SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 30, 2002
-----------------
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Colorado 333-1173 84-0467907
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
8515 East Orchard Road, Greenwood Village, Colorado 80111
(Address of principal executive offices) (Zip Code)
(303) 737-3000
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit Number Title
99 Great-West Lifeco Press Release dated October 29, 2002
ITEM 9. REGULATION FD DISCLOSURE
On January 30, 2003, Great-West Lifeco Inc., an indirect Canadian parent company
of the Registrant, issued a press release regarding its financial results for
the fourth quarter of 2002. The press release includes a discussion of the
financial results of the Registrant. A copy of the press release is attached as
Exhibit 99 hereto. The dollar amounts referred to in the press release are in
Canadian dollars unless otherwise stated.
This Form 8-K contains forward-looking statements. Forward-looking statements
are statements not based on historical information and which relate to future
operations, strategies, financial results or other developments. In particular,
statements using verbs such as "expect," "anticipate," "believe" or words of
similar import generally involve forward-looking statements. Without limiting
the foregoing, forward-looking statements include statements which represent the
Registrant's beliefs concerning future or projected levels of sales of the
Registrant's products, investment spreads or yields, or the earnings or
profitability of the Registrant's activities. Forward-looking statements are
necessarily based upon estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond the Registrant's control and many of which, with
respect to future business decisions, are subject to change. These uncertainties
and contingencies can affect actual results and could cause actual results to
differ materially from those expressed in any forward-looking statements made
by, or on behalf of, the Registrant. Whether or not actual results differ
materially from forward-looking statements may depend on numerous foreseeable
and unforeseeable events or developments, some of which may be national in
scope, such as general economic conditions and interest rates, some of which may
be related to the insurance industry generally, such as pricing competition,
regulatory developments and industry consolidation, and others of which may
relate to the Registrant specifically, such as credit, volatility and other
risks associated with the Registrant's investment portfolio, and other factors.
Readers are also directed to consider other risks and uncertainties discussed in
documents filed by the Registrant and certain of its subsidiaries with the
Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 30, 2003
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
By:/s/ Richard G. Schultz
---------------------------
Name: Richard G. Schultz
Title: Vice President, Counsel
and Associate Secretary
Great-West Lifeco reports 2002 results and dividend increase
Winnipeg, January 30, 2003 ... Great-West Lifeco Inc. has reported net income
attributable to common shareholders of $931 million or $2.530 per common share
for the twelve months ended December 31, 2002, compared to $1.387 per common
share reported a year ago.
This result represents an increase of 15% over 2001, after adjusting for
non-recurring charges relating to goodwill amortization, Alta Health and Life
Insurance Company (Alta), and the events of September 11, 2001 to facilitate
comparison between years.
For the fourth quarter, net income attributable to common shareholders was $235
million or $0.641 per common share, compared to adjusted 2001 results of $208
million or $0.562 per common share.
Highlights - twelve months 2002
o Earnings per common share increased 15% over 2001 levels, reflecting solid
increases in earnings from Lifeco's Canadian and United States operations.
o Return on common shareholders' equity was 22.9% for the twelve months ended
December 31, 2002, compared to 20.8% in 2001, using adjusted 2001 results.
o Quarterly dividends declared were 27(cent) per common share, an increase of
2.25(cent) per share, payable March 31, 2003. Dividends paid on common
shares for 2002 were 21% higher than a year ago.
Consolidated net earnings for Lifeco are the net operating earnings of The
Great-West Life Assurance Company (Great-West) in Canada and Great-West Life &
Annuity (GWL&A) in the United States, together with Lifeco's corporate results.
The following comparative figures for 2001 have been adjusted to exclude
goodwill amortization, Alta charges, and the events of September 11, 2001.
- 2 -
Canadian consolidated net earnings of Lifeco attributable to common shareholders
for the twelve months ended December 31, 2002 increased 15% to $441 million from
$384 million at December 31, 2001. For the fourth quarter, Canadian net income
attributable to common shareholders increased to $116 million compared to $102
million at December 31, 2001.
Lifeco's United States consolidated net earnings for twelve months of 2002
increased 13% to $490 million from $435 million a year ago. For the fourth
quarter, United States net income increased to $119 million compared to $106
million at December 31, 2001.
