ULLICO Inc. 2004 Semi -Annual Report

ULLtCO Inc .

Ullico 1625 Eye Street, NW Washington, 120006 202.682 .0900

www.ullico .com

Dear Shareholders,

This is an extremely exciting and hopeful time for ULLICO Inc. During the first six months of 2004, our efforts to turn ULLICO around began to pay off in big ways .

First and foremost, we have posted two straight quarters of profit for the first time in three years . The hard evidence of new profitability and the renewed dynamism we observed during the first half of this year is just the beginning .

We are well-positioned to meet our ultimate goal of becoming a company strong enough, innovative enough, and secure enough to provide America's jointly-managed trust funds and labor unions with the products and services they need . And, in so doing, we will also ensure that every union member has the opportunity to enjoy his or her fair share of the American Dream .

ULLICO has demonstrated the vibrancy of the American labor movement and our ability to overcome great obstacles when we stick together . Our perseverance has resulted in real, measurable successes .

In the first six months of 2004, ULLICO has seen strong results, including :

• J for Jobs continues to report excellent performance while providing thousands of new union construction jobs for our partners . In fact, the investment fund notched its best new contributions month ever with $83 .8 million in June .

• Trust Fund Advisors added two new products, Large Cap Core Growth and Small Cap Value Equity, provided through sub-advisory relationships with New Amsterdam Partners LLC and Lee Munder Capital Group .

• We are partnering with a number of labor affiliated organizations and companies to provide even better products and services to America's working men and women .

Our partnership with Amalgamated Life Company, owned by UNITE HERE, guarantees that all those covered by The Union Labor Company's health insurance policies will continue to receive excellent claims processing service based on state-of-the-art technology .

New partnerships with Elite Underwriting Services, Gerber Life Insurance Company and State National Insurance Company, allow us to continue to offer A-rated fiduciary liability and stop loss insurance for local unions . Valuing Ullico Relationships

To ensure sound financial governance, the ULLICO Board of Directors' Audit Committee appointed Ernst & Young as the company's outside accountants . We are proud to have Ernst & Young, one of the largest audit firms in the world and a leader in the industry, as our new auditor.

Throughout ULLICO, there is renewed excitement and commitment . In all divisions , new ideas in marketing, sales and product development are leading to new ways of serving working families and their unions .

And, of course, we continue to fine-tune the operational efficiency of the corporation to provide a lean and profitable company while still serving the needs of our customers .

In conclusion, I am pleased and honored to report that thanks to the hard work of many, this company is back on track .

We will continue to shepherd the corporation with a steady hand, focusing on our customers and valuing all of our relationships .

Sincerely,

Terence M . O'Sullivan Chairman and CEO Valuing Ullico Relationships

Insurance Operations

Group Life and Health Unions, jointly managed trust funds and organized employers depend on The Union Labor Life Insurance Company's Group Life and Health division for insur- ance, care management, and administrative services . Operating under the brand name UIIiCare'", the division is a mainstay of the corporation . The first half of 2004 gave further proof of the division's vibrancy and creativity.

Through its underwriting arrangement with Elite Underwriting Services, Inc ., the division reduced the loss ratio on its Stop Loss product from 107 percent overall in June 2003 to 80 percent in June 2004 . The new arrangement with Elite Underwriting Services, Inc . allows for the issuance of stop-loss insurance from an A-rated insurer, Gerber Life Insurance Company .

An agreement with Amalgamated Life Insurance Company was finalized to provide health care claims administration and care management services for insured and fee based clients . The combination of Amalgamated and Union Labor Life strengthens the country's only labor-owned and labor-dedicated insurance companies .

The division began discussions with First Health to aug- ment Union Labor Life's national Preferred Provider Organization (PPO) network and initiated negotiations with MagnaCare to access their PPO network in In March, the division launched UlliCareRx~ Insured, a new insured pharmacy product to assist health and New York and New Jersey. welfare funds that have capped or are considering cap- ping or restricting pharmacy benefits .

Property and Casualty In January, 2004, Ulico Insurance Group announced that it will be offering jointly managed trust funds fiduciary liability insurance through the State National Insurance Company, rated "A" (excellent) by A .M . Best, the insur- ance company rating service . State National, based in Fort Worth, Texas, is part of State National Companies, a privately held group of insurance companies and agencies . Through the Ulico/State National partnership, labor unions have the opportunity to get the best possible protection at a very competitive price .

