UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO ______________
__________________________________
COMMISSION FILE NUMBER 33-58677
__________________________________
THE TRAVELERS LIFE AND ANNUITY COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CONNECTICUT 06-0904249
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
(Address of principal executive offices) (Zip Code)
(860) 277-0111
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
As of the date hereof, there were outstanding 30,000 shares of common stock, par
value $100 per share, of the registrant, all of which were owned by The
Travelers Insurance Company, an indirect wholly owned subsidiary of Citigroup
Inc.
REDUCED DISCLOSURE FORMAT
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced
disclosure format.
THE TRAVELERS LIFE AND ANNUITY COMPANY
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
Condensed Statements of Income for the three and
nine months ended September 30, 2002 and 2001 (unaudited).............................3
Condensed Balance Sheets as of September 30, 2002 (unaudited) and
December 31, 2001.....................................................................4
Condensed Statements of Changes in Shareholder's Equity
for the three and nine months ended September 30, 2002 and 2001 (unaudited)...........5
Condensed Statements of Cash Flows for the
nine months ended September 30, 2002 and 2001 (unaudited).............................6
Notes to Condensed Financial Statements (unaudited)...................................7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................................10
ITEM 4. CONTROLS AND PROCEDURES.....................................................12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................................13
Signatures and Certifications........................................................14
Exhibit 99.01........................................................................17
2
THE TRAVELERS LIFE AND ANNUITY COMPANY
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
($ in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
REVENUES
Premiums $ 11,579 $ 10,236 $ 32,402 $ 28,422
Net investment income 80,003 60,867 223,373 179,287
Realized investment gains (losses) (23,837) (2,659) (39,473) 18,495
Fee income 50,172 44,857 150,735 127,374
Other revenues 6,021 3,512 15,343 9,177
- -------------------------------------------------------------------------------------------------------------------------
Total Revenues 123,938 116,813 382,380 362,755
- -------------------------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future insurance benefits 23,405 21,145 70,195 63,887
Interest credited to contractholders 47,527 33,489 129,653 88,845
Amortization of deferred acquisition costs 21,793 25,690 35,468 66,282
Operating expenses 10,252 4,651 23,433 15,847
- -------------------------------------------------------------------------------------------------------------------------
Total Benefits and Expenses 102,977 84,975 258,749 234,861
- -------------------------------------------------------------------------------------------------------------------------
Income before federal income taxes and cumulative
effect of change in accounting principle 20,961 31,838 123,631 127,894
Federal income taxes 7,279 10,715 43,240 44,186
- -------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of change in
accounting principle 13,682 21,123 80,391 83,708
Cumulative effect of change in accounting for
derivative instruments and hedging activities, net of
tax -- -- -- (62)
- -------------------------------------------------------------------------------------------------------------------------
Net income $ 13,682 $ 21,123 $ 80,391 $ 83,646
=========================================================================================================================
See Notes to Condensed Financial Statements.
3
THE TRAVELERS LIFE AND ANNUITY COMPANY
CONDENSED BALANCE SHEETS
($ in thousands)
SEPTEMBER 30, 2002 DECEMBER 31, 2001
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------
ASSETS
Investments (including $74,650 and $102,347 subject to
securities lending agreements) $ 4,988,082 $ 3,938,782
Separate accounts 6,436,823 7,681,791
Deferred acquisition costs 1,021,042 814,369
Other assets 404,944 221,325
- -----------------------------------------------------------------------------------------------------
Total Assets $12,850,891 $12,656,267
- -----------------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 1,147,152 $ 1,040,856
Contractholder funds 3,627,141 2,624,570
Separate accounts 6,436,823 7,681,791
Other liabilities 525,745 331,486
- -----------------------------------------------------------------------------------------------------
Total Liabilities 11,736,861 11,678,703
- -----------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY
Common stock, par value $100; 100,000 shares authorized,
30,000 issued and outstanding 3,000 3,000
Additional paid-in capital 417,316 417,316
Retained earnings 621,555 541,164
Accumulated other changes in equity from nonowner sources 72,159 16,084
- -----------------------------------------------------------------------------------------------------
Total Shareholder's Equity 1,114,030 977,564
- -----------------------------------------------------------------------------------------------------
Total Liabilities and Shareholder's Equity $12,850,891 $12,656,267
=====================================================================================================
See Notes to Condensed Financial Statements.
