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How to Choose a Life Insurance Company - Lucido-Morris and

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How to Choose a Life Insurance Company
Fulfilling Promises
A 2013 Guide Through Relevant
Industry Information
Because the most important people in your life will
depend on it, life insurance is one of the most significant
purchases you will ever make. Yet, unlike purchasing a home,
car, or computer, most people are completely unfamiliar with
the critical questions they should ask before choosing a
life insurer. In fact, most people spend far more time
researching a vacation than life insurance, even though in
the end they can hardly compare in importance.
At Guardian, we want you to make the most informed
decision possible when it comes to this essential part of
your financial foundation. We hope that you find the
following information helpful in evaluating the strength
and stability of any life insurer.
Table of Contents
1.
The Importance of Strength and Stability. . . . . . . . . . . . . . . . . . . . Page 2
2.Mutuality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4
3. Capitalization Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4
4.Net Investment Yield. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6
5. Total Underperforming Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 7
6. Bond and Mortgage Statutory Credit Results . . . . . . . . . . . . . . . . . Page 8
7.
Investment Environment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 9
8.Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 10
9.
The Guardian Life Insurance Company of America. . . . . . . . . . . . Page 12
– 2012 Financial Highlights
– Key 2012 Accomplishments
– Investment Philosophy
– Life Insurance Products
1
The Importance of Strength
and Stability
There are many places you can put your money to keep it safe and make it grow.
But life insurance is the one place where you must be absolutely certain it is
secure — secure today and for many years to come. Consequently, choosing a life
insurance company is all about the firm’s long-term strength and stability.
WHY? BECAUSE A POLICY IS A PROMISE.
A promise is only as good as the company that can honor it. The values contained
in a life insurance policy will be a major source of accumulated cash values and
security for your family and your business. Quite distinct from most other types
of financial instruments, such as savings accounts and short-term investments, a
life insurance policy is expected to perform or fulfill your goals many years in the
future. Therefore, the long-term financial viability of the life insurance company
you are considering should be a major consideration.
When you purchase life insurance, you are not just buying the coverage itself.
You are also buying the experience, financial strength and services of the
insurance company. With so much change in the financial and insurance
industry — including some carriers exiting the marketplace altogether —
a serious review of the underlying soundness of any company is crucial.
That is why it is important to determine whether the company’s track
record is consistent with the statements made at the time of sale.
2
What should you know about a life
insurance company when purchasing
a policy?
The financial strength and stability of the company.
You should review the following during your life insurance selection process:
• Mutuality — A mutual company is owned by the policyholders, whereas
a stock insurance company’s primary owner is its stockholders.
• Capitalization Ratio — This is a measure of financial strength and an
indicator of a company’s ability to ride out uncertain economic times.
• Net Investment Yield — The yield represents the net earned rate on all
invested assets, excluding realized and unrealized gains and losses.
• Total Underperforming Assets — This is an indicator of the quality of
the asset portfolio supporting the policyholders’ policies.
• Bond and Mortgage Statutory Credit Results — This is a good
indicator of a company’s risk management performance.
• Investment Environment — The way life insurers manage their assets can
be very different from company to company ­— some can be more aggressive
than others. You want to look at how an insurer’s portfolio has performed
during market downturns and how much risk they are currently taking.
• Financial Ratings — All the factors above are evaluated for each life
insurance company by independent ratings services. Their ratings are widely
relied upon by institutions and individuals as essential indicators of financial
strength and stability of insurance companies.
Using the preceding indicators and measurements may help you in selecting a
company focused on strength, integrity and performance.
The charts on the following pages show life insurance carriers ranked by those
measurements. All information in this document was obtained from the annual
and quarterly statement filings with the National Association of Insurance
Commissioners (NAIC) as of 12/31/12.
3
Mutuality: What is a mutual life
insurance company and why is it
important to your buying decision?
Unlike publicly held companies, mutual companies have no stockholders and
therefore no conflicts between the short-term, quarter-to-quarter financial
demands of Wall Street and the long-term interests of policyholders. We believe
mutual companies are positioned to serve customers’ interests by delivering
high-quality, low-net-cost life insurance with the greatest degree of financial
strength possible.
One of the most important ways that mutual companies can enrich the lives of
their policyholders is through annual dividends that result in a lower, long-term
net cost for their insurance policies. While dividends are not guaranteed, (they
are declared annually by the Company’s Board of Directors) Guardian has paid
dividends every year since 1868.