3 Valuing Ullico Relationships

Also during the first half of 2004, Ulico completed state rate, form and application filings for its products that cover unions with fiduciary and other liability protection, and obtained a reinsurance treaty increasing the fiduciary limit of liability to $10 million (for qualifying accounts) .

To cover increased loss and reinsurance expenses, Ulico continued to selectively implement modest price increases .

Ulico also started the renewal process with Zurich North America to extend the ADR Workers' Compensation product offering .

Direct Marketing Early in 2004, Direct Marketing focused on restructuring operations and improving customer service to position the division for future growth . Union Labor Life com- pleted its transition to a new third-party administrator . As a result, policyholders are experiencing significant service improvements . full program support for union benefit administrators will launch in December 2004 . In January, ULLICO Inc . and Union Privilege, the benefits marketing arm of the AFL-CIO, jointly Direct Marketing is also renewing efforts beyond launched UnionSecure. Underwritten by The Hartford, UnionSecure . Working with AIG Assurance, Union UnionSecure products provide affordable life and acci- Labor Life will offer life, accident and supplemental dent insurance to union members and their families . To health insurance to Canadian members of U .S . interna- date, 35 unions representing nearly 6,5 million working tional unions . Plans for 2005 include expansion of men and women have elected to participate in product offerings to Canadian union members and their UnionSecure's programs . families .

UnionSecure has market-tested four products, includ- Union Labor Life will market insurance-related discount ing innovative Comprehensive Accident and Short-Term programs with CAREINGTON International Corporation . Recovery policies . Despite limited distribution, the pro- With over 24,000 participating dentists, CAREINGTON gram has issued over 50,000 policies and now provides offers one of the largest independent provider panels in nearly $400 million in financial protection to working the country. Enhanced products include ancillary bene- families . fits such as vision, pharmacy and chiropractic services .

In May, UnionSecure launched www.unionsecure.com ULLICO's commitment to its customers is manifest in to provide insurance education, and convenient online the company-wide drive for excellence . Across the enrollment for guaranteed issue policies . An exciting company, research and development activities are next-generation UnionSecure website with enhanced underway that will result in the creation of new functionality, improved customer service abilities and products and services that our customers value .

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Financial Services Operations

Investment Services Third party investment management services are pro- vided through The Union Labor Life Insurance Company ("Union Labor Life") and Trust Fund Advisors ("TFA") . Union Labor Life and TFA are dedicated to meeting the specific needs of jointly managed and union pension funds. Together, their goal is to provide high quality, top performing investment products supported by superior client service.

Union Labor Life offers an array of commingled invest- ment accounts, including the flagship J for Jobs Account . Through J for Jobs, pension plans can achieve superior risk-adjusted returns while creating jobs for union contractors and union construction work- Early in the year, TFA hired Boston's Lee Munder Capital ers. Recently, Union Labor Life opened a new account Group (LMCG) to provide small cap value equity invest- called the USA Realty Fund . Through the USA Realty ment strategies . By June, ULLICO had been awarded Fund, Union Labor Life will expand the creation of jobs a total of $11 2 million in new assets by two funds . to maintenance and service employees . Not only will construction projects be built by union workers, but Another one of TFA's new portfolio sub-advisors, New every employee supporting the commercial properties Amsterdam Partners and its Large Cap Core Growth will have the opportunity to organize. Investment product, have been included in several recent significant searches . New Amsterdam Partners' TFA, an SEC registered investment advisor, offers indi- Large Cap Core Growth Equity investment strategy has vidual portfolio services under a unique arrangement consistently outperformed the Russell 1000 and Russell with top performing investment advisors . Through 1000 Growth indices . exclusive agreements with outside advisors, TFA pro- vides superior investment products to jointly managed ULLICO' s flagship investment product , J for Jobs, had pension funds . the best single-month deposit record in its nearly 30- year history in June with $83 .8 million in new assets . The June deposits were made by Local Unions 302 and 612 of the International Union of Operating Engineers WOE), Local Union 10 of the Sheet Metal Workers' International Association (SMWIA ), Local Union 351 of the International Brotherhood of Electrical Workers (IBEW), Plumbers and Steamfitters Local Union 300 Pension Plan, and the South Florida Carpenters .

Currently, through its investment management services division, ULLICO is in the process of putting together the best possible arrangement for a large cap value equity manager and "a manager of managers"' fund for international equity .