4
THE TRAVELERS LIFE AND ANNUITY COMPANY
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(UNAUDITED)
($ in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCK 2002 2001 2002 2001
- ---------------------------------------------------------------------------------------------------------------------
Balance, beginning of period $ 3,000 $ 3,000 $ 3,000 $ 3,000
Changes in common stock -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of period $ 3,000 $ 3,000 $ 3,000 $ 3,000
=====================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------
ADDITIONAL PAID-IN CAPITAL
- --------------------------------------------------------------------------------------------------------------------
Balance, beginning of period $ 417,316 $ 417,316 $ 417,316 $ 417,316
Changes in Additional Paid-in-Capital -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of period $ 417,316 $ 417,316 $ 417,316 $ 417,316
=====================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
- ---------------------------------------------------------------------------------------------------------------------
Balance, beginning of period $ 607,873 $ 488,589 $ 541,164 $ 426,066
Net income 13,682 21,123 80,391 83,646
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of period $ 621,555 $ 509,712 $ 621,555 $ 509,712
=====================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------
ACCUMULATED OTHER CHANGES
IN EQUITY FROM NONOWNER SOURCES
- ---------------------------------------------------------------------------------------------------------------------
Balance, beginning of period $ (1,632) $ 12,598 $ 16,084 $ 13,622
Cumulative effect of change in accounting principle for
derivative instruments and hedging activities, net of tax -- -- -- 62
Unrealized gains, net of tax 69,899 39,417 50,075 37,898
Derivative instrument hedging activity gains,
net of tax 3,892 4,479 6,000 4,912
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of period $ 72,159 $ 56,494 $ 72,159 $ 56,494
=====================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------
SUMMARY OF CHANGES IN EQUITY
FROM NONOWNER SOURCES
- ---------------------------------------------------------------------------------------------------------------------
Net income $ 13,682 $ 21,123 $ 80,391 $ 83,646
Other changes in equity from nonowner sources 73,791 43,896 56,075 42,872
- ---------------------------------------------------------------------------------------------------------------------
Total changes in equity from nonowner sources $ 87,473 $ 65,019 $ 136,466 $ 126,518
=====================================================================================================================
See Notes to Condensed Financial Statements.
5
THE TRAVELERS LIFE AND ANNUITY COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(UNAUDITED)
($ in thousands)
NINE MONTHS ENDED
SEPTEMBER 30,
2002 2001
- --------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES $ (97,516) $ (122,333)
- --------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investments
Fixed maturities 159,685 68,728
Mortgage loans 15,585 15,798
Proceeds from sales of investments
Fixed maturities 1,217,752 679,852
Equity securities 37,768 6,253
Real Estate held for sale -- (36)
Purchases of investments
Fixed maturities (2,243,995) (1,428,928)
Equity securities (42,596) (2,150)
Mortgage loans (21,946) (368)
Policy loans, net (9,112) (3,585)
Short-term securities sales, net 2,657 89,515
Other investment (purchases) sales, net (10,915) 348
Securities transactions in course of settlement, net (6,048) 32,623
- --------------------------------------------------------------------------------------------
Net cash used in investing activities (901,165) (541,950)
- --------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder fund deposits 1,167,790 791,306
Contractholder fund withdrawals (165,218) (122,771)
- --------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,002,572 668,535
- --------------------------------------------------------------------------------------------
Net increase in cash 3,891 4,252
Cash at beginning of period 19,514 14,938
- --------------------------------------------------------------------------------------------
Cash at end of period $ 23,405 $ 19,190
- --------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid (received) $ 19,505 $ (20,911)
============================================================================================
See Notes to Condensed Financial Statements.
6
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The Travelers Life and Annuity Company (the Company) is a wholly owned
subsidiary of The Travelers Insurance Company (TIC), an indirect wholly
owned subsidiary of Citigroup Inc. (Citigroup). Citigroup is a diversified
global financial services holding company whose businesses provide a broad
range of financial services to consumer and corporate customers around the
world. The condensed financial statements and accompanying footnotes of
the Company are prepared in conformity with accounting principles
generally accepted in the United States of America (GAAP) and are
unaudited. The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and benefits and expenses during the
reporting period. Actual results could differ from those estimates. In the
opinion of management, the interim financial statements reflect all
adjustments necessary (all of which were normal recurring adjustments) for
a fair presentation of results for the periods reported. The accompanying
condensed financial statements should be read in conjunction with the
financial statements and related notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001.
Certain financial information that is normally included in annual
financial statements prepared in accordance with GAAP, but is not required
for interim reporting purposes, has been condensed or omitted.
