Discusión de resultados

Year ended December 31, 2010 compared with the year ended December 31, 2009

The following is a summary of certain financial data of the Retirement Services segment for the years ended December 31, 2010 and 2009:

2010 2009

Premium income $ 6 $ 3

Fee income 387 331

Net investment income 399 383

Net realized investment losses (23) (23)

Total revenues 769 694

Policyholder benefits 222 231

Operating expenses 391 362

Total benefits and expenses 613 593

Income before income taxes 156 101

Income tax expense 38 25

Income from continuing operations $ 118 $ 76

Year ended December 31, Income statement data (In millions)

The following is a summary of the Retirement Services segment participant accounts at December 31, 2010 and 2009:

2010 2009

Participant accounts 4,409 4,201

December 31, (In thousands)

Net income for the Retirement Services segment increased by $42 million, or 55%, to $118 million during the year ended December 31, 2010 when compared to 2009. The increase is primarily related to a $56 million increase in fee income, $17 million lower amortization of DAC and an improvement in net interest margins partially offset by a $46 million increase in general insurance expenses due to increased participants.

Premium income increased by $3 million, or 100%, to $6 million for the year ended December 31, 2010 when compared to 2009. The increase is due to increased life annuitizations in the government market business.

Fee income increased by $56 million, or 17%, to $387 million for the year ended December 31, 2010 when compared to 2009. The increase is primarily related to higher variable fee income as a result of higher average account balances due to the performance of the U.S. equities market as seen by the higher S&P 500 index average in 2010 compared to 2009 as well as an increase in participants.

Net investment income increased by $16 million, or 4%, to $399 million for the year ended December 31, 2010 when compared to 2009. The increase is due to increased interest income of $15 million due to higher invested asset balances in addition to $1 million higher unrealized gains on derivatives and held for trading assets.

Net realized investment losses remain unchanged at $23 million during the years ended December 31, 2010 and 2009. The $23 million loss in 2010 is due to $47 million of write-downs primarily on fixed maturity securities guaranteed by Ambac offset by $24 million of net realized gains on the sale of investments. The $23 million loss in 2009 is due to $46 million of write-downs primarily on fixed maturity securities guaranteed by FGIC partially offset by $23 million of net realized gains on the sale of investments.

Total benefits and expenses increased by $20 million, or 3%, to $613 million for the year ended December 31, 2010 when compared to 2009. The increase is primarily related to a $46 million increase in general insurance expenses as a result of higher distribution costs, higher policy administration costs due to increased participant accounts and higher asset based commissions from higher average account balances due to the performance of the U.S. equities market in 2010 compared to 2009. This is offset by $14 million lower interest paid to policyholders due to lower crediting rates and $17 million lower amortization of DAC primarily due to the decrease in net realized investment gains and losses.

Income tax expense increased by $13 million, or 52%, to $38 million during the year ended December 31, 2010 when compared to 2009. The increase is primarily due to a $55 million increase in income before income taxes in 2010.

Retirement participant accounts, including third-party administration and institutional accounts, increased by 208 thousand, or 5%, to 4,409 thousand at December 31, 2010 from 4,201 thousand at December 31, 2009 primarily due to the sale of several large plans in the public/non-profit government market.

The following table provides information for the Retirement Services’ participant account values at December 31, 2010 and 2009:

2010 2009

General account - Fixed options:

Public / Non-profit $ 3,556 $ 3,408

401(k) 4,310 3,563

7,866

$ $ 6,971

Separate accounts - Variable options:

Public / Non-profit $ 8,809 $ 7,628

401(k) 7,048 6,282

15,857

$ $ 13,910

Unaffiliated retail:

Investment options and administrative services only:

Public / Non-profit $ 59,110 $ 46,496

401(k) 24,225 19,905

Institutional 39,911 35,815

123,246

$ $ 102,216

Year ended December 31, (In millions)

Account values invested in the general account fixed investment options have increased by $895 million, or 13%, at December 31, 2010 compared to December 31, 2009 primarily due to an increase in new participant contributions and interest credited to existing account balances.

Account values invested in the separate account variable investment options have increased by $1,947 million, or 14%, at December 31, 2010 compared to December 31, 2009. The increase is primarily due to new sales and an overall increase in the U.S. equity markets.

Participant account values invested in unaffiliated retail investment options and participant account values where only administrative services and record-keeping functions are provided have increased by $21,030 million, or 21%, at December 31, 2010 compared to December 31, 2009. The increase is primarily due to new sales and an overall increase in the U.S. equity markets.