GWL&A's twelve months net income attributable to common shareholders increased
to US $321 million from US $294 million at December 31, 2001. For the fourth
quarter, GWL&A's earnings were US $79 million compared to US $72 million a year
ago.
The Great-West Life Assurance Company
Developments
o In December, Great-West completed its first innovative tier 1 capital
issue, raising $350 million through an offering of Great-West Life Trust
Securities (GREATs).
o Great-West, together with London Life and Investors Group, signed an
agreement with National Bank of Canada to offer banking products and
services through their respective distribution networks.
o Great-West and London Life's Group Retirement Services division enhanced
its Web site, giving plan members the opportunity to do their retirement
planning, including fund selection, online.
Results
"Great-West and London Life ended the year the same way we started, with
exceptional performance from our group and individual lines of business," says
Raymond L. McFeetors, President & Chief Executive Officer, Great-West Life.
"Despite the decline in consumer confidence in investment markets,
segregated funds deposits for the year were up over 2001. Concern for security
also led to increased interest among consumers for participating life insurance,
where our sales increased nearly 30% this year. Price rationalization in the
group insurance market over the past couple of years set the stage for strong
growth in net income from our group insurance business, which also enjoyed very
strong persistency during the year."
- 3 -
Total premiums and deposits for full year 2002, including reinsurance premiums,
were up 9% from 2001 levels.
Fee income increased 7% in 2002 compared to 2001, associated with increases in
both segregated funds assets and ASO contract volumes.
Total assets under administration at December 31, 2002 were $54.5 billion, up 1%
from December 31, 2001.
Great-West Life & Annuity Insurance Company
Developments
o The last quarter of 2002 saw a continuation of our themes for the
year-margin expansion, disciplined expense management and conservative
investment selection.
Results
"Low interest rates, weak stock markets, and rising health care costs all
combined to test our business managers in 2002. I'm very pleased with the
results we achieved in 2002 in this very stormy environment," says William T.
McCallum, President & Chief Executive Officer, Great-West Life & Annuity.
The decrease in US $ premium income and deposits for 2002 of 12% was comprised
of reductions in both Employee Benefits and Financial Services. The change in
the Employee Benefits segment is due to a contraction in health care medical
membership, while the change in the Financial Services segment is primarily due
to lower 401(k) single premium deposits.
Fee income is derived from the management of segregated funds assets and the
administration of Group health ASO business. The decrease in fee income in 2002
arises out of both the health care business and the effects of the U.S. equity
markets on segregated funds fees.
Total assets under administration were $41.6 billion at December 31, 2002, down
$2.6 billion compared with December 31, 2001, essentially due to reductions in
market values of segregated funds.
- 4 -
Quarterly Dividends
At its meeting today, the Board of Directors approved a quarterly dividend of
$0.27 per share on the common shares of the Company payable March 31, 2003 to
shareholders of record at the close of business March 17, 2003.
In addition, the Directors approved quarterly dividends on the preferred shares
of the Company:
o Series C First Preferred Shares $0.484375 per share; and
o Series D First Preferred Shares $0.293750 per share payable March 31, 2003
to shareholders of record at the close of business March 17, 2003
o Class A, Series 1 Preferred Shares $0.3125 per share payable April 30, 2003
to shareholders of record at the close of business April 16, 2003.
Great-West Lifeco
Great-West Lifeco Inc. is a financial services holding company with interests in
the life insurance, health insurance, retirement savings, and reinsurance
businesses, primarily in Canada and the United States. Lifeco's subsidiaries -
The Great-West Life Assurance Company and London Life Insurance Company (Freedom
55 Financial(TM)) in Canada and Great-West Life & Annuity Insurance Company in
the United States - serve the financial security needs of more than 13 million
people. Lifeco and its companies have $96 billion in assets under
administration. Great-West Lifeco is a member of the Power Financial Corporation
group of companies.
- 5 -
Forward-looking statements
This release may contain forward-looking statements about future operations,
financial results, objectives and strategies of the Company. Forward-looking
statements are typically identified by the words "believe", "expect",
"anticipate", "intend", "estimate" and other similar expressions.
These statements are necessarily based on estimates and assumptions that are
inherently subject to risks and uncertainties, many of which are beyond the
Company's control. Actual results may differ materially due to a variety of
factors, including legislative or regulatory developments, competition,
technological change, global capital market activity, interest rates and general
economic and political conditions in Canada, North America or internationally.
