And I want to thank Tom for his hospitality and his effort here, it’s a pleasure to welcome you on behalf of the Board of Directors of Symetra and I welcome you to our Annual Meeting of Shareholders. I would like to officially call the meeting to order.
I would like to introduce the members of our Board of Directors who are present today. We have Pete Burgess who is an independent adviser on financial and governance issues to the insurance companies and to our industry, Pete if you could just stand up. Lois Grady, Former Executive Vice President and Director of Investment Products at Hartford Life. Sander Levy, Managing Director of Vestar Capital Partners; Rob Lusardi, Chief Executive Officer and managing member of PremierRe Holdings. We've also got; and Tom, President and Chief Executive Officer of Symetra.
Unfortunately David Foy is unable to be with us this morning, an important member of our board who is not here because of illness. But he assures us he is listening and he is doing well. I also want to introduce some of the members of our Executive Management team here. We have Margaret Meister, Executive VP and CFO; Michael Fry, Executive Vice President of Benefits Division; Dan Guilbert, Executive Vice President Retirement Division; Tommie Brooks, Senior Vice President; Dave Goldstien, Senior Vice President General Counsel and Secretary; Chris Katzmar Holmes, Senior VP Human resources; George McKinnon, Senior VP Chief Information Officer and Craig Raymond, Senior VP and Chief Strategy Officer.
Dennis Trigle (ph) who is here representing the transfer agent, Computershare and appointed to act as inspector of elections. Also today is Dave Cayer and Chad Miller, John Solaso (ph) and Dan Smith from Ernst & Young, the company's independent CPAs and during the question and answer period they will be available to answer any questions concerning the company’s financial statements.
And now under the instruction on rules of conduct to each of you, should have presented your admission ticket or signed in at the desk as you entered. Each of you also should have an agenda for this meeting. On the reverse side of the agenda there are the rules of conduct for the meeting. If you wish to ask a question or speak during the meeting, please raise your hand and after being recognized, please identify yourself and your status as a shareholder, a representative of the shareholder or neither than the organization with which you are affiliated and then state your point or ask a question. We ask that you restrict your remarks to the business that is on the agenda.
We have an affidavit from Computershare certifying the stock holders of record as of March 7, 2013 were mailed a notice on the internet availability of proxy materials on or about March 22. And the affidavit and notice will be filed within minutes of this meeting. The complete alphabetical list of the shareholders of record who are entitled to vote showing their respective addresses and number of shares held by each had been on file with the company’s offices continually since April 22nd and is available at this meeting for inspection by any shareholder.
The first order of business of this meeting is to determine whether the shares represented at the meeting, either in person or by proxy are sufficient to constitute a quorum for the purpose of taxing business and Computershare has confirmed that prior to the opening of the meeting we have proxies for more 93% of the total shares constituting a quorum necessary to conduct business.
And because the holders of the majority of the shares are entitled to vote at this meeting are present in person or by proxy, I'm therefore able declare this meeting to be duly convened for the purposes of transacting such business, as may properly come before it. A copy of the minutes for the previous meeting is available for inspection at this meeting and we will waive those minutes, reading of those minutes unless there is an objection, they will be considered approved.
Next order of business is a brief description of each of the matters to be voted on today’s meeting. We have proposal number one, election of directors. The first proposal before the shareholders of this company is the election of directors, nominating and governance committee has recommended and the board of directors have nominated David Foy, Lois Grady, Tom Marra as class III directors to hold office until 2016 annual meeting, and until their successors are elected or qualified or until their earlier resignation or removal.
Mr. Foy and Mr. Grady and Mr. Marra presently serve as directors of the company, because no other director nominees were properly recommended within the advance notice period set forth my our bylaws, no other nominations are in order and nominations are therefore closed. The second proposal before the shareholders is the approval of the company’s executive compensation. The board of directors is requesting approval on an advisory basis of the compensation of our named executive officers as disclosed in the proxy statement. The third proposal before the shareholders of the company is the ratification of the appointment of the company’s independent registered public accounting firm, the audit committee of the board of directors has selected Ernst & Young LLP to serve as the independent registered public accounting firm to audit the company's financial statements for the year 2013.
Now the board of directors is requesting that shareholders ratify the appointment as a means of soliciting shareholders’ opinions and as a matter of good corporate business practice. So this includes the introduction of the proposals to be presented at the meeting, you will have an opportunity to vote after discussion of the proposals have taken place and therefore the floor is now open for any discussions on the proposal, if you'd like to speak please raise your hand.
Okay, hearing on and there will be no further discussions, the polls are now open for voting if you desire a ballot please raise your hand. The inspection of election will provide ballots for those who desire them. Okay, if you previously voted by proxy do not need to vote today, unless you wish to change your vote. If you have request a proxy, you can sign it now, but we haven't had any. Anything further?
