Teammates for life Teammates

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2014 Annual Report
May 1-2, 2015
May 30-31, 2015
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I am pleased to report that 2014 was yet another outstanding year for
Penn Mutual. We take our role as stewards of your financial future very
seriously and are delighted to share the following highlights.
2010 - 2014: Five Years of Record Growth
In 2010, we embarked on a 10-year strategy to be positioned as the company that top advisors
recommend to their clients for life insurance, along with retirement income and other financial
products. We are well on our way to accomplishing that objective. Our market share has increased
dramatically, our earnings are strong, our assets are growing, and our financial strength remains our
hallmark. In November, we announced the highest dividend award payout in a decade and
a 24 percent increase over last year’s payout. The Story Behind Our Strength, included later in this
report, provides an in-depth look at our results.
2015 - 2020: Poised for Continued Success
While the life insurance industry in general is financially stronger today than it was five years ago, it is
facing headwinds — persistent low interest rates, market volatility, rapid changes in technology, and
a more diverse population. At Penn Mutual, we have our eye on these trends, and are well-positioned
with the right people in place to respond to them.
We are confident that we have what it takes to continue to attract and retain the ‘best and brightest’
talent in the years to come. After all, we’ve been connecting with every American generation since
1847, and will continue to do so. So, it’s no surprise that we look to the future with great promise as
the next generation — the millennials — begin to make their mark on the world. They will comprise
nearly half of the workforce by 2020. While many companies have been caught off guard on how to
best reach this generation, Penn Mutual is actively embracing them. One way is through our recently
announced sponsorship of the Penn Mutual Collegiate Rugby Championship and the Penn Mutual
Varsity Cup.
Rugby is the fastest growing team sport in America, and we are one of the fastest growing life
insurers in the U.S. We believe this sponsorship is a unique way to reach vital new audiences who
can benefit from the power of life insurance as the center of their financial plan, as well as the career
opportunities it offers. In this report, we bring to life our own “Rugby 7s” team —
­ seven of our
successful rugby-playing advisors and associates, who share how the sport has positively influenced
their careers and the relationships they have with their clients.
On behalf of all of us at Penn Mutual, we thank you for your continued trust in us.
We stand ready to serve you in the years to come.
Sincerely,
Eileen C. McDonnell
Chairman, President and Chief Executive Officer
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Matt Condon*,
Cornerstone Financial
Group, Burlington, MA
Position: Inside Centre
Rugby Club: St. Anselm College Rugby Club,
Old Gold Rugby Football Club
What does it mean to be a “teammate for life” with your clients?
The competition, the camaraderie, and the trust of my teammates
that I’ve gained from rugby are almost irreplaceable. All this, and more,
has helped me in my work with my clients.
Matt
Condon
One of the most important aspects of teamwork is a sense of trust.
My teammates on the pitch know that I will be there to support
them, and vice versa. That trust carries over into the business world.
If someone can trust you on the field, then they can trust you in the
boardroom or in the office afterwards.
Strategy in rugby often takes into account the flow of the game and
the weaknesses of the opponent. What I do with my clients is develop
a game plan for both the immediate short-term and for the rest of
their life. And, while in rugby we’re looking to exploit the other team’s
weaknesses, through proper planning I am able to help address
weaknesses in my client’s plan.
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Crysta
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Crystal Harris,
Penn Mutual information
Management & Technology
Robert Halligan*,
1847Financial,
Conshohocken, PA
Position: Prop
Position: Second Row
Rugby Clubs: MIT Women’s Rugby Football Club,
Rugby Club: Temple University School of Medicine Rugby Club
Bay Area She Hawks
How has rugby benefited your career?
What kind of parallels do you see between rugby and your career
I met many of my clients by playing rugby with them. Quite a few
in financial services?
are still clients despite living in all areas of the country, and many
During my rugby career, I played a number of positions — tight head
have remained friends. There is a certain bond and a lot of respect
prop, loose head prop, flanker, second row. I even played hooker once.
established by “working together in the trenches.” It is truly a team
If the team had a gap that fit my strengths, or I learned new skills that
game and the better in sync you are, the more successful the team.
made me a good fit for another position, I moved into a new role on
My rugby team had a lot of success, due in part to being able to
the field.
anticipate the next move our teammates were about to make.
