on deposit contracts
    
    
    228.3
    
    
    
    218.5Mortality and expense charges and administrative fees
    
    
    (26.7
    )
    
    
    (25.4
    )Changes in:Accrued investment income
    
    
    (9.7
    )
    
    
    (10.3
    )Deferred policy acquisition costs, net
    
    
    (16.2
    )
    
    
    (14.1
    )Other receivables
    
    
    (2.0
    )
    
    
    0.2Future policy benefits
    
    
    0.9
    
    
    
    0.9Policy and contract claims
    
    
    (8.4
    )
    
    
    (5.0
    )Current income taxes
    
    
    4.0
    
    
    
    0.6Other assets and liabilities
    
    
    (14.7
    )
    
    
    (6.3
    )Other, net
    
    
    1.0
    
    
    
    0.2Total adjustments
    
    
    159.3
    
    
    
    163.3Net cash provided by operating activities
    
    
    214.2
    
    
    
    209.6Cash flows from investing activitiesPurchases of:Fixed maturities and marketable equity securities
    
    
    (1,089.7
    )
    
    
    (1,024.8
    )Other invested assets and investments in limited partnerships
    
    
    (5.4
    )
    
    
    (8.9
    )Issuances of mortgage loans
    
    
    (183.5
    )
    
    
    (45.8
    )Issuances of policy loans
    
    
    (3.1
    )
    
    
    (4.7
    )Maturities, calls, paydowns, and other
    
    
    559.4
    
    
    
    387.5Sales of:Fixed maturities and marketable equity securities
    
    
    125.0
    
    
    
    176.4Other invested assets and investments in limited partnerships
    
    
    4.1
    
    
    
    4.9Repayments of mortgage loans
    
    
    32.9
    
    
    
    18.8Repayments of policy loans
    
    
    3.9
    
    
    
    4.8Net increase (decrease) in short-term investments
    
    
    0.2
    
    
    
    (51.9
    )Other, net
    
    
    (2.1
    )
    
    
    (0.4
    )Net cash used in investing activities
    
    
    (558.3
    )
    
    
    (544.1
    )Cash flows from financing activitiesPolicyholder account balances:Deposits
    
    
    722.8
    
    
    
    495.3Withdrawals
    
    
    (332.4
    )
    
    
    (295.2
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    282.7Cash dividends paid on common stock
    
    
    (6.9
    )
    
    
    Other, net
    
    
    (6.1
    )
    
    
    (16.8
    )Net cash provided by financing activities
    
    
    377.4
    
    
    
    466.0Net increase in cash and cash equivalents
    
    
    33.3
    
    
    
    131.5Cash and cash equivalents at beginning of period
    
    
    274.6
    
    
    
    257.8Cash and cash equivalents at end of period
    
    $
    307.9
    
    
    $
    389.3Supplemental disclosures of cash flow informationNon-cash transactions during the period:Investments in limited partnerships and capital obligations incurred
    
    $
    13.4
    
    
    $
    18.6Bond exchanges
    
    
    18.8
    
    
    
    6.0
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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
 1. Description of Business
  2. Summary of Significant Accounting Policies
 Basis of Presentation and Use of Estimates
     Adoption of New Accounting Pronouncements
 ASU 2010-06, Improving Disclosures about Fair Value Measurement
 Fair Value Measurements and Disclosures (Topic 820)  Improving Disclosures
about Fair Value Measurement
 ASU 2010-15, How Investments Held through Separate Accounts Affect an Insurers Consolidation
Analysis of Those Investments
 Financial Services  Insurance (Topic 944)  How
Investments Held through Separate Accounts Affect an Insurers Consolidation Analysis of Those
Investments
 9




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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
  Accounting Pronouncements Not Yet Adopted
 ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
 Financial Services  Insurance (Topic 944) 
Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
 ASU 2011-02, A Creditors Determination of Whether a Restructuring is a Troubled Debt
Restructuring
 Receivables (Topic 310)  A Creditors
Determination of Whether a Restructuring is a Troubled Debt Restructuring. Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit
Losses
 3. Earnings Per Share
    10




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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
  For the Three Months EndedMarch 31,2011
    
    
    2010Numerator:Net income, as reported
    
    $
    54.9
    
    
    $
    46.3Denominator:Weighted-average common shares outstanding  basic
    
    
    137.292
    
    
    
    131.018Add: dilutive effect of restricted stock
    
    
    0.008
    
    
    
    0.020Weighted-average common shares outstanding  diluted
    
    
    137.300
    
    
    
    131.038Net income per common share:Basic
    
    $
    0.40
    
    
    $
    0.35Diluted
    
    $
    0.40
    
    
    $
    0.35
 4. Investments
  Cost or
    
    
    Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    OTTI inAs of March 31, 2011
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    AOCIFixed maturities:U.S. government and agencies
    
    $
    154.8
    
    
    $
    2.8
    
    
    $
    (0.9
    )
    
    $
    156.7
    
    
    $
    (0.1
    )State and political subdivisions
    
    
    471.2
    
    
    
    5.3
    
    
    
    (13.7
    )
    
    
    462.8
    
    
    
    (0.2
    )Corporate securities
    
    
    14,344.6
    
    
    
    820.7
    
    
    
    (168.4
    )
    
    
    14,996.9
    
    
    
    (18.9
    )Residential mortgage-backed securities
    
    
    3,711.1
    
    
    
    140.1
    
    
    
    (35.9
    )
    
    
    3,815.3
    
    
    
    (39.2
    )Commercial mortgage-backed securities
    
    
    1,706.6
    
    
    
    108.1
    
    
    
    (11.8
    )
    
    
    1,802.9
    
    
    
    (3.2
    )Other debt obligations
    
    
    522.8
    
    
    
    34.9
    
    
    
    (6.9
    )
    
    
    550.8
    
    
    
    (4.4
    )Total fixed maturities
    
    
    20,911.1
    
    
    
    1,111.9
    
    
    
    (237.6
    )
    
    
    21,785.4
    
    
    
    (66.0
    )Marketable equity securities, available-for-sale
    
    
    52.8
    
    
    
    0.3
    
    
    
    (6.7
    )
    
    
    46.4
    
    
    
    Total
    
    $
    20,963.9
    
    
    $
    1,112.2
    
    
    $
    (244.3
    )
    
    $
    21,831.8
    
    
    $
    (66.0
    )
 Cost or
    
    
    Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    OTTI inAs of December 31, 2010
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    AOCIFixed maturities:U.S. government and agencies
    
    $
    30.3
    
    
    $
    2.8
    
    
    $
    
    
    
    $
    33.1
    
    
    $
    (0.1
    )State and political subdivisions
    
    
    462.9
    
    
    
    5.3
    
    
    
    (15.4
    )
    
    
    452.8
    
    
    
    (0.2
    )Corporate securities
    
    
    13,891.7
    
    
    
    855.3
    
    
    
    (205.6
    )
    
    
    14,541.4
    
    
    
    (26.2
    )Residential mortgage-backed securities
    
    
    3,707.2
    
    
    
    148.9
    
    
    
    (54.5
    )
    
    
    3,801.6
    
    
    
    (40.0
    )Commercial mortgage-backed securities
    
    
    1,782.2
    
    
    
    115.2
    
    
    
    (10.1
    )
    
    
    1,887.3
    
    
    
    (3.3
    )Other debt obligations
    
    
    542.2
    
    
    
    35.8
    
    
    
    (12.4
    )
    
    
    565.6
    
    
    
    (6.4
    )Total fixed maturities
    
    
    20,416.5
    
    
    
    1,163.3
    
    
    
    (298.0
    )
    
    
    21,281.8
    
    
    
    (76.2
    )Marketable equity securities, available-for-sale
    
    
    52.8
    
    
    
    0.1
    
    
    
    (7.8
    )
    
    
    45.1
    
    
    
    Total
    
    $
    20,469.3
    
    
    $
    1,163.4
    
    
    $
    (305.8
    )
    
    $
    21,326.9
    
    
    $
    (76.2
    )
  11




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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
  Less Than 12 Months
    
    
    12 Months or MoreGross
    
    
    
    
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    # of
    
    
    Fair
    
    
    Unrealized
    
    
    # ofAs of March 31, 2011
    
    Value
    
    
    Losses
    
    
    Securities
    
    
    Value
    
    
    Losses
    
    
    SecuritiesFixed maturities:U.S. government and agencies
    
    $
    124.1
    
    
    $
    (0.9
    )
    
    
    4
    
    
    $
    
    
    
    $
    
    
    
    
    State and political subdivisions
    
    
    141.2
    
    
    
    (3.2
    )
    
    
    20
    
    
    
    126.7
    
    
    
    (10.5
    )
    
    
    21Corporate securities
    
    
    2,483.2
    
    
    
    (79.5
    )
    
    
    227
    
    
    
    844.3
    
    
    
    (88.9
    )
    
    
    93Residential mortgage-backed securities
    
    
    659.2
    
    
    
    (21.9
    )
    
    
    50
    
    
    
    199.0
    
    
    
    (14.0
    )
    
    
    28Commercial mortgage-backed securities
    
    
    167.7
    
    
    
    (4.5
    )
    
    
    24
    
    
    
    61.2
    
    
    
    (7.3
    )
    
    
    17Other debt obligations
    
    
    37.3
    
    
    
    (0.7
    )
    
    
    7
    
    
    
    81.6
    
    
    
    (6.2
    )
    
    
    8Total fixed maturities
    
    $
    3,612.7
    
    
    $
    (110.7
    )
    
    
    332
    
    
    $
    1,312.8
    
    
    $
    (126.9
    )
    
    
    167Marketable equity securities,
available-for-sale
    
    
    19.2
    
    
    
    (1.2
    )
    
    
    1
    
    
    
    25.6
    
    
    
    (5.5
    )
    
    
    2Total
    
    $
    3,631.9
    
    
    $
    (111.9
    )
    
    
    333
    
    
    $
    1,338.4
    
    
    $
    (132.4
    )
    
    
    169
 Less Than 12 Months
    
    
    12 Months or MoreGross
    
    
    
    
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    # of
    
    
    Fair
    
    
    Unrealized
    
    
    # ofAs of December 31, 2010
    
    Value
    
    
    Losses
    
    
    Securities
    
    
    Value
    
    
    Losses
    
    
    SecuritiesFixed maturities:State and political subdivisions
    
    $
    139.1
    
    
    $
    (3.3
    )
    
    
    19
    
    
    $
    146.9
    
    
    $
    (12.1
    )
    
    
    24Corporate securities
    
    
    2,191.5
    
    
    
    (92.2
    )
    
    
    203
    
    
    
    897.7
    
    
    
    (113.4
    )
    
    
    105Residential mortgage-backed securities
    
    
    525.8
    
    
    
    (18.6
    )
    
    
    37
    
    
    
    273.1
    
    
    
    (35.9
    )
    
    
    42Commercial mortgage-backed securities
    
    
    160.5
    
    
    
    (2.9
    )
    
    
    26
    
    
    
    63.2
    
    
    
    (7.2
    )
    
    
    17Other debt obligations
    
    
    41.4
    
    
    
    (0.8
    )
    
    
    7
    
    
    
    94.9
    
    
    
    (11.6
    )
    
    
    10Total fixed maturities
    
    $
    3,058.3
    
    
    $
    (117.8
    )
    
    
    292
    
    
    $
    1,475.8
    
    
    $
    (180.2
    )
    
    
    198Marketable equity securities,
available-for-sale
    
    
    19.9
    
    
    
    (0.7
    )
    
    
    2
    
    
    
    24.1
    
    
    
    (7.1
    )
    
    
    3Total
    
    $
    3,078.2
    
    
    $
    (118.5
    )
    
    
    294
    
    
    $
    1,499.9
    
    
    $
    (187.3
    )
    
    
    201
   Amortized
    
    
    FairCost
    
    
    ValueOne year or less
    
    $
    492.6
    
    
    $
    502.3Over one year through five years
    
    
    3,310.4
    
    
    
    3,510.5Over five years through ten years
    
    
    6,290.3
    
    
    
    6,622.4Over ten years
    
    
    4,919.7
    
    
    
    5,030.0Residential mortgage-backed securities
    
    
    3,711.1
    
    
    
    3,815.3Commercial mortgage-backed securities
    
    
    1,706.6
    
    
    
    1,802.9Other asset-backed securities
    
    
    480.4
    
    
    
    502.0Total fixed maturities
    
    $
    20,911.1
    
    
    $
    21,785.4
 12




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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
  For the Three Months EndedMarch 31,2011
    
    
    2010Fixed maturities
    
    $
    286.7
    
    
    $
    271.0Marketable equity securities, available-for-sale
    
    
    0.6
    
    
    
    0.6Marketable equity securities, trading
    
    
    0.9
    
    
    
    0.7Mortgage loans
    
    
    27.9
    
    
    
    18.8Policy loans
    
    
    1.0
    
    
    
    1.1Investments in limited partnerships
    
    
    (2.6
    )
    
    
    (1.2
    )Other
    
    
    1.3
    
    
    
    1.1Total investment income
    
    
    315.8
    
    
    
    292.1Investment expenses
    
    
    (5.8
    )
    
    
    (5.2
    )Net investment income
    
    $
    310.0
    
    
    $
    286.9
  For the Three Months EndedMarch 31,2011
    
    
    2010Fixed maturities:Gross gains on sales
    
    $
    2.7
    
    
    $
    10.4Gross losses on sales
    
    
    (6.1
    )
    
    
    (1.1
    )Other-than-temporary impairments
    
    
    (0.9
    )
    
    
    (9.7
    )Other(1)
    
    
    8.2
    
    
    
    2.3Total fixed maturities
    
    
    3.9
    
    
    
    1.9Marketable equity securities, trading(2)
    
    
    12.2
    
    
    
    7.6Other invested assets
    
    
    0.5
    
    
    
    (1.4
    )Deferred policy acquisition costs adjustment
    
    
    (1.0
    )
    
    
    (1.3
    )Net realized investment gains
    
    $
    15.6
    
    
    $
    6.8
 
 (1)
    
    This includes net gains on calls and redemptions and changes in
the fair value of the Companys convertible securities held as of
period end totaling $1.8 and $2.5 for the three months ended
March 31, 2011 and 2010, respectively.(2)
    
    This includes changes in fair value of trading securities held as
of period end, totaling $11.6 and $4.8 of net gains for the three
months ended March 31, 2011 and 2010, respectively. Other-Than-Temporary Impairments
 i.e.
  
