<PAGE>
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1993 COMMISSION FILE NUMBER 1-5823
--------------------
CNA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-6169860
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CNA PLAZA
CHICAGO, ILLINOIS 60685
(Address of principal executive offices) (Zip Code)
(312) 822-5000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of each exchange on
Title of each class which registered
------------------- ----------------
Common Stock New York Stock Exchange
with a par value Chicago Stock Exchange
of $2.50 per share Pacific Stock Exchange
------------------
Securities registered pursuant to Section 12(g) of the Act:
None
------------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No...
As of March 1, 1994, 61,797,856 shares of common stock were outstanding and
the aggregate market value of the common stock of CNA Financial Corporation
held by non-affiliates was approximately $721 million.
DOCUMENTS INCORPORATED
BY REFERENCE:
Portions of the CNA Financial Corporation 1993 Annual Report to
Shareholders are incorporated by reference into Parts I and II of this Report.
Portions of the CNA Financial Corporation Annual Proxy Statement prepared
for the 1994 annual meeting of shareholders, pursuant to Regulation 14A, are
incorporated by reference into Part III of this Report.
===============================================================================
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<PAGE>
CNA FINANCIAL CORPORATION
FORM 10-K REPORT
FOR THE YEAR ENDED DECEMBER 31, 1993
Item Page
Number PART I Number
- ------ ------
1 Business ...................................................... 3
2 Properties .................................................... 17
3 Legal Proceedings.............................................. 17
4 Submission of Matters to a Vote of Security Holders............ 17
PART II
5 Market for the Registrant's Common Stock and
Related Stockholder Matters.................................. 17
6 Selected Financial Data........................................ 17
7 Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................ 17
8 Financial Statements and Supplementary Data.................... 17
9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ...................... 17
PART III
10 Directors and Executive Officers of the Registrant ............ 18
11 Executive Compensation ........................................ 18
12 Security Ownership of Certain Beneficial Owners and Management. 18
13 Certain Relationships and Related Transactions ................ 18
PART IV
14 Exhibits, Financial Statements, Schedules and Reports on 18
Form 8-K
2<PAGE>
<PAGE>
PART I
ITEM 1. BUSINESS
CNA Financial Corporation and its consolidated subsidiaries (CNA)
constitute the ninth largest insurance company in the United States as measured
by 1992 statutory premium volume. CNA was incorporated in 1967 as the parent
company of Continental Casualty Company ("CCC"), incorporated in 1897, and
Continental Assurance Company ("CAC") incorporated in 1911. In 1975, CAC
became a wholly-owned subsidiary of CCC. CNA's property and casualty insurance
operations are conducted by CCC and its property and casualty insurance
affiliates, and its life insurance operations are conducted by CAC and its life
insurance affiliates. CNA's principal business conducted through its insurance
subsidiaries is insurance. As multiple-line insurers, the insurance companies
underwrite property, casualty, life, and accident and health coverages. Their
principal market for insurance is the United States. Foreign operations are not
significant.
COMPETITION
All aspects of the insurance business are highly competitive. CNA's
insurance operations compete with a large number of stock and mutual insurance
companies and other entities for both producers and customers and must
continuously allocate resources to refine and improve insurance products and
services.
There are approximately 3,900 property/casualty insurance companies in the
United States, about 900 of which operate in all or most states. CCC
consolidated is ranked as the sixth largest property/casualty insurance
organization based on statutory net premiums written in 1992.
There are approximately 2,000 companies selling life insurance (including
health insurance and pension products) in the United States. CAC is ranked as
the seventeenth largest consolidated life insurance organization based on
statutory premium revenue in 1992.
DIVIDENDS BY INSURANCE SUBSIDIARIES
The payment of dividends to CNA by its insurance affiliates without prior
approval of the Illinois Insurance Department ("IID") is limited to formula
amounts determined in accordance with the accounting practices prescribed or
permitted by the IID. The current formula limits dividends, without approval of
the insurance commissioner, to the greater of 10% of prior year statutory
surplus or prior year statutory net income (excluding realized gains in excess
of 20% of the cumulative unrealized gains position). For 1994, approximately
$360 million in dividends could be paid to CNA by its insurance affiliates
without prior approval. The National Association of Insurance Commissioners
("NAIC") Financial Regulation Standards and Accreditation Committee approved
the Illinois dividend formula as complying with the NAIC Model Dividend Law.
All dividends must be reported to the insurance department within five business
days of declaration and ten days prior to payment.
<PAGE>
<PAGE>
REGULATION
The insurance industry is subject to comprehensive and detailed regulation
and supervision throughout the United States. Each state has established
supervisory agencies with broad administrative power relative to licensing
insurers and agents, approving policy forms, establishing reserve requirements,
maintaining guarantee funds, fixing minimum interest rates for accumulation of
surrender values and maximum interest rates of policy loans, prescribing the
form and content of statutory financial reports and regulating solvency and the
type and amount of investments permitted. Regulatory powers also extend to
premium rate regulation which require that rates not be excessive, inadequate
or unfairly discriminatory. In addition to regulation of dividends by insurance
subsidiaries discussed above, intercompany transfers of assets may be subject
to prior notice or approval, depending on the size of such transfers and
payments in relation to the financial position of the insurance affiliates
making the transfer.
3
The trend for legislation and voter initiatives continues, particularly for
personal lines products, directly impacting insurance rate development, rate
application and the ability of insurers to cancel or renew insurance policies.
Restrictions on the consideration of certain expenses, limits on services
provided by advisory organizations and politically suppressed workers'
compensation rates in certain states continue to be of concern.
Insurers are also required by the states to provide coverage to risks which
would not otherwise be considered eligible by the insurers. Each state dictates
the types of insurance and the level of coverage which must be provided to such
involuntary risks. CNA's insurance subsidiaries share of these involuntary risks
is generally a function of its share of the voluntary market by line of
insurance in each state.
In recent years, insolvencies of a few large insurers previously believed to
be on solid financial ground by many rating agencies and state regulators have
led to increased scrutiny of state regulated insurer solvency requirements by
the members of the U.S. Congress. Certain members of Congress have formally
introduced legislative initiatives that, if passed, would subject insurers to
federal solvency regulation. In response to this challenge the NAIC has
developed new industry minimum Risk-Based Capital (RBC) requirements,
established a formal state accreditation process designed to minimize the
diversity of approved statutory accounting and actuarial practices, and has
increased the annual statutory statement disclosure requirements.
RBC requirements are effective for life insurers in 1993 and for property
and casualty insurers in 1994. The RBC formulas were designed to identify an
insurer's minimum capital requirements based upon the inherent risks (e.g.,
asset default, credit and insurance) of its operations. In addition to the
minimum capital requirements, the RBC formula and related regulations identify
various levels of capital adequacy and corresponding action that the state
insurance departments should initiate. The highest such level of capital
adequacy above which insurance departments would take no action is defined as
the Company Action Level. As of December 31, 1993, CNA's life insurance
affiliates, Continental Assurance Company and Valley Forge Life Insurance
Company, had adjusted capital amounts in excess of NAIC Company Action Levels.
The new property/casualty RBC formula was adopted in December, 1993. Absent
significant changes in the industry experience components of the formula, CNA's
property/casualty domestic insurers have adjusted capital amounts in excess of
NAIC Company Action Levels.
<PAGE>
<PAGE>
In addition to the newly established minimum capital requirements, the NAIC
also maintains the Insurance Regulatory Information System ("IRIS"), which
assists the state insurance departments in overseeing the financial condition of
both life and property/casualty insurers. These tests are in the form of ratios
and have a range of results characterized as "usual" by the NAIC. The NAIC IRIS
user guide regarding these ratios specifically states that "Falling outside the
usual range is not considered a failing result..." and "...in some years it may
not be unusual for financially sound companies to have several ratios with
results outside the usual range." It is important, therefore, that IRIS ratio
test results be reviewed carefully in conjunction with all other financial
information.
CCC had three IRIS ratios with unusual values in 1993, four in 1992 and none
in 1991. The three ratios with unusual values in 1993 were the two year overall
operating, investment yield, and the two year reserve development ratios. The
four IRIS ratios with unusual values in 1992 were the two year overall operat-
ing, the change in surplus, and both the one and two year reserve development
ratios. Catastrophe losses and reserve increases associated with potential
exposure to asbestos-related bodily injury cases recognized in 1992 triggered
all the unusual values generated in 1992. These same events were primarily
responsible for the unusual values for the two year overall operating and
development ratios in 1993. Additionally, lower interest rates in the capital
markets in 1993, coupled with the maintenance of a large short-term investment
portfolio, triggered the unusual value for the investment yield ratio.
CAC had two IRIS ratios with unusual values in 1993, net gain to total
income and change in net written premium. CAC had one unusual value for IRIS
ratios in 1992, net gain to total income, and none in 1991. CAC's reported
statutory net income was adversely affected in both 1993 and 1992 by the
transfer of significant realized capital gains to the Interest Maintenance
Reserve and depressed investment earnings. The unusual value for the change in
premium ratio primarily relates to decreases in the Separate Account annuity
products fund deposits.
4
Federal measures which may significantly affect the insurance business
include proposals for directly regulating insurance company solvency as well as
repeal of the McCarran-Ferguson Act, which exempts certain aspects of insurance
from Federal regulation to the extent regulated by the states. The potential for
Federal health care reform has been widely publicized and debated over the past
year. Although legislative reforms could come as soon as 1994, the impact of
such reforms are as yet unknown. Among the options discussed has been a single
comprehensive health care program that would provide access for all Americans,
while attempting to reduce cost via enactment of various cost containment
measures and tort reforms. If implemented, such reforms may impact both
individual and group accident and health, workers' compensation, automobile
liability and medical malpractice lines of business currently underwritten by
CNA.
Although the courts and legislatures are often asked to expand liability,
there is a growing trend among business and professional organizations to wage
campaigns, which in several instances have been successful, aimed at limiting
their liability risks. Several states have adopted and some are considering
"tort reform" measures which, among other things, limit non-economic and
punitive damages and otherwise limit damage awards in product liability and
malpractice cases.
<PAGE>
<PAGE>
REINSURANCE
CNA's insurance subsidiaries assume and cede insurance with other insurers
and reinsurers and members of various reinsurance pools and associations. CNA
utilizes reinsurance arrangements to limit its maximum loss, to provide greater
diversification of risk and to minimize exposures on larger risks. The
reinsurance coverages are tailored to the specific risk characteristics of each
product line with CNA's retained amount varying by type of coverage. Generally,
reinsurance coverage for property risks is on an excess of loss, per risk basis.
Liability coverages are generally reinsured on a quota share basis in excess of
CNA's retained risk.
The ceding of insurance does not discharge the primary liability of the
original insurer. It had been the practice of insurers to account for the
portion of the risks which have been reinsured with other companies as though
they were risks for which the original insurer is not liable. In December 1992,
the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") 113,"Accounting and Reporting for Reinsurance of
Short-duration and Long-duration Contracts." SFAS 113 sets forth new
requirements for accounting and reporting of reinsurance contracts. The
provisions of this Statement are effective in 1993 and did not impact CNA's
income or stockholders' equity as all material reinsurance arrangements are
prospective and provided for the transfer of risk.
CNA places reinsurance with other carriers only after careful review of the
nature of the contract and a thorough assessment of the reinsurers' credit
quality and claim settlement performance. Further, for carriers that are not
authorized reinsurers in Illinois, CNA receives collateral primarily in the form
of bank letters of credit, securing a large portion of the recoverables.
Reinsurance recoverables on paid and unpaid claims were $2.9, $3.2, and $3.7
billion at year end 1993, 1992 and 1991, respectively. Of the $2.9 billion
recoverable at December 31, 1993, approximately $351 million was due from
unauthorized reinsurers. These balances were partially collateralized by letters
of credit; at December 31, 1993, such collateral totaled $155 million. Despite
best efforts to ensure collection of reinsurance recoverables, the long-tail
nature of many of these recoverables inevitably results in some credit risk. In
estimating CNA's allowance for doubtful accounts, reinsurance recoverables are
carefully analyzed.
CNA's largest recoverable at December 31, 1993 was $484 million due from
Lloyd's of London. The recoverable from Lloyd's of London is dispersed among
thousands of individual members who have unlimited liability, many of which are
Illinois authorized reinsurers. Although Lloyd's of London has recently reported
large underwriting losses, it continues to carry substantial reserves, including
$9 billion in premium trust funds, $6 billion in member trust funds and
policyholder surplus of $381 million. Accordingly, the credit risk associated
with these recoverable balances appears to be minimal. Premiums of $58 million
were ceded to Lloyd's of London in 1993.
5
EMPLOYEE RELATIONS
CNA has approximately 16,800 employees and has experienced satisfactory
labor relations. CNA has never had work stoppages due to labor disputes.
CNA has comprehensive benefit plans for substantially all of its employees,
including a retirement plan, a savings plan, a disability program, a group life
program, and a group health care program.
<PAGE>
<PAGE>
BUSINESS SEGMENTS
Information as to CNA's business segments is set forth in Note L to the
consolidated financial statements, incorporated by reference in Item 8, herein.
LIFE BUSINESS
CNA's life insurance operations market individual and group insurance
products through licensed agents, most of whom are independent contractors, who
sell life insurance for CNA and for other companies on a commission basis.
Individual insurance products include life, accident and health and annuity
products, and are sold to individuals and small businesses.
The individual life products currently being marketed consist primarily of
term, universal life and participating policies. Included in the universal life
category is a salary allotment product marketed through employers as a
supplement to employers' benefit plans. Premiums are collected from employees
through payroll deduction. The individual accident and health product currently
being marketed is long-term disability. Individual annuity products are
primarily periodic payment plans.
Group insurance products include life, accident and health and pension
products, and are sold to employers, employer associations and trusts ranging in
size from small local employers to large multinational corporations. The group
accident and health plans are primarily major medical and hospitalization. Most
of the major medical and hospitalization plans are written under
experience-rated contracts or contracts to provide claim administrative services
only.
CNA's products are designed and priced using assumptions management believes
to be reasonably conservative for mortality, morbidity, persistency, expense
levels and investment results. Underwriting practices that management believes
are prudent are followed in selecting the risks that will be insured. Further,
actual experience related to pricing assumptions is monitored closely so that
adjustments to these assumptions may be implemented as necessary. CNA mitigates
the risk related to persistency by including surrender charge provisions in its
ordinary life and annuity policies in the first five to ten years, thus
providing for the recovery of acquisition expenses. Investment portfolios
supporting interest sensitive products, including universal life and individual
annuities, are segregated from other investments and managed so as to minimize
the liquidity and interest rate risks.
Profitability in the life insurance business has decreased over the past two
years as a result of declining investment income, reflecting lower interest
rates and a large investment in short-term investments. Further, results
continue to be impacted by intense competition and rising medical costs. CNA has
aggressively pursued expense reduction through increases in automation and other
productivity improvements. Further, increasing costs of health care have
resulted in a continued market shift away from traditional forms of health
coverage toward managed care products and experience-rated plans. CNA's ability
to compete in this market will be increasingly dependent on its ability to
control costs through managed care techniques, innovation, and quality customer-
focused service in order to properly position CNA in the evolving health care
environment.
<PAGE>
<PAGE>
The Federal Government's initiative to control health care costs and provide
universal access to health care was presented in 1993. The impact of potential
health care reform cannot be determined at this time. Such reform may affect
both CNA's individual and group accident and health businesses. CNA has urged a
meaningful role for the private sector in any proposed plan. The present health
care system is clearly in need of reform, and CNA has emphasized that the
competitive strengths of the insurance industry must be an integral part of a
workable solution.
6
<TABLE>
The following table sets forth supplemental data for the life insurance business:
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991 1990 1989
(In millions of dollars)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INDIVIDUAL PREMIUMS
Life and annuities ..................................................... $ 312.1 $ 294.7 $ 287.9 $ 239.5 $ 235.6
Accident and health..................................................... 30.9 27.1 24.3 21.1 18.0
------- ------- ------- ------- -------
$ 343.0 $ 321.8 $ 312.2 $ 260.6 $ 253.6
======= ======= ====== ====== ======
GROUP PREMIUMS
Life.................................................................... $ 107.2 $ 100.7 $ 90.8 $ 82.6 $ 75.5
Accident and health (a)................................................. 1,983.0 1,957.5 1,887.0 1,713.3 1,647.8
Annuities .............................................................. 9.0 57.7 24.3 51.6 100.1
------- ------- ------- ------- -------
$2,099.2 $2,115.9 $2,002.1 $1,847.5 $1,823.4
======= ======= ======= ======= =======
NET INVESTMENT INCOME AND OTHER INCOME
Individual ............................................................. $ 154.2 $ 163.0 $ 162.5 $ 162.2 $ 156.8
Group................................................................... 142.8 156.6 185.4 188.8 183.3
------- ------- ------- ------- -------
$ 297.0 $ 319.6 $ 347.9 $ 351.0 $ 340.1
======= ======= ======= ======= =======
INCOME EXCLUDING REALIZED CAPITAL GAINS, BEFORE INCOME TAX
Individual.............................................................. $ 14.5 $ 22.5 $ 13.8 $ 15.3 $ 17.8
Group................................................................... 51.9 56.1 76.0 76.2 56.3
------- ------- ------- ------- -------
$ 66.4 $ 78.6 $ 89.8 $ 91.5 $ 74.1
======= ======= ======= ======= =======
GROSS LIFE INSURANCE IN FORCE
Individual (c).......................................................... $ 76,835 $ 75,569 $ 71,539 $ 68,095 $ 64,814
Group................................................................... 35,413 29,643 27,139 21,167 21,105
------- ------- ------- ------- -------
$112,248 $105,212 $ 98,678 $ 89,262 $ 85,919
======= ======= ======= ======= =======
OTHER DATA (b)
Statutory capital and surplus........................................... $1,022.0 $1,003.0 $ 968.4 $ 848.8 $ 786.4
Statutory capital and surplus-percent of total liabilities.............. 30.1% 33.4% 29.9% 26.4% 26.7%
Participating policyholders'-percent of gross life insurance in force... 1.1 1.2 1.6 1.5 1.8
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
(a) Group accident and health premiums include contracts involving U.S.
Government employees and their dependents amounting to approximately $1.7,
$1.6, $1.5, $1.3, and $1.3 billion in 1993, 1992, 1991, 1990 and 1989,
respectively.
(b) Other Data is determined on the basis of statutory accounting
principles and reflects capital contributions from Continental Casualty
Company of $100 million in 1990 and $130 million in 1989. Life insurance
subsidiaries have received, or will receive, reimbursement from CNA for
general management and administrative expenses and investment expenses in the
amounts of $25.6, $24.5, $25.7, $25.0, and $27.1 million in 1993, 1992, 1991,
1990 and 1989, respectively. Statutory capital and surplus as a percent of
total liabilities is determined after excluding Separate Account liabilities
and reclassifying the Asset Valuation and Interest Maintenance Reserves as
surplus.
(c) Lapse ratios as measured by surrenders and withdrawals as a percentage
of average ordinary life insurance in force were 9.7%, 8.6%, 10.4%, 11.4%, and
13.5%, in 1993, 1992, 1991, 1990, and 1989, respectively.
Annuities and Guaranteed Investment Contracts
- ---------------------------------------------
CAC writes the majority of its annuities and guaranteed investment
contracts ("GlC's") in a fixed or non-variable Separate Account, which is
permitted by Illinois insurance statutes. This treatment affords the
contractholders additional security, in the form of CAC's general account
surplus, which supports any principal and/or guaranteed interest payment
shortfalls of the Separate Account.
CNA manages the liquidity and interest rate risks on the GIC portfolio by
matching the GIC assets and liabilities on the basis of duration and
maintaining market value surrender adjustments on the majority of the
contracts.
7<PAGE>
<PAGE>
LIFE BUSINESS --(CONTINUED)
The table below illustrates the matching in the duration of assets and
liabilities for the GIC portfolio, the investment yield, the weighted average
interest crediting rates and withdrawal characteristics.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
December 31 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Duration in years:
Assets ............................................................................. 2.68 3.04 2.85 3.36
Liabilities......................................................................... 2.73 2.69 2.54 2.89
---- ---- ---- ----
Mismatch ........................................................................... (.05) 0.35 0.31 0.47
==== ==== ==== ====
Weighted average investment yield..................................................... 7.11% 8.05% 9.38% 9.73%
Weighted average interest crediting rates............................................. 7.74% 8.32% 8.84% 9.26%
Withdrawal characteristics:
With market value adjustment......................................................... 81% 83% 85% 85%
Non-withdrawable..................................................................... 13 12 11 12
Without market value adjustment...................................................... 6 5 4 3
- ------------------------------------------------------------------------------------------------------------------------------
Total 100% 100% 100% 100%
==============================================================================================================================
</TABLE>
As shown above, the investment yields at December 31, 1993 and 1992 were
less than the average crediting rates. However, this occurred because of
security sales resulting in realized capital gains. Although the sales
proceeds were invested at lower yields, the asset base was increased. At
December 31, 1993 and 1992, the GIC estimated market value of assets exceeded
the estimated market value of contract liabilities and expenses.
<PAGE>
<PAGE>
PROPERTY/CASUALTY BUSINESS
CNA's property/casualty operations market commercial and personal lines of
property/casualty insurance through independent agents and brokers.
CCC and its property/casualty insurance subsidiaries write primarily
commercial lines coverages. Customers include large national corporations,
small and medium-sized businesses, groups and associations, and professionals.
Coverages are written primarily through traditional insurance contracts, under
which risk is transferred to the insurer. Many commercial account policies are
written under retrospectively-rated contracts, which are experience-rated.
Premiums for such contracts may be adjusted, subject to limitations set by
contract, based on loss experience of the insureds. Other experience-rated
policies include provisions for adjustments to dividends based on loss
experience. Experience-rated contracts reduce risk to the insurer.
Approximately 40% of CNA's property/casualty insurance is written on an
experience-rated basis.
CNA also provides loss control, policy administration and claim adminis-
tration services under service contracts for fees. Such services are provided
primarily in the workers' compensation market where retention of risk through
self-insurance or high-deductible programs has become increasingly prevalent.
Commercial business includes such lines as workers' compensation, general
liability, professional and specialty, multiple peril, and accident and health
coverages. Professional and specialty coverages include liability coverage for
architects and engineers, lawyers, accountants, medical and dental profes-
sionals; directors and officers liability; and other specialized coverages.
CNA also assumes commercial risks from other insurers. CNA's primary lines are
workers' compensation, general liability and professional and specialty cover-
ages, which accounted for 29%, 18% and 13%, respectively, of 1993 premiums
earned, including premiums for involuntary risks. Premiums for involuntary
risks result from mandatory participation in residual markets. CNA is required
by the various states in which it does business to provide coverage for risks
that would not otherwise be considered under CNA's underwriting standards.
CNA's share of involuntary risks is generally a function of its share of the
voluntary market by line of insurance in each state.
CNA also markets personal lines of insurance, primarily automobile and
homeowners coverages sold to individuals under monoline and package policies.
8<PAGE>
<PAGE>
PROPERTY/CASUALTY BUSINESS --(CONTINUED)
The following table sets forth supplemental data for the property/casualty
business:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991 1990 1989
(In millions of dollars)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PREMIUMS EARNED
Workers' compensation................................... $ 1,501.5 $ 1,669.2 $ 1,920.4 $ 1,803.8 $ 1,337.1
General liability ...................................... 1,154.5 1,176.0 1,292.6 1,250.7 1,201.4
Professional and specialty.............................. 798.9 741.5 763.9 786.3 779.0
Reinsurance and other .................................. 712.2 556.0 482.0 448.2 489.6
Accident and health .................................... 428.3 352.6 294.2 254.4 214.3
Multiple peril.......................................... 368.5 374.9 397.2 395.2 380.0
-------- -------- -------- -------- --------
$ 4,963.9 $ 4,870.2 $ 5,150.3 $ 4,938.6 $ 4,401.4
======== ======== ======== ======== ========
PERSONAL PREMIUMS EARNED
Personal lines packages ................................ $ 510.7 $ 447.3 $ 335.6 $ 225.2 $ 137.4
Monoline automobile and property coverages.............. 343.5 395.0 470.7 493.0 469.5
Accident and health .................................... 85.6 88.6 88.8 72.5 56.7
-------- -------- -------- ------- --------
$ 939.8 $ 930.9 $ 895.1 $ 790.7 $ 663.6
======== ======== ======== ======= ========
INVOLUNTARY RISKS PREMIUMS EARNED (A)
Workers' compensation ................................. $ 292.3 $ 451.4 $ 499.5 $ 448.4 $ 219.0
Commercial passenger................................... 50.3 44.9 66.6 48.1 41.2
Private passenger ..................................... 23.2 52.5 39.2 65.8 65.4
Property and multiple peril ........................... 5.5 3.7 4.6 5.0 5.1
-------- -------- -------- -------- --------
$ 371.3 $ 552.5 $ 609.9 $ 567.3 $ 330.7
======== ======== ======== ======== ========
NET INVESTMENT INCOME AND OTHER INCOME
Commercial............................................. $ 979.8 $ 1,087.3 $ 1,131.3 $ 1,059.0 $ 930.3
Personal............................................... 156.1 165.3 160.1 137.3 121.2
Involuntary risks...................................... 75.7 83.6 78.5 58.7 42.7
-------- -------- -------- -------- --------
$ 1,211.6 $ 1,336.2 $ 1,369.9 $ 1,255.0 $ 1,094.2
======== ======== ======== ======== ========
UNDERWRITING INCOME (LOSS)
Commercial............................................. $(1,535.6) $(2,505.9) $ (707.1) $ (664.4) $ (661.7)
Personal............................................... (99.7) (152.8) (172.1) (123.6) (127.1)
Involuntary risks ..................................... (156.5) (340.9) (345.5) (327.7) (209.1)
-------- -------- -------- -------- --------
$(1,791.8) $(2,999.6) $(1,224.7) $(1,115.7) $ (997.9)
======== ======== ======== ======== ========
<PAGE>
<PAGE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991 1990 1989
(In millions of dollars)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TRADE RATIOS (B)
Loss ratio............................................. 96.8% 116.7% 88.1% 88.2% 88.7%
Expense ratio ......................................... 27.3 26.2 25.8 25.2 25.2
Combined ratio (before policyholder dividends) 124.1 142.9 113.9 113.4 113.9
Policyholder dividend ratio ........................... 2.3 1.9 2.4 2.2 2.2
TRADE RATIOS - STATUTORY BASIS (B)
Loss ratio............................................. 96.4% 116.3% 88.2% 88.3% 88.7%
Expense ratio ......................................... 27.1 25.6 25.6(*) 24.6 24.9
Combined ratio (before policyholder dividends) 123.5 141.9 113.8(*) 112.9 113.6
Policyholder dividend ratio ........................... 3.1 2.4 2.7 2.1 2.4
OTHER DATA - STATUTORY BASIS (C)
Capital and surplus ................................... $ 3,598.4 $ 3,135.8 $ 3,927.5 $ 3,146.9 $ 3,117.6
Written to surplus ratio............................... 1.7 2.0 1.7(*) 2.0 1.8
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) In 1991, CNA changed its statutory method of accounting for property/
casualty written premium on indeterminate premium products (policies subject
to exposure audits). This new method defers the recognition of written premium
and acquisition expenses generally until billed. The effect of this change in
1991 was a one-time reduction in written premium and related acquisition
expenses of $864 million and $78 million, respectively. In order to provide
comparability, the Other Data and Trade Ratios for 1991 shown above do not
reflect the one-time impact of this statutory accounting change.
9
(a) Property/casualty involuntary risks include mandatory participation in
residual markets, statutory assessments for insolvencies of other insurers and
other involuntary charges.
(b) Trade ratios reflect the results of Continental Casualty Company and
its property/casualty insurance subsidiaries. Trade ratios are industry
measures of property/casualty underwriting results. The loss ratio is the
percentage of incurred claim and claim adjustment expenses to premiums earned.
Under generally accepted accounting principles, the expense ratio is the
percentage of underwriting expenses, including the change in deferred
acquisition costs, to premiums earned. Under statutory accounting principles,
the expense ratio is the percentage of underwriting expenses (with no deferral
of acquisition costs) to premiums written. The combined ratio is the sum of
the loss ratio and the expense ratio. The policyholder dividend ratio is the
ratio of dividends incurred to premiums earned.
(c) Other Data is determined on the basis of statutory accounting
principles and reflects capital contributions from CNA of $475 million in
1993, $120 million in 1990 and $200 million in 1989. In addition, dividends of
$150 million, $100 million, $130 million and $100 million were paid to CNA by
Continental Casualty Company in 1993, 1992, 1991 and 1989, respectively.
Property/casualty insurance subsidiaries have received, or will receive,
reimbursement from CNA for general management and administrative expenses,
unallocated loss adjustment expenses and investment expenses in the amounts of
$167.5, $141.1, $133.8, $128.1, and $115.3 million in 1993, 1992, 1991, 1990
and 1989, respectively.
<PAGE>
<PAGE>
The following table displays the distribution of domestic written premium
by state:
<TABLE>
<CAPTION>
- --------------------------------------------------------
WRITTEN PREMIUM BY STATE % OF TOTAL
-------------
YEAR ENDED DECEMBER 31 1993 1992
- --------------------------------------------------------
<S> <C> <C>
California.............................. 12.1 11.8
New York................................ 8.4 8.0
Texas................................... 6.2 5.7
Pennsylvania............................ 5.9 6.1
Illinois................................ 5.1 5.1
Florida................................. 4.1 3.3
New Jersey.............................. 3.3 3.1
All other states (a).................... 43.1 41.5
Reinsurance assumed:
Voluntary ........................... 6.9 7.9
Involuntary ......................... 4.9 7.5
----- -----
100.0 100.0
========================================================
(a) No other state accounts for more than 3.0% of gross
written premium.
</TABLE>
The growth and profitability of CNA's property/casualty insurance business
is dependent on many factors, including competitive and regulatory influences,
the efficiency and costs of operations, underwriting quality, the level of
natural disasters, and investment results.
In recent years, CNA's growth and earnings have been impacted by a
prolonged cycle of inadequate commercial lines pricing, particularly in the
workers' compensation market. CNA has intensified efforts in the political
sphere on behalf of a more predictable and equitable insurance marketing
climate. CNA has taken a leadership role in seeking workers' compensation
reform in several states. Among CNA's marketing strategies during this
difficult time are to emphasize responsible pricing over premium growth and to
aggressively adapt to changes in certain markets such as those in which
self-insurance has become important. CNA has also initiated wide-scale cost
management measures. CNA has continued actions to reduce or stabilize the
costs of doing business, including costs of health care, fraud and tort
liability. Programs include managed health care programs and formation of a
department devoted exclusively to fighting fraud.
Workers' compensation has been a difficult line of business during the
past several years. Despite rapidly escalating loss costs, state regulators
have been unwilling to allow premium rate increases sufficient for insurers to
earn a profit. Unlike other insurance carriers, CNA has remained in this
market in most states. It continues to believe that workers' compensation is a
critical product to its customers, and with its proven expertise in this line,
that there is a profit potential over the long term.
10<PAGE>
<PAGE>
During this current industry downcycle, CNA has restricted its exposure to
workers' compensation and has taken other steps to mitigate the underwriting
losses in workers' compensation. These steps include increasing conservatism of
underwriting standards, continuing migration of guaranteed cost policies to
experience-rated contracts, and as mentioned previously, aggressive cost con-
tainment programs geared to reduce the frequency and severity of claims. During
1993, 65% of workers' compensation insurance was written on an experience-rated
basis. As a result of these steps, the past two years' experience has been
encouraging as accident year loss ratios have improved slightly. After
factoring in the investment income related to projected cash flows, this line
of business produced a positive economic return in the 1992 and 1993 accident
years. CNA believes that further improvement in workers' compensation results
will occur as its many efforts toward this objective continue.
The state of California is CNA's largest market, accounting for 12% of its
premium volume in 1993. Workers' compensation is the largest line of business
in California accounting for approximately 40% of premiums written in 1993. As
noted in the discussion of countrywide strategies for workers' compensation,
approximately 87% of California's workers' compensation business was written
via loss sensitive contracts. Profitability trends are slightly more favorable
in this state than countrywide primarily as a result of recently enacted major
workers' compensation reform legislation which included improved benefit
provisions and open premium rating. As a result, favorable profitability trends
in workers' compensation are expected to continue. Other major lines of busi-
ness in California, including commercial multiple peril, commercial automobile
and general liability, are producing less favorable results than countrywide.
CNA is aggressively seeking adequate premium rates for these lines within the
confines of the current regulatory constraints.
PROPERTY/CASUALTY CLAIM AND CLAIM EXPENSES
Property/casualty claim and claim expense reserves, except reserves for
structured settlements, workers' compensation lifetime claims and accident and
health disability claims are based on (a) case basis estimates for losses
reported on direct business, adjusted in the aggregate for ultimate loss
expectations, (b) estimates of unreported losses based upon past experience,
(c) estimates of assumed insurance, (d) estimates of future expenses to be
incurred in settlement of claims and (e) estimates of claim recoveries. Loss
reserve calculations are based on quantitative techniques which utilize
historical trends to project future payments. Other factors, including mix of
business, the anticipated effects of inflation, and other current conditions
and trends, are implicit in the estimation process. The schedule on page 9
provides information on mix of business.
Structured settlements have been negotiated for certain liability claims
under commercial automobile, personal automobile, workers' compensation,
professional liability and other liability coverages. Structured settlements
are agreements to provide periodic payments to claimants, which are fixed and
determinable as to the amount and time of payment. Certain structured settle-
ments are funded by annuities purchased from Continental Assurance Company, an
affiliate. Related annuity obligations are carried in future policy benefits
reserves. Obligations for structured settlements not funded by annuities are
carried at discounted values which approximate the alternative cost of annuity
purchases. Such reserves, discounted at interest rates ranging from 6.25% to
7.5%, totaled $749 million, $663 million and $555 million at December 31,
1993, 1992 and 1991, respectively. Ultimate payouts under all existing con-
tracts at December 31, 1993 and 1992 will approximate $2.2 billion and $2.0
billion, respectively.
<PAGE>
<PAGE>
In 1992, CNA changed its accounting for claim reserves related to workers'
compensation lifetime claims and accident and health disability claims.
Reserving practices under both statutory and generally accepted accounting
principles allow discounting of reserves for fixed and determinable claim
obligations. Reserve discounting for these types of claims is common industry
practice. These claim reserves are discounted at interest rates ranging from
3.5% to 5.5% with mortality and morbidity assumptions reflecting current
industry experience. At December 31, 1993 and 1992, such discounted reserves
totaled $970 million and $911 million, respectively. Ultimate payouts for these
claims are estimated to be $1.4 billion and $1.3 billion at December 31, 1993
and 1992, respectively.
11
Claim and claim expense reserves are based on estimates and the ultimate
liability may vary significantly from such estimates. Any adjustments that are
made to the reserves are reflected in operating income in the year such
adjustments are made.
In 1993, CNA adopted Statement of Financial Accounting Standards 113, which
requires that balances pertaining to reinsurance transactions be reported
"gross" on the balance sheet rather than as reductions of reserves for claims
and claim expenses. As a result of this change in reporting, the reserve
balances reported in the financial statements prepared in accordance with
generally accepted accounting principles and those prepared under statutory
accounting practices differ by the amount of ceded reserves of $2.9 billion and
$2.5 billion at December 31, 1993 and 1992, respectively.
The retention limits of CNA's property/casualty business vary by type of
coverage and are based on individual risks underwritten. In general, retention
limits have been increased with the growth in underwriting capacity. There have
been no reinsurance transactions, such as portfolio reserve transfers or swaps
of reserves, that have had a material impact on net income.
Asbestos-related and Environmental Pollution Claims
- ---------------------------------------------------
Reserves include estimated amounts for exposures to asbestos-related and
environmental pollution claims. Reserving for such claims involves significant
uncertainties for both CNA and the industry, characterized by complex and
costly litigation and further compounded by the tendency of the courts to
broadly reinterpret contracts beyond their original intent.
<PAGE>
<PAGE>
A summary of asbestos-related and environmental pollution claims and claims
expense activity follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
CLAIMS AND CLAIMS EXPENSE
---------------------------------------------------
RESERVES, NET OF
REINSURANCE PAYMENTS
DECEMBER 31 YEAR ENDED DECEMBER 31
---------------- -----------------------
(In millions of dollars) 1993 1992 1993 1992 1991
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Asbestos-related................. $2,080 $1,683 $204 $112 $39
Environmental pollution.......... 433 59 72 38 49
----- ----- --- --- --
Total........................ $2,513 $1,742 $276 $150 $88
======================================================================================
</TABLE>
A major portion of CNA's asbestos-related claim exposure involves
litigation with Fibreboard Corporation, as discussed in Note J of Notes to
Consolidated Financial Statements. Adverse reserve developments for
asbestos-related claims totaled $601 million, $1.689 billion, and $48 million
in 1993, 1992 and 1991, respectively.
Potential exposures also exist for claims involving environmental
pollution, including toxic waste clean-up. Environmental pollution clean-up is
the subject of both Federal and state regulation. By some estimates there are
thousands of potential waste sites subject to clean-up. The insurance industry
is involved in extensive litigation regarding coverage issues. Judicial
interpretations in many cases have expanded the scope of coverage and
liability beyond the original intent of the policies.
Reserve development for environmental claims totaled $446, $48, and $47
million in 1993, 1992 and 1991, respectively, including litigation costs of
$28, $25 and $21 million. Adverse development for 1993 primarily resulted from
the allocation of approximately $340 million of reserves for unreported
claims. The results of operations in future years may continue to be adversely
affected by environmental pollution claims and claim expenses. Management will
continue to monitor potential liabilities and make further adjustments as
warranted. See Note J to the Consolidated Financial Statements.
12
Reserve Development
- -------------------
The table below provides a reconciliation between beginning and ending
claim and claim expense reserve balances for 1993, 1992 and 1991. In 1992,
beginning and ending reserve balances were restated to retroactively reflect
the accounting change for discounting discussed previously. Not included in
the table below is premium development related to certain insurance policies
subject to retroactive premium adjustments, based on various factors including
loss experience. As a result, CNA also recorded premium and dividend related
development to prior years (increasing (decreasing) premium) of $(127), $50
and $(43) million in 1993, 1992 and 1991, respectively.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CHANGES IN RESERVES FOR PROPERTY/CASUALTY
CLAIMS AND CLAIM EXPENSES
YEAR ENDED DECEMBER 31 1993 1992 1991
(In millions of dollars)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reserves at beginning of year:
Gross............................................................... $20,034 $17,712 $16,530
Ceded reinsurance................................................... 2,867 3,297 3,440
------ ------ ------
Net................................................................. 17,167 14,415 13,090
------ ------ ------
Net incurred claims and claim expenses:
Provision for insured events of current year........................ 5,388 5,708 5,811
Increase (decrease) in provision for insured events of prior years.. 590 1,617 (106)
Amortization of discounts........................................... 94 104 89
------ ------ ------
Total net incurred ............................................... 6,072 7,429 5,794
------ ------ ------
Net payments:
Attributable to current year events................................. 1,202 1,260 1,177
Attributable to prior year events................................... 3,706 3,411 3,285
Amortization of discounts........................................... 10 6 7
------ ------ ------
Total net payments ............................................... 4,918 4,677 4,469
------ ------ ------
Net reserves at end of year ......................................... 18,321 17,167 14,415
====== ====== ======
Gross reserves at beginning of year ................................. 20,034 17,712 16,530
------ ------ ------
Gross incurred claims and claim expenses:
Provision for insured events of current year ....................... 5,817 6,382 6,320
Increase (decrease) in provision for insured events of prior years.. 305 1,487 (174)
Amortization of discounts........................................... 94 104 89
------ ------ ------
Total gross incurred ............................................. 6,216 7,973 6,235
------ ------ ------
Gross payments:
Attributable to current year events................................. 1,278 1,348 1,245
Attributable to prior year events................................... 4,150 4,297 3,801
Amortization of discounts........................................... 10 6 7
------ ------ ------
Total gross payments ............................................. 5,438 5,651 5,053
------ ------ ------
- -------------------------------------------------------------------------------------------------------
Gross reserves at end of year $20,812 $20,034 $17,712
=======================================================================================================
</TABLE>
13<PAGE>
<PAGE>
The following table displays the development of financial statement claim
and claim expense reserves for 1983 through 1993. In this table, development
of reserves is included in each calendar year between the date of loss and the
date of reestimation. Therefore, the deficiencies of the original estimates of
required reserves that are reflected are cumulative and should not be summed.
All reserve data has been restated to retroactively reflect the accounting
change for discounting discussed previously.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PROPERTY/CASUALTY
LOSS RESERVE DEVELOPMENT
CALENDAR YEAR ENDED 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
(In millions of dollars)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross reserves for unpaid claim
and claim expenses.................. $ - $ - $ - $ - $ - $ - $ - $16,530 $17,712 $20,034 $20,812
Ceded recoverable.................... - - - - - - - 3,440 3,297 2,867 2,491
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net reserves for unpaid claim
and claim expenses.................. 3,309 3,931 4,873 6,243 8,045 9,552 11,267 13,090 14,415 17,167 18,321
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET PAID (CUMULATIVE) AS OF:
One year later ...................... 1,074 1,330 1,594 1,335 1,763 2,040 2,670 3,285 3,411 3,706 -
Two years later...................... 1,624 1,936 2,932 2,383 2,961 3,622 4,724 5,623 6,024 - -
Three years later.................... 2,066 2,493 3,022 3,197 4,031 4,977 6,294 7,490 - - -
Four years later .................... 2,469 2,963 3,642 3,963 5,007 6,078 7,534 - - - -
Five years later .................... 2,759 3,407 4,175 4,736 5,801 6,960 - - - - -
Six years later...................... 3,084 3,766 4,735 5,339 6,476 - - - - - -
Seven years later.................... 3,330 4,156 5,233 5,880 - - - - - - -
Eight years later.................... 3,625 4,512 5,668 - - - - - - - -
Nine years later .................... 3,914 4,901 - - - - - - - - -
Ten years later...................... 4,243 - - - - - - - - - -
Net Reserves Reestimated as of:
End of initial year.................. 3,309 3,931 4,873 6,243 8,045 9,552 11,267 13,090 14,415 17,167 18,321
One year later ...................... 3,367 3,985 5,047 6,642 8,086 9,737 11,336 12,984 16,032 17,757 -
Two years later...................... 3,477 4,122 5,573 6,763 8,345 9,781 11,371 14,693 16,810 - -
Three years later.................... 3,599 4,659 5,788 6,989 8,424 9,796 13,098 15,737 - - -
Four years later .................... 3,981 4,855 6,170 7,166 8,516 11,471 14,118 - - - -
Five years later .................... 4,127 5,171 6,422 7,314 10,196 12,496 - - - - -
Six years later...................... 4,359 5,395 6,566 9,022 11,239 - - - - - -
Seven years later.................... 4,534 5,486 8,317 10,070 - - - - - - -
Eight years later.................... 4,629 7,215 9,365 - - - - - - - -
Nine years later .................... 6,351 8,270 - - - - - - - - -
Ten years later...................... 7,362 - - - - - - - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total net deficiency............... (4,053) (4,339) (4,492) (3,827) (3,194) (2,944) (2,851) (2,647) (2,395) (590) -
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PROPERTY/CASUALTY
LOSS RESERVE DEVELOPMENT-CONTINUED
CALENDAR YEAR ENDED 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
(In millions of dollars)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Reconciliation to Gross Reestimated
Reserves:
Net reserves reestimated............. 15,737 16,810 17,757 -
Reestimated ceded recoverable........ 3,221 3,060 2,582 -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total gross reestimated reserves 18,958 19,870 20,339 -
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net Deficiency Related to:
Asbestos-related claims.............. (2,608) (2,606) (2,640) (2,682) (2,635) (2,577) (2,476) (2,338) (2,290) (601) -
Environmental........................ (595) (601) (599) (597) (582) (577) (550) (539) (493) (446) -
Other................................ (850) (1,132) (1,253) (548) 23 210 175 230 388 457 -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total net deficiency............... (4,053) (4,339) (4,492) (3,827) (3,194) (2,944) (2,851) (2,647) (2,395) (590) -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As the above table illustrates, most of the unfavorable reserve
development is due to asbestos claims. A discussion of CNA's litigation with
Fibreboard Corporation regarding asbestos-related bodily injury claims can be
found in Note J of the Consolidated Financial Statements in the Annual Report
to Shareholders.
In addition to the asbestos and environmental reserve developments noted
on page 12, the unfavorable reserve developments relate primarily to accident
years 1986 and prior and are comprised of the following lines of business:
product liability, medical malpractice, other liability, professional
liability, reinsurance, and workers' compensation. In the early to mid-1980's,
frequency and severity trends exceeded expectations, resulting in reserve
deficiencies in 1986 and prior accident years. For accident years 1987 and
subsequent, frequency and severity trends have noticeably moderated. In
calendar year 1993, positive severity experience in professional liability
lines and improvement in involuntary workers' compensation experience resulted
in favorable development in accident years 1987 through 1992.
14<PAGE>
<PAGE>
INVESTMENTS
CNA's general account investment portfolio is managed to maximize
after-tax investment return, while minimizing credit risks with investments
concentrated in high quality securities to support its insurance underwriting
operations. At December 31, 1993, approximately 20% of CNA's general account
portfolio is invested in long-term state and municipal bonds in order to
maximize after-tax yield and provide for a more stable yield on the portfolio
with a higher quality of investment than may otherwise be available.
CNA has the capacity to hold its fixed income portfolio to maturity.
However, securities may be sold as part of CNA's asset/liability strategies or
to take advantage of investment opportunities generated by changing interest
rates, prepayments, tax and credit considerations, or other similar factors.
Accordingly, the fixed income securities are classified as available for sale.
CNA's portfolio is managed based on the following investment strategies: i)
diversification is used to limit exposures to any one issue or issuer, and ii)
in general, the public market is used in order to provide liquidity.
Historically, CNA has maintained short-term assets at a level that
provided for liquidity to meet its short-term obligations, principally
anticipated claim payout patterns. Throughout 1992 and 1993, the level of
short-term investments has increased beyond that needed for short-term
liquidity. Though expected to result in a decline in investment income in the
near term, management believes that the increased concentration in short-term
investments will reduce the impact that a rise in interest rates would have on
its fixed income portfolio. At December 31, 1993, the major components of the
short-term investment portfolio were approximately $1.2 billion of U.S.
Treasury bills and $4.5 billion of high-grade commercial paper.
The following summarizes CNA's distribution of general account
investments:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENTS - GENERAL ACCOUNT
DECEMBER 31 1993* 1992 1991
(In millions of dollars)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
Tax-exempt bonds ........................ $ 5,015 $ 9,502 $ 8,998
Taxable bonds............................ 12,145 7,286 9,674
Redeemable preferred stocks.............. 448 568 103
Equity securities:
Common stocks............................ 508 348 230
Non-redeemable preferred stocks - 9 11
Mortgage loans ............................. 58 85 113
Policy loans ............................... 174 179 181
Short-term investments ..................... 6,944 4,444 2,511
Real estate and other invested assets....... 71 57 65
- --------------------------------------------------------------------------------
Total investments at carrying value $25,363 $22,478 $21,886
================================================================================
*Fixed maturity securities are reported at fair value in 1993.
</TABLE>
<PAGE>
<PAGE>
As noted in Management's Discussion and Analysis of Financial Condition
and Results of Operations, in 1993 CNA began a program of realigning its
portfolio which resulted in realizing substantial gains. For the year ended
December 31, 1993, CNA's property and casualty insurance subsidiaries sold
approximately $35.4 billion of fixed income and equity securities realizing
pretax net gains of $741.3 million. Of the securities sold, approximately $5.8
billion was from the tax-exempt municipal bond portfolio. Most of the proceeds
from those sales have been invested in short-term securities, primarily U.S.
Treasury bills and high-grade commercial paper. In addition to reducing the
impact that a rise in interest rates would have on the fixed income portfolio,
the increase in taxable short-term securities and the decrease in tax-exempt
investments will allow the Company to minimize additional alternative minimum
tax credit carryforwards.
15
CNA's general account fixed income portfolio has consistently been of high
quality as illustrated in the following table using the Standard & Poor's
ratings convention (see Note).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
BOND PORTFOLIO QUALITY - GENERAL ACCOUNT
DECEMBER 31 1993 1992 1991
- ------------------------------------------------------------------
<S> <C> <C> <C>
AAA...................................... 77% 73% 78%
AA ...................................... 8 10 10
A........................................ 7 10 7
BBB...................................... 5 3 2
Below BBB................................ 3 4 3
- ------------------------------------------------------------------
Total 100% 100% 100%
==================================================================
</TABLE>
CNA's Separate Account investment portfolio is managed to specifically
support the underlying insurance products (see the discussion of annuities and
GIC's in "Life Insurance" above). Approximately 86% or $5.6 billion of
Separate Account investments are used to fund GlC's; the remaining investments
are funding variable products. Approximately 97% of the GlC investment
portfolio is comprised of taxable fixed income securities. The quality of the
GIC fixed income portfolio is as follows (see Note):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
BOND PORTFOLIO QUALITY - GIC PORTFOLIO
DECEMBER 31 1993 1992 1991
- ------------------------------------------------------------------
<S> <C> <C> <C>
AAA...................................... 44% 50% 50%
AA....................................... 6 9 9
A........................................ 18 18 16
BBB...................................... 13 10 10
Below BBB................................ 19 13 15
- ------------------------------------------------------------------
Total 100% 100% 100%
==================================================================
</TABLE>
<PAGE>
<PAGE>
Note: The bond ratings shown in the two tables above are primarily from
Standard & Poor's (94% of the general account portfolio and 93% of the GIC
portfolio in 1993). In the case of private placements and other unrated
securities, comparable internal ratings are developed by CNA. These ratings
are derived by management using available information on the issuer to assess
the credit risk. Reference also may be made to similar instruments of the
issuer that are rated by Standard & Poor's. In the case of unrated municipal
bonds, a AAA rating may be assigned to issues with financial guarantee
insurance.
CNA actively manages its high yield bonds and maintains the level of such
investments at prudent levels, as illustrated above. In 1993, the level of
high yield investments within the GIC portfolio increased $261 million to
$1.068 billion at year end. This increase is a result of the relative
attractiveness of the high yield investment market in comparison to other
investment opportunities during the year. Although the level of high yield
investments has increased, the components of the high yield portfolio have
shifted toward lower risk issues, with B and BB rated bonds comprising 91% of
the high yield portfolio at December 31, 1993, compared to 82% at the end of
1992. High yield securities generally involve a greater degree of risk than
that of investment grade securities. Expected returns should, however,
compensate for the added risk. The risk is also considered in the interest
rate assumptions in the underlying insurance products. Further, CNA's
investment in real estate and mortgage loans amounted to less than one-half of
one percent of its total assets, substantially below industry averages.
Included in CNA's 1993 AAA-rated fixed income securities (general and GIC
portfolios) are $4.4 billion of asset-backed securities, consisting of
approximately 47% in collateralized mortgage obligations ("CMO's"), 47% in
U.S. Government agency issued pass-through certificates, and 6% in corporate
asset-backed obligations. The majority of CMO's held are U.S. Government
agency issues, are actively traded in liquid markets and are priced monthly by
broker-dealers. At December 31, 1993, market value exceeded amortized cost by
approximately $87 million. CNA limits the risks associated with interest rate
fluctuations and prepayment by concentrating its CMO investments in early
planned amortization classes with wide bands and relatively short principal
repayment windows.
16
ITEM 2. PROPERTIES
A. HOME OFFICE
CNA Plaza, owned by Continental Assurance Company, is a 1,097,000 square
foot office complex located at 333 S. Wabash, Chicago, Illinois. The
forty-five story office building serves as the home office for CNA and its
insurance subsidiaries. CNA Plaza and the adjacent building (a 454,000 square
foot building located at 55 E. Jackson Blvd.) are partially situated on
grounds under leases expiring in 2058 and 2067. Approximately 35% of the
adjacent building is rented to non-affiliates.
B. FIELD OFFICES
CNA also maintains four regional offices and forty branch offices in major
cities throughout the United States. This office space is leased except for
offices located in four CNA owned buildings.
<PAGE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Incorporated herein by reference from Note J of the Notes to the
Consolidated Financial Statements in the 1993 Annual Report to Shareholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Incorporated herein by reference from page 55 of the 1993 Annual Report to
Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference from page 2 of the 1993 Annual Report to
Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Incorporated herein by reference from pages 12 through 21 of the 1993
Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Balance Sheet - December 31, 1993 and 1992
Statement of Consolidated Operations -
Year Ended December 31, 1993, 1992 and 1991
Statement of Consolidated Stockholders' Equity -
Year Ended December 31, 1993, 1992 and 1991
Statement of Consolidated Cash Flows -
Year Ended December 31, 1993, 1992 and 1991
Notes to the Consolidated Financial Statements
Independent Auditors' Report
The above Consolidated Financial Statements, the related Notes to the
Consolidated Financial Statements and the Independent Auditors' Report are
incorporated herein by reference from pages 22 through 54 of the 1993 Annual
Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
17<PAGE>
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required in Part III has been omitted as the Registrant intends
to file a definitive proxy statement pursuant to Regulation 14A with the
Securities and Exchange Commission not later than 120 days after the close of
its fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Information required in Part III has been omitted as the Registrant intends
to file a definitive proxy statement pursuant to Regulation 14A with the
Securities and Exchange Commission not later than 120 days after the close of
its fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required in Part III has been omitted as the Registrant intends
to file a definitive proxy statement pursuant to Regulation l4A with the
Securities and Exchange Commission not later than 120 days after the close of
its fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required in Part III has been omitted as the Registrant intends
to file a definitive proxy statement pursuant to Regulation 14A with the
Securities and Exchange Commission not later than 120 days after the close of
its fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
Page
(a) 1. FINANCIAL STATEMENTS: Number
------
A separate index to the Consolidated Financial Statements
is presented in Part II, Item 8........................... 17
(a) 2. FINANCIAL STATEMENT SCHEDULES:
Schedule I Summary of Investments..................... 21
Schedule III Condensed Financial Information (Parent
Company)................................... 22
Schedule V Supplemental Insurance Information......... 25
Schedule VI Reinsurance ............................... 26
Schedule VIII Valuation and Qualifying Accounts and
Reserves................................... 26
Schedule IX Short-term Borrowings ..................... 27
Schedule X Supplemental Information Concerning
Property/Casualty Insurance Operations..... 27
<PAGE>
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
Page
(a) 2. FINANCIAL STATEMENT SCHEDULES (CONTINUED): Number
------
Other schedules are omitted because of the absence of con-
ditions under which they are required or because the
required information is provided in the Consolidated
Financial Statements or notes thereto.
Independent Auditors' Report ............................. 28
18
(a) 3. EXHIBITS:
Exhibit
Description of Exhibit Number
---------------------- -------
(3) Articles of incorporation and by-laws:
Certificate of Incorporation of CNA Financial
Corporation, as amended May 6, 1987 (Exhibit 3.1
to 1987 Form 10-K incorporated herein by reference.). 3.1
By-Laws of CNA Financial Corporation, as amended
November 3, 1993 .................................... 3.2*
(4) Instruments defining the rights of security holders,
including indentures:
CNA Financial Corporation hereby agrees to furnish
to the Commission upon request copies of instruments
with respect to long-term debt, pursuant to
Item 601(b) (4) (iii) of Regulation S-K.............. -
(10) Material contracts:
Employment Agreement between CNA Financial
Corporation and Dennis H. Chookaszian, dated
February 22, 1993 (Exhibit 10.1 to 1992 Form 10-K
incorporated herein by reference.)................... 10.1
Employment Agreement between CNA Financial
Corporation and Philip L. Engel, dated February 22,
1993 (Exhibit 10.2 to 1992 Form 10-K incorporated
herein by reference.)............................... 10.2
Continuing Services Agreement between CNA Financial
Corporation and Edward J. Noha, dated February 27,
1991 (Exhibit 6.0 to 1991 Form 8-K, filed March 18,
1991, incorporated herein by reference.)............. 10.3
CNA Employees' Retirement Benefit Equalization Plan,
as amended through January 1, 1993 (Exhibit 10.4 to
1992 Form 10-K incorporated herein by reference.).... 10.4
<PAGE>
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
(a) 3. EXHIBITS (CONTINUED):
Exhibit
Description of Exhibit Number
---------------------- -------
CNA Employees' Long Term Award Program
(Exhibit 10.5 to 1990 Form 10-K incorporated herein
by reference.) The plan was terminated effective
December 31, 1993................................... 10.5
CNA Employees' Supplemental Savings Plan, as amended
through January 1, 1993 (Exhibit 10.6 to 1992
Form 10-K incorporated herein by reference.)......... 10.6
Federal Income Tax Allocation Agreement dated
February 29, 1980 between CNA Financial Corporation
and Loews Corporation (Exhibit 10.2 to 1987
Form 10-K incorporated herein by reference.)........ 10.7
Agreement between Fibreboard Corporation and
Continental Casualty Company, dated April 9, 1993
(Exhibit A to 1993 Form 8-K filed April 12, 1993
incorporated herein by reference.)................... 10.8
Settlement Agreement entered into on October 12, 1993
by and among Fibreboard Corporation, Continental
Casualty Company, CNA Casualty of California,
Columbia Casualty Company and Pacific Indemnity
Company together the "Parties" (Exhibit 10.1 to
September 30, 1993 Form 10-Q incorporated herein by
reference.).......................................... 10.9
19
Continental-Pacific Agreement entered into
October 12, 1993 between Continental Casualty
Company and Pacific Indemnity Company (Exhibit 10.2
to September 30, 1993 Form 10-Q incorporated herein
by reference.)....................................... 10.10
Global Settlement Agreement among Fibreboard
Corporation, Continental Casualty Company, CNA
Casualty Company of California, Columbia Casualty
Company, Pacific Indemnity Company and the
Settlement Class dated December 23, 1993............. 10.11*
Glossary of Terms in Global Settlement Agreement,
Trust Agreement, Trust Distribution Process and
Defendant Class Settlement Agreement as of
December 23, 1993.................................... 10.12*
Fibreboard Asbestos Corporation Trust Agreement dated
December 23, 1993.................................... 10.13*
<PAGE>
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
(a) 3. EXHIBITS (CONTINUED):
Exhibit
Description of Exhibit Number
---------------------- -------
Trust Distribution Process - Annex A to the Trust
Agreement as of December 23, 1993.................... 10.14*
Defendant Class Settlement Agreement dated
December 22, 1993.................................... 10.15*
Escrow Agreement among Continental Casualty Company,
Pacific Indemnity Company and The First National
Bank of Chicago dated December 23, 1993.............. 10.16*
(11) Computation of Net Income per Common Share........... 11.1*
(12) Statements regarding computation of ratios:
Computation of Ratio of Earnings to Fixed Charges.... 12.1*
Computation of Ratio of Net Income, As Adjusted,
to Fixed Charges..................................... 12.2*
(13) 1993 Annual Report................................... 13.1*
(21) Subsidiaries of CNA.................................. 21.1*
(23) Consent of Deloitte & Touche......................... 23.1*
(28) Information from reports furnished to state insurance
regulatory authorities:
Property/Casualty Reserve Reconciliation-Statutory
Basis to Generally Accepted Accounting Principles.... 28.1*
Schedule P from Continental Casualty Company's 1993
Consolidated Annual Statutory Statement provided to
state insurance regulatory authorities............... 28.2*
--------------------------------
*Filed herewith
(b) REPORTS ON FORM 8-K:
In a report on Form 8-K dated November 3, 1993, CNA
issued a press release that disclosed third quarter
operating results and noted the addition of
$500 million to Continental Casualty Company's loss
reserves for asbestos-related bodily injury claims.
20<PAGE>
<PAGE>
SCHEDULE I
CNA FINANCIAL CORPORATION
SUMMARY OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992
------------------------------------- --------------------------------------
MARKET CARRYING MARKET CARRYING
(In thousands of dollars) COST VALUE VALUE COST VALUE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fixed maturities available for sale:
Bonds:
United States Government and
government agencies and
authorities-taxable ..................... $ 8,551,503 $ 8,688,293 $ 8,688,293 $ 4,845,180 $ 4,944,095 $ 4,845,180
States, municipalities and political
subdivisions-tax exempt.................. 4,724,041 5,014,841 5,014,841 9,506,971 10,162,427 9,501,741
Foreign governments and political
subdivisions............................. 420,948 423,356 423,356 324,864 325,543 324,864
Public utilities ......................... 235,366 256,502 256,502 259,929 268,691 259,929
Convertibles and bonds with warrants
attached................................. 188,583 193,943 193,943 184,407 187,682 184,407
All other corporate....................... 2,461,688 2,582,716 2,582,716 1,737,491 1,741,534 1,671,861
Redeemable preferred stocks................. 444,606 447,984 447,984 567,556 571,371 567,556
---------- ---------- ---------- ---------- ---------- ----------
Total fixed maturities available for sale 17,026,735 17,607,635 17,607,635 17,426,398 18,201,343 17,355,538
---------- ========== ---------- ----------- ========== ----------
Equity securities available for sale:
Common stocks:
Public utilities ......................... 21,634 21,810 21,810 11,712 12,474 12,474
Banks, trusts, and insurance companies.... 57,784 56,695 56,695 11,754 14,783 14,783
Industrial and other ..................... 353,320 429,744 429,744 282,309 320,030 320,030
Nonredeemable preferred stocks.............. - - - 4,761 9,349 9,349
---------- ---------- ---------- ---------- ---------- ----------
Total equity securities.................. 432,738 $ 508,249 508,249 310,536 $ 356,636 356,636
---------- ========== ---------- ---------- ========== ----------
Mortgage loans............................... 57,641 57,641 86,933 84,708
---------- ---------- ---------- ----------
Real estate:
Investment properties....................... 7,319 3,831 8,070 4,256
Acquired in satisfaction of debt............ 176 132 176 139
---------- ---------- ---------- ----------
Total real estate ....................... 7,495 3,963 8,246 4,395
---------- ---------- ---------- ----------
Policy loans................................. 174,006 174,006 178,611 178,611
Other invested assets ....................... 69,145 67,891 55,898 54,294
Short-term investments....................... 6,943,976 6,943,976 4,444,166 4,444,166
- --------------------------------------------------------------------------------------------------------------------------------
Total investments $24,711,736 $25,363,361 $22,510,788 $22,478,348
================================================================================================================================
</TABLE>
21<PAGE>
<PAGE>
SCHEDULE III
CNA FINANCIAL CORPORATION
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FINANCIAL POSITION
- --------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992
(In thousands of dollars)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments in subsidiaries ................................. $5,409,945 $4,246,054
Federal income taxes recoverable............................. 29,244 71,470
Deferred income taxes ....................................... 974,645 1,010,988
Other ....................................................... 29,783 99,455
--------- ---------
Total assets ........................................... 6,443,617 5,427,967
--------- ---------
LIABILITIES:
Debt......................................................... 895,503 444,865
Amounts due to affiliates ................................... 136,904 157,104
Other ....................................................... 30,133 36,801
--------- ---------
Total liabilities....................................... 1,062,540 638,770
- --------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $5,381,077 $4,789,197
==================================================================================================
</TABLE>
<PAGE>
<PAGE>
SCHEDULE III
(CONTINUED)
CNA FINANCIAL CORPORATION
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991
(In thousands of dollars)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Equity in income of subsidiaries before income tax:
Operating income (loss) ............................. $(467,602) $(1,530,698) $307,845
Realized investment gains ........................... 790,320 342,069 441,155
Net investment income ................................. 1,714 2,462 6,231
Other ................................................. (3,493) 4,122 1,236
Realized investment gains ............................. 12,672 12,630 2,182
-------- ---------- -------
333,611 (1,169,415) 758,649
-------- ---------- -------
EXPENSES:
Administrative and general expenses ................... 198,863 169,488 163,250
Interest expense ...................................... 41,303 36,065 39,515
-------- ---------- -------
240,166 205,553 202,765
-------- ---------- -------
Income (loss) before income tax................... 93,445 (1,374,968) 555,884
Income tax benefit..................................... 174,078 712,524 56,628
-------- ---------- -------
Income (loss) before cumulative effect of
accounting changes....................... 267,523 (662,444) 612,512
Cumulative effect on prior years of accounting changes:
Income taxes......................................... - 133,000 -
Postretirement benefits other than pensions
(net of income tax benefit of $32,780)........... - (63,630) -
Discounting for certain workers' compensation and
disability claim reserves
(net of income tax expense of $135,218) ......... - 262,522 -
- --------------------------------------------------------------------------------------------------
Net income (loss) $ 267,523 $ (330,552) $612,512
==================================================================================================
See accompanying Notes to Condensed Financial Information.
</TABLE>
22<PAGE>
<PAGE>
SCHEDULE III
(CONTINUED)
CNA FINANCIAL CORPORATION
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
CASH FLOW
- -----------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992 1991
(In thousands of dollars)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................. $ 267,523 $(330,552) $612,512
------- --------- -------
Adjustments to reconcile net income to net cash
used in operating activities:
Cumulative effect of accounting changes - Parent ............. - 18,637 -
Equity in earnings of unconsolidated affiliates:
Cumulative effect of accounting changes ..................... - (350,529) -
Earnings before cumulative effect of accounting changes...... (349,517) 935,594 (705,104)
Revenues - realized gains (losses)............................ (12,672) (12,630) (2,182)
Amortization ................................................. (1) 12 82
Changes in:
Accrued investment income ................................... (65) 198 (58)
Federal income taxes......................................... 42,226 (78,678) 73,417
Deferred income taxes ....................................... (124,313) (293,370) (103,982)
Other, net................................................... (17,727) 22,071 4,592
------- --------- -------
Total adjustments ......................................... (462,069) 241,305 (733,235)
------- --------- -------
NET CASH USED IN OPERATING ACTIVITIES ..................... (194,546) (89,247) (120,723)
------- --------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed maturities ................................. (999,273) (441,201) (116,315)
Proceeds from sale or maturity of fixed maturities............. 984,489 488,300 71,053
Change in short-term investments............................... 47,575 (50,287) 50,342
Change in other investments ................................... (4,169) 24,172 -
Capital contribution to Continental Casualty Company........... (475,000) - -
Other ......................................................... (10) (2) -
------- --------- -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES........ (446,388) 20,982 5,080
------- --------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to preferred shareholders....................... (4,018) (4,733) (7,628)
Dividend from Continental Casualty Company..................... 150,000 100,000 130,000
Net decrease in short-term debt ............................... - - (399,423)
Proceeds from issuance of long-term debt....................... 494,933 - 395,784
Principal payments on long-term debt........................... - (27,000) (3,000)
Other ......................................................... - - (151)
------- --------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES ................. 640,915 68,267 115,582
------- --------- -------
NET INCREASE (DECREASE) IN CASH ........................... (19) 2 (61)
Cash at beginning of year ....................................... 19 17 78
- -----------------------------------------------------------------------------------------------------
CASH AT END OF YEAR $ - $ 19 $ 17
=====================================================================================================
<PAGE>
<PAGE>
Supplemental disclosures of cash flow information:
Cash received (paid):
Interest expense ............................................. $ (34,905) $ (35,370) $(30,780)
Federal income taxes ......................................... (54,224) 89,437 69,238
=====================================================================================================
See accompanying Notes to Condensed Financial Information.
</TABLE>
23 SCHEDULE III
(CONTINUED)
CNA FINANCIAL CORPORATION
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION
NOTES TO CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
a. DEBT:
--------------------------------------------------------------------------------------
DECEMBER 31 1993 1992
(In thousands of dollars)
--------------------------------------------------------------------------------------
<S> <C> <C>
Long-term debt:
8.625% Senior Notes, due March 1, 1996 ................... $249,003 $248,601
8.875% Senior Notes, due March 1, 1998 ................... 148,540 148,264
6.250% Senior Notes, due November 15, 2003 ............... 247,932 -
7.250% Debenture, due November 15, 2023................... 247,028 -
1.000% Urban Development Action Grant, due May 7, 2019.... 3,000 3,000
Due to subsidiaries:
Continental Casualty Company ............................. - 45,000
--------------------------------------------------------------------------------------
Total $895,503 $444,865
======================================================================================
</TABLE>
In October 1993, a shelf registration statement was filed with the
Securities and Exchange Commission which made $900 million of debt
securities available for issuance from time to time. In addition,
$100 million from a previous shelf registration remained available for
issuance.
In November 1993, CNA sold $250 million principal amount of 6.25% notes
due 2003 and $250 million principal amount of 7.25% debentures due 2023 at
effective rates per annum of 6.4% and 7.3%, respectively. An additional
$500 million of securities and/or preferred stock will remain available
for issuance under the shelf registration statement.
b. Dividends of $150 million, $100 million, and $130 million were
received by CNA from Continental Casualty Company in 1993, 1992 and
1991, respectively.
c. CNA has reimbursed, or will reimburse, its subsidiaries for general
management and administrative expenses, unallocated loss adjustment
expenses and investment expense in the amounts of $193.1 million, $165.6
million and $159.5 million in 1993, 1992, and 1991, respectively.
d. CNA contributed $475 million in capital to Continental Casualty Company
in 1993. There were no capital contributions by CNA in 1992 and 1991.
- -----------------------------------------------------------------------------
24<PAGE>
<PAGE>
SCHEDULE V
CNA FINANCIAL CORPORATION
SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
GROSS INSURANCE RESERVES**
-----------------------------------------------------------
CLAIM
DEFERRED AND FUTURE POLICY-
ACQUISITION CLAIM POLICY UNEARNED HOLDERS'
(In thousands of dollars) COSTS EXPENSE BENEFITS PREMIUMS FUNDS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1993
Property/Casualty:
Commercial................... $371,866 $18,157,358 $ 17,158 $2,001,192 $ 23,503
Personal..................... 190,163 1,012,996 151,753 536,188 -
Involuntary risks............ - 1,641,601 - 18,635 -
Life:
Individual................... 416,703 143,594 2,178,044 - 31,957
Group ....................... 6,651 434,045 406,636 - 423,156
------- ---------- --------- --------- -------
CNA Insurance.............. $985,383 21,389,594 $2,753,591 $2,556,015 $478,616
======= ========= ========= =======
Other and Intercompany Eliminations 280,608
----------
$21,670,202
==========
DECEMBER 31, 1992
Property/Casualty:
Commercial................... $337,160 $17,286,019 $ 10,540 $1,872,975 $ 69,098
Personal.................... 170,327 990,336 114,898 529,459 -
Involuntary risks............ - 1,757,292 - 22,671 -
Life:
Individual................... 385,323 126,100 1,977,113 - 33,750
Group ....................... 7,296 421,041 418,045 - 435,455
------- ---------- --------- --------- -------
CNA Insurance.............. $900,106 20,580,788 $2,520,596 $2,425,105 $538,303
======= ========= ========= =======
Other and Intercompany Eliminations 152,650
----------
$20,733,438
==========
DECEMBER 31, 1991
Property/Casualty:
Commercial................... $335,660 $15,727,996 $ 7,319 $1,979,962 $109,559
Personal..................... 158,350 925,767 102,257 508,781 -
Involuntary risks............ - 1,455,926 - 19,212 -
Life:
Individual................... 372,094 110,707 1,789,467 - 33,133
Group ....................... 6,821 416,808 419,992 - 410,560
------- ---------- --------- --------- -------
CNA Insurance.............. $872,925 18,637,204 $2,319,035 $2,507,955 $553,252
======= ========= ========= =======
Other and Intercompany Eliminations 90,480
----------
$18,727,684
==========
<PAGE>
<PAGE>
SCHEDULE V
CNA FINANCIAL CORPORATION (CONTINUED)
SUPPLEMENTARY INSURANCE INFORMATION
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
AMORTIZATION
INSURANCE OF
NET NET CLAIMS AND DEFERRED OTHER
PREMIUM INVESTMENT POLICYHOLDERS' ACQUISITION OPERATING PREMIUMS
(In thousands of dollars) REVENUE INCOME BENEFITS COSTS EXPENSES WRITTEN
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1993
Property/Casualty:
Commercial................... $4,963,965 $ 896,661 $5,171,932 $ 951,168 $ 459,686 $5,030,879
Personal..................... 939,792 87,462 756,027 221,194 130,859 984,222
Involuntary risks............ 371,261 75,673 336,264 - 191,452 367,225
Life:
Individual................... 342,994 142,771 362,146 25,507 95,010 -
Group ....................... 2,099,173 116,955 1,945,584 2,436 242,150 -
--------- --------- --------- --------- --------- ---------
CNA Insurance.............. 8,717,185 1,319,522 8,571,953 $1,200,305 1,119,157 $6,382,326
========= =========
Other and Intercompany Eliminations (28,388) (5,212) (28,548) 545
--------- -------- --------- --------
$8,688,797 $1,314,310 $8,543,405* $1,119,702
========= ========= ========= =========
DECEMBER 31, 1992
Property/Casualty:
Commercial................... $4,870,222 $1,039,283 $6,140,824 $ 820,150 $ 463,784 $4,766,168
Personal..................... 930,902 101,188 808,867 212,406 125,964 964,120
Involuntary risks............ 552,450 83,649 643,957 - 249,398 555,909
Life:
Individual................... 321,792 150,584 321,854 40,720 99,665 -
Group ....................... 2,115,933 132,929 1,966,467 1,251 248,653 -
--------- --------- --------- --------- --------- ---------
CNA Insurance.............. 8,791,299 1,507,633 9,881,969 $1,074,527 1,187,464 $6,286,197
========= =========
Other and Intercompany Eliminations (23,328) 1,126 (23,461) (927)
--------- --------- --------- --------
$8,767,971 $1,508,759 $9,858,508* $1,186,537
========= ========= ========= =========
DECEMBER 31, 1991
Property/Casualty:
Commercial................... $5,150,261 $1,103,382 $4,587,406 $ 862,900 $ 434,874 $5,064,347
Personal..................... 895,141 100,839 796,961 193,853 135,742 946,167
Involuntary risks............ 609,916 78,515 678,238 - 277,215 609,585
Life:
Individual................... 312,196 155,662 306,662 61,004 93,259 -
Group ....................... 2,002,145 165,103 1,876,374 1,909 233,269 -
--------- --------- --------- --------- --------- ---------
CNA Insurance.............. 8,969,659 1,603,501 8,245,641 $1,119,666 1,174,359 $6,620,099
========= =========
Other and Intercompany Eliminations (23,308) 4,308 (23,469) 924
--------- --------- --------- ---------
$8,946,351 $1,607,809 $8,222,172* $1,175,283
========= ========= ========= =========
==========================================================================================================================
</TABLE>
<PAGE>
<PAGE>
SCHEDULE V
CNA FINANCIAL CORPORATION (CONTINUED)
NOTES TO SUPPLEMENTARY INSURANCE INFORMATION
=============================================================================
*Excludes participating policyholders' interest related to realized
investment losses of $13,142, $12,140, and $20,055 in 1993, 1992 and 1991,
respectively.
**1992 and 1991 have been restated to conform to the classifications followed
in 1993 upon adoption of SFAS 113.
25<PAGE>
<PAGE>
SCHEDULE VI
CNA FINANCIAL CORPORATION
REINSURANCE
The effects of reinsurance on premium revenues are shown in the following
schedule:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 EARNED PREMIUMS ASSUMED/
------------------------------------- NET
(In millions of dollars) DIRECT CEDED ASSUMED NET %
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Life.......................................... $ 312 $ 20 $ 108 $ 400 27.0%
Accident and health........................... 2,413 32 149 2,530 5.9
Property and casualty......................... 5,228 496 1,027 5,759 17.8
----- --- ----- -----
Total premiums............................... $7,953 $548 $1,284 $8,689 14.8
===== === ===== =====
1992
Life.......................................... $ 336 $ 21 $ 115 $430 26.7%
Accident and health........................... 2,287 33 173 2,427 7.1
Property and casualty......................... 5,324 475 1,062 5,911 18.0
----- --- ----- -----
Total premiums............................... $7,947 $529 $1,350 $8,768 15.4
===== === ===== =====
1991
Life.......................................... $ 281 $ 18 $ 117 $ 380 30.8%
Accident and health........................... 2,173 16 139 2,296 6.1
Property and casualty......................... 5,612 474 1,132 6,270 18.1
----- --- ----- -----
Total premiums............................... $8,066 $508 $1,388 $8,946 15.5
===== === ===== =====
- ----------------------------------------------------------------------------------------------------
</TABLE>
The impact of reinsurance on life insurance in force is shown in the
following schedule:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
LIFE INSURANCE IN FORCE ASSUMED/
------------------------------------- NET
(In millions if dollars) DIRECT CEDED ASSUMED NET %
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1993 ............................. $58,978 $5,713 $53,270 $106,535 50.0%
December 31, 1992 ............................. 53,869 5,146 51,343 100,066 51.3
December 31, 1991 ............................. 49,461 4,983 49,217 93,695 52.5
- ----------------------------------------------------------------------------------------------------
/TABLE
<PAGE>
SCHEDULE VIII
CNA FINANCIAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
BALANCE BALANCE
AT CHARGED TO CHARGED TO AT
BEGINNING COSTS AND OTHER END OF
(In thousands of dollars) OF PERIOD EXPENSES AMOUNTS DEDUCTIONS PERIOD
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Deducted from assets:
Allowance for doubtful accounts:
Insurance receivables ........... $110,420 $ 9,197 $ - $ 2,293 $117,324
======= ====== ======= ===== =======
Year Ended December 31, 1992
Deducted from assets:
Allowance for doubtful accounts:
Insurance receivables ........... $100,382 $27,237 $ - $17,199 $110,420
======= ====== ======= ======= =======
Year Ended December 31, 1991
Deducted from assets:
Allowance for doubtful accounts:
Insurance receivables ........... $ 80,494 $33,423 $ - $13,535 $100,382
======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------
</TABLE>
26<PAGE>
<PAGE>
SCHEDULE IX
CNA FINANCIAL CORPORATION
SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM AT END OF INTEREST DURING THE DURING THE DURING THE
(In thousands of dollars) BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993 Banks $2,000 4.00% $ 2,000 $ 2,000 4.43%
===== ---- ======= ======= ====
YEAR ENDED DECEMBER 31, 1992 (c) Banks $2,000 5.13% $ 2,101 $ 2,040 5.52%
===== ---- ======= ======= ====
YEAR ENDED DECEMBER 31, 1991 (c) Banks $2,011 6.02% $288,577 $107,399 6.61%
===== ---- ======= ======= ====
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (a) Average amounts outstanding during the period are calculated by
an average of end of month balances.
(b) Weighted average interest rate for the period is calculated by
dividing short-term interest expense by the average amount
outstanding for the period.
(c) Excludes CNA's 81/2% Sinking Fund Debentures due December 15,
1995 in the outstanding principal amount of $23.4 million which
were called for redemption on February 28, 1992.<PAGE>
<PAGE>
SCHEDULE X
CNA FINANCIAL CORPORATION
SUPPLEMENTAL INFORMATION CONCERNING PROPERTY/CASUALTY
INSURANCE OPERATIONS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED PROPERTY/
CASUALTY ENTITIES
------------------------------------
YEAR ENDED DECEMBER 31
------------------------------------
1993 1992 1991
(In thousands of dollars) (RESTATED) (RESTATED)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred acquisition costs .......................................................... $ 562,029 $ 507,487 $ 494,010
Reserves for unpaid claims and claim expenses........................................ 20,811,955 20,033,647 18,109,689
Discount, if any, deducted above (based on interest rates ranging from 3.5% to 7.5%). 1,886,532 1,787,348 1,126,024
Unearned premiums.................................................................... 2,556,015 2,425,105 2,507,955
Earned premiums...................................................................... 6,275,018 6,353,574 6,655,318
Net investment income................................................................ 1,059,796 1,224,120 1,282,736
Claim and claim expenses related to current year .................................... 5,387,947 5,708,216 5,833,016
Claim and claim expenses related to prior years...................................... 589,959 1,617,433 (12,255)
Amortization of deferred acquisition costs .......................................... 1,172,362 1,032,556 1,056,753
Paid claim and claim expenses........................................................ 4,916,888 4,676,600 4,468,924
Premiums written .................................................................... 6,382,326 6,286,197 6,620,099
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
27<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
CNA Financial Corporation
We have audited the consolidated financial statements of CNA Financial
Corporation (an affiliate of Loews Corporation) and subsidiaries as of
December 31, 1993 and 1992 and for each of the three years in the period ended
December 31, 1993, and have issued our report thereon dated February 16, 1994,
which report includes an explanatory paragraph as to certain accounting
changes; such consolidated financial statements and report are included in the
Company's 1993 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the financial statement schedules of CNA
Financial Corporation and subsidiaries listed in Item 14. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
Deloitte & Touche
Chicago, Illinois
February 16, 1994
28<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CNA Financial Corporation
By Laurence A. Tisch
-----------------------------
Laurence A. Tisch
Chief Executive Officer
(Principal Executive Officer)
By Peter E. Jokiel
-----------------------------
Peter E. Jokiel
Senior Vice President and
Chief Financial Officer
Date: March 23, 1994<PAGE>
<PAGE>
SIGNATURES --(CONTINUED)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
SIGNATURE TITLE
Antoinette Cook Bush Director
- ------------------------------
Antoinette Cook Bush
Dennis H. Chookaszian Director
- ------------------------------
Dennis H. Chookaszian
Philip L. Engel Director
- ------------------------------
Philip L. Engel
Robert P. Gwinn Director
- ------------------------------
Robert P. Gwinn
Edward J. Noha Chairman of the Board
- ------------------------------ and Director
Edward J. Noha
Dated:
Lester Pollack Director March 23, 1994
- ------------------------------
Lester Pollack
- ------------------------------ Director*
John E. Stipp
Richard L. Thomas Director
- ------------------------------
Richard L. Thomas
James S. Tisch Director
- ------------------------------
James S. Tisch
Laurence A. Tisch Chief Executive Officer
- ------------------------------ and Director
Laurence A. Tisch
Preston R. Tisch Director
- ------------------------------
Preston R. Tisch
Marvin Zonis Director
- ------------------------------
Marvin Zonis
*Passed away on March 8, 1994.
29
<PAGE>
EXHIBIT 11.1
CNA FINANCIAL CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991 1990 1989
(In millions, except per share data)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Weighted average shares outstanding .................................. 61.8 61.8 61.8 61.8 61.9
===== ====== ===== ===== =====
Net income (loss) before cumulative effect of accounting changes...... $267.5 $(662.5) $612.5 $366.5 $613.5
Less preferred stock dividends........................................ 4.0 4.2 6.8 9.8 10.8
----- ------ ----- ----- -----
Net income (loss) before cumulative effect of accounting changes
available to common stockholders.................................. 263.5 (666.7) 605.7 356.7 602.7
Cumulative effect on prior years of changes in accounting principles.. - 331.9 - - -
----- ------ ----- ----- -----
Net income (loss) available to common stockholders.................. $263.5 $(334.8) $605.7 $356.7 $602.7
===== ====== ===== ===== =====
Earnings per share:
Net income (loss) before cumulative effect of accounting changes...... $ 4.26 $(10.79) $ 9.80 $ 5.77 $ 9.73
Cumulative effect on prior years of changes in accounting principles.. - 5.37 - - -
----- ------ ----- ----- -----
Net income (loss) available to common stockholders $ 4.26 $ (5.42) $ 9.80 $ 5.77 $ 9.73
===== ====== ===== ===== =====
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
EXHIBIT 12.1
CNA FINANCIAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991 1990 1989
(In thousands of dollars, except ratios)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income before income tax and cumulative effect of accounting changes... $ 93,445 $(1,374,968) $555,884 $101,031 $319,442
Add:
Interest expense ..................................................... 36,278 36,698 38,293 19,878 2,845
Interest element of operating lease rental............................ 18,239 17,622 17,625 16,818 14,758
------- ---------- ------- ------- -------
Income before income tax and cumulative effect of
accounting changes, as adjusted....................................... $147,962 $(1,320,648) $611,802 $137,727 $337,045
======= ========== ======= ======= =======
Fixed charges:
Interest expense ..................................................... $ 36,278 $ 36,698 $ 38,293 $ 19,878 $ 2,845
Interest element of operating lease rental............................ 18,239 17,622 17,625 16,818 14,758
------- ---------- ------- ------- -------
Fixed charges ......................................................... $ 54,517 $ 54,320 $ 55,918 $ 36,696 $ 17,603
======= ========== ======= ======= =======
Ratio of earnings to fixed charges (1)................................. 2.7 (24.3) 10.9 3.8 19.1
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For purposes of computing this ratio, earnings consist of income before
income taxes and cumulative effect of accounting changes plus fixed
charges of consolidated companies. Fixed charges consist of interest and
that portion of operating lease rental expense which is deemed to be an
interest factor for such rentals.
<PAGE>
EXHIBIT 12.2
CNA FINANCIAL CORPORATION
COMPUTATION OF RATIO OF NET INCOME,
AS ADJUSTED, TO FIXED CHARGES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991 1990 1989
(In thousands of dollars, except ratios)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income........................................................... $267,523 $(330,552) $612,512 $366,509 $613,509
Add:
Interest expense ................................................... 36,278 36,698 38,293 19,878 2,845
Interest element of operating lease rental.......................... 18,239 17,622 17,625 16,818 14,758
------- -------- ------- ------- -------
Net income, as adjusted ............................................. $322,040 $(276,232) $668,430 $403,205 $631,112
======= ======== ======= ======= =======
Fixed charges:
Interest expense ................................................... $ 36,278 $ 36,698 $ 38,293 $ 19,878 $ 2,845
Interest element of operating lease rental.......................... 18,239 17,622 17,625 16,818 14,758
------- -------- ------- ------- -------
Fixed charges ....................................................... $ 54,517 $ 54,320 $ 55,918 $ 36,696 $ 17,603
======= ======== ======= ======= =======
Ratio of net income, as adjusted, to fixed charges (1)............... 5.9 (5.1) 12.0 11.0 35.9
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For purposes of computing this ratio, net income has been adjusted to
include fixed charges of consolidated companies. Fixed charges consist of
interest and that portion of operating lease rental expense which is
deemed to be an interest factor for such rentals.
31
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF CNA
STATE OF
COMPANY INCORPORATION OWNED BY
- ------- ------------- --------
CNA Financial Corporation (CNA) Delaware 83 % Loews
Corporation
Continental Casualty Company (CCC) Illinois 100 % CNA
1897 Corporation Delaware 100 % CNA
CNA Structured Settlements, Inc. Illinois 100 % CNA
CNA Management (International) Limited Jersey Channel Islands 100 % CNA
CNA (Bermuda) Services, Ltd. Bermuda 100 % CNA
Continental Assurance Company (CAC) Illinois 100 % CCC
CNA Assurance Company of Connecticut Connecticut 100 % CCC
1911 Corp. and 3 Subsidiaries Delaware 100 % CCC
Claims Administration Corp. Maryland 100 % CCC
CNA Automation, Inc. Illinois 100 % CCC
Agency Management Services, Inc. and
6 Subsidiaries Delaware 90.6 % CCC
American Casualty Company of Reading,
Pennsylvania (ACCO) Pennsylvania 100 % CCC
National Fire Insurance Company
of Hartford (NFI) Connecticut 100 % CCC
Columbia Casualty Company Illinois 100 % CCC
CNA Casualty of California California 100 % CCC
Transportation Insurance Company Illinois 100 % CCC
Collateral Holding Subsidiaries Illinois 100 % CCC
Transcontinental Technical Services,
Inc. (ServCo) Illinois 100 % CCC
CNA Management Company Limited and
2 Subsidiaries United Kingdom 100 % CCC
CNA Realty Corp. and 1 Subsidiary Delaware 100 % CCC
Larwin Developments, Inc. California 100 % CCC
CNA Services, Incorporated Illinois 100 % CCC
Valley Forge Life Insurance Company Pennsylvania 100 % CAC
Valley Forge Insurance Company Pennsylvania 100 % ACCO
Transcontinental Insurance Company New York 100 % NFI
32
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-50753 of CNA Financial Corporation and subsidiaries on Form S-3 of our
report dated February 16, 1994, appearing in and incorporated by reference in
the Annual Report on Form 10-K of CNA Financial Corporation and subsidiaries
for the year ended December 31, 1993.
Deloitte & Touche
Chicago, Illinois
March 30, 1994
33
<PAGE>
EXHIBIT 28.1
A reconciliation of property/casualty reserves as shown on Schedule P to
reserves for unpaid claims and claim expenses, as shown in the 10-K follows.
Schedule P is from Continental Casualty Company's 1993 consolidated annual
statutory statement provided to state insurance regulatory authorities.
Statutory claim and claim expense reserves are presented net of ceded
reinsurance reserve. Under generally accepted accounting principles such
reserves are recorded "gross" of reinsurance. Ceded reinsurance recoverables
are recorded as assets.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PROPERTY/CASUALTY RESERVE RECONCILIATION
STATUTORY BASIS TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
DECEMBER 31 1993
(In thousands of dollars)
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Total claims and claim expenses per Schedule P (net of reinsurance) ....................... $17,962,503
Non-domestic affiliates ................................................................... 358,778
Ceded claims and claim expenses ........................................................... 2,490,674
- ----------------------------------------------------------------------------------------------------------
Reserve for claims and claim expenses - Generally accepted accounting principles $20,811,955
==========================================================================================================
</TABLE>
34
<PAGE>
BY-LAWS EXHIBIT 3.2
OF
CNA FINANCIAL CORPORATION
(As Amended November 3, 1993)
ARTICLE I. OFFICES.
SECTION 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
SECTION 2. The Corporation may also have offices at such other
places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of
the Corporation may require.
ARTICLE II. MEETINGS OF STOCKHOLDERS.
SECTION 1. Meetings of stockholders for any purpose may be held
at such time and place, within or without the State of Delaware,
as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
SECTION 2. Annual meetings of stockholders, commencing with the
year 1970, shall be held on the first Wednesday in May if not a
legal holiday, and if a legal holiday, then on the next business
day following, at 10:00 a.m., or at such other date and time as
shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting, at which they shall
elect by a plurality vote a Board of Directors, and transact such
other business as may properly be brought before the meeting.
Elections of Directors need not be by ballot.
SECTION 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten
nor more than fifty days before the date of the meeting.