My career at Penn Mutual has had a similar path. I’ve changed roles
When that many people can move as a single unit with one goal in
many times in my 13 years here as I’ve picked up new skill sets or saw
mind, the outcomes can be extraordinary. It directly parallels the
gaps that my strengths could fill. Changing positions kept things fresh
financial services industry. When all the players work for the benefit
and challenging for me on the rugby pitch, and it’s kept things equally
of the client — the advisors, support staff and home office associates —
challenging and exciting for me at Penn Mutual.
success is inevitable.
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Michael
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Michael Schubach,
Advanced Asset
Management, Peoria, IL
Andrew Hallsworth,
Penn Mutual Product
Management
Position: Front Row
Position: Scrum Half
Rugby Clubs: Indiana University Rugby Club and Peoria Rugby Club
Rugby Clubs: University of the West Indies, University of Florida,
What does it mean to be a “teammate for life” with your clients?
Barbados Rugby Club
I care for my clients the same way that I care for my teammates. The
How has rugby benefited your career?
experience I shared with my teammates reinforced the importance
Camaraderie and relationship building go hand in hand when playing
of trust and I know that they will always have my back, no matter
rugby, both with your teammates and the opposition. You have to
what. The same holds true for my clients. I will always be there for
have trust in your teammates during the game, but even when the
them for guidance and support, no matter what comes their way.
game is over, you can celebrate with the opposing team. It doesn’t
For a game plan to succeed in rugby you must plan for what can
matter what side you’re on — you can still be friends.
happen, not what you think will happen. This carries over to planning
Rugby has several positions and people with various talents are
for a client. You cannot predict the future so you must take into
needed to make a great team. In my career with Penn Mutual, I
account every possibility and be able to make changes as situations
have worked with many dedicated people with diverse backgrounds.
change. This type of planning, just as in rugby, must entail both
Bringing together different perspectives and working together as a
offensive and defensive strategies.
team makes us even stronger.
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Roy Naraine*,
Armor Wealth Management,
Addison, TX
Scott Blackley*,
Wealth Development
Strategies, Houston, TX
Position: Inside and Outside Center
Position: Inside Center or Flanker
Rugby Clubs: Leyton College, Eaton Manor Rugby Club,
Rugby Club: Angelo State Rugby Club, Bay Area Rugby Club
Fort Worth Rugby Club
How has rugby benefited your career?
What does rugby have to do with a career in financial services?
Rugby has taught me two important lessons: to never give up and
Rugby is a game of trust, due to the nature of it being 1-on-1
that there is more to life than just winning. Although losing is not fun,
confrontation. If an individual player does not do their job, a try can be
it is more important to do the right thing and keep pushing forward
scored and a game lost. In a game situation you have to have total trust
while believing in something bigger than yourself. The team with the
and confidence in all of the people around you — that’s why relationship
best players does not always win. More often than not, the team that
building within a team is critical. Unequivocal trust is the foundation of a
plays best together will end up with the victory.
great team.
I get up and keep moving forward on the pitch not because I should,
Trust is just as critical in financial services. My clients have to trust me
but because my teammates depend on me to do so. I also expect
and feel confident that the information I provide them is the best for
the same from them. They are not only teammates; they are friends,
their situation. They also need to know that I am always going to be
coworkers, and my family. Rugby has not benefited my career as
there for them, through the good and bad. The team I work with in my
much as my career has benefited from my playing rugby. I still see,
professional life is just as trustworthy as my rugby teammates and each
talk to, and meet up with all my college team members.
person is an expert within their respective areas, which benefits
my clients.
A good rugby player needs to have self-discipline, be a great
communicator and be able to build solid relationships. Sure enough,
these same attributes are necessary for a skilled and reliable advisor.
*Matt Condon, Robert Halligan, Roy Naraine and Scott
Blackley are Registered Representatives of Hornor,
Townsend & Kent, Inc.
