This is Life Insurance.

The Penn Mutual Life Insurance Company

2016 Annual Report

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To Our Valued Policyholders

As we enter our 170th year of service to our policyholders, I want to thank you for the trust and confidence you have placed in us.  Our mission is simple—to help you live life with confidence.  Through the guidance of your trusted adviser, you have made a sound financial decision for your family, business and yourself.  We believe there’s a story behind every life insurance policy, and in this annual report, you can read about how a wonderful family and community has truly benefited from the miracle of life insurance.

I’m pleased to take this opportunity to share with you our continued progress and key highlights of 2016.  Our accomplishments reflect the commitment to our long term strategy of being a life insurance leader.

The Penn Mutual story of 2016 tells of several key accomplishments.

  • 2016 was the ninth consecutive year that we grew or maintained our annual dividend scale.  In fact, Penn Mutual is the only company among other major whole life providers that has not decreased their dividend scale in the post-recession era.
  • We maintained an AM Best rating of A or higher for 75 years—only 1 of 12 life/health insurers to do so,
    earning membership on that list for 88 straight years.
  • We acquired Vantis Life Insurance Company, which will allow us to expand our reach of our life insurance and annuity products through Vantis Life’s direct-to-consumer and bank channels.  These channels will complement our highly regarded adviser network.

The addition of Vantis Life and the continued growth of our adviser network demonstrate our commitment to reaching more Americans with the value that you’ve come to experience from your Penn Mutual life insurance and annuity products.  In fact, 2016 represented our best life insurance sales year ever!

At Penn Mutual, we take pride in our policyholder-first mindset.  As a financially strong, mutual life insurer, you can be assured that our commitment to delivering you great value is our number one priority.

2016 was another exceptional year for Penn Mutual, and I encourage you to read more about our results in our annual report.

On behalf of the entire team here at Penn Mutual, thank you.


Eileen C. McDonnell
Chairman & Chief Executive Officer


This is Life Insurance
Andy Derr’s Story

How one man’s life insurance left a positive impact on his family and community


Craig Schafer met Andy Derr at a charity golf outing outside Philadelphia and forged a business relationship that grew into a friendship.   Craig, an adviser with 1847Financial, powered by Penn Mutual, convinced Andy that life insurance was key to his financial plan because it would ensure that his family would be protected and give Andy the flexibility to live life with confidence and achieve his dreams.  Little did they know how many people would benefit from Andy’s decision to purchase life insurance.

Andy was diagnosed with clear cell kidney cancer in 2003, at age 42 and soon became an active participant in his disease, doing countless hours of research.  His wife, Joann, said, “His question was never ‘why me?’ It was simply, ‘why?’  Andy became an advocate of those suffering with kidney cancer.”

Fortunately, after removal of his left kidney, Andy learned that the cancer had not spread, and eventually he was “cured.”  But 11 years later, the cancer returned in his lungs, stage IV.  While healing from surgery, Andy spent hours researching kidney cancer treatments and clinical trials.  He traveled to major oncology conferences and joined patient forums, supporting other kidney cancer patients along the way.  Andy also consulted with the top kidney cancer physicians in the world, travelling to Memorial Sloan Kettering in New York City, the Cleveland Clinic and to Fox Chase Cancer Center in Philadelphia.  The consensus was the same—that Andy should enroll in a clinical trial—one that was open only five miles from the Derr family’s home, at Lehigh Valley Health Network, under the direction of renowned oncologist, Dr. Suresh Nair.

Andy was eager to become part of kidney cancer research and history.  Unfortunately, the clinical trial did not work, but he immediately compiled his list for top second-line treatments.  Although the drug had not yet been approved and would not be covered by Andy’s health insurance, his and his doctor’s persistence paid off, as Bristol Myer Squibb provided Andy with the drug, free for a year.  Andy and his family were ecstatic at this news.  With a hopeful heart, Andy began his treatments.  His immune system was fighting, and Andy was living and loving life, even able to vacation in Italy with his family.

But soon, Andy learned that he had a brain metastasis and began research for a third line of treatment.  It became obvious that time was running out.  But during that time, he encouraged his family to tell each other how much they loved each other each day. He would always say, “Family first. Always.”  After another hospitalization, Andy called his family together and asked them to take him home.  He was brought home, on hospice, and died peacefully nine days later, surrounded in those final days by the love of his family and friends, including his adviser, Craig Schafer.