    
    Extent and duration of the decline in fair value below cost or amortized cost;
    
    The financial condition and near-term prospects of the issuer of the security,
including any specific events that may affect its operations, earnings potential or
compliance with terms and covenants of the security;
    
    Changes in the financial condition of the securitys underlying collateral;
    
    Any downgrades of the security by a rating agency;
 13




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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
 
    
    Any reduction or elimination of dividends or non-payment of scheduled interest
payments;
    
    Other indications that a credit loss has occurred; and
    
    For fixed maturities, the Companys intent to sell or whether it is more likely than
not the Company will be required to sell the fixed maturity prior to recovery of its
amortized cost, considering any regulatory developments and the Companys liquidity needs.
 i.e.
 Determination of OTTI on Corporate Securities
  
    
    Expected cash flows of the issuer;
    
    Fundamentals of the industry in which the issuer operates;
    
    Fundamentals of the issuer to determine what the Company would recover if the issuer
were to file for bankruptcy, compared to the price at which the market is trading;
    
    Earnings multiples for an issuers industry or sector of the industry, divided by the
outstanding debt to determine an expected recovery value of the security in the case of a
liquidation;
    
    Expectations regarding defaults and recovery rates;
    
    Changes to the rating of the security by a rating agency; and
    
    Additional market information.
 Determination of OTTI on Structured Securities
  
    
    Discounted cash flow analysis based on the future cash flows the Company expects to
recover;
    
    Level of creditworthiness;
    
    Delinquency ratios and loan-to-value ratios;
    
    Average cumulative collateral loss, vintage year and level of subordination;
    
    Susceptibility to fair value fluctuations due to changes in the interest rate
environment;
    
    Susceptibility to variability of prepayments; and
    
    Susceptibility to reinvestment risk.
 14




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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
  As of March 31, 2011
    
    
    As of December 31, 2010Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    LossesFixed maturitiesUnderwater by 20% or more:Less than 6 consecutive months
    
    $
    25.4
    
    
    $
    (7.7
    )
    
    $
    69.1
    
    
    $
    (23.7
    )6 consecutive months or more
    
    
    29.6
    
    
    
    (12.5
    )
    
    
    93.9
    
    
    
    (36.2
    )Total underwater by 20% or more
    
    
    55.0
    
    
    
    (20.2
    )
    
    
    163.0
    
    
    
    (59.9
    )All other underwater fixed maturities
    
    
    4,870.5
    
    
    
    (217.4
    )
    
    
    4,371.1
    
    
    
    (238.1
    )Total underwater fixed maturities
    
    $
    4,925.5
    
    
    $
    (237.6
    )
    
    $
    4,534.1
    
    
    $
    (298.0
    )Marketable equity securities, available-for-saleUnderwater by 20% or more:Less than 6 consecutive months
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6 consecutive months or more
    
    
    1.7
    
    
    
    (4.4
    )
    
    
    1.7
    
    
    
    (4.4
    )Total underwater by 20% or more
    
    
    1.7
    
    
    
    (4.4
    )
    
    
    1.7
    
    
    
    (4.4
    )All other underwater marketable equity securities, available-for-sale
    
    
    43.1
    
    
    
    (2.3
    )
    
    
    42.3
    
    
    
    (3.4
    )Total underwater marketable equity securities, available-for-sale
    
    $
    44.8
    
    
    $
    (6.7
    )
    
    $
    44.0
    
    
    $
    (7.8
    )
    For the Three Months EndedMarch 31,2011
    
    
    2010Balance, beginning of period
    
    $
    68.0
    
    
    $
    69.6Increases recognized in the current period:For which an OTTI was not previously recognized
    
    
    0.4
    
    
    
    6.0For which an OTTI was previously recognized
    
    
    
    
    
    
    1.5Decreases attributable to:Securities sold or paid down during the period
    
    
    (16.2
    )
    
    
    (7.6
    )Balance, end of period
    
    $
    52.2
    
    
    $
    69.5
 5. Mortgage Loans
  15




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
  Allowance for Mortgage Loans
  
    
    Lower Risk Loans Loans with an LTV ratio of less than 65%, and a DSCR of
greater than 1.50.
    
    Medium Risk Loans Loans that have an LTV ratio of less than 65% but a DSCR
below 1.50, or loans with an LTV ratio between 65% and 80%, and a DSCR of greater than
1.50.
    
    Higher Risk Loans All loans with an LTV ratio greater than 80%, or loans which
have an LTV ratio between 65% and 80%, and a DSCR of less than 1.50.
  As of March 31, 2011
    
    
    As of December 31, 2010Carrying 
Value
    
    
    % of Total
    
    

Carrying
Value
    
    
    % of TotalLower Risk
    
    $
    1,020.4
    
    
    
    54.6
    %
    
    $
    917.5
    
    
    
    53.3
    %Medium Risk
    
    
    380.8
    
    
    
    20.4
    
    
    
    430.4
    
    
    
    25.0Higher Risk
    
    
    468.6
    
    
    
    25.0
    
    
    
    372.3
    
    
    
    21.7Credit quality indicator total
    
    
    1,869.8
    
    
    
    100.0
    %
    
    
    1,720.2
    
    
    
    100.0
    %Other (1)
    
    
    (7.8
    )
    
    
    
    
    
    
    (7.2
    )Total
    
    $
    1,862.0
    
    
    
    
    
    
    $
    1,713.0
 
 (1)
    
    Other includes the allowance for loan losses, deferred fees and costs, and a 2004 purchase accounting adjustment.   For the Three Months EndedMarch 31,2011
    
    
    2010Allowance at beginning of period
    
    $
    7.1
    
    
    $
    8.2Provision for loans not specifically identified
    
    
    
    
    
    
    0.1Allowance at end of period
    
    $
    7.1
    
    
    $
    8.3
  16




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
 6. Fair Value of Financial Instruments
  
    
    Level 1 Unadjusted quoted prices in active markets for identical instruments. This
level primarily consists of exchange-traded marketable equity securities and actively
traded mutual fund investments.
    
    Level 2 Quoted prices for similar instruments in active markets, quoted prices for
identical or similar instruments in markets that are not active and model-derived
valuations whose inputs are observable or whose significant value drivers are observable.
This level includes those financial instruments that are valued using industry-standard
pricing methodologies, models or other valuation methodologies. All significant inputs are
observable, derived from observable information in the marketplace or are supported by
observable levels at which transactions are executed in the market place. Financial
instruments in this category primarily include certain corporate fixed maturities,
government or agency securities and certain mortgage-backed securities.
    
    Level 3 Instruments whose significant value drivers are unobservable. This comprises
financial instruments for which fair value is estimated based on industry-standard pricing
methodologies and internally developed models utilizing significant inputs not based on or
corroborated by readily available market information. In limited circumstances, this
category may also utilize non-binding broker quotes. This category primarily consists of
certain less liquid fixed maturities, including certain corporate private placement
securities, and investments in private equity funds.
  As of March 31, 2011Level 3Types of Investments

    
    Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    PercentFixed maturities, available-for-sale:U.S. government and agencies
    
    $
    156.7
    
    
    $
    
    
    
    $
    156.7
    
    
    $
    
    
    
    
    State and political subdivisions
    
    
    462.8
    
    
    
    
    
    
    
    462.8
    
    
    
    
    
    
    
    Corporate securities
    
    
    14,996.9
    
    
    
    
    
    
    
    14,227.5
    
    
    
    769.4
    
    
    
    3.3
    %Residential mortgage-backed securities
    
    
    3,815.3
    
    
    
    
    
    
    
    3,815.3
    
    
    
    
    
    
    
    Commercial mortgage-backed securities
    
    
    1,802.9
    
    
    
    
    
    
    
    1,785.2
    
    
    
    17.7
    
    
    
    0.1Other debt obligations
    
    
    550.8
    
    
    
    
    
    
    
    400.4
    
    
    
    150.4
    
    
    
    0.7Total fixed maturities, available-for-sale
    
    
    21,785.4
    
    
    
    
    
    
    
    20,847.9
    
    
    
    937.5
    
    
    
    4.1Marketable equity securities, available-for-sale
    
    
    46.4
    
    
    
    44.6
    
    
    
    
    
    
    
    1.8
    
    
    
    Marketable equity securities, trading
    
    
    224.7
    
    
    
    224.0
    
    
    
    
    
    
    
    0.7
    
    
    
    Investments in limited partnerships(1)
    
    
    34.9
    
    
    
    
    
    
    
    
    
    
    
    34.9
    
    
    
    0.2Other invested assets
    
    
    6.7
    
    
    
    2.3
    
    
    
    
    
    
    
    4.4
    
    
    
    Total investments carried at fair value
    
    
    22,098.1
    
    
    
    270.9
    
    
    
    20,847.9
    
    
    
    979.3
    
    
    
    4.3Separate account assets
    
    
    901.5
    
    
    
    901.5
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    22,999.6
    
    
    $
    1,172.4
    
    
    $
    20,847.9
    
    
    $
    979.3
    
    
    
    4.3
    %
 
 (1)
    
    Includes investments in
private equity funds. 17




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
 As of December 31, 2010Level 3Types of Investments
    
    Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    PercentFixed maturities, available-for-sale:U.S. government and agencies
    
    $
    33.1
    
    
    $
    
    
    
    $
    33.1
    
    
    $
    
    
    
    
    State and political subdivisions
    
    
    452.8
    
    
    
    
    
    
    
    452.8
    
    
    
    
    
    
    
    Corporate securities
    
    
    14,541.4
    
    
    
    
    
    
    
    13,786.8
    
    
    
    754.6
    
    
    
    3.3
    %Residential mortgage-backed securities
    
    
    3,801.6
    
    
    
    
    
    
    
    3,801.6
    
    
    
    
    
    
    
    Commercial mortgage-backed securities
    
    
    1,887.3
    
    
    
    
    
    
    
    1,868.2
    
    
    
    19.1
    
    
    
    0.1Other debt obligations
    
    
    565.6
    
    
    
    
    
    
    
    412.4
    
    
    
    153.2
    
    
    
    0.7Total fixed maturities, available-for-sale
    
    
    21,281.8
    
    
    
    
    
    
    
    20,354.9
    
    
    
    926.9
    
    
    
    4.1Marketable equity securities, available-for-sale
    
    
    45.1
    
    
    
    43.3
    
    
    
    
    
    
    
    1.8
    
    
    
    Marketable equity securities, trading
    
    
    189.3
    
    
    
    188.7
    
    
    
    
    
    
    
    0.6
    
    
    
    Investments in limited partnerships(1)
    
    
    36.5
    
    
    
    
    
    
    
    
    
    
    
    36.5
    
    
    
    0.2Other invested assets
    
    
    6.4
    
    
    
    2.6
    
    
    
    
    
    
    
    3.8
    
    
    
    Total investments carried at fair value
    
    
    21,559.1
    
    
    
    234.6
    
    
    
    20,354.9
    
    
    
    969.6
    
    
    
    4.3Separate account assets
    
    
    881.7
    
    
    
    881.7
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    22,440.8
    
    
    $
    1,116.3
    
    
    $
    20,354.9
    
    
    $
    969.6
    
    
    
    4.3
    %
 
 (1)
    
    Includes investments in
private equity funds. Fixed Maturities
      18




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
 Corporate Securities
  As of March 31, 2011
    
    As of December 31, 2010Amount
    
    % of Total
    
    # of Securities
    
    Amount
    
    % of Total
    
    # of SecuritiesSignificant Security Sectors:Industrials
    
    $
    2,551.2
    
    
    
    17.9
    %
    
    
    201
    
    
    $
    2,444.7
    
    
    
    17.7
    %
    
    
    225Consumer staples
    
    
    2,273.8
    
    
    
