Properties The Company has no properties. The Company has contracts with PLC and Protective under which it receives investment, legal, and data processing services on a fee basis and other managerial and administrative services on a shared cost basis.
Critical Accounting Policies The Company’s accounting policies inherently require the use of judgments relating to a variety of assumptions and estimates, in particular expectations of current and future mortality, morbidity, persistency, expenses, and interest rates. Because of the inherent uncertainty when using the assumptions and estimates, the effect of certain accounting policies under different conditions or assumptions could be materially different from those reported in the financial statements. A discussion of the various critical accounting policies is presented below.
The Company incurs significant costs in connection with acquiring new insurance business. These costs, which vary with and are primarily related to the production of new business and coinsurance of blocks of policies, are deferred. The recovery of such costs is dependent on the future profitability of the related policies. The amount of future profit is dependent principally on investment returns, mortality, morbidity, persistency, and expenses to administer the business and certain economic variables, such as inflation. These factors enter into management’s estimates of future profits which generally are used to amortize certain of such costs. Revisions to estimates result in changes to the amounts expensed in the reporting period in which the revisions are made and could result in the impairment of the asset and a charge to income if estimated future profits are less than the unamortized deferred amounts.
Establishing an adequate liability for the Company’s obligations to its policyholders requires the use of assumptions. Liabilities for future policy benefits on traditional life insurance products requires the use of assumptions relative to future investment yields, mortality, persistency and other assumptions based on the Company’s experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation.
Net investment income for 2002 was $2.4 million or 7.0% higher than for the preceding year primarily due to increases in the average amount of invested assets. The percentage earned on average cash and investments was 6.3% in 2002 and 6.6% in 2001.
Management evaluates the results of the Company’s segments on a before-income-tax basis as adjusted for certain items which management believes are not indicative of the Company’s core operations. Segment operating income (loss) excludes net realized investment gains and losses and the related amortization of deferred policy acquisition costs because fluctuations in these items are due to changes in interest rates and other financial market factors instead of mortality and morbidity. Also, operating segment income (loss) excludes any net gains or losses on disposals of businesses, discontinued operations, extraordinary items, the cumulative effect of accounting changes, and any other items, that, in each case, are neither normal nor recurring. Although the items excluded from segment operating income (loss) may be significant components in understanding and assessing the Company’s overall financial performance, management believes that operating segment income (loss) enhances an investor’s understanding of the Company’s results of operations by highlighting the income (loss) attributable to the normal, recurring operations of the insurance business (i.e., mortality and morbidity), consistent with industry practice. However, the Company’s segment income (loss) measures may not be comparable to similarly titled measures reported by other companies. Segment income (loss) should not be construed as a substitute for net income (loss) determined in accordance with accounting principles generally accepted in the United States of America (GAAP). “Total income from continuing operations before income tax” is a GAAP measure to which the non-GAAP measure “total operating income” may be compared. Unlike total operating income, total income before income tax includes net realized investment gains and losses and the related amortization of deferred policy acquisition costs.
The Asset Protection segment’s 2002 pretax earnings increased $0.6 million as compared to 2001 primarily due to ceding commissions related to reinsurance arrangements with affiliates. The reinsurance arrangements are more fully discussed in Note J to the Company's financial statements included herein.
The Company offers a guaranteed minimum death benefit feature (GMDB) on its variable annuity products. The Company’s accounting policy has been to calculate its total exposure to GMDB, and then apply a mortality factor to determine the amount of claims that could be expected to occur in the coming twelve months. The Company then accrues to that amount over four quarters. At December 31, 2002, the total GMDB reserve was $0.2 million, an increase of $0.1 million from December 31, 2001. At December 31, 2002, the total guaranteed amount payable under the GMDB feature based on variable annuity account balances at December 31, 2002, was $3.4 million, compared to $1.7 million at December 31, 2001. Based on variable annuity account balances as of January 31, 2003, the total guaranteed dollar amount payable under the GMDB feature was approximately $3.5 million.