Certain prior year amounts have been reclassified to conform to the 2002
presentation.
2. CHANGES IN ACCOUNTING PRINCIPLES AND ACCOUNTING STANDARDS NOT YET ADOPTED
ACCOUNTING CHANGES
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
Effective January 1, 2002, the Company adopted the Financial Accounting
Standards Board (FASB) Statements of Financial Accounting Standards No.
141, "Business Combinations" (FAS 141) and No. 142, "Goodwill and Other
Intangible Assets" (FAS 142). These standards change the accounting for
business combinations by, among other things, prohibiting the prospective
use of pooling-of-interests accounting and requiring companies to stop
amortizing goodwill and certain intangible assets with an indefinite
useful life created by business combinations accounted for using the
purchase method of accounting. Instead, goodwill and intangible assets
deemed to have an indefinite useful life will be subject to an annual
review for impairment. All goodwill was fully amortized at December 31,
2001 and the Company did not have any other intangible assets with an
indefinite useful life. Other intangible assets that are not deemed to
have an indefinite useful life will continue to be amortized over their
useful lives.
The Company had a gross carrying amount of $22.3 million of contract-based
intangible assets as of September 30, 2002 and 2001, with accumulated
amortization of $9.6 million and $14.7 million as of September 30, 2002
and 2001, respectively. Amortization expense was $.2 million for each of
the three months ended September 30, 2002 and 2001, and was $.7 million
for each of the respective nine-month periods. Intangible assets
amortization expense is estimated to be $.2 million for the remainder of
2002, $.9 million in 2003, $.8 million in 2004 and 2005, and $.7 million
in 2006 and 2007.
7
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
Effective January 1, 2002, the Company adopted FASB Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets" (FAS 144). FAS 144 establishes a single accounting
model for long-lived assets to be disposed of by sale. A long-lived asset
classified as held for sale is to be measured at the lower of its carrying
amount or fair value less cost to sell. Depreciation (amortization) is to
cease. Impairment is recognized only if the carrying amount of a
long-lived asset is not recoverable from its undiscounted cash flows and
is measured as the difference between the carrying amount and fair value
of the asset. Long-lived assets to be abandoned, exchanged for a similar
productive asset, or distributed to owners in a spin-off are considered
held and used until disposed of. Accordingly, discontinued operations are
no longer to be measured on a net realizable value basis, and future
operating losses are no longer recognized before they occur. The
provisions of the new standard are to be applied prospectively. There has
been no impact as of September 30, 2002 on the Company's results of
operations, financial condition or liquidity and the Company does not
expect the impact of this standard to be significant.
ACCOUNTING STANDARDS NOT YET ADOPTED
ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
In June 2002, the FASB issued Statement of Financial Accounting Standards
No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" (FAS 146). FAS 146 requires that a liability for costs
associated with exit or disposal activities be recognized when the
liability is incurred. Existing generally accepted accounting principles
provide for the recognition of such costs at the date of management's
commitment to an exit plan. In addition, FAS 146 requires that the
liability be measured at fair value and be adjusted for changes in
estimated cash flows.
The provisions of the new standard are effective for exit or disposal
activities initiated after December 31, 2002. The Company does not expect
the impact of this new standard to be significant.
ACCOUNTING FOR STOCK BASED COMPENSATION
The Company currently applies APB Opinion No. 25, "Accounting for Stock
Issued to Employees" and related interpretations in accounting for its
stock-based compensation plans, under which there is generally no charge
to earnings for employee stock option awards. Alternatively, Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123), allows companies to recognize compensation
expense over the related service period based on the grant-date fair value
of the stock-based award.
Beginning in 2003, the Company intends to account for stock-based
compensation issued with respect to 2003 and thereafter in accordance with
the fair-value method prescribed by FAS 123. The Company does not expect
this change in accounting principle to have a significant impact on its
results of operations, financial condition or liquidity.
8
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
3. SHAREHOLDER'S EQUITY
Statutory capital and surplus of the Company was $407 million at December
31, 2001. The Company is currently subject to various regulatory
restrictions that limit the maximum amount of dividends available to be
paid to its parent without prior approval of insurance regulatory
authorities. The Company does not have surplus available to pay dividends
to TIC in 2002 without prior approval of the State of Connecticut
Insurance Department.
4. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company is a defendant or
co-defendant in various litigation matters incidental to and typical of
the businesses in which it is engaged. In the opinion of the Company's
management, the ultimate resolution of these legal proceedings would not
be likely to have a material adverse effect on its results of operations,
financial condition or liquidity.