    16.0
    
    
    
    155
    
    
    
    2,118.0
    
    
    
    15.4
    
    
    
    157Financials
    
    
    1,892.2
    
    
    
    13.3
    
    
    
    221
    
    
    
    1,862.1
    
    
    
    13.5
    
    
    
    260Utilities
    
    
    1,721.7
    
    
    
    12.1
    
    
    
    170
    
    
    
    1,738.2
    
    
    
    12.6
    
    
    
    194Weighted-average coupon rate
    
    
    6.21
    %
    
    
    
    
    
    
    
    
    
    
    6.27
    %Weighted-average remaining years to contractual maturity
    
    
    12.0
    
    
    
    
    
    
    
    
    
    
    
    12.2
      As of March 31, 2011
    
    
    As of December 31, 2010NAIC Rating:
    
    Comparable Standard & Poors rating:
    
    Fair Value
    
    
    % of Total
    
    
    Fair Value
    
    
    % of Total1
    
    AAA, AA, A
    
    $
    88.0
    
    
    
    12.5
    %
    
    $
    118.6
    
    
    
    16.6
    %2
    
    BBB
    
    
    524.7
    
    
    
    74.6
    
    
    
    497.5
    
    
    
    69.63 - 6
    
    BB & below
    
    
    90.8
    
    
    
    12.9
    
    
    
    98.7
    
    
    
    13.8Total
    
    $
    703.5
    
    
    
    100.0
    %
    
    $
    714.8
    
    
    
    100.0
    %
 19




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
 Residential Mortgage-backed Securities
   As of March 31, 2011
    
    
    As of December 31, 2010Standard & Poors equivalent rating:
    
    Fair Value
    
    
    % of Total
    
    
    Fair Value
    
    
    % of TotalAAA
    
    $
    161.7
    
    
    
    37.0
    %
    
    $
    166.6
    
    
    
    37.8
    %AA through BBB
    
    
    85.4
    
    
    
    19.6
    
    
    
    89.0
    
    
    
    20.2BB & below
    
    
    189.3
    
    
    
    43.4
    
    
    
    185.4
    
    
    
    42.0Total non-agency RMBS
    
    $
    436.4
    
    
    
    100.0
    %
    
    $
    441.0
    
    
    
    100.0
    %Non-agency RMBS with super senior subordination
    
    $
    261.8
    
    
    
    60.0
    %
    
    $
    259.2
    
    
    
    58.8
    %
   Commercial Mortgage-backed Securities
    Marketable Equity Securities
  20




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
  Investments in Limited Partnerships
   Separate Accounts
  Rollforward of Financial Instruments Measured at Fair Value on a Recurring Basis Using Significant
Unobservable Inputs (Level 3)
  Unrealized Gain (Loss)Transfers
    
    
    
    
    
    
    Included in:Balance as
    
    
    
    
    
    
    
    
    
    
    In and/or
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Realized
    
    
    Balance as ofof January 1,
    
    
    
    
    
    
    
    
    
    
    (Out) of
    
    
    
    
    
    
    Net
    
    
    Comprehensive
    
    
    Gains
    
    
    March 31,2011
    
    
    Purchases
    
    
    Sales
    
    
    Level 3(1)
    
    
    Other(2)
    
    
    Income(3)
    
    
    Income
    
    
    (Losses)(3)
    
    
    2011Types of Investments:Corporate securities
    
    $
    754.6
    
    
    $
    29.1
    
    
    $
    (8.5
    )
    
    $
    (4.5
    )
    
    $
    (2.5
    )
    
    $
    
    
    
    $
    5.1
    
    
    $
    (3.9
    )
    
    $
    769.4Commercial mortgage backed securities
    
    
    19.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17.7Other debt obligations
    
    
    153.2
    
    
    
    9.0
    
    
    
    (10.8
    )
    
    
    
    
    
    
    (0.8
    )
    
    
    
    
    
    
    1.5
    
    
    
    (1.7
    )
    
    
    150.4Total fixed maturities, available-for-sale
    
    
    926.9
    
    
    
    38.1
    
    
    
    (19.3
    )
    
    
    (4.5
    )
    
    
    (4.7
    )
    
    
    
    
    
    
    6.6
    
    
    
    (5.6
    )
    
    
    937.5Marketable equity securities,
available-for-sale
    
    
    1.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.8Marketable equity securities, trading
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.7Investments in limited partnerships
    
    
    36.5
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    (3.8
    )
    
    
    1.3
    
    
    
    
    
    
    
    0.8
    
    
    
    34.9Other invested assets
    
    
    3.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    4.4Total Level 3
    
    $
    969.6
    
    
    $
    38.2
    
    
    $
    (19.3
    )
    
    $
    (4.5
    )
    
    $
    (8.5
    )
    
    $
    2.0
    
    
    $
    6.6
    
    
    $
    (4.8
    )
    
    $
    979.3
 
 (1)
    
    Transfers into and/or out of Level 3 are reported at the value as of the beginning of the period in which the transfer
occurs. Gross transfers out of Level 3 were $4.5 for the three months ended March 31, 2011.(2)
    
    Other is comprised of transactions such as pay downs, calls, amortization and redemptions.(3)
    
    Realized and unrealized gains and losses for investments in limited partnerships are included in net investment income. 21




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
  Unrealized Gain (Loss)Transfers
    
    
    
    
    
    
    Included in:Balance as
    
    
    
    
    
    
    
    
    
    
    In and/or
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Realized
    
    
    Balance as ofof January 1,
    
    
    
    
    
    
    
    
    
    
    (Out) of
    
    
    
    
    
    
    Net
    
    
    Comprehensive
    
    
    Gains
    
    
    March 31,2010
    
    
    Purchases
    
    
    Sales
    
    
    Level 3(1)
    
    
    Other(2)
    
    
    Income(3)
    
    
    Income
    
    
    (Losses)(3)
    
    
    2010Types of Investments:State and political subdivisions
    
    $
    7.2
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.2
    
    
    $
    
    
    
    $
    7.4Corporate securities
    
    
    847.1
    
    
    
    16.0
    
    
    
    (17.3
    )
    
    
    8.2
    
    
    
    (1.9
    )
    
    
    
    
    
    
    12.2
    
    
    
    (1.7
    )
    
    
    862.6Residential mortgage-backed securities
    
    
    250.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.7
    
    
    
    
    
    
    
    7.6
    
    
    
    
    
    
    
    260.8Commercial mortgage backed securities
    
    
    24.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.9
    )
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    23.1Other debt obligations
    
    
    54.7
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.9
    )
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    55.0Total fixed maturities, available-for-sale
    
    
    1,183.5
    
    
    
    16.0
    
    
    
    (17.3
    )
    
    
    8.1
    
    
    
    (2.0
    )
    
    
    
    
    
    
    22.3
    
    
    
    (1.7
    )
    
    
    1,208.9Marketable equity securities, available-for-sale
    
    
    1.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.8Marketable equity securities, trading
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.5Investments in limited partnerships
    
    
    24.7
    
    
    
    0.6
    
    
    
    (1.0
    )
    
    
    
    
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    0.1
    
    
    
    25.2Other invested assets
    
    
    4.6
    
    
    
    
    
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.8
    )
    
    
    0.2
    
    
    
    
    
    
    
    0.1
    
    
    
    3.8Total Level 3
    
    $
    1,214.9
    
    
    $
    16.6
    
    
    $
    (18.6
    )
    
    $
    8.1
    
    
    $
    (2.6
    )
    
    $
    1.0
    
    
    $
    22.3
    
    
    $
    (1.5
    )
    
    $
    1,240.2
 
 (1)
    
    Transfers into and/or out of Level 3 are reported at the value as of the beginning of the period in which the transfer occurs. Gross transfers into and out of Level 3 were $10.3 and
$(2.2), respectively, for the three months ended March 31, 2010.(2)
    
    Other is comprised of transactions such as pay downs, calls, amortization, and redemptions.(3)
    
    Realized and unrealized gains and losses for investments in limited partnerships are included in net investment income.  As of March 31, 2011
    
    As of December 31, 2010Carrying
    
    
    
    
    
    CarryingAmount
    
    Fair Value
    
    Amount
    
    Fair ValueFinancial assets:Fixed maturities
    
    $
    21,785.4
    
    
    $
    21,785.4
    
    
    $
    21,281.8
    
    
    $
    21,281.8Marketable equity securities, available-for-sale
    
    
    46.4
    
    
    
    46.4
    
    
    
    45.1
    
    
    
    45.1Marketable equity securities, trading
    
    
    224.7
    
    
    
    224.7
    
    
    
    189.3
    
    
    
    189.3Mortgage loans
    
    
    1,862.0
    
    
    
    1,929.6
    
    
    
    1,713.0
    
    
    
    1,772.2Investments in limited partnerships:Private equity funds
    
    
    34.9
    
    
    
    34.9
    
    
    
    36.5
    
    
    
    36.5Tax credit investments
    
    
    163.9
    
    
    
    165.5
    
    
    
    150.4
    
    
    
    152.6Other invested assets
    
    
    12.8
    
    
    
    12.8
    
    
    
    12.6
    
    
    
    12.6Cash and cash equivalents
    
    
    307.9
    
    
    
    307.9
    
    
    
    274.6
    
    
    
    274.6Separate account assets
    
    
    901.5
    
    
    
    901.5
    
    
    
    881.7
    
    
    
    881.7Financial liabilities:Funds held under deposit contracts:Deferred annuities
    
    
    9,343.2
    
    
    
    9,142.6
    
    
    
    8,795.8
    
    
    
    8,694.2Immediate annuities
    
    
    6,680.0
    
    
    
    7,144.7
    
    
    
    6,670.4
    
    
    
    7,188.9Notes payable:Capital Efficient Notes (CENts)
    
    
    149.9
    
    
    
    150.0
    
    
    
    149.8
    
    
    
    140.9Senior notes
    
    
    299.2
    
    
    
    311.2
    
    
    
    299.2
    
    
    
    301.6
 Other Financial Instruments
  22




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
     7. Deferred Policy Acquisition Costs and Deferred Sales Inducements
  For the Three Months EndedMarch 31,2011
    
    
    2010Unamortized balance at beginning of period
    
    $
    387.4
    
    
    $
    325.7Deferral of acquisition costs
    
    
    37.0
    
    
    
    30.5Adjustments related to investment gains
    
    
    (0.7
    )
    
    
    (1.0
    )Amortization
    
    
    (20.1
    )
    
    
    (15.4
    )Unamortized balance at end of period
    
    
    403.6
    
    
    
    339.8Accumulated effect of net unrealized investment gains
    
    
    (141.1
    )
    
    
    (112.3
    )Balance at end of period
    
    $
    262.5
    
    
    $
    227.5
  For the Three Months EndedMarch 31,2011
    
    
    2010Unamortized balance at beginning of period
    
    $
    105.8
    
    
    $
    67.6Capitalizations
    
    
    17.1
    
    
    
    13.3Adjustments related to investment gains
    
    
    (0.3
    )
    
    
    (0.3
    )Amortization
    
    
    (6.2
    )
    
    
    (3.9
    )Unamortized balance at end of period
    
    
    116.4
    
    
    
    76.7Accumulated effect of net unrealized investment gains
    
    
    (46.8
    )
    
    
    (29.7
    )Balance at end of period
    
    $
    69.6
    
    
    $
    47.0
 23




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
 8. Stockholders Equity
  For the Three Months EndedMarch 31,2011
    
    
    2010Net income
    
    $
    54.9
    
    
    $
    46.3Other comprehensive income, net of taxes:Changes in unrealized gains and losses on available-for-sale securities(1)
    
    
    9.5
    
    
    
    244.9Reclassification adjustment for net realized investment (gains) losses included in net income (2)
    
    
    (10.4
    )
    
    
    (6.1
    )Adjustment for deferred policy acquisition costs and deferred sales inducements valuation allowance(3)
    
    
    (4.2
    )
    
    
    (31.4
    )Other-than-temporary-impairments on fixed maturities not related to credit losses(4)
    
    
    6.6
    
    
    
    1.8Other comprehensive income, net of taxes
    
    
    1.5
    
    
    
    209.2Total comprehensive income
    
    $
    56.4
    
    
    $
    255.5
 
 (1)
    
    Net of taxes of $5.1 and $131.9 for the three months ended March 31, 2011 and 2010, respectively.(2)
    
    Net of taxes of $(5.6) and $(3.3) for the three months ended March 31, 2011 and 2010, respectively. For the three months ended March
31, 2011, $6.6 (net of taxes of $3.6) of the reclassification adjustment is related to losses previously classified as OTTI not
related to credit losses. For the three months ended March 31, 2010, $7.1 (net of taxes of $3.9) of the reclassification adjustment
is related to losses previously classified as OTTI not related to credit losses.(3)
    
    Net of taxes of $(2.3) and $(16.9) for the three months ended March 31, 2011 and 2010, respectively.(4)
    
    Net of taxes of $3.6 and $1.0 for the three months ended March 31, 2011 and 2010, respectively.  Common SharesBalance as of January 1, 2010
    
