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Fourth Quarter 2014 Highlights

Financial Highlights as of December, 2014

Printable Version

For 167 years, Penn Mutual has been driven by our noble purpose to create a world of possibilities. As an original pioneer of mutual life insurance in America, we believe that life insurance is the center of a sound financial plan. Permanent life insurance provides a safety net through the protection it provides, builds cash value to allow you to do more in life, and makes an enduring impact for generations to come. Penn Mutual is committed to helping individuals, families and small businesses unlock life’s possibilities through life insurance and annuity solutions.

That commitment is evidenced by our 2014 milestone of reaching $100 billion of life insurance in force and dividends to policyholders of $39.5 million in 2014, the highest level of dividends since 2004. Penn Mutual achieved solid financial results in 2014, following our strong performance in 2013. Our financial strength and mutual structure allow us to stay focused on what matters—serving the best interests of our policyholders, as well as ensuring our long-term viability and well-being.

GAAP Financial Performance

Operating Income, which includes our insurance product and broker-dealer segments, for 2014, was $192.1 million, an increase of 20% compared to 2013.

Total Revenue supporting our insurance operations was $1,530.0 million for 2014, an increase of $242.1 million compared to 2013.

Total Benefits Paid to policyholders or their beneficiaries for 2014 totaled $620.5 million, which reflects the fulfillment of our promises to them.

Consolidated Net Income for 2014 was a record $177.7 million, which reflects higher income from the growth in our business segments and positive equity market trends, compared to $162.9 million for 2013.

Financial Strength

Total Surplus (Capital) totaled $1.89 billion at December 31, 2014, an increase of 22% from December 31, 2013. Surplus is the amount we set aside for unexpected losses and is our financial protection against business volatility. The company continues to be heavily focused on managing our financial strength. This gives our policyholders the confidence that Penn Mutual is positioned to meet its obligations to them today and well into the future.

Statutory Assets and Liabilities — Assets totaled $19.5 billion as of December 31, 2014, a strong 9% growth rate from 2013. Total liabilities were $17.7 billion as of December 31, 2014.

High Quality, Diversified Investment Portfolio

  • Penn Mutual holds a high-quality and well-diversified portfolio of assets with investment-grade bonds representing the single largest class of investments. As of December 31, 2014, cash and short-term and investment-grade bonds represented 86% of the company’s total invested assets (excluding policy loans).
  • With an average credit quality rating of A, Penn Mutual’s bond portfolio holds a high percentage of NAIC 1 and NAIC 2 rated, or investment grade bonds, which was 97% as of December 31, 2014, as classified by the National Association of Insurance Commissioners (NAIC).
  • Our second largest asset class, “Other Invested Assets and Alternative Assets,” represented 9% of the investment portfolio (excluding policy loans). Included in this growing asset class is our investment in Janney Montgomery Scott, LLC broker/dealer subsidiary; assets associated with our hedging activities, 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.

Sales

Life Insurance Sales for 2014 were $129.7 million. Sales in 2014 have a balanced mix, with 34% coming from whole life, which grew 55% from 2013 as a result of our focus on this product line.

Individual Life Insurance In-Force of $106.3 billion as of December 31, 2014, is the amount of life insurance protection that Penn Mutual provides to policyholders. Once again, this demonstrates that policyholders value the complete value of life insurance - both the protection and the cash accumulation - that our products offer.

New Annuity Sales for 2014 were $617.0 million. These sales are the result of strong product offerings and the role annuities play in our clients’ financial plans.

These results are reported according to Generally Accepted Accounting Principles in the United States of America (GAAP), unless otherwise noted. Life sales are reported on a life weighted-premium basis. Annuity sales are reported on a cash basis. Total surplus, statutory assets and investment portfolio information are reported according to a Statutory Accounting basis.

© 2015 The Penn Mutual Life Insurance Company, Philadelphia, PA 19172 www.pennmutual.com
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