Readers are urged to consider these and other such factors carefully and not
place undue emphasis on the Company's forward-looking statements.
Unless otherwise required by securities laws, the Company does not intend or
have any obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
Further information
Selected financial information is attached. Full financial statements and notes
for 2002 are available on the Great-West Lifeco Web site at
www.greatwestlifeco.com/english/investor/quarterly.html.
Great-West Lifeco's fourth quarter analyst teleconference will be held Thursday,
January 30, at 2:00 p.m. (Eastern). The call can be accessed through
www.greatwestlifeco.com or by phone, through listen-only lines at 1-800-387-6216
(passcode: Chantal) or 416-405-9328 in Toronto.
A replay of the call will be available from January 30 until February 6 and can
be accessed by calling 1-800-408-3053 (passcode: 1348731) or 416-695-5800 in
Toronto.
- end -
For more information contact:
Marlene Klassen
Director, Media & Public Relations
(204) 946-7705
marlene.klassen@gwl.ca
FINANCIAL HIGHLIGHTS
(in millions of dollars except per common share amounts)
------------------------------------- ------------------------------
------------------------------------- ------------------------------
Canada U.S. Total Canada U.S. Total % Change
------------------------------------- ------------------------------ ---------------
- ----------------------------------------------------------------------- ------------------------------ ---------------
For the three months ended December 31 (unaudited) Premiums:
Life insurance, guaranteed annuities
and insured health products $ 1,100 $ 740 $ 1,840 $ 1,010 $ 728 $ 1,738 6%
Reinsurance & specialty
general insurance 1,040 - 1,040 1,127 - 1,127 -8%
Self-funded premium equivalents
(ASO contracts) (1) 353 2,013 2,366 314 2,177 2,491 -5%
Segregated funds deposits: (1)
Individual products 320 144 464 371 312 683 -32%
Group products 334 722 1,056 345 772 1,117 -5%
------------------------------------- ------------------------------ -------
------------------------------------- ------------------------------ -------
Total premiums and deposits $ 3,147 $ 3,619 $ 6,766 $ 3,167 $ 3,989 $ 7,156 -5%
------------------------------------- ------------------------------ -------
------------------------------------- ------------------------------ -------
Fee and other income 104 324 428 105 339 444 -4%
Paid or credited to policyholders 2,303 856 3,159 2,348 862 3,210 -2%
Net income attributable to:
Preferred shareholders 8 - 8 8 - 8 0%
Common shareholders 116 119 235 85 104 189 24%
2001 adjustments (2)
Goodwill amortization - - - 17 1 18
Alta - - - - 1 1
September 11, 2001 - - - - - -
Adjusted net income common
shareholders (2) 116 119 235 102 106 208 13%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Per Common Share
Basic earnings $ 0.641 $ 0.510 26%
2001 adjustments (2)
Goodwill amortization - 0.048
Alta - 0.004
September 11, 2001 - -
Adjusted basic earnings (2) 0.641 0.562 14%
Dividends paid 0.2475 0.205 21%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
(1) Segregated funds deposits and self-funded premium equivalents (ASO
contracts)
The financial statements of a life insurance company do not include the
assets, liabilities, deposits and withdrawals of segregated funds or the
claims payments related to administrative services only (ASO) Group health
contracts. However, the Company does earn fee and other income related to
these contracts.
Both segregated fund and ASO contracts are an important aspect of the overall
business of the Company and should be considered when comparing volumes, size
and trends.
(2) In addition to net income (Canadian GAAP basis), adjusted net income for
2001 is presented for information. 2001 results include: (i) A charge of $18
after-tax or $0.048 per common share for the three months ended December 31,
2001 and $66 after-tax or $0.177 per common share for the year ended December
31, 2001 related to the amortization of goodwill. On January 1, 2002, the
Company stopped amortizing goodwill in accordance with new Canadian Institute
of Chartered Accountants standard 3062 Goodwill and Other Intangible Assets
(see note 1 of the Company's 2002 financial statements); (ii) A charge of
$165 after-tax or $0.444 per common share related to Alta Health & Life
Insurance Company (Alta), an indirect wholly-owned subsidiary and part of the
Company's United States Employee Benefits segment.
(iii) A charge of $73 after-tax or $0.199 per common share from the events of
September 11, 2001. Return on common shareholders' equity is also presented
excluding 2001 adjustments.
