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Crowning The Winners In The 2004 Townsend OLIMPIC Games


The quadrennial Summer Olympic Games held in Athens may have finished recently, but Fred Townsend?s seventh OLIMPIC (Overall Life Insurance Measures of Performance for Insurance Companies) Games are being contested right here in National Underwriter.

New readers (new subscribers since 2001) may find this article “Greek to them,” but we assure you of one thing: This article will not be Spartan in distributing medals.

Competition is limited to the 100 largest U.S. life insurers (each exceeding $4 billion in invested assets at 12/31/03), and awards are based on 2003 operating results.

AGC Life, essentially a holding company for various American General life insurance companies, took advantage of its unique corporate structure to win gold medals in 7 of the 23 events. AGC Life?s assets are 96% invested in subsidiary life insurers and 4% invested in high quality bonds.

Had AGC Life been eliminated from the competition for performance-enhancing subsidiary transactions, or for steroid bonds, both Swiss Re and United Healthcare would have been declared winners of 3 events each. However, no protests were filed by the Chief Athletic Officers of any competitors.

Therefore, AGC Life won 7 gold medals, Swiss Re Life & Health won 2 gold medals, and 14 companies each won one gold medal in the 2004 OLIMPIC Games.

In the race for total medals, AGC Life won 8 medals. Six companies each won 3: AFLAC, American National, Jefferson-Pilot, Nationwide Life and Annuity, Swiss Re and United Healthcare. Nine companies each won 2 medals, and 25 companies each won one.

What follows are the results in each of the contested categories.


High Jump: Companies build the highest ratio of total surplus (statutory surplus, asset valuation reserve and interest maintenance reserve) to assets at risk (invested assets less policy loans). Western & Southern Life was dethroned by AGC Life after winning the 3 previous gold medals. Among the more traditional life insurers, Hartford Life & Accident won silver in 2004 after winning bronze in 2000.

Long Jump: Largest percent gain in total surplus from 1999 to 2003. Swiss Re Life & Health won on the strength of surplus infusions and mergers during the last 4 years.

Hop, Skip and Jump: In the triple jump, companies may change their asset mix, restructure their liabilities and raise surplus, to create a high Risk-Based Capital ratio. Farmers New World won in 2004, while State Farm captured its third consecutive bronze medal.

100 Meter Dash: Companies turning over their bond portfolio quickest in 2003.

Guardian Life had a 64% turnover ratio in 2003, edging out ING Life & Annuity.

Marathon: Companies turning over their bond portfolio slowest in 2003. AGC Life won the gold medal, while silver medalist American National won its fifth medal in the last 5 OLIMPIC GAMES.

Steeplechase: Companies stepping through treacherous investment choices to build an investment portfolio with the lowest Asset Valuation Reserve requirements (lowest ratio of Maximum AVR to Total Surplus). AGC Life also won this event due to its unique corporate structure.

Shot Put: Longest movement in invested assets. Federal Kemper increased its invested assets by 179%, by coinsuring Kemper Investors Life Insurance Company.

Javelin Toss: Longest movement in direct premiums written. Swiss Re increased its direct premiums written by 310%, by acquiring Lincoln National Re and Swiss-Am Re and increasing its nominal base of direct premiums written.


Sprint: Shortest weighted maturity on traditional bonds. AGC Life edged out United Healthcare for the shortest traditional bond portfolio.

Team Pursuit: Highest mix of traditional bonds to total bonds. Standard Insurance edged out AFLAC for the gold medal for the second consecutive time, as both companies won medals in this event for the sixth consecutive OLIMPIC Games.


Balance Beam: Companies tumble their assets and stand on their heads, without a misstep, to achieve the highest net yield on mean invested assets. Intercompany dividend payments enabled AGC Life to edge out United Healthcare for the gold medal.

Vault: Companies invest the highest percentage of their bonds in AAA, AA and A rated bonds. In one of the closest competitions in this OLIMPIC Games, AGC Life (recently acquired by AIG) edged out American Life (an existing AIG subsidiary) by the narrowest of margins.

Uneven Parallel Bars: The qualifying round requires companies to have no delinquencies or restructures in their mortgage loan portfolio. The final round awards medals to the companies with the highest ratios of mortgage loans to total invested assets.

American United edged Nationwide Life & Annuity for the gold medal.


Platform Diving: Companies whose bond market values had the fewest ripples (lowest percent change in bond values). Great American edged out Jefferson-Pilot for the gold medal with a positive .007 percent gain vs. a .007 percent loss.

Springboard Diving: Companies whose bond market values had the least splash (lowest percent change in surplus). AGC Life had the lowest absolute percent change.

Synchronized Swimming: Companies with the largest pool of liquid assets, as a percent of demand liabilities. Monumental Life won the gold medal in 2004, while Teachers Insurance won gold, silver and bronze, respectively, in the last 3 OLIMPIC Games.


Greco-Roman: The qualifying round required companies to have foreclosed real estate holdings at the beginning of 2003, and grappling above the waist (waste?), throw out all of their foreclosed real estate during 2003. Medals go to companies with the highest percent of their invested assets in foreclosed real estate at the beginning of 2003 and none at the end of 2003. Continental Assurance edged out John Hancock by .03 percent to win the gold medal.

Freestyle: The qualifying round required mortgage loans to exceed 10% of invested assets at 12/31/02. Grappling below the waist (see pun above), companies earn medals by throwing out the most mortgage loans in 2003. Peoples Benefit won the gold medal, while Aetna Life has won 2 gold and 2 silver medals in the last 4 OLIMPIC Games.


Archery: Least average annual deviation in return on equity for 4 arrows 1999-2002, compared to 2003 ROE. State Farm won the gold medal, after winning the bronze and silver medals in the 2 previous OLIMPIC Games. The winning score has deteriorated over the last 4 OLIMPICS: 0.6%, 0.7%, 0.9% and 1.1%, respectively.

Beach Volleyball: Largest spike in portfolio net yield. United Healthcare won the gold medal, aided by the benefit of intercompany dividends in 2003.

Equestrian: Team Jumping medals to the managements with the highest return on equity in 2003, excluding horsing around with equity in affiliates. American General Life & Accident finished 1-2-1-1-1 in the last 5 OLIMPIC Games, with strong industrial life earnings on reduced equity.

Kayaking: Companies with the most rapid cash flow, as a percent of total income. Nationwide Life & Accident was flooded with new business and won the gold medal.

Yachting: The old Gentleman?s sport, nearly forgotten in today?s turbulent waters. Companies maintaining the highest mix of ordinary life premiums to total direct premiums written. Primerica Life, with its “Buy Term Insurance” emphasis, won the gold medal for the third consecutive OLIMPIC Games.

Congratulations to the 23 gold medalists and to the 41 life insurance companies winning one or more medals, in Fred Townsend?s 2004 OLIMPIC Games.

Frederick Townsend is an investment banker in Wolcott, Conn. He can be reached via e-mail at [email protected]. Laurie Dallaire is with Insurance Consulting and Analysis, LLC.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 3, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.