    
    92.729Common stock, issued in initial public offering
    
    
    25.260Restricted stock issued, net
    
    
    0.243Employee stock purchase plan shares issued
    
    
    0.033Treasury stock acquired(1)
    
    
    (0.001
    )Treasury stock retired(2)
    
    
    (0.048
    )Balance as of December 31, 2010
    
    
    118.216Balance as of January 1, 2011
    
    
    118.216Restricted stock issued, net
    
    
    0.295Employee stock purchase plan shares issued
    
    
    0.024Balance as of March 31, 2011
    
    
    118.535
 
 (1)
    
    Represents shares repurchased to satisfy employee income tax withholding, pursuant to the
Companys Equity Plan.(2)
    
    Represents shares repurchased and subsequently retired, pursuant to the Companys Equity Plan. 9. Stock-Based Compensation
  Weighted-Number of
    
    Average FairShares
    
    ValueOutstanding as of January 1, 2011
    
    
    0.192
    
    
    $
    12.61Shares granted
    
    
    0.297
    
    
    
    13.81Shares vested
    
    
    (0.001
    )
    
    
    12.48Shares forfeited
    
    
    (0.002
    )
    
    
    12.48Outstanding as of March 31, 2011
    
    
    0.486
    
    
    $
    13.14
 24




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
 10. Commitments and Contingencies
 Litigation
  Other Commitments
  11. Segment Information
  For the Three Months Ended March 31, 2011Deferred
    
    
    IncomeGroup
    
    
    Annuities
    
    
    Annuities
    
    
    Life
    
    
    Other
    
    
    TotalOperating revenues:Premiums
    
    $
    110.0
    
    
    $
    
    
    
    $
    
    
    
    $
    10.9
    
    
    $
    
    
    
    $
    120.9Net investment income
    
    
    4.2
    
    
    
    123.1
    
    
    
    105.0
    
    
    
    71.2
    
    
    
    6.5
    
    
    
    310.0Policy fees, contract charges, and other
    
    
    3.3
    
    
    
    5.1
    
    
    
    0.2
    
    
    
    30.7
    
    
    
    5.4
    
    
    
    44.7Net investment gains on fixed index
annuity (FIA) options
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.5Total operating revenues
    
    
    117.5
    
    
    
    128.7
    
    
    
    105.2
    
    
    
    112.8
    
    
    
    11.9
    
    
    
    476.1Benefits and expenses:Policyholder benefits and claims
    
    
    74.3
    
    
    
    (0.1
    )
    
    
    
    
    
    
    18.1
    
    
    
    
    
    
    
    92.3Interest credited
    
    
    
    
    
    
    77.6
    
    
    
    89.7
    
    
    
    61.7
    
    
    
    (0.7
    )
    
    
    228.3Other underwriting and operating expenses
    
    
    27.3
    
    
    
    12.4
    
    
    
    5.9
    
    
    
    14.4
    
    
    
    6.0
    
    
    
    66.0Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.0
    
    
    
    8.0Amortization of deferred policy
acquisition costs
    
    
    2.1
    
    
    
    15.6
    
    
    
    0.7
    
    
    
    1.7
    
    
    
    
    
    
    
    20.1Total benefits and expenses
    
    
    103.7
    
    
    
    105.5
    
    
    
    96.3
    
    
    
    95.9
    
    
    
    13.3
    
    
    
    414.7Segment pre-tax adjusted operating income
(loss)
    
    $
    13.8
    
    
    $
    23.2
    
    
    $
    8.9
    
    
    $
    16.9
    
    
    $
    (1.4
    )
    
    $
    61.4Operating revenues
    
    $
    117.5
    
    
    $
    128.7
    
    
    $
    105.2
    
    
    $
    112.8
    
    
    $
    11.9
    
    
    $
    476.1Add: Net realized investment gains,
excluding FIA options
    
    
    
    
    
    
    2.9
    
    
    
    9.9
    
    
    
    0.4
    
    
    
    1.9
    
    
    
    15.1Total revenues
    
    
    117.5
    
    
    
    131.6
    
    
    
    115.1
    
    
    
    113.2
    
    
    
    13.8
    
    
    
    491.2Total benefits and expenses
    
    
    103.7
    
    
    
    105.5
    
    
    
    96.3
    
    
    
    95.9
    
    
    
    13.3
    
    
    
    414.7Income before income taxes
    
    $
    13.8
    
    
    $
    26.1
    
    
    $
    18.8
    
    
    $
    17.3
    
    
    $
    0.5
    
    
    $
    76.5As of March 31, 2011:Total assets
    
    $
    214.8
    
    
    $
    10,883.1
    
    
    $
    6,963.3
    
    
    $
    6,055.7
    
    
    $
    2,305.4
    
    
    $
    26,422.3
 25




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##### Table of Contents



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions, except per share data, unless otherwise stated)
(Unaudited)
 For the Three Months Ended March 31, 2010Deferred
    
    
    IncomeGroup
    
    
    Annuities
    
    
    Annuities
    
    
    Life
    
    
    Other
    
    
    TotalOperating revenues:Premiums
    
    $
    108.8
    
    
    $
    
    
    
    $
    
    
    
    $
    10.2
    
    
    $
    
    
    
    $
    119.0Net investment income
    
    
    4.6
    
    
    
    107.8
    
    
    
    104.0
    
    
    
    66.1
    
    
    
    4.4
    
    
    
    286.9Policy fees, contract charges, and other
    
    
    2.9
    
    
    
    4.8
    
    
    
    0.2
    
    
    
    29.1
    
    
    
    3.5
    
    
    
    40.5Net investment gains on fixed index
annuity (FIA) options
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Total operating revenues
    
    
    116.3
    
    
    
    112.7
    
    
    
    104.2
    
    
    
    105.4
    
    
    
    7.9
    
    
    
    446.5Benefits and expenses:Policyholder benefits and claims
    
    
    75.0
    
    
    
    0.1
    
    
    
    
    
    
    
    11.1
    
    
    
    
    
    
    
    86.2Interest credited
    
    
    
    
    
    
    68.5
    
    
    
    92.0
    
    
    
    58.5
    
    
    
    (0.5
    )
    
    
    218.5Other underwriting and operating expenses
    
    
    23.7
    
    
    
    13.6
    
    
    
    5.3
    
    
    
    12.7
    
    
    
    4.3
    
    
    
    59.6Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.0
    
    
    
    8.0Amortization of deferred policy
acquisition costs
    
    
    1.9
    
    
    
    13.2
    
    
    
    0.5
    
    
    
    (0.2
    )
    
    
    
    
    
    
    15.4Total benefits and expenses
    
    
    100.6
    
    
    
    95.4
    
    
    
    97.8
    
    
    
    82.1
    
    
    
    11.8
    
    
    
    387.7Segment pre-tax adjusted operating income
(loss)
    
    $
    15.7
    
    
    $
    17.3
    
    
    $
    6.4
    
    
    $
    23.3
    
    
    $
    (3.9
    )
    
    $
    58.8Operating revenues
    
    $
    116.3
    
    
    $
    112.7
    
    
    $
    104.2
    
    
    $
    105.4
    
    
    $
    7.9
    
    
    $
    446.5Add: Net realized investment gains
(losses), excluding FIA options
    
    
    (0.2
    )
    
    
    3.0
    
    
    
    4.7
    
    
    
    0.2
    
    
    
    (1.0
    )
    
    
    6.7Total revenues
    
    
    116.1
    
    
    
    115.7
    
    
    
    108.9
    
    
    
    105.6
    
    
    
    6.9
    
    
    
    453.2Total benefits and expenses
    
    
    100.6
    
    
    
    95.4
    
    
    
    97.8
    
    
    
    82.1
    
    
    
    11.8
    
    
    
    387.7Income (loss) before income taxes
    
    $
    15.5
    
    
    $
    20.3
    
    
    $
    11.1
    
    
    $
    23.5
    
    
    $
    (4.9
    )
    
    $
    65.5As of March 31, 2010:Total assets
    
    $
    258.8
    
    
    $
    8,809.0
    
    
    $
    6,717.7
    
    
    $
    5,226.4
    
    
    $
    2,349.7
    
    
    $
    23,361.6
 12. Subsequent Events
  26




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 This discussion contains forward-looking statements that involve risk and uncertainties. Our
actual results may differ materially from those discussed in or implied by any of the
forward-looking statements as a result of various factors, including but not limited to those
listed under Forward-Looking Statements. You should read the following discussion in conjunction
with the unaudited interim consolidated financial statements and accompanying condensed notes
included in Item 1  Financial Statements included in this Form 10-Q, our Annual Report for the
year ended December 31, 2010, filed with the SEC on March 16, 2011 (2010 10-K), as well as our
current reports on Form 8-K and other publicly available information. Our fiscal year ends on
December 31 of each calendar year.
 Management considers certain non-GAAP financial measures, including adjusted operating income,
adjusted operating income per common share, adjusted book value, adjusted book value per common
share, adjusted book value per common share, as converted and operating ROAE to be useful to
investors in evaluating our financial performance and condition. These measures have been
reconciled to their most comparable GAAP financial measures. For a definition and further
discussion of these non-GAAP measures, see Item 7  Managements Discussion and Analysis of
Financial Condition  Use of non-GAAP Financial Measures in our 2010 10-K.
 All amounts, except per share data, are in millions unless otherwise stated.
 Overview
  Our Operations
  Group Division
 
    
    Group.We offer medical stop-loss insurance,
limited benefit medical plans, group life
insurance, accidental death and dismemberment
insurance and disability income insurance mainly to
employer groups of 50 to 5,000 individuals. In
addition to our insurance products, we offer
managing general underwriting, or MGU, services.
 Retirement Division
 
    
    Deferred Annuities.We offer fixed and variable
deferred annuities to consumers who want to
accumulate tax-deferred assets for retirement.
    
    Income Annuities.We offer single premium
immediate annuities, or SPIAs, to customers seeking
a reliable source of retirement income or to
protect against outliving their assets during
retirement, and structured settlement annuities to
fund third party personal injury settlements. In
addition, we offer funding services options to
existing structured settlement clients.
 Life Division
 
    
    Life.We offer a wide array of individual products
such as term and universal life insurance,
including single premium life insurance as well as
bank-owned life insurance, or BOLI.
 Other
 
    
    Other.This segment consists of unallocated
corporate income, composed primarily of investment
income on unallocated surplus, unallocated
corporate expenses, interest expense on debt,
earnings related to our limited partnership
interests, the results of small, non-insurance
businesses that are managed outside of our
divisions, and inter-segment elimination entries.
  27




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##### Table of Contents



Current Outlook
     Critical Accounting Policies and Estimates
  
    
    The evaluation of OTTI of investments;
    
    The valuation of investments at fair value;
    
    The balance, recoverability and amortization of deferred policy acquisition costs; and
    
    The liabilities for future policy benefits and policy and contract claims.
   28




---



##### Table of Contents



New Accounting Standards
  Sources of Revenues and Expenses
   Revenues
 Premiums
  Net investment income
  Policy fees, contract charges and other
  Net realized investment gains (losses)
  Benefits and Expenses
 Policyholder benefits and claims
  29




---



##### Table of Contents



Interest credited
  Other underwriting and operating expenses
  Interest expense
  Amortization of deferred policy acquisition costs
  Use of non-GAAP Financial Measures
   As of
    
    
    As ofMarch 31,
    
    
    December 31,2011
    
    
    2010Total stockholders equity
    
    $
    2,431.0
    
    
    $
    2,380.6Less: AOCI
    
    
    434.0
    
    
    
    432.5Adjusted book value*
    
    
    1,997.0
    
    
    
    1,948.1Add: Assumed proceeds from exercise of warrants
    
    
    218.1
    
    
    
    218.1Adjusted book value, as converted*
    
    $
    2,215.1
    
    
    $
    2,166.2Book value per common share (1)
    
    $
    17.68
    
    
    $
    17.35Adjusted book value per common share (2)*
    
    $
    16.85
    
    
    $
    16.48Adjusted book value per common share, as converted (3)*
    
    $
    16.11
    
    
    $
    15.79
 30




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##### Table of Contents



For the Twelve Months EndedMarch 31,
    
    December 31,2011
    
    2010Return on stockholders equity, or ROE
    
    
    8.8
    %
    
    
    9.3
    %Net income (4)
    
    $
    209.5
    
    
    $
    200.9Average stockholders equity (5)
    
    
    2,367.5
    
    
    
    2,167.9Operating return on average equity, or ROAE*
    
    
    9.4
    %
    
    
    9.8
    %Adjusted operating income (6)*
    
    $
    178.4
    
    
    $
    175.2Average adjusted book value (7)*
    
    
    1,898.2
    
    
    
    1,795.4
 
 *
    
    Represents a non-GAAP measure.(1)
    
    Book value per common share is calculated as stockholders equity divided by outstanding
common shares and shares subject to outstanding warrants totaling 137.511 and 137.192 as of
March 31, 2011 and December 31, 2010, respectively.(2)
    
