Annual Report Highights - Financial Strength - Columbus Life Insurance Company

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Letter from the Chairman

Annual Report

Guiding Principles

To Our Valued Friends & Colleagues,

We are living in the absolute best of economic times. Columbus Life and the other member companies of Western & Southern Financial Group® benefited from yet another productive year.

From the 1982 purchase of what is now Columbus Life Insurance Company through the 2006 celebration of its 100th year in business, Columbus Life and its team of high-performing associates have played a key role in the success of our organization.

Our combined performance made 2006 our best year ever. For the year ended December 31, 2006, Western & Southern Financial Group recorded its fifth consecutive year of increased earnings. We reported record GAAP financial results with net income of $306.1 million on revenues of $2.69 billion compared to net income of $267.8 million on revenues of $2.44 billion for 2005. This represents a 14 percent increase in net income. Pretax operating earnings of $280.5 million for 2006 (also a record) were up $50.9 million, or 22 percent, over pretax operating earnings of $229.6 million in 2005.
Full-year combined life insurance premium, annuity and mutual fund sales of $5.4 billion also reached record proportions as life insurance premium and annuity sales increased 6.6 percent to $2.8 billion while mutual fund sales reached $2.6 billion, up from $1.1 billion the previous year. Total assets owned, managed and under our care reached $47 billion (corporate-owned assets totaled $32.2 billion) and GAAP net worth was $5.2 billion—all record year-end highs.

We entered 2007 with a sharpened focus on our core businesses to take full advantage of market opportunities, particularly the burgeoning retirement market. Reflective of this focus, J.J. Miller, CLU, ChFC, FSA, senior vice president, assumed the leadership of Columbus Life as president and chief executive officer effective March 2007. He has held several senior positions at Western & Southern Financial Group since joining us in 1970.

Lawrence L. Grypp, who filled an important role as president and chief executive officer of both Columbus Life and The Lafayette Life Insurance Company, will now focus his chief executive officer responsibilities principally on Lafayette Life while continuing to have responsibility for affiliate Capital Analysts Incorporated in Radnor, Pa. Also, after 17 years of dedicated service most recently as senior vice president and chief marketing officer, Mark A. Wilkerson retired from Columbus Life. We are grateful to both Larry and Mark for all that they did to help build the organization.

Columbus Life’s independent producers, their clients and our dedicated associates are an important part of our remarkable story. We have all benefited tremendously from 25 years of partnership. We are successfully leveraging each other’s strengths to deliver high-quality, market-responsive products; solid customer service; and a superb financial foundation that producers and their clients can count on today and well into the future.

Our impressive financial performance continues to make us one of the 10 highest rated life insurance groups in the world based on our Standard & Poor’s rating. Looking forward, we must find new and ever-improving ways to grow our business in this increasingly competitive integrated financial services environment. We plan to take advantage of the emerging retirement market as we build this outstanding organization into an even more robust financial services powerhouse.

Sincerely,

John F. Barrett
Chairman of the Board, President and Chief Executive Officer
Western & Southern Financial Group

Updated 6/22/2007