Adjusted operating income¹ was $50.4 million, or $0.37 per diluted share, compared with $59.3 million, or $0.43 per diluted share, in first quarter 2012; and up from $32.9 million, or $0.24 per diluted share, in fourth quarter 2012.

Net income was $66.0 million, or $0.48 per diluted share, compared with net income of $75.4 million, or $0.55 per diluted share, in first quarter 2012; and up from $31.0 million, or $0.22 per diluted share, in fourth quarter 2012.

Benefits operating income declined due to a higher loss ratio of 68.5% and increased operating expenses compared with the same quarter in 2012. Sales of group life and disability income (DI) insurance jumped to $12.9 million from $4.7 million in first quarter 2012.

Deferred Annuities earnings increased on higher investment income from prepayment-related activity and account value growth. Fixed indexed annuity (FIA) quarterly sales hit a record high.

Income Annuities operating income decreased as a result of less favorable mortality experience compared with year-ago levels.

Individual Life earnings were down due to decreased contributions from the term life book of business and lower bank-owned life insurance (BOLI) return on assets.

Symetra affirmed its earlier earnings guidance, with expected adjusted operating income per diluted share of $1.30–$1.50 for full-year 2013. The company initiated its stock repurchase plan during the quarter, at a total cost of $4.2 million.

Three Months Ended

March 31

Net Income

Per Diluted Share of Common Stock

Adjusted Operating Income

Per Diluted Share of Common Stock

Three Months Ended

March 31

Benefits

Deferred Annuities

Income Annuities

Individual Life

Other

Subtotal

Less: Income Taxes*

Adjusted Operating Income¹

Pretax adjusted operating income was $13.5 million, compared with $25.1 million in first quarter 2012. Operating income decreased in first quarter 2013 primarily due to a higher loss ratio. Expenses also were up, as planned, over year-ago levels, related to the expansion of Symetra’s group life and disability income insurance business.

Loss ratio was 68.5%, compared with a very favorable 61.6% in first quarter 2012. Higher claims frequency in the medical stop-loss business drove the first quarter 2013 result. Loss ratios can vary widely from period to period. However, given the first quarter 2013 loss ratio and increasingly competitive market conditions, the full-year loss ratio may end a couple of percentage points higher than the company’s long-term target range of 63%–65%.

Sales of $66.5 million were comparable with $66.7 million in first quarter 2012. Stop-loss sales were down $7.2 million from the prior-year period, reflecting underwriting discipline in a competitive market. Group life and disability income sales accelerated to $12.9 million, compared with $4.7 million in first quarter 2012.

Pretax adjusted operating income was $30.7 million, compared with $25.8 million in first quarter 2012. Earnings increased due to higher investment income from prepayment-related activity and growth in account value. Prepayment income, net of related amortization, was $7.4 million in first quarter 2013, an increase of $6.4 million over the same quarter in 2012. This earnings increase was partially offset by higher expense levels and a decline in base interest spread on fixed annuities. Spreads continued to be hampered by the low interest rate environment.

Total account values were $12.0 billion at the end of the quarter, up from $11.6 billion at the end of first quarter 2012. Higher FIA account value drove this increase.

Sales were $322.0 million, compared with $353.8 million in first quarter 2012. FIA sales were $148.7 million, up markedly from $60.6 million in the same quarter a year ago. Sales of traditional fixed annuities dropped $124.2 million year-over-year due to low interest rates.

Pretax adjusted operating income was $8.8 million, compared with $14.5 million in first quarter 2012. The decreased earnings stemmed from lower mortality gains versus year-ago levels. While prepayment-related investment income increased $1.8 million compared with the same quarter of 2012, base interest spread declined, reflecting the impact of low interest rates on investment yields.

Mortality gains were $1.0 million, compared with mortality gains of $5.4 million in first quarter 2012. Mortality experience can be volatile, fluctuating from quarter to quarter.

Sales were $40.7 million, compared with sales of $55.8 million in the same quarter of 2012. The drop in sales was due to the company’s decision in December 2012 to discontinue sales of structured settlement annuities.

