<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 March 31, 1996 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 May 1, 1996 was 34,293,638.
<PAGE>2
USLIFE Corporation
INDEX
Page No.
________
Part I - Financial Information:
Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995................... 3
Summary Statements of Consolidated Net Income -
For the Three Months Ended March 31, 1996 and 1995..... 5
Statements of Consolidated Cash Flows -
For the Three Months Ended March 31, 1996 and 1995..... 6
Notes to Financial Statements.......................... 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 12
Other Financial Information............................ 23
Part II - Other Information.............................. 24
Signatures............................................... 25
<PAGE>3
<TABLE>
USLIFE Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
March 31, 1996 and December 31, 1995
(Dollar amounts in thousands except per share data)
<CAPTION>
March 31, 1996 December 31, 1995
______________ _________________
<S> <C> <C>
Assets
______
Cash:
On hand and in demand accounts.............. $ 46,430 $ 63,914
Restricted funds held in escrow, etc. ...... 3,316 1,821
__________ __________
49,746 65,735
__________ __________
Invested assets:
Fixed maturities available for sale, at fair
value (cost, March 31, 1996, $5,644,324;
December 31, 1995, $5,559,322)............. 5,805,982 6,006,864
Equity securities, at fair value (cost,
March 31, 1996, $4,446; December
31, 1995, $4,918).......................... 4,170 4,717
Mortgage loans.............................. 283,250 296,045
Policy loans................................ 281,632 282,179
Real estate................................. 30,069 29,205
Other long term investments................. 4,813 6,241
Short term investments...................... 110,601 69,560
__________ __________
Total invested assets..................... 6,520,517 6,694,811
__________ __________
Total cash and invested assets............ 6,570,263 6,760,546
__________ __________
Deferred policy acquisition costs............. 789,712 718,439
Other receivables (net)....................... 353,038 350,593
Property and equipment (net of accumulated
depreciation of $39,942 at March 31, 1996
and $38,695 at December 31, 1995)........... 10,059 10,495
Prepaid expenses, deferred charges and
other assets............................. 88,659 90,431
__________ __________
Total assets............................. $7,811,731 $7,930,504
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>4
<TABLE>
<CAPTION>
March December
31, 1996 31, 1995
__________ __________
<S> <C> <C>
Liabilities and Equity Capital
______________________________
Liabilities:
Future policy benefits................................... $1,648,607 $1,638,427
Policyholder account balances............................ 3,811,032 3,787,546
Supplementary contracts without life contingencies....... 35,248 28,775
Policyholder dividend accumulations...................... 20,373 20,419
Policy and contract claims............................... 169,942 177,739
Other policy and contract liabilities.................... 31,137 32,435
Notes payable............................................ 243,400 222,900
Long term debt........................................... 349,527 349,493
Federal income taxes (current and deferred).............. 55,377 118,956
Accounts payable and accrued liabilities................. 260,243 239,642
__________ __________
Total liabilities................................... 6,624,886 6,616,332
__________ __________
Deferred income.......................................... 5,339 5,918
__________ __________
Equity Capital:
Preferred stock, $4.50 Series A Convertible, $1.00
par value; authorized and outstanding, 4,427
shares (December 31, 1995, 4,480 shares)........... 443 448
Preferred stock, $5.00 Series B Convertible, $1.00
par value; authorized and outstanding, 1,788
shares (December 31, 1995, 1,852 shares)........... 89 93
Preferred stock, undesignated, $1.00 par value;
authorized 10,793,785 shares, issued; none
(December 31, 1995; none).......................... 0 0
Common stock, par value $1.00 per share, authorized
60,000,000 shares, issued: 57,470,282 shares
(December 31, 1995, 57,468,882 shares)............. 57,470 57,469
Paid-in surplus.......................................... 118,054 117,512
Net unrealized gains on securities....................... 52,628 195,450
Retained earnings........................................ 1,302,440 1,284,306
__________ __________
1,531,124 1,655,278
Less: Treasury stock, at cost - March 31, 1996:
23,085,402 Common shares; December 31, 1995:
22,997,693 Common shares........................ 343,033 339,662
Deferred compensation............................. 6,585 7,362
__________ __________
Total Equity Capital..................................... 1,181,506 1,308,254
__________ __________
Total liabilities and Equity Capital..................... $7,811,731 $7,930,504
========== ==========
Equity Capital per share................................. $33.91 $37.47
====== ======
</TABLE>
<PAGE>5
<TABLE>
USLIFE Corporation and Subsidiaries
Summary Statements of Consolidated Net Income (Unaudited)
For the Three Months Ended March 31, 1996 and 1995
(Amounts in thousands except per share)
<CAPTION>
Three Months Ended March 31
____________________________
1996 1995
______ ______
<S> <C> <C>
REVENUES:
Premiums................................................. $ 244,970 $ 232,736
Other considerations..................................... 54,701 57,884
Net investment income.................................... 124,146 120,338
Realized gains on investments............................ 566 397
Other income............................................. 11,019 7,474
__________ __________
Total revenues........................................ 435,402 418,829
__________ __________
BENEFITS AND EXPENSES:
Benefits to policyholders and beneficiaries.............. 190,473 180,527
Commissions, net of deferred expenses.................... 43,779 37,402
Other expenses and taxes, net of deferred expenses....... 48,033 45,557
Increase in liability for future policy benefits......... 13,526 16,106
Interest credited to policyholder account balances....... 50,285 50,953
Amortization of deferred policy acquisition costs........ 39,117 40,983
Interest expense......................................... 9,767 9,671
Dividends to policyholders............................... 903 861
__________ __________
Total benefits and expenses........................... 395,883 382,060
__________ __________
Income from operations before Federal income taxes.......... 39,519 36,769
Provision for income taxes.................................. 13,328 12,479
__________ __________
Net income.................................................. $ 26,191 $ 24,290
========== ==========
Net income per share........................................ $ .75 $ .70
========== ==========
Dividends per share:
Common................................................... $ .23333 $ .22
=========== ===========
Preferred Series A....................................... $ 1.125 $ 1.125
=========== ===========
Preferred Series B....................................... $ 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 Three Months Ended March 31, 1996 and 1995
(Amounts in Thousands)
<CAPTION>
Three Months Ended March 31
_____________________________
1996 1995
____ ____
<S> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 26,191 $ 24,290
Adjustments to reconcile net income to net cash
provided by operating activities:
Change in liability for future policy benefits........ 12,002 14,200
Interest credited to policyholder account balances.... 50,285 50,953
Amounts assessed from policyholder account balances... (43,570) (39,131)
Additions to deferred policy acquisition costs........ (52,131) (52,831)
Amortization of deferred policy acquisition costs..... 39,117 40,983
Additions to deferred charges......................... (1,431) (851)
Deferred federal income taxes......................... 2,232 (1,468)
Depreciation and amortization......................... 3,027 3,116
Change in amounts due policyholders................... 4,874 (1,359)
Change in other liabilities and amounts receivable.... 16,778 5,743
Net realized capital gains............................ (566) (397)
Change in restricted cash............................. (1,495) (188)
Change in current federal income tax liability........ 11,094 10,278
Other, net............................................ 553 (1,439)
___________ ___________
Total adjustments................................ 40,769 27,609
___________ ___________
Net cash provided by operating activities... 66,960 51,899
___________ ___________
Cash flows from investing activities:
Change in policy loans.................................. 547 1,455
Proceeds from investments sold, redeemed or matured:
Fixed maturities.................................... 103,232 102,780
Equity securities................................... 467 116
Mortgage loan principal receipts.................... 15,044 18,708
Real estate......................................... 184 7,980
Other long term investments......................... 752 627
Expenditures for property and equipment................. (753) (1,084)
Cost of investments purchased:
Fixed maturities.................................... (184,831) (247,092)
Mortgage loans...................................... (4,109) (5,706)
Real estate......................................... (199) (496)
Net sales or (purchases) of short term investments.. (41,041) 25,833
Other, net.............................................. (88) 1,214
___________ ___________
Net cash used in investing activities....... (110,795) (95,665)
___________ ___________
Cash flows from financing activities:
Increase in notes payable............................. 20,500 19,500
Dividends to shareholders............................. (8,057) (7,544)
Acquisition of treasury stock......................... (3,927) (890)
Change in policyholder account balances............... 16,758 34,380
Other, net............................................ 1,077 1,902
___________ ___________
Net cash provided by financing activities... 26,351 47,348
___________ ___________
Net change in cash.................................. (17,484) 3,582
Cash at beginning of year............................. 63,914 51,878
___________ ___________
Cash at end of period................................. $ 46,430 $ 55,460
=========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>7
USLIFE Corporation and Subsidiaries
Notes to Financial Statements
Note 1. New Accounting Principle
Effective as of January 1, 1996, the Company adopted 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. The adoption of this Statement
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 (bonds
and redeemable preferred stocks) is classified as "available for
sale" and is carried in the accompanying consolidated balance
sheets at fair value. The Company's investments in non-
redeemable preferred stocks and common stocks ("equity
securities") are carried at fair value in the accompanying
consolidated balance sheets. Unrealized gains and losses on
available-for-sale securities, other than those relating to a
reduction in value determined to be other than temporary, are
recorded through direct charges or credits to Equity Capital.
