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strength the sum of all parts
Mutual of Omaha • 2008 Annual Report
strength
consolidated financial highlights
total revenues $4,072,790,000
benefits to policyholders $2,846,659,000
total assets $21,245,594,000
life insurance in force $189,192,123,000
ratings
a.m. best company A+ (superior)
moody’s investors service Aa3 (excellent)
standard & poor’s AA- (very strong)
{equals}
the sum of all parts
chairman’s message 1
{contents} living in the moment 3
safeguarding promised protection 5
finding strength in adversity 7
sustaining a legacy 9
counting on quality 11
fulfilling a crucial mission 13
mutual of omaha affiliates 15
financial growth 17
disciplined investment strategy 19
2008 consolidated operating results 21
individual and family coverages 23
employee benefit solutions 24
leadership and affiliates 25
board of directors 26
A Message to Our
Customers
As 2008 came to a close, Americans were faced with Despite the challenging environment, Mutual of Omaha
economic conditions unlike any most of us have ever reached key milestones in 2008:
experienced. Each day, headlines reported new shock
waves to our financial system as icons of banking and • Both individual and group business units recorded
finance teetered on the brink of collapse. strong sales and earnings in a rapidly changing market.
Sales of our individual Medicare supplement policies
continued to set records in 2008, as did our group
One name that you did not see in those headlines was retirement plans and voluntary products. These results
Mutual of Omaha. Despite the extraordinary economic illustrate the important role our products play in the
and market conditions that have taken a toll on so many lives of our customers.
businesses, I’m pleased to report that Mutual of Omaha is
strong, stable, secure and profitable. • ith the acquisition of the deposits held by a failed
W
banking company in the Southwest, Mutual of Omaha
Thanks to our focused business strategy, disciplined Bank became one of the nation’s fastest-growing banks
investment practices and talented, engaged workforce, we with assets of $3.6 billion and locations in nine states.
avoided many of the pitfalls that ensnared others in our
industry. • onstruction accelerated on Midtown Crossing at
C
Turner Park, a one million-square-foot mixed-use
Absent from our product lines are the variable insurance development adjacent to our headquarters. The project is
and annuity products that are vulnerable to stock market on track for a November 2009 grand opening.
swings and whose guarantees have proven problematic for
other carriers. In 2009, Mutual of Omaha will celebrate its centennial.
Much has changed since our charter was issued back in
In good times and bad, we adhere to a disciplined 1909. But some things haven’t changed. Then, as now,
investment strategy that maintains an appropriate level of our insurance and financial products are designed to be
risk. While no financial company is immune from today’s a straightforward and affordable way to help customers
tumultuous markets, our investment professionals largely through the transitions we all face.
avoided investments in problematic areas such as subprime
mortgages and credit default swaps. I hope you enjoy this year’s report. The real-life stories on
the next few pages highlight the role Mutual of Omaha
Given the headlines, it’s natural to wonder if the businesses plays in our customers’ lives and the dedicated efforts of
in which you place your trust will be there when you need our associates.
them. With a surplus of more than $2 billion, strong ratings
and a commitment to meeting the long-term needs of our Thank you for your trust in Mutual of Omaha.
policyholders, Mutual of Omaha is a company you can
count on for strength, stability and security.
daniel p. neary
chairman and chief executive officer
3
individual and family coverages:
life insurance, disability insurance, long-term care insurance, medicare supplement insurance,
critical illness insurance, accidental death insurance, cancer insurance, annuities, mutual funds
living in the moment sharon roberts, Waukesha, Wisconsin
4
Sharon Roberts is a shining example of someone who With help from their Mutual of
lives life to the fullest and makes every day count. At 71 Omaha representative, Jay Van
years old, she’s seen plenty of ups and downs, but the Beusekom, they put their savings to
work and obtained insurance that
smile on her face reveals a peace she finds in the present
would help protect them. Sharon
that comes from knowing she’s lived a great life. and Jim both have annuities, life
insurance and Medicare supplement
From Alaska to Hawaii, the Caribbean to Colorado, Sharon insurance with Mutual of Omaha.
and her husband, Jim, have traveled the world. And, while Jim did not qualify for
long-term care insurance, Sharon has the coverage should she
“It really has been a great life,” Sharon said. “I’ve seen so many ever need it.
wonderful things and places. I’ve had so much fun.” Although
Sharon’s travels have been on hold for the past year as a result While Sharon remains in good health, she is satisfied with the
of Jim entering a nursing home, her days remain full. She way her Medicare supplement insurance covers what Medicare
has lived in the same modest house in Waukesha, Wis., for 52 does not. “I really like that there is no paperwork,” she said. “I
years and enjoys spending time in her yard and relaxing on also have prescription coverage and that has been a wonderful
her porch. An avid walker, she covers miles throughout her savings. Plus, Jay and his office are always there to help me if I
neighborhood each day and keeps her mind sharp with hours have questions.”
of reading. And, of course, she remains devoted to Jim.
“It really has been Because Jim did not qualify for long-term care insurance,
a great life.”
