HAMPSHIRE FUNDING INC, S-1/A, 1996-05-28

HAMPSHIRE FUNDING INC
S-1/A, 1996-05-28
PATENT OWNERS & LESSORS

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<PAGE>

As filed with the Securities and Exchange Commission on May 28, 1996

Registration No. 333-01873

________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
____________

PRE-EFFECTIVE AMENDMENT NO. 4
FORM S-1/A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
____________

Hampshire Funding, Inc.

(Exact name of registrant as specified in charter)
_____________

NEW HAMPSHIRE

(State or other jurisdiction of incorporation or organization)

02-0277842

(I.R.S. Employer Identification No.)

One Granite Place, Concord, New Hampshire 03301
Tel. (603) 226-5000

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
____________

Charles C. Cornelio, Esquire
Chubb Life Insurance Company of America
One Granite Place
Concord, New Hampshire 03301
(603) 226-5000

(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Approximate date of commencement of proposed sale to the public:
As soon as possible after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. [_]

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<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of each class of to be price offering registration
securities to be registered registered(1) per unit(2) price(2) fee
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Programs for the acquisition of mutual
fund shares and insurance............... $30,000,000 $30,000,000 $30,000,000 $10,344.83
- ------------------------------------------------------------------------------------------------------
</TABLE>

(1) Based on initial investments in mutual fund shares and insurance.
(2) Solely for the purpose of computing the filing fee.
____________
<PAGE>

HAMPSHIRE FUNDING, INC.

PART I

INFORMATION REQUIRED IN PROSPECTUS

CROSS REFERENCE SHEET

Registration Statement Item or Heading Location of Heading in Prospectus
-------------------------------------- ---------------------------------

1. Forepart of the Registration Statement and Outside Front Cover Page of
Prospectus

a. Name of Registrant.............................. Front Cover
b. Title, Amount and Description of Securities..... Front Cover
c. Selling Security Holders........................ Not Applicable
d. Reference to Risk Factors....................... Front Cover
e. S.E.C. Legend................................... Front Cover
f. Price Range..................................... Not Applicable
g. Underwriters' Discounts......................... Not Applicable
h. Preliminary Prospectus Legend................... Not Applicable
i. Blue Sky Legend................................. Front Cover
j. Date of Prospectus.............................. Front Cover

2. Inside Front Cover and Outside Back Cover Pages of the Prospectus
a. Available Information........................... Available Information
b. Reports to Security Holders..................... Not Applicable
c. Incorporation by Reference...................... Available Information
d. Stabilization................................... Not Applicable
e. Delivery of Prospectuses by Dealers............. Not Applicable
f. Enforceability of Civil Liabilities............. Not Applicable
g. Table of Contents............................... Inside Front

3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges
a. Summary......................................... Not Applicable
b. Address and Telephone Numbers................... Front Cover
c. Risk Factors.................................... Factors
d. Ratio of Earnings to Fixed Charges.............. Not Applicable

4. Use of Proceeds.................................... Revenue

5. Determination of Offering Price.................... Not Applicable

6. Dilution........................................... Not Applicable

7. Selling Security Holders........................... Not Applicable

8. Plan of Distribution
a. Underwriters' Obligation........................ Not Applicable
b. New Underwriters................................ Not Applicable
c. Other Distributions............................. The Programs
d. Offerings on Exchange........................... Not Applicable
e. Underwriters' Compensation...................... Not Applicable
f. Underwriters' Representative.................... Not Applicable
g. Indemnification of Underwriters................. Not Applicable
h. Dealers' Compensation........................... Summary of Charges; The
Company and its
Affiliates
i. Finders......................................... Not Applicable
j. Discretionary Accounts.......................... Not Applicable
k. Passive Market Making........................... Not Applicable

9. Description of Securities
a. Capital Stock................................... Not Applicable
b. Debt Securities................................. Not Applicable
c. Warrants and Rights............................. Not Applicable
d. Other Securities................................ Front Cover; The Programs
e. Market Information.............................. Not Applicable
f. American Depositary Receipts.................... Not Applicable

10. Interests of Named Experts and Counsel............ Legal Matters; Experts

11. Information With Respect to Registrant
a. Description of Business
i. General Development of Business............. The Company and its
Affiliates
ii. Financial Statements About Industry
Segments.................................... Financial Statements
iii. Narrative Description of Business........... Available Information
iv. Financial Information About Foreign
and Domestic Operations..................... Not Applicable
b. Description of Property........................ Property
c. Legal Proceedings.............................. Legal Matters
d. Market Price of and Dividends on the
Registrant's Common Equity and Related
Stockholders Matters........................... Stockholder Matters
e. Financial Statements........................... Financial Statements
f. Selected Financial Data........................ Selected Financial Data
g. Supplementary Financial Information............ Not Applicable
h. Management's Discussion and Analysis........... Management's Discussion
and Analysis and
Results of Operations
i. Changes In and Disagreements with Accountants.. Not Applicable
j. Directors and Executive Officers............... Directors and Executive
Officers
k. Executive Compensation......................... Executive Compensation
l. Security Ownership of Certain Beneficial
Owners and Management..................... Security Ownership of
Certain Beneficial Owners
m. Certain Relationships and Related
Transactions.............................. Certain Relationships
and Related Transactions

12.Disclosure re: Indemnification..................... Not Applicable
<PAGE>

PROSPECTUS

One Granite Place
Concord, New Hampshire 03301
Telephone: 1-603-226-5000

HAMPSHIRE FUNDING, INC.

Distributed by: Chubb Securities Corporation
One Granite Place
Concord, New Hampshire 03301
Telephone: 1-603-226-5000

May , 1996

Programs For Coordinating The
Acquisition of Mutual Fund Shares and Insurance

Hampshire Funding, Inc. ("the Company") is offering in excess of $30
million worth of Programs for sale to the public by means of the Prospectus. The
total amount of securities offered by this Prospectus will be determined by
aggregating initial insurance premiums paid and initial mutual fund investments
made by all Participants purchasing after the effective date of this
Prospectus.

The securities offered in this Prospectus are personalized investment
programs which coordinate the acquisition of mutual fund shares and insurance
over a term of years. Hampshire Funding programs (the "Programs") are offered
and administered by the Company.

Under the Hampshire Funding concept a Participant will pay the premiums on
life insurance policies with the proceeds of loans arranged by pledging mutual
fund shares previously purchased or purchased by the Participant for cash at the
time of enrolling in the Program. It is the objective of the Program to enable
the Participant to utilize the appreciation, if any, in the value of the mutual
fund shares and any dividends or capital gain distributions thereon to aid in
offsetting the principal and accumulated interest on loans which must be paid
upon termination of the Program, which is usually the end of the tenth Prorgam
Year.Additionally, the Program will automatically terminate and the loans will
become immediately due and payable if the value of the mutual fund shares
purchased in the Program declines below applicable margin and collateral
maintenance requirements.

The Programs contemplate that out-of-pocket dollars, that would normally be
used to pay insurance premiums, will be invested in mutual fund shares without
losing the protection of insurance. There is no assurance that the objective
will be realized.

THE PROGRAMS INVOLVE SUBSTANTIAL RISKS WHICH COULD RESULT IN SIGNIFICANT
LOSSES TO PARTICIPANTS. ACCORDINGLY, PERSONS CONTEMPLATING ENTERING INTO A
PROGRAM ARE URGED TO READ AND CONSIDER THE DISCUSSION OF "RISK FACTORS" ON
PAGES 6 TO 7 IN THIS PROSPECTUS.

There is no trading market for the Programs, the Programs involve
substantial costs and there are no voting rights associated with the Programs,
(see the discussion of "Programs" on pages 9 to 17 and "Summary of Charges" on
pages 7 to 9.) There are no broker-dealer concessions paid to any broker-dealer
in the distribution of the Programs. The Company may pay services fees to
affiliates pursuant to certain service agreements.

The interest rate on a Program will not be less than 6% per annum, nor
exceed three percentage points above the prime, or base rate, as quoted in The
Wall Street Journal. Interest rules are subject to change at any time during
the Program at the discretion of the Company, and are always subject to maximum
permissible interest rates under state law, (see the discussion of "Loan
Charges" on page 8).

This Prospectus does not constitute an offering in any jurisdiction in
which such offering, or an offering of shares of any of the mutual funds
described herein, or an offering of any insurance policies described herein, may
not lawfully be made. Persons should consult this Prospectus and any supplement
thereto for additional information (if any) required by state law.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>

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TABLE OF CONTENTS
- --------------------------------------------------------------------------------

<TABLE>
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Page
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<S> <C>
Table of Contents........................................................................ 2
Glossary of Terms........................................................................ 3
The Company and Its Affiliates........................................................... 4
The Company........................................................................... 4
The Broker-Dealer..................................................................... 4
The Insurance Companies............................................................... 5
The Service Company................................................................... 5
The Fund Group........................................................................ 5
The Holding Company................................................................... 5
Risk Factors............................................................................. 6
Risk of Loss on Early Termination..................................................... 6
Risk of Termination for Failure to Maintain Collateral
and Margin Requirements............................................................... 6
Risk That the Company Will Not Be Able to Obtain Financing............................ 6
Risk of Adverse Determination Under State Law......................................... 7
Summary of Charges....................................................................... 7
Revenue.................................................................................. 9
The Programs............................................................................. 9
Distribution of the Programs.......................................................... 9
How to Become a Program Participant.................................................. 10
Minimum Required Initial Collateral.................................................. 10
Acquisition of Insurance............................................................. 11
Agency Agreement and Limited Power of Attorney....................................... 11
Insurance Premium Loans to Participants.............................................. 12
Loans Under the Agency Agreement................................................... 12
Margin and Collateral Requirements................................................. 12
A Participant's Personal Deficiency Resulting from the Loans....................... 14
Release of Collateral.............................................................. 14
Additional Mutual Fund Share Purchases............................................... 14
Program Modification................................................................. 15
Termination.......................................................................... 15
Rights of Participants............................................................... 16
Financing of the Programs by the Company............................................. 17
Participant Information................................................................. 17
Status Reports....................................................................... 17
Hypothetical Illustrations........................................................... 18
More Information About the Company...................................................... 19
Properties........................................................................... 19
Related Stockholder Matters.......................................................... 19
Certain Relationships and Related Transactions....................................... 19
Directors and Executive Officers..................................................... 20
Executive Compensation............................................................... 22
Selected Financial Data................................................................. 22
Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................. 22
Legal Matters........................................................................... 25
Experts................................................................................. 26
Available Information................................................................... 26
Index to Financial Statements........................................................... F-1
</TABLE>

2
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- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
- --------------------------------------------------------------------------------

In addition to the capitalized terms which are defined elsewhere in the
Prospectus, the following words and phrases shall have the indicated meanings:

Account Indebtedness or Indebtedness - The Participant's accumulated debt,
- -------------------- ------------
interest, and other charges owed to the Company

Agency Agreement - The Agency Agreement and Limited Power of Attorney between
- ----------------
the Participant and the Company

Agreements - Loan agreements and Company lender agreements with Colonial and
- ----------
Chubb Life.

Broker-Dealer or Chubb Securities - Chubb Securities Corporation
- ------------- ----------------

Chubb Life - Chubb Life Insurance Company of America
- ----------

Colonial - Chubb Colonial Life Insurance Company (formerly known as The Colonial
- --------
Life Insurance Company of America)

Commission - The Securities and Exchange Commission
- ----------

Company or Hampshire - Hampshire Funding, Inc.
- ------- ---------

Exchange Act - The Securities Exchange Act of 1934, as amended
- ------------

Fund Group - Chubb Investment Funds, Inc.
- ----------

Holding Company - The Chubb Corporation
- ---------------

Independent Dealers - Independent securities dealers with whom the Company and
- -------------------
the Broker-Dealer have agreements and who are authorized insurance agents of one
of the Insurance Companies.

Insurance Companies - Affiliated insurance companies of the Company
- -------------------

Participant - A person who purchases a Program
- -----------

Pledged Shares - Mutual fund shares designated as collateral to an individual
- --------------
loan

Programs - Personalized programs which coordinate the acquisition of mutual
- --------
fund shares and insurance through leverage by the Company

Qualified Shares or Qualified Collateral - Mutual fund shares which are
- ---------------- --------------------
properly available for use as collateral within a Program, by virtue of having
been held at least 31 days by a Participant

Registration Statement - The registration statement the Company has filed with
- ----------------------
the Commission under the Securities Act with respect to securities covered under
this prospectus

Representatives - Registered representatives of the Broker-Dealer or other
- ---------------
Independent Dealers

Securities Act - The Securities Act of 1933, as amended
- --------------

Service Company or CASC - Chubb America Service Corporation
- --------------- ----

3
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- --------------------------------------------------------------------------------
THE COMPANY AND ITS AFFILIATES
- --------------------------------------------------------------------------------

THE COMPANY

The Company is primarily engaged in the issuance of Programs that
coordinate the acquisition of mutual fund shares and insurance. The Company owns
100% of the stock of Hampshire Syndications, Inc., which was formed in 1986 to
assist in the formation and management of a limited number of limited
partnership. Hampshire Syndications, Inc. acts as a general or co-general
partner in various limited partnerships that are not related to the Company or
the Programs, and has no role or involvement in the administration or
distribution of the Programs.