Okay, we now seem to have all the ballots and since all those desiring to vote by ballot have done so, I declare the polls closed. The ballots and proxies will be held on possession of the inspector of elections and inspector of elections will count the votes. The preliminary votes that we have from the inspector indicates the following, that more 96% of the stock represented at this meeting has been voted for the election of a nominees named on the proxy statement.
More than 98% of the stock represented in this meeting has been voted for on advisory basis, the compensation of the company’s named executive officers and more than 99% of the stock represented at this meeting has been voted for the ratification and appointment of Ernst & Young LLP as the company's independent registered public accounting firm for the fiscal year 2013.
Final voting results will be filed with the SEC on Form 8-K within four business days of this meeting and Form 8-K can be found on our website under the investor relations tab. Thank you all for joining and attending today’s meeting and there being no further business we will the meeting. And now we will have a presentation from the company’s management and let me turn it back over to Tom Marra, thanks very much.
Thank you. Thank you Lon, you get better and better at that role every year. So, you’re great chairman. As you many of you Lon was my boss for many-many years and I've learned so many things and to have his guidance yet again in this new life is pretty tremendous for me. So, I value that greatly.
Looking out for those of you who maybe listening by phone I’m looking out that shareholders, most of these shareholders are in employees and you all look so good today that you might have made a mistake, because I’m going to convene the management team and the leadership group – I’m wondering whether we should create formal dress as kind of our motto for going to work every day, because you all look so good.
We will not do that because I think part of our spirit is to interact with each other and I think the informality is a part of that. But, we may have a once quarter dress up day, which I think even in Seattle might have a chance. But it’s a great - I think culture is a very important part of our strength as a company.
The other important strength is the way we run our company and in particular we ensure that our balance sheet is strong and our policy holders need that, our shareholders obliviously want us to run the company that way. But our policy holders depend on the promises that we make, and the way stayed away or as you all know our mantra of value transparency sustainability is the way – big part of the way we can honor that commitment is through keeping the balance sheet strong and managing risk appropriately. So, in providing value for the customer for discloser and hence transparency and then sustainability, that last one requires that we manage our company with strong assets, adequate capital and policies and liability guarantees in our products that we can make work, and we can honor. So that every policy holder who comes to our company and gets the benefit of our services will have their promises fulfilled. And that’s we come to work every day.
We are organized in three divisions as the slide says, I think it's very important that we continue to operate with three divisions. Obviously, Retirement is a big part of it, but would expect if we achieve our goals going forward. You’ll see a more balanced by chart in the future with both Life and Benefits growing.
Each group has I think tremendous opportunity. I think in the Retirement side we have now an indexed annuity, again that meets our standards but that has the ability to meet what customers want right now, which is really to participate in markets for their retirement asset, but to protect their capital. Preserve my principal and in that product you can never lose money and I think it’s very responsive to what the near retiree or new retiree is looking for in terms of that vehicle.
Our benefits group is a leader in medical stop-loss insurance providing catastrophic cover for self-insured plans that need that protection if they happened to have a claim that goes above the threshold usually about $125,000.
So, if you’re self insuring and one of your employee needs organ transplant, that would soft of break the bank if it weren’t for a company like Symetra that provides that. So in a very real sense, there are employees who have medical insurance that might not otherwise have it, because we're there with the protection that we offer.
Individual licenses, latest - although historically it's been an important part of the company I think. Now there is a resurgence of energy to try to build that business back to a level of greatness that compete with the other two division. So it’s clear that individualizes from a new revenue generation standpoint is lagging behind the others. There is a firm commitment of your management team to ensure that we feed that business applying right pockets for profitable growth.
The next slide is our results for 2013. I’m not going to go through these results because we've reported on them more than once. This is a respectable result in a climate that is counter to the growth and profitability of the business. We’re maintaining our discipline, hence that you know is a constrain on growth but mostly given that interest rates are again at all time lows that is the headwinds that allowed us to have respectable earnings results and a return on equity that was about the target that we had set for ourselves, but clearly we aspired a higher. So we need a little help from the economy, most importantly you know we need to control what we control and execute where we can bring the value, so that we can start on the path toward a higher ROE.
It's very clear that shareholders, many of which have been long time holders, they're depending on us to find those pockets of good within the value transparency sustainability formula, pockets of opportunity where we can get that ROE up into that healthier level. So this is not just a prayer for higher interest rates, so feel free to pray, all you want. The strategy is not that prayer, our strategy is based on the execution that we will achieve.
The Life industry, just a comment, approaching my 33rd year in this industry and I guess you always say this is the most challenging time I probably said that four or five times at least along the 33 years. And I guess if said to you, this time I really mean it. You would know that I probably said that the last few times, but it is a unique environment and the U.S. marketplace has never seen anything like this. So you've got confluence of forces, again largely driven by the economy and the interest rates being what they are. Just as a quick primer that all of you know, but it’s worth stating the essence of what this issue is. We get our premium today for benefits they're going to be paid out long down the road and in order to ensure that those benefits are ultimately provided, we can’t just invest in anything we want with that differential.