Sharon uses his annuities to help pay for his nursing home
care, which runs an astounding $9,000 a month. The
experience has made Sharon thankful she does have
“There’s never enough hours in a day,” she said. “I always say long-term care coverage.
there should be 48 instead of 24 to make sure you can do all
the fun stuff.” “Jim is in a very nice place and he is very well cared
for, but it’s a lot of money,” Sharon said. “With
Even though Sharon and Jim experienced many free-spirited Jim’s age and health at the time, it was just too
adventures, they knew they couldn’t enjoy the present unless late for him to qualify. I recommend people
their future was secure. They enlisted Mutual of Omaha get long-term care insurance early enough.
Insurance Company in 1987 to help with some of that It’s the smart thing to do.”
planning.
“It gives me peace of mind to know that I
“We knew it was important to start saving have coverage,” she said. “I’m not planning
early in life,” she said. “My dad always on using it anytime soon, but at least I’ll have
told me Social Security wouldn’t be it when I need it. I hope I live another 35
enough. He lived through the Depression years. There’s still stuff I want to see – like
and taught me lots of lessons: everything South America and Australia. I could get in
in moderation and to try to get the most the car and head out right now!”
out of your dollar. I guess that’s stuck with me.”
5
employee benefit plans:
life insurance, disability insurance, dental insurance, voluntary products, retirement plans
Safeguarding promised
protection
jose garza, Houston, Texas
6
In the world of cancer research, countless studies have Following chemotherapy, Jose
been done on the power of positive thinking. It only takes underwent surgery. A follow-up
visit to the doctor brought some
a short conversation with Jose Garza to understand why.
encouraging news. “Right now
With a big smile, infectious laugh and quick wit, Jose is always everything is clear,” said Jose, who
the first to offer a word of encouragement to his co-workers returned to work in December of
at Energy Cranes – a leading manufacturer of cranes used 2008. “It felt great to get back to work.”
to support the offshore oil and gas industry. His job as a
fabrication lead keeps him busy overseeing a team of welders Jose is living proof that a happy and healthy employee is a good
at the company’s Houston Northwinds location, ensuring that employee, said Tamara Butcher, Human Resource manager for
questions are answered and plans are followed. Even so, Jose Energy Cranes. “Our employees are the pulse of our company.
is never too busy to pause and reflect on the challenges he’s Providing quality benefits is our way of taking care of them.”
overcome.
That’s why the company pays for a broad range of Mutual of
“Mutual of Omaha’s Omaha coverages, including life, short-term disability, long-
representatives were term disability and accidental death and dismemberment
wonderful. The service
(AD&D) insurance. In addition, Energy Cranes
offers employees the option to purchase
was amazing.” additional voluntary life and AD&D insurance
“I was diagnosed with colon cancer in March of 2008,” said to protect themselves and their families.
Jose. “I went through eight sessions of chemotherapy, which
was hard. But you never saw me sad – I was always smiling “Sometimes it’s the only opportunity some of
and joking. You just have to keep your spirits up and be our employees have to obtain life
positive.” insurance or AD&D insurance for
themselves and their loved ones,” said
Although Jose’s attitude remained positive, the chemo took Butcher. “In today’s economy, we
its toll on his body, forcing him to miss nearly seven months all have to think about how we
of work. And while Jose courageously fought the disease spend our dollars. I always tell our
with faith and optimism, his employer-sponsored disability employees to invest in their future.
insurance coverage provided by Mutual of Omaha helped The voluntary insurance is a
protect his income. great way to protect their families.”
“I’m definitely thankful for the When selecting a benefits provider,
insurance coverage – it really helped Mutual of Omaha’s solid reputation
me out during my illness,” said Jose. and top-notch service stood out.
“The money was always on time According to Butcher, they haven’t been
and I had no problems. When I had disappointed. Jose agrees: “I feel confident
questions, I talked to Mutual of that Mutual of Omaha is there to help.”
Omaha representatives and they were
wonderful. The service was amazing.”
7
individual and family coverages:
life insurance, disability insurance, long-term care insurance, medicare supplement insurance,
critical illness insurance, accidental death insurance, cancer insurance, annuities, mutual funds
finding strength in Adversity
janet le veque cecil and chuck cecil, Columbia, South Carolina
8
Janet LeVeque Cecil is thankful for every day. At age “I don’t know what I would have done
55, she is living with stage IV breast cancer, which without this coverage,” Janet said. “It was
has spread to other parts of her body. Some days she a safety net for me that kept my life from
is in pain. Other days, she battles fatigue. But, she is crashing and burning. When you have
optimistic knowing she can focus on the things that health insurance, you still have deductibles
and co-pays that add up. You can get into
matter – without worrying about her finances.
trouble fast.”