The Corporate and Other segment consists of net investment income and expenses not identified with the preceding business segments. Pretax earnings in 2002 decreased $0.5 million over 2001, primarily due to decreased net investment income on capital.
Management’s current estimate of the effective income tax rate for 2003 is 34.9%.
Discontinued Operations On December 31, 2001, PLC completed the sale to Fortis, Inc. of substantially all of its Dental Benefits Division (Dental Division), and discontinued certain other remaining Dental Division related operations, primarily other health insurance lines. In 2000, the loss from discontinued operations, net of income tax, was $51,006. In 2001, income from discontinued operations was $158,889 and the gain from the sale of discontinued operations was $1,625,000, both net of income tax.
Net Income The following table sets forth net income from continuing operations before cumulative effect of change in accounting principle for the periods shown:
Net Income ---------------------------------------- Percentage Year Ended Increase December 31 Amount (Decrease) ------------ ------ -----------
Recently Issued Accounting Standards For information regarding recently issued accounting standards see Note A to the financial statements included herein.
Report of Independent Accountants........................................................................ Statements of Income for the years ended December 31, 2002, 2001, and 2000............................... Balance Sheets as of December 31, 2002 and 2001.......................................................... Statements of Share-Owners' Equity for the years ended December 31, 2002, 2001, and 2000..................................................................... Statements of Cash Flows for the years ended December 31, 2002, 2001, and 2000........................... Notes to Financial Statements............................................................................ Financial Statement Schedules: Schedule III-- Supplementary Insurance Information...................................................... Schedule IV-- Reinsurance...............................................................................
In our opinion, the financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Protective Life and Annuity Insurance Company at December 31, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements. These financial statements and financial statement schedules are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
REVENUES Premiums and policy fees.............................................. $51,293,397 $47,707,465 $47,876,379 Reinsurance ceded..................................................... (23,734,401) (18,621,035) (17,319,246) ------------ ------------ ------------ Net of reinsurance ceded............................................ 27,558,996 29,086,430 30,557,133 Net investment income................................................. 36,245,837 33,876,409 31,686,448 Realized investment gains (losses).................................... (696,209) (1,113,538) 42,148 Other income (loss)................................................... 11,087 5,731 (6,551) ------------ ------------ ------------ 63,119,711 61,855,032 62,279,178
Income from continuing operations before income tax....................... 13,246,921 12,286,328 13,426,984 ------------ ------------ ------------
ASSETS Investments: Fixed maturities, at market (amortized cost: 2002 - $466,924,086; 2001 - $442,583,178) $488,701,807 $445,730,493 Mortgage loans on real estate....................................................... 1,793,590 2,717,495 Other long term investments......................................................... 572,818 470,030 Policy loans........................................................................ 54,807,151 54,565,016 Short-term investments.............................................................. 178,805,245 12,000,000 ------------ ------------ Total investments............................................................... 724,680,611 515,483,034 Cash 1,669,532 4,284,257 Accrued investment income................................................................ 8,382,989 8,432,689 Accounts and premiums receivable, net of allowance for uncollectible amounts (2002-$7,000; 2001 - $7,000)................................................ 325,479 7,888,382 Reinsurance receivables.................................................................. 92,256,257 20,642,570 Deferred policy acquisition costs........................................................ 104,779,582 118,997,438 Other assets............................................................................. 21,955 19,689 Assets related to separate accounts Variable annuity.................................................................... 8,382,367 9,001,016 ------------ ------------ $940,498,772 $684,749,075 ============ ============
