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 MARCH 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO __________
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COMMISSION FILE NUMBER 33-58677
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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 CITYPLACE, HARTFORD, CONNECTICUT 06103-3415
(Address of principal executive offices) (Zip Code)
(860)308-1000
(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 [ ]
Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
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
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Statements of Income for the three
months ended March 31, 2004 and 2003 (unaudited)..................................................... 3
Condensed Balance Sheets as of March 31, 2004 (unaudited) and
December 31, 2003.................................................................................... 4
Condensed Statements of Changes in Shareholder's Equity
for the three months ended March 31, 2004 and 2003 (unaudited)....................................... 5
Condensed Statements of Cash Flows for the
three months ended March 31, 2004 and 2003 (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...................................................................... 13
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................................................. 14
Signatures........................................................................................... 15
Exhibit 31.01........................................................................................ 16
Exhibit 31.02........................................................................................ 17
Exhibit 32.01........................................................................................ 18
2
THE TRAVELERS LIFE AND ANNUITY COMPANY
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
($ in millions)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2004 2003
---------- ----------
REVENUES
Premiums $ 10 $ 11
Net investment income 88 84
Realized investment losses (11) (3)
Fee income 75 51
Other revenues 6 5
---------- ----------
Total Revenues 168 148
---------- ----------
BENEFITS AND EXPENSES
Current and future insurance benefits 24 23
Interest credited to contractholders 57 51
Amortization of deferred acquisition costs 43 32
General and administrative expenses 15 7
---------- ----------
Total Benefits and Expenses 139 113
---------- ----------
Income before federal income taxes 29 35
Federal income taxes 1 6
---------- ----------
Net Income $ 28 $ 29
========== ==========
See Notes to Condensed Financial Statements.
3
THE TRAVELERS LIFE AND ANNUITY COMPANY
CONDENSED BALANCE SHEETS
($ in millions)
MARCH 31, 2004
(UNAUDITED) DECEMBER 31, 2003
-------------- -----------------
ASSETS
Investments (including $144 and $131 subject to
securities lending agreements) $ 6,484 $ 6,089
Separate and variable accounts 10,338 9,690
Deferred acquisition costs 1,353 1,279
Premiums and fees receivable 72 67
Other assets 346 313
---------- ----------
Total Assets $ 18,593 $ 17,438
---------- ----------
LIABILITIES
Future policy benefits and claims $ 1,104 $ 1,098
Contractholder funds 4,713 4,512
Separate and variable accounts 10,338 9,690
Deferred federal income taxes 351 225
Other liabilities 589 515
---------- ----------
Total Liabilities 17,095 16,040
---------- ----------
SHAREHOLDER'S EQUITY
Common stock, par value $100; 100,000 shares authorized,
30,000 issued and outstanding 3 3
Additional paid-in capital 417 417
Retained earnings 792 764
Accumulated other changes in equity from nonowner sources 286 215
---------- ----------
Total Shareholder's Equity 1,498 1,399
---------- ----------
Total Liabilities and Shareholder's Equity $ 18,593 $ 17,438
========== ==========
See Notes to Condensed Financial Statements.
4
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(UNAUDITED)
($ in millions)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2004 2003
-------------------------
COMMON STOCK
Balance, beginning of period $ 3 $ 3
Changes in common stock - -
---------- ----------
Balance, end of period $ 3 $ 3
========== ==========
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of period $ 417 $ 417
Changes in additional paid-in capital - -
---------- ----------
Balance, end of period $ 417 $ 417
========== ==========
RETAINED EARNINGS
Balance, beginning of period $ 764 $ 645
Net income 28 29
---------- ----------
Balance, end of period $ 792 $ 674
========== ==========
ACCUMULATED OTHER CHANGES
IN EQUITY FROM NONOWNER SOURCES
Balance, beginning of period $ 215 $ 95
Unrealized gains, net of tax 71 51
Derivative instrument hedging activity gains (losses), net of tax - 1
---------- ----------
Balance, end of period $ 286 $ 147
========== ==========
SUMMARY OF CHANGES IN EQUITY
FROM NONOWNER SOURCES
Net income $ 28 $ 29
Other changes in equity from nonowner sources 71 52
---------- ----------
Total changes in equity from nonowner sources $ 99 $ 81
========== ==========
TOTAL SHAREHOLDER'S EQUITY
Balance, beginning of period $ 1,399 $ 1,160
Changes in equity from nonowner sources 99 81
---------- ----------
Balance, end of period $ 1,498 $ 1,241
========== ==========
See Notes to Condensed Financial Statements.