SECTION 4. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each
stockholder. Such list shall be opened to the examination of any
stockholder, for the purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place
-1-
<PAGE>
<PAGE>
where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is
present.
SECTION 5. Special meetings of the stockholders, for any purpose
or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chief
Executive Officer or President and shall be called by the
President or Secretary at the request in writing of a majority of
the Board of Directors, or at the request in writing of
stockholders owning not less than one-fifth of all shares issued
and outstanding and entitled to vote on any proposal to be
submitted to said meeting. Such request shall state the purpose
or purposes of the proposed meeting.
SECTION 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes
for which the meeting is called, shall be given not less than ten
nor more than fifty days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
SECTION 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the
notice.
SECTION 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings
of the stockholders for the transaction of business except as
otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for
more than thirty days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
SECTION 9. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one
upon which by express provision of the statutes or of the
Certificate of Incorporation, a different vote is required, in
which case such express provision shall govern and control the
decision of such question.
-2-
<PAGE>
<PAGE>
SECTION 10. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for
each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
SECTION 11. Whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken for or in connection
with any corporate action, by any provision of the statutes, the
meeting and vote of stockholders may be dispensed with if all of
the stockholders who would have been entitled to vote upon the
action if such meeting were held shall consent in writing to such
corporate action being taken; or if the Certificate of
Incorporation authorizes the action to be taken with the written
consent of the holders of less than all of the stock who would
have been entitled to vote upon the action if a meeting were
held, then on the written consent of the stockholders having not
less than such percentage of the total number of votes as may be
authorized in the Certificate of Incorporation; provided that in
no case shall the written consent be by the holders of stock
having less than the minimum percentage of the total required by
statute for the proposed corporate action, and provided that
prompt notice must be given to all stockholders of the taking of
corporate action without a meeting and by less than unanimous
written consent.
ARTICLE III. DIRECTORS.
SECTION 1. The number of Directors which shall constitute the
whole Board shall be twelve. Except as provided in Section 2 of
this Article, the Directors shall be elected at the annual
meeting of the stockholders, and each Director shall hold office
until his successor is elected and qualified. Directors need not
be stockholders.
SECTION 2. The office of a Director shall become vacant if he
dies or resigns by a writing signed by him and delivered to the
Corporation, and the Board of Directors may declare vacant the
office of a Director if he be declared of unsound mind by an
order of Court or convicted of a felony, or for any other proper
cause, of if, within sixty days after notice of his election as a
Director, he does not accept such office either in writing or by
attending a meeting of the Board of Directors.
Vacancies and newly created directorships resulting from any
increase in the authorized number of Directors may be filled by a
majority of the Directors then in office, though less than a
quorum, or by a sole remaining Director, and the Directors so
chosen shall hold office until the next annual election and until
their successors are duly elected and shall qualify, unless
sooner displaced. If there are no Directors in office, then an
election of Directors may be held in the manner provided by
statute. If, at the time of filing any vacancy or any newly
created directorship, the Directors then in office shall
-3-
<PAGE>
<PAGE>
constitute less than a majority of the whole Board (as
constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such Directors,
summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the Directors
chosen by the Directors then in office.
SECTION 3. The business of the Corporation shall be managed by
its Board of Directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the
stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the
State of Delaware. The Directors may designate a Director as the
Chairman of the Board of Directors. The Chairman of the Board of
Directors shall not be an officer of the Corporation.
SECTION 5. The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be fixed
by the vote of the stockholders at the annual meeting and no
notice of such meeting shall be necessary to the newly elected
Directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of
the newly elected Board of Directors, or in the event such
meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be
specified in a written waiver signed by all of the Directors.
SECTION 6. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from
time to time be determined by the Board.
SECTION 7. Special meetings of the Board of Directors may be
called by the Chief Executive Officer, the President or the
Secretary, and shall be called upon the written request of any
two or more Directors. Notice of the time and place of such
meetings shall be served upon or telephoned to each Director at
least 24 hours, or mailed (postage prepaid) or telegraphed
(charges prepaid) to each Director at his address as shown on the
books of the Corporation at least 48 hours, prior to the time of
the meeting, and if such notice is mailed or telegraphed as above
provided, the notice shall be deemed to have been given at the
time it is deposited in the United States mail or with the
telegraph office for transmission, as the case may be.
-4-
<PAGE>
<PAGE>
SECTION 8. At all meetings of the Board six (6) Directors shall
constitute a quorum for the transaction of business and the act
of a majority of the Directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors,
except as may be otherwise specifically provided by statute or by
the Certificate of Incorporation. If a quorum shall not be
present at any meeting of the Board of Directors, the Directors
present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present.
SECTION 9. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members
of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes
of proceedings of the Board or committee.
COMMITTEES OF DIRECTORS
SECTION 10. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate one or more committees,
each committee to consist of two or more of the Directors of the
Corporation. The Board may designate one or more Directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution, shall have
and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all
papers which may require it; provided, however, that in the
absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any
such absent or disqualified member. Such committee or committees
shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors.
Unless otherwise provided by the Board of Directors, a majority
of the members of any committee appointed by the Board of
Directors pursuant to this Section shall constitute a quorum at
any meeting thereof and the act of a majority of the members
present at a meeting at which a quorum is present shall be the
act of such committee. Any such committee shall, subject to any
rules prescribed by the Board of Directors, prescribe its own
rules for calling, giving notice of and holding meetings and its
method of procedure at such meetings and shall keep a written
record of all action taken by it.
SECTION 11. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when
required.
-5-
<PAGE>
<PAGE>
SECTION 12. In the absence or disqualification of one or more
members of any Committee, the member or members present at any
meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in
the place of any such absent or disqualified member or members.
COMPENSATION OF DIRECTORS
SECTION 13. The Directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated fee as Director. No such payment shall
preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special
or standing committees may be allowed like compensation for
attending committee meetings.
ARTICLE IV. NOTICE.
SECTION 1. Whenever, under the provisions of the statutes or of
the Certificate of Incorporation or of these By-Laws, notice is
required to be given to any Director or stockholder, it shall not
be construed to mean personal notice, but such notice may be
given in writing, by mail, addressed to such Director or
stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to Directors may
also be given by telegram or telephone.
SECTION 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation
or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE V. OFFICERS.
SECTION 1. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a Chief Executive Officer,
Secretary and Chief Financial Officer. The Board of Directors
may also choose a President and one or more Vice Presidents. The
Board of Directors may designate one or more of the Vice
Presidents as Senior Vice President or Executive Vice President
and may use descriptive words or phrases to designate the
standing, seniority or area of special competence of the Vice
Presidents. Any number of offices may be held by the same
person, unless the Certificate of Incorporation or these By-Laws
otherwise provide.
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<PAGE>
SECTION 2. The Board of Directors at its first meeting after
each annual meeting of stockholders shall choose a Chief
Executive Officer, a Chief Financial Officer and a Secretary.
SECTION 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by
the Board.
SECTION 4. The Board of Directors shall fix the compensation of
the Chief Executive Officer and, unless otherwise established by
the Board of Directors or a committee appointed by the Board of
Directors, the Chief Executive Officer shall fix the compensation
of any or all other officers of the Corporation.
SECTION 5. The officers of the Corporation shall hold office
until their successors are chosen and qualify. Any officer
elected or appointed by the Board of Directors may be removed at
any time by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the
Corporation shall be filled by the Board of Directors.
CHIEF EXECUTIVE OFFICER
SECTION 6. The Chief Executive Officer shall be the chief
executive officer of the Corporation and shall have general and
active control of its business and affairs. He shall preside at
the meetings of the stockholders and the Board of Directors, and
may exercise any and all of the powers of a chief executive
officer. The Chief Executive Officer shall have such other
powers and duties as may be assigned to or vested in him from
time to time by the Board of Directors or by the Executive
Committee.
SECTION 7. The Chief Executive Officer may execute bonds,
mortgages and other contracts requiring a seal, under the seal of
the Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
THE PRESIDENT
SECTION 8. The President, if one shall be chosen, shall have
general supervision and direction of all other officers of the
Corporation, subject to the direction of the Board of Directors,
and shall carry into effect the orders of the Board of Directors
and Chief Executive Officer of the Board of Directors. The
President shall also have such other duties and powers as may be
assigned to or vested in him from time to time by the Board of
Directors or by the Executive Committee.
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<PAGE>
THE VICE PRESIDENTS
SECTION 9. The Vice Presidents shall assist the Chief Executive
Officer, and shall perform such other duties as may from time to
time be directed by the Board of Directors, the Chief Executive
Officer or the President.
THE SECRETARY AND ASSISTANT SECRETARY
SECTION 10. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the stockholders and record all
the proceedings of the meetings of the Corporation and of the
Board of Directors in a book to be kept for that purpose and
shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, under whose
supervision he shall be. He shall have custody of the corporate
seal of the Corporation and he, or an assistant secretary, shall
have authority to affix the same to any instrument requiring it
and when so affixed it may be attested by his signature or by the
signature of such assistant secretary. The Board of Directors
may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by his signature.
SECTION 11. The Assistant Secretary, or if there be more than
one, the Assistant Secretaries in the order determined by the
Board of Directors (or if there be no such determination, then in
the order of their election), shall, in the absence of the
Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
THE CHIEF FINANCIAL OFFICER AND ASSISTANT TREASURER
SECTION 12. The Chief Financial Officer shall have the custody
of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the
Board of Directors.
SECTION 13. He shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the President and the
Board of Directors, at its regular meetings, or when the Board of
Directors so requires, an account of all his transactions as
treasurer and of the financial condition of the Corporation.
SECTION 14. If required by the Board of Directors, he shall give
the Corporation a bond (which shall be renewed every six years)
in such sum and with such surety or sureties as shall be
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<PAGE>
satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration
to the Corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the Corporation.
SECTION 15. The Assistant Treasurer, or if there shall be more
than one, the Assistant Treasurers in the order determined by the
Board of Directors (or if there be no such determination, then in
the order of their election), shall, in the absence of the Chief
Financial Officer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
ARTICLE VI. CERTIFICATES OF STOCK.
SECTION 1. Except as otherwise provided in the Certificate of
Incorporation, every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the
Corporation by, the Chief Executive Officer, the President or a
Vice President and the Chief Financial Officer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him in the
Corporation.
SECTION 2. If the Corporation shall be authorized to issue more
than one class or more than one series of any class, the
designations, preferences and relative, participating, optional
or other special rights of each class of stock or series thereof
and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series of
stock, provided that, except as otherwise provided in Section 202
of the General Corporation Law of Delaware, in lieu of the
foregoing requirements, there may be set forth on the face or
back of the certificate which the Corporation shall issue to
represent such class or series of stock, a statement that the
Corporation will furnish without charge to each stockholder who
so requests the designations, preferences and relative,
participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
SECTION 3. Where a certificate is countersigned (1) by a
transfer agent other than the Corporation or its employees, or,
(2) by a registrar other than the Corporation or its employees,
the signatures of the officers of the Corporation may be
facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have
ceased to be such officer before such certificate is issued, it
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<PAGE>
may be issued by the Corporation with the same effect as if he
were such officer at the date of issue.
LOST CERTIFICATES
SECTION 4. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an
affidavit of the fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
require and/or to give the Corporation a bond in such sum as it
may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
TRANSFER OF STOCK
SECTION 5. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the
Corporation to cause to be issued a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
SECTION 6. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may
fix, in advance, a record date, which shall not be more than
sixty nor less than ten days before the date of such meeting, nor
more than sixty days prior to any other action. A determination
of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a
new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
SECTION 7. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its
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<PAGE>
books as the owner of shares, and shall not be bound to recognize
any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
ARTICLE VII. GENERAL PROVISIONS.
DIVIDENDS
SECTION 1. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors, or a duly
constituted Committee thereof, at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or
in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation.
SECTION 2. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends
such sum or sums as the Directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interest of
the Corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created.
ANNUAL STATEMENT
SECTION 3. The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when
called for by vote of the stockholders, a full and clear
statement of the business and condition of the Corporation.
CHECKS
SECTION 4. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time
to time designate.
FISCAL YEAR
SECTION 5. The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.
SEAL
SECTION 6. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the
words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
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<PAGE>
ARTICLE VIII. AMENDMENTS.
SECTION 1. These By-Laws may be altered or repealed at any
regular meeting of the stockholders or of the Board of Directors
or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration or repeal be contained in
the notice of such special meeting.
ARTICLE IX. MISCELLANEOUS.
SECTION 1. Unless otherwise ordered by the Board of Directors,
the Chief Executive Officer or the President, or any Vice
President, or the Secretary or the Chief Financial Officer in
person or by proxy or proxies appointed by any of them shall have
full power and authority on behalf of the Corporation to vote,
act and consent with respect to any shares of stock issued by
other corporations which the Corporation may own or as to which
the Corporation otherwise has the right to vote, act or consent.
SECTION 2. In the event the protective conditions or
restrictions of any outstanding series of Preferred Stock, fixed
by the Board of Directors pursuant to the authority conferred
upon the Board of Directors by the Certificate of Incorporation
and Section 151 of Title 8 of the Delaware Code of 1953, are
inconsistent with any provision of these By-Laws, such provision
shall be deemed to be amended to remove any inconsistency.
SECTION 3. Business Combinations with interested Stockholders.
Pursuant to the provisions of Section 203(a)(2) of the General
Corporation Law of Delaware, the Corporation, by action of the
Board, expressly elects not to be governed by Section 203 of the
General Corporation Law of Delaware, dealing with the business
combinations with interested stockholders. Notwithstanding
anything to the contrary in these By-Laws, the provisions of this
Section may not be further amended by the Board except as may be
specifically authorized by the General Corporation Law.
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EXHIBIT 10.11
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
GERALD AHERN, JAMES DENNIS, and S
CHARLES W. JEEP, On Behalf of S
Themselves and Others S
Similarly Situated S
S
Plaintiffs, S
S
v. S
S
FIBREBOARD CORPORATION S Civil Action No.6:93cv526
S
Defendant S
S
CONTINENTAL CASUALTY COMPANY S
and S
PACIFIC INDEMNITY COMPANY S
S
Intervenors S
SUBMISSION OF GLOBAL SETTLEMENT AGREEMENT
COMES NOW Continental Casualty Company ("Continental"), together
with Fibreboard Corporation, CNA Casualty Company of California, Columbia
Casualty Company, Pacific Indemnity Company, and the Settlement Class,
provisionally certified by this Court, and submit the following Global
Settlement Agreement, together with Exhibits A-E.
Dated: December 23, 1993
Respectfully submitted,
IRELAND, CARROLL & KELLEY, P.C.
6101 S. Broadway, Suite 500
Tyler, Texas 75703
(903) 561-1600
(903) 581-1071 Facsimile
BY: Bill Parker
__________________
BILL PARKER<PAGE>
<PAGE>
GLOBAL SETTLEMENT AGREEMENT
AMONG
FIBREBOARD CORPORATION,
CONTINENTAL CASUALTY COMPANY,
CNA CASUALTY COMPANY OF CALIFORNIA,
COLUMBIA CASUALTY COMPANY,
PACIFIC INDEMNITY COMPANY,
AND
THE SETTLEMENT CLASS
AND
TOGETHER WITH EXHIBITS A - E<PAGE>
<PAGE>
GLOBAL SETTLEMENT AGREEMENT
AMONG
FIBREBOARD CORPORATION,
CONTINENTAL CASUALTY COMPANY,
CNA CASUALTY COMPANY OF CALIFORNIA,
COLUMBIA CASUALTY COMPANY,
PACIFIC INDEMNITY COMPANY,
AND
THE SETTLEMENT CLASS
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . 8
SECTION 1.1 Certain Defined Terms . . . . . . . . . . 8
ARTICLE 2 SETTLEMENT . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.1 Settlement. . . . . . . . . . . . . . . . 8
SECTION 2.2 Exclusive Rights Against the Trust. . . . 8
SECTION 2.3 Payments. . . . . . . . . . . . . . . . . 9
SECTION 2.4 Additional Fibreboard Obligations. . . . 11
SECTION 2.5 Releases. . . . . . . . . . . . . . . . . 14
SECTION 2.6 Final Settlement of the Insurance
Policies. . . . . . . . . . . . . . . . . 16
SECTION 2.7 Indemnity Obligation of the Trust After
Global Approval Judgment. . . . . . . . . 17
SECTION 2.8 Fibreboard Corporation's Indemnity and
Related Obligations . . . . . . . . . . . 17
ARTICLE 3 ACTIONS TO BE TAKEN TO IMPLEMENT THIS AGREEMENT . 19
SECTION 3.1 Applications for Initial Court Orders,
Settlement Class Order, Defendant Class
Order and Global Approval Judgment. . . . . 19
SECTION 3.2 Effect of Class Certification. . . . . . . 19
SECTION 3.3 Execution and Delivery of Escrow
Instructions. . . . . . . . . . . . . . . . 20
ARTICLE 4 TERMINATION . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.1 Termination. . . . . . . . . . . . . . . . 23
ARTICLE 5 SETTLEMENT TRUST . . . . . . . . . . . . . . . . . . 24
SECTION 5.1 Trust Agreement. . . . . . . . . . . . . . 24
SECTION 5.2 Continuing Jurisdiction of the Court. . . . 24
SECTION 5.3 Preservation of Funds. . . . . . . . . . . 25
ARTICLE 6 THIRD PARTY CLAIMS . . . . . . . . . . . . . . . . . 25
SECTION 6.1 Bar Orders. . . . . . . . . . . . . . . . . 25
SECTION 6.2 Judgment Reduction and Subrogation Rights . 25
SECTION 6.3 Actions Necessary to Obtain Discharges and
Bar Orders. . . . . . . . . . . . . . . . . 26
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Page
ARTICLE 7 INTERIM CLAIM LIQUIDATION PROCEDURES . . . . . . . . . 28
SECTION 7.1 Interim Claims. . . . . . . . . . . . . . . . 28
SECTION 7.2 Processing Interim Claims. . . . . . . . . . 29
SECTION 7.3 Payment of Exigent and Extreme Hardship
Claims. . . . . . . . . . . . . . . . . . . . 32
SECTION 7.4 Payment of Interim Claims Other Than
Exigent Health Claims and Extreme Hardship
Claims. . . . . . . . . . . . . . . . . . . . 32
SECTION 7.5 Sources of Payment of Liquidated Amounts
for Interim Claims. . . . . . . . . . . . . . 34
SECTION 7.6 Miscellaneous Interim Claim Provisions. . . . 35
ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.1 Designated or Qualified Settlement Fund. . . 36
SECTION 8.2 Counsel. . . . . . . . . . . . . . . . . . . 38
SECTION 8.3 No Oral Representations. . . . . . . . . . . 38
SECTION 8.4 Payment of Costs. . . . . . . . . . . . . . . 38
SECTION 8.5 Modification and Waiver. . . . . . . . . . . 39
SECTION 8.6 Further Actions. . . . . . . . . . . . . . . 39
SECTION 8.7 Effectiveness of Agreement Notwithstanding
Developments. . . . . . . . . . . . . . . . . 40
SECTION 8.8 No Admission or Use. . . . . . . . . . . . . 40
SECTION 8.9 No Breach of Other Obligations. . . . . . . . 41
SECTION 8.10 Third Party Beneficiaries. . . . . . . . . . 41
SECTION 8.11 Rights and Obligations of Fibreboard
Corporation and the Insurers Under the
Settlement Agreement and Related
Agreements. . . . . . . . . . . . . . . . . . 42
SECTION 8.12 Headings. . . . . . . . . . . . . . . . . . . 42
SECTION 8.13 Notices. . . . . . . . . . . . . . . . . . . 42
SECTION 8.14 Counterparts. . . . . . . . . . . . . . . . . 47
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<PAGE>
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
TYLER DIVISION
GERALD AHEARN, JAMES DENNIS and )
CHARLES W. JEEP, On Behalf of )
Themselves and Others Similarly Situated, )
)
Plaintiffs, )
)
vs. )
)
FIBREBOARD CORPORATION, )
) Civil Action No. 6:93 cv 526
Defendant, )
)
CONTINENTAL CASUALTY COMPANY )
)
and )
)
PACIFIC INDEMNITY COMPANY, )
)
Intervenors. )
______________________________________ )
GLOBAL SETTLEMENT AGREEMENT
---------------------------
This Agreement is made and entered into as of August 27,
1993, by and among the Representative Plaintiffs as representatives of the
Settlement Class, acting by and through Class Counsel; Fibreboard
Corporation, a Delaware corporation; Continental Casualty Company, an
Illinois corporation; CNA Casualty Company of California, a California
corporation; Columbia Casualty Company, an Illinois corporation; and Pacific
Indemnity Company, a California corporation, together the "Parties."
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RECITALS
--------
A. The Representative Plaintiffs have filed a class
action complaint in the Class Action on behalf of the Settlement Class
against Fibreboard Corporation in the Global Court, and the Court has
provisionally certified that class under Rule 23(b)(1)(B) of the Federal
Rules of Civil Procedure for settlement purposes only. Continental and
Pacific have been allowed to intervene as parties to the Class Action.
B. For more than fifteen years, thousands of
individuals exposed to asbestos or asbestos-containing products have filed
lawsuits alleging personal injury and damage in the state and federal courts
against Fibreboard Corporation and against many other defendants.
C. These lawsuits have resulted in extensive
discovery concerning the potential liability of Fibreboard Corporation and
other defendants, as well as full consideration of the legal and factual
bases, including medical issues, underlying each individual asbestos
plaintiff's personal injury lawsuit.
D. The vast majority of the asbestos personal injury
lawsuits brought against Fibreboard Corporation and others in the past
fifteen years have been settled without trial, although a small percentage
have been tried to verdict, with plaintiffs prevailing in some cases and
Fibreboard Corporation and other defendants prevailing in other cases.
E. Despite significant success in reducing litigation
costs through a variety of mechanisms, plaintiffs and defendants have spent,
and continue to spend, enormous resources contesting both liability and
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<PAGE>
damages, allocating responsibility among the parties, and litigating issues
of insurance coverage.
F. Continental, CNA Casualty, Columbia and Pacific
issued certain Insurance Policies to Fibreboard.
G. Fibreboard Corporation and certain of the Insurers
have been and are engaged in litigation in several actions involving
disputed questions of insurance coverage, the first of which was filed in
1979 in the Superior Court of the State of California in and for the City
and County of San Francisco entitled Fireman's Fund Insurance Company v.
Fibreboard Corporation et al., No. 753885, and is an included action in the
Coverage Case.
H. In the Coverage Case, Fibreboard Corporation
contends that certain of the Insurers are obligated to defend and indemnify
Fibreboard Corporation against certain of Fibreboard Corporation's
liabilities for claims for asbestos personal injury or death and for related
claims. These Insurers contend that they have no further obligation to
defend or indemnify Fibreboard Corporation for any such claims. A judgment
in favor of Fibreboard Corporation was rendered by Judge Ira Brown in the
Coverage Case on January 24, 1990, and that judgment is currently on appeal.
The Parties' contentions are, inter alia, set forth in the pleadings in the
Coverage Case and in the briefs before the Court of Appeal.
I. In addition to the tens of thousands of claims for
asbestos personal injury or death that have been filed and resolved against
Fibreboard Corporation and other defendants in jurisdictions throughout the
United States, tens of thousands of filed claims remain pending and
thousands more are expected to be filed in the future. Litigating the
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<PAGE>
asbestos-related personal injury lawsuits is depleting Fibreboard
Corporation's resources, including insurance resources, available to
compensate claimants. Absent substantial insurance resources, Fibreboard
Corporation could not satisfy the claims for asbestos personal injury
pending against it.
J. The expenditures necessary to process and resolve
asbestos lawsuits have contributed to more than ten major asbestos
defendants filing for bankruptcy reorganization. Because some of these
defendants represent a significant portion of the traditional liability
share for asbestos personal injury cases, and many jurisdictions apply the
principle of joint and several liability, these bankruptcy filings have
increased costs substantially, caused significant delays to plaintiffs and
created financial pressures on the remaining defendants.
K. Continental and Fibreboard Corporation entered
into an agreement, dated April 9, 1993, pursuant to which Continental and
Fibreboard Corporation agreed, among other things, upon terms and conditions
set forth therein, to use their best efforts jointly to negotiate and
finalize a global class action settlement with personal injury claimants,
and Continental agreed, whether or not a global settlement was reached, to
pay certain defense and other costs of certain asbestos-related claims on an
interim basis.
L. On or about August 22, 1993 and August 29, 1993,
Continental and Pacific entered into agreements, which agreements have been
superseded by the Continental-Pacific Agreement, dated as of October 12,
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<PAGE>
1993, whereby Continental and Pacific settled the dispute between them and
agreed upon terms for the sharing of liabilities of each of them with
respect to certain asbestos-related claims.
M. Fibreboard Corporation, Continental, CNA Casualty,
Columbia and Pacific entered into the Settlement Agreement, dated October
12, 1993, pursuant to which they agreed, among other things, to settle and
compromise all claims and potential claims against the Insurers under the
Insurance Policies.
N. Fibreboard Corporation has invested substantial
sums in pursuing its insurance coverage for certain asbestos-related
personal injury claims asserted against Fibreboard Corporation. Although
Fibreboard Corporation has been successful in this litigation to date, it is
still subject to risks and uncertainties. These include the risks
associated with the Coverage Case and the continuing effect on Fibreboard
Corporation's corporate operations created by asbestos-related personal
injury claims and Fibreboard Corporation's unresolved insurance coverage
with respect thereto. The Settlement Class Members are also subject to the
risks associated with the Coverage Case since their ability to collect upon
any judgments they may obtain against Fibreboard Corporation is largely
dependent upon the existence and extent of Fibreboard Corporation's
insurance coverage. Continental and Pacific are similarly subjected to the
risks and uncertainties presented by the Coverage Case and the potential
liabilities Continental and Pacific may have with respect to
asbestos-related personal injury claims. Absent this Agreement, the results
in the Coverage Case likely would be severely prejudicial to either
Continental and Pacific, on the one hand, or Fibreboard Corporation and the
Settlement Class Members, on the other hand.
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<PAGE>
O. Counsel for the Representative Plaintiffs each has
a decade or more of experience in the litigation of asbestos-related
personal injury cases. They have conducted a thorough investigation into
the law and facts relating to matters set forth in the class action
complaint.
P. In light of the uncertainties associated with the
pending, unresolved issues enumerated above, there are substantial risks
that adjudications with respect to certain asbestos-related personal injury
claims by Settlement Class Members will, as a practical matter, be
dispositive of the claims and interests of certain other Settlement Class
Members not yet adjudicated or will substantially impair or impede the
ability of such other Settlement Class Members to protect their interests.
Q. The primary purpose of this Agreement is to create
a fund to compensate the Settlement Class Members, free of the risks of the
pending Coverage Case litigation between Fibreboard Corporation and the
Insurers, and to apply the fund thus created to an equitable settlement of
the claims of the Settlement Class Members. The mechanism for accomplishing
this purpose is creation of the Trust, to which the claims of all Settlement
Class Members against Fibreboard Corporation or the Insurers shall be
directed.
R. The settlement contemplated by this Agreement
would provide a fair, flexible, speedy, cost-effective and assured method of
compensating claimants who have been exposed to asbestos or
asbestos-containing products for which Fibreboard Corporation may bear legal
liability and who have contracted or will in the future contract an
asbestos-related condition. Thus, this Agreement provides considerable
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<PAGE>
benefit to the Settlement Class, while avoiding costly litigation of
difficult and contentious issues.
S. Based on extensive analysis of the law and facts
at issue in the Class Action, the other factors and considerations
enumerated above concerning asbestos litigation, and the fair, flexible,
speedy, cost-effective and assured procedures set forth in this Agreement
and its exhibits for compensating the Settlement Class, each Party has
determined that settlement on the terms set forth below would be fair,
adequate and reasonable, and thus in its best interests.
T. Third Party Claims are litigated infrequently in
asbestos litigation. The vast majority of asbestos personal injury, death
and related cases are settled before trial. In those cases where trials
result in judgments against nonsettling defendants, the law in most
jurisdictions protects settling defendants against claims for contribution
by judgment debtors. Nevertheless, because the potential for Third Party
Claims would remain, absent provision for them, this Agreement sets forth a
fair, flexible, speedy, cost-effective and assured procedure for resolving
Third Party Claims.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants contained herein, the Parties hereby agree as follows:
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<PAGE>
ARTICLE 1
DEFINITIONS
SECTION 1.1 Certain Defined Terms.
Capitalized terms used herein and not defined herein shall
have the definitions for such terms set forth in the Glossary annexed as
Exhibit A hereto and incorporated herein.
ARTICLE 2
SETTLEMENT
SECTION 2.1 Settlement.
Effective upon Global Approval Judgment, Representative
Plaintiffs, on their own behalf and on behalf of all Settlement Class
Members, hereby compromise and settle, finally and fully, all of the Class
Member Claims with Fibreboard Corporation, Continental, CNA Casualty,
Columbia and Pacific on the terms and conditions set forth herein; provided,
however, that nothing in this Agreement or in any exhibit hereto shall
discharge the Insurers from liability predicated on policies other than the
Insurance Policies.
SECTION 2.2 Exclusive Rights Against the Trust.
A. Effective upon Global Approval Judgment, all Class
Member Claims are finally and fully settled by this Agreement, and none of
such claims or any Third Party Claim shall be prosecuted in any way against
any of the Fibreboard, Continental or Pacific Releasees. All Class Member
Claims, except claims for punitive or exemplary damages (which are dismissed
and shall not be enforceable), are hereby directed to the Trust for
disposition pursuant to the Trust Agreement and Trust Distribution Process.
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Third Party Claims shall be treated as provided in Article 6 of this
Agreement. The Court shall retain jurisdiction over this Agreement and
shall use its equitable powers to enforce this Section.
B. The claims of Persons providing workers
compensation benefits to Settlement Class Members shall be directed to the
Trust, instead of Fibreboard Corporation or the Insurers, and disposed of
pursuant to the Trust Agreement and the Trust Distribution Process. Such
Persons providing workers compensation benefits shall have existing
remedies, whether by way of lien rights against a Settlement Class Member's
Claim against the Trust, subrogation, direct action, or otherwise, against
the Trust (instead of Fibreboard Corporation or the Insurers), subject only
to the provisions of the Trust Agreement and Trust Distribution Process.
Only payment of funds pursuant to a Settlement Class Member's individual
settlement with the Trust, and not this Agreement (or the resulting Global
Approval Judgment, dismissal and release), shall trigger the notice,
approval and forfeiture provisions of the Longshore and Harbor Workers
Compensation Act (33 USC Section 933) and other similar state and federal
workers compensation provisions.
SECTION 2.3 Payments.
A. After execution of this Agreement, Continental and
Pacific shall (1) pay, on December 30, 1993, an aggregate amount of
$1,525,000,000 into an escrow account (the "Escrow Fund") and (2) pay the
class notice costs, court costs and other incidental expenses associated
with obtaining Global Approval Judgment and Settlement Agreement Approval
Judgment. Of the foregoing amounts, Continental shall pay 64.71% and
Pacific shall pay 35.29%. Such payment obligations of Continental and
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Pacific shall be several and not joint. The Escrow Fund shall be held in
the manner provided in the Escrow Agreement that is substantially in the
form of Exhibit D to this Agreement.
B. Upon Global Approval Judgment:
(1) The amount in the Escrow Fund shall be transferred
to the Trust.
(2) Fibreboard Corporation shall pay $10,000,000 into
the Trust, plus simple interest at the rate of
3.085% from August 27, 1993; provided that, with
respect to interest owed on the sum of $9,892,223
(of the $10,000,000 referred to above) from
September 23, 1993, Fibreboard Corporation's
obligation shall be fully discharged and satisfied
by delivery of an assignment (in the form attached
hereto as Exhibit E) from Fibreboard Corporation
to the Trust of Fibreboard Corporation's rights
against Home Insurance Company to payment of such
interest and to damages arising from bad faith or
other tortious conduct for failure to pay the
$9,892,223 in a timely fashion and to pay such
interest. Before Global Approval Judgment
Fibreboard Corporation will pay the costs of its
exercise of reasonable diligence in cooperation
with Class Counsel in pursuing such assigned
claims on its own behalf and on behalf of the
Settlement Class. After Global Approval Judgment
Fibreboard will pay the reasonable costs of
pursuing such assigned claims.
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(3) Continental shall pay 64.71% and Pacific shall pay
35.29% of (i) the fees of Class Counsel as
determined and approved by the Court up to a
maximum of 3% of the sum set forth in Section
2.3(A) and (ii) the reasonable expenses of Class
Counsel as determined and approved by the Court.
The payment obligations of Continental and Pacific
under this subsection (B)(3) shall be several and
not joint.
SECTION 2.4 Additional Fibreboard Obligations.
A. Fibreboard Corporation shall provide for intake,
maintenance and processing (but not evaluation) of Class Member Claims for a
period of five years from August 27, 1993 or one year from Global Approval
Judgment, whichever occurs later (unless the obligation is earlier
terminated, at the election of the Trustees). The Parties anticipate that
Fibreboard Corporation and the Trust will subsequently refine the scope of
Fibreboard Corporation's obligation under this paragraph.
B. At the end of the period referred to in subsection
(A) above, Fibreboard Corporation shall transfer without charge the data and
(to the extent transferrable) software with respect to its case management
system (including a perpetual, non-exclusive license to use the case
management system software exclusively for the purpose of processing Class
Member Claims and Third Party Claims), but not including equipment or other
hard assets associated therewith, to the Trust. Thereafter, Fibreboard
Corporation shall have no further responsibility with respect to Class
Member and Third Party Claims. The Trust shall allow Trustors access to and
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use of the case management system thereafter for use in connection with
Settled Claims and Unsettled Claims. The Trust shall establish any
necessary procedures to be followed by the Trustors to facilitate this
arrangement and shall be reimbursed for the actual cost of providing
information or data to the Trustors. The Trust shall not disclose any
information it may obtain relating to Settled Claims or Unsettled Claims
except as required by court order. The Trust shall promptly advise the
Trustors of any request for such information and afford them an opportunity
to object to disclosure of any such information.
C. Fibreboard Corporation shall cooperate by
providing existing information and evidence to the Trust as is reasonably
necessary to evaluate, defend and resolve Class Member Claims and Third
Party Claims, including, but not limited to, information and evidence
concerning Fibreboard's products and their distribution, the history of the
conduct of Fibreboard's business, Fibreboard's defenses and the history of
Fibreboard's settlements in asbestos-related personal injury lawsuits. All
such information and evidence shall be used only for such purposes.
Fibreboard Corporation shall not withhold such information or evidence from
the Trust on any grounds, including attorney-client, work product or any
other privilege; provided, however, that Fibreboard Corporation shall
provide information and evidence which is subject to an express claim of
privilege to the Trust only on the basis that such information and evidence
remains privileged and confidential, and that the Trust shall keep all such
information and evidence privileged and confidential and shall not waive the
privileged and confidential status of such information and evidence without
Fibreboard Corporation's written consent. With respect to Trust requests
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for information or evidence possessed by Fibreboard Corporation which is
subject to a shared ownership, shared work product or shared attorney-client
privilege with a Defendant Class Member, the Trust shall be deemed the
successor-in-interest to Fibreboard Corporation, but any such Defendant
Class Member affected by the proposed transfer of information shall receive
reasonable notice of, and may object to, any proposed transfer of such
shared information or evidence.
D. Effective upon Global Approval Judgment,
Fibreboard Corporation, except as provided in Section H of the Trust
Distribution Process, transfers to the Trust its rights, if any, to all
claims for contribution or indemnity against other joint tortfeasors arising
from (i) Class Member Claims, (ii) Personal Injury Asbestos Claims that were
settled against Fibreboard Corporation before August 27, 1993 and remain
settled thereafter and (iii) judgments against Fibreboard Corporation that
became final before August 27, 1993. Effective upon Global Approval
Judgment, to the extent that Continental, CNA Casualty, Columbia or Pacific
has been subrogated to the foregoing rights of Fibreboard to contribution or
indemnity claims, each such subrogee transfers these rights to the Trust;
provided, however, that such transfer shall not include the rights of any of
the Insurers to any contribution, indemnity or reinsurance claims against
other insurance, reinsurance or indemnity entities or syndicates.
E. Fibreboard Corporation agrees that to the extent
Fibreboard obtains insurance proceeds from companies other than the Insurers
for asbestos-related personal injury claims that are not applied to
asbestos-related indemnity or defense costs and are no longer needed by
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Fibreboard for such purposes, such residual proceeds shall be made available
to the Trust.
SECTION 2.5 Releases.
Effective upon Global Approval Judgment:
A. The Representative Plaintiffs, on behalf of
themselves and as representatives of the Settlement Class, release each of
the Fibreboard, Continental and Pacific Releasees from each and every Class
Member Claim.
B. Fibreboard Corporation, on behalf of itself and
its Subsidiaries, releases Continental, CNA Casualty and Columbia, their
parents, Subsidiaries, Affiliates, directors, employees, officers, agents
and attorneys (the "Continental Releasees") from any and all claims of
whatsoever description by Fibreboard Corporation and its Subsidiaries,
including bad faith claims, except that such release shall not include any
claims arising out of this Agreement, the Settlement Agreement (or the
related agreements referred to therein) or any obligation of a Party
pursuant to an agreement or agreements entered into after this Agreement is
executed. Notwithstanding the foregoing exceptions, such release shall
include any and all claims arising from paragraphs 1 and 2 of the April 9
Agreement. Nothing herein shall affect the validity or effectiveness of the
releases provided for in the April 9 Agreement, all of which are hereby
ratified by Fibreboard Corporation, Continental, CNA Casualty and Columbia.
C. Fibreboard Corporation, on behalf of itself and
its Subsidiaries, releases Pacific, its parents, Subsidiaries, Affiliates,
directors, employees, officers, agents and attorneys (the "Pacific
Releasees") from any and all claims of whatsoever description by Fibreboard
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Corporation and its Subsidiaries, including bad faith claims, except that
such release shall not include any claims arising out of this Agreement, the
Settlement Agreement (or the related agreements referred to therein) or any
obligation of a Party pursuant to an agreement or agreements entered into
after this Agreement is executed. Nothing herein shall affect the validity
or effectiveness of the releases provided for in the Pacific Indemnity
Agreement, all of which are hereby ratified by Fibreboard Corporation and
Pacific.
D. Continental, CNA Casualty and Columbia, on behalf
of themselves and their Subsidiaries, release Fibreboard Corporation, its
parents, Subsidiaries, Affiliates, directors, employees, officers, agents
and attorneys from any and all claims of whatsoever description by
Continental, CNA Casualty and Columbia and their Subsidiaries, except that
such release (i) shall not include any claims arising out of this Agreement,
the Settlement Agreement (or the related agreements referred to therein) or
any obligation of a Party pursuant to an agreement or agreements entered
into after this Agreement is executed, and (ii) shall not prevent
Continental, CNA Casualty or Columbia from raising any defenses to claims
brought against them by any person or entity claiming an interest in the
Insurance Policies, including, without limitation, defenses against the
validity or enforceability of assignments or settlements to which
Continental, CNA Casualty or Columbia is not a party. Notwithstanding the
foregoing exceptions, such release shall include any and all claims arising
from paragraphs 1 and 2 of the April 9 Agreement. Nothing herein shall
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affect the validity or effectiveness of the releases provided for in the
April 9 Agreement, all of which are hereby ratified by Fibreboard
Corporation, Continental, CNA Casualty and Columbia.
E. Pacific, on behalf of itself and its Subsidiaries,
releases Fibreboard Corporation, its parents, Subsidiaries, Affiliates,
directors, employees, officers, agents and attorneys from any and all claims
of whatsoever description by Pacific and its Subsidiaries, except that such
release (i) shall not include any claims arising out of this Agreement, the
Settlement Agreement (or the related agreements referred to therein) or any
obligation of a Party pursuant to an agreement or agreements entered into
after this Agreement is executed, and (ii) shall not prevent Pacific from
raising any defenses to claims brought against Pacific by any person or
entity claiming an interest in the Insurance Policies. Nothing herein shall
affect the validity or effectiveness of the releases provided for in the
Pacific Indemnity Agreement, all of which are hereby ratified by Fibreboard
Corporation and Pacific.
F. The releases required by Sections 2.5(A)-(E) above
shall be effective as a bar to each and every claim, demand and cause of
action encompassed thereby and shall include, as necessary to effectuate
that purpose, waivers by the Parties of any and all benefits conferred on
any of them by Section 1542 of the California Civil Code or similar
provisions in other jurisdictions.
SECTION 2.6 Final Settlement of the Insurance
Policies.
Fibreboard Corporation and the Insurers agree that upon
Global Approval Judgment, except for obligations that an Insurer has
specifically assumed or preserved under this Agreement, or under the
Settlement Agreement (or the related agreements referred to therein), the
Insurers shall be discharged from any and all of their obligations (whether
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direct or indirect) under or in connection with the Insurance Policies,
including any obligations imposed by judgment, decree, statute, regulation
or common law. Upon Global Approval Judgment, Fibreboard Corporation shall
execute and deliver a stipulation for the dismissal with prejudice of the
Coverage Case as to Continental, CNA Casualty, Columbia and Pacific.
SECTION 2.7 Indemnity Obligation of the Trust After
Global Approval Judgment.
A. Except as provided in Section 2.4(A) as to
Fibreboard Corporation, the Trust shall defend and indemnify the Fibreboard,
Continental and Pacific Releasees against, and hold them harmless from, any
costs, fees, claims, liabilities, settlements or judgments incurred or
occurring after Global Approval Judgment and resulting, directly or
indirectly, from the assertion against any of them of any Class Member Claim
or Third Party Claim. This obligation shall include, without limitation,
any such claim to the extent that, after Global Approval Judgment, that
claim attacks the validity or enforceability of the Global Approval
Judgment. Fibreboard Corporation and the Insurers may, at their own
expense, elect to participate with the Trust in the defense of any such
action or claim.
B. The Trust shall reimburse any Person entitled to
reimbursement out of the Escrow Fund pursuant to Section 3.3(A) to the
extent that such Person did not receive reimbursement from the Escrow Fund.
SECTION 2.8 Fibreboard Corporation's Indemnity and
Related Obligations.
Upon Global Approval Judgment, the Continental and Pacific
Releasees shall not have any liability for, and Fibreboard Corporation shall
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indemnify the Continental and Pacific Releasees against, and hold them
harmless from, any and all costs, fees, claims or liabilities relating to
Personal Injury Asbestos Claims and Additional Policy Claims of whatsoever
kind, including those attacking the validity or enforceability of the Global
Approval Judgment, (a) except for costs, claims or liabilities that the
Insurers have specifically undertaken to pay under this Agreement, the
Settlement Agreement (or the related agreements referred to therein), and
(b) except for Defense Costs directly attributable to an actual or
threatened attack on the validity or enforceability of the Global Approval
Judgment ("Collateral Attack"). As to claims asserted against Fibreboard
Corporation that (a) would not be covered by the foregoing indemnity (e.g.,
claims unrelated to asbestos) and (b) could be claimed to give rise to a
direct action against any of the Insurers, Fibreboard Corporation agrees to
reasonably and diligently defend and promptly pay or bond judgments so as to
preclude any such direct action claims. In the event of a Collateral
Attack, Continental and Pacific shall pay Fibreboard Corporation the
reasonable costs incurred by Fibreboard Corporation in defending against a
Collateral Attack to the extent not paid by the Trust (provided that
Continental's and Pacific's obligation shall extend only to those costs
directly attributable to litigation with respect to the validity and
enforceability of the Global Approval Judgment, not to those attributable to
litigation with respect to any underlying claims). Continental, Pacific and
Fibreboard Corporation shall jointly defend against a Collateral Attack and
will cooperate reasonably with one another in this regard.
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ARTICLE 3
ACTIONS TO BE TAKEN TO IMPLEMENT THIS AGREEMENT
SECTION 3.1 Applications for Initial Court Orders,
Settlement Class Order, Defendant Class
Order and Global Approval Judgment.
Promptly upon the execution of this Agreement, the Parties
shall, by joint motions, in form and substance satisfactory to counsel for
each of the Parties:
A. request entry of an order (i) preliminarily
approving this Agreement and the settlement contemplated by this Agreement
for the purpose of the Rule 23 Notice and settlement hearing contemplated
therein, (ii) preliminarily approving the Defendant Class Settlement
Agreement and the settlement contemplated by that agreement, and (iii)
approving the contents and methods for the dissemination of the Rule 23
Notice (which notice shall be in form and substance satisfactory to the
above counsel; and
B. request (i) entry of the Settlement Class Order
and the Defendant Class Order and (ii) entry of Global Approval Judgment.
SECTION 3.2 Effect of Class Certification.
The certification of the Settlement Class pursuant to this
Agreement shall be binding if Global Approval Judgment is entered. In the
event this Agreement is terminated prior to Global Approval Judgment,
Fibreboard Corporation and the Insurers shall retain their right to object
to the continued prosecution of the Class Action as a class action under
Rule 23. Neither this Agreement, nor its exhibits, nor the settlement
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negotiations, nor the proceedings seeking approval of the settlement, may be
used (i) in support of any application for a determination that the Class
Action or any other action shall proceed as a class action except for the
purposes of the settlement in accordance with this Agreement or (ii) as
evidence in any litigation (other than an action to enforce the terms of
this Agreement or any of its exhibits) or proceeding against Fibreboard
Corporation, Continental, CNA Casualty, Columbia or Pacific in any court at
any time.
SECTION 3.3 Execution and Delivery of Escrow
Instructions.
A. Class Counsel (or, after appointment of the
Trustees, the Trustees), Fibreboard Corporation, Continental and Pacific
shall each execute and deliver from time to time to the Escrow Agent
instructions sufficient to order the disbursement from the Escrow Fund of
funds needed to pay the following obligations:
(1) To pay sums payable out of the Escrow Fund
pursuant to Article 7 of this Agreement.
(2) To reimburse monthly to any of the Fibreboard,
Continental or Pacific Releasees amounts, if any,
paid by any of them for costs, fees, claims,
liabilities, settlements, arbitration awards or
judgments with respect to (i) Class Member Claims
or Third Party Claims which receive approval from
the Court during the Interim Period to proceed to
trial or (ii) Interim Claims.
(3) To reimburse monthly any cost or expenses of the
Trust incurred during the Interim Period,
including the fees and expenses of the Interim
Trustee, the Trustees or Class Counsel's designee
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to the Interim Committee and other reasonable
expenditures.
(4) To reimburse monthly any cost or expense of the
SCB (in their capacity as such, and not in their
capacity as Class Counsel) incurred during the
Interim Period and determined by the Court or
agreed by the Trustees to be reasonable.
B. Notwithstanding the provisions of Section
3.3(A)(2), (i) the cost of compliance with Fibreboard Corporation's
obligations under Section 2.4(A), the cost of any in-house employees of
Fibreboard or the Insurers, and the use of more outside personnel than are
reasonably necessary in connection with the economical defense or settlement
of a claim shall not be reimbursed, and (ii) any non-indemnity fees or costs
subject to reimbursement shall be reasonably necessary for the resolution of
an Interim Claim, Class Member Claim or Third Party Claim as determined by
the Court or agreed by the Trustees or their designee. Until the third
anniversary after Global Approval Judgment, the Trust may seek reimbursement
from any Person to whom amounts were disbursed from the Escrow Fund pursuant
to Section 3.3(A)(2) which the Trust alleges, based on the actual experience
of the Trust in processing and resolving claims, were in fact unreasonable
and thus improperly paid from the Escrow Fund. After a hearing on notice to
all of the Parties, the Court shall finally determine the eligibility of any
contested expenditure for reimbursement under Section 3.3(A)(2).
C. Fibreboard Corporation, the Insurers and the SCB
agree to keep separate billing accounts for all fees and expenses subject to
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reimbursement pursuant to Section 3.3(A)(2) or 3.3(A)(4) and, if requested
by the Trustees or Class Counsel's designee to the Interim Committee, submit
them to the Court for a determination as to the reasonableness and
eligibility for reimbursement.
D. Class Counsel, Fibreboard Corporation, Continental
and Pacific shall each execute and deliver a written notice of termination
of the Escrow Agreement and execute and deliver escrow instructions to the
Escrow Agent sufficient to order distribution of the balance of the Escrow
Fund to the following persons upon occurrence of the following events:
(1) to the Trust upon occurrence of Global Approval
Judgment (including Global Approval Judgment as to
which an effective waiver of one or more elements
has been given);
(2) to the trust or other entity described in Section
2.3(c) of the Settlement Agreement if (i)
Settlement Agreement Approval Judgment occurs and
Global Court Disapproval occurs, and (ii) the
conditions to the establishment of such trust or
other entity set forth in Section 2.3(c) of the
Settlement Agreement are satisfied in the opinion
of counsel for Fibreboard Corporation, Continental
and Pacific;
(3) to Continental and Pacific in the percentages of
64.71% and 35.29%, respectively, if (i) Settlement
Agreement Approval Judgment occurs and Global
Court Disapproval occurs, and (ii) the conditions
to the establishment of such trust or other entity
set forth of Section 2.3(c) of the Settlement
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Agreement are not satisfied in the opinion of
counsel for Fibreboard Corporation, Continental
and Pacific; or
(4) to Continental and Pacific in the percentages of
64.71% and 35.29%, respectively, if both
Settlement Agreement Court Disapproval and Global
Court Disapproval occur.
ARTICLE 4
TERMINATION
SECTION 4.1 Termination.
This Agreement shall automatically terminate without any
further action by any of the Parties, upon Global Court Disapproval or upon
a stipulation terminating this Agreement signed by all parties and filed
with this Court. Upon such termination, the Settlement Class Members and
the other Parties shall, as far as may be practicable, be restored to their
respective positions, rights and obligations that existed as if this
Agreement had not been entered into. Notwithstanding the foregoing, the
following provisions of this Agreement and the Trust Distribution Process,
and the rights, obligations, and liabilities created therewith shall survive
such termination: Sections 3.2, 3.3, 4.1, 8.2, 8.3, 8.4, 8.5, 8.8, 8.9,
8.10, 8.11, 8.13 and Article 7 of this Agreement and section D.2.f(i) of the
Trust Distribution Process.
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ARTICLE 5
SETTLEMENT TRUST
SECTION 5.1 Trust Agreement.
A Trust shall be created in accordance with the provisions
of the Trust Agreement attached as Exhibit B hereto. The funds in the Trust
shall be invested and expended in accordance with the terms of the Trust
Agreement and Trust Distribution Process. The Trust shall be separate and
independent from Fibreboard Corporation. Neither the Trust nor Fibreboard
Corporation shall be bound by any adjudications rendered in any litigation
(other than the Class Action, the related class action respecting the
Defendant Class and any future litigation to which both the Trust and
Fibreboard Corporation are parties) to which one, but not the other, has
been a party or privy. Neither Fibreboard Corporation nor the Trust shall
be bound by any stipulations or agreements entered into by the other.
SECTION 5.2 Continuing Jurisdiction of the Court.
The Court shall retain continuing jurisdiction over the
maintenance, administration and distribution of the Trust and the funds
contained therein, subject to and in accordance with the provisions of the
Trust Agreement, the Trust Distribution Process, and the Defendant Class
Settlement Agreement. However, the Court shall not have such continuing
jurisdiction of Settlement Class Members, Defendant Class Members,
Fibreboard Corporation or the Insurers beyond that necessary to enforce this
Agreement, the Trust Agreement, the Trust Distribution Process, and the
Defendant Class Settlement Agreement.
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SECTION 5.3 Preservation of Funds.
To ensure that adequate Trust funds remain available to pay
claims of all Settlement Class Members, the Parties agree that they will
support the goals and purposes of the Trust and that they will cooperate in
taking such steps as may be appropriate from time to time to require the
Trustees to comply with the spending limitations, budgeting requirements,
financial reporting, accounting and audit requirements set forth in the
Trust Agreement and Trust Distribution Process.
ARTICLE 6
THIRD PARTY CLAIMS
SECTION 6.1 Bar Orders.
All Third Party Claims shall be barred and permanently
enjoined from prosecution against any of the Fibreboard, Continental and
Pacific Releasees in any proceeding or court. Third Party Claims against
the Trust in its own capacity or in Fibreboard Corporation's stead shall be
governed by section H of the Trust Distribution Process and the Defendant
Class Settlement Agreement.
SECTION 6.2 Judgment Reduction and Subrogation Rights.
Defendant Class Members shall have such rights to obtain
credits, set-offs, judgment reductions and subrogation to claims of
Settlement Class Members as are provided for in the Defendant Class
Settlement Agreement and the Trust Distribution Process.
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SECTION 6.3 Actions Necessary to Obtain Discharges and
Bar Orders.
A. In exchange for the subrogation and the credit and
set-off rights accorded them under the Trust Distribution Process, the
Defendant Class Members in the Defendant Class Settlement Agreement are
releasing all Third Party Claims against the Fibreboard, Continental and
Pacific Releasees and have agreed that those releases be enforced by the
Global Approval Judgment. Notwithstanding the provisions of the Defendant
Class Settlement Agreement, and except as set forth in Section 6.3(C) below,
in the event that Global Approval Judgment cannot be obtained because of
failure to obtain the discharge of, or an injunction against, one or more
Express Indemnity or Additional Policy Claims, then each and every such
Express Indemnity or Additional Policy Claim against the Fibreboard,
Continental and Pacific Releasees shall (as a sole and exclusive remedy, in
lieu of any claims or remedies at law or in equity against the Fibreboard,
Continental and Pacific Releasees, which claims or remedies are and will be
forever barred and enjoined) be resolved with and compensated by the Trust
as Residual Claims under the provisions of the Trust Distribution Process.
B. Except as set forth in Section 6.3(C) below, in
the event the Parties receive notice that notwithstanding the right to
compensation under the provisions of Section 6.3(A) above, Global Approval
Judgment cannot be obtained because of failure to obtain the discharges of,
or injunctions against, any Third Party Claim against the Fibreboard,
Continental and Pacific Releasees, Settlement Class Members agree to reduce
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judgments in their favor against Defendant Class Members in such amounts as
may be necessary to obtain the discharges of and injunctions against Third
Party Claims as against the Fibreboard, Continental and Pacific Releasees
which are required for the entry of Global Approval Judgment. Any such
reduction of judgment may be up to (but may not exceed) the full amount that
a Defendant Class Member would have been entitled to recover from any of the
Fibreboard, Continental and/or Pacific Releasees in the event that a valid
Third Party Claim arising from the judgment or payment thereof could have
been brought against any of them in the absence of Global Approval Judgment.
C. The Parties believe that there are no valid
Express Indemnity Claims or Additional Policy Claims arising from the
distribution of asbestos or asbestos-containing materials or products
manufactured by Fibreboard and sold or distributed under a label, trade name
or brand name of a Person unaffiliated with Fibreboard pursuant to an
agreement with Fibreboard. Fibreboard Corporation represents that, except
as disclosed to the Insurers and to Class Counsel in writing, it knows of no
Persons unaffiliated with Fibreboard who sold or distributed such materials
or products. In the event the Parties receive notice that Global Approval
Judgment cannot be obtained because of failure to obtain the discharge of,
or an injunction against, any Express Indemnity Claim or Additional Policy
Claim asserted by any Person listed in the writing referred to in the second
sentence of this Section 6.3(C), then (i) the obligations imposed on
Settlement Class Members set forth in Section 6.3(B) do not apply to those
claims, (ii) Continental, Pacific and Fibreboard Corporation may advise
Class Counsel within seven days of receipt of such notice that they have
waived such failure to obtain the discharge of, or injunction against, such
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claim or claims, and (iii) in the event that Continental, Pacific and
Fibreboard Corporation have not so advised Class Counsel, then the Attorney
Ad Litem shall for 14 days following expiration of the seven-day period have
the option, but not the obligation, to elect to have Section 6.3(B) apply to
such claim or claims. If Continental and Pacific elect pursuant to the
foregoing sentence to waive failure to obtain the discharge of, or an
injunction against, any of the Express Indemnity Claims or Additional Policy
Claims described in the preceding sentence, Fibreboard Corporation shall be
deemed to have waived such failure if Continental and Pacific agree to
indemnify and hold harmless Fibreboard Corporation against any cost or
liability resulting from the assertion of any such claims against Fibreboard
Corporation.
ARTICLE 7
INTERIM CLAIM LIQUIDATION PROCEDURES
SECTION 7.1 Interim Claims.
The provisions of this Article 7 specify the procedures to
be followed in handling certain Class Member Claims presented during the
"Interim Period," which is the period commencing at the later of January 1,
1994 or the execution of this Global Settlement Agreement, and ending at
Global Approval Judgment or Global Court Disapproval. Third Party Claims of
Defendant Class Members arising out of Interim Claims shall be resolved in
accordance with the terms of the Defendant Class Settlement Agreement. An
"Interim Committee," consisting of a designee of Class Counsel, a designee
of Fibreboard Corporation, and a designee of the Insurers, shall perform the
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functions specified for it in this Article in connection with Liquidation of
Interim Claims.
An "Interim Claim" is a Class Member Claim which a
Settlement Class Member seeks to Liquidate during the Interim Period and
which meets one of the following criteria:
A. it is an Exigent Health Claim;
B. it is an Extreme Hardship Claim; or
C. the Settlement Class Member establishes to the
satisfaction of the Interim Committee that his or her asbestos-related
personal injury claim in the tort system against a Defendant Class Member
will be tried to judgment during the Interim Period and that the trial will
adjudicate issues unique to that Settlement Class Member (e.g., damages,
legal causation), as distinguished from issues common to a number of
plaintiffs (e.g., negligence, strict liability, punitive damages).
SECTION 7.2 Processing Interim Claims.
A. Any Settlement Class Member electing to submit an
Interim Claim shall forward a notice of Interim Claim and a proof of claim
to the Interim Committee, on forms to be prescribed by the Interim
Committee.
B. Interim Claims shall be processed in accordance
with the claims procedures set forth in the Trust Distribution Process,
except as follows:
(1) Negotiations and any arbitration with respect to
any Interim Claim shall be between the Interim
Claimant, on the one hand, and Fibreboard
Corporation and the Insurers (and not the Trust),
on the other hand.
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<PAGE>
(2) Each Interim Claimant asserting an Exigent Health
Claim or Extreme Hardship Claim shall present a
written demand within seven days of submitting the
notice of Interim Claim and properly completed
proof of claim. Fibreboard Corporation and the
Insurers shall evaluate such Interim Claim.
Fibreboard Corporation and the Insurers shall
jointly respond with a written offer in no more
than seven days from receipt of the written
demand. If settlement negotiations fail to
produce a settlement within 14 days from receipt
of the initial offer, such Interim Claimant may
proceed to binding arbitration. The arbitration
shall be held within 30 days after arbitration is
requested by such Interim Claimant.
(3) Each Interim Claimant asserting an Interim Claim
other than an Exigent Health Claim or Extreme
Hardship Claim shall within seven days of receipt
of a trial date submit a properly completed proof
of claim form and a notice of the date that trial
is scheduled to commence. A settlement demand
shall also be submitted by such Interim Claimant
at that time. Fibreboard Corporation and the
Insurers shall evaluate such Interim Claim.
Fibreboard Corporation and the Insurers shall
jointly respond with a written offer in no more
than 28 days from receipt of the written demand.
The parties shall negotiate in good faith, and, if
a settlement is not reached by 14 days prior to
-30-<PAGE>
<PAGE>
trial, such Interim Claim shall be set for binding
arbitration to be conducted and concluded prior to
entry of judgment in the trial court; provided,
however, that such Interim Claimant may, as early
as 30 days prior to the scheduled trial date,
request binding arbitration.
(4) The arbitration shall consist of an abbreviated
hearing which may be conducted by conference call,
with the award based upon the oral presentations,
and any written submissions, of the parties'
respective settlement positions. Neither party
may submit any evidence in the arbitration that
was not submitted to the other party at least
seven days prior to the earlier of the
commencement of the arbitration or the submission
of its final offer or demand. The written demands
and offers required by subsections (B) (2) and (B)
(3) above shall be included in such submissions.
(5) The Interim Committee shall establish and maintain
a list of Qualified Arbitrators. An arbitrator
shall be told the amount of the final offer and
the amount of the Interim Claimant's final demand
at the commencement of arbitration. The
arbitrator shall only have discretion to award one
of those two amounts.
C. Any settlement of an Interim Claim shall be with
the consent of Class Counsel's designee, which consent shall not be
unreasonably withheld.
-31-<PAGE>
<PAGE>
SECTION 7.3 Payment of Exigent and Extreme Hardship
Claims.
Interim Claims that are Exigent Health Claims or Extreme
Hardship Claims shall be paid as follows:
A. 50% of the amount for which such Interim Claim has
been Liquidated shall be paid 30 days after the Interim Claim is Liquidated.
B. The remaining 50% of such amount shall be paid 60
days after the first to occur of (i) Global Approval Judgment, (ii)
Settlement Agreement Approval Judgment or (iii) entry of the Final Decision
in the Coverage Case; provided that (x) any amount to be paid under this
Section 7.3(B) by reason of the fact that the Final Decision is the first to
occur of the foregoing triggering events shall be paid 60 days after that
event only to the extent of the Insurer's coverage obligations as determined
by the Final Decision and (y) any portion of such amount that remains unpaid
after that time shall be paid 60 days after the first to occur of (a) any of
the other triggering events or (b) both Global Court Disapproval and
Settlement Agreement Court Disapproval.
SECTION 7.4 Payment of Interim Claims Other Than
Exigent Health Claims and Extreme Hardship
Claims.
Interim Claims other than Exigent Health Claims or Extreme
Hardship Claims shall be paid as follows:
A. If Global Approval Judgment is entered on or
before June 30, 1996, these Interim Claims shall be paid in accordance with
the Trust Distribution Process in the same manner as other Class Member
Claims.
-32-<PAGE>
<PAGE>
B. If Global Approval Judgment has not been entered
on or before June 30, 1996,
(1) 50% of the amount for which such Interim Claim has
been Liquidated shall be paid upon the later of
(i) the first to occur of November 30, 1996 or 30
days after Settlement Agreement Approval Judgment,
or (ii) 60 days after receipt by the Insurers and
Fibreboard Corporation of a declaration or
affidavit stating that the case against a
Defendant Class Member has been tried to judgment
or has been settled against all non-bankrupt
defendants in such case, unless both Global Court
Disapproval and Settlement Agreement Court
Disapproval have occurred by such time.
(2) Any unpaid balance of such amount shall be paid 60
days after the first to occur of (i) Global
Approval Judgment, (ii) Settlement Agreement
Approval Judgment or (iii) entry of the Final
Decision in the Coverage Case; provided that (x)
any amount to be paid under this Section 7.4(B)(2)
by reason of the fact that the Final Decision is
the first to occur of the foregoing triggering
events shall be paid 60 days after that event only
to the extent of the Insurer's coverage
obligations as determined by the Final Decision
and (y) any portion of such amount that remains
unpaid after that time shall be paid 60 days after
the first to occur of (a) any of the other
triggering events or
-33-<PAGE>
<PAGE>
(b) both Global Court Disapproval and Settlement
Court Agreement Disapproval.
(3) Notwithstanding the provisions of subsections B(1)
and B(2) above, if an Interim Claim against one or
more Defendant Class Members is consolidated for
trial with the claims of more than 50 other
Settlement Class Members, (i) the Interim
Committee, at the request of the Trustees, shall
pay amounts payable out of the Escrow Fund with
respect to such Interim Claims in such manner and
over such a longer time period (not to exceed 10
years) as the Trustees shall determine is in the
best interests of the Trust and the Beneficiaries
and (ii) the Trustees shall have discretion to pay
amounts payable by the Trust with respect to such
Interim Claims in such manner and over such a
longer time period (not to exceed 10 years) as the
Trustees shall determine is in the best interests
of the Trust and the Beneficiaries.
SECTION 7.5 Sources of Payment of Liquidated Amounts
for Interim Claims.
The amounts due for payment under Sections 7.3 and 7.4
shall be paid:
A. by the Trust if Global Approval Judgment has been
entered by the date payment is due;
B. by Fibreboard Corporation if both Settlement
Agreement Approval Judgment and Global Court Disapproval have occurred by
the date payment is due;
-34-<PAGE>
<PAGE>
C. by the Insurers to the extent of their coverage
obligations as determined by the Final Decision in the Coverage Case, with
any remaining balance paid by Fibreboard Corporation, if each of Global
Court Disapproval, Settlement Agreement Court Disapproval and the Final
Decision has occurred by the date payment is due; and
D. out of the Escrow Fund if neither (A), (B), nor
(C) is applicable by the date a payment is due.
SECTION 7.6 Miscellaneous Interim Claim Provisions.
Any Interim Committee decision shall require the unanimous
approval of all members of the Interim Committee. In the event that
unanimity cannot be achieved, disputes over the handling of Interim Claims
shall be submitted to the Court for resolution. Class Counsel's designee
shall not disclose any privileged or confidential information supplied to
such designee by Fibreboard Corporation or the Insurers except as required
by court order and shall promptly notify the Party which designated such
information as privileged or confidential upon receipt of any subpoena or
other formal request for such information. The members of the Interim
Committee shall not disclose any settlement information with respect to
Interim Claims to anyone other than Fibreboard Corporation, Continental,
Pacific or the Trust, except as required by court order and upon reasonable
prior notice to Fibreboard Corporation, Continental, Pacific and the Trust.
-35-<PAGE>
<PAGE>
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Designated or Qualified Settlement Fund.
Fibreboard Corporation's, Continental's, CNA Casualty's,
Columbia's and Pacific's obligation to proceed with this Agreement are ex-
pressly conditioned upon the receipt by Fibreboard Corporation and the In-
surers of a letter ruling from the Internal Revenue Service pursuant to
which the Internal Revenue Service confirms that the Trust will be treated
either (i) as a Designated Settlement Fund or (ii) as a Qualified Settlement
Fund. In the event that the Internal Revenue Service has not issued such a
ruling within twelve months after execution of this Agreement and has not
expressed substantial concerns about the merits of the ruling request, then
Fibreboard Corporation's and the Insurers' obligations to proceed are ex-
pressly conditioned upon receipt of a written opinion reasonably
satisfactory to Fibreboard Corporation no later than twelve months after the
date of this Agreement from an independent and distinguished professional
tax advisor that either (i) the Trust will be treated either as a Designated
Settlement Fund or as a Qualified Settlement Fund or (ii) Fibreboard
Corporation will not recognize any net taxable income as a result of the
Global Approval Judgment and the transactions contemplated thereby,
establishment of the Trust, or any payments (other than those paid to
Fibreboard Corporation) made by the Trust for Trust Expenses, Class Member
Claims or Third Party Claims. Fibreboard Corporation and the Insurers shall
use good faith efforts to obtain such a ruling or advice, as the case may
be, as promptly as practicable after the date of this Agreement. Class
-36-<PAGE>
<PAGE>
Counsel shall be kept fully informed about, and may participate in, the
efforts to obtain such a ruling.
The tax advisor will be selected in the following manner.
Fibreboard Corporation shall name three tax advisors. Within 5 days of
receipt of such names, Class Counsel or the Insurers may notify Fibreboard
Corporation that either of them objects to any such person on the ground
that he or she is not an independent and distinguished professional tax
advisor. Fibreboard Corporation shall select the final tax advisor from
those persons remaining. If no persons remain, Fibreboard Corporation may
name a substitute or substitutes, or may apply to Judge Patrick H.
Higginbotham for (i) his binding determination that any of the persons
objected to is an independent and distinguished professional tax advisor,
and if he determines that any of the persons selected is an independent and
distinguished tax advisor Fibreboard Corporation shall select the final tax
advisor, from those persons remaining, and (ii) if he determines that none
of the persons remaining is an independent and distinguished tax advisor, he
will give his determination how any future naming of candidates by
Fibreboard Corporation and objections by Class Counsel and the Insurers will
proceed. If Fibreboard Corporation names a substitute or substitutes,
within five days of receipt of such name(s), Class Counsel or the Insurers
may notify Fibreboard Corporation that either of them objects to any such
person on the ground that he or she is not an independent and distinguished
professional tax advisor. Objections to any such substitute may be brought
to Judge Higginbotham as described above.
-37-<PAGE>
<PAGE>
SECTION 8.2 Counsel.
Any act or consent required by or which may be given by
Representative Plaintiffs pursuant to this Agreement may be accomplished by
Class Counsel acting on behalf of all Representative Plaintiffs. Class
Counsel may act or give their consent with the approval of any three or more
of Class Counsel and, in such event, the Representative Plaintiffs shall be
deemed to have so acted or consented. Continental, Pacific, CNA Casualty,
Columbia and Fibreboard Corporation shall be entitled to rely upon such act
or consent by Class Counsel in any case where the act or consent is
evidenced in a writing reflecting the approval of any three of Class
Counsel.
SECTION 8.3 No Oral Representations.
This Agreement, together with its accompanying exhibits,
supersedes and renders unenforceable all earlier oral representations,
warranties or promises made by any Party to any other Party with respect to
the subject matter of this Agreement.
SECTION 8.4 Payment of Costs.
Except as otherwise agreed, each of Fibreboard Corporation,
Continental, CNA Casualty, Columbia and Pacific shall pay its own legal and
other costs and expenses incurred in connection with the preparation,
negotiation, execution and delivery of this Agreement and the consummation
of the settlement contemplated hereby.
-38-<PAGE>
<PAGE>
SECTION 8.5 Modification and Waiver.
A. Subject to any necessary court approvals, this
Agreement and any of the exhibits hereto may be amended, supplemented or
modified from time to time by a writing executed by each of the Parties or,
in the case of Representative Plaintiffs, by Class Counsel (prior to Global
Approval Judgment) or the SCB (after Global Approval Judgment); provided,
however, that the Trust Agreement and the exhibits thereto, including the
Trust Distribution Process, may be amended only in accordance with the
requirements and procedures contained therein.
B. Fibreboard Corporation, Continental, CNA Casualty,
Columbia, Pacific or the Representative Plaintiffs (on behalf of the
Settlement Class), as the case may be, may from time to time by written
instrument waive any provision of this Agreement or any of the exhibits
hereto which inures to its or their benefit; provided, however, that the
provisions of the Trust Agreement and exhibits thereto, including the Trust
Distribution Process, may be waived only in accordance with the requirements
and procedures contained therein. Any such waiver or consent shall be
effective only in the specific instance, for the specific provision of this
Agreement or exhibit hereto and for the specific purpose for which it is
given.
SECTION 8.6 Further Actions.
Each of Fibreboard Corporation, Continental, CNA Casualty,
Columbia, Pacific and the Representative Plaintiffs and their respective
counsel shall take such actions and execute such additional documents as may
be reasonably necessary or appropriate to consummate or implement the
settlement contemplated by this Agreement.
-39-<PAGE>
<PAGE>
SECTION 8.7 Effectiveness of Agreement Notwithstanding
Developments.
The Parties understand and contemplate that during the
period necessary to obtain Global Approval Judgment there will almost
certainly be developments that bear on the issues being resolved and
compromised by this Agreement, including but not limited to, decisions on
issues common to other parties in the Coverage Case, controlling decisions
by the California Supreme Court issued in other cases, changes in estimates
as to volume and severity of future asbestos personal injury claims,
procedural rulings or legislative actions that may make it easier or more
difficult successfully to prosecute claims against asbestos defendants or
their insurers and changes in the financial condition of other asbestos
defendants, any of which may appear to have a bearing on the settlement of
issues resolved herein. The Parties have carefully weighed potential
developments of this nature and have taken them into account in reaching the
compromise recited on the record on August 27, 1993 and reflected in this
Agreement and no such event subsequent to that date shall be the basis for
modifying this Agreement or relieving any of the Parties from any of its
terms. The fairness and reasonableness of this Agreement shall be assessed
as of August 27, 1993.
SECTION 8.8 No Admission or Use.
This Agreement and the provisions thereof, whether or not
Global Approval Judgment is entered, shall in no event be offered as or be
deemed to be evidence or an admission or a concession on the part of any of
the Parties of or with respect to any claim or any fault, liability or
damages whatsoever. This Agreement and the settlement provided for herein,
-40-<PAGE>
<PAGE>
whether or not consummated, and any actions or proceedings taken to enter
into or pursuant to this Agreement or otherwise, are not, and shall not in
any event be construed, interpreted or used as evidence of a presumption,
concession or admission by any Party of the truth of any fact alleged or the
validity of any claim or defense which has, could have been or could be
asserted in any litigation, or of any deficiency in any claim or defense
which was, could have been or could be asserted in any litigation, or of any
liability, fault or dereliction of duty or breach of contract of any Party.
Notwithstanding the foregoing, any Party shall be entitled to introduce this
Agreement in evidence for the purpose of enforcing its terms. Nothing
herein is intended to suggest that any asbestos-related personal injury
claim may be asserted against Fibreboard, the Settlement Trust or the
Insurers by a person who cannot prove exposure to asbestos-containing
materials manufactured by Fibreboard.
SECTION 8.9 No Breach of Other Obligations.
Neither this Agreement nor any acts, statements or
omissions of the Parties in connection with the negotiation, execution or
performance thereof shall be claimed to constitute a breach of any contract,
policy of insurance or law or the basis for any claim of bad faith. Nothing
in this Agreement calls for or obligates any of the Parties in any way to
violate or breach its obligations under any agreement and no term or
provision of this Agreement shall be so construed.
SECTION 8.10 Third Party Beneficiaries.
There shall be no third party beneficiaries of this
Agreement other than the non-Party Releasees hereunder. No Person other
than the Parties hereto, the Settlement Class Members and the Releasees
-41-<PAGE>
<PAGE>
hereunder, shall have any right or claim under or in respect of this
Agreement.
SECTION 8.11 Rights and Obligations of Fibreboard
Corporation and the Insurers Under the
Settlement Agreement and Related
Agreements.
This Agreement shall not abridge or in any way modify or
affect the rights or obligations of Fibreboard Corporation, Pacific,
Continental, CNA Casualty or Columbia in relation to each other under the
Settlement Agreement or related agreements referred to therein. All such
rights and obligations shall be in addition to those created by this
Agreement even where they pertain to the same subject matter. The
definitions contained in the Glossary and in the provisions of this Global
Settlement Agreement and its exhibits shall have no application to the
Settlement Agreement or the related agreements referred to therein unless
incorporated explicitly by written addendum to such agreements.
SECTION 8.12 Headings.
The section headings contained in this Agreement and its
exhibits are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement or its exhibits.
SECTION 8.13 Notices.
All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given if it is
sent by registered or certified mail, postage prepaid, or sent by prepaid
overnight courier or confirmed telecopier, and addressed to the intended
recipient as set forth below:
-42-<PAGE>
<PAGE>
If to Fibreboard Corporation, addressed to:
Fibreboard Corporation
2121 North California Blvd.
Walnut Creek, CA 94596
Attention: Michael R. Douglas
Senior Vice President and
General Counsel
Telecopier: (510) 274-0714
and
BROBECK, PHLEGER & HARRISON
Spear Street Tower
One Market Plaza
San Francisco, California 94105
Attention: Stephen M. Snyder, Esq.
Telecopier: (415) 442-1020
If to Continental, addressed to:
Continental Casualty Co.
Specialty Claims Office, 12th Floor
50 Fremont Street
San Francisco, CA 94105
Attention: Claim Manager
Telecopier: (415) 512-4899
and
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd St.
New York, New York 10019
Attention: Herbert M. Wachtell, Esq.
Telecopier: (212) 403-2000
and
CARROLL, BURDICK & McDONOUGH
44 Montgomery St., Suite 400
San Francisco, CA 94104
Attention: Rodney L. Eshelman, Esq.
Telecopier: (415) 989-0932
-43-<PAGE>
<PAGE>
If to Columbia, addressed to:
Columbia Casualty Company
c/o Continental Casualty Co.,
Specialty Claims Office, 12th Floor
50 Fremont Street
San Francisco, CA 94105
Attention: Claim Manager
Telecopier: (415) 512-4899
and
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd St.
New York, New York 10019
Attention: Herbert M. Wachtell, Esq.
Telecopier: (212) 403-2000
and
CARROLL, BURDICK & McDONOUGH
44 Montgomery St., Suite 400
San Francisco, CA 94104
Attention: Rodney L. Eshelman, Esq.
Telecopier: (415) 989-0932
If to CNA Casualty, addressed to:
CNA Casualty Company of California
c/o Continental Casualty Co.
Specialty Claims Office, 12th Floor
50 Fremont Street
San Francisco, CA 94105
Attention: Claim Manager
Telecopier: (415) 512-4899
and
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd St.
New York, New York 10019
Attention: Herbert M. Wachtell, Esq.
Telecopier: (212) 403-2000
-44-<PAGE>
<PAGE>
and
CARROLL, BURDICK & McDONOUGH
44 Montgomery St., Suite 400
San Francisco, CA 94104
Attention: Rodney L. Eshelman, Esq.
Telecopier: (415) 989-0932
If to Pacific, addressed to:
Pacific Indemnity Company
Chubb & Son Inc.
15 Mountain View Road
P.O. Box 1615
Warren, NJ 07061-1615
Attention: Malcolm B. Burton
Telecopier: (908) 580-3030
and
WHITE & CASE
1155 Avenue of the Americas
New York, NY 10036
Attention: Paul J. Bschorr, Esq.
Telecopier: (212) 354-8113
If to the Representative Plaintiffs, addressed to:
NESS, MOTLEY, LOADHOLT,
RICHARDSON & POOLE
151 Meeting Street, Suite 600
P.O. Box 1137
Charleston, South Carolina 29402
Attention: Joseph F. Rice, Esq.
Joseph B. Cox, Jr., Esq.
Telecopier: (803) 577-7513
CARTWRIGHT, SLOBODIN, BOKELMAN, BOROWSKY,
WARTNICK, MOORE & HARRIS, INC.
101 California Street, Suite 2600
San Francisco, California 94111
Attention: Harry F. Wartnick, Esq.
Telecopier: (415) 391-5845
-45-<PAGE>
<PAGE>
KAZAN, McCLAIN, EDISES & SIMON
171 Twelfth Street, Suite 300
Oakland, California 94607
Attention: Steven Kazan, Esq.
Telecopier: (510) 835-4913
CAPLIN & DRYSDALE, CHARTERED
399 Park Avenue
New York, New York 10022
Attention: Elihu Inselbuch, Esq.
Telecopier: (212) 644-6755
Such communications shall be effective when they are received by the
addressee thereof. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
-46-<PAGE>
<PAGE>
SECTION 8.14 Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed on
December 23, 1993 by the undersigned, thereunto duly
--
authorized.
On behalf of the
Representative Plaintiffs
By: JOSEPH RICE
--------------------------------------
Joseph Rice, Esq.
By: JOSEPH B. COX, JR.
--------------------------------------
Joseph B. Cox, Jr., Esq.
By: HARRY F. WARTNICK
--------------------------------------
Harry F. Wartnick, Esq.
By: STEVEN KAZAN
--------------------------------------
Steven Kazan, Esq.
By: ELIHU INSELBUCH
--------------------------------------
Elihu Inselbuch, Esq.
-47-<PAGE>
<PAGE>
FIBREBOARD CORPORATION
By: MICHAEL R. DOUGLAS
--------------------------------------------------
Title Senior Vice President & General Counsel
------------------------------------------------
CONTINENTAL CASUALTY COMPANY
By: LAURENS F. TERRY
--------------------------------------------------
Title Vice President
------------------------------------------------
CNA CASUALTY COMPANY OF CALIFORNIA
By: LAURENS F. TERRY
--------------------------------------------------
Title Vice President
------------------------------------------------
COLUMBIA CASUALTY COMPANY
By: LAURENS F. TERRY
--------------------------------------------------
Title Vice President Continental Casualty Co.
------------------------------------------------
-48-<PAGE>
<PAGE>
PACIFIC INDEMNITY COMPANY
By: JOHN J. DEGNAN
--------------------------------------------------
Title Senior Vice President
------------------------------------------------
-49-
<PAGE>
EXHIBIT 10.12
EXHIBIT A
GLOSSARY OF TERMS
IN
GLOBAL SETTLEMENT AGREEMENT,
TRUST AGREEMENT,
TRUST DISTRIBUTION PROCESS,
AND
DEFENDANT CLASS SETTLEMENT AGREEMENT<PAGE>
<PAGE>
TABLE OF CONTENTS
Additional Policy Claim . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
April 9 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Asbestos Lung Disease I or ALD-1 . . . . . . . . . . . . . . . . . . . 2
Asbestos Lung Disease II or ALD-2 . . . . . . . . . . . . . . . . . . . 3
Attorney Ad Litem . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
B-reader Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Claims Resolution Facility . . . . . . . . . . . . . . . . . . . . . . 4
Class Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class Member Claim . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CNA Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Columbia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Continental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Continental-Pacific Agreement . . . . . . . . . . . . . . . . . . . . . 5
Continental Releasees . . . . . . . . . . . . . . . . . . . . . . . . . 6
Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Coverage Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Defendant Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Defendant Class Counsel . . . . . . . . . . . . . . . . . . . . . . . . 6
Defendant Class Member . . . . . . . . . . . . . . . . . . . . . . . . 7
Defendant Class Order . . . . . . . . . . . . . . . . . . . . . . . . . 7
Defendant Class Settlement Agreement . . . . . . . . . . . . . . . . . 7
Defense Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Designated Settlement Fund or DSF . . . . . . . . . . . . . . . . . . 7
Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . . 7
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Earnings Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Escrow Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exigent Health Claim . . . . . . . . . . . . . . . . . . . . . . . . . 8
Expedited Review Claim . . . . . . . . . . . . . . . . . . . . . . . . 9
Exposed Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Express Indemnity Claim . . . . . . . . . . . . . . . . . . . . . . . . 9
Extreme Hardship Claim . . . . . . . . . . . . . . . . . . . . . . . . 9
Fibreboard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fibreboard Releasees . . . . . . . . . . . . . . . . . . . . . . . . . 10
FIFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Final Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-i-<PAGE>
<PAGE>
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Fund I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fund II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fund III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Global Approval Judgment . . . . . . . . . . . . . . . . . . . . . . . 12
Global Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Global Court Disapproval . . . . . . . . . . . . . . . . . . . . . . . 16
Global Settlement Agreement . . . . . . . . . . . . . . . . . . . . . . 16
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Increased Principal Amount, . . . . . . . . . . . . . . . . . . . . . . 17
Initial Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Insurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interim Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interim Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interim Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interim Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Judgment Forum Law . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Lung Cancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Malignancy Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Medical Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Mesothelioma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Non-Malignancy Claim . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other Cancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other Claims Resolution Facility . . . . . . . . . . . . . . . . . . . 20
Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Pacific Indemnity Agreement . . . . . . . . . . . . . . . . . . . . . . 20
Pacific Releasees . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . 21
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Personal Injury Asbestos Claim . . . . . . . . . . . . . . . . . . . . 21
PFT Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Qualified Arbitrator and Qualified Mediator . . . . . . . . . . . . . . 24
Qualified Settlement Fund or QSF . . . . . . . . . . . . . . . . . . . 24
Released Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Representative Defendant . . . . . . . . . . . . . . . . . . . . . . . 24
Representative Plaintiffs . . . . . . . . . . . . . . . . . . . . . . . 25
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Residual Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Rule 23 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Select Counsel for the Beneficiaries or SCB . . . . . . . . . . . . . . 25
Schedule Category . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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<PAGE>
Scheduled Disease . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Second Injury Claim . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Settled Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Settlement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 27
Settlement Agreement Approval Judgment . . . . . . . . . . . . . . . . 27
Settlement Agreement Court Disapproval . . . . . . . . . . . . . . . . 27
Settlement Class . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Settlement Class Member . . . . . . . . . . . . . . . . . . . . . . . . 30
Settlement Class Order . . . . . . . . . . . . . . . . . . . . . . . . 30
Settlement Conference Designee . . . . . . . . . . . . . . . . . . . . 30
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Third Party Claimant . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust Distribution Process . . . . . . . . . . . . . . . . . . . . . . 31
Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Trustors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Unreimbursed Borrowings . . . . . . . . . . . . . . . . . . . . . . . . 32
Unsettled Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-iii-<PAGE>
<PAGE>
1. "Additional Policy Claim" means each and every
claim, demand, action or suit of any kind (i) which arises under, pursuant
to or related to the Insurance Policies by any person or entity, whether
directly or indirectly asserted against the Insurers or any third party, or
arising under any term or terms or alleged coverage provided by the
Insurance Policies and (ii) which arises directly or indirectly from
personal injury resulting from exposure to asbestos or asbestos-containing
materials for which Fibreboard may bear legal liability.
2. "Affiliate" of a Person means (i) a Subsidiary of
such Person, (ii) a Person which owns, either alone or with or through one
or more Affiliates, directly or indirectly, securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such Person, and
(iii) a Subsidiary of any Affiliate of such Person.
3. "April 9 Agreement" means the agreement between
Continental and Fibreboard Corporation dated April 9, 1993, as it has been
amended, pursuant to which Continental and Fibreboard Corporation agreed,
among other things, upon terms and conditions set forth therein, to use
their best efforts jointly to negotiate and finalize a global class action
settlement with personal injury claimants and Continental agreed, whether or
not a global settlement was reached, to pay certain defense and other costs
of certain asbestos-related claims on an interim basis.
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<PAGE>
4. "Asbestos Lung Disease I" or "ALD-1" means either:
(1) a diagnosis of pulmonary asbestosis by a
board-certified internist or pulmonary specialist based on the
following minimum objective criteria:
(i) Chest X-rays for which a B-reader
report is furnished showing small irregular opacities of
ILO Grade 1/0 and pulmonary function testing and physical
examination that shows either:
a. FVC <80% of predicted
with FEV-1/FVC >75% (actual value);
-
or
b. TLC <80% of predicted,
with either DLCO <76% of predicted or bilateral
-
basilar crackles, and also the absence of any
probable explanation for this DLCO result or
bilateral basilar crackles finding other than the
presence of asbestos lung disease; or
(ii) Chest X-rays for which a B-reader
report is furnished showing small irregular opacities of
ILO Grade 1/1 or greater; and pulmonary function testing
that shows either:
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<PAGE>
a. FVC <80% of predicted
with FEV-1/FVC >72% (actual value) or, if the
-
individual tested is at least 68 years old at the
time of the testing, with FEV-1/FVC >65% (actual
-
value);
or
b. TLC <80% of predicted.
or
(2) A statement by a board-certified
pathologist that more than one representative section of lung
tissue otherwise uninvolved with any other process (e.g., cancer or
emphysema) demonstrates a pattern of peribronchiolar or parenchymal
scarring in the presence of characteristic asbestos bodies, and
also that there is no other more likely explanation for the
presence of the fibrosis.
5. "Asbestos Lung Disease II" or "ALD-2" means a
diagnosis by a qualified physician that indicates other abnormalities of the
parenchyma or pleura attributed to prior asbestos exposure, including
pleural plaques, pleural thickening, pleural encasement and mild parenchymal
fibrosis not meeting the definition of ALD-1.
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<PAGE>
6. "Attorney Ad Litem" means Professor Eric Green of
Boston University Law School or such successor as may be appointed by the
Court.
7. "Beneficiary" means any Settlement Class Member
who asserts a Class Member Claim, now or at any time in the future.
8. "B-reader Report" means a report of a B-reader
certified at the time the report is prepared (or of an individual who at one
time was a certified B-reader and who has not subsequently failed the
examination for certification or recertification as a B-reader) based on
chest x-rays of an Exposed Person.
9. "Claimant" means any Person, or legal
representative of a Person, who seeks recovery from the Trust for a Personal
Injury Asbestos Claim of any kind.
10. "Claims Resolution Facility" means a facility that
establishes a method for the liquidation and resolution of claims that is
administered by the Trust.
11. "Class Action" means Ahearn et al. v. Fibreboard
Corp. et al., 6:93 cv 526 (E.D. Tex.), filed by Representative Plaintiffs in
the Global Court on behalf of themselves and the Settlement Class against
Fibreboard Corporation on September 9, 1993.
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<PAGE>
12. "Class Counsel" means Joseph F. Rice and
Joseph B.Cox, Jr., of the firm of Ness, Motley, Loadholt, Richard Poole, P.C.;
Harry F. Wartnick, of the firm of Cartwright, Slobodin, Bokelman, Borowsky,
Wartnick, Moore & Harris, Inc.; and Steven Kazan, of the firm of Kazan,
McClain, Edises & Simon; or successors of the foregoing individuals.
13. "Class Member Claim" means any Personal Injury
Asbestos Claim of a Settlement Class Member.
14. "CNA Casualty" means CNA Casualty Company of
California, a California corporation.
15. "Columbia" means Columbia Casualty Company, an
Illinois Corporation.
16. "Continental" means Continental Casualty Company,
an Illinois Corporation.
17. "Continental-Pacific Agreement" means the
agreement between Continental and Pacific dated as of October 12, 1993
pursuant to which Continental and Pacific settled the dispute between them
and agreed upon terms for the sharing of liabilities of each of them with
respect to certain asbestos-related claims.
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<PAGE>
<PAGE>
18. "Continental Releasees" are as defined in Section
2.5(B) of the Global Settlement Agreement.
19. "Court" means the Honorable Robert M. Parker, now
the Chief Judge for the United States District Court for the Eastern
District of Texas. In the event that for any reason Judge Parker ceases to
be a Judge of the United States as defined in Article III of the United
States Constitution or otherwise cannot fulfill the responsibilities of the
Court, the term "Court" shall mean any United States Circuit or District
Judge designated by the Chief Judge of the United States Court of Appeals of
the Fifth Circuit to exercise continuing jurisdiction over the Trust and the
Global Settlement Agreement.
20. "Coverage Case" means the action bearing the
caption Asbestos Insurance Coverage Cases, Judicial Council Coordination
Proceeding No. 1072, which was pending as of the date of the Global
Settlement Agreement in the Court of Appeal of the State of California,
First Appellate District, Division One, Nos. A049419 et al.
21. "Defendant Class" means all Persons with Third
Party Claims.
22. "Defendant Class Counsel" means Richard Josephson
of Baker & Botts and R. Bruce Shaw of Nelson, Mullins, Riley & Scarborough
or their successors.
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<PAGE>
23. "Defendant Class Member" means any Person who or
which is a member of the Defendant Class.
