focused. forward. - securian financial · forward thinking. that’s why we are forming new...

Focused.Forward. 2017 ANNUAL REPORT

2 SECURIAN FINANCIAL

At Securian Financial, we believe that if you’re not going forward, you’re not going anywhere. And we’re going places. Propelling our business ahead. That means achieving our goals matters. A lot. And in 2017, we not only accomplished them, we also made significant progress toward building our future — making last year a success on many accounts. It also set the stage for exciting efforts in 2018.

Today, we’re launching a new brand that demonstrates our long-held values and articulates who we are in a bigger, brighter way. Opening doors and creating new opportunities to serve our customers. Our focus is sharper than ever. Our path is clear. And we are clearly going forward.

We’re creating unstoppable momentum

2017 AT-A-GLANCE

2017 ANNUAL REPORT 1

RATINGS

$5.3BDomestic statutory benefits paid

$78.6BAssets under management

Nearly $1.2TLife insurance in force

$6.1BTotal revenue

$5.1BEquity

5,300Employees and representatives worldwide

19MNearly

Securian Financial’s insurance company affiliates, Minnesota Life Insurance Company and Securian Life Insurance Company, a New York authorized insurer, receive high ratings from independent rating agencies that analyze the financial soundness and claims-paying ability of insurance companies.

These ratings reflect our stability, integrity, long-term focus and commitment to maintaining a strong balance sheet.

All ratings information is current as of May 2018 and is subject to change. A.M. Best Company rating (second highest of 16 ratings); Fitch rating (third highest of 19 ratings); Moody’s rating (fourth highest of 21 ratings); Standard & Poor’s rating (fourth highest of 23 ratings).

For more information about the rating agencies and to see where our ratings rank compared to other ratings, visit securian.com/ratings.

Aa3EXCELLENT

Moody’s Investors Service

AA-VERY STRONG

Standard and Poor’s

AAVERY STRONG

Fitch

A+SUPERIOR

A.M. Best

ENTERPRISE HIGHLIGHTS

customers served


http://securian.com/ratings


2017MESSAGE FROM THE CEO

“Our focus is clear: to give our customers confidence in tomorrow, so they can enjoy today.”

2017 was a year of tremendous progress for Securian Financial. We achieved strong financial results, expanded into new markets and advanced major strategic initiatives to prepare for the future. And I’m proud to share our 2017 annual report with you in our newly launched brand identity, representing who we are, what we stand for and where we’re going.

Strong financial performance While our brand is new, our financial strength is certainly not. Maintaining financial strength is central to fulfilling our purpose of helping our customers protect their loved ones and prepare for the future. We ended the year with $78.6 billion in assets under management and nearly $1.2 trillion of life insurance in force, representing our pledge to help secure the futures of the individuals, families and businesses who rely on us for peace of mind. We also paid over $5.3 billion in domestic statutory benefits. Providing these benefits is the reason we come to work each day and the most tangible way we help people build and protect their financial futures.

CHRISTOPHER M. HILGER, CHAIRMAN, PRESIDENT AND CEO


Christopher M. Hilger Chairman, President and Chief Executive Officer

18In addition to financial strength, Securian Financial delivered on the other characteristics that have defined us for generations: smart growth, high capital levels, excellent investment quality and thoughtful risk management. Attention to these fundamentals allowed Securian Financial to remain among the most highly rated insurance companies in the country and helped drive impressive revenue and earnings growth.

While our 2017 financial results reflect strong performance across our businesses and positive market performance, they also indicate our customers appreciate how we do business. Our customer satisfaction and retention levels remain high in the industry because of our high ethical standards and the personal, responsive approach we bring to each customer interaction.

Growth and expansion One of the highlights of the year was welcoming Canadian Premier Life and affiliates into the Securian family. This acquisition, the largest and first international transaction in company history, allows us to expand our leadership position in the financial institution market while providing potential growth opportunities for our other businesses. It also means we’re now serving nearly 19 million customers throughout North America.

In addition to our geographic expansion, we concentrated on the growth and distribution of our core insurance, investment and retirement businesses, all of which maintained or gained market share in 2017 within a highly competitive and rapidly changing industry.

Preparation for the future To continue to grow in our markets, we know our future success depends on innovation and our ability to stay forward thinking. That’s why we are forming new strategic partnerships and bringing together our people, processes and technology from across the organization to expand engagement with our stakeholders. From improved call center capabilities to enhanced marketing efforts to user-driven digital tools, we took major steps in 2017 to meet the changing expectations of our customers, distribution partners and employees.