LIABILITIES Policy liabilities and accruals: Future policy benefits and claims................................................... $517,624,864 $458,568,381 Unearned premiums................................................................... 26,349,028 7,767,028 ------------ ------------ 543,973,892 466,335,409 Annuity deposits......................................................................... 60,080,082 47,324,337 Other policyholders' funds............................................................... 6,025,066 5,874,932 Funds held-coinsurance................................................................... 89,552,015 2,944,827 Other liabilities........................................................................ 14,214,260 14,445,632 Deferred income taxes.................................................................... 25,533,038 17,077,829 Liabilities related to separate accounts Variable annuity.................................................................... 8,382,367 9,001,016 ------------ ------------ Total liabilities................................................................ 747,760,720 563,003,982 ============ ============
CASH FLOWS FROM OPERATING ACTIVITIES Net income.................................................................. $ 8,624,649 $ 9,620,184 $ 8,743,668 Adjustments to reconcile net income to net cash provided by operating activities: 696,209 1,113,538 (42,148) Realized investment losses (gains)...................................... 8,639,183 7,034,480 6,765,446 Amortization of deferred policy acquisition costs....................... (2,161,267) (1,792,738) (2,593,858) Capitalization of deferred policy acquisition costs..................... 0 (1,625,000) 0 Gain on sale of discontinued operations................................. 4,622,272 5,121,553 4,605,444 Deferred income taxes................................................... 29,693,764 37,752,197 33,753,870 Interest credited to universal life and investment products............. (34,641,740) (36,063,990) (37,777,093) Policy fees assessed on universal life and investment products.......... (64,001,084) (2,959,990) 4,751,257 Change in accrued investment income and other receivables............... Change in policy liabilities and other policyholder funds of traditional life and health products.............................................. 70,326,971 1,495,557 3,848,851
RECENTLY ISSUED ACCOUNTING STANDARDS On January 1, 2001, the Company adopted Statement of Financial Accounting Standard (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities”. SFAS No. 133, as amended by SFAS Nos. 137 and 138, requires the Company to record all derivative financial instruments, at fair value on the balance sheet. Changes in fair value of a derivative instrument are reported in net income or other comprehensive income, depending on the designated use of the derivative instrument. The adoption of SFAS No. 133 resulted in a cumulative after-tax charge to net income of $0.3 million and a cumulative after-tax increase to other comprehensive income of $0.3 million on January 1, 2001. Prospectively, the adoption of SFAS No. 133 may introduce volatility into the Company’s reported net income and other comprehensive income depending on future market conditions and the Company’s hedging activities.
In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS No. 144 requires that the same accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, expands the use of discontinued operations accounting to include more types of transactions and changes the timing of when discontinued operations accounting is applied. The Company adopted SFAS No. 144 on January 1, 2002, and the adoption did not have a material effect on the Company’s financial position or results of operations.
In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002.” SFAS No. 145 rescinds SFAS No. 4, which required companies to treat the extinguishment of debt as an extraordinary item. SFAS No. 145 requires companies to apply APB Opinion 30 when determining the accounting for the extinguishment of debt. The statement also rescinds and amends other statements to make various technical corrections and clarifications. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. The Company does not expect the adoption of SFAS 145 to have a material effect on the Company’s financial position or results of operations.
In November, 2002, the FASB issued FASB Interpretation No. (FIN) 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Others.” FIN 45 clarifies the requirements of SFAS No. 5 “Accounting for Contingencies” relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. The initial recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The Company does not expect FIN 45 to have a material effect on The Company’s financial position or results of operations.
* Mortgage loans--at unpaid balances, adjusted for loan origination costs, net of fees, and amortization of premiums or discount.
