UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 333-69620
GE Life and Annuity Assurance Company
(Exact name of registrant as specified in its charter)
| Virginia |
54-0283385 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 6610 West Broad Street, Richmond, Virginia |
23230 | |
| (Address of principal executive offices) |
(Zip Code) |
(804) 281-6000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
At May 2, 2003, 25,651 shares of common stock with a par value of $1,000.00 were outstanding. The common stock of GE Life and Annuity Assurance Company is not publicly traded.
| Page | ||||
| PART I – FINANCIAL INFORMATION |
||||
| Item 1. |
1 | |||
| Item 2. |
Management’s Discussion and Analysis of Results of Operations and Financial Condition |
7 | ||
| Item 3. |
10 | |||
| Item 4. |
10 | |||
| PART II – OTHER INFORMATION |
||||
| Item 1. |
10 | |||
| Item 6. |
10 | |||
| 11 | ||||
| 12 | ||||
PART I—FINANCIAL INFORMATION
Item 1. Condensed, Consolidated Financial Statements
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Condensed, Consolidated Statements of Current and Retained Earnings
(Dollar amounts in millions)
(Unaudited)
| Three Months Ended |
||||||||
| March 31, 2003 |
March 31, 2002 |
|||||||
| Revenues: |
||||||||
| Net investment income |
$ |
137.9 |
|
$ |
154.7 |
| ||
| Net realized investment gains |
|
19.0 |
|
|
13.4 |
| ||
| Premiums |
|
23.5 |
|
|
25.2 |
| ||
| Cost of insurance |
|
37.3 |
|
|
31.6 |
| ||
| Variable product fees |
|
23.9 |
|
|
31.6 |
| ||
| Other income |
|
9.3 |
|
|
10.7 |
| ||
| Total revenues |
|
250.9 |
|
|
267.2 |
| ||
| Benefits and expenses: |
||||||||
| Interest credited |
|
103.5 |
|
|
118.5 |
| ||
| Benefits and other changes in policy reserves |
|
52.4 |
|
|
49.9 |
| ||
| Commissions |
|
31.4 |
|
|
28.2 |
| ||
| General expenses |
|
25.8 |
|
|
21.9 |
| ||
| Amortization of intangibles, net |
|
7.2 |
|
|
7.8 |
| ||
| Change in deferred acquisition costs, net |
|
(5.7 |
) |
|
(8.2 |
) | ||
| Total benefits and expenses |
|
214.6 |
|
|
218.1 |
| ||
| Earnings before income taxes |
|
36.3 |
|
|
49.1 |
| ||
| Provision for income taxes |
|
11.4 |
|
|
16.4 |
| ||
| Net earnings |
|
24.9 |
|
|
32.7 |
| ||
| Retained earnings at beginning of period |
|
517.6 |
|
|
411.4 |
| ||
| Retained earnings at end of period |
$ |
542.5 |
|
$ |
444.1 |
| ||
See Notes to Condensed, Consolidated Financial Statements.
