ANNUAL REPORT Strength for Generations Securian Financial Group, Inc
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2019 ANNUAL REPORT Strength for generations Securian Financial Group, Inc. 400 Robert Street North St. Paul, MN 55101-2098 securian.com Christopher M. Hilger Chairman, President and CEO April 30, 2020 To our customers, distributors, community partners and employees: We finalized our 2019 Annual Report as the COVID-19 pandemic took hold in North America. As we publish this report, it is clear that the pandemic is causing major disruption to the lives of people around the world. Our hearts go out to those who have been directly affected. I want to assure you that Securian Financial will be here when you and your loved ones need us. We are strongly positioned to withstand the impact of the pandemic because of our dedicated employees and our long history of financial strength. Thank you for the trust you place in us. It is our honor to work for you to help you achieve financial security. We hope you and your loved ones are safe and well. Securian Financial is the marketing name for Securian Financial Group, Inc. and its affiliates. Insurance products are issued by tsi affiliated insurance companies. Securities and investment advisory services offered through Securian Financial Services, Inc., registered investment advisor, member FINRA/SIPC. F27027-9 4-2020 DOFU 4-2020 1118026 2019 AT-A-GLANCE Building on generations of strength COMPANY FACTS More than 21M 6,400 $6.8M customers served Employees and Charitable impact representatives FINANCIAL HIGHLIGHTS Nearly $93.4B $5.6B $1.3T $6.6B $6.2B Assets under Domestic statutory Domestic life GAAP revenue GAAP equity management benefits paid insurance in force RATINGS AA- AA A+ Aa3 (VERY STRONG) (VERY STRONG) (SUPERIOR) (EXCELLENT) Standard & Poor’s Fitch A.M. Best Moody’s Investors Service Ratings information Securian Financial’s insurance company affiliates, Minnesota Life Insurance Company and Securian Life Insurance Company, a New York authorized insurer, receive high ratings from independent rating agencies that analyze the financial soundness and claims-paying ability of insurance companies. These ratings reflect our stability, integrity, long-term focus and commitment to maintaining a strong balance sheet. All ratings information is current as of April 2020 and is subject to change. A.M. Best Company rating (second highest of 16 ratings); Fitch rating (third highest of 19 ratings); Moody’s rating (fourth highest of 21 ratings); Standard & Poor’s rating (fourth highest of 21 ratings). For more information about the rating agencies and to see where our ratings rank compared to other ratings, visit securian.com/ratings. For 140 years, we’ve been helping generations of customers and their families build secure tomorrows. This legacy is built on enduring financial strength reflected in our 2019 results — while adapting to inevitable change in our industry and beyond. 2019 was a year of change at Securian Financial. We made significant investments in our future and launched a company-wide transformation initiative that better positions us to deliver the exceptional experiences our customers and channel partners expect. And while change is all around us, some things at Securian Financial will never change. Like our unwavering commitment to deliver on the promises we make. And the enduring financial strength that helps us provide the security and comfort for generations of families long into the future. 2019 ANNUAL REPORT 3 “Our strong 2019 results helped us build upon the outstanding financial strength that has been a hallmark of our company for generations.” CHRISTOPHER M. HILGER Chairman, President and CEO 4 SECURIAN FINANCIAL MESSAGE FROM THE CEO All of us at Securian Financial come to work each day to help our customers build secure tomorrows. I am proud to report that our 2019 results helped us fulfill this purpose in significant ways. Strong financial performance transformation, which included Community engagement Due to the hard work of our modernizing our administration Another 2019 highlight was our work dedicated employees and distribution platforms, advancing a cloud-first in the community. We introduced partners, 2019 was another year of mindset and forming new strategic new policies and tools to support our strong financial performance. Our partnerships. employees’ community engagement. results helped us build upon the We also launched a formal corporate outstanding financial strength that We also streamlined our operating social responsibility (CSR) effort to has been a hallmark of our company model and launched an internal expand our commitment to diversity for generations. We delivered culture transformation to emphasize and inclusion, sustainability and solid growth in revenue and stable agility and