FIRST FORTIS LIFE INSURANCE CO - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549

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FORM 10-K

(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]

FOR THE TRANSITION PERIOD FROM COMMISSION FILE NUMBER
33-71690

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FIRST FORTIS LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)

NEW YORK 13-2699219
State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)

308 Maltbie St., SUITE
200,
SYRACUSE, NEW YORK 13204
(Address of principal executive
offices)

Registrant's telephone number: (315) 451-0066

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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

/X/ Yes / / No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. / /

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes / / No /X/

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity,
as of the last business day of the registrant's most recently completed second
fiscal quarter. $0
--

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PART I

ITEM 1. BUSINESS

First Fortis is a New York corporation founded in 1971. It is qualified to
sell life, health and annuity insurance in New York. First Fortis is a
wholly-owned subsidiary of Fortis, Inc., which is itself indirectly owned 50% by
Fortis N.V. and 50% by Fortis SA/NV. Fortis, Inc. manages the United States
operations for these two companies. The Company was acquired by the current
owners on March 24, 1989, to enable the Fortis group of companies the ability to
distribute their products to the New York State marketplace.

Fortis N.V. is a diversified financial services company headquartered in
Utrecht, The Netherlands, where its insurance operations began in 1847. Fortis
SA/NV is a diversified financial services company headquartered in Brussels,
Belgium, where its insurance operations began in 1824. Fortis N.V. and Fortis
(SA/NV) have merged their operating companies under the trade name of Fortis.
The Fortis group of companies is active in insurance, banking and financial
services, and real estate development in The Netherlands, Belgium, the United
States, Western Europe, and the Pacific Rim.

We offer and sell insurance products, including life insurance policies,
annuity contracts, and group life, accident and health insurance policies. We
market our products to small business and individuals through a network of
independent agents, brokers, and financial institutions.

Effective April 1, 2001, First Fortis contracted the administrative
servicing obligations for its registered variable and market value adjusted
insurance contracts to Hartford Life Insurance Company ("Hartford Life"), a
subsidiary of The Hartford Financial Services Group. Although First Fortis
remains responsible for all contract terms and conditions, Hartford Life is
responsible for servicing the contracts, including the payment of benefits,
oversight of investment management (i.e., the available investment portfolio)
and overall contract administration. This was part of a larger transaction
whereby Hartford Life reinsured all of the individual life insurance and annuity
business of First Fortis.

The Company seeks to compete primarily on the basis of customer service,
product design, and, in the case of variable products the investment results
achieved. Many other insurance companies compete with the Company in each of its
markets, including on the basis of price. Many of these companies, which include
some of the largest and best known insurance companies, have considerably
greater resources than the Company.

The Company is subject to regulation and supervision by the insurance
departments of the states in which it is licensed to do business. This
regulation covers a variety of areas, including benefit reserve requirements,
adequacy of insurance company capital and surplus, various operational
standards, and accounting and financial reporting procedures. The Company's
operations and accounts are subject to periodic examination by insurance
regulatory authorities.

Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed up to prescribed limits for insurance contract losses,
if covered, incurred by insolvent companies. The amount of any future
assessments of the Company under these laws cannot be reasonably estimated. Most
of these laws do provide, however, that an assessment may be excused or deferred
if it would threaten an insurer's own financial strength.

Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Federal measures that may adversely affect the insurance
business include health care reform, employee benefit regulation, controls on
medicare costs and medical entitlement programs, tax law changes affecting the
taxation of insurance companies or of insurance products, changes in the
relative desirability of various personal investment vehicles, and removal of
impediments on the entry of banking institutions into the business of insurance.

Pursuant to state insurance laws and regulations, the Company is obligated
to carry on its books, as liabilities, reserves to meet its obligations under
outstanding insurance contracts. These reserves are based on assumptions about,
among other things, future claims experience and investment returns. Neither the
reserve requirements nor the other aspects of state insurance regulation provide
absolute protection to holders of insurance contracts, if the Company were to
incur claims or expenses at rates significantly higher than expected or
significant unexpected losses on its investments.

