<PAGE>1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995 or
__________________
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission file number 1-5683
______
USLIFE Corporation
______________________________________________________________________
(Exact name of registrant as specified in its charter)
New York 13-2578598
___________________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 Maiden Lane, New York, New York 10038
___________________________________ ___________________
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (212) 709-6000
_______________
NONE
______________________________________________________________________
Former name, former address and former fiscal year, if changed since
last report.
Indicate by checkmark 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. Yes X No
_______ _______
The number of shares outstanding of the Registrant's Common Stock as
of November 2, 1995 was 34,442,376.
<PAGE>2
USLIFE Corporation
INDEX
Page No.
________
Part I - Financial Information:
Consolidated Balance Sheets -
September 30, 1995 and December 31, 1994............... 3
Summary Statements of Consolidated Net Income -
For the Nine Months and Three Months Ended
September 30, 1995 and 1994............................ 5
Statements of Consolidated Cash Flows -
For the Nine Months Ended September 30, 1995 and 1994.. 6
Notes to Financial Statements.......................... 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 12
Other Financial Information............................ 27
Part II - Other Information.............................. 28
Signatures............................................... 31
<PAGE>3
<TABLE>
USLIFE Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
September 30, 1995 and December 31, 1994
(Dollar amounts in thousands except per share data)
<CAPTION>
September 30, 1995 December 31, 1994
__________________ _________________
Assets
______
<S> <C> <C>
Cash:
On hand and in demand accounts............. $ 56,785 $ 51,878
Restricted funds held in escrow, etc. ..... 2,794 1,653
__________ __________
59,579 53,531
__________ __________
Invested assets (Notes 1 and 2):
Fixed maturities available for sale, at
market (cost, September 30, 1995,
$5,496,130; December 31, 1994, $5,190,230) 5,763,045 4,937,867
Equity securities, at market (cost,
September 30, 1995, $5,788; December
31, 1994, $5,344)......................... 5,613 4,583
Mortgage loans............................. 298,671 319,618
Policy loans............................... 281,733 283,088
Real estate................................ 29,040 41,688
Other long term investments................ 6,110 7,400
Short term investments..................... 84,878 129,335
__________ __________
Total invested assets.................... 6,469,090 5,723,579
__________ __________
Total cash and invested assets........... 6,528,669 5,777,110
__________ __________
Deferred policy acquisition costs
(Note 2)................................... 745,608 793,145
Other receivables (net)...................... 353,653 331,035
Property and equipment (net of accumulated
depreciation of $40,707 at September 30,
1995 and $37,367 at December 31, 1994...... 11,273 11,953
Prepaid expenses, deferred charges and
other assets............................ 89,223 91,019
__________ __________
Total assets............................ $7,728,426 $7,004,262
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>4
<TABLE>
<CAPTION>
September December
30, 1995 31, 1994
__________ __________
Liabilities and Equity Capital
______________________________
<S> <C> <C>
Liabilities:
Future policy benefits................................... $1,605,059 $1,531,996
Policyholder account balances............................ 3,756,773 3,641,393
Supplementary contracts without life contingencies....... 22,640 8,329
Policyholder dividend accumulations...................... 20,258 20,178
Policy and contract claims............................... 163,034 155,048
Other policy and contract liabilities.................... 31,677 31,265
Notes payable............................................ 245,700 196,500
Long term debt........................................... 349,459 349,360
Federal income taxes (current and deferred).............. 67,578 (69,018)
Accounts payable and accrued liabilities................. 261,028 250,577
__________ __________
Total liabilities................................... 6,523,206 6,115,628
__________ __________
Deferred income.......................................... 6,991 10,746
__________ __________
Equity Capital:
Preferred stock, $4.50 Series A Convertible, $1.00
par value; authorized and outstanding, 4,484
shares (December 31, 1994, 4,653 shares)........... 448 465
Preferred stock, $5.00 Series B Convertible, $1.00
par value; authorized and outstanding, 1,852
shares (December 31, 1994, 2,003 shares)........... 93 100
Preferred stock, undesignated, $1.00 par value;
authorized 10,793,664 shares, issued; none
(December 31, 1994; none).......................... 0 0
Common stock, par value $1.00 per share, authorized
60,000,000 shares, issued: 57,468,834 shares
(December 31, 1994, adjusted for stock split,
57,465,735 shares)................................. 57,469 38,310
Paid-in surplus.......................................... 116,536 131,823
Net unrealized gains (losses) on securities (Note 2)..... 107,576 (156,248)
Retained earnings........................................ 1,264,036 1,210,078
__________ __________
1,546,158 1,224,528
Less: Treasury stock, at cost - September 30, 1995,
23,047,772 Common shares; December 31, 1994,
adjusted for stock split, 23,239,722
Common shares................................... 340,245 339,972
Deferred compensation............................. 7,684 6,668
__________ __________
Total Equity Capital..................................... 1,198,229 877,888
__________ __________
Total liabilities and Equity Capital..................... $7,728,426 $7,004,262
========== ==========
Equity Capital per share (Note 3)........................ $34.38 $25.43
====== ======
</TABLE>
<PAGE>5
<TABLE>
USLIFE Corporation and Subsidiaries
Summary Statements of Consolidated Net Income (Unaudited)
For the Nine Months and Three Months Ended September 30, 1995 and 1994
(Amounts in thousands except per share)
<CAPTION>
Nine Months Ended September 30 Three Months Ended September 30
______________________________ _______________________________
1995 1994 1995 1994
______ ______ ______ ______
<S> <C> <C> <C> <C>
REVENUES:
Premiums................................................. $ 734,522 $ 723,060 $ 245,301 $ 237,166
Other considerations..................................... 167,616 144,885 53,102 52,648
Net investment income.................................... 364,224 342,854 122,076 116,641
Realized gains (losses) on investments................... 3,711 396 3,244 (99)
Other income............................................. 24,505 22,189 8,835 7,431
__________ __________ __________ __________
Total revenues........................................ 1,294,578 1,233,384 432,558 413,787
__________ __________ __________ __________
BENEFITS AND EXPENSES:
Benefits to policyholders and beneficiaries.............. 535,305 544,144 178,877 178,067
Commissions, net of deferred expenses.................... 113,595 103,515 39,468 32,869
Other expenses and taxes, net of deferred expenses....... 138,015 126,971 45,756 41,834
Increase in liability for future policy benefits......... 79,977 53,490 23,886 20,901
Interest credited to policyholder account balances....... 156,749 143,701 53,469 49,231
Amortization of deferred policy acquisition costs........ 121,324 120,879 39,598 42,490
Interest expense......................................... 29,805 25,753 10,174 9,187
Dividends to policyholders............................... 2,473 2,668 779 819
__________ __________ __________ __________
Total benefits and expenses........................... 1,177,243 1,121,121 392,007 375,398
__________ __________ __________ __________
Income from operations before Federal income taxes.......... 117,335 112,263 40,551 38,389
Provision for income taxes.................................. 40,235 38,965 13,908 12,879
__________ __________ __________ __________
Net income.................................................. $ 77,100 $ 73,298 $ 26,643 $ 25,510
========== ========== ========== ==========
Net income per share (Note 4)............................... $ 2.22 $ 2.12 $ .76 $ .73
========== ========== ========== ==========
Dividends per share:
Common................................................... $ .67333 $ .62 $ .23333 $ .20667
========== ========== ========== ==========
Preferred Series A....................................... $ 3.375 $ 3.375 $ 1.125 $ 1.125
========== ========== ========== ==========
Preferred Series B....................................... $ 3.75 $ 3.75 $ 1.25 $ 1.25
========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>6
<TABLE>
USLIFE Corporation and Subsidiaries
Statements of Consolidated Cash Flows (Unaudited)
For the Nine Months Ended September 30, 1995 and 1994
(Amounts in Thousands)
<CAPTION>
Nine Months Ended September 30
______________________________
1995 1994
____ ____
<S> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 77,100 $ 73,298
Adjustments to reconcile net income to net cash
provided by operating activities:
Change in liability for future policy benefits........ 69,322 45,922
Interest credited to policyholder account balances.... 156,749 143,701
Amounts assessed from policyholder account balances... (120,688) (107,175)
Additions to deferred policy acquisition costs........ (174,783) (151,525)
Amortization of deferred policy acquisition costs..... 121,324 120,879
Additions to deferred charges......................... (4,661) (4,786)
Deferred Federal income taxes......................... 632 (1,466)
Depreciation and amortization......................... 9,679 9,424
Change in amounts due policyholders................... 19,939 (1,192)
Change in other liabilities and amounts receivable.... (18,088) (11,147)
Net realized capital gains............................ (3,711) (396)
Change in restricted cash............................. (1,141) (1,168)
Change in current Federal income tax liability........ (6,097) (10,569)
Other, net............................................ (4,490) (2,579)
___________ ___________
Total adjustments................................ 43,986 27,923
___________ ___________
Net cash provided by operating activities... 121,086 101,221
___________ ___________
Cash flows from investing activities:
Change in policy loans.................................. 1,355 (2,269)
Proceeds from investments sold, redeemed or matured:
Fixed maturities.................................... 362,141 688,904
Equity securities................................... 14 683
Mortgage loan principal receipts.................... 31,158 40,647
Real estate......................................... 9,244 7,414
Other long term investments......................... 1,660 163
Expenditures for property and equipment................. (2,844) (3,418)
Cost of investments purchased:
Fixed maturities.................................... (664,393) (1,058,365)
Mortgage loans...................................... (5,706) (9,306)
Real estate......................................... (683) (1,013)
Other long term investments......................... (7) (93)
Net sales or (purchases) of short term investments.. 44,457 (21,484)
Other, net............................................ 1,778 953
___________ ___________
Net cash used in investing activities....... (221,826) (357,184)
___________ ___________
Cash flows from financing activities:
Increase in notes payable............................. 49,200 158,000
Repayment of long term debt........................... -- (100,000)
Dividends to shareholders............................. (23,142) (21,258)
Acquisition of treasury stock......................... (5,253) (1,798)
Change in policyholder account balances............... 78,848 208,549
Other, net............................................ 5,994 4,753
___________ ___________
Net cash provided by financing activities... 105,647 248,246
___________ ___________
Net change in cash.................................. 4,907 (7,717)
Cash at beginning of year............................. 51,878 60,321
___________ ___________
Cash at end of period................................. $ 56,785 $ 52,604
=========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>7
USLIFE Corporation and Subsidiaries
Notes to Financial Statements
Note 1. Change in Accounting Principles
Effective as of January 1, 1995, the Company adopted Statement of
Financial Accounting Standards No. 114 ("SFAS 114"), entitled
"Accounting by Creditors for Impairment of a Loan," as modified
by FASB Statement No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures."
These Statements require a writedown to fair value, as defined by
Statement No. 114, for certain mortgage loans and similar
investments where impairment results in a change in repayment
terms. The adoption of these Statements did not have a material
impact on the Company's reported financial position or results of
operations.
Note 2. Investments
The Company's investment management policies include continual
monitoring and evaluation of securities market conditions and
circumstances relating to its investment holdings which may
result in the selection of investments for sale prior to
maturity. Securities may also be sold as part of the Company's
asset/liability management strategy in response to changes in
interest rates, resultant prepayment risk, and similar factors.
Accordingly, the Company's entire Fixed Maturity portfolio is
classified as "available for sale" and is carried in the
accompanying balance sheets at market value. The Company's
investments in preferred stocks (other than redeemable preferred
stocks) and common stocks ("Equity Securities") are also carried
at market value in the accompanying balance sheets. Unrealized
gains and losses on "available for sale" securities, except those
relating to a reduction in value determined to be other than
temporary, are recorded as direct charges or credits to "Net
unrealized gains (losses) on securities" included in Equity
Capital. The cost and market value of the Company's consolidated
investments in Fixed Maturities and Equity Securities at
September 30, 1995 and December 31, 1994 are presented below:
<PAGE>8
<TABLE>
<CAPTION>
Net
Unrealized
Adjusted Gain
Cost Market (Loss)
___________ _________ __________
(Amounts in Thousands)
<S> <C> <C> <C>
September 30, 1995:
Fixed Maturities......................... $5,496,130 $5,763,045 $ 266,915
Equity Securities........................ 5,788 5,613 (175)
__________
266,740
Adjustment of deferred policy acquisition
costs relating to market value
adjustment for certain fixed maturities (95,175)
Adjustment of certain policyholder
liabilities relating to market value
adjustment for certain fixed maturities (6,062)
Tax effect............................... (57,927)
__________
Net unrealized gain on securities
included in Equity Capital............. $ 107,576
==========
December 31, 1994:
Fixed Maturities......................... $5,190,230 $4,937,867 $(252,363)
Equity Securities........................ 5,344 4,583 (761)
__________
(253,124)
Adjustment of deferred policy acquisition
costs relating to market value
adjustment for certain fixed maturities 5,821
Adjustment of certain policyholder
liabilities relating to market value
adjustment for certain fixed maturities 6,921
Tax effect............................... 84,134
__________
Net unrealized loss on securities
included in Equity Capital............. $(156,248)
==========
</TABLE>
Short term investments are carried at cost, which approximates
market value. Real estate is carried at the lower of depreciated
cost or net realizable value. Depreciation is calculated on a
straight line basis with useful lives varying based on the type
of building. Policy loans and mortgages, other than those with a
decline in value determined to be other than temporary, are
stated at the aggregate of unpaid principal balances. Other long
term investments are stated at the lower of cost or estimated net
realizable value.