24. "Defendant Class Order" means an order of the
Court finally certifying the Defendant Class as a class for settlement
purposes under Rule 23(b)(1) and/or (b)(2) of the Federal Rules of Civil
Procedure.
25. "Defendant Class Settlement Agreement" means the
agreement annexed to the Global Settlement Agreement as Exhibit C.
26. "Defense Costs" mean Fibreboard Corporation's
defense fees and costs, including case management system fees and costs, as
more fully defined in the Settlement Agreement.
27. "Designated Settlement Fund" or "DSF" is as
defined in Section 468B of the Internal Revenue Code of 1986.
28. "Distributable Amount" means, with respect to
Fund I, Fund II or Fund III, for any Fiscal Year, the sum of the Earnings
Amount for that Fund for that Fiscal Year plus (i) the Principal Amount or
(ii) in the event that the provisions of Appendix 1 to the Trust
Distribution Process apply, the Increased Principal Amount, for that Fiscal
Year.
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<PAGE>
29. "Distribution Date" is as defined in paragraph E.4
of the Trust Distribution Process.
30. "Earnings Amount" means, with respect to Fund I,
Fund II or Fund III, as the case may be, all elements of current periodic
income from such Fund (other than any such income on the amounts in the
Reserve Account), including interest, periodic dividends (but not special,
liquidating or wasting dividends), rent, royalty and other similar payments
which represent earnings or profit on an asset, and do not represent
elements of appreciation or gain or depreciation or loss (whether realized
or unrealized) on an asset, all determined on an accrual basis in accordance
with generally accepted accounting principles.
31. "Escrow Agent" means the Person acting as escrow
agent pursuant to the Escrow Agreement.
32. "Escrow Agreement" means an Escrow Agreement
substantially in the form attached to the Global Settlement Agreement as
Exhibit D.
33. "Escrow Fund" means the escrow account established
pursuant to Section 2.3(A) of the Global Settlement Agreement.
34. "Exigent Health Claim" means a Class Member Claim
that is supported by an affidavit or declaration made under penalty of
perjury from a physician who has examined the Settlement Class Member within
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<PAGE>
120 days of the date of the affidavit or declaration, which states that the
physician believes that because of asbestos-related disease there is
substantial medical doubt that the Settlement Class Member will survive
beyond six months from the date of the declaration or affidavit.
35. "Expedited Review Claim" is as defined in Section
B.2 of the Trust Distribution Process.
36. "Exposed Person" means the individual whose
exposure to asbestos results in a Personal Injury Asbestos Claim.
37. "Express Indemnity Claim" means a Third Party
Claim (i) which asserts that Fibreboard is liable to indemnify or reimburse
the holder of such claim for payments made or liabilities, expenses or costs
incurred by such claim holder on account of an asbestos-related personal
injury claim asserted against such claim holder by a Settlement Class Member
and (ii) which would not be barred under applicable law by a court
determination that a settlement between Fibreboard (or the Trust) and the
Settlement Class Member asserting such asbestos-related personal injury
claim was made in good faith.
38. "Extreme Hardship Claim" means a Class Member
Claim as to which the Interim Committee (if the Class Member Claim is
submitted during the Interim Period) or the Trust (if the Class Member Claim
is submitted after entry of Global Approval Judgment), in its sole
-9-<PAGE>
<PAGE>
discretion, determines that because of an asbestos-related disease the
Settlement Class Member is suffering a severe financial hardship.
39. "Fibreboard" means Fibreboard Corporation;
Fibreboard Paper Products Corporation; Fibreboard Products, Incorporated;
Paraffine Companies, Incorporated; Plant Rubber & Asbestos Works; Pabco
Products, Incorporated; and Pabco Insulation Corporation; and each of their
respective predecessors, Subsidiaries and divisions, and with regard to
Fibreboard Corporation's liability only, each of their respective successors
in interest.
40. "Fibreboard Releasees" mean the following
entities, each of their respective predecessors, Subsidiaries, divisions,
current and former attorneys, officers, directors and employees, and, with
regard to Fibreboard Corporation's liability only, each of their respective
successors in interest:
(i) Fibreboard Corporation; Fibreboard Paper Products
Corporation; Fibreboard Products, Incorporated;
Paraffine Companies, Incorporated; Plant Rubber &
Asbestos Works; Pabco Products, Incorporated; and
Pabco Insulation Corporation;
-10-<PAGE>
<PAGE>
(ii) Louisiana-Pacific Corporation (other than for
asbestos-related claims against Louisiana-Pacific
which (a) state a basis for liability by
Louisiana-Pacific wholly independent of any
relationship between Louisiana-Pacific and
Fibreboard Corporation or any act or omission in
connection with such a relationship, and (b) as to
which there is no basis for any claim against
Fibreboard Corporation by the claimant or by
Louisiana-Pacific).
41. "FIFO" means first in, first out.
42. "Final Decision" means the final decision or
decisions obtained when all the issues that are pending in the Coverage Case
by Fibreboard Corporation against certain of the Insurers have been finally
resolved and no further appellate review or remand proceedings are possible
with respect to such claims.
43. "Fiscal Year" means the calendar year, except that
the first Fiscal Year shall be that portion of a calendar year commencing
with the date of execution of the Trust Agreement and ending on the last day
of the calendar year in which such execution occurs, and references to a
number of Fiscal Years after Global Approval Judgment shall be determined
based on the assumption that the first Fiscal Year after Global Approval
Judgment shall be the Fiscal Year during which Global Approval Judgment
occurs.
-11-<PAGE>
<PAGE>
44. "Fund I" is as defined in paragraph E of the Trust
Distribution Process.
45. "Fund II" is as defined in paragraph E of the
Trust Distribution Process.
46. "Fund III" is as defined in paragraph E of the
Trust Distribution Process.
47. "Global Approval Judgment" means a judgment, order
or other decree issued and entered by the Global Court in an action in which
Fibreboard Corporation, Continental, CNA Casualty, Columbia, Pacific, the
Settlement Class and all persons having or who may have Third Party Claims
have been made parties, either directly or in a representative capacity, as
to which judgment, order or decree any appeal (and subsequent remand, if
any) has been finally decided and no further appeal or petition for
certiorari can be taken or granted and which judgment, order or decree:
(a) approves the terms and provisions of the Global
Settlement Agreement, including the releases and
indemnities contained therein;
(b) approves the Trust Agreement and the Trust
Distribution Process incorporated in the Global
Settlement Agreement;
-12-<PAGE>
<PAGE>
(c) orders the parties to implement the Global
Settlement Agreement;
(d) determines and awards the fees and expenses of
Class Counsel;
(e) declares that the settlement reflected by the
Global Settlement Agreement, with respect to both
Class Member Claims and Third Party Claims, is
fair, reasonable and adequate and was entered into
in good faith;
(f) declares that the Settlement Class Members and the
Defendant Class Members have received adequate
notice of the settlement contemplated by the
Global Settlement Agreement and Rule 23 of the
Federal Rules of Civil Procedure;
(g) declares that the Settlement Class Members have
been adequately, professionally and ethically
represented by Class Counsel;
(h) orders all Class Member Claims, except for claims
for punitive or exemplary damages, directed to the
Trust for disposition pursuant to the Trust
Agreement and Trust Disposition Process;
-13-<PAGE>
<PAGE>
(i) declares that, as provided in Section 2.2(B) of
the Global Settlement Agreement, only payment of
funds pursuant to the Settlement Class Members'
individual settlements with the Trust shall
trigger the notice, approval and forfeiture
provisions of the Longshore and Harbor Workers
Compensation Act and other similar state and
federal workers compensation provisions;
(j) orders dismissal on the merits, without costs and
with prejudice, of the Class Action and all of the
Class Member Claims (including all punitive and
exemplary damage claims) against the Fibreboard,
Continental and Pacific Releasees;
(k) declares the provision contained in the Global
Settlement Agreement whereby Fibreboard
Corporation and the Insurers agree that the
Insurers shall be discharged from any further
obligation under or in connection with the
Insurance Policies, except as an Insurer has
specifically assumed under the Global Settlement
Agreement or has preserved under the Settlement
Agreement (and the related agreements referred to
therein), to be fair, reasonable and
non-collusive;
-14-<PAGE>
<PAGE>
(l) discharges the Fibreboard, Continental and Pacific
Releasees from any further liability with respect
to any Class Member Claim or Third Party Claim;
(m) permanently enjoins Fibreboard Corporation from
asserting any claim released or discharged under
the Global Settlement Agreement against any
Continental or Pacific Releasee;
(n) permanently enjoins any Settlement Class Member or
Third Party Claimant from asserting any claim
released or discharged under the Global Settlement
Agreement against any Fibreboard, Continental or
Pacific Releasee;
(o) approves the provisions set forth in the Global
Settlement Agreement and the Trust Distribution
Process for the resolution of Third Party Claims;
and
(p) retains exclusive jurisdiction in the Court
rendering such judgment, order or decree (1) to
enforce the provisions of such judgment, order or
decree, (2) to resolve any disputes as to the
performance or interpretation of the Global
Settlement Agreement, or such judgment, order or
decree, (3) to adjudicate any attempt by any
person to challenge such judgment, order or decree
-15-<PAGE>
<PAGE>
in any respect, and (4) over the maintenance,
administration and distribution of the Trust and
the funds contained therein, subject to and in
accordance with the provisions of the Trust
Agreement and the Trust Distribution Process
incorporated therein;
provided that Global Approval Judgment shall not be deemed to have been
entered unless and until either Settlement Agreement Approval Judgment has
been entered or Settlement Agreement Court Disapproval occurs.
48. "Global Court" means the United States District
Court for the Eastern District of Texas.
49. "Global Court Disapproval" means a judgment, order
or other decree of the Global Court or other court of competent jurisdiction
in an action in which Fibreboard Corporation, Continental, CNA Casualty,
Columbia, Pacific and the Settlement Class have been made parties, as to
which judgment, order or decree any appeal (and subsequent remand, if any)
has been finally decided and no further appeal or petition for certiorari
can be taken or granted and which judgment, order or decree disapproves or
declines to approve the Global Settlement Agreement.
50. "Global Settlement Agreement" means the settlement
agreement as of August 27, 1993 among Continental, CNA Casualty, Columbia,
-16-<PAGE>
<PAGE>
Pacific, Fibreboard Corporation and the Representative Plaintiffs as
representatives of the Settlement Class.
51. "Glossary" means this Exhibit A to the Global
Settlement Agreement.
52. "Increased Principal Amount," (i) for any of the
third through the twelfth Fiscal Years after Global Approval Judgment, means
125% of the Principal Amount for such Fiscal Year and (ii) for any of the
sixteenth through the twentieth Fiscal Years after Global Approval Judgment,
means 112.5% of the Principal Amount for such Fiscal Year.
53. "Initial Trustee" is as defined in Section 7.18
of the Trust Agreement.
54. "Insurance Policies" mean policy number
CLP 3197650 issued by Continental effective May 4, 1957, in favor of
Fibreboard Corporation under its former name, Fibreboard Paper Products
Corporation, policy number RD 951 90 81 issued by Continental, policy number
RDU 975 65 87 issued by CNA Casualty and an endorsement thereto issued by
Continental, policy number RDU 186 27 82 issued by Columbia, policy number
RDU 186 30 62 issued by Columbia, policy number RDU 365 32 19 issued by
Columbia, the policy that was alleged by Fibreboard Corporation to have been
issued by Continental in the period 1954-1956, and policy number LAC 88700
found to have been issued by Pacific to Fibreboard Corporation effective
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<PAGE>
May 4, 1956, and any other policies that were, or may be alleged to have been,
issued to Fibreboard Corporation by any of the Insurers, including those set
forth in the Pacific Indemnity Agreement.
55. "Insurers" mean (i) Continental, CNA Casualty,
Columbia and all insurance or indemnity companies controlling, controlled by
or under common control with any of them and (ii) Pacific and all insurance
or indemnity companies controlling, controlled by or under common control
with it.
56. "Interim Claim" is as defined in Section 7.1 of
the Global Settlement Agreement.
57. "Interim Claimant" is a Person asserting an
Interim Claim.
58. "Interim Committee" is as defined in Section 7.1
of the Global Settlement Agreement.
59. "Interim Period" is as defined in Section 7.1 of
the Global Settlement Agreement.
60. "Judgment Forum Law" is as defined in Section
H.1.a of the Trust Distribution Process.
61. "Liquidation" occurs with respect to any Class
Member Claim or Third Party Claim on the date on which the validity and
amount thereof is finally determined pursuant to the Trust Distribution
-18-<PAGE>
<PAGE>
Process or the date on which a final, nonappealable judgment is entered
against the Trust with respect to such Class Member Claim or Third Party
Claim.
62. "Lung Cancer" means a diagnosis by a qualified
physician of a malignant primary tumor of any cell type, originating within
the lung, caused or contributed to by exposure to asbestos.
63. "Malignancy Claim" means a claim for Mesothelioma,
Lung Cancer, or Other Cancer as defined in this Glossary.
64. "Medical Report" means a written narrative report
by a physician confirming that (i) an Exposed Person has an asbestos-related
personal injury or disease, based on a physical examination (as reflected in
medical records or performed by the physician preparing the narrative
report) of the Exposed Person, or (ii) following review of pertinent medical
records and information, that an asbestos-related personal injury or disease
caused or substantially contributed to the death of an Exposed Person.
65. "Mesothelioma" means a diagnosis by a board
certified pathologist of a malignant tumor caused or contributed to by
exposure to asbestos originating in the mesothelial cells of the pleura,
peritoneum or like tissue, or reasonable equivalent clinical diagnosis in
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<PAGE>
<PAGE>
the absence of adequate tissue for pathological diagnosis.
66. "Non-Malignancy Claim" means a claim for ALD-1 or
ALD-2 as defined in this Glossary.
67. "Other Cancer" means a diagnosis by a qualified
physician that indicates a malignant tumor originating in the larynx,
pharynx, stomach, esophagus, colon or rectum, caused or contributed to by
exposure to asbestos.
68. "Other Claims Resolution Facility" means a
facility that establishes a method for the liquidation and resolution of
asbestos-related personal injury claims administered by a Person other than
the Trust.
69. "Pacific" means Pacific Indemnity Company, a
California corporation.
70. "Pacific Indemnity Agreement" collectively means
the Agreement and a Rescission of Insurance Policies, both dated March 27,
1992, between Fibreboard Corporation and Pacific, pursuant to which Pacific
and Fibreboard Corporation agreed to settle their insurance coverage
dispute.
71. "Pacific Releasees" are as defined in Section
2.5(C) of the Global Settlement Agreement.
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72. "Permitted Investments" are as defined in
Section 4.3 of the Trust Agreement.
73. "Person" means any individual, corporation,
partnership or association, whether or not incorporated, and any federal,
state or local government or agency thereof, or any other entity and his,
her or its legal representative.
74. "Personal Injury Asbestos Claim" means:
(i) each and every claim, demand, action or suit of any
kind for personal injury arising, directly or indirectly,
from exposure to asbestos-containing products (including,
without limitation, any direct action claim, wrongful death
claim, punitive or exemplary damages claim, loss of
consortium claim, fear of disease claim, bad faith claim,
or surviving personal injury claim), and whether such
injury manifested itself heretofore or hereafter, or (ii)
any claim, demand, action or suit of any kind arising,
directly or indirectly, from any such claim, demand, action
or suit referred to in (i) above (including without
limitation any bad faith claim, contribution claim,
indemnity claim, warranty claim, direct action claim or
Additional Policy Claim)
against Fibreboard, against the Insurance Policies or against the Insurers
in any way predicated on obligations created by the Insurance Policies;
provided, however, that a Personal Injury Asbestos Claim shall not include
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<PAGE>
any claim for benefits brought by an employee or his or her personal
representative under any federal or state workers compensation statute
(including, but not limited to, the United States Longshore and Harbor
Workers Compensation Act and the Federal Employees Compensation Act), but
shall include any subrogation, contribution or indemnity claim arising from
such claim for benefits.
75. "PFT Report" means a report by a pulmonary
specialist or a board-certified internist interpreting the results of
pulmonary function testing of an Exposed Person.
76. "Principal Amount" means, for any Fiscal Year
after Global Approval Judgment:
(i) (a) (x) the aggregate fair market value of all of the
investment assets contained in the Fund for which the
Distributable Amount is being determined (excluding the
then outstanding balance of the Reserve Account) at the
close of business on the last business day of the Fiscal
Year for which the calculation is made, minus (y) the
Earnings Amount for such Fiscal Year, plus (z) all amounts,
if any, paid during such Fiscal Year for Trust Expenses,
Class Member Claims, Third Party Claims and payments made
pursuant to Section 7.16 of the Trust Agreement, in each
case for such Fiscal Year (other than any such payments
made out of the Reserve Account), minus
(b) for any Fiscal Year prior to the 21st Fiscal Year after
Global Approval Judgment, the greater of (i) Zero and (ii)
the lesser of (Y) the aggregate Surplus for all prior
Fiscal Years and (Z) Zero minus Unreimbursed Borrowings;
multiplied by
(ii) a fraction, the numerator of which is one and the
denominator of which is the number of Fiscal Years that
will occur from the beginning of the Fiscal Year for which
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the calculation is made through and including the end of
the 25th Fiscal Year after Global Approval Judgment in the
case of Fund I, the 20th Fiscal Year after the end of Fund
I (or, if the Trustees have determined to delay the
transfer of the remaining balance in Fund II beyond the
twentieth Fiscal Year after the end of Fund I pursuant to
Section E.2.c(ii) of the Trust Distribution Process, the
end of Fund II so determined by the Trustees) in the case
of Fund II and the 15th Fiscal Year after the end of Fund
II in the case of Fund III (so that, for example, for the
Principal Amount applicable to the tenth Fiscal Year after
Global Approval Judgment, such denominator would be 16);
provided, however, that
(1) for the first Fiscal Year after Global Approval Judgment (a)
the numerator in the fraction stated in clause (ii) above shall be
a fraction in which the numerator is the number of full weeks in
such Fiscal Year (but not less than one) and the denominator is 52
(to adjust for the length of such Fiscal Year) and (b) the
Principal Amount determined as provided above, including as set
forth in clause (1)(a) of this proviso shall be multiplied by 0.4;
(2) for the second Fiscal Year after Global Approval Judgment the
Principal Amount shall be the sum of (A) the Principal Amount
otherwise determined as provided in this definition of Principal
Amount multiplied by 0.4, plus (B) the Principal Amount with
respect to the first Fiscal Year after Global Approval Judgment as
determined in clause (1) above multiplied by 0.75; and
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(3) for each of the twenty-first through the twenty-fifth Fiscal
Years after Global Approval Judgment, the Distributable Amount may
be increased by the Trustees up to an amount not in excess of the
Principal Amount and the Earnings Amount that was in effect for the
twentieth Fiscal Year after Global Approval Judgment.
77. "Qualified Arbitrator" and "Qualified Mediator"
shall each be an impartial, neutral person. No person shall serve as an
arbitrator or mediator if he/she has any financial or personal interest in
the proceedings or, except when otherwise agreed by the parties, in any
asbestos-related matters. Prior to accepting an appointment, the
prospective arbitrator or mediator shall disclose any circumstances likely
to create a reasonable inference of bias or prevent a prompt hearing or
conference with the parties.
78. "Qualified Settlement Fund" or "QSF" is as defined
in the Treasury Regulations under Section 468.B of the Internal Revenue Code
of 1986.
79. "Released Parties" collectively, and "Released
Party" individually, mean the Fibreboard, Continental and Pacific Releasees.
80. "Representative Defendant" means Owens-Illinois,
Inc., a Delaware corporation, or such other Person or Persons as may be
certified by the Global Court, in the capacity as representative(s) of the
Defendant Class Members.
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81. "Representative Plaintiffs" mean Gerald Ahearn,
James Dennis and Charles W. Jeep, the named plaintiffs in the Class Action,
or such other, lesser or greater number of Representative Plaintiffs as may
be certified by the Global Court, in their capacities as representatives of
the interests of the Settlement Class Members.
82. "Reserve Account" means the reserve (which shall
be part of Fund I) in the original principal amount described on Appendix I
to the Trust Distribution Process as such amount may be increased or
decreased from time to time in accordance with the provisions described on
Appendix 1 to the Trust Distribution Process and by earnings, capital gains
or losses or other similar items.
83. "Residual Claim" means any Express Indemnity Claim
or Additional Policy Claim, the disposition of which becomes the
responsibility of the Trust pursuant to the Global Approval Judgment.
84. "Rule 23 Notice" means the notice to be given to
the Settlement Class Members and Defendant Class Members pursuant to Rule 23
of the Federal Rules of Civil Procedure.
85. "Select Counsel for the Beneficiaries" or "SCB"
means four lawyers, initially: Joseph B. Cox, Jr., Steven Kazan, Joseph F.
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Rice and Harry F. Wartnick, and a fifth to be selected unanimously by the
other four lawyers as provided in Section 6.1 of the Trust Agreement.
86. "Schedule Category" means: 1) Mesothelioma and
Lung Cancer; 2) ALD-1 and Other Cancer; 3) ALD-2; and 4) Residual Claims.
87. "Scheduled Disease" means Mesothelioma, Lung
Cancer, Other Cancer, Asbestos Lung Disease I and Asbestos Lung Disease II.
88. "Second Injury Claim" is a Malignancy Claim by a
Claimant who settled a Non-Malignancy Claim in exchange for a limited
release which allowed subsequent Malignancy Claims.
89. "Settled Claims" mean claims of individuals for
asbestos-related personal injuries (a) that are not Class Member Claims and
(b) that as of August 27, 1993 had been settled (by Fibreboard Corporation
or by Fibreboard Corporation and Continental) or were the subject of a
verdict or judgment.
For the purposes of this definition, a claim included
within the terms of a settlement agreement (whether written, oral or placed
on a court record) prior to August 27, 1993 shall be deemed to have been
settled before August 27, 1993 even if (i) an opt-out right with respect to
that claim has been or is exercised, or (ii) the settlement is subsequently
repudiated by the Plaintiff; provided, however, that no claim which was
included within the terms of a settlement agreement and which was not filed
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prior to August 27, 1993 shall be deemed settled unless it was eligible to
be processed and liquidated prior to August 27, 1993.
90. "Settlement Agreement" means the agreement among
Fibreboard Corporation, Continental, CNA Casualty, Columbia and Pacific
dated as of October 12, 1993 pursuant to which they agreed, among other
things, to settle and compromise all claims and potential claims against the
Insurers under the Insurance Policies.
91. "Settlement Agreement Approval Judgment" is as
defined in the Settlement Agreement.
92. "Settlement Agreement Court Disapproval" is as
defined in the Settlement Agreement.
93. "Settlement Class" means:
(a) All persons (or their legal representatives) who
prior to August 27, 1993 were exposed, directly or
indirectly (including but not limited to exposure
through the exposure of a spouse, household member
or any other person), to asbestos or to
asbestos-containing products for which Fibreboard
may bear legal liability and who have not, before
August 27, 1993, (i) filed a lawsuit for any
asbestos related personal injury, or damage, or
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<PAGE>
death arising from such exposure in any court
against Fibreboard or persons or entities for
whose actions or omissions Fibreboard bears legal
liability; or (ii) settled a claim for any
asbestos-related personal injury, or damage, or
death arising from such exposure with Fibreboard
or with persons or entities for whose actions or
omissions Fibreboard bears legal liability;
(b) All persons (or their legal representatives)
exposed to asbestos or to asbestos-containing
products, directly or indirectly (including but
not limited to exposure through the exposure of a
spouse, household member or any other person), who
dismissed an action prior to August 27, 1993
without prejudice against Fibreboard, and who
retain the right to sue Fibreboard upon
development of a nonmalignant disease process or a
malignancy; provided, however, that the Settlement
Class does not include persons who filed and, for
cash payment or some other negotiated value,
dismissed claims against Fibreboard, and whose
only retained right is to sue Fibreboard upon
development of an asbestos-related malignancy; and
(c) All past, present and future spouses, parents,
children and other relatives (or their legal
representatives) of the class members described in
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paragraphs (a) and (b) above, except for any such
person who has, before August 27, 1993, (i) filed
a lawsuit for the asbestos-related personal
injury, or damage, or death of a class member
described in paragraph (a) or (b) above in any
court against Fibreboard (or against entities for
whose actions or omissions Fibreboard bears legal
liability), or (ii) settled a claim for the
asbestos-related personal injury, or damage, or
death of a class member described in (a) or (b)
above with Fibreboard (or with entities for whose
actions or omissions Fibreboard bears legal
liability).
For the purposes of this definition, a claim included
within the terms of a settlement agreement (whether written, oral, or placed
on a court record) prior to August 27, 1993 shall be deemed to have been
settled before August 27, 1993 even if (i) an opt-out right with respect to
that claim has been or is exercised, or (ii) the settlement is subsequently
repudiated by the Plaintiff; provided, however, that no claim which was
included within the terms of a settlement agreement and which claim was not
filed prior to August 27, 1993 shall be deemed settled unless it was
eligible to be processed and liquidated prior to August 27, 1993.
94. "Settlement Class Member" means any Person who is
a member of the Settlement Class.
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95. "Settlement Class Order" means an order of the
Court finally certifying the Settlement Class as a class under Rule
23(b)(1)(B) of the Federal Rules of Civil Procedure for settlement purposes.
96. "Settlement Conference Designee" is as defined in
paragraph D.1 of the Trust Distribution Process.
97. "Subsidiary" means, with respect to any Person,
any corporation or other entity in which that Person owns, directly or
indirectly, securities or other ownership interest having ordinary voting
power to elect a majority of the board of directors or other Persons
performing similar functions.
98. "Surplus" means, as of any Distribution Date:
(i) the Distributable Amount for the prior
Fiscal Year, minus
(ii) the aggregate amounts (other than payments
from the Reserve Account) actually paid by the Trust for Trust Expenses,
Class Member Claims, Third Party Claims and payments made pursuant to
Section 7.16 of the Trust Agreement, in each case for such prior Fiscal
Year.
99. "Termination Date" is as defined in Section 7.2 of
the Trust Agreement.
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100. "Third Party Claim" shall mean any Personal Injury
Asbestos Claim that is not a Class Member Claim, except for Settled Claims,
Unsettled Claims or any claims arising directly or indirectly from any such
Settled Claims or Unsettled Claims.
101. "Third Party Claimant" shall mean any Person
having a Third Party Claim.
102. "Trust" means the trust referred to in Article V
of the Global Settlement Agreement.
103. "Trust Agreement" means the Fibreboard Asbestos
Compensation Trust Agreement among Continental, CNA Casualty, Columbia,
Pacific, Fibreboard Corporation and the Trustees attached as Exhibit B to
the Global Settlement Agreement.
104. "Trust Distribution Process" means Annex A to the
Trust Agreement.
105. "Trust Estate" at any time means all assets of the
Trust at such time.
106. "Trust Expenses" means all expenses of the Trust
(including, without limitation, compensation, legal, accounting and other
professional fees, expenses relating to the operation of a Claims Resolution
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Facility, an Other Claims Resolution Facility, disbursements and related
expenses, administrative expenses, taxes and related expenses, the cost of
liability insurance and reimbursement and indemnification payments), other
than payments in respect of Class Member Claims and Third Party Claims and
payments made pursuant to Section 7.16 of the Trust Agreement.
107. "Trustees" are as defined in Section 7.18 of the
Trust Agreement.
108. "Trustors" mean Continental, CNA Casualty,
Columbia, Pacific and Fibreboard Corporation.
109. "Unreimbursed Borrowings" means, as of any
Distribution Date:
(a) the aggregate of the Principal Amounts (not
including any Increased Principal Amounts) and Earnings Amounts for all
Fiscal Years prior to the Fiscal Year to which such Distribution Date
relates, minus
(b) the aggregate amounts (other than payments from
the Reserve Account) actually paid by the Trust for Trust Expenses, Class
Member Claims and Third Party Claims for all such prior Fiscal Years.
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110. "Unsettled Claims" shall mean claims of
individuals for asbestos-related personal injuries brought against
Fibreboard in lawsuits filed prior to August 27, 1993 and that are not
Settled Claims. For purposes of this definition, "Unsettled Claims" shall
include claims of persons who filed and for cash payment or some other
negotiated value dismissed claims against Fibreboard and whose only retained
right is to sue Fibreboard upon development of an asbestos-related
malignancy.
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EXHIBIT 10.13
EXHIBIT B
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FIBREBOARD ASBESTOS COMPENSATION
TRUST AGREEMENT
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<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . 1
ARTICLE II DECLARATION OF TRUST . . . . . . . . . . . . . . 1
2.1 Name . . . . . . . . . . . . . . . . . . 1
2.2 Purposes . . . . . . . . . . . . . . . . 1
2.3 Transfer of Assets . . . . . . . . . . . 2
2.4 Acceptance of Assets and Assumption of
Liabilities . . . . . . . . . . . . . . 2
2.5 Maintenance of Trustor Privileges and
Confidences . . . . . . . . . . . . . . 2
ARTICLE III POWERS; TRUST ADMINISTRATION . . . . . . . . . . 3
3.1 Powers . . . . . . . . . . . . . . . . . 3
3.2 Administration . . . . . . . . . . . . . 10
3.3 Actions by Trustors . . . . . . . . . . 14
3.4 Protection of Confidential Information
from Disclosure to the Beneficiaries . . 14
ARTICLE IV FUNDS, PAYMENTS AND INVESTMENTS . . . . . . . . 14
4.1 Funds . . . . . . . . . . . . . . . . . 14
4.2 Payments . . . . . . . . . . . . . . . . 16
4.3 Investments . . . . . . . . . . . . . . 16
4.4 Source of Payments . . . . . . . . . . . 20
ARTICLE V TRUSTEES . . . . . . . . . . . . . . . . . . . . 21
5.1 Number . . . . . . . . . . . . . . . . . 21
5.2 Term of Service . . . . . . . . . . . . 21
5.3 Appointment of Successor Trustees . . . 22
5.4 Liability of Trustees, Officers
and Employees . . . . . . . . . . . . . 23
5.5 Compensation and Expenses of Trustees . 23
5.6 Indemnification of Trustees, Officers
and Employees . . . . . . . . . . . . . 24
5.7 Trustees' Employment of Experts . . . . 24
ARTICLE VI SELECT COUNSEL FOR THE BENEFICIARIES . . . . . . 25
6.1 Formation; Duties . . . . . . . . . . . 25
6.2 Term of Office . . . . . . . . . . . . . 26
6.3 Appointment of Successor . . . . . . . . 26
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6.4 Compensation, Expenses and Liability
of SCB Members . . . . . . . . . . . . 27
6.5 Resolution of Disputes Involving
Approval of the Select Counsel for
the Beneficiaries . . . . . . . . . . . 28
ARTICLE VII GENERAL PROVISIONS . . . . . . . . . . . . . . . 29
7.1 Irrevocability . . . . . . . . . . . . . 29
7.2 Termination . . . . . . . . . . . . . . 29
7.3 Amendments . . . . . . . . . . . . . . . 30
7.4 Severability . . . . . . . . . . . . . . 30
7.5 Notices . . . . . . . . . . . . . . . . 31
7.6 Counterparts . . . . . . . . . . . . . . 31
7.7 Successors and Assigns . . . . . . . . . 31
7.8 No Waiver . . . . . . . . . . . . . . . 32
7.9 Headings; Section
References . . . . . . . . . . . . . . . 32
7.10 Governing Law . . . . . . . . . . . . . 32
7.11 Dispute Resolution . . . . . . . . . . . 33
7.12 Enforcement and Administration . . . . . 33
7.13 Settlement of Trustees' Accounts . . . . 33
7.14 No Bond Required . . . . . . . . . . . . 33
7.15 Service of Process . . . . . . . . . . . 34
7.16 Lawsuits Against Trustors . . . . . . . 34
7.17 No Disqualification of SCB . . . . . . 35
7.18 Initial Trustee; Powers . . . . . . . . 35
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<PAGE>
FIBREBOARD ASBESTOS COMPENSATION
TRUST AGREEMENT
Trust Agreement ("Trust Agreement") dated as of
December 23, 1993, among Continental, CNA Casualty, Columbia, Pacific, and
Fibreboard Corporation, as Trustors and Francis McGovern, as Initial Trustee
as provided in Section 7.18.
NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH AND IT IS
HEREBY DECLARED as follows:
ARTICLE I
DEFINITIONS
1.1 Capitalized terms used in this Trust Agreement are
defined herein or in the Glossary.
ARTICLE II
DECLARATION OF TRUST
2.1 Name. The Trust shall be known as the "Fibreboard
Asbestos Compensation Trust," and the Trustees may transact the business and
affairs of the Trust in that name.
2.2 Purposes. The purposes of the Trust are:
(a) to use the assets in the Trust Estate
efficiently to deliver fair and equitable compensation to all qualified
Beneficiaries consistent with Trust resources, without overpaying or
underpaying any Beneficiary and with settlement to be preferred over
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mediation, mediation to be preferred over arbitration, and arbitration to be
preferred over resort to the tort system, all pursuant to the provisions of
this Trust Agreement and the Trust Distribution Process;
(b) to enhance and preserve the Trust Estate;
(c) otherwise to carry out the provisions of
this Trust Agreement and the Trust Distribution Process.
2.3 Transfer of Assets. On the date of Global
Approval Judgment, the Trustors shall transfer and assign to the Trust the
amounts provided for in Section 2.3(B) of the Global Settlement Agreement,
having heretofore taken any and all steps necessary and prerequisite to such
transfer.
2.4 Acceptance of Assets and Assumption of
Liabilities. In connection with and in furtherance of its purposes, and
subject to Section 5.4, the Trustees hereby agree to accept on behalf of the
Trust the transfer of the assets described in Section 2.3 above and hereby
further expressly agree on behalf of the Trust to assume liability or
undertake responsibility for all Class Member Claims and those Third Party
Claims for which the Trust is responsible under the Global Settlement
Agreement and Trust Distribution Process. Except as otherwise provided in
the Trust Distribution Process, the Trust shall have all defenses, cross
claims, and rights to liens, offsets and recoupment that Fibreboard or any
other Trustor would have had under applicable law with respect to the Class
Member Claims and Third Party Claims to be assumed by the Trust.
2.5 Maintenance of Trustor Privileges and Confidences.
The Trust shall maintain as privileged and confidential all information
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expressly designated as such which is provided to it by or on behalf of
Fibreboard Corporation or any other Trustor, including without limitation
information relating to Fibreboard's products and their distribution, the
history of the conduct of Fibreboard's or any other Trustor's business, and
Fibreboard's or any other Trustor's defenses and the history of Fibreboard's
settlements in asbestos-related personal injury lawsuits. The Trust will
not waive the privileged and confidential status of such information without
the prior written consent of the Trustor which designated such information
privileged and confidential. The Trust shall promptly upon receipt of any
subpoena or other formal request for such information notify the Trustor
which designated such information as privileged or confidential.
ARTICLE III
POWERS; TRUST ADMINISTRATION
3.1 Powers.
(a) Subject to the limitations set forth in
this Trust Agreement and the Trust Distribution Process, the Trustees shall
have the powers to take any and all actions as in the judgment of the
Trustees are necessary or convenient to effectuate the purposes of the
Trust, including, without limitation, each power expressly granted in
Subsection (b) below and any power reasonably incidental thereto. Unless
otherwise specified in this Trust Agreement or the Trust Distribution
Process, the Trustees may act by the vote of a majority. All actions by the
Trustees shall be taken at a meeting (which may be by conference telephone
call at which all participants may hear, and be heard by, each other) of all
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Trustees or by unanimous written consent that a particular action may be
taken without a meeting; provided, however, that any such meeting at which
at least two Trustees are present shall be deemed to satisfy the requirement
of this sentence if notice of such meeting was given to all Trustees not
less than five business days' prior thereto, or if all Trustees have
executed, at or prior to such meeting, a waiver of such notice, and all
Trustees are given the opportunity to participate in person or by such a
conference telephone call.
(1) The following actions may be taken only
with the unanimous consent of the Trustees:
(i) Joining in, engaging in or
disengaging from an Other Claims Resolution Facility
pursuant to Section 3.1(b)(iii), except that this action
shall also require SCB approval.
(ii) Appointment or removal of the
chief executive officer, chief financial officer or general
counsel pursuant to Section 3.1(b)(ix).
(iii) Taking of structural or other
actions to minimize tax on the Trust Estate pursuant to
Section 3.2(b)(iv), except that this action shall also re-
quire SCB approval.
(iv) Approval of annual and quarterly
financial statements of the Trust pursuant to Sections
3.2(c)(i) and (ii); provided, however, that after a good
faith effort to act unanimously, a majority of the Trustees
may grant approval in a writing that shall include either
comments of the Trustee who did not join in the approval
reflecting the reasons for his or her failure to join in
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the approval or, if such Trustee is not willing to provide
such comments, comments from the other Trustee or Trustees
reflecting their understanding as to such reasons.
(v) Approval of reports of claims
dispositions pursuant to Section 3.2(c)(iii); provided,
however, that after a good faith effort to act unanimously,
a majority of the Trustees may grant approval in a writing
that shall include either comments of the Trustee who did
not join in the approval reflecting the reasons for his or
her failure to join in the approval or, if such Trustee is
not willing to provide such comments, comments from the
other Trustee or Trustees reflecting their understanding as
to such reasons.
(vi) Approval of budgets and cash flow
projections pursuant to Section 3.2(d); provided, however,
that after a good faith effort to act unanimously, a ma-
jority of the Trustees may grant approval in a writing that
shall include either comments of the Trustee who did not
join in the approval reflecting the reasons for his or her
failure to join in the approval or, if such Trustee is not
willing to provide such comments, comments from the other
Trustee or Trustees reflecting their understanding as to
such reasons.
(vii) Amendment or waiver of the Trust
Agreement other than Sections 2.2, 2.3, 2.4, 2.5, 3.1, 3.2,
3.3, 4.1, 4.2, 4.3, 4.4, 5.1, 5.2, 5.3, 5.4, 5.6, 5.7, 7.1,
7.2, 7.3, 7.4, 7.7, 7.8, 7.11, 7.12, 7.13, 7.16, 7.17 and
7.18, except that any amendment or waiver of any provision
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of Article VI shall also require SCB approval.
(viii) Approval of the fixed cash
payment for Expedited Review Claims pursuant to Trust
Distribution Process Section B.2.
(ix) Approval of additional categories
of Expedited Review Claims pursuant to Trust Distribution
Process Section B.2, except that this action shall also
require SCB approval.
(x) Elimination or suspension of the
Expedited Review Option for one or more categories of Class
Member Claims pursuant to Trust Distribution Process
Section B.2.
(xi) Increase in the amount distribut-
able in any Fiscal Year from the Principal Amount to the In-
creased Principal Amount in accordance with Appendix 1 to
the Trust Distribution Process.
(xii) Amendment or waiver of Section
B.6 of the Trust Distribution Process (but only as to the
amounts referred to therein, and except that any such
amendment or waiver shall also require SCB approval) or
Section F.3.a of the Trust Distribution Process (provided
that no such amendment or waiver can advance the time for
any payments referred to therein for any Fiscal Year in
which any of the Increased Principal Amount was utilized).
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(xiii) Permitting another Person to join
in any claims resolution facility established pursuant to
Section 3.1(b)(ii), except that this action shall also
require SCB approval.
(2) The following actions shall require the
approval of a majority of the Trustees and, unless the unanimous
approval of the Trustees has been obtained, shall also require the
approval of the SCB pursuant to Section 6.1:
(i) Approval of the claim forms
pursuant to Trust Distribution Process Section B.1.
(ii) Approval of the Expedited Review
Claim form pursuant to Trust Distribution Process Section
B.2.
(iii) Approval of form of release
pursuant to Trust Distribution Process Section B.4.
(iv) Requirement that Beneficiaries
submit additional kinds of medical evidence in support of
Class Member Claims pursuant to Trust Distribution Process
Section B.4.
(v) Selection of locations for
mediations and arbitrations pursuant to Trust Distribution
Process Section C.3.
(3) Any provision of the Trust Agreement, the
Trust Distribution Process, or the Glossary not expressly described
above in Sections 3.1(a)(1) and (2) may be amended or waived with
the unanimous approval of each of the Trustors and the Trustees,
the approval of a majority of the SCB, and the approval of the
Court, and not otherwise.
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(b) Without limiting the generality of Subsec-
tion (a) above, the Trustees shall have the power to:
(i) receive and hold the Trust
Estate, and invest monies held from time to time therein;
(ii) establish, supervise and
administer a Claims Resolution Facility;
(iii) join in or with or engage an
Other Claims Resolution Facility to reduce the costs of
liquidating Class Member Claims and Third Party Claims;
(iv) pay Trust Expenses, Class Member
Claims and Third Party Claims Liquidated in accordance with
the Trust Distribution Process;
(v) borrow money and issue notes and
other evidences of indebtedness (which notes or other
evidences of indebtedness may exonerate the Trustees from
personal liability with respect thereto) in the ordinary
course of operations in order to finance the acquisition of
equipment or to pay Trust Expenses; provided, however, that
no such borrowing shall be for a term in excess of five
years or for an amount in excess of $2 million outstanding
at any time;
(vi) take all actions contemplated
hereunder with respect to the Funds of the Trust and
establish such reserves and accounts within such Funds as
may be useful in carrying out the purposes of the Trust;
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(vii) sue and be sued and participate,
as a party or otherwise, in any judicial, administrative,
arbitration or other proceeding, including, without limita-
tion, in connection with any Claims Resolution Facility
administered by or for the Trust;
(viii) adopt and amend bylaws to govern
the affairs of the Trust which are consistent with this
Trust Agreement, the Trust Distribution Process and the
Global Settlement Agreement;
(ix) appoint such officers, including
a chief executive officer, chief financial officer and
general counsel, hire such employees and engage such legal,
financial and other advisors and agents as the business of
the Trust requires, pay the Trustees and the SCB subject to
Sections 5.5 and 6.4 and pay such officers, employees,
advisors and agents reasonable compensation;
(x) enter into such other
arrangements with third parties as are deemed by the
Trustees to be useful in carrying out the purposes of the
Trust (including, without limitation, engaging a Person to
act as paying agent, depositary or custodian and pay such
third parties reasonable compensation);
(xi) enter into the indemnification
agreements referred to in Sections 5.6, 6.4(c) and 7.16;
(xii) enter into any contract or
otherwise engage in any transaction with any Trustee or any
Person affiliated with any Trustee, provided that such
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contract or such transaction is approved by the unanimous
vote of the Trustees who are not parties to or otherwise
involved in, and do not have an interest in, such contract
or transaction; it being understood that the usual rules
prohibiting fiduciaries from dealing with themselves as
individuals or from dealing with respect to any matter in
which they have a personal interest shall apply to the
Trustees; and
(xiii) make such elections and
determinations with respect to taxes as are deemed by the
Trustees to be useful in carrying out the purposes of the
Trust.
(c) The Trustees shall not have the power to
guarantee or assume, directly or indirectly, any debt or borrowings of other
Persons.
3.2 Administration.
(a) The accounting period for the Trust shall
be the Fiscal Year. The first Fiscal Year shall begin on the date of this
Agreement and end on December 31 of the same year. The Trust shall use the
accrual method of accounting under generally accepted accounting principles.
(b) (i) The Trustees shall timely file
such income tax and other returns and statements, and shall
provide for and pay such Trust taxes, as are required to
comply with applicable provisions of the Internal Revenue
Code and of any state or local law and the regulations
promulgated thereunder.
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(ii) For federal income tax purposes,
the Trustees and the Trustors intend that the Trust will be
taxable either as a Qualified Settlement Fund or a Desig-
nated Settlement Fund. Trustors agree to cooperate in
providing such information or documents as the Trustees
determine are useful for the preparation and filing of tax
returns by the Trust. Each of the Trustors agrees to do
such other and further things as may be reasonably
requested by the Trustees in connection with the tax
affairs of the Trust which shall not result in any tax
liability or other material liability to any of the
Trustors.
(iii) The Trustees are hereby
designated as the "administrator" of the Qualified
Settlement Fund or Designated Settlement Fund for federal
income tax purposes within the meaning of Treasury
Regulations section 1.468B-2(k)(3). For federal income tax
purposes, the taxable year of the Trust shall be the
calendar year and the Trust shall use an accrual method of
accounting.
(iv) The Trustees are authorized to
take such structural changes or other actions, as the
Trustees deem prudent and appropriate in reducing or
minimizing the effect of taxes on the Trust Estate,
provided that such changes or actions do not result in any
additional tax liability or other material liability to any
of the Trustors or directly or indirectly amend any
provision of this Agreement or the Trust Distribution
Process that cannot be amended except pursuant to Section
3.1(a)(3).
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(c) (i) The Trustees shall cause
to be prepared, and file with the Court, as soon as
available and in any event within 90 days following the end
of each Fiscal Year, an annual report containing financial
statements of the Trust (including, without limitation, a
balance sheet of the Trust as of the end of such Fiscal
Year and a statement of operations for such Fiscal Year)
audited by a nationally recognized firm of independent
public accountants selected by the Trustees and certified
by such firm.
(ii) The Trustees shall cause to be
prepared and file with the Court as soon as available and
in any event within 45 days following the end of each of
the first three quarters of each Fiscal Year, a quarterly
report containing financial statements of the Trust
(including, without limitation, an unaudited balance sheet
of the Trust as of the end of such quarter and a statement
of operations for such quarter), certified, subject to
normal year-end adjustments (including without limitation
as to consistency with the prior Fiscal Year's audited
financial statements), by an appropriate officer of the
Trust.
(iii) Simultaneously with delivery of
each set of financial statements referred to in Subsections
(i) and (ii) above, the Trustees shall cause to be
prepared, approve and file with the Court a report
containing a summary (in reasonable detail) of the
following information with respect to the period covered by
the financial statement:
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(1) the number of Class Member Claims
Liquidated;
(2) the amount of investment income
earned by the Trust and the fair market value of the assets of the
Trust as of the last business day of the applicable accounting
period;
(3) the amount of Trust Expenses
incurred by the Trust; and
(4) a certification as to compliance
with the Trust Agreement and Trust Distribution Process, specifi-
cally identifying any lack of compliance.
(d) The Trustees shall cause to be prepared
and approve not later than 30 days nor more than 60 days prior to the
commencement of each Fiscal Year annual budgets and cash flow projections
for the next five years of the Trust and budgets and cash flow projections
for the remaining life of the Trust. The budgets and cash flow projections
shall be based on the actual number and type of claims filed against the
Trust, the income, expense and claims payment history of the Trust to date
as well as projected trends in such items.
(e) A copy of all financial statements, re-
ports, budgets and cash flow projections (including any general historical
information upon which such budgets and projections are based) prepared by
the Trustees pursuant to this Section 3.2 shall be delivered to the SCB and
each of the Trustors or their successors and assigns at the time of filing
with the Court or, if not filed with the Court, at the time such documents
are prepared. The Trustees shall petition the Court each year for approval
of the annual financial statements and reports required by Section 3.2(c).
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The SCB and any of the Trustors shall have standing to object to and be
heard on such financial statements and reports. The Trust will provide to
any of the Insurers information which it may need in order to pursue any
reinsurance claim.
3.3 Actions by Trustors. All actions by the Trustors
shall be taken by unanimous vote, unless otherwise provided to the contrary
in this Trust Agreement or the Trust Distribution Process.
3.4 Protection of Confidential Information from Dis-
closure to the Beneficiaries. Consistent with the purposes of the Trust,
the Trustees have the authority and power to keep confidential from the
Beneficiaries such information as the Trust may determine should be
protected from disclosure in order to avoid prejudicing the Trust's position
in negotiation, mediation, arbitration or litigation of claims presented to
the Trust. Nothing contained in this Section 3.4 shall affect the right of
the SCB, the Trustees or the Trustors to receive any such confidential
information, provided that they shall only use such confidential information
for the purpose of conducting their activities in such capacities.
ARTICLE IV
FUNDS, PAYMENTS AND INVESTMENTS
4.1 Funds.
(a) There are hereby created within the Trust
Estate three Funds, Fund I, Fund II and Fund III.
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(b) Fund I shall consist of all of the assets
transferred to the Trust (including all accrued interest) less $210,000,000
which will be segregated and allocated to Funds II and III. The Trust shall
invest the amounts in Fund I subject to the limitations set forth in Section
4.3.
(c) Fund II shall consist of $200,000,000 seg-
regated from the assets transferred to the Trust. The Trust shall invest
the $200,000,000 subject to the limitations set forth in Section 4.3. No
payments of any kind may be made from Fund II until at least 21 years after
Global Approval Judgment.
(d) Fund III shall consist of $10,000,000 seg-
regated from the assets transferred to the Trust. The Trust shall invest
the $10,000,000, subject to the limitations set forth in Section 4.3. No
payments of any kind may be made from Fund III until at least 41 years after
Global Approval Judgment.
(e) Subject to Section 2.2 hereof, the
Trustees may, from time to time, create additional reserves and accounts
(all of which shall remain part of the Fund from which such amounts were
created) within the Trust Estate as they may deem necessary, prudent or
useful in order to provide for the payment of Trust Expenses, Class Member
Claims and Third Party Claims assumed by the Trust, and may, with respect to
any such reserve or account, restrict the use of monies therein.
(f) Any investment earnings received with re-
spect to, or other proceeds of, any asset held within any Fund (including
any reserve or account which is a part thereof) created hereby or pursuant
hereto shall be credited to, and shall be a part of, such Fund.
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4.2 Payments. Payments of Trust Expenses, Class
Member Claims and Third Party Claims shall be made from Funds I, II and III
and such other reserves or accounts as the Trustees may from time to time
establish pursuant to Section 4.1(e). The maximum annual payments which may
be made from such Funds for such Trust Expenses, Class Member Claims and
Third Party Claims are set forth in Section E of the Trust Distribution
Process.
4.3 Investments. Investment of monies held in the
Trust Estate shall be administered in the manner in which individuals of
ordinary prudence, discretion and judgment would act in the management of
their own affairs with the goal of constructing a reasonably conservative
portfolio which minimizes volatility. The Trust shall retain at least two
nationally recognized, independent, professional investment advisers or
managers to assist in investing the Trust Estate subject to the limitations
contained in this Section 4.3. The Trust's investments shall be subject to
each and every one of the following limitations and provisions, and,
notwithstanding anything to the contrary in this Trust Agreement, the Trust
shall not purchase or otherwise acquire the equity, debt obligations or
other securities of, assets of, or any interest in any Person, or otherwise
extend any credit to or make any investments in any Person other than the
investments described below ("Permitted Investments"):
(a) The Trust shall not (i) acquire, directly
or indirectly, any equity interest in any Person if, immediately following
such acquisition, the Trust would hold more than 5% of the equity in such
Person or business enterprise, or (ii) hold, directly or indirectly, more
than 10% of the equity interest in any Person.
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(b) The Trust may acquire and hold commercial
paper if such commercial paper is rated "Prime-1" or higher by Moody's
Investors Service, Inc. ("Moody's"), "A-1" or higher by Standard and Poor's
Corporation ("S&P") or has been given an equivalent rating by another
nationally recognized statistical rating agency.
(c) The Trust may acquire and hold other
corporate debt securities if such securities are rated "A1" or higher by
Moody's, "A+" or higher by S&P, or have been given an equivalent investment
grade rating by another nationally recognized statistical rating agency.
(d) The Trust may acquire and hold equity
securities constituting preferred stock if such preferred stock is rated
"a1" or higher by Moody's, "A+" or higher by S&P or has been given an
equivalent investment grade rating by another nationally recognized
statistical rating agency.
(e) The Trust shall not acquire or hold any
equity securities of any Person unless such equity is in the form of
securities which are traded on a national securities exchange in the United
States or over the National Association of Securities Dealers Automated
Quotation System.
(f) The Trust may acquire and hold any equity
securities constituting common stock if the long-term debt securities of the
issuer are rated "A1" or higher by Moody's, or "A+" or higher by S&P or have
been given an equivalent rating by another nationally recognized statistical
rating agency.
(g) The Trust may acquire and hold
certificates of deposit issued by and bankers' acceptances of and interest
bearing deposits with any U.S. commercial bank or any branch or agency of a
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non-U.S. bank licensed to conduct business in the U.S. having combined
capital and surplus of not less than $1,000,000,000, if all publicly held
long-term debt securities, if any, of such bank and the holding company, if
any, of which such bank is a Subsidiary meet the standards set forth in Sec-
tion 4.3(c).
(h) The Trust may acquire and hold repurchase
obligations if (1) in the opinion of the Trustees, they are adequately
collateralized, (2) the collateral constitutes investment instruments that
would otherwise constitute Permitted Investments hereunder and (3) such
obligations are entered into with either a nationally recognized investment
banking firm or a commercial bank meeting the requirements set forth in
Section 4.3(g).
(i) The Trust may acquire and hold marketable
direct obligations issued or unconditionally guaranteed by the United States
government or issued by any agency or instrumentality thereof.
(j) The Trust may acquire and hold marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof if such
securities are rated "A1" or higher by Moody's, "A+" or higher S&P, or have
been given an equivalent rating by another nationally recognized statistical
rating agency.
(k) The Trust may acquire and hold equity,
bond, money market and other funds organized under the laws of the United
States or any state thereof that invest solely in any of the foregoing
investments permitted under Sections 4.3(b) through (j).
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(l) The Trust may enter into futures and op-
tions arrangements, and interest rate and currency swap agreements, cap,
floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements solely for the
purposes of protecting against fluctuations in the principal of, or interest
or currency exchange rates on, the Trust's investments, provided that the
net obligations of the Trust in respect thereof shall not exceed 5% of the
Trust Estate at any time.
(m) The Trust shall not acquire or hold any
obligations or securities denominated in a currency other than U.S. Dollars
without substantially hedging against fluctuations in such currency,
provided that the net obligations of the Trust in respect thereof shall not
exceed 5% of the Trust Estate at any time.
(n) The Trust shall not acquire or hold any
equity, debt securities or other instruments or obligations of any Person
(other than debt securities or other debt instruments described in Section
4.3(i) or any fund described in Section 4.3(k) investing solely in the
foregoing) if the aggregate market value of all equity, debt securities and
other instruments and obligations of such Person held by the Trust would
exceed 5% of the aggregate value of the Trust Estate.
(o) The Trust shall not (i) acquire any equity
securities of any Person if, following such acquisition, the aggregate
market value of all equity securities held by the Trust would exceed 50% of
the aggregate value of the Trust Estate, or (ii) hold any equity securities
to the extent that the aggregate market value of all equity securities held
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by the Trust would exceed 60% of the aggregate value of the Trust Estate.
(p) The Trust may acquire and hold mutual
funds investing in "baskets" of securities designed to track the performance
of the S&P 500 stock index or the Lehman Brothers Aggregate Bond Index,
provided that the aggregate obligations of the Trust in respect thereof,
together with the aggregate market value of all equity securities held by
the Trust, shall not exceed 60% of the aggregate value of the Trust Estate
at any time.
(q) The Trust may acquire and hold investments
of a type not permitted under Subsections (b)-(l) or (p) above in an
aggregate amount not to exceed 5% of the aggregate value of the Trust Estate
at any time.
4.4 Source of Payments. All Trust Expenses and pay-
ments in respect of Class Member Claims and Third Party Claims shall be
payable solely out of the Trust Estate. Neither the Trustees nor any
officer, agent or employee of the Trust nor any of the Trustors nor any of
their Subsidiaries nor any Affiliate, director, officer, employee or agent
of the Trustors or any of their Subsidiaries nor any member of the SCB shall
be liable for the payment of any Trust Expense, Class Member Claim or Third
Party Claim or other liability of or on account of the Trust, and no Person
shall look to any of the foregoing Persons for payment of any such expense
or liability.
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ARTICLE V
TRUSTEES
5.1 Number. Prior to the appointment of the Trustees
hereunder, the provisions of Section 7.18 shall govern. Thereafter, there
shall be three Trustees at all times (other than during the period
contemplated by Section 5.3(b)), described as the Class A, B and C Trustees.
Each Trustee shall be an individual who has substantial professional
experience related to one or more of the purposes of the Trust and who is
able to devote the necessary time and resources to his or her duties
hereunder, it being understood that whenever possible any person named to
serve as a Trustee will have experience concerning asbestos litigation,
although failure to have such experience will not in and of itself
disqualify any Person from service as a Trustee. No Trustee may
simultaneously hold another office or position in the Trust.
5.2 Term of Service.
(a) The initial term of the Class A, B and C
Trustees are four, five and six years, respectively. Thereafter, each
Trustee shall serve a five-year term. In each case the term of the Trustee
shall be terminated upon death, resignation pursuant to Subsection (b) below
or removal pursuant to Subsection (c) below.
(b) Any Trustee may resign at any time by
written notice to each of the remaining Trustees. Such notice shall specify
a date when such resignation shall take effect, which shall not be less than
90 days after the date such notice is given unless all of the Persons
entitled to appoint the resigning Trustee's successor under Section 5.3(a)
consent to a different date.
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(c) Any Trustee may be removed for cause by
the Court upon application of any of the Trustors or a majority of the SCB.
(d) Any Trustee may be reappointed for ad-
ditional terms.
(e) Any successor Trustee filling an unexpired
term shall serve until the end of such term.
5.3 Appointment of Successor Trustees.
(a) In the event of a vacancy in the position
of a Trustee, the vacancy shall be filled by the SCB in the case of a
Class A or Class B Trustee or by the Trustors in the case of the Class C
Trustee.
(b) If the SCB or the Trustors, as the case
may be, fail to appoint a successor Trustee pursuant to Subsection (a) above
who accepts such appointment in writing within 90 days after the occurrence
of the vacancy in the position of a Trustee, the remaining Trustees shall
apply to the Court, which shall appoint a successor Trustee or successor
Trustees. For a period of 10 days after the occurrence of the vacancy in
the position of a Trustee, no vote on any action requiring the unanimous
consent of the Trustees shall be permitted to occur.
(c) Immediately upon the appointment of any
successor Trustee, all rights, titles, duties, powers and authority of the
predecessor Trustee hereunder shall be vested in and undertaken by the
successor Trustee without any further act. No successor Trustee shall be
liable personally for any act or omission of his or her predecessor, or for
any Trust act or omission which occurred prior to his or her appointment,
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unless such act or omission is expressly ratified by the successor Trustee
after his or her appointment.
5.4 Liability of Trustees, Officers and Employees. No
Trustee, officer or employee of the Trust shall be liable to the Trust, any
Beneficiary or any other Person except for his own gross negligence or
willful misconduct. No Trustee, officer or employee of the Trust shall be
liable for any act or omission of any other officer, agent or employee of
the Trust unless the Trustee, officer or employee acted with gross
negligence or willful misconduct in the selection or retention of such
officer, agent or employee.
5.5 Compensation and Expenses of Trustees.
(a) Each of the Trustees shall receive compen-
sation from the Trust for his or her services as Trustee in the amount of
$100,000 per annum plus, after the first 12 days during which the Trustee
has performed the services described below in this sentence, $1,000 per diem
for each meeting of the Trustees or any committee or subcommittee thereof
attended by such Trustee, reduced proportionately to account for any
fraction of a day spent on such duties in the case of any such meeting not
attended in person, or for special duties performed by such Trustee on
behalf of the Trust, reduced proportionately to account for any fraction of
a day spent on such duties, and $500 for each day of substantial travel in
connection with attendance at any such meeting or performance of any such
special duties. Such compensation amounts shall be increased or decreased
annually at the rate of the Consumer Price Index for urban wage earners and
clerical workers (U.S. City Average) unadjusted for seasonal variation,
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published by the Bureau of Labor Statistics of the United States Department
of Labor, or otherwise by the Trustees with the approval of the Court. In
the event that at any time the Trustees determine that the amount of time
required to perform their duties as Trustees has substantially decreased,
they shall in good faith determine whether a reduction in their compensation
is warranted.
(b) All reasonable out-of-pocket costs and ex-
penses incurred by the Trustees in connection with the performance of their
duties hereunder shall be paid by the Trust or, if paid by a Trustee, shall
be promptly reimbursed to such Trustee by the Trust.
5.6 Indemnification of Trustees, Officers and
Employees. The Trustees, officers and employees of the Trust shall be
indemnified by the Trust to the fullest extent permitted under applicable
law against any and all liabilities, expenses, claims, damages or losses
incurred by them in the performance of their duties hereunder, except any
liability, expense, claim, damage or loss as to which they are liable under
Section 5.4. The Trustees, officers and employees of the Trust shall be
entitled to advancement of attorneys' fees and expenses from the Trust for
the purposes set forth in this Section 5.6 to the fullest extent permitted
under applicable law.
5.7 Trustees' Employment of Experts. The Trustees
may, but shall not be required to, consult with independent, outside
counsel, accountants, appraisers, investment bankers and other parties
reasonably selected and determined in good faith by the Trustees to be
qualified as experts on the matters submitted to them, except as otherwise
expressly provided in this Trust Agreement, and the opinion of any such
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parties on any matters submitted to them by the Trustees shall be full and
complete justification for any action taken or not taken by the Trustees
hereunder in good faith and in reasonable reliance upon the written opinion
of any such expert.
ARTICLE VI
SELECT COUNSEL FOR THE BENEFICIARIES
6.1 Formation; Duties. The SCB shall consist of five
lawyers chosen to represent the interests of the Beneficiaries, and the
initial four SCB lawyers shall be Joseph Rice; Joseph Cox; Harry Wartnick;
and Steven Kazan. The fifth SCB lawyer shall be selected unanimously by the
initial four lawyers on or before January 14, 1994. If the initial four SCB
members are unable to reach unanimous agreement on the identity of the fifth
SCB member, the four SCB members shall appear in Court on January 17, 1994,
and with the assistance of the Court, work day to day until agreement is
reached. In giving their approval or in acting pursuant to this Agreement
the members of the SCB shall act in the best interest of the Beneficiaries
and consistent with the purposes of the Trust. The SCB shall hold an annual
meeting to which all lawyers who have submitted a Class Member Claim to the
Trust during the past five years shall be invited and be entitled to be
present. The SCB shall give a report to the annual meeting describing the
activities of the Trust for the prior year, including any approvals given by
the SCB pursuant to this Agreement and/or the Trust Distribution Process and
all matters on which the Trustees have indicated that they intend to seek
the approval of the SCB during the following year. In giving approval to
the Trustees, the SCB shall consider in good faith all recommendations made
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at such annual meeting. The Trustees shall consult with the SCB on the
implementation and administration of the Trust Distribution Process. The
Trustees may consult with the SCB on any matter affecting the Trust, and, as
provided in Section 3.1(a), certain actions by the Trustees shall require
the prior approval of the SCB. All approvals of the SCB shall be by ma-
jority vote.
6.2 Term of Office.
(a) Each member of the SCB shall serve for the
duration of the Trust, subject to the earlier of his or her death,
resignation, or removal.
(b) Subject to Section 6.3(a) hereof, any
member of the SCB may resign at any time by written notice to each of the
remaining members specifying the date when such resignation shall become
effective.
(c) Any member of the SCB may be removed for
cause by the Court upon joint application of all of the other SCB members.
6.3 Appointment of Successor.
(a) A vacancy in the SCB caused by the resig-
nation of an SCB member shall be filled with an individual nominated by the
resigning SCB member and approved by the unanimous vote of all SCB members.
The resigning SCB member's resignation shall not be effective until such
approval is obtained and the successor SCB member has accepted the
appointment.
(b) In the event of a vacancy in the
membership of the SCB other than one caused by resignation as aforesaid, the
vacancy shall be filled by the unanimous vote of the remaining member(s) of
the SCB.
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6.4 Compensation, Expenses and Liability of SCB Mem-
bers.
(a) Each member of the SCB shall receive com-
pensation from the Trust for his or her services in the amount of $1,000 per
diem for travel related to and attendance at the SCB meetings attended in
person by such member, and $1,000 per diem (adjusted proportionately to
account for any fraction of a day spent on, or in travel in connection with,
such duties) for work done by the members of the SCB (other than attending
SCB meetings in person) in carrying out their duties and responsibilities
under the Trust Agreement. Such compensation shall be payable as determined
the Trustees, but not less frequently than quarterly. Such per diem amount
shall be increased or decreased annually pro rata with the amount that the
per diem for meetings paid to the Trustees is increased or decreased
pursuant to Section 5.5.
(b) The reasonable out-of-pocket costs and ex-
penses incurred by SCB members in connection with the performance of their
duties hereunder, together with the reasonable fees and expenses of their
counsel, shall be paid by the Trust or, if paid by a member of the SCB,
shall be promptly reimbursed to such member by the Trust.
(c) Liability of SCB. No present or former
member of the SCB shall be liable to the Trust, any Beneficiary or any other
Person except for his own gross negligence or willful misconduct. All
present or former members of the SCB shall be indemnified by the Trust to
the fullest extent permitted under applicable law against any and all
liabilities, expenses, claims, damages or losses incurred by them in the
performance of their duties hereunder or in serving as Class Counsel, except
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any liability, expense, claim, damage or loss as to which they are liable
under this Section. No present or former member of the SCB shall be liable
personally for any act or omission of his or her predecessor, or for any act
or omission of the SCB which occurred prior to his or her appointment,
unless such act or omission is expressly ratified by such person after his
or her appointment. The present and former members of the SCB shall be
entitled to advancement of attorneys' fees and expenses from the Trust for
the purposes set forth in this subsection (c) to the fullest extent
permitted under applicable law.
6.5 Resolution of Disputes Involving Approval of the
Select Counsel for the Beneficiaries.
(a) Approval Procedures. In any circumstance
arising under this Trust Agreement or the Trust Distribution Process where
the Trust makes a decision with respect to matters which require the
approval of the SCB, the Trust shall:
(i) provide the SCB with reasonable
access to experts retained by the Trust and to Trust staff
during such time as the decision is being made;
(ii) bring the proposed decision to
the attention of the SCB; and
(iii) unless the circumstances prevent,
provide the SCB no fewer than 10 days to comment with re-
spect to such proposed decision.
In the event the SCB disagree with the Trust's decision,
they shall express their view as fully as possible to the Trust and make
such counterproposal as may be appropriate. The Trust and the SCB shall
thereupon consult in an effort to reach agreement.
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(b) Approval in Writing. The approval of the
SCB, when required under the Trust Agreement or the Trust Distribution
Process, must be in writing to be effective; provided, however, that in the
event the SCB fails to approve or disapprove an action requiring SCB
approval pursuant to Section 3.1(a) within 30 days of notice of proposed
action by the Trust, the SCB shall be deemed to have approved such action.
(c) Access to Financial Information. Subject
to entry into an appropriate confidentiality agreement where applicable, the
Trust shall make available to the SCB any investment banking or other
financial, accounting or statistical information available to the Trust
relating to issues to be discussed and/or as to which the approval of the
SCB is required.
ARTICLE VII
GENERAL PROVISIONS
7.1 Irrevocability. The Trust is irrevocable.
7.2 Termination.
(a) The Trust shall terminate on the date (the
"Termination Date") which is the earlier of (1) the first date on which all
Class Member Claims and Third Party Claims filed with or against the Trust
have been resolved, 24 consecutive months have elapsed during which no such
claim has been filed with the Trust and approval of such termination by the
Court has been obtained upon joint application of all of the Trustees and a
majority of the SCB; or (2) 21 years less 91 days pass after the death of
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the last survivor of any of the descendants of Joseph P. Kennedy living on
the date hereof.
(b) On the Termination Date, after payment of
all liabilities of the Trust have been provided for, the Trust shall be
dissolved, and all of the Trust's assets shall be applied to such charitable
purposes as the Trustees in their reasonable discretion, after consultation
with the SCB, shall determine, which charitable purposes, if practicable,
shall relate to occupational health.
7.3 Amendments.
(a) This Trust Agreement may only be amended
or waived as provided in Section 3.1(a). Thirty days' advance written
notice of any proposed amendment or waiver shall be given to the SCB and the
Trustors.
(b) The Trust Distribution Process may only be
amended or waived as provided in Section 3.1(a) of this Trust Agreement and,
where applicable, Section H.7 of the Trust Distribution Process. Thirty
days' advance written notice of any proposed amendment or waiver of the
Trust Distribution Process shall be given to the SCB, the Trustors and,
where appropriate, the Representative Defendant.
(c) The definitions used in this Trust Agree-
ment or in the Trust Distribution Process and contained in the Glossary may
be amended or waived only if and in the same manner as the Section of this
Trust Agreement or the Trust Distribution Process in which such definition
is used may be amended or waived.
7.4 Severability. Should any provision of this Trust
Agreement or the Trust Distribution Process be determined to be
unenforceable, such determination shall in no way limit or affect the
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enforceability and operative effect of any and all other provisions of this
Trust Agreement or the Trust Distribution Process.
7.5 Notices. Notices to Persons asserting claims
shall be given at the address of such Person, or, where applicable, such
Person's legal representative, in each case as provided on such Person's
proof of claim. Any notices or other communications required or permitted
hereunder shall be in writing and (a) delivered at, or sent by telex or
telecopy to, the addresses designated in Section 8.13 of the Global Settle-
ment Agreement or, in the case of the Trustees, the addresses provided by
the Trustees to the Trust, the SCB and the Trustors, or (b) mailed by
registered or certified mail, return receipt requested, postage prepaid,
addressed as aforesaid, or to such other address or addresses as may
hereafter be furnished by any of the Trustors, the Trust or the Trustees or
the SCB to the others.
All such notices and communications shall be effective when
delivered at the designated addresses or when the telex or telecopy
communication is received at the designated addresses and confirmed by the
recipient by return telex or telecopy in conformity with the provisions
hereof.
7.6 Counterparts. This Trust Agreement may be exe-
cuted in any number of counterparts, each of which shall constitute an
original, but such counterparts shall together constitute but one and the
same instrument.
7.7 Successors and Assigns. The provisions of this
Trust Agreement shall be binding upon and inure to the benefit of the
Trustors, the Trust, the Trustees, the SCB and their respective successors
and assigns, except that neither the Trustors nor the Trust nor any Trustee,
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nor the SCB members may assign or otherwise transfer any of its, his or her
rights or obligations under this Trust Agreement except, in the case of the
Trust and the Trustees, as contemplated by Section 7.2.
7.8 No Waiver. No failure to exercise or delay in
exercising any right, power or privilege hereunder or under the Trust
Distribution Process shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege hereunder or under the
Trust Distribution Process preclude any further exercise thereof or of any
other right, power or privilege. The rights and remedies provided herein or
in the Trust Distribution Process are cumulative and are not exclusive of
rights under law or in equity.
7.9 Headings; Section References. The headings used
in this Trust Agreement and in the Trust Distribution Process are inserted
for convenience only and neither constitute a portion of this Trust
Agreement or the Trust Distribution Process nor in any manner affect the
construction of the provisions of this Trust Agreement or the Trust
Distribution Process. All references in this Trust Agreement or in the
Trust Distribution Process to "Sections," unless otherwise expressly
indicated, shall be deemed to refer to sections of the document in which
such reference appears.
7.10 Governing Law. This Trust Agreement and the Trust
Distribution Process shall be governed by, administered under and construed
in accordance with, the laws of the State of Texas.
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7.11 Dispute Resolution. Any disputes which arise
under this Trust Agreement or the Trust Distribution Process shall be
resolved by the Court, except as otherwise provided herein or in the Trust
Distribution Process.
7.12 Enforcement and Administration. The provisions of
this Trust Agreement and the Trust Distribution Process shall be enforced
and administered by the Court.
7.13 Settlement of Trustees' Accounts. Notwithstanding
any state law to the contrary, the Court shall have exclusive jurisdiction
over the settlement of the accounts of the Trustees, whether such account is
rendered by the Trustees themselves or is sought by any Beneficiary or other
Person. The Trustees shall render successive accounts covering periods of
not more than one Fiscal Year, commencing on the first completed Fiscal Year
of the Trust or the last day of the prior accounting period, as the case may
be, except that an account shall be rendered for the period ending on the
date of the death, resignation, removal or retirement of any Trustee. Upon
the acceptance of any such account by the Court after hearing on notice to
the SCB, the Trustors and such other parties as the Court shall designate,
the Trustees shall be discharged from any further liability or
responsibility to any Beneficiary or other Person as to all matters embraced
in such account.
7.14 No Bond Required. Notwithstanding any state law
to the contrary, each Trustee (including any successor Trustee) shall be
exempt from giving any bond or other security in any jurisdiction.
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7.15 Service of Process. Service of process upon any
of the Trustees in an action or proceeding under Sections 7.11, 7.12 or 7.13
shall be effective upon delivery to the address set forth in Section 7.5.
Successor Trustees, by acceptance of their appointment as such, shall be
deemed to have approved this method of service.
7.16 Lawsuits Against Trustors. Except as provided in
Section 2.4(a) of the Global Settlement Agreement as to Fibreboard
Corporation, the Trust shall defend and indemnify the Fibreboard,
Continental and Pacific Releasees against and hold them harmless from any
costs, fees, claims, liabilities, settlements or judgments incurred or
occurring after Global Approval Judgment and resulting, directly or
indirectly, from the assertion against any of them of any Class Member Claim
or Third Party Claim. This obligation shall include without limitation any
such claim to the extent that, after Global Approval Judgment, that claim
attacks the validity or enforceability of the Global Approval Judgment, but
shall exclude any Additional Policy Claims or Express Indemnity Claims that
are the subject of a waiver by the Insurers or Fibreboard under Sec-
tion 6.3(C) of the Global Settlement Agreement. The defense of any such
lawsuit will be tendered to the Trust and any defense costs or indemnity
obligation will be paid by the Trust for so long as funds remain in Funds I,
II and III. The Trustors may, at their own expense, elect to participate
with the Trust in the defense of any such action or claim. Amounts paid to
or on behalf of the Fibreboard, Continental and Pacific Releasees pursuant
to this Section shall not be limited in any manner, including by the
provisions of Section E of the Trust Distribution Process. The provisions
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of this Section 7.16 shall only be applicable after Global Approval
Judgment, subject to Section 2.7(B) of the Global Settlement Agreement.
7.17 No Disqualification of SCB. No member of the SCB
shall be disqualified solely by reason of his or her service as an SCB
member from serving as counsel for any Class Member in connection with the
submission of any Class Member Claim to the Trust, nor shall service as such
counsel be deemed to create a conflict of interest with respect to service
to the Trust as an SCB member. No SCB member shall take any action in his
or her capacity as such that would prefer the interests of his or her
clients over the interests of similarly situated Beneficiaries generally.
7.18 Initial Trustee; Powers. In the event that as of
the date of execution of the Global Settlement Agreement, the Trustees have
not been selected, then:
(a) On that date, the Trustors shall
contribute $100 to the Trust. Francis McGovern shall be the sole initial
trustee ("Initial Trustee"). The Initial Trustee shall have only the power
to take those ministerial and administrative actions necessary or desirable
to apply for a letter ruling from the Internal Revenue Service pursuant to
Section 8.1 of the Global Settlement Agreement and preserve the existence of
the Trust until Trustees are appointed hereunder. The Initial Trustee shall
not have authority to make any discretionary decisions, waivers or
amendments to the Trust Agreement.
(b) No later than January 14, 1994, the
Trustors and the Class Counsel (as defined in the Global Settlement
Agreement) shall select three trustees, who shall be the original Class A,
Class B and Class C Trustees (such persons, and their successors appointed
pursuant to Section 5.3, being referred to as the "Trustees"). Trustors and
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Class Counsel have agreed to confer to attempt to reach joint agreement as
to the selection of all three original Trustees. If Trustors and Class
Counsel cannot agree, Class Counsel will unanimously select the Class A and
B Trustees and Trustors will unanimously select the Class C Trustee. Absent
agreement among Class Counsel as to the selection of the Class A and B
Trustees, or among Trustors as to the selection of the Class C Trustee, all
Class Counsel and/or all Trustors agree to appear in Court on January 17,
1994, and with the assistance of the Court, to work from day to day until
agreement on the selection of the Trustee(s) for whom they are responsible
is reached. Upon acceptance of this Trust Agreement by the original Class
A, Class B and Class C Trustees, the Initial Trustee shall resign.
IN WITNESS WHEREOF, the parties have executed this Trust
Agreement on this 23rd day of December, 1993.
TRUSTORS:
FIBREBOARD CORPORATION
By: MICHAEL R. DOUGLAS
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Title: Sr. Vice President and General Counsel
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COLUMBIA CASUALTY COMPANY
By: LAURENS F. TERRY
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Title: Vice President Continental Casualty Co.
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CONTINENTAL CASUALTY COMPANY
By: LAURENS F. TERRY
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Title: Vice President
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CNA CASUALTY COMPANY OF
CALIFORNIA
By: LAURENS F. TERRY
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Title: Vice President
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PACIFIC INDEMNITY COMPANY
By: JOHN J. DEGNAN
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Title: Senior Vice President
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INITIAL TRUSTEE:
FRANCIS MCGOVERN
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EXHIBIT 10.14
TRUST DISTRIBUTION PROCESS
Annex A to the Trust Agreement<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
A. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. The Claim Procedure . . . . . . . . . . . . . . . . . . . . . 3
1. Submitting a Claim . . . . . . . . . . . . . . . . . . 3
2. Expedited Review Option . . . . . . . . . . . . . . . 4
3. Ordering of Claims for Processing . . . . . . . . . . 5
4. Initial Evaluation of Claims . . . . . . . . . . . . . 6
5. Further Claims Processing . . . . . . . . . . . . . . 7
6. Second (Malignant) Injury Claims . . . . . . . . . . . 8
7. Audit Procedures . . . . . . . . . . . . . . . . . . . 8
8. Exigent Health and Extreme Hardship Claims . . . . . . 9
9. Withdrawal of Claims . . . . . . . . . . . . . . . . . 10
C. ADR Procedures . . . . . . . . . . . . . . . . . . . . . . . . 10
1. Mediation . . . . . . . . . . . . . . . . . . . . . . 10
2. Arbitration . . . . . . . . . . . . . . . . . . . . . 11
3. Location for ADR Procedures . . . . . . . . . . . . . 13
D. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1. Mandatory Settlement Conference . . . . . . . . . . . 14
2. Procedural Rules . . . . . . . . . . . . . . . . . . . 15
E. Funds for Payment of Claims . . . . . . . . . . . . . . . . . 17
1. Fund I . . . . . . . . . . . . . . . . . . . . . . . . 19
a. Commencement of Payments . . . . . . . . . . 19
b. Distributable Amount . . . . . . . . . . . . 19
c. Distribution of Remaining Balance . . . . . . 20
2. Fund II . . . . . . . . . . . . . . . . . . . . . . . 20
a. Commencement of Payments . . . . . . . . . . 20
b. Distributable Amount . . . . . . . . . . . . 21
c. Distribution of Remaining Balance . . . . . . 21
3. Fund III . . . . . . . . . . . . . . . . . . . . . . . 21
a. Commencement of Payments . . . . . . . . . . 21
b. Distributable Amount . . . . . . . . . . . . 21
c. Distribution of Remaining Balance . . . . . . 22
4. Determination of Distributable Amount for Each
Fund . . . . . . . . . . . . . . . . . . . . . . . . . 22
F. Order, Timing and Limitations on Payments of Claims . . . . . 22
1. Eligibility for Payment . . . . . . . . . . . . . . . 22
2. Order of Payment . . . . . . . . . . . . . . . . . . . 23
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3. Terms of Payment . . . . . . . . . . . . . . . . . . . 25
a. Claims Resolved Outside the Tort System . . . 25
b. Claims Resolved in the Tort System . . . . . 25
4. Deferral of Payments . . . . . . . . . . . . . . . . . 26
5. Limitation on Payment of Claims . . . . . . . . . . . 27
G. All Claims Resolved Pursuant to the Trust Distribution
Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
H. Defendant Class Member Procedures . . . . . . . . . . . . . . 27
1. Claims Liquidated Before Judgment Against
Defendant Class Members . . . . . . . . . . . . . . . 29
a. Calculation of Set-Off Amount . . . . . . . . 29
b. Status of the Trust at Trial . . . . . . . . 30
c. Discovery and Informational Issues . . . . . 31
2. Claims Not Liquidated When Verdict or Judgment
Obtained Against Defendant Class Members . . . . . . . 31
a. Effect of Verdict or Judgment . . . . . . . . 31
b. Retention of Several Liability Claim . . . . 32
c. Payment of Verdict or Judgment . . . . . . . 32
3. Tort System Claims Against the Trust . . . . . . . . . 33
4. Litigation Between Defendant Class Members and
Settlement Class Members . . . . . . . . . . . . . . . 34
5. Pursuit of Third Party Claims . . . . . . . . . . . . 35
a. Defendant Class Member to Stand in
Settlement Class Members' Stead . . . . . . . 35
b. Resolution of Claims . . . . . . . . . . . . 36
c. Processing and Payment of Claims . . . . . . 37
d. Multiple Claims or Multiple Third Party
Claims . . . . . . . . . . . . . . . . . . . 37
6. Cooperation for Court Approvals . . . . . . . . . . . 40
7. No Modification Without Consent . . . . . . . . . . . 40
I. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . 41
J. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 41
APPENDIX 1 TO THE TRUST DISTRIBUTION PROCESS . . . . . . . . . . . . A-1
SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
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TRUST DISTRIBUTION PROCESS
Annex A to the Trust Agreement
This Trust Distribution Process creates the procedures for
submitting, processing and paying Class Member Claims and Third Party
Claims. Capitalized terms used in this Trust Distribution Process are
defined herein or in the Glossary.
A. Overview.
The primary goal of the Trust is fair and equitable
treatment for all Beneficiaries consistent with Trust resources. This Trust
Distribution Process furthers that goal by establishing procedures that are
intended to process and evaluate Class Member Claims of Beneficiaries
impartially, pay all Class Member Claims over time, and maintain reasonable
reserves for any Class Member Claims in excess of projections. The Trustees
shall implement and administer this Trust Distribution Process in accordance
with their duties under the Trust Agreement.
The claims resolution process begins with a proof of claim.
The Trust then makes a determination whether the claim meets the criteria
for any of the five Scheduled Diseases: Mesothelioma, Lung Cancer, Other
Cancer, Asbestos Lung Disease I ("ALD-1") and Asbestos Lung Disease II
("ALD-2"). If the claim meets the criteria for a Scheduled Disease, it will
be evaluated based on factors that have significance in the resolution of
similar claims by settlement or trial, including but not limited to the
factors set forth in Schedule A hereto. If the claim does not meet the
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criteria for one of the Scheduled Diseases, the Trust will evaluate whether
it nonetheless asserts a compensable claim for an asbestos-related injury.
After evaluation, the Trust will make a good faith
settlement offer or advise the Beneficiary of the reasons for rejecting the
claim. The Beneficiary may either accept or reject that offer or negotiate
further with the Trust. If the Beneficiary rejects the Trust's offer, he or
she may submit supplemental information to the Trust and have his or her
claim reevaluated by the Trust and/or negotiate further with the Trust. If
negotiation with the Trust fails, the Beneficiary shall, if he or she wishes
to pursue the claim, proceed to mediation and then to binding or nonbinding
arbitration. Beneficiaries may bring an action against the Trust in the
tort system only after they have participated in good faith in both
mediation and nonbinding arbitration and have rejected the award in a
nonbinding arbitration.
Beneficiaries must also appear at a mandatory settlement
conference under the auspices of the Court before proceeding to the tort
system. If a Beneficiary rejects settlement following the settlement
conference, he or she may elect immediate binding arbitration or exit to the
tort system. No punitive damages, pre-judgment or post-judgment interest,
damages for risk of cancer, or compensatory damages beyond Fibreboard's own
share will be allowable in the tort system. Judgments may be collected only
as provided in this Trust Distribution Process.
Similar claims-handling procedures (described in Section H
below) apply to certain Third Party Claims including those of Defendant
Class Members who succeed to Class Member Claims.
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Class Member Claims and Third Party Claims will be eligible
for payment once they are Liquidated, whether by settlement, arbitration, or
judgment. Judgments or claims settled after exit to the tort system will
normally be paid out over a five-year period, while claims resolved without
resort to the tort system will normally be paid over a three-year period.
Total payments from the Trust in each year for Trust Expenses, Class Member
Claims and Third Party Claims are limited to the amounts set forth in
Section E. While the Trust is expected to be able to pay all claims as
Liquidated yearly, if amounts available are insufficient to make all
payments due on Liquidated claims in any year, claims for Mesothelioma and
Lung Cancer will be paid first, then Other Cancer and ALD-1 claims, then
ALD-2 claims, and then Residual Claims, whether any such claims have been
Liquidated by settlement, arbitration or judgment. Within each of those
categories, claims will be paid in the order of the date on which a release
is received by the Trust (for settled claims), an arbitration ruling is
rendered (for claims resolved through arbitration) or a judgment becomes
final (for claims resolved in the tort system). Class Member Claims and
Third Party Claims which cannot be paid because the amount available for
that year is insufficient to make all payments due on such claims will be
deferred for payment (FIFO within their payment categories) until the
following year.
B. The Claim Procedure.
1. Submitting a Claim. Other than Interim Claims submitted
pursuant to Article 7 of the Global Settlement Agreement, commencing on
February 14, 1994, any Beneficiary may submit a claim to the Trust. To do
so, the Beneficiary shall provide to the Trust, on forms approved by the
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Trustees and the SCB, a proof of claim including at least the following
information concerning the Exposed Person: name, address, social security
number, date of birth, date of death (if applicable), marital status and
number and age of dependents, spouse's name and social security number,
occupation, smoking history, year of first exposure to any asbestos or
asbestos-containing products, identification and source of identification of
asbestos-containing products manufactured or supplied by Fibreboard to which
the Exposed Person was exposed, the work sites where the Exposed Person was
exposed to asbestos or to Fibreboard asbestos, the years of such exposures
including specific descriptive comments concerning the duration and
intensity of such exposure, the status of related workers compensation or
civil litigation regarding asbestos exposure, and the Scheduled Disease, if
any, for which the Beneficiary believes the claim qualifies or a statement
of the disease or injury the Beneficiary asserts he or she has if he or she
does not believe he or she qualifies for a Scheduled Disease. In addition,
the Beneficiary shall provide the Trust with a Medical Report, a PFT Report
and a B-reader Report, and, in Malignancy Claims, a pathology report (where
available).
2. Expedited Review Option. The Trust may establish a process
for expedited review of ALD-2 claims by persons desiring an accelerated
settlement of their claim at a fixed amount ("Expedited Review Claims").
A Beneficiary seeking such expedited review shall submit an abbreviated
proof of claim for expedited review by the Trust. The abbreviated proof of
claim shall provide the following information concerning the Exposed Person:
name, address, social security number, date of birth, date of death (if
applicable), marital status, spouse's name and social security number,
occupation, the Scheduled Disease for which the Beneficiary believes the
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claim qualifies, the work sites where the Exposed Person was exposed to
asbestos or to Fibreboard asbestos and such information requested by the
Trust that adequately demonstrates exposure to asbestos or
asbestos-containing products and to Fibreboard asbestos or
asbestos-containing products. In addition, the Beneficiary shall supply the
Trust with a Medical Report. The Trust will expeditiously review the
abbreviated proof of claim and may, but is not required to, offer to settle
such Expedited Review Claims for a single fixed cash payment of an amount
and on a time schedule established from time to time by the Trust. If the
Trust determines not to offer to settle an Expedited Review Claim, the
Beneficiary may submit a proof of claim as set forth in Section B.1.
The Trust may establish additional categories of Expedited
Review Claims with differing fixed cash payments and differing information
requirements. In addition, the Trust may eliminate or suspend the Expedited
Review Claim option for one or more categories of Class Member Claims if it
determines that such option is encouraging the filing of claims that would
not otherwise be eligible for payment under these procedures or is using a
disproportionate share of the Trust's assets.
3. Ordering of Claims for Processing. Claims shall be ordered
for processing by the Trust in the manner described in this Section. As a
general practice, the Trust shall review its claims files on a regular basis
and notify all Beneficiaries whose claims are likely to be processed in the
near future. A Beneficiary's position in the FIFO queue for processing will
be determined by the date of receipt by the Trust of a properly completed
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proof of claim form, and among claims received the same day, by the date of
diagnosis of the disease on which the claim is based. Where the Beneficiary
has filed an incomplete proof of claim, the Trust shall notify the
Beneficiary of the need for additional information and shall not process the
claim until the file is complete. A Beneficiary shall not receive a
position in the FIFO processing queue until his or her proof of claim is
properly completed.
4. Initial Evaluation of Claims. As a proof of claim is
reached in the FIFO queue, the Trust shall evaluate it to determine whether
the claim qualifies as one of the five Scheduled Diseases. A Beneficiary's
right to assert a valid claim for an asbestos-related injury or disease is
in no way prejudiced by failure of his or her asbestos-related injury or
disease to qualify as one of the Scheduled Diseases. If a Scheduled Disease
is determined to exist, the Trust shall evaluate the Beneficiary's claim
using factors relevant to the resolution of asbestos claims for that
Scheduled Disease by settlement or trial, including the factors set forth in
Schedule A hereto. If the Trust concludes that the Beneficiary's injury or
disease does not meet the criteria for a Scheduled Disease, it shall
determine whether the Beneficiary nonetheless asserts a meritorious claim
for an asbestos-related injury or disease and shall evaluate the claim using
factors relevant to the resolution of similar claims by settlement or trial.
If the Trust accepts for disposition a claim with respect to a disease which
is not a Scheduled Disease, the Trust shall place it in a Schedule Category
based on which Scheduled Disease it most closely resembles.
In addition to the medical evidence which Beneficiaries are
required to submit with the initial proof of claim or submit as part of any
supplemental information provided to the Trust, the Trust may require that
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additional kinds of medical evidence be provided. The Trust may obtain
additional medical evidence which it believes necessary to evaluate any
claim.
Once its evaluation is completed, the Trust shall make a
written good faith offer of settlement based upon such evaluation or advise
the Beneficiary of the reasons for rejecting the claim. Such responses
shall be sent to the Beneficiary's counsel or representative, if any, or to
the Beneficiary. The claim shall not be processed further until the Trust
receives a response from the Beneficiary. The Beneficiary and the Trust
shall then negotiate in good faith toward a resolution of the claim. Once
the Trust receives confirmation of resolution of the claim, it shall forward
an appropriate form of release approved by the Trust to the Beneficiary's
counsel or representative, or to the Beneficiary. The claim's eligibility
for payment under Section F shall be based on the date the executed release
with respect to a resolved claim is received by the Trust.