<PAGE>8
Equity Capital at March 31, 1996 and December 31, 1995 includes
net unrealized gains and losses on available-for-sale securities
as follows:
<TABLE>
<CAPTION>
March 31, December
1996 31, 1995
_________ __________
(Amounts in Thousands)
<S> <C> <C>
Fixed maturities:
Fair value..................................... $5,805,982 $6,006,864
Adjusted cost.................................. 5,644,324 5,559,322
__________ __________
Unrealized gain................................ 161,658 447,542
__________ __________
Equity securities:
Fair value..................................... 4,170 4,717
Adjusted cost.................................. 4,446 4,918
__________ __________
Unrealized loss................................ (276) (201)
__________ __________
Total unrealized gain............................ 161,382 447,341
__________ __________
Related adjustments:
Deferred policy acquisition costs.............. (77,667) (135,926)
Policyholder liabilities....................... (2,748) (10,721)
Deferred federal income tax liability.......... (28,339) (105,244)
__________ __________
(108,754) (251,891)
__________ __________
Net unrealized gain on securities included
in Equity Capital.............................. $ 52,628 $ 195,450
========== ==========
</TABLE>
Short term investments are carried at cost, which approximates
fair 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 March 31, 1996, consolidated invested assets included $304
million (at fair value; adjusted cost $311 million) of less than
investment grade corporate securities, based on ratings assigned
by recognized rating agencies and insurance regulatory
authorities. Based on fair value, these securities represent 4%
of consolidated total assets at that date. Approximately $7
million of these investments (at fair value; adjusted cost $6
million) are in default at March 31, 1996. Also at March 31,
1996, the book value of mortgage loans included in consolidated
total assets which were 60 days or more delinquent or in
foreclosure was approximately $4 million, and the book value of
property acquired through foreclosure of mortgage loans was
approximately $19 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 March 31, 1996 and December 31, 1995, the number
of such shares used for this purpose was 34.840 million and
34.918 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 three month periods ended March 31, 1996 and 1995:
<TABLE>
<CAPTION>
Three Months Ended
March 31
__________________
1996 1995
____ ____
(Shares and Amounts in Thousands
except Per Share data)
<S> <C> <C>
Net income......................................... $ 26,191 $ 24,290
======== ========
Weighted average common shares
outstanding, net of treasury shares.............. 34,463 34,268
Add - common share equivalents of:
Preferred Stock - Series A....................... 53 55
Preferred Stock - Series B....................... 22 23
Outstanding stock options - treasury stock method 381 228
______ ______
Total common shares and common equivalent shares... 34,919 34,574
====== ======
Net income per share............................... $ .75 $ .70
====== ======
</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 for or recoverable under reinsurance contracts are
included in total assets as reinsurance receivable or recoverable
amounts. 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. Reinsurance contracts do
not relieve the Company from its obligations to policyholders,
and 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:
March 31, December
1996 31, 1995
_________ _________
(Amounts in Thousands)
Reinsurance receivables - paid claims... $ 9,766 $ 8,568
Other reinsurance recoverable amounts... 128,276 138,146
________ ________
$138,042 $146,714
======== ========
The effect of reinsurance on premiums, other considerations, and
benefits to policyholders and beneficiaries, is as follows:
Three Months Ended March 31
___________________________
1996 1995
________ ________
(Amounts in Thousands)
Premiums, before reinsurance ceded......... $263,140 $250,796
Premiums ceded............................. 18,170 18,060
________ ________
Net premiums............................... $244,970 $232,736
======== ========
Other considerations, before reinsurance
ceded................................... $ 59,325 $ 61,914
Other considerations ceded................. 4,624 4,030
________ ________
Net other considerations................... $ 54,701 $ 57,884
======== ========
Benefits to policyholders and beneficiaries,
before reinsurance recoveries............ $199,920 $192,942
Reinsurance recoveries..................... 9,447 12,415
________ ________
Benefits to policyholders and beneficiaries,
net of reinsurance recoveries............ $190,473 $180,527
======== ========
<PAGE>11
Note 6. Subsequent Refinancing Transactions
In April 1996, the Company renewed its revolving credit agreement
with The Bank of New York (as agent). The credit agreement
provides for term borrowings in segments of up to six months with
interest indexed to the LIBOR borrowing rate or based on certain
alternative interest rates at the option of the Company. USLIFE
has the option to prepay amounts borrowed under the credit
agreement, in whole or in part, and to reborrow loans thereunder
provided the total amount of outstanding borrowings does not
exceed $150 million. All borrowings under the revolving credit
agreement must mature no later than April 10, 1999. The proceeds
of the initial $150 million borrowing under this agreement, on
April 10, 1996 at an interest rate of 5.77% for a 90 day period,
were utilized to repay maturing bank indebtedness under the
previous revolving credit agreement.
Also in April 1996, the Company advised the holders of its 9.15
percent Notes due June 15, 1999 that it would redeem the entire
$50 million debt issue, without penalty, on June 15, 1996. It is
anticipated that the debt issue will be initially refinanced by
the proceeds of short term bank borrowings or by issuance of debt
securities under the Company's shelf registration statement, with
the determination to be made based on market conditions at the
time of the redemption.
<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 quarter of 1996
was $59 million.
On a consolidated basis, net cash provided by operating
activities amounted to $67 million for the first quarter of
1996, compared to $52 million for the corresponding period
of 1995. 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
$45 million in the first quarter of 1996 versus $48 million
in the corresponding 1995 period.
Cash flows from operating activities for the first quarter
of 1996 included $12 million from the change in liability
for future policy benefits, versus $14 million in the
corresponding 1995 period. The decrease reflected a reduced
level of single premium immediate annuity sales and
attrition of employer / association group health insurance
business, as discussed under "Results of Operations." These
factors more than offset the impact of greater written
premiums on credit life and disability products in the first
quarter of 1996 versus the comparable year-ago period.
<PAGE>13
Interest credited to policyholder account balances amounted
to $50 million in the first quarter of 1996, approximating
the $51 million reported for the corresponding 1995 period.
Policyholder account balances increased from $3.69 billion
at March 31, 1995 to $3.81 billion at March 31, 1996. The
portion of policyholder account balances relating to
individual annuities was approximately $1.8 billion at both
March 31, 1996 and March 31, 1995. The balance, relating to
universal life insurance contracts, increased approximately
$190 million during that one year period. The impact of
this increase in the base of interest sensitive contracts
was essentially offset by reductions in rates of interest
credited that were implemented during 1995 and continuing
into 1996, as discussed under "Results of Operations."
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.
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.