    Adjusted book value per common share is calculated as adjusted book value divided by
outstanding common shares totaling 118.535 and 118.216 as of March 31, 2011 and December 31,
2010, respectively.(3)
    
    Adjusted book value per common share, as converted is calculated as adjusted book value plus
the assumed proceeds from exercise of warrants, divided by outstanding common shares and
shares subject to outstanding warrants totaling 137.511 and 137.192 as of March 31, 2011 and
December 31, 2010, respectively.(4)
    
    Net income for the most recent twelve months is used in the calculation of ROE. For the
twelve months ended March 31, 2011, this consisted of quarterly net income of $54.9, $62.2,
$56.6 and $35.8.(5)
    
    Ending stockholders equity balances for the most recent five quarters are used in the
calculation of ROE. As of March 31, 2011, stockholders equity for the most recent five
quarters was $2,431.0, $2,380.6, $2,711.3, $2,342.8, and $1,971.7. As of December 31, 2010,
stockholders equity for the most recent five quarters was $2,380.6, $2,711.3, $2,342.8,
$1,971.7, and $1,433.3.(6)
    
    Adjusted operating income for the most recent twelve months is used in the calculation of
operating ROAE. For the twelve months ended March 31, 2011, this consisted of quarterly
adjusted operating income of $45.1, $48.0, $43.8, and $41.5. Adjusted operating income
consists of net income, less after-tax net realized gains, plus after-tax net realized and
unrealized investment gains on our FIA options. For the twelve months ended March 31, 2011,
this consisted of net quarterly reconciling amounts of $9.8, $14.2, $12.8, and $(5.7). For the
twelve months ended December 31, 2010, this consisted of quarterly adjusted operating income
of $48.0, $43.8, $41.5, and $41.9, and net quarterly reconciling amounts of $14.2, $12.8,
$(5.7), and $4.4.(7)
    
    Ending adjusted book values for the most recent five quarters are used in the calculation of
operating ROAE. Adjusted book value consists of stockholders equity, less AOCI. As of March
31, 2011, adjusted book value for the most recent five quarters was $1,997.0, $1,948.1,
$1,891.9, $1,841.7, and $1,812.2. AOCI, for the most recent five quarters was $434.0, $432.5,
$819.4, $501.1, and $159.5. As of December 31, 2010, adjusted book value of the most recent
five quarters was $1,948.1, $1,891.9, $1,841.7, $1,812.2, and $1,483.0. AOCI, for the most
recent five quarters was $432.5, $819.4, $501.1, $159.5, and $(49.7). 31




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##### Table of Contents



Results of Operations
  Total Company
  Three Months Ended
    
    
    QTDMarch 31,
    
    
    Variance (%)2011
    
    
    2010
    
    
    2011 vs. 2010Revenues:Premiums
    
    $
    120.9
    
    
    $
    119.0
    
    
    
    1.6
    %Net investment income
    
    
    310.0
    
    
    
    286.9
    
    
    
    8.1Policy fees, contract charges, and other
    
    
    44.7
    
    
    
    40.5
    
    
    
    10.4Net realized investment gains:Net impairment losses recognized in earnings
    
    
    (0.9
    )
    
    
    (9.7
    )
    
    
    90.7Other net realized investment gains
    
    
    16.5
    
    
    
    16.5
    
    
    
    Total net realized investment gains
    
    
    15.6
    
    
    
    6.8
    
    
    
    *Total revenues
    
    
    491.2
    
    
    
    453.2
    
    
    
    8.4Benefits and expenses:Policyholder benefits and claims
    
    
    92.3
    
    
    
    86.2
    
    
    
    7.1Interest credited
    
    
    228.3
    
    
    
    218.5
    
    
    
    4.5Other underwriting and operating expenses
    
    
    66.0
    
    
    
    59.6
    
    
    
    10.7Interest expense
    
    
    8.0
    
    
    
    8.0
    
    
    
    Amortization of deferred policy acquisition costs
    
    
    20.1
    
    
    
    15.4
    
    
    
    30.5Total benefits and expenses
    
    
    414.7
    
    
    
    387.7
    
    
    
    7.0Income from operations before income taxes
    
    
    76.5
    
    
    
    65.5
    
    
    
    16.8Provision for income taxes:Current
    
    
    11.2
    
    
    
    9.9
    
    
    
    13.1Deferred
    
    
    10.4
    
    
    
    9.3
    
    
    
    11.8Total provision for income taxes
    
    
    21.6
    
    
    
    19.2
    
    
    
    12.5Net income
    
    $
    54.9
    
    
    $
    46.3
    
    
    
    18.6
    %Net income per common share(1):Basic
    
    $
    0.40
    
    
    $
    0.35
    
    
    
    14.3
    %Diluted
    
    $
    0.40
    
    
    $
    0.35
    
    
    
    14.3Weighted-average common shares outstanding:Basic
    
    
    137.292
    
    
    
    131.018
    
    
    
    4.8Diluted
    
    
    137.300
    
    
    
    131.038
    
    
    
    4.8Non-GAAP Financial Measures:Adjusted operating income
    
    $
    45.1
    
    
    $
    41.9
    
    
    
    7.6
    %Adjusted operating income per common share:Basic
    
    $
    0.33
    
    
    $
    0.32
    
    
    
    3.1
    %Diluted
    
    $
    0.33
    
    
    $
    0.32
    
    
    
    3.1Reconciliation to net income:Net income
    
    $
    54.9
    
    
    $
    46.3
    
    
    
    18.6Less: Net realized investment gains (net of taxes of $5.5 and $2.3)
    
    
    10.1
    
    
    
    4.5
    
    
    
    *Add: Net investment gains on FIA options (net of taxes of $0.2 and $0.0)
    
    
    0.3
    
    
    
    0.1
    
    
    
    *Adjusted operating income
    
    $
    45.1
    
    
    $
    41.9
    
    
    
    7.6
    %
 
 *
    
    Represents percentage variances that are not meaningful or are explained through the
discussion of other variances. 32




---



##### Table of Contents



(1)
    
    Basic and diluted net income per common share includes all participating securities, such as
warrants and unvested restricted shares, based on the application of the two-class method.
Diluted net income per common share also includes the dilutive impact of non-participating
securities, to the extent dilutive, such as stock options and shares estimated to be issued
under the employee stock purchase plan, based on application of the treasury stock method.
Antidilutive awards were excluded from the computation of dilutive net income per share. Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010
 Summary of Results
    Further discussion of adjusted operating income drivers described above:
     Division Operating Results
  33




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##### Table of Contents



Group
  Three Months Ended
    
    
    QTDMarch 31,
    
    
    Variance (%)2011
    
    
    2010
    
    
    2011 vs. 2010Operating revenues:Premiums
    
    $
    110.0
    
    
    $
    108.8
    
    
    
    1.1
    %Net investment income
    
    
    4.2
    
    
    
    4.6
    
    
    
    (8.7
    )Policy fees, contract charges, and other
    
    
    3.3
    
    
    
    2.9
    
    
    
    13.8Total operating revenues
    
    
    117.5
    
    
    
    116.3
    
    
    
    1.0Benefits and expenses:Policyholder benefits and claims
    
    
    74.3
    
    
    
    75.0
    
    
    
    (0.9
    )Other underwriting and operating expenses
    
    
    27.3
    
    
    
    23.7
    
    
    
    15.2Amortization of deferred policy acquisition costs
    
    
    2.1
    
    
    
    1.9
    
    
    
    10.5Total benefits and expenses
    
    
    103.7
    
    
    
    100.6
    
    
    
    3.1Segment pre-tax adjusted operating income
    
    $
    13.8
    
    
    $
    15.7
    
    
    
    (12.1
    )%
  Three Months EndedMarch 31,2011
    
    
    2010Group loss ratio(1)
    
    
    67.6
    %
    
    
    68.9
    %Expense ratio(2)
    
    
    25.9
    %
    
    
    23.1
    %Combined ratio(3)
    
    
    93.5
    %
    
    
    92.0
    %Medical stop-loss  loss ratio(4)
    
    
    69.3
    %
    
    
    70.1
    %Total sales(5)
    
    $
    48.7
    
    
    $
    41.4
 
 (1)
    
    Group loss ratio represents policyholder benefits and claims incurred divided by premiums earned.(2)
    
    Expense ratio is equal to other underwriting and operating expenses of our insurance operations
and amortization of DAC divided by premiums earned.(3)
    
    Combined ratio is equal to the sum of the loss ratio and the expense ratio.(4)
    
    Medical stop-loss  loss ratio represents medical stop-loss policyholder benefits and incurred
claims divided by medical stop-loss premiums earned.(5)
    
    Total sales represents annualized first-year premiums net of first year policy lapses. Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010
 Summary of Results
   Benefits and Expenses
  34




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##### Table of Contents



Deferred Annuities
  Three Months Ended
    
    
    QTDMarch 31,
    
    
    Variance (%)2011
    
    
    2010
    
    
    2011 vs. 2010Operating revenues:Net investment income
    
    $
    123.1
    
    
    $
    107.8
    
    
    
    14.2
    %Policy fees, contract charges, and other
    
    
    5.1
    
    
    
    4.8
    
    
    
    6.3Net investment gains on FIA options
    
    
    0.5
    
    
    
    0.1
    
    
    
    *Total operating revenues
    
    
    128.7
    
    
    
    112.7
    
    
    
    14.2Benefits and expenses:Policyholder benefits and claims
    
    
    (0.1
    )
    
    
    0.1
    
    
    
    *Interest credited
    
    
    77.6
    
    
    
    68.5
    
    
    
    13.3Other underwriting and operating expenses
    
    
    12.4
    
    
    
    13.6
    
    
    
    (8.8
    )Amortization of deferred policy acquisition costs
    
    
    15.6
    
    
    
    13.2
    
    
    
    18.2Total benefits and expenses
    
    
    105.5
    
    
    
    95.4
    
    
    
    10.6Segment pre-tax adjusted operating income
    
    $
    23.2
    
    
    $
    17.3
    
    
    
    34.1
    %
 
 *
    
    Represents percentage variances that are not meaningful or are explained through the discussion of other variances.  Three Months EndedMarch 31,2011
    
    2010Account values  Fixed annuities
    
    $
    9,793.9
    
    
    $
    8,005.4Account values  Variable annuities
    
    
    809.2
    
    
    
    768.0Interest spread on average account values(1)
    
    
    1.82
    %
    
    
    1.86
    %Total sales(2)
    
    $
    618.4
    
    
    $
    377.5
 
 (1)
    
    Interest spread is the difference between net investment yield earned and the credited interest
rate to policyholders. The investment yield is the approximate yield on invested assets in the
general account attributed to the segment. The credited interest rate is the approximate rate
credited on policyholder fixed account values within the segment. Interest credited is subject to
contractual terms, including minimum guarantees.(2)
    
    Total sales represent deposits for new policies net of first year policy lapses and/or surrenders. Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010
 Summary of Results
   Operating Revenues
  35




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##### Table of Contents



Benefits and Expenses
  Income Annuities
  Three Months Ended
    
    
    QTDMarch 31,
    
    
    Variance (%)2011
    
    
    2010
    
    
    2011 vs. 2010Operating revenues:Net investment income
    
    $
    105.0
    
    
    $
    104.0
    
    
    
    1.0
    %Policy fees, contract charges, and other
    
    
    0.2
    
    
    
    0.2
    
    
    
    Total operating revenues
    
    
    105.2
    
    
    
    104.2
    
    
    
    1.0Benefits and expenses:Interest credited
    
    
    89.7
    
    
    
    92.0
    
    
    
    (2.5
    )Other underwriting and operating expenses
    
    
    5.9
    
    
    
    5.3
    
    
    
    11.3Amortization of deferred policy acquisition costs
    
    
    0.7
    
    
    
    0.5
    
    
    
    40.0Total benefits and expenses
    
    
    96.3
    
    
    
    97.8
    
    
    
    (1.5
    )Segment pre-tax adjusted operating income
    
    $
    8.9
    
    
    $
    6.4
    
    
    
    39.1
    %
  Three Months EndedMarch 31,2011
    
    2010Reserves(1)
    
    $
    6,681.4
    
    
    $
    6,726.7Interest spread on reserves(2)
    
    
    0.58
    %
    
    
    0.41
    %Mortality gains (losses)(3)
    
    $
    0.7
    
    
    $
    (0.1
    )Prepayment speed adjustment on mortgage-backed securities(4)
    
    
    1.8
    
    
    
    (0.2
    )Total sales(5)
    
    
    64.5
    
    
    
    66.3
 
 (1)
    
    Reserves represent the present value of future income annuity benefits and assumed expenses, discounted by the assumed interest
rate. This metric represents the amount of our in-force book of business.(2)
    
    Interest spread is the difference between net investment yield earned and the credited interest rate on policyholder reserves.
The investment yield is the approximate yield on invested assets, excluding equities, in the general account attributed to the
segment. The credited interest rate is the approximate rate credited on policyholder reserves and excludes the gains and losses
from funding services and mortality.(3)
    
    Mortality gains (losses) represent the difference between actual and expected reserves released on our life contingent annuities.(4)
    