At September 30, 1995, consolidated invested assets included $246
million (at market; adjusted cost $236 million) of less than
investment grade corporate securities, based on ratings assigned
by recognized rating agencies and insurance regulatory
authorities. Based on market value, these securities represent
3% of consolidated total assets at that date. Approximately $9
million of these investments (at adjusted cost which approximates
market) are in default at September 30, 1995. Also at September
30, 1995, the book value of mortgage loans included in
consolidated total assets which were 60 days or more delinquent
or in foreclosure was approximately $6 million, and the book
value of property acquired through foreclosure of mortgage loans
was approximately $18 million.
<PAGE>9
Note 3. Equity Capital Per Share
Equity Capital per share was determined by dividing total Equity
Capital by the number of common shares and common equivalent
shares outstanding at the end of the period. The number of
common shares and common equivalent shares for this purpose has
been determined on the same basis as that for income per share
(see Note 4 of Notes to Financial Statements), except amounts are
based on the number of shares outstanding at the end of the
period. As of September 30, 1995 and December 31, 1994, the
number of such shares used for this purpose was 34.851 million
and 34.515 million, respectively.
Note 4. Income Per Share
Income per share was computed by dividing the income applicable
to common and common equivalent shares by the weighted average
number of common and common equivalent shares outstanding during
each period. The weighted average number of common and common
equivalent shares was determined by using the average number of
common shares outstanding during each period, net of reacquired
(treasury) shares from the date of acquisition; by converting the
shares of the Series A and Series B Preferred Stock to their
equivalent common shares, and by calculating the number of shares
issuable on exercise of those common stock options with exercise
prices lower than the market price of the common stock, reduced
by the number of shares assumed to have been purchased with the
proceeds from the exercise of the options. Fully diluted income
per share is the same as income per share data indicated. The
following table sets forth the computations of income per share
for the nine and three month periods ended September 30, 1995 and
1994:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30 September 30
__________________ __________________
1995 1994 1995 1994
____ ____ ____ ____
(Shares and Amounts in Thousands
except Per Share data)
<S> <C> <C> <C> <C>
Net income......................................... $ 77,100 $ 73,298 $ 26,643 $ 25,510
======== ======== ======== ========
Weighted average common shares
outstanding, net of treasury shares.............. 34,334 34,224
Add - common share equivalents of:
Preferred Stock - Series A....................... 54 57
Preferred Stock - Series B....................... 23 24
Outstanding stock options - treasury stock method 354 227
______ ______
Total common shares and common equivalent shares... 34,765 34,532
====== ======
Net income per share............................... $ 2.22 $ 2.12 $ .76 $ .73
====== ====== ====== ======
</TABLE>
<PAGE>10
Note 5. Reinsurance
The Company's life insurance subsidiaries reinsure with other
companies portions of the risks they underwrite and assume
portions of risks on policies underwritten by other companies.
The life insurance subsidiaries generally reinsure risks over
$1.5 million as well as selected risks of lesser amounts.
Amounts paid or deemed to have been paid for reinsurance
contracts are recorded as reinsurance receivables, and the cost
of reinsurance related to long-duration contracts is accounted
for over the life of the underlying reinsured policies using
assumptions consistent with those used to account for the
underlying policies. The Company is contingently liable with
respect to insurance ceded in the event any reinsurer is unable
to meet the obligations which have been assumed. Reinsurance
receivable and recoverable amounts included in "Other
receivables" in the accompanying Consolidated Balance Sheets are
as follows:
September December
30, 1995 31, 1994
_________ _________
(Amounts in Thousands)
Reinsurance receivables - paid claims... $ 5,964 $ 8,865
Other reinsurance recoverable amounts... 134,398 128,252
________ ________
$140,362 $137,117
======== ========
The effect of reinsurance on premiums, other considerations, and
benefits to policyholders and beneficiaries, is as follows:
<TABLE>
<CAPTION>
Nine Months Three Months
Ended September 30 Ended September 30
___________________________ ___________________________
1995 1994 1995 1994
________ ________ ________ ________
(Amounts in Thousands)
<S> <C> <C> <C> <C>
Premiums, before reinsurance ceded......... $791,320 $782,283 $265,044 $257,527
Premiums ceded............................. 56,798 59,223 19,743 20,361
________ ________ ________ ________
Net premiums............................... $734,522 $723,060 $245,301 $237,166
======== ======== ======== ========
Other considerations, before reinsurance
ceded................................... $180,108 $155,768 $ 57,679 $ 56,457
Other considerations ceded................. 12,492 10,883 4,577 3,809
________ ________ ________ ________
Net other considerations................... $167,616 $144,885 $ 53,102 $ 52,648
======== ======== ======== ========
Benefits to policyholders and beneficiaries,
before reinsurance recoveries............ $573,540 $585,748 $193,614 $187,984
Reinsurance recoveries..................... 38,235 41,604 14,737 9,917
________ ________ ________ ________
Benefits to policyholders and beneficiaries,
net of reinsurance recoveries............ $535,305 $544,144 $178,877 $178,067
======== ======== ======== ========
</TABLE>
<PAGE>11
Note 6. Split of Common Stock
In July, 1995, the Board of Directors of USLIFE Corporation
approved a 3-for-2 split of the Company's common stock ($1.00 par
value). As a result of this action, one additional share of
USLIFE common stock was distributed on September 22, 1995 for
each two shares held by shareholders of record at the close of
business on September 1, 1995. The par value per share of the
common stock was not changed, and the aggregate par value of
$19.2 million for the additional shares issued was transferred
from Paid-in Surplus to Common Stock as of the effective date of
the transaction. All references in the financial statements
herein to number of common shares and per-share amounts have been
restated as appropriate to reflect the 3-for-2 split of the
Company's common stock.
<PAGE>12
USLIFE Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Condition
___________________
The liquidity requirements of the Company are met primarily
by cash flows from operations of the life insurance
subsidiaries and accumulated funds at the subsidiary level.
These internal sources of liquidity are complemented by such
external sources as available bank lines of credit and
revolving credit agreements and the ability of the Company
to utilize capital markets for intermediate and long-term
financing.
Premium and investment income as well as maturities and
sales of invested assets provide the primary sources of cash
available for liquidity requirements at the life insurance
subsidiaries, while cash is applied by such subsidiaries to
payment of policy benefits and loans, costs of acquiring new
business (principally commissions), and operating expenses,
as well as purchases of new investments. Excluding the
impact of changes in accounts payable and receivable and
amounts due policyholders, all of which are subject to
random fluctuations from the timing of securities
transaction settlements, claims payments and similar
matters, net cash provided by operating activities of the
life insurance subsidiaries for the first nine months of
1995 was $145.1 million.
On a consolidated basis, net cash provided by operating
activities amounted to $121.1 million for the first nine
months of 1995, compared to $101.2 million for the
corresponding period of 1994. As indicated above, these
amounts reflect changes in accounts that are subject to
random timing fluctuations. Excluding the impact of changes
in these accounts, net cash provided by consolidated
operating activities amounted to $119.2 million in the first
nine months of 1995 versus $113.6 million in the
corresponding 1994 period.
Cash flows from operating activities for the first nine
months of 1995 included $69.3 million from the change in
liability for future policy benefits, versus $45.9 million
in the corresponding 1994 period. The increase reflected
increased sales of term insurance and single premium
immediate annuities as well as greater written premiums on
credit life and disability products in the first nine months
of 1995.
<PAGE>13
Interest credited to policyholder account balances increased
to $156.7 million in the first nine months of 1995 versus
$143.7 million in the corresponding 1994 period, reflecting
the aggregate increase in policyholder account balances from
$3.6 billion at September 30, 1994 to $3.8 billion at
September 30, 1995. The portion of policyholder account
balances relating to individual annuities was approximately
$1.8 billion at both September 30, 1995 and September 30,
1994. The balance, relating to universal life insurance
contracts, increased approximately $190 million during that
one year period.
Increases in rates of interest credited on substantially all
of the Company's deferred annuities, initiated during the
second half of 1994 and effective for renewing contracts
either at contract anniversary or January 1, 1995, were also
a factor in the increase in interest credited to
policyholder account balances for the first nine months of
1995 versus 1994. As discussed under "Results of
Operations," reductions in interest rates offered and
credited on the Company's universal life insurance and
annuity products are being implemented during 1995.
Interest rates credited on universal life and individual
deferred annuity contracts may be adjusted periodically by
the Company. Subject to any applicable surrender charges,
the Company's universal life insurance products and
individual deferred annuities may be surrendered by the
holder. A cash surrender value, based on contractual terms,
is also available to the policyholder upon surrender of many
of the Company's traditional individual life insurance
policies under which cash values are accumulated. Such
surrenders are influenced by various factors including
economic conditions, available alternative investment
returns, competition for investment and insurance funds, and
perceived financial strength of the insurer. These
contracts are generally supported by the Company's
investment portfolios, which are primarily comprised of
investment grade, publicly traded corporate bonds.
Substantially all of the Company's interest sensitive life
insurance and annuity contracts provide for imposition of a
surrender charge in the event of policy surrender during a
specified initial period commencing with contract inception,
typically ten to fifteen years for universal life insurance
and five to seven years for individual annuities, with the
significance of this charge often subject to reduction over
the applicable period or during the later portion thereof.
<PAGE>14
The Company's investment portfolios are continually
monitored to determine whether the distribution of
investment maturities is considered appropriate for expected
levels of policy surrenders. The Company's fixed maturity
investments may be sold prior to maturity as part of the
Company's asset/liability management strategy and are
classified as "available for sale." Adjustments to the
investment maturity distribution, if necessary, may also be
accomplished by actions concerning the investment of
incoming funds and/or reinvestment of the proceeds of
securities matured or redeemed.
The Company monitors its surrenders on a monthly basis. Any
material deviation or emerging trend is traced to the
product line and agency of record, and remedial action is
taken where appropriate. If an acceleration of surrenders
were experienced, the cash flow requirements associated with
such surrenders could conceivably require the Company to
liquidate a portion of the underlying security investments
prior to maturity, at then-prevailing market prices. Any
additional cash flow requirements would be met through the
sources of liquidity described earlier.
Net additions to deferred policy acquisition costs amounted
to $53.5 million in the 1995 period versus $30.6 million in
the 1994 period. The increase of approximately $23 million
came primarily from greater individual life insurance sales
in the 1995 period. New annualized premiums for traditional
individual life products (primarily term insurance)
increased $12.8 million or 33% over the corresponding 1994
period, while sales of interest-sensitive life insurance
products increased $10.5 million or 24% over that period.
Federal income tax payments amounted to $44.7 million in the
first nine months of 1995, versus $51.0 million in the
corresponding 1994 period. Approximately $11 million of the
1994 period amounts deposited were applied to taxable income
for the fourth quarter of 1994.
Net cash used in investing activities amounted to $221.8
million in the first nine months of 1995, compared to $357.2
million in the corresponding 1994 period. The decrease
reflected a reduced level of individual annuity sales and a
greater level of surrenders on these contracts during the
first nine months of 1995, both of which affected the
increase in policyholder account balances.
Individual annuity gross deposits decreased from $190
million in the first nine months of 1994 to $85 million in
the 1995 period, as a result of various factors including
the negative impact on sales of declining interest rates
offered on these contracts during 1995.
<PAGE>15
Individual annuity surrender benefits increased to $161
million in the first nine months of 1995 versus $128 million
in the corresponding 1994 period, reflecting the greater
volume of annuity contracts in force and increased interest
rates available to consumers on certain alternative
investments. It should be noted that the major portion of
these surrenders resulted in imposition of a surrender
charge by the Company as contractually permitted and
consequently, these surrenders did not have an adverse
impact upon consolidated results of operations for the first
nine months of 1995.
Reflecting the above factors, the increase in policyholder
account balances amounted to $78.8 million in the first nine
months of 1995, versus $208.5 million in the corresponding
1994 period, despite the aforementioned increase in interest
sensitive life insurance sales.
The $362.1 million and $688.9 million disposals of fixed
maturity investments included in cash flows from investing
activities for the first nine months of 1995 and 1994
included, respectively, $75 million and $192 million (at
cost) of securities which were called for redemption by the
respective issuers prior to maturity. Fixed maturity
disposals also reflected sales of certain securities as part
of the Company's asset/liability management strategy with
objectives including maintenance of an appropriate
relationship of asset yields and maturities to current
policy liabilities, as well as sales of certain non-
performing securities for which reserves had previously been
established. Substantially all of the proceeds from fixed
maturities sold or redeemed were directed to investment
grade fixed maturity investments.
Net cash flows provided by consolidated financing activities
amounted to $105.6 million in the first nine months of 1995
versus $248.2 million in the corresponding 1994 period,
reflecting the smaller 1995 period increase in policyholder
account balances discussed above.
Cash flows from financing activities for the first nine
months of 1994 reflected a refinancing transaction in which
the Company borrowed $100 million in May 1994, classified as
notes payable, under a revolving credit agreement, and
utilized the proceeds to repay $100 million "current
maturities of long term debt" under an expiring credit
facility.
Notes payable increased $49 million in the first nine months
of 1995 and $58 million in the corresponding 1994 period
(excluding the refinancing transaction). These increases in
notes payable related primarily to working capital
requirements. Cash dividends are typically remitted by the
life insurance subsidiaries to the parent company during the
fourth quarter. Historically, a portion of these dividends
has been applied toward reduction of short term debt
incurred for working capital purposes during the earlier
part of the year.