5
THE TRAVELERS LIFE AND ANNUITY COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(UNAUDITED)
($ in millions)
THREE MONTHS ENDED
MARCH 31,
2004 2003
---------- ----------
NET CASH USED IN OPERATING ACTIVITIES $ (61) $ (42)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investments
Fixed maturities 119 93
Equity Securities 3 3
Mortgage loans 3 -
Proceeds from sales of investments
Fixed maturities 107 330
Equity securities 3 5
Real Estate 2 -
Purchases of investments
Fixed maturities (364) (753)
Equity securities (3) -
Mortgage loans (15) (7)
Policy loans, net (1) (2)
Short-term securities sales (purchases), net (136) 141
Other investment sales (purchases), net 12 (15)
Securities transactions in course of settlement, net 137 67
---------- ----------
Net cash used in investing activities (133) (138)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder fund deposits 253 210
Contractholder fund withdrawals (52) (44)
---------- ----------
Net cash provided by financing activities 201 166
---------- ----------
Net increase (decrease) in cash 7 (14)
Cash at beginning of period 1 15
---------- ----------
Cash at end of period 8 1
---------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid (received) $ (13) $ 42
========== ==========
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 condensed 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 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, 2003. The condensed balance sheet as of December 31, 2003
was derived from the audited balance sheet included in the Form 10-K.
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 2004
presentation.
2. ACCOUNTING STANDARDS
ACCOUNTING CHANGES
ACCOUNTING AND REPORTING BY INSURANCE ENTERPRISES FOR CERTAIN
NONTRADITIONAL LONG-DURATION CONTRACTS AND FOR SEPARATE ACCOUNTS
In July 2003, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of
Position 03-1 "Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate
Accounts" (SOP 03-1). The main components of SOP 03-1 provide guidance
on accounting and reporting by insurance enterprises for separate
account presentation, accounting for an insurer's interest in a separate
account, transfers to a separate account, valuation of certain
liabilities, contracts with death or other benefit features, contracts
that provide annuitization benefits, and sales inducements to contract
holders. SOP 03-1 is effective for financial statements for fiscal years
beginning after December 15, 2003, and was adopted by the Company on
January 1, 2004.
The following summarizes the more significant aspects of the Company's
adoption of SOP 03-1:
Variable Annuity Contracts with Guaranteed Minimum Death Benefit
----------------------------------------------------------------
Features. For variable annuity contracts with guaranteed minimum death
---------
benefit features (GMDB), SOP 03-1 requires the reporting entity to
categorize the contract as either an insurance or investment contract
based upon the significance of mortality or morbidity risk. SOP 03-1
provides explicit guidance for calculating a reserve for insurance
contracts, and provides that the reporting entity does not hold reserves
for investment contracts (i.e., there is no significant mortality risk).
The Company determined that the mortality risk on its GMDB features was
not a significant component of the overall variable annuity product, and
accordingly continued to classify these products as investment
contracts.
7
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Reserving for Universal Life and Variable Universal Life Contracts. SOP
-------------------------------------------------------------------
03-1 requires that a reserve, in addition to the account balance, be
established for certain insurance benefit features provided under
universal life (UL) and variable universal life (VUL) products if the
amounts assessed against the contract holder each period for the
insurance benefit feature are assessed in a manner that is expected to
result in profits in earlier years and losses in subsequent years from
the insurance benefit function.
The Company's UL and VUL products were reviewed to determine if an
additional reserve is required under SOP 03-1. The Company determined
that SOP 03-1 applied to some of its UL and VUL contracts with these
features and established an additional reserve of less than $1 million.
