<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-Q
---------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 2000
------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
---------------------
Commission file number 0-23375
---------------------
GE Financial Assurance Holdings, Inc.
-------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 54-1829180
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6604 West Broad Street, Richmond, Virginia 23230
(Address of principal executive offices) (Zip Code)
(804) 281-6000
(Registrant's telephone number, including area code)
----------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ______
At July 25, 2000, 1,000 shares of common stock with a par value of $1.00 were
outstanding. The common stock of GE Financial Assurance Holdings, Inc. is not
publicly traded.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b)
OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE
FORMAT.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION.
Item 1. Financial Statements.................................................. 1
Item 2. Management's Discussion and Analysis of Results of Operations.......... 7
Exhibit 12. Computation of Ratio of Earnings to Fixed Charges................. 10
PART II - OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K...................................... 11
Signatures...................................................................... 12
Index to Exhibits............................................................... 13
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
GE FINANCIAL ASSURANCE HOLDINGS, INC. AND SUBSIDIARIES
Condensed, Consolidated Statement of Current and Retained Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------------------------------
(In millions) July 1, June 26, July 1, June 26,
2000 1999 2000 1999
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Revenues:
Premiums $ 1,436 $ 842 $ 2,665 $ 1,681
Net investment income 938 775 1,792 1,523
Net realized investment gains 9 41 30 57
Surrender fee income 627 7 666 14
Policy fees and other income 226 113 453 226
--------- ---------- --------- ----------
Total revenues 3,236 1,778 5,606 3,501
--------- ---------- --------- ----------
Benefits and expenses:
Benefits and other changes in policy reserves 1,643 810 2,638 1,659
Interest credited 369 317 710 631
Commissions 318 187 643 346
General expenses 456 292 1,016 552
Amortization of intangibles, net 419 76 617 141
Change in deferred acquisition costs, net (296) (170) (627) (306)
Interest expense 35 23 62 46
--------- ---------- --------- ----------
Total benefits and expenses 2,944 1,535 5,059 3,069
--------- ---------- --------- ----------
Earnings before income taxes, minority interest and
cumulative effect of accounting change 292 243 547 432
Provision for income taxes 110 89 204 161
--------- ---------- --------- ----------
Earnings before minority interest and cumulative
effect of accounting change 182 154 343 271
Minority interest 1 2 2 2
--------- ---------- --------- ----------
Earnings before cumulative effect of accounting change 181 152 341 269
Cumulative effect of accounting change, net of tax -- -- -- 25
--------- ---------- --------- ----------
Net earnings 181 152 341 294
Retained earnings at beginning of period 1,855 1,376 1,695 1,234
--------- ---------- --------- ----------
Retained earnings at end of period $ 2,036 $ 1,528 $ 2,036 $ 1,528
========= ========== ========= ==========
</TABLE>
See Notes to Condensed, Consolidated Financial Statements.
1
<PAGE>
Item 1. Financial Statements (Continued).
GE FINANCIAL ASSURANCE HOLDINGS, INC. AND SUBSIDIARIES
Condensed, Consolidated Statement of Financial Position
<TABLE>
<CAPTION>
July 1, December 31,
(In millions) 2000 1999
--------------------- ---------------------
<S> <C> <C>
Assets (Unaudited)
Investments:
Fixed maturities available-for-sale, at fair value $42,533 $36,932
Mortgage loans, net of valuation allowance 8,231 3,414
Policy loans 1,455 945
Short-term investments 5,982 267
Other invested assets 1,429 997
--------------------- ---------------------
Total investments 59,630 42,555
Cash 567 265
Accrued investment income 1,023 961
Deferred acquisition costs 2,947 2,307
Intangible assets 5,454 4,345
Reinsurance recoverable 1,388 1,537
Other assets 2,699 3,328
Separate account assets 11,078 9,308
--------------------- ---------------------
Total assets $84,786 $64,606
===================== =====================
Liabilities and Shareholder's Interest
Liabilities:
Future annuity and contract benefits $57,334 $39,639
Unearned premiums 811 842
Liability for policy and contract claims 2,161 1,886
Other policyholder liabilities 705 626
Accounts payable and accrued expenses 2,812 2,933
Short-term borrowings 1,841 1,036
Separate account liabilities 11,078 9,308
Long-term debt 703 705
--------------------- ---------------------
Total liabilities 77,445 56,975
--------------------- ---------------------
Minority interest 46 475
Shareholder's interest:
Net unrealized investment losses (1,177) (1,079)
Foreign currency translation adjustments 116 220
--------------------- ---------------------
Accumulated non-owner changes in equity (1,061) (859)
Common stock --- ---
Additional paid-in capital 6,320 6,320
Retained earnings 2,036 1,695
--------------------- ---------------------
Total shareholder's interest 7,295 7,156
--------------------- ---------------------
Total liabilities and shareholder's interest $84,786 $64,606
===================== =====================
</TABLE>
See Notes to Condensed, Consolidated Financial Statements.