Pretax adjusted operating income was $11.2 million, compared with $14.5 million in first quarter 2012. Operating income fell due to Symetra’s smaller block of term business and lower BOLI return on assets (ROA). The decline in ROA was driven by increased BOLI claims and lower reinvestment rates. Individual life claims remained flat compared with first quarter 2012, in line with expectations.

Sales of individual life products were $2.3 million, down from $3.0 million in the same quarter a year ago. The lower sales reflected mid-2012 changes to the single premium life product in response to sustained low interest rates. Sales of corporate-owned life insurance (COLI) were $2.4 million in first quarter 2013 on $23.8 million in deposits. There were no BOLI sales in first quarter 2013, compared with sales of $2.0 million in the same quarter last year.

Pretax adjusted operating loss was $4.8 million, compared with a loss of $3.3 million in first quarter 2012. The Other segment includes unallocated corporate income and expenses, interest expense on debt and other income outside of Symetra’s four business segments. The higher loss was driven by increased expenses, approximately half of which was related to Symetra’s continued exploration of acquisition opportunities, and lower net investment income.

Symetra’s equity portfolio is marked to market and consists of common stock and other equity-like investments. This portfolio posted net investment gains of $33.0 million, compared with net gains of $18.0 million in first quarter 2012, reflecting growth in assets and a stronger equity market in first quarter 2013. The company’s common stock portfolio, which is included in Symetra’s overall net realized investment results, delivered a total return of 10.5% in first quarter 2013, in line with the S&P 500 Total Return Index result of 10.6%.

Net realized investment gains were $26.5 million, compared with net gains of $25.9 million in first quarter 2012. Higher gains on Symetra’s equity portfolio were offset by net losses on sales of fixed maturities during first quarter 2013.

The provision for income taxes was $17.4 million, compared with $25.9 million in first quarter 2012. The decrease stemmed from lower pretax income and increased tax benefits from tax credit investments, which reduced the company’s effective tax rate. Symetra’s effective tax rate for first quarter 2013 was 20.9%, compared with 25.6% for the same period in 2012.

Total stockholders’ equity, or book value, as of March 31, 2013, was $3,604.2 million, or $26.10 per share, compared with $3,630.1 million, or $26.29 per share, as of Dec. 31, 2012.

Adjusted book value as converted,¹ as of March 31, 2013, was $2,529.2 million, or $18.32 per share, up from $2,477.0 million, or $17.94 per share, as of Dec. 31, 2012.

Stock repurchases during first quarter 2013 totaled 309,000 common shares at an average price per share of $13.46 and a total cost of $4.2 million. At March 31, 2013, there were 9.7 million shares remaining under the repurchase authorization.

Risk-based capital (RBC) ratio for Symetra Life Insurance Company at the end of first quarter 2013 was estimated at 498%. Statutory capital and surplus, including asset valuation reserve (AVR), was $2,222.5 million.

changes in the interest rate environment;

Benefits Division loss ratio relative to long-term target;

maintenance of current distribution relationships and success with new distribution partners;

timing and levels of life and annuity sales;

amount of issuance and yields on commercial mortgage loans;

increases or decreases in the amount of prepayments in the investment portfolio;

returns on alternative investment portfolio;

mortality experience;

management of operating expense levels;

timing and amount of common stock buybacks;

changes in expenses related to legal proceedings or regulatory investigations; and

achievement of target cash balances.

Adjusted operating income is defined by the company as net income, excluding after-tax net investment gains (losses) and including after-tax net realized gains (losses) related to Symetra’s fixed indexed annuity (FIA) products.

Adjusted operating income per diluted share is defined as adjusted operating income divided by diluted common shares outstanding.

Pretax adjusted operating income is defined as adjusted operating income on a pretax basis. It also represents the cumulative total of segment pretax adjusted operating income, which at the segment level is a GAAP measure.

Adjusted book value is defined as stockholders’ equity, less accumulated other comprehensive income (loss), or AOCI.

Adjusted book value, as converted, is defined as stockholders’ equity, less AOCI plus the assumed proceeds from exercising the outstanding warrants.