Sales Inducements to Contract Holders. SOP 03-1 provides that,
--------------------------------------
prospectively, sales inducements provided to contract holders meeting
certain criteria are capitalized and amortized over the expected life of
the contract as a component of benefit expense. The implementation of
SOP 03-1 regarding sales inducements to contract holders did not have a
material impact on the Company's financial statements.
CONSOLIDATION OF VARIABLE INTEREST ENTITIES
On January 1, 2004, the Company adopted the Financial Accounting
Standards Board (FASB) Interpretation No. 46, "Consolidation of Variable
Interest Entities (revised December 2003)," (FIN 46-R), which includes
substantial changes from the original FIN 46. Included in these changes,
the calculation of expected losses and expected residual returns has
been altered to reduce the impact of decision maker and guarantor fees
in the calculation of expected residual returns and expected losses. In
addition, the definition of a variable interest has been changed in the
revised guidance. The Company has evaluated the impact of applying FIN
46-R to existing variable interest entities in which it has variable
interests. The effect of adopting FIN 46-R on the Company's balance
sheet is immaterial.
FIN 46 and FIN 46-R change the method of determining whether certain
entities, including securitization entities, should be included in the
Company's condensed financial statements. An entity is subject to FIN 46
and FIN 46-R and is called a VIE if it has (1) equity that is
insufficient to permit the entity to finance its activities without
additional subordinated financial support from other parties, or (2)
equity investors that cannot make significant decisions about the
entity's operations or that do not absorb the expected losses or receive
the expected returns of the entity. All other entities are evaluated for
consolidation under Statement of Financial Accounting Standards (SFAS)
No. 94, "Consolidation of All Majority-Owned Subsidiaries" (SFAS 94). A
VIE is consolidated by its primary beneficiary, which is the party
involved with the VIE that has a majority of the expected losses or a
majority of the expected residual returns or both.
For any VIEs that must be consolidated under FIN 46 that were created
before February 1, 2003, the assets, liabilities, and noncontrolling
interests of the VIE are initially measured at their carrying amounts
with any difference between the net amount added to the balance sheet
and any previously recognized interest being recognized as the
cumulative effect of an accounting change. If determining the carrying
amounts is not practicable, fair value at the date FIN 46 first applies
may be used to measure the assets, liabilities, and noncontrolling
interests of the VIE. In October 2003, FASB announced that the effective
date of FIN 46 was deferred from July 1, 2003 to periods ending after
December 15, 2003 for VIEs created prior to February 1, 2003. The
Company elected to implement the provisions of FIN 46 in the 2003 third
quarter. The implementation of FIN 46 encompassed a review of numerous
entities to determine the impact of adoption and considerable judgment
was used in evaluating whether or not a VIE should be consolidated.
Based upon the implementation guidance, the Company is not considered a
primary beneficiary of any VIEs, thus no consolidations were required
due to the implementation of FIN 46 on July 1, 2003. The Company does,
8
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
however, hold a significant interest in other VIEs, none of which were
material to the Company's financial statements.
STOCK-BASED COMPENSATION
On January 1, 2003, the Company adopted the fair value recognition
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation"
(SFAS 123), prospectively for all awards granted, modified, or settled
after December 31, 2002. The prospective method is one of the adoption
methods provided for under SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", issued in December 2002. SFAS
123 requires that compensation cost for all stock awards be calculated
and recognized over the service period (generally equal to the vesting
period). This compensation cost is determined using option pricing
models, intended to estimate the fair value of the awards at the grant
date. Similar to Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", the alternative method of accounting, an
offsetting increase to shareholder's equity under SFAS 123 is recorded
equal to the amount of compensation expense charged. During the 2004
first quarter, the Company changed its valuation from the Black-Scholes
model to the Binomial Method. The impact of this change was
insignificant. Compensation expense and proforma compensation expense
had the Company applied SFAS 123 prior to 2003 was insignificant for the
three months ended March 31, 2004 and 2003.
3. INVESTMENTS
The Company participates in dollar roll repurchase transactions as a way
to generate investment income. These transactions involve the sale of
mortgage-backed securities with the agreement to repurchase
substantially the same securities from the same counterparty. Cash is
received from the sale, which is invested in the Company's short-term
money market pool. The cash is returned at the end of the roll period
when the mortgage-backed securities are repurchased. The Company will
generate additional investment income based upon the difference between
the sale and repurchase prices.
