Improving earnings profile supporting fixed-charge coverage of nearly 7x in 2004, an increase from 5x in 2003. Improving operating company dividend capacity of $61 million in 2004 providing strong statutory fixed charge coverage of more than 4x. Strong liquidity and demonstrated capital markets access ($325 million raised in 2004). Relatively weak GAAP capital with deferred acquisition expenses to unadjusted GAAP equity of 2.9x. Relatively high leverage with double leverage of 132%, debt leverage of 34%, and debt-plus-preferred to capital of 52% in 2004. Significant interest-rate risk exposure with a 1.5-year duration mismatch as of the first quarter of 2005 and significant negative convexity associated with a substantial amount of callable agency bonds. Reliance on a single operating company with product