The Company was incorporated in the State of New Hampshire on December 8,
1969, as a wholly-owned subsidiary of Chubb Life Insurance Company of America
("Chubb Life"). Its stock was sold to The Chubb Corporation (the "Holding
Company") on December 21, 1971. On April 1, 1981, the Company's stock was
transferred by contribution to a predecessor corporation of Chubb Life. Chubb
Life owns 100% (50,000 shares) of the Company's issued and outstanding common
stock.

The Company's principal executive offices are located at One Granite Place,
Concord, New Hampshire 03301, and its telephone number is (603) 226-5000.

All administrative duties of the Company are performed by personnel
employed by Chubb America Service Corporation (the "Service Company"). The
Company pays the Service Company a fee, determined in accordance with reasonable
cost allocation methods, for the performance of such duties.

One of its affiliates, Chubb Investment Funds, Inc. (the "Fund Group"), is
a registered investment company which offers mutual funds that are among those
available to Participants in the Programs. As of May 20, 1996, the Fund Group
represented 2.42% of the total pledged mutual fund shares under the Programs.
Two of its affiliates, Chubb Life and Chubb Colonial Life Insurance Company
("Colonial") are the exclusive underwriters of the life insurance policies
coordinated under the Programs. Another affiliate, Chubb Securities Corporation,
is the principal underwriter of the Fund Group and of certain life insurance
policies.

The Company faces limited competition in the sale of Programs, as the
number of companies offering plans similar to the Programs is quite small.
Historically, a large number of companies offered programs combining the
purchase of insurance and mutual fund shares; however, in recent years the
number of companies has reduced dramatically.

THE BROKER-DEALER

Chubb Securities Corporation (the "Broker-Dealer or "Chubb Securities") was
incorporated in 1969 and is a member of the National Association of Securities
Dealers, Inc. and the Boston Stock Exchange. The Broker-Dealer's common stock
(50,000 shares) is wholly owned by Chubb Life. It also is a registered
investment adviser under the Investment Advisers Act of 1940, and those of its
representatives who are also registered independently as investment advisers
perform personal financial planning services.

The Programs and most mutual fund shares offered in conjunction with the
Programs are sold through the Broker-Dealer or other independent securities
dealers. The Broker-Dealer has non-exclusive selling agreements with a number of
mutual fund distributors and is the principal

4
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underwriter and distributor for the Fund Group. The Broker-Dealer does not
maintain dealer agreements with certain mutual funds for the following reasons:
the mutual fund is a no-load mutual fund that does not have dealer agreements;
the mutual fund is a proprietary mutual fund and dealer agreeemnts are not
available to the Broker-Dealer; or, the Broker-Dealer has decided not to enter a
dealer agreement with the mutual fund based on due diligence factors such as
fund management, performance and service issues. The Broker-Dealer does not have
agreements with all of the mutual fund distributors whose funds may be used
under the Programs. See "Distribution of the Programs".

The Broker-Dealer also makes available for sale stocks and bonds, limited
partnership units, both public and private, unit investment trusts, variable
annuities and variable life insurance. These investments are not available as
collateral under the Programs.

THE INSURANCE COMPANIES

The Programs coordinate the acquisition of various forms of life insurance
offered exclusively by the affiliated Insurance Companies, Chubb Life and
Colonial, (the "Insurance Companies").

As of December 31, 1995, Chubb Life's admitted assets were $2,456,098,599
and gross insurance in force was $53,437,323. Its stock (600,000 shares) is
wholly owned by the Holding Company. At present Chubb Life provides funds to the
Company for financing the Programs pursuant to a Loan Agreement and the Company-
Lender Agreement. See "The Programs -Financing of the Programs by the Company."

Colonial was organized as a New Jersey corporation in 1897. As of December
31, 1995, admitted assets were $615,290,036 and gross insurance in force was
$9,498,987. Its stock (132,000 shares) is wholly owned by Chubb Life. At present
Colonial provides funds to the Company for financing the Programs, pursuant to a
Loan Agreement and a Company-Lender Agreement. See "The Programs - Financing of
the Programs by the Company."

Each Insurance Company's policies may be sold for use with the Programs in
those states where it has agents who are also qualified as registered
representatives of broker-dealers.

THE SERVICE COMPANY

The Service Company is a management service company incorporated in New
Hampshire on June 19, 1981. Its stock (1,000 shares) is wholly owned by Chubb
Life. It employs all personnel who perform services for the Company, the Broker-
Dealer, and the Insurance Companies. It performs administrative and clerical
duties for the Company.

THE FUND GROUP

The Fund Group is a registered investment company under the Investment
Company Act of 1940. The Fund Group offers a series of seven mutual funds: the
Chubb Money Market Fund, the Chubb Tax-Exempt Fund, the Chubb Government
Securities Fund, the Chubb Total Return Fund, the Chubb Growth and Income Fund,
the Chubb Capital Appreciation Fund and the Chubb Global Income Fund. Shares
issued by the Fund Group are available for purchase in conjunction with the
Programs.

THE HOLDING COMPANY

The Chubb Corporation (the "Holding Company") is a holding company, the
total assets of which on December 31, 1995 were $22,996,525,000. The Holding
Company is not a subsidiary of any other corporation, and its stock is traded on
the New York Stock Exchange. Principal subsidiaries of the Holding Company
include Chubb Life Insurance Company of

5
<PAGE>

America, Chubb Colonial Life Insurance Company (formerly known as The Colonial
Life Insurance Company of America), Chubb Sovereign Life Insurance Company,
Chubb America Service Corp, ChubbHealth Holdings, Inc., Federal Insurance
Company, Vigilant Insurance Company, Chubb Insurance Company of Australia, Ltd.,
Great Northern Insurance Company, Pacific Indemnity Company, Northwestern
Pacific Indemnity Company, Texas Pacific Indemnity Company, Chubb Custom
Insurance Company, Chubb National Insurance Company, Chubb Indemnity Insurance
Company, CC Canada Holdings, Ltd, Chubb Insurance Company of Canada, Chubb
Insurance Company of Europe, S.A., Chubb Atlantic Indemnity Ltd., Chubb
Insurance Company of New Jersey, Chubb & Son, Inc., Chubb Capital Corporation,
Chubb Investment Company of New Jersey, Inc., and Bellemead Development
Corporation.

- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------

RISK OF LOSS ON EARLY TERMINATION

Although a Program is voluntary and may be terminated at any time upon
facsimile or written request by a Participant, it should not be concluded that
it necessarily may be terminated without loss. Termination of the Program in its
early stages is more likely to lead to a loss in a Participant's investment if
sales charges are incurred in the acquisition of mutual fund shares.
Furthermore, in the event of an early termination of a Program, the cash value,
if any, of an insurance policy included under the Program would be minimal and
might not be available if the Participant is not the owner of the policy. A
Participant also would pay a termination fee and liquidation charges for early
termination. On the other hand, a termination in the latter stages of the
Program will result in increased interest expense and administrative fees which
the Participant must pay. See "Summary of Charges."

RISK OF TERMINATION FOR FAILURE TO MAINTAIN COLLATERAL AND MARGIN REQUIREMENTS

Failure to maintain the appropriate collateral and margin requirements can
result in an involuntary termination of a Program without prior notice to the
Participant. Certain collateral and margin requirements have been imposed by the
Company in order to comply with Federal regulations and to insure sufficient
collateral for the Company's loans to Participants. These requirements are more
fully described under "The Programs - Insurance Premium Loans to
Participants".

THE COMPANY HAS NO OBLIGATION TO PROVIDE NOTICE TO THE PARTICIPANT THAT THE
APPLICABLE MARGIN REQUIREMENT HAS BEEN VIOLATED AND THAT HIS PROGRAM WILL
BE TERMINATED. IN ADDITION, THE AMOUNT REALIZED BY THE COMPANY UPON
REDEMPTION OF A PARTICIPANT'S SHARES MAY BE SIGNIFICANTLY LESS THAN THE
APPLICABLE MARGIN REQUIREMENT.

RISK THAT THE COMPANY WILL NOT BE ABLE TO OBTAIN FINANCING

The continuance of the Programs is dependent upon the Company's ability to
provide, or arrange for, the financing of insurance premiums for Participants.
At present, Colonial and Chubb Life, provide the funds necessary to the
Company's financing of the Programs. A Participant should carefully consider the
Company's ability to borrow money and the consequences of its inability to
borrow. Moreover, although the Company's present financing

6
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arrangements with its lenders do not include the assignment of a Participant's
mutual fund shares to the lender as security, the Agency Agreement does
authorize the Company to assign a Participant's mutual fund shares to any lender
as collateral security for the Company's indebtedness pursuant to any financing
arrangements. If any such assignment takes place and the Company subsequently
defaults on an obligation for which the Participant's mutual fund shares have
been pledged as security, the mutual fund shares may be redeemed by the lender
to whom the obligation is owed. The redemption could occur at a time when the
value of the shares had declined. A Participant should carefully consider the
extent to which the rights of a lender who might receive such an assignment
would have priority over his interests in the pledged mutual fund shares.

The Company may also borrow funds from non-affiliated companies. There is
no assurance that the Company may obtain financing from non-affiliated companies
upon terms, conditions and rates as favorable as those from affiliated
companies. If the Company is unable to borrow funds in the future or continue
to borrow funds under its Loan Agreements for the purpose of financing loans to
Participants for the payment of insurance premiums, it may not be able to
continue the sale of the Programs.

A lender, affiliated or unaffiliated with the Company, may cease to provide
financing if the Company is in default under its loan agreements. In this case,
Programs will be terminated on their renewal dates. The Company is under no
contractual obligation to continue to make loans on future Program renewal
dates; however, it intends to continue making such loans as long as funds are
available to it.

RISK OF ADVERSE DETERMINATION UNDER STATE LAW

Most States have passed "prohibited inducement" statutes. These statutes
generally restrict certain kinds of prohibited inducements in the sale of life
insurance and/or securities. The Programs are not constructed or in any way
intended to be an inducement of the type prohibited by the state statutes.
In particular, the terms and conditions of both the life insurance and the
mutual fund sales are the same whether purchased in connection with the
Programs or separately. The Company, however, cannot predict whether, or the
extent to which, a state may later interpret its statute to restrict the
Programs. In 1995, the Programs were eligible for sale to the public in all
states except for South Dakota and Vermont.

- --------------------------------------------------------------------------------
SUMMARY OF CHARGES
- --------------------------------------------------------------------------------

The following table summarizes the charges imposed under the Programs.
Certain of the charges will vary in total dollar amount depending on the amount
of the loans taken out under the Programs. Other charges are collected only upon
the occurence of a particular transaction, as described below.

PROGRAM FEES

<TABLE>
<S> <C> <C>
PLACEMENT FEE: One time fee for each insurance policy placed in or added to the
Program $25.00

PROGRAM FEE: One time fee for Programs pledging certain no-load funds with which
Broker Dealer does not have a selling agreement $200.00

ADMINISTRATIVE
FEE: Annual fee for administration and recordkeeping of Participant's Program
(Reduced Rate: Currently $360 for ten-year period if paid in advance)
$50.00

SPECIAL SERVICES
FEE: For certain special transactions, described below $25.00

TERMINATION FEE: Upon termination by Participant or the Company prior to ten-year
scheduled termination $100.00

LIQUIDATION FEE: Upon liquidation of each fund, if any, prior to liquidation at end of ten-
year term $25.00
</TABLE>

7
<PAGE>

LOAN CHARGES

INTEREST RATE: Interest rates on a Participant's indebtedness are
subject to change at any time during the Program at the
discretion of the Company and are always subject to
maximum permissible interest rates under state law. The
Agency Agreement provides that the nominal interest
rate on a Program will not be less than 6% per annum,
nor exceed three percentage points above the prime, or
base rate, as quoted in The Wall Street Journal. Such
interest increases may occur without prior notice to
the Participants and will become effective immediately.
The current interest rate will be applicable to all
outstanding indebtedness and apply to all Participants
uniformly. The Company reserves the right to impose a
rate less than the maximum permissible rate. Any such
reduced interest rate will apply to all outstanding
Participant loans.