5. Further Claims Processing. If the Beneficiary rejects the
Trust's initial offer, he or she may elect to negotiate further with the
Trust and may submit additional information to the Trust in support of the
claim. Alternatively, he or she may proceed to mediation as set forth
below. The Trust shall evaluate claims based on the medical evidence
submitted to the Trust as part of the Beneficiary's proof of claim. A
Beneficiary may, but need not, supplement this information from time to time
with additional medical evidence. If he or she does so, the Beneficiary's
legal representative or, if he or she has no legal representative, the Bene-
ficiary shall submit an affidavit or declaration under penalty of perjury,
in a form acceptable to the Trust, stating that he or she has submitted to
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the Trust all medical reports relating to any alleged asbestos-related
condition other than those subject to attorney work product privilege. If
the Beneficiary submits supplemental information to the Trust, the Trust
shall reevaluate the claim and either make a written good faith settlement
offer or reject the claim. The Beneficiary shall then reject or accept any
offer based on reevaluation using the procedures outlined above for
rejection or acceptance of the Trust's initial offer. If the Beneficiary
rejects such offer, he or she may elect to negotiate further with the Trust
or shall proceed to mediation.
6. Second (Malignant) Injury Claims. The Trust shall offer to
settle Non-Malignancy Claims on two alternative bases: 1) in exchange for a
general release; or 2) in exchange for a limited release covering all
asbestos-related personal injury claims other than subsequent Malignancy
Claims. The Trust's settlement offer for a limited release shall be the
amount of its offer for the general release minus the lesser of: 1) half of
its settlement offer for the general release; and 2) $1,750. If a
Beneficiary accepts the Trust's offer of a limited release, the Trust shall
account for the monetary difference between its settlement offer for the
general release and its settlement offer for the limited release in a
separate account. A Second Injury Claim shall be ordered in the FIFO queue
for processing based upon the date of receipt by the Trust of the Second
Injury Claim, and shall be treated as a new claim under this Trust
Distribution Process.
7. Audit Procedures. In all cases, the Trust may require that
medical x-rays, tests, laboratory examinations and other medical evidence
comply with recognized medical standards regarding equipment, testing
methods, and procedures to assure that such evidence is reliable. The Trust
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may develop methods for auditing the reliability of all data submitted in
support of claims, including product identification and medical evidence,
and may require independent interpretation of CT scans, X-rays, pathology
specimens or other physical evidence. If its audits show an unacceptable
level of reliability for evidence submitted from specific individuals or
institutions, the Trust may refuse to accept evidence from them. In
addition, the Trust may develop methods for auditing other types of evidence
necessary to support a claim.
8. Exigent Health and Extreme Hardship Claims.
Notwithstanding the FIFO order processing rules described in Sections B.2
through B.4, the Trust may process and Liquidate Extreme Hardship Claims and
Exigent Health Claims at any time.
The Trust shall establish procedures to expedite its
processing, evaluation and negotiation of Exigent Health Claims and Extreme
Hardship Claims as well as the ADR procedures the Beneficiary asserting such
a claim shall be required to follow under Section C. Such expedited
procedures shall be designed to allow all Exigent Health Claims to be
Liquidated within six months of presentation of a properly completed proof
of claim to the Trust, and to ensure, to the maximum extent practicable,
that in jurisdictions in which Beneficiaries can obtain accelerated trial
dates for Exigent Health Claims, the Trust's negotiation process and the ADR
procedures can be completed before a trial of an Exigent Health claimant's
case against Defendant Class Members.
If the Trust determines, in its sole discretion, that a
Beneficiary asserting an Extreme Hardship Claim needs greater financial
assistance than would be afforded by the payout scheme set forth in
Section F.3, the Trust may accelerate payment to the Beneficiary of part or
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all of the amount for which that claim has been Liquidated as the Trust
deems appropriate. Payments with respect to Exigent Health Claims shall be
made only in accordance with the payout scheme set forth in Section F.3.
9. Withdrawal of Claims. If the Beneficiary does not respond
to the Trust's offer on initial evaluation or reevaluation within 30 days,
the Trust's offer and the claim shall be deemed to be withdrawn without
prejudice unless the Beneficiary has requested in writing one or more
extensions of time, not to exceed six months in the aggregate, within which
to respond to the offer. If the Beneficiary still has not responded to the
Trust's offer at the end of the extension period, the Trust's offer and the
claim shall then be deemed to be withdrawn without prejudice. A Beneficiary
may also elect to withdraw a claim at any time without prejudice. A claim
that is withdrawn or deemed to have been withdrawn may be resubmitted at any
time, and shall be reordered in the FIFO queue for processing based on the
date of receipt by the Trust of a properly completed proof of claim with
respect to the refiled claim.
C. ADR Procedures.
1. Mediation. If the Beneficiary chooses not to submit
supplemental information or rejects the Trust's offer based on its
evaluation of such supplemental information and elects not to negotiate
further with the Trust, the Beneficiary's claim shall be referred to
mediation. The Trust shall establish and maintain a list of Qualified
Mediators, compensated by the Trust. The Trust shall refer claims to
Qualified Mediators from the list in rotation as soon as practicable after
being notified by the claimant that he wishes to proceed to mediation.
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Claims shall be handled by each mediator in the order
received by him or her, to the extent practicable. Any party may be
represented by legal counsel. The mediator shall confer with the parties
and/or their legal representatives, individually and jointly. Such
conference may be in person or by telephone, at the claimant's election.
The Beneficiary and a representative of the Trust with settlement authority
must personally participate in the conference unless, in the judgment of the
mediator, the Beneficiary's physical or psychological condition precludes
such participation. Such conference shall be in the nature of a settlement
conference. The mediator shall review the claim and the positions of the
parties, the prior negotiations between the parties, the offer(s) and
demand(s), such information as the parties may wish to submit as to a fair
and equitable settlement, and all documents and medical reports relevant to
the claim. At least five days prior to the mediation conference,
Beneficiary and the Trust shall each submit to the mediator a concise,
confidential statement outlining the Beneficiary's medical condition,
exposure to Fibreboard products and each party's position on settlement
value. The mediator shall work with both sides toward reaching an
acceptable, reasonable settlement. The mediator does not have the authority
to impose a settlement on the parties.
2. Arbitration. If the Beneficiary is unable to settle his or
her claim with the Trust within 30 days of the mediation conference, the
Beneficiary shall, if he or she wishes to pursue the claim, proceed to
arbitration of the claim. The arbitration shall be commenced by a written
demand for arbitration by the Beneficiary served on the Trust within 45 days
of the mediation conference. Such arbitration shall be binding or
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nonbinding at the election of the Beneficiary, which election must be made
in the Beneficiary's written demand for arbitration. The Trust and the
Beneficiary shall bear their own fees and costs, except that the Trust shall
pay the administrative fees and costs of conducting the arbitration unless
the arbitrator in his or her sole discretion assesses such administrative
fees and costs against any Beneficiary for delaying or abusing the
arbitration procedures.
The Trust shall maintain a list of Qualified Arbitrators.
Arbitrations shall be conducted by a single Qualified Arbitrator. The
Beneficiary and the Trust shall attempt to agree on a Qualified Arbitrator
who will preferably, but not necessarily, be selected from the list
maintained by the Trust. If the parties cannot agree on a Qualified
Arbitrator, a Qualified Arbitrator shall be selected pursuant to the
procedures of an independent arbitration facility to be selected by the
Trust or by such other procedures as may be adopted by the Trust. The
parties shall provide the Qualified Arbitrator and each other with copies of
all relevant materials concerning the claim and any supplementary
information they wish the Qualified Arbitrator to consider not less than 30
days prior to the date of the arbitration hearing. The Qualified Arbitrator
may require the parties to submit such additional information as he or she
deems necessary. The Qualified Arbitrator shall conduct a hearing on the
claim at which testimony may be offered, unless both parties agree to waive
such hearing. In nonbinding arbitrations, the Beneficiary must attend the
hearing in person, unless in the judgment of the Qualified Arbitrator his or
her physical or psychological condition makes such attendance impossible.
The Qualified Arbitrator shall issue an award promptly but in no event later
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than 120 days from the date on which he or she receives the last submission
of information from either of the parties relevant to the claim, unless the
parties agree to extend such time. The Award shall be based on the same
factors used by the Trust in evaluating claims.
If the Beneficiary elected binding arbitration at the time
of the demand, neither party shall have the right to appeal the award other
than on grounds set forth in the Federal Arbitration Act. If the
Beneficiary elected nonbinding arbitration at the time of the demand, the
award shall become final and binding if the Beneficiary does not reject the
award by so notifying the Trust in writing within 30 days after receipt of
the award. If the Beneficiary does not reject the award as provided above,
he or she shall be deemed to have accepted it. If the Beneficiary rejects
the award, the award shall not be binding on either party and the
Beneficiary may proceed to the tort system under the procedures set forth
below.
3. Location for ADR Procedures. The Trust shall establish
procedures to conduct mediations and arbitrations at scheduled intervals at
such locations around the United States as the Trust determines will be
convenient to the largest numbers of claimants and will not impose undue
burden on the Trust.
D. Litigation.
A Beneficiary may not proceed to litigate his or her claim
against the Trust in the tort system unless he or she has in good faith:
(1) submitted a proof of claim and rejected the resulting settlement offer
from the Trust; (2) participated in a mediation conference and failed to
settle his or her claim; (3) participated in nonbinding arbitration and
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rejected the resulting arbitration award; and (4) participated in a
mandatory settlement conference as described below. The following
procedures shall govern any Beneficiary who elects to litigate in the tort
system his or her claim against the Trust.
1. Mandatory Settlement Conference. Before any Beneficiary
may proceed to the tort system, the Beneficiary must request the Court to
conduct a mandatory settlement conference with respect to the claim. This
mandatory settlement conference may be conducted by the Court, or by another
judge or a neutral special master designated by the Court, or, if both the
Beneficiary and the Trust agree, by a mutually selected, neutral third party
other than the Court (the "Settlement Conference Designee"). The settlement
conference may be conducted by telephone unless the Court or the Settlement
Conference Designee determines, on application by the Trust or the
Beneficiary, that the conference should be conducted in person. If the
Court or the Settlement Conference Designee so determines, the settlement
conference must be attended in person by the Beneficiary, unless in the
judgment of the Court or the Settlement Conference Designee his or her
physical or psychological condition makes such attendance impossible, and by
a representative of the Trust with settlement authority at such location as
the Court or the Settlement Conference Designee shall determine. If no
settlement is reached within 30 days of the mandatory settlement conference,
the Beneficiary and the Trust shall submit to each other on that date a
written settlement offer that will remain in effect for an additional 30
days. If neither party accepts the other party's settlement offer during
this period, then the Beneficiary may, upon certification from the Court or
the Settlement Conference Designee that the Beneficiary has completed the
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settlement conference process and otherwise has complied with the
requirements of the preceding paragraph of this Section D, commence a
lawsuit against the Trust in the tort system or elect binding arbitration.
2. Procedural Rules.
a. Any Beneficiary who elects binding arbitration
following the mandatory settlement conference shall follow the procedures
set forth in Section C.2 above. Payment of any resulting award shall,
however, be governed by Section F of this Trust Distribution Process.
b. Any Beneficiary who elects to resolve a claim
through the tort system may pursue the claim in any appropriate forum,
subject to the procedures set forth herein. Payment of any resulting
judgment shall, however, be governed by Section F of this Trust Distribution
Process.
c. The Trust may assert any and all defenses
available to it or which would have been available to any Trustor against
which the claim could have been asserted absent Global Approval Judgment
with respect to Beneficiaries who elect to resolve their claims through the
tort system.
d. In no event shall a Beneficiary be permitted to
seek or recover from the Trust in a lawsuit in the tort system any punitive
or exemplary damages of any sort. Nor may any claimant seek or recover
compensatory damages in excess of Fibreboard's actual share of
responsibility or for the actual percentage risk of contracting cancer.
Finally, no Beneficiary may seek or recover pre-judgment interest in a suit
in the tort system. Any other damages available under the applicable law
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shall remain recoverable except as provided in Section D.2.e below.
e. In no event shall the Trust or any other Person be
required to post a bond to stay collection of a judgment in the tort system.
Judgments shall be paid by the Trust in the order set forth in Section F
below, and no Beneficiary shall be permitted to take any steps to collect a
judgment from the Trust except as set forth in this Trust Distribution
Process. The Trust shall not be responsible to pay post-judgment interest;
in lieu thereof, the procedures set forth in the last sentence of Section
F.1 shall apply.
f. (i) The death of a Beneficiary after he or she has
filed a proof of claim with the Trust shall not eliminate compensable
elements of his or her claim accruing prior to the date of death, by, for
example, eliminating any claim for damages for pain and suffering occurring
prior to the date of death or by creating an offset to a lost earnings award
for personal consumption occurring prior to the date of death,
notwithstanding applicable state law to the contrary. (ii) However, such
compensable elements may not be recovered after exit to the tort system
unless the Beneficiary shows that he or she could have recovered such
damages absent compliance with the requirements of the Trust Distribution
Process.
g. At trial the defendant shall be the Trust and the
Trust and Beneficiary shall jointly request that the Trust be introduced to
the trier of fact (judge or jury as the case may be) in the following
fashion or in another substantially similar fashion as the trial court may
direct, in addition to any other evidence permitted by the Court about the
Trust's identity, goals and operations:
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Members of the jury, this is an action for
damages for [personal injury/wrongful death]
brought by plaintiff[s] against [various defen-
dants, including] the Fibreboard Asbestos
Compensation Trust.
The Fibreboard Asbestos Compensation Trust
was created by Order of a United States District
Court to provide fair and equitable treatment for
persons with asbestos injury for which Fibreboard
Corporation might bear legal liability. The Trust
has a fixed amount of money with which to
compensate all persons with an asbestos injury to
whom Fibreboard is found to be legally liable.
This sum of money must cover all victims, past and
future. Under no circumstances may you award any
sum designed or intended to punish or make an
example of Fibreboard or the Trust.
If you should find that Fibreboard or
products manufactured by Fibreboard were a legal
cause of injury to plaintiff[s], any payment of
damages awarded with respect to Fibreboard's
products will be made by the Trust, not by
Fibreboard itself. The fact that a trust exists
is in no way an indication that you should impose
any liability on the Trust. No sum you might
award will be paid by either Fibreboard or by
insurance; any award will be paid only by the
Trust.
h. Any Beneficiary who elects to resolve a claim
through the tort system shall provide the Trust (without cost to the Trust)
with copies of all pleadings, discovery materials, evaluations, and other
similar nonprivileged documentation requested by the Trust in connection
with its defense of the claim in the tort system, so that the Trust may
efficiently and economically prepare for trial.
E. Funds for Payment of Claims.
As set forth in the Trust Agreement, the Trust shall
administer three funds, for payment of Trust Expenses, Class Member Claims
and Third Party Claims, to be known as "Fund I," "Fund II," and "Fund III."
Fund I is primarily intended to pay expenses of, and claims against, the
Trust during the first 25 years after Global Approval Judgment. Fund II is
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primarily intended to pay expenses of, and claims against, the Trust
commencing 26 years after Global Approval Judgment, although it is available
to pay expenses and claims commencing 21 years after Global Approval
Judgment, if Fund I is insufficient for that purpose. Fund III is primarily
intended to pay any expenses and claims not paid from Fund I or Fund II,
commencing 46 years after Global Approval Judgment, although it is available
to pay expenses and claims commencing 41 years after Global Approval
Judgment if Fund II is exhausted prior to 46 years after Global Approval
Judgment.
In order to assure that, to the maximum extent feasible,
Trust resources are preserved and fairly allocated among all Beneficiaries
(i.e., those who will have claims in the future as well as those who have
claims now) Appendix 1 describes in detail how Trust surpluses realized in
any Fiscal Year are to be preserved and limits amounts that can be spent in
any Fiscal Year to pay claims from Funds I, II or III. In general,
Appendix 1 specifies that payments for Trust Expenses, Class Member Claims
and Third Party Claims may not exceed annual earnings on the assets within
the relevant Fund plus a portion of the remaining principal (calculated by
allocating remaining Fund principal equally over the years remaining in the
Fund then in use). If any Surplus remains after payment of all Trust
Expenses, Class Member Claims and Third Party Claims and certain indemnity
expenses for a Fiscal Year (and after restoration of any increases in
Principal Amount used in prior years as described below), such Surplus will
either increase the Reserve Account or build Trust principal. This Reserve
Account will be used to pay expenses or claims for any later year before
Trustees may access any Increased Principal Amount to be used in that year.
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If, however, in any of the Fiscal Years 3 through 12 or 16 through 20 after
Global Approval Judgment, the Earnings Amount and Principal Amount together
with the funds contained in the Reserve Account in excess of $10,000,000 are
not sufficient to pay Trust Expenses and to make all payments with respect
to Class Member Claims or Third Party Claims for the first two Schedule
Categories that are due or all payments with respect to Class Member Claims
or Third Party Claims for the third Schedule Category that were due and
unpaid on four consecutive prior Distribution Dates, the Trust may increase
the usable portion of the Fund principal by up to 25% for any of Fiscal
Years 3 through 12 after Global Approval Judgment or 12.5% for any of Fiscal
Years 16 through 20 after Global Approval Judgment.
1. Fund I.
a. Commencement of Payments. The Trust shall not pay
any Class Member Claim or Third Party Claim (other than Extreme Hardship
Claims and Expedited Review Claims) from Fund I until the Distribution Date
first occurring after the end of the first Fiscal Year after Global Approval
Judgment.
b. Distributable Amount. Total payments for Trust
Expenses, Class Member Claims and Third Party Claims made from Fund I for
any Fiscal Year (i.e., payments for Trust Expenses, Extreme Hardship Claims
and Expedited Review Claims made during that Fiscal Year, together with
payments for Class Member Claims and Third Party Claims for that Fiscal Year
made on the Distribution Date immediately following that Fiscal Year) (other
than any payments made from the Reserve Account) shall not exceed the
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Distributable Amount for that Fiscal Year. For the first Fiscal Year after
Global Approval Judgment the Earnings Amount for Fund I shall be calculated
from the date of Global Approval Judgment.
c. Distribution of Remaining Balance. The transfer
from Fund I to Fund II of any remaining balance in Fund I shall occur on the
earlier of (i) the day after the Distribution Date for the twenty-fifth
Fiscal Year after Global Approval Judgment, or (ii) the day before the
Distribution Date for the first Fiscal Year occurring after the twentieth
Fiscal Year after Global Approval Judgment in which the maximum possible
Distributable Amount is less than the Earnings Amount and the Principal
Amount that were in effect for Fund I for the twentieth Fiscal Year after
Global Approval Judgment, the Trust shall transfer such remaining balance
and the remaining balance of the Reserve Account to Fund II, at which time
payments out of Fund II shall commence as provided in Section E.2.
2. Fund II.
a. Commencement of Payments. No payments shall be
made from Fund II until the Distribution Date for the twenty-first Fiscal
Year after Global Approval Judgment. If at that time Fund I still has money
left to pay Trust Expenses, Class Member Claims or Third Party Claims, no
payments shall be made from Fund II until the earlier of: (1) the day after
the Distribution Date for the twenty-fifth Fiscal Year after Global Approval
Judgment; or (2) the Fiscal Year in which the Distribution Date referred to
in Section E.1.c.(ii) occurs.
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b. Distributable Amount. The total amount of
payments for Trust Expenses, Class Member Claims and Third Party Claims made
from Fund II for any Fiscal Year is limited to the Distributable Amount for
that Fiscal Year.
c. Distribution of Remaining Balance. The transfer
from Fund II to Fund III of any remaining balance in Fund II shall occur on
(i) the day after the Distribution Date for the twentieth Fiscal Year after
the transfer of the balance in Fund I to Fund II pursuant to Section E.1.c,
or (ii) such later date as the Trustees determine would be in the best
interests of all Beneficiaries, both present and future (but in no event
later than the day after the Distribution Date for the forty-fifth Fiscal
Year after Global Approval Judgment); at which time payments out of Fund III
shall commence as provided in Section E.3.
3. Fund III.
a. Commencement of Payments. No payments shall be
made from Fund III until the Distribution Date for the forty-first Fiscal
Year after Global Approval Judgment. If at that time Fund II still has
money left to pay Trust Expenses, Class Member Claims or Third Party Claims,
no payments shall be made from Fund III until the date Fund II is exhausted
or the balance of Fund II has been transferred into Fund III pursuant to
Section E.2.c.
b. Distributable Amount. The total amount of payments
for Trust Expenses, Class Member Claims and Third Party Claims made from
Fund III for any Fiscal Year is limited to the Distributable Amount for that
Fiscal Year.
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c. Distribution of Remaining Balance. If there is a
remaining balance in Fund III on the day after the Distribution Date for the
sixty-first Fiscal Year after Global Approval Judgment, and there are then,
or are anticipated by the Trustees to be in the future, any Trust Expenses,
Class Member Claims, Third Party Claims and other obligations of the Trust
which have not yet been liquidated and/or fully paid, the Trust shall use
the remaining balance of Fund III to pay such Trust Expenses, Class Member
Claims, Third Party Claims and other obligations of the Trust. Upon the
occurrence of the Termination Date, the Trust shall apply any remaining
balance of Fund III to such charitable purposes as the Trustees in their
reasonable discretion, after consultation with the SCB, shall determine,
which charitable purposes, if practicable, shall be related to occupational
health.
4. Determination of Distributable Amount for Each Fund.
Within 90 days following the end of each Fiscal Year after Global Approval
Judgment, the Trust shall determine the Distributable Amount for such Fiscal
Year, which Distributable Amount (after payment of Trust Expenses, Extreme
Hardship Claims and Expedited Review Claims for such Fiscal Year) shall be
distributed to pay Class Member Claims and Third Party Claims, in the order
set forth in Section F.2, on a date, no later than 120 days following the
end of each such Fiscal Year, chosen by the Trust (the "Distribution Date").
F. Order, Timing and Limitations on Payments of Claims.
1. Eligibility for Payment. All Class Member Claims and Third
Party Claims become eligible to begin receiving payments from the Trust on
the Distribution Date immediately following the Fiscal Year in which such
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Class Member Claims or Third Party Claims are Liquidated, provided that in
the case of settled Class Member Claims the Trust has received the release
required by Section B.4. Judgments obtained in the tort system shall be
eligible for payment in the same order as Claims Liquidated by settlement or
arbitration, except as provided in Section F.3.b, and shall be treated as
having been Liquidated on the date the claimant obtains a final,
nonappealable judgment, except that upon an unsuccessful appeal by the
Trust, the date of Liquidation shall be the date of the trial court
judgment.
2. Order of Payment. On each Distribution Date, the Trust
shall make payments on Liquidated Class Member Claims and Third Party Claims
in the following order: (1) claims for Mesothelioma and Lung Cancer;
(2) claims for Other Cancer and Asbestos Lung Disease I; (3) the first
payment on claims for Asbestos Lung Disease II which was due and unpaid on
four or more consecutive prior Distribution Dates, (4) the second payment on
claims for Asbestos Lung Disease II which was originally due and unpaid on
four or more consecutive prior Distribution Dates; (5) the third payment for
claims on Asbestos Lung Disease II which was originally due and unpaid on
four or more consecutive prior Distribution Dates; (6) any other payments on
claims for Asbestos Lung Disease II; and (7) Residual Claims. While it is
anticipated that the Trust will be able to pay all Liquidated Class Member
Claims and Third Party Claims on each Distribution Date, all payments due on
Liquidated claims for Mesothelioma and Lung Cancer must be made before any
payments due on Liquidated claims for Asbestos Lung Disease I and Other
Cancer may be made, all payments due on Liquidated claims for Asbestos Lung
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Disease I and Other Cancer must be made before any payments due on
Liquidated claims for Asbestos Lung Disease II may be made, the first
payment on Liquidated claims for Asbestos Lung Disease II which was due and
unpaid on four or more consecutive prior Distribution Dates must be made
before any other payments for other Liquidated claims for Asbestos Lung
Disease II may be made, the second payment on Liquidated claims for Asbestos
Lung Disease II which was originally due and unpaid on four or more
consecutive prior Distribution Dates must be made before any other payments
for other Liquidated claims for Asbestos Lung Disease II may be made, the
third payment on Liquidated claims for Asbestos Lung Disease II which was
originally due and unpaid on four or more consecutive prior Distribution
Dates must be made before any other payments for other Liquidated claims for
Asbestos Lung Disease II and all other payments due on Liquidated claims for
Asbestos Lung Disease II must be made before any payments due on Liquidated
Residual Claims may be made. Within each of the seven categories, payments
due on Class Member Claims and Third Party Claims shall be made in FIFO
order based on when the Class Member Claims and Third Party Claims were
Liquidated, whether by settlement, arbitration or judgment, except that
settled Class Member Claims shall be ordered within each such category
according to when the release required by Section B.4 is received by the
Trust. Other than by virtue of subrogation to a Class Member Claim pursuant
to Section H.5.a, no contribution claim brought by a Defendant Class Member
shall be paid inasmuch as resolution of a Class Member Claim against the
Trust gives rise to a right of set-off or reduction under Section H.1.a of
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the Trust Distribution Process sufficient to satisfy, and bar the assertion
of, any such contribution claim against the Trust.
3. Terms of Payment.
a. Claims Resolved Outside the Tort System. Class
Member Claims resolved without filing an action against the Trust in the
tort system and all Third Party Claims shall be eligible for payment over a
three-year period, 40% due on the Distribution Date immediately following
the Fiscal Year in which such claim was Liquidated and 30% due on each of
the next two Distribution Dates, except for Expedited Review Claims paid
pursuant to Section B.2 and Extreme Hardship Claims paid pursuant to
Section B.8 of this Trust Distribution Process.
b. Claims Resolved in the Tort System.
(i) Class Member Claims resolved after the
filing of an action against the Trust in the tort system shall be eligible
for payment on the following schedule. On the Distribution Date following
the Fiscal Year in which such a claim was Liquidated, the Beneficiary shall
be eligible to receive the lesser of: (1) 100% of the last settlement offer
made by the Trust before the Beneficiary filed an action against the Trust
in the tort system, or 100% of the proposed Award in nonbinding arbitration
with the Trust pursuant to Section C, whichever is greater; and (2) 40% of
the amount of the judgment or settlement after the action was filed. The
remaining balance of the judgment or settlement shall be eligible for
payment on the Distribution Dates following the next four Fiscal Years in
equal installments so long as each such installment does not exceed $50,000.
In the event that each such installment would exceed $50,000, the
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Beneficiary shall be eligible to receive $50,000 per year until the Class
Member Claim is fully paid. In the event that any resulting judgment is
less than the proposed Award in nonbinding arbitration with the Trust
pursuant to Section C, the Trust shall be entitled to recover as a cost of
litigation and deduct from the judgment its cost of mediation and
arbitration pursuant to the procedures set forth in Section C.
(ii) Notwithstanding the foregoing, in order to
prevent evasion or abuse of the ADR provisions of this Trust Distribution
Process, to conserve the assets of the Trust for the benefit of all
Beneficiaries, and to manage prudently the cash flow of the Trust in a
manner consistent with Section E of this Trust Distribution Process, the
Trustees shall have the discretion, in any instance in which the
Beneficiaries' judgments against the Trust result from a trial of the claims
of more than 15 such Beneficiaries, to pay such judgments in such manner and
over such a longer time period (not to exceed 10 years) as the Trustees
shall determine is in the best interests of the Trust and of all
Beneficiaries.
4. Deferral of Payments. All Class Member Claims or Third
Party Claims eligible for a payment on a Distribution Date which do not
receive that payment on that Date because the Distributable Amount for the
Fiscal Year has been exhausted shall have that payment deferred until the
following Distribution Date. Any payment obligation so deferred shall
retain its position in the FIFO queue as set forth in Section F.2 and shall
be accorded priority as set forth in Section F.2. Deferrals may continue
from year to year until the Distributable Amount is sufficient to make the
payments due on deferred obligations.
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5. Limitation on Payment of Claims. Aggregate payments on
account of Class Member Claims and Third Party Claims arising from any one
individual's exposure to asbestos shall not total more than $500,000,
whether the Class Member Claim or Third Party Claim is Liquidated through
settlement, mediation, arbitration or in the tort system. Any individual
with asbestos-related disease shall be deemed to be a separate exposure for
purposes of this section.
G. All Claims Resolved Pursuant to the Trust Distribution Process.
In order to conserve the assets of the Trust, all Claimants
are enjoined from filing future litigation based on or arising out of a
Class Member Claim or Third Party Claim against the Fibreboard, Continental
or Pacific Releasees. Any such claim may only be pursued against the Trust
as provided in this Trust Distribution Process.
H. Defendant Class Member Procedures.
Pursuant to the Defendant Class Settlement Agreement, and
except as otherwise provided herein, (a) Defendant Class Members are
releasing Third Party Claims against the Trust, Fibreboard Releasees,
Continental Releasees and Pacific Releasees (except that nothing in this
Trust Distribution Process or the Defendant Class Settlement Agreement shall
be read as releasing, or be deemed to release, any claims whatsoever
Defendant Class Members may have against the Continental Releasees and
Pacific Releasees other than those arising out of, or in any way predicated
upon obligations created by, the Insurance Policies); (b) Fibreboard
Corporation and the Trust are releasing contribution and indemnity claims
arising out of Class Member Claims; and (c) the Continental Releasees and
Pacific Releasees are releasing any claims (except for reinsurance claims)
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arising out of Class Member Claims they may have against Defendant Class
Members; provided, however, that Defendant Class Members shall have rights
against the Trust and the Trust shall succeed to Fibreboard's rights against
Defendant Class Members to the extent provided for under this Trust
Distribution Process. Without enlarging any substantive rights accorded
them by this Trust Distribution Process, Defendant Class Members shall have
such procedural rights (relating to procedural issues not expressly dealt
with by this Trust Distribution Process) reasonably necessary to pursue or
defend rights accorded them by this Trust Distribution Process. Class
Member Claims against the Trust to which Defendant Class Members succeed
shall be governed by this Section H of the Trust Distribution Process.
Settlement Class Members, Fibreboard Corporation, Continental, Pacific and
the Trust are bound by the terms of this Section and must abide by the
following procedures in connection with suits by Settlement Class Members
for asbestos-related injury or disease against Defendant Class Members.
1. Claims Liquidated Before Judgment Against Defendant Class
Members.
a. Calculation of Set-Off Amount. If a Settlement
Class Member Liquidates his or her Class Member Claim against the Trust
before judgment is rendered in litigation between the Settlement Class
Member and Defendant Class Member(s), the Trust (itself or in Fibreboard
Corporation's stead) shall be deemed, in such ongoing litigation, to be (i)
a settled defendant within the meaning of the law which governs the judgment
entered by the trial court (or any underlying verdict) (the "Judgment Forum
Law") and (ii) a legally responsible joint tortfeasor under Judgment Forum
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Law, without introduction of further proof. Any judgment obtained by a
Settlement Class Member against Defendant Class Member(s) shall be reduced
or set off to reflect the Settlement Class Member's settlement with the
Trust in the manner (whether pro tanto, pro rata, jury allocation or
apportionment or otherwise), and in the amount provided for under Judgment
Forum Law. Where the dollar amount of the settlement between the Trust and
the Settlement Class Member is relevant to the calculation of any such
reduction or set off, that dollar amount shall be the total amount agreed to
by the Settlement Class Member and the Trust in settlement of the Class
Member Claim, including all sums paid and agreed to be paid, without any
reduction to present value for claims paid or to be paid within three years
of Liquidation. For that portion of any claim not to be paid within three
years of Liquidation, the amount of reduction or set off will be calculated
at present value as of the end of that three year period. Trust estimates
as to the length of time likely to elapse before future payments will be
made will be binding on Defendant Class Members and Settlement Class Members
alike. Where the judgment against the Defendant Class Member(s) resolves
only a portion of the Class Member Claim or potential Class Member Claim
that the Class Member has settled with the Trust (for example, personal
injury as distinct from wrongful death claims), the dollar amount of the
settlement between the Trust and the Settlement Class Member used in
calculation of any reduction or set off shall reflect any apportionment made
by the Trust and the Settlement Class Member reasonably and in good faith
with regard to rights of the Defendant Class Members under this Trust
Distribution Process, provided (i) that Defendant Class Members shall retain
any rights available to them under Judgment Forum Law to challenge such
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<PAGE>
apportionment, and (ii) that wherever Judgment Forum Law calls for
apportionment of economic and non-economic damages, the value assigned to
the Trust's settlement of a Class Member Claim shall be allocated between
economic and non-economic damages in the same proportion that the subsequent
judgment or underlying verdict against Defendant Class Member(s) allocates
such damages, notwithstanding any apportionment set forth in the settlement
documents.
b. Status of the Trust at Trial. The Settlement
Class Member and the Trust shall consent to any procedures required in order
to enable the trial court to establish the amount of any judgment reduction
or set off in respect of a Trust settlement as if the Trust, itself or in
Fibreboard Corporation's stead, had been a party to the litigation prior to
settlement. Should a trial court require that the Trust or Fibreboard
Corporation be a party in order to establish such amount, no objection shall
be made by the Trust or the Settlement Class Member to the filing by
Defendant Class Member(s) of a third-party complaint or to the joinder of
the Trust, for itself or in Fibreboard Corporation's stead, as a party for
this limited purpose only. The Trust, if made a party, shall not be
required to enter an appearance, be subject to discovery as a party, or be
subject to default or other trial court process or procedure. Under no
circumstances shall Fibreboard Corporation or the Insurers be made parties
for any purpose.
c. Discovery and Informational Issues. The Trust
shall comply with the rules of discovery under Judgment Forum Law concerning
requests for product exposure and disease information provided by the
Settlement Class Member pertaining to such Class Member Claim. In response
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<PAGE>
to a Defendant Class Member request, the Trust and the Settlement Class
Member shall promptly verify, no later than the start of jury selection in
the trial of an action by the Settlement Class Member against the Defendant
Class Member, the fact of the settlement; and in accordance with Judgment
Forum Law, also shall provide information regarding the amount and terms of
any such settlement of a Class Member Claim. Without waiver by the Trust or
Settlement Class Members of their rights to object to discovery of such
information, neither product exposure nor disease information provided
pursuant to this Subsection H.1.c shall be considered inadmissible at trial
based on Rule 408 of the Federal Rules of Evidence or any of its state law
counterparts.
2. Claims Not Liquidated When Verdict or Judgment Obtained
Against Defendant Class Members.
a. Effect of Verdict or Judgment. Except as provided
in Section H.2.b and Section H.3, if a Settlement Class Member goes to
judgment or verdict against one or more Defendant Class Members without
having Liquidated his or her Class Member Claim against the Trust, the
Settlement Class Member forever waives and releases that portion of his or
her Class Member Claim against the Trust which would have been determined
(under principles of Judgment Forum Law unaffected by Global Approval
Judgment) by the verdict or judgment had the Trust for itself or in
Fibreboard Corporation's stead been a judgment defendant.
b. Retention of Several Liability Claim.
Notwithstanding any other provision of Section H.2, where (under principles
of Judgment Forum Law unaffected by Global Approval Judgment) the Trust's
liability to a Settlement Class Member would be several only, or where the
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<PAGE>
Trust's liability as to a particular category of damages (for example,
non-economic damages) would be several only, a Settlement Class Member shall
retain that several-only aspect of his or her claim against the Trust, even
if the Settlement Class Member goes to judgment or verdict against a
Defendant Class Member without having Liquidated his or her Class Member
Claim. However, no aspect of the Class Member Claim to which principles of
joint or joint and several liability would apply shall be so retained.
Should the Trust thereafter settle with the Settlement Class Member based
only on the Trust's several liability, the release shall state that Third
Party Claims based on joint, or joint and several, liability are not barred
by virtue of the several liability settlement and may be pursued in
accordance with the provisions of this Trust Distribution Process.
c. Payment of Verdict or Judgment. Upon payment of a
verdict or judgment returned prior to Liquidation of the underlying Class
Member Claim, the Defendant Class Member(s) shall succeed in all respects to
that portion of the Class Member Claim against the Trust which would have
been determined (under principles of Judgment Forum Law unaffected by Global
Approval Judgment) by the judgment in the action against the Defendant Class
Member had the Trust for itself or Fibreboard Corporation's stead been a
judgment defendant, except to the extent provided in Sections H.2.b and H.5
hereof, and may pursue such Class Member Claim in accordance with this Trust
Distribution Process. Notwithstanding any contrary provisions of Judgment
Forum Law, a Class Member Claim to which a Defendant Class Member may
succeed under this subsection upon payment of a verdict or judgment shall
not be lost or extinguished by virtue of a Defendant Class Member's
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<PAGE>
settlement with a Settlement Class Member reached after a contested trial
resulting in verdict, or a verdict or jury or court fact finding as to
damages or judgment.
3. Tort System Claims Against the Trust. Should a Settlement
Class Member proceed to litigation against the Trust pursuant to Section D
of this Trust Distribution Process, no objection shall be made in such tort
system cases by the Trust or the Settlement Class Member to the filing by
Defendant Class Member(s) of a third-party or cross-complaint against the
Trust as successor to Fibreboard Corporation under the Global Approval
Judgment. Without in any way waiving or limiting the provisions of this
Trust Distribution Process limiting the Trust's liabilities with respect to
Class Member Claims and Third Party Claims when a Class Member Claim
proceeds to litigation against the Trust in the tort system pursuant to
Section D, Defendant Class Members shall retain against the Trust whatever
rights of contribution and/or indemnification they otherwise would have had
against Fibreboard Corporation under Judgment Forum Law and the Trust shall
retain whatever Fibreboard Corporation rights of contribution and/or
indemnification it would have had against Defendant Class Members under
Judgment Forum Law. In the event that after a verdict or judgment against a
Defendant Class Member, the Defendant Class Member upon assertion of its
rights is determined to have a valid contribution claim or indemnity claim
against Fibreboard or the Trust under Judgment Forum Law, the Settlement
Class Member's verdict or judgment against the Defendant Class Member shall
be reduced or set off in the amount necessary under Judgment Forum Law to
satisfy such Defendant Class Member's claim for contribution or indemnity
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<PAGE>
against Fibreboard or the Trust. Nothing in this Section H.3 or in
Section H.2.a shall prevent the Settlement Class Member from liquidating and
collection pursuant to other provisions of Section D of this Trust
Distribution Process his or her claim against the Trust based on the verdict
or judgment referred to in this Section H.3.
4. Litigation Between Defendant Class Members
and Settlement Class Members.
In any litigation between Defendant Class Members and
Settlement Class Members each shall retain their respective rights under
Judgment Forum Law to introduce evidence at trial.
Under no circumstances (other than the commencement by the
Trust of formal bankruptcy or insolvency proceedings) shall the Trust (or
Fibreboard Corporation) be treated as a bankrupt or insolvent defendant, nor
shall the Trust (or Fibreboard Corporation) be considered, for purposes of
litigation between Defendant Class Members and Settlement Class Members
only, a Person who cannot be made a party for lack of personal jurisdiction,
or otherwise a party over whom a Settlement Class Member is unable to obtain
jurisdiction.
5. Pursuit of Third Party Claims.
a. Defendant Class Member to Stand in
Settlement Class Members' Stead.
In pursuing any Class Member Claim against the Trust to
which a Defendant Class Member has succeeded under subsection H.2.c above,
(i) the Defendant Class Member shall stand in the stead of the Settlement
Class Member in respect of whose Class Member Claim the Defendant Class
Member has succeeded, (ii) such Class Member Claim shall be resolved by
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<PAGE>
Defendant Class Members under this Trust Distribution Process in the same
manner as such Class Member Claim would have been resolved had it been
asserted by the Settlement Class Member, and (iii) it shall be evaluated on
the same basis as if the Settlement Class Member directly presented his or
her Class Member Claim to the Trust, without any enhancement, discount or
limitation because it is asserted by a Defendant Class Member. Defendant
Class Members must present evidence of such Class Member Claims in the same
manner as Settlement Class Members; provided, however, that Defendant Class
Members are not required to provide information unavailable to them because
such information is solely within the control of the Settlement Class
Member. In any event, however, Defendant Class Member Claims are to be
evaluated by the same standards as Class Member Claims. For the limited
purpose of pursuing Class Member Claims, or otherwise in respect of
assertion of other rights specifically granted under this Trust Distribution
Process, Defendant Class Members shall be treated as beneficiaries of the
Trust; provided, however, that under no circumstances shall Section H.6
below apply to Class Member Claims to which Defendant Class Members have
succeeded.
b. Resolution of Claims. Notwithstanding any other
provision of this subsection, Class Member Claims to which Defendant Class
Members have succeeded under Section H.2.c hereof or Residual Claims shall
be decided by binding arbitration under Section C.2 of this Trust
Distribution Process, if not settled previously, and may not exit to the
tort system. In such arbitrations and in its negotiations with Defendant
Class Members, the Trust shall not assert any Fibreboard Corporation
defenses based on the state of the art, or failure to show negligence or
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<PAGE>
product defect (whether based upon design, manufacture or failure to warn),
except in those circumstances under which the Trust would also have asserted
those defenses against the Settlement Class Member to whose Class Member
Claim the Defendant Class Member has succeeded. Moreover, the Trust shall
not assert failure to show negligence or product defect as a defense where a
Class Member Claim to which the Defendant Class Member has succeeded is
brought by a former manufacturer and/or distributor of asbestos-containing
high-temperature pipe and block insulation, if the issues of product defect
or negligence (as the case may be) covering such pipe and block insulation
were fully litigated to an adverse result against that Defendant Class
Member at trial of the underlying asbestos-related personal injury action.
Under no other circumstances shall the results of such trial be given
preclusive effect in any such arbitration. Any arbitration under this
subsection shall be confidential, and no statement made, or contention
advanced, at such arbitration shall be introduced as evidence or otherwise
used against the maker or proponent of such statement or contention in the
course of any proceeding other than arbitrations under this Trust
Distribution Process.
c. Processing and Payment of Claims. Class Member
Claims to which Defendant Class Members have succeeded shall be included in
the FIFO queue established pursuant to this Trust Distribution Process. For
purposes of processing, the position of a Class Member Claim to which a
Defendant Class Member has succeeded in the FIFO queue shall be determined
by the earlier of (a) the date the Settlement Class Member filed with the
Trust the underlying Class Member Claim or (b) the date on which the
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<PAGE>
Defendant Class Member paid the Settlement Class Member with respect to the
judgment or verdict. For purposes of payment, a Class Member Claim to which
a Defendant Class Member has succeeded will be placed within the appropriate
Schedule Category set forth in Section F.2 and, within such category, in
FIFO order, based on the date on which the Defendant Class Member paid the
Settlement Class Member in respect to the judgment or verdict. Class Member
Claims to which Defendant Class Members have succeeded, shall be paid under
the terms set forth in Section F.3.a. Prior to receiving payment the
Defendant Class Member shall have provided a release as described in
Section B.4.
d. Multiple Claims or Multiple Third Party Claims.
Where Defendant Class Members succeed to a portion of a Class Member Claim
by virtue of payment with respect to any verdict or judgment where a
Beneficiary retains an interest in the several liability aspect of the same
Class Member Claim (regardless of the number of Defendant Class Members who
may have succeeded to portions of the Class Member Claim) ("Partial
Claims"), Settlement Class Members and Defendant Class Members shall comply
with procedures established by the Trust to ensure that all persons with
rights under this Trust Distribution Process in respect of the same Class
Member Claim coordinate their effort so that all such Partial Claims can be
processed and Liquidated in a single proceeding, designed to resolve all
elements of such claims, whether malignancy or non-malignancy, and all
causes of action, whether for personal injury, death, loss of consortium, or
otherwise against the Trust; provided, however, that nothing in the
foregoing shall prevent the Trust, a Settlement Class Member or a Defendant
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Class Member, as the case may be, from electing to give or take a limited,
non-malignancy release under this Trust Distribution Process. In evaluating
Partial Claims in the course of such a single proceeding, the Trust shall
not differentiate among the aspects of such claims based on whether the
right to payment is asserted by a Settlement Class Member or Defendant Class
Member. In those circumstances where different parties (whether Settlement
Class Member and Defendant Class Member(s), or more than one Defendant Class
Member) assert rights under this Trust Distribution Process in respect of
the same Class Member Claim, any disputes regarding such Class Member Claim
shall be presented in a single arbitration. Should more than one Defendant
Class Member be entitled to payment from a single settlement or award by the
Trust, the Defendant Class Members shall share such amount in the same
proportion that each made payments to the Settlement Class Member.
Notwithstanding the above or any other provision of this Trust Distribution
Process, (i) a Settlement Class Member shall not be entitled to take to the
tort system a Class Member Claim if any portion of that claim was resolved
as to a Defendant Class Member by settlement or in binding arbitration
pursuant to Section H.5.b of this Trust Distribution Process; and (ii)
Settlement Class Members retain all rights to resolve their Partial Claims
with the Trust after the verdict or judgment against the Defendant Class
Member and before one or more Defendant Class Member's related Partial
Claim(s) is submitted to the Trust in writing for resolution; provided,
however, that the Settlement Class Member's resolution of his or her Partial
Claim shall not bind any Defendant Class Members or the Trust with respect
to any Defendant Class Member's related Partial Claim. The Trust shall
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<PAGE>
settle Partial Claims only in accordance with Section H.5.d-g.
e. If a Settlement Class Member resolves his or her
Partial Claim pursuant to Section H.5.d, the Trust or arbitrator will
apportion the settlement or award among all elements of the claims that are
being resolved (for example, personal injury, wrongful death, loss of
consortium, etc.). Until such time as the Partial Claim of a Defendant
Class Member has been Liquidated and paid or denied, the related Partial
Claim of a Settlement Class Member Liquidated under Section H.5.d(ii) shall
only be entitled to payment of
(i) that portion of the Settlement Class Member's
Partial Claim allocated to resolved claims which were not included in the
verdict or judgment against the Defendant Class Member, plus
(ii) $500,000 minus the amount in (i) above, multiplied
by the ratio of (x) the several liability portion of the verdict or judgment
against the Defendant Class Member to (y) the total underlying verdict or
judgment against the Defendant Class Member. Any award of punitive or
exemplary damages will be excluded from the verdict or judgment against the
Defendant Class Member when calculating (x) or (y).
f. The provisions of Section H.5.e shall not apply if
the underlying total verdict or judgment in favor of a Settlement Class
Member against one or more Defendant Class Members (excluding any award for
punitive or exemplary damages) is $500,000 or less.
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<PAGE>
g. The provisions of Section H.5.e will cease to
apply if the Partial Claim of a Settlement Class Member plus the related
Partial Claims of all Defendant Class Members are Liquidated for a total of
$500,000 or less.
h. The provisions of Section H.5.e will cease to
apply as to any Partial Claim of a Defendant Class Member which is not
submitted to the Trust and served on the Settlement Class Member, or his
attorney, if any, within three months of the date on which the underlying
judgment against the Defendant Class Member becomes final.
6. Cooperation for Court Approvals. Upon liquidation of his
or her Class Member Claim, each Beneficiary shall cooperate with the Trust
in seeking any needed trial court approval under Judgment Forum Law of the
settlement.
7. No Modification Without Consent. Neither the terms of this
Section H nor as they apply to Defendant Class Members the provisions of
this Trust Distribution Process as to arbitration may be modified without
the written concurrence of the Representative Defendant. Other provisions
of the Trust Distribution Process may be modified (after prior notice to the
Representative Defendant) without the concurrence of the Representative
Defendant unless the modification (i) has an adverse effect on Defendant
Class Members and (ii) discriminates against them vis-a-vis Settlement Class
Members, in which case the modification shall require the written
concurrence of the Representative Defendant.
I. Attorneys' Fees.
Attorneys' fees payable in connection with Class Member
Claims Liquidated and paid through this Trust Distribution Process, whether
as a result of settlement, an arbitration award, or a judgment obtained in
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<PAGE>
the tort system, and whether or not calculated as a percentage of recovery,
shall be the lower of the fee provided in the contract between the
Beneficiary and counsel and 25%. Costs related to the prosecution of the
claim shall be subtracted from the recovery before calculating the
attorney's fee. Legal fees shall be paid pro rata from the payments due to
the Beneficiaries as such payments are made by the Trust.
J. Amendment.
No amendments or waivers of this Trust Distribution Process
will be permitted except as set forth in Section 3.1 of the Trust Agreement.
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<PAGE>
APPENDIX 1 TO THE
TRUST DISTRIBUTION PROCESS
--------------------------
1. Increased Principal Amount. The Trustees may increase the
Principal Amount for any of the third Fiscal Year through the twelfth Fiscal
Year after Global Approval Judgment or the sixteenth Fiscal Year through the
twentieth Fiscal Year after Global Approval Judgment up to the Increased
Principal Amount for that year, if
(i) the Distributable Amount (if not increased as
provided in this sentence) for that Fiscal Year, plus the amount, if any, by
which the balance (on the last business day of that Fiscal Year) of the
Reserve Account exceeds $10 million, is insufficient to pay all Trust
Expenses for such Fiscal Year plus all Class Member Claims and Third Party
Claims included in any of the first two Schedule Categories due and payable
on the Distribution Date immediately following that Fiscal Year, or any
payments with respect to Class Member Claims or Third Party Claims included
in the third Schedule Category that were due and unpaid on four or more
consecutive Distribution Dates prior to the Distribution Date immediately
following that Fiscal Year, and
(ii) the Trustees conclude that increasing the
Principal Amount would be in the best interests of all Beneficiaries, both
present and future, and that the sum of the Earnings Amount for Fund I, such
amount in the Reserve Account in excess of $10 million and the amount of the
Increased Principal Amount does not exceed the amount required to pay all
such Trust Expenses and Class Member Claims and Third Party Claims included
in the first two Schedule Categories and any payments with respect to Class
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<PAGE>
Member Claims or Third Party Claims included in the third Schedule Category
that were due and unpaid on four or more consecutive Distribution Dates
prior to such Distribution Date.
2. Reserve Account. The Reserve Account shall initially be
credited with the full amount transferred to the Trust pursuant to Section
2.3(B) of the Global Settlement Agreement, minus the sum of
(a) $1.340 billion of the starting balance of Fund I,
(b) $200 million, the starting balance of Fund II, and
(c) $10 million, the starting balance of Fund III.
The Reserve Account is part of Fund I.
The Reserve Account shall be increased on each Distribution Date by
(x) 100%, until the balance of the Reserve Account
equals $25 million,
(y) 50%, after the balance of the Reserve Account
equals $25 million and until the balance of the
Reserve Account equals the sum of the Principal
Amount and Earnings Amount for the prior Fiscal
Year, and
(z) 0%, after the balance of the Reserve Account
equals the sum of the Principal Amount and
Earnings Amount for the prior Fiscal Year,
of either
(i) if the Unreimbursed Borrowings as of such
date is zero or a positive number, then
the Surplus as of such date, or
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<PAGE>
(ii) if the Unreimbursed Borrowings as of such
date is a negative number, but such
Unreimbursed Borrowings plus the Surplus
as of such date is a positive number, then
such positive number, or
(iii) if Unreimbursed Borrowings as of such date
plus the Surplus as of such date is zero
or a negative number, then zero (so that
this calculation shall not result in a
decrease in the Reserve Account).
The Reserve Account shall be used to pay all Trust
Expenses, Class Member Claims, Third Party Claims and payments made pursuant
to Section 7.16 of the Trust Agreement (it being understood that such
payments pursuant to Section 7.16 shall not be limited by the amounts in the
Reserve Account) for any Fiscal Year in which the Principal Amount and the
Earnings Amount is insufficient for such purpose; provided, that the
provisions of this sentence shall not be applied to require the reduction of
the balance of the Reserve Account below $10 million. Notwithstanding the
foregoing, during the first Fiscal Year after Global Approval Judgment, the
Trustees shall create and thereafter maintain an appropriate reserve (to be
taken out of the amounts otherwise included in the Reserve Account) for
required payments in later Fiscal Years for Class Member Claims and Third
Party Claims presented in such first Fiscal Year or before, which reserve
shall not be otherwise available for the purposes of the immediately
preceding sentence. The Trustees shall have the discretion to utilize any
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<PAGE>
and all amounts in the Reserve Account to pay Trust Expenses, Class Member
Claims, Third Party Claims and payments pursuant to Section 7.16 of the
Trust Agreement.
- A-4 -<PAGE>
<PAGE>
SCHEDULE A
----------
Injury Factor
- ------ ------
Mesothelioma Fibreboard share
age at diagnosis of mesothelioma
venue and status of litigation
amount of lost income
claimant alive or deceased
number of dependents
Lung Cancer Fibreboard share
year of diagnosis
venue and status of litigation
degree of functional impairment
industry of most significant
exposure
amount of lost income
number of dependents
current or former smoker
ILO x-ray reading
Other Cancer Fibreboard share
age at diagnosis of cancer
venue and status of litigation
degree of functional impairment
time since first exposure
prior claim of less severe injury
employment status
number of minor dependents
Asbestos Lung
Disease I Fibreboard share
venue and status of litigation
degree of functional impairment
industry of most significant
exposure
disputed claim
claimant alive or deceased
claimant housebound and sedentary
claim for lost wages
ILO x-ray reading
Asbestos Lung
Disease II Fibreboard share
venue and status of litigation
degree of functional impairment
ILO x-ray reading
- B-1 -
<PAGE>
EXHIBIT 10.15
EXHIBIT C
DEFENDANT CLASS
SETTLEMENT AGREEMENT
--------------------
This Defendant Class Settlement Agreement is made and
entered into as of December 22, 1993, by and among Owens-Illinois, Inc., a
Delaware corporation ("Representative Defendant"), as representative of the
Defendant Class, acting by and through Defendant Class Counsel; Fibreboard
Corporation, a Delaware corporation; the Representative Plaintiffs as
representatives of the Settlement Class, acting by and through Class
Counsel; Continental Casualty Company, an Illinois corporation
("Continental"); CNA Casualty Company of California, a California
corporation ("CNA Casualty"); Columbia Casualty Company, an Illinois
corporation ("Columbia"); and Pacific Indemnity Company, a California
corporation ("Pacific"), together the "Parties."
R E C I T A L S
---------------
A. On August 27, 1993, Class Counsel, Fibreboard
Corporation, Continental, CNA Casualty, Columbia, and Pacific announced an
agreement in principle to settle all future asbestos-related personal injury
claims against Fibreboard (the "Global Settlement"). The Global Settlement
is set forth in the transcript of a hearing before the Honorable Robert
Parker, Chief Judge, United States District Court for the Eastern District
of Texas (the "Global Court"). The Global Settlement, as announced, was
subject to the execution of definitive agreements and final court approval,
among other conditions.
B. In connection with implementing the Global
Settlement, Representative Plaintiffs, on behalf of themselves and the
Settlement Class, filed the Class Action on
- 1 -<PAGE>
<PAGE>
September 9, 1993. On September 9, 1993, the Court provisionally certified
the Settlement Class as a mandatory, non-opt out class under Federal Rules
of Civil Procedure, Rule 23(b)(1)(B), and entered a temporary restraining
order preventing any member of the Settlement Class from initiating any
asbestos-related claims against Fibreboard. The relief afforded by the
temporary restraining order was extended by the entry of a preliminary
injunction on September 27, 1993, which shall remain in effect pending
notice to the Settlement Class and the hearing and determination of the
fairness, reasonableness, and adequacy of the proposed settlement of the
Class Action.
C. In December, 1993 Representative Plaintiffs on
behalf of themselves and as representatives of the Settlement Class,
Fibreboard Corporation, Continental, CNA Casualty, Columbia, and Pacific,
entered into a definitive agreement to implement the Global Settlement (the
"Global Settlement Agreement"). A copy of the Global Settlement Agreement
(including exhibits thereto) is attached as Exhibit A hereto.
D. The expenditures necessary to process and resolve
asbestos lawsuits have contributed to more than ten major asbestos
defendants filing for bankruptcy reorganization. Because some of these
defendants represented a significant portion of the traditional liability
share for asbestos personal injury cases, and since many jurisdictions apply
the principle of joint and several liability, these bankruptcy filings have
increased costs substantially and have caused significant delays to
plaintiffs.
E. Claims for contribution and/or indemnification are
infrequently litigated in asbestos personal injury cases. The vast majority
of asbestos-related personal injury cases are settled by all defendants
before trial. In those cases where trials result in judgments against
- 2 -<PAGE>
<PAGE>
non-settling defendants, the law in most jurisdictions protects settling
defendants against claims for contribution and/or indemnity by judgment
debtors. Nevertheless, the potential remains for litigation of contribution
and/or indemnity claims. The parties to the Global Settlement Agreement and
the members of the Defendant Class all have strong and common interests in
preventing a Fibreboard Corporation insolvency, in Fibreboard Corporation
funding a Global Settlement, in Fibreboard Corporation paying its unfunded
settlement obligations and in resolving potential Third Party Claims by
Defendant Class Members without the delay, expense, and uncertainty of
litigating such claims. Although Defendant Class Members are numerous and
include, among others, manufacturers, distributors, shipowners, premises
owners and/or occupiers, and so-called "peripheral" defendants, any
differing interests that may exist among Defendant Class Members are
outweighed by the benefits to the Defendant Class as a whole afforded by the
funds to be provided by the success of the Global Settlement Agreement.
F. Fibreboard Corporation has been engaged in
insurance coverage litigation with Continental and Pacific for a number of
years. Although Fibreboard Corporation was awarded coverage under a trial
court judgment, the insurers appealed that judgment and the outcome of the
appeal remains uncertain. The interests of the Defendant Class are served
by the Global Settlement Agreement, which provides over $1.5 billion to
compensate Settlement Class members for asbestos-related personal injuries
for which Fibreboard Corporation may bear legal liability, while eliminating
the risk that Fibreboard Corporation may lose insurance coverage, and which
also may enable Fibreboard Corporation to fund existing unfunded settlement
obligations totalling over $1.0 billion. Absent the funds that will be made
- 3 -<PAGE>
<PAGE>
available by and as a result of the Global Settlement Agreement, Defendant
Class Members could bear a proportionately greater share of the overall
liability for asbestos-related personal injuries.
G. Representative Defendant adequately represents the
interests of the Defendant Class, in that Representative Defendant is a
publicly held corporation that has been sued in thousands of asbestos-
related personal injury lawsuits in jurisdictions throughout the country.
H. Defendant Class Counsel have extensive experience
in asbestos-related litigation. Defendant Class Counsel have reviewed the
Global Settlement Agreement (including the exhibits thereto) and have been
advised of the record to date in the Class Action, and have otherwise
conducted a thorough investigation of the facts and law relevant to the
matters set forth herein. Based upon this experience and investigation,
Defendant Class Counsel have determined that this Agreement is in the best
interests of the Defendant Class.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants contained herein, the Parties hereby agree as follows:
I. DEFINITIONS
-----------
Capitalized terms used, and not otherwise defined, herein
are defined in the Glossary of Terms attached as Exhibit A to the Global
Settlement Agreement.
II. RESOLUTION OF DEFENDANT CLASS CLAIMS
------------------------------------
A. Defendant Class Members hereby release the
Released Parties from any and all Third Party Claims and agree that
the Global Approval Judgment shall bar and enjoin permanently
- 4 -<PAGE>
<PAGE>
Defendant Class Members from prosecution of any Third Party Claims
against any of the Released Parties in any proceeding or court.
B. Fibreboard Corporation, Continental, CNA Casualty,
Columbia, Pacific and the Trust release contribution and/or indemnity claims
against Defendant Class Members as set forth in the Trust Distribution
Process.
C. Defendant Class Members shall have the rights
described in Section H of the Trust Distribution Process.
III. ACTIONS TO IMPLEMENT THIS AGREEMENT
-----------------------------------
A. Fibreboard Corporation shall commence, as a third-
party claim or other appropriate pleading in the Class Action, a mandatory,
non-opt out class action against the Defendant Class pursuant to Federal
Rules of Civil Procedure, Rule 23(b)(1) and (2) (the "Defendant Class
Action").
B. The Parties shall join in motions, in form and
substance satisfactory to counsel for each of the Parties, to certify
provisionally the Defendant Class for settlement purposes only, to
preliminarily enjoin the prosecution of any Third Party Claim during the
pendency of the Defendant Class Action and for entry of the Defendant Class
Order and Global Approval Judgment. Should the motions to certify
provisionally the Defendant Class for settlement purposes only and to
preliminarily enjoin the prosecution of any Third Party Claims be granted,
while the orders granting those motions are in effect before entry of Global
Approval Judgment, Section H of the Trust Distribution Process and this
Defendant Class Settlement Agreement shall govern -- as if they were fully
operative -- the rights and liabilities of the Parties with respect to
claims of Defendant Class Members arising out of Interim Claims
- 5 -<PAGE>
<PAGE>
resolved under Section 7 of the Global Settlement Agreement; provided that
during the Interim Period Fibreboard, the Insurers, the Interim Committee
and the Escrow Fund shall have (as appropriate and consistent with Section 7
of the Global Settlement Agreement) the rights and responsibilities assigned
to the Trust in Section H of the Trust Distribution Process. Should Global
Court Disapproval occur, Defendant Class Members shall be restored to any
rights they may have under applicable law to pursue claims otherwise
released under this Defendant Class Settlement Agreement.
C. Notice shall be given to the Defendant Class in
form and substance satisfactory to counsel for each of the Parties and
approved by the Court. Pursuant to such notice, a hearing shall be held
pursuant to Federal Rules of Civil Procedure, Rule 23 (e), to determine the
fairness and reasonableness of the settlement contemplated by this Defendant
Class Settlement Agreement.
D. The certification of the Defendant Class pursuant
to this Defendant Class Settlement Agreement shall be binding if Global
Approval Judgment is entered.
E. In the event either (i) Global Court Disapproval
occurs; (ii) Class Counsel move to convert the Class Action or the Defendant
Class Action to a litigation class action; (iii) either the Court or the
Global Court enters an order over objection by the Representative Defendant
converting the Class Action or the Defendant Class Action to a litigation
class action; or (iv) before Global Approval Judgment or Global Court
Disapproval, the Trust Distribution Process is amended without complying
with Section H.7 of the Trust Distribution Process, then the order
certifying the Defendant Class shall be vacated, and Fibreboard Corporation
and Representative Defendant shall stipulate to the dismissal of the Defendant
- 6 -<PAGE>
<PAGE>
Class Action without prejudice, and the Parties shall return in all respects
to the status quo ante, including, but not limited to, the revocation of any
releases given in this document or in the Trust Distribution Process. The
Defendant Class shall retain any and all rights to object to the continued
prosecution of such action as a litigation class action under Rule 23.
Neither this Defendant Class Settlement Agreement, nor its exhibits, nor the
settlement negotiations, nor the proceedings seeking approval of the
settlement, may be used in support of any application for a determination
that such action or any other action shall proceed as a class action except
for the purposes of the settlement in accordance with this Defendant Class
Settlement Agreement, or as evidence in any litigation or proceeding against
any of the Parties other than an action or proceeding to enforce the
provisions of this Defendant Class Settlement Agreement.
IV. MISCELLANEOUS
-------------
A. Amendments. No amendment of any provision of this
Defendant Class Settlement Agreement (or to Section H of the Trust
Distribution Process) shall be valid unless the same shall be in writing and
signed by all Parties hereto and, upon the request of any of them, approved
by the Court.
B. Counterparts. This Defendant Class Settlement
Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together will constitute one and the
same instrument.
C. Further Actions. The parties shall take such
reasonable actions as may be necessary or appropriate to consummate or
implement this Defendant Class Settlement Agreement.
- 7 -<PAGE>
<PAGE>
D. The Representative Defendant shall not be responsible
for any cost or expenses (including the expense of any class notice)
associated with obtaining any necessary Court approvals of this Defendant
Class Settlement Agreement. In the event of Global Approval Judgment,
Representative Defendant may apply to the Court for approval of
reimbursement of its own reasonable costs and expenses, including the
reasonable cost and expenses of its counsel, in an amount not to exceed
$250,000, incurred in connection with negotiating and obtaining any
necessary approvals of this Defendant Class Settlement Agreement. In the
event of Global Court Disapproval, Fibreboard and the Insurers will
negotiate in good faith with the Representative Defendant regarding whether,
and to what extent, reimbursement of Representative Defendant's expenses is
appropriate.
E. Defendant Class shall not change the identity of
Representative Defendant without consent of Class Counsel, Fibreboard
Corporation, Continental and Pacific without approval of the Court.
IN WITNESS WHEREOF, this Agreement has been executed as of
the date first above written by the Parties hereto, thereunto duly
authorized.
ON BEHALF OF DEFENDANT CLASS
By PHILIP MCWEENY
_____________________________
Philip McWeeny
FIBREBOARD CORPORATION
By MICHAEL R. DOUGLAS
____________________________
Title: Sr. Vice President and
General Counsel
- 8 -<PAGE>
<PAGE>
CONTINENTAL CASUALTY COMPANY
By LAURENS F. TERRY
___________________________
Title: Vice President
CNA CASUALTY COMPANY OF CALIFORNIA
By LAURENS F. TERRY
____________________________
Title: Vice President
COLUMBIA CASUALTY COMPANY
By LAURENS F. TERRY
____________________________
Title: Vice President
Continental Casualty Co.
PACIFIC INDEMNITY COMPANY
By JOHN J. DEGNAN
____________________________
Title: Senior Vice President
ON BEHALF OF SETTLEMENT CLASS
By JOSEPH F. RICE
____________________________
Joseph F. Rice, Esq.
By JOSEPH B. COX, JR.
____________________________
Joseph B. Cox, Jr., Esq.
By STEVEN KAZAN
____________________________
Steven Kazan, Esq.
By HARRY F. WARTNICK
____________________________
Harry F. Wartnick, Esq.
- 9 -
<PAGE>
EXHIBIT 10.16
EXHIBIT D
ESCROW AGREEMENT
ESCROW AGREEMENT made this 23rd day of December, 1993, by
and among Continental Casualty Company, an Illinois corporation
("Continental"), Pacific Indemnity Company, a California corporation
("Pacific"), and The First National Bank of Chicago (the "Escrow Agent").
WHEREAS, Continental, Pacific and Fibreboard Corporation, a
Delaware corporation, have entered into an Agreement dated as of October 12,
1993 (as the same may be amended from time to time, the "Settlement
Agreement") relating to the settlement of lawsuits relating to questions of
insurance coverage, all as described in the Settlement Agreement;
WHEREAS, Fibreboard Corporation, Continental, Pacific, the
Representative Plaintiffs (acting by and through Class Counsel) (as such
terms are defined in the Glossary attached to the Global Settlement
Agreement (as defined below) as Exhibit A (the "Glossary")) entered into a
Global Settlement Agreement as of August 27, 1993 (as the same may be
amended from time to time, the "Global Settlement Agreement"), relating to
the settlement, inter alia, of personal injury lawsuits and lawsuits
relating to questions of insurance coverage, all as described in the Global
Settlement Agreement;
-1-<PAGE>
<PAGE>
WHEREAS, the Global Settlement Agreement provides for
payment of an aggregate amount of $1,525,000,000 by Continental and Pacific
into an escrow account pending further distribution of such funds; and
WHEREAS, the parties desire to arrange for such escrow and
appoint Escrow Agent as the escrow agent in accordance with the terms
hereof.
NOW, THEREFORE, in consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and intending to be legally
bound, the parties agree as follows:
1. Interpretation and Definitions. This Escrow Agreement
is being executed and delivered pursuant to Section 2.3 of the Global
Settlement Agreement and the Escrow Account created pursuant to this Escrow
Agreement is the Escrow Fund referred to therein. The provisions of this
Escrow Agreement shall not in any event be construed so as to enlarge or
diminish the rights of any party under the Global Settlement Agreement.
Capitalized terms used and not defined herein have the meanings given to
them in the Glossary.
2. Appointment and Compensation of Escrow Agent. Escrow
Agent is hereby appointed to act as escrow agent in accordance with the
terms hereof, and
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<PAGE>
Escrow Agent hereby accepts such appointment. Escrow Agent shall have all
the rights, powers, duties and obligations provided herein. All persons
dealing with the Escrow Agent are released from inquiry into the decision or
authority of the Escrow Agent and from seeing to the application of any
monies, securities or other property paid or delivered to the Escrow Fund.
Escrow Agent shall be entitled to charge the Escrow Account for its fees, as
determined in accordance with the fee letter attached hereto as Exhibit A,
and for reimbursement of reasonable costs and expenses suffered or incurred
by Escrow Agent in connection with the performance of its duties and
obligations hereunder including, but not limited to, any suit in
interpleader brought by Escrow Agent.
3. Deposit and Investment of Funds. (a) On December 30,
1993, Continental shall deliver $986,827,500, and Pacific shall deliver
$538,172,500, for an aggregate amount of $1,525,000,000 (collectively, the
"Funds") to Escrow Agent, by wire transfer of immediately available funds to
such account of Escrow Agent that Escrow Agent identifies in a writing
delivered to Continental and Pacific.
(b) On or before the date hereof, Escrow Agent shall
establish at the office of its corporate trust department in Chicago,
Illinois and, at all times thereafter until the escrow created by this
Escrow Agreement shall have terminated pursuant to Section 6 hereof (the
"Escrow Termination Date"), shall maintain a separate account entitled the
"Fibreboard Asbestos Claimants Escrow Account" (the "Escrow Account"). All
-3-<PAGE>
<PAGE>
funds, securities and other property held by the Escrow Agent (collectively,
the "Escrow Assets") at any time pursuant to this Escrow Agreement, in-
cluding the Funds and all investments, interest, earnings and proceeds
thereof and thereon, shall be held in the Escrow Account. No property other
than the Escrow Assets shall be held in the Escrow Account. Escrow Agent
shall make and maintain, at all times until the Escrow Termination Date,
appropriate entries in its books and records to reflect that all of the
Escrow Assets existing from time to time are held in the Escrow Account.
(c) During the term of this Escrow Agreement, Escrow
Agent shall invest and reinvest the Escrow Assets from time to time in
obligations backed by the full faith and credit of the United States of
America which have a maturity date which is not more than three months from
the date of acquisition ("Eligible Treasury Securities"); provided, however,
that pending investment or prompt distribution Escrow Agent may invest funds
in an aggregate amount at any time not exceeding the lesser of $10,000,000
or 5% of the amount of the Escrow Assets in (i) a money market fund or funds
sponsored by an Eligible Institution (as defined below) or (ii) repurchase
agreements with an Eligible Institution with a term of not more than one day
for Eligible Treasury Securities, with respect to which such Eligible
Treasury Securities are held by Escrow Agent in its account with a Federal
Reserve Bank and maintained on its books and records in the Escrow Account.
An Eligible Institution shall mean a commercial bank having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000)
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<PAGE>
and which is well capitalized or adequately capitalized (as such terms are
defined in applicable federal regulations).
The Escrow Agent shall liquidate investments in order to
comply with the provisions of this Escrow Agreement without liability for
any resulting losses. Any losses incurred from an investment shall be borne
by the Escrow Account.
4. Accrued Interest on the Escrow Assets. All interest
and earnings of the Escrow Assets shall be added to and become part of the
Escrow Assets, and shall be held by Escrow Agent under this Escrow
Agreement.
5. Payments of Amounts Held in Escrow Account.
(a) Subject to Sections 5(b) and 5(c) hereof, upon termination of the Escrow
Agreement pursuant to Section 6 hereof, Escrow Agent shall distribute all
amounts held in the Escrow Account pursuant to (i) written payment
instructions executed by each of Continental, Pacific, Fibreboard
Corporation, Class Counsel (acting on behalf of the Settlement Class), and,
after appointment of the Trustees, the Trustees or (ii) an order obtained
after a hearing held on notice to each of Continental, Pacific, Fibreboard
Corporation and Class Counsel (a "Court Order") of the United States
District Court for the Eastern District of Texas.
-5-<PAGE>
<PAGE>
(b) At any time and from time to time during the term
of this Escrow Agreement, Escrow Agent shall (i) at the written direction of
each of Continental, Pacific, Fibreboard Corporation, Class Counsel, and,
after appointment of the Trustees, the Trustees distribute such amount or
amounts to such person or persons and at such time or times as each of
Continental, Pacific, Fibreboard Corporation, Class Counsel, and, after
appointment of the Trustees, the Trustees shall direct in an Interim Payment
Direction or (ii) in accordance with a Court Order, distribute such amount
or amounts to such person or persons and at such time or times as is
specified in the Court Order. Any payment instructions to the Escrow Agent
shall include the mailing address and taxpayer identification number of the
person or persons receiving the distribution hereunder.
(c) Notwithstanding any contrary provision of this
Escrow Agreement, within the 30-day period following the end of each
calendar quarter, Escrow Agent shall pay to Continental 64.71% and to
Pacific 35.29% of 5% of the income earned by the Escrow Account during such
calendar quarter.
6. Termination. Escrow Agent shall maintain the Escrow
Account and hold the Escrow Assets in escrow pursuant to this Escrow
Agreement until receipt of written notice of termination from each of
Continental, Pacific, Fibreboard Corporation, Class Counsel, and, after
appointment of the Trustees, the Trustees.
-6-<PAGE>
<PAGE>
7. Escrow Agent Qualifications. Escrow Agent shall at all
times be (i) a bank, savings and loan association or trust company in good
standing, organized and doing business under the laws of the United States
or a state of the United States or a United States branch of a foreign bank,
(ii) have combined capital and surplus of not less than Five Hundred Million
Dollars ($500,000,000) and be well capitalized or adequately capitalized (as
such terms are defined in applicable federal regulations) and (iii) be
authorized under the laws governing its organization to exercise corporate
trust powers and be authorized under such laws to enter into and perform
this Escrow Agreement. If Escrow Agent shall at any time cease to have the
foregoing qualifications, Escrow Agent shall give notice of resignation to
Continental and Pacific as provided in Section 10 hereof and Continental and
Pacific agree to thereupon promptly appoint a qualified successor escrow
agent in accordance with Section 11.
8. Limitations on Liability of Escrow Agent.
(a) Escrow Agent may act upon any written notice,
certificate, instrument, request, waiver, consent, paper or other document
that Escrow Agent in good faith reasonably believes to be genuine and to
have been made, sent, signed, prescribed, or presented by the proper person
or persons acting on behalf of the parties named in paragraph 5(a) and 5(b).
Escrow Agent shall not be liable for any action taken or omitted by it in
connection with the performance of its duties and obligations hereunder,
-7-<PAGE>
<PAGE>
except for its own gross negligence or willful misconduct. Escrow Agent
shall be under no obligation to institute or defend any action, suit or
legal proceeding in connection with this escrow or this Escrow Agreement
unless it is indemnified to its satisfaction by the party or parties who
desire that it undertake such action.
(b) Escrow Agent shall be under no obligation or
liability for failure to inform Continental, Pacific, Fibreboard Corporation
or Class Counsel regarding any transaction or facts within Escrow Agent's
knowledge, even though the same may concern the matters described herein,
provided they do not prevent or interfere with Escrow Agent's compliance
with this Escrow Agreement, nor shall Escrow Agent be liable for the
sufficiency, correctness or genuineness as to form, manner of execution or
validity of any instrument deposited, nor as to identity, authority, or
rights of any person executing the same, except as above provided.
(c) Should Escrow Agent during or after the term of
the escrow receive or become aware of any conflicting demands or claims with
respect to the Escrow Account, Escrow Assets or the rights of any of the
parties hereto, Fibreboard Corporation or Class Counsel, Escrow Agent shall
have the right to discontinue any or all further acts on its part until such
conflict is resolved to its satisfaction, and Escrow Agent shall have the
further right to commence or defend any action or proceeding for the
determination of such conflict. In the event Escrow Agent should file suit
in interpleader and deposit the Escrow Assets in dispute in a court of
competent jurisdiction, it shall be fully released and discharged from all
further obligations under this Escrow Agreement with respect to such Escrow
-8-<PAGE>
<PAGE>
Assets (but such release and discharge shall not relieve Escrow Agent from
any liability incurred prior to such event).
(d) Escrow Agent may consult with legal counsel
satisfactory to it in connection with any dispute, the construction of any
provision of this Escrow Agreement or the duties and obligations of Escrow
Agent under this Escrow Agreement.
9. Accounts and Release of Escrow Agent. (a) The
retention and distribution of the Escrow Assets in accordance with the terms
and provisions of this Escrow Agreement shall fully and completely release
Escrow Agent from any obligations or liabilities assumed under this Escrow
Agreement with respect to the Escrow Assets. Nothing in this Escrow
Agreement shall be interpreted as depriving the Escrow Agent, Continental,
Pacific, Fibreboard Corporation or Class Counsel of the right to have a
judicial settlement of the Escrow Agent's accounts, and upon any proceeding
for a judicial settlement of the Escrow Agent's accounts or for instructions
the only necessary parties thereto will be the Escrow Agent, Continental,
Pacific, Fibreboard Corporation and Class Counsel.
(b) The Escrow Agent shall keep accurate and detailed
records of all investments, receipts, disbursements, and all other
transactions required to be done, including such specific records as shall
be agreed upon in writing between Continental, Pacific and the Escrow Agent.
Within ten (10) days following the close of each calendar month, the Escrow
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<PAGE>
Agent shall deliver to Continental, Pacific, Fibreboard Corporation and
Class Counsel a written account of its administration of the escrow during
such month and cumulatively for the period from the date hereof through the
end of such month, setting forth all investments, receipts, disbursements
and other transactions effected by it, including a description of all
investments purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or received being shown sepa-
rately), showing all cash, securities and other property held in the Escrow
Account at the end of such month and the book and fair market value of all
Escrow Assets.
(c) All accounts, books and records maintained
pursuant to this Section shall be opened to inspection and audit at all
reasonable times by Continental, Pacific, Fibreboard Corporation and Class
Counsel and their respective representatives.
(d) The fair market value of the Escrow Assets shall
be determined by the Escrow Agent whenever required pursuant to the Escrow
Agreement, but in any event not less than monthly. The Escrow Agent may
base such determination upon such sources of information as it may deem
reliable including, but not limited to, information reported in (i)
newspapers of general circulation, (ii), standard financial periodicals or
publications, (iii) statistical and valuation services, (iv) the records of
securities exchanges or brokerage firms deemed by the Escrow Agent to be
reliable, or any combination thereof. The Escrow Agent shall promptly
inform Continental, Pacific, Fibreboard Corporation and Class Counsel of any
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<PAGE>
such valuation and provide them with complete copies thereof.
10. Resignation and Removal of Escrow Agent. Escrow Agent
may be removed by the joint action of Continental and Pacific, with or
without cause, at any time upon 15 days' prior written notice to Escrow
Agent, which notice may be waived by Escrow Agent. Escrow Agent may resign
at any time upon 60 days' prior written notice to Continental, Pacific,
Fibreboard Corporation and Class Counsel.
Notwithstanding any resignation or removal of Escrow Agent
pursuant to Section 7 hereof or this Section 10, such resignation or removal
shall not be effective and Escrow Agent shall continue to serve in its
capacity as Escrow Agent until (i) a successor escrow agent is appointed in
accordance with the provisions of Section 11 hereof and has accepted such
appointment and (ii) the Escrow Assets together with such records and
documents as may be reasonably required to enable the successor escrow agent
to properly administer the Escrow Fund have been transferred to and received
by such successor escrow agent. Continental and Pacific shall promptly take
the necessary action to appoint a successor escrow agent in accordance with
the provisions of Section 11 hereof.
11. Appointment of Successor Escrow Agent. If at any time
Escrow Agent shall resign, be removed or otherwise become incapable of
acting as Escrow Agent pursuant to this Escrow Agreement, or if at any time
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<PAGE>
a vacancy shall occur in the office of Escrow Agent for any other cause, a
successor Escrow Agent that meets the qualifications set forth in Section 7
shall be appointed jointly by Continental and Pacific by a written
instrument delivered to the successor Escrow Agent with a copy delivered to
the Escrow Agent. If no successor Escrow Agent is appointed (i) within 30
days after the time Escrow Agent becomes incapable of acting or a vacancy
occurred in the office of Escrow Agent or (ii) within 60 days of Escrow
Agent's giving notice of resignation, any party hereto may petition a court
of competent jurisdiction for an appointment of a successor Escrow Agent.
Upon the appointment and acceptance of any successor Escrow Agent hereunder,
Escrow Agent shall transfer the Escrow Assets to its successor. Upon
receipt by the successor Escrow Agent of the Escrow Assets, Escrow Agent
shall be discharged from any continuing duties or obligations under this
Escrow Agreement, but such discharge shall not relieve Escrow Agent from any
liability incurred prior to such event, and the successor Escrow Agent shall
be vested with all rights, powers, duties and obligations of Escrow Agent
under this Agreement.
12. IRS Filings and Examinations. (a) For federal income
tax purposes, the parties expect that Continental will be allocated 64.71%
of the income, gains and deductions of the Escrow Fund and that Pacific will
be allocated 35.29% of the income, gains and deductions of the Escrow Fund
and that Continental and Pacific will each be required to include those
items of taxable income, gains and deductions of the Escrow Fund which are
attributable to them in computing their separate taxable income and this
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<PAGE>
Escrow Agreement shall be construed accordingly. Notwithstanding the
foregoing, Escrow Agent shall timely file such tax and other returns and
statements for the Escrow Account (collectively "Returns"), and shall
provide for and pay such taxes, as are required to comply with applicable
provisions of the Internal Revenue Code of 1986, as amended, and of any
state or local law and the regulations promulgated thereunder. The Escrow
Agent shall provide all completed Returns to Continental and Pacific at
least 10 days in advance of the due date for such Returns and shall obtain
the consent of Continental and Pacific to all Returns before they are filed.
The Escrow Agent is authorized to employ such agents and independent
contractors as it deems necessary in its best judgment in order to perform
the federal and state tax reporting required by this paragraph. Continental
and Pacific will advise the Escrow Agent of the party who will sign any
required federal and state tax returns on behalf of the Escrow Account.
(b) The Escrow Agent agrees that Continental and
Pacific shall have the sole and exclusive responsibility for handling any
income tax examinations relating to the Escrow Fund. All costs and expenses
of any income tax examination relating to potential tax liability of the
Escrow Fund, including the expense of defending any adjustments or proposed
adjustments, shall be charged to the Escrow Fund.
(c) Escrow Agent agrees that it will inform
Continental and Pacific promptly of all questions raised by agents
conducting an income tax examination of the Escrow Account and shall
cooperate with accountants, tax advisers and counsel retained by Continental
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<PAGE>
and Pacific in working with the income tax agents and in responding to any
questions and proposed tax adjustments.
13. Notices. Any notice or other communication hereunder
must be given in writing and either (a) delivered in person, (b) transmitted
by telex, telefax or other telecopy mechanism, provided that any notice so
given is also mailed as provided in clause (c), or (c) mailed, postage
prepaid, receipt requested, as follows:
If to Continental, addressed to:
Continental Casualty Co.
Specialty Claims Office, 12th Floor
50 Fremont Street
San Francisco, CA 94105
Attention: Claim Manager
Telecopier: (415) 512-4899
and
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd Street
New York, New York 10019
Attention: Herbert M. Wachtell, Esq.
Telecopier: (212) 403-2000
and
CARROLL, BURDICK & McDONOUGH
44 Montgomery Street, Suite 400
San Francisco, CA 94104
Attention: Rodney L. Eshelman, Esq.
Telecopier: (415) 989-0932
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<PAGE>
If to Pacific, addressed to:
Pacific Indemnity Company
Chubb & Son Inc.
15 Mountain View Road
P.O. Box 1615
Warren, NJ 07061-1615
Attention: Malcolm B. Burton
Telecopier: (908) 580-3030
and
WHITE & CASE
1155 Avenue of the Americas
New York, NY 10036
Attention: Paul J. Bschorr, Esq.
Telecopier: (212) 354-8113
If to Fibreboard, addressed to:
FIBREBOARD CORPORATION
2121 North California Blvd.
Walnut Creek, CA 94596
Attention: Michael R. Douglas
Senior Vice President and
General Counsel
Telecopier: (510) 274-0714
and
BROBECK, PHLEGER & HARRISON
Spear Street Tower
One Market Plaza
San Francisco, CA 94105
Attention: Stephen M. Snyder, Esq.
Telecopier: (415) 442-1020
If to the Class Counsel, addressed to:
CAPLIN & DRYSDALE, CHARTERED
399 Park Avenue
New York, New York 10022
Attention: Elihu Inselbuch
Telecopier: (212) 644-6755
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<PAGE>
If to Escrow Agent, addressed to:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Joseph Cahill
Telecopier: (312) 407-1708
or to such other address or to such other person as either party shall have
last designated by such notice to the other party. Each such notice or
other communication shall be effective (i) if given by telecommunication,
when transmitted to the applicable number so specified in (or pursuant to)
this Section 13 and an appropriate answer back is received, (ii) if given by
mail, three business days after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or (iii) if given
by any other means, when actually delivered at such address.
14. Amendments; Waivers. This Escrow Agreement may be
amended only by (i) an agreement in writing executed by Escrow Agent,
Continental, Pacific, Fibreboard Corporation and Class Counsel, or (ii)
pursuant to a Court Order. No waiver of any provisions nor consent to any
exception to the terms of this Escrow Agreement shall be effective unless in
writing and signed by the party to be bound, and then only to the specific
purpose, extent and instance as so provided.
15. Counterparts. This Escrow Agreement and any other
agreement (or document) delivered pursuant hereto may be executed in one or
more counterparts and by different parties in separate counterparts. All of
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<PAGE>
such counterparts shall constitute one and the same agreement and shall
become effective when one or more counterparts of this Escrow Agreement have
been signed by each party, and delivered to the other parties.
16. Assignment. Neither this Escrow Agreement nor any
rights or obligations under it are assignable.
17. Governing Law. This Escrow Agreement and the legal
relations among the parties shall be governed by and construed in accordance
with the laws of the State of Illinois applicable to contracts made and
performed in such state without regard to conflicts of law doctrines, except
to the extent that certain matters are preempted by federal law or are gov-
erned by the law of the jurisdiction of organization of the respective
parties.
18. Integration. This Escrow Agreement constitutes the
entire agreement and understanding of Continental, Pacific, Fibreboard
Corporation and Class Counsel on the one hand and Escrow Agent on the other
with respect to the subject matter of this Escrow Agreement and supersedes
all prior agreements and understandings with respect thereto.
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<PAGE>
19. Severability. If any provision of this Escrow
Agreement is held invalid by any court, governmental agency or regulatory
body, the other provisions shall remain in full force and effect.
20. Parties in Interest. This Escrow Agreement shall be
binding upon and inure to the benefit of each party, Fibreboard Corporation
and Class Counsel, and nothing in this Escrow Agreement, express or implied,
is intended to confer upon any other person any rights or remedies of any
nature whatsoever by, under or by reason of this Escrow Agreement. Nothing
in this Escrow Agreement is intended to relieve or discharge the obligation
of any third person to, or to confer any right of subrogation or action over
against, any party to this Escrow Agreement or Fibreboard Corporation or
Class Counsel or Class Counsel.
21. Headings. The descriptive headings of the Sections of
this Escrow Agreement are for convenience only and do not constitute a part
of this Escrow Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on the day and year first above written.
CONTINENTAL CASUALTY
COMPANY
By LAURENS F. TERRY
--------------------------
Title Vice President
--------------------
PACIFIC INDEMNITY
CORPORATION
By JOHN J. DEGNAN
--------------------------
Title Senior Vice President
--------------------
THE FIRST NATIONAL BANK
OF CHICAGO
By RICHARD D. MANELLA
--------------------------
Title Vice President
--------------------
AGREED TO:
FIBREBOARD CORPORATION
By MICHAEL R. DOUGLAS
_____________________________________________
Title Sr. Vice President and General Counsel
________________________________________
CLASS COUNSEL
By JOSEPH RICE
_______________________________
Joseph Rice, Esq.
By JOSEPH COX
_______________________________
Joseph Cox, Esq.
By HARRY WARTNICK 12/23/93
_______________________________
Harry Wartnick, Esq.
By STEVEN KAZAN 12/23/93
_______________________________
Steven Kazan, Esq.
-19-
<PAGE>
EXHIBIT 13.01
CNA FINANCIAL CORPORATION
1993 A N N U A L R E P O R T
CNA
<PAGE>
<PAGE>
CNA Financial Corporation is the parent company of the CNA
Insurance Companies, which rank among the 10 largest
insurance organizations in the United States, as measured
by premium income.
As a multiple-line insurer, CNA underwrites property and
casualty coverages; life, accident and health insurance;
fidelity and surety products; excess and surplus lines;
reinsurance; and pension and annuity business. CNA serves a
wide spectrum of insureds, including individuals; small,
medium and large businesses; associations; professionals
and groups. CNA's property/casualty and life/health
insurance products are marketed primarily through
independent agents and brokers.
CNA Financial Corporation, with 1993 assets of $41.9
billion and stockholders' equity of $5.4 billion, was
formed in 1967 by Continental Casualty Company, which was
incorporated in 1897, and Continental Assurance Company,
incorporated in 1911. In 1975, Continental Assurance became
a wholly owned subsidiary of Continental Casualty. CNA
Financial Corporation's stock is traded on the New York
Stock Exchange and, as of 12/31/93, is 83 percent owned by
Loews Corporation.