    Prepayment speed adjustment on mortgage-backed securities is the impact to net investment income due to the change in prepayment
speeds on the underlying collateral of mortgage-backed securities.(5)
    
    Sales represent deposits for new policies net of first year policy lapses and/or surrenders. Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010
 Summary of Results
  36




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##### Table of Contents



Benefits and Expenses
  Life
  Three Months Ended
    
    
    QTDMarch 31,
    
    
    Variance (%)2011
    
    
    2010
    
    
    2011 vs. 2010Operating revenues:Premiums
    
    $
    10.9
    
    
    $
    10.2
    
    
    
    6.9
    %Net investment income
    
    
    71.2
    
    
    
    66.1
    
    
    
    7.7Policy fees, contract charges, and other
    
    
    30.7
    
    
    
    29.1
    
    
    
    5.5Total operating revenues
    
    
    112.8
    
    
    
    105.4
    
    
    
    7.0Benefits and expenses:Policyholder benefits and claims
    
    
    18.1
    
    
    
    11.1
    
    
    
    63.1Interest credited
    
    
    61.7
    
    
    
    58.5
    
    
    
    5.5Other underwriting and operating expenses
    
    
    14.4
    
    
    
    12.7
    
    
    
    13.4Amortization of deferred policy acquisition costs
    
    
    1.7
    
    
    
    (0.2
    )
    
    
    *Total benefits and expenses
    
    
    95.9
    
    
    
    82.1
    
    
    
    16.8Segment pre-tax adjusted operating income
    
    $
    16.9
    
    
    $
    23.3
    
    
    
    (27.5
    )%
 
 *
    
    Represents percentage variances that are not meaningful or are explained through the discussion of other variances.  Three Months EndedMarch 31,2011
    
    2010Individual insurance:Individual insurance in force(1)
    
    $
    37,689.0
    
    
    $
    38,640.5Individual claims(2)
    
    
    15.7
    
    
    
    13.9UL account value(3)
    
    
    617.3
    
    
    
    585.3UL interest spread (4)
    
    
    1.59
    %
    
    
    1.37
    %Individual sales(5)
    
    $
    2.4
    
    
    $
    2.8BOLI:BOLI insurance in force(1)
    
    $
    12,681.3
    
    
    $
    11,416.0BOLI account value (3)
    
    
    4,403.0
    
    
    
    3,853.2BOLI ROA (6)
    
    
    1.14
    %
    
    
    1.08
    %BOLI sales (7)
    
    $
    
    
    
    $
    2.7
 
 (1)
    
    Insurance in force represents dollar face amounts of policies.(2)
    
    Individual claims represents incurred claims on our term and universal life policies.(3)
    
    UL account value and BOLI account value represent our liabilities to our policyholders. 37




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##### Table of Contents



(4)
    
    UL interest spread is the difference between net investment yield earned and the
credited interest rate to policyholders. The investment yield is the approximate yield
on invested assets in the general account attributed to the UL policies. The credited
interest rate is the approximate rate credited on UL policyholder fixed account
values. Interest credited to UL policyholders account values is subject to
contractual terms, including minimum guarantees. Interest credited tends to move
gradually over time to reflect actions by management to respond to competitive
pressures and profit targets. The 2010 first quarter credited rate to policyholders
was adjusted to exclude a reserve adjustment related to a persistency bonus. Without
this adjustment the 2010 first quarter UL interest spread of 1.37% would have been
5.40%.(5)
    
    Individual sales represents annualized first year premiums for recurring premium
products, and 10% of new single premium deposits net of first year policy lapses
and/or surrenders.(6)
    
    BOLI ROA is a measure of the gross margin on our BOLI book of business. This metric is
calculated as the difference between our BOLI revenue earnings rate and our BOLI
policy benefits rate. The revenue earnings rate is calculated as revenues divided by
average invested assets. The policy benefits rate is calculated as total policy
benefits divided by average account value. The policy benefits used in this metric do
not include expenses.(7)
    
    BOLI sales represent 10% of new BOLI total deposits. Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010
 Summary of Results
   Operating Revenues
  Benefits and Expenses
   38




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##### Table of Contents



Other
  Three Months Ended
    
    
    QTDMarch 31,
    
    
    Variance (%)2011
    
    
    2010
    
    
    2011 vs. 2010Operating revenues:Net investment income
    
    $
    6.5
    
    
    $
    4.4
    
    
    
    47.7
    %Policy fees, contract charges, and other
    
    
    5.4
    
    
    
    3.5
    
    
    
    54.3Total operating revenues
    
    
    11.9
    
    
    
    7.9
    
    
    
    50.6Benefits and expenses:Interest credited
    
    
    (0.7
    )
    
    
    (0.5
    )
    
    
    (40.0
    )Other underwriting and operating expenses
    
    
    6.0
    
    
    
    4.3
    
    
    
    39.5Interest expense
    
    
    8.0
    
    
    
    8.0
    
    
    
    Total benefits and expenses
    
    
    13.3
    
    
    
    11.8
    
    
    
    12.7Segment pre-tax adjusted operating loss
    
    $
    (1.4
    )
    
    $
    (3.9
    )
    
    
    64.1
    %
 Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010
 Summary of Results
  Investments
   As of March 31, 2011
    
    
    As of December 31, 2010Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of TotalTypes of InvestmentsFixed maturities, available-for-sale:Public
    
    $
    20,919.1
    
    
    
    86.4
    %
    
    $
    20,388.9
    
    
    
    86.8
    %Private
    
    
    866.3
    
    
    
    3.6
    
    
    
    892.9
    
    
    
    3.8Marketable equity securities, available-for-sale(1)
    
    
    46.4
    
    
    
    0.2
    
    
    
    45.1
    
    
    
    0.2Marketable equity securities, trading(2)
    
    
    224.7
    
    
    
    0.9
    
    
    
    189.3
    
    
    
    0.8Mortgage loans, net
    
    
    1,862.0
    
    
    
    7.7
    
    
    
    1,713.0
    
    
    
    7.3Policy loans
    
    
    70.4
    
    
    
    0.3
    
    
    
    71.5
    
    
    
    0.3Investments in limited partnerships(3):Private equity funds
    
    
    34.9
    
    
    
    0.1
    
    
    
    36.5
    
    
    
    0.1Tax credit investments
    
    
    163.9
    
    
    
    0.7
    
    
    
    150.4
    
    
    
    0.6Other invested assets
    
    
    12.8
    
    
    
    0.1
    
    
    
    12.6
    
    
    
    0.1Total
    
    $
    24,200.5
    
    
    
    100.0
    %
    
    $
    23,500.2
    
    
    
    100.0
    %
 
 (1)
    
    Amount primarily represents non-redeemable preferred stock. 39




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##### Table of Contents



(2)
    
    Amount represents investments in common stock.(3)
    
    Investments in private equity funds are carried at fair value, while our limited partnership interests related to
tax credit investments are carried at amortized cost.  Investment Returns
 Net Investment Income
  For the Three Months Ended
    
    
    For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Yield(1)
    
    
    Amount
    
    
    Yield(1)
    
    
    AmountTypes of InvestmentsFixed maturities, available-for-sale
    
    
    5.55
    %
    
    $
    286.7
    
    
    
    5.76
    %
    
    $
    271.0Marketable equity securities, available-for-sale
    
    
    4.44
    
    
    
    0.6
    
    
    
    4.43
    
    
    
    0.6Marketable equity securities, trading
    
    
    2.10
    
    
    
    0.9
    
    
    
    1.68
    
    
    
    0.7Mortgage loans, net
    
    
    6.22
    
    
    
    27.9
    
    
    
    6.17
    
    
    
    18.8Policy loans
    
    
    5.73
    
    
    
    1.0
    
    
    
    5.99
    
    
    
    1.1Investments in limited partnerships:Private equity funds
    
    
    8.25
    
    
    
    0.7
    
    
    
    11.70
    
    
    
    0.9Tax credit investments(2)
    
    
    (6.68
    )
    
    
    (3.3
    )
    
    
    (6.96
    )
    
    
    (2.1
    )Other income producing assets(3)
    
    
    1.52
    
    
    
    1.3
    
    
    
    0.89
    
    
    
    1.1Gross investment income before investment expenses
    
    
    5.42
    
    
    
    315.8
    
    
    
    5.58
    
    
    
    292.1Investment expenses
    
    
    (0.10
    )
    
    
    (5.8
    )
    
    
    (0.10
    )
    
    
    (5.2
    )Net investment income
    
    
    5.32
    %
    
    $
    310.0
    
    
    
    5.48
    %
    
    $
    286.9
 
 (1)
    
    Yields are determined based on monthly averages calculated using beginning and end-of-period balances. Yields are based on
carrying values except for fixed maturities and equity securities, and private equity funds. Yields for fixed maturities and
private equity funds are based on amortized cost. Yields for equity securities are based on cost.(2)
    
    The negative yield from tax credit investments is offset by U.S. federal income tax benefits. The resulting overall impact to
net income was $2.1 and $1.5 for the three months ended March 31, 2011 and 2010, respectively.(3)
    
    Other income producing assets includes income from other invested assets, short-term investments and cash and cash equivalents.   40




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##### Table of Contents



Net Realized Investment Gains (Losses)
   For the Three Months EndedMarch 31,2011
    
    
    2010Gross realized gains on sales of fixed maturities
    
    $
    2.7
    
    
    $
    10.4Gross realized losses on sales of fixed maturities
    
    
    (6.1
    )
    
    
    (1.1
    )Impairments:Public fixed maturities(1)
    
    
    (0.4
    )
    
    
    (2.4
    )Private fixed maturities
    
    
    
    
    
    
    (5.1
    )Total credit-related
    
    
    (0.4
    )
    
    
    (7.5
    )Other
    
    
    (0.5
    )
    
    
    (2.2
    )Total impairments
    
    
    (0.9
    )
    
    
    (9.7
    )Net gains on trading securities
    
    
    12.2
    
    
    
    7.6Other net investment gains (losses)(2):Other gross gains
    
    
    10.0
    
    
    
    3.8Other gross losses
    
    
    (2.3
    )
    
    
    (4.2
    )Net realized investment gains before taxes
    
    $
    15.6
    
    
    $
    6.8
 
 (1)
    
    Public fixed maturities includes publicly traded securities and highly marketable private placements for which there is an actively traded market.(2)
    
    This primarily consists of changes in fair value on derivatives instruments, gains (losses) on calls and redemptions, and the impact of net realized
investment gains (losses) on DAC and deferred sales inducements. Impairments
  Fixed Maturity Securities
  Fixed Maturity Securities Credit Quality
  41




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##### Table of Contents



As of March 31, 2011
    
    
    As of December 31, 2010Amortized
    
    
    Fair
    
    
    % of Total
    
    
    Amortized
    
    
    Fair
    
    
    % of TotalCost
    
    
    Value
    
    
    Fair Value
    
    
    Cost
    
    
    Value
    
    
    Fair ValueNAIC:
    
    S&P Equivalent:1
    
    AAA, AA, A
    
    $
    12,577.6
    
    
    $
    13,141.0
    
    
    
    60.3
    %
    
    $
    12,453.2
    
    
    $
    13,042.4
    
    
    
    61.3
    %2
    
    BBB
    
    
    6,962.1
    
    
    
    7,306.9
    
    
    
    33.6
    
    
    
    6,642.1
    
    
    
    6,981.9
    
    
    
    32.8Total investment grade
    
    
    19,539.7
    
    
    
    20,447.9
    
    
    
    93.9
    
    
    
    19,095.3
    
    
    
    20,024.3
    
    
    
    94.13
    
    BB
    
    
    728.8
    
    
    
    719.5
    
    
    
    3.3
    
    
    
    700.3
    
    
    
    679.0
    
    
    
    3.24
    
    B
    
    
    477.9
    
    
    
    462.7
    
    
    
    2.1
    
    
    
    420.6
    
    
    
    393.8
    
    
    
    1.85
    
    CCC & lower
    
    
    156.5
    
    
    
    146.6
    
    
    
    0.7
    
    
    
    178.4
    
    
    
    164.8
    
    
    
    0.86
    
    In or near default
    
    
    8.2
    
    
    
    8.7
    
    
    
    
    
    
    
    21.9
    
    
    
    19.9
    
    
    
    0.1Total below investment grade
    
    
    1,371.4
    
    
    
    1,337.5
    
    
    
    6.1
    
    
    
    1,321.2
    
    
    
    1,257.5
    
    
    
    5.9Total
    
    
    
    $
    20,911.1
    
    
    $
    21,785.4
    
    
    
    100.0
    %
    
    $
    20,416.5
    
    
    $
    21,281.8
    
    
    
    100.0
    %
    42




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##### Table of Contents



Fixed Maturity Securities and Unrealized Gains and Losses by Security Sector
  As of March 31, 2011Cost or
    
    
    Gross
    
    
    Gross
    
    
    
    
    
    
    % ofAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    Total Fair
    
    
    OTTICost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Value
    
    
    in AOCISecurity SectorCorporate securities:Consumer discretionary
    
    $
    1,625.7
    
    
    $
    70.9
    
    
    $
    (14.5
    )
    