FINANCIAL HIGHLIGHTS (cont'd)
(in millions of dollars except per common share amounts)
2002 2001
------------------------------------- ------------------------------
------------------------------------- ------------------------------
Canada U.S. Total Canada U.S. Total % Change
------------------------------------- ------------------------------ ---------------
- ----------------------------------------------------------------------- ------------------------------ -------
For the years ended December 31
Premiums:
Life insurance, guaranteed annuities
and insured health products $ 4,276 $ 2,989 $ 7,265 $ 3,996 $ 3,026 $ 7,022 3%
Reinsurance & specialty
general insurance 3,922 - 3,922 3,455 - 3,455 14%
Self-funded premium equivalents
(ASO contracts) (1) 1,355 8,209 9,564 1,238 8,861 10,099 -5%
Segregated funds deposits: (1)
Individual products 1,649 644 2,293 1,586 1,369 2,955 -22%
Group products 1,163 3,219 4,382 1,045 3,650 4,695 -7%
------------------------------------- ------------------------------ -------
------------------------------------- ------------------------------ -------
Total premiums and deposits $ 12,365 $ 15,061 $ 27,426 $ 11,320 $ 16,906 $ 28,226 -3%
------------------------------------- ------------------------------ -------
------------------------------------- ------------------------------ -------
Fee and other income 420 1,387 1,807 391 1,467 1,858 -3%
Paid or credited to policyholders 8,978 3,615 12,593 8,308 3,722 12,030 5%
Net income attributable to:
Preferred shareholders 31 - 31 30 1 31 -%
Common shareholders 441 490 931 249 266 515 81%
2001 adjustments (2)
Goodwill amortization - - - 62 4 66
Alta - - - - 165 165
September 11, 2001 - - - 73 - 73
Adjusted net income common
shareholders (2) 441 490 931 384 435 819 14%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Per Common Share
Basic earnings $ 2.530 $ 1.387 82%
2001 adjustments (2)
Goodwill amortization - 0.177
Alta - 0.444
September 11, 2001 - 0.199
Adjusted basic earnings (2) 2.530 2.207 15%
Dividends paid 0.945 0.780 21%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Return on common shareholders' equity
Net income 22.9% 13.7%
Adjusted net income (2) - 20.8%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
At December 31
Total assets $ 36,010 $ 24,061 $ 60,071 $ 34,690 $ 24,469 $ 59,159 2%
Segregated funds assets (1) 18,504 17,544 36,048 19,093 19,774 38,867 -7%
------------------------------------- ------------------------------ -------
------------------------------------- ------------------------------ -------
Total assets under administration $ 54,514 $ 41,605 $ 96,119 $ 53,783 $ 44,243 $ 98,026 -2%
===================================== ============================== =======
===================================== ============================== =======
Capital stock and surplus $ 4,708 $ 4,397 7%
Book value per common share $ 11.68 $ 10.47 12%
SUMMARY OF CONSOLIDATED OPERATIONS
(in millions of dollars except earnings per common share)
For the three months For the years
ended December 31 ended December 31
--------------------------- ---------------------------
--------------------------- ---------------------------
2002 2001 2002 2001
------------- ------------ ------------- ------------
--------------------------- ------------- ------------
(unaudited)
Income
Premium income $ 2,880 $ 2,865 $ 11,187 $ 10,477
Net investment income 934 977 3,638 3,713
Fee and other income 428 444 1,807 1,858
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
4,242 4,286 16,632 16,048
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
Benefits and Expenses
Paid or credited to policyholders and
beneficiaries including policyholder
dividends and experience refunds 3,159 3,210 12,593 12,030
Commissions 187 179 718 696
Operating expenses 457 486 1,786 1,941
Premium taxes 17 35 109 124
Special charges - 2 - 204
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
Net operating income before income taxes 422 374 1,426 1,053
Income taxes - current 100 199 397 427
- future 47 (60) 33 (30)
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
Net income before non-controlling interests 275 235 996 656
Non-controlling interests 32 20 34 44
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
Net income before amortization of goodwill 243 215 962 612
Amortization of goodwill - 18 - 66
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
Net income $ 243 $ 197 $ 962 $ 546
============= ============ ============= ============
============= ============ ============= ============
Earnings per Common Share
Basic $ 0.641 $ 0.510 $ 2.530 $ 1.387
============= ============ ============= ============
============= ============ ============= ============
Diluted $ 0.634 $ 0.503 $ 2.499 $ 1.365
============= ============ ============= ============
============= ============ ============= ============
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder dividends $ 8 $ 8 $ 31 $ 31
Net income - common shareholders 235 189 931 515
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
Net income $ 243 $ 197 $ 962 $ 546
============= ============ ============= ============
============= ============ ============= ============
Average number of shares outstanding - basic 367,987,648 371,244,073
Average number of shares outstanding - diluted 372,607,557 377,364,057
United States operating results during 2002 have been included at the average
market rate of $1.5700 Canadian compared with $1.5490 Canadian in 2001.