<PAGE>14
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. The
sources of liquidity described earlier would be applied
toward any further cash flow requirements.
Net additions to deferred policy acquisition costs amounted
to $13 million in the 1996 period versus $12 million in the
first quarter of 1995. The increase reflects various
factors including a $10 million increase in net written
premiums on credit life and disability insurance products.
Net cash used in investing activities amounted to $111
million in the first quarter of 1996, compared to $96
million in the corresponding 1995 period. Individual
annuity surrenders, which have a negative impact on net
funds available to invest, amounted to $53 million during
the first quarter of 1996 versus $65 million during the
corresponding 1995 period. 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.
As of March 31, 1996, approximately 11% of the Company's
deferred annuity contracts (versus 9% at December 31, 1995),
based on policyholder account balances, were beyond the
contractual period during which a significant charge could
be imposed in the event of termination. Based on the
Company's significant 1991 sales of individual annuities
with five year surrender charge periods, with gross deposits
that year totalling approximately $500 million, a further
increase in the proportion of annuity contracts beyond the
surrender charge period is anticipated during the balance of
1996. The Company's asset / liability management strategies
have contemplated the expected surrender pattern for these
annuities, and based on cash flow testing the Company
believes that its distribution of investments is appropriate
for the cash requirements associated with the expected level
of surrenders.
Disposals of fixed maturity investments included in cash
flows from investing activities for the first quarter of
1996 and 1995 totalled $103 million in each period. These
disposals included, respectively, $32 million and $19
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
<PAGE>15
management strategy with objectives including maintenance of
an appropriate relationship of asset yields and maturities
to current policy liabilities, as well as maintenance of
issuer diversification. 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 $26 million in the first quarter of 1996 versus
$47 million in the corresponding 1995 period, reflecting a
smaller 1996 period increase in policyholder account
balances. The increase in policyholder account balances was
$17 million in the 1996 period, versus $34 million in the
first quarter of 1995. A reduced level of gross deposits on
single premium deferred annuities, together with reductions
in rates of interest credited by the Company on its deferred
annuities and universal life insurance policies as noted
above, offset the impact of an increased base of universal
life insurance in force.
During the first quarter of 1996, the Company acquired
approximately 132,000 shares of its common stock (including
100,000 shares purchased under a repurchase program and the
remainder relating to benefit plans) at a total cost of $4
million. The purchases were financed primarily by selective
sales of bonds in the parent company investment portfolio.
Notes payable increased $21 million in the first quarter of
1996 and $20 million in the corresponding 1995 period.
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.
At March 31, 1996, 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 four banks, negotiated
independently of such lines to take advantage of more
favorable interest rates, in the aggregate amount of $93
million. The Company's remaining short term borrowings at
March 31, 1996 consisted of $150 million outstanding under a
revolving credit agreement with The Bank of New York. As
discussed in Note 6 of Notes to Financial Statements, this
agreement was renewed in April 1996 for a three-year period
and the amount outstanding thereunder was refinanced under
the new agreement.
Also at March 31, 1996, the Company had available a bank
revolving credit agreement expiring in February 1997 which
<PAGE>16
provides term loan borrowing facilities up to $100 million,
under which no borrowings were outstanding.
The Company's short term borrowings are utilized primarily
for working capital requirements.
Long term debt at March 31, 1996 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 March 31, 1996 consists of a $50
million issue of 9.15% Notes due 1999. As discussed in Note
6 of Notes to Financial Statements, this issue will be
refinanced by the Company 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.
Results of Operations
_____________________
Three Months Ended March 31, 1996 compared to
Three Months Ended March 31, 1995
For the three months ended March 31, 1996, net income
amounted to $26.2 million versus $24.3 million for the
comparable period of 1995, an increase of $1.9 million or
8%.
Net income for the first quarter of 1996 and 1995 included
net capital gains with an after-tax impact of $367 thousand
and $258 thousand, respectively. The first quarter 1996 net
capital gains came primarily from fixed maturity investments
that were called for redemption prior to maturity by the
respective issuers and securities sold in order to maintain
diversification following the merger of certain issuers.
Capital gains and losses during the first quarter of 1995
reflect disposals of non-performing securities with adjusted
cost of approximately $12 million, as well as several real
estate properties that were acquired through foreclosure,
with aggregate cost of approximately $12 million. Since
<PAGE>17
reserves had been previously recorded to recognize the
reduction in value of these investments, these disposals did
not have a material impact on reported results for that
period.
Excluding the capital gains and losses discussed above,
consolidated after-tax income amounted to $25.8 million for
the first quarter of 1996 versus $24.0 million for the
corresponding 1995 period, an increase of $1.8 million or
7%. On a similar basis, after-tax income of the life
insurance subsidiaries increased $2.4 million or 7%. Also
on a similar basis, after-tax corporate charges (including
the operating results of USLIFE's servicing units) amounted
to $10.7 million in the first quarter of 1996, approximating
the $10.2 million for the comparable 1995 period.
The improvement in life insurance subsidiary results came
primarily from an increase in pre-tax profits from the
individual life and annuity product line and improved
results from the credit disability line, partially offset by
unfavorable results from the employer/association group
health insurance line.
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
$52.3 million for the first quarter of 1996 versus $49.4
million for the corresponding 1995 period. The increase of
approximately $3 million or 6% reflected greater gains from
investment income and voluntary policy termination
experience ("persistency"). Mortality experience was
favorable during the first quarter of 1996 and contributed
to the overall pre-tax profit reported for the period, but
this contribution was to a lesser degree than the first
quarter of 1995.
Written premiums from credit life insurance products
increased from $15 million in the first quarter of 1995 to
$19 million in the 1996 period, reflecting increased sales
through financial institutions. 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. A pre-tax loss of
$328 thousand was reported for credit life insurance
coverages for the first quarter of 1996, versus a pre-tax
loss of $565 thousand in the corresponding 1995 period. It
should be noted that credit life insurance coverages are
often sold in conjunction with credit disability insurance
and/or other credit-related products. Combined credit life
and disability results were profitable for both the first
<PAGE>18
quarter of 1996 and the corresponding 1995 period. Credit
disability results are discussed below.
Pre-tax profits from the Company's group life insurance
lines of business amounted to $2.2 million for the first
quarter of 1996, versus $1.8 million for the corresponding
1995 period, for a positive variance of $361 thousand.
These lines include employer/association group life
insurance, mortgage life insurance, and certain specialty
coverages. The positive variance reflected various factors
including more favorable mortality experience on group
mortgage life insurance coverages.
Pre-tax income from employer/association group life
insurance products amounted to $2.0 million for the first
quarter of 1996, approximating year-ago period results.
The Company's group health insurance lines of business
reported a pre-tax loss of $1.4 million for the first
quarter of 1996, versus a pre-tax loss of approximately $600
thousand for the corresponding 1995 period. The employer /
association group health insurance product line reported
pre-tax losses of $1.5 million and $381 thousand in the
first quarter of 1996 and 1995, respectively. The negative
variance of $1.1 million from this line was partially offset
by improved first quarter 1996 results from specialty group
health and disability products marketed through retailers
and financial institutions.
Premium revenues on employer / association group health
insurance products declined from $92 million in the first
quarter of 1995 to $84 million in the 1996 period. The
decline in revenues during the first quarter of 1996
resulted from a high level of terminations on traditional
indemnity major medical business which more than offset
increased revenues from non-major medical and managed care
products.
Historically, the majority of the Company's employer /
association group insurance premium revenues were derived
from indemnity major medical coverages, which were often
sold together with group life insurance. A change in market
emphasis toward managed care products resulted both in a
reduction of new sales of the Company's indemnity major
medical products and an erosion of business in force over
the past several years.
The Company has taken a number of actions to address the
decline in revenues, including refinement of "ancillary"
group products such as long-term disability and dental
insurance. The goals of these actions include an increase
in the proportion of group business from non-major medical
lines. Additionally, the Company has introduced new managed
care products in several states (using provider networks
<PAGE>19
made available through unrelated companies). The Company
has also undertaken expense reduction measures, such as
claims office consolidations, to alleviate the impact of
reduced group health revenues. Despite these measures, the
revenue decline has outpaced reductions in overhead and
other expenses thus far.