<PAGE>16
At September 30, 1995, the Company had lines of credit with
seven banks amounting to $60 million, all of which was
unused. However, at that date, the Company had
outstanding short term borrowings with five banks,
negotiated independently of such lines to take advantage of
more favorable interest rates, in the aggregate amount of
$95.7 million. The Company's remaining short term
borrowings at September 30, 1995 consisted of $150 million
outstanding under a revolving credit agreement with The Bank
of New York. In April 1995, the term of the latter
agreement was extended to April 1996.
Also at September 30, 1995, the Company had available a bank
revolving credit agreement which provides term loan
borrowing facilities up to $100 million, under which no
borrowings were outstanding. In February 1995, the term of
this agreement was extended to February 1997.
The Company's short term borrowings are utilized primarily
for working capital requirements.
Long term debt at September 30, 1995 includes a $150 million
non-callable issue of 6.75% Notes due 1998 and a $150
million non-callable issue of 6.375% Notes due 2000. The
Company has filed a shelf registration statement which
permits the issuance of up to $150 million principal amount
of debt securities subject to management's discretion as to
timing and amount of issues thereunder. The Company's
remaining long term debt at September 30, 1995 consists of a
$50 million issue of 9.15% Notes due 1999 which permits
early repayment at the option of the Company, commencing in
June 1996.
While it is currently anticipated that the major portion of
the long term debt will be repaid using bank borrowings or
the net proceeds of debt and/or equity or combination
securities to be issued at future dates, determination of
the timing and amount of such repayments, borrowings and
securities issues will be dependent upon future market
conditions, future cash flows, and other unforeseen
circumstances.
Consolidated interest expense increased to $29.8 million in
the first nine months of 1995 from $25.8 million in the
corresponding 1994 period, primarily as a result of an
increase of nearly 200 basis points in interest rates
applicable to the Company's short term borrowings.
Dividends paid on the Company's outstanding stock issues
amounted to $23.1 million in the first nine months of 1995
versus $21.3 million in the corresponding 1994 period,
reflecting the increase in common stock quarterly dividends
per share (on a post-split basis; see Note 6 of Notes to
Financial Statements) from 20.667 cents to 22 cents in the
fourth quarter of 1994 and subsequently, to 23.333 cents
during the third quarter of 1995.
<PAGE>17
Results of Operations
_____________________
Nine Months Ended September 30, 1995 compared to
Nine Months Ended September 30, 1994
For the nine months ended September 30, 1995, net income
amounted to $77.1 million versus $73.3 million for the
comparable period of 1994, an increase of $3.8 million or
5.2%.
Net income for the first nine months of 1995 and 1994
included net capital gain transactions with an after-tax
impact of $2.4 million and $253 thousand, respectively. The
1995 period net capital gains reflect disposals of several
fixed maturity investments pursuant to tender offers by the
respective issuers, as well as certain redemptions as
discussed under "Financial Condition."
Capital gains and losses during the first nine months of
1995 reflect disposals of non-performing securities with
adjusted cost of approximately $26 million, as well as
several real estate properties that were acquired through
foreclosure, with aggregate cost of approximately $23
million. Since reserves had been previously recorded to
recognize the reduction in value of these investments, these
disposals did not have a material impact on current reported
results.
Excluding the capital gains and losses discussed above,
consolidated after-tax income amounted to $74.7 million for
the first nine months of 1995 versus $73.0 million for the
corresponding 1994 period, an increase of $1.6 million or
2.2%. On a similar basis, after-tax income of the life
insurance subsidiaries increased $4.7 million or 4.7%. Also
on a similar basis, after-tax corporate charges (including
the operating results of USLIFE's servicing units) amounted
to $30.8 million in the first nine months of 1995 versus
$27.7 million for the comparable 1994 period, resulting in a
negative comparative impact of approximately $3 million on
after-tax consolidated results that partially offset the
improvement in life insurance subsidiary results.
The improvement in life insurance subsidiary results came
primarily from an increase in pre-tax profits from the
individual life and annuity product line, partially offset
by unfavorable results from the employer/association group
health insurance line.
<PAGE>18
The negative variance in corporate charges reflected
increased interest expense at the corporate level. The
Company's consolidated interest expense, which increased to
$29.8 million in the first nine months of 1995 from $25.8
million in the corresponding 1994 period, relates to
borrowings at the parent company level for general corporate
purposes including treasury stock repurchases. As discussed
under "Financial Condition," an increase of nearly 200 basis
points in interest rates applicable to the Company's short
term borrowings was the primary cause of the increase in
interest expense for the first nine months.
A discussion of the Company's various product lines,
excluding the impact of capital gains and losses which are
previously discussed, follows.
Individual life and annuity pre-tax profits, including
income attributable to capital and surplus, amounted to
$154.1 million for the first nine months of 1995 versus
$139.6 million for the corresponding 1994 period. The
increase of $14.6 million or 10.4% reflected contributions
from major sources of profit including mortality experience,
investment income, and voluntary policy termination
experience ("persistency").
A pre-tax profit of $423 thousand was reported for credit
life insurance coverages for the first nine months of 1995,
versus $915 thousand in the corresponding 1994 period. The
negative variance of $492 thousand came primarily from less
favorable mortality experience during the 1995 period.
Written premiums from credit life insurance products
increased $5.9 million or 12% versus the first nine months
of 1994. It should be noted that pre-tax profits on credit
insurance products are anticipated to be realized when
currently written premiums are earned in future periods
rather than during the period of sale.
Pre-tax profits from the Company's group life insurance
lines of business amounted to $5.1 million for the first
nine months of 1995, versus $3.3 million for the
corresponding 1994 period, for a positive variance of $1.7
million. These lines include employer/association group
life insurance, mortgage life insurance, and certain
specialty coverages.
Pre-tax income from employer/association group life
insurance products increased approximately $1 million, from
$3.3 million in the 1994 period to $4.3 million in the first
nine months of 1995, reflecting an increased base of earned
premiums.
<PAGE>19
A favorable variance of approximately $800 thousand from the
Company's other group life insurance lines, including
mortgage life insurance and specialty coverages, accompanied
the improved employer/association group life results. The
improvement in these lines reflected the impact on 1994
period results of poor mortality experience on a certain
group accidental death coverage program which was
subsequently terminated.
The Company's group health insurance lines of business
reported a pre-tax loss of approximately $4.5 million for
the first nine months of 1995 versus a pre-tax profit of
$5.0 million for the corresponding 1994 period. The
negative variance of $9.6 million was primarily attributed
to the employer/association group health insurance line,
which reported a pre-tax loss of $4.1 million for the 1995
period versus a pre-tax profit of $4.9 million a year ago.
Premium revenues on employer/association group health
insurance products declined from $302 million in the first
nine months of 1994 to $267 million in the 1995 period, with
the decline primarily attributed to small group major
medical cases. Since the major portion of the Company's
major medical business has consisted primarily of
"indemnity" coverages, a shift in market emphasis to managed
care products arising from legislation in New York and New
Jersey resulted in a reduction of new sales as well as
erosion of business in force. The Company's decision in
late 1993 to restrict major medical sales to states where it
has a significant amount of in-force business also
contributed to the decline in revenues.
The Company has initiated expense reduction measures to
alleviate the impact of reduced group health revenues.
Despite these measures, the revenue decline outpaced
reductions in overhead and other expenses during the first
nine months of 1995. This revenue shortfall, together with
third quarter 1995 expense charges of approximately $900
thousand related to the closing of a claims office, resulted
in the reported pre-tax loss for the 1995 period. The
claims office closing represents the substantial completion
of a program to consolidate these offices in order to
achieve future economies.
The Company has refined its "ancillary" group products, such
as long-term disability and dental insurance, with goals
including an increase in the proportion of group business
from non-major medical lines, and is introducing new managed
care products and networks in several states with the
objective of improving its competitive position.
Additionally, in attempting to address the underabsorption
of fixed expenses, the Company is pursuing the purchase of
group life and association group life blocks of business.
<PAGE>20
Pre-tax income from credit disability products amounted to
$5.0 million in the 1995 period, versus $4.7 million in the
comparable 1994 period, reflecting an increased base of
earned premiums.
Total revenues of the life insurance subsidiaries in the
1995 period amounted to $1.279 billion, an increase of $61.0
million or 5.0% over the same period of 1994, primarily on
increases of $32.4 million (or 3.7%) and $21.3 million (or
6.4%) in premiums and considerations and net investment
income, respectively.
The increase in premiums and considerations came primarily
from the individual life insurance and annuity product line
and the credit life and disability lines, with declining
employer/association group health premiums a partial offset
as previously discussed.
Premiums and other considerations from individual life
insurance and annuity products amounted to $367 million in
the 1995 period, compared to $325 million in the 1994
period, with the increase from both interest sensitive and
traditional products and reflecting a larger base of in-
force business as well as increased sales during the first
nine months of 1995.
Net premium income on credit life and disability products
increased $13.4 million to $112.7 million in the first nine
months of 1995, reflecting increased written premium for
both credit life and credit disability products. The
increased written premium is attributed to various factors
including increased sales through bank sources of business.
Net investment income of the life insurance subsidiaries
increased $21.3 million, as noted above, reflecting a larger
investment base in the 1995 period. The pre-tax annualized
yield was 7.91% in both the 1995 and 1994 periods.
While interest rates available on investment securities have
fluctuated in recent quarters, the overall yield was
somewhat lower during the third quarter of 1995 than the
first half of the year. It should be noted that the
Company's interest sensitive life insurance and annuity
contracts are subject to periodic adjustment of credited
interest rates which are determined by management based on
factors including available market interest rates and
portfolio rates of return. Recent rate actions are
discussed below.
Total benefits and expenses of the life insurance
subsidiaries increased $51.2 million or 4.8% over the same
period of 1994.
<PAGE>21
Benefits to policyholders and beneficiaries amounted to
$535.1 million in the 1995 period, a decrease of $9.6
million versus the $544.6 million reported for the first
nine months of 1994. A $31.6 million decrease in
employer/association group health benefits, reflecting the
decline in volume on that line, was the primary cause of the
overall decrease in benefits. Volume related increases of
$10.3 million in death benefits on individual life insurance
products and $3.7 million on credit life and disability
benefits partially offset the impact of the decline in
employer/association group health benefits.
Interest credited to policyholder account balances increased
$13.0 million (or 9.1%) over the first nine months of 1994.
This increase reflected the greater volume of universal
life-type and individual annuity contracts in the 1995
period as well as increases in rates of interest offered,
initiated during the second half of 1994, on substantially
all of the Company's deferred annuities.
Interest rates credited on the Company's deferred annuity
contracts, exclusive of first year increments on certain
products, typically ranged from 4.5% to 4.8% during the 1994
period and from 4.8% to 5.5% during the 1995 period,
depending on type of contract and period of issue. As a
result of the 1994 rate actions, increases in renewal rates
of interest on these annuities became effective January 1,
1995 or at contract anniversary, based on type of contract.
Subsequently, during the first nine months of 1995, a series
of reductions in interest rates offered on newly issued
deferred annuity contracts were implemented, together with
various adjustments of credited interest rates on renewing
contracts. Further reductions in renewal rates, generally
amounting to 25 basis points, are being implemented on these
contracts during the fourth quarter of 1995.
Interest rates credited on the Company's universal life
insurance contracts typically ranged from 6.0% to 7.0%
during the 1994 period and from 5.8% to 7.0% during the
first nine months of 1995. Reductions in credited interest
rates, generally amounting to 25 basis points, were
implemented during the third quarter of 1995 with respect to
the major portion of the Company's universal life insurance
policies in force as well as certain newly issued policies.
Similar rate reductions are being implemented during the
fourth quarter with respect to substantially all of the
Company's currently offered universal life insurance
policies (other than those adjusted in the third quarter),
for both newly issued and in-force contracts. Following
these actions, credited rates on the Company's universal
life insurance contracts will generally range from 5.8% to
6.8%.
The prospective impact of rate adjustments for interest
sensitive products on reported results will be dependent
upon future sales, surrender levels, and investment
portfolio yield.
<PAGE>22
An increase in future policy benefits of $80.0 million was
recorded for the 1995 period, versus $53.5 million for the
corresponding 1994 period, with the $26.5 million variance
primarily associated with the increase in premiums on
traditional individual life insurance and credit insurance
coverages.
Aggregate commissions, general expenses, and insurance taxes
and licenses increased from $198 million in the 1994 period
to $219 million in the first nine months of 1995. The $21
million increase reflects approximately $4 million volume
related expenses which are directly associated with premiums
from a specialty group insurance product marketed in
conjunction with a consumer retailer, as well as third
quarter expenses of about $900 thousand from closing of a
group claims office as previously discussed. The remainder
of the increase is primarily attributed to increased volume
in the individual life insurance and annuity product line
and greater credit insurance written premiums.
At September 30, 1995, consolidated invested assets included
approximately $246 million (at market) of less than
investment grade corporate securities, based on ratings
assigned by recognized rating agencies and insurance
regulatory authorities. These investments represent about
3% of consolidated total assets at that date. See Note 2 of
Notes to Financial Statements for further information.
These securities generally involve greater risk of loss from
borrower default than investment grade securities because
their issuers typically have higher levels of indebtedness
and are more vulnerable to adverse economic conditions than
other issuers. The Company's results of operations
historically have not reflected a material adverse impact
from investments in such securities.
