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Life Insurance Company of the Southwest (LSW) specializes in annuity and life insurance products. Our goal is to provide secure products that benefit our policyholders regardless of market conditions.
Annuities offered by LSW include single and flexible premium annuities specially designed for each of the qualified and non-qualified markets.
Life insurance products offered by LSW include term and universal life plans.
Dynamic Portfolio Management
Each proposed investment is carefully analyzed prior to purchase. Only those investments providing the highest risk-adjusted return are selected. All invested assets are constantly managed by a process called dynamic portfolio management, which improves the quality and performance of the assets as market conditions change.
LSW’s basic investment strategy involves the selection of diverse investments, including bonds, money market instruments and first-lien commercial mortgages. Securities are purchased and sold on a cash basis in accordance with such policy.
The percentage mix within each investment category varies with the trend of interest rates, the policyholder reserves to be supported and the availability of suitable investments. All amounts invested are in accordance with our investment policy.
LSW’s careful and conservative investment techniques have resulted in steady growth with an emphasis on quality.
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Detailed Planning Resulted in Continued Growth in ’05
By carefully managing our assets, we ensure that funds are
available when our policyholders need them. Our ongoing strategy of
buying high quality assets to properly support policy reserves achieved
excellent results in 2005. |
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At year end 2005…
Records were reached in Total Assets of $5.1 billion and Stockholders’ Equity of $418.8 million.
- Total liabilities (including Policy Reserves) were $4.7 billion.
- Our Net Gain from Operations (after tax) totaled $45.6 million.
- Over 95% of our bond portfolio was investment grade.
- Our commercial mortgage loan portfolio was 13.05% of invested assets.
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Bond Investments
Bond investments are limited to:
- U.S. Government and U.S. Government Agency bonds and notes
- Corporate
bonds and notes (including certain mortgage-backed securities).
Approximately 63.3% of LSW’s bond portfolio is comprised of corporate
bonds with 5.0% being U.S. Government/Treasury/Municipal Bonds.
Collateralized Mortgage Obligations (CMOs) comprise 31.7% of bonds, all
of which represent the right to receive both principal and interest
from the underlying first-lien mortgages. The majority of LSW’s CMO
portfolio has the collection of principal and interest guaranteed by
the U.S. Government or agencies thereof. Approximately 4.2% of LSW’s
bonds are non-investment grade.
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Money Market Instruments
Money market instrument investments consist of:
- Treasury bills
- Commercial paper
- Certificates of deposit
- Other similar short-term instruments
Commercial Mortgage Loans
Commercial mortgage loans comprise 11.8% of Total Assets
and only consist of first-lien commercial mortgages. LSW has a staff of
knowledgeable mortgage loan underwriters who use rigorous guidelines to
evaluate commercial lending opportunities.
LSW limits its commercial loan exposure by diversifying geographically,
loaning dollars on many different types of property, and by having an
average loan amount of $1.5 to $2 million.
Real estate holdings (amounting to less than 1% of assets) are actively
managed, leased and marketed for sale. LSW’s delinquency and
foreclosure experience is significantly better than the industry
average.
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Historical Performance
The objective of LSW’s investment policy is to develop the
maximum rate of return while minimizing risk. Results of this
investment philosophy are shown in the accompanying Net Investment
Income chart.
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 LSW’s Financial Rating
LSW’s rating by the A.M. Best Company provides a good reflection of LSW’s claims paying ability, investment quality and financial strength.
A.M. Best Company, the oldest rating agency in the life insurance industry, gives LSW an “A” (Excellent) rating (effective May 6, 2005).
A description of the rating scale used by the A.M. Best Company is shown to the right.
A. M. Best Company Rating Scale
Rating Reports from the A.M. Best Company represent an independent opinion from the leading provider of insurer ratings of a company’s financial strength and ability to meet its obligations to policyholders.
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About LSW 