In 2004, while at the gym, Janet noticed a Mutual of Omaha
Once Yip made the calls and Mutual of Omaha was able to
brochure displayed on the locker room counter. A self-
obtain medical records to confirm the diagnosis, Janet received
employed court reporter, she wanted to know more about
her $100,000 benefit.
health insurance and other products designed for the self-
employed. She called the number on the brochure for Mutual
She and her husband, Chuck, built a new home – mortgage-free
of Omaha representative Lokyan Yip. It’s a call she’s glad she
– on 14 acres of wooded land that Chuck already owned. They
made.
used the remainder of the money to pay off other debt.
After she met with Yip, she decided a
“Not having to make a mortgage payment has taken a
critical illness policy along with a health
tremendous stress out of my life. It has simplified things at
savings account – major medical plan
a time when I need that the most,” Janet said. “It feels good
were good options to protect her in
to be able to walk into the doctor’s office and write a check.
the event of an unexpected illness. The
That’s one thing I don’t have to worry about. I can focus on my
critical illness policy would provide a
treatment and my health.”
lump sum benefit if she were diagnosed
with one of several life-threatening conditions, including
Janet’s treatments will continue for the rest of her life. She
cancer. Although Janet already had a disability policy that
knows she will never be cured, but all she has to do is look
would replace part of her income, the critical illness coverage
around to know she has much to look forward to. She recently
would serve as a supplement. Janet also liked that there was
became a first-time grandmother and relishes every minute
no criteria for how the money must be used. And if she
she is able to spend with her grandson. She also appreciates her
never needed the insurance, her heir could receive all of her
home and land, which provide a peaceful retreat where she can
premium payments back. She also purchased an annuity that
spend time with Chuck and their dogs.
could be used as extra income later down the road.
“I don’t know what I would have “I meet many people at the clinic and they always talk about
done without this coverage.”
money and wonder how they are
going to pay for their treatments,”
she said. “I’ve seen that worrying
Like many people, Janet forgot about the critical illness policy
only exacerbates what someone
– until 2006. That May, as she took a deposition, she felt
is going through. I tell others
excruciating pain in her back. “In August, when I found out
of my experience and how
what it really was, it brought me to my knees,” Janet said.
they need to protect
themselves. I can sleep at night
The pain and her treatments left Janet unable to work.
knowing I am protected.”
Because she had some savings and disability payments were
coming in, she knew she was okay for a little while. She called
Yip to discuss accessing money from her annuity and was
reminded of the critical illness insurance she had purchased
two years earlier.
9
individual and family coverages:
life insurance, disability insurance, long-term care insurance, medicare supplement insurance,
critical illness insurance, accidental death insurance, cancer insurance, annuities, mutual funds
sustaining a
Legacy
richard bertolette, kermit seitz and dave smith, Harrisburg, Pennsylvania
10
When John Plouse founded a machine shop in his garage With clients like Tyco and the U.S. Defense Department, the
in 1957, the world was a different place. However, Plouse company experienced its most profitable year ever in 2008.
Precision Manufacturing’s commitment to meet their
customers’ changing needs have allowed the company “At the time, it would have been a tremendous burden to take
to withstand the test of time for more than half a century. out a loan,” Dave said. “It would have put us in a bad financial
position from the get go.”
With our help, three key employees have carried on
John’s legacy and secured a future for the business.
“Honestly, I think it was more money
than a bank would probably have loaned
When John first met Mutual of us,” Kermit added. “We would never have
Omaha representative Dick Hestwood, been able to expand like we did.”
he didn’t believe in life insurance.
Hestwood worked with him to The experience made the trio realize the importance of business
establish group life and disability continuation planning and the role life insurance plays. Richard
plans for his employees and a small is already semi-retired and Kermit is making plans for his
individual life policy that would retirement. Their sons, Jeff Bertolette and Dale Seitz, are owners
provide a benefit for his wife. John didn’t want to discuss life and will continue running the business along with Dave and his
insurance beyond that. However, in 1997, Hestwood asked brother Darrel. All five of the current owners are insured with
him about his plans for passing on the business. In his 70s United of Omaha Life Insurance Company, a Mutual of Omaha
and in good health, John didn’t have an answer. Hestwood company.
suggested a universal life policy that would allow three key
employees to buy the business from his wife when the time “We kept up insurance because it opened our eyes when John
came. Thinking of his business’s future, John agreed. died,” Kermit said.
“This business was his LIFE.” “You never know what is going to happen to an important
member of the company – and when it does happen, you are
Kermit Seitz was John’s right-hand man when it came to never prepared for it,” Kermit said. “Life insurance is one of
finances and business operations. And, the expertise of Dave the best safety nets that you can have, especially when you’re
Smith and Richard Bertolette was essential. Richard was the working on a shoestring like we were. Mutual of Omaha made
top tool maker and Dave was an expert at the computerized it possible for us to be here today.”
technology that allows for precise customization of machine
parts. With that plan in place, John knew the future of his The three agree – if the insurance hadn’t been in place, they
business was secure. would all be working for someone else today.
Less than two years later, John fell ill with pancreatic cancer “We had 35 employees at the time of
and passed away. John’s death,” Kermit said. “Many
families would have been affected.