In March, 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121,
entitled "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." The Statement
requires that long-lived assets such as property and
equipment, and certain intangible assets, be reviewed for
impairment when events or changes in circumstances indicate
that the carrying amount may not be recoverable. When
recoverability standards specified in the Statement are not
met, a writedown of the covered assets may be required. The
Statement does not apply to various classes of assets
including the Company's investment securities and deferred
policy acquisition costs, which will continue to be
evaluated based on previously established accounting
standards. Statement No. 121 must be adopted by calendar
year enterprises no later than 1996. The Company has not
yet completed its analysis of the prospective impact, if
any, of these accounting standards on its reported financial
position and results of operations.
<PAGE>23
Three Months Ended September 30, 1995 compared to
Three Months Ended September 30, 1994
For the three months ended September 30, 1995, net income
amounted to $26.6 million versus $25.5 million for the
comparable period of 1994, an increase of $1.1 million.
Net income for the third quarter of 1995 included net
capital gain transactions with an after-tax impact of $2.1
million, reflecting disposals of several fixed maturity
investments pursuant to tender offers by the respective
issuers as well as certain redemptions. Capital gains and
losses had no material impact on reported results of
operations for the third quarter of 1994.
Excluding capital gains and losses, consolidated after-tax
income amounted to $24.5 million for the third quarter of
1995 versus $25.6 million for the corresponding 1994 period,
a decrease of about $1 million. On a similar basis, after-
tax income of the life insurance subsidiaries amounted to
$34.5 million in the third quarter of 1995 versus $35.1
million for the corresponding 1994 period. Also on a
similar basis, after-tax corporate charges (including the
operating results of USLIFE's servicing units) amounted to
$10.0 million in the third quarter of 1995 versus $9.6
million for the comparable 1994 period, resulting in a
negative comparative impact of approximately $400 thousand
on after-tax consolidated results.
The decline in life insurance subsidiary results came from
an adverse mortality fluctuation that affected the Company's
life insurance lines of business as well as unfavorable
results from the employer/association group health insurance
line, as discussed below.
The negative variance in corporate charges reflected
increased interest expense at the corporate level. The
Company's consolidated interest expense, which increased to
$10.2 million in the third quarter of 1995 from $9.2 million
in the corresponding 1994 period, relates to borrowings at
the parent company level for general corporate purposes
including treasury stock repurchases. As previously
discussed, higher interest rates applicable to the Company's
short term borrowings were the primary cause of the increase
in interest expense for the third quarter.
<PAGE>24
A discussion of the Company's various product lines,
excluding the impact of capital gains and losses which are
previously discussed, follows.
Individual life and annuity pre-tax profits, including
income attributable to capital and surplus, amounted to
$51.1 million for the third quarter of 1995 versus $46.9
million for the corresponding 1994 period, an increase of
$4.3 million or 9.1%. Although the gain from mortality did
contribute to overall third quarter 1995 profitability for
this line, the current quarter contribution from this source
was less than that of the corresponding 1994 period.
Improved investment income gains, reflecting a larger base
of in-force business on which these gains are generated,
together with more favorable voluntary policy termination
experience ("persistency") and margins from increased term
insurance sales, contributed to the overall increase in pre-
tax profits for this line.
A pre-tax profit of $208 thousand was reported for credit
life insurance coverages for the third quarter of 1995,
versus $1.0 million for the corresponding 1994 period. The
negative variance of about $800 thousand came primarily from
less favorable mortality experience during the third quarter
of 1995.
Pre-tax profits from the Company's group life insurance
lines of business amounted to $1.5 million for the third
quarter of 1995, versus $2.2 million for the corresponding
1994 period. The negative variance of approximately $700
thousand came primarily from less favorable mortality
experience on employer/association group life insurance and
on certain specialty coverages included in these lines.
The Company's group health insurance lines of business
reported a pre-tax loss of approximately $2.5 million for
the third quarter of 1995 versus a pre-tax profit of $825
thousand for the corresponding 1994 period. The negative
variance of $3.3 million was primarily attributed to the
employer/association group health insurance line, which
reported a pre-tax loss of $2.4 million for the 1995 period
versus a pre-tax profit of $1.1 million a year ago.
Premium revenues on employer/association group health
insurance products declined from $97 million in the third
quarter of 1994 to $86 million in the 1995 period, with the
decline primarily attributed to small group major medical
cases. As previously discussed, although the Company has
initiated strategies directed toward expense reduction,
emphasis of non-major medical products, and programs to
improve its competitive position in the employer/association
group insurance market, the revenue decline outpaced
reductions in overhead and other expenses during the 1995
period. This revenue shortfall, coupled with third quarter
1995 expense charges of approximately $900 thousand relating
to the previously discussed closing of a claims office
resulted in the reported pre-tax loss for the 1995 period.
<PAGE>25
Total revenues of the life insurance subsidiaries in the
1995 period amounted to $427.1 million, an increase of $18.8
million or 4.6% over the same period of 1994, primarily on
increases of $8.6 million (or 3.0%) and $5.5 million (or
4.8%) in premiums and considerations and net investment
income, respectively.
The increase in premiums and considerations came primarily
from the individual life insurance and annuity product line
and the credit life and disability lines, partially offset
by declining employer/association group health premiums.
Premiums and other considerations from individual life
insurance and annuity products amounted to $121 million in
the 1995 period, compared to $112 million in the 1994
period, with the increase from both interest sensitive and
traditional products and reflecting a larger base of in-
force business as well as increased sales during the third
quarter of 1995.
Net premium income on credit life and disability products
increased $6.7 million versus the prior year period to $43.1
million in the third quarter of 1995, reflecting increased
written premium for both credit life and credit disability
products.
Net investment income of the life insurance subsidiaries
increased $5.5 million, as noted above, reflecting a larger
investment base in the 1995 period which more than offset
the impact of a modest decline in overall yield versus the
third quarter of 1994. As previously discussed, the Company
considers available market interest rates and portfolio
rates of return in determining interest rates credited and
offered on its interest sensitive policies, and has
initiated rate reductions on various products during 1995.
Total benefits and expenses of the life insurance
subsidiaries increased $15.9 million or 4.5% over the same
period of 1994.
Benefits to policyholders and beneficiaries amounted to
$178.6 million in the 1995 period versus $178.1 million
reported for the third quarter of 1994. A $10.7 million
decrease in employer/association group health benefits,
reflecting the decline in volume on that line, was
essentially offset by increases in death benefits in the
individual life, credit life, and group life insurance
lines. These increases reflected both greater volume and
less favorable mortality experience, as discussed earlier,
in comparison to the third quarter of 1994.
<PAGE>26
Interest credited to policyholder account balances increased
$4.2 million (or 8.6%) over the third quarter of 1994. This
increase reflected the greater volume of universal life-type
and individual annuity contracts in the 1995 period as well
as the current year impact of increases in rates of interest
credited, initiated during the second half of 1994, on
substantially all of the Company's deferred annuities as
previously discussed.
An increase in future policy benefits of $23.9 million was
recorded for the 1995 period, versus $20.9 million for the
corresponding 1994 period, with the $3.0 million increase
primarily associated with the increase in premiums on credit
insurance products.
Amortization of deferred policy acquisition costs amounted
to $39.6 million in the third quarter of 1995, versus $42.5
million in the corresponding 1994 period. The decline came
primarily from the credit life and disability lines, which
reflected amortization relating to the termination of a
block of business in the 1994 period.
Aggregate commissions, general expenses, and insurance taxes
and licenses increased from $64 million in the third quarter
of 1994 to $75 million in the 1995 period. The increase
reflected approximately $2 million volume related expenses
which are directly associated with premiums from a specialty
group insurance product marketed in conjunction with a
consumer retailer, as well as third quarter expenses of
about $900 thousand from closing of a group claims office as
previously discussed. The remainder of the increase is
primarily attributed to increased volume in the individual
life and annuity line as well as greater credit insurance
written premiums.
<PAGE>27
OTHER FINANCIAL INFORMATION
The management of USLIFE believes that all adjustments
(consisting only of normal recurring accruals and adjustments)
necessary to present fairly the consolidated financial position
of USLIFE Corporation and subsidiaries as of September 30, 1995
and December 31, 1994, the consolidated results of operations for
the nine and three month periods ended September 30, 1995 and
1994, and consolidated cash flows for the nine month periods
ended September 30, 1995 and 1994, have been included in the
accompanying financial statements.
Certain prior year amounts have been reclassified to conform to
current year presentation.
<PAGE>28
Part II - Other Information
Item 1. Legal Proceedings
_________________
On August 29, 1995, the United States District Court for the
Northern District of Illinois in Hoban v. USLIFE Credit Life
Insurance Company, All American Life Insurance Company and
Security of America Life Insurance Company, certified a
plaintiff class and then granted the defendants' Motion to
Dismiss based upon the lack of a valid Federal RICO claim. As
reported in the Company's Report on Form 10-Q for the quarter
ended June 30, 1995, this purported class action alleged that the
defendant companies, all of which are subsidiaries of the
Company, sold single premium credit life and credit disability
insurance policies to second mortgage borrowers in several states
and that some second mortgage loans were paid off early so that
the insureds were legally entitled to refunds for unearned
premiums. In granting this Motion to Dismiss, the Court also
refused to assert its discretionary jurisdiction over the
remaining state law claims, thereby terminating this case, and
requiring that those claims be asserted in state court if at all.
As reported in the Company's Report on Form 10-Q for the quarter
ended March 30, 1995, on March 1, 1995, a purported class action
(Grant, et al. v. USLIFE Credit Life Insurance Company and
Security of America Life Insurance Company) was filed in the
Chancery Division, Circuit Court of Cook County, Illinois. The
Complaint alleged that the defendant companies, which are
subsidiaries of the Company, sold single premium credit life and
credit disability insurance policies to second mortgage borrowers
and that when some second mortgage loans were prepaid, defendants
failed to refund unearned premiums to insureds. On August 3,
1995, the Court granted the plaintiffs' Motion for Voluntary
Dismissal, thereby terminating this case without prejudice.
<PAGE>29
As previously reported in the Company's Report on Form 10-K for
the year ended December 31, 1994, on November 17, 1994, a
purported class action (Smith, et al. v. USLIFE Credit Life
Insurance Company, et al.) was filed in the United States
District Court for the Northern District of Illinois. The
Complaint alleges that in connection with purchases by plaintiffs
of single premium term life insurance from mortgage lenders in
connection with second mortgage loans, defendants misrepresented
the type of insurance offered as credit life insurance and sold
the term life insurance at premiums in excess of those permitted
for credit life insurance. The Complaint further alleges that
upon prepayment of mortgage loans plaintiffs did not receive
refunds of unearned premiums, which they would have been entitled
to receive had they purchased credit life insurance. The
Complaint contains claims for damages for breach of contract,
breach of fiduciary duty, unfair and deceptive acts and
practices, fraud, restitution and unjust enrichment and civil
claims under the Federal RICO statute. On January 10, 1995,
defendants filed motions to dismiss the Complaint for, among
other reasons, failure to state a legally cognizable claim. On
July 27, 1995, the parties filed a Stipulation of Dismissal of
plaintiffs' claims against USLIFE Credit Life Insurance Company
and Security of America Life Insurance Company, leaving the
matter pending against only All American Life Insurance Company.
The parties are working toward a possible settlement of all
claims asserted in this action. Such a settlement would also
resolve the claims asserted by plaintiffs in the Hoban and Grant
cases described above.
On August 28, 1995, a purported class action (John G. Robinson &
Company, et al. v. The Old Line Life Insurance Company of
America) was filed in the District Court of Tarrant County,
Texas. On September 29, 1995, the case was removed to the United
States District Court for the Northern District of Texas. The
Complaint alleges that defendant, a subsidiary of the Company,
violated the federal Telephone Consumer Protection Act by sending
unsolicited facsimiles of advertisements. The Complaint contains
claims for damages in the amount of $500 for each such
unsolicited facsimile or alternatively, plaintiffs' actual
monetary loss, and treble damages or alternatively punitive
damages. No contingent loss has been accrued for this litigation
because the amount of the loss, if any, cannot be reasonably
estimated.
On March 16, 1995, a purported class action (Dana Galloway v.
USLIFE Credit Life Insurance Company) was filed in the Circuit
Court of Fayette County, Alabama. The complaint alleges that
defendant, a subsidiary of the Company, issued insurance
contracts in an amount sufficient to cover the gross amount of
indebtedness, rather than the net amount of indebtedness,
contrary to Alabama law. Plaintiffs seek compensatory and
punitive damages in unspecified amounts. No contingent loss has
been accrued for the litigation because the amount of the loss,
if any, cannot be reasonably estimated.
<PAGE>30
Item 6. Exhibits and Reports on Form 8-K
________________________________
(a) Exhibits
10 (i) - USLIFE Corporation 1981 Stock Option Plan.
(ii) - USLIFE Corporation 1978 Stock Option Plan, as
amended.
(iii) - USLIFE Corporation Restricted Stock Plan (As Amended
Effective September 1, 1995).
(iv) - USLIFE Corporation 1991 Stock Option Plan (As Amended
Effective September 1, 1995).
(v) - USLIFE Corporation Book Unit Plan (As Amended
Effective September 1, 1995).
27 Financial Data Schedule
(b) No reports on Form 8-K were filed on behalf of the Registrant
during the quarter ended September 30, 1995.
<PAGE>31
SIGNATURES
Pursuant to the requirements 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.