Craig Schafer: “I was invited to a family meeting right before Andy died, and at that meeting, Andy shared his last wish—for his family to create a foundation in his name to help other kidney cancer patients through research and patient education and advocacy.  If it weren’t for the proceeds from Andy's life insurance policies, the Andy Derr Foundation could never have gotten off the ground.”

Visit for more information.

Joann Derr: “My husband wanted other people to have the resources for kidney cancer education and be able to compare notes with other patients.  The foundation is having its first annual Kidney Cancer Community Day this spring, where doctors and patients will gather to listen to the latest research and share their journeys.  More than 200 people were touched by our first event, an Oktoberfest.  To think that all these people are being helped because of Andy’s life insurance is amazing.  Sometimes people think you don’t need it now, but life changes in a moment.  And Craig’s working with Andy was so important to our family.  We have the utmost respect and trust in Craig—he’s become a family friend.”

Megan Derr: “My dad always had his I’s dotted and T’s crossed.  His life insurance program took one entire area of stress away from our family.  My brother, my mom and I knew we could do things and our lifestyle wouldn’t change.  In fact, my mom was able to purchase a shore house, which was one of their dreams.  And while he was ill, his disability of waiver premium gave him and us peace of mind.  And on top of us being able to keep our lifestyles intact, starting that foundation in his name took the worst days of our lives and turned them into a positive—that’s what my dad was all about.  Today, I’m not only an advocate for kidney cancer, but I’m also an advocate for life insurance.  I know that while I’m young and healthy, it’s the best time to purchase life insurance, and I’ve done just that.  I am indebted to Craig and Penn Mutual.”

2016 Financial Results

Consolidated GAAP Financial Statements ($ in thousands)

  • Assets +

    Debt securities, at fair value: $ 12,533,118

    Equity securities, at fair value: 123,225

    Real estate, net of accumulated depreciation: 38,507

    Other invested assets: 1,829,033

    Total investments: 14,523,883

    Other assets: 6,876,360

    Separate account assets: 7,356,965

    Total assets: $28,757,208


  • Liablities +

    Reserves and funds for payment of future benefits: $ 12,913,340

    Accrued income tax payable: 703,992

    Other liabilities: 4,420,156

    Separate account liabilities: 7,356,965

    Total liabilities: 25,394,453


  • Equity +

    Accumulated other comprehensive income: 260,150

    Retained earnings: 3,065,873

    Noncontrolling Interest: 36,732

    Total equity: 3,362,755

  • Total +

    Total liabilities and equity $28,757,208


  • Revenues +

    Premium and other product revenue: $1,164,693

    Investment income: 658,767

    Broker Dealer Fees and Commissions:  630,828

    Other revenue (including realized capital gains and (losses)): 82,177

    Total revenue: $2,536,465


  • Benefits and Expenses +

    Policyholder benefits: 629,305

    Change in reserve for payment of future benefits: 576,060

    Policyholder dividends: 55,637

    Broker Dealer Sales expense: 364,315

    Other expenses: 631,999

    Total expenses: $2,257,316


  • Net Income +

    Income before income taxes: $279,149

    Income tax expenses: 67,455

    Net income: 211,694

    Net income attributable to non controlling interest: (878)

    Net income attributable to Penn Mutual: $210,816


  • Printable PDF +

The Story Behind Our Strength

Penn Mutual is passionate about serving our policyholders.  Along with our team of advisers, we empower our clients to make sound financial decisions now and into the future. We are a pioneer of mutual life insurance in America, and believe that life insurance is the center of a sound financial plan.

Because of our mutual structure, our decisions are always made with our policyholders’ long-term best interests in mind.

Because of our financial strength, we have faithfully kept all our promises to our policyholders and contract owners.

Because we are a relationship-based company, we are a valued partner to our advisers, who help their clients make smart decisions and offer the support, solutions and guidance to make good things in life possible.

By staying true to these foundational elements, we have always been there for our policyholders, their families and businesses.  Penn Mutual is proud that as we enter our 170th year of service to policyholders, the story behind our strength continues, and positions us for a bright future.

Financial Strength

Total Surplus (Capital), Total Assets, and Investment Portfolio information are reported according to a Statutory Accounting basis.

Total Liabilities were $20.4, $19.0, $17.6, $16.4, and $14.6, billion for years 2016-2012 respectively.