ITEM 2. PROPERTIES

The Company leases its home office building, consisting of 15,684 square
feet, in Syracuse, New York. It also leases space consisting of 9,471 square
feet for the maintenance of a sales office located in New York City and space
consisting of 2,539 square feet for a sales office in Rochester, NY. The Company
expects that this office space will be adequate for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

The Company is a defendant in various lawsuits, none of which, in the
opinion of the Company counsel, will result in a material liability.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

A meeting was held on May 3, 2002 in which the current directors of the
Company were elected.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Not applicable. There are no equity securities that are authorized for
issuance pursuant to a compensation plan.

ITEM 6. SELECTED FINANCIAL DATA

The following is a summary of certain financial data of First Fortis. This
summary has been derived in part from the financial statements of First Fortis
included elsewhere in this prospectus. You should read the following along with
these financial statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

2002 COMPARED TO 2001

On November 30, 2001, First Fortis Life Insurance Company ("FFLIC") acquired
100% of the issued and outstanding common stock of Bankers American Life
Assurance Company ("BALAC") from American Bankers Insurance Group, Inc. ("ABIG")
for a total purchase price of $32 million. FFLIC paid the purchase price in cash
using internally generated working capital.

Also on November 30, 2001, and immediately following the stock purchase
described above, BALAC merged with and into FFLIC, with FFLIC as the surviving
corporation (the "Merger").

Both ABIG and FFLIC are wholly owned subsidiaries of Fortis, Inc., a Nevada
corporation that serves as a holding company for insurance and related business
in the U.S. FFLIC is, and BALAC was immediately prior to the Merger, a New York
life insurance company engaged in life and other lines of insurance business in
the State of New York. Fortis, Inc. determined that it was advisable to combine
the assets and operations of FFLIC and BALAC, so that it would have only one New
York-domiciled life insurance company. BALAC's assets, liabilities and
obligations, which have been transferred to FFLIC by operation of law as a
result of the Merger, consist primarily of outstanding insurance policies
written in the State of New York, and the related reserve assets, liabilities
and obligations.

On December 31, 2001, the Company purchased (the "Purchase") the Dental Benefits
Division of Protective Life Corporation ("Protective"). The Purchase includes
group dental, group life and group disability insurance products ("Insurance
Products"). The Company will reinsure these Insurance Products on a 100%
coinsurance basis and perform administration of such Insurance Products. The
Company paid $2.3 million for the business and recorded $1.6 million of goodwill
in the transaction.

As a result of the BALAC merger, the Company's financial statement for 2001
included BALAC's income statement from November 30, 2001 thru December 31, 2001.
The 2001 income statement does not include Protective as the purchase date
was December 31, 2001. For 2002, the Company's income statement includes a full
year's activity of BALAC and Protective causing variances between years.

REVENUES

The Company's life insurance premium increased from December 31, 2001 to
December 31, 2002 principally due to additional premium levels associated with
the merger. Life premiums are composed of group life and credit life business
representing 73% and 27%, respectively of premium for the year ended December
31, 2002; and 88% and 12% respectively of premium for the year ended December
31, 2001. Accident and health premiums increased during 2002 as compared to 2001
primarily due to the merger as well as a 10% increase in dental premium.
Offsetting this is a decrease in disability premium due to slower sales and
decreases in persistency.

On April 1, 2001 the Company entered into a coinsurance agreement with Hartford
Financial Services Group ("Hartford") whereby the Company ceded the Investment
Product block of business to the Hartford. This business is reflected on the
Income statement as interest sensitive and investment product policy charges of
$0 and $0.4 million at December 31, 2002 and December 31, 2001, respectively.

The Company continues to match investment portfolio composition to liquidity
needs and capital requirements. Changes in interest rates during 2002 and 2001
resulted in recognition of realized gains and losses upon sales of securities.
The Company realized losses of $1,077 and $ 541 in 2002 and 2001, respectively.