Focused. Forward. Securian Financial is strong. We’re growing. We’re preparing for the future. Throughout these pages, you will see how our new brand helps us share why it’s such an exciting time at Securian Financial and how our extraordinary employees and distribution partners are helping protect and secure the future for millions of people across the United States and Canada.

Guided by our values and purpose, our focus is clear: to give our customers confidence in tomorrow, so they can enjoy today.

$6.1

$2.6$3.0

$3.6

$4.4

$2.4

$4.2$4.8

$2.2

$3.6

2013 20132014 20142015 20152016 20162017 2017


24% Operating earnings increased 24 percent to $309 million, driven by strong revenue growth and prudent expense management.

15% Equity increased 15 percent to $5.1 billion, driven by net income and increased net unrealized gains on investments. Our solid financial position protects benefit payments in case of adverse results.

Revenue increased 27 percent to $6.1 billion, demonstrating continued excellent retention and business growth across all of the key markets we serve.

Sales were very good in an increasingly competitive marketplace and complex regulatory environment. Insurance and annuity sales exceeded $1.0 billion and $2.6 billion, respectively, reflecting a diverse array of product, distribution and administration capabilities.

REVENUE ($ BILLION)

Securian Financial achieved steady performance in 2017 to deliver another year of solid results with increases in several key measures. Our financial position is strong, reflecting our ongoing operational and risk management discipline.

FINANCIAL AND INVESTMENT RESULTS

OPERATING EARNINGS3EQUITY2ASSETS UNDER MANAGEMENT

11% Assets under management increased 11 percent to $78.6 billion, due to strong sales, retention and market performance.

Annuity

Insurance

1 Sales generally represent annualized premiums, fund deposits and new asset deposits as applicable to specific products.2 Equity represents total Securian Financial Group, Inc. and subsidiaries equity.3 Operating earnings equal net income attributable to Securian Financial Group, Inc. and subsidiaries, less net realized investment gains, net of taxes.

SALES1 ($ BILLION)


Investments The quality of Securian Financial’s investments remains high, allowing us to serve the long-term interests of our customers.

Our investment approach is consistent with our risk management goals and philosophy. We combine a long-term market perspective with a balance between risk and reward. We focus on quality, diversification and competitive return.

Securian Financial’s investment portfolio is predominantly fixed income assets, which are primarily investment grade

FIXED MATURITY SECURITIES (% OF FIXED MATURITY SECURITIES)

INVESTED ASSETS (% OF INVESTED ASSETS4)

The quality of Securian Financial’s investments remains high, allowing us to serve the long-term interests of our customers.

4 Excludes separate accounts. 5 National Association of Insurance Commissioners.

59.7% NAIC5 1 A- to AAA

37.3% NAIC 2 BBB- to BBB+

2.5% NAIC 3 BB- to BB+

0.4% NAIC 4 B- to B+

0.1% NAIC 5 & 6 D to CCC+

74.1% Fixed maturity securities

13.5% Mortgage loans

9.9% Other invested assets

2.5% Equity securities

fixed maturity securities and mortgage loans. Our disciplined guidelines limit exposure to any single asset class, sector and issuer, while continuing to hold ample liquidity in our investment portfolio.

The size of our investment portfolio allows us to access and select from all asset classes, which provide a broad universe of attractive opportunities. We invest in asset classes that provide higher return potential in the long term while limiting overall credit, market and interest rate risk.


NEARLY

800,000CUSTOMERS SERVED


SERVICE EXCELLENCE

$669MIndividual life insurance domestic statutory benefits paid

87%Individual life insurance customer satisfaction

95%Individual annuity customer satisfaction

BUSINESS RESULTS

$173MIndividual life insurance direct premiums

$8.6BIndividual annuity assets under management

$35.5BSecurian Financial Network assets under administration

Putting familyfirst

INDIVIDUALS | FAMILIES | BUSINESS OWNERS

From the everyday moments to major milestones, we understand that our customers’ most valuable asset is family — however they define it. That’s why we provide life insurance, annuities and wealth management solutions that help them continue putting family first. Because when family is cared for, our customers can thrive.

2017

2018AND BEYOND.. .

Expanded offerings of hybrid insurance products, annuities, executive benefits and financial wellness solutions will continue to help customers put family first.

NEARLY

800,000CUSTOMERS SERVED


Making the workplace work for employeesWorkplace benefits are the foundation of many families’ financial futures — allowing them to focus on the moments that matter today. We provide employers group insurance, retirement plans and longevity solutions paired with decades of expertise in the creation of specialized benefits programs — helping employees love where they work and prioritize those they love.

6 As of December 31, 2017, based on direct group life insurance in force on a consolidated basis. Source: S&P Global Market Intelligence. This statistic reflects the insurance affiliates of Securian Financial Group, Inc., Minnesota Life Insurance Company and Securian Life Insurance Company.