    $
    1,682.1
    
    
    
    7.7
    %
    
    $
    (1.0
    )Consumer staples
    
    
    2,271.1
    
    
    
    139.4
    
    
    
    (18.8
    )
    
    
    2,391.7
    
    
    
    11.0
    
    
    
    (1.4
    )Energy
    
    
    668.5
    
    
    
    46.9
    
    
    
    (4.4
    )
    
    
    711.0
    
    
    
    3.3
    
    
    
    Financials
    
    
    2,027.8
    
    
    
    75.0
    
    
    
    (59.6
    )
    
    
    2,043.2
    
    
    
    9.4
    
    
    
    (0.7
    )Health care
    
    
    1,243.2
    
    
    
    88.5
    
    
    
    (6.7
    )
    
    
    1,325.0
    
    
    
    6.1
    
    
    
    (1.8
    )Industrials
    
    
    2,545.1
    
    
    
    173.0
    
    
    
    (14.7
    )
    
    
    2,703.4
    
    
    
    12.4
    
    
    
    (0.4
    )Information technology
    
    
    451.6
    
    
    
    41.5
    
    
    
    (1.6
    )
    
    
    491.5
    
    
    
    2.3
    
    
    
    Materials
    
    
    1,231.5
    
    
    
    65.5
    
    
    
    (22.7
    )
    
    
    1,274.3
    
    
    
    5.8
    
    
    
    (12.7
    )Telecommunication services
    
    
    573.8
    
    
    
    30.0
    
    
    
    (7.8
    )
    
    
    596.0
    
    
    
    2.7
    
    
    
    (0.8
    )Utilities
    
    
    1,706.3
    
    
    
    90.0
    
    
    
    (17.6
    )
    
    
    1,778.7
    
    
    
    8.2
    
    
    
    (0.1
    )Total corporate securities
    
    
    14,344.6
    
    
    
    820.7
    
    
    
    (168.4
    )
    
    
    14,996.9
    
    
    
    68.9
    
    
    
    (18.9
    )U.S. government and agencies
    
    
    154.8
    
    
    
    2.8
    
    
    
    (0.9
    )
    
    
    156.7
    
    
    
    0.7
    
    
    
    (0.1
    )State and political subdivisions
    
    
    471.2
    
    
    
    5.3
    
    
    
    (13.7
    )
    
    
    462.8
    
    
    
    2.1
    
    
    
    (0.2
    )Residential mortgage-backed securities:Agency
    
    
    3,275.3
    
    
    
    125.5
    
    
    
    (21.9
    )
    
    
    3,378.9
    
    
    
    15.5
    
    
    
    Non-agency:Prime
    
    
    327.0
    
    
    
    9.7
    
    
    
    (9.2
    )
    
    
    327.5
    
    
    
    1.5
    
    
    
    (30.4
    )Alt-A
    
    
    108.8
    
    
    
    4.9
    
    
    
    (4.8
    )
    
    
    108.9
    
    
    
    0.5
    
    
    
    (8.8
    )Total residential mortgage-backed
securities
    
    
    3,711.1
    
    
    
    140.1
    
    
    
    (35.9
    )
    
    
    3,815.3
    
    
    
    17.5
    
    
    
    (39.2
    )Commercial mortgage-backed securities
    
    
    1,706.6
    
    
    
    108.1
    
    
    
    (11.8
    )
    
    
    1,802.9
    
    
    
    8.3
    
    
    
    (3.2
    )Other debt obligations
    
    
    522.8
    
    
    
    34.9
    
    
    
    (6.9
    )
    
    
    550.8
    
    
    
    2.5
    
    
    
    (4.4
    )Total
    
    $
    20,911.1
    
    
    $
    1,111.9
    
    
    $
    (237.6
    )
    
    $
    21,785.4
    
    
    
    100.0
    %
    
    $
    (66.0
    )
   43




---



##### Table of Contents



As of December 31, 2010Cost or
    
    
    Gross
    
    
    Gross
    
    
    
    
    
    
    % ofAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    Total Fair
    
    
    OTTICost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Value
    
    
    in AOCISecurity SectorCorporate securities:Consumer discretionary
    
    $
    1,526.6
    
    
    $
    77.4
    
    
    $
    (15.0
    )
    
    $
    1,589.0
    
    
    
    7.4
    %
    
    $
    (2.8
    )Consumer staples
    
    
    2,085.3
    
    
    
    145.9
    
    
    
    (15.1
    )
    
    
    2,216.1
    
    
    
    10.4
    
    
    
    (1.4
    )Energy
    
    
    675.5
    
    
    
    49.1
    
    
    
    (4.3
    )
    
    
    720.3
    
    
    
    3.4
    
    
    
    Financials
    
    
    2,028.9
    
    
    
    68.7
    
    
    
    (83.9
    )
    
    
    2,013.7
    
    
    
    9.5
    
    
    
    (0.7
    )Health care
    
    
    1,218.9
    
    
    
    99.6
    
    
    
    (6.2
    )
    
    
    1,312.3
    
    
    
    6.2
    
    
    
    (1.8
    )Industrials
    
    
    2,446.8
    
    
    
    176.4
    
    
    
    (19.6
    )
    
    
    2,603.6
    
    
    
    12.2
    
    
    
    (5.8
    )Information technology
    
    
    450.9
    
    
    
    40.2
    
    
    
    (1.7
    )
    
    
    489.4
    
    
    
    2.3
    
    
    
    Materials
    
    
    1,176.7
    
    
    
    64.8
    
    
    
    (30.6
    )
    
    
    1,210.9
    
    
    
    5.7
    
    
    
    (12.7
    )Telecommunication services
    
    
    569.3
    
    
    
    32.6
    
    
    
    (10.1
    )
    
    
    591.8
    
    
    
    2.8
    
    
    
    (0.9
    )Utilities
    
    
    1,712.8
    
    
    
    100.6
    
    
    
    (19.1
    )
    
    
    1,794.3
    
    
    
    8.4
    
    
    
    (0.1
    )Total corporate securities
    
    
    13,891.7
    
    
    
    855.3
    
    
    
    (205.6
    )
    
    
    14,541.4
    
    
    
    68.3
    
    
    
    (26.2
    )U.S. government and agencies
    
    
    30.3
    
    
    
    2.8
    
    
    
    
    
    
    
    33.1
    
    
    
    0.2
    
    
    
    (0.1
    )State and political subdivisions
    
    
    462.9
    
    
    
    5.3
    
    
    
    (15.4
    )
    
    
    452.8
    
    
    
    2.1
    
    
    
    (0.2
    )Residential mortgage-backed securities:Agency
    
    
    3,239.9
    
    
    
    139.3
    
    
    
    (18.6
    )
    
    
    3,360.6
    
    
    
    15.8
    
    
    
    Non-agency:Prime
    
    
    351.6
    
    
    
    6.1
    
    
    
    (28.0
    )
    
    
    329.7
    
    
    
    1.5
    
    
    
    (31.3
    )Alt-A
    
    
    115.7
    
    
    
    3.5
    
    
    
    (7.9
    )
    
    
    111.3
    
    
    
    0.5
    
    
    
    (8.7
    )Total residential mortgage-backed
securities
    
    
    3,707.2
    
    
    
    148.9
    
    
    
    (54.5
    )
    
    
    3,801.6
    
    
    
    17.8
    
    
    
    (40.0
    )Commercial mortgage-backed securities
    
    
    1,782.2
    
    
    
    115.2
    
    
    
    (10.1
    )
    
    
    1,887.3
    
    
    
    8.9
    
    
    
    (3.3
    )Other debt obligations
    
    
    542.2
    
    
    
    35.8
    
    
    
    (12.4
    )
    
    
    565.6
    
    
    
    2.7
    
    
    
    (6.4
    )Total
    
    $
    20,416.5
    
    
    $
    1,163.3
    
    
    $
    (298.0
    )
    
    $
    21,281.8
    
    
    
    100.0
    %
    
    $
    (76.2
    )
 Fixed Maturity Securities by Contractual Maturity Date
  Mortgage-Backed Securities
   Residential Mortgage-Backed Securities (RMBS)
  44




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##### Table of Contents



As of March 31, 2011
    
    
    As of December 31, 2010% of Total
    
    
    
    
    
    
    % of TotalFair Value
    
    
    Invested Assets
    
    
    Fair Value
    
    
    Invested AssetsAgency
    
    $
    3,378.9
    
    
    
    14.0
    %
    
    $
    3,360.6
    
    
    
    14.3
    %Non-agency:Prime
    
    
    327.5
    
    
    
    1.4
    
    
    
    329.7
    
    
    
    1.4Alt-A
    
    
    108.9
    
    
    
    0.4
    
    
    
    111.3
    
    
    
    0.5Subtotal non-agency
    
    
    436.4
    
    
    
    1.8
    
    
    
    441.0
    
    
    
    1.9Total
    
    $
    3,815.3
    
    
    
    15.8
    %
    
    $
    3,801.6
    
    
    
    16.2
    %
  As of March 31, 2011Highest Rating Agency RatingTotal as ofBB and
    
    
    
    
    
    
    December 31,AAA
    
    
    AA
    
    
    A
    
    
    BBB
    
    
    Below
    
    
    Total
    
    
    2010Vintage:2007
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    34.4
    
    
    $
    34.4
    
    
    $
    41.12006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.3
    
    
    
    111.2
    
    
    
    116.5
    
    
    
    127.92005
    
    
    
    
    
    
    9.2
    
    
    
    7.4
    
    
    
    56.1
    
    
    
    39.5
    
    
    
    112.2
    
    
    
    115.22004 and prior
    
    
    158.7
    
    
    
    13.4
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    172.7
    
    
    
    183.1Total amortized cost
    
    $
    158.7
    
    
    $
    22.6
    
    
    $
    7.4
    
    
    $
    61.4
    
    
    $
    185.7
    
    
    $
    435.8
    
    
    $
    467.3Net unrealized gains (losses)
    
    
    3.0
    
    
    
    (2.6
    )
    
    
    0.1
    
    
    
    (3.5
    )
    
    
    3.6
    
    
    
    0.6
    
    
    
    (26.3
    )Total fair value
    
    $
    161.7
    
    
    $
    20.0
    
    
    $
    7.5
    
    
    $
    57.9
    
    
    $
    189.3
    
    
    $
    436.4
    
    
    $
    441.0
     45




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##### Table of Contents



Commercial Mortgage-Backed Securities (CMBS)
  As of March 31, 2011
    
    
    As of December 31, 2010% of Total
    
    
    
    
    
    
    % of TotalFair Value
    
    
    Invested Assets
    
    
    Fair Value
    
    
    Invested AssetsAgency
    
    $
    545.6
    
    
    
    2.2
    %
    
    $
    607.4
    
    
    
    2.6
    %Non-Agency
    
    
    1,257.3
    
    
    
    5.2
    
    
    
    1,279.9
    
    
    
    5.4Total
    
    $
    1,802.9
    
    
    
    7.4
    %
    
    $
    1,887.3
    
    
    
    8.0
    %
   As of March 31, 2011Highest Rating Agency RatingTotal as ofBB and
    
    
    
    
    
    
    December 31,AAA
    
    
    AA
    
    
    A
    
    
    BBB
    
    
    Below
    
    
    Total
    
    
    2010Vintage:2008
    
    $
    51.0
    
    
    $
    18.5
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    69.5
    
    
    $
    69.52007
    
    
    442.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    443.6
    
    
    
    444.42006
    
    
    157.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.4
    
    
    
    168.9
    
    
    
    168.52005
    
    
    277.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    277.7
    
    
    
    283.62004 and prior
    
    
    197.0
    
    
    
    
    
    
    
    3.9
    
    
    
    
    
    
    
    9.5
    
    
    
    210.4
    
    
    
    224.8Total amortized cost
    
    $
    1,125.5
    
    
    $
    18.5
    
    
    $
    3.9
    
    
    $
    
    
    
    $
    22.2
    
    
    $
    1,170.1
    
    
    $
    1,190.8Net unrealized gains (losses)
    
    
    93.3
    
    
    
    (2.3
    )
    
    
    
    
    
    
    
    
    
    
    (3.8
    )
    
    
    87.2
    
    
    
    89.1Total fair value
    
    $
    1,218.8
    
    
    $
    16.2
    
    
    $
    3.9
    
    
    $
    
    
    
    $
    18.4
    
    
    $
    1,257.3
    
    
    $
    1,279.9
  46




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##### Table of Contents



As of March 31, 2011Total AAASuper Senior (Post 2004)
    
    
    Other Structures (2005 and Prior)
    
    
    Securities atSuper
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Other
    
    
    
    
    
    
    AmortizedSenior
    
    
    Mezzanine
    
    
    Junior
    
    
    Senior
    
    
    Subordinate
    
    
    Other
    
    
    CostVintage:2008
    
    $
    51.0
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    51.02007
    
    
    442.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    442.32006
    
    
    157.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157.52005
    
    
    134.7
    
    
    
    29.7
    
    
    
    
    
    
    
    113.3
    
    
    