<PAGE>
<PAGE>
1993 C O N T E N T S
2 Financial Highlights
4 Letter From CNA Financial Corporation
Chairman Edward J. Noha
6 Letter From CNA Insurance Companies
Chairman and Chief Executive Officer
Dennis H. Chookaszian
11 Financial Section Contents
12 Management's Discussion and Analysis
of Financial Condition and Results of
Operations
22 Financial Statements
54 Independent Auditors' Report
55 Common Stock Information
56 Corporate Directors and Officers
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 1993 1992 1991 1990 1989
(In millions of dollars,
except per share data)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Revenues $11,010.8 $10,793.4 $11,131.4 $9,944.4 $9,084.0
-------- -------- -------- ------- -------
Income (loss) before income tax 93.4 (1,375.0) 555.9 101.0 319.4
Net income (loss) excluding
net realized investment gains/losses
and accounting changes:
Property/Casualty (266.6) (928.4) 289.7 324.5 400.8
Life 43.5 52.0 60.4 66.7 57.1
Other (28.6) (21.4) (22.8) 4.9 9.7
--------- -------- -------- ------- -------
Net operating income (loss) (251.7) (897.8) 327.3 396.1 467.6
Net realized investment gains (losses) 519.2 235.3 285.2 (29.6) 145.9
Accounting changes - 331.9 - - -
--------- -------- -------- ------- -------
Net income (loss) $267.5 $(330.6) $612.5 $366.5 $613.5
========================================================
EARNINGS PER SHARE
SEE NOTE B TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Net income (loss) excluding net
realized investment gains/losses
and accounting changes $(4.14) $(14.60) $5.19 $6.25 $7.37
Net realized investment gains (losses) 8.40 3.81 4.61 (.48) 2.36
Accounting changes - 5.37 - - -
-------- -------- -------- ------- -------
Net income (loss) $4.26 $(5.42) $9.80 $5.77 $9.73
========================================================
FINANCIAL POSITION
Assets $41,912.3 $39,743.9 $39,161.7 $34,712.9 $30,882.5
Debt 915.3 415.0 437.1 439.5 243.1
Stockholders' equity 5,381.1 4,789.2 5,108.6 4,490.0 4,153.8
Book value per common share 84.65 75.07 80.24 70.23 64.74
</TABLE>
2
<PAGE>
<PAGE>
This page of CNA Financial Corporation's annual report has three 3-D line
graphs which illustrate the trend in revenues, assets and stockholders' equity
from 1983 through 1993.
The table below shows the data points used in those graphs.
<TABLE>
<CAPTION>
CNA FINANCIAL CORPORATION (1983-1993)
($ In Billions)
------------------------------------------------------------------------
| Measurement Period | | |Stockholders'|
| (Fiscal Year Covered) | Revenues | Assets | Equity |
|------------------------------------------------------------------------|
<S> <C> <C> <C> |
| | | | |
|FYE 12/31/83 ..................| $ 3.2 | $10.4 | $1.4 |
|FYE 12/31/84...................| $ 3.7 | $12.4 | $1.5 |
|FYE 12/31/85...................| $ 4.7 | $15.4 | $2.1 |
|FYE 12/31/86...................| $ 6.5 | $18.2 | $2.7 |
|FYE 12/31/87...................| $ 6.9 | $21.6 | $3.1 |
|FYE 12/31/88...................| $ 8.3 | $25.9 | $3.6 |
|FYE 12/31/89...................| $ 9.1 | $30.9 | $4.2 |
|FYE 12/31/90...................| $ 9.9 | $34.7 | $4.5 |
|FYE 12/31/91...................| $11.1 | $39.2 | $5.1 |
|FYE 12/31/92...................| $10.8 | $39.7 | $4.8 |
|FYE 12/31/93...................| $11.0 | $41.9 | $5.4 |
| | | | |
------------------------------------------------------------------------
</TABLE>
3<PAGE>
<PAGE>
A LETTER TO OUR SHAREHOLDERS
From CNA Financial Corporation
Chairman Edward J. Noha
CNA Financial Corporation reported improved earnings in 1993, although, like
much of the insurance industry, results were constrained by a wide range of
pressures on profitability. These included the prolonged pricing downcycle
in commercial property/casualty lines, suppression of premium rates in some
regulatory jurisdictions and low interest rates that inhibit investment
yields.
Nevertheless, CNA has responded forcefully to the challenges of a difficult
operating environment and remains one of the largest, strongest and most
stable insurance organizations in the United States. In 1993, this strength
was again reflected in CNA's substantial surplus and reserves, conservative
investment portfolio and low debt position in relation to total capital.
Maintaining a sound financial foundation continues to rank among
management's highest priorities.
CNA took a major step in 1993 toward further assuring its long-term
financial integrity by achieving a global settlement of longstanding
asbestos-related litigation with Fibreboard Corporation, a former asbestos
manufacturer. The settlement is described in detail in Note J on page 43 of
this report. A $500 million addition to claim reserves, associated with the
Fibreboard settlement, resulted in an after-tax charge of $325 million.
Because of the agreement, however, we have substantially reduced
uncertainties concerning CNA's future asbestos-related liabilities.
The property/casualty industry's after-tax earnings also increased in 1993,
although much of this growth was due to capital gains that took advantage of
strong stock and bond markets. The industry's investment income declined in
1993 for only the third time in 50 years, falling by an estimated 6.2
percent. While the industry's insured disaster losses totaled more than $6
billion in 1993, the third highest in history, they were not comparable to
the record $23 billion set in 1992. Preliminary estimates of the cost to
insurers of the January 1994 California earthquake have been put at more
than $2.5 billion and the cost of winter storms at more than $800 million.
4
<PAGE>
<PAGE>
Results in the life and health insurance industries were generally
satisfactory in 1993. As many life insurers have focused on upgrading the
quality of their invested assets over the past few years, widespread public
concerns about company solvency have largely diminished. In the life
insurance marketplace, pricing also has become more disciplined,
particularly in setting rates for interest-sensitive products.
Considerable uncertainty confronts the health insurance industry, pending
the outcome of the struggle to reform the nation's health care system. The
escalation of medical costs slowed in 1993, from 6.3 percent in the first
half of the year to 4.4 percent in the second half. Much of this reduction
can reasonably be attributed to cost containment efforts in the private
sector.
Two new members joined CNA Financial's Board of Directors in 1993:
Antoinette Cook Bush, an attorney with a Washington, D.C., law firm and
former counsel to the U.S. Senate Committee on Commerce, Science and
Transportation, and Marvin Zonis, a professor of international political
economy at the University of Chicago's Graduate School of Business and head
of his own consulting firm. The board accepted the resignation of Walter
Mondale, who departed to become U.S. ambassador to Japan. It is with deep
regret that we report the death of John E. Stipp, who had served as a
director of CNA Financial Corporation's Board for 27 years and also served
on the boards of the principal subsidiaries of the CNA Insurance Companies
for an additional 16 years.
In today's volatile insurance climate, we believe CNA's commitment to a
strong financial base and a conservative investment strategy is increasingly
important. In 1993, CNA again demonstrated that it has the resources and the
ability to live up to that commitment.
Sincerely,
E. J. NOHA
Edward J. Noha
Chairman of the Board
CNA Financial Corporation
5<PAGE>
<PAGE>
A LETTER TO OUR SHAREHOLDERS
From CNA Insurance Companies
Chairman and Chief Executive Officer Dennis H. Chookaszian
For the second year in a row, CNA's insurance operations were adversely
affected by a substantial addition to reserves for asbestos-related bodily
injury claims. Our results also reflect the continuation of inadequate
pricing in the commercial property/casualty marketplace. However, realized
investment gains offset these effects and produced a positive return for the
year.
In 1993, CNA Financial reported net income of $267.5 million, or $4.26 per
share, compared with a $330.6 million net loss, or $5.42 per share, in 1992.
Excluding net realized investment gains, CNA Financial reported a 1993 net
loss of $251.7 million, or $4.14 per share, compared with a net loss of
$897.8 million, or $14.60 per share, in 1992. Net realized investment gains
for 1993 were $519.2 million, compared with $235.3 million in 1992.
During the third quarter of 1993, CNA added $500 million to the claim
reserves of Continental Casualty Company, which resulted in a $325 million
charge against after-tax earnings. This action was taken in recognition of
Continental Casualty entering into a global agreement to settle
asbestos-related bodily injury claims against Fibreboard Corporation.
Throughout 1993, CNA engaged in complex negotiations to reach this
agreement. On December 23, CNA, Pacific Indemnity, Fibreboard and the
plaintiffs signed the global settlement, completing the transaction agreed
to in principle in August. The agreement was submitted to the court in
January 1994. Final approval by the court will conclude long and costly
litigation stemming from a general liability policy written by Continental
Casualty in the late 1950s.
6
The agreement among all parties has eliminated a significant element of
uncertainty. CNA can now focus even more management attention and resources
on building the long-term value of our businesses. We believe with current
reserves, including the addition this year, Continental Casualty has
sufficient reserves to cover all of its liability associated with
asbestos-related bodily injury claims against Fibreboard. (See Note J to the
following financial statements for a detailed discussion of the Fibreboard
settlement.)
While our 1993 results were affected most significantly by the Fibreboard
settlement, they also reflect other profitability pressures. The commercial
property/casualty insurance marketplace remains in one of the longest
periods of inadequate pricing on record. Low investment yields due to
declining interest rates further depressed earnings.
In spite of these adverse developments, CNA remains strong and
well-capitalized. The statutory surplus of Continental Casualty is $3.6
billion, one of the largest in the industry. The statutory surplus of CNA's
life insurance subsidiaries is more than $1 billion.
<PAGE>
<PAGE>
During the fourth quarter, we strengthened our financial base through a
substantial debt issue. CNA Financial issued $500 million of debt to take
advantage of favorable interest rates in the capital markets. Before the
issuance, we had a debt-to-capital ratio of about 8 percent. Even with the
new debt issue, our debt-to-capital ratio of approximately 16 percent is low
by industry standards. A total of $475 million was added to Continental
Casualty's surplus, expanding our cushion for unexpected losses and
increasing our capacity for growth.
CNA's surplus position also continues to be supported by an investment
portfolio that reflects management's conservative financial posture. Less
than 5 percent of CNA assets held at the end of 1993 were in high-yield
bonds, commercial mortgages and investment real estate. This is far below
the industry average.
In addition to bolstering our financial strength and substantially resolving
the uncertainties over the Fibreboard litigation, CNA in 1993 launched a set
of initiatives to respond to fundamental changes in our operating
environment. Our markets have gradually fragmented into
7
many niches with unique characteristics and needs. Consumers expect
customized service and lower costs. Our competitors have become more
numerous and diverse.
Success in this environment requires insurance companies to become much more
nimble, efficient and customer-oriented. In recognition of these changes,
CNA management is pushing authority and accountability down in the
organization and giving employees more flexibility to do their jobs. We are
emphasizing interdisciplinary teams to speed decision-making and customer
response. We have developed Strategic Business Units to increase management
accountability and customer focus in each of our businesses. We have also
begun to re-engineer many of our business processes, and we continue to
invest in new automation tools and training. Together, these initiatives
will help CNA remain successful throughout the 1990s and beyond.
Along with fundamental change in our operating style, CNA undertook a number
of actions to improve our position in existing businesses, to exploit
emerging opportunities and to increase the long-term value of our total
operation.
We continued to emphasize strong business relationships with the independent
agents and brokers who sell our products. In a rapidly changing,
increasingly competitive environment, strong business partners are more
important than ever. Our preferred agency programs -- the High Performance
Agency program, the Life Select Agency program and the Supervising General
Agency program -- remain among the strongest in the industry. Our producer
advisory councils in property/casualty, life/health and specialty lines
provide forums for the candid exchange of views necessary for partnership
and mutual success.
<PAGE>
<PAGE>
CNA established new marketing programs and pursued a number of opportunities
in industry-specific insurance programs, professional liability,
environmental remediation, financial institution insurance, catastrophe
reinsurance and excess workers' compensation insurance. CNA's financial
strength, expertise and reputation for market stability continue to give us
a competitive position in the more specialized lines of property/casualty
insurance. To improve our position further,
8
we have formed a number of strategic alliances with underwriting and
distribution partners whose skills complement ours.
CNA made major progress in upgrading our capabilities to manage the cost of
claims. We trained new cost management consultants, formed a new cost
management division and developed an integrated process to manage an
insured's total loss costs. We also doubled the size of our Special
Investigations Unit, strengthening CNA's leadership in the control of
insurance fraud. Not only do customers demand these activities, but cost
management is an increasingly important condition of a healthy insurance
marketplace. In too many states and lines of insurance, we have seen
out-of-control claims costs lead directly to onerous regulation and market
failure.
CNA continued to develop alternative market capabilities in response to
greater customer interest in retaining risk and purchasing unbundled
services. Through our service company, ServCo, we are positioning ourselves
among the most competitive and flexible providers of unbundled services for
claims, loss control and administrative functions.
In personal lines, CNA put in place the foundations of a strategy to improve
our position in the preferred risk segment of the market. Product and
processing enhancements will enable us to respond more flexibly to customer
needs. Our service organization is becoming even more customer-oriented
through new service teams, and we are further increasing our operating
efficiencies through redesign of business processes and improved
agency-company automation. These actions set a course to a stable, growing
and profitable personal lines business.
In health insurance, many uncertainties surround the marketplace because of
legislative proposals for health care reform. However, it is clear that
reform momentum is accelerating the market-driven trend toward managed care.
CNA is well positioned to pursue a range of opportunities in a managed care
environment. Our group health business has access to competitive managed
care networks through a national alliance with other insurers. Our strategy
of integrating contracted services rather than owning managed care
capabilities gives us
9<PAGE>
<PAGE>
greater flexibility in a rapidly evolving marketplace. In addition, CNA will
participate indirectly in the new health care environment through
reinsurance of health plans and managed care liability insurance.
We continued our grassroots activities and other lobbying to influence the
regulatory and legislative climate for insurance. In a time of increasing
political pressure, it is essential for CNA to promote informed discussion
of insurance issues, and, when appropriate, to work with agents,
policyholders and employees to mobilize voters in support of sensible
choices. In 1993, CNA engaged in selected state activities involving
workers' compensation, personal auto and group health insurance. We were
also active at the national level on health care and pollution liability
reform.
The past year was not an easy one for CNA. However, our financial results do
not reflect the solid progress we made on many fronts. In 1993, we put a
major source of financial uncertainty behind us. We launched changes in our
operating style that will help us serve customers more flexibly, quickly and
efficiently. In each of our businesses, we took actions to sharpen our
competitive edge.
CNA continues to rank among the nation's premier insurance organizations.
Our balance sheet is strong, our strategies are sound and our people are
among the best in the industry. In the more competitive, constantly changing
insurance environment, I am confident that CNA is well positioned for
continued success.
Sincerely,
DENNIS CHOOKASZIAN
Dennis H. Chookaszian
Chairman and Chief Executive Officer
CNA Insurance Companies
10<PAGE>
<PAGE>
1993 FINANCIAL SECTION
C O N T E N T S
12 Management's Discussion and Analysis
of Financial Condition and Results of
Operations
22 Consolidated Balance Sheet
23 Statement of Consolidated Operations
24 Statement of Consolidated Stockholders' Equity
25 Statement of Consolidated Cash Flows
26 Notes to Consolidated Financial Statements
54 Independent Auditors' Report
55 Common Stock Information
56 Corporate Directors and Officers
11<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements and related notes found on pages 22 to
53, which contain additional information helpful in evaluating operating
results and financial condition.
RESULTS OF OPERATIONS:
The following chart summarizes key components of operating results for
each of the last three years.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS
YEAR ENDED DECEMBER 31 1993 1992 1991
(In millions of dollars)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING SUMMARY (EXCLUDING REALIZED INVESTMENT
GAINS/LOSSES AND ACCOUNTING CHANGES):
Revenues:
Premiums............................................................................. $ 8,688.8 $ 8,768.0 $ 8,946.4
Net investment income................................................................ 1,314.3 1,508.8 1,607.8
Other................................................................................ 191.6 149.8 113.8
-------- -------- --------
10,194.7 10,426.6 10,668.0
Benefits and expenses................................................................. 10,904.3 12,156.3 10,555.4
-------- -------- --------
Income (loss) before income tax...................................................... (709.6) (1,729.7) 112.6
Income tax benefit ................................................................... 457.9 831.9 214.7
-------- -------- --------
Net operating income (loss) (excluding realized investment gains/losses)............. $ (251.7) $ (897.8) $ 327.3
======== ======== ========
<PAGE>
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS
YEAR ENDED DECEMBER 31 1993 1992 1991
(In millions of dollars)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SUPPLEMENTAL FINANCIAL DATA:
Net operating income (loss) by group:
Property/Casualty ................................................................... $ (266.6) $ (928.4) $ 289.7
Life ................................................................................ 43.5 52.0 60.4
Other ............................................................................... (28.6) (21.4) (22.8)
-------- -------- --------
(251.7) (897.8) 327.3
-------- -------- --------
Net realized investment gains (losses) by group:
Property/Casualty.................................................................... 435.8 175.9 300.0
Life................................................................................. 72.6 53.2 (14.9)
Other................................................................................ 10.8 6.2 .1
-------- -------- --------
519.2 235.3 285.2
-------- -------- --------
Accounting changes by group:
Property/Casualty.................................................................... - 307.9 -
Life................................................................................. - 24.0 -
-------- -------- --------
- 331.9 -
-------- -------- --------
Net income (loss) by group:
Property/Casualty ................................................................... 169.2 (444.6) 589.7
Life ................................................................................ 116.1 129.2 45.5
Other ............................................................................... (17.8) (15.2) (22.7)
-------- -------- --------
$ 267.5 $ (330.6) $ 612.5
===============================================================================================================================
</TABLE>
Overview
- --------
For the year ended December 31, 1993, CNA reported net income of $267.5
million ($4.26 per share) compared with a $330.6 million net loss ($5.42 per
share) in 1992, and net income of $612.5 million ($9.80 per share) in 1991.
Excluding net realized investment gains, CNA reported a net operating loss
of $251.7 million ($4.14 per share) compared with a net loss of $897.8
million ($14.60 per share) in 1992.
In each of the last two years, results were adversely affected by
substantial additions to reserves for asbestos-related bodily injury claims.
The 1993 operating loss reflects a third quarter $500 million addition to
Continental Casualty Company's (Casualty) claim reserves, which resulted in
a $325 million charge against after-tax earnings, or $5.26 per share,
against CNA's net income. In 1992, Casualty also increased its claim
reserves with respect to asbestos-related bodily injury cases by $1.5
billion, resulting in an after-tax charge of $990 million, or $16.02 per
share.
These reserving actions were taken in recognition of Casualty's
litigation with Fibreboard Corporation (Fibreboard), a former asbestos
manufacturer. In February 1993, CNA reported that Casualty intended to
discuss a global agreement to settle third party asbestos-related
12<PAGE>
<PAGE>
bodily injury claims with Fibreboard. An agreement in principle was reached
with Fibreboard, Pacific Indemnity Company (Pacific) (a subsidiary of Chubb
Corporation) and a negotiating committee of asbestos claimant attorneys, in
August 1993, and was executed in December 1993.
CNA worked aggressively throughout the year with all involved parties
to reach this settlement. Assuming final court approval, the Fibreboard
agreement removes a major source of financial uncertainty for CNA and
enables management to focus even more attention and resources on
strengthening the economic value of CNA's businesses. No material reserve
increases are anticipated to fulfill CNA's obligations in regard to
Fibreboard liabilities. See Note J to the Consolidated Financial Statements
for a further discussion of Fibreboard.
While CNA's 1993 and 1992 results were affected most significantly by
the Fibreboard litigation, they also reflect the impact of serious external
pressures on profitability throughout the insurance industry. Foremost
among these are the longstanding cycle of inadequate pricing in
property/casualty commercial lines and low investment yields due to
declining interest rates. In addition, complex and costly litigation has
been continuing, fueled by the tendency of the courts to interpret insurance
contracts beyond their stated intent.
CNA's commercial lines remain in a downcycle that has lasted over
seven years and has seriously depressed profitability. The Company cannot
predict when the current negative cycle will turn. The current phase of the
downcycle has been characterized by a difficult pricing environment caused
by strong market competitiveness, a trend toward alternative risk mechanisms
such as self-insurance, and regulatory constraints on adequate premium
rates, especially in the workers' compensation line of business.
Profitability for the life segment remains stable, although
negatively affected by intense competition, high health care costs and weak
investment yields. Increasing costs of health care have resulted in a
continued market shift away from traditional forms of health coverage toward
managed care products. The Federal Government's initiative to control
health care costs and provide universal access to quality health care was
presented in 1993. The impact of potential health care reform cannot be
determined at this time. Such reform may impact both individual and group
accident and health, workers' compensation, automobile liability and medical
malpractice business of CNA. CNA has urged a meaningful role for the
private sector in any proposed plan. The present health care system is
clearly in need of reform, and CNA has emphasized the competitive strengths
of the insurance industry must be an integral part of a workable solution.
CNA's ability to compete in this market will be increasingly dependent on
its ability to control costs through managed care techniques, innovation,
and quality customer-focused service.
While CNA's strong financial position continues to represent a major
competitive advantage, CNA continues to take a number of initiatives to
respond to the many uncertainties and changes impacting the insurance
environment. One of these has been to continue to focus on the risk
characteristics and premium rates in commercial lines. CNA will continue to
seek business in lines where it has a sizable market share, substantial
experience, and foresees clear profit potential over the long term. The
emphasis is on reasonable rates rather than volume growth.
<PAGE>
<PAGE>
One of CNA's primary goals has been to provide more efficient and
responsive quality service to our customers. These actions include working
closely with insureds to reduce claims costs through loss control and fraud
prevention; providing professional services to self-insured accounts and
other alternative markets; implementing medical and workers' compensation
cost management programs; reinforcing business partnerships with the
independent agents who represent us and equipping them with new or upgraded
products tailored to specific customer needs.
Additionally, CNA has increased the flexibility, productivity, and customer
focus of its employee force through less centralized decision-making and
more widespread use of automation tools.
CNA also continues to devote time and effort to legislative concerns in the
interests of a more equitable and stable insurance marketing climate. It
has enjoyed some success in enlisting support for workers' compensation
reform in several states and opposing unnecessary restrictions on the
insurance industry in others.
13
Consolidated Results
- --------------------
CNA's consolidated revenues (including realized investment gains) in
1993 were $11.011 billion, an increase of 2.0% from the $10.793 billion
reported in 1992 and down 1.1% from the $11.131 billion reported in 1991.
Revenues excluding realized gains were $10.195 billion down 2.2% from 1992
and down 4.4% from 1991. The decrease in operating revenues in both 1993
and 1992 are principally attributable to the implementation of a high
deductible program for large commercial accounts begun in late 1991. For
1993, revenues also reflect a decrease of $194.5 million in investment
income, reflecting lower interest rates and a significant investment in
short-term investments.
For 1993, CNA reported a net operating loss (which excludes net realized
investment gains and accounting changes), of $251.7 million, or $4.14 per
share, compared to a loss of $897.8 million, or $14.60 per share, for the
year 1992 and net operating income of $327.3 million, or $5.19 per share,
for 1991.
Realized investment gains, net of tax, amounted to $519.2 million, or
$8.40 per share in 1993, compared to $235.3 million, or $3.81 per share in
1992 and $285.2 million, or $4.61 per share, in 1991.
<PAGE>
<PAGE>
The components of the realized investment gains are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
REALIZED INVESTMENT GAINS (LOSSES)
YEAR ENDED DECEMBER 31 1993 1992 1991
(In millions of dollars)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturity securities:
U.S. Government and government agencies.............................................. $120.0 $ 93.8 $313.4
Tax exempt........................................................................... 440.6 40.9 50.2
Asset-backed......................................................................... 55.1 108.5 102.4
Taxable.............................................................................. 117.4 29.7 (28.4)
Redeemable preferred stocks.......................................................... 7.7 19.7 3.2
----- ----- -----
Total fixed maturity securities..................................................... 740.8 292.6 440.8
Equity securities..................................................................... 82.5 28.9 72.9
Other................................................................................. (7.2) 45.3 (50.3)
----- ----- -----
Realized investment gains reported in revenues...................................... 816.1 366.8 463.4
Participating policyholders' interest................................................. (13.1) (12.1) (20.1)
Income tax expense.................................................................... (283.8) (119.4) (158.1)
----- ----- -----
Net realized investment gains....................................................... $519.2 $235.3 $285.2
===========================================================================================================================
</TABLE>
CNA's total income tax benefits for 1993 amounted to $174.1 million
compared to $712.5 million and $56.6 million for the same periods in 1992
and 1991, respectively.
CNA's income tax benefits on net operating losses (which exclude net
realized investment gains and accounting changes) amounted to $457.9 million
for 1993, compared to $831.9 million for 1992 and $214.7 million for 1991.
Income tax expense on realized investment gains totaled $283.8 million for
1993, compared with $119.4 million and $158.1 million for 1992 and 1991,
respectively.
On August 10, 1993, President Clinton signed into law the Omnibus Budget
Reconciliation Act of 1993 increasing the corporate tax rate from 34% to
35%, effective retroactively to January 1, 1993. As a result of revaluing
its deferred tax balances at January 1, 1993 to reflect the new tax rate,
CNA recognized a favorable tax benefit of $30 million (or $.49 per share).
Net income for 1993 was $267.5 million, or $4.26 per share, compared
with a loss of $330.6 million, or $5.42 per share, for 1992 and net income
of $612.5 million, or $9.80 per share, in 1991. Included in 1992 net income
were accounting changes related to the discounting of certain workers'
compensation and disability claims, as well as the adoption of Statements of
Financial Accounting Standards on Postretirement Benefits (SFAS 106) and
Accounting for Income Taxes (SFAS 109). The effect of these accounting
changes on 1992 was to decrease the net loss by $312.1 million, or $5.05 per
share. This includes a cumulative effect on prior years of $331.9 million,
or $5.37 per share, and an increase in net operating loss of $19.8 million,
or $.32 per share.
14<PAGE>
<PAGE>
Property/Casualty Operations
- ----------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
PROPERTY/CASUALTY GROUP
YEAR ENDED DECEMBER 31 1993 1992 1991
(In millions of dollars)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING SUMMARY (EXCLUDING REALIZED INVESTMENT
GAINS/LOSSES AND ACCOUNTING CHANGES):
Revenues:
Premiums................................................................................ $6,275.0 $6,353.6 $6,655.3
Net investment income................................................................... 1,059.8 1,224.1 1,282.7
Other................................................................................... 151.8 112.1 87.2
------- ------- -------
7,486.6 7,689.8 8,025.2
Benefits and expenses.................................................................... 8,218.6 9,465.3 7,967.2
------- ------- -------
Income (loss) before income tax......................................................... (732.0) (1,775.5) 58.0
Income tax benefit....................................................................... 465.4 847.1 231.7
------- ------- -------
Net operating income (loss) (excluding realized investment gains/losses)................ $ (266.6) $ (928.4) $ 289.7
===============================================================================================================================
</TABLE>
Property/casualty revenues, excluding net realized investment gains were
$7.487 billion, down 2.6% from 1992 and down 6.7% from 1991.
Property/casualty earned premiums were $6.275 billion down 1.2% from the
$6.354 billion earned in 1992 and down 5.7% from 1991. The 1993 decrease
was $78.6 million and was principally attributable to increased utilization
of a high deductible program for large commercial accounts. This accounted
for $235 million in reduced premiums. Involuntary risks premium was $182
million below the prior year primarily due to a decline in involuntary
workers' compensation premium recorded for the current and previous years.
Small commercial accounts premium declined by $70 million. These declines
were partially offset by growth in professional and specialty lines and
commercial reinsurance assumed premiums of $217 million, group A&H of $75
million and personal lines packages premium of $63 million.
Property/casualty investment income was down 13.4% from the $1.224 billion
reported in 1992 and down 17.4% from 1991. Investment income decreased
primarily due to the continuing general decline in interest rates and an
increase in short-term investments (excluding investments relating to loaned
securities) from $3.0 billion at December 31, 1992 to $5.1 billion at
December 31, 1993.
The net operating loss excluding net realized investment gains of CNA's
property/casualty insurance subsidiaries was $266.6 million for 1993,
compared to $928.4 million for the same period in 1992 and net operating
income of $289.7 million for 1991. Net realized investment gains for 1993
were $435.8 million, compared to $175.9 million and $300.0 million for 1992
and 1991, respectively.
<PAGE>
<PAGE>
The pretax operating loss excluding net realized investment gains for
the property/casualty insurance subsidiaries was $732.0 million compared to
an operating loss of $1,775.5 million and operating income of $58.0 million
for 1992 and 1991, respectively. Underwriting loss for 1993 was $1,791.8
million compared to $2,999.6 million and $1,224.7 million in 1992 and 1991,
respectively. The combined ratio was 126.4 for 1993 compared with 144.8 and
116.3 for 1992 and 1991, respectively. As previously discussed in the
Overview Section, the primary reason for the 1993 and 1992 poor operating
results was the addition of $500 million in underwriting losses related to
Fibreboard in the third quarter of 1993 and $1.5 billion in the fourth
quarter of 1992.
Catastrophe losses for 1993 were approximately $74 million, compared
with $270 million in 1992. CNA's 1992 catastrophe losses related primarily
to Hurricane Andrew. For the Los Angeles area earthquake and winter storms
occurring in the first quarter of 1994, CNA has recorded losses on reported
claims of approximately $65 million. Further loss development related to
unreported claims, including assumed reinsurance, is estimated at
approximately $35 million.
Property/casualty pretax results include losses for involuntary risks of
$80.8 million in 1993. Involuntary risk charges were $257.3 million and
$267.0 million in 1992 and 1991, respectively. Involuntary risks include
mandatory participation in residual markets, statutory assessments for
insolvencies of other insurers and other involuntary charges. CNA's share of
15
involuntary risks is generally a function of its share of the voluntary
market by line of insurance in each state. CNA records the estimated effects
of its mandatory participation in residual markets on an accrual basis.
These estimates are adjusted as premium, claim and expense activity is
received from the residual markets' administrators. CNA records assessments
for insolvencies as they are paid rather than on an accrual basis. Such an
accrual process would be very difficult, as past experience is not a reliable
indicator of future activity. Further, information currently available from
all the states' life and property/casualty guarantee funds is fairly limited
and would not provide reliable data on which to base an estimated liability.
Many states allow recovery of insolvency assessments by a direct offset to
premium taxes or a separate policy surcharge. In addition, some states
assess prospectively based on current premiums written. Thus, it would be
unclear whether or not future assessments should be accrued on a current
basis as they do not necessarily represent a liability until assessed. In
any event, CNA believes that any potential estimated liability would not be
material.
<PAGE>
<PAGE>
Property/casualty underwriting losses include reserve
increases/(decreases) related to prior years, net of reinsurance recoverable,
of $590 million, $1,617 million and $(106) million for the years 1993, 1992
and 1991, respectively. This reserve development includes $601 million,
$1,689 million and $48 million for asbestos claims, primarily representing
reserve additions related to the Fibreboard litigation, as discussed above.
Adverse reserve development for reported environmental pollution claims and
claim expenses totaled $107 million, $48 million and $47 million,
respectively. In 1993, CNA also allocated approximately $340 million of
claim reserves for unreported environmental pollution claims. Adverse
reserve developments for asbestos and environmental pollution claims were
offset, in part, by favorable development in other lines. For 1993,
favorable trends were represented primarily by positive severity experience
in professional liability lines and improvement in involuntary workers'
compensation experience, resulting in reserve decreases of $182 million and
$148 million, respectively. Refer to Note J of the Consolidated Financial
Statements for further discussion of asbestos and environmental pollution
exposures.
In early 1993, CNA began a program of realigning its portfolio, which
resulted in realizing gains in its investment portfolio that increased
Casualty's statutory surplus. Casualty sold approximately $35.4 billion of
fixed income and equity securities in 1993, realizing pretax net gains of
$741.3 million. Of the securities sold, approximately $11.5 billion, $13.5
billion and $5.8 billion were from the U.S. Treasury, Government
mortgage-backed and tax-exempt municipal bond portfolios, respectively. The
$2.1 billion increase in short-term securities since December 31, 1992 has
been invested primarily in U.S. Treasury bills and high grade commercial
paper. In addition to reducing the impact that a rise in interest rates
would have on the fixed income portfolio, the increase in taxable short-term
securities and the decrease in tax-exempt investments will allow the Company
to minimize additional alternative minimum tax credit carryforwards. Since
the portfolio is extremely liquid, CNA has the flexibility to shift quickly
into higher-yielding investments, as the economic environment warrants.
<PAGE>
<PAGE>
Life Operations
- ---------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
LIFE GROUP
YEAR ENDED DECEMBER 31 1993 1992 1991
(In millions of dollars)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING SUMMARY (EXCLUDING REALIZED INVESTMENT
GAINS/LOSSES AND ACCOUNTING CHANGES):
Revenues:
Premiums........................................................................... $2,442.2 $2,437.7 $2,314.3
Net investment income.............................................................. 259.7 283.5 320.8
Other.............................................................................. 37.3 36.1 27.1
------- ------- -------
2,739.2 2,757.3 2,662.2
Benefits and expenses............................................................... 2,672.8 2,678.7 2,572.4
------- ------- -------
Income before income tax........................................................... 66.4 78.6 89.8
Income tax expense.................................................................. 22.9 26.6 29.4
------- ------- -------
Net operating income (excluding realized investment gains/losses).................. $ 43.5 $ 52.0 $ 60.4
=============================================================================================================================
</TABLE>
16
Life insurance revenues, excluding realized net investment gains were
down less than 1% from 1992 and up 2.9% from 1991. Life earned premiums for
1993 were about the same as the $2.438 billion earned in 1992 and up 5.5%
from 1991. Life investment income declined due to the same reasons
described for property/casualty operations. Short-term investments
(excluding investments relating to loaned securities) for the life group
increased from $846 million at December 31, 1992 to $1.2 billion at December
31, 1993.
CNA's life insurance subsidiaries' net operating income excluding net
realized investment gains was $43.5 million for 1993, compared to $52.0
million and $60.4 million for 1992 and 1991, respectively. Net realized
investment gains for 1993 were $72.6 million, compared to $53.2 million for
1992 and a loss of $14.9 million for 1991.
Pretax operating income, excluding net realized investment gains for the
life insurance subsidiaries was $66.4 million for 1993 compared to $78.6
million and $89.8 million for 1992 and 1991, respectively.
FINANCIAL CONDITION:
Assets totaled $41.9 billion at the end of 1993, an increase of 5.5%
over 1992 and 7.0% over 1991. Included in the increase are $504 million of
unrealized appreciation for the general account and $189 million for the
Separate Accounts, due to reporting debt securities at fair value in
accordance with SFAS 115, as discussed below, and $495 million in proceeds
from financing activities. Stockholders' equity was $5.4 billion at
December 31, 1993, compared to $4.8 billion and $5.1 billion at December 31,
1992 and 1991, respectively.
<PAGE>
<PAGE>
In 1993, CNA adopted the following two new accounting standards which
together increased CNA's assets, liabilities and stockholders' equity but
did not impact income.
Investments in Debt and Equity Securities
- -----------------------------------------
Effective December 31, 1993, CNA adopted Financial Accounting Standards
Board (FASB) Statement of Financial Accounting Standards (SFAS) 115,
"Accounting for Certain Investments in Debt and Equity Securities." This
Statement requires that investments in debt and equity securities classified
as available for sale be carried at fair value. Previously, fixed income
securities classified as available for sale were carried at the lower of
aggregate amortized cost or market value. Unrealized holding gains and
losses are reflected as a separate component of shareholders' equity net of
deferred income taxes and participating policyholders' interest. The effect
of adopting this Statement was to increase shareholders' equity by $319.6
million (net of $176.5 million in deferred income taxes and $8.3 million of
participating policyholders' interest). The adoption of this Statement did
not impact net income. In accordance with the Statement, prior period
financial statements have not been restated. Separate Account assets
invested in debt securities have also been classified as available for sale
and are now carried at fair value. As a result, Separate Account
investments were increased by $189 million with a corresponding increase to
Separate Account liabilities.
Reinsurance Accounting
- ----------------------
Effective January 1, 1993, CNA adopted SFAS 113, "Accounting and
Reporting for Reinsurance of Short-duration and Long-duration Contracts."
This Statement establishes the conditions required for a contract to be
accounted for as reinsurance, prescribes accounting and reporting standards
for those contracts, and requires that balances pertaining to reinsurance
transactions be reported "gross" on the balance sheet rather than as
reductions of reserves for claim and claim expense, policy benefits, or
unearned premiums. At December 31, 1993, reinsurance recoverables on
insurance claims and policy reserves of $2.5 billion and ceded unearned
premiums of $167 million are reported as assets. Prior years' amounts were
restated to conform to the classifications followed in 1993. As a result,
assets and liabilities at December 31, 1992 were each increased by $3.1
billion.
The provisions of SFAS 113 that pertain to risk transfer and recognition
of revenues and costs did not impact CNA's income or stockholders' equity as
all material reinsurance arrangements are prospective and provided for the
transfer of risk.
17<PAGE>
<PAGE>
CNA's property/casualty insurance subsidiaries' statutory surplus grew
from $2.7 billion five years ago to $3.9 billion in 1991. In 1992,
property/casualty surplus declined to $3.1 billion, primarily due to $1.5
billion in asbestos reserve development and offsets resulting from the
accounting changes discussed above. In 1993, property/casualty surplus rose
to approximately $3.6 billion despite another $500 million increase in
asbestos reserves. Statutory surplus of CNA's life insurance subsidiaries
grew from $637 million at December 31, 1988 to over $1 billion at December
31, 1993.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL CONDITION STATUTORY SURPLUS CONSOLIDATED
----------------- -------------------------------------
DECEMBER 31 PROPERTY/ ASSETS STOCKHOLDERS' BOOK VALUE
(In millions of dollars, except per share data) CASUALTY LIFE (RESTATED) EQUITY PER SHARE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993............................................................... $3,598 $1,022 $41,912 $5,381 $84.65
1992............................................................... 3,136 1,003 39,744 4,789 75.07
1991............................................................... 3,928 968 39,162 5,109 80.24
1990............................................................... 3,147 849 34,713 4,490 70.23
1989............................................................... 3,118 786 30,883 4,154 64.74
1988............................................................... 2,686 637 25,950 3,568 54.87
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Included in the property/casualty surplus increases are capital
contributions from CNA to Casualty of $475 million in 1993, $120 million in
1990, $200 million in 1989, and $100 million in 1988. Dividends of $150
million, $100 million, $130 million and $100 million were paid to CNA by
Casualty in 1993, 1992, 1991 and 1989, respectively.
Life statutory surplus includes capital contributions from Casualty to
Continental Assurance Company of $100 million and $130 million, in 1990 and
1989, respectively.
<PAGE>
<PAGE>
INVESTMENTS:
The following table summarizes CNA's general account investments with
debt securities shown at amortized cost for each of the last five years.
Total investments, with debt securities at market value, are shown as the
last line in the table.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENTS-
GENERAL ACCOUNT
DECEMBER 31 1993 % 1992 % 1991 % 1990 % 1989 %
(In millions of dollars)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments:
Fixed maturities (at amortized cost)
Bonds:
Tax exempt..................................... $ 4,725 19 $ 9,502 42 $ 8,998 41 $ 7,985 44 $10,123 61
Taxable........................................ 11,933 48 7,286 32 9,674 44 6,885 38 3,006 18
Redeemable preferred stocks...................... 445 2 568 3 103 1 157 1 111 1
Equity securities:
Common stocks..................................... 508 2 348 2 230 1 440 2 411 3
Non-redeemable preferred stocks................... - - 9 - 11 - 9 - 36 -
Mortgage loans..................................... 58 - 85 - 113 1 136 1 155 1
Policy loans....................................... 174 1 179 1 181 1 185 1 193 1
Short-term investments............................. 6,944 28 4,444 20 2,511 11 2,405 13 2,526 15
Real estate and other invested assets.............. 72 - 57 - 65 - 33 - 44 -
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS $24,859 100% $22,478* 100% $21,886* 100% $18,235* 100% $16,605* 100%
================================================================================================================================
INVESTMENTS AT MARKET VALUE $25,363* $23,324 $22,816 $18,466 $17,053
================================================================================================================================
</TABLE>
*Reported in the Consolidated Balance Sheet and/or Financial Highlights
CNA's general account investment portfolio is managed to maximize
after-tax investment return, while minimizing credit risks with investments
concentrated in high quality securities to support its insurance
underwriting operations.
CNA has the capacity to hold its fixed income portfolio to maturity.
However, securities may be sold as part of CNA's asset/liability strategies
or to take advantage of investment opportunities generated by changing
interest rates, prepayments, tax and credit considerations, or other similar
factors. Accordingly, the fixed income securities are classified as
available for sale.
18<PAGE>
<PAGE>
During 1993, consolidated investments increased $2.9 billion to $25.4
billion. This increase is primarily due to investment of operating cash
flow and realized gains on sales of securities, $504 million of unrealized
appreciation due to reporting debt securities at fair value, in accordance
with SFAS 115, and $495 million in net proceeds from borrowings. The
general account portfolio consists primarily of high quality marketable debt
securities, 96% of which are rated as investment grade. At December 31,
1993, tax-exempt securities and short-term investments comprised
approximately 19% and 28%, respectively, of the general account's total
investment portfolio compared to 42% and 20%, respectively, at December 31,
1992.
Historically, CNA has maintained short-term assets at a level that
provided for liquidity to meet its short-term obligations, principally
anticipated claim payout patterns. Throughout 1992 and 1993, the level of
short-term investments has increased beyond that needed for short-term
liquidity. Though expected to result in a decline in investment income in
the near term, management believes that the increased concentration in
short-term investments will reduce the impact that a rise in interest rates
would have on its fixed income portfolio. At December 31, 1993, the major
components of the short-term investment portfolio were approximately $1.2
billion of U.S. Treasury bills and $4.5 billion of high-grade commercial
paper.
As of December 31, 1993, in accordance with SFAS 115, CNA's general
account investments in bonds and redeemable preferred stocks were carried at
a fair value of $17.6 billion. In both 1992 and 1991, these securities were
carried at the lower of aggregate amortized cost or market value which
amounted to $17.4 billion and $18.8 billion, respectively. This compares to
fair values of $18.2 billion and $19.7 billion on these respective dates.
At December 31, 1993, net unrealized gains on fixed income securities
amounted to approximately $504 million. This is after realizing $741
million in capital gains from the bond portfolio during 1993. This compares
to $846 million and $931 million of net unrealized gains at December 31,
1992 and 1991, respectively. The gross unrealized gains and losses for the
fixed income securities portfolio at December 31, 1993 were $564 million and
$60 million, respectively, compared to $931 million and $85 million,
respectively, at December 31, 1992.
Net unrealized gains on general account bonds at December 31, 1993
include net unrealized gains on high yield securities of $15 million,
compared to $44 million at December 31, 1992. High yield securities are
bonds rated as below investment grade by bond rating agencies, plus private
placements and other unrated securities which, in the opinion of management,
are below investment grade. Carrying values of high yield securities in the
general account were $727 million (fair value) at December 31, 1993,
compared to $704 million (amortized cost) at December 31, 1992.
<PAGE>
<PAGE>
At December 31, 1993, total Separate Account investments amounted to
$6.5 billion with taxable debt securities representing approximately 96% of
the Separate Account portfolio. Approximately 86% of Separate Account
investments is used to fund guaranteed investment contracts (GIC's) for
which Continental Assurance Company guarantees principal and a specified
return to the contractholders. At December 31, 1993, all fixed income
securities in the GIC portfolio were carried at fair value in accordance
with SFAS 115 and amounted to $5.4 billion. In both 1992 and 1991, these
securities were carried at the lower of aggregate amortized cost or market
value which amounted to $5.8 billion and $5.4 billion, respectively. This
compares to market values of $6.0 billion and $5.6 billion on those
respective dates. At December 31, 1993, net unrealized gains on fixed
income securities amounted to approximately $148 million. This compares to
$158 million in net unrealized gains at December 31, 1992 and $203 million
at December 31, 1991. The gross unrealized gains and losses for the fixed
income securities portfolio at December 31, 1993 were $163 million and $15
million, respectively, compared to $184 million and $26 million,
respectively, at December 31, 1992.
At December 31, 1993, high yield securities in the GIC portfolio were
carried at fair value and amounted to $1.068 billion. In 1992 and 1991,
these securities were carried at the lower of aggregate amortized cost or
market value which amounted to $779 million and $809 million, respectively.
Net unrealized gains on high yield securities held in such Separate Accounts
were $56 million at December 31, 1993, compared to $28 million at December
31, 1992 and unrealized losses of $14 million at December 31, 1991.
19
High yield securities generally involve a greater degree of risk than
that of investment grade securities. Expected returns should, however,
compensate for the added risk. The risk is also considered in the interest
rate assumptions in the underlying insurance products. As of December 31,
1993, CNA's concentration in high yield bonds including Separate Accounts
was approximately 4.3% of total assets.
Included in CNA's fixed income securities at December 31, 1993 (general
and GIC portfolios) are $4.4 billion of asset-backed securities, consisting
of approximately 47% in U.S. Government agency issued pass-through
certificates, 47% in collateralized mortgage obligations ("CMO's"), and 6%
in corporate asset-backed obligations. The majority of CMO's held are U.S.
Government agency issues, which are actively traded in liquid markets and
are priced monthly by broker-dealers. At December 31, 1993, the fair value
of asset-backed securities exceeded amortized cost by approximately $87
million compared to $172 million for the comparable period a year ago. CNA
limits the risks associated with interest rate fluctuations and prepayment
by concentrating its CMO investments in early planned amortization classes
with wide bands and relatively short principal repayment windows.
<PAGE>
<PAGE>
Over the last few years, much concern has been raised regarding the
quality of insurance company invested assets. At December 31, 1993, 52% of
the general account's debt securities portfolio was invested in U.S.
Government and affiliated securities, 25% in other AAA rated securities and
15% in AA and A rated securities. CNA's GIC fixed income portfolio is
comprised of 30% U.S. Government and affiliated securities, 14% other AAA
rated securities and 24% in AA and A rated securities. These ratings are
primarily from Standard & Poor's (94% of the general account portfolio and
93% of the GIC portfolio). In addition, CNA's investment in mortgage loans
and real estate is substantially below the industry average.
The following table summarizes the General Account's unrealized net
gains and losses from fixed income and equity securities for the last five
years.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
UNREALIZED APPRECIATION
FIXED INCOME AND EQUITY SECURITIES--GENERAL ACCOUNT
DECEMBER 31 1993 1992 1991 1990 1989
(In millions of dollars)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bonds....................................................................... $501 $842 $918 $246 $442
Redeemable preferred stocks................................................. 3 4 13 (15) 6
Equity securities........................................................... 76 46 33 23 29
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes investment results for each of the last
five years, including investment income, realized gains/losses, recorded
unrealized gains/losses primarily relating to equity securities and
unrealized gains/losses relating to fixed income securities.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PRETAX INVESTMENT RESULTS--GENERAL ACCOUNT
YEAR ENDED DECEMBER 31 1993 1992 1991 1990 1989
(In millions of dollars)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income......................................................... $1,314 $1,509 $1,608 $1,510 $1,344
Realized gains (losses)*.................................................. 803 355 443 (68) 200
Change in unrealized gains (losses) - equity securities and other*........ 19 20 16 (20) 16
Change in unrealized gains (losses) - debt securities..................... (350)* (85) 700 (217) 81
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Net of participating policyholders' interest, pretax
<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
The liquidity requirements of CNA have been met primarily by funds
generated from operations. The principal operating cash flow sources of
CNA's property/casualty and life insurance subsidiaries are premiums and
investment income. The primary operating cash flow uses are payments for
claims, policy benefits and operating expenses.
For the year ended December 31, 1993, CNA's operating activities
generated net cash flows of $1.3 billion compared to $1.0 billion in 1992
and $1.8 billion in 1991. The increase in cash flow, as compared with 1992,
is due primarily to Federal income tax recoveries of $294 million offset by
a decrease of approximately $96 million in investment income received. CNA
believes that future liquidity needs will be met primarily from operations.
20
Additional sources of cash flow include sales and maturities of
investments, and financing activities. CNA's debt position in relation to
total capital is low which allowed the Company to take advantage of the
current borrowing opportunities at favorable rates in the capital markets.
As a result, on October 25, 1993, CNA filed a shelf registration statement
with the Securities and Exchange Commission which made $900 million of debt
securities available for issuance from time to time. In addition $100
million from a previous shelf registration remained available for issuance.
In November 1993, CNA sold $250 million principal amount of 6.25% notes, due
2003, and $250 million principal amount of 7.25% debentures, due 2023, at an
effective rate per annum of 6.4% and 7.3%, respectively. CNA contributed
$475 million of the proceeds from this offering to the capital of Casualty.
An additional $500 million of securities and/or preferred stock remain
available for issuance under the shelf registration statement.
Net cash flows are invested in marketable securities. Investment
strategies employed by CNA's insurance subsidiaries consider the cash flow
requirements of the insurance products sold, and the tax attributes of the
various types of marketable investments.
ACCOUNTING STANDARDS:
Accounting for Post-employment Benefits
- ---------------------------------------
In November 1992, the FASB issued SFAS 112, "Employers' Accounting for
Post-employment Benefits." This Statement establishes accounting standards
for employers who provide benefits to former or inactive employees after
employment but before retirement (postretirement benefits). Post-employment
benefits include salary continuation, supplemental unemployment benefits,
severance benefits, disability-related benefits, job training and
counseling, and continuation of benefits such as health care benefits and
life insurance coverage.
The Statement requires employers to accrue the obligation to provide
post-employment benefits if (1) the obligation is attributable to employees'
service already rendered; (2) employees' rights to those benefits accumulate
or vest; (3) payment of the benefits is probable; and (4) the amount of the
benefits can be reasonably estimated.
This Statement applies to financial statements for fiscal years
beginning after December 15, 1993, with earlier application encouraged.
This Statement will not have a significant impact on the Company.
<PAGE>
<PAGE>
Accounting by Creditors for Impairment of a Loan
- ------------------------------------------------
In May 1993, the FASB issued SFAS 114, "Accounting by Creditors for
Impairment of a Loan." This Statement addresses the accounting by creditors
for impairment of certain loans. It is applicable to all creditors and to
all loans, uncollateralized as well as collateralized, except large groups
of smaller-balance homogeneous loans that are collectively evaluated for
impairment, loans that are measured at fair value or at the lower of cost or
fair value, leases, and debt securities.
The Statement requires that applicable loans be treated as impaired when
it is probable that a creditor will be unable to collect all amounts (both
principal and interest) contractually due. It requires that the impaired
loans be measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate. Impairments may also be
measured at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. In early 1994, the FASB
began deliberating certain amendments to the Statement. This Statement
applies to financial statements for fiscal years beginning after December
15, 1994. This Statement will not have a significant impact on CNA.
21
<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992
(In thousands of dollars) (RESTATED)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments--Note C:
Fixed maturities available for sale (cost: $17,103,240 and market: $18,201,343)--Note B...... $17,607,635 $17,355,538
Equity securities available for sale (cost: $432,738 and $310,536) .......................... 508,249 356,636
Mortgage loans............................................................................... 57,641 84,708
Real estate (less accumulated depreciation: $3,532 and $3,851)............................... 3,963 4,395
Policy loans................................................................................. 174,006 178,611
Other invested assets........................................................................ 67,891 54,294
Short-term investments--Note A............................................................... 6,943,976 4,444,166
---------- ----------
TOTAL INVESTMENTS........................................................................... 25,363,361 22,478,348
Cash.......................................................................................... 129,631 84,120
Insurance receivables:
Reinsurance receivables--Note B.............................................................. 2,951,664 3,249,849
Other insurance receivables.................................................................. 3,657,048 3,995,103
Less allowance for doubtful accounts......................................................... (117,324) (110,420)
Deferred acquisition costs.................................................................... 985,383 900,106
Accrued investment income..................................................................... 245,880 287,536
Receivables for securities sold............................................................... 387,477 131,718
Federal income taxes recoverable (includes $71,774 and $348,088 due from Loews)--Note H....... 78,512 347,299
Deferred income taxes--Note H................................................................. 1,029,657 1,077,586
Property and equipment at cost (less accumulated depreciation: $219,417 and $221,551)......... 221,507 177,032
Prepaid reinsurance premiums.................................................................. 167,292 152,263
Other assets.................................................................................. 271,639 138,014
Separate Account business..................................................................... 6,540,557 6,835,342
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $41,912,284 $39,743,896
===============================================================================================================================
</TABLE>
<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET - CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992
(In thousands of dollars) (RESTATED)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Insurance reserves:
Claim and claim expense...................................................................... $21,670,202 $20,733,438
Future policy benefits....................................................................... 2,753,591 2,520,596
Unearned premiums............................................................................ 2,556,015 2,425,105
Policyholders' funds................................. ....................................... 478,616 538,303
Participating policyholders' equity........................................................... 141,501 158,378
Securities sold under repurchase agreements................................................... 613,250 510,862
Payables for securities purchased............................................................. 40,070 99,870
Short-term debt--Note D....................................................................... 2,000 2,000
Long-term debt--Note D........................................................................ 913,279 412,961
Other liabilities............................................................................. 822,126 717,844
Separate Account business..................................................................... 6,540,557 6,835,342
---------- ----------
TOTAL LIABILITIES........................................................................... 36,531,207 34,954,699
========== ==========
Commitments and contingent liabilities--Notes G, J and K
Stockholders' equity--Note E:
Common stock ($2.50 par value; Authorized - 200,000,000 shares;
Issued - 61,841,969 shares)................................................................... 154,605 154,605
Preferred stock............................................................................... 150,000 150,000
Additional paid-in capital.................................................................... 434,692 434,692
Retained earnings............................................................................. 4,284,293 4,020,743
Net unrealized investment gains--Note C....................................................... 360,003 31,673
Treasury stock, at cost....................................................................... (2,516) (2,516)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY.................................................................. 5,381,077 4,789,197
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $41,912,284 $39,743,896
===============================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
22<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991
(In thousands of dollars, except per share data)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Premiums (net of premiums ceded of $548,151, $529,265 and $507,578).............. $ 8,688,797 $ 8,767,971 $ 8,946,351
Net investment income--Note C.................................................... 1,314,310 1,508,759 1,607,809
Realized investment gains--Note C................................................ 816,134 366,840 463,393
Other............................................................................ 191,572 149,872 113,800
---------- ---------- ----------
11,010,813 10,793,442 11,131,353
---------- ---------- ----------
Benefits and expenses:
Insurance claims and policyholders' benefits (net of reinsurance recoveries of
$177,550, $570,208 and $473,161)............................................... 8,556,547 9,870,648 8,242,227
Amortization of deferred acquisition costs....................................... 1,200,305 1,074,527 1,119,666
Other operating expenses......................................................... 1,119,702 1,186,537 1,175,283
Interest expense................................................................. 40,814 36,698 38,293
---------- ---------- ----------
10,917,368 12,168,410 10,575,469
---------- ---------- ----------
Income (loss) before income tax............................................... 93,445 (1,374,968) 555,884
Income tax benefit--Note H........................................................ 174,078 712,524 56,628
---------- ---------- ----------
Income (loss) before cumulative effect of accounting changes.................. 267,523 (662,444) 612,512
Cumulative effect on prior years of accounting changes--Note B:
Income taxes...................................................................... - 133,000 -
Postretirement benefits other than pensions (net of income tax benefit of $32,780) - (63,630) -
Discounting of certain workers' compensation and disability claim reserves
(net of income tax expense of $135,218)....................................... - 262,522 -
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 267,523 $ (330,552) $ 612,512
===============================================================================================================================
EARNINGS PER SHARE--NOTE B:
Income (loss) before cumulative effect of accounting changes $ 4.26 $ (10.79) $ 9.80
Cumulative effect of accounting changes........................................... - 5.37 -
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 4.26 $ (5.42) $ 9.80
===============================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
23<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
NET
ADDITIONAL UNREALIZED
PREFERRED COMMON TREASURY PAID-IN RETAINED INVESTMENT
(In thousands of dollars) STOCK STOCK STOCK CAPITAL EARNINGS GAINS (LOSSES) TOTAL
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1990... $150,000 $154,605 $(2,776) $434,952 $3,749,790 $ 3,426 $4,489,997
Net income................... - - - - 612,512 - 612,512
Unrealized investment gains--
Note C....................... - - - - - 12,802 12,802
Preferred stock dividends.... - - - - (6,760) - (6,760)
------- ------- ------ ------- --------- ------ ---------
BALANCE, DECEMBER 31, 1991... 150,000 154,605 (2,776) 434,952 4,355,542 16,228 5,108,551
Net loss..................... - - - - (330,552) - (330,552)
Unrealized investment gains--
Note C....................... - - - - - 15,445 15,445
Preferred stock dividends.... - - - - (4,247) - (4,247)
Other........................ - - 260 (260) - - -
------- ------- ------ ------- --------- ------- ---------
BALANCE, DECEMBER 31, 1992... 150,000 154,605 (2,516) 434,692 4,020,743 31,673 4,789,197
Net income................... - - - - 267,523 - 267,523
Unrealized investment gains--
Note C...................... - - - - - 8,769 8,769
Adjustment resulting from
change in accounting for
debt securities, net of
income tax expense of
$176,538 and participating
policyholders' interest of
$8,296--Note B............. - - - - - 319,561 319,561
Preferred stock dividends.... - - - - (3,973) - (3,973)
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 $150,000 $154,605 $(2,516) $434,692 $4,284,293 $360,003 $5,381,077
==============================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
24<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991
(In thousands of dollars) (RESTATED) (RESTATED)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................................... $ 267,523 $ (330,552) $ 612,512
--------- ---------- ----------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Cumulative effect of accounting changes........................................ - (331,892) -
Pretax realized (gains) losses................................................. (816,134) (366,840) (463,393)
Participating policyholders' interest.......................................... (4,252) (3,750) 11,267
Amortization of bond discount.................................................. (88,047) (126,738) (123,296)
Depreciation................................................................... 46,513 39,819 38,099
Changes in:
Reinsurance receivables....................................................... 298,185 457,892 213,036
Other insurance receivables................................................... 344,959 68,302 191,253
Prepaid reinsurance premiums.................................................. (15,029) (388) (3,863)
Deferred acquisition costs.................................................... (85,277) (27,181) (20,378)
Accrued investment income..................................................... 41,656 (25,865) 5,770
Federal income taxes.......................................................... 268,787 (387,595) 107,458
Deferred income taxes......................................................... (161,337) (360,601) (138,379)
Insurance reserves............................................................ 1,211,686 2,478,438 1,401,434
Reinsurance payables.......................................................... 30,546 36,533 (48,532)
Other, net.................................................................... (67,644) (107,190) (12,147)
--------- ---------- ----------
TOTAL ADJUSTMENTS........................................................... 1,004,612 1,342,944 1,158,329
--------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES................................... 1,272,135 1,012,392 1,770,841
--------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed maturities.................................................. (42,828,880) (32,289,777) (38,007,646)
Proceeds from fixed maturities:
Sales....................................................................... 41,216,861 32,762,585 32,039,457
Maturities, calls and redemptions........................................... 2,347,707 1,414,987 2,633,222
Purchases of equity securities................................................. (758,869) (485,837) (289,348)
Proceeds from sale of equity securities........................................ 736,142 397,490 612,670
Change in short-term investments............................................... (2,485,567) (1,942,162) (105,599)
Change in securities sold under repurchase agreements.......................... 102,388 (889,373) 1,381,439
Change in other investments.................................................... 9,409 51,738 (12,365)
Purchases of property and equipment............................................ (89,471) (31,885) (31,725)
Other.......................................................................... (1,235) 933 491
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES....................................... (1,751,515) (1,011,301) (1,779,404)
---------- ---------- ----------
/TABLE
<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991
(In thousands of dollars) (RESTATED) (RESTATED)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to preferred shareholders....................................... (4,018) (4,733) (7,628)
Receipts for investment contracts credited to
policyholder account balances................................................ 47,481 47,293 45,204
Return of policyholder account balances in investment contracts................ (18,185) (18,476) (11,581)
Net decrease in short-term debt ............................................... - (23,442) (399,429)
Proceeds from issuance of long-term debt....................................... 500,660 1,517 397,461
Principal payments on long-term debt........................................... (1,047) (862) (851)
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES................................... 524,891 1,297 23,176
---------- ---------- ----------
NET INCREASE IN CASH........................................................ 45,511 2,388 14,613
---------- ---------- ----------
Cash at beginning of year....................................................... 84,120 81,732 67,119
- -------------------------------------------------------------------------------------------------------------------------------
CASH AT END OF YEAR $ 129,631 $ 84,120 $ 81,732
===============================================================================================================================
Supplemental disclosures of cash flow information:
Cash received (paid):
Interest expense............................................................. $ (36,278) $ (36,155) $ (29,702)
Federal income taxes......................................................... 293,605 (30,224) 19,114
===============================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
25<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A. SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
Loews Corporation (Loews) owns 83% of the outstanding common stock of
CNA Financial Corporation (CNA).
The Consolidated Financial Statements include CNA and its principal
operating groups which consist of property/casualty insurance subsidiaries
(principally Continental Casualty Company) and life insurance subsidiaries
(principally Continental Assurance Company).
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles. Certain amounts applicable
to prior years have been reclassified to conform to classifications followed
in 1993.
INSURANCE
Premium revenue-Insurance premiums on property/casualty and health
insurance contracts are earned ratably over the terms of the policies after
provision for estimated adjustments on retrospectively rated policies and
deductions for ceded insurance. Revenues on universal life-type contracts
are comprised of contract charges and fees which are recognized over the
coverage period when assessed against the policyholders' account balances.
Other life insurance premiums are recognized as revenue when due after
deductions for ceded insurance.
Claim and claim expense reserves-Claim and claim expense reserves,
except reserves for structured settlements, workers' compensation lifetime
claims, and accident and health disability claims, are based on (a) case
basis estimates for losses reported on direct business, adjusted in the
aggregate for ultimate loss expectations, (b) estimates of unreported losses
based upon past experience, (c) estimates of assumed insurance, (d)
estimates of future expenses to be incurred in settlement of claims, and (e)
estimates of claim recoveries. In establishing these estimates,
consideration is given to current conditions and trends as well as past
Company and industry experience.
Structured settlements have been negotiated for claims on certain
property/casualty insurance policies. Structured settlements are agreements
to provide periodic payments to claimants, which are fixed and determinable
as to the amount and time of payment. Certain structured settlements are
funded by annuities purchased from Continental Assurance Company. Related
annuity obligations are carried in future policy benefits reserves.
Obligations for structured settlements not funded by annuities are carried
at discounted values which approximate the alternative cost of annuity
purchases. Such reserves, discounted at interest rates ranging from 6.25%
to 7.5%, totaled $748.9 million and $662.6 million at December 31, 1993 and
1992, respectively.
<PAGE>
<PAGE>
Workers' compensation lifetime claims and accident and health disability
claim reserves are discounted at interest rates ranging from 3 1/2% to
5 1/2% with mortality and morbidity assumptions reflecting current industry
experience. Such discounted reserves totaled $969.8 million and $911.1
million at December 31, 1993 and 1992, respectively.
Claim and claim expense reserves are based on estimates and the ultimate
liability may vary significantly from such estimates. Any adjustments that
are made to the reserves are reflected in operating income in the year such
adjustments are made.
Future policy benefits reserves-Reserves for traditional life insurance
products are computed based upon net level premium methods using actuarial
assumptions as to interest rates, mortality, morbidity, withdrawals and
expenses. Actuarial assumptions include a margin for adverse deviation and
generally vary by plan, age at issue and policy duration. Interest rates
range from 3% to 10 1/2% and mortality, morbidity and withdrawal assumptions
reflect CNA and industry experience prevailing at the time of issue.
Renewal expense estimates include the estimated effects of inflation and
expenses beyond the premium paying period.
26
Reinsurance-CNA assumes and cedes insurance with other insurers and
reinsurers, and members of various reinsurance pools and associations. CNA
utilizes reinsurance arrangements to limit its maximum loss, to provide
greater diversification of risk and to minimize exposures on larger risks.
The reinsurance coverages are tailored to the specific risk characteristics
of each product line with CNA's retained amount varying by type of coverage.
Generally, reinsurance coverage for property risks is on excess of loss, per
risk basis. Liability coverages are generally reinsured on a quota share
basis in excess of CNA's retained risk. Amounts recoverable from reinsurers
are estimated in a manner consistent with the claim liability associated
with the reinsured policy.
Deferred acquisition costs-Costs of acquiring insurance business which
vary with and are primarily related to the production of such business are
deferred. Such costs include commissions, premium taxes, and certain
underwriting and policy issuance costs. Property/casualty acquisition costs
are amortized ratably over the period the related premiums are recognized.
Anticipated investment income is considered in the determination of the
recoverability of deferred acquisition costs. Life acquisition costs are
capitalized and amortized based on assumptions consistent with those used
for computing policy benefit reserves. Acquisition costs on ordinary life
business are amortized over the assumed premium paying periods. Universal
life and investment annuity acquisition costs are amortized in proportion to
the present value of estimated gross profits over the products' assumed
durations, which are regularly evaluated and adjusted as appropriate. To
the extent that unrealized gains or losses on available-for-sale securities
would result in an adjustment of deferred policy acquisition costs had those
gains or losses actually been realized, the related unamortized deferred
policy acquisition costs are recorded as an adjustment of the unrealized
gains or losses included in shareholders' equity.
<PAGE>
<PAGE>
Valuation of investments-CNA believes it has the ability to hold all
fixed income investments until maturity. However, securities may be sold to
take advantage of investment opportunities generated by changing interest
rates, prepayments, tax and credit considerations, as part of the Company's
asset/liability strategy, or for other similar factors. As a result, CNA
considers its fixed maturity securities (bonds and redeemable preferred
stocks) and equity securities as available-for-sale. At December 31, 1993,
CNA adopted the provisions of Statement of Financial Accounting Standards
(SFAS) 115, "Accounting for Certain Investments in Debt and Equity
Securities." Under SFAS 115, available-for-sale securities are carried at
fair value. In prior years, fixed maturity securities were also considered
as available-for-sale, but were carried at the lower of aggregate amortized
cost or fair value, in accordance with guidance promulgated by the
Securities and Exchange Commission. The amortized cost of debt securities
is adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization is included in investment income.
Mortgage loans are carried at unpaid principal balances, including
unamortized premium or discount. Real estate is carried at depreciated
cost. Policy loans are carried at unpaid balances. Short-term investments
are carried at amortized cost which approximates market value.
Investment gains and losses-All securities transactions are recorded on
the trade date. Realized investment gains and losses are determined on the
basis of the cost of the specific securities sold. Unrealized investment
gains and losses on fixed maturity and equity securities are reflected as
part of stockholders' equity, net of applicable deferred income taxes and
participating policyholders' interest. In prior years, fixed maturity
securities were carried at amortized cost; thus, no net unrealized
investment gains or losses were recorded. Investments with an other than
temporary decline in value are written down to estimated realizable values
resulting in losses that are included in realized investment gains and
losses.
27
Securities sold under agreements to repurchase-CNA has a securities
lending program where securities are loaned to third parties, primarily major
brokerage firms. Borrowers of these securities must deposit cash and/or
securities equal to 102% of the market value of the securities, plus interest.
Cash deposits from these transactions have been invested in short-term
investments (primarily commercial paper). CNA continues to receive the
interest on the loaned debt securities, as beneficial owner and, accordingly,
the loaned debt securities are included in fixed maturity securities.
Restricted investments-On December 30, 1993, CNA deposited $986.8 million
in an escrow account, pursuant to the Fibreboard Global Settlement Agreement,
as discussed in Note J to the Consolidated Financial Statements. The funds
are included in short-term investments and are invested in U.S. Treasury
securities. The escrow account is the prefunding mechanism to the trust fund
for future claimants.
<PAGE>
<PAGE>
Participating business-Participating business represented 1.1%, 1.2% and
1.6% of gross life insurance in force and 1.1%, 1.2% and 1.4% of life
insurance premium income for 1993, 1992 and 1991, respectively. Participating
policyholders' equity is determined by allocating 90% of related net income or
loss and unrealized investment gains or losses to such business, less
dividends determined by the Board of Directors. In the accompanying Statement
of Consolidated Operations, revenues and benefits and expenses include amounts
related to participating policies; the net income or loss allocated to
participating policyholders' equity is a component of insurance claims and
policyholders' benefits.
Separate Account business-Continental Assurance Company issues certain
investment and annuity contracts, the assets and liabilities of which are
legally segregated and reflected in the accompanying Consolidated Balance
Sheet as assets and liabilities of Separate Account business. Continental
Assurance Company guarantees principal and a specified return to the
contractholders of approximately 86% of the Separate Account business.
Substantially all assets of the Separate Accounts are carried at fair value.
Separate Account liabilities are carried at the higher of contract value or
the fair value of the underlying assets. Investment income, and gains and
losses for the Separate Account accrue to the contractholders and are,
therefore, not included in the Statement of Consolidated Operations or Cash
Flows except for funding which may be required under the guarantees. Revenues
to CNA from the Separate Account business consist principally of
administration fees.
INCOME TAXES
In 1993 and 1992, provision for income taxes includes deferred taxes
resulting from temporary differences between the financial statement and tax
bases of assets and liabilities, using the liability method as required by
SFAS 109. Such temporary differences relate to insurance reserves
(principally claim reserve discounting), net unrealized investment gains and
deferred acquisition costs. In 1991, the provision for income taxes included
deferred taxes based on the principles of Accounting Principles Board Opinion
11.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost less accumulated depreciation.
Depreciation is based on the estimated useful lives of the various classes of
property and equipment principally on accelerated methods. The cost of
maintenance and repairs is charged to income as incurred; major improvements
are capitalized.
MANAGEMENT SERVICES
CNA reimbursed Loews for management services, travel and similar expenses,
and expenses of investment facilities and services provided to CNA, amounting
to approximately $9,207,000, $7,641,000 and $6,800,000 in 1993, 1992 and 1991,
respectively.
28
EARNINGS PER SHARE
Earnings per share applicable to common stock are based on weighted
average outstanding shares of common stock of 61,798,000, 61,794,000 and
61,793,000 in 1993, 1992 and 1991, respectively.
<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE B. CHANGES IN ACCOUNTING PRINCIPLES:
1993 ACCOUNTING CHANGES
Investments in Debt and Equity Securities
Effective December 31, 1993, CNA adopted Financial Accounting Standards
Board (FASB) Statement of Financial Accounting Standards (SFAS) 115,
"Accounting for Certain Investments in Debt and Equity Securities." This
Statement requires that investments in debt and equity securities classified
as available for sale be carried at fair value. Previously, fixed income
securities classified as available for sale were carried at the lower of
aggregate amortized cost or market value. Unrealized holding gains and losses
are reflected as a separate component of shareholders' equity, net of deferred
income taxes and participating policyholders' interest. The effect of
adopting this Statement was to increase shareholders' equity by $319.6 million
(net of $176.5 million in deferred income taxes and $8.3 million of
participating policyholders' interest). The adoption of this Statement did
not impact net income. In accordance with the Statement, prior period
financial statements have not been restated. Separate Account assets invested
in debt securities have also been classified as available for sale and are now
carried at fair value. As a result, Separate Account investments were
increased by $189 million with a corresponding increase to Separate Account
liabilities.
Reinsurance Accounting
Effective January 1, 1993, CNA adopted SFAS 113, "Accounting and Reporting
for Reinsurance of Short-duration and Long-duration Contracts." This
Statement establishes the conditions required for a contract to be accounted
for as reinsurance, prescribes accounting and reporting standards for those
contracts, and requires that balances pertaining to reinsurance transactions
be reported "gross" on the balance sheet rather than as reductions of reserves
for claim and claim expense, policy benefits, or unearned premiums. At
December 31, 1993, reinsurance recoverables on insurance claims and policy
reserves of $2.5 billion and ceded unearned premiums of $167 million are
reported as assets. Prior years' amounts were restated to conform to the
classifications followed in 1993. As a result, assets and liabilities at
December 31, 1992 were each increased by $3.1 billion.
The provisions of SFAS 113 that pertain to risk transfer and recognition
of revenues and costs did not impact CNA's income or stockholders' equity as
all material reinsurance arrangements are prospective and provided for the
transfer of risk.
<PAGE>
<PAGE>
1992 ACCOUNTING CHANGES
In 1992, CNA adopted SFAS 109, "Accounting for Income Taxes," which
provides a balance sheet approach in determining income tax expense and SFAS
106, "Employers' Accounting for Postretirement Benefits Other than Pensions,"
which resulted in significant changes in accounting for postretirement
benefits. In addition, CNA changed its accounting practice of reporting
ultimate reserves for fixed and determinable claim reserves related to
workers' compensation lifetime claims, and accident and health disability
claims to discounting such reserves consistent with accounting practices on
other similar fixed and determinable claims.
29
CNA has restated its quarterly financial statements for 1992 to reflect
these changes. The cumulative effect as of January 1, 1992 of adopting these
accounting changes is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1992 PER SHARE
(In thousands of dollars, except per share data)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accounting for income taxes...................................................................... $ 133,000 $ 2.15
Postretirement benefits other than pensions (net of income tax
benefit of $32,780)............................................................................. (63,630) (1.03)
Discounting of certain workers' compensation and disability claim
reserves (net of income tax expense of $135,218)............................................... 262,522 4.25
--------- -------
$ 331,892 $ 5.37
======== =======
- -----------------------------------------------------------------------------------------------------------------------------------
Pro forma amounts, assuming the 1992 changes in accounting for discounting
certain workers' compensation and disability claim reserves were applied
retrospectively, follow:
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1992 1991
(In thousands of dollars, except per share data)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AS REPORTED IN THE STATEMENT OF CONSOLIDATED OPERATIONS:
Income (loss) before cumulative effect
of accounting changes........................................................................... $(662,444) $612,512
Earnings per share............................................................................... (10.79) 9.80
Net income (loss)................................................................................ (330,552) 612,512
Earnings per share............................................................................... (5.42) 9.80
PRO FORMA RESULTS:
Income (loss) before cumulative effect
of accounting changes........................................................................... $(662,444) $657,550
Earnings per share............................................................................... (10.79) 10.53
Net income (loss)................................................................................ (593,074) 657,550
Earnings per share............................................................................... (9.67) 10.53
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE C. INVESTMENTS:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
YEAR ENDED DECEMBER 31 1993 1992 1991
(In thousands of dollars)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
Bonds:
Tax exempt........................................................................... $ 504,896 $ 728,031 $ 638,110
Taxable.............................................................................. 531,873 591,514 789,107
Redeemable preferred stocks........................................................... 21,231 11,207 13,734
Equity securities...................................................................... 7,648 14,513 15,679
Mortgage loans......................................................................... 5,349 8,024 9,349
Real estate............................................................................ 1,092 1,714 1,934
Policy loans........................................................................... 10,013 10,035 9,968
Short-term investments................................................................. 245,230 141,028 123,404
Security repurchase transactions--income............................................... 6,249 18,627 44,373
Other.................................................................................. 10,849 19,618 17,579
--------- --------- ---------
1,344,430 1,544,311 1,663,237
Investment expense..................................................................... (24,789) (22,439) (20,233)
Security repurchase transactions--expenses and fees.................................... (5,331) (13,113) (35,195)
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $1,314,310 $1,508,759 $1,607,809
===================================================================================================================================
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ANALYSIS OF INVESTMENT GAINS (LOSSES)
YEAR ENDED DECEMBER 31 1993 1992 1991
(In thousands of dollars)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Realized investment gains (losses):
Fixed maturities...................................................................... $ 740,760 $ 292,627 $ 440,771
Equity securities..................................................................... 82,521 28,908 72,880
Real estate........................................................................... 588 2,944 120
Guaranteed separate accounts.......................................................... - 35,496 (39,675)
Other................................................................................. (7,735) 6,865 (10,703)
--------- --------- ---------
816,134 366,840 463,393
Allocated to participating policyholders............................................... (13,142) (12,140) (20,055)
Income tax expense..................................................................... (283,813) (119,381) (158,166)
--------- --------- ---------
Net realized investment gains....................................................... 519,179 235,319 285,172
--------- --------- ---------
Change in unrealized investment gains (losses):
Equity securities..................................................................... 29,411 13,465 9,959
Guaranteed separate accounts.......................................................... - 5,814 4,735
Other................................................................................. (10,443) 23 (144)
--------- --------- ---------
18,968 19,302 14,550
Allocated to participating policyholders.............................................. (12) 736 1,674
Income tax expense.................................................................... (10,187) (4,593) (3,422)
--------- --------- ---------
Change in net unrealized investment gains........................................... 8,769 15,445 12,802
--------- --------- ---------
Change in accounting for adoption of SFAS 115-Note B................................ 319,561 - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized investment gains $ 847,509 $ 250,764 $ 297,974
===================================================================================================================================
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET UNREALIZED INVESTMENT GAINS
INCLUDED IN STOCKHOLDERS' EQUITY
DECEMBER 31 1993 1992
----------------------------------- ------------------------------------
(In thousands of dollars) GAINS LOSSES NET GAINS LOSSES NET
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fixed maturities................................ $564,698 $(60,303) $504,395 $ - $ - $ -
Equity securities............................... 84,861 (9,350) 75,511 58,628 (12,528) 46,100
Other........................................... 2,112 (13,308) (11,196) 991 (1,744) (753)
------- ------- ------- ------ ------- -------
$651,671 $(82,961) 568,710 $59,619 $(14,272) 45,347
======= ======= ====== =======
Allocated to participating policyholders........ (6,381) 1,927
Deferred income taxes........................... (202,326) (15,601)
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized investment gains $360,003 $31,673
===================================================================================================================================
</TABLE>
31<PAGE>
<PAGE>
Proceeds from sales of investments in fixed income securities during 1993
and 1992 were $41.2 billion and $32.8 billion, respectively, of which $19.4
billion and $25.9 billion, respectively were sales of U.S. Treasury
securities. Realized investment gains of $833.5 million and $421.1 million
and realized losses of $92.7 million and $128.5 million were recognized on
sales of fixed income securities in the years ended December 31, 1993 and
1992, respectively. 1993 realized investment gains and losses for equity
securities were $103.3 million and $20.8 million, respectively.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS IN FIXED MATURITIES
AND EQUITY SECURITIES AVAILABLE FOR SALE AMORTIZED UNREALIZED UNREALIZED MARKET
(In thousands of dollars) COST GAINS LOSSES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1993
United States Treasury securities and obligations of
government agencies....,............................................ $ 6,482,814 $ 80,070 $ 8,405 $ 6,554,479
Asset-backed securities.............................................. 2,514,596 42,073 9,373 2,547,296
States, municipalities and political subdivisions tax exempt......... 4,725,384 316,717 27,260 5,014,841
Corporate securities................................................. 1,765,811 48,203 12,413 1,801,601
Other debt securities................................................ 1,170,030 73,457 2,053 1,241,434
Redeemable preferred stocks ......................................... 444,605 4,178 799 447,984
---------- ------- ------ ----------
Total fixed maturities............................................. 17,103,240 564,698 60,303 17,607,635
Equity securities.................................................... 432,738 84,861 9,350 508,249
- -----------------------------------------------------------------------------------------------------------------------------------
Total $17,535,978 $649,559 $69,653 $18,115,884
===================================================================================================================================
DECEMBER 31, 1992
United States Treasury securities and obligations of
government agencies................................................. $ 2,878,835 $ 28,639 $ 7,428 $ 2,900,046
Asset-backed securities.............................................. 2,132,976 94,942 14,054 2,213,864
States, municipalities and political subdivisions tax exempt..,...... 9,501,741 712,962 52,276 10,162,427
Corporate securities................................................. 1,092,396 47,799 8,420 1,131,775
Other debt securities................................................ 1,182,034 42,121 2,295 1,221,860
Redeemable preferred stocks.......................................... 567,556 4,427 612 571,371
---------- ------- ------ ----------
Total fixed maturities............................................. 17,355,538 930,890 85,085 18,201,343
Equity securities.................................................... 310,536 58,628 12,528 356,636
- -----------------------------------------------------------------------------------------------------------------------------------
Total $17,666,074 $989,518 $97,613 $18,557,979
===================================================================================================================================
</TABLE>
<PAGE>
<PAGE>
The amortized cost and market value of fixed maturities at December 31,
1993 and 1992 are shown below by contractual maturity. Actual maturities may
differ from contractual maturities because securities may be called or prepaid
with or without call or prepayment penalties.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992
-------------------------- --------------------------
AMORTIZED MARKET AMORTIZED MARKET
(In thousands of dollars) COST VALUE COST VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due in one year or less................................................. $ 687,704 $ 702,683 $ 815,722 $ 825,464
Due after one year through five years................................... 7,486,797 7,581,348 4,800,765 4,942,447
Due after five years through ten years ................................. 1,445,365 1,486,226 2,200,811 2,292,244
Due after ten years..................................................... 4,968,778 5,290,082 7,405,264 7,927,324
Asset-backed securities not due at a single maturity date .............. 2,514,596 2,547,296 2,132,976 2,213,864
- -----------------------------------------------------------------------------------------------------------------------------------
Total $17,103,240 $17,607,635 $17,355,538 $18,201,343
===================================================================================================================================
</TABLE>
The carrying value of investments (other than equity securities) that have
not produced income for the last twelve months is $124.1 million at
December 31, 1993.
32<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE D. DEBT:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
LONG AND SHORT-TERM DEBT
DECEMBER 31 1993 1992
(In thousands of dollars)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Long-term debt:
8 5/8% Senior Notes, due March 1, 1996....................................................... $249,003 $248,601
8 7/8% Senior Notes, due March 1, 1998....................................................... 148,540 148,264
6 1/4% Senior Notes, due November 15, 2003................................................... 247,932 -
7 1/4% Debenture, due November 15, 2023...................................................... 247,028 -
Other debt, due 1994 through 2019:
Fixed interest rates 1.0% to 9.98%.......................................................... 4,741 3,394
Variable interest rates 2.45% to 7.5%....................................................... 16,035 12,702
------- -------
Total long-term debt....................................................................... 913,279 412,961
------- -------
Short-term debt............................................................................... 2,000 2,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total debt $915,279 $414,961
===================================================================================================================================
</TABLE>
In October 1993, the Company filed a shelf registration statement with the
Securities and Exchange Commission which made $900 million of debt securities
available for issuance from time to time. In addition, $100 million from a
previous shelf registration remained available for issuance.
In November 1993, CNA sold $250 million principal amount of 6.25% notes
due 2003 and $250 million principal amount of 7.25% debentures due 2023 at
effective rates per annum of 6.4% and 7.3%, respectively. CNA contributed
$475 million of the proceeds from this offering to the capital of Casualty.
An additional $500 million of securities and/or preferred stock remains
available for issuance under the shelf registration statement.
Aggregate maturities of long-term debt for 1994 through 1998 are
$1,699,000; $1,443,000; $251,363,000; $1,117,000 and $150,780,000,
respectively.
33<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE E. STOCKHOLDERS' EQUITY:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SUMMARY OF CAPITAL STOCK NUMBER OF SHARES
DECEMBER 31 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Preferred stock, without par value-voting stock:
Authorized........................................................................................ 12,500,000 12,500,000
Money market cumulative preferred stock, without par value-non-voting:
Issued and outstanding:
Series E (stated value $100,000 per share)...................................................... 750 750
Series F (stated value $100,000 per share)...................................................... 750 750
Common stock with par value of $2.50-voting stock:
Authorized........................................................................................ 200,000,000 200,000,000
Issued............................................................................................ 61,841,969 61,841,969
Outstanding....................................................................................... 61,797,856 61,797,856
Treasury stock.................................................................................... 44,113 44,113
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The dividend rate on money market preferred stock is determined
approximately every 49 days by auction. The preferred stock is non-voting and
is redeemable at CNA's option, as a whole or in part, at $100,000 per share
plus accrued and unpaid dividends.
CNA's ability to pay dividends to its stockholders is affected, in part,
by receipt of dividends from its affiliates. The payment of dividends to CNA
by its insurance affiliates without prior approval of the Illinois Insurance
Department is limited to formula amounts. As of December 31, 1993,
approximately $360 million was not subject to prior Insurance Department
approval.
Statutory capital and surplus and net income (loss), determined in
accordance with accounting practices prescribed or permitted by the Illinois
Insurance Department, for property/casualty and life insurance subsidiaries
are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATUTORY CAPITAL
AND SURPLUS STATUTORY NET INCOME (LOSS)
---------------------------- ---------------------------------------------
(In thousands of dollars) 1993 1992 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Property/Casualty Insurance Subsidiaries....... $3,598,415 $3,135,847 $120,710 $(1,043,050) $716,950
Life Insurance Subsidiaries.................... 1,021,970 1,002,985 99 11,831 113,288
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
34<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE F. FAIR VALUE OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards (SFAS) 107, "Disclosures about
Fair Value of Financial Instruments," requires disclosure of fair value
information, whether or not recognized in the balance sheet, for which it is
practicable to estimate that value. In cases where quoted market prices are
not available, fair values may be based on estimates using present value or
other valuation techniques. These techniques are significantly affected by
the assumptions used, including the discount rates and estimates of future
cash flows. Accordingly, the estimates presented herein are subjective in
nature and are not necessarily indicative of the amounts that CNA could
realize in a current market exchange. SFAS 107 excludes certain financial
instruments and all nonfinancial instruments such as real estate and insurance
reserves from fair value disclosure. Thus, the aggregate fair value amounts
cannot be aggregated to determine the underlying economic value of CNA.
The carrying amounts and estimated fair values of CNA's financial
instruments are listed below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992
------------------------------ ------------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
(In thousands of dollars) AMOUNT FAIR VALUE AMOUNT FAIR VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Investments:
Fixed maturities available for sale--Note C........................ $17,607,635 $17,607,635 $17,355,538 $18,201,343
Equity securities available for sale--Note C....................... 508,249 508,249 356,636 356,636
Mortgage loans..................................................... 57,641 60,739 84,708 86,627
Policy loans....................................................... 174,006 163,566 178,611 167,894
Other invested assets.............................................. 67,891 70,664 54,294 54,901
Separate Account assets:
Fixed maturities available for sale................................ 6,234,964 6,234,964 6,507,127 6,693,943
Equity securities available for sale............................... 145,663 145,663 112,511 112,594
Other.............................................................. 159,930 168,570 215,704 215,727
FINANCIAL LIABILITIES
Premium deposits and annuity contracts.............................. 544,669 534,948 519,758 511,027
Options written and interest rate swaps............................. 15,543 15,543 11,289 9,674
Long-term debt...................................................... 913,279 940,224 412,961 445,699
Financial guarantee liabilities..................................... 352,535 350,253 248,439 234,774
Separate Account liabilities:
Guaranteed investment contracts ................................... 4,875,440 5,178,817 5,531,806 5,782,639
Deferred annuities................................................. 66,458 81,433 64,284 78,600
Variable separate accounts......................................... 222,780 222,780 148,970 148,970
Other.............................................................. 887,440 887,440 685,390 685,390
Off-Balance-Sheet Financial Instruments--Note G
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
The following methods and assumptions were used by CNA in estimating
its fair value disclosures for financial instruments:
The carrying amounts reported in the balance sheet approximate fair
value for cash, short-term investments, receivables, accrued investment
income, receivables for securities sold, securities sold under repurchase
agreements, payables for securities purchased, short-term debt, and
certain other assets and other liabilities. As such, these financial
instruments are not shown in the above table.
Fixed maturity securities, equity securities, options written, and
interest rate swaps are based on quoted market prices, where available.
For securities not actively traded, fair values are estimated using values
obtained from independent pricing services, costs to settle, or quoted
market prices of comparable instruments.
The fair values for mortgage loans and policy loans are estimated
using discounted cash flow analyses at interest rates currently offered
for similar loans to borrowers with comparable credit ratings. Loans with
similar characteristics are aggregated for purposes of the calculations.
35
Other invested assets and other Separate Account assets consist of
investments in limited partnerships, short-term securities and various
miscellaneous assets. Valuation techniques to determine fair value
consist of discounted cash flows and quoted market prices of a) the
investments, b) comparable instruments and c) underlying assets of the
investments. The fair value of certain assets contained above
approximates their carrying value.
Premium deposits and annuity contracts are valued based on cash
surrender values and the outstanding fund balances.
CNA's Senior Notes and Debenture, which represent the majority of
CNA's long-term debt, are valued based on quoted market prices. The fair
value for other long-term debt is estimated using discounted cash flow
analyses, based on current incremental borrowing rates for similar types
of borrowing arrangements.
The fair value of the liability for financial guarantee contracts is
based on discounted cash flows utilizing interest rates currently being
offered for similar contracts and spot interest rates.
Guaranteed investment contracts and deferred annuities of the separate
accounts are estimated using discounted cash flow calculations, based on
interest rates currently being offered for similar contracts with
maturities consistent with those remaining for the contracts being valued.
The fair values of the liabilities for variable separate accounts are
based on the quoted market values of the underlying assets of each
variable separate account. The fair value of other separate account
liabilities approximates carrying value.
<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE G. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK:
CNA occasionally utilizes financial instruments with off-balance-sheet
risk to increase investment returns. Financial instruments used for such
purposes include put and call options, swap agreements and commitments to
purchase securities. The notional or contractual amounts of these instruments
are indications of the volume of transactions and do not represent market risk
or credit risk. The market values associated with these instruments are
generally affected by changes in interest rates. The credit exposure
associated with these instruments is generally limited to the positive
unrealized market value of the instruments and will vary based on changes in
market prices. The risk of default depends on the creditworthiness of the
counterparty to the instrument. The Company does not require collateral or
other security to support the financial instruments.
A summary of the aggregate notional or contractual amounts and estimated
fair values of these instruments at December 31, 1993 and 1992 is presented
below. The estimated fair values are based on quoted market prices, where
available. For securities not actively traded, fair values are estimated
using values obtained from independent pricing services, costs to settle, or
quoted market prices of comparable instruments.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992
--------------------------- ----------------------------
FAIR VALUE FAIR VALUE
CONTRACTUAL/ ASSET CONTRACTUAL/ ASSET
(In thousands of dollars) NOTIONAL VALUE (LIABILITY) NOTIONAL VALUE (LIABILITY)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest rate swaps.................................................. $ 75,000 $(8,005) $ 325,000 $(3,435)
Commitments to purchase government and municipal securities.......... 211,000 137 299,500 3,071
Options written on:
Intermediate term United States Treasury securities.................. - - 1,000,000 (6,239)
Debt and equity securities........................................... 4,050 (7,538) - -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE H. INCOME TAXES:
CNA and its eligible subsidiaries (CNA Tax Group) are included in the
consolidated Federal income tax return of Loews and its eligible subsidiaries.