The life insurance and business continuation plan worked, We all would have lost our jobs.”
and Dave, Kermit and Richard purchased the business from
John’s widow. Since then they have expanded to keep pace “It was important to John that it
with market demands, growing from 7,500 square-feet continued, too,” Dave said. “This
and 35 employees to 24,000 square-feet and 70 employees. business was his life. It is his legacy.”
11
Employee Benefit Plans:
life insurance, disability insurance, dental insurance, voluntary products, retirement plans
Counting on Quality
diana lopez, Silicon Valley, California
12
Every day, doctors in clinics and hospitals around the Katia Bejan, senior director of Human Resources. With 190
world rely on cutting edge technology developed by NDS employees in five countries, it’s an important aspect of her job –
Surgical Imaging – and it all starts with people like but just one of her many responsibilities.
Diana Lopez.
Bejan knows she can rely on Mutual of Omaha to provide
a quality product and excellent service. Anytime she has a
Based in Silicon Valley, Calif., the company designs and question, Mutual of Omaha representatives Kevin Doucet and
manufactures high definition monitors and touch-screen Kim Short are just a phone call away.
software technology that puts a wealth of medical information
at a surgeon’s fingertips. “The service was what sold
us and the service continues
Behind each device produced by NDS to be the reason we have such
Surgical Imaging (NDSsi) is a promise high participation,” said Bejan,
of quality and precision. That’s where noting that 80 percent of NDSsi’s
Diana comes in. As the manufacturing employees are enrolled in the
lead, it’s her job to ensure that the high- 401(k) plan, which includes a
tech equipment is produced with an matching contribution from the
extreme attention to detail. company. “When Kim and Kevin
are onsite, they go through how everything works, including the
“Every unit starts on the production floor,” said Diana, who investments. They even pass out their business cards with their
has been at NDSsi for five years. “We build it, test it and send cell phone numbers and tell employees to call them anytime
it to the customer, usually with a turnaround of three days. We they have a question. That’s good service.”
make sure everything is done well and on schedule.”
As NDSsi continues to grow, Bejan knows Mutual of Omaha is
When she’s not at work, Diana finds contentment spending a partner she can count on to deliver a quality retirement plan,
time with her family. A native of California, she also loves giving her peace of mind.
sewing, camping and fishing. All are hobbies she hopes to
enjoy with more frequency when she retires someday. “When we selected Mutual of Omaha, we
wanted a provider that had been in the
That’s why Diana appreciates her employer-sponsored business for a long time, had a good
retirement plan from United of Omaha, a Mutual of Omaha reputation in the industry, substantial
company. “I love having a retirement plan,” she said. “My financial assets and great customer
goal is to save enough so I can be happy, enjoy life and still be service,” she said. “If all my vendors
young enough to do all the things I want to do.” were like Mutual of Omaha, I wouldn’t
“I love having a retirement plan — have anything to worry about.”
my goal is to save enough so I can
be happy and enjoy life.”
Educating employees like Diana about the importance of
saving for retirement is an ongoing process at NDSsi, said
13
mutual of omaha foundation mission:
empowering families to overcome critical issues and work toward positive change
Fulfilling a Crucial mission
jackie kelsey and students from the omaha street school, Omaha, Nebraska
14
For Jackie Kelsey, working with at-risk youth at the Seeing students undergo the process
Omaha Street School is more than a job. She defines it of transformation and achieve success
as her “calling and purpose in life.” is what Jackie loves most about her
job. “That’s where my moments of
peace come from. Seeing their success
After 23 years as a teacher, Jackie discovered the Omaha Street
and their understanding that they
School in 2000. She felt an immediate connection to their
have value is priceless.”
mission of providing a safe, nurturing environment where
troubled kids can earn a high school diploma and a new lease
Empowering others to overcome obstacles is the reason the
on life.
Mutual of Omaha Foundation exists. With literacy being one
of its critical issues, the Foundation is committed to helping
“I saw a brochure and thought ‘this is it – this is what I need
organizations like the Omaha Street School and people like
to be doing,’” said Jackie. “In my training, we always learned
Jackie who are bringing about positive change.
about the importance of educating the total child and I saw
this as an opportunity to do that. When I’m here, I feel like it’s
John Parsons, executive director at the Omaha Street School,
my calling to work with these kids.”
appreciates the Foundation’s financial support and knows it’s a
critical part of the school’s work helping students close the gap
By the time students reach the Omaha
between where they are and where they need to be.
Street School, they often have nowhere
else to go. Most weren’t able to succeed
“We have to understand the depths of where the students come
in a traditional school. Some come from
from before we can help them,” said Parsons. “We try to help
the juvenile correction system. Many see
them put their lives back together within the context of school.
the school as their last chance.
And without financial support, we couldn’t do this because the
kids can’t afford tuition.”
When they first arrive, students meet Jackie, who tests them
and begins the process of designing their individualized
For Jackie, the Foundation’s financial support is a huge
education plans. But her job doesn’t end there. With her vast
encouragement.
teaching experience and a master’s degree in guidance and
counseling, Jackie has many roles.