CONSOLIDATED BALANCE SHEET
(in millions of dollars)
December 31, December 31,
2002 2001
-------------- -------------
-------------- -------------
Assets
Bonds $ 33,764 $ 32,581
Mortgage loans 7,850 8,369
Stocks 1,581 1,379
Real estate 1,267 1,272
Loans to policyholders 6,177 6,213
Cash and certificates of deposit 912 837
Funds withheld by ceding insurers 4,786 4,477
Premiums in course of collection 305 410
Interest due and accrued 511 543
Future income taxes 138 317
Goodwill and intangible assets 1,687 1,604
Other assets 1,093 1,157
-------------- -------------
-------------- -------------
Total assets $ 60,071 $ 59,159
============== =============
============== =============
Liabilities
Policy liabilities
Actuarial liabilities $ 44,508 $ 43,909
Provision for claims 645 753
Provision for policyholder dividends 363 355
Provision for experience rating refunds 927 834
Policyholder funds 1,853 1,748
-------------- -------------
-------------- -------------
48,296 47,599
Commercial paper and other loans 1,012 1,075
Current income taxes 454 508
Other liabilities 2,081 2,181
Repurchase agreements 511 400
Net deferred gains on portfolio investments sold 958 1,049
-------------- -------------
-------------- -------------
53,312 52,812
Non-controlling interests 2,051 1,950
Capital Stock and Surplus
Capital stock 1,982 2,083
Surplus 2,382 1,951
Provision for unrealized gain on translation
of net investment in foreign operations 344 363
-------------- -------------
-------------- -------------
4,708 4,397
-------------- -------------
-------------- -------------
Liabilities, capital stock and surplus $ 60,071 $ 59,159
============== =============
============== =============
United States assets and liabilities have been translated at the market
rates of $1.5800 Canadian for December 31, 2002 and $1.5930 Canadian for
December 31, 2001.
Segmented Information
Consolidated Operations
For the three months ended December 31, 2002 (unaudited)
Canadian Operations
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Participating
Shareholder Policyholder
-------------------------------------------------------------- -----------
-------------------------------------------------------------- ---------
Individual Individual
Insurance & Insurance &
Group Investment Reinsurance Investment Total
Insurance Products & Specialty Corporate Total Products Canada
---------- ---------- ----------------------- ----------- --------- ------
---------- ---------- ---------- ---------- ----------- --------- ------
Income:
Premium income $ 568 $ 172 $ 1,040 $ 6 $ 1,786 $ 354 $ 2,140
Net investment income 51 118 117 32 318 246 564
Fee and other income 18 81 1 4 104 - 104
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Total income 637 371 1,158 42 2,208 600 2,808
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Benefits and Expenses:
Paid or credited to policyholders 476 180 1,146 8 1,810 493 2,303
Other 108 84 8 3 203 64 267
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net operating income
before income taxes 53 107 4 31 195 43 238
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Income taxes 19 46 (3) 3 65 26 91
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income before non-controlling
interests 34 61 7 28 130 17 147
Non-controlling interests - - - 6 6 17 23
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income before goodwill amortization 34 61 7 22 124 - 124
Amortization of goodwill - - - - - - -
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income $ 34 $ 61 $ 7 $ 22 $ 124 $ - $ 124
========== ========== ========== ========== =========== ========= ========
========== ========== ========== ========== =========== ========= ========
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder dividends $ - $ - $ - $ 8 $ 8 $ - $ 8
Net income - common shareholders 34 61 7 14 116 - 116
---------- ---------- ---------- ---------- ----------- --------- ------
---------- ---------- ---------- ---------- ----------- --------- ------
Net income $ 34 $ 61 $ 7 $ 22 $ 124 $ - $ 124
========== ========== ========== ========== =========== ========= ======
========== ========== ========== ========== =========== ========= ======
For the three months ended December 31, 2002 (unaudited)
United States Operations
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Participating
Shareholder Policyholder
------------------------------------------------- -----------------------
------------------------------------------------- -----------
Employee Financial Financial Total Total
Benefits Services Corporate Total Services U.S. Company
---------- ---------- ----------------------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Income:
Premium income $ 378 $ 243 $ - $ 621 $ 119 $ 740 $ 2,880
Net investment income 27 200 (1) 226 144 370 934
Fee and other income 238 85 1 324 - 324 428
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Total income 643 528 - 1,171 263 1,434 4,242