In January 1996, the Company announced that it would
discontinue offering its traditional indemnity major medical
products, and that it would restrict its new sales of
managed care major medical products to eight states where it
has significant market presence and an appropriate managed
care network in place. It was estimated that about 60% of
employer / association group health premium in force at year
end 1995 related to traditional indemnity products, and the
Company further reported that it would monitor this business
in order to determine whether future financial statement
adjustments would become necessary. As of March 31, 1996,
deferred policy acquisition costs relating to employer /
association group life and health insurance amount to $20
million and $51 million, respectively. Recoverability of
deferred policy acquisition costs is dependent upon future
revenues and gross profits from the business to which it
relates.
Based on preliminary data, there are early indications that
the January announcement may have contributed to a
deterioration in persistency on the Company's indemnity
major medical business. The Company is currently analyzing
the early 1996 results from its employer / association group
product lines and will continue to track this experience in
order to evaluate whether financial statement adjustments
are necessary.
Profitability of the Company's group health insurance lines
is dependent upon various factors including the ability of
the Company to match premiums charged to benefit costs and
to maintain underwriting standards so that premium charged
is consistent with risk assumed on an overall basis. Market
acceptance of products currently offered and those being
introduced is also a key factor in the prospective
profitability of these product lines.
Written premiums on credit disability products increased
from $14 million in the first quarter of 1995 to $19 million
in the 1996 period. Pre-tax income from credit disability
products amounted to $2.3 million in the 1996 period, versus
$1.7 million in the comparable 1995 period, reflecting more
favorable morbidity experience as well as an increased base
of earned premiums.
Total revenues of the life insurance subsidiaries in the
first quarter of 1996 amounted to $428 million, an increase
of $15 million or 4% over the same period of 1995, primarily
<PAGE>20
on increases of $9 million (or 3%) and $4 million (or 3%) in
premiums and considerations and net investment income,
respectively. Additionally, "other income" of the life
insurance subsidiaries increased from $5 million to $7
million, reflecting increased volume on certain credit
insurance related products.
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 $125 million in
the first quarter of 1996, compared to $120 million in the
1995 period, with the increase from both interest sensitive
and traditional products and reflecting a larger base of in-
force business. This increase was accompanied by greater
written premiums on credit insurance products, reflecting
increased sales through financial institution sources of
business as noted above.
The $4 million increase in net investment income of the life
insurance subsidiaries reflected a larger investment base in
the 1996 period. The pre-tax annualized yield was 7.82% in
the first quarter of 1996 versus 7.92% for the corresponding
1995 period. The decline in yield reflects redemptions of
securities by the respective issuers, totalling $115 million
(at cost) for the year 1995 and $32 million during the first
quarter of 1996. An intentional shortening of maturities on
investments associated with individual annuity contracts, in
anticipation of annuities nearing the end of their surrender
charge period, was also a factor.
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 $11 million or 3% over the same
period of 1995.
Benefits to policyholders and beneficiaries amounted to $190
million in the first quarter of 1996, an increase of $10
million versus the $180 million reported for the first
quarter of 1995. The increase is attributed primarily to
greater volume of individual life insurance and credit life
and disability insurance products. A $3 million decrease in
employer/association group health benefits, reflecting the
decline in volume on that line, was a partial offset.
<PAGE>21
Interest credited to policyholder account balances amounted
to $50 million in the first quarter of 1996, approximating
the $51 million reported for the corresponding 1995 period.
As noted under "Financial Condition," the impact of an
increased base of interest sensitive contracts in the 1996
period was essentially offset by reductions in rates of
interest credited on universal life insurance and annuities
during 1995 and continuing into 1996.
Interest rates credited on the Company's deferred annuity
contracts, exclusive of first year bonuses on certain
products, typically ranged from 4-3/4% to 5-1/2% during the
first quarter of 1995, depending on type of contract and
period of issue. During the year 1995, the Company
implemented a series of rate reductions on newly issued
annuities together with credited rate reductions on renewing
contracts. As a result of actions taken during the fourth
quarter of 1995 affecting the major portion of the Company's
deferred annuities in force, credited rate reductions of 25
to 50 basis points were implemented on January 1, 1996 for
calendar year contracts and are being implemented on policy
anniversary dates during 1996 for other contracts. Interest
rates credited on these contracts during the first quarter
of 1996 typically ranged from 4-1/4% to 5-1/2%.
Interest rates credited on the Company's universal life
insurance contracts typically ranged from 6% to 7% during
the first quarter 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.
Additional rate reductions of 25 to 50 basis points were
implemented during the first quarter of 1996. Following
these actions, current credited rates on the Company's
universal life insurance contracts generally range from 5-
1/4% to 6-1/2%.
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.
An increase in future policy benefits of $14 million was
recorded for the first quarter of 1996, versus $16 million
for the corresponding 1995 period. The decrease reflected a
reduced level of single premium immediate annuity sales and
attrition of employer / association group health business as
previously discussed.
Aggregate commissions, general expenses, and insurance taxes
and licenses increased from $72 million in the first quarter
of 1995 to $78 million in the 1996 period. The $6 million
<PAGE>22
increase is primarily associated with the 1996 period
increase in credit insurance written premiums and increased
volume on individual life insurance and credit insurance
related products.
At March 31, 1996, consolidated invested assets included
approximately $304 million (at fair value) of less than
investment grade corporate securities, based on ratings
assigned by recognized rating agencies and insurance
regulatory authorities. These investments represent about
4% 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 October 1995, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
No. 123, entitled "Accounting for Stock-Based Compensation."
This Statement, which must be adopted in 1996, establishes
financial accounting and reporting standards for stock
option plans and other stock-based forms of compensation.
Under previously established accounting standards, stock
options such as those granted by the Company (with option
price set equal to market price at date of grant) do not
require income statement charges, although the outstanding
options are considered in earnings per share calculations.
FASB 123 introduces standards for computing "fair value" of
these stock options using a mathematical model, as well as
expense charges over the related service period based on
this calculated value. However, companies can elect to
report the pro-forma impact of these computed charges on net
income and earnings per share in a footnote rather than
actually recording the computed income statement charges.
USLIFE Corporation intends to provide footnote disclosure of
the pro-forma impact of the calculated stock option expense
charges, commencing with its year end 1996 financial
statements (indicating comparative data for 1995), rather
than record these charges in its income statement.
<PAGE>23
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 March 31, 1996 and
December 31, 1995, and the consolidated results of operations and
cash flows for the three month periods ended March 31, 1996 and
1995, have been included in the accompanying financial
statements.
<PAGE>24
Part II - Other Information
Item 1. Legal Proceedings
_________________
As previously reported in the Company's Report on Form 10-K for
the year ended December 31, 1995, 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 alleged that defendant, a
subsidiary of the Company, violated the federal Telephone
Consumer Protection Act ("TCPA") by sending unsolicited facsimile
advertisements. On March 25, 1996, the District Court granted
defendant's Motion to Dismiss based on McCarran-Ferguson, and
dismissed with prejudice all of plaintiffs' federal claims
against defendant and remanded the case to the Texas state court
to adjudicate the remaining state court claims. In May, 1996,
prior to class certification, defendant reached a favorable
settlement for an immaterial sum with named plaintiffs,
dismissing their remaining state court claims with prejudice, and
dismissing any other claims of unnamed putative class members
without prejudice, resulting in the dismissal of this litigation.
Item 6. Exhibits and Reports on Form 8-K
________________________________
(a) Exhibits
3(ii) - By-laws as amended and restated.
27 - Financial Data Schedule.
(b) No reports on Form 8-K were filed on behalf of the
Registrant during the quarter ended March 31, 1996.