BENEFITS

The total Company ratio of benefits to premium decreased in 2002 to 64% from 68%
in 2001 primarily due to lower benefit to premium ratios on the merged credit
business. Group life benefit to premium ratios decreased to 58% at December 31,
2002 from 63% at December 31, 2001 due to the Company's review of reserve
estimates at 12/31/2002. The loss ratio increased from 72% in 2001 to 93% in
2002 as a result of increased incidence and decreased terminations.

EXPENSES

The Company continues to monitor its commission rate structures, and, as
indicated by market conditions, periodically adjusts rates paid. Rates paid vary
by product type, group size and duration.

The Company's general and administrative expense to premium ratio increased to
22% in 2002 from 19% in 2001. Shifts in the mix of business are the primary
reason for this increase as different products require varying levels of
administrative costs. The Company continues to strive for improvements in the
expense to gross revenue ratio while maintaining quality and timely services to
the policyholders.

MARKET RISK AND RISK MANAGEMENT

Interest rate risk is the Company's primary market risk exposure. Substantial
and sustained increases and decreases in market interest rates can affect the
profitability of insurance products and market value of investments. The yield
realized on new investments generally increases or decreases in direct
relationship with interest rate changes. The market value of the Company's fixed
maturity and mortgage loan portfolios generally increases when interest rates
decrease and decreases when interest rates increase.

Interest rate risk is monitored and controlled through asset/liability
management. As part of the risk management process, different economic scenarios
are modeled, including cash flow testing required for insurance regulatory
purposes, to determine that existing assets are adequate to meet projected
liability cash flows. A major component of the Company's asset/liability
management program is structuring the investment portfolio with cash flow
characteristics consistent with the cash flow characteristics of the Company's
insurance liabilities.

The Company uses computer models to perform simulations of the cash flow
generated from existing insurance policies under various interest rate
scenarios. Information from these models is used in the determination of
interest crediting strategies and investment strategies. The asset/liability
management discipline includes strategies to minimize exposure to loss as market
interest rates change. On the basis of these analyses, management believes there
is no material solvency risk to the Company with respect to interest rate
movements up or down of 100 basis points from year end levels.

Equity market risk exposure is not significant. Equity investments in the
general account are not material enough to threaten solvency and contract owners
bear the investment risk related to the variable products. Therefore, the risks
associated with the investments supporting the variable separate accounts are
assumed by contract owners, not by the Company. The Company provides certain
minimum death benefits that depend on the performance of the variable separate
accounts. Currently these death benefit risks are reinsured which then
protects the Company from adverse mortality experience and prolonged capital
market decline.

LIQUIDITY AND CAPITAL RESOURCES

The liquidity requirements of the Company have been met by funds provided from
operations, including investment income. Funds are principally used to provide
for policy benefits, operating expenses, commissions and investment purchases.
The Company expects its operating activities to continue to generate sufficient
funds.

The National Association of Insurance Commissioners has implemented risk-based
capital standards to determine the capital requirements of a life insurance
company based upon the risks inherent in its operations. These standards require
the computation of a risk-based capital amount which is then compared to a
company's actual total adjusted capital. Based upon current calculation using
these risk-based capital standards, the Company's percentage of total adjusted
capital is in excess of ratios which would require regulatory attention.

The Company has no long or short term debt. As of December 31, 2002, 98.4% of
the Company's fixed maturity investments consisted of investment grade bonds.
The Company does not expect this percentage to change significantly in the
future.

CRITICAL ACCOUNTING POLICIES AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company makes estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent assets and liabilities
as of December 31, 2002 and the reported amounts of revenues and expenses for
the year ended December 31, 2002.

The most critical estimates include those used in determining deferred policy
acquisition costs, impairment losses on investment and federal income taxes.

DEFERRED POLICY ACQUISITION COSTS

The costs of acquiring new business, which vary with and are directly related to
the production of new business, are deferred to the extent recoverable and
amortized. For traditional and pre-need life insurance and long-term care
products (included as accident and health products), such costs are amortized
over the premium paying period. For interest sensitive and investment products,
such costs are amortized in relation to expected future gross profits.
Estimation of future gross profits requires significant management judgment and
is reviewed periodically. As excess amounts of deferred costs over future
premiums or gross profits are identified, such excess amounts are expensed.