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Benefits and Expenses:
Paid or credited to policyholders 253 351 (1) 603 253 856 3,159
Other 292 92 5 389 5 394 661
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net operating income
before income taxes 98 85 (4) 179 5 184 422
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Income taxes 35 26 (1) 60 (4) 56 147
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income before non-controlling
interests 63 59 (3) 119 9 128 275
Non-controlling interests - - - - 9 9 32
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income before goodwill amortization 63 59 (3) 119 - 119 243
Amortization of goodwill - - - - - - -
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income $ 63 $ 59 $ (3) $ 119 $ - $ 119 $ 243
========== ========== ========== ========== =========== ========= ========
========== ========== ========== ========== =========== ========= ========
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder dividends $ - $ - $ - $ - $ - $ - $ 8
Net income - common shareholders 63 59 (3) 119 - 119 235
---------- ---------- ---------- ---------- ----------- --------- ------
---------- ---------- ---------- ---------- ----------- --------- ------
Net income $ 63 $ 59 $ (3) $ 119 $ - $ 119 $ 243
========== ========== ========== ========== =========== ========= ======
========== ========== ========== ========== =========== ========= ======
For the three months ended December 31, 2001 (unaudited)
Canadian Operations
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Participating
Shareholder Policyholder
-------------------------------------------------------------- ------------------
-------------------------------------------------------------- -----------
Individual Individual
Insurance & Insurance &
Group Investment Reinsurance Investment Total
Insurance Products & Specialty Corporate Total Products Canada
----------------------- ------------------------------------ ------------------
---------- ---------- ---------- ---------- ----------- --------- -------
Income:
Premium income $ 521 $ 144 $ 1,127 $ 5 $ 1,797 $ 340 $ 2,137
Net investment income 53 131 136 37 357 263 620
Fee and other income 16 82 1 6 105 - 105
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Total income 590 357 1,264 48 2,259 603 2,862
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Benefits and Expenses:
Paid or credited to policyholders 446 187 1,263 13 1,909 439 2,348
Other 102 98 28 1 229 63 292
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net operating income
before income taxes 42 72 (27) 34 121 101 222
Income taxes 16 27 (9) (27) 7 83 90
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net income before non-controlling
interests 26 45 (18) 61 114 18 132
Non-controlling interests - - (2) 6 4 18 22
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net income before goodwill amortization 26 45 (16) 55 110 - 110
Amortization of goodwill 6 7 2 2 17 - 17
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net income $ 20 $ 38 $ (18) $ 53 $ 93 $ - $ 93
========== ========== ========== ========== =========== ========= =======
========== ========== ========== ========== =========== ========= =======
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder dividends $ - $ - $ - $ 8 $ 8 $ - $ 8
Net income - common shareholders 20 38 (18) 45 85 - 85
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net income $ 20 $ 38 $ (18) $ 53 $ 93 $ - $ 93
========== ========== ========== ========== =========== ========= =======
========== ========== ========== ========== =========== ========= =======
For the three months ended December 31, 2001 (unaudited)
United States Operations
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Participating
Shareholder Policyholder
------------------------------------------------- -----------------------
------------------------------------------------- -----------
Employee Financial Financial Total Total
Benefits Services Corporate Total Services U.S. Company
---------- ---------- ----------------------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Income:
Premium income $ 434 $ 166 $ - $ 600 $ 128 $ 728 2,865
Net investment income 27 202 (7) 222 135 357 977
Fee and other income 249 90 - 339 - 339 444
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Total income 710 458 (7) 1,161 263 1,424 4,286
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Benefits and Expenses:
Paid or credited to policyholders 332 275 (1) 606 256 862 3,210
Other 303 90 7 400 8 408 700
Special charges 2 - - 2 - 2 2
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net operating income
before income taxes 73 93 (13) 153 (1) 152 374
Income taxes 23 24 1 48 1 49 139
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net income before non-controlling
interests 50 69 (14) 105 (2) 103 235
Non-controlling interests - - - - (2) (2) 20