Capitalization Ratio: What is it and
why is it important to you?
The capitalization ratio shows the company’s capital as a percentage
of net admitted assets.
Most of the liabilities of any insurance company are composed of the reserves set
aside to pay future claims. Capital represents the amount of assets in excess of
those liabilities, and a high capitalization ratio indicates a greater proportion of
these excess assets. It is calculated using the following formula:
Capital
Net Admitted Assets (Excluding Separate Account Assets)
The following table lists the capitalization ratios* over the last five years of many of
the major companies within the industry.
4
Ranked by Five-Year Average Capitalization Ratio*
Five-Year
Average
Company
2008
2009
2010
2011
2012
Guardian Life Insurance Company of America
14.7%
15.9%
16.1%
15.5%
15.4%
15.5%
State Farm Life Insurance Company
13.2%
14.1%
14.6%
15.0%
15.7%
14.5%
New York Life Insurance Company
11.8%
13.6%
14.7%
14.8%
15.8%
14.1%
Ohio National Life Insurance Company
11.7%
12.9%
13.6%
14.3%
16.1%
13.7%
Massachusetts Mutual Life Insurance Company
11.4%
13.2%
14.1%
14.4%
14.8%
13.6%
Pacific Life Insurance Company
8.2%
11.8%
13.7%
13.6%
14.5%
12.4%
Northwestern Mutual Life Insurance Company
11.1%
11.0%
12.5%
12.1%
12.2%
11.8%
Nationwide Life Insurance Company
8.7%
10.6%
12.3%
10.8%
11.5%
10.8%
AXA Equitable Life Insurance Company
8.7%
9.6%
10.3%
10.7%
11.1%
10.1%
Lincoln National Life Insurance Company
7.6%
9.2%
9.3%
9.0%
8.6%
8.8%
Principal Life Insurance Company
8.0%
8.0%
8.1%
8.0%
7.6%
7.9%
Prudential Insurance Company of America
5.9%
8.6%
7.9%
7.5%
7.7%
7.5%
John Hancock Life Insurance Company (USA)
7.7%
6.8%
7.3%
6.8%
7.5%
7.2%
Metropolitan Life Insurance Company
6.9%
6.7%
7.0%
7.6%
7.6%
7.2%
Aviva Life & Annuity Company
6.0%
6.1%
5.8%
6.2%
6.2%
6.1%
What this means to you is…
The higher the capitalization ratio, the more confident you can be in making sure that the company that is issuing the policy:
• Has the financial endurance to handle severe market volatility; and
• Is in a position to honor the promise of the policy — to protect and insure when it’s needed most.
*All information provided was obtained from each company’s statutory statements. Results include surplus notes issued.
5
Net Investment Yield: What is it and
why is it important to you?
Net Investment Yield (NIY, also known as Net Yield on Mean
Invested Assets) is net investment income expressed as a percent of
cash and invested assets plus accrued investment income, minus
borrowed money. Net Investment Yield comes from all
invested assets.
The table shown is ranked by percentage of yield over a five-year period.
Ranked by Five-Year Net Investment Yield*
2008
2009
2010
2011
2012
AXA Equitable Life Insurance Company
6.48%
5.25%
6.21%
6.31%
5.60%
5.97%
John Hancock Life Insurance Company (USA)
5.52%
7.62%
5.33%
5.58%
4.69%
5.75%
Ohio National Life Insurance Company
6.10%
5.82%
5.64%
5.48%
5.30%
5.67%
Aviva Life & Annuity Company
4.84%
6.02%
6.21%
5.49%
5.54%
5.62%
Northwestern Mutual Life Insurance Company
5.96%
5.64%
5.63%
5.30%
5.10%
5.52%
Guardian Life Insurance Company of America
5.60%
5.65%
5.62%
5.42%
5.12%
5.48%
Massachusetts Mutual Life Insurance Company
6.47%
5.09%
5.37%
5.37%
5.06%
5.47%
Principal Life Insurance Company
6.01%
5.41%
5.40%
5.32%
5.11%
5.45%
State Farm Life Insurance Company
5.67%
5.69%
5.42%
5.24%
4.93%
5.39%
Prudential Insurance Company of America
5.29%
6.10%
5.14%
5.29%
4.93%
5.35%
Lincoln National Life Insurance Company
5.75%
5.41%
5.45%
5.14%
4.96%
5.34%
Metropolitan Life Insurance Company
5.77%
4.74%
5.13%
5.17%
4.89%
5.14%
Nationwide Life Insurance Company
5.11%
5.36%
5.17%
4.95%
4.70%
5.06%
New York Life Insurance Company
5.22%
5.23%
4.98%
4.77%
4.74%
4.99%
Pacific Life Insurance Company
7.96%
1.61%
3.99%
4.18%
3.55%
4.26%
What this means to you is…
The yield represents the net earned rate on all invested assets, excluding realized and unrealized gains and losses.