2
<PAGE>
Item 1. Financial Statements (Continued).
GE FINANCIAL ASSURANCE HOLDINGS, INC. AND SUBSIDIARIES
Condensed, Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
---------------------------------------------
July 1, June 26,
(In millions) 2000 1999
--------------------- ---------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net earnings $ 341 $ 294
Adjustments to reconcile net earnings to net cash provided by
operating activities:
(Decrease) increase in future policy benefits (4,240) 480
Cumulative effect of accounting change, net of tax -- (25)
Other - net 137 (242)
--------------------- ---------------------
Net cash provided by (used in) operating activities (3,762) 507
--------------------- ---------------------
Cash Flows From Investing Activities
Proceeds from investment securities and other invested assets 3,173 3,069
Principal collected on mortgage and policy loans 400 221
Purchases of investment securities and other invested assets (8,116) (4,430)
Mortgage and policy loan originations (487) (552)
Acquisitions (220) (47)
--------------------- ---------------------
Net cash used in investing activities (5,250) (1,739)
--------------------- ---------------------
Cash Flows From Financing Activities
Proceeds from issuance of investment contracts 4,226 3,382
Redemption and benefit payments on investment contracts (3,095) (2,148)
Net commercial paper borrowings (repayments) 617 (5)
Proceeds from other borrowings 1,371 651
Payments on other borrowings (1,183) (681)
Cash received from assumption of Toho Mutual Life Insurance
Company insurance liabilities 13,177 --
--------------------- ---------------------
Net cash provided by financing activities 15,113 1,199
--------------------- ---------------------
Effect of Exchange Rate Changes on Cash (84) 3
--------------------- ---------------------
Increase (Decrease) in Cash and Equivalents 6,017 (30)
Cash and Equivalents at Beginning of Period 532 378
--------------------- ---------------------
Cash and Equivalents at End of Period $ 6,549 $ 348
===================== =====================
</TABLE>
See Notes to Condensed, Consolidated Financial Statements.
3
<PAGE>
Item 1. Financial Statements (Continued).
GE FINANCIAL ASSURANCE HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed, Consolidated Financial Statements
(Unaudited)
1. The accompanying condensed, consolidated quarterly financial statements
represent GE Financial Assurance Holdings, Inc. and its consolidated
subsidiaries (collectively "the Company"). All significant intercompany
transactions have been eliminated. Certain prior year amounts have been
reclassified to conform to the current year presentation.
2. The condensed, consolidated quarterly financial statements are unaudited.
These statements include all adjustments (consisting of normal recurring
accruals) considered necessary by management to present a fair statement of
the results of operations, financial position and cash flows. The results
reported in these condensed, consolidated financial statements should not be
regarded as necessarily indicative of results that may be expected for the
entire year.
3. A summary of changes in shareholder's interest that do not result directly
from transactions with the shareholder follows:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------
(In millions) July 1, 2000 June 26, 1999
--------------------- ---------------------
<S> <C> <C>
Net earnings $ 181 $ 152
Unrealized losses on investment securities - net (200) (913)
Foreign currency translation adjustments (8) (10)
--------------------- ---------------------
Total $ (27) $ (771)
===================== =====================
Six Months Ended
------------------------------------------------
(In millions) July 1, 2000 June 26, 1999
--------------------- ---------------------
Net earnings $ 341 $ 294
Unrealized losses on investment securities - net (98) (1,240)
Foreign currency translation adjustments (104) (15)
--------------------- ---------------------
Total $ 139 $ (961)
===================== =====================
</TABLE>
4. The Company conducts its operations through two operating segments: (1)
Wealth Accumulation and Transfer, comprised of products intended to increase
the policyholder's wealth, transfer wealth to beneficiaries or provide a
means for replacing the income of the insured in the event of premature
death, and (2) Lifestyle Protection and Enhancement, comprised of products
intended to protect accumulated wealth and income from the financial drain of
unforeseen events and provide consumer club membership opportunities.