5 Valuing Ullico Relationships

Real Estate Investment Banking Group ULLICO's Real Estate Investment Banking Group (REIBG) is responsible for originating, underwriting and managing all real estate and mortgage investments that the company makes, whether through J for Jobs, other accounts, or its general account

REIBG saw exceptional results with J for Jobs loan orig- inations exceeding $552 .9 million for projects that are estimated to create more than 9,300 union jobs .

The loan origination pipeline is very strong and at the current pace, may exceed $1 billion in volume for the year which would represent the highest level of originations ever. In addition, the department closed more than $232 .1 million in new loans .

J for Jobs once again reached the $2 billion mark in total assets after declining to less than $1 .9 billion at year end 2003 from a peak of $2 .2 billion at the beginning of 2003 . The portfolio had only one delinquent loan for $7 million ( .0035% of total assets) and no foreclosed properties . The delinquent loan was brought current in the third quarter.

Through June 2004, J for Jobs exceeded the Lehman benchmark by 140 basis points and investor confidence in the fund was demonstrated with nearly $100 million Administrative Services Operations in new deposits . Zenith Administrators ULLICO provides benefit administration support servic- es to clients through Zenith Administrators, Inc .

This year, Zenith exceeded its six month projected sales goal . Its investment in new technology was successful both in improving efficiency and , more importantly, in increasing customer satisfaction .

The division will continue to better its efficiency throughout 2004 and into 2005, as cutting-edge docu- ment scanning technology is implemented . These effi- ciencies will position Zenith to meet the challenges that lie ahead .

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ULLICO Inc . Board of Directors

Morton Bahr Edward J . McElroy President, Communications Workers of America Secretary of the American Federation of Teachers Dana A. Brigham General President, International Union Jeremiah J . O'Connor of Elevator Constructors International Secretary-Treasurer, International Brotherhood of Electrical Workers John J . Flynn President, International Union of Bricklayers Terence M . O'Sullivan and Allied Craftsworkers General President, Laborers' International Union of North America (LIUNA), James A. Grogan Chairman & CEO . ULLICO Inc . General President, International Association Of Heat & Frost Insulators & Asbestos Workers Richard Ravitch Principal, Ravitch, Rice & Company, LLC Joseph Hansen President of the United Food and Vincent R . Sombrotto Commercial Workers President Emeritus, National Association of Letter Carriers James D . Heczko President, Opus Investment Advisors, L .L .C . Edward C . Sullivan President, Building and Construction Joseph J . Hunt Trades Department, AFL-CIO (BCTD) General President, International Association Secretary-Treasurer, ULLICO Inc . of Bridge, Structural, Ornamental and Reinforcing Iron Workers Michael J . Sullivan General President, Sheet Metal Workers' Earl J. Kruse International Association President Emeritus, United Union of Roofers, Waterproofers and Allied Workers George Tedeschi President, Graphic Communications Martin J . Maddaloni International Union General President, of Journeymen and Apprentices of The Plumbing & Pipe Fitting Richard L . Trumka Industry of The & Canada Secretary-Treasurer, AFL-CIO

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ULLICO Inc. Officers

Terence M . O'Sullivan James M . Paul Chairman and Chief Executive Officer Senior Vice President, Human Resources Edward Grebow President Mark E . Singleton Senior Vice President and Edward C . Sullivan Chief Financial Officer Secretary-Treasurer Teresa E . Valentine Theodore T. Green Vice President, Senior Vice President, General Counsel Associate General Counsel and Assistant Secretary and Compliance Officer

James J . Kennedy, Jr. Adam Fried Senior Vice President, Investment Sales, Assistant Vice President, Tax Marketing and Operations Management 's Discussion and Analysis of Consolidated Financial Conditions Ullico and Results of Operations

For the Period Ended June 30, 2004 (Unaudited)

Operating Results ULLICO Inc.'s ("the Company") consolidated net income for the period ending June 30, 2004 was $0 .6 million, compared to a consolidated net loss of $20 .5 million for the same period in 2003, an improvement of $21 .1 million . Profit/ (loss) results by major business segment were as follows (in millions) :

2Q04 2003 2004 YTD 2Q03 YTD

Life and Health $ (0.6) $ (1 .8) $ 0.4 $ (0.1) Property and Casualty 1 .3 1 .0 2.7 3.1 Investment Services 6.8 1 .1 7.4 0.7 Zenith Administrators 0.6 0.5 1 .5 1 .6 Corporate Operations (6.6) (17 .2) (11 .6) (26 .3) Pre-tax income from continuing operations 1 .5 (16 .4) 0.4 (21 .0) Discontinued operations (0 .1) (11 .5) 2.8 (10 .5) Preferred stock dividends (1 .3) (2 .6) Federal income tax 9.8 11 .0 Net income $ 0 .1 $ (18.1) $ 0.6 $ (20.5)