The Company believes that an insurance company’s balance sheet may be difficult to analyze without disclosing the effects of recording accumulated other comprehensive income (including unrealized gains and losses on investments). The carrying value of the Company’s investments, deferred policy acquisition costs, deferred income taxes and share-owners’ equity are all affected by recording unrealized gains and losses on investments, therefore these items are separately identified in the table below. The captions “all other assets” and “all other liabilities” represent the assets and liabilities unaffected by recording unrealized gains and losses on investments. The Company’s balance sheets at December 31, adjusted for the effects of recording accumulated other comprehensive income (including unrealized gains and losses on investments), are as follows:
Deferred income taxes............................... $ 20,414,120 $ 15,791,847 All other liabilities............................... 722,227,682 545,926,153 ------------ ------------ 742,641,802 561,718,000 Share-owners' equity................................ 183,231,490 119,356,841 ------------ ------------ $925,873,292 $681,074,841 ============ ============
DEFERRED POLICY ACQUISITION COSTS Commissions and other costs of acquiring traditional life and health insurance, credit insurance, universal life insurance, and investment products that vary with and are primarily related to the production of new business, have been deferred. Traditional life and health insurance acquisition costs are amortized over the premium-payment period of the related policies in proportion to the ratio of annual premium income to the present value of the total anticipated premium income. Credit insurance acquisition costs are being amortized in proportion to earned premium. Acquisition costs for universal life and investment products are amortized over the lives of the policies in relation to the present value of estimated gross profits before amortization. Under SFAS No. 97, “Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments,” the Company makes certain assumptions regarding the mortality, persistency, expenses, and interest rates (equal to the rate used to compute liabilities for future policy benefits; currently 3.0% to 9.4%) it expects to experience in future periods. These assumptions are to be best estimates and are to be periodically updated whenever actual experience and/or expectations for the future change from that assumed. Additionally, relating to SFAS No. 115, these costs have been adjusted by an amount equal to the amortization that would have been recorded if unrealized gains or losses on investments associated with the Company’s universal life and investment products had been realized.
Paid related to: Current year........................................... 10,612,857 9,454,229 9,504,618 Prior year............................................. 1,137,071 2,155,651 1,276,856 ---------- ----------- ----------- Total paid.......................................... 11,749,928 11,609,880 10,781,474 ---------- ----------- -----------
• Universal Life and Investment Products - Universal life and investment products include universal life insurance, deferred annuities, and annuities without life contingencies. Premiums and policy fees for universal life and investment products consist of policy fees that have been assessed against policy account balances for the costs of insurance, policy administration, and surrenders. Such fees are recognized when assessed and earned. Benefit reserves for universal life and investment products represent policy account balances before applicable surrender charges plus certain deferred policy initiation fees that are recognized in income over the term of the policies. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances and interest credited to policy account balances. Interest credit rates for universal life and investment products ranged from 3.6% to 9.4% in 2002.
Income (loss) before income taxes from discontinued operations $ 0 $ 240,377 $ (77,872) Income tax (expense) benefit (81,488) 26,866 ----------------------------------------------------------------------------------------------- Income (loss) from discontinued operations $ 0 $ 158,889 $ (51,006) ----------------------------------------------------------------------------------------------- Gain from sale of discontinued operations $ 2,500,000 before income tax Income tax expense related to sale $ 875,000 ----------------------------------------------------------------------------------------------- Gain from sale of discontinued operations $ 1,625,000 -----------------------------------------------------------------------------------------------
In conformity with statutory reporting practices: $10,879,132 $13,895,381 $ 13,006,859 $102,550,549 $ 34,354,020 $ 31,878,162 Additions (deductions) by adjustment: Deferred policy acquisition costs, net of amortization................. (6,477,916) (5,241,742) (4,700,240) 104,779,582 118,997,438 128,228,360 Deferred income tax................... (4,622,272) (5,121,553) (4,605,444) (25,533,038) (17,077,829) (9,063,941) Asset Valuation Reserve............... 1,678,921 217,592 2,797,912 Interest Maintenance Reserve.......... (811,107) (446,638) 118,604 1,505,616 694,509 247,870 Nonadmitted items..................... 374,966 281,394 25,902 Other timing and valuation adjustments 9,656,812 6,534,736 4,923,889 7,381,456 (15,722,031) (34,745,806) ----------- ------------ ------------ ------------ ------------- ------------ In conformity with generally accepted accounting principles $8,624,649 $ 9,620,184 $ 8,743,668 $192,738,052 $121,745,093 $119,368,459 =========== ============ ============ ============ ============= ============
As of December 31, 2002, the Company had on deposit with regulatory authorities, fixed maturity and short-term investments with a market value of approximately $7.6 million.
In 2002, gross gains on the sale of investments available for sale (fixed maturities and short-term investments) were approximately $2.1 million and gross losses were approximately $2.6 million. In 2001, gross gains were approximately $1.1 million and gross losses were approximately $2.2 million. In 2000, gross gains were approximately $27,500 and gross losses were approximately $97,700.
Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Values 2001 -------------- -------------- ------------- ---------------- ---- Fixed maturities: Bonds: Mortgage-backed securities.............. $ 6,655,797 $ 214,820 $ 0 $ 6,870,617 United States Government and authorities............................. 7,736,901 406,974 2,454 8,141,421 States, municipalities, and political subdivisions.................. 3,012,672 70,074 0 3,082,746 Public utilities........................ 64,825,621 1,228,963 1,229,425 64,825,159 All other corporate bonds............... 360,352,187 10,242,579 7,784,216 362,810,550 ------------- ----------- ------------ ----------- 442,583,178 12,163,410 9,016,095 445,730,493 Short-term investments........................... 12,000,000 0 0 12,000,000 ------------- ----------- ------------ ----------- $ 454,583,178 $12,163,410 $ 9,016,095 $457,730,493 ============= =========== ============ ============
---- Due in one year or less.......................... $ 54,352,524 $ 55,079,080 Due after one year through five years............ 93,935,056 98,446,189 Due after five years through ten years........... 132,434,167 142,450,128 Due after ten years.............................. 186,202,339 192,726,410 ------------ ------------ $466,924,086 $488,701,807 ============ ============
At December 31, 2002 and 2001, the Company had bonds which were rated less than investment grade of $27.7 million and $10.8 million, respectively, having an amortized cost of $32.9 million and $15.0 million, respectively. Approximately $7.6 million of bonds are not publicly traded.
Statutory federal income tax rate applied to pretax income....... 35.0% 35.0% 35.0% Tax-exempt interest.............................................. (0.1) Other adjustments................................................ (1.1) (0.5) ----- ------ ----- Effective income tax rate........................................ 34.9% 33.9% 34.5% ===== ====== =====
Deferred policy acquisition costs................................ $(8,924,591) $10,448,277 $ 6,202,088 Benefit and other policy liability changes....................... 15,201,433 (6,335,100) (3,129,276) Temporary differences of investment income....................... (1,654,570) 51,888 1,532,632 ------------ ------------ ------------- $4,622,272 $ 4,165,065 $ 4,605,444 ============ ============ =============
Deferred income tax assets: Policy and policyholder liability reserves................... $6,260,637 $ 21,462,070 Unrealized (gain) loss on investments........................ (3,644,299) (1,295,737) ----------- ------------- 2,616,338 20,166,333 ----------- ------------- Deferred income tax liabilities: Deferred policy acquisition costs............................ 27,509,713 36,434,304 Other........................................................ 639,663 809,858 ----------- ----------- 28,149,376 37,244,162 ------------ ------------ Net deferred income tax liability............................ $25,533,038 $ 17,077,829 ============ =============
The Company’s income tax returns are included in the consolidated income tax returns of PLC. The allocation of income tax liabilities among affiliates is based upon separate income tax return calculations. At December 31, 2001 and 2000 no amounts were payable to PLC for income tax liabilities.
A number of civil jury verdicts have been returned against insurers and other providers of financial services involving sales practices, alleged agent misconduct, failure to properly supervise representatives' relationships with agents or persons with whom the insurer does business, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive and non-economic compensatory damages. In some states, juries, judges and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very little appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The Company, like other financial service companies, in the ordinary course of business, is involved in such litigation or, alternatively, in arbitration. Although the outcome of any such litigation or arbitration cannot be predicted, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse effect on the financial position, results of operations, or liquidity of the Company.
Dividends on common stock are noncumulative and are paid as determined by the Board of Directors. At December 31, 2002, approximately $91.3 million of share-owners’ equity excluding net unrealized gains and losses represented net assets of the Company that cannot be transferred to Protective. In general, dividends up to specified levels are considered ordinary and may be paid thirty days after written notice to the insurance commissioner of the state of domicile unless such commissioner objects to the dividend prior to the expiration of such period. Dividends in larger amounts are considered extraordinary and are subject to affirmative prior approval by such commissioner. The maximum amount that would qualify as ordinary dividends to Protective by the Company in 2003 is estimated to be $12.1 million.