Loews and CNA have agreed that, for each taxable year, CNA will (i) be paid by
Loews the amount, if any, by which Loews' consolidated Federal income tax
liability is reduced by virtue of the inclusion of the CNA Tax Group in Loew's
consolidated Federal income tax return, or (ii) pay to Loews an amount, if
any, equal to the Federal income tax which would have been payable by the CNA
Tax Group filing a separate consolidated return. In the event that Loews
should have a net operating loss in the future computed on the basis of filing
a separate consolidated tax return without the CNA Tax Group, CNA may be
required to repay tax recoveries previously received from Loews. This
agreement between Loews and CNA may be cancelled by either party upon thirty
days' written notice.
In 1993 and 1992, the inclusion of the CNA Tax Group in the consolidated
Federal income tax return of Loews results in a reduced Federal income tax
liability for Loews. In 1991, the inclusion of the CNA Tax Group in the
consolidated Federal income tax return of Loews increased the Federal income
tax liability for Loews. Accordingly, CNA will receive, or has received, from
Loews approximately $17 million for 1993 and $350 million for 1992. CNA paid
Loews $82 million for 1991.
Effective January 1, 1992, CNA changed its method of accounting for income
taxes from the deferred method, as specified by Accounting Principles Board
Opinion (APB) 11, to the liability method required by the Financial Accounting
Standards Board's Statement of Financial Accounting Standards (SFAS) 109. As
permitted under SFAS 109, prior years' financial statements have not been
restated.
The cumulative effect of adopting SFAS 109, as of January 1, 1992,
increased net income by $133 million due primarily to recognizing the
remaining fresh start tax benefit which resulted from discounting the January
1, 1987 property/casualty loss reserves under the Tax Reform Act of 1986 (the
Act). Under the Act, this reduction in reserves, previously deducted for tax
purposes, does not give rise to taxable income.
Under SFAS 109, deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
Significant components of CNA's deferred tax assets and liabilities, as of
December 31, 1993, 1992 and as of January 1, 1992, are shown in the table
below. The amounts shown for January 1, 1992 represent beginning balances
upon adopting SFAS 109 and are shown for comparative purposes only. Amounts
will not agree to the deferred income taxes shown in the Consolidated Balance
Sheet as of December 31, 1991.<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES DECEMBER 31 DECEMBER 31 JANUARY 1
(In thousands of dollars) 1993 1992 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Insurance reserves:
Property/casualty claim reserve discounting..................................... $ 990,206 $ 861,323 $714,320
Unearned premium reserves....................................................... 125,560 147,874 134,239
Life reserve differences........................................................ 144,078 140,120 108,535
Other insurance reserves........................................................ (12,126) 4,747 15,111
Deferred acquisition costs....................................................... (310,228) (280,902) (282,073)
Alternative minimum tax credit carryforward...................................... 165,200 151,000 -
Investment valuation differences................................................. 101,775 44,150 28,745
Postretirement benefits other than pensions...................................... 40,452 36,364 32,780
Unrealized gains................................................................. (202,786) (15,601) (11,008)
Other, net....................................................................... (12,474) (11,489) (22,158)
- ----------------------------------------------------------------------------------------------------------------------------------
Net deferred tax assets $1,029,657 $1,077,586 $718,491
==================================================================================================================================
</TABLE>
At December 31, 1993, gross deferred tax assets and liabilities amounted
to $1,618.2 million and $588.5 million, respectively. Gross deferred tax
assets and liabilities, at December 31, 1992, amounted to $1,408.4 million and
$330.8 million, respectively.
37
The Loews/CNA Tax Group's election to designate its 1988 through 1991 tax
payments as Special Estimated Tax Payments (SETP), as permitted under the
Technical and Miscellaneous Revenue Act of 1988, should assure realization of
a substantial portion of deferred tax assets arising from the discounting of
property/casualty loss reserves. Further, the Loews/CNA Tax Group has a past
history of profitability and anticipates future profitability, including
realization of substantial available gains in its fixed income security
portfolio.
The 1986 Tax Reform Act requires companies to pay taxes equal to the
greater of those calculated at the regular statutory rate (regular tax) or
those calculated under the Alternative Minimum Tax (AMT). Under the Act, the
excess of AMT over the regular tax may be recovered in future years if, and to
the extent, the taxpayer pays regular taxes in those years in excess of AMT.
Due to the substantial operating loss sustained in 1992, CNA was an AMT
taxpayer. The excess of AMT over regular tax generated in 1992 was
approximately $152 million. In 1993, CNA experienced additional operating
losses; however, these losses were substantially offset by realization of
available gains in its fixed income security portfolio. As of December 31,
1993, the cumulative excess of AMT over regular tax is approximately $165
million. CNA has prepared various analyses of future operating and tax
scenarios, and has identified various steps that it will take to manage its
tax position so as to recover the aforementioned $165 million. Based on these
analyses, CNA has recorded the $165 million cumulative AMT credit as
recoverable as it is "more likely than not" (as required by SFAS 109) that the
benefit will be realized.
<PAGE>
<PAGE>
Significant components of CNA's income tax provision are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAX BENEFIT (EXPENSE) DEFERRED
LIABILITY METHOD METHOD
---------------------- ---------
YEAR ENDED DECEMBER 31 1993 1992 1991
(In thousands of dollars)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax benefit (expense):
On ordinary income/loss............................................................... $355,520 $510,842 $111,541
On realized investment gains/losses................................................... (342,779) (158,919) (193,292)
------- ------- -------
Total current tax benefit (expense).................................................. 12,741 351,923 (81,751)
------- ------- -------
Deferred tax benefit:
On ordinary income/loss............................................................... 102,371 321,063 103,253
On realized investment gains/losses................................................... 58,966 39,538 35,126
------- ------- -------
Total deferred tax benefit........................................................... 161,337 360,601 138,379
- --------------------------------------------------------------------------------------------------------------------------------
Total income tax benefit $174,078 $712,524 $ 56,628
================================================================================================================================
38
The sources of CNA's deferred income tax benefit (expense) for 1991 are as follows:
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
COMPONENTS OF DEFERRED TAX BENEFIT (EXPENSE) DEFERRED
METHOD
-------
YEAR ENDED DECEMBER 31 1991
(In thousands of dollars)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Ordinary income/loss:
Insurance reserves (principally claim reserve discounting)........................................................ $149,076
Deferred acquisition costs........................................................................................ 7,183
Revision of prior years' liability................................................................................ (13,316)
Allowance for doubtful accounts................................................................................... 6,800
Alternative minimum tax credit carryforward (utilization)......................................................... (41,000)
Amortization of bond discount..................................................................................... 1,330
Other items, net.................................................................................................. (6,820)
-------
Total deferred tax on ordinary income/loss....................................................................... 103,253
-------
Realized investment gain/losses:
Amortization of bond discount..................................................................................... 1,853
Investment write-downs............................................................................................ 28,572
Other items, net.................................................................................................. 4,701
-------
Total deferred tax on realized investment gains/losses........................................................... 35,126
- --------------------------------------------------------------------------------------------------------------------------------
Deferred income tax benefit $138,379
================================================================================================================================
</TABLE>
<PAGE>
<PAGE>
A reconciliation of the expected income tax benefit (expense) resulting
from the use of statutory tax rates to the effective income tax benefit
(expense) follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF EXPECTED AND EFFECTIVE TAXES DEFERRED
LIABILITY METHOD METHOD
------------------ --------
YEAR ENDED DECEMBER 31 1993 1992 1991
(In thousands of dollars)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected tax benefit (expense) on ordinary income at statutory rates........................ $248,341 $588,087 $(38,266)
Exempt interest and dividends received deduction............................................ 166,111 224,415 198,212
Effect of 1% change in tax rate on January 1 deferred tax balances.......................... 28,262 - -
Fresh start adjustments..................................................................... - - 39,780
Special deduction--salvage and subrogation.................................................. 17,148 16,658 33,316
Revision of prior years' liability.......................................................... - 2,600 (13,316)
Foreign tax differences..................................................................... (534) 1,476 (5,699)
State taxes................................................................................. (1,003) (4,115) (2,624)
Other items, net............................................................................ (434) 2,784 3,391
-------- ------- -------
Income tax benefit on ordinary income..................................................... 457,891 831,905 214,794
-------- ------- -------
Expected tax benefit (expense) on realized investment gains/losses
at statutory rates........................................................................ (281,046) (120,598) (150,735)
Differences in tax bases of assets sold.................................................... - - (5,666)
Effect of 1% change in tax rate on January 1 deferred tax balances......................... 1,536 - -
State income taxes......................................................................... (3,085) (2,276) -
Other items, net........................................................................... (1,218) 3,493 (1,765)
-------- ------- -------
Income tax benefit (expense) on realized investment gains/losses......................... (283,813) (119,381) (158,166)
- ----------------------------------------------------------------------------------------------------------------------------------
Income tax benefit $174,078 $712,524 $ 56,628
===================================================================================================================================
</TABLE>
39<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE I. BENEFIT PLANS:
PENSION PLAN
The CNA Employees' Retirement Plan is a noncontributory pension plan
covering all full-time employees age 21 or over who have completed at least
one year of service. Plan benefits are based on years of credited service and
the employee's highest sixty consecutive months of compensation.
CNA's funding policy is to make contributions in accordance with
applicable governmental regulatory requirements. Plan assets are invested
primarily in short-term investments and U.S. Government securities with the
balance in common stocks and other fixed income securities.
On January 1, 1991, a Plan amendment, prompted by the Tax Reform Act of
1986, raised the minimum pension benefit and reduced the social security
offset. The amendment generated an unrecognized prior service cost of $23.5
million.
The following table sets forth the plan's funded status and amounts
recognized in CNA's Consolidated Financial Statements at December 31, 1993,
1992 and 1991.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992 1991
(In thousands of dollars)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value of accumulated plan benefits:
Vested.................................................................................. $386,127 $285,873 $226,671
Nonvested............................................................................... 40,300 42,728 34,766
------- ------- -------
Accumulated benefit obligation......................................................... $426,427 $328,601 $261,437
======= ======= =======
Projected benefit obligation............................................................. $591,712 $480,699 $419,071
Plan assets at fair value................................................................ 458,917 411,972 358,706
------- ------- -------
Plan assets less than projected benefit obligation..................................... (132,795) (68,727) (60,365)
Unrecognized net asset at January 1, 1986 being recognized over 12 years ................ (22,330) (27,407) (32,484)
Unrecognized prior service costs......................................................... 16,273 21,470 23,500
Unrecognized net loss.................................................................... 155,955 80,998 64,660
------- ------- -------
Net pension asset (liability) recognized in the balance sheet.......................... $ 17,103 $ 6,334 $ (4,689)
======= ======= =======
Net periodic pension cost:
Service cost--benefits attributed to employee
service during the year ............................................................... $ 25,947 $ 23,798 $ 20,414
Interest cost on projected benefit obligation........................................... 39,078 35,963 31,797
Actual return on plan assets............................................................ (25,107) (30,483) (49,987)
Net amortization and deferral........................................................... (14,559) (5,201) 22,482
- ---------------------------------------------------------------------------------------------------------------------------------
Net periodic pension cost $ 25,359 $ 24,077 $ 24,706
=================================================================================================================================
</TABLE>
<PAGE>
<PAGE>
Actuarial assumptions are set forth in the following table. The funded
status is determined using assumptions at the end of the year. Pension cost is
determined using assumptions at the beginning of the year.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ASSUMPTIONS
DECEMBER 31 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rate.......................................................................... 7.25% 8.25% 8.50% 8.75%
Rate of increase in compensation levels................................................ 4.50 5.25 5.75 6.00
Expected long-term rate of return on plan assets....................................... 7.50 9.00 9.25 9.25
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
40
In addition, CNA maintains other unfunded supplemental benefit plans for
officers and other key employees. Benefits provided under these plans are
those that would otherwise have been payable under the qualified plans but for
compensation and/or benefit restrictions imposed by the Internal Revenue Code.
POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
CNA provides certain health and dental care benefits for eligible
retirees, ages 55 through 64, and provides life insurance and reimbursement of
Medicare Part B premiums for all eligible retired persons.
Effective January 1, 1992, CNA adopted SFAS 106, "Employers' Accounting
for Postretirement Benefits Other than Pensions." The Company elected to
immediately recognize the cumulative effect of the change in accounting for
postretirement benefits of $96.4 million ($63.6 million, net of income tax
benefit) which represents the accumulated postretirement benefit obligation
existing at January 1, 1992. The effect of this change on 1992 operating
results, after recording the cumulative effect for years prior to 1992, was to
increase annual expenses for postretirement benefits by $10.5 million to $14.3
million. Prior to 1992, the cost of providing health care and life insurance
benefits to retired employees was recognized as expense primarily as claims
were paid. These costs totaled approximately $3.8 million for 1991. CNA
continues to fund benefit costs principally on a pay-as-you-go basis.
<PAGE>
<PAGE>
The following table sets forth the amounts recognized in CNA's
Consolidated Financial Statements at December 31, 1993 and 1992.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31 1993 1992
(In thousands of dollars)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.......................................................................................... $ 26,245 $ 22,599
Fully eligible, active plan participants.......................................................... 24,097 21,718
Other active plan participants.................................................................... 70,804 65,672
------- -------
Total accumulated postretirement benefit obligation.............................................. $121,146 $109,989
Unrecognized net loss.............................................................................. (5,291) (3,045)
------- -------
Accrued postretirement benefit cost.............................................................. $115,855 $106,944
======= =======
Net periodic postretirement benefit cost:
Service cost--benefits attributed to employee service during the year............................. $ 5,625 $ 6,241
Interest cost on accumulated postretirement benefit obligation.................................... 7,638 8,091
- ---------------------------------------------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 13,263 $ 14,332
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
ASSUMPTIONS
DECEMBER 31 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
Assumptions used in determining net periodic benefit cost:
Discount rate..................................................................................... 8.25% 8.50%
Rate of increase in compensation levels........................................................... 5.25 5.75
Assumptions used in determining projected benefit obligation (liability):
Discount rate..................................................................................... 7.25% 8.25%
Rate of increase in compensation levels........................................................... 4.50 5.25
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
41
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 15% in 1993, declining by 1% per year to
an ultimate rate of 6% in 2002. The health care cost trend rate assumption
has a significant effect on the amount of the benefit obligation and periodic
cost reported. An increase in the assumed health care cost trend rates of 1%
in each year would increase the accumulated postretirement benefit obligation
as of December 31, 1993 by $11.5 million and the aggregate net periodic
postretirement benefit cost for the year then ended by $1.4 million.
SAVINGS PLAN
The CNA Employees' Savings Plan is a contributory plan which allows
employees to make a regular contribution of up to 6% of their salary. CNA
contributes an additional amount equal to 70% of the employee's regular
contribution. Employees may also make an additional contribution of up to 10%
of their salaries for which there is no additional contribution by CNA. CNA
contributions to the plan were $17.2 million, $16.1 million and $14.4 million
in 1993, 1992 and 1991, respectively.
42<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE J. LEGAL PROCEEDINGS AND CONTINGENT LIABILITIES:
FIBREBOARD LITIGATION
CNA's primary property/casualty subsidiary, Continental Casualty Company
("Continental"), is party to litigation with Fibreboard Corporation
("Fibreboard") involving coverage for certain asbestos-related claims and
defense costs (San Francisco Superior Court, Judicial Council Coordination
Proceeding 1072). As described below, Continental, Fibreboard, another
insurer (Pacific Indemnity, a subsidiary of the Chubb Corporation), and a
negotiating committee of asbestos claimant attorneys have reached a Global
Settlement (the "Global Settlement") to resolve all future asbestos-related
bodily injury claims involving Fibreboard. Continental, Fibreboard and
Pacific Indemnity have also reached an agreement, which is subject to court
approval, (the "Trilateral Agreement") on a settlement to resolve the coverage
litigation in the event the Global Settlement does not obtain final court
approval. The implementation of the Global Settlement or the Trilateral
Agreement would have the effect of settling Continental's litigation with
Fibreboard. Pending final court approval of either the Global Settlement or
the Trilateral Agreement, at the request of Continental, Fibreboard and
Pacific Indemnity, the California Court of Appeal withheld its ruling on the
issues discrete to Continental and Pacific Indemnity in the appeal in that
litigation.
Coverage Litigation
Between 1928 and 1971, Fibreboard manufactured insulation products
containing asbestos. Since the 1970's, thousands of claims have been filed
against Fibreboard by individuals claiming bodily injury as a result of
asbestos exposure.
Continental insured Fibreboard under a comprehensive general liability
policy between May 4, 1957 and March 15, 1959. Fibreboard disputed the
coverage positions taken by its insurers and, in 1979, Fireman's Fund, another
of Fibreboard's insurers, brought suit with respect to coverage for defense
and indemnity costs. In January 1990, the San Francisco Superior Court
(Judicial Council Coordination Proceeding 1072) rendered a decision against
the insurers including Continental and Pacific Indemnity. The court held that
the insurers owed a duty to defend and indemnify Fibreboard for certain of the
asbestos-related bodily injury claims asserted against Fibreboard (in the case
of Continental, for all claims involving exposure to Fibreboard's asbestos
products if there was exposure to asbestos at any time prior to 1959 including
years prior to 1957, regardless of when the claims were asserted or injuries
manifested) and that the policies contained no aggregate limit of liability in
relation to such claims. The judgment was appealed.
<PAGE>
<PAGE>
The Court of Appeal entered an opinion on November 15, 1993, as modified
on December 13, 1993, which substantially affirmed the lower court's decisions
on scope of coverage and trigger of coverage issues, as described below. The
Court of Appeal withheld its ruling on the issues discrete to Continental and
Pacific Indemnity pending final court approval of either the Global Settlement
or the Trilateral Agreement described below. On January 27, 1994, the
California Supreme Court granted a Petition for Review filed by several
insurers, including Continental, of, among other things, the trigger and scope
of coverage issues. The order granting review has no effect on the Court of
Appeal's order severing the issues unique to Continental and Pacific
Indemnity. Continental cannot predict the time frame within which the issues
before the California Supreme Court may be resolved. If neither the Global
Settlement nor the Trilateral Agreement is approved, it is anticipated that
Continental and Pacific Indemnity will resume the appeal process.
43
Continental's appeal of the coverage judgment raises many legal issues.
Key issues on appeal under the policy are trigger of coverage, scope of
coverage, dual coverage requirements and number of occurrences:
. The trial court adopted a continuous trigger of coverage theory under
which all insurance policies in effect at any time from first exposure
to asbestos until the date of the claim filing or death are triggered.
The Court of Appeal endorsed the continuous trigger theory, but
modified the ruling to provide that policies are triggered by a
claimant's first exposure to the policyholder's products, as opposed to
the first exposure to any asbestos product. Therefore, an insurance
policy is not triggered if a claimant's first exposure to the
policyholder's product took place after the policy period. The court,
however, placed the burden on the insurer to prove the claimant was not
exposed to its policyholder's product before or during the policy
period. The trigger of coverage issue is now on appeal to the
California Supreme Court.
Continental's position is that its policy is triggered under California
law by manifestation of appreciable harm. The bodily injury cannot be
said to occur within the meaning of the policy until actual physical
symptoms and associated functional impairment manifest themselves.
Thus, Continental's position is that if existing California law were
applied, there would be no coverage under Continental's policy.
. The scope of coverage decision imposed a form of "joint and several"
liability that makes each triggered policy liable in whole for each
covered claim, regardless of the length of the period the policy was in
effect. This decision was affirmed by the Court of Appeal, and is now
on appeal to the California Supreme Court. Continental's position is
that liability for asbestos claims should be shared not jointly, but
severally and on a pro rata basis between the insurers and insured.
Under this theory, Continental would only be liable for that proportion
of the bodily injury that occurred during the 22-month period its
policy was in force.
<PAGE>
<PAGE>
. Continental maintains that both the occurrence and the injury resulting
therefrom must happen during the policy period for the policy to be
triggered. Consequently, if the court holds that the occurrence is
exposure to asbestos, Continental's position is that coverage under the
Continental policy is restricted to those who actually inhaled
Fibreboard asbestos fibers and suffered injury from May 4, 1957 to
March 15, 1959. The Court of Appeal withheld ruling on this issue, as
noted above.
. Continental's policy had a $1 million per occurrence limit.
Continental contends the number of occurrences under California law
must be determined by the general cause of the injuries, not the number
of claimants, and that the cause of the injury was the continuous sale
and manufacture of the product. Because the manufacture and sale
proceeded from two locations, Continental maintains that there were
only two occurrences and thus only $2 million of coverage under the
policy. However, the per occurrence limit was interpreted by the trial
court to mean that each claim submitted by each individual constituted
a separate occurrence. The Court of Appeal withheld ruling on this
issue, as noted above.
Under various reinsurance agreements, Continental has asserted a right to
reimbursement for a portion of its potential exposure to Fibreboard. The
reinsurers have disputed Continental's right to reimbursement and have taken
the position that any claim by Continental is subject to arbitration under
provisions in the reinsurance agreement. A Federal court has ruled that the
dispute must be resolved by arbitration. There can be no assurance that
Continental will be successful in obtaining a recovery under its reinsurance
agreements.
44
Interim Agreement
While the state court action in regard to the coverage issues was pending,
Continental and Fibreboard entered into an Interim Agreement in 1988 under
which Continental agreed to fund Fibreboard's defense costs and certain
settlements up to specified dollar limits through 1992. Continental funded
approximately $96 million in defense costs under the Interim Agreement.
Assignments
Beginning in 1991, Fibreboard unilaterally reached settlements with
various classes of claimants by purporting to assign to plaintiffs potential
proceeds from its insurance policy with Continental. Continental disputed
Fibreboard's right to make such settlements and assignments, asserted that
they violated the terms of the policy and the Interim Agreement described
above and asserted that the settlement amounts were unreasonable and
excessive. In June 1992 a California trial court ruled in one case that
Fibreboard could make such settlements and assignments since, in its view,
Continental was not fully defending Fibreboard against the claims.
Continental is appealing this decision. The trial court did rule that
Continental could challenge the reasonableness of individual settlements and
assignments. Following that ruling, Continental agreed to fund Fibreboard's
reasonable defense costs without limitation as to amount pending resolution of
Continental's appeal. Fibreboard continued to make settlements and
assignments following such agreement, and Continental vigorously disputed
Fibreboard's right to do so.
<PAGE>
<PAGE>
This settlement and assignment process by Fibreboard escalated
significantly in the fourth quarter of 1992. Through December 31, 1992,
Fibreboard entered into unilateral assignment agreements covering 31,100
claims for a total of approximately $400 million or an average of $12,800 per
claim. Of these claims, approximately 30,000 were settled and assigned by
Fibreboard in the month of December, 1992.
Settlement Negotiations
Based on the facts and circumstances of the Fibreboard case prior to the
fourth quarter of 1992, including the strength of Continental's legal
arguments, a material loss to Continental was not known or believed to be
probable. Significant fourth quarter developments, including the assignments
noted above, and the continuing trend for court decisions to expand liability
of policies beyond their original intent, led management to consider
negotiation of an all-inclusive settlement of Continental's asbestos-related
bodily injury litigation with Fibreboard.
On April 9, 1993, Continental and Fibreboard entered into an agreement
pursuant to which, among other things, the parties agreed to use their best
efforts to negotiate and finalize a global class action settlement with
asbestos-related bodily injury and death claimants.
Through December 31, 1993, Continental, Fibreboard and plaintiff attorneys
had reached settlements with respect to approximately 95,000 claims, subject
to resolution of the coverage issues, for a maximum settlement amount of
approximately $1.2 billion. If neither the Global Settlement nor the
Trilateral Agreement receive final court approval, Continental's obligation to
pay under all settlements will be partially subject to the results of the
pending appeal in the coverage litigation. Minimum amounts payable under all
such agreements, regardless of the outcome of coverage litigation, total
approximately $560 million, of which $193 million was paid through December
31, 1993. Continental may negotiate other agreements with various classes of
claimants including groups who may have previously reached agreement with
Fibreboard.
Continental will continue to pursue its appeals in respect of the coverage
litigation and all other litigation involving Fibreboard if the Global
Settlement or the Trilateral Agreement cannot be implemented.
45
Global Settlement
On August 27, 1993, Continental, Pacific Indemnity, Fibreboard and a
negotiating committee of asbestos claimant attorneys reached an agreement in
principle for an omnibus settlement to resolve all future asbestos-related
bodily injury claims involving Fibreboard. The Global Settlement was executed
on December 23, 1993. The agreement calls for contribution by Continental and
Pacific Indemnity of an aggregate of $1.525 billion to a trust fund for a
class of all future asbestos claimants, defined generally as those persons
whose claims against Fibreboard were neither filed nor settled on or before
August 27, 1993. An additional $10 million is to be contributed to the fund
by Fibreboard. The Global Settlement is subject to court approval and
possible appeals. As noted below, there is limited precedent with settlements
which determine the rights of future claimants to seek relief.
<PAGE>
<PAGE>
Subsequent to the announcement of the agreement in principle, Continental,
Fibreboard and Pacific entered into the Trilateral Agreement which sets forth
the parties' obligations in the event the Global Settlement is not approved by
the court. In such case, Continental and Pacific would contribute to a
settlement fund an aggregate of $2 billion, less certain adjustments. Such
fund would be devoted to the payment of Fibreboard's asbestos liabilities
other than liabilities in respect of previously settled claims. Continental's
share of such fund would be $1.46 billion reduced by a portion of an
additional payment of $635 million which Pacific Indemnity has agreed to pay
in respect of unsettled present claims and previously settled claims.
Continental has agreed that if either the Global Settlement or the Trilateral
Agreement is approved, it will assume responsibility for the claims that had
been settled and paid on or before August 27, 1993. A portion of the
additional $635 million to be contributed by Pacific Indemnity would be
applied to the payment of such claims as well. As a part of the Global
Settlement and the Trilateral Agreement, Continental would be released by
Fibreboard from any further liability under the comprehensive general
liability policy written for Fibreboard by Continental, including but not
limited to liability for asbestos-related claims against Fibreboard. The
Trilateral Agreement is subject to court approval and possible appeals.
Continental and Fibreboard have entered into a supplemental agreement (the
"Supplemental Agreement") which governs the interim arrangements and
obligations between the parties until such time as the Global Settlement is
either approved or disapproved by the court and also governs certain
obligations between the parties in the event the Global Settlement is
approved, including the payment of present claims which had been filed or
settled and not included in the Global Settlement.
In addition, Continental and Pacific Indemnity have entered into an
agreement (the "Continental-Pacific Agreement") which sets forth the parties'
agreement with respect to the means for allocating among themselves
responsibility for payments arising out of the Fibreboard insurance policies
whether or not the Global Settlement or the Trilateral Agreement is approved.
Under the Continental-Pacific Agreement, Continental and Pacific Indemnity
have agreed to pay 64.71% and 35.29%, respectively, of the $1.525 billion plus
interest and expenses to be used to satisfy the claims of future claimants.
If neither the Global Settlement nor the Trilateral Agreement is approved,
Continental and Pacific Indemnity would share, in the same percentages, most
but not all liabilities and costs of either insurer including, but not limited
to, liabilities in respect of unsettled present claims and presently settled
claims. If either the Trilateral Agreement or the Global Settlement is
approved by the court, Pacific Indemnity's share for unsettled present claims
and presently settled claims will be $635 million.
46
Reserves
In the fourth quarter of 1992, Continental increased its reserve with
respect to potential exposure to asbestos-related bodily injury cases by $1.5
billion. In connection with the agreement in principle announced on August
27, 1993, Continental added $500 million to such claim reserve. The
Fibreboard litigation represents the major portion of Continental's
asbestos-related claim exposure.
<PAGE>
<PAGE>
There are inherent uncertainties in establishing a reserve for complex
litigation of this type. Courts have tended to impose joint and several
liability, and because the number of manufacturers who remain potentially
liable for asbestos-related injuries has diminished on account of
bankruptcies, as has the potential number of insurers due to operation of
policy limits, the liability of the remaining defendants is difficult to
estimate. Further, a recent trend by courts to consolidate like cases into
mass tort trials limits the discovery ability of insurers, generally does not
allow for individual claim adjudication, restricts the identification of
appropriate allocation methods and thereby results in an increasing likelihood
for fraud and disproportionate and potentially excessive judgments.
Additionally, management believes that recent court decisions would appear to
be based on social or other considerations irrespective of the facts and legal
issues involved.
The Global Settlement and the Trilateral Agreement are subject to court
approval. There is limited precedent with settlements which determine the
rights of future claimants to seek relief. It is extremely difficult to
assess the magnitude of Continental's potential liability in respect of such
future claimants if neither the Global Settlement nor the Trilateral Agreement
is approved and upheld, keeping in mind that Continental's potential liability
is limited to persons exposed to asbestos prior to the termination of the
policy in 1959.
Projections by experts of future trends differ widely, based upon
different assumptions with respect to a host of complex variables. Some
recently published studies, not specifically related to Fibreboard, conclude
that the number of future asbestos-related bodily injury claims against
asbestos manufacturers could be several times the number of claims brought to
date. Such studies include claims asserted against asbestos manufacturers for
all years, including claims filed or projected to be filed in respect of
periods after 1959. As indicated above, Continental, Fibreboard and plaintiff
attorneys have reached settlements with respect to approximately 95,000
claims, subject to the resolution of coverage issues. Such amount does not
include presently pending or unsettled claims, claims previously dismissed or
claims settled pursuant to agreements to which Continental is not a party.
Another aspect of the complexity in establishing a reserve arises from the
widely disparate values that have been ascribed to claims by courts and in the
context of settlements. Under the terms of a settlement reached with
plaintiff counsel in August, 1993, the expected settlement for approximately
34,000 claims for exposure to asbestos prior to 1959 is expected to be $445
million, or an average of $13,000 per claim. Based on reports by Fibreboard,
since September 1988 Fibreboard resolved approximately 40,000 claims (other
than by the assignment process noted above), approximately 45% of which
involved no cost to Fibreboard other than defense costs, with the remaining
claims involving the payment of approximately $11,000 per claim. On the other
hand, a trial court in Texas in 1990 rendered a verdict in which Fibreboard's
liability in respect of 2,300 claims was found to be approximately $310,000
per claim including interest and punitive damages. Fibreboard entered into a
settlement of such claims by means of an assignment of its potential proceeds
from its policy with Continental. Continental intervened and settled these
claims in 1992 for approximately $77,000 on average, subject to resolution of
the coverage appeal.
47<PAGE>
<PAGE>
Continental believes that as a result of the Global Settlement and the
Trilateral Agreement it has greatly reduced the uncertainty of its exposure
with respect to the Fibreboard matter. However, if neither the Global
Settlement, nor the Trilateral Agreement is approved and upheld, in light of
the factors discussed herein the range of Continental's potential liability
cannot be meaningfully estimated and there can be no assurance that the
reserves established would be sufficient to pay all amounts which ultimately
could become payable in respect of asbestos-related bodily injury liabilities.
While it is possible that the ultimate outcome of this matter could have a
material adverse impact on the equity of the Company, management does not
believe that a further loss material to equity is probable. Management will
continue to monitor the potential liabilities with respect to asbestos-related
bodily injury claims and will make adjustments to the claim reserves if
warranted.
ENVIRONMENTAL POLLUTION
Potential exposures exist for claims involving environmental pollution,
including toxic waste clean-up. Environmental pollution clean-up is the
subject of both federal and state regulation. By some estimates, there are
thousands of potential waste sites subject to clean-up. The insurance
industry is involved in extensive litigation regarding coverage issues.
Judicial interpretations in many cases have expanded the scope of coverage and
liability beyond the original intent of the policies.
Under federal regulation, the Comprehensive Environmental Response
Compensation and Liability Act of 1980 ("Superfund") governs the clean-up and
restoration of abandoned toxic waste sites and formalizes the concept of legal
liability for clean-up and restoration by "Potentially Responsible Parties"
("PRP's"). Superfund establishes a mechanism to pay for clean-up of waste
sites if PRP's fail to do so, and to assign liability to PRP's. The extent of
liability to be allocated to a PRP is dependent on a variety of factors.
Further, the number of waste sites subject to clean-up is unknown. To date,
approximately 1,300 clean-up sites have been identified by the Environmental
Protection Agency. On the other hand, the Congressional Budget Office is
estimating that there will be 4,500 National Priority List sites and other
estimates run as high as 30,000 sites will require clean-up. Very few sites
have been subject to clean-up to date. The extent of clean-up necessary and
the assignment of liability has not been established.
CNA and the insurance industry are disputing coverage for many such
claims. Key coverage issues include whether Superfund response costs are
considered damages under the policies, trigger of coverage, applicability of
pollution exclusions, the potential for joint and several liability and
definition of an occurrence. Similar coverage issues exist for clean-up of
waste sites not covered under Superfund. To date, courts have been
inconsistent in their rulings on these issues.
The Superfund legislation must be reauthorized in 1994. A number of
proposals to reform Superfund have been made by various parties including the
EPA, the Treasury Department, congressional delegates and the Keystone
Commission, a broad-based national coalition which includes community,
industry and insurance representatives. It is too early to determine the
future impact of these proposals on CNA and the insurance industry.
48<PAGE>
<PAGE>
Due to the inherent uncertainties described above, including the
inconsistency of court decisions, the number of waste sites subject to
clean-up, and the standards for clean-up and liability, the exposure to CNA
for environmental pollution claims cannot be meaningfully quantified. Prior
to 1993, no specific allocation of reserves was made for unreported claims or
for litigation expenses. CNA identified reserves only for reported
environmental pollution claims. In 1993, CNA allocated approximately $340
million of claim and claim expense reserves for unreported environmental
pollution claims in addition to the $94 million of reserves recorded for
reported claims. Claim and claim expense reserves represent management's
estimates of ultimate liabilities based on currently available facts and law.
However, in addition to the uncertainties previously discussed, additional
issues related to, among other things, specific policy provisions, multiple
insurers and allocation of liability among insurers, consequences of conduct
by the insured, missing policies and proof of coverage make quantification of
liabilities exceptionally difficult.
The number of claims filed for environmental pollution coverage continues
to increase. Approximately 2,700 claims were reported in 1993 and
approximately 19,200 claims have been reported to date. Pending claims
totaled approximately 10,600, 10,800, and 9,300 at December 31, 1993, 1992 and
1991, respectively. Approximately 8,600 claims were closed through December
31, 1993, of which approximately 7,800 claims were settled without payment,
except for claim expenses of $18 million. Settlements for the remaining 800
claims totaled $76 million, plus claim expenses of $21 million. Reserve
development for environmental claims totaled $446, $48, and $47 million in
1993, 1992 and 1991, respectively, including litigation costs of $28, $25 and
$21 million. As noted above, adverse development for 1993 primarily resulted
from the allocation of approximately $340 million of reserves for unreported
claims. The results of operations in future years may continue to be
adversely affected by environmental pollution claims and claim expenses.
Management will continue to monitor potential liabilities and make further
adjustments as warranted.
OTHER LITIGATION
CNA and its subsidiaries are also parties to other litigation arising in
the ordinary course of business. The outcome of this other litigation will
not, in the opinion of management, materially affect the results of operations
or equity of CNA.
49<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE K. REINSURANCE:
CNA assumes and cedes insurance with other insurers and reinsurers and
members of various reinsurance pools and associations. CNA utilizes
reinsurance arrangements to limit its maximum loss, to provide greater
diversification of risk and to minimize exposures on larger risks. The
reinsurance coverages are tailored to the specific risk characteristics of
each product line with CNA's retained amount varying by type of coverage.
Generally, reinsurance coverage for property risks is on excess of loss, per
risk basis. Liability coverages are generally reinsured on a quota share
basis in excess of CNA's retained risk. In addition, CNA has catastrophe
coverage for certain types of losses over stipulated amounts arising from any
one occurrence or event.
The ceding of insurance does not discharge the primary liability of the
original insurer. CNA places reinsurance with other carriers only after
careful review of the nature of the contract and a thorough assessment of the
reinsurers' credit quality and claim settlement performance. Further, for
carriers that are not authorized reinsurers in Illinois, CNA receives
collateral primarily in the form of bank letters of credit, securing a large
portion of the recoverables. At December 31, 1993, such collateral totaled
approximately $155 million. CNA's largest recoverable, including prepaid
reinsurance premiums, at December 31, 1993, was approximately $484 million
with Lloyd's of London. The recoverable from Lloyd's of London is dispersed
among thousands of individual reinsurers and other names who have unlimited
liability.<PAGE>
The effects of reinsurance on written premiums and earned premiums are
shown in the following schedules:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 WRITTEN PREMIUMS
----------------------------------------
(In millions of dollars) DIRECT CEDED ASSUMED NET
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993
Long Duration Contracts........................................................ $ 422.7 $ 23.0 $ 141.6 $ 541.3
Short Duration Contracts....................................................... 7,654.9 540.1 1,168.4 8,283.2
------- ----- -------- -------
Total......................................................................... $8,077.6 $563.1 $1,310.0 $8,824.5
======= ===== ======= =======
1992
Long Duration Contracts ....................................................... $ 413.8 $ 23.2 $ 146.5 $ 537.1
Short Duration Contracts....................................................... 7,325.8 506.5 1,367.5 8,186.8
------- ----- ------- -------
Total......................................................................... $7,739.6 $529.7 $1,514.0 $8,723.9
======= ===== ======= =======
1991
Long Duration Contracts........................................................ $ 366.0 $ 19.7 $ 161.7 $ 508.0
Short Duration Contracts....................................................... 7,623.5 491.8 1,294.7 8,426.4
------- ----- ------- -------
Total......................................................................... $7,989.5 $511.5 $1,456.4 $8,934.4
======= ===== ======= =======
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 EARNED PREMIUMS
----------------------------------------
(In millions of dollars) DIRECT CEDED ASSUMED NET
- -------------------------------------------------------------------------------------------------------------------------------
1993
Long Duration Contracts........................................................ $ 350.1 $ 23.0 $ 140.9 $ 468.0
Short Duration Contracts ...................................................... 7,603.2 525.1 1,142.7 8,220.8
------- ----- ------- -------
Total......................................................................... $7,953.3 $548.1 $1,283.6 $8,688.8
======= ===== ======= =======
1992
Long Duration Contracts........................................................ $ 376.4 $ 23.2 $ 146.5 $ 499.7
Short Duration Contracts....................................................... 7,570.5 506.1 1,203.9 8,268.3
------- ------ ------- -------
Total......................................................................... $7,946.9 $529.3 $1,350.4 $8,768.0
======= ====== ======== =======
1991
Long Duration Contracts........................................................ $ 324.1 $ 19.7 $ 161.7 $ 466.1
Short Duration Contracts....................................................... 7,741.7 487.9 1,226.5 8,480.3
------- ------ ------- -------
Total......................................................................... $8,065.8 $507.6 $1,388.2 $8,946.4
======= ====== ======== =======
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
50<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
NOTE L. BUSINESS SEGMENTS:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991
(In millions of dollars)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Property/Casualty-commercial............................................................. $ 5,943.7 $ 5,957.5 $ 6,281.6
Property/Casualty-personal............................................................... 1,095.9 1,096.2 1,055.2
Property/Casualty-involuntary risks...................................................... 447.0 636.1 688.4
Life-individual.......................................................................... 497.2 484.8 474.7
Life-group............................................................................... 2,242.0 2,272.5 2,187.5
-------- -------- --------
CNA Insurance........................................................................... 10,225.8 10,447.1 10,687.4
Other and intercompany eliminations...................................................... (31.1) (20.5) (19.4)
-------- -------- --------
Revenues Excluding Realized Investment Gains (Losses).................................. 10,194.7 10,426.6 10,668.0
-------- -------- --------
Realized Investment Gains (Losses):
Property/Casualty....................................................................... 673.5 262.5 458.2
Life.................................................................................... 126.0 94.8 5.1
Other................................................................................... 16.6 9.5 .1
-------- -------- --------
Total Realized Investment Gains........................................................ 816.1 366.8 463.4
-------- -------- --------
$11,010.8 $10,793.4 $11,131.4
======== ======== ========
INCOME (LOSS) BEFORE INCOME TAX
Property/Casualty-commercial............................................................. $ (638.9) $(1,466.6) $ 396.3
Property/Casualty-personal............................................................... (12.3) (51.6) (71.3)
Property/Casualty-involuntary risks...................................................... (80.8) (257.3) (267.0)
Life-individual.......................................................................... 14.5 22.5 13.8
Life-group............................................................................... 51.9 56.1 76.0
-------- -------- --------
CNA Insurance........................................................................... (665.6) (1,696.9) 147.8
Interest, other and intercompany eliminations............................................ (44.0) (32.8) (35.2)
-------- --------- --------
Income (Loss) Excluding Realized Investment Gains (Losses)............................ (709.6) (1,729.7) 112.6
-------- --------- --------
Realized Investment Gains (Losses):
Property/Casualty....................................................................... 673.5 262.5 458.2
Life.................................................................................... 112.9 82.7 (15.0)
Other................................................................................... 16.6 9.5 .1
-------- -------- --------
Total Realized Investment Gains Net of Policyholders' Interest......................... 803.0 354.7 443.3
-------- -------- --------
$ 93.4 $(1,375.0) $ 555.9
======= ======== ========
<PAGE>
<PAGE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991
(In millions of dollars)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INCOME (LOSS)
Property/Casualty-commercial............................................................. $ (241.5) $ (765.6) $ 476.6
Property/Casualty-personal............................................................... 13.3 (8.7) (25.8)
Property/Casualty-involuntary risks...................................................... (38.4) (154.1) (161.1)
Life-individual.......................................................................... 9.6 14.5 9.2
Life-group............................................................................... 33.9 37.5 51.2
-------- -------- --------
CNA Insurance........................................................................... (223.1) (876.4) 350.1
Interest, other and intercompany eliminations............................................ (28.6) (21.4) (22.8)
------- -------- -------
Net Income (Loss) Excluding Net Realized Investment Gains (Losses)
and Accounting Changes............................................................... (251.7) (897.8) 327.3
------- --------- --------
Net Realized Investment Gains (Losses):
Property/Casualty....................................................................... 435.8 175.9 300.0
Life.................................................................................... 72.6 53.2 (14.9)
Other................................................................................... 10.8 6.2 .1
------- -------- --------
Total Net Realized Investment Gains.................................................... 519.2 235.3 285.2
------- -------- --------
Accounting Changes:
Property/Casualty....................................................................... - 307.9 -
Life.................................................................................... - 24.0 -
-------- -------- --------
Total Accounting Changes.............................................................. - 331.9 -
-------- -------- --------
$ 267.5 $ (330.6) $ 612.5
========= ======== ========
</TABLE>
51
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991
(In millions of dollars)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Property/Casualty-commercial....................................................... $25,356.7 $23,357.6 $23,360.4
Property/Casualty-personal......................................................... 2,213.1 1,981.9 1,878.2
Property/Casualty-involuntary risks................................................ 2,187.2 2,114.4 1,817.8
Life-individual.................................................................... 3,329.6 3,145.5 2,844.3
Life-group......................................................................... 8,932.2 9,247.1 9,345.1
-------- -------- --------
CNA Insurance.................................................................... 42,018.8 39,846.5 39,245.8
Other and intercompany eliminations................................................ (106.5) (102.6) (84.1)
-------- -------- --------
$41,912.3 $39,743.9 $39,161.7
======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Assets and investment income of the property/casualty group are allocated
to business segments on the basis of insurance reserves after attribution of
separately identifiable assets. Life group assets and investment income are
allocated to business segments based on cash flows after attribution of
separately identifiable assets. Income taxes have been allocated on the basis
of taxable operating income of the respective insurance segments.
Property/casualty involuntary risks include mandatory participations in
residual markets, statutory assessments for insolvencies of other insurers and
other involuntary charges. CNA's share of involuntary risks is generally a
function of its share of the voluntary market by line of insurance in each
state.
Through August 1, 1989, CNA's property/casualty operations wrote financial
guarantee insurance contracts. These contracts primarily represent industrial
development bond guarantees and equity guarantees typically extending from ten
to thirteen years. For these guarantees, CNA received an advance premium which
is recognized over the exposure period and in proportion to the underlying
exposure insured.
At December 31, 1993 and 1992, gross exposure of financial guarantee
insurance contracts amounted to $792 million and $1.0 billion, respectively.
The degree of risk attached to this exposure is substantially reduced through
reinsurance, collateral requirements and diversification of exposures. At
December 31, 1993 and 1992, collateral consisting of letters of credit and
debt service reserves amounted to $48 million and $60 million, respectively.
In addition, security interests in the real estate are also obtained.
Approximately 38% of the risks were ceded to reinsurers at December 31, 1993
and 1992, respectively. Total exposure, net of reinsurance, amounted to $492
million and $603 million at December 31, 1993 and 1992, respectively. Gross
unearned premium reserves for financial guarantee contracts were $33 million
and $51 million at December 31, 1993 and 1992, respectively. Gross claim and
claim expense reserves totaled $320 million and $197 million at December 31,
1993 and 1992, respectively.
Life revenues include $1.7 billion, $1.6 billion and $1.5 billion in 1993,
1992 and 1991, respectively, under contracts covering U.S. Government
employees and their dependents.
52<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONCLUDED
NOTE M. UNAUDITED QUARTERLY FINANCIAL DATA:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NET OPERATING INCOME (LOSS)
INCOME (LOSS) BEFORE
EXCLUDING CUMULATIVE EFFECT EARNINGS NET EARNINGS
(In millions of dollars, NET REALIZED OF ACCOUNTING PER INCOME PER
except per share data) REVENUES GAINS/LOSSES CHANGES SHARE (LOSS) SHARE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1993
Fourth Quarter...................................... $2,708.2 $ 37.3 $ 87.4 $ 1.40 $ 87.4 $ 1.40
Third Quarter....................................... 2,756.9 (300.8) (208.3) (3.39) (208.3) (3.39)
Second Quarter...................................... 2,628.2 (12.7) 74.8 1.19 74.8 1.19
First Quarter....................................... 2,917.5 24.5 313.6 5.06 313.6 5.06
1992
Fourth Quarter...................................... 2,684.2 (961.1) (914.3) (14.81) (914.3) (14.81)
Third Quarter....................................... 2,702.6 (72.0) (3.3) (.07) (3.3) (.07)
Second Quarter...................................... 2,691.2 67.5 145.6 2.33 145.6 2.33
First Quarter....................................... 2,715.4 67.8 109.5 1.76 441.4 7.13
1991
Fourth Quarter...................................... 2,995.9 51.1 243.8 3.92 243.8 3.92
Third Quarter....................................... 2,700.3 87.4 96.8 1.54 96.8 1.54
Second Quarter...................................... 2,754.6 98.2 154.3 2.46 154.3 2.46
First Quarter....................................... 2,680.6 90.6 117.6 1.88 117.6 1.88
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
53<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
CNA Financial Corporation
We have audited the consolidated balance sheets of CNA Financial
Corporation (an affiliate of Loews Corporation) and subsidiaries as of
December 31, 1993 and 1992 and the related statements of consolidated
operations, stockholders' equity, and cash flows for each of the three years
in the period ended December 31, 1993. 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 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, such Consolidated Financial Statements present fairly, in
all material respects, the financial position of CNA Financial Corporation and
subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles.
As discussed in Note B to the Consolidated Financial Statements, the
Company changed its methods of accounting for reinsurance and certain
investments in debt and equity securities in 1993 and its methods of
accounting for income taxes, postretirement benefits, and certain workers'
compensation and disability claims in 1992.
DELOITTE & TOUCHE
Chicago, Illinois
February 16, 1994
<PAGE>
<PAGE>
INVITATION TO THE ANNUAL MEETING FORM 10-K
- ------------------------------------- -------------------------------------
Shareholders are cordially invited to A copy of CNA Financial Corporation's
attend the annual meeting at annual report on Form 10-K, which is
11:00 a.m. Wednesday, May 4, 1994 to filed with the Securities and Exchange
be held in Room 308, CNA Plaza, Commission, will be furnished to
333 S. Wabash Avenue, Chicago. to shareholders without charge upon
Shareholders unable to attend are written request to:
requested to exercise their right to
vote by proxy. Proxy material will be Donald M. Lowry
mailed to shareholders prior to the Senior Vice President, Secretary and
meeting. General Counsel
CNA Financial Corporation
CNA Plaza, 43 South
Chicago, Illinois 60685
54
COMMON STOCK INFORMATION
CNA's common stock is listed on the New York, Chicago and Pacific Stock
Exchanges and is also traded on the Philadelphia Stock Exchange. The number of
holders of record of CNA's common stock as of March 1, 1994 was 3,438. As of
March 1, 1994, Loews Corporation owned 83 percent of CNA's outstanding common
stock.
The table below sets forth the high and low closing sales prices for CNA's
common stock based on the New York Stock Exchange Composite Transactions. No
dividends have been paid on CNA's common stock in order to develop and
maintain a strong surplus position for CNA's insurance subsidiaries, which is
necessary to support business growth in an increasingly competitive
environment. CNA's ability to pay dividends is influenced, in part, by
dividend restrictions of its principal operating insurance subsidiaries as
described in Note E to the Consolidated Financial Statements.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
QUARTER 1993 1992
------------------ ------------------
HIGH LOW HIGH LOW
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fourth........................ 88 74 1/4 102 7/8 90 1/4
Third......................... 94 1/2 83 3/4 94 1/2 84 1/2
Second........................ 100 5/8 87 93 80 1/2
First......................... 101 90 5/8 104 1/2 78 1/2
- ----------------------------------------------------------------------------
</TABLE>
55<PAGE>
<PAGE>
CORPORATE DIRECTORS AND OFFICERS
DIRECTORS EXECUTIVE COMMITTEE
Antoinette Cook Bush Preston R. Tisch, Chairman
Partner, Antoinette Cook Bush
Skadden, Arps, Slate, Meagher & Flom Dennis H. Chookaszian
Philip L. Engel
Dennis H. Chookaszian Robert P. Gwinn
Chairman and Chief Executive Officer, Edward J. Noha
CNA Insurance Companies Lester Pollack
Richard L. Thomas
Philip L. Engel James S. Tisch
President, Laurence A. Tisch
CNA Insurance Companies Marvin Zonis
Robert P. Gwinn
Retired Chairman and Chief Executive Officer, FINANCE COMMITTEE
Encyclopedia Britannica
Lester Pollack, Chairman
Edward J. Noha Antoinette Cook Bush
Chairman of the Board of CNA Dennis H. Chookaszian
Philip L. Engel
Lester Pollack Robert P. Gwinn
Chairman, Finance Committee; Edward J. Noha
General Partner, John E. Stipp
Lazard Freres & Co.; Richard L. Thomas
Chief Executive Officer, James S. Tisch
Centre Partners L.P. Laurence A. Tisch
Preston R. Tisch
John E. Stipp Marvin Zonis
Retired President,
Federal Home Loan Bank of Chicago AUDIT COMMITTEE
Richard L. Thomas Richard L. Thomas, Chairman
Chairman, Audit Committee; Antoinette Cook Bush
Chairman and Chief Executive Officer, Robert P. Gwinn
The First National Bank of Chicago and Marvin Zonis
First Chicago Corporation
OFFICERS
James S. Tisch
Executive Vice President, Laurence A. Tisch
Loews Corporation Chief Executive Officer
CNA Financial Corporation
Laurence A. Tisch
Chief Executive Officer of CNA; Dennis H. Chookaszian
Chairman of the Board and Chairman and Chief Executive
Co-Chief Executive Officer, Officer,
Loews Corporation; CNA Insurance Companies
Chairman of the Board, President and
Chief Executive Officer of CBS Inc. Philip L. Engel
President,
CNA Insurance Companies
Preston R. Tisch
Chairman, Executive Committee; Donald M. Lowry
President and Co-Chief Executive Officer, Senior Vice President,
Loews Corporation Secretary and General
Counsel
CNA Financial Corporation
<PAGE>
<PAGE>
Marvin Zonis
Professor of International Political Economy Peter E. Jokiel
Graduate School of Business Senior Vice President and
University of Chicago Chief Financial Officer
CNA Financial Corporation
ADMINISTRATIVE OFFICES
CNA Plaza Carolyn L. Murphy
Chicago, Illinois 60685 Senior Vice President,
312/822-5000 CNA Insurance Companies
TRANSFER AGENT AND REGISTRAR Jae L. Wittlich
The First National Bank of Chicago Senior Vice President,
CNA Insurance Companies
56
<PAGE>
<PAGE>
CNA FINANCIAL CORPORATION
APPENDIX
OMITTED GRAPH MATERIAL
Exhibit 13.01 - CNA Financial Corporation 1993 Annual Report
3-D line graphs of:
- Revenues for the period 1983 through 1993
- Assets for the period 1983 through 1993
- Stockholders' equity for the period 1983 through 1993
(See page 3 of Exhibit 13.01 for a table showing the data points
used in the above graphs.)
<PAGE>
Form 2 EXHIBIT 28.2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - ANALYSIS OF LOSSES AND LOSS EXPENSES
Notes to Schedule P
(1) The Parts of Schedule P:
Part 1 - detailed information on losses and loss expenses.
Part 2 - history of incurred losses and allocated expenses.
Part 3 - history of loss and allocated expense payments.
Part 4 - history of bulk and incurred-but-not reported reserves.
Schedule P Interrogatories
(2) Lines of business A through M and R are groupings of the lines of business
used on Page 14, the state page.
(3) Reinsurance A, B, C, and D (lines N to Q) are:
Reinsurance A = nonproportional property (1988 and subsequent)
Reinsurance B = nonproportional liability (1988 and subsequent)
Reinsurance C = financial lines (1988 and subsequent)
Reinsurance D = old Schedule O line 30 (1987 and prior)
(4) The Instructions to Schedule P contain directions necessary for filling
out Schedule P.
SCHEDULE P - PART 1 - SUMMARY
<TABLE>
<CAPTION>
(000 omitted)
--------------------------------------------------------------------------------------------------------------------
| | Premiums Earned | Loss and Loss Expense |
| 1 |------------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 304,164 | 48,439 | 99,060 | 5,911 |
| 2. 1984.....| 1,972,550 | 251,064 | 1,721,486 | 1,718,025 | 322,406 | 262,790 | 45,095 |
| 3. 1985.....| 2,756,886 | 425,772 | 2,331,114 | 2,259,526 | 587,368 | 306,759 | 39,434 |
| 4. 1986.....| 4,300,449 | 550,592 | 3,749,857 | 2,096,005 | 311,551 | 314,112 | 29,692 |
| 5. 1987.....| 4,915,810 | 665,280 | 4,250,529 | 2,341,964 | 334,228 | 273,173 | 12,982 |
| 6. 1988.....| 5,399,645 | 613,422 | 4,786,223 | 2,761,739 | 343,647 | 291,235 | 16,501 |
| 7. 1989.....| 5,768,987 | 549,762 | 5,219,225 | 3,345,300 | 344,621 | 295,604 | 19,201 |
| 8. 1990.....| 6,595,234 | 454,185 | 6,141,049 | 3,244,754 | 182,895 | 273,915 | 8,275 |
| 9. 1991.....| 6,891,720 | 425,638 | 6,466,082 | 2,701,737 | 148,931 | 184,187 | 6,734 |
|10. 1992.....| 6,535,769 | 434,065 | 6,101,704 | 2,138,580 | 176,908 | 84,153 | 4,834 |
|11. 1993.....| 6,404,755 | 454,555 | 5,950,200 | 966,538 | 73,897 | 23,537 | 1,531 |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 23,878,333 | 2,874,891 | 2,408,526 | 190,190 |
--------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
SCHEDULE P - PART 1 - SUMMARY - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------
| |Payments | |
| 1 |---------------------------------------------| 12 |
| Years | 9 | 10 | 11 | |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 8,685 | 4,544 | 353,419 | X X X X |
| 2. 1984.....| 60,367 | 75,702 | 1,689,016 | X X X X |
| 3. 1985.....| 67,693 | 91,787 | 2,031,271 | X X X X |
| 4. 1986.....| 72,640 | 115,504 | 2,184,378 | X X X X |
| 5. 1987.....| 63,611 | 129,481 | 2,397,408 | X X X X |
| 6. 1988.....| 164,867 | 152,894 | 2,845,720 | X X X X |
| 7. 1989.....| 146,989 | 184,707 | 3,461,789 | X X X X |
| 8. 1990.....| 87,595 | 190,299 | 3,517,798 | X X X X |
| 9. 1991.....| 119,841 | 193,098 | 2,923,357 | X X X X |
|10. 1992.....| 68,429 | 179,934 | 2,220,924 | X X X X |
|11. 1993.....| 119,228 | 153,236 | 1,067,884 | X X X X |
|-------------|--------------|--------------|---------------|---------------|
|12. Totals ..| 979,945 | 1,471,186 | 24,692,964 | X X X X |
---------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpaid|
| Years |---------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|----------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|--------------|--------------|-------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| 878,775 | 213,722 | 2,722,911 | 199,116 | 0 | 0 | 43,214 |
| 2. 1984.....| 186,423 | 27,043 | 106,347 | 22,261 | 0 | 0 | 17,331 |
| 3. 1985.....| 206,441 | 35,257 | 182,710 | 26,435 | 0 | 0 | 26,127 |
| 4. 1986.....| 269,220 | 28,839 | 236,977 | 23,741 | 0 | 0 | 44,507 |
| 5. 1987.....| 332,114 | 37,723 | 279,893 | 35,749 | 0 | 0 | 61,626 |
| 6. 1988.....| 461,651 | 33,439 | 369,280 | 69,356 | 0 | 0 | 76,584 |
| 7. 1989.....| 627,807 | 51,015 | 426,054 | 62,814 | 0 | 0 | 111,645 |
| 8. 1990.....| 943,114 | 51,907 | 680,064 | 120,339 | 0 | 0 | 192,202 |
| 9. 1991.....| 1,040,354 | 57,790 | 1,288,800 | 158,056 | 0 | 0 | 284,729 |
|10. 1992.....| 1,076,401 | 35,068 | 1,903,538 | 213,145 | 0 | 0 | 357,554 |
|11. 1993.....| 900,547 | 65,653 | 2,985,885 | 229,084 | 0 | 0 | 416,424 |
|-------------|-------------|--------------|--------------|-------------|--------------|--------------|--------------|
|12. Totals ..| 6,922,847 | 637,456 | 11,182,458 | 1,160,096 | 0 | 0 | 1,631,943 |
--------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1 - SUMMARY - (CONTINUED)
<CAPTION>
------------------------------------------------------------------------------------------
| | | | | | |
| Years |--------------| 21 | 22 | 23 | 24 |
| in Which | + IBNR | | | | Number of |
|Premiums Were|--------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | and Assumed |
|-------------|--------------|---------------|---------------|---------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ...| 6,723 | 34,973 | 7,915 | 3,233,254 | X X X X |
| 2. 1984.....| 2,894 | 7,110 | 2,168 | 260,071 | X X X X |
| 3. 1985.....| 4,840 | 14,622 | 2,430 | 351,176 | X X X X |
| 4. 1986.....| 4,251 | 15,780 | 3,776 | 497,649 | X X X X |
| 5. 1987.....| 5,183 | 15,043 | 6,338 | 601,316 | X X X X |
| 6. 1988.....| 8,369 | 23,696 | 7,022 | 803,373 | X X X X |
| 7. 1989.....| 9,939 | 34,351 | 8,382 | 1,050,120 | X X X X |
| 8. 1990.....| 14,049 | 53,711 | 12,593 | 1,641,678 | X X X X |
| 9. 1991.....| 18,229 | 67,353 | 19,027 | 2,398,835 | X X X X |
|10. 1992.....| 16,142 | 81,757 | 27,129 | 3,100,267 | X X X X |
|11. 1993.....| 24,896 | 103,346 | 41,542 | 4,024,765 | X X X X |
|-------------|--------------|---------------|---------------|---------------|-------------|
|12. Totals ..| 115,515 | 451,742 | 138,322 | 17,962,504 | X X X X |
------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| Years | Total Losses and | Loss and Loss Expense Percentage | Discount|
| in Which | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of|
|Premiums Were|------------------------------------------|--------------------------------------------|---------------|
| Earned and | 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|---------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 2,368,786 | 419,699 | 1,949,087 | 120.1 | 167.2 | 113.2 | 0 |
| 3. 1985.....| 3,075,780 | 693,334 | 2,382,446 | 111.6 | 162.8 | 102.2 | 0 |
| 4. 1986.....| 3,080,101 | 398,074 | 2,682,027 | 71.6 | 72.3 | 71.5 | 0 |
| 5. 1987.....| 3,424,589 | 425,865 | 2,998,724 | 69.7 | 64.0 | 70.5 | 0 |
| 6. 1988.....| 4,120,405 | 471,312 | 3,649,093 | 76.3 | 76.8 | 76.2 | 0 |
| 7. 1989.....| 4,999,499 | 487,590 | 4,511,909 | 86.7 | 88.7 | 86.4 | 0 |
| 8. 1990.....| 5,536,941 | 377,465 | 5,159,476 | 84.0 | 83.1 | 84.0 | 0 |
| 9. 1991.....| 5,711,932 | 389,740 | 5,322,192 | 82.9 | 91.6 | 82.3 | 0 |
|10. 1992.....| 5,767,289 | 446,097 | 5,321,192 | 88.2 | 102.8 | 87.2 | 0 |
|11. 1993.....| 5,487,709 | 395,061 | 5,092,648 | 85.7 | 86.9 | 85.6 | 0 |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|---------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
---------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1 - SUMMARY - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------
| Years |for Time | | Net Balance Sheet Reserves |
| in Which | Money | 33 | After Discount |
|Premiums Were|--------------|Inter-Company |-------------------------------|
| Earned and | 32 | Pooling | 34 | 35 |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|----------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 3,188,848 | 44,406 |
| 2. 1984.....| 0 | 0.0 | 243,466 | 16,605 |
| 3. 1985.....| 0 | 0.0 | 327,459 | 23,717 |
| 4. 1986.....| 0 | 0.0 | 453,616 | 44,032 |
| 5. 1987.....| 0 | 0.0 | 538,534 | 62,781 |
| 6. 1988.....| 0 | 0.0 | 728,137 | 75,237 |
| 7. 1989.....| 0 | 0.0 | 940,031 | 110,088 |
| 8. 1990.....| 0 | 0.0 | 1,450,932 | 190,746 |
| 9. 1991.....| 0 | 0.0 | 2,113,309 | 285,527 |
|10. 1992.....| 0 | 0.0 | 2,731,726 | 368,541 |
|11. 1993.....| 0 | 0.0 | 3,591,695 | 433,070 |
|-------------|--------------|--------------|----------------|--------------|
|12. Totals ..| 0 | X X X X | 16,307,753 | 1,654,750 |
---------------------------------------------------------------------------
</TABLE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 2 - SUMMARY
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported At Year End (000 |
| Years in Which |-------------------------------------------------------------------------------------------------------|
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-------------------|----------------|-------------|--------------|-------------|-------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ......| 2,338,933 * | 2,454,076 | 2,566,981 | 2,919,734 | 3,085,482 | 3,324,720 | 3,492,509 |
| 2. 1984........| 1,508,144 | 1,490,738 | 1,508,155 | 1,659,625 | 1,715,717 | 1,803,022 | 1,848,457 |
| 3. 1985........| X X X X | 2,036,469 | 2,105,231 | 2,094,082 | 2,119,566 | 2,191,704 | 2,212,837 |
| 4. 1986........| X X X X | X X X X | 3,034,038 | 2,915,814 | 2,824,448 | 2,672,855 | 2,595,606 |
| 5. 1987........| X X X X | X X X X | X X X X | 3,056,861 | 3,004,221 | 3,045,014 | 2,942,054 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 3,674,384 | 3,616,713 | 3,575,399 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 4,225,774 | 4,245,052 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 5,082,895 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
|---------------------------------------------------------------------------------------------------------------------------|
| 12. Totals ............................................................................................................|
---------------------------------------------------------------------------------------------------------------------------
*Reported reserves only. Subsequent development relates only to subsequent payments and reserves.
**Current year less first or second prior year, showing (redundant) or adverse.
<PAGE>
<PAGE>
SCHEDULE P - PART 2 - SUMMARY - (CONTINUED)
<CAPTION>
------------------------------------------------------------------------------------------
| 1 |omitted) | Development** |
| Years in Which |------------------------------------------|---------------------------|
| Losses Were | 9 | 10 | 11 | 12 | 13 |
| Incurred | 1991 | 1992 | 1993 | One Year | Two Year |
|-------------------|--------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ......| 3,605,121 | 5,347,424 | 6,376,184 | 1,028,759 | 2,771,063 |
| 2. 1984........| 1,847,357 | 1,856,201 | 1,871,217 | 15,016 | 23,860 |
| 3. 1985........| 2,266,914 | 2,289,475 | 2,288,229 | (1,246)| 21,316 |
| 4. 1986........| 2,603,601 | 2,561,578 | 2,562,747 | 1,169 | (40,854)|
| 5. 1987........| 2,897,060 | 2,870,274 | 2,862,904 | (7,370)| (34,156)|
| 6. 1988........| 3,506,208 | 3,504,812 | 3,489,178 | (15,634)| (17,031)|
| 7. 1989........| 4,272,963 | 4,322,588 | 4,318,820 | (3,769)| 45,856 |
| 8. 1990........| 4,954,751 | 4,932,462 | 4,956,585 | 24,123 | 1,834 |
| 9. 1991........| 5,461,255 | 5,369,712 | 5,110,068 | (259,645)| (351,188)|
| 10. 1992........| X X X X | 5,264,857 | 5,114,128 | (150,729)| X X X X |
| 11. 1993........| X X X X | X X X X | 4,897,871 | X X X X | X X X X |
|--------------------------------------------------------------|-------------|-------------|
| 12. Totals ...............................................| 630,675 | 2,420,701 |
------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE P - PART 3 - SUMMARY
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses At Year End (000 |
| Years in Which |--------------------------------------------------------------------------------------------------------|
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|-------------------|--------------- |--------------|--------------|-------------|-------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ......| 0 | 516,822 | 949,048 | 1,334,725 | 1,635,347 | 1,957,064 | 2,204,591 |
| 2. 1984........| (28,063) | 701,748 | 848,913 | 997,651 | 1,177,489 | 1,293,517 | 1,403,568 |
| 3. 1985........| X X X X | (39,769)| 868,516 | 1,092,877 | 1,240,564 | 1,414,678 | 1,585,980 |
| 4. 1986........| X X X X | X X X X | 467,087 | 947,280 | 1,263,953 | 1,420,288 | 1,651,606 |
| 5. 1987........| X X X X | X X X X | X X X X | 547,999 | 1,201,193 | 1,563,459 | 1,748,920 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 651,625 | 1,428,893 | 1,886,171 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 789,063 | 1,827,085 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 918,597 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------------
Note: Net of salvage and subrogation received.