BUSINESS RESULTS

$992BGroup insurance in force

$2.3BGroup insurance direct premiums

$20.1BRetirement plan assets under management

3rd largestDirect writer of group life insurance in the United States6

SERVICE EXCELLENCE

97%Retirement plan customer satisfaction

99%Group insurance customer satisfaction

2017

2018AND BEYOND.. .

New and engaging enrollment and financial wellness solutions will help employees take greater advantage of their workplace benefits.

EMPLOYERS | EMPLOYEES AND THEIR FAMILIES


NEARLY

9 millionCUSTOMERS SERVED


MORE THAN

9 millionCUSTOMERS SERVED

FINANCIAL INSTITUTIONS AND THEIR CUSTOMERS


BUSINESS RESULTS

$619MDomestic direct insurance premiums

$138MCanadian direct insurance premiums

More than

4,000Financial institutions offer our products and solutions

SERVICE EXCELLENCE

$248MDomestic statutory benefits paid

100%Domestic customer satisfaction

Helping customers be present in the here and nowMany people rely on their financial institutions to protect what matters to them. And those financial institutions look to us to provide sound solutions in a market that’s constantly on the move. Our insurance, credit and debt protection products help customers spend less time worrying about their finances and more time being present in the here and now.

2017

2018AND BEYOND.. .

Customers will have more opportunities to engage with us digitally. We'll bring these capabilities — along with expanded products — to more customers through expansion into adjacent markets. Financial institutions and affinity groups can expect a consultative approach to addressing customer needs.

INSTITUTIONAL INVESTORS


BUSINESS RESULTS

$40.9BSecurian Asset Management assets under management

$19.7BAAM assets under management

SERVICE EXCELLENCE

100%Of customers would recommend working with Securian Asset Management

98%Of customers would recommend working with AAM Insurance Investment Management

Institutional investors look to Securian Asset Management and AAM Insurance Investment Management to help them achieve their investment objectives. We take a long-term, collaborative and research-driven approach to help achieve steady growth, bringing decades of experience and providing tailored solutions to corporations, nonprofits, insurance companies, public funds and retirement plans nationwide.

Providing customized strategies

2017

2018AND BEYOND.. .

Customers will have access to broader pension solution capabilities, as well as our expertise in public and private fixed income, commercial real estate, alternatives and specialized insurance investments.


ENTERPRISE OVERVIEW

• Alternative investments• Commercial mortgage loans• Commercial real estate

debt and equity• Convertible bonds• High yield/bank loans• Investment grade

fixed income

• Securian Asset Management

• AAM Insurance Investment Management

Group insurance• Term, universal and

variable universal life• Critical illness, accident

and hospital indemnity• Accidental death and

dismemberment• Business travel accident Retirement solutionsRecordkeeping solutions• Defined contribution and

defined benefit plans• Fully bundled and

TPA-serviced plans

• Minnesota Life Insurance Company

• Securian Life Insurance Company

Individual life insurance• Universal: fixed, fixed

indexed, variable and survivorship

• Term• Whole• Hybrid life/long-term care



• Securian Financial Services• Securian Trust Company

Individual annuities• Variable, fixed, fixed

indexed and immediate Wealth management

• Investment advisory• Asset management• Brokerage accounts• Mutual funds• Trust services• Estate planning

COMPANIESPRODUCTS AND SERVICESMARKETS

• Non-registered group variable annuities and custodial accounts

Longevity solutions• Pension risk transfer• Defined contribution

income solutions Institutional solutions• Guaranteed investment

contracts• Fixed group annuity

contracts

• Pension solutions and liability-driven investing

• Private placements• Public and private

fixed income• Public equities

For financial institutions• Collateral protection• Consumer loan forms• Direct response, digital,

point-of-sale and call center services

• Vendor single interest

For their customers• Accident and sickness

insurance• Accidental death and

dismemberment insurance



• Securian Casualty Company• Allied Solutions• American Modern Life

Insurance Company• Southern Pioneer Life

Insurance Company• Canadian Premier Life

Insurance Company• Legacy General

Insurance Company

• Credit life, disability and involuntary unemployment insurance

• Credit property insurance• Debt protection• Guaranteed asset

protection• Mortgage accidental

death, disability and life insurance

• Term life insurance

Employers and employeesSERVINGPrivate and public employers, employees and their families

Individuals and familiesSERVINGIndividuals, families, executives and business owners

InstitutionalinvestorsSERVINGCorporations, endowments and foundations, insurance companies, mutual fund companies, pension plans, variable insurance providers, 401(k) and related separate account platforms