  • One of our foundational elements is, and always will be, our financial strength and stability. That foundation begins with capital strength.

    Total Surplus (Capital) was a very strong $1.9 billion as of December 31, 2016. Total surplus is the amount set aside for unexpected losses from operations, and is our financial protection against business volatility. Our surplus position is a testament to our high-quality investment portfolio and our ability to manage the guarantees we provide our policyholders and contract owners through appropriate investment techniques.


    Penn Mutual currently has more than enough surplus to meet rating agency capital requirements for our high financial strength ratings. Additionally, surplus is one of the key indicators of the company’s long-term financial strength and stability, which helps ensure we continue to meet the future obligations to policyholders.

    Total Statutory Assets Under Management, including the funds we safeguard for our policyholders, was $22.3 billion, an increase of $1.4 billion from 2015.

High Quality Investment Portfolio

  • We manage our investments with one goal in mind: to meet our obligations to policyholders while protecting the long-term viability of Penn Mutual. Our investment philosophy stresses rigorous asset/liability management diversification, good liquidity, and a conservative approach to portfolio risk. This philosophy has provided us with strong and superior performance. Because of our mutual structure, we can take a longer-term view of the economy, which helps us mitigate market volatility.


    • Penn Mutual holds a high-quality portfolio of assets, with investment grade bonds representing the single largest class of investments. As of December 31, 2016, 83.5 percent, or $11.0 billion, of the company’s total invested assets of $13.1 billion (excluding policy loans), represented cash, short-term and investment grade bonds.
    • Our second largest asset class, “Other Invested Assets and Alternative Assets,” represented 9.3 percent of the investment portfolio (excluding policy loans). Included in this growing asset class is our investment in Janney Montgomery Scott LLC, one of our broker dealer subsidiaries; assets associated with our successful equity hedging program, which allows us to manage the guarantees we provide within our living benefits for our clients; and alternative assets, consisting of our investments in limited partnerships.

    Our policyholders can take comfort in knowing that Penn Mutual takes a conservative approach to investment risk. We avoid any actions that might jeopardize our ability to keep the promises we make to our valued policyholders. The charts below feature our bond portfolio and compare our conservative approach versus that of the industry.

    With an average credit quality rating of A-, Penn Mutual holds a higher percentage of NAIC 1 bonds than the industry, as classified by the National Association of Insurance Commissioners (NAIC). And, Penn Mutual holds a lower percentage of below investment grade bonds than the industry.

    This is the story behind our strength. You can be confident that your life insurance policy or annuity contract has the full backing of a company with an incomparable record of integrity—a company with a 170-year history of safety, stability and security.

Financial Performance

  • Our financial performance for 2016 is a direct result of our historic strength and stability, even through a challenging economic and investment environment. Unlike many companies, we built and maintained our surplus position to high levels during positive economic cycles, which has kept us in a very strong position. Because of this, we are able to take advantage of opportunities to build on our strong foundation.


    Our results for the 12 months ended December 31, 2016, underscore our continued focus on and commitment to meeting our obligations to our policy holders and contract owners and protecting Penn Mutual’s long-term viability. We acheived solid financial results for the year, following our strong performance in 2015.

    Benefits paid to our policyholders or their beneficiaries in 2016 totaled $629 million — the fullfillment of our promises to them.

    Total Revenue for the year was $2.5 billion. This includes premium and product revenue from life and annuity products, investment income on our assets, and broker dealer fees and commissions, which have shown solid growth over the past five years.

    Consolidated Net Income, which includes income from all business segments—Insurance Products, Broker/Dealer and Corporate—was a record $211 million, for the year ended December 31, 2016, compared to $209 million in 2015.

    We continue to be very pleased that throughout the economic and market challenges, the underlying operations of Penn Mutual continue to perform well and remain strong.

Sales Performance

  • Individual Life Insurance in-Force, the amount of life insurance protection we provide to policyholders, reached a new high of $128 billion, a very strong 11 percent increase over 2015. This growth demonstrates that policyholders value the protection and living benefits offered by Penn Mutual products based on the advice of their trusted advisors.


    Life insurance sales for the year were a record $177 million. This premium measures life sales based on internal formulas for specific products. Individual New Life Premiums were $437 million. Our results are evidence of our laser focus on life insurance as a key component of a financial plan.