USLIFE Corporation
_____________________________
(Registrant)
November 8, 1995 By /s/ Greer F. Henderson
____________________ _____________________________
Date Greer F. Henderson
Vice Chairman and
Chief Financial Officer
<PAGE>1
USLIFE Corporation
Form 10-Q for the Quarterly Period Ended September 30, 1995
Exhibit Index
Exhibit Number
Per Item 601 of
Regulation S-K
_______________
10 (i) - USLIFE Corporation 1981 Stock Option Plan.
(ii) - USLIFE Corporation 1978 Stock Option Plan, as
amended.
(iii) - USLIFE Corporation Restricted Stock Plan (As Amended
Effective September 1, 1995).
(iv) - USLIFE Corporation 1991 Stock Option Plan (As Amended
Effective September 1, 1995).
(v) - USLIFE Corporation Book Unit Plan (As Amended
Effective September 1, 1995).
27 Financial Data Schedule
<PAGE>1
Exhibit 10(i)
_____________
1981 Stock Option Plan of
USLIFE CORPORATION
The purpose of the 1981 Stock Option Plan of USLIFE Corporation (hereinafter
"Plan"), like the 1978 Stock Option Plan and the 1971 Amended Stock Option Plan,
is to encourage and enable selected key employees of USLIFE Corporation
(hereinafter the "Corporation") and its subsidiary corporations upon whose
judgment, initiative and efforts the Corporation is largely dependent for its
business success to acquire a proprietary interest in the Corporation through
the ownership of its common stock. In this Plan, the terms "employees of the
Corporation", "employment by the Corporation", and "in the employ of the
Corporation" shall be deemed to include employees of, employment by, and in the
employ of, a "subsidiary corporation" or "parent corporation" of the
Corporation, as those terms are defined in Section 425 of the Internal Revenue
Code of 1954, as amended (hereinafter "Code").
1. The Stock. Options granted under the Plan shall be for the purchase of
shares of the common stock, par value $1.00 per share, of the Corporation.
Subject to adjustment in the number and kind of shares as hereinafter provided,
not more than 800,000 shares of such stock shall be sold on exercise of options
under the Plan. Such shares may be authorized but unissued shares or shares
acquired by the Corporation and held in its treasury, as the Board of Directors
may determine. Any shares in respect of which an option granted under the Plan
shall have expired or terminated may again be allotted under the Plan. Each
option granted under the Plan shall be subject to the requirement that, if at
any time the Board of Directors shall determine that the listing, registration
or qualification of the shares subject thereto upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable in connection with the granting of
such option or the issue or purchase of shares subject thereto, no such option
may be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors.
2. Eligibility. Options shall be granted to persons who are key employees of
the Corporation (including officers and directors, except for persons acting as
directors only and persons who are then serving on the Executive Compensation
Committee (the "Committee")). No option shall be granted to any person who,
immediately after such option is granted, would own shares possessing more than
5% of the total combined voting power of all classes of stock of the
Corporation.
<PAGE>2
The aggregate fair market value (determined at the time of grant) of all shares
subject to Incentive Stock Options (as defined under section 422A of the Code)
which are granted after December 31, 1980 under the Plan (and under all stock
option plans of the Corporation) to a person in a calendar year shall not exceed
$100,000; provided, however, one-half of the excess of $100,000 over such
aggregate fair market value shall be carried-over to each of the three
succeeding calendar years. In each such succeeding calendar year, the aggregate
fair market value of all shares subject to Incentive Stock Options which are
granted under the Plan (and under all stock option plans of the Corporation) to
a person shall be applied first to the annual $100,000 limitation and then to
any amount previously carried-over.
3. Price. The purchase price of shares under each option shall be 100% of the
fair market value of such shares at the time of grant of the option.
4. Option Period. The period during which each option may be exercised shall be
set forth in the option, but in no event shall an option be exercisable in whole
or in part after the expiration of ten years from the date it is granted. Each
option may be exercisable in one or more installments as provided therein.
5. Exercise of Option. Except as provided in paragraphs 7 and 8 below, no
option may be exercised unless the optionee is at the time of such exercise in
the employ of the Corporation and shall have been continuously so employed since
the granting of the option. If required at any time by the Committee, an option
may not be exercised until the optionee (or the purchaser acting under paragraph
7 below) has delivered to the Corporation a written representation that at the
time of such exercise it is his then present intention to acquire the shares
being purchased for investment and not with a view to any disposition thereof
(except, in the case of purchase by the legal representative of the optionee
under paragraph 7 below, for distribution to the optionee's legal heirs,
legatees, or other testamentary beneficiaries). Payment for shares purchased
must be made in full at the time of exercise. The purchase price may be paid in
cash; and unless the Committee adopts a contrary resolution, the purchase price
may also be paid through the delivery of shares of common stock of the
Corporation owned by the employee or a combination of cash and such shares equal
to the total option price. No fractional shares will be issued. The Corporation
may require as a condition of the exercise of the option that the optionee will
pay to the Corporation, in cash, an amount sufficient to satisfy the
Corporation's obligation to withhold federal, state and local taxes with respect
to the exercise of the option.
6. Non-transferability of Option. No option granted under the Plan to an
employee shall be transferable by the employee otherwise than by will or the
laws of descent and distribution, and such option shall be exercisable, during
his lifetime, only by the employee.
<PAGE>3
7. Death of Optionee. In the event of the death of an optionee while entitled
to exercise any option theretofore granted to him, such option shall be
exercisable up to the date of expiration of the option period or within twelve
months next succeeding the date of death, whichever is earlier, and then only
(a) by the optionee's legal representatives or the person or persons to whom the
optionee's rights under the option pass by the optionee's will or the laws of
descent and distribution, and (b) to the extent that he was entitled to exercise
the option at the date of his death.
8. Continuation of Employment. Each option, to the extent it shall not have
been exercised, shall terminate when the employment of the optionee terminates
for any reason other than death, disability or retirement either after age 65,
or prior thereto with the consent of the Board of Directors under a pension,
profit sharing, long-term disability or similar plan of his employer. In the
event of termination of employment because of such retirement or disability, the
employee's option shall terminate on the date of expiration of the option period
and may be exercised as though the optionee had remained in the employ of the
Corporation until the termination of the option, except as the Committee may
provide. Nothing contained in the Plan or in any option granted pursuant to the
Plan shall confer on any optionee any right to be continued in the employ of the
Corporation.
9. Dilution or Other Adjustments. In the event that the outstanding shares of
the common stock of the Corporation shall be increased or decreased or changed
into or exchanged for a different number or kind of shares of stock or other
securities of the Corporation or of another corporation, whether through
reorganization, merger, consolidation, recapitalization, stock split,
combination of shares, stock dividend or otherwise, the Board of Directors shall
make appropriate adjustment in the number or kind of shares or securities
available for option pursuant to the Plan and subject to any option, and the
purchase price therefor. The determination of the Board of Directors as to such
adjustments shall be conclusive.
10. Effective Date and Termination of the Plan. The Plan was authorized
effective May 19, 1981. The Board of Directors may in its discretion terminate
the Plan with respect to any shares for which options have not theretofore been
granted. No option may be granted hereunder after May 18, 1991.
<PAGE>4
11. Administration and Amendment to the Plan. The Plan shall be administered
by the Committee as appointed from time to time by the Board of Directors of the
Corporation from among its members, none of whom shall be eligible to be granted
stock options under the Plan or any other stock option plan of the Corporation
or any of its affiliates during such time as they shall be members of such
Committee or shall have been thus eligible within one year prior to such time.
Subject to and within the limitations provided in the Plan, the Committee shall
recommend to the Board of Directors the grant of options under the Plan on such
terms and conditions as the Committee shall deem appropriate and the Board of
Directors shall grant the options so recommended to the extent it deems
advisable. The Committee from time to time may adopt rules and regulations for
carrying out the Plan. The interpretation and decision with regard to any
question arising under the Plan made by the Committee shall, unless otherwise
determined by the Board of Directors, be final and conclusive on the Corporation
and on all employees participating, or eligible to participate, in the Plan. The
Board of Directors may make such amendments to the Plan as it may deem in the
best interest of the Corporation, provided that such action shall not without
the consent of the holders of a majority of the Corporation's outstanding shares
of common stock, Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock, Series C Cumulative Preferred Stock, Series D Convertible
Preferred Stock, and any other class or series of stock which is similarly
entitled to vote with the holders of the common stock, all voting as a single
class, increase the aggregate numbers of shares which may be purchased under the
Plan or change the class of employees to which options may be granted. No
amendment of the Plan may, however, without the consent of the holder of an
existing option, adversely affect his right under such option.
Upon the recommendation of the Committee and with the approval of the Board of
Directors, any option, or part thereof, granted after August 13, 1981 may be
designated as an Incentive Stock Option or a non-Incentive Stock Option.
<PAGE>1
Exhibit 10(ii)
______________
Stock Option Plan Of 1978 Stock Option Plan
USLIFE CORPORATION (May 16, 1978) w/Post-ISO Amendments
(hereinafter referred to as the "Plan")
The purpose of the Plan is to encourage and enable selected key employees of
USLIFE Corporation (hereinafter called "the Corporation") and its subsidiary
corporations upon whose judgment, initiative and efforts the Corporation is
largely dependent for its business success to acquire a proprietary interest in
the Corporation through the ownership of its Common Stock.
l. The Stock. Options granted under the Plan shall be for the purchase of
shares of the Common Stock, par value $1.00 per share, of the Corporation.
Subject to adjustment in the number and kind of shares as hereinafter provided,
not more than 600,000 shares of such stock shall be sold on exercise of options
under the Plan. Such shares may be authorized but unissued shares or shares
acquired by the Corporation and held in its treasury, as the Board of Directors
may determine. Any shares in respect of which an option granted under the Plan
shall have expired or terminated or have been cancelled, substituted or
exchanged may again be allotted under the Plan. Each option granted under the
Plan shall be subject to the requirement that, if at any time the Board of
Directors of the Corporation shall determine that the listing, registration or
qualification of the shares subject thereto upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable in connection with the granting of
such option or the issue or purchase of shares subject thereto, no such option
may be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors.
2. Eligibility. Options shall be granted to persons who are key employees of the
Corporation (including officers and directors, except for persons acting as
directors only and persons who are then serving on the Executive Compensation
Committee).
The aggregate fair market value (determined at the time of grant) of all shares
subject to Incentive Stock Options (as defined under Section 422A of the
Internal Revenue Code of 1954, as amended) which are granted after December 31,
1980 under the Plan (and under all stock option plans of the Corporation) to a
person in a calendar year shall not exceed $100,000; provided, however, one-half
of the excess of $100,000 over such aggregate fair market value shall be
carried-over to each of the three succeeding calendar years. In each such
succeeding calendar year, the aggregate fair market value of all shares subject
to Incentive Stock Options which are granted under the Plan (and under all stock
option plans of the Corporation) to a person shall be applied first to the
annual $100,000 limitation and then to any amount previously carried-over.
<PAGE>2
3. Price. The purchase price of shares under each option shall be 100% of the
fair market value of such shares at the time of grant of the option.
4. Option Period. The period during which each option may be exercised shall be
set forth in the option, but in no event shall an option be exercisable in whole
or in part after the expiration of ten years from the date it is granted. Each
option may be exercisable in one or more installments as provided therein.
5. Exercise of Option. Except as provided in Paragraphs 7 and 8 below, no
option may be exercised unless the optionee is at the time of such exercise in
the employ of the Corporation and shall have been continuously so employed since
the granting of his option. If required at any time by the Executive
Compensation Committee, an option may not be exercised until the optionee (or
the purchaser acting under Paragraph 7 below) has delivered to the Corporation a
written representation that at the time of such exercise it is his then present
intention to acquire the shares being purchased for investment and not with a
view to any disposition thereof (except, in the case of purchase by the legal
representative of the optionee under Paragraph 7 below, for distribution to the
optionee's legal heirs, legatees, or other testamentary beneficiaries). Payment
for shares purchased must be made in full at the time of exercise. The purchase
price may be paid in cash; and unless the Executive Compensation Committee
adopts a contrary resolution, the purchase price of non-qualified option shares
may also be paid through the delivery of shares of Common Stock of the
Corporation owned by the employee or a combination of cash and such shares equal
to the total option price. Any shares so delivered will be valued at their fair
market value on the day preceding the day of exercise and the value thereof
shall not exceed the total option price. No fractional shares will be issued.
6. Non-transferability of Option. No option granted under the Plan to an
employee shall be transferable by him otherwise than by will or the laws of
descent and distribution, and such option shall be exercisable, during his
lifetime, only by him.
7. Death of Optionee. In the event of the death of an optionee while entitled
to exercise any option theretofore granted to him, such option shall be
exercisable up to the date of expiration of the option period or within twelve
months next succeeding the date of death, whichever is earlier, and then only
(a) by the optionee's legal representatives or the person or persons to whom the
optionee's rights under the option pass by the optionee's will or the laws of
descent and distribution, and (b) to the extent that he was entitled to exercise
the option at the date of his death.
<PAGE>3
8. Continuation of Employment. It is expected that each employee receiving an
option will remain in the employ of the Corporation during the term of the
option. Each option, to the extent it shall not have been exercised, shall
terminate when the employment of the optionee terminates for any reason other
than death, disability or retirement either after age 65, or prior thereto with
the consent of the Board of Directors under a pension, profit sharing, long-term
disability or similar plan of his employer. In the event of termination of
employment because of such retirement or disability, the employee's option shall
terminate on the date of expiration of the option period and may be exercised as
though the optionee had remained in the employ of the Corporation until the
termination of the option, except as the Committee may provide. Nothing
contained in the Plan or in any option granted pursuant to the Plan shall confer
on any optionee any right to be continued in the employ of the Corporation.