This transaction is recorded as a secured borrowing. The mortgage-backed
securities remain recorded as assets. The cash proceeds are reflected in
short-term investments and a liability is established to reflect the
Company's obligation to repurchase the securities at the end of the roll
period. This liability is classified as other liabilities in the
condensed balance sheets. The liability balances were $38.5 million, and
$0 at March 31, 2004 and December 31, 2003, respectively.
4. SHAREHOLDER'S EQUITY
Statutory capital and surplus of the Company was $494 million at
December 31, 2003. The Company is currently subject to various
regulatory restrictions that limit the maximum amount of dividends
available to be paid to its parent without prior approval of insurance
regulatory authorities. The Company may not pay dividends during 2004
without prior approval of the State of Connecticut Insurance Department.
5. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company is a defendant or
co-defendant in various litigation matters incidental to and typical of
the businesses in which it is engaged. In the opinion of the Company's
management, the ultimate resolution of these legal proceedings would not
be likely to have a material adverse effect on the Company's results of
operations, financial condition or liquidity.
9
THE TRAVELERS LIFE AND ANNUITY COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's narrative analysis of the results of operations is presented in
lieu of Management's Discussion and Analysis (MDA) of Financial Condition and
Results of Operations, pursuant to General Instruction H(2)(a) of Form 10-Q.
This MDA should be read in conjunction with the MDA included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2003.
The Company's Annual Report on Form 10-K, its quarterly reports on Form 10-Q and
any current reports on Form 8-K, and all amendments to these reports are
available on the Travelers Life & Annuity website at
http://www.travelerslife.com by selecting the "Financial Information" page and
selecting "SEC Filings".
RESULTS OF OPERATIONS ($ in millions)
THREE MONTHS ENDED
MARCH 31,
2004 2003
---------- ----------
Revenues $ 168 $ 148
Benefits and interest credited 81 74
Operating expenses 58 39
---------- ----------
Income before taxes 29 35
Income taxes 1 6
---------- ----------
Net income $ 28 $ 29
========== ==========
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). TIC has a license from Travelers
Property Casualty Corp. to use the names "Travelers Life & Annuity," "The
Travelers Insurance Company," "The Travelers Life and Annuity Company" and
related names in connection with the Company's business. The Company offers
fixed and variable retail annuities and individual life insurance to individuals
and small businesses.
Net income for the first quarter of 2004 was $28 million, versus $29 million in
the prior year first quarter. The decrease in net income was driven by higher
business volume-related operating expenses and increased realized investment
portfolio losses. These expenses and losses were mostly offset by increased
revenues from the business volume growth and a tax benefit related to an
adjustment to the Dividends Received Deduction (DRD) in the first quarter of
2004 of $8 million resulting in a 3% effective tax rate for the current-year
period compared to 17% in the prior year three-month period, which included a $6
million adjustment to the DRD.
The revenue increase for the first quarter 2004 over prior year was primarily
driven by a 47% increase in fee income. Fee income in the retail annuity and
individual life product lines together increased $24 million due to higher
business volumes, particularly in the individual life line. Net investment
income increased 5% in the first three months of 2004 versus the same period in
2003, primarily as the result of a larger invested asset base. These revenue
increases were partially offset by an $8 million increase in net realized
investment losses related to derivative transactions and the Company's
guaranteed minimum withdrawal product.
10
THE TRAVELERS LIFE AND ANNUITY COMPANY
Insurance benefits and interest credited increased 10% to $81 million in the
first quarter of 2004, compared to $74 million in the prior year period. This
increase was primarily related to the volume growth in retail annuity and
universal life contractholder funds. Operating expenses increased in the three
months ended March 31, 2004 over the same period in 2003 primarily due to an $11
million increase in the amortization of deferred acquisition costs and increases
in other operating expenses related to higher business volumes.