5
2014 Financial Results
Condensed, Consolidated Balance Sheets; as of
December 31, 2014
December 31, 2013
$ 10,642,194
$ 9,562,695
Equity securities, at fair value
85,166
9,698
Real estate, net of accumulated depreciation
27,642
19,238
1,510,502
1,344,777
(in thousands)
Assets
Debt securities, at fair value
Other invested assets
Total investments
12,265,504
10,936,408
Other assets
4,751,277
4,510,433
Separate account assets
7,242,168
6,684,174
$24,258,949
$22,131,015
$ 9,654,592
$ 8,979,462
681,613
465,097
Other liabilities
3,528,271
3,308,100
Separate account liabilities
7,242,168
6,684,174
$21,106,644
19,436,833
494,140
213,700
Retained earnings
2,658,165
2,480,482
Total equity
3,152,305
2,694,182
24,258,949
$22,131,015
December 31, 2014
December 31, 2013
Total assets
Liabilities
Reserves and funds for payment of future benefits
Accrued income tax payable
Total liabilities
Equity
Accumulated other comprehensive income
Total liabilities and equity
Condensed, Consolidated Income Statements; for the year ended
(in thousands)
Revenues
$828,737
$578,947
Investment income
Premium and other product revenue
614,663
552,789
Broker Dealer Fees and Commissions
643,211
623,448
17,317
104,108
2,103,928
1,859,292
Policyholder benefits
620,523
561,902
Change in reserve for payment of future benefits
221,969
114,685
Other revenue (including realized capital gains and (losses))
Total revenue
Benefits and Expenses
Policyholder dividends
39,474
34,020
Broker Dealer Sales expense
359,137
351,604
Other expenses
622,573
568,212
1,863,676
1,630,423
240,252
228,869
Total expenses
Income before income taxes
Income tax expenses
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Net income
62,569
66,012
$177,683
$162,857
These financial results are reported according to Generally Accepted Accounting Principles in the United States of America [GAAP].
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Since 1847, Penn Mutual has been driven by
our noble purpose to create a world of possibilities for our
policyholders and contract holders. As an original pioneer of
mutual life insurance in America, we believe that life insurance
is the first part and center of a sound financial plan, and
purchasing it is the most protective, responsible and rewarding
action a person can take to build a solid foundation today and a
brighter future for generations to come.
Because of our financial strength, we have faithfully kept all our
promises to our policyholders and contract owners. Because
of our mutual structure, we have a long-term perspective,
basing all our decisions on the long-term best interests of our
policyholders. And because of the power of relationships, we
are a valued partner to our advisors, who help their clients make
smart decisions and offer the support, solutions and guidance to
make good things in life possible.
By staying true to these foundational elements, we have always
been there for our policyholders, their families and businesses.
Penn Mutual is proud that in 2014, the story behind our strength
continues, and positions us for a bright future.
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Financial Strength
One of our foundational elements is, and always will be, our financial strength and
stability. That foundation begins with capital strength.
Total Surplus (Capital) was a very strong $1.9 billion as of December 31, 2014. Total
surplus is the amount set aside for unexpected losses from operations, and is our
financial protection against business volatility. Our surplus position is a testament
to our high-quality investment portfolio and our ability to manage the guarantees
we provide our policyholders and contract owners through appropriate
investment techniques.
Penn Mutual has more than enough surplus to meet rating agency capital
requirements for our high financial strength ratings. Additionally, surplus is one
of the key indicators of the company’s long-term financial strength and stability,
which ensures we can meet future obligations to policyholders.
Total Statutory Assets Under Management, including the funds we safeguard for
‘14
‘13
‘12
‘11
1.6
1.6
1.6
1.5
Total Surplus
dollar amount in billions
1.9
our policyholders, was $19.5 billion, an increase of $1.6 billion from 2013.
‘10
‘14
‘13
‘12
‘11
13.3
14.5
16.2
17.9
19.5
Total Statutory assets under management
dollar amount in billions
‘10
Total Surplus (Capital), Total Assets, and Investment Portfolio information are reported according to a
Statutory Accounting basis.
8
Total Liabilities were $17.6, $16.4, $14.6, $12.9, and $11.7 billion for years 2014-2010 respectively.
High-Quality Investment Portfolio
Cash, short-term and investment-grade bonds 85.9%
Other invested assets and alternative assets 9.2%
Below investment-grade bonds 3.0%
Preferred stock 0.8%
Common stock 0.8%
Mortgages and real estate 0.3%
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We manage our investments with one goal in mind: to meet our
Our policyholders can take comfort in knowing that Penn Mutual
obligations to policyholders while protecting the long-term viability
takes a conservative approach to investment risk. We avoid any
of Penn Mutual. Our investment philosophy stresses rigorous
actions that might jeopardize our ability to keep the promises we
asset/liability management diversification, good liquidity, and a
make to our valued policyholders. The charts below feature our bond
conservative approach to portfolio risk. This philosophy has stood
portfolio and compare our conservative approach versus that of the
the test of time and has provided us with strong and superior
industry.
performance. Because of our mutual structure, we can take a longerterm view of the economy, which helps us mitigate market volatility.