4
<PAGE>
The following is a summary of operating segment activity for the three and
six month periods ended July 1, 2000 and June 26, 1999:
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------
(In millions) July 1, 2000 June 26, 1999
--------------------- ---------------------
<S> <C> <C>
Revenues
Wealth Accumulation and Transfer...................................... $2,347 $1,219
Lifestyle Protection and Enhancement.................................. 889 559
--------------------- ---------------------
Total revenues................................................. $3,236 $1,778
===================== =====================
Earnings before income taxes, minority interest and cumulative
effect of accounting change
Wealth Accumulation and Transfer...................................... $ 241 $ 207
Lifestyle Protection and Enhancement.................................. 51 36
--------------------- ---------------------
Total earnings before income taxes, minority interest and
cumulative effect of accounting change........................ $ 292 $ 243
===================== =====================
Six Months Ended
----------------------------------------------
(In millions) July 1, 2000 June 26, 1999
--------------------- ---------------------
Revenues
Wealth Accumulation and Transfer...................................... $3,997 $2,431
Lifestyle Protection and Enhancement.................................. 1,609 1,070
--------------------- ---------------------
Total revenues................................................. $5,606 $3,501
===================== =====================
Earnings before income taxes, minority interest and cumulative
effect of accounting change
Wealth Accumulation and Transfer...................................... $ 493 $ 361
Lifestyle Protection and Enhancement.................................. 54 71
--------------------- ---------------------
Total earnings before income taxes, minority interest and
cumulative effect of accounting change........................ $ 547 $ 432
===================== =====================
</TABLE>
The following is a summary of assets by operating segment as of July 1, 2000
and December 31, 1999:
<TABLE>
July 1, December 31,
(In millions) 2000 1999
--------------------- ---------------------
<S> <C> <C>
Assets
Wealth Accumulation and Transfer...................................... $77,302 $57,302
Lifestyle Protection and Enhancement.................................. 7,484 7,304
--------------------- ---------------------
Total assets................................................... $84,786 $64,606
===================== =====================
</TABLE>
5. Effective March 1, 2000, GE Edison Life Insurance Company (GE Edison), a
subsidiary of the Company, acquired, by means of a comprehensive transfer
(the Transfer) in accordance with the Insurance Business Law of Japan (IBL),
the insurance policies and related assets of Toho Mutual Life Insurance
Company (Toho). GE Edison assumed approximately $21.5 billion of policyholder
liabilities, $0.4 billion of accounts payable and accrued expenses, and
acquired $20.3 billion of cash, investments and other tangible assets. The
$1.6 billion difference between acquired assets and assumed liabilities
represents the present value of future profits (PVFP) on the transferred
insurance policies. Assets acquired by GE Edison include approximately $0.5
billion of redeemable preferred stock and warrants issued by another
subsidiary of the Company. The redeemable preferred stock and warrants have
been eliminated in the accompanying Condensed, Consolidated Statement of
Financial Position, and the corresponding
5
<PAGE>
amount eliminates the minority interest in the Company previously held by
Toho. The Company has recorded the assets acquired and liabilities assumed
based on their estimated fair values according to preliminary valuations.
Such estimated values may change as additional information is obtained and
the valuations are finalized.
As disclosed in Note 2 to the Company's Consolidated Financial Statements for
the year ended December 31, 1999, included in the Company's Annual Report on
Form 10-K, GE Edison had previously acquired Toho's operating infrastructure
in March 1998. In June 1999, the Financial Supervisory Agency (FSA) of Japan
determined that Toho's continued operation was not in the best interests of
its policyholders given its weak financial position. As a result, the FSA
issued a partial business suspension order to Toho on June 4, 1999. In
connection with such suspension order, the FSA appointed two independent
individuals from the Japanese insurance industry and the Life Insurance
Association of Japan as administrators of Toho (collectively, the
Administrator).