Other charges, commissions and fees may be imposed by other entities such
as a broker-dealer, including Chubb Securities, a mutual fund or Insurance
Company. For example, an unaffiliated broke-dealer may charge a fee for
transfering mutual fund shares to the Program.

The Placement Fee, Program Fee, Administrative Fee, and Special Charges.
- ------------------------------------------------------------------------

The Company charges a one-time placement fee of $25 for each insurance
policy issued in connection with the Programs. The placement fee is due at the
time when the Company determines that a prospective Participant has qualified
for investment in a Program (including the life insurance application). In
addition, the Company will charge a fee of $25 for adding a policy to an
existing Program.

The Company also charges a one-time Program fee of $200 for Programs using
certain no-load funds with which the Broker-Dealer does not have a selling
agreement. This Program fee is due at the time of application for the Programs.
An annual administrative fee is also charged by the Company for its services
under the Agency Agreement to cover the reasonable cost of administering the
Programs. The annual administrative fee is $50 and may be paid in a lump sum for
the entire ten year period at a reduced rate, currently $360. Unless the
Participant pays the annual administrative fee in cash, the Company, at its
discretion, may pay the fee from proceeds realized from the redemption of mutual
fund shares or by adding the fee to the Participant's indebtedness.

Charges will also be made for certain special services. The current charges
are $25 for each of the following services on a per fund and per policy basis:
(i) return check charge (protested check); (ii) transfer of registration of
shares; (iii) reduction of loan balance; (iv) conversion from one premium mode
to another; (v) transfer of shares from one fund to another; (vi) policy
conversion; (vii) policy change; (viii) redemption of shares; and (ix) other
exceptional transactions requested by the Participant. These charges are payable
by a Participant in cash or from proceeds realized from the redemption of mutual
fund shares. The Company reserves the right to adjust these charges at any time
and from time to time.

The Termination and Liquidation Fees.
- -------------------------------------

The Company will charge a termination fee of $100 when a Program is
terminated by either the Participant or the Company, except for termination at
the end of ten years. A Participant also will be charged a $25 liquidation
charge per fund whenever a fund is liquidated, regardless of whether the Program
is being terminated, except at termination at the end of ten years. These fees
are based upon the Company's administrative costs for processing terminations
and liquidations.

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REVENUE
- --------------------------------------------------------------------------------

The Company's proceeds from the sale of the Programs is in the form of fees,
charges and interest income. These proceeds are used to pay administrative and
operational expenses, and to obtain financing. See "Summary of Charges" for more
information on fees, charges and interest.

- --------------------------------------------------------------------------------
THE PROGRAMS
- --------------------------------------------------------------------------------

DISTRIBUTION OF THE PROGRAMS

The securities offered by this Prospectus are personalized investment
programs which coordinate the acquisition of mutual fund shares and insurance
over a period of ten years, commencing with the due date of the initial premium
advanced under the Program.

The Programs are neither distributed through underwriters nor traded in
securities markets. Unlike other securities, Participants may not sell or trade
their Programs, rather the Programs must be held for the ten year period unless
earlier terminated. As personalized investment programs, they are sold only
through registered representatives (the "Representatives") of Chubb Securities
or other independent securities dealers ("Independent Dealers") with whom the
Company, Chubb Securities and one of the Insurance Companies have
agreements.

Under the terms of the agreements under which the Independant Dealers may
distribute the Programs, the Independant Dealers agree to comply with applicable
laws, and to solicit the distribution of the Programs, and remain responsible
for the determination of whether a Program is suitable for a prospective
Participant.

The Representatives are jointly licensed to sell both mutual funds and
insurance. As registered representatives of Chubb Securities they are authorized
to sell mutual fund shares pledged in the Programs, as well as the Programs
themselves. As licensed agents of one or more of the Insurance Companies, they
are authorized to sell various forms of life insurance. In every case, the
Representative will have some form of agency relationship with Chubb Securities
and/or the Insurance Companies. There are no additional benefits to the
Representatives by selling mutual funds or life insurance products of affiliated
companies in connection with the Programs.

The Representatives sell the Programs on a best-efforts basis. No
underwriting compensation is paid to Chubb Securities or any other party in
connection with the sale of the Programs. Chubb Securities or the Independant
Dealer typically receives a commission on the sale of mutual fund shares in
connection with a Program. A portion of any commission received by Chubb
Securities is paid to the Representative. In his capacity as a licensed
insurance agent, the Representative also receives commissions from one of the
Insurance Companies on insurance sold as part of any Program.

9
<PAGE>

HOW TO BECOME A PROGRAM PARTICIPANT

To become a Program Participant, the prospective Participant must contact a
Representative authorized to distribute the Programs. The Program may begin
once the Participant enters into the Limited Power of Attorney and Agency
Agreement with the Company and signs the Federal Reserve Form G-3 (concerning
extensions of credit and the use of margin stock).

Participants should obtain independent advice from their Representative in
regard to insurance and mutual fund acquisitions.

Prior to the sale of a Program, the Representative will make an independent
assessment as to whether the entire transaction, including the loan arrangement,
is suitable for the prospective Participant; this in no way relieves the
prospective Participant from the responsibility of making his own considered
determination as to whether a particular Program is suitable for him.

MINIMUM REQUIRED INITIAL COLLATERAL

If a Participant decides to begin a Program, an investment in the mutual
fund selected by him is made in an amount at least equal to the minimum required
initial collateral. Any mutual fund shares which are to be used as collateral
for premium loans must be owned by a prospective Participant for at least 31
days. If a prospective Participant already owns sufficient qualified shares of a
mutual fund which permits reinvestment of dividends and capital gains
distributions, these shares may be utilized to initiate and maintain a Program.
The initial collateral must be at least 250% of the insurance premium for most
Programs, regardless of the mode of premium payment selected. Programs using no-
load funds with which Chubb Securities does not have a selling agreement or
that are not sold through an approved investment management program require
initial collateral of at least 1800% of the initial insurance premium, which
premium must be paid annually. Prospective Participants are cautioned, however,
that the minimum investment required by certain mutual funds for the purchase of
their shares may exceed the minimum collateral required by the Company to
initiate a Program ($1,200 for most Programs).

The only mutual funds available for sale by Chubb Securities in connection
with the Programs are those which agree to use the Company's administrative and
confirmation requirements. Moreover, Chubb Securities does not sell all mutual
funds currently available. The services of another broker-dealer may be required
if the Participant wants to purchase mutual fund shares that Chubb Securities
does not sell. Previously purchased mutual fund shares may be used if the fund
agrees to use the Company's administrative and confirmation requirements.
Moreover, the Participant need not use the services offered by Chubb Securities
in purchasing mutual funds to be pledged with the Company at the start of the
Program. However, a Participant may be charged a fee by another broker-dealer
for transfering mutual fund shares to the Program.

Mutual funds available for sale by Chubb Securities in connection with the
Programs must provide for the automatic reinvestment of dividends and capital
gains distributions in mutual fund shares. Ordinary income dividends generally
are reinvested either at net asset value or at the public offering price, which
usually includes the sales charge. Capital gains distributions generally are
reinvested at net asset value. If a service charge is applicable, it is made
irrespective of the Program.

10
<PAGE>

Orders for mutual funds will be accepted only from those persons who desire to
make their mutual fund investment irrespective of the Insurance Companies'
insurability requirements. Accordingly, the purchase of the initial order of
mutual funds shares will be required even though the person may not be a
Participant in the Program because he is uninsurable. Individuals proposed for
insurance who have had medical problems, who have been denied insurance in the
past, or who are in higher risk groups, may bear a much greater risk for the
affiliated Insurance Companies and may not be issued an insurance policy or may
have to pay additional premiums. Prospective Participants should discuss these
insurance questions with the insurance agent/ registered representive.

ACQUISITION OF INSURANCE

A Program allows a Participant to purchase insurance by financing the
premiums through a loan secured by his mutual fund shares. Insurance available
for purchase in connection with a Program may vary from state to state,
depending on whether Chubb Life or Colonial is licensed to sell insurance in a
particular jurisdiction, and whether a jurisdiction in which one of the
Insurance Companies is licensed has approved a particular insurance
product.

Whole life, variable universal life, single premium whole life, level term,
renewable or convertible term, and decreasing term insurance are available for
purchase in connection with a Program on a nonparticipating basis.

AGENCY AGREEMENT AND LIMITED POWER OF ATTORNEY

An Agency Agreement and Limited Power of Attorney (the "Agency Agreement")
is executed by a Participant contemporaneously with the signing of the
application for insurance or the purchase or delivery of mutual fund shares to
be used in the Program. It is also signed by the Company and is thereafter
effective until terminated by the Participant or the Company. Upon giving notice
in writing or via facsimile, a Participant may terminate the Agency Agreement at
any time, which automatically results in termination of a Program, but the
Company may do so only for reasons discussed under "The Programs-Termination."

Under the Agency Agreement, the Company, as attorney-in-fact of the
Participant, has the power to:

(a) arrange loans to Participants to pay insurance premiums and administrative
fees, if not paid in cash, as they become due or excess premiums as agreed to by
the Company;

(b) receive pledge as collateral of all mutual fund shares acquired in the
Program, furnished by a Participant or available for pledge, having an aggregate
redemption value of up to the applicable margin requirement of 250% or 1800% of
a Participant's Account Indebtedness as security therefor; and

(c) pledge the Participant's mutual fund shares securing his Account
Indebtedness if necessary for the purpose of obtaining funds to finance the
Programs.

After execution of the Agency Agreement, no further notice is given to a
Participant prior to the loans made by the Company to a Participant to pay
insurance premiums. All mutual fund shares purchased in the Program will be
registered in the name of the Company, as custodian for the Participant, to be
held by the mutual fund companies, subject to instructions of the

11
<PAGE>

Company pursuant to the Agency Agreement. Certificates for mutual fund shares
acquired by the Participants will be issued upon direction of the Company only
in those instances where it is necessary to meet the legal collateral
requirements of a state or governmental agency.

INSURANCE PREMIUM LOANS TO PARTICIPANTS

LOANS UNDER THE AGENCY AGREEMENT

Upon issuance of a policy by an Insurance Company and contingent upon
acceptance of the policy by the Participant, the Company makes a loan to the
Participant under the Agency Agreement in an amount equal to the selected
premium mode. Mutual fund shares are then pledged to secure that loan ("Pledged
Shares").

As each premium becomes due, a new loan equal to the next premium and
administrative fee, if not paid in cash, is made and added to the Participant's
Account Indebtedness. It is intended that such loans will recur each premium due
date until the expiration of ten years after the due date of the initial premium
advanced under the Program, unless the Program is sooner terminated. Thus,
interest, as well as principal, is borrowed, and all mutual funds purchased or
otherwise accumulated in the Program having redemption value of up to 250% of
the Participant's Account Indebtedness, or 1800% for the initial premium loan of
Programs using certain no-load funds, are pledged as collateral for such loans.
Shares representing any excess in redemption value over the applicable margin
requirement of 250% or 1800% of the Participant's Account Indebtedness are not
required to be pledged as collateral.

Pursuant to the Agency Agreement, the Company may renew a Participant's
Program at the due date for the insurance premium, in accordance with the same
basic Program terms and conditions (including but not limited to the "Margin and
Collateral Requirements" discussed below) for a period of time ending as of the
due date of the next insurance premium. For example, if the insurance premium
payment mode is annual, the renewal of the Program will be for a period of one
year. Until the Programs are terminated, it is intended that such loans will
recur over the life of the Program.

Assuming that the minimum collateral requirements described hereinafter are
met, the Company will recompute a Participant's Account Indebtedness in advance
of the premium due date so that the loan can be renewed on the premium due date
of the insurance policy during each year of a Program. The new Account
Indebtedness is determined by adding the amount of the Participant's existing
Account Indebtedness to the amount of the next premium due, new fees, plus
interest. See "Summary of Charges."

Since May 29, 1970, the date the Company first offered Programs for sale,
the nominal interest rate charged by the Company pursuant to the Agency
Agreement has ranged from a low of 6% to a high of 13%. An increase in the
interest rate on the loans will serve to increase the cost of the Program and
diminish its value to a Participant upon termination.

MARGIN AND COLLATERAL REQUIREMENTS

Any mutual fund shares used to secure premium loans must have been owned by
the Participant for a minimum period of 31 days before credit secured by such
mutual fund shares is extended to the Participant. The holding period applies to
all purchases of mutual fund shares, whether for initial purchases, renewals, or
meeting margin requirements.