With an average credit quality rating of A, Penn Mutual holds a
significantly higher percentage of NAIC 1 bonds than the industry,
Penn Mutual holds a high-quality portfolio of assets, with
as classified by the National Association of Insurance Commissioners
investment grade bonds representing the single largest class of
(NAIC). And, Penn Mutual holds a lower percentage of below
investments. As of December 31, 2014, 85.9 percent, or $9.2 billion,
investment grade bonds than the industry.
of the company’s total invested assets of $10.7 billion (excluding
policy loans), represented cash, short-term and investment grade
bonds.
This is the story behind our strength. You can be confident that your
life insurance policy or annuity contract has the full backing of a
company with an incomparable record of integrity—a company with
Our second largest asset class, “Other Invested Assets and
a 168-year history of safety, stability and security.
Alternative Assets,” represented 9.2 percent of the investment
portfolio (excluding policy loans). Included in this growing asset
class is our investment in Janney Montgomery Scott LLC, our
broker/dealer subsidiary; assets associated with our successful
equity hedging program, which allows us to manage the
guarantees we provide within our living benefits for our clients;
and alternative assets, consisting of our investments in limited
partnerships.
Naic 1 Bonds
Naic Below investment grade Bonds
73.4%
63.1%
3.4%
penn mutual (12/31/14)
industry (9/30/14)
penn mutual (12/31/14)
6.0%
industry (9/30/14)
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Financial Performance
Our financial performance for 2014 is a direct result of our
Total Revenue
historic strength and stability, even through a challenging
dollar amount in billions
economic and investment environment. Unlike many
companies, we built and maintained our surplus position to
high levels during positive economic cycles, which has kept us
in a very strong position. Because of this, we are able to take
2014
advantage of opportunities to build on our strong foundation.
2.1
2013:
2012:
2011:
2010:
1.9
1.8
1.7
1.6
Our results for the 12 months ended December 31, 2014,
underscore our continued focus on and commitment to
meeting our obligations to our policy holders and contract
owners and protecting Penn Mutual’s long-term viability. We
acheived solid financial results for the year, following our strong
Consolidated net income
dollar amount in millions
performance in 2013.
Total Revenue for the year was $2.1 billion. This includes
premium and product revenue from life and annuity products,
2014
investment income on our assets, and broker dealer fees and
178
2013:
2012:
2011:
2010:
163
130
91
85
commissions, which have shown solid growth over the past
five years.
Consolidated Net Income, which includes income from all
business segments—Insurance Products, Broker/Dealer and
Policyholder Benefits
Corporate—was a record $178 million, for the year ended
dollar amount in millions
December 31, 2014, compared to $163 million in 2013.
Benefits paid to our policyholders or their beneficiaries in 2014
totaled $621 million — the fullfillment of our promises to them.
We continue to be very pleased that throughout the economic
and market challenges, the underlying operations of Penn
Mutual continue to perform well and remain strong.
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2014
621
2013:
2012:
2011:
2010:
562
568
544
512
Sales Performance
Since 1847, Penn Mutual has been an advocate for the
individual life insurance in-force
complete value of life insurance as the first part and center of a
dollar amount in billions
sound financial plan.
Individual Life Insurance in-Force, the amount of life insurance
protection we provide to policyholders, reached a new high
2014
of $106 billion, a very strong 7 percent increase over 2013. This
106
2013:
2012:
2011:
2010:
99
92
82
74
growth demonstrates that policyholders value the protection
and living benefits offered by Penn Mutual products based on
the advice of their trusted advisors.
Life insurance sales for the year were $130 million. This
premium measures life sales based on internal formulas for
new life insurance sales
dollar amount in millions
specific products. Individual New Life Premiums were $430
million. Our results are evidence of our commitment to
our noble purpose to create a world of possibilities for our
policyholders through life insurance.
