Contents. Corporate Statement 4. Shareholders Letter 5. Who We Are 6. Atlanta Life Insurance Company 7. Atlanta Life General Agency 7

Transcription

1 2011 Annual Report

2 Contents Corporate Statement 4 Shareholders Letter 5 Who We Are 6 Atlanta Life Insurance Company 7 Atlanta Life General Agency 7 Jackson Securities 8 Herndon Capital Management 9 Financials 11 Board of Directors

3 With more than a century of experience as a business entrepreneur, Atlanta Life s commitment to our triple bottom line is as strong ever. As a leader in corporate sustainability, and our subsidiaries continue to explore viable methods to help to increase energy and water conservation and further reduce our carbon footprint. We understand that our shareholders, customers and the communities we serve expect transparency and our firm pledge of financial, environmental and social citizenship. continues to review and seek ways to improve our sustainability practices. Corporate Sustainability Statement To Our Shareholders, Customers, Partners and Employees: In 2011, ( ALFG or the Company ) President & Chief Executive Officer William A. Clement retired. After the preparation of a strategic vision for the Company, the Board of Directors and the executive leadership of the business units developed position specifications and engaged an executive search firm to conduct a national search. That led to the recruitment of William J. Taggart ( Bill ) as the Company s President & CEO. Since joining the Company in July, 2011, Bill has engaged the leadership of ALFG s business units in refining their respective strategic plans and developing tactical actions to improve their businesses in five key areas: revenue generation, expense management, risk management, employee engagement, and customer satisfaction. The new strategic plans identified various areas to enhance performance within the business units. Moreover, ALFG s new business strategy involves expanding into two new high growth markets the U.S. financially underserved and the U.S. Small Business Private Equity markets. The combination of the strategic and tactical initiatives will position ALFG for sustained profitability. As we look back at 2011, ALFG s financial performance improved significantly over Here are a few financial and operational highlights: (ALFG) generated a net income of $2.3M a 59% increase over $1.4M in 2010, while increasing its cash by $2.5M a 128% increase over As a result, ALFG s Stockholders Equity is up 44% over Atlanta Life Insurance Company (ALIC) reported an upgrade of its A.M. financial strength and credit ratings from C+/bb- (Marginal/negative) to B-/b- (Fair/stable). In addition, RBC improved from 288 to 304, Capital and Surplus grew 10% from $10M to $11M; and the firm reinsured an additional $4.9M in new business. ALIC continued to broaden its income spectrum with its multi-line General Agency. Atlanta Life General Agency (ALGA) forged a partnership with Forethought Life Insurance Company to underwrite a proprietary preneed product. ALGA also partnered with Oklahoma-based Equity Life Association to market products for ALGA, and introduced the Atlanta Life Drug RX card. Jackson Securities (JS) has been navigating through the worst muni market in more than a decade. Despite market fears of mounting defaults and sluggish debt issuance, JS increased competitive underwriting by 25%, won 15 Request for Proposals (RFP s) and participated in 500 new issues totaling $53 billion. Yet, with mounting headwinds brought on by the broader economic challenges, and in an effort to create a more focused company and reduce expenses, JS has undergone a corporate restructuring that included staff and compensation reductions and the exit of their Wealth Management business. In addition, JS re-established its strategic partnership with Bank of America Merrill Lynch (BAML) and opened a GRC trading desk in Red Bank, New Jersey. The company continues to explore its options in a still depressed muni marketplace. Herndon Capital Management (HCM) assets under management increased 93% in As of December 2011, the firm s assets grew to $4.8 billion compared to the $2.48 billion at year-end In 2011, HCM managed approximately 170 client relationships and greatly expanded its distribution channels through numerous existing and new client platforms including wrap and model to name a couple. The firm s mutual fund (sub-advised) assets have grown to over $1.1 billion. HCM serves as sub-adviser for Scotia Asset Management (Pinnacle), Aston Asset Management (Aston/Herndon), and co-sub-adviser for Principal Financial and Delaware Investments (Optimum Fund). In addition, HCM moved from #14 to #12 on Black Enterprise (B.E.) 100s 2011 Asset Managers list. HCM effectively managed its infrastructure growth in 2011 and increased its headcount over 50%. As ALFG continues to implement its new strategic plan, we will continue to build on the recent strong financial performance, while re-engaging with traditional markets and cultivating new ones in order to become a premier provider of financial services. We believe we are positioned for growth and are excited over the prospects for 2012 and beyond. Sincerely, William J. Taggart President and Chief Executive Officer Egbert L. J. Perry Chairman of the Board of Directors Chairman and Chief Executive Officer The Integral Group, LLC 4 5