See note 2 to the financial statements for a discussion of the Company's
accounting policies, including recently issued accounting pronouncements.

IMPAIRMENT LOSSES ON INVESTMENTS

The Company regularly reviews its fixed maturities and equity securities
portfolio to evaluate the necessity of recording impairment loss for
other-than-temporary declines in the fair value of investments. A number of
criteria are considered during this process including, but not limited to,
violations of financial covenants, public securities trading at a substantial
discount to par as a result of credit concerns, securities with a market value
less than carrying value for an extended period of time and other subjective
factors relating to the issuer. Other than temporary impairments are recorded at
the end of each quarter based on the fair value of the security at the reporting
date.

FEDERAL INCOME TAXES

Income taxes have been provided using the liability method. Deferred tax assets
and liabilities are determined based on the temporary differences between the
financial reporting and the tax bases and are measured using the currently
enacted tax rates.

REGULATION
The Company is subject to the laws and regulations established by the New York
State Insurance Department governing insurance business conducted in New York
State. Periodic audits are conducted by the New York Insurance Department
related to the Company's compliance with these laws and regulations. To date,
there have been no adverse findings regarding the Company's operations.

2001 COMPARED TO 2000

On April 1, 2001, Fortis, Inc. completed the sale (the "Sale") of its Fortis
Financial Group division (the "Division") to Hartford Life Insurance Company
("The Hartford"). The Division includes, among other blocks of business, certain
individual life insurance policies and annuity contracts (collectively, the
"Insurance Contracts") written by First Fortis Life Insurance Company (the
"Company").

To effect the Sale as it relates to the Company, The Hartford reinsured the
Insurance Contracts on a 100% coinsurance basis (or a 100% modified coinsurance
basis for some of the block) and agreed to administer the Insurance Contracts
going forward. The Company received in connection with the Sale aggregate cash
consideration of approximately $15 million from The Hartford. The reinsurance
transaction resulted in a gain of $10 million which was deferred and will be
amortized into income at the rate that earnings from the business sold would
have been expected to emerge.

On November 30, 2001, First Fortis Life Insurance Company ("FFLIC") acquired
100% of the issued and outstanding common stock of Bankers American Life
Assurance Company ("BALAC") from American Bankers Insurance Group, Inc. ("ABIG")
for a total purchase price of $32 million. FFLIC paid the purchase price in cash
using internally generated working capital.

Also on November 30, 2001, and immediately following the stock purchase
described above, BALAC merged with and into FFLIC, with FFLIC as the surviving
corporation (the "Merger"). No consideration was exchanged in the Merger.

Both ABIG and FFLIC are wholly owned subsidiaries of Fortis, Inc., a Nevada
corporation that serves as a holding company for insurance and related business
in the U.S. FFLIC is, and BALAC was immediately prior to the Merger, a New York
life insurance company engaged in life and other lines of insurance business in
the State of New York. Fortis, Inc. determined that it was advisable to combine
the assets and operations of FFLIC and BALAC, so that it would have only one New
York-domiciled life insurance company. BALAC's assets, liabilities and
obligations, which have been transferred to FFLIC by operation of law as a
result of the Merger, consist primarily of outstanding insurance policies
written in the State of New York, and the related reserve assets, liabilities
and obligations.

On December 31, 2001, the Company purchased (the "Purchase") the Dental Benefits
Division of Protective Life Corporation ("Protective"). The Purchase includes
group dental, group life and group disability insurance products ("Insurance
Products"). The Company will reinsure these Insurance Products on a 100%
coinsurance basis and perform administration of such Insurance Products. The
Company paid $2.5 million for the business and recorded $1.6 million of goodwill
in the transaction.