“The fact that the Mutual of Omaha Foundation is willing to
“When I’m here, help gives me the motivation to move ahead, to keep trying, to
I feel like it’s my calling
continue doing things better. It’s just awesome to me.”
to work with these kids.”
First and foremost, she’s responsible for overseeing the
school’s literacy program, which is funded by the Mutual of
Omaha Foundation. As part of the program, Jackie mentors a
group of retired teachers who tutor students with significant
learning disabilities. She works with the students, tutors and
classroom teachers to facilitate communication and ensure the
kids receive the help they need.
15
Mutual of Omaha Affiliates
Mutual of Omaha Bank
For Mutual of Omaha Bank, 2008 was a landmark year. access to industry leading technology. That, combined with
While the industry faced an unprecedented credit crisis, new capabilities acquired in the West Region, allowed the
Mutual of Omaha Bank became one of the fastest-growing bank to offer an expanded and improved menu of banking
banks in the nation, relying on a strong capital base and solutions – from wealth management and trust services
a conservative, community banking approach to remain for individuals, to state-of-the-art cash management and
steadfast and strong. treasury services for businesses of all shapes and sizes.
New markets and regions. Mutual of Omaha Bank acquired Strength and stability. While other financial institutions fell
the deposits of the failed First National Bank of Nevada (also on hard times in 2008, Mutual of Omaha Bank continues
operating as First National Bank of Arizona) from the FDIC. to be able to lend to qualified individuals and businesses. As
The acquisition allowed the bank to quadruple its assets a result, Mutual of Omaha Bank’s customers have peace of
overnight, while entering several key markets – Arizona, mind that the bank will remain a solid financial partner well
California and Nevada. In addition, the bank opened loan into the future.
production offices in Florida, Iowa, Kansas and Texas,
establishing three distinct regions – Central, West and East. For more information about Mutual of Omaha Bank, visit
mutualofomahabank.com.
Enhanced products and services. The bank enhanced its
core banking system in the Central Region, giving customers
16
Midtown Crossing
Scheduled to open in fall 2009, East Campus Realty LLC’s Element by Westin announced it will open a luxury hotel at
Midtown Crossing development represents a $300 million the site. Element is Starwood Hotels & Resorts’ newest hotel
investment in the neighborhood that Mutual of Omaha calls concept. The upscale extended stay hotel will open in 2010.
home. With seven buildings totaling more than one million
square feet, Midtown Crossing will offer the best of urban The project earned Stage 2 LEED Certification.
condo and apartment living without the compromise of LEED for Neighborhood Development recognizes projects
amenities such as green space. An expanded and revitalized that protect and enhance the overall health, natural
Turner Park will be the centerpiece of the development. environment and quality of life in their communities.
Prairie Life Fitness and Marcus Theatres signed on as For more information about Midtown Crossing, visit
anchor tenants. Prairie Life will open a 31,000-square-foot midtowncrossing.com.
fitness center, while Marcus Theatres will operate a unique
five-screen, four-level upscale theater and entertainment
complex.
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Continuum Worldwide is a leading provider of operational
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Services include: • Professional Services
Regulatory and Compliance Solutions • Enterprise Resiliency
• Investigative and Compliance Solutions
• Enterprise Security Solutions For more information about Continuum, visit
• Business Partner Assurance continuumww.com.
17
Financial Growth
In this time of great financial stress,
Mutual of Omaha is strong, stable and secure.
For a century – through multiple recessions and even a Great Current Ratings for
Depression – Mutual of Omaha has been there to keep our Mutual of Omaha and United of Omaha
promises to our customers. That will not change. During these Objective, third-party assessments offer a valuable perspective on a
uncertain times, as the nation grapples with new financial company’s financial strength. The leading rating agencies validate
realities, Mutual of Omaha has the strength and stability to meet and reinforce Mutual of Omaha’s financial strength. We have
the insurance and financial needs of our customers. consistently earned high marks from rating agencies like
Mutual of Omaha ended 2008 in a strong capital position. A.M. Best, Standard & Poor’s and Moody’s Investors Service.
Thanks to our disciplined balance sheet management and In December 2008 – in the midst of the current economic
investment strategy, as well as our prudent business philosophy, uncertainty – Standard & Poor’s reaffirmed Mutual of Omaha’s
we have avoided drains on our capital. AA- (Very Strong) rating and issued a stable outlook for the
The financial information on pages 21 and 22 is presented on a company. A.M. Best upgraded Mutual of Omaha’s financial
basis that conforms to generally accepted accounting principles. strength rating to A+ (Superior) in 2007. As Forbes noted in its
Total consolidated assets and retained earnings at the end of 2008 Oct. 13, 2008, issue, A+ and better companies are best positioned
were $21.2 billion and $3.6 billion respectively. to weather financial storms. The magazine even listed Mutual of
Omaha as one of five “wise policies” due to our strong balance
For reporting to state insurance regulators, we are required to sheet and high rating.
use statutory accounting principles. Statutory policy reserves
ended the year at $14.6 billion. Statutory surplus, which
represents additional funds set aside to meet current and future
A.M. Best Company A+ (Superior)
obligations to policyholders and is a key measure of an insurer’s
For overall financial strength and ability to This rating is second
capital strength, ended 2008 at $2.1 billion. This reflects a meet ongoing obligations to policyholders highest of 16
decrease of $119 million from the previous year due in large
part to investment losses related to the country’s unprecedented Moody’s Investors Service Aa3 (Excellent)
economic upheaval. For current financial strength and ability This rating is fourth
to withstand financial stress in the future highest of 21
Despite this decrease, our statutory surplus represents financial
security for our policyholders and ensures we will have the ability
Standard & Poor’s AA- (Very Strong)
to not just survive, but to thrive in these difficult times.
