(2) Includes future annuity and contract benefits, liability for policy and contract claims, unearned premiums, other policyholder liabilities and separate account liabilities.
In addition, all historical financial information contained herein has been restated to reflect the contribution of the Mortgage Insurers to the Company in the second quarter of 2001 which was accounted for in a manner similar to a pooling of interests.
Operating income from this segment represented 51.4%, 51.9% and 53.0% of the Company's total operating income for the years ended December 31, 2001, 2000, and 1999, respectively. The Company's operating income from the Wealth Accumulation and Transfer segment increased 5.6% in 2001 to $1,012 million, and 23.0% in 2000 to $958 million from $779 million in 1999. These increases were primarily attributable to growth in aforementioned products, the Toho Transfer and lower operating expenses.
Shareholder's interest increased $1.1 billion to $12.8 billion at December 31, 2001 from $11.7 billion at December 31, 2000. This increase was largely attributed to net income during the year of $1.3 billion partially offset by dividends declared of $25 million.
We have audited the accompanying consolidated balance sheets of GE Financial Assurance Holdings, Inc. and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, shareholder's interest, and cash flows for each of the years in the three-year period ended December 31, 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
(b) Presented net of deferred taxes of $(27), $(304) and $926 in 2001, 2000 and 1999, respectively.
Changes in the fair values of investments available-for-sale, net of the effect on deferred acquisition costs, present value of future profits, and deferred income taxes, are reflected as unrealized investment gains or losses in a separate component of shareholder's interest and, accordingly, have no effect on net income. Investment securities are regularly received for impairment based on criteria that include the extent to which cost exceeds market value, the duration of the market decline, and the financial health of and specific prospects for the issuer. Unrealized losses that are considered other than temporary are recognized in earnings through an adjustment to the amortized cost basis of the underlying securities. The Company engages in certain securities lending transactions, which require the borrower to provide collateral, primarily consisting of cash and government securities, on a daily basis, in amounts equal to or exceeding 102% of the fair value of the applicable securities loaned.
Liquidity requirements of GE Financial Assurance are principally met through dividends from its insurance subsidiaries, the Commercial Paper program and credit line. At December 31, 2001, the Company has a credit line of $2,500 with GE Capital.
(b) Includes fixed rate borrowings and $1.1 billion ($1.7 billion in 2000) notional long-term interest rate swaps that effectively convert the floating-rate nature of short term borrowings into fixed rate borrowings.
The following table provides fair value information about derivative instruments for the year 2000. Following adoption of SFAS No. 133 on January 1, 2001, all derivative instruments are reported at fair value in the accompanying Consolidated Financial Statements and similar disclosures for December 31, 2001, are not relevant.
The Company's insurance subsidiaries file financial statements with state insurance regulatory authorities and the National Association of Insurance Commissioners ("NAIC") that are prepared on an accounting basis prescribed or permitted by such authorities (statutory basis). Statutory accounting practices differ from GAAP in several respects, causing differences in reported net income and shareholder's interest. Permitted statutory accounting practices encompass all accounting practices not so prescribed but that have been specifically allowed by state insurance authorities. The Company's insurance subsidiaries have no significant permitted accounting practices. The impact of adoption of codification increased statutory capital and surplus by $214, primarily related to the recognition of certain deferred tax assets.
The GE Financial Assurance Holdings, Inc., and subsidiaries consolidated financial statements and accompanying notes are an integral part of this schedule.