    New Annuity Sales were a strong $559 million in 2016, surpassing our goal. These sales were the result of Penn Mutual’s solid product offerings and the role that annuities play in our clients’ financial plans.


Our Family & Leadership


Our Family of Companies

Penn Mutual

The Penn Insurance
& Annuity

& Kent, Inc.


Leap Systems

Vantis Life

Penn Mutual Asset Management, LLC (PMAM), a registered investment adviser and a wholly owned subsidiary of Penn Mutual, is focused on risk-based institutional asset management, advisory and fund operation services.  PMAM offers a wide range of tailored investment strategies and solutions to help meet the investment goals of their clients, while focusing on their mission to provide exceptional experience and service.  PMAM manages the investment portfolios of Penn Mutual and its subsidiaries’ general account.  In addition, PMAM serves as an investment adviser and manager of manager for the Penn Series Funds, Inc., a proprietary fund complex that offers diverse investment options within Penn Mutual’s variable life and annuity products.

David M. O’Malley
Chairman & Chief Executive Officer

The Penn Insurance & Annuity Company (PIA) is a wholly owned life insurance subsidiary of Penn Mutual.  Domiciled in Delaware, PIA maintains its operations in Horsham, PA and is licensed to do business in 48 states and the District of Columbia.  It markets its products through Penn Mutual’s distribution systems and has its in-force business serviced by the parent company.

Hornor, Townsend & Kent, Inc. (HTK), is a wholly owned broker/dealer subsidiary of Penn Mutual.  HTK provides a superior support network for enabling financial advisors to serve individuals and businesses through all life’s stages.  HTK financial advisors enjoy broad product choices, innovative technology tools and exciting networking events designed to build a successful practice that supports clients investment needs.  HTK also advances a better understanding of how life insurance and investments work together to help clients protect and grow their financial resources.

Michelle A. Barry, MSM
President & Chief Executive Officer

Janney Montgomery Scott LLC (Janney), a member of the Penn Mutual family since 1982, serves a national client base of individuals, corporations, institutions, and municipalities.  Janney provides strategic advice and innovative solutions through the firm’s experienced Private Client Group Financial Advisors, and Capital Markets professionals.  Janney is committed to delivering superior advice, service, and solutions to help its clients reach their long-term financial goals.

Timothy C. Scheve
President & Chief Executive Officer

Janney Montgomery Scott LLC is a member of the New York Stock Exchange (NYSE), the Financial Industry Regulatory Authority (FINRA), and the Securities Investor Protection Corporation (SIPC).

Leap Systems, LLC, an affiliate of Penn Mutual, is a leading provider of innovative financial systems for advisors throughout the United States and Canada.  Since its founding in 1980, Leap has been recognized by many of the world’s top financial institutions as a leader and trusted resource for achieving superior results and delivering an end-to-end financial solution.

Ande B. Frazier, CLU®, ChFC®, RICP
President & Chief Executive Officer

Vantis Life Insurance Company, established in 1942, became part of the Penn Mutual family in 2016.  From its inception, the Vantis Life’s primary goal has been to provide families with affordable life insurance and annuity products. The company markets its products through financial institutions and direct to the consumer. Vantis Life prides itself on providing simple, easy-to-afford products to hard working American families, and supporting these products with attentive and personal customer service.

Peter L. Tedone, CLU®
President & CEO

Our Leadership

Eileen C. McDonnell

Chairman, and Chief Executive Officer

David M. O’Malley

President & Chief Operating Officer

Susan T. Deakins, FSA, MAAA

Executive Vice President, Chief Financial Officer

and Treasurer

Thomas H. Harris, CLU®, ChFC®, FLMI

Executive Vice President, Distribution

Raymond Caucci, FSA, MAAA, ChFC®

Senior Vice President, Product Management,

Underwriting &  Advanced Markets

Greg Driscoll

Senior Vice President, Service

Operations & Chief Information Officer

Jeffrey Fleischman

Senior Vice President, Chief Marketing

& Digital Officer

Alida Moose, Ed.D

Senior Vice President,

Chief Human Resources Officer

Nina M. Mulrooney, CLU®, CPA, FLMI

Senior Vice President and General Auditor

Kevin T. Reynolds

Senior Vice President,

Chief Legal Officer

The Penn Mutual Board of Trustees

Joan Carter


UM Holdings, Ltd.