    
    
    
    
    
    
    
    
    277.72004 and prior
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    168.5
    
    
    
    28.5
    
    
    
    
    
    
    
    197.0Total
    
    $
    785.5
    
    
    $
    29.7
    
    
    $
    
    
    
    $
    281.8
    
    
    $
    28.5
    
    
    $
    
    
    
    $
    1,125.5As of December 31, 2010Total
    
    $
    787.0
    
    
    $
    30.6
    
    
    $
    
    
    
    $
    298.3
    
    
    $
    28.9
    
    
    $
    
    
    
    $
    1,144.8
  Return on Equity-Like Investments
   Three Months EndedMarch 31,2011
    
    
    2010Common stock
    
    
    6.7
    %
    
    
    5.4
    %S&P 500 Total Return Index
    
    
    5.9
    
    
    
    5.4Difference
    
    
    0.8
    %
    
    
    
    %
 Mortgage Loans
  47




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##### Table of Contents



Credit Quality
  As of March 31, 2011
    
    
    As of December 31, 2010Carrying
    
    
    
    
    
    
    CarryingValue
    
    
    % of Total
    
    
    Value
    
    
    % of TotalLoan-to-Value Ratio:< or = 50%
    
    $
    575.9
    
    
    
    30.8
    %
    
    $
    596.2
    
    
    
    34.7
    %51% - 60%
    
    
    418.1
    
    
    
    22.4
    
    
    
    369.8
    
    
    
    21.561% - 70%
    
    
    564.5
    
    
    
    30.2
    
    
    
    463.7
    
    
    
    26.971% - 75%
    
    
    123.2
    
    
    
    6.6
    
    
    
    120.4
    
    
    
    7.076% - 80%
    
    
    60.9
    
    
    
    3.2
    
    
    
    46.3
    
    
    
    2.781% - 100%
    
    
    92.4
    
    
    
    4.9
    
    
    
    90.7
    
    
    
    5.3> 100%
    
    
    34.8
    
    
    
    1.9
    
    
    
    33.1
    
    
    
    1.9Total
    
    $
    1,869.8
    
    
    
    100.0
    %
    
    $
    1,720.2
    
    
    
    100.0
    %
 st th
  48




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##### Table of Contents



As of March 31, 2011
    
    
    As of December 31, 2010Carrying
    
    
    
    
    
    
    CarryingValue
    
    
    % of Total
    
    
    Value
    
    
    % of TotalDebt Service Coverage Ratio:> or = 1.60
    
    $
    987.7
    
    
    
    52.8
    %
    
    $
    896.4
    
    
    
    52.1
    %1.40 - 1.59
    
    
    370.9
    
    
    
    19.9
    
    
    
    327.1
    
    
    
    19.01.20 - 1.39
    
    
    312.5
    
    
    
    16.7
    
    
    
    295.7
    
    
    
    17.21.00 - 1.19
    
    
    116.2
    
    
    
    6.2
    
    
    
    117.7
    
    
    
    6.80.85 - 0.99
    
    
    31.6
    
    
    
    1.7
    
    
    
    32.0
    
    
    
    1.9< 0.85
    
    
    50.9
    
    
    
    2.7
    
    
    
    51.3
    
    
    
    3.0Total
    
    $
    1,869.8
    
    
    
    100.0
    %
    
    $
    1,720.2
    
    
    
    100.0
    %
  Composition of Mortgage Loans
  As of March 31, 2011
    
    
    As of December 31, 2010Carrying
    
    
    
    
    
    
    CarryingValue
    
    
    % of Total
    
    
    Value
    
    
    % of TotalRegion:California
    
    $
    604.4
    
    
    
    32.3
    %
    
    $
    533.6
    
    
    
    31.0
    %Washington
    
    
    280.4
    
    
    
    15.0
    
    
    
    270.4
    
    
    
    15.7Texas
    
    
    185.4
    
    
    
    9.9
    
    
    
    168.9
    
    
    
    9.8Oregon
    
    
    96.0
    
    
    
    5.1
    
    
    
    95.6
    
    
    
    5.6Florida
    
    
    62.1
    
    
    
    3.3
    
    
    
    54.9
    
    
    
    3.2Other
    
    
    641.5
    
    
    
    34.4
    
    
    
    596.8
    
    
    
    34.7Total
    
    $
    1,869.8
    
    
    
    100.0
    %
    
    $
    1,720.2
    
    
    
    100.0
    %
  As of March 31, 2011
    
    
    As of December 31, 2010Carrying
    
    
    
    
    
    
    CarryingValue
    
    
    % of Total
    
    
    Value
    
    
    % of TotalProperty Type:Shopping Centers and Retail
    
    $
    782.0
    
    
    
    41.8
    %
    
    $
    735.7
    
    
    
    42.8
    %Office Buildings
    
    
    522.2
    
    
    
    27.9
    
    
    
    460.8
    
    
    
    26.8Industrial
    
    
    457.9
    
    
    
    24.5
    
    
    
    433.9
    
    
    
    25.2Multi-Family
    
    
    50.6
    
    
    
    2.7
    
    
    
    46.8
    
    
    
    2.7Other
    
    
    57.1
    
    
    
    3.1
    
    
    
    43.0
    
    
    
    2.5Total
    
    $
    1,869.8
    
    
    
    100.0
    %
    
    $
    1,720.2
    
    
    
    100.0
    %
 49




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##### Table of Contents



Maturity Date of Mortgage Loans
  As of March 31, 2011
    
    
    As of December 31, 2010Carrying
    
    
    
    
    
    
    CarryingValue
    
    
    % of Total
    
    
    Value
    
    
    % of TotalYears to Maturity:Due in one year or less
    
    $
    9.7
    
    
    
    0.5
    %
    
    $
    6.3
    
    
    
    0.4
    %Due after one year through five years
    
    
    99.2
    
    
    
    5.3
    
    
    
    107.1
    
    
    
    6.2Due after five years through ten years
    
    
    1,001.6
    
    
    
    53.6
    
    
    
    871.9
    
    
    
    50.7Due after ten years
    
    
    759.3
    
    
    
    40.6
    
    
    
    734.9
    
    
    
    42.7Total
    
    $
    1,869.8
    
    
    
    100.0
    %
    
    $
    1,720.2
    
    
    
    100.0
    %
  Investments in Limited Partnerships  Affordable Housing Investments
   Three Months Ended March 31,2011
    
    
    2010Amortization related to affordable housing investments, net of taxes
    
    $
    (2.2
    )
    
    $
    (1.3
    )Affordable housing tax credits
    
    
    4.3
    
    
    
    2.8Impact to net income
    
    $
    2.1
    
    
    $
    1.5
  Impact to NetIncomeRemainder of 2011
    
    $
    6.22012
    
    
    14.12013
    
    
    14.62014 and beyond
    
    
    50.0Estimated impact to net income
    
    $
    84.9
 Liquidity and Capital Resources
   50




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##### Table of Contents




    
    Sales for the three months ended March 31, 2011 were solid and exceeded levels for the
same period in 2010. Sales on our deposit contracts (annuities and universal life policies,
including BOLI) continue to generate strong cash inflows.
    
    We continued to generate strong cash flows from operations, which grew slightly by $4.6
to $214.2 as of March 31, 2011, from $209.6 for March 31, 2010.
    
    While certain lapses and surrenders occur in the normal course of business, these
lapses and surrenders have not deviated materially from management expectations.
    
    As of March 31, 2011, we had the ability to borrow, on an unsecured basis, up to a
maximum principal amount of $200.0 under a revolving line of credit arrangement.
    
    To support the sales of our products and maintain financial strength ratings, we target
a risk-based capital level of at least 350% in our life insurance company, Symetra Life
Insurance Company. As of March 31, 2011, Symetra Life Insurance Company had an estimated
risk-based capital ratio of 475%. This capital level provides more than adequate capital
levels for growth of our business.
 Liquidity Requirements and Sources of Liquidity
   51




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##### Table of Contents



As of March 31, 2011
    
    
    As of December 31, 2010Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of TotalIlliquid LiabilitiesStructured settlements & other SPIAs(1)
    
    $
    6,679.8
    
    
    
    30.6
    %
    
    $
    6,670.4
    
    
    
    31.4
    %Deferred annuities with 5-year payout provision or MVA(2)
    
    
    377.9
    
    
    
    1.7
    
    
    
    377.1
    
    
    
    1.8Traditional insurance (net of reinsurance)(3)
    
    
    185.8
    
    
    
    0.9
    
    
    
    185.6
    
    
    
    0.9Group health & life (net of reinsurance)(3)
    
    
    90.6
    
    
    
    0.4
    
    
    
    95.9
    
    
    
    0.4Total illiquid liabilities
    
    
    7,334.1
    
    
    
    33.6
    
    
    
    7,329.0
    
    
    
    34.5Somewhat Liquid LiabilitiesBank-owned life insurance (BOLI)(4)
    
    
    4,482.7
    
    
    
    20.5
    
    
    
    4,444.0
    
    
    
    20.9Deferred annuities with surrender charges of 5% or higher
    
    
    6,671.8
    
    
    
    30.6
    
    
    
    6,176.8
    
    
    
    29.1Universal life with surrender charges of 5% or higher
    
    
    192.7
    
    
    
    0.9
    
    
    
    181.7
    
    
    
    0.9Total somewhat liquid liabilities
    
    
    11,347.2
    
    
    
    52.0
    
    
    
    10,802.5
    
    
    
    50.9Fully Liquid LiabilitiesDeferred annuities with surrender charges of:3% up to 5%
    
    
    494.8
    
    
    
    2.3
    
    
    
    462.6
    
    
    
    2.2Less than 3%
    
    
    188.0
    
    
    
    0.9
    
    
    
    231.2
    
    
    
    1.1No surrender charges(5)
    
    
    2,006.0
    
    
    
    9.1
    
    
    
    1,946.9
    
    
    
    9.2Universal life with surrender charges less than 5%
    
    
    439.8
    
    
    
    2.0
    
    
    
    439.9
    
    
    
    2.0Other (6)
    
    
    16.8
    
    
    
    0.1
    
    
    
    21.9
    
    
    
    0.1Total fully liquid liabilities
    
    
    3,145.4
    
    
    
    14.4
    
    
    
    3,102.5
    
    
    
    14.6Total
    
    $
    21,826.7
    
    
    
    100.0
    %
    
    $
    21,234.0
    
    
    
    100.0
    %
 
 (1)
    
    These contracts cannot be surrendered. The benefits are specified in the contracts as fixed
amounts, primarily to be paid over the next several decades.(2)
    
    In a liquidity crisis situation, we could invoke the five-year payout provision so that the
contract value with interest is paid out ratably over five years.(3)
    
    The surrender value on these contracts is generally zero. Represents incurred but not
reported claim liabilities.(4)
    
    The biggest deterrent to surrender is the taxation on the gain within these contracts, which
includes a 10% non-deductible penalty tax. Banks can exchange certain of these contracts with
other carriers, tax-free. However, a significant portion of this business does not qualify for
this tax-free treatment due to the employment status of the original covered employees and
charges may be applicable.(5)
    
    Approximately half of this business has been with the Company for over a decade, contains
lifetime minimum interest guarantees of 4.0% to 4.5%, and has been free of surrender charges
for many years. This business has experienced high persistency given the high lifetime
guarantees that have not been available in the market on new issues for many years.(6)
    
    Represents BOLI, traditional insurance, and Group health and life reported claim liabilities. Liquid Assets
    52




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##### Table of Contents



Capitalization
  As of
    
    
    As ofMarch 31, 2011
    
    
    December 31, 2010Notes payable
    
    $
    449.1
    
    
    $
    449.0Stockholders equity
    
    
    2,431.0
    
    
    
    2,380.6Total capital
    
    $
    2,880.1
    
    
    $
    2,829.6
  Dividends
  Cash Flows
  Three Months Ended March 31,2011
    
    2010Net cash flows provided by operating activities
    
    $
    214.2
    
    
    $
    209.6Net cash flows used in investing activities
    
    
    (558.3
    )
    
    
    (544.1
    )Net cash flows provided by financing activities
    
    
    377.4
    
    
    
    466.0
 Operating Activities
   Investing Activities
  53




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##### Table of Contents



Financing Activities
   
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Limitations on Controls
  Changes in Internal Control Over Financial Reporting
  54




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##### Table of Contents



PART II  Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 6. Exhibits
 ExhibitNumber
    
    Description10.1
    
    Form of Performance Unit Award Agreement Pursuant to the Symetra Financial Corporation Equity
Plan 2011-2013 Grant*31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act, as amended*31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act, as amended*32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002*32.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002*
 
 *
    
    Filed herewith. 55




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##### Table of Contents



SIGNATURES
  SYMETRA FINANCIAL CORPORATIONDate:  May 12, 2011
    By:
    /s/ Thomas M. MarraName:
    Thomas M. MarraTitle:
    President and Chief Executive OfficerDate:  May 12, 2011
    By:
    /s/ Margaret A. MeisterName:
    Margaret A. MeisterTitle:
    Executive Vice President and Chief Financial Officer 56