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## AMERICAN INCOME AGENCY OPERATION 

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Annualized premium issued increased 35% to $103 million. Premium income increased 11% to $329 million, and underwriting margin increased 13% to $102 million. 

American Income is a “union label” company. Our sales force, with the endorsement of unions at the local level, markets insurance products to union members. At year end, our sales force included 1,975 producing agents, over 200 more agents than a year earlier. 

Of our life distribution systems, American Income is not only our fastest growing, but also produces the highest underwriting margin, both in dollars and as a percentage of premium income. Going forward into 2003, expectations are for continued impressive growth in life insurance sales, premium, and underwriting margin. 

## DIRECT RESPONSE OPERATION 

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Annualized premium issued increased 13% to $130 million. Premium income increased 10% to $337 million, and underwriting margin increased 7% to $79 million. 

We grew our life insurance sales and reduced our packaging and postage expenses; life insurance sales increased 10% and the associated expenses declined 2%. Per dollar of annualized premium issued, we spent $.63 in 2002, compared to $.71 in 2001. For the business issued in the last two years, underwriting margin is greater than for business issued earlier. As we go forward, we expect the overall underwriting margin to grow at a rate equal to or greater than the growth rate of our premium income. Going forward into 2003, although we don’t expect any further reductions in our per unit acquisition expenses, we do expect strong growth in sales, premium, and underwriting margin. 