The Company’s preferred stock pays, when and if declared, noncumulative participating dividends to the extent the Company’s statutory earnings for the immediately preceding year exceeded $1.0 million. In 2002, the Company paid $50,000 of preferred dividends. In 2001, the Company paid $1.0 million of preferred dividends. No preferred dividends were paid in 2000.
The Company has no employees; therefore, the Company purchases data processing, legal, investment, and other management services from PLC and other affiliates. The cost of such services was $8.4 million in 2002, $8.6 million in 2001, and $7.8 million in 2000.
Receivables from and payables to related parties consisted of receivables from and payables to affiliates under control of PLC in the amount of a $6.5 million payable at December 31, 2002 and a $4.9 million payable at December 31, 2001. The Company routinely receives from or pays to affiliates under the control of PLC reimbursements for expenses incurred on one another’s behalf. Receivables and payables among affiliates are generally settled monthly.
Protective and the Company entered into a guaranty agreement on October 27, 1993, whereby Protective guaranteed the payment of all insurance policy claims made by the holders or beneficiaries of any of the Company’s policies which were issued after the date of the guaranty agreement in accordance with the terms of said policies. Total liabilities for policies covered by this agreement were $50.6 million and $43.8 million at December 31, 2002 and 2001, respectively.
The Annuities segment manufactures, sells, and supports fixed and variable annuity products. These products are primarily sold through stockbrokers, but are also sold through financial institutions and the Life Marketing segment’s sales force. As of January 2003, the Company is no longer actively marketing variable annuity products.
The Company has an additional business segment herein referred to as Corporate and Other. The Corporate and Other segment primarily consists of net investment income and expenses not attributable to the segments above (including net investment income on unallocated capital).
Premiums and policy fees, net.... $27,443,897 $2,997,130 $ 116,106 $30,557,133 Net investment income............ 29,275,899 628,572 1,416,117 $ 365,860 31,686,448 Realized investment gains........ $ 42,148 42,148 Other income (loss)............. (4,486) (2,065) (6,551) ----------- ---------- --------- --------- ---------- ------------ Total revenues............. 56,715,310 3,625,702 1,530,158 365,860 42,148 62,279,178 ----------- ---------- --------- --------- ---------- ------------ Benefits and settlement expenses. 29,247,353 2,250,237 1,267,445 32,765,035 Amortization of deferred policy acquisition costs.......... 5,871,420 714,278 179,748 6,765,446 Other operating expenses......... 9,991,067 57,601 (787,364) 60,409 9,321,713 ----------- ---------- --------- --------- ---------- ------------ Total benefits and expenses 45,109,840 3,022,116 659,829 60,409 48,852,194 ----------- ---------- --------- --------- ---------- ------------ Income from continuing operations before income tax..... 11,605,470 603,586 870,329 305,451 42,148 13,426,984 Income tax expense............... 4,632,310 4,632,310 Discontinued operations, net of income tax.................. (51,006) (51,006) ----------- Net income...................... $ 8,743,668 ============
Life Asset Corporate Operating Segment Assets Marketing Acquisitions Protection Annuities and Other Adjustments Total ------------------------ ---------- ------------ ------------ ---------- ----------- ----------- ------------ Investments and other assets.....(476,600) $600,231,727 $78,120,621 $54,071,804 $100,048,550 $3,723,088 $835,719,190 Deferred policy acquisition costs 583,131 100,007,935 1,607,207 2,581,309 104,779,582 ---------- ------------ ------------ ------------ ------------ ----------- ------------ Total assets.................... $106,531 $700,239,662 $79,727,828 $56,653,113 $100,048,550 $3,723,088 $940,498,772 ========== ============ ============ ============ ============ =========== ============
Approximately 16% and 65% of the reinsurance receivable balances at December 31, 2002 and 2001, respectively, relate to one unaffiliated insurance company rated “A+” (Superior) by the A. M. Best Company, an independent rating organization. Another $73.1 or 79% of the reinsurance receivable balance at December 31, 2002 relates to Protective.