2014
130
2013:
2012:
2011:
2010:
139
163
137
114
2013:
2012:
2011:
2010:
687
817
825
887
New Annuity Sales were a strong $617 million in 2014. These
sales were the result of Penn Mutual’s solid product offerings
and the role that annuities play in our clients’ financial plans.
new annuity sales
dollar amount in millions
2014
617
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our leadership
Eileen C. McDonnell
Chairman, President
and Chief Executive Officer
David M. O’Malley
Chief Operating Officer
Thomas H. Harris, CLU®, ChFC®, FLMI
Executive Vice President, Distribution
Raymond G. Caucci, FSA, MAAA, ChFC®
Senior Vice President, Product Management, Underwriting & Advanced Sales
Susan T. Deakins, FSA, MAAA
Senior Vice President, Chief Financial Officer
Gregory J. Driscoll
Senior Vice President and Chief Information Officer
Alida M. Moose, Ed.D
Senior Vice President, Chief Human Resources Officer
Nina M. Mulrooney, CLU®, CPA, FLMI
Senior Vice President and General Auditor
Kevin T. Reynolds
Senior Vice President, Chief Legal Officer
The Penn Mutual Family
of Companies Leadership Team
Eileen C. McDonnell
Chairman, President and Chief Executive Officer
The Penn Mutual Life Insurance Company
David M. O’Malley
Chairman and Chief Executive Officer
Penn Mutual Asset Management, Inc.
Michelle A. Barry, MSM
President and Chief Executive Officer
Hornor, Townsend & Kent, Inc.
Timothy C. Scheve
President and Chief Executive Officer
Janney Montgomery Scott LLC
Ande B. Frazier, CLU®, LUTCF
President and Chief Marketing Officer
Leap Systems, LLC
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The Penn Mutual Board of Trustees
Edward G. Boehne
James S. Hunt
Edmond F. Notebaert
Former President
Federal Reserve Bank of Philadelphia
Retired Executive Vice President and
Chief Financial Officer
Disney Parks and Resorts Worldwide
Former Healthcare Executive
Joan Carter
President
UM Holdings, Ltd.
Robert E. Chappell
Retired Chairman
The Penn Mutual Life Insurance
Company
William R. Cook
Retired Chairman
BetzDearborn Inc.
Charisse R. Lillie
Vice President, Community Investment,
Comcast Corporation
President, Comcast Foundation
Eileen C. McDonnell
Chairman, President and
Chief Executive Officer
The Penn Mutual Life Insurance
Company
Robert H. Rock
President
MLR Holdings LLC
Anthony M Santomero
Former President
Federal Reserve Bank of Philadelphia
Susan D. Waring
Retired Executive Vice President and
Chief Administrative Officer
State Farm Life Insurance Company
Helen P. Pudlin
Retired Executive Vice President &
General Counsel
PNC Financial Services Group, Inc.
2016 Election of Trustees
Penn Mutual’s annual election of trustees will be held on Tuesday,
March 1, 2016, from 10:00 a.m. to 2:00 p.m. in the company’s office
at 600 Dresher Road, Horsham, PA.
All policyholders with policies in-force at the time of the election are
eligible to vote. Voting can be done by mail, online or telephone.
Proxy forms or additional information may be obtained through the
Secretary’s office, 600 Dresher Road, Horsham, PA 19044.
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Ourcompa
Penn Mutual Asset
of
Management, Inc.
On January 1, 2015, Independence Capital Management,
Inc. (ICMI), received a fresh face with an eye toward the
future, and was rebranded Penn Mutual Asset Management,
Inc. The firm has been a registered investment advisor and
wholly owned subsidiary of Penn Mutual since 1989.
Penn Mutual Asset Management serves as investment
adviser and manager of managers for the Penn Series
Funds, Inc., a proprietary fund complex. Penn Series Funds
had approximately $8.2 billion in assets as of December 31,
2014, and offers 29 diverse investment options within Penn
Mutual’s variable life and annuity products. Penn Mutual
Asset Management directly manages nine of the Funds,
three fixed income and six funds-of-funds, and employs subadvisers for the remaining 20.
Recently, Penn Mutual Asset Management added associates
to its talented team and invested in its operational
infrastructure to enhance its capabilities. As a result,
effective January 1, 2015, the firm began managing the
investment portfolios of Penn Mutual and its subsidiaries’
$12 billion general account. The launch of Penn Mutual
Asset Management, Inc. now brings alignment with the
increasingly prominent Penn Mutual brand, and its focus
will center on managing the $20 billion in assets held
cumulatively in Penn Mutual’s general account and inside
the Penn Series Funds.
Penn Mutual’s financial strength has been its hallmark
for 168 years, and the associates of Penn Mutual Asset
Management have greatly contributed to this strength by
successfully managing Penn Mutual’s diversified investment
portfolio through all types of economic and market
environments.