12
<PAGE>

The maximum credit allowed by Regulation G (adopted by the Federal Reserve
Board and applicable to loans made under the Programs) against pledged mutual
fund shares is 50% of the value of the shares. The Company's present policy is
to make an initial loan not to exceed 40% of the value of the mutual fund shares
pledged as security. If the Federal Reserve Board should increase margin
requirements beyond the Company's requirement, a Participant would be required
to acquire and pledge more securities to finance the premiums due and to
maintain the ratio required to prevent involuntary termination of the plan. It
is possible that such increased margin requirements might require the Company to
discontinue the sale of its Programs and terminate Programs then outstanding. It
is also possible that periods may exist when the Federal Reserve Board margin
regulations will preclude the financing of additional premiums.

As a matter of policy, independent of Federal regulations, the Company
presently requires Participants to provide qualified collateral with values
exceeding the amount of their indebtedness by specific margins in three
different situations: at initiation, at renewal, and between renewal dates.

(i) Initiation Requirement - Each initial loan by the Company to pay
insurance premiums for all Programs except those using certain no-load funds
must be secured by qualified mutual fund shares which have a value of at least
250% of the premium to be financed. Accordingly, a Participant must pledge
qualified shares having a value of at least $1,200 to initiate an annual Program
which has a life insurance policy with the minimum annual premium of $480.
Programs using no-load funds with which Chubb Securities does not have a
selling agreement require an 1800% initiation requirement and qualified shares
having a value of at least $90,000 for a minimum annual premium of $5,000.

(ii) Maintenance Margin Requirement - The Company requires Participants to
maintain qualified collateral with a value of at least 130% of Account
Indebtedness at all times. Failure to maintain the 130% requirement will result
in termination of a Program. The Company generally will notify a Participant of
a decline in value in his mutual fund shares, although it is not required and
undertakes no obligation to do so. If the value of Pledged Shares with the
Company declines below 130% of a Participant's Account Indebtedness, the account
indebtedness will automatically become due and payable, and the Company will
terminate the program and sell or redeem the pledged shares to satisfy the debt,
all without notice to the Participant. The Company will act promptly but accepts
no responsibility for any loss incurred by a Participant due to a reduction in
the value of mutual fund shares arising from delays in redemption which are
beyond the control of the Company. Any Pledged Shares not required to be
redeemed to satisfy the Account Indebtedness will be released from pledge and
re-registered to the Participant.

The Company intends to enforce its rights whenever the 130% requirement is
breached. If the Company is holding shares available for pledge, it will pledge
such shares with itself in order to maintain a Participant's 130% margin
requirement. No mutual fund shares pledged by the Company to secure payment of
one Participant's Account Indebtedness may be redeemed in order to satisfy the
payment of another Participant's Account Indebtedness.

(iii) Account Indebtedness at Renewal - At the time of renewal, a
Participant must have qualified shares pledged to the Company equal to least
150% of the Participant's Account Indebtedness. The 150% renewal requirement may
be met in one of four ways: (a) a Participant's qualified Pledged Shares in the
Program may have a value in excess of 150% of

13
<PAGE>

the Account Indebtedness; (b) if the Company is holding additional qualified
shares available for pledge as custodian for the Participant under the Agency
Agreement, then the Company may automatically pledge sufficient additional
shares to cover the 150% requirement; (c) if the Company is not holding enough
qualified Pledged Shares, then the Participant may make the necessary shares
available for pledge by purchasing additional shares at least 31 days prior to
the renewal date; or (d) a Participant may make a cash payment to reduce the
Account Indebtedness to no more than 66.66% of the value of the shares pledged
in the Program. If the 150% margin requirement is not met in one of these four
ways, prior to the renewal of a loan, the Company will terminate the Program.
The Company may notify a Participant 31 days prior to a renewal date if it
appears that the 150% requirement may not be met, but the Company is under no
obligation to provide such notice.

(iv) Renewal Loan Margin Requirement - The Company requires at renewal that
a new premium loan be secured by qualified shares which have not been previously
pledged to the Program. The new qualified shares must have a value of at least
250% of the new premium loan. If qualified shares are not available to be
pledged by the Company as custodian for the Participant, then the Participant
must provide additional qualified shares with a value of at least 250% of the
new premium loan before the life insurance policy can be renewed within the
Program.

A PARTICIPANT'S PERSONAL DEFICIENCY RESULTING FROM THE LOANS

The Loans which the Company makes to Participants to finance insurance
premiums are made without recourse. Consequently, a Participant will not be
responsible for payment of a deficiency in the event the value of the pledged
shares is not sufficient to pay his entire Account Indebtedness. A Participant
should not infer from this that a Program will not result in a loss to him. The
appreciation of value of mutual fund shares and the costs and expenses of the
Program (including interest and fees) all will have a bearing on whether the
Participant incurs a loss in a Program.

RELEASE OF COLLATERAL

If at any time the redemption value of all the shares held in the
Participant's account exceeds 250% of the Participant's Account Indebtedness for
all Programs except those using certain no-load funds, the Participant may, upon
written request to the Company, have such excess released to him either in
shares or in cash. Shares are valued at their net asset value for redemption
purposes.

ADDITIONAL MUTUAL FUND SHARE PURCHASES

A Participant is under no obligation to make additional purchases of mutual
fund shares once a Program is initiated, except to the extent necessary to meet
the margin and collateral requirements described above. Failure to make
additional purchases generally may result in termination of a Participant's
Program since the amount of collateral required to secure a Participant's
Account Indebtedness will increase correspondingly with the amount of each
borrowing. Similarly, failure to purchase additional mutual fund shares in order
to prevent a decline in the aggregate redemption value of the pledged shares
below 130% of a Participant's Account Indebtedness will result in a sale of
existing collateral and termination of the Participant's Program. Accordingly,
many Participants must make investments, some as often as monthly, in shares
which are transferred into the name of the Company as custodian for the

14
<PAGE>

Participant and held until they become qualified shares. These qualified shares
then will be pledged by the Company to itself if the value of the shares
previously pledged with the Company declines below the margin and collateral
requirements.

PROGRAM MODIFICATION

Subject to the minimum premium requirement of $480 annually for all
Programs except those using certain no-load funds for which the minimum premium
requirement is $5,000 and an annual premium, the amount of insurance and the
premium(s) to be financed may be reduced. If increased insurance protection is
desired, a Participant may add either a new or existing policy, but only within
six weeks of the annual anniversary date of his Program. The cost of acquisition
(including the placement fee) must be paid by a Participant upon the issuance of
a new policy. Provided the appropriate authorization form is on file with the
Company, a Participant or, if authorized, the Participant's registered
representative, may direct the redemption or exchange of mutual fund shares by
telephone to the Company. The Company will employ procedures that it believes
are reasonable in order to confirm that instructions communicated to it by
telephone are genuine. These procedures include (i) any Participant or
registered representative providing instructions by telephone to redeem or
exchange shares must be on a recorded telephone line, (ii) all such Participants
or registered representatives must supply the Company with personal
identification information at the time of redemption or exchange for
verification purposes, and (iii) all transactions relying on telephone
instructions will be verified by a written confirmation statement sent by the
mutual fund to the Participant. If these "reasonable procedures" or other
procedures that may be developed are not employed in order to confirm that
instructions communicated by telephone to the Company are genuine, the Company
may be liable for any losses due to unauthorized or fraudulent instructions.

The Company will not be liable to the Participant or any third party if the
Participant is unable to reach the Company by telephone. The Participant may be
unable to implement a telephone transaction during periods of drastic economic
or market change.

This telephone transaction privilege may be terminated or modified upon 60
days written notice to the Participants.

A Participant may likewise re-direct his periodic investment from one
mutual fund to another fund available in the Programs. The Company assesses an
additional charge to redeem shares of one mutual fund so that a Participant may
purchase another mutual fund's shares. See "Summary of Charges." Presently there
is no limit on the number of times a Participant may modify his Program;
however, the Company reserves the right at any time to limit the number of times
a Participant may modify his Program.

TERMINATION

Programs are entirely voluntary and may be terminated at any time by a
Participant, upon written notice mailed or transmitted via facsimile to the
Company. A Program will be terminated by the Company upon the occurrence of any
of the following: (i) the death of the Participant; (ii) the death of all
insureds covered by a policy issued as part of a Program; (iii) failure to meet
minimum collateral requirements due to a decline in the value of the mutual fund
shares securing premium loans; (iv) failure to meet minimum investment
requirements due to a decrease in

15
<PAGE>

insurance premiums advanced under a Program unless waived by the Company to the
extent permitted by law; (v) failure to provide sufficient collateral to secure
loans for premiums due under the Program; (vi) inability of the Company to
provide or arrange for financing of premiums; (vii) failure of the Participant's
bank to honor checks made payable to the Company from the Participant's account.
A Participant should clearly understand that in the event of any of the above
circumstances a Program may be terminated by the Company without prior notice to
the Participant. Programs must be terminated not later than ten years from the
due date of the initial premium financed (unless extended at the option of the
Company).

If a Participant terminates his Program, he must pay his Account
Indebtedness in full, plus interest to the date of payment. The Company also
charges a $100 termination fee and liquidation charges unless the termination is
at the end of the tenth year of the Program. If the Company terminates a Program
with prior notice to a Participant, the Participant must pay his Account
Indebtedness within seven business days after a notice of termination. In either
case, if a Participant's Account Indebtedness is not paid, the Company has the
right to redeem as many of the Participant's qualified shares as necessary to
pay his debt.

To pay his Account Indebtedness, a Participant may: (i) redeem his mutual
fund shares and surrender his life insurance policy for its cash value; (ii)
redeem such shares and, if he has the right, borrow on the cash surrender value
of the life insurance policy, keeping the policy in force; (iii) redeem his
mutual fund shares only and independently continue the insurance; (iv) retain
his mutual fund shares and, if he has the right, surrender the insurance policy
for its cash value, if any; or, (v) retire the debt from funds unrelated to the
mutual fund shares or the insurance policy. The cash value of the insurance
policy alone will not provide adequate funds to liquidate all of the accumulated
indebtedness.

The continuance of the Program is dependent upon the Company's ability to
provide, or to arrange for, the financing of insurance premiums for
Participants. A Participant's Program may be involuntarily terminated if such
financing cannot be obtained by the Company. See "The Programs - Financing of
the Programs by the Company."

A Participant must maintain certain margin and collateral requirements in
order to avoid termination of his Program. See "The Programs - Insurance Premium
Loans to Participants."

RIGHTS OF PARTICIPANTS

Program Rights. Participants in the Programs have certain rights in
connection with the Programs themselves (as distinct from the mutual funds
shares and insurance acquired in the Programs). These rights include the right
to receive status reports, the right to modify a Program, and the right to
terminate a Program entirely. See generally "The Programs-Status Reports;
Program Modification; Termination." However, Participants are not stockholders
in the Company or any of its affiliates and have no voting rights or other
interests therein; except that Participants who purchase shares of the Fund
Group will have the rights and interests of a shareholder with respect to the
Fund Group.

Voting of Mutual Fund Shares. The mutual fund(s) selected by a Participant
will advise him of any meeting where his shares may be voted and furnish him
with a proxy statement and appropriate voting forms. It is the responsibility of
the Participant to complete and return the proxy statement in order to vote his
mutual fund shares. The Company will vote the Participant's pledged shares or
shares available for pledge only if the Participant gives the Company specific

16
<PAGE>

written instructions accompanied by a signed proxy. If such instructions and the
signed proxy are not received, the Company will take no action with respect to
voting the Participant's shares.

FINANCING OF THE PROGRAMS BY THE COMPANY

The Company's funds for financing the Programs are currently obtained
through Loan Agreements and Company-Lender Agreements (together the
"Agreements") with Colonial and Chubb Life. The Agreements provide for revolving
credit arrangements under which Colonial will make advances to the Company in an
amount not to exceed $29,000,000 and Chubb Life will make advances to the
Company in an amount not to exceed $20,000,000. The loans are made at short term
lending rates agreed upon by the Company and its Lenders which are subject to
change in accordance with the Agreements. The Agreements contain minimum
collateral requirements co-extensive with the minimum collateral requirements
for Participants set forth herein. If the value of all of the Participants'
shares pledged to the Company declines below 130% of the Company's indebtedness,
Colonial or Chubb Life may demand that the Company redeem any shares from
Participant's Programs which do not meet the Company's margin and collateral
requirements and liquidate that portion of the Company's indebtedness.