Financial institutions and their customersSERVINGBanks, credit unions, finance companies, mortgage lenders, other affinity groups and customers of financial institutions


CONDENSED CONSOLIDATED BALANCE SHEETSDecember 31, 2017 and 2016 in millions 2017 2016Assets

Total investments7 $ 22,472 $ 19,430

Total other assets 3,836 3,487

Separate account assets 24,924 21,350

Total assets $ 51,232 $ 44,267

Liabilities and Equity

Liabilities:

Policyholder benefits and funds8 $ 18,798 $ 15,944

Other liabilities 2,397 2,513

Separate account liabilities 24,924 21,350

Total liabilities 46,119 39,807Equity:

Total Securian Financial Group, Inc. and subsidiaries equity 5,087 4,434

Noncontrolling interests 26 26

Total equity 5,113 4,460

Total liabilities and equity $ 51,232 $ 44,267

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31, 2017, 2016 and 2015 in millions 2017 2016 2015RevenuesPremiums and policy and contract fees $ 4,588 $ 3,373 $ 3,074

Net investment income 832 763 724

Net realized investment gains 10 1 9

Other income 636 640 626

Total revenues 6,066 4,777 4,433

Benefits and expenses

Policyholder benefits 3,609 2,508 2,191

Dividends to policyholders and interest credited 481 446 407

Other operating costs and expenses 1,535 1,498 1,441

Total benefits and expenses 5,625 4,452 4,039

Income from operations before taxes 441 325 394

Income tax expense 19 75 111

Net income 422 250 283

Less: Net income attributable to noncontrolling interests 3 2 2

Net Income attributable to Securian Financial Group, Inc. and subsidiaries $ 419 $ 248 $ 281

7 Total investments includes cash, cash equivalents and invested assets.

8 Policyholder benefits and funds includes policyholder and contract holder benefits, funds, claims and dividends.

These condensed consolidated financial statements are derived from the company’s audited consolidated financial statements, which are prepared in accordance with generally accepted accounting principles (GAAP).


BOARD OF DIRECTORS

Wilson G. Bradshaw Retired President Florida Gulf Coast University Fort Myers, Florida

Committees: Corporate Governance and Public Affairs; Human Resources and Compensation; Non-Overlapping Directors

Mary K. Brainerd Retired President and Chief Executive Officer HealthPartners Minneapolis, Minnesota

Committees: Audit (Chair); Investment; Executive

John W. Castro Retired Chief Executive Officer Merrill Corporation St. Paul, Minnesota

Committees: Corporate Governance and Public Affairs (Chair); Human Resources and Compensation; Executive

Sara H. Gavin President, North America Weber Shandwick Minneapolis, Minnesota

Committees: Corporate Governance and Public Affairs; Human Resources and Compensation

Eric B. Goodman Retired Chief Investment Officer AEGON USA Cedar Rapids, Iowa

Committees: Audit; Investment

Christopher M. Hilger Chairman, President and Chief Executive Officer Securian Financial Group, Inc. St. Paul, Minnesota

Committees: Corporate Governance and Public Affairs; Investment; Executive

John H. Hooley Retired Executive Vice President/President SUPERVALU Retail Companies Eden Prairie, Minnesota

Committees: Human Resources and Compensation (Chair); Audit; Executive

Ronald J. Peltier Chairman and Chief Executive Officer HomeServices of America, Inc. Minneapolis, Minnesota

Committees: Human Resources and Compensation; Investment; Non-Overlapping Directors

Trudy A. Rautio Retired President and Chief Executive Officer Carlson Minnetonka, Minnesota

Committees: Audit; Investment (Chair); Executive

Robert L. Senkler Former Chairman and Retired Chief Executive Officer Securian Financial Group, Inc. St. Paul, Minnesota

Committees: Corporate Governance and Public Affairs; Audit; Investment

Paul L. Snyder Former Managing Partner KPMG LLP Minneapolis, Minnesota

Committees: Audit; Investment; Non-Overlapping Directors


SENIOR OFFICERS

Christopher M. Hilger Chairman, President and Chief Executive Officer

Bruce P. Shay Executive Vice President

Warren J. Zaccaro Executive Vice President Chief Financial Officer and Chief Compliance Officer