REVENUES

The Company's life insurance is principally group life business and the premium
decreased from 2000 to 2001. This decrease is a result of lower persistency and
sales coupled with additional ceding premium paid to ceding companies in 2001
for higher coverage levels. Accident and health premiums increased during 2001
as compared to 2000 due to strong group dental sales. Accident and health
premiums are principally composed of group accident and health coverages.
Dental, disability income, and medical premium represented 55%, 45%, and 0%,
respectively, of total group accident and health premium in 2001 compared to
52%, 47%, and 1%, respectively, in 2000. The decrease in the group medical
premium as a percent of the total group accident and health premium is due to
the run-out of a block of business that discontinued sales in 1996.

The Company continues to match investment portfolio composition to liquidity
needs and capital requirements. Changes in interest rates during 2001 and 2000
resulted in recognition of realized gains and losses upon sales of securities.

BENEFITS

The ratio of life benefits to premium decreased in 2001 to 62% from 74% in 2000
primarily due to additional reinsurance coverage purchased in 2001. The accident
and health benefits as a percent of premium decreased to 71% in 2001 from 73% in
2000. This decrease is due to a decline in the dental benefit to premium ratio
as this line continues to see improved experience. The disability income line
maintained a 72% benefit to premium ratio from 2000 to 2001.

EXPENSES

The Company continues to monitor its commission rate structures, and, as
indicated by market conditions, periodically adjusts rates paid. Rates paid vary
by product type, group size and duration.

The Company's general and administrative expense to premium ratio decreased from
20% in 2000 to 19% in 2001. The Company continues to strive for improvements in
the expense to gross revenue ratio while maintaining quality and timely services
to the policyholders.

MARKET RISK AND RISK MANAGEMENT

Interest rate risk is the Company's primary market risk exposure. Substantial
and sustained increases and decreases in market interest rates can affect the
profitability of insurance products and market value of investments. The yield
realized on new investments generally increases or decreases in direct
relationship with interest rate changes. The market value of the Company's fixed
maturity and mortgage loan portfolios generally increases when interest rates
decrease, and decreases when interest rates increase.

Interest rate risk is monitored and controlled through asset/liability
management. As part of the risk management process, different economic scenarios
are modeled, including cash flow testing required for insurance regulatory
purposes, to determine that existing assets are adequate to meet projected
liability cash flows. A major component of the Company's asset/liability
management program is structuring the investment portfolio with cash flow
characteristics consistent with the cash flow characteristics of the Company's
insurance liabilities.

The Company uses computer models to perform simulations of the cash flow
generated from existing insurance policies under various interest rate
scenarios. Information from these models is used in the determination of
interest crediting strategies and investment strategies. The asset/liability
management discipline includes strategies to minimize exposure to loss as market
interest rates change. On the basis of these analyses, management believes there
is no material solvency risk to the Company with respect to interest rate
movements up or down of 100 basis points from year end levels.

Equity market risk exposure is not significant. Equity investments in the
general account are not material enough to threaten solvency and contract owners
bear the investment risk related to the variable products. Therefore, the risks
associated with the investments supporting the variable separate accounts are
assumed by contract owners, not by the Company. The Company provides certain
minimum death benefits that depend on the performance of the variable separate
accounts. Currently these death benefit risks are reinsured
which then protects the Company from adverse mortality experience and prolonged
capital market decline.

REGULATION

The Company is subject to the laws and regulations established by the New York
State Insurance Department governing insurance business conducted in New York
State. Periodic audits are conducted by the New York Insurance Department
related to the Company's compliance with these laws and regulations. To date,
there have been no adverse findings regarding the Company's operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The matters set forth under the caption "Market Risk and Risk Management" in
Management's Discussion and Analysis of Results of Operations (Item 7 of this
report) are incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's financial statements attached hereto as Exhibit No. 99 are
incorporated by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Robert S. Pollock, 48 President, Chief Executive Officer and Chairman of
Director since 1995 the Board; President and Chief Executive Officer of
Fortis Benefits Insurance Company

Larry M. Cains, 56 Treasurer; Senior Vice President of Fortis, Inc.
Director since 1995

