PDF Mutual of Omaha Insurance Company and Subsidiaries

Mutual of Omaha

Insurance Company

and Subsidiaries

Consolidated Financial Statements as of and for the

Years Ended December 31, 2016 and 2015, and

Independent Auditors¡¯ Report

INDEPENDENT AUDITORS¡¯ REPORT

To the Board of Directors

Mutual of Omaha Insurance Company

Omaha, Nebraska

We have audited the accompanying consolidated financial statements of Mutual of Omaha Insurance

Company and Subsidiaries (the ¡°Company¡±), which comprise the consolidated balance sheets as of

December 31, 2016 and 2015, and the related consolidated statements of operations and comprehensive

income (loss), changes in equity, and cash flows for the years then ended, and the related notes to the

consolidated financial statements.

Management¡¯s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial

statements in accordance with accounting principles generally accepted in the United States of America;

this includes the design, implementation, and maintenance of internal control relevant to the preparation

and fair presentation of consolidated financial statements that are free from material misstatement,

whether due to fraud or error.

Auditors¡¯ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of

America. Those standards require that we plan and perform the audit to obtain reasonable assurance about

whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the consolidated financial statements. The procedures selected depend on the auditor¡¯s judgment,

including the assessment of the risks of material misstatement of the consolidated financial statements,

whether due to fraud or error. In making those risk assessments, the auditor considers internal control

relevant to the Company¡¯s preparation and fair presentation of the consolidated financial statements in

order to design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the Company¡¯s internal control. Accordingly, we express no

such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the

reasonableness of significant accounting estimates made by management, as well as evaluating the overall

presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material

respects, the financial position of Mutual of Omaha Insurance Company and Subsidiaries as of

December 31, 2016 and 2015, and the results of their operations and their cash flows for the years then

ended in accordance with accounting principles generally accepted in the United States of America.

March 10, 2017

-2-

MUTUAL OF OMAHA INSURANCE COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2016 AND 2015

(In thousands)

2016

ASSETS

INVESTMENTS:

Fixed maturities ¡ª available-for-sale ¡ª at fair value

Fixed maturities ¡ª trading ¡ª at fair value

Equity securities ¡ª available-for-sale ¡ª at fair value

Equity securities ¡ª trading ¡ª at fair value

Equity securities ¡ª at cost

Loans ¡ª net

Real estate

Limited partnerships

Derivative assets

Policy loans

Short-term investments

2015

$ 20,121,089

155,644

13,918

38,994

50,566

8,275,542

154,266

374,410

51,451

215,231

193,721

$ 18,710,578

148,916

13,352

40,074

38,782

7,458,198

174,027

396,812

35,768

213,694

225,036

29,644,832

27,455,237

CASH AND CASH EQUIVALENTS

118,990

272,967

ACCRUED INVESTMENT INCOME

191,373

180,878

PREMIUMS AND OTHER RECEIVABLES

129,173

125,281

Total investments

DEFERRED POLICY ACQUISITION COSTS

3,454,374

2,970,460

REINSURANCE RECOVERABLE

522,827

476,709

GOODWILL AND INTANGIBLE ASSETS

183,438

183,138

COMPANY OWNED LIFE INSURANCE

443,813

373,469

OTHER ASSETS

336,525

333,873

3,439,532

3,250,868

$ 38,464,877

$ 35,622,880

$ 10,036,093

7,430,954

1,888,307

412,277

5,920,840

938,280

1,616,135

1,164,572

3,439,532

$ 9,011,161

7,214,083

1,773,969

429,015

5,585,752

744,821

1,375,353

1,110,557

3,250,868

32,846,990

30,495,579

SEPARATE ACCOUNT ASSETS

TOTAL

LIABILITIES AND EQUITY

LIABILITIES:

Future policy benefits

Policyholder account balances

Unpaid claims

Unearned revenues

Deposits

Deferred income taxes payable

Borrowings

Other liabilities

Separate account liabilities

Total liabilities

EQUITY:

Retained earnings

Accumulated other comprehensive income (loss)

Total equity

TOTAL

See notes to consolidated financial statements.

-3-

5,553,674

64,213

5,197,116

(69,815)

5,617,887

5,127,301

$ 38,464,877

$ 35,622,880

MUTUAL OF OMAHA INSURANCE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

(In thousands)

2016

REVENUES:

Health and accident

Life and annuity

Net investment income

Other

Net realized investment gains (losses):

Other-than-temporary impairments on fixed maturities

Other-than-temporary impairments on fixed maturities transferred to other comprehensive income

Other net realized investment gains

$ 4,116,255

2,465,011

1,204,450

104,401

2015

$ 3,820,587

2,145,881

1,177,683

73,870

(12,762)

1,610

19,507

(21,791)

2,847

36,657

8,355

17,713

7,898,472

7,235,734

3,064,795

2,229,478

212,771

816,204

816,479

194,076

31,204

2,874,930

1,877,166

210,845

802,156

749,713

174,330

3,019

31,018

7,365,007

6,723,177

INCOME BEFORE INCOME TAXES

533,465

512,557

INCOME TAXES

176,907

179,551

NET INCOME

356,558

333,006

98,402

(380,445)

1,807

(2,744)

100,209

(383,189)

Total net realized investment gains

Total revenues

BENEFITS AND EXPENSES:

Health and accident benefits

Life and annuity benefits

Interest credited

Policy acquisition costs

General insurance expenses

General bank expenses

Nonoperating loss on extinguishment of debt

Other

Total benefits and expenses

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Unrealized gains (losses) on securities:

Unrealized holding gains (losses) arising during the year net of related

policyholder amounts (net of taxes of $52,986 and ($204,856), respectively)

Reclassification adjustments for realized holding losses (gains)

(net of taxes of $973 and ($1,478), respectively)

Change in net unrealized gains

Unrealized holding gains (losses) arising during the year on other-than-temporarily

impaired securities (net of taxes of ($1,002) and $1,821, respectively)

Defined benefit plans:

Unrecognized post-retirement benefit net gains arising during the year (net of taxes of

$7,873 and $5,066, respectively)

Less amortization of unrecognized post-retirement benefit gains (net of taxes of

$11,339 and $13,372, respectively)

Unrecognized post-retirement benefit net gains arising during the year

OTHER COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE INCOME (LOSS)

See notes to consolidated financial statements.

-4-

(1,861)

3,382

14,621

9,409

21,059

24,833

35,680

34,242

134,028

(345,565)

$ 490,586

$ (12,559)

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