19. Segment Information

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Note 19 - Segment Information

In managing our business, we analyze segment performance on the basis of operating income. Operating income, as well as components of and financial measures derived from operating income, are non-U.S. GAAP financial measures.

Management believes that these measures provide additional insight into the underlying trends in our operations and are the internal performance measures we use in the management of our operations, including our compensation plans and planning processes. However, our non-U.S. GAAP financial measures should not be considered as substitutes for net income or measures that are derived from or incorporate net income and may be different from similarly titled measures of other companies. Investors should evaluate both U.S. GAAP and non-U.S. GAAP financial measures when reviewing our performance. Operating income is calculated by excluding realized investment gains (losses) as their amount and timing may be subject to management’s investment decisions.

Segment Information	Three Months Ended				Nine Months Ended
on Revenues:	September 30,				September 30,
($ in millions)	2012		2011		2012		2011
			As restated and amended				As restated and amended
Life and Annuity(1)	$	474.8	$	449.7	$	1,342.7	$	1,383.6
Saybrus Partners(2)		5.9		5.3		16.1		13.3
Less: Intercompany revenues(3)		2.6		3.2		8.3		7.4
Total revenues	$	478.1	$	451.8	$	1,350.5	$	1,389.5

———————

(1)	Includes intercompany interest revenue of $0.2 million and $0.1 million for the three months ended September 30, 2012 and 2011 and $0.5 million and $0.6 million for the nine months ended September 30, 2012 and 2011.
(2)	Includes intercompany commission revenue of $2.8 million and $3.3 million for the three months ended September 30, 2012 and 2011 and $8.8 million and $8.0 million for the nine months ended September 30, 2012 and 2011.

(3) All intercompany balances are eliminated in consolidating the financial statements.

Life and Annuity derives revenue from premiums, fee income and COI charges and net investment income. Saybrus derives revenue primarily from fees collected for advisory and distribution services.

Results of Operations by Segment as Reconciled to	Three Months Ended						Nine Months Ended
Consolidated Net Income:	September 30,						September 30,
($ in millions)	2012			2011			2012			2011
				As restated and amended						As restated and amended
Life and Annuity operating income (loss)	$	(136.8	)	$	14.9		$	(150.5	)	$	23.6
Saybrus Partners operating income (loss)		0.5			—			0.9			(1.5	)
Less: Applicable income tax expense (benefit)		(4.9	)		(6.8	)		(1.0	)		9.5
Loss from discontinued operations, net of income taxes		(6.0	)		(3.9	)		(12.0	)		(6.1	)
Net realized investment gains (losses)		27.5			(10.1	)		1.6			(18.0	)
Gain on debt repurchase		11.9			—			11.9			—
Less:  Net income (loss) attributable to noncontrolling interests		0.8			(0.3	)		0.6			(0.4	)
Net income (loss)	$	(98.8	)	$	8.0		$	(147.7	)	$	(11.1	)

We have not provided asset information for the segments. The assets attributable to Saybrus are not significant relative to the assets of our consolidated balance sheets and are not utilized by the chief operating decision maker. All third-party interest revenue and interest expense of the Company reside within the Life and Annuity segment.