6
Five-Year
Average
Company
* All information provided was obtained from each company’s statutory statements. Results include surplus notes issued.
Total Underperforming Assets:
What are they and why are they important?
This is one measure of the quality of a life insurance company’s asset
portfolio that supports the policyholders’ policies.
Total underperforming assets measures:
• The amount of bonds in or near default;
• Mortgages with interest three months overdue;
• Mortgages in the process of foreclosure;
• Real estate acquired in satisfaction of debt; and
• Mortgage loans with restructured terms.
A lower number indicates a lower degree of underperforming assets over time.
Underperforming Assets as a Percentage of Capital*
Five-Year
Average
Company
2008
2009
2010
2011
2012
Guardian Life Insurance Company of America
1.0%
0.7%
0.3%
0.4%
0.6%
0.6%
New York Life Insurance Company
0.7%
1.0%
0.6%
0.6%
0.5%
0.7%
State Farm Life Insurance Company
0.4%
0.6%
0.4%
1.2%
1.2%
0.8%
Aviva Life & Annuity Company
0.8%
0.6%
1.1%
0.8%
1.2%
0.9%
Metropolitan Life Insurance Company
0.9%
1.8%
0.8%
1.1%
1.2%
1.2%
Northwestern Mutual Life Insurance Company
0.8%
1.9%
1.2%
1.2%
1.1%
1.3%
Lincoln National Life Insurance Company
1.4%
2.9%
1.7%
1.0%
0.5%
1.5%
Nationwide Life Insurance Company
3.4%
2.0%
0.6%
0.7%
0.7%
1.5%
Massachusetts Mutual Life Insurance Company
2.0%
2.0%
1.5%
0.9%
0.9%
1.5%
Pacific Life Insurance Company
1.4%
1.7%
1.5%
1.5%
2.1%
1.6%
AXA Equitable Life Insurance Company
0.6%
0.8%
4.6%
2.9%
3.6%
2.5%
Ohio National Life Insurance Company
3.6%
2.6%
3.0%
2.5%
1.4%
2.6%
Principal Life Insurance Company
1.1%
3.4%
3.4%
2.9%
2.5%
2.7%
John Hancock Life Insurance Company (USA)
0.8%
4.0%
4.2%
4.1%
2.8%
3.2%
Prudential Insurance Company of America
5.3%
4.0%
2.0%
3.2%
2.0%
3.3%
* All information provided was obtained from each company’s statutory statements.
7
Bond and Mortgage Statutory
Credit Results: Why are they
important to your buying decision?
What this means
to you is…
You want a company that
can manage a portfolio to
their intended investment
philosophy — keeping your
best interests top of mind.
Bond and mortgage credit results sum the credit related gains/
(losses), including credit impairments.
Bond and Mortgage Credit Loss Experience is important to your insurance
buying decision. Bond and mortgage credit results are a good indicator of the
company’s risk management performance. A consumer should consider a
company’s investment and risk management results — and this is one way to
look at it. Good credit analysis and risk management can minimize the actual
loss experience.
When reviewing credit loss, you should balance the risk associated with the
company’s ability to achieve income results with its ability to minimize risk and
historical credit losses.