Under the Agreements, the failure of the Company to repay its debts gives
Colonial the right to terminate its obligation to make future advances and
declare all outstanding principal and interest to be due and payable. In this
event, the Company will not renew any Programs by making further loans to
Participants, and will redeem the qualified collateral to satisfy its
indebtedness to Colonial.

If the Company is unable to borrow funds in the future or to continue to
borrow funds under the Agreements for the purpose of financing loans to
Participants for the payment of insurance premiums, it may not be able to
continue the sale of the Programs. In addition, its ability to renew existing
loans may be impaired to the point of terminating, without notice to
Participants, all Programs at their loan renewal dates. The Company is under no
contractual obligation to continue to make loans on future Program renewal
dates; however, it intends to continue making such loans as long as funds are
available to it.

The Company may in the future borrow funds from affiliated or non-
affiliated companies. There is no assurance that the Company may obtain
financing from non-affiliated companies upon terms, conditions and rates as
favorable as those from affiliated companies. All future material affiliated
transactions and loans will be generally available on terms no less favorable to
the Company than those from unaffiliated third parties; and all future material
affiliated transactions and loans, and any forgiveness of loans, will be
approved by a majority, if any, of the independent outside members of the
Company's board of directors not having any interest in the transactions.

- --------------------------------------------------------------------------------
PARTICIPANT INFORMATION
- --------------------------------------------------------------------------------

STATUS REPORTS

The Company, upon request, will furnish to each Participant annually a
statement of his Program account indicating the amount of his Account
Indebtedness and a current prospectus of the Company with respect to its
Programs. Annual and interim reports and current prospectuses

17
<PAGE>

of the mutual fund(s) selected generally will be forwarded to Participants
directly by the particular funds. Current prospectuses and annual and interim
reports of any variable universal life insurance policy will be forwarded to
Participants directly by the issuing Insurance Company. Participants will
receive confirmations when mutual fund investments are made. The Company will,
at any time upon request, furnish a Participant with a statement of the total
redemption value of his mutual fund shares compared with his Account
Indebtedness. Annual reports of the Company containing financial statements
reported upon by independent auditors will also be furnished to a Participant at
any time upon request.

HYPOTHETICAL ILLUSTRATIONS

One feature of the Programs is the possibility of using the appreciated
value of purchased mutual fund shares (as well as dividends or capital gains
distributions thereon) to help defray the amount of Account Indebtedness. This
depends on the actual performance of mutual fund shares purchased, and any given
fund may decline rather than appreciate in value. Hypothetical illustrations are
available from registered Representatives, and potential Participants are
strongly advised to obtain these illustrations. At the request of a Participant,
a Program will be reviewed by his Representative at any time upon submission of
appropriate current data, in order to permit a Participant to determine its
continued suitability. Any suggested changes will be detailed in a written
review, prepared by the Representative, which the Participant is free to adopt
or reject. Depending on the changes adopted, the costs and expenses of a revised
Program may be more or less than those previously applicable.

18
<PAGE>

- --------------------------------------------------------------------------------
MORE INFORMATION ABOUT THE COMPANY
- --------------------------------------------------------------------------------

PROPERTIES

The Company does not own or lease any real property. The Company occupies
a portion of the home office of Chubb Life located at One Granite Place,
Concord, New Hampshire. The use by the Company of such facilities and the
equipment and furnishings owned by the Service Company, Chubb Life, or any of
the other Insurance Companies is subject to a pro-rata allocation of expenses.

RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners and Management

The Company's stock is not publicly traded. The table below sets forth
ownership of the Company's issued and outstanding common stock as of March 15,
1996.

<TABLE>
<CAPTION>
Title of Name and Address Amount and Nature of Percent of
Class of Beneficial Owner Beneficial Ownership Class
- -------- ------------------- --------------------- ----------
<S> <C> <C> <C>
Common Chubb Life Insurance 50,000 shares of record 100
Company of America
One Granite Place
Concord, New Hampshire
</TABLE>

The Company has not authorized or paid any dividends since inception. There
are no restrictions presently known on the Company's ability to pay dividends
except for general New Hampshire corporate laws relating to earnings.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company, Chubb Life, Colonial and Chubb Securities have a joint
agreement with the Service Company (the "Service Agreement") whereby the Service
Company provides services, office facilities and joint operations to each party.
In addition, the Company utilizes furniture, equipment and fixtures owned by one
or more of the Insurance Companies. Pursuant to the Service Agreement, the
Company pays the Service Company a fee, determined in accordance with mutually
agreed upon cost allocation methods, which the parties believe reflect a
proportional allocation of common costs and are commensurate for the performance
of the applicable duties of the employees. The Service Company allocated 0.74%
of its costs to the Company in 1995. The coordination of common employee
services and office facilities pursuant to the Service Agreement is intended to
result in greater efficiencies and economics of operation.

19
<PAGE>

made at short-term lending rates agreed upon by the Company and its lenders
which are subject to change in accordance with the Agreements and market
conditions.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following sets forth information relating to Directors and Executive
Officers of the Company as of December 31, 1995.

<TABLE>
<CAPTION>
Name/(1)/ Age Position/(2)/
------ --- -------------
<S> <C> <C>
Ronald J. Angarella 36 Director, Chairman and President
Randell G. Craig 49 Director
Ernest J. Tsouros 62 Director
Frederick H. Condon 60 Director
Joseph A. Morein 57 Director
John A. Weston 36 Treasurer,Principal Financial and
Accounting Officer
Charles C. Cornelio 36 Vice President, General Counsel
and Secretary
Carol R. Hardiman 42 Vice President, Administration
Shari J. Lease 41 Assistant Secretary
</TABLE>

/(1)/ There are no family relationships existing between or among any of the
above-listed Directors or Executive Officers.

/(2)/ The term of office of each of the foregoing Directors and Executive
Officers extends until the annual meetings of the shareholders and Board
of Directors or until removed by the Board of Directors.

Ronald R. Angarella was elected Chairman and President of the Broker Dealer
in October 1995. Mr. Angarella was elected Senior Vice President of Chubb Life
and Vice Chairman of the Broker-Dealer in November 1994. Mr. Angarella served
as Vice President, Staff Management of Chubb Life from September 1992 to
November 1994, and Assistant Vice President, Staff Management of Chubb Life from
February 1992 to September 1992. From March 1990 to February 1992 he served as
Assistant Vice President, Marketing of the Broker-Dealer.

Randell G. Craig was elected Director of the Company and the Broker-Dealer
in May 1990. His principal occupation has been as Executive Vice President and
Chief Operating Officer of Chubb Life. He also serves as Director and Executive
Vice President of Colonial and the Service Company. Prior to January 1995, Mr.
Craig served as Executive Vice President, Individual Insurance, and prior to
March 1991 he served as Senior Vice President and Chief Marketing Officer of the
Parent Corporation. From 1986 to May 1990, Mr. Craig was Vice President and
Chief Marketing Officer, Individual Insurance, for Crown Life Insurance Company.

20
<PAGE>

Ernest J. Tsouros was elected Director of the Company and the Broker-Dealer in
May 1969. His principal occupation since 1982 has been as Vice President of
Chubb Life. He also serves as Vice President of Colonial and the Service
Company.

Frederick H. Condon was elected Director of the Company and the Broker-
Dealer in February 1984. His principal occupation since 1985 has been as Senior
Vice President, General Counsel and Secretary of Chubb Life. He serves as
Senior Vice President, General Counsel and Secretary of Colonial, Chubb
Sovereign, and the Service Company and as Vice President and Director of
Hampshire Syndications, Inc.

Joseph A. Morein was elected Director of the Company and the Broker-Dealer
in September 1987. His principal occupation since August 1986 has been as a
Vice President of The Chubb Corporation.

John A. Weston was elected Treasurer of the Company and the Broker-Dealer
in August 1988. Mr. Weston was elected Treasurer of Chubb Series Trust in June
1994, and Assistant Treasurer, UST Master Variable Series, Inc. in September
1994. His principal occupation since April of 1995 has been as Assistant Vice
President of Chubb Life. He was elected Treasurer of Chubb Investment Funds,
Inc. and Chubb America Fund, Inc. in April 1992, Treasurer of Chubb Investment
Advisory Corporation in May 1992, and Hampshire Syndications, Inc. in July 1991.
From July 1989 to April 1995 Mr. Weston was Mutual Fund Accounting Officer for
Chubb Life.

Charles C. Cornelio was elected Vice President, General Counsel and
Secretary of the Company, the Broker-Dealer, and Hampshire Syndications, Inc. in
May 1993. His principal occupation since December, 1994 has been as Senior Vice
President and Chief Administrative Officer of Chubb Life. From March 1992 to
December 1994 he served as Vice President, Counsel and Assistant Secretary for
the Chubb Life. He also serves as Vice President and Chief Administrative
Officer of Colonial and the Service Company and as Senior Vice President,
Counsel and Assistant Secretary to Chubb Investment Funds, Inc. and Chubb
America Fund, Inc. From September 1988 to October 1989 Mr. Cornelio was
Assistant Counsel of Chubb Life, and from October 1989 to June 1991 he was
Associate Counsel of Chubb Life. He also serves as a Director of UST Master
Variable Series and Hampshire Syndications, Inc.

Carol R. Hardiman was elected Vice President, Administration of the Company
and the Broker-Dealer in June 1989. From October 1987 to May 1989, she was
Assistant Vice President of the Company and the Broker-Dealer.

Shari J. Lease was elected Assistant Secretary of the Company and the
Broker-Dealer in December 1994. Her principal occupation since April 1995 has
been as Assistant Vice President and Counsel of Chubb Life. Ms. Lease was
elected Secretary of Chubb Investment Funds, Inc. and Chubb America Fund, Inc.,
in April 1992, Secretary of Chubb Series Trust in December 1993 and Assistant
Secretary of Hampshire Syndications, Inc. in May 1994. She served as Associate
Counsel of Chubb Life from April 1994 to April 1995, Assistant Counsel of Chubb
Life from October 1990 to April 1994 and Assistant Secretary of Chubb Investment
Funds, Inc. and Chubb America Fund, Inc. from July 1991 to April 1992.

21
<PAGE>

EXECUTIVE COMPENSATION

Executive Officers of the Company also serve one or more of the affiliated
companies of the Company. Allocations have been made to each individual's time
devoted to his/her duties as officer of the Company. There were no executive
officers of the Company whose allocated compensation exceeded $100,000 during
1995.

No compensation was allocated to his services to the company paid to Ronald
R. Angarella, Chairman and President of the Company for 1995.

Directors of the Company receive no compensation in addition to their
allocated portion of compensation as employees of the Company.

- --------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------

Selected Statement of Operations Data:

<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Year Ended December 31
Total Revenue................. $ 4,435,676 $ 3,590,273 $ 3,004,114 $ 2,699,890 $ 2,475,154
Net Income.................... $ 232,354 $ 458,294 $ 514,505 $ 330,545 $ 218,462
Dividends Per Common Share - - - - -
Selected Balance Sheet Data:
December 31,
Total Assets.................. $47,388,865 $42,241,816 $33,773,719 $27,905,714 $22,930,802
Loan Payable.................. $43,899,673 $38,889,535 $30,924,833 $25,382,406 $21,413,588
</TABLE>

- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

Collateral loans receivable from Participants were $47,059,897 at December
31, 1995. Annual amounts due to the Company were as follows:

1996 1997 1998 1999 2000 2001-2005
---- ---- ---- ---- ---- ---------
Collateral loans receivable $2.7 $3.0 $2.7 $3.7 $5.9 $29.0
(in millions)

22
<PAGE>

OPERATIONS

The Company's funds for financing the Programs are currently obtained
through Loan Agreements with its affiliates, Colonial and Chubb Life. The Loan
Agreements provide for revolving credit arrangements under which advances will
be made to the Company in amounts not to exceed $29,000,000 from Colonial and
$20,000,000 from Chubb Life. The advances are currently short term in nature, as
none of the loans outstanding as of December 31, 1995 (or during 1995) exceeded
365 days to maturity. The advances are made at short-term lending rates agreed
upon by the Company and its lenders and are subject to change in accordance with
the Loan Agreements and market conditions. If the Company is unable to obtain
loans from affiliatesat favorable market rates, the Company's borrowing costs
will increase. The Company's loan Agreements state however, the interest rate
may not exceed the prime interest rate in effect in New York City plus 2.5%. The
average lending rate on these loans at December 31, 1995 was 6.70% and ranged
from 4.95% to 9.25%.