<PAGE>25
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)
May 8, 1996 By /s/ James M. Schlomann
____________________ ___________________________________
Date James M. Schlomann
Executive Vice President - Finance
(Principal Financial Officer and
Duly Authorized Officer)
<PAGE>1
USLIFE Corporation
Form 10-Q for the Quarterly Period Ended March 31, 1996
Exhibit Index
Exhibit Number
Per Item 601 of
Regulation S-K
_______________
3(ii) By-laws as amended and restated.
27 Financial Data Schedule.
<PAGE>1
Exhibit 3(ii)
_____________
USLIFE Corporation
(Formed under the laws of the State of New York)
____________________
BY-LAWS
AS AMENDED AND RESTATED MARCH 26, 1996
____________________
ARTICLE I
Shareholders
SECTION 1. ANNUAL MEETING. A meeting of shareholders
shall be held annually for the election of directors and the
transaction of other business on the third Tuesday in May or on
such other date as may be fixed from time to time by the Board of
Directors.
SECTION 2. Special Meetings. Special Meetings of the
shareholders may be called by the Board of Directors or, subject
to the control of the Board, by the Chairman.
SECTION 3. Place of Meetings. Meetings of shareholders
shall be held at such place, within or without the State of New
York, as may be fixed by the Board of Directors. If no place is
so fixed, such meetings shall be held at the office of the
Corporation in the State of New York.
SECTION 4. Notice of Meetings. Notice of each meeting
of shareholders shall be given in writing and shall state the
place, date and hour of the meeting and the purpose or purposes
for which the meeting is called. Notice of a special meeting
shall indicate that it is being issued by or at the direction of
the person or persons calling or requesting the meeting.
<PAGE>2
If, at any meeting, action is proposed to be taken which
would, if taken, entitle objecting shareholders to receive
payment for their shares, the notice shall include a statement of
that purpose and to that effect.
A copy of the notice of each meeting shall be given,
personally or by first class mail, not less than ten nor more
than fifty days before the date of the meeting, to each
shareholder entitled to vote at such meeting. If mailed, such
notice is given when deposited in the United States mail, with
postage thereon prepaid, directed to the shareholder at his
address as it appears on the record of shareholders, or, if he
shall have filed with the Secretary of the Corporation a written
request that notices to him be mailed to some other address, then
directed to him at such other address.
When a meeting is adjourned to another time or place, it
shall not be necessary to give any notice of the adjourned
meeting if the time and place to which the meeting is adjourned
are announced at the meeting at which the adjournment is taken,
and at the adjourned meeting any business may be transacted that
might have been transacted on the original date of the meeting.
However, if after the adjournment the Board of Directors fixes a
new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record on
the new record date entitled to notice under the preceding
paragraphs of this SECTION 4.
SECTION 5. Waiver of Notice. Notice of meeting need
not be given to any shareholder who submits a signed waiver of
notice, in person or by proxy, whether before or after the
meeting. The attendance of any shareholder at a meeting, in
person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute
a waiver of notice by him.
SECTION 6. Inspectors of Election. The Board of
Directors, in advance of any shareholders' meeting, may appoint
one or more inspectors to act at the meeting or any adjournment
thereof. If inspectors are not so
<PAGE>3
appointed, the person presiding at a shareholders' meeting may,
and on the request of any shareholder entitled to vote thereat
shall, appoint two inspectors. In case any person appointed
fails to appear or act, the vacancy may be filled by appointment
made by the Board in advance of the meeting or at the meeting by
the person presiding thereat. Each inspector, before entering
upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his
ability.
The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented
at the meeting, the existence of a quorum, and the validity and
effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting
or any shareholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by
them. Any report or certificate made by them shall be prima
facie evidence of the facts stated and of the vote as certified
by them.
SECTION 7. List of Shareholders at Meeting. A list of
shareholders as of the record date, certified by the Secretary or
any Assistant Secretary or by a transfer agent, shall be produced
at any meeting of shareholders upon the request thereat or prior
thereto of any shareholder. If the right to vote at any meeting
is challenged, the inspectors of election, or persons presiding
thereat, shall require such list of shareholders to be produced
as evidence of the right of the persons challenged to vote at
such meeting, and all persons who appear from such list to be
shareholders entitled to vote thereat may vote at such meeting.
<PAGE>4
SECTION 8. Qualification of Voters. Unless otherwise
provided in the certificate of incorporation, every shareholder
of record shall be entitled at every meeting of shareholders to
one vote for every share standing in his name on the record of
shareholders.
Treasury shares as of the record date and shares held as
of the record date by another domestic or foreign corporation of
any type or kind, if a majority of the shares entitled to vote in
the election of directors of such other corporation is held as of
the record date by the Corporation, shall not be shares entitled
to vote or to be counted in determining the total number of
outstanding shares.
Shares held by an administrator, executor, guardian,
conservator, committee, or other fiduciary, except a trustee, may
be voted by him, either in person or by proxy, without transfer
of such shares into his name. Shares held by a trustee may be
voted by him, either in person or by proxy, only after the shares
have been transferred into his name as trustee or into the name
of his nominee.
Shares standing in the name of another domestic or
foreign corporation of any type or kind may be voted by such
officer, agent or proxy as the by-laws of such corporation may
provide, or, in the absence of such provision, as the board of
directors of such corporation may determine.
A shareholder shall not sell his vote or issue a proxy
to vote to any person for any sum of money or anything of value
except as permitted by law.
SECTION 9. Quorum of Shareholders. The holders of a
majority of the shares entitled to vote thereat shall constitute
a quorum at a meeting of shareholders for the transaction of any
business, provided that when a specified item of business is
required to be voted on by a class or series, voting as a class,
the holders of a majority of the shares of such class or series
shall constitute a quorum for the transaction of such specified
item of business.
<PAGE>5
When a quorum is once present to organize a meeting, it
is not broken by the subsequent withdrawal of any shareholders.
The shareholders who are present in person or by proxy
and who are entitled to vote may, by a majority of votes cast,
adjourn the meeting despite the absence of a quorum.
SECTION 10. Proxies. Every shareholder entitled to
vote at a meeting of shareholders or to express consent or
dissent without a meeting may authorize another person or persons
to act for him by proxy.
Every proxy must be signed by the shareholder or his
attorney-in-fact. No proxy shall be valid after the expiration
of eleven months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of
the shareholder executing it, except as otherwise provided by
law.
The authority of the holder of a proxy to act shall not
be revoked by the incompetence or death of the shareholder who
executed the proxy unless, before the authority is exercised,
written notice of an adjudication of such incompetence or of such
death is received by the Secretary or any Assistant Secretary.
SECTION 11. Vote or Consent of Shareholders. Directors
shall, except as otherwise required by law, be elected by a
plurality of the votes cast at a meeting of shareholders by the
holders of shares entitled to vote in the election.
Whenever any corporate action, other than the election
of directors, is to be taken by vote of the shareholders, it
shall, except as otherwise required by law, be authorized by a
majority of the votes cast at a meeting of shareholders by the
holders of shares entitled to vote thereon.
Whenever shareholders are required or permitted to take
any action by vote, such action may be taken without a meeting on
written consent, setting forth the action so taken, signed by the
holders of all outstanding
<PAGE>6
shares entitled to vote thereon. Written consent thus given by
the holders of all outstanding shares entitled to vote shall have
the same effect as a unanimous vote of shareholders.
SECTION 12. Fixing Record Date. For the purpose of
determining the shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or to
express consent to or dissent from any proposal without a
meeting, or for the purpose of determining shareholders entitled
to receive payment of any dividend or the allotment of any
rights, or for the purpose of any other action, the Board of
Directors may fix, in advance, a date as the record date for any
such determination of shareholders. Such date shall not be more
than fifty nor less than ten days before the date of such
meeting, nor more than fifty days prior to any other action.
When a determination of shareholders of record entitled
to notice of or to vote at any meeting of shareholders has been
made as provided in this section, such determination shall apply
to any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting.