Under the IBL, the sole means for rehabilitating an insolvent insurer is
through a comprehensive transfer of the insurer's insurance policies and
assets to a rescuing company. On December 22, 1999, the Administrator entered
into an agreement with GE Edison, acting as the rescuing company, for the
comprehensive transfer of Toho's insurance policies. In conjunction with the
Transfer, the Administrator restructured Toho's in-force insurance contracts.
The restructured insurance contracts have surrender charges, reduced benefits
and lower policy guarantees. As an inducement for GE Edison to become the
rescuing company, Japan's Policyholder Protection Corporation contributed
approximately $3.6 billion as part of the assets supporting Toho's
restructured policies.
The Company accounted for the Transfer under the purchase method of
accounting and, accordingly, the results of operations of the restructured
insurance contracts and related assets have been included in the Company's
Condensed, Consolidated Statement of Current and Retained Earnings since the
date of the Transfer. In connection with the Transfer, the Company terminated
its former reinsurance arrangements with Toho. Certain amounts in the
Condensed, Consolidated Statement of Current and Retained Earnings for the
six months ended July 1, 2000 reflect the impact of terminating such
reinsurance arrangements. The termination of the reinsurance arrangements did
not have a significant effect on net earnings for the three or six month
periods ended July 1, 2000.
6. On April 3, 2000, the Company acquired Phoenix American Life Insurance
Company, a subsidiary of Phoenix Home Life Mutual Insurance Company, for
approximately $280 million. Phoenix American Life Insurance Company, based in
Hartford, Connecticut, serves the needs of small business owners by offering
a broad range of products including dental, disability, and life insurance.
7. On April 14, 2000, the Company signed a definitive agreement to underwrite
and distribute long-term care insurance through a long term, strategic
alliance with The Travelers Insurance Company (Travelers) and certain of its
Citigroup affiliates. Under the agreement, the Company will acquire 90% of
Travelers long-term care insurance portfolio, as well as enter into a
continuing marketing agreement with various Citigroup distribution channels
including Travelers. Consummation of this transaction is subject to
regulatory approval.
8. The Financial Accounting Standards Board has issued, then subsequently
amended, Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities, effective for
the Company on January 1, 2001. Upon adoption, all derivative instruments
(including certain derivative instruments embedded in other contracts) will
be recognized in consolidated statements of financial position at fair value,
and changes in such fair values must be recognized immediately in earnings
unless specific hedging criteria are met. Changes in the values of
derivatives meeting these hedging criteria will ultimately offset related
earnings effects of the hedged items; effects of qualifying changes in fair
value are to be recorded in shareholder's interest pending recognition in
earnings. Management has not determined the total probable effects on its
financial statements of adopting SFAS No. 133, as amended, and does not
believe that an estimate of such effects would be meaningful at this time.
Item 2. Management's Discussion and Analysis of Results of Operations.
Overview
Net earnings before cumulative effect of accounting change for the first six
months of 2000 were $341 million, a $72 million, or 26.8%, increase over the
first six months of 1999. This increase was driven largely by increased
investment income, premiums earned and surrender fee income due to the transfer
of insurance policies and related assets of Toho to GE Edison and growth in
sales of certain existing products, partially offset by increased benefits and
other changes in policy reserves, amortization of PVFP primarily as a
result of the transfer of insurance policies of Toho to GE Edison and
subsequent surrenders thereof, as well as increased general expenses
principally relating to recent acquisitions and the Company's core growth
initiatives.
Operating Results
Premiums increased $984 million, or 58.5%, to $2,665 million for the first six
months of 2000 from $1,681 million for the first six months of 1999. As
discussed in Note 5, $154 million of the increase is a result of the termination
of the Toho reinsurance arrangements. The remaining increase primarily relates
to the transfer of the insurance policies of Toho to GE Edison, the acquisitions
6
<PAGE>
of The Signature Group in July 1999 and Phoenix American Life in April 2000
and growth in the Company's life, long-term care and accident and health
businesses.