For financial strength to meet obligations This rating is fourth
to policyholders highest of 21
18
As we enter our 100th year in business, Mutual of Omaha is a company that customers can count on for the strength, stability and
security that’s even more important during these uncertain times.
A renewed sense of ownership, accountability and engagement is alive throughout Mutual of Omaha. We are collaborating internally and
competing externally. We are executing our plans with consistency and focus. As a result, we are realizing our vision of being the kind of
company that our customers value, people admire and our competitors envy.
Total Consolidated Assets Statutory Policy Reserves Statutory Surplus
(In billions of dollars) (In billions of dollars) (In billions of dollars)
$21.2
20
15 2.25
$14.6
$2.1
15
1.75
10
10
1.25
5
5 .75
YEAR 04 05 06 07 08 YEAR 04 05 06 07 08 YEAR 04 05 06 07 08
Total assets of $21.2 billion demonstrate Policy reserves are funds set aside to pay Statutory surplus represents additional
our financial stability. future claims and other obligations to our funds available to meet current and future
policyholders. Measured on a statutory obligations to policyholders, and is an
basis, policy reserves totaled $14.6 billion important indicator of an insurer’s financial
at year-end 2008. strength. Mutual of Omaha’s statutory
surplus remained very strong, finishing 2008
at $2.1 billion.
19
Disciplined Investment Strategy
The mission of insurance is to provide financial security customer needs, we have developed sophisticated asset/liability
through life’s uncertainties. This discipline has served us well management strategies to support the different obligations we have
in good times and bad. We design, build, monitor and manage a to our policyholders. Certain insurance products can necessitate
diversified portfolio of carefully selected investments that offer payments to policyholders at any time, so the appropriate percentage
attractive returns, while still maintaining an appropriate level of of each company’s portfolio is invested in shorter-term instruments.
risk. On the other hand, some products – such as life and long-term care
insurance – represent obligations that may not require payments for
Because Mutual of Omaha and United of Omaha sell a broad
several years, so the investments supporting those obligations are
range of insurance products designed to meet a variety of
longer-term.
Mutual of Omaha Invested Assets United of Omaha Invested Assets
■ Bonds 46.0% ■ Bonds 78.5%
■ Affiliated Companies Stock 39.4% ■ Mortgage Loans 14.5%
■ Limited Partnerships 5.7% ■ Limited Partnerships 2.7%
■ Mortgage Loans 5.4% ■ Policy Loans 1.5%
■ Preferred Stock 1.8% ■ Affiliated Companies Stock 0.9%
■ Real Estate 0.9% ■ Cash and Short-Term Investments 0.8%
■ Cash and Short-Term Investments 0.5% ■ Real Estate 0.6%
■ Other Invested Assets 0.3% ■ Other Invested Assets 0.5%
Total Invested Assets 100% Total Invested Assets 100%
20
Recent dramatic swings in the stock market have challenged bond portfolio is very strong, with more than 94 percent of its holdings
all investors. Mutual of Omaha has limited exposure to the public rated as high quality by the National Association of Insurance
equity markets. As a result, even though the stock market was down Commissioners (NAIC). We emphasize investments in those asset
significantly at year-end 2008, the market declines have not had a classes that can most effectively fund our insurance products while
material impact on our financial position. providing adequate risk-adjusted returns.