Assets (see Notes A and C): Investments: Fixed maturities...................... $488,701,807 $488,701,807 $445,730,493 $445,730,493 Mortgage loans on real estate......... 1,793,590 1,863,134 2,717,495 2,873,017 Short-term investments................ 178,805,245 178,805,245 12,000,000 12,000,000 Cash 1,669,532 1,669,532 4,284,257 4,284,257 Liabilities (see Note A): Annuity deposits...................... 60,080,082 62,984,955 47,324,337 46,396,261
---------------------------- ------------- ------------ ----------- ------------- ----------- ----------- ------------ ------------ ------------- COL. A COL. B COL. C COL. D COL. E COL. F COL. G COL. H COL. I COL. J ---------------------------- ------------- ------------ ----------- ------------- ----------- ----------- ------------ ------------ -------------
Year Ended December 31, 2002 Life Insurance Life Marketing........... $ 583,131 $ 689,662 $ 0 $ 0 $ 142,454 $ 8,123 $ 186,800 $ 76,132 $ (254,425) Acquisitions............. 100,007,935 460,211,404 43,965 4,841,464 23,808,052 30,989,460 27,513,318 7,225,750 8,330,634 Specialty Insurance Products Asset Protection......... 1,607,207 54,415,603 26,305,063 614,369 3,454,960 571,275 2,087,070 669,620 (324,360) Retirement Savings and Investment Products Annuities................ 2,581,309 1,962,360 0 57,272,062 153,530 3,729,514 3,511,858 667,681 246,104 Corporate and Other........ 0 0 0 0 0 947,465 0 0 (63,392) Adjustments (2) ........... 0 345,835 0 3,377,253 0 0 0 0 0 ----------- ------------ ----------- ----------- ----------- ----------- ----------- ---------- ----------- TOTAL................. $104,779,582 $517,624,864 $26,349,028 $66,105,148 $27,558,996 $36,245,837 $33,299,046 $8,639,183 $7,934,561 =========== ============ =========== =========== =========== =========== =========== ========== ===========
Year Ended December 31, 2001 Life Insurance Acquisitions............ $114,902,459 $457,126,255 $ 46,457 $ 1,924,344 $25,209,340 $29,892,723 $28,533,646 $6,092,729 $8,937,528 Specialty Insurance Products Asset Protection........ 1,611,339 2,178,423 7,718,370 493,645 3,721,792 606,345 2,567,742 694,491 89,248 Retirement Savings and Investment Products Annuities............... 2,483,640 (1,233,215) 0 47,324,337 155,298 1,909,607 2,243,541 247,260 226,297 Corporate and Other....... 0 0 0 0 0 1,467,734 0 0 (63,778) Adjustments (2) .......... 0 496,918 2,201 3,456,943 0 0 0 0 0 ----------- ------------ ----------- ----------- ----------- ----------- ----------- ---------- ----------- Adjustments (2) .......... $118,997,438 $458,568,381 $7,767,028 $53,199,269 $29,086,430 $33,876,409 $33,344,929 $7,034,480 $9,189,295 =========== ============ =========== =========== =========== =========== =========== ========== ===========
Year Ended December 31, 2002: Life insurance in force(1) ................... $1,045,749 $ 6,646,105 $7,207,124 $1,606,768 448.5% =========== ========== =========== ========== ==========
Premiums and policy fees: Life insurance.................................. $6,006,689 $18,481,015 $39,585,878 $27,111,552 146.0% Accident and health insurance................... 2,106,881 140,020 8,017 1,974,878 ---------- ----------- ------------ ----------- 0.4% TOTAL........................................ $8,113,570 $18,621,035 $39,593,895 $29,086,430 ========== =========== =========== ===========
Year Ended December 31, 2000: Life insurance in force(1) ..................... $ 324,167 $ 5,287,046 $ 6,600,096 $ 1,637,217 403.1% =========== ========== =========== ========== ==========