Shared Interests

2013 Annual Report

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SHARED INTERESTS

Guardian provides personalized service and a full range of solutions such as whole life, term life, group long term disability, individual disability, and The Living Balance Sheet® to help fulfill our clients' most meaningful promises to themselves and their loved ones. The true-life client videos below showcase Guardian's shared interests with our clients in everything we do.

TO OUR POLICYHOLDERS

  • 2013 was another strong year for Guardian, and it is with pride that I present the company's annual results.

    We performed despite challenges in the markets. The economic recovery was slow, interest rates remained low, and the political landscape in Washington created uncertainty. Nonetheless, we embraced change and moved forward in ways that benefited our clients and our 8,000 combined employees and financial professionals in the field.

    Guardian has been around for 153 years, but we’re not resting on our laurels. We are developing new products and services to ensure we are here for our clients for generations to come. As one of our founders, Hugo Wesendonck, said: "A life insurance company should live forever." You only accomplish that by being innovative, flexible, and willing to challenge the status quo.

    2013 was our fifth consecutive year of capital growth, ending the year at $6.1 billion. Sales were up in almost all actively marketed products. Consolidated net investment income grew 2.0% to $2.1 billion.

    Our high ratings were affirmed by all four major credit agencies – Fitch, Standard & Poor’s, Moody’s, and A.M. Best – a testament to our financial strength. We have retained the same ratings since 2008, when we were the only major life insurance company upgraded by two rating agencies during the financial crisis.

    These financial results allowed us to declare another strong dividend payout of $776 million to our whole life policyholders. As a mutual company, we enjoy a shared interest with our policyholders, who are also our owners. As owners, our policyholders share in Guardian’s actual financial results

  • through annual dividends. But having a shared interest means even more than this. Being a mutual company allows us to invest for the future without worrying about the short-term interests and demands of Wall Street. Instead of seeking quick-fix gains by making risky investments, our focus is always on building a strong financial foundation that will serve us well not only today, but in the years ahead.

    As for what our future might look like, Guardian is creating a host of new products and services with a focus on innovation. Here are just a few of our initiatives:

    TECHNOLOGY: Few things are more important than serving our clients better – giving them the products they want, when they want them, and where they want them. Along these lines, we have created Guardian Labs, which aims to accelerate our leverage of innovative products and services in our businesses.

    NEW BUSINESS OPPORTUNITIES: We see the Affordable Care Act (ACA) as an opportunity for our dental care insurance division. We are making our plans available on 48 of the small business insurance exchanges created under the ACA. In other words: we are going to be where our current and future clients are.

    PHILANTHROPY: We have rolled out a new non-profit program dedicated to a topic close to our heart: financial literacy. The program, called “Money Management for Life,” offers for-credit courses at select community colleges. We hope to give students the real-life financial tools to help them make the right decisions, whether it’s buying a home, purchasing insurance, or filling out a tax return. The first pilot program was launched at Capital Community College in Hartford, with a more extensive rollout planned for the coming year.

  • OUR VALUES: Over the years, we have built our values with the collective interests of all of our stakeholders in mind. What are those values? We do the right thing; we hold ourselves to very high standards; and people count. For example, diversity is a high priority when it comes to our clients, employees, and executive team. As we strive to serve current and future policyholders in the way they want to be reached, we’re making sure that we are serving women responsively. We have a sales force that is increasingly female and representative of our client base. These goals and aspirations also apply to our executive suite. Twenty-five percent of our board members are female, and the 2020 Women on Boards national campaign recently recognized us for this.

    Our financial results, diverse and energized workforce, and commitment to innovation are driven by these strong values that are woven into the fabric of our organization. It’s that kind of culture that should help Guardian continue to advance the shared interests of all of our stakeholders for yet another 150 years.

    Sincerely,
    Deanna M. Mulligan
    President and Chief Executive Officer

2013 was another strong year for Guardian, and it is with pride that I present the company's annual results.

We performed despite challenges in the markets. The economic recovery was slow, interest rates remained low, and the political landscape in Washington created uncertainty. Nonetheless, we embraced change and moved forward in ways that benefited our clients and our 8,000 combined employees and financial professionals in the field.

Guardian has been around for 153 years, but we’re not resting on our laurels. We are developing new products and services to ensure we are here for our clients for generations to come. As one of our founders, Hugo Wesendonck, said: "A life insurance company should live forever." You only accomplish that by being innovative, flexible, and willing to challenge the status quo.