provide exceptional responsible investing. earnings — and our strong capital, customer experiences. I have been excellent investment quality and inspired by how our employees have Strength for generations disciplined approach to enterprise embraced new and different ways 2019 was an excellent year for risk management kept us among the of working together. Our team gets Securian Financial. We leveraged most highly rated insurance stronger every day as we make the qualities that have made our companies in the country. investments to attract and retain the company successful for generations, best talent to serve our customers. while developing new capabilities that Our enduring financial strength allows will keep us strong for generations us to fulfill our commitments and offer Strategic growth to come. We are starting 2020 — our peace of mind and financial security Our long-term strategic priorities 140th anniversary year — with great to our more than 21 million customers. include growing our core insurance, momentum and optimism about the In 2019, we provided nearly $1.3 trillion investment and retirement businesses. future of the organization and our of in-force life insurance protection, Record sales in 2019 reflect our strong ability to serve those who count on us. managed more than $93 billion in reputation in the markets we serve, assets and, most importantly, paid extensive distribution relationships $5.6 billion in statutory benefits to and broad product offerings. our customers and their families when they needed us most. We also continued pursuing acquisitions that bring us new Christopher M. Hilger Ambitious transformation efforts capabilities and access to new Chairman, President and Being there for our customers also markets. A highlight of 2019 was Chief Executive Officer means staying prepared for what welcoming Empyrean Benefit lies ahead. We continue to invest Solutions, a technology company that in our future to remain innovative provides leading employee benefits and competitive during a time administration, into the Securian of unprecedented change in our Financial family. This acquisition will industry. In 2019, these efforts help expand our leadership position included accelerating our technology in the employee benefits market. 2019 ANNUAL REPORT 5 FINANCIAL AND INVESTMENT RESULTS In 2019, Securian Financial delivered excellent financial results and achieved strong growth within our risk appetite. 1 SALES ($ BILLION) REVENUE ($ BILLION) Annuity $6.6 Insurance $6.1 $5.5 $4.8 $4.3 $4.4 $3.1 $3.1 $2.5 $2.2 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Overall sales results were strong in 2019, reflecting our GAAP revenue surged 20 percent to $6.6B, driven by strong market position and diverse product offerings. excellent retention and business growth across the Insurance sales increased 8 percent, to $560 million, markets we serve. and annuity sales increased over 40 percent, to $3.8 billion, from 2018. ASSETS UNDER MANAGEMENT EQUITY2 OPERATING EARNINGS3 18% 28% $331M Assets under management increased Total GAAP equity increased Operating earnings totaled $331 million, by 18 percent to $93.4 billion, driven 28 percent to $6.2 billion, driven reflecting positive contributions from all by strong sales, retention and market by net income and increased net of our market segments. performance. unrealized gains on investments. 1. Sales generally represent annualized premiums, fund deposits and new asset deposits as applicable to specific products. Beginning in 2019, insurance sales reflects a new sales metric for insurance products sold through financial institutions and affinity organizations to be more consistent with how group and individual life insurance sales are measured. Historical sales have been recast to reflect this update. 2. Equity represents total Securian Financial Group., Inc. and subsidiaries equity. 3. Operating earnings equal net income attributable to Securian Financial Group, Inc., and subsidiaries, less net realized investment gains (losses), net of taxes. 6 SECURIAN FINANCIAL Securian Financial's TOTAL INVESTMENTS FIXED MATURITY SECURITIES (% OF TOTAL INVESTMENTS4) (% OF FIXED MATURITY SECURITIES) investment portfolio performed very well in 2019. We adhered to our investment fundamentals and the quality of our investments remained high. 74.2% Fixed maturity securities 60.0% NAIC5 1 A- to AAA 14.6% Mortgage loans 37.2% NAIC 2 BBB- to BBB+ 9.2% Other invested assets 2.5% NAIC 3 BB- to BB+ 2.0% Equity securities 0.3% NAIC 4 B- to B+ 0.0% NAIC 5 & 6 D to CCC+ Investments The quality of Securian Financial’s fixed maturity securities and mortgage investments remains high, allowing loans. Our disciplined guidelines limit us to help serve the long-term interests exposure to any single asset class, sector of our customers. and issuer, and