SECTION 13. Nomination of Directors by Shareholders.
Notice of all nominations by shareholders for the office of
director shall be given in writing to the Secretary of the
Corporation at least sixty but not more than ninety days prior to
the date of the annual meeting of shareholders or any other
meeting at which directors are to be elected. Such notice shall
contain information about the nominee called for by Item 401 of
Regulation S-K under The Securities Act of 1933 and The
Securities Exchange Act of 1934, as Item 401 may hereinafter
provide on the date such notice is given, together with such
additional information about the nominee's background as the
Secretary of the Corporation may reasonably require. No person
nominated by a shareholder for the office of director shall be
eligible for election to that office unless nominated in
accordance with this Section 13 of Article I.
<PAGE>7
SECTION 14. Shareholder Proposals. Any shareholder
desiring to submit a proposal for corporate action at an annual
or special meeting of shareholders must submit a written proposal
together with a concise written supporting statement to the
Secretary of the Corporation at least sixty days prior to the
date of said meeting. No proposal submitted by a shareholder for
corporate action shall be considered at an annual or special
meeting unless such proposal is submitted in accordance with this
Section 14 of Article I.
<PAGE>8
ARTICLE II
Board of Directors
SECTION 1. Power of Board and Qualification of
Directors. The business of the Corporation shall be managed by
the Board of Directors. Each director shall be at least
twenty-one years of age.
SECTION 2. Number of Directors. The number of
directors constituting the entire Board of Directors shall be the
number, not less than three, fixed from time to time by a
majority of the total number of directors which the Corporation
would have, prior to any increase or decrease, if there were no
vacancies, provided, however, that no decrease shall shorten the
term of an incumbent director. The number of directors
constituting the entire Board shall be 18 except that from and
after May 21, 1996 the number of directors constituting the
entire Board shall be 17.
SECTION 3. Election and Term of Directors. The Board of
Directors shall be divided into three classes, designated Class
I, Class II and Class III. Such classes shall be as nearly equal
in number as the then total number of directors constituting the
entire Board permits. At the 1978 Annual Meeting of
Shareholders, or any special meeting in lieu thereof, five Class
I, five Class II and six Class III directors shall be elected to
initial terms expiring at the next succeeding annual meeting, the
second succeeding annual meeting and the third succeeding annual
meeting, respectively, and until their respective successors are
elected and qualified. At each annual meeting of shareholders
after 1978, the directors chosen to succeed those in the class
whose terms expire shall be elected by shareholders for terms
expiring at the third succeeding annual meeting after election
and until their respective successors are elected and qualified.
Newly created directorships or any decrease in directorships
resulting from increases or decreases in the number of directors
shall be so apportioned among the classes of directors as to make
all the classes as nearly equal in number as possible.
<PAGE>9
Notwithstanding the foregoing and Section 8 of this
Article II, whenever the holders of any one or more classes or
series of preferred stock issued by the Corporation shall have
the right, voting separately by class or series, to elect
directors at an annual or special meeting of shareholders, the
election, term of office, filling of vacancies and other features
of such directorships shall be governed by any terms of the
Certificate of Incorporation applicable thereto, and such
directors so elected shall not be divided into classes pursuant
to this Section 3 unless expressly provided by such terms.
SECTION 4. Quorum of Directors and Action by Board. A
majority of the entire Board of Directors shall constitute a
quorum for the transaction of business, and, except where
otherwise provided in these by-laws, the vote of a majority of
the directors present at a meeting at the time of such vote, if a
quorum is then present, shall be the act of the Board.
Any one or more members of the Board of Directors may
participate in a meeting of the Board by means of a conference
telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the
same time, and participation by such means shall constitute
presence in person at such meeting.
SECTION 5. Meetings of Board. An annual meeting of the
Board of Directors shall be held in each year directly after the
annual meeting of shareholders. Regular meetings of the Board
shall be held at such times as may be fixed by the Board.
Special meetings of the Board may be held at any time upon the
call of the Chairman of the Board or any two directors.
Meetings of the Board of Directors shall be held at such
places as may be fixed by the Board for annual and regular
meetings and in the notice of meeting for special meeting. If no
place is so fixed, meetings of the Board shall be held at the
office of the Corporation in New York, New York.
<PAGE>10
No notice need be given of annual or regular meetings of
the Board of Directors. Notice of each special meeting of the
Board shall be given to each director either by mail not later
than noon, New York time, on the third day prior to the meeting
or by telegram, written message or orally to the director not
later than noon, New York time, on the day prior to the meeting.
Notices are deemed to have been given: by mail, when deposited in
the United States mail; by telegram at the time of filing; and by
messenger at the time of delivery. Notices by mail, telegram or
messenger shall be sent to each director at the address
designated by him for that purpose, or, if none has been so
designated, at his last known residence or business address.
Notice of a meeting of the Board of Directors need not
be given to any director who submits a signed waiver of notice
whether before or after the meeting, or who attends the meeting
without protesting, prior thereto or at its commencement, the
lack of notice to him.
A notice, or waiver of notice, need not specify the
purpose of any meeting of the Board of Directors.
Unless the Board of Directors otherwise provides, each
committee designated by the Board may make, alter and repeal
rules for the conduct of its business. In the absence of a
provision by the Board of Directors or a provision in the rules
of such committee to the contrary, a majority of the entire
authorized number of members of such committee shall constitute a
quorum for the transaction of business, the vote of a majority of
the members present at a meeting at the time of such vote if a
quorum is then present or the unanimous written consent of all
members thereof shall be the act of such committee, any one or
more members of such committee may participate in a meeting of
such committee by means of a conference telephone or similar
<PAGE>11
communications equipment allowing all persons participating in
the meeting to hear each other at the same time and participation
by such means shall constitute presence in person at such
meeting, and in other respects each committee shall conduct its
business in the same manner as the Board of Directors conducts
its business pursuant to Article II of these by-laws.
SECTION 6. Resignations. Any director of the
Corporation may resign at any time by giving written notice to
the Board of Directors or to the Chairman of the Board or to the
Secretary of the Corporation. Such resignation shall take effect
at the time specified therein; and unless specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
SECTION 7. Removal of Directors. Any one or more of
the directors may be removed for cause by action of the Board of
Directors or by vote of the shareholders.
SECTION 8. Newly Created Directorships and Vacancies.
Newly created directorships resulting from an increase in the
number of directors and vacancies occurring in the Board of
Directors for any reason except the removal of directors by
shareholders shall be filled by vote of a majority of the
directors then in office, although less than a quorum exists.
Vacancies occurring as a result of the removal of directors by
shareholders shall be filled by the shareholders. A director
elected to fill a vacancy shall be elected to hold office for the
unexpired term of his predecessor.
SECTION 9. Executive and Other Committees of Directors.
The Board of Directors, by resolution adopted by a majority of
the entire Board, may designate from among its members an
executive committee and other committees, each consisting of
three or more directors, and each of which, to the extent
provided in the resolution, shall have all the authority of the
Board, except that no such committee shall have authority as to
the following matters:
<PAGE>12
(1) The submission to shareholders of any
action that needs shareholders'
approval;
(2) The filling of vacancies in the Board
or in any committee;
(3) The fixing of compensation of the
directors for serving on the Board or
on any committee;
(4) The amendment or repeal of the
by-laws, or the adoption of new
by-laws;
(5) The amendment or repeal of any
resolution of the Board which, by its
terms, shall not be so amendable or
repealable; or
(6) The removal or indemnification of directors.
The Board of Directors may designate one or more
directors as alternate members of any such committee, who may
replace any absent member or members at any meeting of such
committee.
Unless a greater proportion is required by the
resolution designating a committee, a majority of the entire
authorized number of members of such committee shall constitute a
quorum for the transaction of business, and the vote of a
majority of the members present at a meeting at the time of such
vote, if a quorum is then present, shall be the act of such
committee.