Edmond F. Notebaert

Former Healthcare Executive

Robert E. Chappell

Retired Chairman

The Penn Mutual Life Insurance Company

David M. O’Malley

President & Chief Operating Officer

The Penn Mutual Life Insurance Company

William R. Cook

Retired Chairman

BetzDearborn Inc.

Helen P. Pudlin

Retired Executive Vice President & General Counsel

PNC Financial Services Group, Inc.


James S. Hunt

Retired Executive Vice President and Chief Financial Officer

Disney Parks and Resorts Worldwide

Robert H. Rock


MLR Holdings LLC

Charisse R. Lillie

Fellow and Vice President, Community Investment

Executive Vice President

Comcast Foundation

Anthony M Santomero

Former President

Federal Reserve Bank of Philadelphia

Eileen C. McDonnell

Chairman & Chief Executive Officer

The Penn Mutual Life Insurance Company

Susan D. Waring

Retired Executive Vice President and

Chief Administrative Officer

State Farm Life Insurance Company

The 2018 Election of Trustees

Penn Mutual’s annual election of trustees will be held on Tuesday,  March 6, 2018, at 9:00 a.m. in the company’s office  at 600 Dresher Road, Horsham, PA.

All policyholders with policies in-force at the time of the election are eligible to vote. Voting can be done by mail, online or telephone. Proxy forms or additional information may be obtained through the Secretary’s office, 600 Dresher Road, Horsham, PA 19044.

Our Strength

Our legacy of financial strength, our mutual structure, and our long-term perspective continue to stand the test of time and are foundational to the company and our success. The rating agencies recognize this and have, once again, given us a vote of confidence in 2016, with a stable outlook, despite the challenging economy.

A.M. Best: A+ Superior

Penn Mutual’s A+ Superior rating, which was reaffirmed in March 2017, ranks the second highest out of 16 ratings.

A.M. Best’s Financial Strength Rating (FSR) is an opinion of an insurer’s ability to meet its obligations to policyholders. A.M. Best uses letter grades ranging from A++, the highest, to F, companies in liquidation. Rating modifiers and affiliation codes may also be associated  with these ratings.

Moody’s Investors Service: Aa3 Excellent

Penn Mutual’s Aa3 Excellent rating, which was reaffirmed in October 2016, ranks the fourth highest out of 21 ratings.

Moody’s uses a letter grade scale that ranges from Aaa, the highest rating, to C, the lowest rating. It also applies modifiers (1, 2 or 3) for ratings below Aaa to indicate the approximate rank of the company in a particular class. These ratings gradations provide investors with a system for measuring an insurance company’s ability to meet its policyholder claims and obligations.

Standard & Poor’s: A+ Strong

Penn Mutual’s A+ Strong rating, effective December 2016, ranks the fifth highest out of 16 ratings.

Standard and Poor’s uses a letter grade scale that ranges from AAA, the highest rating, to CCC, the lowest rating. Ratings from AA to B may be modified by a plus or minus sign to show relative standing within those grades. An insurer rated BBB or higher is regarded as having financial security characteristics that outweigh any vulnerability, and is highly likely to have the ability to meet financial commitments. An insurer rated A+ has strong financial security characteristics.

Our continued financial strength is not possible without your confidence in our ability to help you meet your financial need to protect your life and unlock the value of all of life’s possibilities. On behalf of Penn Mutual’s executive team, advisors, and all of our field and home office associates, we thank you for that strong vote of confidence and pledge to keep earning your trust in the years to come.

All guarantees are based upon the claim-paying ability of the issuer. Loans and other policy withdrawals will adversely impact cash values and/or death benefits, where you will receive less than the original principal.

The ratings quoted above apply only to Penn Mutual’s claims-paying ability and not to the products we offer or their underlying investments.

Investors should carefully consider the investment objectives, risks, charges and expenses of a variable insurance product before investing. Please read carefully the prospectuses for the relevant variable insurance product and its underlying investment options, which contain this and other information about the product. You can obtain a prospectus from your Penn Mutual financial professional or visit

Product and features may not be available in all states. Penn Mutual’s variable products are principally offered through Hornor, Townsend & Kent, Inc. (HTK), Registered Investment Advisor, Member FINRA/SIPC. HTK is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.


© 2017 The Penn Mutual Life Insurance Company, Philadelphia, PA 19172



This is Life Insurance.

This is Life Insurance.
This is Life Insurance.

This is Life Insurance.
This is Life Insurance.

This is Life Insurance.