Adjusted book value per share, as converted, is calculated as adjusted book value, as converted, divided by the sum of outstanding common shares and shares subject to outstanding warrants.

estimates or projections of revenues, net income (loss), net income (loss) per share, adjusted operating income (loss), adjusted operating income (loss) per share, market share or other financial forecasts;

trends in operations, financial performance and financial condition;

financial and operating targets or plans;

business and growth strategy, including prospective products, services and distribution partners; and

stock repurchase program.

the effects of fluctuations in interest rates and a prolonged low interest rate environment;

general economic, market or business conditions, including further economic downturns or other adverse conditions in the global and domestic capital and credit markets;

the effects of changes in monetary and fiscal policy;

the effects of changes in government programs to stimulate mortgage refinancing and significant increases in corporate refinance activity;

the performance of Symetra’s investment portfolio;

the continued availability of quality commercial mortgage loan investments and Symetra’s continued capacity to invest in commercial mortgage loans;

Symetra’s ability to successfully execute on its strategies;

recorded reserves for future policy benefits and claims subsequently proving to be inadequate or inaccurate;

deviations from assumptions used in setting prices for insurance and annuity products or establishing cash flow testing reserves;

continued viability of certain products under various economic, regulatory and other conditions;

market pricing and competitive trends related to insurance products and services;

changes in amortization of deferred policy acquisition costs and deferred sales inducements;

financial strength or credit ratings changes;

the availability and cost of capital and financing;

the continued availability and cost of reinsurance coverage;

changes in laws or regulations, or their interpretation, including those that could increase Symetra’s business costs, reserve levels and required capital levels;

the ability of subsidiaries to pay dividends to Symetra;

the effects of implementation of the Patient Protection and Affordable Care Act;

Symetra’s ability to implement effective risk management policies and procedures, including hedging strategies;

the initiation of legal or regulatory investigations against Symetra and the results of any legal or regulatory proceedings;

the effects of implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and

the risks that are described from time to time in Symetra’s filings with the U.S. Securities and Exchange Commission, including those in Symetra’s 2012 Annual Report on Form 10-K.

Revenues

Premiums

Net investment income

Policy fees, contract charges and other

Net realized investment gains (losses):

Total other-than-temporary impairment losses on securities

Less: portion recognized in other comprehensive income

Net impairment losses recognized in earnings

Other net realized investment gains (losses)

Total net realized investment gains (losses)

Total revenues

Benefits and expenses

Policyholder benefits and claims

Interest credited

Other underwriting and operating expenses

Interest expense

Amortization of deferred policy acquisition costs

Total benefits and expenses

Income from operations before income taxes

Provision (benefit) for income taxes

Current

Deferred

Total provision for income taxes

Net income

Net income per common share

Basic

Diluted

Weighted-average number of common shares outstanding

Basic

Diluted

Cash dividends declared per common share

Non-GAAP financial measures

Adjusted operating income

Reconciliation to net income

Net income

Less: Net realized investment gains (losses) (net of taxes)*

Add: Net realized gains (losses) - FIA (net of taxes)**

Adjusted operating income

Assets

Total investments

Other assets

Separate account assets

Total assets

Liabilities and stockholders’ equity

Policyholder liabilities

Notes payable

Other liabilities

Separate account liabilities

Total liabilities

Common stock and additional paid-in capital

Treasury stock

Retained earnings

Accumulated other comprehensive income, net of taxes

Total stockholders’ equity

Total liabilities and stockholders’ equity

Book value per share*

Non-GAAP financial measures

Adjusted book value

Reconciliation to stockholders’ equity

Total stockholders’ equity

Less: AOCI

Adjusted book value

Add: Assumed proceeds from exercise of warrants

Adjusted book value, as converted

Adjusted book value per share, as converted**

Segment pretax adjusted operating income (loss)

Benefits

Deferred Annuities

Income Annuities

Individual Life

Other

Subtotal

Add: Net realized investment gains (losses)

Less: Net realized gains (losses) - FIA

Income from operations before income taxes

Reconciliation of revenues to operating revenues

Revenues

Less: Net realized investment gains (losses)

Add: Net realized gains (losses) - FIA

Operating revenues

ROE

Average stockholders’ equity*

Non-GAAP financial measures

Operating ROAE

Average adjusted book value**