Total Income are now being invested in fixed income securities Total income for the period ending June 30, 2004 which will provide a steady stream of income and was $249 .7 million which represented a $48 .6 million cash flow. Realized gains on investments increased by decrease when compared to June 30, 2003 . The $4.8 million as well as the Company took advantage primary reason for the decrease was a $57 .8 million of the market to sell selected limited partnership and decrease in premium income for life, health and equity investments . annuity and property and casualty operations . Total Expenses Group Life and Health operations were responsible for Total expenses were $249.1 million for the period $42.2 million of the $45 .3 million decrease in the life, ended June 30, 2004, a decrease of $80 .8 million health and annuities total . Property and casualty also when compared to June 30, 2003 . The overall decrease experienced a decrease in their premium income was the result of decreases in benefits and claims of $12 .5 million when compared to 2003 . The majority expenses of $61 .9 million and sales, general and of this business is subject to an annual renewal administrative expenses (SG&A) of $18 .9 million when of the policy . The premium income decreases are pri- compared to the prior period . marily due to a significant reduction in the number of accounts renewing their policy . This is largely Benefits and claims expenses decreased for all because of the A.M . Best ratings downgrade strategic business units primarily due to the reduced and strong competition from non-union commercial premium volumes mentioned above and improved insurance carriers . underwriting performance . Loss ratios for both continuing and discontinued lines have improved Fee-based income experienced a slight increase for significantly from prior years . The consolidated loss the period ended June 30, 2004. Fee-based income ratio at June 30, 2004 was 77%, compared to 83% at decreases in Trust Fund Advisors and Zenith were more June 30, 2003 . The most significant changes occurred than offset by Investment Services and Property and in the Property and Casualty operations and the Stop Casualty increases . Separate Account J (J for Jobs) Loss line of business, which improved from ratios of continues to perform well, as evidenced by new contri- 136% and 107% at June 30, 2003, respectively, to butions of $83 .8 million in the month of June alone. 68% and 80% at June 30 . 2004.

Net investment income has increased by $4 .6 million SG&A expenses declined substantially as a result of the when compared to June 30, 2003 . This was due to the Company's cost containment program which was put investment of the proceeds from the December 2003 in place a year ago . Personnel related costs, legal fees sale of the 1625 Eye Street property. Funds that were and consulting fees have decreased significantly when previously tied up in non-revenue producing real estate compared to prior year . Other controllable costs, such 9 Management ' s Discussion and Analysis of Consolidated Financial Conditions Ullico and Results of Operations

For the Period Ended June 30, 2004 (Unaudited)

as travel expense, printing and office supplies have balance. These decreases were offset by the increase also decreased. Total SG&A also includes $3 .4 million in separate account liabilities noted above . of one-time costs relating to the closing of the King of Prussia office within the Group Health line of Stockholders' Equity business. In addition, the 2003 results included signifi- Stockholders' Equity decreased $6 .2 million from cant one-time expenses associated with the December 31, 2003. The comprehensive income Company's restructing efforts . decrease of $9 .2 million was made up of net income of $0.6 million combined with a $9 .8 million increase in Results also include the recognition of convertible pre- unrealized losses (net of tax) . The unrealized loss ferred dividends which were paid to shareholders in is comprised of the FAS 115 adjustment to the additional preferred shares . Unlike common stock divi- Company's bond portfolio, which has increased due to dends, which are directly charged to equity, preferred the recent rise in market interest rates . None of this dividends are expensed . loss was related to impairment losses . Preferred stock issuances of $4.1 million were offset by $1 .1 million of Provision for Income Taxes preferred stock redemptions . The consolidated income tax benefit decreased by $11 .0 million compared to June 30, 2003 . This Book value per share declined modestly from resulted from the utilization of the net operating loss December 31, 2003, primarily due to the previously carry forwards which offset the taxable income for mentioned FAS 115 market value adjustment to the the period ending June 30, 2004. bond portfolio and the issuance of additional preferred stock . Excluding the FAS 115 adjustment, the June 30, 2004 book value per share would have been $30 .63 and Balance Sheet $19 .48 on a basic and fully diluted basis, respectively . Assets Total assets decreased by $8 .0 million compared to Cash Flow December 31, 2003 . Decreases in total invested assets Cash and short term investments decreased by $166 .6 and deferred acquisitions costs ("DAC") were partially million from December 31, 2003 . This decrease is pri- offset by a large increase in separate account assets . marily due to $150 .0 million of proceeds from the sale Invested assets decreased by $64 .8 million due to sales of the home office building were invested in longer of limited partnership and equity investments which are term securities in the first quarter of 2004 . At year end, used to cover current period operating costs . Since the the proceeds were invested in short tern securities . Company ceased writing new individual business there will be no new DAC to capitalize . The DAC amortization Operating cash flows from insurance activities for the period was $8.6 million . The separate account were a negative $33 .4 million through June 30, 2004, assets and liabilities increased $75 .0 million primarily compared to a negative $11 .1 million through due to significant deposits in J for Jobs in June . June 30, 2003 . Payment of claims on the Company's runoff lines of business was significantly higher Liabilities than premium and fee income collections . Total liabilities decreased by $1 .7 million for the period ended June 30, 2004 . Total policy liabilities decreased Net cash flows on the Company's asset management by $65.7 million due to the lost business and improved business were a negative $331 .1 million . Strong underwriting results . Current income taxes payable Separate Account J net cash inflows of $105 .0 million decreased by $14 .3 million due to a payment to were offset by significant net withdrawals on the Trust the Internal Revenue Service in May of a prior period Fund Advisors' assets under management .