Most of Mutual of Omaha’s portfolio – approximately 70 percent
of its invested assets – is invested in bonds. Mutual of Omaha’s
Mutual of Omaha Bond Portfolio Quality United of Omaha Bond Portfolio Quality
■ NAIC 1 (Highest Quality) 68.0% ■ NAIC 1 (Highest Quality) 61.9%
■ NAIC 2 (High Quality) 28.5% ■ NAIC 2 (High Quality) 31.6%
■ NAIC 3 (Medium Quality) 2.6% ■ NAIC 3 (Medium Quality) 4.3%
■ NAIC 4 (Lower Quality) 0.8% ■ NAIC 4 (Lower Quality) 1.8%
■ NAIC 5 (Lowest Quality) 0.0% ■ NAIC 5 (Lowest Quality) 0.2%
■ NAIC 6 (In or Near Default) 0.1% ■ NAIC 6 (In or Near Default) 0.2%
Total Invested Assets 100% Total Invested Assets 100%
21
2008 Consolidated Operating Results
Mutual of Omaha Insurance Company and Subsidiaries
Consolidated Balance Sheet December 31, 2008 (In thousands of dollars)
Assets Liabilities and Equity
Investments: Liabilities:
Fixed maturities, Future policy benefits $5,370,445
available for sale, at fair value $11,977,225
Policyholder account balances 5,657,948
Fixed maturities,
Unpaid claims 1,216,357
trading, at fair value 91,887
Unearned premiums 284,196
Equity securities 81,696
Deposits 2,842,551
Loans, net 3,415,089
Borrowings 569,524
Real estate 153,970
Other liabilities 982,816
Limited partnerships 503,071
Separate account liabilities 1,157,484
Other invested assets 29,626
Total Liabilities 18,081,321
Policy loans 184,485
Short-term investments 668,316
Equity:
Total Investments 17,105,365
Retained earnings 3,611,096
Accumulated other
Cash and cash equivalents 88,507 comprehensive loss (446,823)
Accrued investment income 130,451 Total Equity 3,164,273
Premiums and other receivables 110,896
Deferred policy acquisition costs 1,705,701
Reinsurance recoverable 354,026
Income taxes receivable, current and deferred 10,701
Goodwill and intangible assets 220,723
Other assets 361,740
Separate account assets 1,157,484
Total Assets $21,245,594 Total Liabilities and Equity $21,245,594
The above information is presented on a basis that conforms with generally accepted accounting principles.
22
Mutual of Omaha Insurance Company and Subsidiaries
Consolidated Summary of Operations For the Year Ended December 31, 2008
(In thousands of dollars)
Revenues
Health and accident $1,908,333
Life and annuity 1,322,571
Net investment income 909,689
Net realized investment losses (133,714)
Other 65,911
Total Revenues 4,072,790
Benefits and Expenses
Health and accident benefits 1,370,210
Life and annuity benefits 1,211,119
Interest credited 265,330
Policy acquisition costs 483,768
General insurance and bank expenses 586,006
Other 64,341
Total Benefits and Expenses 3,980,774
Income before income taxes 92,016
Income taxes 44,968
Net Income $47,048
The above information is presented on a basis that conforms with generally accepted accounting principles.
23
Individual and Family Coverages
We offer products and services that provide financial Our nationwide network of sales offices and representatives are ready
protection to help families, individuals and small to assist you in planning for your future. For more information or to
businesses achieve their financial goals. locate an office near you, visit mutualofomaha.com.
Products and Services for Individuals, Families and Small Businesses
Life Insurance Income Protection Insurance
Protect your family from the financial risk associated Protect your most valuable asset – your income
with death or build wealth to achieve your financial goals
N Short-Term and Long-Term Disability Income Plans
N Universal Life Insurance N Accident Disability Income Plans
N Whole Life Insurance
N Term Life Insurance Supplemental Health Insurance
Protection from life’s unforeseen events
Medicare Supplement Insurance*
Reduce out-of-pocket health care expenses N Critical Illness
with competitively priced products that work with N Accidental Death
Medicare plans N Cancer Insurance
N Medicare Supplement Plans Investment Products***
N Medicare SELECT Plans Registered representatives can help you invest wisely
toward your financial goals
Annuities
Accumulate savings and assets or convert into N Mutual Funds
guaranteed income payments for retirement N Variable Annuities
N Variable Universal Life
N Single Premium Deferred Annuities N 529 Plans
N Single Premium Immediate Annuities N Mutual Fund Wrap Accounts¹
N Flexible Premium Annuities N Separately Managed Accounts¹
N Hybrid Annuity (Deferred Annuity with N Financial Planning¹
Long-Term Care Benefits)
Long-Term Care Insurance** * Mutual of Omaha Insurance Company, United of Omaha Life Insurance
Preserve assets and receive quality care with coverage for Company, United World Life Insurance Company, nor any of their Medicare
supplement insurance policies/certificates, are connected with or endorsed by
home health care, assisted living facilities and nursing homes the U.S. Government or the federal Medicare program.
** Certain benefits or features may not be available in your state. These products
N Two-Year, Three-Year, Four-Year, Five-Year and have exclusions and limitations. Please consult a representative for full
Unlimited Benefit Policy Options details.
N Simplified and Comprehensive Benefit Plans *** Investment products and advisory services offered through Mutual of Omaha
Investor Services, Inc., a broker-dealer and registered investment adviser.
Home office: Mutual of Omaha Plaza, Omaha, NE 68175-1020.
¹ These products and services available only through investment adviser
representatives of Mutual of Omaha Investor Services, Inc.