1
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Condensed, Consolidated Balance Sheets
(Dollar amounts in millions except per share amounts)
(Unaudited)
| March 31, 2003 |
December 31, 2002 |
|||||||
| Assets |
||||||||
| Investments: |
||||||||
| Fixed maturities available-for-sale, at fair value |
$ |
10,556.6 |
|
$ |
10,049.0 |
| ||
| Equity securities available-for-sale, at fair value |
|
24.9 |
|
|
24.9 |
| ||
| Mortgage loans, net of valuation allowance |
|
1,048.2 |
|
|
1,034.7 |
| ||
| Policy loans |
|
126.8 |
|
|
123.9 |
| ||
| Short-term investments |
|
32.7 |
|
|
278.0 |
| ||
| Other invested assets |
|
440.9 |
|
|
80.5 |
| ||
| Total investments |
|
12,230.1 |
|
|
11,591.0 |
| ||
| Cash and cash equivalents |
|
— |
|
|
— |
| ||
| Accrued investment income |
|
160.5 |
|
|
160.4 |
| ||
| Deferred acquisition costs |
|
816.4 |
|
|
827.2 |
| ||
| Goodwill |
|
107.4 |
|
|
107.4 |
| ||
| Intangible assets |
|
196.0 |
|
|
207.7 |
| ||
| Reinsurance recoverable |
|
176.4 |
|
|
174.4 |
| ||
| Other assets |
|
98.7 |
|
|
97.2 |
| ||
| Separate account assets |
|
6,650.4 |
|
|
7,182.8 |
| ||
| Total assets |
$ |
20,435.9 |
|
$ |
20,348.1 |
| ||
| Liabilities and Shareholders’ Interest |
||||||||
| Liabilities: |
||||||||
| Future annuity and contract benefits |
$ |
10,838.3 |
|
$ |
10,771.5 |
| ||
| Liability for policy and contract claims |
|
127.4 |
|
|
240.4 |
| ||
| Other policyholder liabilities |
|
195.5 |
|
|
208.1 |
| ||
| Accounts payable and accrued expenses |
|
656.7 |
|
|
136.2 |
| ||
| Deferred income tax liability |
|
180.5 |
|
|
104.9 |
| ||
| Separate account liabilities |
|
6,650.4 |
|
|
7,182.8 |
| ||
| Total liabilities |
|
18,648.8 |
|
|
18,643.9 |
| ||
| Shareholders’ interest: |
||||||||
| Net unrealized investment gains (losses) |
|
44.6 |
|
|
(12.0 |
) | ||
| Derivatives qualifying as hedges |
|
3.7 |
|
|
2.3 |
| ||
| Accumulated non-owner changes in equity |
|
48.3 |
|
|
(9.7 |
) | ||
| Preferred stock, Series A ($1,000 par value, $1,000 redemption and liquidation value, 200,000 shares authorized, 120,000 shares issued and outstanding) |
|
120.0 |
|
|
120.0 |
| ||
| Common stock ($1,000 par value, 50,000 shares authorized, 25,651 shares issued and outstanding) |
|
25.6 |
|
|
25.6 |
| ||
| Additional paid-in capital |
|
1,050.7 |
|
|
1,050.7 |
| ||
| Retained earnings |
|
542.5 |
|
|
517.6 |
| ||
| Total shareholders’ interest |
|
1,787.1 |
|
|
1,704.2 |
| ||
| Total liabilities and shareholders’ interest |
$ |
20,435.9 |
|
$ |
20,348.1 |
| ||
See Notes to Condensed, Consolidated Financial Statements.
2
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Condensed, Consolidated Statements of Cash Flows
(Dollar amounts in millions)
(Unaudited)
| Three Months Ended |
||||||||
| March 31, 2003 |
March 31, 2002 |
|||||||
| Cash Flows From Operating Activities |
||||||||
| Net earnings |
$ |
24.9 |
|
$ |
32.7 |
| ||
| Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
||||||||
| Change in reserves |
|
130.3 |
|
|
155.6 |
| ||
| Other, net |
|
38.2 |
|
|
(190.9 |
) | ||
| Net cash provided by (used in) operating activities |
|
193.4 |
|
|
(2.6 |
) | ||
| Cash Flows From Investing Activities |
||||||||
| Short-term investment activity, net |
|
245.3 |
|
|
7.9 |
| ||
| Proceeds from sales, securitizations and maturities of investment securities and other invested assets |
|
1,233.9 |
|
|
1,155.7 |
| ||
| Principal collected on mortgage and policy loans |
|
61.0 |
|
|
35.6 |
| ||
| Purchases of investment securities and other invested assets |
|
(1,633.6 |
) |
|
(863.3 |
) | ||
| Mortgage and policy loan originations |
|
(77.4 |
) |
|
(25.0 |
) | ||
| Net cash (used in) provided by investing activities |
|
(170.8 |
) |
|
310.9 |
| ||
| Cash Flows From Financing Activities |
||||||||
| Proceeds from issuance of investment contracts |
|
749.4 |
|
|
836.0 |
| ||
| Redemption and benefit payments on investment contracts |
|
(775.2 |
) |
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