AFES provides our Customers the financial security they need and deserve, such as our disability income protection endorsed by the National Education Association. We enroll and administer more than 3,600 Section 125 plans for school districts across America and span the nation with licenses in 49 states and the District of Columbia, plus offices or manpower in 37 states.

Good people do good things for business. We firmly believe in this principle, which served as a guide when increasing our field manpower. By the end of 2005, we counted 242 account representatives servicing our accounts. Our highest increases came in California with the emergence of many new accounts.

Expense reduction efforts also excelled with spending substantially below 2005 expense guidelines. This resulted in our division’s new benchmark for lowest efficiency ratio.

The more we do to eliminate inefficiency through systems improvements, the more we can do for our Customers. The new Flex Administration System decreased turnaround time for reimbursement accounts, quickly putting money back in the hands of our Customers while reducing manpower costs. Also, easy-to-read statements for year-end distribution were brought to light after utilizing the new summary of account information generated by the Annuity Administrative System.

Acquisition of Creative Benefits and their endorsement partnerships with the Public Employees Services Company (PESCO) and the Florida Education Association (FEA) will allow us to grow sales premium rapidly. This is due to our inclusion in PESCO’s package of employee benefits and the opportunity to market supplemental products to the FEA’s 130,000 members.

Adding to an already stellar product lineup, fall 2006 will see the launch of AFA’s new C-11 and C-12 Cancer Policies. Growth prospects for our block of annuity business provide another opportunity as a new annuity product manager position was created to increase field knowledge and product information delivery.

Expanding on our 2005 success, continued improvements lay ahead for Phase III of the Flex Administration System implementation. Further development of our field distribution system into new markets and states will benefit our Colleagues and Customers alike.

Continued persistence with our expense reduction initiative looks to bring down our efficiency ratio by 1 percent over 2005. With such success, we next turn efforts to assuring that our leaders are equal to any future tasks. Succession Planning will be emphasized while on the road to attaining a 12 percent sales growth in our insurance product lines for 2006.