9
THE TRAVELERS LIFE AND ANNUITY COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's narrative analysis of the results of operations is presented in
lieu of Management's Discussion and Analysis of Financial Condition and Results
of Operations, pursuant to General Instruction H(2)(a) of Form 10-Q.
The Travelers Life and Annuity Company (the Company) is a wholly owned
subsidiary of The Travelers Insurance Company (TIC), an indirect wholly owned
subsidiary of Citigroup Inc. (Citigroup).
RESULTS OF OPERATIONS ($ in millions)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
---- ---- ---- ----
Revenues $123.9 $116.8 $382.4 $362.8
Net income $ 13.7 $ 21.1 $ 80.4 $ 83.6
The Company offers fixed and variable deferred annuities and individual life
insurance to individuals and small businesses. These products are distributed
primarily through Salomon Smith Barney (SSB), Primerica Financial Services
(Primerica), affiliates of the Company, a nationwide network of independent
financial professionals and non-affiliated broker-dealers. In addition, the
Company distributes these products through CitiStreet Retirement Services and
Citibank, N.A. (Citibank), affiliates of the Company.
Net income decreased $7.4 million for the three months ended September 30, 2002
versus the prior year period. Net after-tax realized investment losses, were
$17.1 million greater than the prior year period, primarily related to
impairments of fixed maturity holdings in the energy sector.
Operating income, defined as income before net realized investments gains and
losses, was $32.5 million for the quarter ended September 30, 2002 up 27.6% from
$22.9 million for the same period in the prior year. This increase in operating
income, including a one time real estate transaction, is related to net
investment income and fee income growth in the individual annuity and individual
life lines which reflects increased business volumes, offset partially by lower
yields in the investment portfolio related to the declining interest rate
environment in 2002 vs. 2001. These increased volumes also caused a 10.6%
increase in insurance benefits, a 41.9% increase in interest credited to
contractholders and an increase in operating expenses in the third quarter of
2002 over the same period in 2001.
Net income decreased $3.2 million for the nine months ended September 30, 2002
compared to the nine months ended September 30, 2001. Net realized investment
losses were $29.0 million in 2002, compared to $12.0 million of gains in 2001.
These losses were driven primarily by impairments to fixed maturity holdings,
including $12.9 million of WorldCom Inc. in the second quarter and impairments
of fixed maturity holdings in the energy sector in the third quarter of 2002.
Operating income was $109.3 million in the first nine months of 2002 versus
$71.7 million in the prior year period. This $37.6 million increase was driven
by individual annuity and individual life business volume growth, a one time
real estate transaction and a $19.4 million after-tax reduction to the
amortization of deferred acquisition costs in the individual annuity product
line resulting from changes in underlying lapse and interest rate assumptions
during the first quarter of 2002. These increases were partially offset by lower
yields in the fixed income investment portfolio related to the declining
interest rate environment in 2002 vs. 2001. The increased volumes caused
increases in insurance benefits, interest credited to contractholders and
operating expenses over the prior year nine-month period.
10
THE TRAVELERS LIFE AND ANNUITY COMPANY
BUSINESS VOLUME ($ IN MILLIONS)
AT AND FOR THE AT AND FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
---- ---- ---- ----
Individual Annuity Account Balances $9,412 $8,332 $9,412 $8,332
Individual Life Net Premiums and Deposits $ 108 $ 72 $ 340 $ 223
The growth in September 30, 2002 individual annuity account balances over
September 30, 2001 reflects strong sales and good in-force policy retention,
which were partially offset by declining equity market values.
Individual life volumes continued to grow, reflecting strong universal life and
traditional life sales through the independent financial professionals channel
and SSB.
The Company's business is significantly affected by movements in the U.S.
equity and fixed income credit markets. U.S. equity and credit market
events can have both positive and negative effects on the deposit and revenue
performance of the business. A sustained weakness in the equity markets will
decrease revenues and earnings in variable products. Declines in credit quality
of issuers will have a negative effect on earnings. These statements are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act. See "Forward-Looking Statements" on page 12.