Looking ahead, the firm will continue to execute on its
core asset management competencies, which include
total return-based investing, advisory services and expertise
in alternative asset investing, as it enters a new chapter
of growth.
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The Penn Insurance
& Annuity Company
Hornor, Townsend &
Kent, Inc.
Founded in 1980, The Penn Insurance and Annuity
Company (PIA) is a wholly owned life insurance subsidiary
of Penn Mutual. Domiciled in Delaware, PIA maintains its
operations in Horsham, PA, and is licensed to do business
in 48 states and the District of Columbia. It markets its
products through Penn Mutual’s distribution systems and
has its in-force business serviced by the parent company.
Like its parent company, PIA is financially strong on a standalone basis, with total assets of $3.3 billion and total surplus
of $434 million at December 31, 2014.
Hornor, Townsend & Kent, Inc. (HTK) is a wholly owned
broker/dealer subsidiary of Penn Mutual. HTK provides a
superior support network for enabling financial advisors to
serve individuals and businesses through all life’s stages. With
more than 900 registered representatives and over $12 billion
in assets under management, HTK achieved record revenues
of $69 million in 2014. This was done by the hard work and
dedication of its advisors and associates who passionionately
and tirelessly serve its clients.
Leap Systems, LLC
In September 2012, Leap Systems, LLC (Leap) became
an affiliate of Penn Mutual. Leap is a leading provider of
innovative financial systems for advisors throughout the
United States and Canada. Since its founding in 1980,
Leap has been recognized by many of the world’s top
financial institutions as a leader and trusted resource for
achieving superior results and delivering an end-to-end
financial solution.
Leap’s strategies, methodologies and technologies
continue to transform the way advisors interact and build
relationships with their clients. The result is a holistic,
scientific, interactive and visually engaging experience
unlike any other financial process designed around the
Leap Model.
Financial Advisors
HTK financial advisors enjoy broad product choices, innovative
technology tools and exciting networking events designed to
build a successful business that supports clients’ investment
needs. HTK advances a better understanding of how life
insurance and investments work together to help clients
protect and grow their precious financial resources. In 2014,
HTK welcomed more than 200 new advisors to its team and
expanded its footprint across the country.
The values and integrity of HTK advisors and field leaders are
vital to its success and commitment to the financial services
industry. HTK avidly supports the proper regulation and
advancement of the life insurance and investment community
through its dedication to industry involvement and a steadfast
commitment to doing the right thing.
Home Office Professionals
HTK’s incredibly talented professionals support its national
network of advisors by building strong relationships and
understanding their needs and those of their clients. HTK’s
combination of tenured, knowledgeable associates and freshly
hired learners creates an exciting place to work and a true
service culture.
In 2014, HTK completed further upgrades to its technology
infrastructure and added more resources to support its growth.
HTK continues to compete in these exciting times…..and
continues to win!
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Janney Montgomery
Scott LLC
Janney Montgomery Scott LLC (Janney), a member of the
Penn Mutual family since 1982, serves more than 300,000
clients nationally— individuals, corporations, institutions, and
municipalities. Janney provides strategic financial advice and
innovative solutions through the firm’s experienced Private
Client Group, Financial Advisors, and Capital Markets
professionals. Janney is committed to delivering superior
advice, service, and solutions to help its clients reach their
financial goals.
Continued Growth and Resilience
Janney recorded a solid performance in 2014, achieving
revenues of $565 million that exceeded 2013 results. With
the challenges of modest economic growth, equity and
fixed income market volatility, and a stubbornly low interest
rate environment, Janney continued to grow in 2014 while
remaining profitable and resilient. The growth was a result
of diligently managing expenses, leveraging technology, and
recruiting and retaining top-notch talent across the firm.
Private Client Group
The Private Client Group showed strong performance for
the year, with increased market share and revenue growth
up 6 percent over 2013 results, to $442 million. The Private
Client Group continued to enhance product and service
offerings, with a particular focus on providing advice for the
income needs of clients approaching, or in, retirement.
Janney’s financial strength and stability, strong business
platform, and client-focused model continue to position
the Private Client Group as an attractive destination for top
industry advisors, professionals, and clients seeking a longterm relationship built on trusted, comprehensive advice.
16
Capital Markets
In 2014, Janney’s Capital Markets organization continued to
align its strategic focus across business lines and implement
its business plan by providing exceptional advice and
solutions to institutional, corporate, and municipal clients,
while weathering an increasingly challenging marketplace.