The amount of funds borrowed under the Agreements at December 31, 1995 were
$44,200,000 compared to $39,500,000 at December 31, 1994. Funds borrowed at
December 31, 1995 represent $26,000,000 from Colonial and $18,200,000 from Chubb
Life. At December 31, 1994 funds borrowed represented $26,000,000 from Colonial
and $13,500,000 from Chubb Life. The increase in amounts borrowed by the
Company year to year was used to fund increased sales of Programs and for other
working capital needs.

In addition to loans payable, the Company has other short-term amounts due
to affiliates related to insurance premium payments and expense reimbursements
to the Service Company. The Company has an arrangement with affiliated Insurance
Companies whereby the Company makes monthly payments in arrears for premiums
due. Reimbursements to the Service Company are also made one month in arrears
and are included in amounts due to affiliates.

Loan schedule as of December 31, 1995:

<TABLE>
<CAPTION>
Loan Face Days to Maturity
Source Date (mils) Rate Maturity Date
- --------- ------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
Chubb Life 07/31/95 $10.0 6.31% 270 04/26/96
09/27/95 0.5 8.95% 277 06/30/96
09/29/95 6.0 8.95% 275 06/30/96
10/27/95 0.6 8.95% 247 06/30/96
11/27/95 0.5 8.95% 216 06/30/96
12/28/95 0.6 8.95% 185 06/30/96
-----
$18.2

Colonial 05/15/95 $14.5 6.02% 270 02/09/96
07/21/95 9.2 5.65% 266 04/12/96
10/10/95 2.3 5.67% 266 07/02/96
-----
$26.0
</TABLE>

23
<PAGE>

The Service Company, a wholly-owned subsidiary of Chubb Life, is a
management service company which provides employee services and office
facilities to the Company and its affiliates under a Service Agreement. The
Company pays the Service Company a monthly fee in accordance with mutually
agreed upon cost allocation methods which the Companies believe reflect a
proportional allocation of common expenses and are commensurate for the
performance of the applicable duties.

Working capital in 1995 and 1994 was provided by Participants' loan
repayments, administrative fees for the placement and maintenance of Programs
and interest earned on investments.

RESULTS OF OPERATIONS

The Company concluded the year ended December 31, 1995 with net operating
income of $232,354 as compared to net operating income of $458,294 in 1994, and
$514,505 in 1993. The decline in net operating income is due to the narrowing
spread between the Company's cost of funds necessary to finance premium loans
and the lending rate charged to Program Participants.

Total revenues through December 31, 1995 were $4,435,676 versus $3,590,273
in 1994, and $3,004,114 in 1993. These revenues include interest on collateral
loans receivable, program fees, interest on investments and partnership income.
The largest source of revenue was represented by interest on collateral loans
receivable.

The growth in collateral loan interest resulted from the increase in
collateral loans receivable year to year. Collateral loans receivable as of
December 31, 1995 were $47,059,897 as compared to $40,805,159 in 1994, and
$33,348,372 in 1993. Comparatively, collateral loan interest was $3,899,087,
$3,094,809 and $2,523,551 for the years ended December 31, 1995, 1994 and 1993.
The average interest rate charged to each Participant's outstanding loan balance
was 9.22%, 8.65% and 8.50% for the years 1995, 1994 and 1993, respectively.

The Company's collateral loans receivable, collateral loan interest and
average interest rate charged to each Participant's loan balance for the three
years ended December 31 are summarized as follows:

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Collateral loans receivable $47,059,897 $40,805,159 $33,348,372
Collateral loan interest $ 3,899,087 $ 3,094,809 $ 2,523,551
Average Participant interest rate 9.22% 8.65% 8.50%
</TABLE>

Interest expense on the Loan Agreements increased each year since 1993 due
to increases in interest rates and amounts borrowed by the Company. The
Company's outstanding loans payable, interest expense and average cost of
borrowings for the three years ended December 31 are summarized as follows:

24
<PAGE>

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Loans payable $43,899,673 $38,889,535 $30,924,833
Interest expense $ 2,730,924 $ 1,516,229 $ 973,490
Average loan interest rate 6.70% 4.60% 3.50%
</TABLE>

The Company's ability to achieve and maintain a spread between its cost of
funds necessary to finance premium loans and the lending rate charged to Program
Participants may impact its future operating results. The interest rate spread
is intended to provide sufficient revenue to offset the Company's general and
administrative expenses. General and administrative expenses, arising from
normal operating activities through December 31, 1995, were $1,299,523 as
compared to $1,260,818 in 1994, and $1,185,907 in 1993.

The Company may increase the interest rate charged to Participants to a
maximum of the prime interest rate plus 3% as its cost of borrowing increases.
If the Company's cost of borrowing were to rise significantly above the prime
interest rate, its ability to maintain an adequate interest rate spread would be
difficult and future earnings could be adversely impacted.

Program fees include placement, administrative and termination fees as well
as charges for special services. For the years ended December 31, 1995, 1994
and 1993 the number of programs administered by the Company were 6,521, 6,662
and 6,328, respectively.

Investment income earned by the Company increased in 1995 as compared to
1994 and 1993 due to an increase in investment returns on cash equivalents held
year to year.

Substantially all general and administrative expenses are allocated to the
Company by the Service Company. These include the costs associated with
providing staff and facilities to service the Programs and includes such items
as salaries, rent, utilities, accounting fees, printing, postage and other
typical operating expenses.

- --------------------------------------------------------------------------------
LEGAL MATTERS
- --------------------------------------------------------------------------------

LITIGATION

In the ordinary course of business, legal proceedings involving the Company
periodically arise. Currently, the Company is not the subject of any material
pending legal proceedings.

LEGAL OPINIONS

The validity of the securities offered hereby has been passed upon for the
Company by

25
<PAGE>

Charles C. Cornelio, Esquire, Senior Vice President, Counsel and Assistant
Secretary to Chubb Life.

- --------------------------------------------------------------------------------
EXPERTS
- --------------------------------------------------------------------------------

This Registration Statement includes on the following pages, the Company's
annual financial statements. The consolidated balance sheets of the Company at
December 31, 1995 and 1994, and the consolidated statements of income and
retained earnings and cash flows for each of the three years in the period ended
December 31, 1995, appearing in this Prospectus and Registration Statement, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon, appearing elsewhere herein, and are included in reliance upon
such report, given upon the authority of such firm as experts in accounting and
auditing.

- --------------------------------------------------------------------------------
AVAILABLE INFORMATION
- --------------------------------------------------------------------------------

The Company is subject to the periodic reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other required information with the
Securities and Exchange Commission (the "Commission"). Such reports and other
information may be inspected and copied at public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the following regional offices: Room 1028,
26 Federal Plaza, New York, New York 10278; and Room 1628, Everett McKinley
Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604.

The Company has filed with the Commission a Registration Statement on Form
S-1/A (the "Registration Statement") under the Securities Act of 1933, as
amended, with respect to the securities covered by this Prospectus. The
Registration Statement is complete in material respects. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
such exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
Copies of the Registration Statement and the exhibits may be inspected without
charge at the Washington, D.C. office of the Commission.

The Company's Annual Report on Form 10-K for the year ended December 31,
1995, which was filed with the Commission pursuant to Section 13(a) of the
Exchange Act, is incorporated herein by reference. All other reports filed
pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the
fiscal year covered by the Annual Report referred to above and prior to the date
of this Prospectus shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof.

In addition, copies of these reports (and any other information
incorporated by reference in the Registration Statement covering the Programs)
will be provided without charge to any person, including any beneficial owner,
receiving this Prospectus, on written or oral request to Hampshire Funding,
Inc., One Granite Place, Concord, New Hampshire 03301, Attention: Vice
President-Operations; telephone (603) 226-5000.

26
<PAGE>

HAMPSHIRE FUNDING, INC. AND SUBSIDIARY

Audited Consolidated Financial Statements

December 31, 1995

Page
----
Report of Ernst & Young LLP, Independent Auditors.................... F-2
Consolidated Balance Sheets.......................................... F-3
Consolidated Statements of Income and Retained Earnings.............. F-4
Consolidated Statements of Cash Flows................................ F-5
Notes to Consolidated Financial Statements........................... F-6

Unaudited Consolidated Financial Statements

March 31, 1996

Page
----
Unaudited Consolidated Balance Sheets................................ F-9
Unaudited Consolidated Statements of Income and Retained Earnings.... F-10
Unaudited Consolidated Statements of Cash Flows...................... F-11
Notes to Unaudited Consolidated Financial Statements................. F-12

F-1
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors
Hampshire Funding, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheets of Hampshire
Funding, Inc. and Subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of operations and retained earnings and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hampshire Funding, Inc. and Subsidiary at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.

As discussed in Note 2 to the financial statements, in 1994 the Company changed
its method of accounting for postemployment benefits, and in 1993, the Company
changed its method of accounting for postretirement benefits other than
pensions, and income taxes.

ERNST & YOUNG LLP

Boston, Massachusetts
January 26, 1996

F-2
<PAGE>

HAMPSHIRE FUNDING, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
-------------------
1995 1994
----------- ----------
<S> <C> <C>
Assets:
Cash and cash equivalents.........................................$ 289,918 $ 1,311,399
Accounts receivable from customers................................ 26,793 47,215
Federal income taxes recoverable.................................. 12,257 78,043
-------- ----------
Total Current Assets.............................................. 328,968 1,436,657

Collateral notes receivable (including accrued
interest of $1,207,853 in 1995 and $1,027,677 in 1994)........... 47,059,897 40,805,159
---------- ----------
Total Assets......................................................$47,388,865 $42,241,816
=========== ===========

Liabilities and Stockholder's Equity:
Liabilities:
Due to affiliates................................................$ 1,145,850 $ 1,188,275
Accrued expenses and other liabilities........................... 263,232 316,250
----------- ----------
Total Current Liabilities........................................ 1,409,082 1,504,525

Loans payable to affiliates (net of prepaid
interest of $300,327 in 1995 and $610,465 in 1994).............. 43,899,673 38,889,535
----------- ----------
Total Liabilities................................................. 45,308,755 40,394,060
----------- ----------
Stockholder's Equity:
Common stock, par value $1 per share; Authorized 100,000 shares;
issued and outstanding 50,000 shares............................ 50,000 50,000
Additional paid-in capital....................................... 550,000 550,000
Retained earnings................................................ 1,480,110 1,247,756
----------- ---------
Total Stockholder's Equity........................................ 2,080,110 1,847,756
----------- ---------
Total Liabilities and Stockholder's Equity........................$47,388,865 $42,241,816
========== ===========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

HAMPSHIRE FUNDING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Interest on collateral notes
receivable......................................................... $3,899,087 $3,094,809 $2,523,551
Program participant fees............................................ 456,556 464,851 457,636
Interest on investments............................................. 74,648 30,613 22,927
Partnership syndication fees........................................ 5,385
----------- ---------- ----------
4,435,676 3,590,273 3,004,114
Operating Expenses:
Interest on affiliated loan agreements.............................. 2,730,924 1,516,229 973,490
General and administrative.......................................... 1,299,523 1,260,818 1,185,907
Realized loss on investments........................................ 60,000
----------- ---------- ----------
4,030,447 2,837,047 2,159,397
----------- ---------- ----------
Income before income taxes........................................... 405,229 753,226 844,717

Federal and state income tax (benefit):
Federal - Current................................................... 125,112 257,593 283,525
Federal - Deferred.................................................. (10,819) (6,485)
State tax........................................................... 47,763 48,158 53,172
----------- ---------- ----------
172,875 294,932 330,212
----------- ---------- ----------

Net Income........................................................... 232,354 458,294 514,505
Retained earnings at beginning of year............................... 1,247,756 789,462 274,957
----------- ---------- ----------
Retained earnings at end of year..................................... $1,480,110 $1,247,756 $ 789,462
========== ========== ==========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

HAMPSHIRE FUNDING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Operating activities:
Net Income.................................................. $232,354 $ 458,294 $ 514,505
Adjustments to reconcile net income to net cash used in
operating activities:
(Increase) decrease in accounts receivable from customers.. 20,422 (9,535) (11,160)
Increase (decrease) in accrued expenses and other
liabilities............................................... (53,018) (57,749) 126,277
Increase (decrease) in due to affiliates................... (42,425) 114,610 (311,931)
Increase in collateral notes receivable.................... (6,254,738) (7,456,787) (5,788,925)
Change in federal income taxes payable (recoverable)....... 65,786 (89,803) (3,273)
(Increase) decrease in prepaid interest on affiliated loan
agreements................................................. 310,138 (235,298) (157,573)
------------ ------------ ------------
Net cash used in operating activities....................... (5,721,481) (7,276,268) (5,632,080)

Investing activities:
Write off of limited partnership investment................. 60,000

Financing activities:
Proceeds from affiliated loan agreements.................... 69,025,000 73,400,000 59,000,000
Principal payments on affiliated loan agreements............(64,325,000) (65,200,000) (53,300,000)
------------ ------------ ------------
Net cash provided by financing activities................... 4,700,000 8,200,000 5,700,000
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents............ (1,021,481) 983,732 67,920
Cash and cash equivalents at beginning of year.............. 1,311,399 327,667 259,747
------------ ------------ ------------
Cash and cash equivalents at end of year.................... $ 289,918 $1,311,399 $ 327,667
============ ============ ============
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

HAMPSHIRE FUNDING, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 1995

1. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Hampshire Funding, Inc. ("Hampshire") and its wholly-owned subsidiary, Hampshire
Syndications, Inc. Hampshire is a wholly-owned subsidiary of Chubb Life
Insurance Company of America ("Chubb Life"). Affiliates of Chubb Life include
Chubb Colonial Life Insurance Company (formerly known as The Colonial Life
Insurance Company of America) ("Colonial"), Chubb Sovereign Life Insurance
Company ("Chubb Sovereign"), Chubb America Service Corporation ("CASC"), Chubb
Investment Advisory Corporation and Chubb Securities Corporation ("Chubb
Securities"), which are all 100% owned by Chubb Life. Chubb Life is 100% owned
by The Chubb Corporation ("Chubb").