Terry J. Kryshak, 52 Senior Vice President and Chief Administrative Officer
Director Since 1991

Allen R. Freedman, 63 Past CEO and Chairman of the Board of Fortis, Inc.
Director since 1989

Dale Edward Gardner, 72 President, Gardner & Bull
Director Since 1989

Kenneth W. Nelson, 81 President, Tech Products, Inc.
Director Since 1989

Clarence Elkus Galston, 93 Attorney at Law
Director Since 1989

Esther L. Nelson 50 General Director/CEO, Glimmerglass Opera since 1996; before that,
Director since 1999 General Director/CEO of Nevada Opera

Barbara R. Hege, 59 Assistant Treasurer and Chief Financial Officer
Director since 1999

Katherine L. Greenzang, 38 Secretary; Senior Vice President-Legal of Fortis, Inc.

First Fortis' officers serve at the pleasure of the Board of Directors, and
members of the Board who are also officers or employees of First Fortis serve
without compensation. All Directors serve until their successors are duly
elected and qualified. The compensation of members of the Board who are not also
officers or employees of First Fortis or its affiliates is as follows. The
Director receives $1,000 for attendance at the annual Board meeting. If the
Director is also a member of the Audit Committee and/or the Investment
Committee, the Director also receives $1,000 for attending any meeting of such
committee unless the committee meeting date is the same as the annual meeting,
in which case the committee meeting compensation is $500.

ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
-----------------------------------------
OTHER ANNUAL ALL OTHER
SALARY BONUS COMPENSATION COMPENSATION (1)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)
- ----------------------------------------------- --------- ----------- --------- ----------------- -----------------

Robert B. Pollock.............................. 2002 $ 0 $ 0 $ 0 $ 0
President 2001 0 0 0 0
2000 0 0 0 0

Terry J. Kryshak............................... 2002 145,000 61,600 0 11,760
Senior Vice President and 2001 134,000 53,200 0 13,104
Chief Administrative Officer 2000 127,000 40,260 0 9,600

(1) This column includes contributions made by First Fortis for the year for the
benefit for the named individual to defined contribution retirement plans.

As additional compensation to its employees and executive officers, First
Fortis has established the Fortis Pension Plan and the Fortis Executive
Pension Plan which generally provide an annual annuity benefit upon retirement
at age 65 (or a reduced benefit upon early retirement) equal to: .9% of the
employee's Average Annual compensation up to the employee's social security
covered compensation, plus 1.3% of average annual compensation above the
employee's social security covered compensation. The compensation recognized
under the plan is limited by an amount ($295,000 in 2002) that is annually
adjusted by an index.

The following table illustrates the combined estimated life annuity benefit
payable from the Fortis Pension Plan and the Fortis Executive Pension Plan to
employees with the specified Final Average Salary and Years of Service upon
retirement.

COMBINED BENEFITS PAYABLE AS OF DECEMBER 31, 2002 UNDER
THE FORTIS PENSION PLAN AND THE FORTIS EXECUTIVE PENSION PLAN
FOR EXECUTIVES RETIRING IN 2002

YEARS OF SERVICE
2002 -------------------------------------------------------------
EARNINGS 10 15 20 25 30 35
------ ------ ------ ------ ------- -------

125,000 14,672 22,008 29,344 36,681 44,017 51,353
150,000 17,922 26,883 35,844 44,806 53,767 62,728
175,000 21,172 31,758 42,344 52,931 63,517 74,103
200,000 24,422 36,633 48,844 61,056 73,267 85,478
225,000 27,672 41,508 55,344 69,181 83,017 96,853
250,000 30,922 46,383 61,844 77,306 92,767 108,228
275,000 33,842 50,764 67,685 84,606 101,527 118,449
285,000 34,362 51,544 68,725 85,906 103,087 120,268
295,000 + 34,622 51,934 69,245 86,556 103,867 121,178

ASSUMPTIONS:

Earnings remain constant

The benefit is based on the Final Average Benefit formula

The employee is age 60 in 2002

The table above excludes social security benefits. In general, for the
purposes of these plans compensation includes salary and bonuses. The credited
years of service with First Fortis for those individuals named in the Summary
Compensation Table above are as follows: 21.6 and 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners

PERCENTAGE
NUMBER OF OF OUTSTANDING
NAME & ADDRESS OF BENEFICIAL OWNER SHARES VOTING SHARES
- --------------------------------------- ----------- ------------------

Fortis, Inc. 100,000 100%
One Chase Manhattan Plaza
New York, NY 10005

(b) Security Ownership of Management

None.