<PAGE>
<PAGE>
SCHEDULE P - PART 3 - SUMMARY - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------
| | | 12 | 13 |
| 1 |omitted) | Number of | Number of |
| Years in Which |-------------------------------------------| Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed With | Closed |
| Incurred | 1991 | 1992 | 1993 | Loss |Without Loss |
| | | | | Payment | Payment |
|-------------------|--------------|--------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ......| 2,505,698 | 2,801,970 | 3,150,845 | X X X X | X X X X |
| 2. 1984........| 1,493,715 | 1,560,866 | 1,613,314 | X X X X | X X X X |
| 3. 1985........| 1,752,074 | 1,887,316 | 1,939,483 | X X X X | X X X X |
| 4. 1986........| 1,861,599 | 1,963,470 | 2,068,874 | X X X X | X X X X |
| 5. 1987........| 1,950,264 | 2,137,487 | 2,267,927 | X X X X | X X X X |
| 6. 1988........| 2,188,695 | 2,490,999 | 2,692,826 | X X X X | X X X X |
| 7. 1989........| 2,507,948 | 2,925,775 | 3,277,082 | X X X X | X X X X |
| 8. 1990........| 2,061,339 | 2,802,747 | 3,327,500 | X X X X | X X X X |
| 9. 1991........| 997,430 | 2,012,959 | 2,730,259 | X X X X | X X X X |
| 10. 1992........| X X X X | 1,004,297 | 2,040,990 | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | 914,648 | X X X X | X X X X |
-------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE P - PART 4 - SUMMARY
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
| 1 | Bulk and Incurred But Not Reported Reserves on Losses and Allocated |
| Years in Which | ----------------------------------------------------------------------------------------|
| Losses | 2 | 3 | 4 | 5 | 6 | 7 |
| Were Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
|--------------------|--------------|---------------|--------------|--------------|-------------|--------------|
<S> <C> <C> <C> <C> <C> <C> |
| | | | | | | |
| 1. Prior .....| 873,964 | 649,519 | 491,275 | 580,826 | 561,553 | 473,323 |
| 2. 1984.......| 1,164,329 | 427,252 | 278,463 | 297,143 | 209,779 | 221,474 |
| 3. 1985.......| X X X X | 1,610,921 | 781,359 | 557,294 | 437,921 | 419,052 |
| 4. 1986.......| X X X X | X X X X | 2,048,934 | 1,417,507 | 1,057,062 | 771,057 |
| 5. 1987.......| X X X X | X X X X | X X X X | 1,964,787 | 1,207,755 | 910,368 |
| 6. 1988.......| X X X X | X X X X | X X X X | X X X X | 2,335,680 | 1,457,537 |
| 7. 1989.......| X X X X | X X X X | X X X X | X X X X | X X X X | 2,596,516 |
| 8. 1990.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 4 - SUMMARY - (CONTINUED)
<CAPTION>
- -------------------------------------------------------------------------------
| 1 |Expenses at Year End (000 omitted) |
| Years in Which |---------------------------------------------------------|
| Losses | 8 | 9 | 10 | 11 |
| Were Incurred | 1990 | 1991 | 1992 | 1993 |
|--------------------|--------------|--------------|-------------|-------------|
<S> <C> <C> <C> <C> |
| 1. Prior .....| 479,150 | 395,468 | 1,898,880 | 2,560,286 |
| 2. 1984.......| 191,724 | 130,513 | 93,114 | 98,523 |
| 3. 1985.......| 309,281 | 244,302 | 202,851 | 177,562 |
| 4. 1986.......| 520,491 | 391,556 | 305,341 | 253,492 |
| 5. 1987.......| 671,384 | 500,199 | 368,650 | 300,587 |
| 6. 1988.......| 957,875 | 646,699 | 469,139 | 368,139 |
| 7. 1989.......| 1,503,631 | 882,306 | 602,913 | 464,946 |
| 8. 1990.......| 3,251,645 | 1,746,567 | 1,046,699 | 737,878 |
| 9. 1991.......| X X X X | 3,433,404 | 2,202,453 | 1,397,244 |
| 10. 1992.......| X X X X | X X X X | 3,344,444 | 2,031,805 |
| 11. 1993.......| X X X X | X X X X | X X X X | 3,148,329 |
- -------------------------------------------------------------------------------
</TABLE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS
<TABLE>
<CAPTION>
(000 omitted)
---------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense |
| |------------------------------------------|------------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|------------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|---------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ...| X X X X | X X X X | X X X X | 209 | 0 | 35 | 0 |
| 2. 1984.....| 69,369 | 1,307 | 68,063 | 45,753 | 694 | 2,130 | 13 |
| 3. 1985.....| 79,932 | 5,347 | 74,585 | 59,538 | 0 | 3,198 | 0 |
| 4. 1986.....| 90,407 | 970 | 89,437 | 53,997 | 1 | 2,879 | 0 |
| 5. 1987.....| 110,990 | 1,029 | 109,960 | 65,414 | 16 | 4,769 | 0 |
| 6. 1988.....| 147,610 | 759 | 146,851 | 85,099 | (5)| 4,072 | 0 |
| 7. 1989.....| 169,394 | 1,244 | 168,150 | 123,772 | 262 | 5,975 | 5 |
| 8. 1990.....| 188,947 | 517 | 188,430 | 144,028 | 237 | 6,117 | 10 |
| 9. 1991.....| 203,426 | 2,272 | 201,154 | 138,661 | 442 | 4,560 | 28 |
|10. 1992.....| 216,699 | 681 | 216,018 | 175,088 | 10,923 | 4,343 | 15 |
|11. 1993.....| 223,351 | 299 | 223,053 | 99,073 | 24 | 2,247 | 3 |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|---------------|
|12. Totals ..| X X X X | X X X X | X X X X | 990,632 | 12,594 | 40,325 | 74 |
---------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years. Report
loss payments net of salvage and subrogation received.<PAGE>
<PAGE>
SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| 1 |Payments | |
| |--------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| | | | | |
| 1. Prior ...| 3 | 6 | 250 | X X X X |
| 2. 1984.....| 1,218 | 508 | 47,683 | 35,760 |
| 3. 1985.....| 923 | 1,628 | 64,363 | 44,723 |
| 4. 1986.....| 848 | 4,377 | 61,252 | 38,493 |
| 5. 1987.....| 798 | 5,822 | 75,989 | 45,207 |
| 6. 1988.....| 1,512 | 6,221 | 95,398 | 49,533 |
| 7. 1989.....| 1,803 | 7,991 | 137,470 | 67,666 |
| 8. 1990.....| 2,369 | 9,294 | 159,192 | 72,498 |
| 9. 1991.....| 1,527 | 11,941 | 154,692 | 80,160 |
|10. 1992.....| 963 | 13,823 | 182,316 | 80,675 |
|11. 1993.....| 562 | 14,021 | 115,313 | 62,634 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 12,526 | 75,632 | 1,093,921 | X X X X |
-------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpaid|
| Years |---------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|----------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 591 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984.....| 855 | 0 | 98 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 691 | 0 | 277 | 0 | 0 | 0 | 16 |
| 4. 1986.....| 660 | 0 | 300 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 1,390 | 0 | 334 | 0 | 0 | 0 | 177 |
| 6. 1988.....| 2,921 | 0 | 1,432 | 0 | 0 | 0 | 52 |
| 7. 1989.....| 3,799 | 0 | 1,473 | 32 | 0 | 0 | 260 |
| 8. 1990.....| 5,804 | 0 | 1,794 | 6 | 0 | 0 | 587 |
| 9. 1991.....| 8,975 | 0 | 6,537 | 1,210 | 0 | 0 | 2,878 |
|10. 1992.....| 10,784 | 647 | 16,475 | 93 | 0 | 0 | 3,967 |
|11. 1993.....| 21,713 | 0 | 45,686 | 82 | 0 | 0 | 4,442 |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 58,182 | 647 | 74,406 | 1,423 | 0 | 0 | 12,379 |
--------------------------------------------------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS - (CONTINUED)
<CAPTION>
----------------------------------------------------------------------------------------
| | | | | | |
| Years |--------------| 21 | 22 | 23 | 24 |
| in Which |+ IBNR | | | | Number of |
|Premiums Were|--------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|---------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| | | | | | |
| 1. Prior ...| 0 | 1 | 0 | 591 | 5 |
| 2. 1984.....| 0 | 24 | 4 | 957 | 7 |
| 3. 1985.....| 0 | 11 | 6 | 990 | 9 |
| 4. 1986.....| 0 | 12 | 9 | 969 | 22 |
| 5. 1987.....| 0 | 75 | 21 | 1,922 | 27 |
| 6. 1988.....| 0 | 319 | 52 | 4,457 | 52 |
| 7. 1989.....| 0 | 686 | 72 | 5,572 | 114 |
| 8. 1990.....| 0 | 1,457 | 118 | 8,297 | 145 |
| 9. 1991.....| 0 | 1,448 | 317 | 17,497 | 342 |
|10. 1992.....| 3 | 2,939 | 600 | 31,082 | 615 |
|11. 1993.....| 0 | 2,739 | 1,351 | 73,110 | 3,984 |
|-------------|--------------|---------------|--------------|--------------|-------------|
|12. Totals ..| 3 | 9,712 | 2,550 | 145,444 | 5,322 |
----------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of|
| in Which |-----------------------------------------|--------------------------------------------|----------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|----------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 49,348 | 707 | 48,641 | 71.1 | 54.1 | 71.5 | 0 |
| 3. 1985.....| 65,354 | 0 | 65,354 | 81.8 | 0.0 | 87.6 | 0 |
| 4. 1986.....| 62,222 | 1 | 62,221 | 68.8 | 0.1 | 69.6 | 0 |
| 5. 1987.....| 77,927 | 16 | 77,911 | 70.2 | 1.6 | 70.9 | 0 |
| 6. 1988.....| 99,849 | (5)| 99,854 | 67.6 | (0.7)| 68.0 | 0 |
| 7. 1989.....| 143,342 | 299 | 143,043 | 84.6 | 24.0 | 85.1 | 0 |
| 8. 1990.....| 167,742 | 253 | 167,489 | 88.8 | 48.9 | 88.9 | 0 |
| 9. 1991.....| 173,869 | 1,680 | 172,189 | 85.5 | 73.9 | 85.6 | 0 |
|10. 1992.....| 225,080 | 11,681 | 213,399 | 103.9 | 1,715.3 | 98.8 | 0 |
|11. 1993.....| 188,533 | 109 | 188,424 | 84.4 | 36.5 | 84.5 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|----------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
---------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| |for Time | | Net Balance Sheet Reserves|
| Years |Money | 33 | After Discount |
| in Which |--------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 0 | X X X X | 591 | 0 |
| 2. 1984.....| 0 | 0.0 | 953 | 4 |
| 3. 1985.....| 0 | 0.0 | 968 | 22 |
| 4. 1986.....| 0 | 0.0 | 960 | 9 |
| 5. 1987.....| 0 | 0.0 | 1,724 | 198 |
| 6. 1988.....| 0 | 0.0 | 4,353 | 104 |
| 7. 1989.....| 0 | 0.0 | 5,240 | 332 |
| 8. 1990.....| 0 | 0.0 | 7,592 | 705 |
| 9. 1991.....| 0 | 0.0 | 14,302 | 3,195 |
|10. 1992.....| 0 | 0.0 | 26,518 | 4,564 |
|11. 1993.....| 0 | 0.0 | 67,317 | 5,793 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 130,518 | 14,926 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense|
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|---------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ...| X X X X | X X X X | X X X X | 1,942 | 212 | 226 | 12 |
| 2. 1984.....| 129,306 | 3,006 | 126,300 | 121,343 | 3,617 | 8,950 | 85 |
| 3. 1985.....| 146,068 | 10,748 | 135,320 | 136,303 | 2,775 | 10,131 | 37 |
| 4. 1986.....| 170,619 | 6,847 | 163,772 | 154,882 | 8,231 | 11,837 | 190 |
| 5. 1987.....| 202,239 | 12,200 | 190,039 | 184,373 | 11,519 | 13,441 | 293 |
| 6. 1988.....| 260,594 | 18,142 | 242,452 | 211,440 | 15,141 | 13,663 | 537 |
| 7. 1989.....| 308,866 | 19,341 | 289,524 | 247,105 | 15,965 | 15,212 | 412 |
| 8. 1990.....| 356,704 | 11,055 | 345,650 | 254,679 | 8,579 | 15,601 | 278 |
| 9. 1991.....| 378,037 | 6,068 | 371,969 | 226,370 | 4,402 | 10,128 | 101 |
|10. 1992.....| 410,684 | 6,450 | 404,233 | 179,556 | 4,587 | 4,741 | 49 |
|11. 1993.....| 418,598 | 5,705 | 412,893 | 76,939 | 1,009 | 1,348 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|---------------|-------------|
|12. Totals ..| X X X X | X X X X | X X X X | 1,794,933 | 76,035 | 105,277 | 1,993 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.<PAGE>
<PAGE>
SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| 1 |Payments | |
| |--------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 1,307 | 68 | 2,012 | X X X X |
| 2. 1984.....| 3,414 | 5,325 | 131,915 | 61,428 |
| 3. 1985.....| 5,797 | 7,751 | 151,374 | 62,470 |
| 4. 1986.....| 4,360 | 10,940 | 169,238 | 66,322 |
| 5. 1987.....| 5,668 | 11,680 | 197,682 | 76,365 |
| 6. 1988.....| 6,735 | 15,594 | 225,020 | 83,598 |
| 7. 1989.....| 6,648 | 19,123 | 265,063 | 92,421 |
| 8. 1990.....| 6,004 | 17,816 | 279,240 | 96,465 |
| 9. 1991.....| 4,654 | 17,768 | 249,763 | 94,290 |
|10. 1992.....| 2,866 | 17,824 | 197,485 | 91,072 |
|11. 1993.....| 1,004 | 17,139 | 94,417 | 73,422 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 48,457 | 141,029 | 1,963,211 | X X X X |
-------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpaid|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|----------------------------|---------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|-------------|---------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 3,871 | 631 | 5,781 | 0 | 0 | 0 | 303 |
| 2. 1984.....| 2,844 | 0 | 2,356 | 0 | 0 | 0 | 192 |
| 3. 1985.....| 4,470 | 0 | 3,042 | 0 | 0 | 0 | 338 |
| 4. 1986.....| 8,773 | 0 | 2,395 | 0 | 0 | 0 | 1,250 |
| 5. 1987.....| 9,713 | 50 | 4,236 | 0 | 0 | 0 | 2,017 |
| 6. 1988.....| 14,591 | 60 | 6,676 | 0 | 0 | 0 | 2,429 |
| 7. 1989.....| 30,378 | 582 | 14,355 | 0 | 0 | 0 | 5,828 |
| 8. 1990.....| 45,186 | 358 | 29,383 | 0 | 0 | 0 | 9,684 |
| 9. 1991.....| 66,947 | 727 | 50,786 | 0 | 0 | 0 | 16,860 |
|10. 1992.....| 99,171 | 1,576 | 103,747 | 0 | 0 | 0 | 22,134 |
|11. 1993.....| 87,848 | 1,776 | 200,144 | 1,852 | 0 | 0 | 17,216 |
|-------------|-------------|-------------|-------------|--------------|--------------|-------------|---------------|
|12. Totals ..| 373,794 | 5,761 | 422,901 | 1,852 | 0 | 0 | 78,251 |
-------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
----------------------------------------------------------------------------------------
| | | | | | |
| Years |--------------| 21 | 22 | 23 | 24 |
| in Which |+ IBNR | | | | Number of |
|Premiums Were|--------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses| Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|---------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| | | | | | |
| 1. Prior ...| 0 | 179 | 95 | 9,419 | 105 |
| 2. 1984.....| 0 | 95 | 48 | 5,440 | 38 |
| 3. 1985.....| 0 | 55 | 53 | 7,903 | 44 |
| 4. 1986.....| 0 | 88 | 90 | 12,508 | 86 |
| 5. 1987.....| 0 | 192 | 109 | 16,025 | 133 |
| 6. 1988.....| 0 | 512 | 147 | 23,783 | 248 |
| 7. 1989.....| 0 | 949 | 387 | 50,366 | 639 |
| 8. 1990.....| 0 | 2,598 | 765 | 84,660 | 1,383 |
| 9. 1991.....| 0 | 3,808 | 1,279 | 135,145 | 2,826 |
|10. 1992.....| 0 | 5,058 | 2,075 | 225,551 | 6,650 |
|11. 1993.....| 1 | 5,448 | 4,130 | 305,709 | 17,653 |
|-------------|--------------|---------------|--------------|--------------|-------------|
|12. Totals ..| 1 | 18,981 | 9,178 | 876,510 | 29,805 |
----------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of|
| in Which |-----------------------------------------|--------------------------------------------|----------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|----------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 141,058 | 3,702 | 137,356 | 109.1 | 123.2 | 108.8 | 0 |
| 3. 1985.....| 162,088 | 2,812 | 159,276 | 111.0 | 26.2 | 117.7 | 0 |
| 4. 1986.....| 190,167 | 8,421 | 181,746 | 111.5 | 123.0 | 111.0 | 0 |
| 5. 1987.....| 225,569 | 11,862 | 213,707 | 111.5 | 97.2 | 112.5 | 0 |
| 6. 1988.....| 264,540 | 15,738 | 248,802 | 101.5 | 86.7 | 102.6 | 0 |
| 7. 1989.....| 332,388 | 16,959 | 315,429 | 107.6 | 87.7 | 108.9 | 0 |
| 8. 1990.....| 373,114 | 9,215 | 363,899 | 104.6 | 83.4 | 105.3 | 0 |
| 9. 1991.....| 390,138 | 5,230 | 384,908 | 103.2 | 86.2 | 103.5 | 0 |
|10. 1992.....| 429,248 | 6,212 | 423,036 | 104.5 | 96.3 | 104.7 | 0 |
|11. 1993.....| 404,764 | 4,638 | 400,126 | 96.7 | 81.3 | 96.9 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|----------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
---------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| |for Time | | Net Balance Sheet Reserves|
| Years |Money | 33 | After Discount |
| in Which |--------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 0 | X X X X | 9,021 | 398 |
| 2. 1984.....| 0 | 0.0 | 5,200 | 240 |
| 3. 1985.....| 0 | 0.0 | 7,512 | 391 |
| 4. 1986.....| 0 | 0.0 | 11,168 | 1,340 |
| 5. 1987.....| 0 | 0.0 | 13,899 | 2,126 |
| 6. 1988.....| 0 | 0.0 | 21,207 | 2,576 |
| 7. 1989.....| 0 | 0.0 | 44,151 | 6,215 |
| 8. 1990.....| 0 | 0.0 | 74,211 | 10,449 |
| 9. 1991.....| 0 | 0.0 | 117,006 | 18,139 |
|10. 1992.....| 0 | 0.0 | 201,342 | 24,209 |
|11. 1993.....| 0 | 0.0 | 284,364 | 21,345 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 789,082 | 87,428 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense P|
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 1,480 | 545 | 168 | 2 |
| 2. 1984.....| 127,994 | 14,501 | 113,493 | 140,029 | 13,133 | 14,267 | 458 |
| 3. 1985.....| 221,827 | 39,207 | 182,619 | 174,080 | 27,186 | 19,879 | 1,350 |
| 4. 1986.....| 403,419 | 95,375 | 308,043 | 235,218 | 64,104 | 26,648 | 352 |
| 5. 1987.....| 508,426 | 139,851 | 368,576 | 302,656 | 94,173 | 32,236 | 584 |
| 6. 1988.....| 522,888 | 127,960 | 394,928 | 315,449 | 85,339 | 32,197 | 560 |
| 7. 1989.....| 523,927 | 96,218 | 427,708 | 320,264 | 49,869 | 29,787 | 445 |
| 8. 1990.....| 536,387 | 63,618 | 472,769 | 304,094 | 30,559 | 25,104 | 322 |
| 9. 1991.....| 586,500 | 59,306 | 527,195 | 227,339 | 20,584 | 16,409 | 378 |
|10. 1992.....| 546,403 | 49,741 | 496,661 | 132,493 | 11,527 | 6,338 | 181 |
|11. 1993.....| 533,280 | 38,265 | 495,015 | 57,472 | 1,879 | 1,581 | 10 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 2,210,574 | 398,898 | 204,613 | 4,640 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| 1 ayments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| | | | | |
| 1. Prior ...| 846 | 15 | 1,114 | X X X X |
| 2. 1984.....| 2,764 | 6,304 | 147,009 | 61,813 |
| 3. 1985.....| 2,256 | 7,460 | 172,882 | 75,705 |
| 4. 1986.....| 1,684 | 8,895 | 206,306 | 94,664 |
| 5. 1987.....| 1,961 | 11,346 | 251,481 | 106,320 |
| 6. 1988.....| 2,978 | 11,986 | 273,733 | 106,884 |
| 7. 1989.....| 2,491 | 12,871 | 312,609 | 104,752 |
| 8. 1990.....| 2,936 | 12,735 | 311,053 | 96,764 |
| 9. 1991.....| 2,793 | 13,024 | 235,810 | 87,109 |
|10. 1992.....| 1,502 | 12,908 | 140,031 | 71,105 |
|11. 1993.....| 882 | 14,798 | 71,963 | 58,630 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 23,094 | 112,342 | 2,123,991 | X X X X |
-------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 12,817 | 0 | 7,583 | 205 | 0 | 0 | 938 |
| 2. 1984.....| 11,625 | 17 | 3,743 | 2 | 0 | 0 | 795 |
| 3. 1985.....| 13,121 | 313 | 5,483 | 9 | 0 | 0 | 2,193 |
| 4. 1986.....| 28,039 | 920 | 14,732 | 8 | 0 | 0 | 4,206 |
| 5. 1987.....| 37,098 | 2,011 | 6,918 | 107 | 0 | 0 | 6,288 |
| 6. 1988.....| 57,680 | 3,837 | 12,005 | 612 | 0 | 0 | 7,252 |
| 7. 1989.....| 63,788 | 7,303 | 16,415 | 198 | 0 | 0 | 14,395 |
| 8. 1990.....| 80,321 | 5,963 | 49,780 | 2,166 | 0 | 0 | 24,532 |
| 9. 1991.....| 101,928 | 13,708 | 133,834 | 2,785 | 0 | 0 | 28,621 |
|10. 1992.....| 118,303 | 7,054 | 205,816 | 13,403 | 0 | 0 | 39,350 |
|11. 1993.....| 82,696 | 5,289 | 278,947 | 19,630 | 0 | 0 | 39,224 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 607,417 | 46,416 | 735,256 | 39,125 | 0 | 0 | 167,794 |
-------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| | | | | | |
| 1. Prior ...| 0 | 12 | 108 | 21,241 | 67 |
| 2. 1984.....| 0 | 19 | 22 | 16,166 | 39 |
| 3. 1985.....| 0 | 40 | 42 | 20,517 | 81 |
| 4. 1986.....| 0 | 16 | 114 | 46,163 | 188 |
| 5. 1987.....| 0 | 17 | 692 | 48,877 | 283 |
| 6. 1988.....| 0 | 213 | 821 | 73,309 | 474 |
| 7. 1989.....| 2 | 366 | 982 | 88,078 | 852 |
| 8. 1990.....| 6 | 715 | 873 | 147,371 | 1,497 |
| 9. 1991.....| 2 | 1,354 | 1,253 | 249,140 | 2,577 |
|10. 1992.....| 442 | 1,959 | 1,229 | 343,799 | 4,542 |
|11. 1993.....| 632 | 1,933 | 2,405 | 377,721 | 12,532 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 1,084 | 6,645 | 8,541 | 1,432,383 | 23,132 |
---------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| in Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 176,785 | 13,610 | 163,175 | 138.1 | 93.9 | 143.8 | 0 |
| 3. 1985.....| 222,258 | 28,858 | 193,400 | 100.2 | 73.6 | 105.9 | 0 |
| 4. 1986.....| 317,852 | 65,384 | 252,468 | 78.8 | 68.6 | 82.0 | 0 |
| 5. 1987.....| 397,234 | 96,875 | 300,359 | 78.1 | 69.3 | 81.5 | 0 |
| 6. 1988.....| 437,390 | 90,348 | 347,042 | 83.6 | 70.6 | 87.9 | 0 |
| 7. 1989.....| 458,502 | 57,817 | 400,685 | 87.5 | 60.1 | 93.7 | 0 |
| 8. 1990.....| 497,439 | 39,016 | 458,423 | 92.7 | 61.3 | 97.0 | 0 |
| 9. 1991.....| 522,408 | 37,457 | 484,951 | 89.1 | 63.2 | 92.0 | 0 |
|10. 1992.....| 516,437 | 32,607 | 483,830 | 94.5 | 65.6 | 97.4 | 0 |
|11. 1993.....| 477,123 | 27,440 | 449,683 | 89.5 | 71.7 | 90.8 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
------------- -----------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves|
| Years f Money | 33 | After Discount |
| in Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 20,195 | 1,046 |
| 2. 1984.....| 0 | 0.0 | 15,349 | 817 |
| 3. 1985.....| 0 | 0.0 | 18,282 | 2,235 |
| 4. 1986.....| 0 | 0.0 | 41,843 | 4,320 |
| 5. 1987.....| 0 | 0.0 | 41,897 | 6,980 |
| 6. 1988.....| 0 | 0.0 | 65,236 | 8,073 |
| 7. 1989.....| 0 | 0.0 | 72,703 | 15,375 |
| 8. 1990.....| 0 | 0.0 | 121,972 | 25,399 |
| 9. 1991.....| 0 | 0.0 | 219,268 | 29,872 |
|10. 1992.....| 0 | 0.0 | 303,662 | 40,137 |
|11. 1993.....| 0 | 0.0 | 336,724 | 40,997 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 1,257,132 | 175,251 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1D - WORKERS' COMPENSATION
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense P|
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 33,952 | 6,477 | 2,121 | 59 |
| 2. 1984.....| 473,454 | 39,695 | 433,759 | 378,596 | 35,564 | 19,082 | 220 |
| 3. 1985.....| 583,337 | 68,397 | 514,940 | 488,588 | 47,864 | 26,243 | 255 |
| 4. 1986.....| 965,342 | 95,101 | 870,241 | 664,932 | 85,094 | 33,922 | 131 |
| 5. 1987.....| 1,162,512 | 134,836 | 1,027,676 | 863,310 | 129,824 | 40,789 | 100 |
| 6. 1988.....| 1,494,062 | 111,679 | 1,382,383 | 1,082,547 | 95,051 | 47,577 | 148 |
| 7. 1989.....| 1,619,759 | 57,453 | 1,562,305 | 1,255,153 | 21,747 | 50,842 | 92 |
| 8. 1990.....| 2,256,388 | 10,031 | 2,246,356 | 1,372,201 | 3,314 | 53,647 | 261 |
| 9. 1991.....| 2,446,769 | 22,557 | 2,424,211 | 994,629 | 5,282 | 41,754 | 205 |
|10. 1992.....| 2,158,130 | 17,929 | 2,140,202 | 588,501 | 5,804 | 21,306 | 136 |
|11. 1993.....| 1,856,803 | 20,230 | 1,836,573 | 169,561 | 2,574 | 5,764 | 44 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 7,891,970 | 438,594 | 343,048 | 1,651 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
SCHEDULE P - PART 1D - WORKERS' COMPENSATION - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| 1 ayments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| | | | | |
| 1. Prior ...| 4,734 | 790 | 30,327 | X X X X |
| 2. 1984.....| 10,528 | 34,300 | 396,194 | 205,359 |
| 3. 1985.....| 12,118 | 38,712 | 505,423 | 239,026 |
| 4. 1986.....| 13,853 | 48,914 | 662,543 | 287,916 |
| 5. 1987.....| 17,791 | 50,744 | 824,920 | 308,936 |
| 6. 1988.....| 18,539 | 60,774 | 1,095,699 | 338,690 |
| 7. 1989.....| 18,159 | 76,138 | 1,360,294 | 327,505 |
| 8. 1990.....| 14,729 | 80,813 | 1,503,085 | 341,219 |
| 9. 1991.....| 6,778 | 77,300 | 1,108,196 | 323,327 |
|10. 1992.....| 3,472 | 65,925 | 669,792 | 274,976 |
|11. 1993.....| 260 | 38,583 | 211,291 | 232,795 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 120,960 | 572,993 | 8,367,764 | X X X X |
-------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 257,889 | 59,004 | 96,298 | 7,569 | 0 | 0 | 6,209 |
| 2. 1984.....| 40,203 | 7,538 | 15,641 | 1,515 | 0 | 0 | 1,305 |
| 3. 1985.....| 61,784 | 9,973 | 11,300 | 2,995 | 0 | 0 | 3,005 |
| 4. 1986.....| 88,231 | 12,382 | 14,675 | 4,702 | 0 | 0 | 6,536 |
| 5. 1987.....| 125,801 | 25,131 | 29,804 | 8,132 | 0 | 0 | 11,460 |
| 6. 1988.....| 183,936 | 17,165 | 52,024 | 11,734 | 0 | 0 | 13,538 |
| 7. 1989.....| 242,279 | 9,980 | 81,920 | 5,322 | 0 | 0 | 11,553 |
| 8. 1990.....| 343,648 | 7,777 | 158,609 | 6,987 | 0 | 0 | 21,295 |
| 9. 1991.....| 394,420 | 2,407 | 548,551 | 10,547 | 0 | 0 | 34,385 |
|10. 1992.....| 383,948 | 6,322 | 772,624 | 15,347 | 0 | 0 | 43,091 |
|11. 1993.....| 278,777 | 6,080 | 987,801 | 11,732 | 0 | 0 | 46,571 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 2,400,916 | 163,759 | 2,769,247 | 86,582 | 0 | 0 | 198,948 |
-------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1D - WORKERS' COMPENSATION - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| | | | | | |
| 1. Prior ...| 101 | 17,563 | 2,080 | 295,801 | 3,484 |
| 2. 1984.....| 37 | 3,071 | 456 | 48,515 | 532 |
| 3. 1985.....| 118 | 2,919 | 783 | 63,786 | 721 |
| 4. 1986.....| 544 | 4,373 | 1,196 | 93,010 | 1,227 |
| 5. 1987.....| 1,270 | 8,590 | 2,731 | 135,263 | 1,785 |
| 6. 1988.....| 1,477 | 13,953 | 2,587 | 221,709 | 2,911 |
| 7. 1989.....| 602 | 20,368 | 1,885 | 321,733 | 4,463 |
| 8. 1990.....| 2 | 32,978 | 2,699 | 511,484 | 8,396 |
| 9. 1991.....| 120 | 36,552 | 4,807 | 969,089 | 13,713 |
|10. 1992.....| 517 | 39,858 | 6,229 | 1,183,707 | 19,848 |
|11. 1993.....| 702 | 31,202 | 6,638 | 1,301,273 | 52,250 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 5,490 | 211,427 | 32,091 | 5,145,370 | 109,330 |
---------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| in Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 489,583 | 44,874 | 444,709 | 103.4 | 113.0 | 102.5 | 0 |
| 3. 1985.....| 630,415 | 61,205 | 569,210 | 108.1 | 89.5 | 110.5 | 0 |
| 4. 1986.....| 858,406 | 102,853 | 755,553 | 88.9 | 108.2 | 86.8 | 0 |
| 5. 1987.....| 1,124,639 | 164,457 | 960,182 | 96.7 | 122.0 | 93.4 | 0 |
| 6. 1988.....| 1,442,983 | 125,575 | 1,317,408 | 96.6 | 112.4 | 95.3 | 0 |
| 7. 1989.....| 1,719,770 | 37,743 | 1,682,027 | 106.2 | 65.7 | 107.7 | 0 |
| 8. 1990.....| 2,032,912 | 18,341 | 2,014,571 | 90.1 | 182.8 | 89.7 | 0 |
| 9. 1991.....| 2,095,846 | 18,561 | 2,077,285 | 85.7 | 82.3 | 85.7 | 0 |
|10. 1992.....| 1,881,624 | 28,126 | 1,853,498 | 87.2 | 156.9 | 86.6 | 0 |
|11. 1993.....| 1,533,695 | 21,132 | 1,512,563 | 82.6 | 104.5 | 82.4 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1D - WORKERS' COMPENSATION - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves|
| Years f Money | 33 | After Discount |
| in Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| | | | | |
| 1. Prior ...| 0 | X X X X | 287,613 | 8,188 |
| 2. 1984.....| 0 | 0.0 | 46,791 | 1,724 |
| 3. 1985.....| 0 | 0.0 | 60,116 | 3,670 |
| 4. 1986.....| 0 | 0.0 | 85,822 | 7,188 |
| 5. 1987.....| 0 | 0.0 | 122,342 | 12,921 |
| 6. 1988.....| 0 | 0.0 | 207,061 | 14,648 |
| 7. 1989.....| 0 | 0.0 | 308,897 | 12,836 |
| 8. 1990.....| 0 | 0.0 | 487,492 | 23,992 |
| 9. 1991.....| 0 | 0.0 | 930,017 | 39,072 |
|10. 1992.....| 0 | 0.0 | 1,134,904 | 48,803 |
|11. 1993.....| 0 | 0.0 | 1,248,766 | 52,507 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 4,919,821 | 225,549 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1E - COMMERCIAL MULTIPLE PERIL
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense P|
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 2,404 | (17)| 2,918 | 20 |
| 2. 1984.....| 201,916 | 22,558 | 179,359 | 148,520 | 10,703 | 26,885 | 272 |
| 3. 1985.....| 314,626 | 21,298 | 293,328 | 175,242 | 3,256 | 29,733 | 423 |
| 4. 1986.....| 457,243 | 18,707 | 438,536 | 152,394 | 2,495 | 34,703 | 112 |
| 5. 1987.....| 542,854 | 16,282 | 526,572 | 178,993 | 2,783 | 36,449 | 130 |
| 6. 1988.....| 596,503 | 15,753 | 580,749 | 203,137 | 2,338 | 41,358 | 84 |
| 7. 1989.....| 658,911 | 22,097 | 636,814 | 336,080 | 36,355 | 46,637 | 2,264 |
| 8. 1990.....| 721,512 | 23,907 | 697,605 | 275,050 | 4,825 | 42,268 | 247 |
| 9. 1991.....| 743,264 | 19,148 | 724,116 | 278,850 | 5,585 | 28,043 | 134 |
|10. 1992.....| 722,128 | 23,724 | 698,403 | 311,714 | 32,086 | 13,025 | 333 |
|11. 1993.....| 748,413 | 20,392 | 728,021 | 153,331 | 13,564 | 4,873 | 102 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 2,215,715 | 113,973 | 306,892 | 4,122 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
<CAPTION>
-------------------------------------------------------------------------
| 1 ayments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 111 | 98 | 5,418 | X X X X |
| 2. 1984.....| 5,112 | 3,685 | 168,115 | 54,182 |
| 3. 1985.....| 4,312 | 4,906 | 206,203 | 56,619 |
| 4. 1986.....| 6,695 | 6,667 | 191,158 | 52,291 |
| 5. 1987.....| 5,201 | 12,904 | 225,434 | 53,483 |
| 6. 1988.....| 5,306 | 16,205 | 258,278 | 63,468 |
| 7. 1989.....| 6,813 | 20,620 | 364,717 | 83,793 |
| 8. 1990.....| 6,318 | 20,147 | 332,393 | 91,441 |
| 9. 1991.....| 5,307 | 19,892 | 321,065 | 91,742 |
|10. 1992.....| 4,585 | 18,293 | 310,613 | 82,720 |
|11. 1993.....| 1,306 | 21,607 | 166,145 | 68,138 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 51,067 | 145,025 | 2,549,537 | X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1E - COMMERCIAL MULTIPLE PERIL - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 14,740 | 456 | 4,113 | 727 | 0 | 0 | 1,087 |
| 2. 1984.....| 9,681 | 0 | 2,185 | 0 | 0 | 0 | 419 |
| 3. 1985.....| 6,346 | 0 | 3,063 | 0 | 0 | 0 | 119 |
| 4. 1986.....| 11,185 | 0 | 3,911 | 384 | 0 | 0 | 616 |
| 5. 1987.....| 21,907 | 0 | 4,875 | 203 | 0 | 0 | 1,144 |
| 6. 1988.....| 30,062 | 0 | 14,202 | 0 | 0 | 0 | 3,704 |
| 7. 1989.....| 56,821 | 5 | 12,471 | 0 | 0 | 0 | 5,908 |
| 8. 1990.....| 76,102 | 0 | 33,052 | 1,130 | 0 | 0 | 18,721 |
| 9. 1991.....| 90,316 | 11 | 60,486 | 1,356 | 0 | 0 | 42,519 |
|10. 1992.....| 87,703 | 1,026 | 137,123 | 18,310 | 0 | 0 | 60,323 |
|11. 1993.....| 90,287 | 1,414 | 288,012 | 7,961 | 0 | 0 | 74,056 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 495,150 | 2,912 | 563,493 | 30,071 | 0 | 0 | 208,616 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| | | | | | |
| 1. Prior ...| 133 | 356 | 236 | 18,859 | 1,702 |
| 2. 1984.....| 0 | 236 | 278 | 12,563 | 110 |
| 3. 1985.....| 0 | 199 | 125 | 9,653 | 113 |
| 4. 1986.....| 10 | 411 | 170 | 15,488 | 286 |
| 5. 1987.....| 8 | 596 | 293 | 28,008 | 423 |
| 6. 1988.....| 0 | 1,131 | 267 | 48,235 | 638 |
| 7. 1989.....| 0 | 2,520 | 489 | 75,684 | 1,309 |
| 8. 1990.....| 23 | 3,619 | 772 | 127,494 | 2,271 |
| 9. 1991.....| 40 | 4,917 | 1,035 | 192,949 | 3,477 |
|10. 1992.....| 577 | 8,034 | 1,674 | 266,910 | 4,749 |
|11. 1993.....| 290 | 11,592 | 1,962 | 444,652 | 12,271 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 1,081 | 33,611 | 7,301 | 1,240,496 | 27,349 |
---------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1E - COMMERCIAL MULTIPLE PERIL - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| in Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 191,653 | 10,975 | 180,678 | 94.9 | 48.7 | 100.7 | 0 |
| 3. 1985.....| 219,534 | 3,679 | 215,855 | 69.8 | 17.3 | 73.6 | 0 |
| 4. 1986.....| 209,646 | 3,001 | 206,645 | 45.9 | 16.0 | 47.1 | 0 |
| 5. 1987.....| 256,565 | 3,124 | 253,441 | 47.3 | 19.2 | 48.1 | 0 |
| 6. 1988.....| 308,935 | 2,422 | 306,513 | 51.8 | 15.4 | 52.8 | 0 |
| 7. 1989.....| 479,026 | 38,624 | 440,402 | 72.7 | 174.8 | 69.2 | 0 |
| 8. 1990.....| 466,112 | 6,225 | 459,887 | 64.6 | 26.0 | 65.9 | 0 |
| 9. 1991.....| 521,141 | 7,126 | 514,015 | 70.1 | 37.2 | 71.0 | 0 |
|10. 1992.....| 629,855 | 52,332 | 577,523 | 87.2 | 220.6 | 82.7 | 0 |
|11. 1993.....| 634,128 | 23,331 | 610,797 | 84.7 | 114.4 | 83.9 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves|
| Years f Money | 33 | After Discount |
| in Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| | | | | |
| 1. Prior ...| 0 | X X X X | 17,669 | 1,190 |
| 2. 1984.....| 0 | 0.0 | 11,866 | 697 |
| 3. 1985.....| 0 | 0.0 | 9,409 | 244 |
| 4. 1986.....| 0 | 0.0 | 14,712 | 776 |
| 5. 1987.....| 0 | 0.0 | 26,579 | 1,429 |
| 6. 1988.....| 0 | 0.0 | 44,264 | 3,971 |
| 7. 1989.....| 0 | 0.0 | 69,287 | 6,397 |
| 8. 1990.....| 0 | 0.0 | 108,024 | 19,470 |
| 9. 1991.....| 0 | 0.0 | 149,435 | 43,514 |
|10. 1992.....| 0 | 0.0 | 205,490 | 61,420 |
|11. 1993.....| 0 | 0.0 | 368,924 | 75,728 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 1,025,660 | 214,836 |
-------------------------------------------------------------------------
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE
</TABLE>
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense P|
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ...| X X X X | X X X X | X X X X | 17,785 | 5,221 | 1,584 | 197 |
| 2. 1984.....| 99,848 | 13,442 | 86,406 | 84,607 | 7,947 | 40,063 | 546 |
| 3. 1985.....| 142,103 | 19,829 | 122,274 | 67,197 | 2,812 | 30,618 | (14)|
| 4. 1986.....| 195,700 | 18,078 | 177,622 | 68,577 | 2,390 | 26,884 | 309 |
| 5. 1987.....| 151,511 | 10,257 | 141,254 | 24,433 | 3,038 | 11,721 | 373 |
| 6. 1988.....| 47,559 | 10,725 | 36,834 | 4,769 | 2,047 | 5,094 | 765 |
| 7. 1989.....| 24,074 | 10,451 | 13,624 | 4,748 | 5,095 | 4,086 | 1,174 |
| 8. 1990.....| 38,788 | 10,291 | 28,497 | 6,784 | 1,007 | 2,366 | 479 |
| 9. 1991.....| 37,194 | 11,325 | 25,869 | 1,936 | 1,476 | 1,202 | 210 |
|10. 1992.....| 34,442 | 13,049 | 21,393 | 734 | 53 | 219 | 49 |
|11. 1993.....| 40,982 | 21,238 | 19,744 | 32 | 1 | 12 | 3 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 281,603 | 31,088 | 123,848 | 4,091 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
<CAPTION>
-------------------------------------------------------------------------
| 1 ayments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| (56)| 185 | 14,136 | X X X X |
| 2. 1984.....| 11,145 | 3,386 | 119,562 | 7,291 |
| 3. 1985.....| 4,046 | 2,920 | 97,937 | 6,811 |
| 4. 1986.....| 1,650 | 2,848 | 95,610 | 5,707 |
| 5. 1987.....| 517 | 1,477 | 34,221 | 3,308 |
| 6. 1988.....| 168 | 1,835 | 8,885 | 1,608 |
| 7. 1989.....| 23 | 697 | 3,262 | 1,640 |
| 8. 1990.....| 32 | 545 | 8,210 | 1,867 |
| 9. 1991.....| 10 | 445 | 1,897 | 1,230 |
|10. 1992.....| 0 | 488 | 1,339 | 797 |
|11. 1993.....| 0 | 1,377 | 1,416 | 280 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 17,534 | 16,203 | 386,475 | X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 52,968 | 8,738 | 49,471 | 24,286 | 0 | 0 | 8,200 |
| 2. 1984.....| 25,213 | 1,802 | 11,474 | 3,029 | 0 | 0 | 5,406 |
| 3. 1985.....| 16,319 | 0 | 12,843 | 1,771 | 0 | 0 | 5,959 |
| 4. 1986.....| 17,472 | 0 | 20,806 | 3,730 | 0 | 0 | 5,787 |
| 5. 1987.....| 14,943 | 1,940 | 13,687 | 1,046 | 0 | 0 | 5,840 |
| 6. 1988.....| 9,078 | 1,228 | 31,612 | 808 | 0 | 0 | 2,948 |
| 7. 1989.....| 7,956 | 1,623 | 14,180 | 348 | 0 | 0 | 3,539 |
| 8. 1990.....| 9,837 | 2,067 | 28,619 | 3,879 | 0 | 0 | 4,832 |
| 9. 1991.....| 12,493 | 1,736 | 18,168 | 5,771 | 0 | 0 | 5,357 |
|10. 1992.....| 6,079 | 469 | 31,856 | 12,547 | 0 | 0 | 6,862 |
|11. 1993.....| 1,036 | 202 | 31,975 | 11,406 | 0 | 0 | 6,674 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 173,392 | 19,806 | 264,691 | 68,621 | 0 | 0 | 61,404 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| | | | | | |
| 1. Prior ...| 1,447 | 1,928 | 651 | 76,819 | 187 |
| 2. 1984.....| 109 | 1,021 | 336 | 37,489 | 248 |
| 3. 1985.....| 336 | 2,395 | 358 | 33,372 | 158 |
| 4. 1986.....| 475 | 1,481 | 476 | 40,336 | 185 |
| 5. 1987.....| 313 | 768 | 320 | 31,492 | 141 |
| 6. 1988.....| 661 | 811 | 159 | 41,099 | 117 |
| 7. 1989.....| 1,313 | 1,510 | 123 | 22,514 | 149 |
| 8. 1990.....| 1,784 | 1,009 | 199 | 35,757 | 228 |
| 9. 1991.....| 2,546 | 886 | 254 | 26,220 | 317 |
|10. 1992.....| 2,178 | 677 | 336 | 29,939 | 213 |
|11. 1993.....| 2,783 | 525 | 275 | 25,568 | 101 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 13,945 | 13,012 | 3,487 | 400,603 | 2,044 |
---------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| in Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 170,485 | 13,433 | 157,052 | 170.7 | 99.9 | 181.8 | 0 |
| 3. 1985.....| 136,214 | 4,905 | 131,309 | 95.9 | 24.7 | 107.4 | 0 |
| 4. 1986.....| 142,850 | 6,904 | 135,946 | 73.0 | 38.2 | 76.5 | 0 |
| 5. 1987.....| 72,421 | 6,710 | 65,711 | 47.8 | 65.4 | 46.5 | 0 |
| 6. 1988.....| 55,495 | 5,509 | 49,986 | 116.7 | 51.4 | 135.7 | 0 |
| 7. 1989.....| 35,329 | 9,553 | 25,776 | 146.8 | 91.4 | 189.2 | 0 |
| 8. 1990.....| 53,182 | 9,216 | 43,966 | 137.1 | 89.6 | 154.3 | 0 |
| 9. 1991.....| 39,855 | 11,739 | 28,116 | 107.2 | 103.7 | 108.7 | 0 |
|10. 1992.....| 46,574 | 15,296 | 31,278 | 135.2 | 117.2 | 146.2 | 0 |
|11. 1993.....| 41,381 | 14,395 | 26,986 | 101.0 | 67.8 | 136.7 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves|
| Years f Money | 33 | After Discount |
| in Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 69,415 | 7,404 |
| 2. 1984.....| 0 | 0.0 | 31,856 | 5,633 |
| 3. 1985.....| 0 | 0.0 | 27,391 | 5,981 |
| 4. 1986.....| 0 | 0.0 | 34,548 | 5,788 |
| 5. 1987.....| 0 | 0.0 | 25,645 | 5,847 |
| 6. 1988.....| 0 | 0.0 | 38,653 | 2,446 |
| 7. 1989.....| 0 | 0.0 | 20,165 | 2,349 |
| 8. 1990.....| 0 | 0.0 | 32,510 | 3,247 |
| 9. 1991.....| 0 | 0.0 | 23,155 | 3,065 |
|10. 1992.....| 0 | 0.0 | 24,919 | 5,020 |
|11. 1993.....| 0 | 0.0 | 21,402 | 4,166 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 349,657 | 50,946 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense P|
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 0 | 0 | 0 | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 77,440 | 9,388 | 68,052 | 32,077 | 435 | 8,233 | 34 |
| 6. 1988.....| 193,675 | 17,218 | 176,457 | 35,759 | 5,356 | 16,379 | 504 |
| 7. 1989.....| 238,793 | 20,745 | 218,048 | 55,482 | 5,212 | 22,194 | 583 |
| 8. 1990.....| 243,443 | 19,349 | 224,094 | 51,627 | 3,507 | 22,239 | 337 |
| 9. 1991.....| 213,034 | 17,383 | 195,652 | 44,859 | 672 | 16,135 | 92 |
|10. 1992.....| 206,764 | 17,799 | 188,965 | 26,852 | 146 | 8,788 | 47 |
|11. 1993.....| 221,483 | 16,867 | 204,616 | 5,937 | 1,305 | 1,126 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 252,593 | 16,632 | 95,094 | 1,598 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
<CAPTION>
-------------------------------------------------------------------------
| 1 ayments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 0 | 0 | 0 | X X X X |
| 2. 1984.....| 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 |
| 5. 1987.....| 135 | 2,309 | 42,150 | 1,222 |
| 6. 1988.....| 368 | 2,810 | 49,088 | 3,057 |
| 7. 1989.....| 761 | 4,453 | 76,334 | 4,229 |
| 8. 1990.....| 312 | 4,811 | 74,832 | 4,621 |
| 9. 1991.....| 171 | 4,275 | 64,506 | 4,981 |
|10. 1992.....| 196 | 3,844 | 39,291 | 6,020 |
|11. 1993.....| 27 | 2,889 | 8,647 | 5,558 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 1,969 | 25,390 | 354,848 | X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 5,053 | 2,336 | 5,941 | 386 | 0 | 0 | 1,480 |
| 6. 1988.....| 22,286 | 923 | 10,711 | 2,672 | 0 | 0 | 5,679 |
| 7. 1989.....| 38,306 | 234 | 19,137 | 4,321 | 0 | 0 | 9,047 |
| 8. 1990.....| 39,912 | 261 | 27,456 | 9,000 | 0 | 0 | 18,532 |
| 9. 1991.....| 50,550 | 1,108 | 47,466 | 10,463 | 0 | 0 | 24,492 |
|10. 1992.....| 60,028 | 1,007 | 61,557 | 12,191 | 0 | 0 | 33,160 |
|11. 1993.....| 34,981 | 44 | 143,479 | 11,034 | 0 | 0 | 43,330 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 251,116 | 5,913 | 315,747 | 50,067 | 0 | 0 | 135,720 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| | | | | | |
| 1. Prior ...| 0 | 0 | 0 | 0 | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 109 | 180 | 122 | 9,765 | 15 |
| 6. 1988.....| 752 | 221 | 294 | 34,623 | 67 |
| 7. 1989.....| 811 | 1,191 | 594 | 61,718 | 151 |
| 8. 1990.....| 2,191 | 840 | 832 | 75,279 | 320 |
| 9. 1991.....| 2,560 | 2,664 | 1,528 | 109,905 | 658 |
|10. 1992.....| 2,108 | 2,841 | 2,106 | 141,545 | 1,313 |
|11. 1993.....| 2,916 | 3,932 | 3,099 | 210,896 | 2,882 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 11,447 | 11,870 | 8,575 | 643,731 | 5,406 |
---------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| in Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 5. 1987.....| 55,215 | 3,300 | 51,915 | 71.3 | 35.2 | 76.3 | 0 |
| 6. 1988.....| 93,918 | 10,207 | 83,711 | 48.5 | 59.3 | 47.4 | 0 |
| 7. 1989.....| 149,213 | 11,161 | 138,052 | 62.5 | 53.8 | 63.3 | 0 |
| 8. 1990.....| 165,409 | 15,296 | 150,113 | 67.9 | 79.1 | 67.0 | 0 |
| 9. 1991.....| 189,305 | 14,895 | 174,410 | 88.9 | 85.7 | 89.1 | 0 |
|10. 1992.....| 196,335 | 15,499 | 180,836 | 95.0 | 87.1 | 95.7 | 0 |
|11. 1993.....| 234,841 | 15,299 | 219,542 | 106.0 | 90.7 | 107.3 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves|
| Years f Money | 33 | After Discount |
| in Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 0 | 0 |
| 2. 1984.....| 0 | 0.0 | 0 | 0 |
| 3. 1985.....| 0 | 0.0 | 0 | 0 |
| 4. 1986.....| 0 | 0.0 | 0 | 0 |
| 5. 1987.....| 0 | 0.0 | 8,272 | 1,493 |
| 6. 1988.....| 0 | 0.0 | 29,402 | 5,221 |
| 7. 1989.....| 0 | 0.0 | 52,888 | 8,830 |
| 8. 1990.....| 0 | 0.0 | 58,106 | 17,173 |
| 9. 1991.....| 0 | 0.0 | 86,445 | 23,460 |
|10. 1992.....| 0 | 0.0 | 108,387 | 33,158 |
|11. 1993.....| 0 | 0.0 | 167,383 | 43,513 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 510,883 | 132,848 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY)
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense P|
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 643 | 38 | 56 | 33 |
| 2. 1984.....| 32,014 | 20,126 | 11,888 | 13,379 | 6,644 | 1,194 | 801 |
| 3. 1985.....| 29,949 | 20,650 | 9,299 | 13,055 | 9,351 | 1,468 | 809 |
| 4. 1986.....| 46,208 | 29,411 | 16,797 | 20,797 | 9,784 | 1,536 | 917 |
| 5. 1987.....| 59,993 | 33,400 | 26,592 | 17,561 | 9,758 | 1,649 | 1,082 |
| 6. 1988.....| 46,236 | 25,138 | 21,097 | 11,555 | 2,925 | 3,191 | 2,456 |
| 7. 1989.....| 37,990 | 19,020 | 18,970 | 27,917 | 17,353 | 2,456 | 1,653 |
| 8. 1990.....| 25,046 | 15,403 | 9,643 | 25,067 | 14,267 | 2,568 | 1,903 |
| 9. 1991.....| 28,231 | 12,396 | 15,835 | 26,311 | 16,578 | 2,013 | 1,468 |
|10. 1992.....| 29,224 | 13,155 | 16,069 | 19,535 | 12,098 | 1,301 | 986 |
|11. 1993.....| 38,887 | 18,715 | 20,173 | 11,826 | 8,381 | 483 | 351 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 187,647 | 107,177 | 17,915 | 12,458 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY) - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| 1 ayments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| | | | | |
| 1. Prior ...| 0 | 0 | 628 | X X X X |
| 2. 1984.....| 38 | 194 | 7,323 | 0 |
| 3. 1985.....| 71 | 91 | 4,455 | 0 |
| 4. 1986.....| 59 | 136 | 11,768 | 0 |
| 5. 1987.....| 36 | 222 | 8,592 | 0 |
| 6. 1988.....| 52 | 157 | 9,521 | 0 |
| 7. 1989.....| 80 | 165 | 11,532 | 0 |
| 8. 1990.....| 129 | 170 | 11,635 | 0 |
| 9. 1991.....| 91 | 192 | 10,470 | 0 |
|10. 1992.....| 100 | 229 | 7,982 | 0 |
|11. 1993.....| 16 | 292 | 3,869 | 0 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 671 | 1,848 | 87,776 | X X X X |
-------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 1,697 | 1,266 | 66 | 66 | 0 | 0 | 0 |
| 2. 1984.....| 34 | 15 | 333 | 333 | 0 | 0 | 0 |
| 3. 1985.....| 241 | 132 | 701 | 701 | 0 | 0 | 0 |
| 4. 1986.....| 164 | 78 | 2,075 | 2,075 | 0 | 0 | 1 |
| 5. 1987.....| 491 | 293 | 3,686 | 3,686 | 0 | 0 | 6 |
| 6. 1988.....| 1,916 | 272 | 13,785 | 13,501 | 0 | 0 | 9 |
| 7. 1989.....| 1,962 | 927 | 4,104 | 3,787 | 0 | 0 | 57 |
| 8. 1990.....| 4,355 | 2,706 | 7,063 | 6,541 | 0 | 0 | 9 |
| 9. 1991.....| 1,882 | 811 | 11,298 | 10,845 | 0 | 0 | 178 |
|10. 1992.....| 4,099 | 1,424 | 4,966 | 3,649 | 0 | 0 | 844 |
|11. 1993.....| 8,221 | 6,500 | 15,240 | 7,428 | 0 | 0 | 2,278 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 25,062 | 14,424 | 63,317 | 52,612 | 0 | 0 | 3,382 |
-------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY) - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ...| 0 | 1 | 0 | 431 | 55 |
| 2. 1984.....| 0 | 0 | 0 | 18 | 12 |
| 3. 1985.....| 0 | 0 | 0 | 109 | 19 |
| 4. 1986.....| 0 | 0 | 0 | 87 | 19 |
| 5. 1987.....| 0 | 0 | 0 | 204 | 21 |
| 6. 1988.....| 0 | 1 | 0 | 1,937 | 59 |
| 7. 1989.....| 0 | 3 | 0 | 1,409 | 87 |
| 8. 1990.....| 0 | 10 | 8 | 2,188 | 109 |
| 9. 1991.....| 0 | 27 | 0 | 1,702 | 86 |
|10. 1992.....| 186 | 33 | 5 | 4,655 | 137 |
|11. 1993.....| 1,373 | 134 | 34 | 10,472 | 175 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 1,559 | 209 | 47 | 23,214 | 779 |
---------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| in Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 15,134 | 7,793 | 7,341 | 47.3 | 38.7 | 61.8 | 0 |
| 3. 1985.....| 15,556 | 10,993 | 4,563 | 51.9 | 53.2 | 49.1 | 0 |
| 4. 1986.....| 24,709 | 12,854 | 11,855 | 53.5 | 43.7 | 70.6 | 0 |
| 5. 1987.....| 23,615 | 14,819 | 8,796 | 39.4 | 44.4 | 33.1 | 0 |
| 6. 1988.....| 30,613 | 19,154 | 11,459 | 66.2 | 76.2 | 54.3 | 0 |
| 7. 1989.....| 36,661 | 23,720 | 12,941 | 96.5 | 124.7 | 68.2 | 0 |
| 8. 1990.....| 39,240 | 25,417 | 13,823 | 156.7 | 165.0 | 143.3 | 0 |
| 9. 1991.....| 41,874 | 29,702 | 12,172 | 148.3 | 239.6 | 76.9 | 0 |
|10. 1992.....| 30,979 | 18,343 | 12,636 | 106.0 | 139.4 | 78.6 | 0 |
|11. 1993.....| 38,374 | 24,033 | 14,341 | 98.7 | 128.4 | 71.1 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY) - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves|
| Years f Money | 33 | After Discount |
| in Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| | | | | |
| 1. Prior ...| 0 | X X X X | 431 | 0 |
| 2. 1984.....| 0 | 0.0 | 18 | 0 |
| 3. 1985.....| 0 | 0.0 | 109 | 0 |
| 4. 1986.....| 0 | 0.0 | 86 | 1 |
| 5. 1987.....| 0 | 0.0 | 198 | 6 |
| 6. 1988.....| 0 | 0.0 | 1,928 | 9 |
| 7. 1989.....| 0 | 0.0 | 1,352 | 57 |
| 8. 1990.....| 0 | 0.0 | 2,171 | 17 |
| 9. 1991.....| 0 | 0.0 | 1,524 | 178 |
|10. 1992.....| 0 | 0.0 | 3,992 | 663 |
|11. 1993.....| 0 | 0.0 | 9,533 | 939 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 21,344 | 1,870 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense P|
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 219,105 | 31,119 | 95,240 | 4,263 |
| 2. 1984.....| 282,070 | 71,380 | 210,690 | 360,049 | 160,409 | 105,364 | 27,038 |
| 3. 1985.....| 442,435 | 107,492 | 334,943 | 679,666 | 420,301 | 130,455 | 27,775 |
| 4. 1986.....| 846,355 | 133,251 | 713,104 | 329,139 | 87,139 | 117,511 | 23,652 |
| 5. 1987.....| 493,711 | 28,380 | 465,331 | 139,425 | 5,524 | 46,164 | 1,015 |
| 6. 1988.....| 464,192 | 36,984 | 427,208 | 141,725 | 9,167 | 50,403 | 1,264 |
| 7. 1989.....| 407,460 | 48,217 | 359,243 | 135,709 | 9,955 | 47,869 | 835 |
| 8. 1990.....| 464,249 | 44,621 | 419,628 | 121,641 | 9,802 | 41,144 | 377 |
| 9. 1991.....| 408,354 | 46,989 | 361,365 | 88,359 | 15,019 | 21,188 | 762 |
|10. 1992.....| 386,504 | 60,883 | 325,621 | 33,139 | 3,835 | 5,069 | 615 |
|11. 1993.....| 487,556 | 72,961 | 414,595 | 17,071 | 3,458 | 1,053 | 105 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 2,265,027 | 755,728 | 661,457 | 87,702 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
<CAPTION>
-------------------------------------------------------------------------
| 1 ayments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 1,149 | 2,977 | 281,940 | X X X X |
| 2. 1984.....| 3,245 | 11,111 | 289,077 | 35,564 |
| 3. 1985.....| 12,316 | 13,256 | 375,300 | 35,371 |
| 4. 1986.....| 9,519 | 10,627 | 346,487 | 43,366 |
| 5. 1987.....| 2,189 | 7,736 | 186,785 | 40,960 |
| 6. 1988.....| 1,613 | 10,214 | 191,910 | 41,808 |
| 7. 1989.....| 1,581 | 9,940 | 182,729 | 43,253 |
| 8. 1990.....| 1,251 | 8,823 | 161,427 | 49,777 |
| 9. 1991.....| 1,407 | 8,840 | 102,605 | 43,898 |
|10. 1992.....| 249 | 7,432 | 41,189 | 31,742 |
|11. 1993.....| 101 | 12,116 | 26,677 | 25,336 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 34,620 | 103,071 | 2,186,125 | X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1H - SECTION 1 - OTHER LIABILITY - OCCURRENCE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 367,305 | 124,760 | 2,519,816 | 161,332 | 0 | 0 | 24,417 |
| 2. 1984.....| 47,412 | 13,233 | 40,860 | 15,875 | 0 | 0 | 8,234 |
| 3. 1985.....| 58,665 | 22,326 | 58,577 | 17,135 | 0 | 0 | 12,299 |
| 4. 1986.....| 68,241 | 14,815 | 60,381 | 10,142 | 0 | 0 | 20,233 |
| 5. 1987.....| 28,237 | 271 | 53,306 | 4,992 | 0 | 0 | 15,298 |
| 6. 1988.....| 41,219 | 1,796 | 87,802 | 13,713 | 0 | 0 | 13,893 |
| 7. 1989.....| 70,896 | 5,234 | 86,636 | 13,607 | 0 | 0 | 15,573 |
| 8. 1990.....| 85,856 | 4,797 | 120,583 | 22,163 | 0 | 0 | 35,333 |
| 9. 1991.....| 76,908 | 9,868 | 170,167 | 37,319 | 0 | 0 | 52,339 |
|10. 1992.....| 54,837 | 4,628 | 243,768 | 49,056 | 0 | 0 | 61,978 |
|11. 1993.....| 38,003 | 1,687 | 309,108 | 64,591 | 0 | 0 | 59,987 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 937,579 | 203,417 | 3,751,004 | 409,925 | 0 | 0 | 319,584 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| | | | | | |
| 1. Prior ...| 3,993 | 13,971 | 3,797 | 2,625,250 | 14,716 |
| 2. 1984.....| 2,329 | 1,903 | 697 | 65,766 | 543 |
| 3. 1985.....| 3,927 | 7,522 | 716 | 86,868 | 801 |
| 4. 1986.....| 3,055 | 7,036 | 1,106 | 121,948 | 871 |
| 5. 1987.....| 76 | 3,680 | 759 | 92,260 | 606 |
| 6. 1988.....| 352 | 4,317 | 1,129 | 128,181 | 669 |
| 7. 1989.....| 785 | 4,453 | 1,586 | 155,065 | 1,227 |
| 8. 1990.....| 991 | 6,652 | 2,507 | 216,328 | 2,160 |
| 9. 1991.....| 1,358 | 9,943 | 3,246 | 254,115 | 3,174 |
|10. 1992.....| 3,662 | 8,514 | 4,142 | 307,379 | 3,438 |
|11. 1993.....| 4,018 | 8,099 | 5,229 | 342,031 | 5,976 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 24,546 | 76,090 | 24,914 | 4,395,193 | 34,181 |
---------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1H - SECTION 1 - OTHER LIABILITY - OCCURRENCE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| in Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 573,727 | 218,884 | 354,843 | 203.4 | 306.6 | 168.4 | 0 |
| 3. 1985.....| 953,634 | 491,464 | 462,170 | 215.5 | 457.2 | 138.0 | 0 |
| 4. 1986.....| 607,238 | 138,803 | 468,435 | 71.7 | 104.2 | 65.7 | 0 |
| 5. 1987.....| 290,925 | 11,878 | 279,047 | 58.9 | 41.9 | 60.0 | 0 |
| 6. 1988.....| 346,385 | 26,292 | 320,093 | 74.6 | 71.1 | 74.9 | 0 |
| 7. 1989.....| 368,209 | 30,416 | 337,793 | 90.4 | 63.1 | 94.0 | 0 |
| 8. 1990.....| 415,887 | 38,130 | 377,757 | 89.6 | 85.5 | 90.0 | 0 |
| 9. 1991.....| 421,047 | 64,326 | 356,721 | 103.1 | 136.9 | 98.7 | 0 |
|10. 1992.....| 410,365 | 61,796 | 348,569 | 106.2 | 101.5 | 107.0 | 0 |
|11. 1993.....| 442,567 | 73,859 | 368,708 | 90.8 | 101.2 | 88.9 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves|
| Years f Money | 33 | After Discount |
| in Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 2,601,029 | 24,221 |
| 2. 1984.....| 0 | 0.0 | 59,164 | 6,602 |
| 3. 1985.....| 0 | 0.0 | 77,780 | 9,088 |
| 4. 1986.....| 0 | 0.0 | 103,664 | 18,284 |
| 5. 1987.....| 0 | 0.0 | 76,279 | 15,981 |
| 6. 1988.....| 0 | 0.0 | 113,511 | 14,670 |
| 7. 1989.....| 0 | 0.0 | 138,691 | 16,374 |
| 8. 1990.....| 0 | 0.0 | 179,479 | 36,849 |
| 9. 1991.....| 0 | 0.0 | 199,888 | 54,227 |
|10. 1992.....| 0 | 0.0 | 244,921 | 62,458 |
|11. 1993.....| 0 | 0.0 | 280,832 | 61,198 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 4,075,241 | 319,952 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense P|
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ...| X X X X | X X X X | X X X X | 0 | 0 | 0 | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 485,410 | 119,663 | 365,747 | 110,973 | 28,086 | 46,103 | 4,751 |
| 6. 1988.....| 500,957 | 115,402 | 385,555 | 126,018 | 31,355 | 44,714 | 4,510 |
| 7. 1989.....| 534,973 | 113,421 | 421,552 | 184,873 | 80,060 | 43,941 | 7,254 |
| 8. 1990.....| 455,514 | 109,190 | 346,325 | 113,646 | 31,694 | 43,717 | 2,364 |
| 9. 1991.....| 481,319 | 90,083 | 391,236 | 79,865 | 5,604 | 27,310 | 223 |
|10. 1992.....| 430,719 | 87,990 | 342,729 | 22,507 | 89 | 10,085 | 221 |
|11. 1993.....| 361,502 | 103,639 | 257,863 | 3,701 | 2 | 1,048 | 57 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 641,584 | 176,891 | 216,919 | 19,379 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
<CAPTION>
-------------------------------------------------------------------------
| 1 ayments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 0 | 0 | 0 | X X X X |
| 2. 1984.....| 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 |
| 5. 1987.....| 1,626 | 4,997 | 129,236 | 5,025 |
| 6. 1988.....| 1,766 | 3,627 | 138,495 | 5,113 |
| 7. 1989.....| 349 | 3,994 | 145,493 | 5,034 |
| 8. 1990.....| 429 | 3,915 | 127,221 | 5,791 |
| 9. 1991.....| 207 | 3,930 | 105,278 | 6,246 |
|10. 1992.....| 323 | 3,487 | 35,769 | 6,460 |
|11. 1993.....| 14 | 2,216 | 6,905 | 6,070 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 4,716 | 26,165 | 688,397 | X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| | | | | | | | |
| 1. Prior ...| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 20,740 | 3,492 | 28,916 | 13,714 | 0 | 0 | 10,053 |
| 6. 1988.....| 30,489 | 5,968 | 36,444 | 20,905 | 0 | 0 | 17,825 |
| 7. 1989.....| 64,871 | 18,790 | 46,019 | 23,223 | 0 | 0 | 31,085 |
| 8. 1990.....| 87,831 | 25,301 | 103,541 | 54,619 | 0 | 0 | 44,992 |
| 9. 1991.....| 101,016 | 23,424 | 112,096 | 59,957 | 0 | 0 | 60,232 |
|10. 1992.....| 73,526 | 2,614 | 157,952 | 63,242 | 0 | 0 | 67,986 |
|11. 1993.....| 43,351 | 295 | 231,326 | 61,326 | 0 | 0 | 94,178 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 421,823 | 79,883 | 716,294 | 296,986 | 0 | 0 | 326,351 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| | | | | | |
| 1. Prior ...| 0 | 0 | 0 | 0 | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 3,051 | 4 | 585 | 40,037 | 174 |
| 6. 1988.....| 4,181 | 9 | 539 | 54,243 | 305 |
| 7. 1989.....| 5,135 | 22 | 987 | 95,814 | 446 |
| 8. 1990.....| 7,291 | 77 | 1,626 | 150,779 | 808 |
| 9. 1991.....| 9,775 | 179 | 1,918 | 182,106 | 1,412 |
|10. 1992.....| 3,648 | 361 | 2,514 | 232,474 | 2,330 |
|11. 1993.....| 10,176 | 1,986 | 2,267 | 299,325 | 4,121 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 43,257 | 2,638 | 10,436 | 1,054,778 | 9,596 |
---------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| in Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 5. 1987.....| 222,367 | 53,094 | 169,273 | 45.8 | 44.4 | 46.3 | 0 |
| 6. 1988.....| 259,656 | 66,919 | 192,737 | 51.8 | 58.0 | 50.0 | 0 |
| 7. 1989.....| 375,770 | 134,462 | 241,308 | 70.2 | 118.6 | 57.2 | 0 |
| 8. 1990.....| 399,268 | 121,269 | 277,999 | 87.7 | 111.1 | 80.3 | 0 |
| 9. 1991.....| 386,367 | 98,983 | 287,384 | 80.3 | 109.9 | 73.5 | 0 |
|10. 1992.....| 338,057 | 69,814 | 268,243 | 78.5 | 79.3 | 78.3 | 0 |
|11. 1993.....| 378,087 | 71,856 | 306,231 | 104.6 | 69.3 | 118.8 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves|
| Years f Money | 33 | After Discount |
| in Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | Loss |
| Losses Were | Loss |Participation | Losses | Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 0 | 0 |
| 2. 1984.....| 0 | 0.0 | 0 | 0 |
| 3. 1985.....| 0 | 0.0 | 0 | 0 |
| 4. 1986.....| 0 | 0.0 | 0 | 0 |
| 5. 1987.....| 0 | 0.0 | 32,450 | 7,587 |
| 6. 1988.....| 0 | 0.0 | 40,060 | 14,183 |
| 7. 1989.....| 0 | 0.0 | 68,877 | 26,937 |
| 8. 1990.....| 0 | 0.0 | 111,452 | 39,327 |
| 9. 1991.....| 0 | 0.0 | 129,731 | 52,375 |
|10. 1992.....| 0 | 0.0 | 165,622 | 66,852 |
|11. 1993.....| 0 | 0.0 | 213,056 | 86,269 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 761,248 | 293,530 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT)
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense |
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 13,740 | 4,470 | 1,486 | 405 |
| 2. 1992.....| 179,956 | 70,306 | 109,651 | 128,918 | 62,113 | 2,786 | 1,282 |
| 3. 1993.....| 193,799 | 71,866 | 121,933 | 45,042 | 25,190 | 1,328 | 696 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| X X X X | X X X X | X X X X | 187,699 | 91,773 | 5,600 | 2,382 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<CAPTION>
-------------------------------------------------------------------------
| 1 Payments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 6,969 | 212 | 10,564 | X X X X |
| 2. 1992.....| 405 | 2,433 | 70,741 | X X X X |
| 3. 1993.....| 165 | 2,677 | 23,161 | X X X X |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 7,540 | 5,322 | 104,466 | X X X X |
-------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT) - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpaid|
| Years |--------------------------------------------------------|--------------------------------------------|
| Which | Case Basis | Bulk + IBNR | Case Basis | Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| 13,320 | 2,828 | 29,816 | 15,143 | 0 | 0 | 5,753 |
| 2. 1992.....| 17,137 | 3,518 | 20,294 | 10,611 | 0 | 0 | 3,484 |
| 3. 1993.....| 70,774 | 38,453 | 29,506 | 8,865 | 0 | 0 | 4,201 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 101,231 | 44,799 | 79,616 | 34,619 | 0 | 0 | 13,438 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expense | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ...| 15 | 2,689 | 137 | 31,040 | 688 |
| 2. 1992.....| 1,578 | 2,402 | 110 | 25,318 | 344 |
| 3. 1993.....| 738 | 2,597 | 362 | 56,787 | 1,077 |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 4. Totals ..| 2,331 | 7,688 | 609 | 113,145 | 2,109 |
---------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1992.....| 175,162 | 79,102 | 96,060 | 97.3 | 112.5 | 87.6 | 0 |
| 3. 1993.....| 153,890 | 73,942 | 79,948 | 79.4 | 102.9 | 65.6 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT) - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves |
| Years f Money | 33 | After Discount |
| Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 25,165 | 5,875 |
| 2. 1992.....| 0 | 0.0 | 23,302 | 2,016 |
| 3. 1993.....| 0 | 0.0 | 52,962 | 3,825 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 0 | X X X X | 101,429 | 11,716 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
SCHEDULE P - PART 1J - AUTO PHYSICAL DAMAGE
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense |
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ...| X X X X | X X X X | X X X X | 2,752 | (20)| 1,888 | 53 |
| 2. 1992.....| 393,174 | 11,491 | 381,683 | 185,113 | 4,539 | 2,846 | 23 |
| 3. 1993.....| 362,501 | 6,771 | 355,730 | 159,678 | 3,164 | 1,912 | 7 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| X X X X | X X X X | X X X X | 347,543 | 7,684 | 6,646 | 83 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<CAPTION>
-------------------------------------------------------------------------
| 1 Payments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 3,683 | (124)| 4,484 | X X X X |
| 2. 1992.....| 32,809 | 20,399 | 203,794 | 185,594 |
| 3. 1993.....| 17,545 | 16,229 | 174,649 | 153,975 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 54,037 | 36,505 | 382,927 | X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1J - AUTO PHYSICAL DAMAGE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpaid|
| Years |--------------------------------------------------------|--------------------------------------------|
| Which | Case Basis | Bulk + IBNR | Case Basis | Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| 0 | 0 | 0 | 0 | 0 | 0 | 1,751 |
| 2. 1992.....| 1,259 | 13 | 20,580 | 1,563 | 0 | 0 | 2,084 |
| 3. 1993.....| 11,032 | 247 | 35,807 | 2,283 | 0 | 0 | 11,127 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 12,291 | 260 | 56,387 | 3,846 | 0 | 0 | 14,962 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expense | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ...| 0 | 3,848 | 169 | 13,345 | 310 |
| 2. 1992.....| 27 | 5,330 | 635 | 22,955 | 156 |
| 3. 1993.....| 99 | 31,402 | 1,800 | 57,137 | 5,217 |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 4. Totals ..| 126 | 40,579 | 2,604 | 93,437 | 5,683 |
---------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1992.....| 232,916 | 6,165 | 226,751 | 59.2 | 53.7 | 59.4 | 0 |
| 3. 1993.....| 237,585 | 5,800 | 231,785 | 65.5 | 85.7 | 65.2 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
--------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1J - AUTO PHYSICAL DAMAGE - (CONTINUED)
<CAPTION>
--------------------------- ---------------------------------------------
| for Time | | Net Balance Sheet Reserves |
| Years f Money | 33 | After Discount |
| Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 11,425 | 1,920 |
| 2. 1992.....| 0 | 0.0 | 20,263 | 2,692 |
| 3. 1993.....| 0 | 0.0 | 44,309 | 12,828 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 0 | X X X X | 75,997 | 17,440 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense |
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 9,566 | 9,200 | 2,721 | 4,070 |
| 2. 1992.....| 121,630 | 24,714 | 96,915 | 22,018 | 1,928 | 1,748 | 361 |
| 3. 1993.....| 127,118 | 20,304 | 106,814 | 53,968 | 10,277 | 355 | 8 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| X X X X | X X X X | X X X X | 85,552 | 21,406 | 4,824 | 4,438 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<CAPTION>
-------------------------------------------------------------------------
| 1 Payments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 53,772 | 148 | (835)| X X X X |
| 2. 1992.....| 20,901 | 553 | 22,030 | X X X X |
| 3. 1993.....| 97,322 | 558 | 44,596 | X X X X |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 171,994 | 1,259 | 65,791 | X X X X |
-------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY
- (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpaid|
| Years |--------------------------------------------------------|--------------------------------------------|
| Which | Case Basis | Bulk + IBNR | Case Basis | Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| 31,700 | 8,341 | 77,062 | 30,803 | 0 | 0 | 16,670 |
| 2. 1992.....| 3,393 | 1,494 | 28,211 | 8,085 | 0 | 0 | 2,778 |
| 3. 1993.....| 1,513 | 225 | 29,928 | 4,165 | 0 | 0 | 4,412 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 36,607 | 10,060 | 135,201 | 43,053 | 0 | 0 | 23,860 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expense | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ...| 6,733 | 8,116 | 958 | 80,513 | 1,062 |
| 2. 1992.....| 1,046 | 3,055 | 77 | 23,835 | 251 |
| 3. 1993.....| 707 | 890 | 281 | 31,038 | 202 |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 4. Totals ..| 8,486 | 12,062 | 1,316 | 135,386 | 1,515 |
---------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1992.....| 58,778 | 12,914 | 45,864 | 48.3 | 52.3 | 47.3 | 0 |
| 3. 1993.....| 91,015 | 15,382 | 75,633 | 71.6 | 75.8 | 70.8 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY
- (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves |
| Years f Money | 33 | After Discount |
| Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 69,618 | 10,895 |
| 2. 1992.....| 0 | 0.0 | 22,026 | 1,809 |
| 3. 1993.....| 0 | 0.0 | 27,052 | 3,986 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 0 | X X X X | 118,696 | 16,690 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
SCHEDULE P - PART 1L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense |
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ...| X X X X | X X X X | X X X X | 72,090 | 1,397 | 4 | 0 |
| 2. 1992.....| 441,805 | 13,828 | 427,977 | 169,634 | 6,446 | 61 | 3 |
| 3. 1993.....| 512,288 | 13,503 | 498,785 | 102,825 | 2,690 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| X X X X | X X X X | X X X X | 344,549 | 10,533 | 65 | 3 |
--------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<CAPTION>
-------------------------------------------------------------------------
| 1 Payments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 0 | 2,518 | 73,216 | X X X X |
| 2. 1992.....| 0 | 10,824 | 174,069 | X X X X |
| 3. 1993.....| 0 | 7,469 | 107,604 | X X X X |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 0 | 20,811 | 354,889 | X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH) - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpaid|
| Years |--------------------------------------------------------|--------------------------------------------|
| Which | Case Basis | Bulk + IBNR | Case Basis | Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| 286,727 | 4,333 | 3,013 | 832 | 0 | 0 | 309 |
| 2. 1992.....| 101,821 | 343 | 2,481 | 657 | 0 | 0 | 114 |
| 3. 1993.....| 108,651 | 3,037 | 136,928 | 3,163 | 0 | 0 | 52 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 497,199 | 7,714 | 142,422 | 4,652 | 0 | 0 | 475 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expense | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ...| 11 | 0 | 6,028 | 290,901 | 4 |
| 2. 1992.....| 67 | 0 | 4,715 | 108,064 | 6 |
| 3. 1993.....| 9 | 0 | 10,962 | 250,384 | 24 |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 4. Totals ..| 87 | 0 | 21,705 | 649,349 | 34 |
---------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1992.....| 289,650 | 7,516 | 282,134 | 65.6 | 54.4 | 65.9 | 0 |
| 3. 1993.....| 366,887 | 8,899 | 357,988 | 71.6 | 65.9 | 71.8 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<PAGE>
<PAGE>
SCHEDULE P - PART 1L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH) - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves |
| Years f Money | 33 | After Discount |
| Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 284,575 | 6,326 |
| 2. 1992.....| 0 | 0.0 | 103,302 | 4,762 |
| 3. 1993.....| 0 | 0.0 | 239,379 | 11,005 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..| 0 | X X X X | 627,256 | 22,093 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1M - INTERNATIONAL
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| | Premiums Earned | Loss and Loss Expense |
| 1 |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ..| X X X X | X X X X | X X X X | 0 | 0 | 0 | 0 |
| 2. 1984....| (646)| 0 | (646)| (1,522)| 0 | 0 | 0 |
| 3. 1985....| 0 | (131)| 131 | 0 | 0 | 0 | 0 |
| 4. 1986....| 0 | (131)| 131 | 0 | 0 | 0 | 0 |
| 5. 1987....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 6. 1988....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 7. 1989....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 8. 1990....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 9. 1991....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|10. 1992....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|11. 1993....| 183 | 0 | 183 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | (1,522)| 0 | 0 | 0 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
<CAPTION>
-------------------------------------------------------------------------
| Payments | |
| 1 ---------------------------------------------| 12 |
| Years | 9 | 10 | 11 | |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ..| 0 | 0 | 0 | X X X X |
| 2. 1984....| 0 | 0 | (1,522)| X X X X |
| 3. 1985....| 0 | 0 | 0 | X X X X |
| 4. 1986....| 0 | 0 | 0 | X X X X |
| 5. 1987....| 0 | 0 | 0 | X X X X |
| 6. 1988....| 0 | 0 | 0 | X X X X |
| 7. 1989....| 0 | 0 | 0 | X X X X |
| 8. 1990....| 0 | 0 | 0 | X X X X |
| 9. 1991....| 0 | 0 | 0 | X X X X |
|10. 1992....| 0 | 0 | 0 | X X X X |
|11. 1993....| 0 | 0 | 0 | X X X X |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | 0 | (1,522)| X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1M - INTERNATIONAL - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ..| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 5. 1987....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 6. 1988....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 7. 1989....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 8. 1990....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 9. 1991....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|10. 1992....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|11. 1993....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | and Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ..| 0 | 0 | 0 | 0 | 0 |
| 2. 1984....| 0 | 0 | 0 | 0 | 0 |
| 3. 1985....| 0 | 0 | 0 | 0 | 0 |
| 4. 1986....| 0 | 0 | 0 | 0 | 0 |
| 5. 1987....| 0 | 0 | 0 | 0 | 0 |
| 6. 1988....| 0 | 0 | 0 | 0 | 0 |
| 7. 1989....| 0 | 0 | 0 | 0 | 0 |
| 8. 1990....| 0 | 0 | 0 | 0 | 0 |
| 9. 1991....| 0 | 0 | 0 | 0 | 0 |
|10. 1992....| 0 | 0 | 0 | 0 | 0 |
|11. 1993....| 0 | 0 | 0 | 0 | 0 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 0 | 0 | 0 | 0 | 0 |
---------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1M - INTERNATIONAL - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| Years | Total Losses and | Loss and Loss Expense Percentage | Discount|
| in Which | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
|Premiums Were|-----------------------------------------|--------------------------------------------|--------------|
| Earned and | 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984....| (1,522)| 0 | (1,522)| 235.6 | 0.0 | 235.6 | 0 |
| 3. 1985....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 4. 1986....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 5. 1987....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 6. 1988....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 7. 1989....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 8. 1990....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 9. 1991....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
|10. 1992....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
|11. 1993....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| Years for Time | | Net Balance Sheet Reserves |
| in Which f Money | 33 | After Discount |
|Premiums Were---------------|Inter-Company |-----------------------------|
| Earned and | 32 | Pooling | 34 | 35 |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ..| 0 | X X X X | 0 | 0 |
| 2. 1984....| 0 | 0.0 | 0 | 0 |
| 3. 1985....| 0 | 0.0 | 0 | 0 |
| 4. 1986....| 0 | 0.0 | 0 | 0 |
| 5. 1987....| 0 | 0.0 | 0 | 0 |
| 6. 1988....| 0 | 0.0 | 0 | 0 |
| 7. 1989....| 0 | 0.0 | 0 | 0 |
| 8. 1990....| 0 | 0.0 | 0 | 0 |
| 9. 1991....| 0 | 0.0 | 0 | 0 |
|10. 1992....| 0 | 0.0 | 0 | 0 |
|11. 1993....| 0 | 0.0 | 0 | 0 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 0 | 0 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1N - REINSURANCE A
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense |
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. 1988.....| 18,107 | 2,084 | 16,022 | (8,536)| 113 | 260 | 2 |
| 2. 1989.....| 30,323 | 5,188 | 25,136 | 76,534 | 27,493 | 202 | 1 |
| 3. 1990.....| 52,398 | 8,887 | 43,511 | 38,177 | 12,667 | 130 | 0 |
| 4. 1991.....| 53,594 | 8,599 | 44,995 | 35,811 | 3,072 | 235 | 2 |
| 5. 1992.....| 71,214 | 6,982 | 64,231 | 130,165 | 18,150 | 121 | 58 |
| 6. 1993.....| 88,237 | 7,979 | 80,258 | 5,307 | 19 | 20 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| X X X X | X X X X | X X X X | 277,458 | 61,515 | 968 | 64 |
-------------------------------------------------------------------------------------------------------------------
NOTE: Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<CAPTION>
-------------------------------------------------------------------------
| 1 Payments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. 1988.....| 0 | (1)| (8,392)| X X X X |
| 2. 1989.....| 0 | 0 | 49,242 | X X X X |
| 3. 1990.....| 0 | 0 | 25,640 | X X X X |
| 4. 1991.....| 0 | 0 | 32,972 | X X X X |
| 5. 1992.....| 0 | 0 | 112,078 | X X X X |
| 6. 1993.....| 0 | 143 | 5,451 | X X X X |
|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| 0 | 142 | 216,991 | X X X X |
-------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1N - REINSURANCE A - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai
| Years |--------------------------------------------------------|--------------------------------------------
| Which | Case Basis | Bulk + IBNR | Case Basis | Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. 1988.....| 4,978 | 0 | 11,202 | 0 | 0 | 0 | 0 |
| 2. 1989.....| 10,245 | 1,884 | 8,049 | 3,548 | 0 | 0 | 0 |
| 3. 1990.....| 10,817 | 549 | 9,442 | 710 | 0 | 0 | 0 |
| 4. 1991.....| 4,895 | 201 | 2,497 | 1,900 | 0 | 0 | 0 |
| 5. 1992.....| 16,671 | 2,548 | 2,574 | 1,461 | 0 | 0 | 0 |
| 6. 1993.....| 6,256 | 72 | 54,567 | 4,069 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| 53,861 | 5,255 | 88,331 | 11,688 | 0 | 0 | 0 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expense | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. 1988.....| 0 | 0 | 0 | 16,180 | X X X X |
| 2. 1989.....| 0 | 0 | 0 | 12,862 | X X X X |
| 3. 1990.....| 0 | 0 | 0 | 19,000 | X X X X |
| 4. 1991.....| 0 | 0 | 0 | 5,290 | X X X X |
| 5. 1992.....| 0 | 0 | 0 | 15,236 | X X X X |
| 6. 1993.....| 0 | 0 | 0 | 56,681 | X X X X |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 7. Totals ..| 0 | 0 | 0 | 125,249 | X X X X |
---------------------------------------------------------------------------------------
<PAGE>
<PAGE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. 1988.....| 7,903 | 115 | 7,788 | 43.6 | 5.5 | 48.6 | 0 |
| 2. 1989.....| 95,030 | 32,926 | 62,104 | 313.4 | 634.7 | 247.1 | 0 |
| 3. 1990.....| 58,566 | 13,926 | 44,640 | 111.8 | 156.7 | 102.6 | 0 |
| 4. 1991.....| 43,438 | 5,175 | 38,263 | 81.1 | 60.2 | 85.0 | 0 |
| 5. 1992.....| 149,531 | 22,217 | 127,314 | 210.0 | 318.2 | 198.2 | 0 |
| 6. 1993.....| 66,293 | 4,160 | 62,133 | 75.1 | 52.1 | 77.4 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
------------- -----------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)<PAGE>
<PAGE>
SCHEDULE P - PART 1N - REINSURANCE A - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves |
| Years f Money | 33 | After Discount |
| Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. 1988.....| 0 | 0.0 | 16,180 | 0 |
| 2. 1989.....| 0 | 0.0 | 12,862 | 0 |
| 3. 1990.....| 0 | 0.0 | 19,000 | 0 |
| 4. 1991.....| 0 | 0.0 | 5,290 | 0 |
| 5. 1992.....| 0 | 0.0 | 15,236 | 0 |
| 6. 1993.....| 0 | 0.0 | 56,681 | 0 |
|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| 0 | X X X X | 125,249 | 0 |
-------------------------------------------------------------------------
SCHEDULE P - PART 1O - REINSURANCE B
<CAPTION> (000 Omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense |
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. 1988.....| 68,483 | (3,131)| 71,614 | 5,237 | 142 | 461 | 7 |
| 2. 1989.....| 112,647 | 743 | 111,904 | 14,135 | 93 | 529 | 4 |
| 3. 1990.....| 105,662 | 626 | 105,037 | 8,340 | 209 | 543 | 3 |
| 4. 1991.....| 115,392 | 734 | 114,657 | 29,587 | 227 | 562 | (2)|
| 5. 1992.....| 107,906 | 1,450 | 106,456 | 6,849 | 1,676 | 150 | 60 |
| 6. 1993.....| 111,104 | 138 | 110,966 | 1,465 | (30)| 8 | 26 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| X X X X | X X X X | X X X X | 65,613 | 2,318 | 2,252 | 97 |
-------------------------------------------------------------------------------------------------------------------
NOTE: Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
SCHEDULE P - PART 1O - REINSURANCE B - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| 1 Payments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. 1988.....| 0 | 0 | 5,549 | X X X X |
| 2. 1989.....| 0 | 0 | 14,566 | X X X X |
| 3. 1990.....| 0 | 0 | 8,671 | X X X X |
| 4. 1991.....| 0 | 0 | 29,924 | X X X X |
| 5. 1992.....| 0 | 0 | 5,262 | X X X X |
| 6. 1993.....| 0 | 0 | 1,477 | X X X X |
|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| 0 | 0 | 65,449 | X X X X |
-------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| Which | Case Basis | Bulk + IBNR | Case Basis | Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. 1988.....| 11,517 | 18 | 48,808 | 0 | 0 | 0 | 0 |
| 2. 1989.....| (22,023)| 50 | 71,667 | 0 | 0 | 0 | 0 |
| 3. 1990.....| 74,096 | 0 | 51,712 | 49 | 0 | 0 | 0 |
| 4. 1991.....| 26,410 | 338 | 49,852 | 207 | 0 | 0 | 0 |
| 5. 1992.....| 27,996 | 2 | 59,085 | 814 | 0 | 0 | 0 |
| 6. 1993.....| 10,886 | 30 | 117,653 | 110 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| 128,883 | 437 | 398,777 | 1,180 | 0 | 0 | 0 |
-------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
<CAPTION>
---------------------------- -----------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expense | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. 1988.....| 0 | 0 | 0 | 60,308 | X X X X |
| 2. 1989.....| 0 | 0 | 0 | 49,594 | X X X X |
| 3. 1990.....| 0 | 0 | 0 | 125,759 | X X X X |
| 4. 1991.....| 0 | 0 | 0 | 75,717 | X X X X |
| 5. 1992.....| 0 | 0 | 0 | 86,266 | X X X X |
| 6. 1993.....| 0 | 0 | 0 | 128,399 | X X X X |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 7. Totals ..| 0 | 0 | 0 | 526,043 | X X X X |
---------------------------- -----------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1O - REINSURANCE B - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. 1988.....| 66,023 | 167 | 65,856 | 96.4 | (5.3)| 92.0 | 0 |
| 2. 1989.....| 64,308 | 147 | 64,161 | 57.1 | 19.8 | 57.3 | 0 |
| 3. 1990.....| 134,691 | 261 | 134,430 | 127.5 | 41.7 | 128.0 | 0 |
| 4. 1991.....| 106,411 | 770 | 105,641 | 92.2 | 104.9 | 92.1 | 0 |
| 5. 1992.....| 94,080 | 2,552 | 91,528 | 87.2 | 176.0 | 86.0 | 0 |
| 6. 1993.....| 130,012 | 136 | 129,876 | 117.0 | 98.6 | 117.0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves |
| Years f Money | 33 | After Discount |
| Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. 1988.....| 0 | 0.0 | 60,308 | 0 |
| 2. 1989.....| 0 | 0.0 | 49,594 | 0 |
| 3. 1990.....| 0 | 0.0 | 125,759 | 0 |
| 4. 1991.....| 0 | 0.0 | 75,717 | 0 |
| 5. 1992.....| 0 | 0.0 | 86,266 | 0 |
| 6. 1993.....| 0 | 0.0 | 128,399 | 0 |
|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| 0 | X X X X | 526,043 | 0 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1P - REINSURANCE C
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense |
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. 1988.....| 7,954 | 107 | 7,847 | 61,724 | 0 | 14 | 0 |
| 2. 1989.....| 13,214 | 0 | 13,214 | 38,493 | 0 | 45 | 0 |
| 3. 1990.....| 11,353 | 0 | 11,353 | 34,760 | 0 | 41 | 0 |
| 4. 1991.....| 8,416 | 0 | 8,416 | 1,884 | 0 | 1 | 0 |
| 5. 1992.....| 3,283 | 0 | 3,283 | 101 | 0 | 0 | 0 |
| 6. 1993.....| 2,923 | 0 | 2,923 | 120 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| X X X X | X X X X | X X X X | 137,082 | 0 | 101 | 0 |
-------------------------------------------------------------------------------------------------------------------
NOTE: Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<CAPTION>
-------------------------------------------------------------------------
| 1 Payments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. 1988.....| 0 | 0 | 61,738 | X X X X |
| 2. 1989.....| 7,940 | 0 | 38,538 | X X X X |
| 3. 1990.....| 0 | 0 | 34,801 | X X X X |
| 4. 1991.....| 0 | 0 | 1,884 | X X X X |
| 5. 1992.....| 0 | 0 | 101 | X X X X |
| 6. 1993.....| 0 | 0 | 120 | X X X X |
|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| 7,940 | 0 | 137,183 | X X X X |
-------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1P - REINSURANCE C - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| Which | Case Basis | Bulk + IBNR | Case Basis | Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. 1988.....| 596 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1989.....| 246 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1990.....| 914 | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1991.....| 1,407 | 0 | 0 | 0 | 0 | 0 | 0 |
| 5. 1992.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 6. 1993.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| 3,163 | 0 | 0 | 0 | 0 | 0 | 0 |
-------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expense | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. 1988.....| 0 | 0 | 0 | 596 | X X X X |
| 2. 1989.....| 0 | 0 | 0 | 246 | X X X X |
| 3. 1990.....| 0 | 0 | 0 | 914 | X X X X |
| 4. 1991.....| 0 | 0 | 0 | 1,407 | X X X X |
| 5. 1992.....| 0 | 0 | 0 | 0 | X X X X |
| 6. 1993.....| 0 | 0 | 0 | 0 | X X X X |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 7. Totals ..| 0 | 0 | 0 | 3,163 | X X X X |
---------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. 1988.....| 62,334 | 0 | 62,334 | 783.7 | 0.0 | 794.4 | 0 |
| 2. 1989.....| 38,784 | 0 | 38,784 | 293.5 | 0.0 | 293.5 | 0 |
| 3. 1990.....| 35,715 | 0 | 35,715 | 314.6 | 0.0 | 314.6 | 0 |
| 4. 1991.....| 3,292 | 0 | 3,292 | 39.1 | 0.0 | 39.1 | 0 |
| 5. 1992.....| 101 | 0 | 101 | 3.1 | 0.0 | 3.1 | 0 |
| 6. 1993.....| 120 | 0 | 120 | 4.1 | 0.0 | 4.1 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)<PAGE>
<PAGE>
SCHEDULE P - PART 1P - REINSURANCE C - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves |
| Years f Money | 33 | After Discount |
| Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. 1988.....| 0 | 0.0 | 596 | 0 |
| 2. 1989.....| 0 | 0.0 | 246 | 0 |
| 3. 1990.....| 0 | 0.0 | 914 | 0 |
| 4. 1991.....| 0 | 0.0 | 1,407 | 0 |
| 5. 1992.....| 0 | 0.0 | 0 | 0 |
| 6. 1993.....| 0 | 0.0 | 0 | 0 |
|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..| 0 | X X X X | 3,163 | 0 |
-------------------------------------------------------------------------
SCHEDULE P - PART 1Q - REINSURANCE D
<CAPTION> (000 Omitted)
-------------------------------------------------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense |
| |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 11,182 | 2,096 | 334 | 61 |
| 2. 1984.....| 57,740 | 3,861 | 53,879 | 69,532 | 4,299 | 1,165 | 63 |
| 3. 1985.....| 123,179 | 5,941 | 117,239 | 61,679 | 4,955 | 689 | 12 |
| 4. 1986.....| 212,988 | 9,139 | 203,849 | 24,322 | 917 | 860 | 0 |
| 5. 1987.....| 170,335 | 7,926 | 162,408 | 49,900 | 2,125 | 886 | 1 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 6. Totals ..| X X X X | X X X X | X X X X | 216,615 | 14,393 | 3,934 | 137 |
-------------------------------------------------------------------------------------------------------------------
NOTE: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
SCHEDULE P - PART 1Q - REINSURANCE D - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------
| 1 Payments | |
| ---------------------------------------------| |
| Years | 9 | 10 | 11 | 12 |
| Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 0 | 0 | 9,359 | X X X X |
| 2. 1984.....| 0 | 12 | 66,347 | X X X X |
| 3. 1985.....| 0 | 111 | 57,513 | X X X X |
| 4. 1986.....| 0 | 52 | 24,316 | X X X X |
| 5. 1987.....| 0 | 12 | 48,671 | X X X X |
|-------------|--------------|--------------|--------------|--------------|
| 6. Totals ..| 0 | 187 | 206,207 | X X X X |
-------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai
| Years |--------------------------------------------------------|--------------------------------------------
| Which | Case Basis | Bulk + IBNR | Case Basis | Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ...| 86,806 | 2,058 | 19,175 | 1,044 | 0 | 0 | 0 |
| 2. 1984.....| 28,552 | 180 | 13,144 | 231 | 0 | 0 | 0 |
| 3. 1985.....| 21,058 | 1,259 | 63,183 | 791 | 0 | 0 | 0 |
| 4. 1986.....| 16,903 | 1 | 84,574 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 28,762 | 139 | 91,596 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 6. Totals ..| 182,080 | 3,638 | 271,672 | 2,066 | 0 | 0 | 0 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expense | and Expenses | Direct and |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ...| 0 | 0 | 0 | 102,878 | X X X X |
| 2. 1984.....| 0 | 0 | 0 | 41,285 | X X X X |
| 3. 1985.....| 0 | 0 | 0 | 82,191 | X X X X |
| 4. 1986.....| 0 | 0 | 0 | 101,475 | X X X X |
| 5. 1987.....| 0 | 0 | 0 | 120,219 | X X X X |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 6. Totals ..| 0 | 0 | 0 | 448,048 | X X X X |
---------------------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1Q - REINSURANCE D - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Total Losses and | Loss and Loss Expense Percentage | Discount|
| Years | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
| Which |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were| 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Earned and | | | | | | | |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 112,405 | 4,773 | 107,632 | 194.7 | 123.6 | 199.8 | 0 |
| 3. 1985.....| 146,720 | 7,017 | 139,703 | 119.1 | 118.1 | 119.2 | 0 |
| 4. 1986.....| 126,711 | 918 | 125,793 | 59.5 | 10.0 | 61.7 | 0 |
| 5. 1987.....| 171,156 | 2,265 | 168,891 | 100.5 | 28.6 | 104.0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 6. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| for Time | | Net Balance Sheet Reserves |
| Years f Money | 33 | After Discount |
| Which ---------------| |-----------------------------|
|Premiums Were| 32 |Inter-Company | 34 | 35 |
| Earned and | | Pooling | | |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | 0.0 | 102,878 | 0 |
| 2. 1984.....| 0 | 0.0 | 41,285 | 0 |
| 3. 1985.....| 0 | 0.0 | 82,191 | 0 |
| 4. 1986.....| 0 | 0.0 | 101,475 | 0 |
| 5. 1987.....| 0 | 0.0 | 120,219 | 0 |
|-------------|--------------|--------------|--------------|--------------|
| 6. Totals ..| 0 | X X X X | 448,048 | 0 |
-------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| | Premiums Earned | Loss and Loss Expense |
| 1 |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | 5,869 | 2,614 | (4,012)| 831 |
| 2. 1984.....| 35,534 | 5,420 | 30,114 | 40,542 | 19,074 | 35,816 | 13,247 |
| 3. 1985.....| 80,190 | 10,391 | 69,798 | 52,167 | 7,607 | 39,835 | 2,136 |
| 4. 1986.....| 174,766 | 11,465 | 163,301 | 67,736 | 974 | 45,326 | 549 |
| 5. 1987.....| 163,036 | 4,451 | 158,585 | 34,395 | 3,679 | 19,207 | 1,146 |
| 6. 1988.....| 153,691 | 12,764 | 140,928 | 35,004 | 5,727 | 13,287 | 937 |
| 7. 1989.....| 131,729 | 9,675 | 122,054 | 22,957 | 2,388 | 10,069 | 276 |
| 8. 1990.....| 119,042 | 18,024 | 101,018 | 20,707 | 2,044 | 8,216 | 340 |
| 9. 1991.....| 106,109 | 16,836 | 89,273 | 14,219 | 902 | 4,323 | 280 |
|10. 1992.....| 74,984 | 13,886 | 61,097 | 5,665 | 908 | 1,227 | 416 |
|11. 1993.....| 75,698 | 15,677 | 60,020 | 3,189 | 390 | 379 | 119 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 302,449 | 46,307 | 173,675 | 20,275 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
-------------------------------------------------------------------------
| Payments | |
| 1 ---------------------------------------------| 12 |
| Years | 9 | 10 | 11 | |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 360 | 126 | (1,462)| X X X X |
| 2. 1984.....| 878 | 2,173 | 46,210 | 10,195 |
| 3. 1985.....| 1,183 | 3,352 | 85,611 | 12,536 |
| 4. 1986.....| 459 | 1,898 | 113,438 | 9,914 |
| 5. 1987.....| 347 | 2,026 | 50,803 | 9,299 |
| 6. 1988.....| 326 | 1,800 | 43,427 | 8,915 |
| 7. 1989.....| 380 | 1,457 | 31,820 | 7,612 |
| 8. 1990.....| 302 | 1,295 | 27,834 | 8,012 |
| 9. 1991.....| 146 | 1,354 | 18,714 | 6,155 |
|10. 1992.....| 58 | 1,469 | 7,038 | 5,244 |
|11. 1993.....| 24 | 1,121 | 4,181 | 4,484 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 4,464 | 18,073 | 427,616 | X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| 31,097 | 15,635 | 18,309 | 3,628 | 0 | 0 | 1,744 |
| 2. 1984.....| 10,021 | 1,257 | 13,761 | 878 | 0 | 0 | 560 |
| 3. 1985.....| 11,007 | 911 | 19,474 | 1,280 | 0 | 0 | 1,338 |
| 4. 1986.....| 11,481 | 29 | 28,996 | 1,180 | 0 | 0 | 3,537 |
| 5. 1987.....| 15,626 | 199 | 29,864 | 465 | 0 | 0 | 4,902 |
| 6. 1988.....| 16,217 | 407 | 24,176 | 883 | 0 | 0 | 5,642 |
| 7. 1989.....| 15,235 | 522 | 27,190 | 424 | 0 | 0 | 10,312 |
| 8. 1990.....| 21,937 | 1,522 | 33,299 | 121 | 0 | 0 | 10,527 |
| 9. 1991.....| 14,221 | 1,122 | 43,291 | 734 | 0 | 0 | 9,983 |
|10. 1992.....| 9,644 | 384 | 34,426 | 2,116 | 0 | 0 | 9,399 |
|11. 1993.....| 4,520 | 300 | 49,771 | 9,384 | 0 | 0 | 8,675 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 161,006 | 22,287 | 322,557 | 21,093 | 0 | 0 | 66,619 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | and Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ...| 1,040 | 392 | 165 | 31,011 | 2,962 |
| 2. 1984.....| 113 | 271 | 172 | 22,265 | 395 |
| 3. 1985.....| 356 | 717 | 126 | 29,398 | 734 |
| 4. 1986.....| 8 | 339 | 321 | 43,118 | 465 |
| 5. 1987.....| 0 | 367 | 334 | 50,062 | 512 |
| 6. 1988.....| 0 | 451 | 463 | 45,209 | 398 |
| 7. 1989.....| 0 | 1,035 | 507 | 52,298 | 998 |
| 8. 1990.....| 0 | 1,199 | 763 | 64,884 | 1,501 |
| 9. 1991.....| 0 | 886 | 684 | 66,323 | 598 |
|10. 1992.....| 103 | 693 | 682 | 51,548 | 514 |
|11. 1993.....| 452 | 866 | 747 | 53,577 | 680 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 2,072 | 7,217 | 4,964 | 509,694 | 9,757 |
---------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| Years | Total Losses and | Loss and Loss Expense Percentage | Discount|
| in Which | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
|Premiums Were|-----------------------------------------|--------------------------------------------|--------------|
| Earned and | 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 103,045 | 34,569 | 68,476 | 290.0 | 637.8 | 227.4 | 0 |
| 3. 1985.....| 127,299 | 12,290 | 115,009 | 158.7 | 118.3 | 164.8 | 0 |
| 4. 1986.....| 159,295 | 2,740 | 156,555 | 91.1 | 23.9 | 95.9 | 0 |
| 5. 1987.....| 106,354 | 5,489 | 100,865 | 65.2 | 123.3 | 63.6 | 0 |
| 6. 1988.....| 96,589 | 7,954 | 88,635 | 62.8 | 62.3 | 62.9 | 0 |
| 7. 1989.....| 87,727 | 3,610 | 84,117 | 66.6 | 37.3 | 68.9 | 0 |
| 8. 1990.....| 96,744 | 4,027 | 92,717 | 81.3 | 22.3 | 91.8 | 0 |
| 9. 1991.....| 88,075 | 3,038 | 85,037 | 83.0 | 18.0 | 95.3 | 0 |
|10. 1992.....| 62,512 | 3,927 | 58,585 | 83.4 | 28.3 | 95.9 | 0 |
|11. 1993.....| 68,402 | 10,645 | 57,757 | 90.4 | 67.9 | 96.2 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| Years for Time | | Net Balance Sheet Reserves |
| in Which f Money | 33 | After Discount |
|Premiums Were---------------|Inter-Company |-----------------------------|
| Earned and | 32 | Pooling | 34 | 35 |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 30,142 | 869 |
| 2. 1984.....| 0 | 0.0 | 21,646 | 619 |
| 3. 1985.....| 0 | 0.0 | 28,290 | 1,108 |
| 4. 1986.....| 0 | 0.0 | 39,268 | 3,850 |
| 5. 1987.....| 0 | 0.0 | 44,826 | 5,236 |
| 6. 1988.....| 0 | 0.0 | 39,104 | 6,105 |
| 7. 1989.....| 0 | 0.0 | 41,479 | 10,819 |
| 8. 1990.....| 0 | 0.0 | 53,594 | 11,290 |
| 9. 1991.....| 0 | 0.0 | 55,656 | 10,667 |
|10. 1992.....| 0 | 0.0 | 41,570 | 9,978 |
|11. 1993.....| 0 | 0.0 | 44,607 | 8,970 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 440,183 | 69,511 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 1R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
(000 omitted)
-------------------------------------------------------------------------------------------------------------------
| | Premiums Earned | Loss and Loss Expense |
| 1 |-----------------------------------------|-----------------------------------------------------------|
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss |
| in Which | | | | | Expense Payments |
|Premiums Were| | | |-----------------------------|-----------------------------|
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ...| X X X X | X X X X | X X X X | 0 | 0 | 0 | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 1,893 | 94 | 1,799 | 0 | 0 | 1 | 0 |
| 6. 1988.....| 1,027 | 47 | 980 | 3 | 0 | 0 | 0 |
| 7. 1989.....| 803 | 16 | 786 | 0 | 0 | 0 | 0 |
| 8. 1990.....| 333 | 2 | 332 | 7 | 0 | 0 | 0 |
| 9. 1991.....| 199 | 2 | 197 | 15 | 0 | 0 | 0 |
|10. 1992.....| 121 | 4 | 117 | 0 | 0 | 0 | 0 |
|11. 1993.....| 51 | 6 | 44 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | 24 | 0 | 1 | 0 |
-------------------------------------------------------------------------------------------------------------------
Note: For "prior," report amounts paid or received in current year only.
Report cumulative amounts paid or received for specific years.
Report loss payments net of salvage and subrogation received.
