Build with vision 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 ULLICO Inc. 1625 Eye Street, NW 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Washington, DC 20006 202.682.0900 www.ullico.com ANNUAL REPORT 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20062007 80 years of serving the labor movement Time and experience will enable us to so develop our enterprise to “ place it beyond our present conception of possibilities. —Matthew Woll, President’s Report, “One Year of Progress: Addresses and Communications”” 1927 Annual Report, The Union Labor Life Insurance Company 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 James Messinger Joseph Ranaudo Vernon Fields s we celebrate 80 years of service to the labor community, we realize that we could not have reached that milestone without the hard work and dedi- cation of our employees. For many years, these members of the ULLICO family have played an integral part in the success that is revealed in these Apages. In tribute to their loyalty and service, we highlight all of the employees who have worked for ULLICO for 25 years or more, as of December 2007. We took the opportunity to ask them why they have remained loyal and committed to our Com- pany and the responses were virtually unanimous—ULLICO continues to meet the needs of its employees and the labor community—today, tomorrow, and beyond. I am proud to be ULLICO’s most tenured employee. ULLICO is not just about work;“ it’s about family. I even met my wife here! As I look back on the years, every change has brought ULLICO closer to what matters most…the working people. Vernon Fields, 38-year employee” Many of us started in the original New York office and we are still “a close knit group. The ULLICO family is not just the companies…. it’s all of us who are a part of it. James” Messinger, 32-year employee I’ve been a part of this company for so long and the future“ looks as good as the past. As ULLICO has grown, there have been opportunities for all of us to grow, too. Joseph Ranaudo, 31-year employee” | 2007 ANNUAL REPORT Table of Contents 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 Message from the Chairman 4 Message from the CEO 6 Financial Highlights 10 2007 Summary of Operations 13 Property and Casualty 14 Retirement Services 16 Real Estate Investment Group 18 Life and Health 20 Market Development 22 Our History 24 Financial Information 25 2007 and 2006 Consolidated Financial Statements 43 Corporate Information 84 Note regarding terminology: In the text that follows, references to “board of directors” and “board” refer to the Board of Directors of ULLICO Inc. The words “business unit” and “unit” are used interchangeably, and refer to the strategic business units, or major business divisions of ULLICO Inc. These include: Property and Casu- alty, Retirement Services, Real Estate Investment Group, Life and Health, and Market Development. LABOR’S OWN INSURANCE AND FINANCIAL SERVICES COMPANY | Message from the Chairman Joseph J. Hunt, Chairman, ULLICO Inc. 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 ur 80th year of serving America’s working families causes me to think about our roots and how we’ve grown, yet stayed true to our beginnings. Our founder, Matthew Woll, was a vice presi- dent of the American Federation of Labor who believed that if America’s business was business, Othen working people should be incorporated as well as organized. Workers were getting left behind in the booming Our total commitment to the needs of working industrial age. For many of these organized workers, people is why our company has endured good times insurance was unavailable because insurers did not and bad—that remains ULLICO’s focus today. want to take the underwriting risk associated with their jobs. Woll had a vision for a better arrangement. In 2007, ULLICO reached many milestones. In this Unions would form their own insurance compa- annual report, we trace the 80-year history of our ny…one workers could trust. That trust was what great company. While we celebrate this special mile- ULLICO was founded upon 80 years ago. Continu- stone, we are also hitting another tremendous land- ing to build on and earn that trust every day is what mark—the 30th anniversary of our flagship product, ULLICO is all about. Separate Account J. Over the last 30 years, J for Jobs has funded more than 400 projects through more ULLICO was launched on the eve of the Great De- than $8.6 billion in construction and permanent pression and we not only survived, but we prospered. loans, creating an estimated 400 million man-hours We understood the needs of labor and created new of work which translates into more than 200,000 products and services to fill those needs—needs com- full-time construction jobs. For 2007, the 5- and mercial providers often ignored. New business doesn’t 10-year annualized return for J for Jobs once again come about from the single-minded pursuit of profits. exceeded its benchmark on a net-of-fee basis.*† Our goal has never been to be the biggest business on the block but to anticipate the needs of labor and J for Jobs is just one of the many unique solutions develop products, programs, and services to best meet ULLICO has developed exclusively for the labor mar- those needs. In that mission, we are a success. ket. Be sure to take the time to review our timeline on page 24. It is a history lesson in dedication and Our achievements over these many years could not have success. been accomplished without the skills of our profession- als and expert technicians. ULLICO could not survive Financially, the Company enjoyed a very successful without the dedication and hard work of our employ- year as revenue growth and operating profits were ees—they are the living heritage of the Company. achieved in all core lines of business for the first time | 2007 ANNUAL REPORT in more than 10 years. A.M. Best, the leading source reer with the Laborers’ International Union of North for insurance financial strength ratings, recognized America, Ed Smith is joining ULLICO full time as our continued strong balance sheet and improv- President. Also, Dave Barra, with almost 30 years of ing operating profile by reaffirming both The Union financial services experience, recently stepped into Labor Life Insurance Company and ULLICO Casualty the Chief Financial Officer role. Ed and Dave are Company’s secure, B+ ratings while moving ULLICO further evidence of the Board’s commitment to build- Casualty to a positive outlook. ing a management team with the best combination of labor and financial services expertise in the industry. Equally important, we achieved these positive results while at the same time making significant investment We will never forget our commitment to our vision. in new growth initiatives. By continuing our strategy We work with unions, trust funds, and organized of redeploying resources and capital from low-margin employers to develop and deliver products and businesses to growth opportunities, the Company services designed specifically to meet labor’s evolving made strong progress in developing the broad and needs. We recruit, train, and retain the highest qual- diverse portfolio of products and services necessary ity of people to serve the men and women of labor to position ULLICO for sustainable growth and im- with compassion. proved profitability. Through depression, wars, and social change, ULLICO Among the notable successes were: our new medical has endured for eight decades and remains the only stop loss program; a series of new casualty products multi-line financial services company solely focused with particular focus on a risk-solutions approach to on labor. What began with a $400 thousand invest- customer needs; initial progress in the transformation ment to provide union workers insurance benefits of the asset management product line to a full scope they couldn’t receive elsewhere, has become a family retirement services business; and the well-received of companies managing more than $5 billion in as- launch of our Market Development group. sets and providing risk protection solutions to funds serving almost 6 million active union members. Our Board of Directors has been strengthened with the Although it has been 80 years, ULLICO has only just addition of Mark Ayers, President, Building and Con- begun. I am proud to be a part of it. struction Trades Department of the AFL-CIO, as our new Secretary-Treasurer and with the arrival of Lindell Lee, Secretary-Treasurer of the International Brother- hood of Electrical Workers. They replace Ed Sullivan and Jon Walters, who have retired following long careers of service and leadership to organized labor.