PREMIUMS AND DEPOSITS ($ IN MILLIONS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
---- ---- ---- ----
Deposits
Individual Annuity $618 $720 $2,135 $2,328
Individual Life 98 63 311 198
Other Annuity 2 1 4 2
---- ---- ------ ------
Total Deposits $718 $784 $2,450 $2,528
Total Premiums 11 10 32 28
---- ---- ------ ------
Total Premiums and Deposits $729 $794 $2,482 $2,556
==== ==== ====== ======
The majority of the annuity business and a substantial portion of the individual
life business written by the Company are accounted for as investment contracts,
with the result that the deposits collected from contractholders are reported as
liabilities and are not included in revenues. Declining variable annuity sales,
resulting from lower yields in the investment portfolio related to the declining
interest rate environment in 2002 vs. 2001, were partially offset by increased
fixed annuity deposits in both the three and nine months ended September 30,
2002.
INSURANCE REGULATIONS
Risk-based capital requirements are used as minimum capital requirements by the
National Association of Insurance Commissioners (NAIC) and the states to
identify companies that merit further regulatory action. At December 31, 2001,
the Company had total adjusted capital in excess of amounts requiring any
regulatory action as defined by the NAIC.
The Company is subject to various regulatory restrictions that limit the maximum
amount of dividends available to be paid to its parent without prior approval of
insurance regulatory authorities in the state of domicile. The Company does not
have surplus available to pay dividends to its parent in 2002 without prior
approval of the
11
THE TRAVELERS LIFE AND ANNUITY COMPANY
State of Connecticut Insurance Department. The Company did not pay any dividends
to its parent during the nine months ended September 30, 2002.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See Note 2 of Notes to Condensed Financial Statements for a discussion of
recently issued accounting pronouncements.
FORWARD-LOOKING STATEMENTS
Certain of the statements contained herein that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act. The Company's actual results may differ materially from
those included in the forward-looking statements. Forward-looking statements are
typically identified by the words "believe," "expect," "anticipate," "intend,"
"estimate," "may increase," "may fluctuate," and similar expressions or future
or conditional verbs such as "will," "should," "would," and "could." These
forward-looking statements involve risks and uncertainties including, but not
limited to, the resolution of legal proceedings.
ITEM 4. CONTROLS AND PROCEDURES
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.
The Company's Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of the Company's disclosure controls and procedures (as such
term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) as of a date within 90 days prior
to the filing date of this quarterly report (the "Evaluation Date"). Based on
such evaluation, such officers have concluded that, as of the Evaluation Date,
the Company's disclosure controls and procedures are effective in alerting them
on a timely basis to material information relating to the Company required to be
included in the Company's reports filed or submitted under the Exchange Act.
(B) CHANGES IN INTERNAL CONTROLS.
Since the Evaluation Date, there have not been any significant changes in the
Company's internal controls or in other factors that could significantly affect
such controls.
12
THE TRAVELERS LIFE AND ANNUITY COMPANY
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
3.01 Charter of The Travelers Life and Annuity Company (the
"Company"), as amended on April 10, 1990, incorporated herein
by reference to Exhibit 6(a) to the Registration Statement on
Form N-4, File No. 33-58131, filed on March 17, 1995.
3.02 By-laws of the Company, as amended on October 20, 1994,
incorporated herein by reference to Exhibit 6(b) to the
Registration Statement on Form N-4, File No. 33-58131, filed
on March 17, 1995.
99.01+ Certification Pursuant to 18 U.S.C. Section 1350.
- ------------------------
+Filed herewith
(B) REPORTS ON FORM 8-K.
None.
13
THE TRAVELERS LIFE AND ANNUITY COMPANY
SIGNATURES
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 thereunto duly authorized.
THE TRAVELERS LIFE AND ANNUITY COMPANY
(Registrant)
Date November 14, 2002 /s/ Glenn D. Lammey
------------------- -----------------------------------------------
Glenn D. Lammey
Executive Vice President,
Chief Financial Officer and Chief Accounting
Officer
(Principal Financial Officer and Principal
Accounting Officer)
CERTIFICATIONS
I, Glenn D. Lammey, Chief Financial Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Travelers Life
and Annuity Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
14
THE TRAVELERS LIFE AND ANNUITY COMPANY
CERTIFICATIONS
(continued)
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date November 14, 2002 /s/ Glenn D. Lammey
------------------------- --------------------------------------------
Glenn D. Lammey
Executive Vice President,
Chief Financial Officer and Chief Accounting
Officer
(Principal Financial Officer and Principal
Accounting Officer)
I, George C. Kokulis, Chief Executive Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Travelers Life
and Annuity Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
15
THE TRAVELERS LIFE AND ANNUITY COMPANY
CERTIFICATIONS
(continued)
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date November 14, 2002 /s/ George C. Kokulis
--------------------------------- --------------------------------
George C. Kokulis
Chief Executive Officer
16