Statutory Investment Credit Losses*
The credit loss is calculated
with the following formula:
Pre-Tax Bond/Preferred
Stock Gain/(Loss)
- T
ransfer to Interest
Maintenance Reserve (IMR)
+ P re-Tax Mortgage Loan
Realized & Change in
Unrealized Gain/(Loss)
Average Invested Assets
8
Company
2010
2011
2012
3-Year
Total
State Farm Life Insurance Company
0.03%
-0.01%
-0.02%
0.00%
Guardian Life Insurance
Company of America
-0.03%
-0.03%
-0.03%
-0.09%
New York Life Insurance Company
0.00%
-0.14%
-0.02%
-0.16%
Northwestern Mutual Life
Insurance Company
-0.24%
0.04%
-0.07%
-0.26%
Aviva Life & Annuity Company
-0.27%
0.02%
-0.06%
-0.31%
Pacific Life Insurance Company
-0.05%
-0.19%
-0.08%
-0.32%
Ohio National Life Insurance Company
-0.09%
-0.17%
-0.10%
-0.36%
Metropolitan Life Insurance Company
-0.18%
-0.21%
-0.10%
-0.49%
Prudential Insurance Company of America
-0.31%
-0.03%
-0.15%
-0.49%
Lincoln National Life Insurance Company
-0.21%
-0.20%
-0.20%
-0.61%
John Hancock Life Insurance Company (USA)
-0.25%
-0.02%
-0.35%
-0.62%
Principal Life Insurance Company
-0.45%
-0.34%
0.15%
-0.64%
Nationwide Life Insurance Company
-0.45%
-0.22%
-0.10%
-0.78%
AXA Equitable Life Insurance Company
-0.75%
-0.14%
-0.27%
-1.16%
Massachusetts Mutual Life
Insurance Company
-0.27%
-0.65%
-0.29%
-1.20%
Source: Annual Statements
*Results are reported and calculated based on the annual statutory financial statements.
Investment Environment: How
does market performance
impact your buying decision?
Since life insurance has longer-term benefits, you should
think carefully about what you want your policy to do for
you over time and what your comfort level is with exposing
your coverage to market fluctuations.
If you are not comfortable with market fluctuations, then understanding a
company’s investment philosophy and historical experience is extremely
important. You may want to consider doing business with a company that:
• Is defensively positioned to withstand market swings;
• Is relatively conservative in taking insurance premium dollars and investing
in a strong, well-diversified portfolio;
• Is known for thorough due diligence and an independent research process;
• Avoids risky investments; and
• Executes a risk management plan to protect capital in volatile
financial markets.
This philosophy lends itself to building and maintaining the kind of strong
capital and liquidity needed to pay death claims.
What this means to you is…
Independent rating agencies look well beyond company financials. They also have
face-to-face interviews with senior executives of each firm they rate in order to
get a sense of their vision and philosophy – and to help determine the integrity
and foundation of their company’s values.
9
Ratings: What are they and why
are they important?
Independent, third-party rating services provide measures of the
qualifications of insurance companies that might be under consideration.
As you have seen, there are many financial facts to evaluate when choosing a
solid life insurance company. Because this is a time-consuming task even for
professionals, many years ago independent rating services were developed to
evaluate the latest strength and stability of virtually all insurers. These rating
services are impartial in their evaluations and provide a common ground for
valid comparisons. There are four major rating agencies that evaluate and publish
ratings for life insurance companies:
• Moody’s
• Standard & Poor’s
• Fitch
• A.M. Best Company
For each insurance company being rated, each agency evaluates the firm’s
financial statements, interviews their management, and subsequently develops
ratings based upon statistical models and certain qualitative measures. The
cumulative result is a relative ranking of all the insurance companies that they
have evaluated.
The benefit of having several companies produce their own ratings is that overall,
there is less chance of something being missed or overlooked. Illustrating this
point is a table called the Comdex Rankings. Comdex is not a rating, but a
composite of all ratings that a company has received. Comdex percentile ranks
the companies, on a scale of 1 to 100 (with 100 being the best).
For perspective, experts who write about the insurance industry will tell you that
a Comdex of 95 or higher is considered an “extremely safe” company, 90
represents a “safe” company and a ranking of 85 indicates a “reasonably
safe” company.*
Contact your Guardian representative to review rating reports and narratives
from the major rating agencies.
