-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DI7Ze4oyLLJFaBTzskRFifRrNsa5Rejwd8eE0bVBjCEtNlxbELu0mZdvDJ9wFtOb EmkEgFBjzDHPrX5JF3yLgg== 0000950134-02-014043.txt : 20021113 0000950134-02-014043.hdr.sgml : 20021113 20021113120103 ACCESSION NUMBER: 0000950134-02-014043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FORTIS BENEFITS INSURANCE CO CENTRAL INDEX KEY: 0000823533 IRS NUMBER: 810170040 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-37576 FILM NUMBER: 02818955 BUSINESS ADDRESS: STREET 1: 500 BIELENBERG DRIVE CITY: WOODBURY STATE: MN ZIP: 55125 BUSINESS PHONE: 6517384000 MAIL ADDRESS: STREET 1: P O BOX 64284 CITY: ST PAUL STATE: MN ZIP: 55164 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN LIFE INSURANCE CO DATE OF NAME CHANGE: 19920329 10-Q 1 c72955e10vq.txt FORM 10-Q FOR QUARTER ENDING SEPTEMBER 30, 2002 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 33-46620 FORTIS BENEFITS INSURANCE COMPANY (Exact name of registrant as specified in its charter) MINNESOTA 81-0170040 (State or other jurisdiction of (IRS Identification No.) incorporation or organization) 576 BIELENBERG DRIVE, WOODBURY, MN 55125 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: 651-361-4000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months ( or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- FORTIS BENEFITS INSURANCE COMPANY BALANCE SHEETS (In thousands, except share data) - --------------------------------------------------------------------------------
ASSETS SEPTEMBER 30, DECEMBER 31, 2002 2001 ---------------------------------- (UNAUDITED) Investments: Fixed maturities, at fair value (amortized cost 2002 - $2,963,495; 2001 - $2,744,158 $ 3,092,247 $ 2,785,442 Equity securities, at fair value (cost 2002 - $128,908; 2001 - $114,049) 125,882 115,348 Mortgage loans on real estate, less allowance for possible losses (2002--$13,228, 2001--$13,118) 595,822 655,211 Policy loans 10,199 9,935 Short-term investments 154,343 258,790 Real estate and other investments 61,619 64,424 ------------- -------------- 4,040,112 3,889,150 Cash and cash equivalents 10,283 11,704 Receivables: Uncollected premiums 66,875 63,080 Reinsurance recoverable on unpaid and paid losses 1,117,542 1,104,617 Other 11,664 34,027 ------------- -------------- 1,196,081 1,201,724 Accrued investment income 51,695 50,999 Deferred policy acquisition costs 122,591 108,406 Property and equipment at cost, less accumulated depreciation 4,116 4,972 Deferred federal income taxes 159,375 193,022 Other assets 7,442 12,780 Due from affiliates 21,639 12,044 Goodwill, less accumulated amortization (2002 - $5,720 2001 - $5,720) 171,788 167,992 Assets held in separate accounts 3,023,242 4,372,559 ------------- -------------- Total assets $ 8,808,364 $ 10,025,352 ============= ==============
The accompanying notes are an integral part of the financial statements. 2 FORTIS BENEFITS INSURANCE COMPANY BALANCE SHEETS (In thousands, except share data) - --------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, POLICY RESERVES AND LIABILITIES AND SHAREHOLDER'S EQUITY 2002 2001 ---------------------------------- (UNAUDITED) Policy reserves and liabilities: Future policy benefit reserves: Traditional and pre-need life insurance $ 1,860,905 $ 1,796,952 Interest sensitive and investment products 1,019,915 1,052,932 Accident and health 1,217,404 1,110,436 ------------- -------------- 4,098,224 3,960,320 Unearned revenues 48,795 54,811 Other policy claims and benefits payable 254,390 265,702 Policyholder dividends payable 2,023 2,023 ------------- -------------- 4,403,432 4,282,856 Accrued expenses 92,264 92,783 Current income taxes payable 4,904 80,306 Other liabilities 120,255 106,220 Deferred gain on reinsurance ceded 323,551 369,833 Liabilities related to separate accounts 3,023,242 4,372,559 ------------- -------------- Total policy reserves and liabilities 7,967,648 9,304,557 ------------- -------------- Shareholder's equity: Common stock, $5 par value: authorized, issued and outstanding shares - 1,000,000 5,000 5,000 Additional paid-in capital 516,570 516,570 Retained earnings 235,664 170,811 Unrealized gain on available-for-sale securities (net of deferred taxes 2002 - $45,643; 2001 - $16,099) 84,766 29,899 Unrealized loss due to foreign currency exchange (1,284) (1,485) ------------- -------------- Total shareholder's equity 840,716 720,795 ------------- -------------- Total policy reserves and liabilities and shareholder's equity $ 8,808,364 $ 10,025,352 ============= ==============