2013 was our fifth consecutive year of capital growth, ending the year at $6.1 billion. Sales were up in almost all actively marketed products. Consolidated net investment income grew 2.0% to $2.1 billion.

Our high ratings were affirmed by all four major credit agencies – Fitch, Standard & Poor’s, Moody’s, and A.M. Best – a testament to our financial strength. We have retained the same ratings since 2008, when we were the only major life insurance company upgraded by two rating agencies during the financial crisis.

These financial results allowed us to declare another strong dividend payout of $776 million to our whole life policyholders. As a mutual company, we enjoy a shared interest with our policyholders, who are also our owners. As owners, our policyholders share in Guardian’s actual financial results

through annual dividends. But having a shared interest means even more than this. Being a mutual company allows us to invest for the future without worrying about the short-term interests and demands of Wall Street. Instead of seeking quick-fix gains by making risky investments, our focus is always on building a strong financial foundation that will serve us well not only today, but in the years ahead.

As for what our future might look like, Guardian is creating a host of new products and services with a focus on innovation. Here are just a few of our initiatives:

TECHNOLOGY: Few things are more important than serving our clients better – giving them the products they want, when they want them, and where they want them. Along these lines, we have created Guardian Labs, which aims to accelerate our leverage of innovative products and services in our businesses.

NEW BUSINESS OPPORTUNITIES: We see the Affordable Care Act (ACA) as an opportunity for our dental care insurance division. We are making our plans available on 48 of the small business insurance exchanges created under the ACA. In other words: we are going to be where our current and future clients are.

PHILANTHROPY: We have rolled out a new non-profit program dedicated to a topic close to our heart: financial literacy. The program, called “Money Management for Life,” offers for-credit courses at select community colleges. We hope to give students the real-life financial tools to help them make the right decisions, whether it’s buying a home, purchasing insurance, or filling out a tax return. The first pilot program was launched at Capital Community College in Hartford, with a more extensive rollout planned for the coming year.

OUR VALUES: Over the years, we have built our values with the collective interests of all of our stakeholders in mind. What are those values? We do the right thing; we hold ourselves to very high standards; and people count. For example, diversity is a high priority when it comes to our clients, employees, and executive team. As we strive to serve current and future policyholders in the way they want to be reached, we’re making sure that we are serving women responsively. We have a sales force that is increasingly female and representative of our client base. These goals and aspirations also apply to our executive suite. Twenty-five percent of our board members are female, and the 2020 Women on Boards national campaign recently recognized us for this.

Our financial results, diverse and energized workforce, and commitment to innovation are driven by these strong values that are woven into the fabric of our organization. It’s that kind of culture that should help Guardian continue to advance the shared interests of all of our stakeholders for yet another 150 years.

Sincerely,
Deanna M. Mulligan
President and Chief Executive Officer

FINANCIALS

  • Financial Highlights


    2013


    $776 Million

    Whole life dividends declared

    $4.9 Billion

    Benefits paid to policyholders
    (on a consolidated basis)

    $6.1 Billion

    Capital

    $1,204 Million

    Statutory gain from operations,
    before taxes and dividends to policyholders
    (on a consolidated basis)

    $307 Billion

    Life insurance in force
    (on a consolidated basis)

    2012


    $805 Million

    Whole life dividends declared

    $4.7 Billion

    Benefits paid to policyholders
    (on a consolidated basis)

    $5.8 Billion

    Capital

    $1,165 Million

    Statutory gain from operations,
    before taxes and dividends to policyholders
    (on a consolidated basis)

    $289 Billion

    Life insurance in force
    (on a consolidated basis)