Edward Grebow Mark E . Singleton President Senior Vice President & Chief Financial Officer

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2004 Semi-Annual Consolidated Financial Statements (Unaudited)

For the Period Ended June 30, 2004

11 Consolidated Balance Sheets UllIco (in thousands, except share amounts)

Unaudited Audited June 30, 2004 December 31, 2003

Assets Fixed maturitics, a! fair value $ 468,701 $ 350,182 Equity securities, at fair value 1,220 6,831 Investments in limited partnerships 64,732 77,499 Mortgage loans, held for investment 42,567 45,535 Real estate 3,873 3,950 Short-term investments 96,646 258,591 Total Investments 677,739 742,588

Cash 5,637 10,299 Accrued investment income 5,517 3,723 Premiums, accounts and notes receivable 49,624 47,692 Reinsurance recoverable 156,509 166,116 Property and equipment 15,746 16,052 Goodwill and other intangible assets 5,354 5,676 Deferred policy acquisition costs 75,502 82,793 Current income tax recoverable 469 - Deferred income tax recoverable 34,862 30,036 Other assets 28,357 33,324 Separate account assets 2,261,030 2,186,041

Total Assets $ 3,316,346 $ 3,324,340

12 Consolidated Balance Sheets Ullico (in thousands, except share amounts)

Unaudited Audited June 30, 2004 December 31, 2003 Liabilities Policy and claim reserves : Life, health & annuities $ 274,918 $ 291,087 Property & casualty 173,164 191,774 Deposit-type annuity contracts 125,403 144,239 Policyholder funds on deposit 24,043 26,994 Policyholder dividends payable 11,095 17,320 Unearned & advance premiums 13,863 16,811 Total Policy Liabilities 622,486 688,225 Notes payable 20,031 22,111 Accounts payable & other liabilities 63,372 68,471 Reinsurance balances payable 58,399 48,381 Accrued pension & other postretirement benefits 47,199 46,720 Current income taxes payable - 14,315 Separate account liabilities 2,261,030 2,186,041 Total Liabilities $ 3,072,517 $ 3,074,264

Stockholders' Equity Series A convertible preferred stock ($1 par value ; 10,000,000 shares authorized, $ 519 $ 489 issued and outstanding 518,761 at 6/30/04 and 489,086 at 12/31/03)

Capital stock ($25 par value ; 2,000,000 shares authorized ; issued and 6,327 6,327 outstanding 253,086 at 6/30/04 and 12/31/03)

Class A common stock, voting ($1 par value ; 12,000,000 shares authorized ; 6,635 6,635 issued and outstanding 6,635,011 at 6/30/04 and 12/31/03)

Class B common stock, nonvoting ($1 par value ; 12,000,000 shares authorized ; 753 753 Issued and outstanding 753,485 at 6/30/04 and 12/31/03)

Additional capital paid-in 224,818 221,572 Accumulated other comprehensive income: Unrealized investment gain/(loss), net of deferred tax (6,097) 3,745 Minimum pension liability, net of tax (1,170) (1,170) Total accumulated other comprehensive income (7,267) 2,575 Retained earnings 12,044 11,725 Total Stockholders ' Equity $ 243,829 $ 250,076