The preparation of financial statements in conformity with generally accepted
accounting principles requires Hampshire's management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Nature of Operations and Transactions with Affiliates

Hampshire offers and administers Programs whereby Participants obtain life
insurance coverage solely from Chubb Life, Colonial and Chubb Sovereign. Under
the Programs, insurance premiums are paid by Participants through a series of
loans from Hampshire which are recorded as "collateral notes receivable." Loans
to the Participants are secured by Participants' ownership in shares of
regulated investment companies. The loans to Participants are funded
substantially with the proceeds from loan arrangements with Colonial and Chubb
Life (see Note 6). Chubb Securities is a registered broker-dealer that buys and
sells the shares for Participants. The fair value of a Participant's secured
investment company shares must exceed 150% of the total loan balance plus
accrued interest (Participant's Total Account Indebtedness). If the value of the
shares pledged as collateral to Hampshire declines below 130% of the
Participant's Total Account Indebtedness, Hampshire will terminate the Program
and liquidate shares sufficient to repay the indebtedness. All Programs are ten
years in length. Upon Program conclusion, loan balances and accrued interest
become due.

Collateral notes receivable from Participants were $47,059,897 at December 31,
1995. Annual amounts due to Hampshire under collateral notes receivable were as
follows:

1996 1997 1998 1999 2000 2001-2005
---- ---- ---- ---- ---- -------
Collateral notes receivable $2.7 $3.0 $2.7 $3.7 $5.9 $29.0
(in millions)

Substantially all general and administrative expenses are allocated to Hampshire
by CASC in accordance with mutually agreed upon and reasonable cost allocation
methods which Hampshire and CASC believe reflect a proportional allocation of
common expenses and which are commensurate for the performance of the applicable
duties.

Recognition of Revenues and Expenses

Interest on collateral notes receivable and administrative fees charged to
Participants for establishing and maintaining Programs are recognized as revenue
when earned. Partnership syndication fees represent fees earned by Hampshire
Syndications, Inc. as a participating general partner of certain limited
partnerships. The amount of such fees earned was $5,385 in 1995 and $0 in 1994
and 1993.

Cash Equivalents

For purposes of reporting cash flows, cash equivalents include cash invested in
securities purchased under repurchase agreements and short-term corporate notes,
all of which have remaining maturities of three months or less at the date of
purchase.

At December 18, 1995, Hampshire entered into a reverse repurchase agreement with
Shawmut Bank ("Bank") in the amount of $198,000. The agreement matures on
January 17, 1996. This reverse repurchase agreement is included in cash
equivalents in the accompanying consolidated balance sheet. Hampshire requires
that the market value of the underlying securities provided as collateral for
repurchase agreements be a minimum of 100% of their contractual resale price to
the Bank.

F-6
<PAGE>

HAMPSHIRE FUNDING, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements-(Continued)

Short-term corporate notes are carried at cost which approximates market
value.

Reclassifications

Certain amounts in the financial statements for prior years have been
reclassified to correspond to the 1995 presentation.

2. Change in Accounting Principles

Effective January 1, 1994, Chubb Life and Hampshire adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." SFAS No. 112 requires that
the expected cost of providing postemployment benefits, principally severance,
disability and unemployment benefits, to former or inactive employees, their
beneficiaries and covered dependents be accrued during the years that the
employees render the necessary service. Prior to 1994, the pay as you go, or
cash method was used to recognize the cost of these benefits. The cumulative
effect of this change as of January 1, 1994 and Hampshire's allocated portion of
such costs have been immaterial to Hampshire.

Effective January 1, 1993, Chubb Life and Hampshire adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions." SFAS
No. 106 requires that the expected cost of providing postretirement benefits,
principally health care and life insurance, to employees, their beneficiaries
and covered dependents be accrued during the years that the employees render the
necessary service. Prior to 1993, the pay-as-you-go, or cash method was used to
recognize the cost of these benefits. The cumulative effect of this change as of
January 1, 1993 was immaterial to Hampshire. Hampshire's allocated portion of
such costs was $27,237, $24,631 and $18,530 in 1995, 1994 and 1993,
respectively, which has been included in General and Administrative expenses in
the accompanying financial statements.

Chubb Life and Hampshire also adopted SFAS No. 109, "Accounting for Income
Taxes," as of January 1, 1993. SFAS No. 109 prescribes an asset and liability
method of accounting for income taxes, rather than the deferred method
previously used. The objective of the asset and liability method is to recognize
an asset or liability for the expected future tax effects attributable to
differences between the financial reporting and the tax basis of assets and
liabilities, based on the enacted tax rates and other provisions of tax law. The
cumulative effect of such change as of January 1, 1993 was immaterial to
Hampshire.

3. Federal Income Taxes

The operations of Hampshire are included in the consolidated federal income tax
return of Chubb. Federal income tax is allocated by Chubb Life as if Hampshire
filed a separate income tax return. Deferred tax assets and liabilities are
recognized for the expected future tax effects attributable to temporary
differences between the financial reporting and tax bases of assets and
liabilities, based on enacted tax rates and other provisions of tax law. Federal
income taxes have been provided at the statutory rate of 35% in 1995, 1994 and
1993.

Of the $12,257 federal income taxes recoverable at December 31, 1995, $6,875
represents a deferred tax asset related to net post-retirement benefits
expense. The deferred tax asset at December 31, 1994 was $10,819, which also
related to postretirement benefits.

Hampshire made income tax payments to Chubb of $59,326, $336,577 and $280,313
in 1995, 1994 and 1993, respectively.

4. Retirement Benefits

Hampshire participates in the Pension Plan for the Employees of Chubb Life and
Participating Affiliates, a defined benefit plan, which covers substantially all
of its employees. Accumulated plan benefits, plan net assets and net periodic
pension costs by component for Hampshire are not determinable. Costs allocated
by Chubb Life to Hampshire during 1995 and 1994 relative to the Pension Plan
were $24,218 and $24,269, respectively.

Certain health and life insurance benefits for all eligible retired employees
are provided by Chubb Life. Benefits are paid as covered expenses are incurred.
Health care coverage is contributory. Retiree contributions vary based upon a
retiree's age, type of coverage and years

F-7
<PAGE>

HAMPSHIRE FUNDING, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements-(Continued)

of service with Hampshire. Life insurance is noncontributory. The expected cost
of providing these postretirement benefits to employees and their beneficiaries
and covered dependents are being accrued during the years that the employees
render the necessary service.

5. Option and Incentive Plans

As a subsidiary of Chubb, Hampshire and its employees are eligible to
participate in the following option and incentive plans:

The Employee Stock Ownership Plan (ESOP) is funded through semi-annual
contributions in amounts determined at the discretion of Chubb's Board of
Directors. A portion of Chubb common stock is allocated to eligible employees as
contributions are made by Chubb.

The Capital Accumulation Plan, a savings plan, is funded by employee
contributions. Hampshire makes a matching contribution equal to 100% of each
eligible employee's pre-tax elective contributions, up to 4% of the employees
compensation. Contributions are invested at the election of the employee in
Chubb's common stock or in various other investment funds.

Hampshire's proportionate share of costs related to these option and incentive
plans were $36,247 and $39,394 for the years ended December 31, 1995 and 1994,
respectively. Hampshire's costs prior to 1994 relative to these plan were
immaterial.

Total costs allocated by Chubb Life to Hampshire, during the year presented
relative to the above benefits, have been included in General and Administrative
expenses in the accompanying financial statements.

6. Loan Agreements

Since 1989, Hampshire's funds for financing premium loans have been obtained
through loan agreements with affiliates. Hampshire has a loan agreement with
Colonial providing for a $29,000,000 revolving line of credit. The interest rate
is variable and is based on Colonial's cost of short-term funds. The range of
interest rates at December 31, 1995 on this loan were from 5.65% to 6.02%. At
December 31, 1995, Hampshire had borrowed $26,000,000 under the agreement with
Colonial. On September 29, 1994, Hampshire amended its loan agreement with Chubb
Life to provide for a $20,000,000 revolving line of credit, representing an
increase of $10 million from the previous loan agreement. The interest accrues
at a rate not to exceed prime plus 250 basis points per annum. Presently,
interest is being charged to Hampshire at current short term rates (6.3% at
December 31, 1995) on the first $10 million and at the rate which Hampshire
charges their clients (8.95%) on any loan balance over $10 million. At December
31, 1995, Hampshire had borrowed $18,200,000 under this agreement with Chubb
Life. Hampshire expects that it will be able to obtain financing for the
forseeable future.

Interest paid, including prepayments, on the loan agreements was $2,420,786,
$1,751,527 and $1,131,064 in 1995, 1994 and 1993, respectively.

F-8
<PAGE>

HAMPSHIRE FUNDING, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
(UNAUDITED)
March 31, December 31,
1996 1995
-------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 529,473 $ 289,918
Accounts receivable from customers 52,370 26,793
Federal income taxes recoverable 12,257
-------------------------

Total Current Assets 581,843 328,968

Collateral notes receivable (including accrued
interest of $1,115,319 in 1996 and $1,207,853 in
1995) 49,021,825 47,059,897
-------------------------

Total Assets $49,603,668 $47,388,865
=========================

Liabilities and Stockholder's Equity
Liabilities:
Due to affiliates $ 1,341,401 $ 1,145,850
Accrued expenses and other liabilities 275,185 263,232
Federal income tax payable 15,725
-------------------------

Total Current Liabilities 1,632,311 1,409,082

Loans payable to affilitates (net of prepaid
interest of $144,004 in 1996 and $300,327 in 1995) 45,855,996 43,899,673
-------------------------

Total Liabilities 47,488,307 45,308,755
-------------------------

Stockholder's Equity:
Common stock, par value $1 per share; authorized
100,000 shares; issued and outstanding 50,000 shares 50,000 50,000
Additional paid-in capital 550,000 550,000
Retained earnings 1,515,361 1,480,110
-------------------------

Total Stockholder's Equity 2,115,361 2,080,110
-------------------------

Total Liabilities and Stockholder's Equity $49,603,668 $47,388,865
=========================
</TABLE>

See accompanying notes.

F-9
<PAGE>

HAMPHIRE FUNDING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
(UNAUDITED)
Three Months Ending March 31,
1996 1995
------------------------------
<S> <C> <C>
Revenues :
Interest on collateral notes receivable $1,036,658 $ 927,465
Program participant fees 140,063 117,554
Interest on investments 13,495 24,473
------------------------------
1,190,216 1,069,492

Operating expenses:
Interest on affiliated loan agreements 718,199 639,120
General and administrative 403,687 310,665
------------------------------
1,121,886 949,785

Income before income taxes 68,330 119,707

Federal and state income tax:
Federal tax 18,982 32,524
State tax(1) 14,097 26,783
------------------------------
33,079 59,307
------------------------------

Net income 35,251 60,400

Retained earnings at
beginning of year 1,480,110 1,247,756
------------------------------

Retained earnings at end of period $1,515,361 $1,308,156
==============================
</TABLE>

See accompanying notes.