4 Who We Are Founded in 1905, Atlanta Life is a privately-held financial services company that consists of four operating units: Atlanta Life Insurance Company, Atlanta Life General Agency (a subsidiary of Atlanta Life Insurance Company), Herndon Capital Management and Jackson Securities. Atlanta Life Insurance Company (ALIC) is the oldest member of the Atlanta Life Financial Group s Family of Companies. Capabilities include the reinsurance of group life insurance and dental benefits. These companies provide a range of financial solutions to help institutional customers manage their insurance, investment banking and asset management needs. William J. Taggart is President and Chief Executive Officer. To learn more, please log on to Atlanta Life General Agency (ALGA), a subsidiary of Atlanta Life Insurance Company, is a multi-line insurance broker that offers personal & commercial lines of property & casualty coverages, including E&O and D&O as well as life, health and other financial service products. Leonard P. Grimes is President and Chief Executive Officer, Atlanta Life General Agency, Chief Operating Officer, Atlanta Life Insurance Company. For more information, please visit and respectively. 6 7

5 Jackson Securities (JS), founded in 1987 by the former Mayor Maynard H. Jackson, is renowned as an industry leader specializing in Municipal Finance, Corporate Underwriting and Equity Execution. Jackson Securities has participated in more than 3,500 issues in 49 states totaling in excess of $755 billion in cumulative par value. In 2007, acquired Jackson Securities creating a financial services powerhouse and the only privately held African-American services company of its kind in the country. Jackson Securities team of experienced financial professionals serves clients in the following areas: Public Finance Tax-Exempt Underwriting, Sales and Trading Institutional Sales and Trading Equity and Debt Capital Markets W. Bruce Gow is President. Founded and registered with the SEC in 2001, Herndon Capital Management (HCM) is an institutional investment management firm specializing in large and mid capitalization equity strategies. Herndon Capital Management offerings include five investment products: Large Cap Core International, managed by Kenneth R. Holley, CFA; Large Cap US Growth, managed by Drake J. Craig, CFA; Large Cap US Value, managed by Randell A. Cain, Jr., CFA; Mid Cap US Value, managed by Randell A. Cain, Jr., CFA; and Large Cap US Core, managed by Holley, Craig and Cain, collectively. In addition, the firm is the sub-adviser for a Pinnacle fund [Fund Manager, Scotia Asset Management, L.P.], the Aston/Herndon Large Cap Value Fund [Fund Manager, Aston Asset Management, Ticker: AALIX], and the co-sub-adviser for the Optimum Large Cap Value Fund [Fund Manager, Delaware Management Company, Ticker: OALVX] and the Prinicpal Large Cap Value Fund I [Fund Manager, Principal Management Corporation, Ticker: PAGBX]. Headquartered in Atlanta, Jackson Securities has offices in New York, Red Bank (NJ), Stamford (CT), Miami, Chicago, Dallas, Little Rock, Los Angeles, and San Francisco. Please visit Please log on to for more information. 8 9

6 10 Financials

7 ATLANTA LIFE FINANCIAL GROUP, INC. CONSOLIDATED BALANCE SHEETS (GAAP BASIS) December ASSETS Investments Fixed Maturities $ 12,659,550 $ 12,824,535 Equity Securities 517, ,555 Policy Loans 1,379,200 1,520,905 Total Investments 14,556,652 15,077,995 OTHER ASSETS Cash and Cash Equivalents 4,468,807 2,152,631 Accrued Investment Income 264, ,031 Premiums And Other Receivables 81,319,083 96,318,719 Reinsurance Recoverable 27,558,684 33,564,219 Investment Management Fees Receivable 4,095,823 2,109,364 Broker Dealer Receivables 133, ,534 Deferred Income Taxes 543, ,225 Property And Equipment, Net 3,080,201 3,399,946 Funded Status Of Pension Plan 1,853,475 1,934,549 Goodwill 1,217,741 1,217,741 Other Assets 732,452 2,035,706 Total Assets 139,823, ,703,665 LIABILITIES Future Policy Benefits 111,665, ,024,583 Deferred Income 1,213,186 2,035,669 Other Liabilities 12,368,924 12,119,962 Total Liabilities 125,247, ,180,214 ATLANTA LIFE FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS) For the Year Ended December Premium Income, Net $ 42,132,782 $ 41,217,757 Investment Management Fees 13,743,020 6,482,789 Net Investment Income (536,078) (569,464) Net Investment Realized Gains 79, ,876 Broker Dealer Revenue 3,153,631 5,651,646 Other Income 1,666,035 1,861,100 Total Revenue 60,238,482 55,445,704 EXPENSES Benefits Incurred 37,514,342 36,946,617 Commissions 4,362,722 3,447,689 Other Expenses 16,123,555 13,612,139 Total Benefits and Expenses 58,000,619 54,006,445 Income (Loss) From Operations Before Income Tax Expense 2,237,863 1,439,259 Income Tax Expense 41,958 19,498 Net Income (Loss) 2,195,905 1,419,761 Net Income (Loss) Attributed To Noncontrolling Interest 1,298, ,394 Net Income (Loss) Attributed To Controlling Interest $ 897,271 $ 924,367 STOCKHOLDERS EQUITY Common Stocks Authorized 1,000,000 Shares Issued 55,192 and 55,288, respectively Treasury Stock (498,220) (400,000) Additional Paid-in Capital 1,128, ,109 Retained Earnings 10,045,505 10,675,888 Accumulated Other Comprehensive Income 2,214,442 2,121,940 Total ALFG Stockholders Equity 12,890,013 12,996,937 Noncontrolling Interests 1,686, ,509 Total Equity 14,576,647 13,601,446 Total Liabilities & STOCKHOLDERS Equity $ 139,823,972 $ 158,781,660 Note: The consolidated statements of income and the consolidated balance sheets (GAAP Basis) are currently unaudited

