Sagicor Life Insurance Company Statutory Financial Statements
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Sagicor Life Insurance Company Statutory Financial Statements As of and for the years ended December 31, 2010 and 2009 And Supplemental Schedules As of and for the year ended December 31, 2010 Sagicor Life Insurance Company Index December 31, 2010 and 2009 Page(s) Report of Independent Auditors...........................................................................................................1–2 Statutory Financial Statements Statutory Statements of Admitted Assets, Liabilities and Capital and Surplus........................................3–4 Statutory Statements of Operations.............................................................................................................5 Statutory Statements of Changes in Capital and Surplus ...........................................................................6 Statutory Statements of Cash Flow ............................................................................................................7 Notes to Statutory Financial Statements................................................................................................8–49 Supplemental Information Supplemental Schedule of Assets and Liabilities - December 31, 2010 .............................................50–52 Summary Investment Schedule - December 31, 2010 ..............................................................................53 Investment Risks Interrogatories - December 31, 2010 ......................................................................54–56 Report of Independent Auditors To Board of Directors and Shareholder of Sagicor Life Insurance Company We have audited the accompanying statutory statements of admitted assets, liabilities and capital and surplus of Sagicor Life Insurance Company (the “Company”) as of December 31, 2010 and 2009, and the related statutory statements of operations, of changes in capital and surplus, and of cash flow for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the statutory financial statements, the Company prepared these financial statements using accounting practices prescribed or permitted by the Texas Department of Insurance, which practices differ from accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between the statutory basis of accounting and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. In our opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2010 and 2009, or the results of its operations or its cash flows for the years then ended. PricewaterhouseCoopers LLP, 350 South Grand Avenue, Los Angeles, CA 90071 T: (213) 356 6000, F: (813) 637 4444, www.pwc.com/us In our opinion, the statutory financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and capital and surplus of the Company as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended, on the basis of accounting described in Note 1. As discussed in Note 1 to the statutory financial statements, during 2009, the Company adopted a new accounting guidance related to other-than-temporary impairments for loan-backed and structured securities and new accounting guidance related to deferred income taxes. Our audit was conducted for the purpose of forming an opinion on the basic statutory basis financial statements taken as a whole. The accompanying Supplemental Schedule of Assets and Liabilities, Summary Investment Schedule and Investment Risk Interrogatories (collectively, the "Schedules") of the Company as of December 31, 2010 and for the year then ended are presented for purposes of additional analysis and are not a required part of the basic statutory basis financial statements. The effects on the Schedules of the variances between the statutory basis of accounting and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. As a consequence, the Schedules do not present fairly, in conformity with accounting principles generally accepted in the United States of America, such information of the Company as of December 31, 2010 and for the year then ended. The Schedules have been subjected to the auditing procedures applied in the audit of the basic statutory basis financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic statutory basis financial statements taken as a whole. November 16, 2011 2 Sagicor Life Insurance Company Statutory Statements of Admitted Assets, Liabilities and Capital and Surplus December 31, 2010 and 2009 (dollars in thousands, except par and share data) 2010 2009 Admitted Assets Cash and invested assets Bonds (fair value 2010 - $687,443; 2009 - $563,278) 660,871$ 557,443$ Preferred stock (fair value 2010 - $7,636; 2009 - $7,852) 7,200 8,364 Common stock (cost 2010 - $5,294; 2009 - $5,442) 5,294 5,442 Mortgage loans 23,502 27,439 Real estate held for sale 719 446 Contract loans 29,064 31,309 Cash and short-term investments 26,391 23,567 Derivatives 8,676 2,365 Other invested asset 2,900 2,900 Receivables for securities - 153 Total cash and invested assets 764,617 659,428 Amounts due from reinsurers 5,642 8,122 Electronic data processing equipment 785 388 Current federal income tax recoverable - 160 Premiums deferred, premiums uncollected and agents' balances 2,225 2,283 Investment income due and accrued 10,290 8,652 Guaranty fund assessments 236 324 Due from affiliates 9,490 540 Other assets 661 733 Total admitted assets 793,946$ 680,630$ The accompanying notes are an integral part of these statutory financial statements. 3 Sagicor Life Insurance Company Statutory Statements of Admitted Assets, Liabilities and Capital and Surplus December 31, 2010 and 2009 (dollars in thousands, except par and share data) 2010 2009 Liabilities Policyholders' liabilities Aggregate reserves for life contracts 581,639$ 484,073$ Accident and health reserves 267 299 Deposit-type contracts 16,136 13,318 Policy and contract claims 4,007 3,966 Dividends and coupons payable 138 143 Advanced premiums 163 129 Amounts payable on reinsurance 2,407 4,953 Interest maintenance reserve 8,934 7,893 General expenses due or accrued 1,570 1,073 Taxes, licenses and fees due or accrued, excluding federal income taxes 889 1,528 Other liabilities 662 993 Remittance and items not allocated 3,434 606 Borrowed money 119,341 121,652 Asset valuation reserve 3,647 1,361 Payable for securities 4,387 - Total liabilities 747,621 641,987 Capital and surplus Common stock, $1.25 par value; 4,000,000 shares authorized, 2,000,000 shares issued and outstanding 2,500 2,500 Additional contributed surplus 120,620 91,359 Unassigned deficit (76,795) (55,216) Total capital and surplus 46,325 38,643 Total liabilities and capital and surplus 793,946$ 680,630$ The accompanying notes are an integral part of these statutory financial statements. 4 Sagicor Life Insurance Company Statutory Statements of Operations Years Ended December 31, 2010 and 2009 (dollars in thousands) 2010 2009 Revenue Premiums and annuity considerations 119,860$ 152,565$ Consideration for supplementary contracts with life contingencies 72 391 Net investment income 33,577 27,558 Amortization of interest maintenance reserve 818 372 Commissions and expense allowances on reinsurance ceded 2,913 3,160 Reserve adjustments on reinsurance ceded (3,298) (3,056) Miscellaneous income 452 492 Total revenues 154,394 181,482 Benefits and expenses Death benefits 11,262 11,764 Matured endowments 70 58 Annuity benefits 7,582 6,545 Disability benefits 180 71 Surrender benefits 24,543 20,048 Interest on policy and contract funds 726 478 Payments on supplementary contracts with life contingencies 396 416 Other benefits 5 (3) Increase in aggregate reserves for life and accident and health policies 94,936 124,553 Commission expenses 10,661 12,486 General insurance expenses 21,631 19,993 Taxes, licenses and fees 2,216 2,076 Increase (decrease) in loading on deferred and uncollected premiums (508) 336 Total benefits and expenses 173,700 198,821 Net loss from operations before policyholders' dividends, income taxes and net realized capital loss (19,306) (17,339) Dividends to policyholders 135 144 Net loss from operations before income taxes and net realized capital loss (19,441) (17,483) Federal income tax (benefit)