Gary R. Christensen Senior Vice President General Counsel and Secretary

George I. Connolly Senior Vice President Wealth Management Group

Robert J. Ehren Senior Vice President Individual Market

David M. Kuplic Senior Vice President Chief Investment Officer

David J. LePlavy Senior Vice President Treasurer and Controller

Kathleen L. Pinkett Senior Vice President Human Resources and Corporate Services

Rick L. Ayers Vice President Retirement Plans

Mark A. Baltes Vice President Technology Services

Barbara A. Baumann Vice President Service and Operations

Peter G. Berlute Vice President Enterprise Technology

Laurence G. Cochrane Vice President Retail Product Distribution

Susan L. Ebertz Vice President Enterprise Benefit Distribution

Kristi L. Fox Vice President Talent Solutions and Chief Diversity Officer

Craig J. Frisvold Vice President Individual Life and Annuity Operations

Siddharth S. Gandhi Vice President Chief Strategy and Enterprise Technology Officer

Mark J. Geldernick Vice President Law

William M. Gould Vice President Financial Institution Market

Suzette L. Huovinen Vice President Chief Actuary and Chief Risk Officer

Daniel H. Kruse Vice President and Actuary Individual Life and Annuity

Anthony J. Martins Vice President Career Distribution

Paul E. Rudeen Vice President and Actuary Group Insurance

David A. Seidel President Canadian Premier Life Insurance Company and Legacy General Insurance Company

Erica A. Bergsland Second Vice President Asset Management Research and Trading

Richard A. Binger Second Vice President Chief Architect and Technology Infrastructure

Michael P. Boyle Second Vice President Law

Kimberly K. Carpenter Second Vice President Wealth Management

Julio A. Fesser Second Vice President Facilities Services

Christopher R. Greene Second Vice President Financial Institution Group President, Securian Casualty Company

Gary M. Kleist Second Vice President Investment Operations

Karen A. Leighton Second Vice President Corporate Services

Andrea L. Mack Second Vice President Individual Product Solutions Group

Ann P. McGarry Second Vice President Enterprise Marketing

Susan M. Munson-Regala Second Vice President and Actuary Group Insurance

Kristi J. Nelson Second Vice President and Actuary Credit Protection

Ted J. Nistler Second Vice President Corporate Tax

Sean M. O’Connell Second Vice President and Portfolio Manager

Kent O. Peterson Second Vice President and Actuary Retirement

Daniel P. Preiner Second Vice President Corporate Compliance Officer and Chief Information Security Officer

Mark W. Sievers Second Vice President Chief Audit Executive

Mary Anne Smith Second Vice President Career Distribution

Craig M. Stapleton-Corcoran Second Vice President and Portfolio Manager

Mary L. Streed Second Vice President Human Resources Planning

Robert J. Subjects Second Vice President Career Distribution Recruitment

Stephen R. Thor Second Vice President Retail Market Technology

Michael J. Webster Second Vice President Technology Customer Experience and Insights

John A. Yaggy Second Vice President Assistant Controller

securian.com

400 Robert Street North, St. Paul, MN 55101-2098 ©2018 Securian Financial Group, Inc. All rights reserved.

F27027 Rev 5-2018 DOFU 5-2018 465049

INSURANCEINVESTMENTSRETIREMENT

At Securian Financial, we’re here for family. And we’re here because of it.

Family doesn’t have to branch from your tree, but it always shares your roots. Roots woven by common understanding, shared values and mutual respect. Like you, we believe a rewarding life is really about being present in the here and now, and that money isn’t the only thing when family is your everything.

Since 1880, we’ve been here for those who see family as their most valuable asset. Our longevity is a testament to the strength of our company. We’ve weathered economic ups and downs while staying true to our customers. We’re not publicly traded, so we can focus on you and what you care most about.

We believe your financial picture should support the everyday moments as much as the major milestones. That’s why our insurance, investment and retirement solutions give you the confidence to focus on what’s truly valuable: banking memories with those who matter most.

For information about the rating agencies, visit securian.com/ratings.

For information on our financial strength, visit securian.com/financials.

Customer satisfaction results are based on our customer surveys conducted in 2016-2017.

The Securian Financial Network, the marketing name for the sales and distribution arm of Securian Financial Group, Inc., its subsidiaries and affiliates, is a nationwide network of financial services firms. Products and services are offered and sold only by appropriately licensed entities and financial representatives.

Securian Financial is the marketing name for Securian Financial Group, Inc., and its affiliates.

Securian Financial Group, Inc. is the holding company parent of a group of companies that provide a broad range of financial services, including: • Allied Solutions, LLC• American Modern Life Insurance Company• Asset Allocation & Management

Company, LLC• Minnesota Life Insurance Company• Securian Asset Management, Inc.• Securian Casualty Company • Securian Financial Services, Inc.• Securian Life Insurance Company• Securian Trust Company, N.A. • Southern Pioneer Life Insurance Company

http://securian.com

focused. forward. - securian financial · forward thinking. that’s why we are forming new...

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