10
Comdex Rankings as of April 2013*
A.M. Best
Company
S&P
Moody’s
Fitch
Comdex
Northwestern Mutual Life Insurance Company
A++
AA+
Aaa
AAA
100
New York Life Insurance Company
A++
AA+
Aaa
AAA
100
Guardian Life Insurance Company of America
A++
AA+
Aa2
AA+
98
Massachusetts Mutual Life Insurance Company
A++
AA+
Aa2
AA+
98
State Farm Life Insurance Company
A++
AA
Aa1
AA+
98
Penn Mutual Life Insurance Company
A+
AA-
Aa3
Metropolitan Life Insurance Company
A+
AA-
Aa3
Ohio National Life Insurance Company
A+
AA
A1
AXA Equitable Life Insurance Company
A+
A+
Aa3
AA-
93
John Hancock Life Insurance Company (USA)
A+
AA-
A1
AA-
93
Principal Life Insurance Company
A+
A+
Aa3
AA-
93
Lincoln National Life Insurance Company
A+
AA-
A2
A+
89
Pacific Life Insurance Company
A+
A+
A1
A+
89
Prudential Insurance Company of America
A+
AA-
A2
A+
89
Nationwide Life Insurance Company
A+
A+
A1
A
87
Hartford Life Insurance Company
A-
A-
A3
A-
67
Sun Life Assurance Company (U.S.)
A-
BBB
Baa2
A-
64
Aviva Life & Annuity Company
A-
A-
Company
96
AA-
95
94
63
What this means to you is…
Industry experts find that the difference between choosing a company with a Comdex of 98 versus 93 is the difference
between “extremely safe” versus “safe.”**
You have a choice – if not a responsibility – in choosing an insurance company based on your personal tolerance for company
strength and safety.
* Vital Signs as of April 2013. Not all companies are ranked by all four rating agencies.
** Source: Richard M. Weber, MBA, CLU, AEP; and Chris Hause, FSA, MAAA, CLU; Life Insurance as an Asset Class: Managing a Valuable Asset.
11
Choose GUARDIANВ®
What this means
to you is…
These are the results that
you should be basing your
decisions on when choosing
a life insurance company.
Guardian’s track record is
consistent with the statements
we have made. When you
choose Guardian, there’s less
need to worry.
Because as a mutual company, our decisions are measured
based on serving the best interests of our policyholders.
Now that you have the tools to evaluate the strength and stability and
performance of a life insurer, let’s see how Guardian stacks up.
Since our founding in 1860, The Guardian Life Insurance Company of America,
as a mutual company, has been able to manage for the long term, allowing us to
avoid risky business practices in the pursuit of short-term profits. Striking the
right balance between managing risk and generating healthy long-term returns is
one of our highest priorities — and a practice that paid off very well in 2012.
Guardian has staying power.
When you compare the key financial strength indicators across companies,
Guardian is on top:
• Top Tier Comdex Ranking: 98
• Top 3% in insurance company ratings and rankings*
• Best-in-class Capitalization Ratio over 5 years: 15.5%
• Surplus Growth Rate over 5 years: 4.8%
2012 Financial Highlights**
As of December 31, 2012
Net Investment Income
$1,728
Total Revenues
$7,967
Policyholder Dividends Incurred
$792
Gain from Operations Before Taxes and Realized Losses
$284
Net Income
$253
Total Invested Assets
$35,478
Total Admitted Assets
$37,529
Total Surplus
$4,752
* Vital Signs as of March 2013. Vital Signs, a collection of published industry research, provides
financial analysis of 695 participating carriers. Of those 695 companies, only 106 are rated by all four
independent rating agencies. Out of those 106 companies, only 21 have ratings equal to or better than
Guardian’s. And the top four mutual life insurance companies (including Guardian) are among the TOP
3% of the 695 rated insurance companies.
** Financial information concerning The Guardian Life Insurance Company of America as of 12/31/12 on
a statutory basis: Admitted Assets = $37.5 Billion; Liabilities = $32.8 Billion (including $28.6 Billion of
Reserves); and Surplus = 4.7 Billion.
12
Guardian’s Key 2012 Accomplishments
• Declared, in November 2012, a 2013 dividend payout* of $805 million to
our policyholders — the largest declared dividend in Guardian’s history.
• In 2012, paid $4.7 billion** in total benefits to policyholders, demonstrating
our ability to continuously operate for the benefit of policyholders.
• All four major crediting rating agencies affirmed our already strong ratings.
• Obtained a capitalization ratio of 15.4%, which is among the best in
the industry.
• Increased life insurance in force to $289 billion, reflecting our overall
2012
$5,762
business growth.