  • Statutory Basis Balance Sheets


    As of December 31 (In millions) 2013 2012*
    ADMITTED ASSETS
    Bonds $27,380 $25,186
    Unaffiliated common and
    preferred stocks
    634 978
    Investments in affiliates 1,016 1,008
    Mortgage loans 2,838 3,069
    Private and real estate equity 1,425 1,368
    Policy loans 3,104 3,000
    Receivable for securities and other
    invested assets
    683 579
    Cash and short-term investments 631 290
    TOTAL INVESTED ASSETS 37,711 35,478
    Due and accrued investment
    income
    346 340
    Premiums deferred and uncollected 924 892
    Net deferred tax asset 706 642
    Reinsurance recoverable from
    affiliate
    2,196 0
    Other assets 183 177
    TOTAL ADMITTED ASSETS $42,066 $37,529
    2013 2012*
    LIABILITIES AND SURPLUS
    Reserves for policy benefits 32,685 28,621
    Policyholder dividends payable and other contract liabilities 1,970 1,927
    Interest maintenance reserve 387 422
    Asset valuation reserve 686 608
    Amounts due to brokers and other
    liabilities
    1,326 1,199
    TOTAL LIABILITIES 37,054 32,777
    Policyholders' surplus 4,616 4,356
    Surplus note 396 396
    TOTAL LIABILITIES AND SURPLUS $42,066 $37,529

    Results Are Guardian Life Only (Not Consolidated)
    The condensed financial statements of The Guardian Life Insurance Company of America have been derived from audited statutory financial statements, which are available upon request.

    * Certain amounts from 2012 have been reclassified to conform to the current year presentation.

  • Statutory Basis Statements of Operations


    For the Year Ended December 31 (In millions) 2013 2012*
    REVENUES
    Premiums, annuity considerations,
    and fund deposits
    $8,734 $5,998
    Net investment income 1,765 1,728
    Other income 407 241
    TOTAL REVENUE 10,906 7,967
    BENEFITS AND EXPENSES
    Benefit payments to policyholders and beneficiaries 3,659 3,333
    Net increase to policy benefit reserves 4,051 1,889
    Commissions and operating expenses 2,071 1,669
    TOTAL BENEFITS AND EXPENSES 9,781 6,891
    2013 2012*
    Gain from operations before
    policyholder dividends and taxes
    1,125 1,076
    Policyholder dividends (770) (792)
    Gain from operations before taxes and
    realized gains
    355 284
    Income tax expense (135) (60)
    Income from operations before net
    realized capital gains
    220 224
    Net realized capital gains 66 29
    NET INCOME $286 $253

    Results Are Guardian Life Only (Not Consolidated)
    The condensed financial statements of The Guardian Life Insurance Company of America have been derived from audited statutory financial statements, which are available upon request.

    * Certain amounts from 2012 have been reclassified to conform to the current year presentation.

  • Policyholders Dividends Declared


    2006 619
    2007 664
    2008 723
    2009 712
    2010 740
    2011 795
    2012 805
    2013 776

    Results in $ millions

  • Capital


    2006 4,307
    2007 4,628
    2008 4,256
    2009 4,920
    2010 5,343
    2011 5,460
    2012 5,762
    2013 6,089

    Results in $ millions

  • Statutory Pre-tax Operating Income Before Dividends


    2006 1,013
    2007 1,142
    2008 986
    2009 1,015
    2010 1,082
    2011 1,101
    2012 1,165
    2013 1,204

    Results in $ millions

Financial Highlights


2013


$776 Million

Whole life dividends declared

$4.9 Billion

Benefits paid to policyholders
(on a consolidated basis)

$6.1 Billion

Capital

$1,204 Million

Statutory gain from operations,
before taxes and dividends to policyholders
(on a consolidated basis)

$307 Billion

Life insurance in force
(on a consolidated basis)

2012


$805 Million

Whole life dividends declared

$4.7 Billion

Benefits paid to policyholders
(on a consolidated basis)

$5.8 Billion

Capital

$1,165 Million

Statutory gain from operations,
before taxes and dividends to policyholders
(on a consolidated basis)

$289 Billion

Life insurance in force
(on a consolidated basis)

Statutory Basis Balance Sheets


As of December 31 (In millions) 2013 2012*
ADMITTED ASSETS
Bonds $27,380 $25,186
Unaffiliated common and
preferred stocks
634 978
Investments in affiliates 1,016 1,008
Mortgage loans 2,838 3,069
Private and real estate equity 1,425 1,368
Policy loans 3,104 3,000
Receivable for securities and other
invested assets
683 579
Cash and short-term investments 631 290
TOTAL INVESTED ASSETS 37,711 35,478
Due and accrued investment
income
346 340
Premiums deferred and uncollected 924 892
Net deferred tax asset 706 642
Reinsurance recoverable from
affiliate
2,196 0
Other assets 183 177
TOTAL ADMITTED ASSETS $42,066 $37,529
2013 2012*
LIABILITIES AND SURPLUS
Reserves for policy benefits 32,685 28,621
Policyholder dividends payable and other contract liabilities 1,970 1,927
Interest maintenance reserve 387 422
Asset valuation reserve 686 608
Amounts due to brokers and other
liabilities
1,326 1,199
TOTAL LIABILITIES 37,054 32,777
Policyholders' surplus 4,616 4,356
Surplus note 396 396
TOTAL LIABILITIES AND SURPLUS $42,066 $37,529