The accompanying notes are an integral part of the financial statements. 3 FORTIS BENEFITS INSURANCE COMPANY STATEMENTS OF INCOME (In thousands) - --------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2002 2001 --------------------------------- (UNAUDITED) (unaudited) Revenues: Insurance operations: Traditional and pre-need life insurance premiums $ 383,287 $ 376,069 Interest sensitive and investment product policy charges 1,953 46,371 Accident and health insurance premiums 883,529 750,082 ------------- --------------- 1,268,769 1,172,522 Net investment income 196,031 228,140 Net realized gains (losses) on investments (41,736) 8,483 Amortization of gain on reinsured business 46,282 33,883 Other income 7,502 12,492 ------------- --------------- Total revenues 1,476,848 1,455,520 Benefits and expenses: Benefits to policyholders: Traditional and pre-need life insurance 332,246 317,292 Interest sensitive investment products 4,470 35,385 Accident and health claims 656,086 574,773 ------------- --------------- 992,802 927,450 Policyholder dividends 167 875 Amortization of deferred policy acquisition costs 35,120 44,096 Insurance commissions 119,461 109,180 General and administrative expenses 233,658 220,711 ------------- --------------- Total benefits and expenses 1,381,208 1,302,312 ------------- --------------- Income before income taxes 95,640 153,208 Income tax expense Current 23,383 168,215 Deferred 7,408 (115,736) ------------- --------------- 30,791 52,479 ------------- --------------- Net income $ 64,849 $ 100,729 ============= =============== Other comprehensive loss: Unrealized (loss) gain on investments 55,072 49,695 ------------- --------------- Comprehensive income $ 119,921 $ 150,424 ============= ===============
The accompanying notes are an integral part of the financial statements. 4 FORTIS BENEFITS INSURANCE COMPANY STATEMENTS OF INCOME (In thousands) - --------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 2002 2001 --------------------------------- (UNAUDITED) (unaudited) Revenues: Insurance operations: Traditional and pre-need life insurance premiums $ 125,469 $ 121,758 Interest sensitive and investment product policy charges 541 3,290 Accident and health insurance premiums 296,208 255,065 -------------- -------------- 422,218 380,113 Net investment income 66,449 73,500 Net realized gains (losses) on investments (19,426) 10,132 Amortization of gain on reinsured business 15,402 16,362 Other income 2,119 3,934 -------------- -------------- Total revenues 486,762 484,041 Benefits and expenses: Benefits to policyholders: Traditional and pre-need life insurance 108,435 100,581 Interest sensitive investment products 1,159 4,451 Accident and health claims 218,995 191,279 -------------- -------------- 328,589 296,311 Policyholder dividends 572 116 Amortization of deferred policy acquisition costs 13,295 11,872 Insurance commissions 33,741 40,047 General and administrative expenses 76,205 70,152 -------------- -------------- Total benefits and expenses 452,402 418,498 ---------------- -------------- Income before income taxes 34,360 65,543 Income tax expense Current 24,184 18,034 Deferred (12,816) 4,112 -------------- -------------- 11,368 22,146 -------------- -------------- Net income $ 22,992 $ 43,397 ============== ============== Other comprehensive loss: Unrealized gain (loss) on investments 77,488 33,456 --------------- -------------- Comprehensive income $ 100,480 $ 76,853 =============== ==============
The accompanying notes are an integral part of the financial statements. 5 FORTIS BENEFITS INSURANCE COMPANY STATEMENTS OF CASH FLOWS (In thousands) - --------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2002 2001 ----------------------------------- (UNAUDITED) (unaudited) Cash flows from operating activities: Net income $ 64,849 $ 100,729 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization of goodwill 1,003 2,349 Amortization of gain on reinsured business (46,282) (33,883) Amortization of investment (discounts) premiums, net (1,688) (534) Net realized losses (gains) on sold investments 41,736 (8,483) Policy acquisition costs deferred (49,220) (61,395) Amortization of deferred policy acquisition costs 35,120 44,096 Provision for deferred federal income taxes 7,408 (115,736) (Decrease) increase in income taxes payable (73,358) 166,935 Change in receivables, accrued investment income, unearned premiums, accrued expenses, other assets, due to and from affiliates and other liabilities 7,260 66,199 Increase in future policy benefit reserves for traditional, interest sensitive and accident and health policies 137,696 65,798 Decrease in other policy claims and benefits and policyholder dividends payable (11,312) (797) Gain on sale of property and equipment -- (2,782) ------------ ------------- Net cash provided by operating activities 113,212 222,496 ------------ ------------- Cash flows from investing activities: Purchases of fixed maturity investments (1,572,410) (1,120,226) Sales and repayments of fixed maturity investments 1,309,567 1,363,064 Increase (decrease) in short-term investments 104,447 (362,904) Purchases of other investments (69,225) (280,301) Sales of other investments 120,614 333,399 (Purchases) sales of property and equipment (147) 20,670 Cash disbursed pursuant to reinsurance agreement (6,697) (1,605) ------------ ------------- Net cash used in investing activities (113,851) (47,903) ------------ ------------- Cash flows from financing activities: Activities related to investment products: Considerations received -- 43,713 Surrenders and death benefits -- (79,329) Dividends paid (75,000) Interest credited to policyholders -- 7,174 Change in foreign exchange rate (782) 4,035 ------------ ------------- Net cash used in financing activities (782) (99,407) ------------ ------------- (Decrease) increase in cash and cash equivalents (1,421) 75,186 Cash and cash equivalents at beginning of year 11,704 17,084 ------------ ------------- Cash and cash equivalents at end of year $ 10,283 $ 92,270 ============ =============
The accompanying notes are an integral part of the financial statements. 6 FORTIS BENEFITS INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS (unaudited) (In thousands) - -------------------------------------------------------------------------------- General: The accompanying unaudited financial statements of Fortis Benefits Insurance Company contain all adjustments necessary to present fairly the balance sheet as of September 30, 2002 and the related statement of income for the nine months ended September 30, 2002 and 2001, and cash flows for the nine months ended September 30, 2002 and 2001. Income tax payments were $98,763 and $1,323 for the nine months ended September 30, 2002 and 2001, respectively. The classification of fixed maturity investments is to be made at the time of purchase and, prospectively, that classification is expected to be reevaluated as of each balance sheet date. At September 30, 2002, all fixed maturity and equity securities are classified as available-for-sale and carried at fair value. The amortized cost and fair values of investments available-for sale were as follows at September 30, 2002:
GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE Fixed maturities: Governments $ 164,696 $ 12,771 $ 60 $ 177,407 Public utilities 251,017 18,468 10,318 259,167 Industrial and miscellaneous 2,009,424 153,778 70,103 2,093,099 Other 538,358 24,233 17 562,574 ------------ ---------- ---------- ------------ Total fixed maturities 2,963,495 209,250 80,498 3,092,247 Equity securities 128,908 6,604 9,630 125,882 ------------ ---------- ---------- ------------ Total $ 3,092,403 $ 215,854 $ 90,128 $ 3,218,129 ============ ========== ========== ============
The amortized cost and fair value in fixed maturities at September 30, 2002, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
AMORTIZED FAIR COST VALUE Due in one year or less $ 61,569 $ 62,106 Due after one year through five years 326,016 343,270 Due after five years through ten years 931,356 964,955 Due after ten years 1,644,554 1,721,916 ------------ ------------ Total $ 2,963,495 $ 3,092,247 ============ ============
7 FORTIS BENEFITS INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS (unaudited) (In thousands) - -------------------------------------------------------------------------------- Proceeds from sales of investments in fixed maturities in the nine-month period ended September 30, 2002 and September 30, 2001 were $1,309,567 and $1,363,064 respectively. Gross gains of $23,260 and $33,882 and gross losses of $68,180 and $37,092 were realized during the nine month periods ended September 30, 2002 and 2001, respectively. Mortgage Loans The Company has issued commercial mortgage loans on properties located throughout the United States. Approximately 37.0% of outstanding principal is concentrated in the states of New York, California and Florida, at September 30, 2002. The Company has a diversified loan portfolio with a small average size, which greatly reduces any loss exposure. The Company has established a reserve for mortgage loans. Effective as of July 1, 2001, Fortis Benefits Insurance Company, a Minnesota insurance company ("FBIC"), completed a merger in which Pierce National Life Insurance Company, a California insurance company ("PNL"), merged with and into FBIC (the "Merger"). Immediately prior to the Merger, both FBIC and PNL were indirect wholly owned subsidiaries of Fortis, Inc., a Nevada corporation and a holding company for certain insurance companies in the United States. The Merger was completed as part of an internal reorganization being effected by Fortis, Inc. with respect to certain of its life and health insurance companies. The PNL business is primarily pre-need life insurance designed to pre-fund funeral expenses and is sold as individual life and annuity products. The transaction will be accounted for as a statutory merger. Disposal of Fortis Financial Group (the "Division"): On April 1, 2001, Fortis, Inc. completed the sale (the "Sale") of its Division to The Hartford Financial Services Group ("Hartford") for $1.12 billion. The Division includes, among other blocks of business, certain individual life insurance policies (including variable universal life insurance policies) and all annuity contracts (collectively, the "Insurance Contracts") written by the Company and some of its affiliates. To effect the Sale as it relates to the Company, Hartford reinsured the Insurance Contracts on a 100% coinsurance basis, with the variable products on a modified coinsurance basis, and agreed to administer the Insurance Contracts prospectively. The Company received $500 million as part of the reinsurance agreement. The Sale also included Hartford's purchase of certain real and personal property owned by the Company and used in connection with the Division's business for which the Company received $21 million. The $1.12 billion purchase price was reallocated amongst the Company and other affiliates involved in the sale. The Sale resulted in a pre-tax deferred gain of approximately $395 million for the Company. The deferred gain will be amortized at the rate that earnings from the business sold would have been expected to emerge. Amortization of $43,670 has been included in income during the nine months ended September 30, 2002. The Company ceded $236,009 of premiums and $908,753 of reserves to Hartford through September 30, 2002. In the fourth quarter of 2001, the Company entered into a reinsurance agreement with Protective Life Corporation (Protective). The agreement, which became effective December 31, 2001, provided for the assumption of Protective's Dental Benefits Division on a 100% co-insurance basis. The Company assumed approximately $75,000 of reserves, $244,000 of assets including $147,000 of goodwill, and paid net cash of approximately $169,000 as of December 31, 2001. 8 FORTIS BENEFITS INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS (unaudited) (In thousands) - -------------------------------------------------------------------------------- Net Investment Income and Net Realized (Losses) Gains on Investments: Major categories of net investment income and realized (losses) gains on investments for the first nine months of each year were as follows:
REALIZED GAIN (LOSS) INVESTMENT INCOME ON INVESTMENTS 2002 2001 2002 2001 Fixed maturities $ 152,072 $ 166,833 $ (44,920) $ (3,210) Preferred stocks 4,687 1,784 (66) 61 Common stocks 3,490 9,658 2,400 815 Mortgage loans on real estate 39,142 50,595 919 7,810 Policy loans 422 2,010 -- -- Short-term investements 178 846 (69) (110) Real estate and other investments 1,945 1,219 -- 3,117 --------- --------- --------- --------- 201,936 232,945 (41,736) 8,483 --------- --------- Expenses (5,905) (4,805) --------- ---------- $ 196,031 $ 228,140 ========= ==========
9 FORTIS BENEFITS INSURANCE COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SEPTEMBER 30, 2002 COMPARED TO SEPTEMBER 30, 2001 REVENUES Fortis Benefits Insurance Company (the "Company") distributes its products through a network of independent agents, brokers and financial institutions. The Company's major products offered are group dental, group disability, group medical, group life, pre-need annuity and life and accidental death coverages. On December 31, 2001, the Company purchased (the "Purchase") the Dental Benefits Division of Protective Life Corporation ("Protective"). The Purchase includes primarily group dental products. The Company reinsured this business on a 100% coinsurance basis and will perform all administration activities. The Company assumed approximately $75 million of reserves, $244 million of assets including $147 million of goodwill, and paid net cash of approximately $169 million. The purchase of the Protective business accounts for a $153 million increase in accident and health premiums from September 30, 2001 to September 30, 2002. During 2001, the Company began offering a new accidental death product through financial institutions. This business represents 6.6% and 3.6% of total accident and health premium as of September 30, 2002 and 2001 respectively. Rate increases in the group medical line resulted in a 19% decrease of group medical premium due to non-renewal of existing business and lower new sales. Strong sales in the pre-need annuity and life line resulted in an increase of pre-need premium from nine months ended September 30, 2001 to nine months ended September 30, 2002 of 5%. On April 1, 2001, the Company entered into a coinsurance agreement with Hartford Financial Services Group ("Hartford") whereby the Company ceded the Investment Product block of business to the Hartford. Premium on this business represented 0% and 3.7% of total Company premium income for nine months ended September 30, 2002 