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net income before goodwill amortization 50 69 (14) 105 - 105 215
Amortization of goodwill - 1 - 1 - 1 18
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net income $ 50 $ 68 $ (14) $ 104 $ - $ 104 $ 197
========== ========== ========== ========== =========== ========= =======
========== ========== ========== ========== =========== ========= =======
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Summary of Net Income
Preferred shareholder dividends $ - $ - $ - $ - $ - $ - $ 8
Net income - common shareholders 50 68 (14) 104 - 104 189
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net income $ 50 $ 68 $ (14) $ 104 $ - $ 104 $ 197
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For the year ended December 31, 2002
Canadian Operations
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Participating
Shareholder Policyholder
-------------------------------------------------------------- -----------
-------------------------------------------------------------- ---------
Individual Individual
Insurance & Insurance &
Group Investment Reinsurance Investment Total
Insurance Products & Specialty Corporate Total Products Canada
---------- ---------- ----------------------- ----------- --------- ---------
---------- ---------- ---------- ---------- ----------- --------- ---------
Income:
Premium income $ 2,220 $ 662 $ 3,922 $ 17 $ 6,821 $ 1,377 $ 8,198
Net investment income 205 463 474 98 1,240 909 2,149
Fee and other income 68 332 2 18 420 - 420
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Total income 2,493 1,457 4,398 133 8,481 2,286 10,767
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Benefits and Expenses:
Paid or credited to policyholders 1,868 741 4,338 37 6,984 1,994 8,978
Other 426 365 28 22 841 256 1,097
---------- ---------- ---------- ---------- ----------- --------- --------
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Net operating income
before income taxes 199 351 32 74 656 36 692
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Income taxes 74 139 2 (55) 160 36 196
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Net income before non-controlling
interests 125 212 30 129 496 - 496
Non-controlling interests - - 1 23 24 - 24
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---------- ---------- ---------- ---------- ----------- --------- --------
Net income before goodwill amortization 125 212 29 106 472 - 472
Amortization of goodwill - - - - - - -
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income $ 125 $ 212 $ 29 $ 106 $ 472 $ - $ 472
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Summary of Net Income
Preferred shareholder dividends $ - $ - $ - $ 31 $ 31 $ - $ 31
Net income - common shareholders 125 212 29 75 441 - 441
---------- ---------- ---------- ---------- ----------- --------- ------
---------- ---------- ---------- ---------- ----------- --------- ------
Net income $ 125 $ 212 $ 29 $ 106 $ 472 $ - $ 472
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For the year ended December 31, 2002
United States Operations
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Participating
Shareholder Policyholder
------------------------------------------------- -----------------------
------------------------------------------------- -----------
Employee Financial Financial Total Total
Benefits Services Corporate Total Services U.S. Company
---------- ---------- ----------------------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Income:
Premium income $ 1,577 $ 1,016 $ - $ 2,593 $ 396 $ 2,989 $ 11,187
Net investment income 109 824 (5) 928 561 1,489 3,638
Fee and other income 1,036 350 1 1,387 - 1,387 1,807
---------- ---------- ---------- ---------- ----------- --------- --------
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Total income 2,722 2,190 (4) 4,908 957 5,865 16,632
---------- ---------- ---------- ---------- ----------- --------- --------
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Benefits and Expenses:
Paid or credited to policyholders 1,208 1,484 (2) 2,690 925 3,615 12,593
Other 1,139 347 9 1,495 21 1,516 2,613
---------- ---------- ---------- ---------- ----------- --------- --------
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Net operating income
before income taxes 375 359 (11) 723 11 734 1,426
Income taxes 125 112 (4) 233 1 234 430
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income before non-controlling
interests 250 247 (7) 490 10 500 996
Non-controlling interests - - - - 10 10 34
---------- ---------- ---------- ---------- ----------- --------- --------
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Net income before goodwill amortization 250 247 (7) 490 - 490 962
Amortization of goodwill - - - - - - -
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income $ 250 $ 247 $ (7) $ 490 $ - $ 490 $ 962
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Summary of Net Income
Preferred shareholder dividends $ - $ - $ - $ - $ - $ - $ 31