Results Are Guardian Life Only (Not Consolidated)
The condensed financial statements of The Guardian Life Insurance Company of America have been derived from audited statutory financial statements, which are available upon request.

* Certain amounts from 2012 have been reclassified to conform to the current year presentation.

Statutory Basis Statements of Operations


For the Year Ended December 31 (In millions) 2013 2012*
REVENUES
Premiums, annuity considerations,
and fund deposits
$8,734 $5,998
Net investment income 1,765 1,728
Other income 407 241
TOTAL REVENUE 10,906 7,967
BENEFITS AND EXPENSES
Benefit payments to policyholders and beneficiaries 3,659 3,333
Net increase to policy benefit reserves 4,051 1,889
Commissions and operating expenses 2,071 1,669
TOTAL BENEFITS AND EXPENSES 9,781 6,891
2013 2012*
Gain from operations before
policyholder dividends and taxes
1,125 1,076
Policyholder dividends (770) (792)
Gain from operations before taxes and
realized gains
355 284
Income tax expense (135) (60)
Income from operations before net
realized capital gains
220 224
Net realized capital gains 66 29
NET INCOME $286 $253

Results Are Guardian Life Only (Not Consolidated)
The condensed financial statements of The Guardian Life Insurance Company of America have been derived from audited statutory financial statements, which are available upon request.

* Certain amounts from 2012 have been reclassified to conform to the current year presentation.

Policyholders Dividends Declared


2006 619
2007 664
2008 723
2009 712
2010 740
2011 795
2012 805
2013 776

Results in $ millions

Capital


2006 4,307
2007 4,628
2008 4,256
2009 4,920
2010 5,343
2011 5,460
2012 5,762
2013 6,089

Results in $ millions

Statutory Pre-tax Operating Income Before Dividends


2006 1,013
2007 1,142
2008 986
2009 1,015
2010 1,082
2011 1,101
2012 1,165
2013 1,204

Results in $ millions

EXECUTIVE MANAGEMENT

Image

Deanna M. Mulligan

President and Chief Executive Officer

Image

Robert E. Broatch, CPA

Executive Vice President, Chief Financial Officer, Risk and Operational Excellence

Image

D. Scott Dolfi

Chief Operating Officer

Image

Tracy L. Rich

Executive Vice President, General Counsel and Corporate Secretary

Image

Matthew H. Scanlan, CFA

Chief Executive Officer
RS Investment Management Co. LLC

Image

Thomas G. Sorell, CFA

Executive Vice President and Chief Investment Officer

Image

Bradley A. Thomas

Executive Vice President, Human Resources

BOARD OF DIRECTORS

John J. Brennan
Chairman Emeritus, Vanguard

Robert E. Broatch, CPA
Executive Vice President, Chief Financial Officer, Risk and Operational Excellence, The Guardian Life Insurance Company of America

Lloyd E. Campbell
Consultant, Spencer Stuart

Richard E. Cavanagh
Retired President and Chief Executive Officer,
The Conference Board, Inc.

Nancy E. Cooper
Former CFO, CA Technologies, Inc.

James E. Daley
Retired Executive Vice President and Chief Financial Officer, Electronic Data Systems Corporation

Deborah L. Duncan
Executive Vice President and Chief Financial Officer, Fremont Group

Paul B. Guenther
Retired President, PaineWebber Group, Inc.

Deanna M. Mulligan
President and Chief Executive Officer, The Guardian Life Insurance Company of America

John A. Somers
Former Executive Vice President and Retired Head of Fixed Income and Real Estate, Teachers Insurance and Annuity Association

Stephen J. Squeri
Group President, Global Corporate Services, American Express Company

Donald C. Waite III
Director, Office of Executives in Residence and Adjunct Professor, Columbia Graduate School of Business

Independent Accountants

PricewaterhouseCoopers LLP
New York, NY

CONTACT US

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