EXHIBIT 99.5
USG Annuity & Life Company
Balance Sheet - Statutory Basis
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September 30,
2003
(In Thousands)
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Admitted assets Cash and invested assets:
Bonds $ 6,118,513
Preferred stocks 1,273
Mortgage loans 1,494,360
Real estate 3,743
Policy loans 31,921
Other invested assets 102,237
Cash and short-term investments 38,475
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Total cash and invested assets 7,790,522
Deferred and uncollected premiums 360
Accrued investment income 77,796
Reinsurance balances recoverable 597
Indebtedness from related parties 384
Federal income tax recoverable 39,903
Other assets 1,576
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Total admitted assets $ 7,911,138
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Liabilities and capital and surplus
Liabilities:
Policy and contract liabilities:
Life and annuity reserves 6,863,230
Deposit type contracts 230,684
Policyholders' funds 43
Unpaid claims 957
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Total policy and contract liabilities 7,094,914
Accounts payable and accrued expenses 41,931
Indebtedness to related parties 21,035
Interest maintenance reserve 33,230
Contingency reserve 75
Asset valuation reserve 53,269
Borrowed money 230,447
Payable for securities 83,330
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Total liabilities 7,558,231
Capital and surplus:
Common stock 2,500
Additional paid-in capital 316,963
Unassigned surplus 33,444
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Total capital and surplus 352,907
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Total liabilities and capital and surplus $ 7,911,138
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USG Annuity & Life Company
Statements of Operations - Statutory Basis
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Nine months ended September 30,
2003 2002
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(In Thousands)
Premiums and other revenues:
Life, annuity, and accident and health premiums $ 279,075 $ 1,151,696
Policy proceeds and dividends left on deposit 5,877 6,694
Net investment income 346,810 411,994
Amortization of interest maintenance reserve (3,298) (6,073)
Commissions, expense allowances and reserve adjustments
on reinsurance ceded 16,395 10,725
Other income 203 9,108
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Total premiums and other revenues 645,062 1,584,144
Benefits paid or provided:
Death benefits 3,933 110,810
Annuity benefits 191,961 194,775
Surrender benefits 389,140 435,457
Interest on policy or contract funds 4,541 5,111
Other benefits 3 8
Life contract withdrawals 5,200 4,698
Change in life, annuity, and accident and health reserves 3,316 653,995
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Total benefits paid or provided 598,094 1,404,854
Insurance expenses:
Commissions 50,487 71,220
General expenses 24,408 23,635
Insurance taxes, licenses and fees, excluding federal income taxes 1,782 767
Other (36) 933
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Total insurance expenses 76,641 96,555
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Gain (loss) from operations before federal income
taxes and net realized capital losses (29,673) 82,735
Federal income taxes (21,514) 35,765
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Gain from operations before net realized capital losses (8,159) 46,970
Net realized capital gains or (losses), net of income
taxes 2003 - $14,234; 2002 - $0 and excluding net
transfers to the interest maintenance reserve 2003 - $(9,764); 2002 - $0
(29,176) (29,856)
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Net income (loss) $ (37,335) $ 17,114
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USG Annuity & Life Company
Statements of Changes in Capital and Surplus - Statutory Basis
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Nine months ended September 30,
2003 2002
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(In Thousands)
Common stock:
Balance at beginning and end of year $ 2,500 $ 2,500
Paid-in and contributed surplus:
Balance at beginning and end of year 316,963 286,963
Unassigned surplus:
Balance at beginning of year 66,723 19,994
Net income (37,335) 17,114
Change in net unrealized capital gains or losses 3,085 (8,420)
Change in nonadmitted assets 3,844 (7,012)
Change in asset valuation reserve (2,635) 13,348
Change in net deferred income tax (238) 8,456
Other adjustments - 344
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Balance at end of year 33,444 43,824
Total capital and surplus $ 352,907 $ 333,287
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USG Annuity & Life Company
Statements of Changes in Capital and Surplus - Statutory Basis
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Nine months ended September 30,
2003 2002
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(In Thousands)
Operations
Premiums, policy proceeds, and other
considerations received, net of reinsurance paid $ 279,055 $ 1,158,497
Net investment income received 453,000 470,113
Commission and expense allowances received on reinsurance ceded (76,234) 10,725
Benefits paid (597,706) (766,933)
Insurance expenses paid - (87,379)
Federal income taxes (paid) received (7,368) (41,719)
Net other (expenses) revenues 23,350 7,774
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Net cash provided by operations 74,097 751,078
Investments
Proceeds from sales, maturities, or repayments of investments:
Bonds 6,410,635 6,569,984
Stocks - 357
Mortgage loans 239,479 180,517
Other invested assets 2,643 6,190
Miscellaneous proceeds 86,405 -
Net tax on capital gains - 2,375
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Net proceeds from sales, maturities, or repayments of investments 6,739,162 6,759,423
Cost of investments acquired:
Bonds 6,509,956 7,668,436
Preferred stocks 185 142
Mortgage loans 249,957 23,347
Real estate 2,708 -
Other invested assets 5,599 11,911
Miscellaneous applications 56,243 -
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Total cost of investments acquired 6,824,648 7,703,836
Net increase (decrease) in policy loans (1,309) 441
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Net cash used in investment activities 86,876 (944,854)
Financing and miscellaneous activities
Cash provided (used):
Borrowed money 45,998 147,060
Net deposits on deposit-type contract funds (15,814) (28,233)
Other sources 11,954 (11,699)
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Net cash provided by financing and miscellaneous activities 42,138 107,128
Net change in cash and short-term investments 29,359 (86,648)
Cash and short-term investments:
Beginning of year 9,116 102,848
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End of year $ 38,475 $ 16,200
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