8 ATLANTA LIFE FINANCIAL GROUP, INC. STATEMENT OF FINANCIAL POSITION ATLANTA LIFE FINANCIAL GROUP, INC. STATEMENT OF OPERATIONS ASSETS Discussion on Significant Items As with other financial institutions, most of our assets are income producing investments. Atlanta Life Financial Group maintains an extremely high quality, risk-averse investment portfolio. REVENUE Net Premiums increased by $0.9m or 2% due primarily to the Net increase in New Premiums from Group Treaties and cancellations of unprofitable Group Treaties. On December 31, 2011, investments totaled $14.6m or 10.4% of total assets versus $15.1m or 10.5% reported in 2010.The high quality of the bond portfolio is reflected in the ratings and classifications with 100% of all bonds rated Class 1 as of December 31, 2011, with U.S. Government Bonds representing 44% of all bonds. Preferred and Common Stocks are 3.6% of total investments in Maintaining a high quality investment portfolio is an integral part of our investment philosophy. Premiums and Other Receivables decreased by 15.6% due to various settlements in Group Reinsurance Treaties whereas Reinsurance Recoverable primarily related to our 100% co-insurance with Mutual Savings, decreased by 17.9%. Net Investment Realized Gains decreased by $0.7m due to minimum activities in the sale of invested assets. Investment Management Fees increased by $7.3m or 112% due to increase in Assets under management from 2.5 billion in 2010 to 4.8 billion in Broker Dealer revenue decreased by $2.5m or 44.2% due to decreased activities in Municipal Underwriting and Taxable Fixed Income. Overall, Total Revenue increased by $4.8m or 9% due mainly to the strong performance of the Asset Management Business Unit. Investment Management fees receivable increased by 94% due to significant growth experienced in the asset management business unit. EXPENSES Total Benefits and Expenses increased in tandem with the increase in Revenues. LIABILITIES Liabilities decreased by 13.7% due primarily to corresponding reduction associated with the Group Reinsurance Receivables. OPERATING RESULTS Overall, Net Income increased by $0.8m or 55% due mainly to the strong performance attributable to the Asset Management Business Unit. STOCKHOLDERS EQUITY Total Equity increased by approximately 7%. This increase was due mainly to net income of $2.2m. William J. Taggart President and Chief Executive Officer Geoffrey C. Nnadi, MBA, CPA Executive Vice President and Chief Financial Officer Atlanta Life Insurance Company 14 15

9 ATLANTA LIFE FINANCIAL GROUP BOARD OF DIRECTORS (pictured left to right) Roy Barnes Founding Partner Barnes Law Group M. Alexis Scott Publisher Atlanta Daily World Egbert L.J. Perry Chairman of the Board of Directors Chairman and Chief Executive Officer The Integral Group, LLC (seated) William J. taggart President and Chief Executive Officer (seated) Roosevelt Giles Vice Chairman of the Board of Directors Chief Executive Officer EndPoint Consulting Group, LLC William J. Stanley, III, FAIA, NOMA Principal Stanley, Love-Stanley, P.C. 16

10 Herndon Plaza, 100 Auburn Avenue, NE Atlanta, GA