F-10
<PAGE>

HAMPHIRE FUNDING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
(UNAUDITED)
Three Months Ending March 31,
1996 1995
------------------------------
<S> <C> <C>
Operating activities:
Net income $35,251 $60,400
Adjustments to reconcile net income to net
cash used in operating activities:
Increase in accounts receivable from
customers (25,577) (29,820)
Increase in accrued expenses
and other liabilities 11,953 32,535
Increase in due to affiliates 195,551 78,561
Increase in collateral notes receivable (1,961,928) (1,073,150)
Change in federal income taxes payable 27,982 103,414
Decrease in prepaid interest
on affiliated loan agreements 156,323 252,147
-------------------------------

Net cash used in operating activities (1,560,445) (575,913)

Financing activities:
Proceeds from affiliated loan agreements 16,275,000 23,325,000
Principal payments on affiliated loan
agreements (14,475,000) (22,325,000)
-------------------------------

Net cash provided by financing activities 1,800,000 1,000,000
-------------------------------

Increase in cash and cash equivalents 239,555 424,087

Cash and cash equivalents at beginning of year 289,918 1,311,399
-------------------------------

Cash and cash equivalents at end of period $529,473 $1,735,486
===============================
</TABLE>

See accompanying notes.

F-11
<PAGE>

HAMPSHIRE FUNDING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 1996

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Hamphire Funding, Inc. and
Subsidiary's annual report included elsewhere herein for the year ended December
31, 1995.

NOTE 2. TRANSACTIONS WITH AFFILIATES

Collateral loans receivable from Participants were $49,021,825 at March 31,
1996. Annual amounts due to Hampshire Funding, Inc. (Hampshire) under
collateral notes receivable were as follows:

1996 1997 1998 1999 2000 2001-2005
---- ---- ---- ---- ---- ---------
Collateral loans receivable $2.1 $3.1 $2.8 $3.6 $6.0 $31.4
(in millions)

NOTE 3. LOAN AGREEMENTS

Since 1989, Hampshire's funds for financing premium loans have been obtained
through loan agreements with affiliates. Hampshire has a loan agreement with
Chubb Colonial Life Insurance Company (Colonial) providing for a $29,000,000
revolving line of credit. The interest rate is variable and is based on
Colonial's cost of short-term funds. The range of interest rates at March 31,
1996 on this loan were from 4.97% to 5.90%. At March 31, 1996, Hampshire had
borrowed $26,000,000 under the agreement with Colonial. Hampshire has a
separate loan agreement with Chubb Life Insurance Company of America (Chubb
Life) which provides for a $20,000,000 revolving line of credit, and accrues
interest at a rate not to exceed prime plus 250 basis points per annum.
Presently interest is charged to Hampshire at current short term rates (6.31% at
March 31, 1996) on the first $10 million and at the rate which Hampshire charges
its clients (8.95%) on any loan balance over $10 million. At March 31, 1996,
Hampshire had borrowed $20,000,000 under this agreement with Chubb Life.
Hamphire expects that it will be able to obtain this financing for the
foreseeable future.

F-12
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution (Estimated)

Expenses of issue and distribution are not deducted from proceeds.

<TABLE>
<S> <C>
Registration Fees
Securities and Exchange Commission.................. $10,344
National Association of Securities Dealers.......... 3,500
Printing.............................................. 100,000
Accounting Fees....................................... 8,400
State Registration Fees............................... 30,635
Miscellaneous......................................... -
-------
TOTAL................................................. $152,879
========
</TABLE>

Item 14. Indemnification of Directors and Officers

Under the general corporation law of the State of New Hampshire, corporations
are required to indemnify their officers in the event such officers and
directors are successful in defending suits brought against them in their
corporate capacities. In addition, a New Hampshire corporation is generally
permitted to indemnify its officers and directors, regardless of the results of
a suit, provided the officer or director involved acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation. Where a claim for indemnification arises out of an action by or
in the right of the corporation, the individual director or officer must not
only have acted in good faith, but also must not be adjudged to have been
negligent or to have acted in a way constituting misconduct. Unless ordered by a
court, any indemnification made by a corporation must follow a determination of
compliance with the applicable standard of conduct. Such a determination is to
be made by the Board of Directors, independent legal counsel, or the
stockholders.

A New Hampshire corporation may purchase and maintain insurance to protect its
officers and directors from any liability which may be incurred by them in their
corporate capacities, whether or not the corporation could normally indemnify
such individuals. Expenses incurred by an officer or director in defending a
suit may be paid by the corporation in advance of the final disposition of the
action provided the individual involved undertakes to repay the amount unless it
is ultimately determined that he is entitled to be indemnified by the
corporation. The indemnification provided for in the New Hampshire general
corporation law is not exclusive of any other rights to which those indemnified
may be entitled under any by-law, amendment, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding office, and shall continue as
to a person who has ceased to be a director or officer, and shall inure to the
benefit of the heirs, executors and administrators of that person.

Article VIII of the Company's By-Laws provides that the Company shall indemnify
directors and officers against all costs and expenses incurred in connection
with any action, suit or proceeding in which the director or officer may be
involved by reason of being a director or officer of the Company, unless it
shall be finally adjudged in such action, suit or proceeding that the
director or officer was negligent in the performance of his duty, or unless the
suit, action or proceeding was the subject of a compromise settlement accepted
with the approval of a majority of the outstanding shares of the Company; and
finally, that the right to indemnification is not exclusive of other rights to
which the director or officer may be entitled as a matter of law.

The Company and its affiliates have purchased two policies of liability
insurance which, subject to the limitations contained in the policies,
indemnifies directors and officers against liabilities incurred as directors and
officers. The insurer's maximum liability under the policies is $30 million.

II-1
<PAGE>

Item 15. Recent Sales of Unregistered Securities

Not Applicable

Item 16. Exhibits and Financial Data Schedules

The following exhibits are filed herewith or incorporated by reference under
Commission Rule 411(c).

Exhibit No. Description of Exhibit

- --------- --------------------------------------------------------------------
1 -Distribution Agreement between the Company and Chubb Securities
Corporation dated March 1, 1990.*
4 -(i) Agency Agreement and Limited Power of Attorney.++
-(ii) Change of Participant in Program.++
-(iii) Disclosure Statement.++
5 -Opinion of Charles C. Cornelio, Esquire re: Legality.+++
10 -(i)(a) Loan Agreement between The Colonial Life Insurance Company of
America and the Company, dated July 10, 1989.*
-(i)(b) Amendment to Loan Agreement between The Colonial Life Insurance
Company of America and the Company, dated March 8, 1990.*
-(i)(c) Second Amendment to Loan Agreement between The Colonial Life
Insurance Company of America and the Company, dated December 15, 1992.***
-(i)(d) Third Amendment to Loan Agreement between The Colonial Life
Insurance Company of America and the Company, dated March 8, 1993.***
-(i)(e) Fourth Amendment to Loan Agreement between The Colonial Life
Insurance Company of America and the Company, dated June 17, 1993.****
-(ii)(a) Company-Lender Agreement between The Colonial Life Insurance
Company of America and the Company, dated July 7, 1989.*
-(ii)(b) Amendment to Acceptance of Company-Lender Agreement between The
Colonial Life Insurance Company of America and the Company, dated March 8,
1990.*
-(ii)(c) Second Amendment to Acceptance of Company-Lender Agreement between
The Colonial Life Insurance Company of America and the Company, dated
December 15, 1992.***
-(ii)(d) Third Amendment to Acceptance of Company-Lender Agreement between
The Colonial Life Insurance Company of America and the Company, dated March
8, 1993.***
-(ii)(e) Fourth Amendment to Acceptance of Company-Lender Agreement between
The Colonial Life Insurance Company of America and the Company, dated June
17, 1993.****
-(iii) Franchise Fee Agreement between Chubb Life Insurance Company of
America and the Company, dated March 9, 1990.*
-(iv) Franchise Fee Agreement between The Volunteer State Life Insurance
Company and the Company, dated March 9, 1990.*
-(v)(a) Loan Agreement between Chubb Life Insurance Company of America and
the Company dated September 29, 1993.****
-(v)(b) Company-Lender Agreement between the Company and Chubb Life
Insurance Company of America dated September 29, 1993.****
-(v)(c) Acceptance of Company-Lender Agreement between Chubb Life Insurance
Company of America and the Company dated September 29, 1993.****
-(vi)(a) Loan Agreement between the Company and Chubb Life Insurance
Company of America dated September 29, 1994.*****
-(vi)(b) Company Lender Agreement between the Company and Chubb Life
Insurance Company of America dated September 29, 1994.*****
-(vi)(c) Acceptance of Company Lender Agreement between Chubb Life
Insurance Company of America and the Company dated September 29, 1994.*****
-(vii) Service Agreement++++
24 -(i) Consent of Ernst & Young LLP, Independent Auditors.+
-(ii) Consent of Counsel (contained in Exhibit 5).
25 -Power of Attorney.+++
27 -Financial Data Schedule.++
______

* Incorporated by Reference to the exhibit number indicated to the
Company's Annual Report on Form 10-K for the year ended December 31, 1989.
** Incorporated by Reference to the exhibit number indicated to the
Company's Annual Report on Form 10-K for the year ended December 31, 1991.
*** Incorporated by Reference to the exhibit number indicated to the
Company's Annual Report on Form 10-K for the year ended December 31, 1992.
**** Incorporated by Reference to the exhibit number indicated to the
Company's Annual Report on Form 10-K for the year ended December 31, 1993.
***** Incorporated by Reference to the exhibit number indicated to the
Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
+ Filed herewith.
++ Incorporated by Reference to the Exhibit number indicated to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
+++ Incorporated by Reference to the Exhibit number indicated to an earlier
filing on April 12, 1996 (SEC File No. 333-01873) of the Form S-1/A Registration
Statement.
++++ Incorporated by reference to the Exhibit number indicated to an earlier
filing on April 29, 1996 (SEC File No. 333-01873) of the Form S-1/A Registration
Statement.

II-2
<PAGE>

Item 17. Undertakings

(a) The Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-
effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(i) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions set forth in Item 15, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission (the "Commission"), such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1/A and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Concord, State of New Hampshire on May 24, 1996
Hampshire Funding, Inc.

By: /s/ Ronald R. Angarella
-----------------------------
Ronald R. Angarella, President

POWER OF ATTORNEY

Each of Hampshire Funding, Inc. (the "Company") and the undersigned Officers and
Directors thereof whose signatures appear below hereby makes, constitutes and
appoints Ronald R. Angarella and Charles C. Cornelio and each of them acting
individually, its and his true and lawful attorneys with power to act without
any other and with full power of substitution, to execute, deliver and file in
its or his name and on its behalf, and in each of the undersigned Officers' and
Directors' capacity or capacities as shown below, this Registration Statement
and any and all documents in support of this Registration Statement or
supplemental thereto, and any and all amendments, including any and all post-
effective amendments to the foregoing; and each of the company and said Officers
and Directors hereby grants to said attorneys, and to any one or more of them,
full power and authority to do and perform each and every act and thing
whatsoever as said attorneys or attorney may deem necessary or advisable to
carry out fully the intent of this Power of Attorney to the same extent and with
the same effect as the Company might or could do, and as each of said Officers
and Directors might or could do personally in his capacity or capacities as
aforesaid, and each of the Company and said Officers and Directors hereby
ratifies, confirms and approves all acts and things which said attorneys or
attorney might do or cause to be done by virtue of this Power of Attorney and
its or his signature as the same may be signed by said attorneys or attorney, or
any one or more of them, to this Registration Statement and any and all
amendments thereto, including any and all post-effective amendments to the
foregoing.

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by thefollowing persons in the capacities and on
the dates indicated.

Name Title Date
---- ----- ----

* President and Director May 24, 1996
- -------------------------
Ronald R. Angarella

* Director May 24, 1996
- -------------------------
Frederick H. Condon

* Director May 24, 1996
- -------------------------
Ernest J. Tsouros

* Director May 24, 1996
- -------------------------
Randell G. Craig

* Director May 24, 1996
- -------------------------
Joseph A. Morein

/s/ John A. Weston Treasurer, Principal May 24, 1996
- -------------------------
John A. Weston Financial and Accounting
Officer

*By: /s/ Ronald R. Angarella
-------------------------------------
Ronald R. Angarella, Attorney-in-Fact

II-4

<PAGE>

EXHIBIT 24 (i)

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 26, 1996, with respect to the consolidated
financial statements of Hampshire Funding, Inc and Subsidiary for the year ended
December 31, 1995, included in Pre-Effective Amendment No. 4 to the Registration
Statement (Form S-1/A) and related Prospectus of Hampshire Funding, Inc. and
Subsidiary.

ERNST & YOUNG LLP

Boston, Massachusetts

May 23, 1996