24
Employee Benefit Solutions
Employee benefit plans play a key role in helping attract and their futures. We can tailor a plan for you and your employees.
and retain a talented workforce. That’s why employers look Our commitment to service and offices nationwide make us easy to
to us for high-quality, comprehensive plans that help them work with. For more information, log on to mutualofomaha.com.
control costs while securing their employees, their families
Products and Services for Businesses and Employees
Life Insurance Retirement Services Products
Protect your employees and their families from the financial Choose from turnkey employer solutions, with fiduciary
risk associated with death support and individually managed account options, to
protect plan sponsors and help employees save for a
N Term Life Insurance
financially secure future
N Accidental Death and Dismemberment Insurance
N Travel Accident N Defined Contribution – 401(k), 401(a) and 457(b)
N Defined Benefit
Disability Insurance
Protect employees’ incomes in the event of a disabling accident Retirement Income Products
or illness Provide employees and individuals with a steady stream of
retirement income
N Short-Term and Long-Term Disability Insurance
N Defined Benefit Plan Terminations
Dental Insurance N Retirement Income and Rollover Annuities
Offer your employees comprehensive, affordable coverage N Deferred Compensation
backed by a large network N Executive Benefits
N Charitable Gift Annuity Products
Voluntary Products
Provide a comprehensive benefits package with voluntary Special Markets
benefits employees can purchase through payroll deduction N Stop-Loss for Third Party Administrators (TPAs)
N Youth Activities/Sports Accident
N Term Life Insurance
N Short-Term and Long-Term Disability Insurance
N Voluntary Accidental Death and Dismemberment
Insurance
N Dental Insurance
Note: Coverages are underwritten by Mutual of Omaha Insurance Company, United of Omaha Life Insurance Company, United World Life Insurance
Company and Companion Life Insurance Company. In the state of New York, Companion Life Insurance Company – an affiliate of Mutual of Omaha –
underwrites individual life and group life insurance plans, annuity products and special risks coverages. DentaBenefits is underwritten and administered
exclusively by United Concordia Companies, Inc.’s licensed corporate affiliates and marketed exclusively by Mutual of Omaha. United Concordia
and Mutual of Omaha are separate and unaffiliated companies. Many of the products listed are available either as fully or partially insured or as
administrative services only.
25
Leadership and Affiliates
Senior Officers Madeline R. Rucker
Executive Vice President, Customer Service
Daniel P. Neary
Chairman of the Board and Chief Jeffrey R. Schmid
Executive Officer President and Chief Executive Officer,
Omaha Financial Holdings, Inc.
Richard C. Anderl
Executive Vice President and General Counsel Stacy A. Scholtz
Executive Vice President, Corporate Services
David A. Diamond
Executive Vice President, Chief Financial Michael C. Weekly
Officer and Treasurer Executive Vice President,
Individual Financial Services and President,
Robert T. Handren United World Life Insurance Company
Executive Vice President, Information Services
Richard A. Witt
Daniel P. Martin Executive Vice President and
Executive Vice President, Group Benefit Services Chief Investment Officer
Mutual of Omaha Affiliate Companies
Companion Life Insurance Company of Lynbrook, N.Y., offers a full line of individual life, annuity and group life
insurance plans to residents of New York.
Continuum Worldwide Corporation is a leading provider of Operational Risk Management services and consulting.
East Campus Realty, LLC is developing Midtown Crossing at Turner Park, a mixed-use development adjacent to
Mutual of Omaha’s headquarters.
Mutual of Omaha Investor Services, Inc., a registered broker-dealer, provides mutual funds directly to consumers
through Mutual of Omaha’s agency sales force and Retirement Plans Division.
Omaha Financial Holdings, Inc. is a holding company for Mutual of Omaha’s banking operations.
Retirement Marketing Solutions, Inc. is a national wholesaling organization specializing in retirement products.
United of Omaha Life Insurance Company offers a diversified portfolio of life insurance, fixed annuities and other
insurance and financial services products through Mutual of Omaha’s agency sales force, group sales offices and
independent agent networks.
United World Life Insurance Company offers specialty life plans and health and accident coverage through direct
marketing, Mutual of Omaha’s agency sales force and independent agent networks.
26
Board of Directors
Robert Clarke, Anthony Principi, Derek McClain, Jeffrey Heller, Daniel Neary, Richard Mies, Gary Gates, James McFarlane, Samuel Foggie
Robert L. Clarke Derek R. McClain Daniel P. Neary
Senior Partner, Former Chief Financial Officer, Chairman of the Board and
Bracewell & Giuliani, LLP Trammell Crow Company Chief Executive Officer,
Houston, Texas Dallas, Texas Mutual of Omaha Insurance Company
and United of Omaha
W. Gary Gates James G. McFarlane Life Insurance Company
President and Area Chairman, Omaha, Neb.
Chief Executive Officer, Arthur J. Gallagher & Co.
Omaha Public Power District Glendale, Calif. Anthony J. Principi
Omaha, Neb. Senior Vice President,
Admiral Richard W. Mies Pfizer, Inc.
United States Navy (Retired) Washington, D.C.
Jeffrey M. Heller
Former Vice Chairman, President and Chief Executive Officer,
Electronic Data Systems (EDS) The Mies Group Ltd. Samuel L. Foggie Sr.
Dallas, Texas McLean, Va. Director Emeritus
Fort Washington, Md.
Mutual of Omaha Insurance Company
Mutual of Omaha Plaza
Omaha, NE 68175
mutualofomaha.com
M1973_0409
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