Net income - common shareholders 250 247 (7) 490 - 490 931
---------- ---------- ---------- ---------- ----------- --------- ------
---------- ---------- ---------- ---------- ----------- --------- ------
Net income $ 250 $ 247 $ (7) $ 490 $ - $ 490 $ 962
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For the year ended December 31, 2001
Canadian Operations
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Participating
Shareholder Policyholder
-------------------------------------------------------------- ------------------
-------------------------------------------------------------- -----------
Individual Individual
Insurance & Insurance &
Group Investment Reinsurance Investment Total
Insurance Products & Specialty Corporate Total Products Canada
----------------------- ------------------------------------ --------------------
---------- ---------- ---------- ---------- ----------- --------- ---------
Income:
Premium income $ 2,026 $ 628 $ 3,455 $ 16 $ 6,125 $ 1,326 $ 7,451
Net investment income 215 513 473 125 1,326 926 2,252
Fee and other income 61 311 2 17 391 - 391
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Total income 2,302 1,452 3,930 158 7,842 2,252 10,094
---------- ---------- ---------- ---------- ----------- --------- --------
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Benefits and Expenses:
Paid or credited to policyholders 1,739 799 3,894 33 6,465 1,843 8,308
Other 391 374 78 17 860 275 1,135
---------- ---------- ---------- ---------- ----------- --------- --------
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Net operating income
before income taxes 172 279 (42) 108 517 134 651
Income taxes 67 104 (12) (7) 152 116 268
---------- ---------- ---------- ---------- ----------- --------- --------
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Net income before non-controlling
interests 105 175 (30) 115 365 18 383
Non-controlling interests - - 2 22 24 18 42
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income before goodwill amortization 105 175 (32) 93 341 - 341
Amortization of goodwill 23 28 8 3 62 - 62
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income $ 82 $ 147 $ (40) $ 90 $ 279 $ - $ 279
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Summary of Net Income
Preferred shareholder dividends $ - $ - $ - $ 30 $ 30 $ - $ 30
Net income - common shareholders 82 147 (40) 60 249 - 249
---------- ---------- ---------- ---------- ----------- --------- -------
---------- ---------- ---------- ---------- ----------- --------- -------
Net income $ 82 $ 147 $ (40) $ 90 $ 279 $ - $ 279
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For the year ended December 31, 2001
United States Operations
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Participating
Shareholder Policyholder
------------------------------------------------- -----------------------
------------------------------------------------- -----------
Employee Financial Financial Total Total
Benefits Services Corporate Total Services U.S. Company
---------- ---------- ----------------------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Income:
Premium income $ 1,708 $ 893 $ - $ 2,601 $ 425 $ 3,026 $ 10,477
Net investment income 106 831 (10) 927 534 1,461 3,713
Fee and other income 1,105 362 - 1,467 - 1,467 1,858
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Total income 2,919 2,086 (10) 4,995 959 5,954 16,048
---------- ---------- ---------- ---------- ----------- --------- --------
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Benefits and Expenses:
Paid or credited to policyholders 1,439 1,359 (2) 2,796 926 3,722 12,030
Other 1,208 382 14 1,604 22 1,626 2,761
Special charges 204 - - 204 - 204 204
---------- ---------- ---------- ---------- ----------- --------- --------
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Net operating income
before income taxes 68 345 (22) 391 11 402 1,053
Income taxes 18 101 1 120 9 129 397
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income before non-controlling
interests 50 244 (23) 271 2 273 656
Non-controlling interests - - - - 2 2 44
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income before goodwill amortization 50 244 (23) 271 - 271 612
Amortization of goodwill 2 1 1 4 - 4 66
---------- ---------- ---------- ---------- ----------- --------- --------
---------- ---------- ---------- ---------- ----------- --------- --------
Net income $ 48 $ 243 $ (24) $ 267 $ - $ 267 $ 546
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------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder dividends $ - $ - $ 1 $ 1 $ - $ 1 $ 31
Net income - common shareholders 48 243 (25) 266 - 266 515
---------- ---------- ---------- ---------- ----------- --------- ------
---------- ---------- ---------- ---------- ----------- --------- ------
Net income $ 48 $ 243 $ (24) $ 267 $ - $ 267 $ 546
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