Capital Markets revenues were $89 million in 2014. Our
equity research, banking coverage, and depth of knowledge
within the core industries of consumer & retail, financials,
healthcare, and technology & media added value to many
client relationships in 2014.
Living Our Values as We Focus Forward
Our commitment to living our Values: Deliver with Integrity,
Drive for Success, Keep People at the Center, and Exceed
Expectations, guides our path forward. Our support of
diversity, inclusion, teamwork, and community will be our
catalyst for future innovation and strength—as we strive
to become the highest standard of success in financial
relationships.
Janney Montgomery Scott LLC is a member of the New York Stock
Exchange (NYSE), the Financial Industry Regulatory Authority
(FINRA), and the Securities Investor Protection Corporation (SIPC).
Building on our Strength
Our legacy of financial strength, our mutual structure, and our long-term perspective
continue to stand the test of time and are foundational to the company and our success.
The rating agencies recognize this and have, once again, given us a vote of confidence
in 2014, with a stable outlook, despite the challenging economy.
A.M. Best: A+ Superior
Penn Mutual’s A+ Superior rating,
which was reaffirmed in June 2014,
ranks the second highest out
of 16 ratings.
A.M. Best’s Financial Strength
Rating (FSR) is an opinion of
an insurer’s ability to meet its
obligations to policyholders.
A.M. Best uses letter grades
ranging from A++, the highest,
to F, companies in liquidation.
Rating modifiers and affiliation
codes may also be associated with these ratings.
Moody’s Investors
Service: Aa3 Excellent
Standard & Poor’s:
A+ Strong
Penn Mutual’s Aa3 Excellent rating,
which was reaffirmed in December
2014, ranks the fourth highest out
of 21 ratings.
Penn Mutual’s A+ Strong rating,
effective December 2014, ranks the
fifth highest out of 16 ratings.
Moody’s uses a letter grade scale
that ranges from Aaa, the highest
rating, to C, the lowest rating. It
also applies modifiers (1, 2 or 3) for
ratings below Aaa to indicate the
approximate rank of the company
in a particular class. These ratings
gradations provide investors with a
system for measuring an insurance
company’s ability to meet its
policyholder claims and obligations.
Standard and Poor’s uses a letter
grade scale that ranges from AAA,
the highest rating, to CCC, the
lowest rating. Ratings from AA to B
may be modified by a plus or minus
sign to show relative standing
within those grades. An insurer
rated BBB or higher is regarded
as having financial security
characteristics that outweigh any
vulnerability, and is highly likely to
have the ability to meet financial
commitments. An insurer rated
A+ has strong financial security
characteristics.
Our continued financial strength is not possible without your confidence in our ability to help you meet your financial
need to protect your life and unlock the value of all of life’s possibilities. On behalf of Penn Mutual’s executive team,
advisors, and all of our field and home office associates, we thank you for that strong vote of confidence and pledge to
keep earning your trust in the years to come.
All guarantees are based upon the claim-paying ability of the issuer. Loans and other policy withdrawals will
adversely impact cash values and/or death benefits, where you will receive less than the original principal.
The ratings quoted above apply only to Penn Mutual’s claims-paying ability and not to the products we offer or
their underlying investments.
Investors should carefully consider the investment objectives, risks, charges and expenses of a variable
insurance product before investing. Please read carefully the prospectuses for the relevant variable insurance
product and its underlying investment options, which contain this and other information about the product.
You can obtain a prospectus from your Penn Mutual financial professional or visit www.pennmutual.com.
Product and features may not be available in all states. Penn Mutual’s variable products are principally offered
through Hornor, Townsend & Kent, Inc. (HTK), Registered Investment Advisor, Member FINRA/SIPC. HTK is a
wholly owned subsidiary of The Penn Mutual Life Insurance Company.
Our Noble Purpose
Since 1847, Penn Mutual has been driven by our noble purpose —
to create a world of possibilities, one individual, one family and one
small business at a time. As an original pioneer of mutual life insurance
in America, we believe that purchasing life insurance is the most
protective, responsible and rewarding action a person can take to build
a solid foundation today and create a brighter future for generations
to come.
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© 2015 The Penn Mutual Life Insurance Company, Philadelphia, PA 19172 www.pennmutual.com
PM6796
03/15 | A5TM-0325-08E2