9. Dilution or Other Adjustments. In the event that the outstanding shares of
the Common Stock of the Corporation shall be increased or decreased or changed
into or exchanged for a different number or kind of shares of stock or other
securities of the Corporation or of another corporation, whether through
reorganization, merger, consolidation, recapitalization, stock split-up,
combination of shares, stock dividend or otherwise, the Board of Directors of
the Corporation shall make appropriate adjustment in the number or kind of
shares or securities available for option pursuant to the Plan and subject to
any option, and the purchase price therefor. The determination of the Board as
to such adjustments shall be conclusive.
10. Effective Date and Termination of the Plan. The Plan was authorized May
16, 1978. The Board of Directors of the Corporation may in its discretion,
terminate the Plan with respect to any shares for which options have not
theretofore been granted . No option may be granted hereunder after May 16,
l988.
11. Administration and Amendment to the Plan. The Plan shall be administered
by the Executive Compensation Committee as appointed from time to time by the
Board of Directors of the Corporation from among its members, none of whom shall
be eligible to be granted stock options under the Plan during such time as they
shall be members of such Committee. Subject to and within the limitations
provided in the Plan, the Committee shall recommend to the Board of Directors of
the Corporation the grant of options under the Plan on such terms and conditions
as the committee shall deem appropriate and the Board of Directors shall grant
the options to the extent it deems advisable. The Committee from time to time
may adopt rules and regulations for carrying out the Plan. The interpretation
and decision with regard to any question arising under the Plan made by the
Committee shall, unless otherwise determined by the Board of Directors of the
Corporation, be final and conclusive on the Corporation and on all employees
participating, or eligible to participate in the Plan. The Board of Directors
of the Corporation may make such amendments to the Plan as it may deem in the
best interest of the Corporation, provided that except as provided in paragraph
9 hereof, such action shall not without the consent of the holders of the
Corporation's Common Stock increase the aggregate numbers of shares which may be
purchased under the Plan or change the class of employees to which options may
be granted. No amendment of the Plan may, however, without the consent of the
holder of an existing option, adversely affect his right under such option.
<PAGE>4
The Committee may, with respect to each option unexercised as of August 13,
1981, and granted prior to April 28, 1981, and pursuant to a procedure
established by it, rescind the amendments to such unexercised options adopted on
September 23, 1980 (Section 3), March 24, 1981 (Sections 6 and 7) and April 28,
1981 (Section 6) to the extent necessary for such options to be treated as
Incentive Stock Options; provided, however, that the amendment to Section 2
(adopted on April 28, 1981) concerning the acceleration of the time when an
option becomes fully exercisable shall not be rescinded. Notwithstanding the
preceding sentence, no rescission may be made by the Committee without the prior
written consent of the person to whom the option was granted. With respect to
each person who consents to the recission of the amendments to this option, the
amendments to the Plan adopted on September 23, 1980 (Paragraph 5), March 24,
1981 (Paragraph 8) and April 28, 1981 (Paragraph 8) are rescinded to the extent
necessary for such options to be treated as Incentive Stock Options; such
rescission shall be effective as of the date of consent.
Any option, or part thereof, granted after August 13, 1981 may be designated as
an Incentive Stock Option or a non-Incentive Stock Option upon the
recommendation of the Committee and with the approval of the Board of Directors
of the Corporation.
<PAGE>1
Exhibit 10(iii)
_______________
USLIFE CORPORATION
RESTRICTED STOCK PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
1. Purpose
The purpose of the USLIFE Corporation Restricted Stock Plan
(the "Plan") is to promote the growth and profitability of
USLIFE Corporation (the "Company") and its subsidiaries by
providing the incentive of long-term equity rewards
consisting of the common stock of the Company (the "Common
Stock"), subject to certain restrictions as provided herein,
to those executive officers of the Company and its
subsidiaries who have had, and who are expected to continue
to have, a significant impact on the performance of the
Company, to encourage such officers to remain with the
Company and to further identify their interests with those
of the Company's shareholders.
2. Definitions
For purposes of the Plan, the following terms shall have the
meanings indicated:
(a) "Board of Directors" or "Board" shall mean the Board of
Directors of the Company.
(b) "Cause" shall mean the existence of circumstances
whereby a termination of a Participant's employment by
the Company is permitted under applicable law and
without liability under the provisions of the
employment agreement, if any, between such Participant
and the Company.
(c) "Change in Control" shall mean (i) a merger or
consolidation to which the Company is a party and for
which the approval of any shareholders of the Company
is required; (ii) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended) becoming the beneficial owner,
directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power
of the Company's then outstanding securities; (iii) a
sale or transfer of substantially all of the assets of
the Company; or (iv) a liquidation or reorganization of
the Company.
(d) "Committee" shall mean the Executive Compensation and
Nominating Committee of the Board of Directors.
(e) "Covered Employee" shall have the meaning specified in
Section 162(m)(3) of the Internal Revenue Code of 1986,
as amended.
<PAGE>2
USLIFE CORPORATION
RESTRICTED STOCK PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
(f) "Earnings Per Share from Continuing Operations" shall
mean the Company's income from operations per share,
before the impact of realized gains and losses,
discontinued operations, changes in accounting
principles and extraordinary items and before material
non-operational items that are beyond the control of
the Company's management, provided that the Committee
may, in its sole discretion, elect to take such
material non-operations items into account (but not for
purposes of determining Threshold Earnings Per Share
from Continuing Operations) to the extent such items
would result in a reduction in the Company's income
from operations.
(g) "Initial Restricted Period" shall mean the Restricted
Period beginning on January 1, 1989 and ending on
January 1, 1994.
(h) "Participant" shall mean any executive officer of the
Company or one of its subsidiaries who has met the
eligibility requirements set forth in Section 5 hereof
and to whom a grant has been made and is outstanding
under the Plan.
(i) "Permanent Disability" shall mean a physical or mental
condition of a Participant that, in the judgment of the
Committee, after consultation with a duly licensed
physician, permanently prevents such Participant from
being able to serve as an active employee of the
Company and its subsidiaries. For purposes of
determining the day on which a Participant becomes
Permanently Disabled, the Committee may select the day
on which such Participant first becomes eligible for
long-term disability benefits under the Company's long-
term disability plan then in effect.
(j) "Restricted Period" shall mean a period of 62
consecutive months, commencing with the first day of
the calendar year in which the Restricted Shares are
granted, during which restrictions on such Restricted
Shares are in effect.
(k) "Restricted Shares" means shares of Common Stock
granted to a Participant subject to the restrictions
specified in Section 6 of the Plan.
(l) "Retirement" shall mean a Participant's cessation of
employment by reason of retirement under the USLIFE
Corporation Retirement Plan.
(m) "Threshold Earnings Per Share from Continuing
Operations" shall mean, with respect to any calendar
year, the average of the Company's Earnings Per Share
from Continuing Operations for the three preceding
calendar years.
<PAGE>3
USLIFE CORPORATION
RESTRICTED STOCK PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
3. Administration
The Plan shall be administered by the Committee. Subject to
the provisions of the Plan, the Committee shall have sole
and complete authority to: (i) select Participants; (ii)
determine the number of Restricted Shares subject to each
grant; (iii) determine the time or times when grants are to
be made; (iv) prescribe the form or forms of the instruments
evidencing any grants made hereunder, provided that such
forms are consistent with the Plan; (v) adopt, amend, and
rescind such rules and regulations as, in its opinion, may
be advisable for the administration of the Plan; (vi)
construe and interpret the Plan and any related documents
including, with limitation, any Restricted Share Agreement
(as defined in Section 6(a) hereof); and (vii) make all
other determinations deemed advisable or necessary for the
administration of the Plan. All determinations by the
Committee shall be final and binding.
4. Shares of Common Stock Subject to the Plan
No more than 1,575,000 shares of Common Stock in the
aggregate (as adjusted for the September 1995 3-for-2 stock
split) shall be issued as Restricted Shares under the Plan,
subject to adjustment as provided in Section 7 hereof. A
Participant may be granted more than one award of Restricted
Shares under the Plan. No Participant shall be granted more
than 112,500 Restricted Shares in the aggregate (as adjusted
for the September 1995 3-for-2 stock split) under the Plan
during any one-year period, subject to adjustment as
provided in Section 7 hereof. Shares of Common Stock issued
as Restricted Shares under the Plan that are later forfeited
pursuant to Section 6 hereof may again be subject to grants
under the Plan. All shares of Common Stock issued as
Restricted Shares hereunder shall either be shares held by
the Company in its treasury or shares previously forfeited
under the terms of the Plan.
5. Eligibility and Participation
Participation in the Plan shall be limited to those
executive officers of the Company and its subsidiaries at
the level of Senior Vice President and above (including
Directors who are officers) and such other key officers as
shall be designated by the Committee as being in positions
in which they can made a significant impact on the
profitability of the Company. The Committee may at any time
designate additional executive officers as Participants or
revoke any prior designation, but such revocation shall not
affect a Participant's rights with respect to Restricted
Shares granted prior to the revocation.
<PAGE>4
USLIFE CORPORATION
RESTRICTED STOCK PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
6. Provisions Applicable to Restricted Shares
(a) Grants of Restricted Shares
The Committee may grant Restricted Shares to
Participants at any time. Subject to the provisions of
Section 6(b) and (d) hereof, a grant of Restricted
Shares shall be effective for the entire applicable
Restricted Period and may not be revoked. Each grant
to a Participant shall be evidenced by a written
agreement, signed by the Participant (a "Restricted
Share Agreement"), which shall state the number of
Restricted Shares granted, the Restricted Period, the
restrictions that apply to such Restricted Shares, and
any other terms, conditions, and rights with respect to
such grant.
(b) Restrictions
At the time Restricted Shares are granted to a
Participant, share certificates representing the
appropriate number of Restricted Shares shall be
registered in the name of such Participant but held by
the Company for the account of such Participant. Such
certificates shall bear a legend restricting their
transferability as provided herein. During the
Restricted Period, the Participant shall have the right
to vote such Restricted Shares. Dividends paid for any
calendar year during the Restricted Period shall be
held by the Company for the account of such Participant
and shall, subject to clause (iii) of this Section
6(b), be distributed to the Participant as soon as
practicable following the March 1 following such
calendar year, with the exception of dividends payable
on grants made under the Company's Long-Term Incentive
Award Guidelines to participants who are not Covered
Employees, which shall be paid as set forth in Section
6(c). The Restricted Shares shall, however, be subject
to the following restrictions during the Restricted
Period:
<PAGE>5
USLIFE CORPORATION
RESTRICTED STOCK PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
(i) subject to Sections 6(c) and (d) hereof, none of
the Restricted Shares may be sold, exchanged,
transferred, assigned, pledged, or otherwise
encumbered or disposed of by the Participant
during the applicable Restricted Period; provided,
however, that as of March 1 (the "Vesting Date")
of each of the second, third, fourth and fifth of
the five calendar years comprising such Restricted
Period, and as of March 1 following such fifth
calendar year, (the "Vesting Schedule"), such
restrictions (including any restrictions under the
applicable Restricted Share Agreement) shall,
subject to clause (iii) of this Section 6(b),
terminate with respect to 20% (the "Vesting
Rate") of the number of Restricted Shares granted
to such Participant for such Restricted Period,
and as soon as practicable following the relevant
Vesting Date, certificates for the appropriate
number of shares of Common Stock shall be
delivered to such Participant, free of the
restrictions of the Plan and the Restricted Share
Agreement, in accordance with Section 6(e) hereof;
(ii) subject to Section 6(d) hereof, if such
Participant ceases to be an employee of the
Company or any of its subsidiaries prior to the
expiration of the applicable Restricted Period,
any Restricted Shares granted to such Participant
which are still subject to restriction shall be
forfeited and all rights of the Participant to
such Restricted Shares shall terminate without
further obligation on the part of the Company; and
(iii) notwithstanding the provisions of clause (i)
of this Section 6(b), but subject to the last
sentence of Section 6(c) hereof, in the event
that, for any calendar year during the Restricted
Period, the Company's Earnings Per Share from
Continuing Operations do not exceed the Company'
Threshold Earnings Per Share from Continuing
Operations, any Restricted Shares for which the
applicable restrictions would have terminated as
of the March 1 following such calendar year shall
be forfeited and all rights of the Participant to
such Restricted Shares (and to any dividends paid
and held by the Company for such calendar year
with respect to such Restricted Shares or any
other Restricted Shares granted to the
Participant) shall terminate without further
obligation on the part of the Company.
<PAGE>6
USLIFE CORPORATION
RESTRICTED STOCK PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
(c) Alternative Vesting Schedules and Rates
Notwithstanding the proviso to Section 6(b)(i) hereof,
with respect to Restricted Shares granted to a
Participant for any Restricted Period other than the
Initial Restricted Period, the Committee may, in its
sole discretion, prescribe that all restrictions on
such Restricted Shares under the Plan and the
applicable Restricted Share Agreement shall terminate
in accordance with a schedule other than the Vesting
Schedule and at a rate other than the Vesting Rate;
provided, however, that any such grant shall, subject
to the following sentence, be subject to the
performance thresholds specified in Section 6(b)(iii).