Net investment income increased $269 million, or 17.7%, to $1,792 million for
the first six months of 2000 from $1,523 million for the first six months of
1999. The increase was primarily attributable to higher levels of average
invested assets ($53.6 billion in the first six months of 2000 vs. $41.9 billion
in the first six months of 1999) due to investments relating to the acquisition
of certain assets of Toho, the acquisition of The Signature Group in July 1999
and growth in core invested assets. This increase was partially offset by a
decrease in weighted average yields to 6.8% for the first six months of 2000
from 7.4% for the first six months of 1999 due to lower yields on investment
activity related to the Company's Japanese operations.
Surrender fee income increased $652 million to $666 million in the first six
months of 2000 from $14 million in the first six months of 1999. The increase
in surrender fee income relates to amounts retained by the Company from the
surrender of policyholder contracts assumed from Toho as part of the Transfer,
which policies became subject to surrender charges under the terms of the
restructuring of Toho's in-force insurance contracts as discussed in Note 5.
Policy fees and other income increased $227 million, or 100.4%, to $453 million
in the first six months of 2000 from $226 million in the first six months of
1999. Other income is principally comprised of insurance charges made against
universal life contracts, club membership revenues, fees assessed against
policyholder account values and commission income. The increase in the first
six months of 2000 was primarily due to club membership revenues associated with
the acquisition of The Signature Group in July 1999.
Benefits and other changes in policy reserves includes both activity related to
future policy benefits on long-duration life and health insurance products as
well as claim costs incurred during the year under these contracts and property
and casualty policies. These amounts increased $979 million, or 59.0%, to
$2,638 million in the first six months of 2000 from $1,659 million in the first
six months of 1999. As discussed in Note 5, $116 million of this increase
results from the termination of the Toho reinsurance arrangements. The remaining
increase primarily relates to the transfer of the insurance policies of Toho to
GE Edison, acquisitions of The Signature Group in July 1999 and Phoenix American
Life in April 2000, and growth in certain of the Company's life, long-term care
and accident and health products.
Interest credited increased $79 million, or 12.5%, to $710 million in the first
six months of 2000 from $631 million in the first six months of 1999. This
increase was a result of the increase in the underlying reserves arising
primarily from sales of annuity products. The increased sales resulted from
higher crediting rates that the Company implemented in response to changes in
market conditions and other factors.
Commission expenses increased $297 million, or 85.8%, to $643 million in the
first six months of 2000 from $346 million in the first six months of 1999
primarily due to higher production on certain of the Company's life and annuity
products, the acquisitions of The Signature Group in July 1999 and Phoenix
American Life in April 2000 and the termination of reinsurance arrangements with
Toho.
General expenses were $1,016 million for the first six months of 2000, an
increase of $464 million, or 84.1%, over the expenses for the first six months
of 1999 of $552 million. As discussed in Note 5, $96 million of the increase
results from the Termination of the Toho reinsurance arrangements, as discussed
in Note 5. The remaining increase primarily relates to the acquisition of The
Signature Group in July 1999, the transfer of the insurance policies and related
assets of Toho to GE Edison, and increases in compensation and other operating
expenses commensurate with the Company's increase in premium revenue and in
support of the Company's core growth initiatives.
Amortization of intangibles, net increased $476 million, or 337.6%, to $617
million for the first six months of 2000 from $141 million for the first six
months of 1999. The Company's significant intangible assets consist of two
components that both result from acquisition activities. PVFP, representing the
estimated future gross profit in acquired insurance and annuity contracts, and
goodwill, representing the excess of purchase price over the fair value of
identified net assets of the acquired entities. Amortization of PVFP increased
approximately $453 million as a result of the transfer of the insurance policies
of Toho to GE Edison and subsequent surrenders thereof and the acquisition of
The Signature Group in July 1999.
Change in deferred acquisition costs, net increased $321 million, or 104.9%, to
$627 million for the first six months of 2000 from $306 million for the first
six months of 1999. As discussed in Note 5, $59 million of the increase in
7
<PAGE>
change in deferred acquisition costs, net was related to the termination of the
Toho reinsurance arrangements. The remaining increase primarily relates to an
increase in deferral of costs due to increased product sales as a result of
acquisitions and growth in existing products, partially offset by amortization
of previously capitalized acquisition costs.
Interest expense increased $16 million, or 34.8%, to $62 million for the first
six months of 2000 from $46 million for the first six months of 1999. This
increase relates primarily to an increase in weighted average commercial paper
borrowings outstanding, and an increase in the weighted average interest rate on
commercial paper borrowings, for the first six months of 2000 compared to the
first six months of 1999.