Year ended December 31, 2009 compared with the year ended December 31, 2008

The following is a summary of certain financial data of the Retirement Services segment for the years ended December 31, 2009 and 2008:

2009 2008

Premium income $ 3 $ 2

Fee income 331 368

Net investment income 383 352

Net realized investment gains (23) (10)

Total revenues 694 712

Policyholder benefits 231 230

Operating expenses 362 329

Total benefits and expenses 593 559

Income before income taxes 101 153

Income tax expense 25 34

Income from continuing operations $ 76 $ 119

Year ended December 31, Income statement data (In millions)

The following is a summary of the Retirement Services segment participant accounts at December 31, 2009 and 2008:

2009 2008

Participant accounts 4,201 3,739

December 31, (In thousands)

Income from continuing operations for the Retirement Services segment decreased by $43 million, or 36%, to $76 million during the year ended December 31, 2009 when compared to 2008 primarily due to a decrease in fee income, an increase in amortization of DAC and an increase in realized losses on investments. These are partially offset by an increase in interest margins on guaranteed products.

Fee income decreased by $37 million, or 10%, to $331 million for the year ended December 31, 2009 when compared to 2008. The decrease is primarily related to lower variable fee income as a result of lower average account balances due to the weak performance of the U.S. equities market as seen by the lower S&P 500 Index average in 2009 compared to 2008.

Net investment income increased by $31 million, or 9%, to $383 million for the year ended December 31, 2009 when compared to 2008. The increase is primarily due to an increase in the average account value of the general accounts during 2009 when compared to 2008. This average asset increase is primarily due to transfers from variable investment options to the general account.

Net realized losses on investments increased by $13 million to $23 million during the year ended December 31, 2009 when compared to 2008. The $23 million loss in 2009 is due to $46 million of write- downs primarily on fixed maturity securities guaranteed by FGIC partially offset by $23 million of net realized gains on the sale of investments. The $10 million loss during 2008 is due to $35 million of write-downs primarily on a fixed maturity security backed by Lehman Brothers Holdings Inc. and on securities backed by General Motors Corporation. These write-downs are partially offset by $25 million of net realized gains on the sale of investments.

Operating expenses increased by $33 million, or 10%, to $362 million for the year ended December 31, 2009 when compared to 2008. The increase is primarily related to a $20 million increase in amortization of DAC, value of business acquired and other intangibles due to lower estimated future gross profits in 2009 compared to the estimated future gross profits in 2008 due to a decrease in projected fee income. In addition, pension and post-retirement expenses increased $5 million and state assessments increased $2 million.

Income tax expense decreased by $9 million to $25 million during the year ended December 31, 2009 when compared to 2008 is due to the $52 million decrease in income from continuing operations before income taxes.

Retirement participant accounts, including third-party administration and institutional accounts, increased by 462 thousand, or 12%, to 4,201 thousand at December 31, 2009 from 3,739 thousand at December 31, 2008 primarily due to the acquisition of an additional block of business from an existing institutional client and from the sale of a large plan in the public/non-profit government market. The following table provides information for the Retirement Services’ participant account values at December 31, 2009 and 2008:

2009 2008

General account - Fixed options:

Public / Non-profit $ 3,408 $ 3,302

401(k) 3,563 3,269

6,971

$ $ 6,571

Separate accounts - Variable options:

Public / Non-profit $ 7,628 $ 5,639

401(k) 6,282 4,651

13,910

$ $ 10,290

Unaffliaited retail:

Investment options and administrative services only:

Public / Non-profit $ 46,496 $ 36,829 401(k) 19,905 14,639 Institutional 35,815 23,603 102,216 $ $ 75,071 (In millions)

Year ended December 31,

Account values invested in the general account fixed investment options have increased by $400 million, or 6%, at December 31, 2009 compared to December 31, 2008 primarily due to transfers from variable investment options to the general account.

Account values invested in the separate account variable investment options have increased by $3,620 million, or 35%, at December 31, 2009 compared to December 31, 2008. The increase is primarily due new sales and the higher U.S. equity markets at December 31, 2009 compared to December 31, 2008.

Participant account values invested in unaffiliated retail investment options and participant account values where only administrative services and record-keeping functions are provided have increased by $27,145 million, or 36%, at December 31, 2009 compared to December 31, 2008. The increase is primarily due to new sales and the higher U.S. equity markets at December 31, 2009 compared to December 31, 2008.