and 2001, respectively. The Company continues to match investment portfolio composition to liquidity needs and capital requirements. Changes in interest rates during 2002 and 2001 resulted in recognition of realized gains and losses upon sales of securities. The Company had net capital losses from fixed maturity investments of $44.9 million and $3.2 million for the first nine months of 2002 and 2001, respectively. BENEFITS The total year-to-date policyholder benefit to premium ratio decreased from 79.1% to 78.2% from September 30, 2001 to September 30, 2002. The group dental, group disability, group medical, group life and pre-need benefit to premium ratios for the nine months ended September 30, were 73%, 88%, 65%, 75% and 102% 10 respectively in 2002 and 75%, 86%, 75%, 73% and 100% respectively in 2001. Group disability claim incidence is higher and terminations lower during the nine months ended September 30, 2002 as compared to the same period ended September 30, 2001. The 10% decrease in the group medical benefit to premium ratio during the nine months of 2002 compared to the same period in 2001 is a result of pricing increases and improved administration on this business. EXPENSES Commission rates have increased slightly from levels in 2001. This is primarily due to changes in the mix of business by product lines as well as the change in first year versus renewal premiums. The Company's general and administrative expense to premium ratio has decreased slightly from 18.8% at September 30, 2001 to 18.4% at September 30, 2002. 2001 expenses associated with the business reinsured by the Hartford had proportionally higher expenses on premium revenue than the remaining business' expense to premium levels. Offsetting this 2001 to 2002 decrease in expense to premium ratio are expense increases related to systems project costs. The Company continues to monitor expenses, striving to improve the expense to premium ratio, while maintaining quality and timely services to policyholders. MARKET RISK AND RISK MANAGEMENT Interest rate risk is the Company's primary market risk exposure. Substantial and sustained increases and decreases in market interest rates can affect the profitability of insurance products and market value of investments. The yield realized on new investments generally increases or decreases in direct relationship with interest rate changes. The market value of the Company's fixed maturity and mortgage loan portfolios generally increases when interest rates decrease, and decreases when interest rates increase. Interest rate risk is monitored and controlled through asset/liability management. As part of the risk management process, different economic scenarios are modeled, including cash flow testing required for insurance regulatory purposes, to determine that existing assets are adequate to meet projected liability cash flows. A major component of the Company's asset/liability management program is structuring the investment portfolio with cash flow characteristics consistent with the cash flow characteristics of the Company's insurance liabilities. The Company uses computer models to perform simulations of the cash flow generated from existing insurance policies under various interest rate scenarios. Information from these models is used in the determination of interest crediting strategies and investment strategies. The asset/liability management discipline includes strategies to minimize exposure to loss as market interest rates change. On the basis of these analyses, management believes there is no material solvency risk to the Company with respect to interest rate movements up or down of 100 basis points from year-end levels. Equity market risk exposure is not significant. Equity investments in the general account are not material enough to threaten solvency and contract owners bear the investment risk related to the variable products. Therefore, the risks associated with the investments supporting the variable separate accounts are assumed by contract owners, not by the Company. The Company provides certain 11 minimum death benefits that depend on the performance of the variable separate accounts. Currently the majority of these death benefit risks are reinsured which then protects the Company from adverse mortality experience and prolonged capital market decline. LIQUIDITY AND CAPITAL RESOURCES The market value of cash, short-term investments and publicly traded bonds and stocks is at least equal to all policyholder reserves and liabilities. The Company's portfolio is readily marketable and convertible to cash to a degree sufficient to provide for short-term needs. The Company consistently monitors its liability durations and invests assets accordingly. The Company has no material commitments or off-balance sheet financing arrangements, which would