Each such committee shall serve at the pleasure of the
Board of Directors.
SECTION 10. Compensation of Directors. The Board of
Directors shall have authority to fix the compensation of
directors for services in any capacity.
SECTION 11. Interest of Director in a Transaction.
Unless shown to be unfair and unreasonable as to the Corporation,
no contract or other transaction between the Corporation and one
or more of its directors, or between the Corporation and any
other corporation, firm, association or other entity in which one
<PAGE>13
or more of the directors are directors or officers, or are
financially interested, shall be either void or voidable,
irrespective of whether such interested director or directors are
present at a meeting of the Board of Directors, or of a committee
thereof, which authorizes such contract or transaction and
irrespective of whether his or their votes are counted for such
purpose. In the absence of fraud any such contract or
transaction may be conclusively authorized or approved as fair
and reasonable by:
(1) The Board of Directors, or a duly empowered
committee thereof, by a vote sufficient for such
purpose without counting the vote or votes of such
interested director or directors (although he or
they may be counted in determining the presence of a
quorum at the meeting which authorizes such contract
or transaction), if the fact of such common
directorship, officership or financial interest is
disclosed or known to the Board or committee (as the
case may be); or
(2) The shareholders entitled to vote for the election
of directors, if such common directorship,
officership or financial interest is disclosed or
known to such shareholders.
Notwithstanding the foregoing, no loan, except advances
in connection with idemnification, shall be made by the
Corporation to any director unless it is authorized by vote of
the shareholders without counting any shares of the director who
would be the borrower.
SECTION 12. Indemnification. Except to the extent
expressly prohibited by the New York Business Corporation Law,
the Corporation shall indemnify each person made or threatened to
be made a party to or called as a witness in or asked to provide
information in connection with any pending or threatened action,
proceeding, hearing or investigation, whether civil or criminal,
and whether judicial, quasi-judicial, administrative, or
legislative, and whether or not for or in the right of the
Corporation or any other enterprise, by reason of the fact that
<PAGE>14
such person or such person's testator or intestate is or was a
director or officer of the Corporation, or is or was a director
or officer of the Corporation who also serves or served at the
request of the Corporation any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise
in any capacity, against judgments, fines, penalties, amounts
paid in settlement and reasonable expenses, including attorneys'
fees, incurred in connection with such action or proceeding, or
any appeal therein, provided that no such indemnification shall
be made if a judgment or other final adjudication adverse to such
person establishes that his or her acts were committed in bad
faith or were the result of active and deliberate dishonesty and
were material to the cause of action so adjudicated, or that he
or she personally gained in fact a financial profit or other
advantage to which he or she was not legally entitled, and
provided further that no such indemnification shall be required
with respect to any settlement or other nonadjudicated
disposition of any threatened or pending action or proceeding
unless the Corporation has given its prior consent to such
settlement or other disposition.
The Corporation shall advance or promptly reimburse,
upon request of any person entitled to indemnification hereunder,
all expenses, including attorneys' fees, reasonably incurred in
defending any action or proceeding in advance of the final
disposition thereof upon receipt of a written undertaking by or
on behalf of such person to repay such amount if such person is
ultimately found not to be entitled to indemnification or, where
indemnification is granted, to the extent the expenses so
advanced or reimbursed exceed the amount to which such person is
entitled, provided, however, that such person shall cooperate in
good faith with any request by the Corporation that common
counsel be utilized by the parties to an action or proceeding who
are similarly situated unless to do so would be inappropriate due
to actual or potential differing interests between or among such
parties.
<PAGE>15
Nothing herein shall limit or affect any right of any
person otherwise than hereunder to indemnification or expenses,
including attorneys' fees, under any statute, rule, regulation,
certificate of incorporation, by-law, insurance policy, contract
or otherwise.
No elimination of this by-law, and no amendment of this
by-law adversely affecting the right of any person to
indemnification or advancement of expenses hereunder shall be
effective until the 60th day following notice to such person of
such action, and no elimination of or amendment to this by-law
shall deprive any person of his or her rights hereunder arising
out of alleged or actual occurrences, acts or failures to act
prior to such 60th day. The provisions of this paragraph shall
supersede anything to the contrary in these by-laws.
The Corporation shall not, except by elimination or
amendment of this by-law in a manner consistent with the
preceding paragraph, take any corporate action or enter into any
agreement which prohibits, or otherwise limits the rights of any
person to, indemnification in accordance with the provisions of
this by-law. The indemnification of any person provided by this
by-law shall continue after such person has ceased to be a
director or officer of the Corporation and shall inure to the
benefit of such person's heirs, executors, administrators and
legal representatives.
The Corporation is authorized to enter into agreements
with any of its directors, officers or employees extending rights
to indemnification and advancement of expenses to such person to
the fullest extent permitted by applicable law, but the failure
to enter into any such agreement shall not affect or limit the
rights of such person pursuant to this by-law. It is hereby
expressly recognized that all directors and officers of the
Corporation, by serving as such after the adoption hereof, are
acting in reliance hereon and that the Corporation is estopped to
contend otherwise. Additionally, it is hereby expressly
recognized that all persons who serve or served as directors,
officers or employees of corporations which are subsidiaries or
<PAGE>16
affiliates of the Corporation (or other entities controlled by
the Corporation) and are directors or officers of the Corporation
are conclusively presumed to serve or have served as such at the
request of the Corporation and, to the extent permitted by law,
are entitled to indemnification hereunder, but that no such
person shall have any rights hereunder or in connection herewith,
except to the extent that indemnification hereunder is permitted
by law.
In case any provision in this by-law shall be determined
at any time to be unenforceable in any respect, the other
provisions shall not in any way be affected or impaired thereby,
and the affected provision shall be given the fullest possible
enforcement in the circumstances, it being the intention of the
Corporation to afford indemnification and advancement of expenses
to its directors and officers, acting in such capacities or in
the other capacities mentioned herein, to the fullest extent
permitted by law.
For purposes of this by-law, the Corporation shall be
deemed to have requested a director or officer of the Corporation
to serve an employee benefit plan where the performance by such
person of his or her duties to the Corporation also imposes
duties on, or otherwise involves services by, such person to the
plan or participants or beneficiaries of the plan, and excise
taxes assessed on a person with respect to an employee benefit
plan pursuant to applicable law shall be considered indemnifiable
expenses. For purposes of this by-law, the term "Corporation"
shall include any legal successor to the Corporation, including
any corporation which acquires all or substantially all of the
assets of the Corporation in one or more transactions.
A person who has been successful, on the merits or
otherwise, in the defense of a civil or criminal action or
proceeding of the character described in the first paragraph of
this by-law shall be entitled to indemnification as authorized in
such paragraph. Except as provided in the preceding sentence and
<PAGE>17
unless ordered by a court, any indemnification under this by-law
shall be made by the Corporation if, and only if, authorized in
the specific case:
(l) By the Board of Directors acting by a quorum consisting
of directors who are not parties to such action or
proceeding upon a finding that the director or officer
has met the standard of conduct set forth in the first
paragraph of this by-law, or,
(2) If such a quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so
directs:
(a) By the Board of Directors upon the opinion in
writing of independent legal counsel that
indemnification is proper in the circumstances
because the standard of conduct set forth in the
first paragraph of this by-law has been met by
such director or officer, or
(b) By the shareholders upon a finding that the
director or officer has met the applicable
standard of conduct set forth in such paragraph.
If any action with respect to indemnification of
directors and officers is taken by way of amendment of these
by-laws, resolution of directors, or by agreement, the
Corporation shall, not later than the next annual meeting of
shareholders, unless such meeting is held within three months
from the date of such action and, in any event, within fifteen
months from the date of such action, mail to its shareholders of
record at the time entitled to vote for the election of directors
a statement specifying the action taken.