Financial Condition
Total assets increased $20.2 billion, or 31.2%, at July 1, 2000 from December
31, 1999. As discussed in Note 5 to the Condensed, Consolidated Financial
Statements presented herewith, assets acquired in connection with the March 1,
2000 comprehensive transfer of the insurance policies and related assets of Toho
to GE Edison, net of amounts eliminated in consolidation, approximated $21.9
billion.
Excluding the assets acquired on March 1, 2000 from Toho, various other
fluctuations in core operations and changes in assets occurred. Assets invested
in separate accounts increased by approximately $1.7 billion, or 17.8%, at July
1, 2000 from December 31, 1999 primarily due to continued sales of variable
annuity products and overall increased market value of the underlying investment
funds. Total investments increased approximately $11.1 billion, or 26.1%, at
July 1, 2000 from December 31, 1999. This increase was primarily driven by
purchases of short-term investments and other securities by GE Edison subsequent
to the receipt of cash from Toho as part of the Transfer, net of cash
payments related to surrenders of certain contracts by former Toho
policyholders, investment growth in core operations and net investment income of
approximately $1.8 billion. These increases were partially offset by a $12.3
billion decrease in cash, primarily resulting from purchases of investments at
GE Edison, a $1.3 billion decrease in other assets, primarily related to
decreased balances due from brokers relating to investment transactions and a
decrease in commissions receivable related to the termination of reinsurance
arrangements with Toho, and various other decreases related to cash flows and
amortization affecting the balance of assets acquired from Toho from the
acquisition date through July 1, 2000.
Total liabilities increased $20.5 billion, or 35.9%, at July 1, 2000 from
December 31, 1999. As discussed in Note 5 to the Condensed, Consolidated
Financial Statements presented herewith, liabilities assumed in connection with
the March 1, 2000 transfer of the insurance policies and related assets of Toho
by GE Edison approximated $21.9 billion.
Excluding the liabilities assumed on March 1, 2000 from Toho, various other
fluctuations in core operations and changes in liabilities have occurred.
Future annuity and contract benefits decreased approximately $3.0 billion, or
7.5%, at July 1, 2000 from December 31, 1999. This decrease resulted primarily
from surrender payments made to former Toho policyholders subsequent to the
Transfer, partially offset by growth in reserves due to the sales of certain of
the Company's life, annuity, and long-term care business. Accounts payable and
accrued other expenses decreased $.5 billion, or 17.7%, due primarily to the
timing of net payments and receipts related to the investment portfolio and
normal business activity. Borrowings increased approximately $803 million, or
46.1%, primarily as a result of the issuance of additional commercial paper by
the Company, the proceeds of which were used to support strong solvency margins
and claims paying ratings at GE Edison. Separate account liabilities increased
by approximately $1.7 billion, or 17.8%, at July 1, 2000 from December 31, 1999
primarily due to continued sales of variable annuity products and overall
increased market value of the underlying investment funds.
8
<PAGE>
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
Exhibit 12.1 Computation of ratio of earnings to fixed charges.
Exhibit 27.1 Financial Data Schedule (filed electronically herewith).
b. Reports on Form 8-K.
The Company filed a Current Report on Form 8-K/A, dated May 15, 2000,
reporting (under Item 2 thereof) additional information relating to the
comprehensive transfer of the insurance policies and related assets of Toho
Mutual Life Insurance Company to GE Edison Life Insurance Company.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GE FINANCIAL ASSURANCE HOLDINGS, INC.
-------------------------------------
(Registrant)
Date: July 26, 2000 By: /s/ Thomas W. Casey
-------------------------------------------------
Thomas W. Casey,
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: July 26, 2000 By: /s/ Richard G. Fucci
------------------------------------------------
Richard G. Fucci,
Vice President and Controller
(Principal Accounting Officer)
10
<PAGE>
GE FINANCIAL ASSURANCE HOLDINGS, INC. AND SUBSIDIARIES
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit No. Page
------------------ -----------
<S> <C> <C>
12.1 Computation of ratio of earnings to fixed charges 10
27.1 Financial Data Schedule (filed electronically herewith) --
</TABLE>
11