Total Liabilities & Stockholders' Equity $ 3,316,346 $ 3,324,340

Unaudited Audited Book Value Per Share Calculations June 30 , 2004 December 31, 2003 Fully Diluted $ 19 .01 $ 19.87 Fully Diluted - Excluding FAS 1 15 adjustment $ 19 .48 $ 19 .57 Basic $ 29.88 $ 30 .76 Basic - Excluding FAS 115 adjustment $ 30 .63 $ 30 .30

13 Consolidated Statements of Operations Ullico (Unaudited, in thousands)

Income June 30 , 2004 June 30, 2003 Premium income : Life, health & annuities $ 149,917 $ 195,179 Property & casualty 14,403 26,921 Fee based income 64,022 63,887 Net investment income 15,211 10,614 Net realized investment gains 5,851 1,096 Other income 329 649 Total Income 249,733 298,346

Benefits & Expenses Policy benefits and claims : Life, health & annuities 116,689 160,346 Interest credited to policyholder account balances 2,943 4,626 Losses and loss adjustment expenses - property & casualty 10,012 24,723 Policyholder dividends 1,741 3,571 Total benefits and claims expenses 131,385 193,266 Commissions 5,285 5,707 Sales, general & administrative expenses 105,754 124,693 Taxes, licenses & fees 3,544 6,173 Dividends to preferred shareholders 2,564 - Interest expense 546 75 Total Expenses 249,078 329,914

Net income/(loss) before federal and state income taxes 655 (31,568) Income tax (expense) benefit (28) 11,035 Net Income/(Loss ) S 627 $ (20,533)

14 Consolidated Statements of Changes Ullico in Stockholders ' Equity

Unaudited Audited June 30 , 2004 December 31, 2003

Stockholders ' equity, beginning of period $ 250,076 $ 273,504

Comprehensive Income : Net income (loss) 627 (70,764) Other comprehensive income (9,642) (1,129) Total comprehensive income (loss) (9,215) (71,893)

Other items: Issuance of preferred stock 2,209 48,908 Preferred stock dividends 1,876 - Redemptions (1,117) (443) Total other items 2,968 48,465

Stockholders' equity, end of period $ 243,829 $ 250,076

15 Consolidated Statements of Cash Flows Ullico

Unaudited Audited June 30 , 2004 December 31, 2003 Cash flows from operating activities : Net loss $ 627 $ (70,764) Adjustments to reconcile net loss to net cash provided by operating activities : Interest credited to policyholder account balances 2,943 8,103 Amortization of deferred policy acquisition costs 8,614 25,292 Capitalization of deferred policy acquisition costs (1,323) (16,374) Amortization and depreciation expense 3,593 9,019 Deterred income taxes 473 (12,585) Realized (gains) losses on investments, net (5,851) 5,675 Loss on sale of subsidiary - 3,517 Gain on sale of home office building - (16,841) Non-cash (gains) losses on limited partnership investments, net (3,190) (607) Change in premiums and other receivables (1,931) 11,493 Change in reinsurance recoverable/payable 19,624 12,343 Change in policy liabilities (43,952) (18,794) Change in other liabilities (4,620) 7,395 Change in current income taxes (14,784) 44 Other, net 6,422 (1,285) Cash used in operating activities (33,355) (54,369) Cash flows from investing activities : Proceeds from sales and maturities of investments : Fixed maturities 86,037 206,860 Equity securities and other invested assets 5,733 2,982 Mortgage loans 2,787 32,812 Limited partnerships 22,303 21,192 Net proceeds from sale of home office building - 150,092 Proceeds from sale of subsidiary - 2,200 Purchases of Investments : Fixed maturities (218,130) (213,216) Equity securities and other invested assets - (14) Mortgage loans (16,168) Limited partnerships (3,316) (8,265) Purchases of property and equipment (4,889) (25,822) Proceeds from note receivable - 9,044 Other, net 63 480 Cash provided by (used in) provided by investing activities : (109,412) 162,177 Cash flows from financing activities Issuance of convertible preferred stock 4,086 48,908 Investment product deposits 6,548 15,536 Investment product withdrawals (31,277) (85,945) Purchase of convertible preferred stock (1,117) (443) Proceeds from borrowings - 44,432 Repayment of borrowings (2,080) (22,370) Cash provided by (used in) financing activities (23,840) 118 Net Change in Cash (166,607) 107,926 Cash and short term investments, beginning of period 268,890 160,964 Cash and short term investments, end of period $ 102,283 $ 268,890

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