Grants made under the Company' Long-Term Incentive
Award Guidelines, as amended from time to time, to
Participants who are not Covered Employees are not
subject to the forfeiture provisions contained in
Section 6(b)(iii), and dividends payable on such shares
shall not be held by the Company for the account of
such Participant in accordance with Section 6(b) hereof
but shall be paid on the regular dividend payment date.
(d) Termination of Employment or Occurrence of a Change in
Control
With respect to any Participant, if (i) such
Participant ceases to be an employee of the Company or
any of its subsidiaries prior to the expiration of the
applicable Restricted Period by reason of death,
Permanent Disability, Retirement or termination by the
Company without Cause or (ii) a Change in Control
occurs, all restrictions set forth in the Plan and the
applicable Restricted Share Agreement (and the
provisions of Section 6(b)(iii) hereof) shall terminate
as to any Restricted Shares granted to such Participant
which are still subject to restriction, and
certificates for the appropriate number of shares of
Common Stock free of the restrictions of the Plan and
such Restricted Share Agreement shall be delivered to
the Participant or his or her beneficiary or estate, as
the case may be, in accordance with Section 6(e)
hereof. If a Participant ceases to be an employee
prior to the end of the applicable Restricted Period
for any other reason, such Participant shall
immediately forfeit, in accordance with the provisions
of Section 6(b) hereof, all Restricted Shares granted
to such Participant which are still subject to
restriction.
(e) Delivery of Restricted Shares
At the end of the applicable Restricted Period or at
such earlier time as provided for in accordance with
Section 6(b), (c) or (d) hereof, subject to Section
6(b)(iii) hereof, where applicable, all restrictions
contained in the Plan and the applicable Restricted
Share Agreement shall terminate as to the Restricted
Shares granted to a Participant with respect to such
Restricted Period, and certificates for the appropriate
number of shares of Common Stock free of the
restrictions of the Plan and the Restricted Share
Agreement, registered in the name of the Participant,
shall be delivered to the Participant or his or her
beneficiary or estate, as the case may be.
<PAGE>7
USLIFE CORPORATION
RESTRICTED STOCK PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
7. Changes in Capitalization
If any change shall occur in or affect the Common Stock on
account of a merger, consolidation, reorganization, stock
dividend, stock split or combination, reclassification,
recapitalization, or distribution to holders of the Common
Stock (other than regular dividends), the Committee shall
make such adjustments, if any, that it may deem, in its sole
discretion, necessary or equitable in (a) the maximum number
of shares of Common Stock available for issuance under the
Plan, (b) the number of shares of Common Stock subject to or
reserved for issuance under outstanding Restricted Shares
grants, and (c) the maximum number of Restricted Shares
which may be granted in the aggregate under the Plan to a
Participant during any one-year period. In the case of any
stock split or stock dividend, such adjustments shall be
self-operative and shall not require any specific action by
the Committee or the Board of Directors to effectuate the
same.
8. Designation of Beneficiary
A Participant may designate a person or persons to receive,
in the event of his or her death, any rights to which he or
she would be entitled under the Plan. Such a designation
shall be made in writing and filed with the Secretary of the
Company. A beneficiary designation may be changed or
revoked by a Participant at any time by filing a written
statement of such change or revocation with the Secretary of
the Company. If a Participant fails to designate a
beneficiary, then his or her estate shall be deemed to be
his or her beneficiary.
9. Rights as an Employee
Neither the Plan nor any action taken hereunder shall be
construed as giving any officer or employee of the Company
or any of its subsidiaries the right to become a
Participant, and a grant under the Plan shall not be
construed as giving any Participant any right to be retained
in the employ or service of the Company or any of its
subsidiaries.
10. Nontransferability
A Participant's rights under the Plan, including the right
to any amounts or Common Stock payable, may not be assigned,
pledged, or otherwise transferred except, in the event of a
Participant's death, to his or her designated beneficiary
or, in the absence of such a designation, by will or the
laws of the descent and distribution.
<PAGE>8
USLIFE CORPORATION
RESTRICTED STOCK PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
11. Withholding
The Company and its subsidiaries shall have the right,
before any payment is made or a certificate for any Common
Stock is delivered, to deduct or withhold from any payment
to a Participant under the Plan to satisfy any Federal,
state, or local taxes, including transfer taxes, required by
law to be withheld or to require the Participant or his or
her beneficiary or estate, as the case may be, to pay any
amount, or the balance of any amount, required to be
withheld. The Committee may, in its discretion and subject
to such rules and procedures as it may adopt, permit a
Participant to satisfy in whole or in part his or her
withholding tax obligations for Federal, state and local
income taxes, including without limitation FICA, arising in
connection with the vesting of Restricted Shares under the
Plan by withholding shares of Common Stock with a fair
market value equal to such withholding obligations from the
shares that would otherwise vest and be delivered to the
Participant.
12. No Trust or Fund Created
Neither the Plan nor any grant made hereunder shall create
or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company or any
of its subsidiaries and a Participant or any other person.
To the extent that any person acquires a right to receive
payments from the Company pursuant to a grant under the
Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company.
13. Expenses
The expenses of administering the Plan shall be borne by the
Company.
14. Amendment and Termination
The Committee may modify, amend, or terminate the Plan at
any time; provided, however, that no modification,
amendment, or termination of the Plan shall adversely affect
the rights of a Participant under a grant previously made to
him or her without the consent of such Participant.
<PAGE>9
USLIFE CORPORATION
RESTRICTED STOCK PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
15. Governmental and Other Regulations
The Plan and any grant hereunder shall be subject to all
applicable Federal and state laws, rules and regulations and
to such approvals by any regulatory or governmental agency
as may be required.
16. Governing Law
The Plan shall be construed and its provisions enforced and
administered in accordance with the laws of the State of New
York.
17. Effective Date
The Plan shall be effective as of January 1, 1989; provided,
however, that it shall be a condition to the effectiveness
of the Plan, and any grants hereunder, that the shareholders
of the Company shall approve the adoption of the Plan at the
1989 annual shareholders' meeting. If such shareholders
fail to approve the Plan, then the Plan and any grants
hereunder shall be null and void ab initio. It shall be a
condition to the effectiveness of any grants hereunder made
on or after January 1, 1994 that the shareholders of the
Company shall approve at the 1994 annual shareholders'
meeting the amendments to the Plan submitted to the
shareholders for their approval.
<PAGE>1
Exhibit 10(iv)
______________
USLIFE CORPORATION
1991 STOCK OPTION PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
The purpose of the 1991 Stock Option Plan of USLIFE Corporation
(the "Plan") is to encourage and enable selected employees who
are key officers of USLIFE Corporation (the "Corporation") and
its subsidiary corporations upon whose judgment, initiative and
efforts the Corporation is largely dependent for its business
success to acquire a proprietary interest in the Corporation
through the ownership of its common stock. In this Plan, the
terms "employees of the Corporation", "employment by the
Corporation", and "in the employ of the Corporation", shall be
deemed to include employees of, employment by, and in the employ
of, a "subsidiary corporation" or "parent corporation" of the
Corporation, as those terms are defined in section 424 of the
Internal Revenue Code of 1986, as amended (the "Code").
1. The Stock
Options granted under the Plan shall be for the purchase of
shares of common stock, par value $1.00 per share, of USLIFE
Corporation together with any Common Stock Purchase Rights
appertaining thereto ("Common Stock"). Subject to
adjustment in the number and kind of shares as hereinafter
provided, not more than 1,575,000 shares of such stock shall
be sold on exercise of options under the Plan (as adjusted
for the September 1995 3-for-2 stock split, pursuant to
paragraph 12 below). Such shares may be authorized but
unissued shares or shares acquired by the Corporation and
held in its treasury, as the Board of Directors may
determine. Any shares in respect of which an option granted
under the Plan shall have expired or terminated may again be
allotted under the Plan. Each option granted under the Plan
shall be subject to the requirement that, if at any time the
Board of Directors shall determine that the listing,
registration or qualification of the shares subject thereto
upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental
regulatory body, is necessary or desirable in connection
with the granting of such option or the issue or purchase of
shares subject thereto, no such option may be exercised in
whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the
Board of Directors.
2. Types of Options
The types of Original Options (as defined in paragraph 10)
that may be granted under the Plan are incentive stock
options (hereinafter "ISOs"), as defined under section 422
of the Code, and non-qualified stock options. Any such
option, or part thereof, granted under the Plan may be
designated as an ISO or a non-qualified stock option by the
Committee and with the approval of the Board of Directors of
the Corporation.
<PAGE>2
USLIFE CORPORATION
1991 STOCK OPTION PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
3. Eligibility
Options shall be granted only to employees who are key
officers of the Corporation (including key officers who are
directors); provided that no options may be granted to
directors who are not employees or to persons who are then
serving on the Executive Compensation and Nominating
Committee (the "Committee").
Under the Plan, the aggregate fair market value of the
shares of Common Stock with respect to which all ISOs,
including any ISOs granted after December 31, 1986 under the
1981 USLIFE Corporation Stock Option Plan (hereinafter "1981
Plan") are first exercisable by the optionee during any
calendar year shall not exceed $100,000. Notwithstanding
any contrary provision of either the 1981 Plan or the Plan,
no ISO shall be granted to any employee who, at the time the
option is granted, owns directly or indirectly within the
meaning of section 424(d) of the Code more than ten percent
of the total combined voting power of all classes of stock
of the Corporation, unless (a) the purchase price of shares
under such option is at least 110% of the fair market value
of a share of the Common Stock on the date the option is
granted, and (b) the expiration date of such option is a
date not later than the day preceding the fifth anniversary
of the date on which the option is granted.
4. Number of Options
No individual shall be granted more than 112,500 options in
the aggregate (as adjusted for the September 1995 3-for-2
stock split) under the Plan during any one-year period,
subject to adjustment as provided in paragraph 12 below.
5. Price
The purchase price of shares under each option shall not be
less than 100% of the fair market value of such shares at
the time of grant of the option.
6. Option Period
The period during which each option may be exercised shall
be set forth in the option, but in no event shall an option
be exercisable in whole or in part (a) before the end of six
(6) months following the date of the grant, or (b) after the
expiration of ten (10) years from such date; provided,
however, that a Reload Option, as such term is defined in
paragraph 10, may not be exercised for a period of three (3)
years from the date of the exercise of an Original Option.
Each option may be exercisable in one or more installments
as provided therein.
<PAGE>3
USLIFE CORPORATION
1991 STOCK OPTION PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
7. Exercise of Option
Except as provided in paragraphs 9 and 11 below, no option
may be exercised unless the optionee is at the time of such
exercise in the employ of the Corporation and shall have
been continuously so employed since the granting of the
option. Payment for shares purchased must be made in full
at the time of exercise. The purchase price may be paid in
cash; and unless the Committee adopts a contrary resolution,
the purchase price may also be paid through the delivery of
shares of Common Stock owned by the employee or through a
combination of cash and such shares equal to the total
option price. Any shares so delivered will be valued at
their fair market value on the day preceding the day of
exercise and the value thereof shall not exceed the total
option price. No fractional shares will be issued. The
Corporation may require as a condition of the exercise of
the option that the optionee will pay to the Corporation, in
cash, an amount sufficient to satisfy the Corporation's
obligation to withhold federal, state and local taxes with
respect to the exercise of the option.
8. Non-transferability of Option
No option granted under the Plan to an employee shall be
transferable by the employee otherwise than by will or the
laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title 1
of the Employee Retirement Income Security Act, or the rules
thereunder, and such option shall be exercisable, during his
or her lifetime, only by the employee.
9. Death of Optionee
In the event of the death of an optionee while entitled to
exercise any option granted to him or her, such option shall
be exercisable up to the date of expiration of the option
period or within twelve months next succeeding the date of
death, whichever is earlier, and then only (a) by the
optionee's legal representatives or the person or persons to
whom the optionee's rights under the option pass by the
optionee's will or the laws of descent and distribution, and
(b) to the extent that he or she was entitled to exercise
the option at the date of his or her death.
<PAGE>4
USLIFE CORPORATION
1991 STOCK OPTION PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
10. Reload Features
Whenever the holder of any option (the "Original Option")
outstanding under the Plan (including any Reload Option
granted under the provisions of this paragraph 10) exercises
the Original Option and makes payment of the option purchase
price in whole or in part by delivering shares of Common
Stock previously held by him or her, then the holder of that
Option shall, subject to paragraph 4 above, receive a new
option (the "Reload Option") for that number of additional
shares of Common Stock delivered by the optionee in payment
of the purchase price for the Original Option being
exercised. All such Reload Options granted hereunder shall
be non-qualified stock options and shall be subject to all
of the following terms and conditions:
(a) the option price per share shall be the then current
fair market value per share of the Common Stock as of
the date of exercise of the Original Option;
(b) the Reload Option shall be exercisable for three (3)
years from the date it vests;
(c) any Reload Option shall vest and be exercisable three
(3) years from the date of its grant;
(d) except as set forth in subparagraph (e) below, all
other terms and conditions of Reload Options shall be
identical to the terms and conditions of the Original
Option; and
(e) any and all Reload Options granted pursuant to this
paragraph 10 shall be subject to the following
additional conditions and restrictions:
(i) no Reload Option shall be granted unless the
shares tendered upon exercise of the Original
Option in payment therefor have been held by the
optionee for a period of more than six (6) months
prior to the exercise of the Original Option; and
(ii) if any of the shares of Common Stock which are
issued upon exercise of the Original Option are
sold within three (3) years following the exercise
of the Original Option, then the Reload Option
shall immediately terminate and the optionee shall
have no further rights with respect to that Reload
Option.