(c) Changes in Control

None.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14. CONTROLS AND PROCEDURES

The Company, under the direction of the Chief Executive Officer and the
Chief Financial Officer, has established disclosure controls and procedures
that are designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission s rules
and forms. The disclosure controls and procedures are also intended to
ensure that such information is accumulated and communicated to the
Company's management, including the Chief Executive Officer and the Chief
Financial Officer, as appropriate to allow timely decisions regarding
required disclosures.

Within 90 days of the filing of this report, the Chief Executive Officer and
the Chief Financial Officer have reviewed and evaluated the Company's
disclosure controls and procedures, Based on, and as of the date of, that
review and evaluation, the Chief Executive Officer and the Chief Financial
Officer have concluded that the Company's disclosure controls and procedures
are effectively serving the stated purposes.

In addition, there have been no significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their most recent evaluation. No
significant deficiencies or material weaknesses in the internal controls
were identified during the evaluation and, as a consequence, no corrective
action is required to be taken.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1)The following financial statements of First Fortis Life Insurance Company
are included in Item 8:

Report of Independent Accountants

Balance Sheets at December 31, 2002 and 2001

Statements of Operations for the years ended December 31, 2002, 2001, and
2000

Statements of Changes in Shareholder's Equity for the years ended
December 31, 2002, 2001, and 2000

Statements of Cash Flows for the years ended December 31, 2002, 2001, and
2000.

Notes to Financial Statements

(a)(2) The information required by the following financial statement schedules
for First Fortis Life Insurance Company are included in Item 8:

I. Summary of Investments -- Other than Investments in Related Parties
-- Contained in the Notes to Financial Statements.

II. Condensed Financial Information of Registrant -- Not applicable

III. Supplementary Insurance Information -- Contained in Financials and
Notes to Financial Statements.

IV. Reinsurance -- Contained in the Notes to Financial Statements.

V. Valuation and Qualifying Accounts -- Contained in the Financial
Statements and Notes to Financial Statements.

All other schedules to the financial statements required by Article 7 of the
Regulation S-X are not required under the related instructions or are
inapplicable and therefore have been omitted.

(a)(3) Listing of Exhibits

2. None.

3.(a) Articles of Incorporation of First Fortis Life Insurance Company --
Incorporated by reference from Form 10-K filed by registrant, File No.
33-71690, on March 29, 1996.

(b) By-laws of First Fortis Life Insurance Company (Incorporated by
reference from Form N-4 Registration Statement, File No. 33-71686, of
registrant and its Separate Account A filed on November 15, 1993);

4.(a) Form of Combination Fixed and Variable Group Annuity Contract;
(Incorporated by reference from Post-Effective Amendment No. 2 to Form
N-4 Registration Statement, File No. 33-71686, of registrant and its
Separate Account A filed on April 27, 1995);

(b) Form of Application to be used in connection with Contract filed as
Exhibit 4 (a) (Incorporated by reference from Post-Effective Amendment
No. 2 to Form N-4 Registration Statement, File No. 33-71686, of
registrant and its Separate Account A filed on April 27, 1995);

(c) Form of IRA Endorsement (Incorporated by reference from
Post-Effective Amendment No. 2 to Form N-4 Registration Statement, File
No. 33-71686, of registrant and its Separate Account A filed on April 27,
1995);

(d) Form of Section 403(b) Annuity Endorsement (Incorporated by
reference from Post-Effective Amendment No. 2 to Form N-4 Registration
Statement, File No. 33-71686, of registrant and its Separate Account A
filed on April 27, 1995);

24. Power of Attorney for Messrs. Gardner, Nelson and Galston.
(Incorporated by reference from Form N-4 Registration Statement, File No.
33-71686, of registrant and its Separate Account A filed on February 28,
1995.)