reduce sources of funds in the upcoming year. The National Association of Insurance Commissioners has implemented risk-based capital standards to determine the capital requirements of a life insurance company based upon the risks inherent in its operations. These standards require the computation of a risk-based capital amount which is then compared to a company's actual total adjusted capital. Based upon current calculations using these risk-based capital standards, the Company's percentage of total adjusted capital is in excess of ratios, which would require regulatory attention. The Company's fixed maturity investments consisted of 96.5% investment grade bonds as of September 30, 2002 and the Company does not expect this percentage to change significantly in the future. REGULATION The Company is subject to the laws and regulations established by the Minnesota State Insurance Department governing insurance business conducted in Minnesota. Periodic audits are conducted by the Minnesota Insurance Department related to the Company's compliance with these laws and regulations. To date, there have been no adverse findings regarding the Company's operations. 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a. Written Statement of Chief Executive Officer (Exhibit 99.1) Written Statement of Chief Executive Officer (Exhibit 99.2) b. None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on it's behalf by the undersigned thereunto duly authorized. Fortis Benefits Insurance Company (Registrant) Date: November 12, 2002 /s/ Larry M. Cains - -------------------------------------------- Larry M. Cains Treasurer (on behalf of the Registrant and as its principal financial and chief accounting officer) 13 CERTIFICATION OF PERIODIC REPORT PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, the undersigned Chief Executive Officer of Fortis Benefits Insurance Company (the "Company"), do hereby certify, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: 1. I have reviewed the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2002 (this "Report"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and have: a) Designated such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) Evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this Report (the "Evaluation Date"); and c) Presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent functions): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this Report whether there were significant changes in internal controls or in the other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 12, 2002 /s/ Robert B. Pollock -------------------------- Robert B. Pollock Chief Executive Officer 14 CERTIFICATION OF PERIODIC REPORT PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, the undersigned Chief Financial Officer of Fortis Benefits Insurance Company (the "Company"), do hereby certify, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: 1. I have reviewed the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2002 (this "Report"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and have: a) Designated such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) Evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this Report (the "Evaluation Date"); and c) Presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent functions): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this Report whether there were significant changes in internal controls or in the other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 12, 2002 /s/ Larry M. Cains -------------------------- Larry M. Cains Chief Financial Officer 15 EX-99.1 3 c72955exv99w1.txt WRITTEN STATEMENT OF CHIEF EXECUTIVE OFFICER Exhibit 99.1 STATEMENT OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SS. 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Fortis Benefits Insurance Company (the "Company") on Form 10-Q for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, the undersigned Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: 1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Robert B. Pollock - ------------------------------------------- Robert B. Pollock Chief Executive Officer November 12, 2002 EX-99.2 4 c72955exv99w2.txt WRITTEN STATEMENT OF CHIEF FINANCIAL OFFICER Exhibit 99.2 STATEMENT OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SS. 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Fortis Benefits Insurance Company (the "Company") on Form 10-Q for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, the undersigned Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: 3) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 4) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Larry M. Cains - ------------------------------------- Larry M. Cains Chief Financial Officer November 12, 2002 -----END PRIVACY-ENHANCED MESSAGE-----