SECTION 13. Action by Written Consent. Any action
required or permitted to be taken at any meeting of the Board of
Directors or any Committee thereof may be taken without a meeting
if all members of the Board or Committee as the case may be,
consent thereto in writing, to the adoption of a resolution
authorizing the action and such resolution and the written
consents thereto are filed with the minutes of the proceedings of
the Board or Committee.
<PAGE>18
ARTICLE III
Officers
SECTION 1. Officer. The Board of Directors, as soon as
may be practicable after the annual election of directors, shall
elect a Chairman of the Board, a President, one or more Vice
Presidents, a Secretary and a Treasurer, and from time to time
may elect or appoint such other officers as it may deem
advisable. Any two or more offices may be held by the same
person, except that the same person may not hold the offices of
President and Secretary.
SECTION 2. Term of Office and Removal. Each officer shall
hold office for the term for which he is elected or appointed,
and until his successor has been elected or appointed and
qualified. Unless otherwise provided in the resolution of the
Board of Directors electing or appointing an officer, his term of
office shall extend to and expire at the meeting of the Board
following the next annual meeting of shareholders. Any officer
may be removed by the Board, with or without cause, at any time.
Removal of an officer without cause shall be without prejudice to
his contract rights, if any, and the election or appointment of
an officer shall not of itself create contract rights.
SECTION 3. Powers and Duties. The Chairman of the Board
shall preside at all meetings of shareholders and of the Board of
Directors and shall, unless otherwise prescribed by the Board of
Directors, be the Chief Executive Officer of the Corporation.
All the other officers of the Corporation shall have such
authority and perform such duties in the management of the
Corporation, as may be prescribed by the Board of Directors and,
to the extent not so prescribed, they shall have such authority
and perform such duties in the management of the Corporation,
subject to the control of the Board, as generally pertain to
their respective offices. Securities of other corporations held
by the Corporation may be voted by the Chairman of the Board or
by another officer designated by the Board and, in the absence of
any such designation, by the President, any Vice President, the
<PAGE>19
Secretary or the Treasurer. The Board may require any officer,
agent or employee to give security for the faithful performance
of his duties.
SECTION 4. Books to be Kept. The Corporation shall keep
(a) correct and complete books and records of account, (b)
minutes of the proceeding of the shareholders, Board of Directors
and any committees of directors, and (c) a current list of the
directors and officers and their residence addresses; and the
Corporation shall also keep at its office in the State of New
York or at the office of its transfer agent or registrar in the
State of New York, if any, a record containing the name and
addresses of all shareholders, the number and class of shares
held by each and the dates when they respectively became the
owners of record thereof.
The Board of Directors may determine whether and to what
extent and at what times and places and under what conditions and
regulations any accounts, books, records or other documents of
the Corporation shall be open to inspection, and no creditor,
security holder or other person shall have any right to inspect
any accounts, books, records or other documents of the
Corporation except as conferred by statute or as so authorized by
the Board.
SECTION 5. Checks, Notes, etc. All checks and drafts on,
and withdrawals from, the Corporation's accounts with banks or
other financial institutions, and all bills of exchange, notes
and other instruments for the payment of money, drawn, made,
endorsed, or accepted by the Corporation, shall be signed on its
behalf by the person or persons thereunto authorized by, or
pursuant to resolution of, the Board of Directors.
<PAGE>20
ARTICLE IV
Forms of Certificates and Loss and
Transfer of Shares
SECTION 1. Forms of Share Certificates. The shares of
the Corporation shall be represented by certificates, in such
forms as the Board of Directors may prescribe, signed by the
Chairman or a Vice-Chairman of the Board or the President or a
Vice President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, and may be sealed with the
seal of the Corporation or a facsimile thereof. The signatures
of the officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by
a registrar other than the Corporation or its employee. In case
any officer who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at
the date of issue.
Each certificate representing shares issued by the
Corporation shall set forth upon the face or back of the
certificate, or shall state that the Corporation will furnish to
any shareholder upon request and without charge, a full statement
of the designation, relative rights, preferences and limitations
of the shares of each class of shares, if more than one,
authorized to be issued and the designation, relative rights,
preferences and limitations of each series of any class of
preferred shares authorized to be issued so far as the same have
been fixed and the authority of the Board of Directors to
designate and fix the relative rights, preferences and
limitations of other series.
Each certificate representing shares shall state upon
the face thereof:
(1) That the Corporation is formed under the laws of the
State of New York;
<PAGE>21
(2) The name of the person or persons to whom issued;
and
(3) The number and class of shares, and the designation
of the series, if any, which such certificate
represents.
SECTION 2. Transfers of Shares. Shares of the
Corporation shall be transferable on the record of shareholders
upon presentment to the Corporation or a transfer agent of a
certificate or certificates representing the shares requested to
be transferred, with proper endorsement on the certificate or on
a separate accompanying document, together with such evidence of
the payment of transfer taxes and compliance with other
provisions of law as the Corporation or its transfer agent may
require.
SECTION 3. Lost, Stolen or Destroyed Share
Certificates. No certificate for shares of the Corporation shall
be issued in place of any certificate alleged to have been lost,
destroyed or wrongfully taken, except, if and to the extent
required by the Board of Directors, upon: (1) Production of
evidence of loss, destruction or wrongful taking;
(2) Delivery of a bond indemnifying the Corporation and
its agents against any claim that may be made
against it or them on account of the alleged loss,
destruction or wrongful taking of the replaced
certificate or the issuance of the new certificate;
(3) Payment of the expenses of the Corporation and its
agents incurred in connection with the issuance of
the certificate; and
(4) Compliance with such other reasonable requirements
as may be imposed.
<PAGE>22
ARTICLE V
Other Matters
SECTION 1. Corporate Seal. The Board of Directors may
adopt a corporate seal, alter such seal at pleasure, and
authorize it to be used by causing it or a facsimile to be
affixed or impressed or reproduced in any other manner.
SECTION 2. Fiscal Year. The fiscal year of the
Corporation shall be the calendar year or such other period as
may be fixed by the Board of Directors.
SECTION 3. Amendments. By-Laws of the Corporation may
be adopted, amended or repealed by vote of the holders of shares
at the time entitled to vote in the election of directors, and
By-Laws may also be adopted, amended or repealed by the Board of
Directors, provided that any by-law adopted by the Board may be
amended or repealed by the shareholders entitled to vote thereon
as hereinabove provided, and, provided further, that Section 3 of
Article II and this paragraph of Section 3 of Article V may not
be altered, amended or repealed, or new by-laws inconsistent
therewith be adopted, except as provided in Article Seventh of
the Certificate of Incorporation of the Corporation.
If any by-law regulating an impending election of
directors is adopted, amended or repealed by the Board of
Directors, there shall be set forth in the notice of the next
meeting of shareholders for the election of directors the by-law
so adopted, amended or repealed, together with a concise
statement of the changes made.
-----------------------------------------
<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 MARCH
31, 1996 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 5,805,982
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 4,170
<MORTGAGE> 283,250
<REAL-ESTATE> 30,069
<TOTAL-INVEST> 6,520,517
<CASH> 49,746
<RECOVER-REINSURE> 9,766 <F1>
<DEFERRED-ACQUISITION> 789,712
<TOTAL-ASSETS> 7,811,731
<POLICY-LOSSES> 5,459,639
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 201,079
<POLICY-HOLDER-FUNDS> 55,621
<NOTES-PAYABLE> 592,927
0
532
<COMMON> 57,470
<OTHER-SE> 1,123,504
<TOTAL-LIABILITY-AND-EQUITY> 7,811,731
244,970
<INVESTMENT-INCOME> 124,146
<INVESTMENT-GAINS> 566
<OTHER-INCOME> 65,720
<BENEFITS> 254,284
<UNDERWRITING-AMORTIZATION> 39,117
<UNDERWRITING-OTHER> 101,579
<INCOME-PRETAX> 39,519
<INCOME-TAX> 13,328
<INCOME-CONTINUING> 26,191
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,191
<EPS-PRIMARY> .75
<EPS-DILUTED> .75
<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>