99. First Fortis Life Insurance Company Financial Statements.

99.1 Written Statement of Chief Executive Officer

99.2 Written Statement of Chief Financial Officer

(b) Reports on Form 8-K filed in the fourth quarter of 2002

None

(c) Exhibits

Included in 14 (a)(3) above.

(d) Financial Statement Schedules

Included in 14(a)(2) above.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on this 27th day of
March, 2003.

FIRST FORTIS LIFE INSURANCE COMPANY
By: /s/ Robert S. Pollock
-----------------------------------
Robert S. Pollock
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE BOARD
(PRINCIPAL EXECUTIVE OFFICER)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been duly signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 27th day of March, 2003. The
following persons represent a majority of the Board of Directors of First Fortis
Life Insurance Company:

SIGNATURE TITLE WITH FIRST FORTIS
- -------------------------------------------------------- --------------------------------------------------------

/s/ Robert B. Pollock
-------------------------------------------- President, Chief Executive Officer and Chairman of
Robert B. Pollock the Board (Principal Executive Officer)

/s/ TERRY J. KRYSHAK
-------------------------------------------- Sr. Vice President and Chief Administrative Officer and
Terry J. Kryshak Director

/s/ LARRY M. CAINS
-------------------------------------------- Treasurer and Director (Principal Financial Officer)
Larry M. Cains

/s/ BARBARA R. HEGE
-------------------------------------------- Chief Financial Officer and Director
Barbara R. Hege

/s/ ALLEN R. FREEDMAN
-------------------------------------------- Director
Allen R. Freedman

*
-------------------------------------------- Director
Clarence E. Galston

*
-------------------------------------------- Director
Dale Edward Gardner

*
-------------------------------------------- Director
Kenneth Warwick Nelson

-------------------------------------------- Director
Esther L. Nelson

*By /s/ TERRY J. KRYSHAK
--------------------------------------------
Terry J. Kryshak
ATTORNEY-IN-FACT

CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, the undersigned Chief Executive Officer of First Fortis Life
Insurance Company (the "Company"), do hereby certify, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1. I have reviewed the Annual Report on Form 10-K of the Company for
the period ended December 31, 2002 (this "Report");

2. Based on my knowledge, this Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the periods covered by this Report;

3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Company as of,
and for, the periods presented in this Report;

4. The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and have:
a) Designated such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Report is being prepared;
b) Evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this Report (the "Evaluation Date"); and
c) Presented in this Report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The Company's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Company's auditors and the audit committee
of Company's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's
ability to record, process, summarize and report financial data
and have identified for the Company's auditors any material
weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and

6. The Company's other certifying officers and I have indicated in this
Report whether there were significant changes in internal controls or in the
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 27, 2003

/s/ Robert B. Pollock
--------------------------
Robert B. Pollock
Chief Executive Officer

CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, the undersigned Chief Financial Officer of First Fortis Life
Insurance Company (the "Company"), do hereby certify, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1. I have reviewed the Annual Report on Form 10-K of the Company for
the period ended December 31, 2002 (this "Report");

2. Based on my knowledge, this Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the periods covered by this Report;

3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Company as of,
and for, the periods presented in this Report;

4. The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and have:
a) Designated such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Report is being prepared;
b) Evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this Report (the "Evaluation Date"); and
c) Presented in this Report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The Company's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Company's auditors and the audit committee
of Company's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's
ability to record, process, summarize and report financial data
and have identified for the Company's auditors any material
weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and

6. The Company's other certifying officers and I have indicated in this
Report whether there were significant changes in internal controls or in the
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 27, 2003

/s/ Larry M. Cains
--------------------------
Larry M. Cains
Treasurer and director