We have to invest a conservative investment that have very low expectations for the downside. So we invest primarily in bonds and mortgages, basically fixed income instruments which obviously are tied directly to interest rates available in the market. That’s a headwind that our entire industry is facing. One of the things that we are also seeing in this industry is there has been a deleveraging that has occurred post the crisis of 2008 and 2009 and companies have short up their capital to the point that their capital ratios are much higher than they have ever been, and that’s a good thing.
But I think now that it’s not to say we are out of the woods, but now that it’s has been really two or three years of those high capital ratios and we are not seeing quite the credit issues that we had. In fact if you had looked at the impairments in the first quarter for a company like Symetra, we are really a historic low. So it is a pretty stable credit market, so companies are starting to say, this is in the greatest environment. Interest rates are real headwinds and secondly boy we got all this capital, what do we do? And that’s why you're starting to see some of the development such as consolidation. You've seeing a lot of acquisition activity.
We have stated publically that we would be interested in the acquisition, in fact we had expenses that we hadn’t disclosed that were as a result of acquisitions that didn’t come to the forefront. So it's a challenging time for the industry, but I think it's one where you are going to see a little bit of a parsing out of who the important players are. European and Canadian companies seem to be deemphasizing U.S. That should be good for us, because we are committed to the U.S., you know we see ourselves as a U.S. company. We have no international operation and our ability to focus and the experience that the management team has in the U.S. market place should be positive to us.
In terms of legislative aspects, I think our industry - obviously demographics are important, I think Washington understands the need for tax incentives for products and programs that support the types of products that we offer and I see that is actually a positive. Always looking for money at the margin, but I actually think both life insurance, annuity taxation seem to be in a good spot. We need to continue to promote and make sure the legislators know the important social purpose that our products play in American society. Healthcare reform is here, I do not believe it will be repealed. I think that will wear down overtime. I also think because of these reforms and requirements there, that more employers will look at all their options.
And when they look at all their options they'll consider the option of self insurance and that's where our medical stop-loss comes in. I also feel employers are increasingly are going to feel the need to provide, even if it's somewhat employee paid. Products like disability and life insurance and other line, so that we may look at one of our pockets of emphasis in the play benefits area being what we call select benefits as another place to play in what broadly termed the voluntary marketplace where in essence employers are creating really a condo at a payroll opportunity. A payroll slide of deduction, so that people can provide for their insurance needs.
We're positioned to be able to explore and when appropriate to execute on programs like that. And I think again we'll see support from the legislative bodies to endeavor that. The insurance industry is uniquely regulated in that we have both State and Federal regulation and governance that we have to deal with and I think the states are doing what they can, but since there are 50 individual states they don’t always move in lockstep and that’s something that we just have to deal with. I do not see that as any more of an obstacle than it's ever been. It's just always - it's sort of a fact of life if you're going to be in this business.
The Symetra story is, we're going to maintain our strength no matter what. That's first and foremost, our policy ever is to depend on our shareholders and board, expect that we are not going to put capital risk. So we are going to manage the company conservatively. Our core franchises are very important. They are important contributors in their own rights being the fixed annuities through banks and the medical stop-loss through benefit brokers, but they will also provide the opportunity for us to extend logically into lines that are the future generations of growth.
I would love for us to be able to have that middle bucket, have four or five things someday and then we continue to endeavor so that we have several things that we consider core in our; in some cases the cash machines. I never liked the term cash cow because I don’t know about you, but cow doesn't visualize something like wonderful and great and contributing, but if you remembered the Boston Consulting Group, Matrix, it was really - in many cases if it were not for the stability and the strength in the market position, all of that of that cash generator, you wouldn’t be able to spring into the other endeavors. So, we need more of that, hopefully individual life, core business will enter that middle ground and see the part of our future growth.
And then we are moving into the newer products and after a great start with group like Disability, Fixed Indexed Annuity; with our first quarter story and we have already - on our conference call told them that you can expect even better things in the second quarter, so we are really thrilled about that. And then individualized insurance we're definitely getting the activity we need so that we can start to turn the corner. That's been sort of a challenging one and one where we didn’t meet our objective in 2012. So we've reset what we expect to do in 2013. I'm confident that we will do that, which brings me to really a conclusion slide. So beautiful, isn't it?
I really just want to talk to you and reach out to you, and just say thank you. This is the Symetra team, this is a team that deservedly should be proud of the accomplishments and really the resilience and the hard work and the energy, and frankly the teamwork that I have seen throughout the company which I think really come a long way in the past years. So, 2012 was a good year, I think 2013 will be an even better year and as we continue to build our best days are clearly ahead of us. So, I really thank you for everything you do each day and I especially thank you for dressing up and joining me and the Board in kind of going through the annual meeting and talking about where we're going to take this company in future. So, again thank you.
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