<PAGE>5
USLIFE CORPORATION
1991 STOCK OPTION PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
11. Continuation of Employment
Each option, to the extent it shall not have been exercised,
shall terminate when the employment of the optionee
terminates for any reason other than death, disability or
retirement either after age 65, or prior thereto with the
consent of the Board of Directors under a pension, profit
sharing, long-term disability or similar plan of his or her
employer. In the event of termination of employment because
of such retirement or disability, the employee's options
shall terminate on the date of expiration of the option
period and may be exercised as though the optionee had
remained in the employ of the Corporation until the
termination of the option except as the Committee may
provide. Nothing contained in the Plan or in any option
granted pursuant to the Plan shall confer on any optionee
any right to be continued in the employ of the Corporation.
12. Dilution or Other Adjustments
In the event that the outstanding shares of Common Stock
shall be increased or decreased or changed into or exchanged
for a different number or kind of shares of stock or other
securities of the Corporation or of another corporation,
whether through reorganization, merger, consolidation,
recapitalization, stock split, combination of shares, stock
dividend or otherwise, the Board of Directors shall make
appropriate adjustment in the number or kind of shares or
securities available for option pursuant to the Plan and
subject to any option, and the purchase price therefor. The
determination of the Board of Directors as to such
adjustments shall be conclusive. In the case of any stock
split or stock dividend, such adjustments shall be self-
operative and shall not require any specific action by the
Corporation's Board of Directors to effectuate the same.
13. Effective Date and Termination of the Plan
The Plan was authorized by the Board of Directors effective
as of May 21, 1991, subject to and conditioned upon approval
of the holders of a majority of the Corporation's then
outstanding shares of Common Stock, Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock,
Series C Cumulative Preferred Stock and any other class or
series of stock which is entitled to vote with the holders
of the Common Stock, all voting as a single class. The
Board of Directors may in its discretion terminate the Plan
with respect to any shares for which options have not
theretofore been granted. No option may be granted
hereunder after May 20, 2001.
<PAGE>6
USLIFE CORPORATION
1991 STOCK OPTION PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
14. Effect of a Change in Control on Options
"Change in Control" shall mean (i) a merger or consolidation
to which the Corporation is a party and for which the
approval of any shareholders of the Corporation is required;
(ii) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as
amended) becoming the beneficial owner, directly or
indirectly, of securities of the Corporation representing
25% or more of the combined voting power of the
Corporation's then outstanding securities; (iii) a sale or
transfer of substantially all of the assets of the
Corporation; or (iv) a liquidation or reorganization of the
Corporation. In the event of a Change in Control then all
outstanding options, including Original Options and Reload
Options, which have been held by the optionee for at least
six (6) months from the date of their grant shall vest and
become immediately exercisable and the restrictions
contained in paragraph 10(c) and paragraph 10(e)(ii) shall
no longer apply.
15. Administration and Amendment to the Plan
The Plan shall be administered by the Committee as appointed
from time to time by the Board of Directors from among its
members, none of whom shall be eligible to be granted stock
options under the Plan and each of whom shall be (a) a
"disinterested person" within the meaning of Rule 16b-
3(c)(2)(i) under the Securities Exchange Act of 1934, as
amended (the "'34 Act") and (b) an "outside director" within
the meaning of Section 162(m)(4) of the Code. Subject to
and within the limitations provided in the Plan, the
Committee shall grant options under the Plan on such terms
and conditions as the Committee shall deem appropriate. The
Committee from time to time may adopt rules and regulations
for carrying out the Plan. The interpretation and decision
with regard to any question arising under the Plan made by
the Committee shall be final and conclusive on the
Corporation and on all participants, and other persons
eligible to participate, in the Plan. The Committee may at
any time, or from time to time, suspend or terminate the
Plan in whole or in part or amend the Plan in such respect
as the Committee may deem appropriate; provided, however,
that no such amendment shall be made, which would, without
approval of the holders of a majority of the Corporation's
outstanding shares of Common Stock, Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock and
any other class or series of stock which is entitled to vote
with the holders of the Common Stock, all voting as a single
class:
(a) materially modify the eligibility requirements for
receiving options or change the class of employees to
whom options may be granted;
(b) materially increase the number of shares of Common
Stock which may be issued pursuant to options;
(c) reduce the minimum purchase price for option shares as
set forth in paragraph 5 above;
(d) extend the period of granting options; or
<PAGE>7
USLIFE CORPORATION
1991 STOCK OPTION PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
(e) materially increase in any other way the benefits
accruing to optionees.
No amendment, suspension or termination of the Plan may,
without the optionee's consent, alter or impair any of the
rights or obligations under any option theretofore granted
to an optionee under the Plan. The Committee may amend the
Plan, subject to the limitations cited above, in such manner
as it deems necessary to (a) permit the granting of options
meeting the requirements of future amendments, if any, to
the Code or future regulations issued thereafter and (b)
ensure that options granted or to be granted hereunder meet
the requirements of Rule 16b-3 of the '34 Act for exemption
from the provisions of Rule 16b-3 thereunder, as such rule
may hereinafter be amended.
<PAGE>1
Exhibit 10(v)
_____________
USLIFE CORPORATION BOOK UNIT PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
SECTION 1. Purpose
1.1 This Plan shall be known as the USLIFE Corporation Book Unit Plan. The
purpose of the Plan is to provide additional compensation which is directly
related to the performance of USLIFE Corporation and its subsidiaries for
selected key officers.
SECTION 2. Definitions
2.1 "Award Date" shall mean the January 1 set by the Committee for the date as
of which Units are awarded to Participants.
2.2 "Beneficiary" shall include only persons who are living on the date of
Payment under the Plan, or such living person or persons as a deceased
Participant shall have designated as his or her beneficiaries by a written
instrument executed by him or her and filed with the Secretary of the Company.
2.3 "Board of Directors" means the board of directors of USLIFE Corporation.
2.4 "Book Value Per Share" means the book value per share of common stock of
the Company, determined on the basis of the certified financial reports of the
Company as published in the Company's annual reports to shareholders.
2.5 "Change in Control" shall mean (i) a merger or consolidation to which the
Company is a party and for which the approval of any shareholders of the Company
is required; (ii) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended) becoming the
beneficial owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities; (iii) a sale or transfer of substantially all of the
assets of the Company; or (iv) a liquidation or reorganization of the Company.
2.6 "Committee" means the Executive Compensation and Nominating Committee of
the Company, or such other Committee composed of members of the Board of
Directors who are not eligible to participate in this Plan as may be designated
by the Board of Directors and who meet the definition of "outside director"
under Section 162(m)(4) of the Internal Revenue Code of 1986, as hereinafter
amended from time to time.
2.7 "Company" means USLIFE Corporation.
<PAGE>2
USLIFE CORPORATION BOOK UNIT PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
2.8 "Participant" means any key officer of the Company or its subsidiaries
selected by the Committee to participate in the Plan.
2.9 "Payment" of Units means the actual payment in cash of the then value of
Units.
2.10 "Plan" means USLIFE Corporation Book Unit Plan.
2.11 "Unit" means any Unit which has been awarded to a Participant, but for
which no Payment has been made.
2.12 "Valuation Date" means the December 31 set by the Committee or by Section
6.5 as the date as of which the value of a Unit shall be established for
subsequent Payment.
2.13 "Year" means the calendar year 1976 and each successive calendar year.
SECTION 3. Effective Date of Plan
3.1 This Plan shall be effective as of January 1, 1976.
SECTION 4. Administration
4.1 All matters of administration of this Plan shall be vested in the
Committee.
SECTION 5. Units and Valuation
5.1 No more than 900,000 Units (as adjusted for the September 1995 3-for-2
stock split in accordance with Section 8.4) shall be outstanding under the Plan
at any time. No Participant shall receive more than 112,500 Units in the
aggregate under the Plan during any one-year period, (as adjusted for said
September 1995 3-for-2 split, in accordance with Section 8.4).
5.2 The Committee may award, in its sole discretion, one or more Units to key
officers it has selected to become Participants in the Plan. A Participant may
be awarded additional Units subsequently. Units shall be awarded as of an Award
Date.
5.3 The value of a Unit shall be the amount by which the Book Value Per Share
as of its Award Date has been increased or decreased by the increases (or
decreases) in the Book Value Per Share for subsequent Years up to and including
its Valuation Date set pursuant to Section 6.1.
<PAGE>3
USLIFE CORPORATION BOOK UNIT PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
SECTION 6. Valuation Date and Payment
6.1 The Committee shall set (by specifying at the time a Unit is awarded to a
Participant a fixed date or dates or by formula referring to the occurrence of
one or more events) the Valuation Date or Dates as of which the value of the
Units shall be determined for the purpose of Payment, except as otherwise
provided in Section 6.5.
6.2 Except as otherwise provided in Section 6.4, Payment of a Unit will be made
as soon as practicable after the Valuation Date for such Unit. If as of the
Valuation Date the Unit has no value, or a negative value, no Payment shall be
made with respect thereto.
6.3 Except as provided in Section 6.4, any Units awarded to a Participant
during his or her employment shall be forfeited upon the date such employment
terminates, and he or she shall not be entitled to any Payment in respect
thereof.
6.4 If a Participant ceases to be an employee of the Company or any of its
subsidiaries due to retirement under the USLIFE Corporation Retirement Plan on
his or her early, normal or deferred retirement date, disability or death, or a
Change in Control occurs, the value of all his or her Units shall be paid to the
Participant or his or her Beneficiary, as the case may be, as soon as
practicable after retirement, disability or death, or the occurrence of the
Change in Control, as the case may be. In the event the person or persons
designated by a Participant as his Beneficiary shall not be living upon the date
of Payment of Units, or if no designation has been made, then the Payment of
Units shall be made to the estate of the Participant.
6.5 The Valuation Date for Units paid pursuant to Section 6.4 shall be the
December 31 of the Year prior to the Year in which the Participant's retirement
or death occurred.
6.6 A Unit which has been forfeited or whose Valuation Date has passed shall
not be deemed an outstanding Unit for purposes of the first sentence of Section
5.1.
SECTION 7. No Assignment of Units
7.1. Any and all Units which a Participant or any Beneficiary claiming under or
through him or her shall have or might thereafter acquire under the Plan shall
forthwith be forfeited in the event of any sale, assignment, transfer,
hypothecation, pledge or other alienation, made or attempted, whether voluntary
or involuntary, and if involuntary whether by process of law in any civil or
criminal suit, action or proceeding, whether in the nature of an insolvency or
bankruptcy proceeding or otherwise.
<PAGE>4
USLIFE CORPORATION BOOK UNIT PLAN
(AS AMENDED EFFECTIVE SEPTEMBER 1, 1995)
SECTION 8. Miscellaneous
8.1 Nothing in the Plan shall give any Participant any right to continued
employment by the Company or any subsidiary of the Company.
8.2 The Committee shall be entitled to rely on the advise of counsel,
certificates of the independent auditor of the Company, and any other
representations believed by the Committee to be genuine; and no member of the
Committee shall be liable for any action taken in reliance on any such advice,
certificates or representations.
8.3 The Plan may be terminated at any time by the Board of Directors in which
event no further Units will be awarded under the Plan, but the provisions of the
Plan with respect to Units theretofore awarded shall, subject to the provisions
of Section 6.3, continue to apply until the value of all Units has been
determined and Payment made.
8.4 In the event that the number of outstanding shares of common stock of the
Company shall be changed by reason of split-ups, combinations, recapitalizations
or stock dividends, the Committee shall make such adjustments as it deems
appropriate in the number of Units which may be outstanding at any one time
under this Plan, in the number of Units credited to the account of Participants
and in Book Value Per Share.
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, SUMMARY STATEMENTS OF CONSOLIDATED NET
INCOME, AND NOTES TO FINANCIAL STATEMENTS FOR THE PERIOD ENDED
SEPTEMBER 30, 1995 OF USLIFE CORPORATION AND SUBSIDIARIES FILED ON
FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 5,763,045
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 5,613
<MORTGAGE> 298,671
<REAL-ESTATE> 29,040
<TOTAL-INVEST> 6,469,090
<CASH> 59,579
<RECOVER-REINSURE> 5,964 <F1>
<DEFERRED-ACQUISITION> 745,608
<TOTAL-ASSETS> 7,728,426
<POLICY-LOSSES> 5,361,832
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 194,711
<POLICY-HOLDER-FUNDS> 42,898
<NOTES-PAYABLE> 595,159
<COMMON> 57,469
0
541
<OTHER-SE> 1,140,219
<TOTAL-LIABILITY-AND-EQUITY> 7,728,426
734,522
<INVESTMENT-INCOME> 364,224
<INVESTMENT-GAINS> 3,711
<OTHER-INCOME> 192,121
<BENEFITS> 772,031
<UNDERWRITING-AMORTIZATION> 121,324
<UNDERWRITING-OTHER> 281,415
<INCOME-PRETAX> 117,335
<INCOME-TAX> 40,235
<INCOME-CONTINUING> 77,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,100
<EPS-PRIMARY> 2.22
<EPS-DILUTED> 2.22
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1> See "Note 5. Reinsurance" of Notes to Financial
Statements.
</TABLE>