$5,460
2011
$5,343
2010
“
$4,256
2
CAPITAL
Results in $ millions
ST
BE
Re
$805
$1,165
$795
$5,762
$1,101
2012
2012
2011
2012
2011
2
$5,460
$740
$1,082
2011
2010
2010
2
$712
$5,343
$1,015
$4,920
$723
$986
2
2
$4,256
need to earn your confidence each and
every day. We will continue to make our
2
2011
policyholders’ needs, and delivery on our
$795
$740
long-term promises, our highest priority—
$712
2009
through the quality of the decisions we$723
2008
WHOLE LIFE DIVIDENDS DECLARED
Results in $ millions
make, and the integrity, hard work,
”
ST
BE
Re
$805
2012
and dedication of our people.
2
2008 LIFEPRE-TAX
WHOLE
DIVIDENDS
DECLARED
STATUTORY
OPERATING
INCOME
Results inDIVIDENDS
$ millions (on a consolidated basis)
BEFORE
Results
in $ millions
CAPITAL
Results in $ millions
CAPITAL
Results in $ millions
2010
2
$4,920
2009
2009
2008
2008
$4,256
My colleagues and I know we
2008
2
$5,343
2010
2009
2010
2009
$4,920
2009
2
$5,460
2011
2008
• Continued to maintain a highly diversified, high-quality investment
portfolio of more than $35 billion.
$5,762
2012
$805
2012
$795
2011
2010
$740
2009
$712
2008
$723
WHOLE LIFE DIVIDENDS DECLARED
Results in $ millions
Deanna M. Mulligan
President and Chief Executive Officer
* Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors.
** On a consolidated basis.
13
Guardian’s Investment Philosophy:
What is it and why should you
consider it?
In 2012, the majority of
Guardian’s total investment
portfolio was comprised
of public fixed income,
private placement debt and
commercial mortgages.
The portfolio continued to
perform well in 2012.
Guardian’s investment philosophy focuses on maintaining a well-diversified
portfolio, with a long-term orientation that provides the most attractive and
consistent dividends to our policyholders.
Our investment objectives are clear and focused, and remain as they have
been for many years. We start with sound asset allocation and diversification
strategies.
Guardian’s portfolio managers employ a disciplined investment decision-making
process, which is based on proprietary research and analysis, rather than being
overly reliant on ratings agencies or quantitative risk models. Additionally,
our asset liability investment management process carefully integrates asset
maturities with prudent funding of insurance liabilities.
Despite market volatility in recent years, Guardian’s investment team
successfully managed the economic crisis, delivering strong investment
performance and results.
Why did Guardian’s investment
portfolio perform so well in 2012?
The ongoing success of our investment strategy is a result of active portfolio and
risk-management practices, executed by an experienced team of professionals
who have worked through previous periods of market turbulence. They
thoroughly and independently research every decision, while keeping a close
watch on macroeconomic, political, and competitive developments.
Guardian’s investment risk management has been and continues to be principally
focused on managing and mitigating potential capital losses by actively
managing credit risk, executing hedging strategies that protect capital and
constructing well-diversified portfolios that reduce correlated risk.
We remain diligent about assessing emerging risks and stress-testing the
portfolio to better understand how to mitigate risks, which currently include
uncertainties associated with recession and debt problems in Europe, political
turbulence in the Middle East, North Africa, and the Korean Peninsula ­— as
well as the possibility that interest rates could either remain exceptionally low
for an extended period or rise more sharply than anticipated. We expect
continued market volatility and are positioning our portfolio to deal with
a wide range of contingencies.