<PAGE>
<PAGE>
<CAPTION>
-------------------------------------------------------------------------
| Payments | |
| 1 ---------------------------------------------| 12 |
| Years | 9 | 10 | 11 | |
| in Which | | | | Number of |
|Premiums Were| Salvage | Unallocated | Total | Claims |
| Earned and | and | Loss | Net Paid | Reported - |
| Losses Were | Subrogation | Expense | (5 - 6 + 7 | Direct and |
| Incurred | Received | Payments | - 8 + 10) | Assumed |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| 1. Prior ...| 0 | 0 | 0 | X X X X |
| 2. 1984.....| 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 |
| 5. 1987.....| 0 | 0 | 1 | 148 |
| 6. 1988.....| 0 | 6 | 9 | 3 |
| 7. 1989.....| 0 | 6 | 6 | 3 |
| 8. 1990.....| 0 | 13 | 20 | 0 |
| 9. 1991.....| 0 | 13 | 28 | 2 |
|10. 1992.....| 0 | 2 | 2 | 1 |
|11. 1993.....| 0 | 1 | 1 | 1 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | 42 | 67 | X X X X |
-------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 1R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| | Losses Unpaid | Allocated Loss Expenses Unpai|
| Years |--------------------------------------------------------|--------------------------------------------|
| in Which | Case Basis | Bulk + IBNR | Case Basis | Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
| Earned and | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| Losses Were | Direct | | Direct | | Direct | | Direct |
| Incurred | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 0 | 0 | 2 | 0 | 0 | 0 | 96 |
| 6. 1988.....| 0 | 0 | 479 | 0 | 0 | 0 | 28 |
| 7. 1989.....| 0 | 0 | 502 | 0 | 0 | 0 | 29 |
| 8. 1990.....| 0 | 0 | 111 | 0 | 0 | 0 | 6 |
| 9. 1991.....| 0 | 0 | 3 | 0 | 0 | 0 | 0 |
|10. 1992.....| 0 | 0 | 3 | 0 | 0 | 0 | 0 |
|11. 1993.....| 1 | 0 | 6 | 3 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 1 | 0 | 1,106 | 3 | 0 | 0 | 159 |
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------
| d | | | | |
| Years ---------------| 21 | 22 | 23 | 24 |
| in Which + IBNR | | | | Number of |
|Premiums Were---------------| Salvage | Unallocated | Total | Claims |
| Earned and | 20 | and | Loss | Net Losses |Outstanding -|
| Losses Were | | Subrogation | Expenses | and Expenses | Direct |
| Incurred | Ceded | Anticipated | Unpaid | Unpaid | and Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ...| 0 | 0 | 0 | 0 | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0 | 0 |
| 5. 1987.....| 0 | 0 | 0 | 98 | 3 |
| 6. 1988.....| 0 | 0 | 2 | 509 | 0 |
| 7. 1989.....| 0 | 0 | 2 | 533 | 0 |
| 8. 1990.....| 0 | 0 | 0 | 117 | 0 |
| 9. 1991.....| 0 | 0 | 0 | 3 | 0 |
|10. 1992.....| 0 | 0 | 0 | 3 | 0 |
|11. 1993.....| 0 | 1 | 0 | 4 | 1 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..| 0 | 1 | 4 | 1,267 | 4 |
---------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 1R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE - (CONTINUED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
| Years | Total Losses and | Loss and Loss Expense Percentage | Discount|
| in Which | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value o|
|Premiums Were|-----------------------------------------|--------------------------------------------|--------------|
| Earned and | 25 | 26 | 27 | 28 | 29 | 30 | 31 |
| Losses Were | Direct | | | Direct | | | |
| Incurred | and Assumed | Ceded | Net * | and Assumed | Ceded | Net | Loss |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ...| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 2. 1984.....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 3. 1985.....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 4. 1986.....| 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 |
| 5. 1987.....| 99 | 0 | 99 | 5.2 | 0.0 | 5.5 | 0 |
| 6. 1988.....| 518 | 0 | 518 | 50.4 | 0.0 | 52.9 | 0 |
| 7. 1989.....| 539 | 0 | 539 | 67.1 | 0.0 | 68.6 | 0 |
| 8. 1990.....| 137 | 0 | 137 | 41.1 | 0.0 | 41.3 | 0 |
| 9. 1991.....| 31 | 0 | 31 | 15.6 | 0.0 | 15.7 | 0 |
|10. 1992.....| 5 | 0 | 5 | 4.1 | 0.0 | 4.3 | 0 |
|11. 1993.....| 8 | 3 | 5 | 15.7 | 50.0 | 11.4 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
-------------------------------------------------------------------------------------------------------------------
*Net = (25 - 26) = (11 + 23)
<CAPTION>
-------------------------------------------------------------------------
| Years for Time | | Net Balance Sheet Reserves |
| in Which f Money | 33 | After Discount |
|Premiums Were---------------|Inter-Company |-----------------------------|
| Earned and | 32 | Pooling | 34 | 35 |
| Losses Were | Loss |Participation | Losses |Loss Expenses |
| Incurred | Expense | Percentage | Unpaid | Unpaid |
|-------------|--------------|--------------|--------------|--------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ...| 0 | X X X X | 0 | 0 |
| 2. 1984.....| 0 | 0.0 | 0 | 0 |
| 3. 1985.....| 0 | 0.0 | 0 | 0 |
| 4. 1986.....| 0 | 0.0 | 0 | 0 |
| 5. 1987.....| 0 | 0.0 | 2 | 96 |
| 6. 1988.....| 0 | 0.0 | 479 | 30 |
| 7. 1989.....| 0 | 0.0 | 502 | 31 |
| 8. 1990.....| 0 | 0.0 | 111 | 6 |
| 9. 1991.....| 0 | 0.0 | 3 | 0 |
|10. 1992.....| 0 | 0.0 | 3 | 0 |
|11. 1993.....| 0 | 0.0 | 4 | 0 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..| 0 | X X X X | 1,104 | 163 |
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 2A - HOMEOWNERS/FARMOWNERS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ......| 9,767 * | 12,896 | 10,547 | 11,464 | 11,636 | 12,711 | 12,625 |
| 2. 1984........| 48,697 | 45,283 | 45,989 | 47,386 | 47,504 | 48,986 | 48,298 |
| 3. 1985........| X X X X | 62,117 | 62,365 | 62,044 | 62,014 | 63,695 | 63,126 |
| 4. 1986........| X X X X | X X X X | 65,194 | 58,601 | 58,790 | 59,175 | 57,893 |
| 5. 1987........| X X X X | X X X X | X X X X | 67,127 | 66,277 | 68,484 | 68,556 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 91,380 | 89,634 | 90,361 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 116,539 | 131,293 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 142,431 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ......| 12,547 | 12,853 | 12,850 | (2)| 304 |
| 2. 1984........| 48,255 | 48,044 | 48,128 | 85 | (127)|
| 3. 1985........| 63,232 | 64,430 | 63,719 | (711)| 487 |
| 4. 1986........| 57,352 | 57,781 | 57,836 | 55 | 483 |
| 5. 1987........| 68,395 | 69,493 | 72,068 | 2,575 | 3,673 |
| 6. 1988........| 91,038 | 92,591 | 93,581 | 990 | 2,544 |
| 7. 1989........| 133,507 | 134,724 | 134,980 | 256 | 1,473 |
| 8. 1990........| 154,377 | 155,017 | 158,077 | 3,060 | 3,700 |
| 9. 1991........| 154,363 | 157,088 | 159,931 | 2,842 | 5,568 |
| 10. 1992........| X X X X | 214,501 | 198,976 | (15,525)| X X X X |
| 11. 1993........| X X X X | X X X X | 173,051 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | (6,375)| 18,105 |
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
| 1. Prior ......| 107,972 * | 96,618 | 94,384 | 99,676 | 103,130 | 108,818 | 109,820 |
| 2. 1984........| 124,468 | 119,509 | 117,450 | 119,249 | 124,865 | 132,090 | 129,586 |
| 3. 1985........| X X X X | 123,125 | 120,818 | 130,310 | 141,132 | 152,980 | 150,315 |
| 4. 1986........| X X X X | X X X X | 139,780 | 137,514 | 147,745 | 163,043 | 164,967 |
| 5. 1987........| X X X X | X X X X | X X X X | 163,129 | 164,710 | 181,639 | 194,915 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 220,392 | 224,635 | 229,403 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 265,547 | 264,101 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 312,892 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 113,453 | 114,451 | 115,150 | 699 | 1,696 |
| 2. 1984........| 130,619 | 131,191 | 131,983 | 792 | 1,363 |
| 3. 1985........| 151,764 | 150,887 | 151,473 | 586 | (291)|
| 4. 1986........| 166,577 | 168,625 | 170,717 | 2,092 | 4,140 |
| 5. 1987........| 199,770 | 201,462 | 201,918 | 456 | 2,148 |
| 6. 1988........| 236,897 | 236,796 | 233,062 | (3,735)| (3,836)|
| 7. 1989........| 293,241 | 295,394 | 295,919 | 525 | 2,678 |
| 8. 1990........| 350,967 | 347,663 | 345,319 | (2,344)| (5,648)|
| 9. 1991........| 364,018 | 374,177 | 365,861 | (8,316)| 1,843 |
| 10. 1992........| X X X X | 394,817 | 403,137 | 8,320 | X X X X |
| 11. 1993........| X X X X | X X X X | 378,857 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | (925)| 4,094 |
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 169,071 * | 158,780 | 163,274 | 171,151 | 167,949 | 174,103 | 179,244 |
| 2. 1984........| 126,744 | 120,841 | 122,546 | 135,443 | 146,077 | 154,034 | 155,608 |
| 3. 1985........| X X X X | 157,128 | 157,722 | 154,605 | 166,762 | 178,709 | 184,278 |
| 4. 1986........| X X X X | X X X X | 224,610 | 228,436 | 235,687 | 232,571 | 245,055 |
| 5. 1987........| X X X X | X X X X | X X X X | 241,142 | 239,568 | 253,323 | 276,917 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 296,205 | 304,106 | 316,343 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 372,926 | 375,983 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 439,285 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 179,356 | 171,972 | 170,345 | (1,627)| (9,011)|
| 2. 1984........| 156,343 | 155,679 | 156,849 | 1,170 | 505 |
| 3. 1985........| 189,387 | 184,815 | 185,898 | 1,083 | (3,490)|
| 4. 1986........| 247,493 | 241,878 | 243,459 | 1,582 | (4,033)|
| 5. 1987........| 288,105 | 288,244 | 288,320 | 76 | 215 |
| 6. 1988........| 325,084 | 331,808 | 334,235 | 2,427 | 9,152 |
| 7. 1989........| 388,444 | 385,064 | 386,834 | 1,770 | (1,610)|
| 8. 1990........| 447,367 | 446,694 | 444,816 | (1,878)| (2,551)|
| 9. 1991........| 483,153 | 482,530 | 470,673 | (11,857)| (12,480)|
| 10. 1992........| X X X X | 470,910 | 469,693 | (1,217)| X X X X |
| 11. 1993........| X X X X | X X X X | 432,482 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | (8,472)| (23,304)|
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2D - WORKERS' COMPENSATION
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 647,630 * | 661,194 | 679,565 | 668,112 | 694,377 | 700,759 | 713,220 |
| 2. 1984........| 367,350 | 366,640 | 365,722 | 361,226 | 380,519 | 396,829 | 399,129 |
| 3. 1985........| X X X X | 461,923 | 452,463 | 453,449 | 452,378 | 470,207 | 479,628 |
| 4. 1986........| X X X X | X X X X | 789,056 | 727,732 | 713,799 | 689,124 | 692,356 |
| 5. 1987........| X X X X | X X X X | X X X X | 859,527 | 853,658 | 885,561 | 888,847 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 1,221,237 | 1,212,149 | 1,218,800 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 1,451,074 | 1,470,086 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 1,998,227 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 694,317 | 721,722 | 742,532 | 20,809 | 48,215 |
| 2. 1984........| 405,101 | 407,143 | 409,954 | 2,811 | 4,853 |
| 3. 1985........| 520,045 | 524,580 | 529,714 | 5,134 | 9,669 |
| 4. 1986........| 698,344 | 700,274 | 705,442 | 5,169 | 7,098 |
| 5. 1987........| 893,691 | 902,324 | 906,708 | 4,384 | 13,017 |
| 6. 1988........| 1,232,705 | 1,245,533 | 1,254,047 | 8,514 | 21,342 |
| 7. 1989........| 1,517,662 | 1,566,917 | 1,604,004 | 37,087 | 86,342 |
| 8. 1990........| 1,925,745 | 1,938,821 | 1,931,057 | (7,763)| 5,312 |
| 9. 1991........| 2,151,880 | 2,135,447 | 1,995,178 | (140,269)| (156,702)|
| 10. 1992........| X X X X | 1,833,601 | 1,781,345 | (52,256)| X X X X |
| 11. 1993........| X X X X | X X X X | 1,467,343 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | (116,380)| 39,146 |
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2E - COMMERCIAL MULTIPLE PERIL
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 104,100 * | 106,276 | 120,893 | 149,016 | 161,048 | 167,105 | 170,001 |
| 2. 1984........| 150,082 | 137,053 | 133,640 | 156,885 | 160,878 | 167,993 | 170,339 |
| 3. 1985........| X X X X | 216,990 | 216,397 | 192,849 | 187,092 | 194,499 | 199,657 |
| 4. 1986........| X X X X | X X X X | 219,883 | 208,707 | 209,307 | 199,829 | 193,972 |
| 5. 1987........| X X X X | X X X X | X X X X | 221,282 | 222,046 | 219,821 | 224,519 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 294,467 | 288,327 | 279,037 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 374,350 | 393,370 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 444,918 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
*Reported reserves only. Subsequent development relates only to subsequent
payments and reserves.
**Current year less first or second prior year, showing (redundant) or adverse.
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 174,399 | 179,774 | 182,221 | 2,446 | 7,821 |
| 2. 1984........| 172,338 | 175,278 | 176,714 | 1,436 | 4,377 |
| 3. 1985........| 205,399 | 209,493 | 210,825 | 1,332 | 5,426 |
| 4. 1986........| 200,028 | 194,250 | 199,808 | 5,558 | (220)|
| 5. 1987........| 235,766 | 236,623 | 240,244 | 3,620 | 4,478 |
| 6. 1988........| 282,782 | 283,506 | 290,041 | 6,536 | 7,259 |
| 7. 1989........| 401,136 | 405,790 | 419,292 | 13,502 | 18,156 |
| 8. 1990........| 436,993 | 434,964 | 438,968 | 4,004 | 1,975 |
| 9. 1991........| 509,763 | 499,279 | 493,087 | (6,192)| (16,676)|
| 10. 1992........| X X X X | 554,354 | 557,557 | 3,203 | X X X X |
| 11. 1993........| X X X X | X X X X | 587,228 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | 35,446 | 32,597 |
---------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 2F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ......| 174,646 * | 230,592 | 269,029 | 352,778 | 362,630 | 370,758 | 380,371 |
| 2. 1984........| 98,816 | 112,930 | 124,576 | 136,895 | 136,850 | 157,313 | 152,478 |
| 3. 1985........| X X X X | 150,292 | 175,982 | 173,767 | 170,361 | 144,771 | 139,589 |
| 4. 1986........| X X X X | X X X X | 252,314 | 244,077 | 227,358 | 172,093 | 144,877 |
| 5. 1987........| X X X X | X X X X | X X X X | 122,981 | 119,534 | 101,239 | 71,845 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 39,038 | 34,328 | 39,444 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 25,139 | 28,080 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 29,631 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ......| 387,502 | 381,268 | 383,476 | 2,208 | (4,027)|
| 2. 1984........| 152,838 | 156,255 | 153,329 | (2,926)| 492 |
| 3. 1985........| 132,251 | 135,856 | 128,030 | (7,826)| (4,221)|
| 4. 1986........| 142,308 | 135,622 | 132,622 | (3,001)| (9,687)|
| 5. 1987........| 84,375 | 78,673 | 63,916 | (14,758)| (20,460)|
| 6. 1988........| 78,634 | 72,303 | 47,990 | (24,313)| (30,645)|
| 7. 1989........| 59,479 | 62,420 | 24,956 | (37,464)| (34,523)|
| 8. 1990........| 77,249 | 70,976 | 43,222 | (27,754)| (34,027)|
| 9. 1991........| 52,157 | 76,693 | 27,418 | (49,276)| (24,740)|
| 10. 1992........| X X X X | 63,127 | 30,454 | (32,673)| X X X X |
| 11. 1993........| X X X X | X X X X | 25,333 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | (197,783)| (161,837)|
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 0 * | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984........| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985........| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986........| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987........| X X X X | X X X X | X X X X | 50,593 | 52,678 | 61,177 | 49,956 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 144,687 | 148,285 | 114,050 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 180,744 | 164,708 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 193,539 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 0 | 0 | 0 | 0 | 0 |
| 2. 1984........| 0 | 0 | 0 | 0 | 0 |
| 3. 1985........| 0 | 0 | 0 | 0 | 0 |
| 4. 1986........| 0 | 0 | 0 | 0 | 0 |
| 5. 1987........| 38,949 | 41,742 | 49,484 | 7,742 | 10,535 |
| 6. 1988........| 61,967 | 64,865 | 80,607 | 15,742 | 18,640 |
| 7. 1989........| 118,407 | 106,482 | 133,005 | 26,523 | 14,598 |
| 8. 1990........| 133,317 | 129,210 | 144,469 | 15,259 | 11,152 |
| 9. 1991........| 169,686 | 146,459 | 168,608 | 22,149 | (1,078)|
| 10. 1992........| X X X X | 164,942 | 174,887 | 9,944 | X X X X |
| 11. 1993........| X X X X | X X X X | 213,555 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | 97,359 | 53,848 |
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT
(ALL PERILS), BOILER AND MACHINERY)
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 2,672 * | 3,204 | 3,408 | 2,878 | 4,289 | 5,576 | 6,223 |
| 2. 1984........| 5,327 | 7,221 | 7,835 | 7,244 | 7,234 | 7,078 | 6,902 |
| 3. 1985........| X X X X | 4,496 | 4,201 | 4,185 | 4,280 | 4,449 | 4,602 |
| 4. 1986........| X X X X | X X X X | 12,063 | 11,799 | 11,888 | 11,676 | 11,729 |
| 5. 1987........| X X X X | X X X X | X X X X | 10,699 | 10,370 | 10,055 | 9,391 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 15,777 | 14,393 | 13,128 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 14,036 | 12,982 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 13,656 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 7,114 | 8,068 | 8,894 | 826 | 1,780 |
| 2. 1984........| 6,910 | 7,138 | 7,147 | 9 | 237 |
| 3. 1985........| 4,572 | 4,487 | 4,473 | (14)| (99)|
| 4. 1986........| 11,755 | 11,750 | 11,720 | (30)| (36)|
| 5. 1987........| 8,714 | 8,723 | 8,574 | (149)| (140)|
| 6. 1988........| 12,322 | 11,275 | 11,301 | 27 | (1,021)|
| 7. 1989........| 13,572 | 13,257 | 12,777 | (480)| (795)|
| 8. 1990........| 12,178 | 14,934 | 13,645 | (1,289)| 1,467 |
| 9. 1991........| 16,204 | 12,980 | 11,980 | (1,000)| (4,224)|
| 10. 1992........| X X X X | 13,689 | 12,402 | (1,286)| X X X X |
| 11. 1993........| X X X X | X X X X | 14,015 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | (3,387)| (2,831)|
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 619,780 * | 675,744 | 731,362 | 868,748 | 957,421 | 1,117,718 | 1,238,203 |
| 2. 1984........| 196,625 | 193,705 | 211,419 | 275,890 | 281,022 | 299,081 | 315,930 |
| 3. 1985........| X X X X | 348,677 | 357,939 | 371,041 | 369,162 | 398,304 | 423,482 |
| 4. 1986........| X X X X | X X X X | 642,964 | 636,283 | 593,438 | 537,277 | 487,564 |
| 5. 1987........| X X X X | X X X X | X X X X | 353,169 | 381,253 | 326,561 | 311,899 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 337,084 | 314,769 | 313,979 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 284,621 | 282,908 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 373,664 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 1,266,175 | 2,970,737 | 3,977,689 | 1,006,952 | 2,711,514 |
| 2. 1984........| 324,791 | 335,818 | 343,035 | 7,217 | 18,244 |
| 3. 1985........| 422,984 | 440,052 | 448,197 | 8,145 | 25,213 |
| 4. 1986........| 481,780 | 462,219 | 456,702 | (5,517)| (25,078)|
| 5. 1987........| 289,461 | 273,974 | 270,551 | (3,424)| (18,910)|
| 6. 1988........| 312,014 | 306,824 | 308,748 | 1,924 | (3,266)|
| 7. 1989........| 295,594 | 310,778 | 326,268 | 15,490 | 30,673 |
| 8. 1990........| 371,622 | 368,156 | 366,426 | (1,730)| (5,196)|
| 9. 1991........| 374,769 | 363,708 | 344,634 | (19,074)| (30,135)|
| 10. 1992........| X X X X | 319,766 | 336,994 | 17,229 | X X X X |
| 11. 1993........| X X X X | X X X X | 351,363 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | 1,027,212 | 2,703,059 |
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 0 * | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984........| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985........| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986........| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987........| X X X X | X X X X | X X X X | 263,290 | 230,079 | 285,321 | 206,981 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 272,132 | 295,462 | 293,826 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 289,647 | 290,852 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 294,875 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
*Reported reserves only. Subsequent development relates only to subsequent
payments and reserves.
**Current year less first or second prior year, showing (redundant) or adverse.
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 0 | 0 | 0 | 0 | 0 |
| 2. 1984........| 0 | 0 | 0 | 0 | 0 |
| 3. 1985........| 0 | 0 | 0 | 0 | 0 |
| 4. 1986........| 0 | 0 | 0 | 0 | 0 |
| 5. 1987........| 183,174 | 169,247 | 163,692 | (5,555)| (19,482)|
| 6. 1988........| 213,212 | 202,544 | 188,571 | (13,973)| (24,641)|
| 7. 1989........| 244,274 | 230,027 | 236,327 | 6,300 | (7,947)|
| 8. 1990........| 263,631 | 263,334 | 272,459 | 9,125 | 8,828 |
| 9. 1991........| 289,492 | 281,795 | 281,536 | (259)| (7,956)|
| 10. 1992........| X X X X | 303,057 | 262,242 | (40,815)| X X X X |
| 11. 1993........| X X X X | X X X X | 301,748 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
| (45,176)| (51,198)|
---------------------------
/TABLE
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 2F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior ......| 174,646 * | 230,592 | 269,029 | 352,778 | 362,630 | 370,758 | 380,371 |
| 2. 1984........| 98,816 | 112,930 | 124,576 | 136,895 | 136,850 | 157,313 | 152,478 |
| 3. 1985........| X X X X | 150,292 | 175,982 | 173,767 | 170,361 | 144,771 | 139,589 |
| 4. 1986........| X X X X | X X X X | 252,314 | 244,077 | 227,358 | 172,093 | 144,877 |
| 5. 1987........| X X X X | X X X X | X X X X | 122,981 | 119,534 | 101,239 | 71,845 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 39,038 | 34,328 | 39,444 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 25,139 | 28,080 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 29,631 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior ......| 387,502 | 381,268 | 383,476 | 2,208 | (4,027)|
| 2. 1984........| 152,838 | 156,255 | 153,329 | (2,926)| 492 |
| 3. 1985........| 132,251 | 135,856 | 128,030 | (7,826)| (4,221)|
| 4. 1986........| 142,308 | 135,622 | 132,622 | (3,001)| (9,687)|
| 5. 1987........| 84,375 | 78,673 | 63,916 | (14,758)| (20,460)|
| 6. 1988........| 78,634 | 72,303 | 47,990 | (24,313)| (30,645)|
| 7. 1989........| 59,479 | 62,420 | 24,956 | (37,464)| (34,523)|
| 8. 1990........| 77,249 | 70,976 | 43,222 | (27,754)| (34,027)|
| 9. 1991........| 52,157 | 76,693 | 27,418 | (49,276)| (24,740)|
| 10. 1992........| X X X X | 63,127 | 30,454 | (32,673)| X X X X |
| 11. 1993........| X X X X | X X X X | 25,333 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | (197,783)| (161,837)|
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 0 * | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984........| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985........| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986........| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987........| X X X X | X X X X | X X X X | 50,593 | 52,678 | 61,177 | 49,956 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 144,687 | 148,285 | 114,050 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 180,744 | 164,708 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 193,539 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 0 | 0 | 0 | 0 | 0 |
| 2. 1984........| 0 | 0 | 0 | 0 | 0 |
| 3. 1985........| 0 | 0 | 0 | 0 | 0 |
| 4. 1986........| 0 | 0 | 0 | 0 | 0 |
| 5. 1987........| 38,949 | 41,742 | 49,484 | 7,742 | 10,535 |
| 6. 1988........| 61,967 | 64,865 | 80,607 | 15,742 | 18,640 |
| 7. 1989........| 118,407 | 106,482 | 133,005 | 26,523 | 14,598 |
| 8. 1990........| 133,317 | 129,210 | 144,469 | 15,259 | 11,152 |
| 9. 1991........| 169,686 | 146,459 | 168,608 | 22,149 | (1,078)|
| 10. 1992........| X X X X | 164,942 | 174,887 | 9,944 | X X X X |
| 11. 1993........| X X X X | X X X X | 213,555 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | 97,359 | 53,848 |
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT
(ALL PERILS), BOILER AND MACHINERY)
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 2,672 * | 3,204 | 3,408 | 2,878 | 4,289 | 5,576 | 6,223 |
| 2. 1984........| 5,327 | 7,221 | 7,835 | 7,244 | 7,234 | 7,078 | 6,902 |
| 3. 1985........| X X X X | 4,496 | 4,201 | 4,185 | 4,280 | 4,449 | 4,602 |
| 4. 1986........| X X X X | X X X X | 12,063 | 11,799 | 11,888 | 11,676 | 11,729 |
| 5. 1987........| X X X X | X X X X | X X X X | 10,699 | 10,370 | 10,055 | 9,391 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 15,777 | 14,393 | 13,128 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 14,036 | 12,982 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 13,656 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 7,114 | 8,068 | 8,894 | 826 | 1,780 |
| 2. 1984........| 6,910 | 7,138 | 7,147 | 9 | 237 |
| 3. 1985........| 4,572 | 4,487 | 4,473 | (14)| (99)|
| 4. 1986........| 11,755 | 11,750 | 11,720 | (30)| (36)|
| 5. 1987........| 8,714 | 8,723 | 8,574 | (149)| (140)|
| 6. 1988........| 12,322 | 11,275 | 11,301 | 27 | (1,021)|
| 7. 1989........| 13,572 | 13,257 | 12,777 | (480)| (795)|
| 8. 1990........| 12,178 | 14,934 | 13,645 | (1,289)| 1,467 |
| 9. 1991........| 16,204 | 12,980 | 11,980 | (1,000)| (4,224)|
| 10. 1992........| X X X X | 13,689 | 12,402 | (1,286)| X X X X |
| 11. 1993........| X X X X | X X X X | 14,015 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | (3,387)| (2,831)|
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 619,780 * | 675,744 | 731,362 | 868,748 | 957,421 | 1,117,718 | 1,238,203 |
| 2. 1984........| 196,625 | 193,705 | 211,419 | 275,890 | 281,022 | 299,081 | 315,930 |
| 3. 1985........| X X X X | 348,677 | 357,939 | 371,041 | 369,162 | 398,304 | 423,482 |
| 4. 1986........| X X X X | X X X X | 642,964 | 636,283 | 593,438 | 537,277 | 487,564 |
| 5. 1987........| X X X X | X X X X | X X X X | 353,169 | 381,253 | 326,561 | 311,899 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 337,084 | 314,769 | 313,979 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 284,621 | 282,908 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 373,664 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 1,266,175 | 2,970,737 | 3,977,689 | 1,006,952 | 2,711,514 |
| 2. 1984........| 324,791 | 335,818 | 343,035 | 7,217 | 18,244 |
| 3. 1985........| 422,984 | 440,052 | 448,197 | 8,145 | 25,213 |
| 4. 1986........| 481,780 | 462,219 | 456,702 | (5,517)| (25,078)|
| 5. 1987........| 289,461 | 273,974 | 270,551 | (3,424)| (18,910)|
| 6. 1988........| 312,014 | 306,824 | 308,748 | 1,924 | (3,266)|
| 7. 1989........| 295,594 | 310,778 | 326,268 | 15,490 | 30,673 |
| 8. 1990........| 371,622 | 368,156 | 366,426 | (1,730)| (5,196)|
| 9. 1991........| 374,769 | 363,708 | 344,634 | (19,074)| (30,135)|
| 10. 1992........| X X X X | 319,766 | 336,994 | 17,229 | X X X X |
| 11. 1993........| X X X X | X X X X | 351,363 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | 1,027,212 | 2,703,059 |
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
|-------------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior ......| 0 * | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984........| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985........| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986........| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987........| X X X X | X X X X | X X X X | 263,290 | 230,079 | 285,321 | 206,981 |
| 6. 1988........| X X X X | X X X X | X X X X | X X X X | 272,132 | 295,462 | 293,826 |
| 7. 1989........| X X X X | X X X X | X X X X | X X X X | X X X X | 289,647 | 290,852 |
| 8. 1990........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 294,875 |
| 9. 1991........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------
*Reported reserves only. Subsequent development relates only to subsequent
payments and reserves.
**Current year less first or second prior year, showing (redundant) or adverse.
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| ------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior ......| 0 | 0 | 0 | 0 | 0 |
| 2. 1984........| 0 | 0 | 0 | 0 | 0 |
| 3. 1985........| 0 | 0 | 0 | 0 | 0 |
| 4. 1986........| 0 | 0 | 0 | 0 | 0 |
| 5. 1987........| 183,174 | 169,247 | 163,692 | (5,555)| (19,482)|
| 6. 1988........| 213,212 | 202,544 | 188,571 | (13,973)| (24,641)|
| 7. 1989........| 244,274 | 230,027 | 236,327 | 6,300 | (7,947)|
| 8. 1990........| 263,631 | 263,334 | 272,459 | 9,125 | 8,828 |
| 9. 1991........| 289,492 | 281,795 | 281,536 | (259)| (7,956)|
| 10. 1992........| X X X X | 303,057 | 262,242 | (40,815)| X X X X |
| 11. 1993........| X X X X | X X X X | 301,748 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
| (45,176)| (51,198)|
---------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 2I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |--------------------------------------------------------------------------------------------------- |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|------------- |
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior .....| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .....| 118,550 * | 96,326 | 79,289 | (17,037)| (39,261)|
| 2. 1992.......| X X X X | 94,291 | 93,517 | (774)| X X X X |
| 3. 1993.......| X X X X | X X X X | 76,909 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
4. Totals | (17,811)| (39,261)|
---------------------------
SCHEDULE P - PART 2J - AUTO PHYSICAL DAMAGE
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |--------------------------------------------------------------------------------------------------- |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|------------- |
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior .....| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2J - AUTO PHYSICAL DAMAGE - (CONTINUED)
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior .....| 112,361 * | 67,462 | 39,896 | (27,567)| (72,466)|
| 2. 1992.......| X X X X | 221,476 | 205,715 | (15,761)| X X X X |
| 3. 1993.......| X X X X | X X X X | 213,757 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
4. Totals | (43,327)| (72,466)|
---------------------------
SCHEDULE P - PART 2K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000|
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior .....| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior .....| 100,725 * | 113,143 | 99,551 | (13,592)| (1,174)|
| 2. 1992.......| X X X X | 43,010 | 45,234 | 2,224 | X X X X |
| 3. 1993.......| X X X X | X X X X | 74,795 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
4. Totals | (11,367)| (1,174)|
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000|
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior .....| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior .....| 506,472 * | 476,579 | 487,757 | 11,178 | (18,716)|
| 2. 1992.......| X X X X | 293,403 | 266,594 | (26,809)| X X X X |
| 3. 1993.......| X X X X | X X X X | 339,557 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
4. Totals | (15,631)| (18,716)|
---------------------------
SCHEDULE P - PART 2M - INTERNATIONAL
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000|
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .....| 6,447 * | 5,925 | 5,561 | 5,314 | 4,923 | 4,634 | 4,554 |
| 2. 1984.......| (1,522) | (1,522)| (1,522)| (1,522)| (1,522)| (1,522)| (1,522)|
| 3. 1985.......| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.......| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.......| X X X X | X X X X | X X X X | 0 | 0 | 0 | 0 |
| 6. 1988.......| X X X X | X X X X | X X X X | X X X X | 0 | 0 | 0 |
| 7. 1989.......| X X X X | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
| 8. 1990.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 9. 1991.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------
*Reported reserves only. Subsequent development relates only to subsequent payments and reserves.
**Current year less first or second prior year, showing (redundant) or adverse.
<PAGE>
<PAGE>
SCHEDULE P - PART 2M - INTERNATIONAL - (CONTINUED)
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior .....| 4,077 | 4,077 | 4,077 | 0 | 0 |
| 2. 1984.......| (1,522) | (1,522)| (1,522)| 0 | 0 |
| 3. 1985.......| 0 | 0 | 0 | 0 | 0 |
| 4. 1986.......| 0 | 0 | 0 | 0 | 0 |
| 5. 1987.......| 0 | 0 | 0 | 0 | 0 |
| 6. 1988.......| 0 | 0 | 0 | 0 | 0 |
| 7. 1989.......| 0 | 0 | 0 | 0 | 0 |
| 8. 1990.......| 0 | 0 | 0 | 0 | 0 |
| 9. 1991.......| 0 | 0 | 0 | 0 | 0 |
| 10. 1992.......| X X X X | 0 | 0 | 0 | X X X X |
| 11. 1993.......| X X X X | X X X X | 0 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | 0 | 0 |
---------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 2N - REINSURANCE A
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 |
| |--------------------------------------------------------------------------------------------------- |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|------------- |
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. 1988.......| X X X X | X X X X | X X X X | X X X X | 7,276 | 9,524 | 9,000 |
| 2. 1989.......| X X X X | X X X X | X X X X | X X X X | X X X X | 54,263 | 53,955 |
| 3. 1990.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 40,349 |
| 4. 1991.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 5. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 6. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. 1988.......| 7,790 | 7,789 | 7,789 | 0 | (1)|
| 2. 1989.......| 61,097 | 60,659 | 62,102 | 1,444 | 1,006 |
| 3. 1990.......| 51,076 | 44,339 | 44,640 | 301 | (6,436)|
| 4. 1991.......| 14,527 | 35,744 | 38,261 | 2,517 | 23,734 |
| 5. 1992.......| X X X X | 109,945 | 127,314 | 17,369 | X X X X |
| 6. 1993.......| X X X X | X X X X | 61,988 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
7. Totals | 21,631 | 18,303 |
---------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2O - REINSURANCE B
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000|
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. 1988.......| X X X X | X X X X | X X X X | X X X X | 77,448 | 70,694 | 68,842 |
| 2. 1989.......| X X X X | X X X X | X X X X | X X X X | X X X X | 127,264 | 126,567 |
| 3. 1990.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 123,160 |
| 4. 1991.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 5. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 6. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 2O - REINSURANCE B - (CONTINUED)
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. 1988.......| 68,497 | 67,897 | 65,856 | (2,040)| (2,641)|
| 2. 1989.......| 127,463 | 127,631 | 64,160 | (63,471)| (63,303)|
| 3. 1990.......| 104,462 | 104,953 | 134,430 | 29,477 | 29,968 |
| 4. 1991.......| 128,753 | 122,384 | 105,641 | (16,743)| (23,112)|
| 5. 1992.......| X X X X | 116,932 | 91,528 | (25,404)| X X X X |
| 6. 1993.......| X X X X | X X X X | 129,876 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
7. Totals | (78,181)| (59,088)|
---------------------------
SCHEDULE P - PART 2P - REINSURANCE C
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000|
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. 1988.......| X X X X | X X X X | X X X X | X X X X | 62,139 | 62,443 | 62,436 |
| 2. 1989.......| X X X X | X X X X | X X X X | X X X X | X X X X | 36,570 | 37,120 |
| 3. 1990.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 27,174 |
| 4. 1991.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 5. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 6. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. 1988.......| 62,425 | 62,416 | 62,334 | (82)| (91)|
| 2. 1989.......| 37,608 | 38,646 | 38,785 | 138 | 1,177 |
| 3. 1990.......| 27,670 | 35,516 | 35,715 | 199 | 8,045 |
| 4. 1991.......| 15,730 | 2,978 | 3,291 | 313 | (12,439)|
| 5. 1992.......| X X X X | 0 | 101 | 101 | X X X X |
| 6. 1993.......| X X X X | X X X X | 120 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
7. Totals | 669 | (3,308)|
---------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 2Q - REINSURANCE D
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000|
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .....| 104,568 | 114,624 | 139,538 | 234,906 | 248,072 | 274,116 | 302,835 |
| 2. 1984.......| 41,064 | 44,919 | 43,869 | 88,369 | 103,284 | 106,592 | 105,347 |
| 3. 1985.......| X X X X | 90,501 | 123,307 | 125,726 | 143,396 | 148,112 | 146,763 |
| 4. 1986.......| X X X X | X X X X | 137,803 | 120,160 | 125,653 | 133,461 | 134,775 |
| 5. 1987.......| X X X X | X X X X | X X X X | 169,683 | 164,244 | 164,324 | 171,622 |
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .....| 306,556 | 307,400 | 306,590 | (810)| 34 |
| 2. 1984.......| 107,019 | 105,679 | 107,621 | 1,942 | 602 |
| 3. 1985.......| 144,326 | 143,726 | 139,592 | (4,134)| (4,733)|
| 4. 1986.......| 133,908 | 131,141 | 125,739 | (5,402)| (8,169)|
| 5. 1987.......| 170,773 | 170,816 | 168,878 | (1,938)| (1,895)|
-------------------------------------------------------------|-------------|-------------|
6. Totals | (8,403)| (4,098)|
---------------------------
SCHEDULE P - PART 2R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000|
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .....| 120,850 * | 123,675 | 111,736 | 131,462 | 145,872 | 161,505 | 163,219 |
| 2. 1984.......| 49,227 | 50,032 | 44,911 | 52,245 | 50,714 | 57,434 | 93,159 |
| 3. 1985.......| X X X X | 104,073 | 102,395 | 96,957 | 95,665 | 105,613 | 101,089 |
| 4. 1986.......| X X X X | X X X X | 150,773 | 148,399 | 147,244 | 141,612 | 144,327 |
| 5. 1987.......| X X X X | X X X X | X X X X | 116,646 | 118,015 | 121,667 | 115,974 |
| 6. 1988.......| X X X X | X X X X | X X X X | X X X X | 94,507 | 93,972 | 95,215 |
| 7. 1989.......| X X X X | X X X X | X X X X | X X X X | X X X X | 90,173 | 89,862 |
| 8. 1990.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 83,625 |
| 9. 1991.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 2R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE - (CONTINUED)
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior .....| 249,895 | 263,158 | 258,741 | (4,417)| 8,846 |
| 2. 1984.......| 70,851 | 63,786 | 66,131 | 2,345 | (4,721)|
| 3. 1985.......| 115,272 | 118,291 | 111,532 | (6,758)| (3,739)|
| 4. 1986.......| 152,586 | 153,824 | 154,336 | 512 | 1,750 |
| 5. 1987.......| 102,951 | 99,229 | 98,505 | (724)| (4,446)|
| 6. 1988.......| 90,246 | 87,845 | 86,373 | (1,472)| (3,873)|
| 7. 1989.......| 89,851 | 87,671 | 82,154 | (5,518)| (7,697)|
| 8. 1990.......| 81,821 | 79,084 | 90,660 | 11,576 | 8,839 |
| 9. 1991.......| 78,491 | 78,524 | 82,999 | 4,475 | 4,509 |
| 10. 1992.......| X X X X | 53,034 | 56,435 | 3,401 | X X X X |
| 11. 1993.......| X X X X | X X X X | 55,890 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | 3,418 | (533)|
---------------------------
SCHEDULE P - PART 2R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000|
| |---------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior .....| 0 * | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984.......| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.......| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.......| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.......| X X X X | X X X X | X X X X | 1,515 | 1,514 | 136 | 137 |
| 6. 1988.......| X X X X | X X X X | X X X X | X X X X | 704 | 553 | 552 |
| 7. 1989.......| X X X X | X X X X | X X X X | X X X X | X X X X | 649 | 649 |
| 8. 1990.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 293 |
| 9. 1991.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
---------------------------------------------------------------------------------------------------------------------
*Reported reserves only. Subsequent development relates only to subsequent payments and reserves.
**Current year less first or second prior year, showing (redundant) or adverse.
<PAGE>
<PAGE>
SCHEDULE P-PART 2R-SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE - (CONTINUED)
<CAPTION>
-----------------------------------------------------------------------------------------
| 1 omitted) | Development** |
| --------------------------------------------|---------------------------|
| Years in Which | 9 | 10 | 11 | 12 | 13 |
| Losses Were | 1991 | 1992 | 1993 | One Year | Two Year |
| Incurred | | | | | |
| | | | | | |
|-----------------|---------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior .....| 0 | 0 | 0 | 0 | 0 |
| 2. 1984.......| 0 | 0 | 0 | 0 | 0 |
| 3. 1985.......| 0 | 0 | 0 | 0 | 0 |
| 4. 1986.......| 0 | 0 | 0 | 0 | 0 |
| 5. 1987.......| 137 | 98 | 99 | 1 | (38)|
| 6. 1988.......| 553 | 510 | 510 | (1)| (43)|
| 7. 1989.......| 649 | 531 | 531 | (1)| (118)|
| 8. 1990.......| 300 | 124 | 124 | 0 | (176)|
| 9. 1991.......| 168 | 18 | 18 | 0 | (150)|
| 10. 1992.......| X X X X | 3 | 3 | 1 | X X X X |
| 11. 1993.......| X X X X | X X X X | 4 | X X X X | X X X X |
-------------------------------------------------------------|-------------|-------------|
12. Totals | 1 | (525)|
---------------------------
/TABLE
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 3A - HOMEOWNERS/FARMOWNERS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (00 |
| |------------------------------------------------------------------------------------------------- |
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|------------- |
<S> <C> <C> <C> <C> <C> <C> <C> |
| Prior.............| 000 | 4,476 | 5,719 | 7,724 | 9,336 | 10,381 | 11,208 |
| 2. 1984.........| 30,403 | 41,793 | 43,380 | 44,743 | 45,930 | 46,317 | 46,708 |
| 3. 1985.........| X X X X | 38,850 | 54,569 | 57,593 | 59,318 | 60,356 | 61,456 |
| 4. 1986.........| X X X X | X X X X | 35,945 | 50,355 | 52,895 | 54,023 | 55,416 |
| 5. 1987.........| X X X X | X X X X | X X X X | 38,122 | 58,523 | 61,501 | 64,193 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 49,210 | 79,587 | 83,370 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 71,302 | 120,691 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 92,035 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 0 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss | Without |
| | | | | Payment |Loss Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior .......| 11,473 | 12,015 | 12,259 | 153,426 | 39,407 |
| 2. 1984.........| 46,806 | 47,054 | 47,176 | 27,849 | 7,904 |
| 3. 1985.........| 62,351 | 63,416 | 62,735 | 35,370 | 9,344 |
| 4. 1986.........| 56,125 | 56,730 | 56,875 | 29,474 | 8,997 |
| 5. 1987.........| 65,451 | 67,081 | 70,167 | 34,436 | 10,744 |
| 6. 1988.........| 85,844 | 88,104 | 89,176 | 37,255 | 12,226 |
| 7. 1989.........| 124,932 | 128,887 | 129,480 | 50,260 | 17,292 |
| 8. 1990.........| 138,853 | 143,714 | 149,898 | 53,962 | 18,391 |
| 9. 1991.........| 97,832 | 134,371 | 142,751 | 59,896 | 19,922 |
| 10. 1992.........| X X X X | 129,003 | 168,493 | 61,100 | 18,960 |
| 11. 1993.........| X X X X | X X X X | 101,293 | 43,322 | 15,328 |
------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
SCHEDULE P - PART 3B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (00|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | |
| 1. Prior .......| 000 | 36,592 | 61,903 | 79,689 | 89,374 | 96,919 | 99,614 |
| 2. 1984.........| 30,475 | 64,231 | 83,859 | 102,790 | 111,985 | 117,814 | 120,917 |
| 3. 1985.........| X X X X | 30,986 | 71,312 | 99,847 | 118,525 | 129,168 | 135,247 |
| 4. 1986.........| X X X X | X X X X | 38,033 | 74,470 | 104,091 | 124,955 | 138,387 |
| 5. 1987.........| X X X X | X X X X | X X X X | 38,663 | 93,343 | 126,301 | 151,680 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 48,594 | 110,584 | 148,320 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 57,250 | 134,406 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 71,789 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 0 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss | Without |
| | | | | Payment |Loss Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 101,871 | 103,881 | 105,826 | 200,202 | 86,028 |
| 2. 1984.........| 123,492 | 125,411 | 126,591 | 43,979 | 17,411 |
| 3. 1985.........| 139,937 | 142,048 | 143,623 | 44,012 | 18,414 |
| 4. 1986.........| 146,954 | 153,406 | 158,299 | 45,620 | 20,616 |
| 5. 1987.........| 170,872 | 178,800 | 186,002 | 51,381 | 24,851 |
| 6. 1988.........| 179,846 | 199,535 | 209,426 | 56,481 | 26,869 |
| 7. 1989.........| 184,596 | 221,341 | 245,940 | 63,157 | 28,625 |
| 8. 1990.........| 161,442 | 217,595 | 261,424 | 66,824 | 28,258 |
| 9. 1991.........| 73,978 | 164,746 | 231,995 | 63,416 | 28,048 |
| 10. 1992.........| X X X X | 77,634 | 179,661 | 58,249 | 26,173 |
| 11. 1993.........| X X X X | X X X X | 77,278 | 35,607 | 20,162 |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (00|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 51,811 | 82,944 | 105,576 | 122,508 | 137,905 | 142,828 |
| 2. 1984.........| 21,787 | 48,670 | 69,899 | 93,766 | 113,479 | 125,337 | 134,111 |
| 3. 1985.........| X X X X | 25,494 | 57,863 | 86,635 | 114,824 | 136,757 | 147,710 |
| 4. 1986.........| X X X X | X X X X | 28,865 | 67,871 | 108,474 | 138,398 | 163,230 |
| 5. 1987.........| X X X X | X X X X | X X X X | 35,077 | 86,537 | 137,055 | 179,958 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 41,639 | 104,428 | 152,393 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 51,661 | 123,580 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 57,761 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 0 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss | Without |
| | | | | Payment |Loss Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| | | | | | |
| 1. Prior .......| 144,893 | 148,112 | 149,212 | 153,017 | 86,516 |
| 2. 1984.........| 136,563 | 138,557 | 140,705 | 40,357 | 21,417 |
| 3. 1985.........| 157,751 | 163,097 | 165,423 | 45,663 | 29,961 |
| 4. 1986.........| 177,484 | 189,218 | 197,410 | 54,266 | 40,210 |
| 5. 1987.........| 206,231 | 229,240 | 240,135 | 61,250 | 44,787 |
| 6. 1988.........| 205,255 | 236,984 | 261,747 | 63,153 | 43,257 |
| 7. 1989.........| 197,448 | 252,179 | 299,738 | 63,583 | 40,317 |
| 8. 1990.........| 139,716 | 219,887 | 298,318 | 60,333 | 34,934 |
| 9. 1991.........| 55,749 | 134,908 | 222,786 | 54,518 | 30,014 |
| 10. 1992.........| X X X X | 53,990 | 127,122 | 44,235 | 22,328 |
| 11. 1993.........| X X X X | X X X X | 57,166 | 30,593 | 15,505 |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3D - WORKERS' COMPENSATION
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (00|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 113,240 | 187,474 | 242,062 | 287,193 | 331,860 | 358,482 |
| 2. 1984.........| 79,376 | 184,026 | 240,051 | 275,996 | 308,324 | 322,109 | 334,880 |
| 3. 1985.........| X X X X | 95,510 | 223,323 | 270,977 | 326,674 | 357,985 | 382,358 |
| 4. 1986.........| X X X X | X X X X | 125,153 | 295,782 | 406,227 | 474,499 | 525,496 |
| 5. 1987.........| X X X X | X X X X | X X X X | 166,427 | 425,814 | 563,615 | 664,174 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 184,350 | 515,900 | 728,120 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 237,431 | 681,258 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 282,541 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 0 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss | Without |
| | | | | Payment |Loss Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 392,298 | 419,273 | 448,810 | 721,619 | 187,925 |
| 2. 1984.........| 346,625 | 353,569 | 361,895 | 167,504 | 37,323 |
| 3. 1985.........| 439,472 | 456,711 | 466,711 | 190,773 | 47,532 |
| 4. 1986.........| 568,625 | 593,079 | 613,628 | 223,564 | 63,125 |
| 5. 1987.........| 695,431 | 743,294 | 774,176 | 237,027 | 70,124 |
| 6. 1988.........| 883,556 | 979,513 | 1,034,925 | 257,167 | 78,612 |
| 7. 1989.........| 987,095 | 1,172,124 | 1,284,156 | 254,805 | 68,237 |
| 8. 1990.........| 849,350 | 1,202,027 | 1,422,272 | 259,181 | 73,642 |
| 9. 1991.........| 306,367 | 750,209 | 1,030,896 | 247,545 | 62,069 |
| 10. 1992.........| X X X X | 214,419 | 603,867 | 206,414 | 48,714 |
| 11. 1993.........| X X X X | X X X X | 172,708 | 142,157 | 38,388 |
------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
SCHEDULE P - PART 3E - COMMERCIAL MULTIPLE PERIL
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (00|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 37,249 | 68,531 | 102,624 | 122,507 | 135,099 | 143,184 |
| 2. 1984.........| 46,646 | 84,811 | 103,479 | 116,711 | 130,485 | 143,016 | 149,298 |
| 3. 1985.........| X X X X | 65,936 | 113,791 | 127,453 | 148,032 | 164,470 | 175,050 |
| 4. 1986.........| X X X X | X X X X | 50,003 | 92,785 | 114,133 | 134,888 | 152,121 |
| 5. 1987.........| X X X X | X X X X | X X X X | 56,710 | 110,117 | 134,803 | 155,903 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 77,257 | 144,592 | 170,123 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 105,545 | 223,811 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 117,597 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
Note: Net of salvage and subrogation received.
<CAPTION>
------------------------------------------------------------------------------------------
| 1 0 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss | Without |
| | | | | Payment |Loss Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 150,236 | 158,278 | 163,598 | 152,066 | 55,652 |
| 2. 1984.........| 157,531 | 162,117 | 164,429 | 37,538 | 16,534 |
| 3. 1985.........| 186,778 | 198,246 | 201,297 | 38,033 | 18,473 |
| 4. 1986.........| 167,334 | 175,696 | 184,490 | 31,285 | 20,720 |
| 5. 1987.........| 178,898 | 200,640 | 212,529 | 33,692 | 19,368 |
| 6. 1988.........| 187,635 | 219,599 | 242,073 | 39,467 | 23,363 |
| 7. 1989.........| 263,275 | 300,297 | 344,097 | 51,479 | 31,005 |
| 8. 1990.........| 208,883 | 259,705 | 312,246 | 56,028 | 33,145 |
| 9. 1991.........| 149,903 | 238,435 | 301,173 | 54,666 | 33,599 |
| 10. 1992.........| X X X X | 183,122 | 292,320 | 48,193 | 29,778 |
| 11. 1993.........| X X X X | X X X X | 144,538 | 33,981 | 21,886 |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 3F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000 |
| |------------------------------------------------------------------------------------------------- |
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|------------- |
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 48,182 | 91,600 | 147,944 | 195,642 | 232,042 | 261,260 |
| 2. 1984.........| (1,056)| 1,451 | 8,150 | 25,567 | 51,083 | 69,588 | 89,378 |
| 3. 1985.........| X X X X | 189 | 3,678 | 12,259 | 30,484 | 50,073 | 65,357 |
| 4. 1986.........| X X X X | X X X X | 296 | 3,698 | 14,042 | 32,768 | 49,317 |
| 5. 1987.........| X X X X | X X X X | X X X X | 232 | 3,364 | 7,364 | 16,494 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 130 | 830 | (1,722) |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | (3)| (1,912) |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | (292) |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 276,587 | 293,357 | 307,308 | 4,863 | 9,288 |
| 2. 1984.........| 101,306 | 110,199 | 116,176 | 2,616 | 4,427 |
| 3. 1985.........| 76,675 | 86,952 | 95,017 | 2,107 | 4,546 |
| 4. 1986.........| 67,987 | 76,694 | 92,762 | 1,559 | 3,963 |
| 5. 1987.........| 24,992 | 29,397 | 32,744 | 844 | 2,323 |
| 6. 1988.........| 42 | 4,088 | 7,050 | 295 | 1,196 |
| 7. 1989.........| (1,234)| (1,407)| 2,565 | 288 | 1,203 |
| 8. 1990.........| 566 | (998)| 7,665 | 364 | 1,275 |
| 9. 1991.........| (145)| (1,132)| 1,452 | 80 | 833 |
| 10. 1992.........| X X X X | 157 | 851 | 39 | 545 |
| 11. 1993.........| X X X X | X X X X | 40 | 11 | 168 |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984.........| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.........| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.........| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.........| X X X X | X X X X | X X X X | 141 | 4,361 | 13,814 | 22,206 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 652 | 7,662 | 26,536 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 1,674 | 19,158 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 1,909 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 0 | 0 | 0 | 0 | 0 |
| 2. 1984.........| 0 | 0 | 0 | 0 | 0 |
| 3. 1985.........| 0 | 0 | 0 | 0 | 0 |
| 4. 1986.........| 0 | 0 | 0 | 0 | 0 |
| 5. 1987.........| 27,542 | 33,950 | 39,841 | 305 | 902 |
| 6. 1988.........| 15,303 | 33,432 | 46,278 | 763 | 2,227 |
| 7. 1989.........| 55,452 | 58,889 | 71,881 | 1,014 | 3,064 |
| 8. 1990.........| 22,915 | 64,105 | 70,021 | 1,013 | 3,288 |
| 9. 1991.........| 2,410 | 29,967 | 60,231 | 884 | 3,439 |
| 10. 1992.........| X X X X | 3,537 | 35,448 | 790 | 3,917 |
| 11. 1993.........| X X X X | X X X X | 5,758 | 344 | 2,332 |
------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
SCHEDULE P - PART 3G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT
(ALL PERILS), BOILER AND MACHINERY)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 1,260 | 967 | 1,797 | 3,261 | 4,756 | 5,615 |
| 2. 1984.........| 2,063 | 4,915 | 5,913 | 6,400 | 6,555 | 6,609 | 6,702 |
| 3. 1985.........| X X X X | 2,669 | 3,368 | 2,427 | 3,121 | 3,588 | 4,062 |
| 4. 1986.........| X X X X | X X X X | 5,566 | 8,425 | 9,337 | 10,581 | 11,133 |
| 5. 1987.........| X X X X | X X X X | X X X X | 2,135 | 4,297 | 5,990 | 7,947 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 3,442 | 7,276 | 9,305 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 4,371 | 7,529 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 4,315 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 6,634 | 7,835 | 8,463 | X X X X | X X X X |
| 2. 1984.........| 6,796 | 7,070 | 7,129 | X X X X | X X X X |
| 3. 1985.........| 4,356 | 4,345 | 4,364 | X X X X | X X X X |
| 4. 1986.........| 11,392 | 11,671 | 11,633 | X X X X | X X X X |
| 5. 1987.........| 8,124 | 8,356 | 8,369 | X X X X | X X X X |
| 6. 1988.........| 8,856 | 9,107 | 9,364 | X X X X | X X X X |
| 7. 1989.........| 9,792 | 10,637 | 11,368 | X X X X | X X X X |
| 8. 1990.........| 8,458 | 10,228 | 11,465 | X X X X | X X X X |
| 9. 1991.........| 5,161 | 8,900 | 10,278 | X X X X | X X X X |
| 10. 1992.........| X X X X | 3,408 | 7,752 | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | 3,578 | X X X X | X X X X |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 159,015 | 316,524 | 445,205 | 543,467 | 664,343 | 792,966 |
| 2. 1984.........| 4,516 | 29,395 | 60,979 | 101,264 | 152,117 | 182,446 | 216,130 |
| 3. 1985.........| X X X X | 6,584 | 31,822 | 76,786 | 137,156 | 172,455 | 251,689 |
| 4. 1986.........| X X X X | X X X X | 9,737 | 44,232 | 112,549 | 179,865 | 234,993 |
| 5. 1987.........| X X X X | X X X X | X X X X | 8,977 | 32,146 | 67,525 | 98,873 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 14,952 | 41,835 | 75,968 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 2,484 | 38,769 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 14,073 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
SCHEDULE P - PART 3H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 903,163 | 1,077,273 | 1,356,236 | 82,218 | 256,415 |
| 2. 1984.........| 241,931 | 263,519 | 277,966 | 15,198 | 19,823 |
| 3. 1985.........| 279,472 | 338,157 | 362,044 | 14,813 | 19,757 |
| 4. 1986.........| 297,911 | 308,938 | 335,860 | 18,728 | 23,767 |
| 5. 1987.........| 128,037 | 159,283 | 179,049 | 20,466 | 19,888 |
| 6. 1988.........| 104,161 | 146,917 | 181,696 | 20,087 | 21,052 |
| 7. 1989.........| 83,475 | 127,503 | 172,789 | 19,764 | 22,262 |
| 8. 1990.........| 42,770 | 95,172 | 152,605 | 22,913 | 24,704 |
| 9. 1991.........| 15,796 | 45,774 | 93,765 | 18,918 | 21,806 |
| 10. 1992.........| X X X X | 11,346 | 33,757 | 12,291 | 16,013 |
| 11. 1993.........| X X X X | X X X X | 14,561 | 8,085 | 11,275 |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984.........| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.........| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.........| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.........| X X X X | X X X X | X X X X | 2,523 | 19,930 | 44,977 | 73,564 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 3,497 | 22,762 | 59,139 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 16,108 | 27,492 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 3,721 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
Note: Net of salvage and subrogation received.
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims | Claims |
| Losses Were | 9 | 10 | 11 | Closed | Closed |
| Incurred | 1991 | 1992 | 1993 | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 0 | 0 | 0 | 0 | 0 |
| 2. 1984.........| 0 | 0 | 0 | 0 | 0 |
| 3. 1985.........| 0 | 0 | 0 | 0 | 0 |
| 4. 1986.........| 0 | 0 | 0 | 0 | 0 |
| 5. 1987.........| 99,594 | 115,106 | 124,240 | 964 | 3,887 |
| 6. 1988.........| 91,611 | 116,850 | 134,867 | 1,021 | 3,787 |
| 7. 1989.........| 71,569 | 113,938 | 141,500 | 988 | 3,600 |
| 8. 1990.........| 39,912 | 81,786 | 123,306 | 1,026 | 3,957 |
| 9. 1991.........| 4,268 | 34,254 | 101,348 | 844 | 3,990 |
| 10. 1992.........| X X X X | 4,176 | 32,282 | 486 | 3,644 |
| 11. 1993.........| X X X X | X X X X | 4,689 | 135 | 1,814 |
------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 3I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims |Claims Closed|
| Losses Were | 9 | 10 | 11 | Closed With | Without |
| Incurred | 1991 | 1992 | 1993 |Loss Payment |Loss Payment |
| | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 38,034 | 48,386 | X X X X | X X X X |
| 2. 1992.........| X X X X | 28,637 | 68,308 | X X X X | X X X X |
| 3. 1993.........| X X X X | X X X X | 20,484 | X X X X | X X X X |
------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 3J - AUTO PHYSICAL DAMAGE
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims |Claims Closed|
| Losses Were | 9 | 10 | 11 | Closed With | Without |
| Incurred | 1991 | 1992 | 1993 |Loss Payment |Loss Payment |
| | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 22,112 | 26,720 | 1,532,528 | 288,905 |
| 2. 1992.........| X X X X | 155,188 | 183,395 | 152,179 | 33,259 |
| 3. 1993.........| X X X X | X X X X | 158,420 | 121,487 | 27,271 |
------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
SCHEDULE P - PART 3K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims |Claims Closed|
| Losses Were | 9 | 10 | 11 | Closed With | Without |
| Incurred | 1991 | 1992 | 1993 |Loss Payment |Loss Payment |
| | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 20,978 | 19,995 | X X X X | X X X X |
| 2. 1992.........| X X X X | 11,913 | 21,477 | X X X X | X X X X |
| 3. 1993.........| X X X X | X X X X | 44,038 | X X X X | X X X X |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
| | | | | | | | |
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims |Claims Closed|
| Losses Were | 9 | 10 | 11 | Closed With | Without |
| Incurred | 1991 | 1992 | 1993 |Loss Payment |Loss Payment |
| | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|
| | | | | | |
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 132,186 | 202,884 | X X X X | X X X X |
| 2. 1992.........| X X X X | 80,154 | 163,245 | X X X X | X X X X |
| 3. 1993.........| X X X X | X X X X | 100,135 | X X X X | X X X X |
------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
SCHEDULE P - PART 3M - INTERNATIONAL
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000|
| |-------------------------------------------------------------------------------------------------|
| Years in Which | | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 1,639 | 1,629 | 1,293 | 1,038 | 2,197 | 2,619 |
| 2. 1984.........| (1,522)| (1,522)| (1,522)| (1,522)| (1,522)| (1,522)| (1,522)|
| 3. 1985.........| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.........| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.........| X X X X | X X X X | X X X X | 0 | 0 | 0 | 0 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 0 | 0 | 0 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
Note: Net of salvage and subrogation received.
<CAPTION>
------------------------------------------------------------------------------------------
| 1 omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | | | | Claims |Claims Closed|
| Losses Were | 9 | 10 | 11 | Closed With | Without |
| Incurred | 1991 | 1992 | 1993 |Loss Payment |Loss Payment |
| | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 4,077 | 4,077 | 4,077 | X X X X | X X X X |
| 2. 1984.........| (1,522)| (1,522)| (1,522)| X X X X | X X X X |
| 3. 1985.........| 0 | 0 | 0 | X X X X | X X X X |
| 4. 1986.........| 0 | 0 | 0 | X X X X | X X X X |
| 5. 1987.........| 0 | 0 | 0 | X X X X | X X X X |
| 6. 1988.........| 0 | 0 | 0 | X X X X | X X X X |
| 7. 1989.........| 0 | 0 | 0 | X X X X | X X X X |
| 8. 1990.........| 0 | 0 | 0 | X X X X | X X X X |
| 9. 1991.........| 0 | 0 | 0 | X X X X | X X X X |
| 10. 1992.........| X X X X | 0 | 0 | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | 0 | X X X X | X X X X |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 3N - REINSURANCE A
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000 |
| |-------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. 1988.........| X X X X | X X X X | X X X X | X X X X | 1,351 | 4,676 | 6,088 |
| 2. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 9,939 | 49,095 |
| 3. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 12,324 |
| 4. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 5. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 6. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 Omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | 9 | 10 | 11 | Claims | Claims |
| Losses Were | 1991 | 1992 | 1993 | Closed | Closed |
| Incurred | | | | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. 1988.........| (12,114)| (9,735)| (8,391)| X X X X | X X X X |
| 2. 1989.........| 55,813 | 45,587 | 49,241 | X X X X | X X X X |
| 3. 1990.........| 36,445 | 40,990 | 25,640 | X X X X | X X X X |
| 4. 1991.........| 5,353 | 27,310 | 32,971 | X X X X | X X X X |
| 5. 1992.........| X X X X | 45,295 | 112,078 | X X X X | X X X X |
| 6. 1993.........| X X X X | X X X X | 5,307 | X X X X | X X X X |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3O - REINSURANCE B
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000 |
| |-------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. 1988.........| X X X X | X X X X | X X X X | X X X X | 367 | 5,194 | 13,574 |
| 2. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 589 | 6,342 |
| 3. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 986 |
| 4. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 5. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 6. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 Omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | 9 | 10 | 11 | Claims | Claims |
| Losses Were | 1991 | 1992 | 1993 | Closed | Closed |
| Incurred | | | | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. 1988.........| (7,642)| 341 | 5,549 | X X X X | X X X X |
| 2. 1989.........| 17,806 | 6,118 | 14,566 | X X X X | X X X X |
| 3. 1990.........| 7,608 | 23,114 | 8,671 | X X X X | X X X X |
| 4. 1991.........| 1,061 | 15,093 | 29,924 | X X X X | X X X X |
| 5. 1992.........| X X X X | 864 | 5,262 | X X X X | X X X X |
| 6. 1993.........| X X X X | X X X X | 1,477 | X X X X | X X X X |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3P - REINSURANCE C
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000 |
| |-------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. 1988.........| X X X X | X X X X | X X X X | X X X X | 28,164 | 60,996 | 61,230 |
| 2. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 1,846 | 29,081 |
| 3. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 619 |
| 4. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 5. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 6. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 Omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | 9 | 10 | 11 | Claims | Claims |
| Losses Were | 1991 | 1992 | 1993 | Closed | Closed |
| Incurred | | | | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. 1988.........| 61,766 | 61,771 | 61,738 | X X X X | X X X X |
| 2. 1989.........| 37,001 | 38,227 | 38,538 | X X X X | X X X X |
| 3. 1990.........| 9,392 | 34,727 | 34,801 | X X X X | X X X X |
| 4. 1991.........| 465 | 1,495 | 1,884 | X X X X | X X X X |
| 5. 1992.........| X X X X | 0 | 101 | X X X X | X X X X |
| 6. 1993.........| X X X X | X X X X | 120 | X X X X | X X X X |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3Q - REINSURANCE D
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000 |
| |-------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 872 | 12,029 | 42,384 | 65,574 | 105,219 | 131,871 |
| 2. 1984.........| 3,840 | 21,366 | (7,013)| (26,464)| (10,281)| 1,114 | 20,867 |
| 3. 1985.........| X X X X | 6,384 | 72,889 | 94,508 | 3,261 | 24,638 | 36,042 |
| 4. 1986.........| X X X X | X X X X | 16,090 | 64,669 | 74,825 | (11,950)| (1,347)|
| 5. 1987.........| X X X X | X X X X | X X X X | 27,929 | 93,493 | 103,039 | 3,271 |
----------------------------------------------------------------------------------------------------------------------
SCHEDULE P - PART 3Q - REINSURANCE D
<CAPTION>
------------------------------------------------------------------------------------------
| 1 Omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | 9 | 10 | 11 | Claims | Claims |
| Losses Were | 1991 | 1992 | 1993 | Closed | Closed |
| Incurred | | | | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 156,437 | 194,353 | 203,712 | X X X X | X X X X |
| 2. 1984.........| 31,190 | 52,933 | 66,336 | X X X X | X X X X |
| 3. 1985.........| 44,862 | 57,479 | 57,401 | X X X X | X X X X |
| 4. 1986.........| 6,318 | 17,557 | 24,264 | X X X X | X X X X |
| 5. 1987.........| 21,961 | 35,356 | 48,660 | X X X X | X X X X |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000 |
| |-------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 20,908 | 49,282 | 75,500 | 93,769 | 116,914 | 121,027 |
| 2. 1984.........| 1,052 | 2,360 | 5,823 | 13,190 | 20,276 | 28,825 | 32,532 |
| 3. 1985.........| X X X X | 799 | 3,541 | 7,992 | 19,976 | 28,760 | 39,173 |
| 4. 1986.........| X X X X | X X X X | 922 | 4,467 | 10,761 | 21,762 | 55,363 |
| 5. 1987.........| X X X X | X X X X | X X X X | 962 | 5,907 | 12,738 | 18,758 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 1,150 | 4,301 | 9,483 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 1,060 | 3,128 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 899 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
| 1 Omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | 9 | 10 | 11 | Claims | Claims |
| Losses Were | 1991 | 1992 | 1993 | Closed | Closed |
| Incurred | | | | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 213,551 | 229,482 | 227,894 | 10,974 | 26,956 |
| 2. 1984.........| 46,760 | 42,840 | 44,037 | 3,231 | 6,569 |
| 3. 1985.........| 66,699 | 82,460 | 82,260 | 3,463 | 8,339 |
| 4. 1986.........| 91,480 | 103,493 | 111,539 | 2,769 | 6,680 |
| 5. 1987.........| 28,521 | 37,945 | 48,777 | 2,738 | 6,049 |
| 6. 1988.........| 17,114 | 27,563 | 41,627 | 2,918 | 5,599 |
| 7. 1989.........| 12,679 | 21,292 | 30,363 | 2,131 | 4,483 |
| 8. 1990.........| 5,417 | 7,978 | 26,539 | 1,856 | 4,655 |
| 9. 1991.........| 1,216 | 6,355 | 17,360 | 1,892 | 3,665 |
| 10. 1992.........| X X X X | 1,453 | 5,569 | 1,524 | 3,206 |
| 11. 1993.........| X X X X | X X X X | 3,060 | 889 | 2,915 |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 3R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000 |
| |-------------------------------------------------------------------------------------------------|
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | | |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> <C> <C> |
| 1. Prior .......| 000 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984.........| 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985.........| X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
| 4. 1986.........| X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
| 5. 1987.........| X X X X | X X X X | X X X X | 0 | 0 | 0 | 1 |
| 6. 1988.........| X X X X | X X X X | X X X X | X X X X | 1 | 3 | 3 |
| 7. 1989.........| X X X X | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
| 8. 1990.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | 7 |
| 9. 1991.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993.........| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
----------------------------------------------------------------------------------------------------------------------
Note: Net of salvage and subrogation received.
<CAPTION>
- ------------------------------------------------------------------------------------------
| 1 Omitted) | 12 | 13 |
| ------------------------------------------| Number of | Number of |
| Years in Which | 9 | 10 | 11 | Claims | Claims |
| Losses Were | 1991 | 1992 | 1993 | Closed | Closed |
| Incurred | | | | With Loss |Without Loss |
| | | | | Payment | Payment |
|--------------------|-------------|-------------|-------------|-------------|-------------|
<S> <C> <C> <C> <C> <C> |
| 1. Prior .......| 0 | 0 | 0 | 0 | 0 |
| 2. 1984.........| 0 | 0 | 0 | 0 | 0 |
| 3. 1985.........| 0 | 0 | 0 | 0 | 0 |
| 4. 1986.........| 0 | 0 | 0 | 0 | 0 |
| 5. 1987.........| 1 | 1 | 1 | 1 | 144 |
| 6. 1988.........| 3 | 3 | 3 | 1 | 2 |
| 7. 1989.........| 0 | 0 | 0 | 0 | 3 |
| 8. 1990.........| 7 | 7 | 7 | 0 | 0 |
| 9. 1991.........| 15 | 15 | 15 | 1 | 1 |
| 10. 1992.........| X X X X | 0 | 0 | 0 | 1 |
| 11. 1993.........| X X X X | X X X X | 0 | 0 | 0 |
------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 4A - HOMEOWNERS/FARMOWNERS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 1,575 | 1,964 | 977 | 357 | 284 | 988 |
| 2. 1984................| 8,659 | 958 | 139 | 216 | 64 | 1,332 |
| 3. 1985................| X X X X | 9,931 | 3,129 | 801 | 561 | 1,488 |
| 4. 1986................| X X X X | X X X X | 18,344 | 4,820 | 3,140 | 3,285 |
| 5. 1987................| X X X X | X X X X | X X X X | 11,603 | 3,666 | 3,247 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 26,713 | 4,633 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 27,311 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
| | | | | |
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 457 | 306 | 79 | 0 |
| 2. 1984................| 420 | 287 | 65 | 98 |
| 3. 1985................| 499 | 73 | 275 | 293 |
| 4. 1986................| 1,347 | 179 | 344 | 300 |
| 5. 1987................| 1,403 | 628 | 824 | 511 |
| 6. 1988................| 3,192 | 1,629 | 1,300 | 1,484 |
| 7. 1989................| 4,425 | 2,983 | 754 | 1,701 |
| 8. 1990................| 25,184 | 5,985 | 2,880 | 2,375 |
| 9. 1991................| X X X X | 34,653 | 9,981 | 8,205 |
| 10. 1992................| X X X X | X X X X | 62,510 | 20,346 |
| 11. 1993................| X X X X | X X X X | X X X X | 50,046 |
---------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 4B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
| | | | | | | |
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 48,911 | 22,384 | 9,266 | 6,277 | 4,528 | 6,006 |
| 2. 1984................| 61,329 | 24,914 | 13,480 | 1,379 | 1,925 | 6,934 |
| 3. 1985................| X X X X | 56,635 | 18,192 | 4,845 | 3,823 | 10,805 |
| 4. 1986................| X X X X | X X X X | 65,156 | 22,367 | 11,497 | 12,746 |
| 5. 1987................| X X X X | X X X X | X X X X | 79,343 | 21,932 | 16,527 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 119,671 | 59,979 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 144,253 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
| | | | | |
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 5,721 | 7,052 | 6,581 | 6,084 |
| 2. 1984................| 3,452 | 2,725 | 2,442 | 2,548 |
| 3. 1985................| 5,638 | 5,117 | 3,807 | 3,380 |
| 4. 1986................| 9,029 | 5,956 | 4,763 | 3,645 |
| 5. 1987................| 17,396 | 12,437 | 10,498 | 6,253 |
| 6. 1988................| 35,928 | 24,224 | 16,266 | 9,105 |
| 7. 1989................| 58,913 | 49,513 | 30,402 | 20,183 |
| 8. 1990................| 156,719 | 98,339 | 64,747 | 39,067 |
| 9. 1991................| X X X X | 198,799 | 115,598 | 67,646 |
| 10. 1992................| X X X X | X X X X | 225,555 | 125,881 |
| 11. 1993................| X X X X | X X X X | X X X X | 215,507 |
---------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 4C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
| | | | | | | |
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 90,278 | 54,214 | 39,533 | 35,997 | 21,844 | 19,625 |
| 2. 1984................| 79,106 | 35,047 | 10,431 | 7,343 | 6,056 | 8,271 |
| 3. 1985................| X X X X | 98,069 | 54,689 | 21,291 | 17,667 | 16,179 |
| 4. 1986................| X X X X | X X X X | 160,017 | 102,501 | 70,056 | 45,676 |
| 5. 1987................| X X X X | X X X X | X X X X | 161,138 | 84,923 | 46,877 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 199,029 | 112,791 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 253,493 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
| | | | | |
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 22,175 | 20,439 | 10,889 | 8,316 |
| 2. 1984................| 6,454 | 5,045 | 4,837 | 4,536 |
| 3. 1985................| 17,404 | 14,503 | 7,711 | 7,667 |
| 4. 1986................| 40,076 | 32,281 | 21,937 | 18,930 |
| 5. 1987................| 37,879 | 29,982 | 17,965 | 13,099 |
| 6. 1988................| 71,375 | 41,740 | 24,720 | 18,645 |
| 7. 1989................| 153,915 | 94,921 | 57,768 | 30,610 |
| 8. 1990................| 299,904 | 194,173 | 118,082 | 72,140 |
| 9. 1991................| X X X X | 346,530 | 229,729 | 159,668 |
| 10. 1992................| X X X X | X X X X | 342,458 | 231,321 |
| 11. 1993................| X X X X | X X X X | X X X X | 297,909 |
---------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 4D - WORKERS' COMPENSATION
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
| | | | | | | |
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 187,532 | 146,352 | 143,791 | 91,054 | 102,406 | 72,946 |
| 2. 1984................| 167,679 | 60,950 | 31,662 | 3,477 | 3,080 | 10,937 |
| 3. 1985................| X X X X | 219,540 | 93,591 | 50,185 | 19,118 | 12,178 |
| 4. 1986................| X X X X | X X X X | 477,026 | 245,433 | 146,978 | 76,427 |
| 5. 1987................| X X X X | X X X X | X X X X | 482,389 | 185,683 | 99,711 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 744,642 | 396,217 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 876,687 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
| | | | | |
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 77,915 | 44,630 | 86,001 | 94,837 |
| 2. 1984................| 9,569 | 10,157 | 13,698 | 15,394 |
| 3. 1985................| 14,427 | 10,400 | 11,086 | 11,192 |
| 4. 1986................| 42,884 | 20,619 | 16,703 | 15,965 |
| 5. 1987................| 40,660 | 43,608 | 33,145 | 31,862 |
| 6. 1988................| 182,232 | 91,953 | 59,408 | 52,351 |
| 7. 1989................| 417,418 | 143,733 | 82,244 | 87,549 |
| 8. 1990................| 1,320,243 | 559,345 | 264,872 | 172,915 |
| 9. 1991................| X X X X | 1,389,314 | 886,087 | 572,269 |
| 10. 1992................| X X X X | X X X X | 1,283,531 | 799,851 |
| 11. 1993................| X X X X | X X X X | X X X X | 1,021,938 |
---------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 4E - COMMERCIAL MULTIPLE PERIL
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 35,339 | 12,974 | 4,888 | 11,577 | 12,085 | 8,028 |
| 2. 1984................| 65,423 | 25,364 | 2,791 | 13,945 | 8,132 | 8,007 |
| 3. 1985................| X X X X | 113,278 | 67,134 | 32,751 | 15,542 | 11,197 |
| 4. 1986................| X X X X | X X X X | 129,407 | 83,127 | 61,287 | 33,598 |
| 5. 1987................| X X X X | X X X X | X X X X | 118,319 | 74,507 | 44,829 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 162,476 | 105,203 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 195,789 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 7,172 | 6,508 | 5,909 | 4,340 |
| 2. 1984................| 4,012 | 2,323 | 2,447 | 2,604 |
| 3. 1985................| 6,859 | 3,214 | 3,468 | 3,182 |
| 4. 1986................| 15,220 | 13,421 | 5,571 | 4,133 |
| 5. 1987................| 26,692 | 17,977 | 8,985 | 5,808 |
| 6. 1988................| 67,959 | 46,342 | 25,694 | 17,906 |
| 7. 1989................| 113,809 | 74,344 | 33,557 | 18,379 |
| 8. 1990................| 248,715 | 155,523 | 85,815 | 50,620 |
| 9. 1991................| X X X X | 269,066 | 174,744 | 101,609 |
| 10. 1992................| X X X X | X X X X | 268,504 | 178,559 |
| 11. 1993................| X X X X | X X X X | X X X X | 353,817 |
---------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 4F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 98,224 | 102,680 | 81,647 | 121,510 | 100,312 | 77,741 |
| 2. 1984................| 95,591 | 98,194 | 89,058 | 74,933 | 45,600 | 49,475 |
| 3. 1985................| X X X X | 145,132 | 157,223 | 132,929 | 102,888 | 63,740 |
| 4. 1986................| X X X X | X X X X | 246,636 | 226,500 | 189,186 | 108,263 |
| 5. 1987................| X X X X | X X X X | X X X X | 117,615 | 98,427 | 81,483 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 30,709 | 29,796 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 24,250 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 64,298 | 61,254 | 41,700 | 31,938 |
| 2. 1984................| 32,254 | 22,721 | 22,732 | 13,742 |
| 3. 1985................| 46,075 | 30,999 | 30,805 | 16,695 |
| 4. 1986................| 60,255 | 49,510 | 36,439 | 22,388 |
| 5. 1987................| 39,293 | 36,835 | 27,826 | 18,168 |
| 6. 1988................| 28,459 | 43,486 | 38,298 | 33,091 |
| 7. 1989................| 23,048 | 21,201 | 19,927 | 16,058 |
| 8. 1990................| 28,026 | 26,520 | 19,277 | 27,788 |
| 9. 1991................| X X X X | 28,796 | 27,191 | 15,208 |
| 10. 1992................| X X X X | X X X X | 31,879 | 23,993 |
| 11. 1993................| X X X X | X X X X | X X X X | 24,460 |
---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
SCHEDULE P - PART 4F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984................| 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985................| X X X X | 0 | 0 | 0 | 0 | 0 |
| 4. 1986................| X X X X | X X X X | 0 | 0 | 0 | 0 |
| 5. 1987................| X X X X | X X X X | X X X X | 50,452 | 48,317 | 37,888 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 144,035 | 120,186 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 162,559 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 0 | 0 | 0 | 0 |
| 2. 1984................| 0 | 0 | 0 | 0 |
| 3. 1985................| 0 | 0 | 0 | 0 |
| 4. 1986................| 0 | 0 | 0 | 0 |
| 5. 1987................| 17,661 | 11,407 | 7,792 | 6,926 |
| 6. 1988................| 62,929 | 38,491 | 23,919 | 12,966 |
| 7. 1989................| 116,661 | 62,955 | 37,946 | 23,052 |
| 8. 1990................| 170,308 | 110,402 | 65,105 | 34,797 |
| 9. 1991................| X X X X | 167,276 | 116,492 | 58,935 |
| 10. 1992................| X X X X | X X X X | 161,405 | 80,418 |
| 11. 1993................| X X X X | X X X X | X X X X | 172,859 |
---------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 4G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT
(ALL PERILS), BOILER AND MACHINERY)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
-----------------------------------------------------------------------------------------------------------------------------
| | | | | | | |
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 249 | 183 | 194 | 110 | 69 | 0 |
| 2. 1984................| 1,954 | 1,209 | 1,222 | 477 | 437 | 164 |
| 3. 1985................| X X X X | 262 | 186 | 146 | 57 | 39 |
| 4. 1986................| X X X X | X X X X | 3,700 | 957 | 645 | 93 |
| 5. 1987................| X X X X | X X X X | X X X X | 6,631 | 2,286 | 335 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 10,786 | 2,394 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 6,297 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
SCHEDULE P - PART 4G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT
(ALL PERILS), BOILER AND MACHINERY)
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 0 | 0 | 0 | 0 |
| 2. 1984................| 0 | 0 | 0 | 0 |
| 3. 1985................| 1 | 1 | 1 | 0 |
| 4. 1986................| 17 | 10 | 8 | 1 |
| 5. 1987................| 297 | 81 | 97 | 6 |
| 6. 1988................| 1,044 | 1,151 | 297 | 293 |
| 7. 1989................| 1,032 | 85 | 790 | 374 |
| 8. 1990................| 6,812 | 1,867 | 922 | 531 |
| 9. 1991................| X X X X | 5,786 | 1,464 | 631 |
| 10. 1992................| X X X X | X X X X | 9,032 | 1,975 |
| 11. 1993................| X X X X | X X X X | X X X X | 8,717 |
---------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
SCHEDULE P - PART 4H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 281,637 | 212,017 | 145,466 | 187,177 | 206,381 | 216,951 |
| 2. 1984................| 159,551 | 108,804 | 71,706 | 91,208 | 50,096 | 50,412 |
| 3. 1985................| X X X X | 300,140 | 252,140 | 205,429 | 146,972 | 137,899 |
| 4. 1986................| X X X X | X X X X | 575,896 | 501,867 | 384,193 | 253,586 |
| 5. 1987................| X X X X | X X X X | X X X X | 290,459 | 269,578 | 205,003 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 263,306 | 210,880 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 241,874 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 190,301 | 164,829 | 1,698,304 | 2,378,908 |
| 2. 1984................| 38,591 | 31,268 | 25,349 | 30,890 |
| 3. 1985................| 96,467 | 77,109 | 56,805 | 49,814 |
| 4. 1986................| 157,193 | 109,007 | 87,813 | 67,417 |
| 5. 1987................| 159,749 | 110,490 | 75,270 | 63,536 |
| 6. 1988................| 172,663 | 134,071 | 98,231 | 87,630 |
| 7. 1989................| 192,073 | 145,297 | 100,265 | 87,817 |
| 8. 1990................| 318,101 | 256,053 | 181,935 | 132,762 |
| 9. 1991................| X X X X | 315,263 | 248,543 | 183,829 |
| 10. 1992................| X X X X | X X X X | 276,614 | 253,028 |
| 11. 1993................| X X X X | X X X X | X X X X | 300,486 |
---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
SCHEDULE P - PART 4H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| 1 | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| |-----------------------------------------------------------------------------------------------|
| Years in Which | | | | | | |
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984................| 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985................| X X X X | 0 | 0 | 0 | 0 | 0 |
| 4. 1986................| X X X X | X X X X | 0 | 0 | 0 | 0 |
| 5. 1987................| X X X X | X X X X | X X X X | 260,767 | 210,148 | 202,979 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 268,635 | 231,499 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 248,142 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| 1 EXPENSES AT YEAR END (000 OMITTED) |
| ----------------------------------------------------------------|
| Years in Which | | | | |
| Losses Were | 8 | 9 | 10 | 11 |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
| | | | | |
<S> <C> <C> <C> <C> |
| 1. Prior ..............| 0 | 0 | 0 | 0 |
| 2. 1984................| 0 | 0 | 0 | 0 |
| 3. 1985................| 0 | 0 | 0 | 0 |
| 4. 1986................| 0 | 0 | 0 | 0 |
| 5. 1987................| 99,830 | 57,338 | 32,649 | 22,204 |
| 6. 1988................| 185,773 | 81,132 | 55,800 | 29,183 |
| 7. 1989................| 195,276 | 109,869 | 65,639 | 48,746 |
| 8. 1990................| 257,110 | 150,949 | 107,326 | 86,623 |
| 9. 1991................| X X X X | 247,097 | 171,078 | 102,596 |
| 10. 1992................| X X X X | X X X X | 267,154 | 159,048 |
| 11. 1993................| X X X X | X X X X | X X X X | 254,002 |
---------------------------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 4I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | | | | | | |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | | | | |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| 1. Prior ..............| X X X X | 52,745 | 37,654 | 20,411 |
| 2 1992................| X X X X | X X X X | 34,877 | 11,589 |
| 3. 1993................| X X X X | X X X X | X X X X | 24,104 |
---------------------------------------------------------------------------------------------
SCHEDULE P - PART 4J - AUTO PHYSICAL DAMAGE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | | | | | | |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 4J - AUTO PHYSICAL DAMAGE - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | | | | |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ..............| X X X X | 97,224 | 43,794 | 11,152 |
| 2 1992................| X X X X | X X X X | 55,011 | 21,074 |
| 3. 1993................| X X X X | X X X X | X X X X | 44,552 |
---------------------------------------------------------------------------------------------
SCHEDULE P - PART 4K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | | | | | | |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| | | | | | | |
| 1. Prior ..............| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | | | | |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ..............| X X X X | 85,514 | 68,420 | 56,196 |
| 2 1992................| X X X X | X X X X | 28,066 | 21,858 |
| 3. 1993................| X X X X | X X X X | X X X X | 29,469 |
---------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 4L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | | | | | | |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 2 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 3. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | | | | |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| 1. Prior ..............| X X X X | 103,093 | 5,854 | 2,479 |
| 2 1992................| X X X X | X X X X | 122,633 | 1,871 |
| 3. 1993................| X X X X | X X X X | X X X X | 133,808 |
---------------------------------------------------------------------------------------------
SCHEDULE P - PART 4M - INTERNATIONAL
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | | | | | | |
| Incurred | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. Prior ..............| 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984................| 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985................| X X X X | 0 | 0 | 0 | 0 | 0 |
| 4. 1986................| X X X X | X X X X | 0 | 0 | 0 | 0 |
| 5. 1987................| X X X X | X X X X | X X X X | 0 | 0 | 0 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 0 | 0 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 4M - INTERNATIONAL - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | | | | |
| Incurred | 1990 | 1991 | 1992 | 1993 |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ..............| 0 | 0 | 0 | 0 |
| 2. 1984................| 0 | 0 | 0 | 0 |
| 3. 1985................| 0 | 0 | 0 | 0 |
| 4. 1986................| 0 | 0 | 0 | 0 |
| 5. 1987................| 0 | 0 | 0 | 0 |
| 6. 1988................| 0 | 0 | 0 | 0 |
| 7. 1989................| 0 | 0 | 0 | 0 |
| 8. 1990................| 0 | 0 | 0 | 0 |
| 9. 1991................| X X X X | 0 | 0 | 0 |
| 10. 1992................| X X X X | X X X X | 0 | 0 |
| 11. 1993................| X X X X | X X X X | X X X X | 0 |
---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
(Name)
SCHEDULE P - PART 4N - REINSURANCE A
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| Incurred | | | | | | |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| 1. 1988................| X X X X | X X X X | X X X X | X X X X | 3,295 | 2,189 |
| 2. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 11,205 |
| 3. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 4. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 5. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 6. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | 1990 | 1991 | 1992 | 1993 |
| Incurred | | | | |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| 1. 1988................| 913 | 13,507 | 11,896 | 11,202 |
| 2. 1989................| 767 | 724 | 5,646 | 4,501 |
| 3. 1990................| 15,745 | 8,459 | 440 | 8,732 |
| 4. 1991................| X X X X | 5,095 | 2,048 | 597 |
| 5. 1992................| X X X X | X X X X | 18,850 | 1,113 |
| 6. 1993................| X X X X | X X X X | X X X X | 50,498 |
---------------------------------------------------------------------------------------------<PAGE>
<PAGE>
SCHEDULE P - PART 4O - REINSURANCE B
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| Incurred | | | | | | |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| | | | | | | |
| 1. 1988................| X X X X | X X X X | X X X X | X X X X | 74,506 | 54,980 |
| 2. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 122,650 |
| 3. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 4. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 5. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 6. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | 1990 | 1991 | 1992 | 1993 |
| Incurred | | | | |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. 1988................| 42,582 | 57,628 | 52,034 | 48,808 |
| 2. 1989................| 99,076 | 89,563 | 95,112 | 71,667 |
| 3. 1990................| 114,300 | 74,675 | 61,537 | 51,663 |
| 4. 1991................| X X X X | 118,175 | 83,979 | 49,645 |
| 5. 1992................| X X X X | X X X X | 107,597 | 58,271 |
| 6. 1993................| X X X X | X X X X | X X X X | 117,543 |
---------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 4P - REINSURANCE C
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| Incurred | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| | | | | | | |
| 1. 1988................| X X X X | X X X X | X X X X | X X X X | 1,265 | 1,207 |
| 2. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 3,382 |
| 3. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 4. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 5. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 6. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | 1990 | 1991 | 1992 | 1993 |
| Incurred | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. 1988................| 883 | 180 | 142 | 0 |
| 2. 1989................| 0 | 0 | 0 | 0 |
| 3. 1990................| 18,570 | 3,520 | 0 | 0 |
| 4. 1991................| X X X X | 14,237 | 0 | 0 |
| 5. 1992................| X X X X | X X X X | 0 | 0 |
| 6. 1993................| X X X X | X X X X | X X X X | 0 |
---------------------------------------------------------------------------------------------
SCHEDULE P - PART 4Q - REINSURANCE D
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| Incurred | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| | | | | | | |
| 1. Prior ..............| 29,161 | 21,605 | 28,269 | 93,957 | 85,213 | 47,735 |
| 2. 1984................| 29,739 | 13,150 | 16,267 | 68,354 | 67,013 | 63,997 |
| 3. 1985................| X X X X | 51,844 | 25,004 | 20,894 | 62,099 | 102,514 |
| 4. 1986................| X X X X | X X X X | 79,735 | 36,231 | 31,640 | 114,155 |
| 5. 1987................| X X X X | X X X X | X X X X | 109,091 | 57,319 | 49,775 |
-----------------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 4Q - REINSURANCE D - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | 1990 | 1991 | 1992 | 1993 |
| Incurred | | | | |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ..............| 90,250 | 71,164 | 32,160 | 18,131 |
| 2. 1984................| 42,922 | 37,141 | 9,422 | 12,913 |
| 3. 1985................| 68,640 | 61,793 | 61,510 | 62,392 |
| 4. 1986................| 110,295 | 105,004 | 94,635 | 84,574 |
| 5. 1987................| 132,893 | 115,479 | 105,147 | 91,596 |
---------------------------------------------------------------------------------------------
SCHEDULE P - PART 4R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| Incurred | | | | | | |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| | | | | | | |
| 1. Prior ..............| 80,297 | 63,776 | 30,023 | 25,480 | 23,293 | 19,811 |
| 2. 1984................| 57,250 | 40,991 | 28,488 | 27,276 | 20,310 | 19,437 |
| 3. 1985................| X X X X | 98,573 | 88,885 | 72,805 | 57,864 | 52,672 |
| 4. 1986................| X X X X | X X X X | 143,872 | 132,778 | 118,569 | 97,107 |
| 5. 1987................| X X X X | X X X X | X X X X | 111,395 | 102,259 | 94,609 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 86,920 | 77,482 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 84,384 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 4R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | 1990 | 1991 | 1992 | 1993 |
| Incurred | | | | |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ..............| 18,179 | 16,574 | 14,474 | 15,385 |
| 2. 1984................| 51,275 | 13,666 | 10,778 | 13,330 |
| 3. 1985................| 41,969 | 33,600 | 22,758 | 19,176 |
| 4. 1986................| 65,001 | 38,471 | 30,856 | 31,345 |
| 5. 1987................| 77,331 | 53,534 | 41,167 | 34,301 |
| 6. 1988................| 70,445 | 51,821 | 41,637 | 28,935 |
| 7. 1989................| 76,860 | 62,919 | 50,754 | 37,078 |
| 8. 1990................| 79,413 | 66,673 | 53,966 | 43,705 |
| 9. 1991................| X X X X | 73,479 | 62,252 | 52,540 |
| 10. 1992................| X X X X | X X X X | 48,765 | 41,606 |
| 11. 1993................| X X X X | X X X X | X X X X | 48,610 |
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SCHEDULE P - PART 4R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED|
| 1 |-----------------------------------------------------------------------------------------------|
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 |
| Incurred | | | | | | |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> <C> <C> |
| | | | | | | |
| 1. Prior ..............| 0 | 0 | 0 | 0 | 0 | 0 |
| 2. 1984................| 0 | 0 | 0 | 0 | 0 | 0 |
| 3. 1985................| X X X X | 0 | 0 | 0 | 0 | 0 |
| 4. 1986................| X X X X | X X X X | 0 | 0 | 0 | 0 |
| 5. 1987................| X X X X | X X X X | X X X X | 1,515 | 1,514 | 136 |
| 6. 1988................| X X X X | X X X X | X X X X | X X X X | 704 | 550 |
| 7. 1989................| X X X X | X X X X | X X X X | X X X X | X X X X | 649 |
| 8. 1990................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 9. 1991................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 10. 1992................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| 11. 1993................| X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
-----------------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE>
SCHEDULE P - PART 4R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE - (CONTINUED)
<CAPTION>
---------------------------------------------------------------------------------------------
| EXPENSES AT YEAR END (000 OMITTED) |
| 1 ----------------------------------------------------------------|
| | | | | |
| Years in Which | 8 | 9 | 10 | 11 |
| Losses Were | 1990 | 1991 | 1992 | 1993 |
| Incurred | | | | |
| | | | | |
| | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|
<S> <C> <C> <C> <C> |
| | | | | |
| 1. Prior ..............| 0 | 0 | 0 | 0 |
| 2. 1984................| 0 | 0 | 0 | 0 |
| 3. 1985................| 0 | 0 | 0 | 0 |
| 4. 1986................| 0 | 0 | 0 | 0 |
| 5. 1987................| 136 | 136 | 97 | 98 |
| 6. 1988................| 550 | 545 | 507 | 507 |
| 7. 1989................| 649 | 649 | 531 | 531 |
| 8. 1990................| 286 | 293 | 117 | 117 |
| 9. 1991................| X X X X | 153 | 3 | 3 |
| 10. 1992................| X X X X | X X X X | 3 | 3 |
| 11. 1993................| X X X X | X X X X | X X X X | 3 |
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</TABLE>