The majority of the annuity business and a substantial portion of the life
business written by the Company are accounted for as investment contracts, with
the result that deposits collected are reported as liabilities and are not
included in revenues. Deposits represent an operating statistic used for
measuring business volumes, which management of the Company uses to manage the
life insurance and annuities operations, and may not be comparable to similarly
captioned measurements used by other life insurance companies. The following
table shows net written premiums and deposits by product line for the quarters
ended March 31, 2004 and 2003.
PREMIUMS AND DEPOSITS ($ in millions)
THREE MONTHS ENDED
MARCH 31,
2004 2003
---------- ----------
Premiums
Individual Life $ 9 $ 10
Other Annuity 1 1
---------- ----------
Total Premiums $ 10 $ 11
---------- ----------
Deposits
Retail Annuity - Fixed $ 125 $ 138
Retail Annuity - Variable 547 245
---------- ----------
Total Retail Annuity 672 383
Individual Life 232 87
Other Annuity 2 1
---------- ----------
Total Deposits $ 906 $ 471
---------- ----------
Retail annuity deposits collected for the quarter ended March 31, 2004 were up
75% from the prior year quarter primarily as a result of a 123% increase in
variable annuity sales due to improved equity market conditions in 2004 and
sales of a guaranteed minimum withdrawal product. Weak equity markets and
competitive pressures adversely affected the first quarter of 2003. Retail
annuity account balances and benefit reserves were $13.7 billion and $10.1
billion at March 31, 2004 and 2003, respectively. This increase is reflective of
$2.1 billion market appreciation and $1.6 billion of net sales of variable
annuity investments subsequent to March 31, 2003.
Deposits for the life insurance business increased 167% for the three months
ended March 31, 2004 versus 2003. This increase was the result of the continued
momentum of universal life production, primarily single premium sales. Life
insurance in force was $46 billion at March 31, 2004, up from $37 billion at
March 31, 2003.
OUTLOOK
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, revenue and policy retention
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. This statement is a
forward-looking statement within the meaning of the Private Securities
Litigation Reform Act. See "Forward-Looking Statements" on page 12.
11
THE TRAVELERS LIFE AND ANNUITY COMPANY
RECENT EVENTS
The Company's ultimate parent, Citigroup, has disclosed that the Securities and
Exchange Commission (SEC) is conducting a non-public investigation, which
Citigroup believes originated with its accounting treatment regarding its
investments and business activities, and loan loss allowances, with respect to
Argentina in the fourth quarter of 2001 and the first quarter of 2002; it is
also addressing the timing and support documentation for certain accounting
entries or adjustments. In connection with these matters, the SEC has requested
certain accounting and internal controls-related information for the years 2001,
2002 and 2003. The SEC has recently scheduled testimony to begin in May 2004.
Citigroup is cooperating with the SEC in its investigation. Citigroup cannot
predict the outcome of the investigation. This statement is a forward-looking
statement within the meaning of the Private Securities Litigation Reform Act.
See "Forward-Looking Statements" on this page.
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, 2003,
the Company had total adjusted capital in excess of amounts requiring any
regulatory action as defined by the NAIC.
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 in the state of domicile. The
Company may not pay dividends during 2004 without prior approval of the State of
Connecticut Insurance Department. The Company did not pay any dividends to its
parent during the three months ended March 31, 2004 and 2003.
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," "predict," 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, regulatory matters, the resolution of legal proceedings, the impact
that the adoption of recent legislation may have on the demand for life and
annuity products and the potential impact of a decline in credit quality of
investments on earnings.
12
THE TRAVELERS LIFE AND ANNUITY COMPANY
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Company's disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended ("Exchange Act")) as of the end of the period covered by this report.
Based on such evaluation, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such period, the
Company's disclosure controls and procedures are effective in recording,
processing, summarizing and reporting, on a timely basis, information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act.
INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
13
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.
31.01+ Certification of chief financial officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.02+ Certification of chief executive officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.01+ Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) REPORTS ON FORM 8-K.
None.
- --------------------
+Filed herewith
14
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 May 13, 2004 /s/ Glenn D. Lammey
----------------------------------------------
Glenn D. Lammey
Senior Executive Vice President,
Chief Financial Officer & Chief Accounting Officer
(Principal Financial Officer & Principal Accounting
Officer)
15