14
Statutory Basis Balance Sheets
As of December 31
(in millions)
Statutory Basis Statements of Operations
2012
2011*
ADMITTED ASSETS
For the year ended December
31 (in millions)
2012
2011*
$5,998
$5,860
1,728
1,715
241
169
7,967
7,744
REVENUES
$25,186
$23,057
978
1,110
Investments in affiliates
1,008
886
Mortgage loans
3,069
3,156
Private and real estate equity
1,368
1,247
Policy loans
3,000
2,889
Receivable for securities and other
invested assets
579
457
Benefit payments to policyholders
and beneficiaries
3,333
3,401
Cash and short-term investments
290
221
Net increase to policy benefit
reserves
1,889
1,638
TOTAL INVESTED ASSETS
35,478
33,023
Due and accrued investment income
340
341
Commissions and operating
expenses
1,669
1,633
Premiums deferred and uncollected
892
874
Net deferred tax asset
642
639
TOTAL BENEFITS
AND EXPENSES
6,891
6,672
Other assets
177
250
Gain from operations before
policyholder dividends and taxes
1,076
1,072
$37,529
$35,127
Policyholder dividends incurred
(792)
(785)
Gain from operations before taxes
and realized losses
284
287
Income tax expense
(60)
(81)
Income from operations before net
realized capital losses
224
206
29
(10)
$253
$196
Bonds
Unaffiliated common and
preferred stocks
TOTAL ADMITTED ASSETS
LIABILITIES AND SURPLUS
28,621
26,732
1,927
1,903
Interest maintenance reserve
422
241
Asset valuation reserve
608
489
1,199
1,189
32,777
30,554
4,356
4,177
396
396
$37,529
$35,127
Reserves for policy benefits
Policyholder dividends payable and
other contract liabilities
Amounts due to brokers and
other liabilities
TOTAL LIABILITIES
Policyholders’ surplus
Surplus note
TOTAL LIABILITIES
AND SURPLUS
Premiums, annuity considerations,
and fund deposits
Net investment income
Other income
TOTAL REVENUE
BENEFITS AND EXPENSES
Net realized capital gains (losses)
NET INCOME
Results Are Guardian Life Only (Not Consolidated) The condensed financial
statements of The Guardian Life Insurance Company of America have been
derived from audited statutory financial statements, which are available
upon request.
* Certain amounts from 2011 have been reclassified to conform to
the current year presentation.
15
Guardian’s Life Insurance Product
Offerings: What life insurance
products does Guardian offer
and how will they help you?
The hallmark of Guardian’s individual life portfolio has long been our
traditional life insurance products, which are designed with integrity and
backed by the financial strength of Guardian.
Individual insurance plays an integral role in helping families and business
owners fulfill their lives, not only by removing some of the “unknown,” but also
by providing tax-smart wealth transfer opportunities.* Guardian’s wide range of
life insurance options — including whole life, universal life, variable universal
life and term life insurance — helps meet these objectives. The distinguishing
difference between these types of insurance is the amount of market exposure
(variable universal life having the most) and the price (term being the least
expensive in the short term). We also offer products specifically for small
business owners to help attract and retain top talent through sophisticated
corporate-owned policies.
Policyowners of participating whole life insurance benefit the most from
Guardian’s financial strength. First, whole life insurance offers a death benefit —
guaranteed — and guaranteed cash value that can be borrowed against to pay
for expenses such as retirement or health care. Second, as a mutual company,
Guardian is focused on long-term results for the benefit of its participating whole
life policyholders, which are delivered in the form of dividends. Our payout of
$805 million to the owners of these whole life policies in 2013 is evidence of
Guardian’s commitment to provide the greatest amount of insurance for the
lowest long-term cost, with the greatest amount of financial strength.
Not-so-Trivial Trivia about Guardian
Guardian declared, for 2013, a dividend payout of $805 million based on
2012 Company performance. This amount is the highest payout in the
Company’s history.
• The Company has paid a dividend to its policyholders since 1868 — through
good times and bad, including two World Wars, the Great Depression, the
Great Recession and years of market volatility.
• Guardian was one of a handful of life insurance companies to have been
upgraded by A.M. Best and Standard & Poor’s in 2008 (11/08 and 7/08,
respectively), and our ratings were reaffirmed in 2009, 2010, 2011 and 2012.
• Our claims-paying ability has not been impaired by the market downturn.
* G uardian, its subsidiaries, agents or employees do not give tax or legal advice. You should consult your
tax or legal advisor.
16
Your Guardian Representative Can
Tell You More
As you can see, Guardian scores highly on all the preceding
tests of strength and stability.
But there’s more to a company than just the numbers.
There’s also integrity, innovation, and true commitment to
the well-being of its clients. Guardian has demonstrated
these attributes for over 150 years, which explains why
we have become one of America’s top life insurers. Most
importantly, you can count on us maintain the highest
strength and standards for as long as you need us.
View Guardian’s most recent Annual Report at:
www.ar.guardianlife.com/
Your Guardian representative can provide much more
information about why you should choose Guardian. And
now that you have the knowledge to compare the essential
facts, you’ll feel more confident about your decision
than ever.
If you don’t have a representative, contact us at:
www.guardianlife.com/contactus
The Guardian Life Insurance
Company of America
7 Hanover Square
New York, NY 10004-4025
www.GuardianLife.com
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