<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Mark One
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995.
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from N/A to N/A.
Commission file number: 33-46881*
KEMPER INVESTORS LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Illinois 36-3050975
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1 Kemper Drive
Long Grove, Illinois 60049-0001
(Address of Principal Executive Offices) (Zip Code)
708-320-4500
(Registrant's telephone number, including area code)
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 May 1, 1995, 250,000 shares of Common Stock (all held by
an affiliate, Kemper Financial Companies, Inc.) were
outstanding.
* Pursuant to Rule 429 under the Securities Act of 1933, this
Form 10-Q also relates to Commission file numbers 33-33547
and 33-43462.
<PAGE> 2
KEMPER INVESTORS LIFE INSURANCE COMPANY
FORM 10-Q
PART I. FINANCIAL STATEMENTS Page No.
--------
Consolidated Balance Sheet -
March 31, 1995 and December 31, 1994 . . . . . . . . 3
Consolidated Statement of Operations -
Three months ended March 31, 1995 and 1994. . . . . 4
Consolidated Statement of Cash Flows -
Three months ended March 31, 1995 and 1994 . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . 6
Management's Discussion and Analysis
Results of Operations . . . . . . . . . . . . . . . 8
Investments . . . . . . . . . . . . . . . . . . . . 12
Liquidity and Capital Resources . . . . . . . . . . 24
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K . . . . . . . 26
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 27
- 2 -
<PAGE> 3
Kemper Investors Life Insurance Company and Subsidiaries
Consolidated Balance Sheet
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
March 31 December 31
1995 1994
-------- -----------
<S> <C> <C>
ASSETS
Investments
Fixed maturities, available for sale, at market
(cost: 1995, $3,645,597; 1994, $3,707,356) $ 3,528,547 $ 3,463,732
Equity securities, at market (cost: 1995,
$15,011; 1994, $14,947) 14,805 14,767
Short-term investments 149,797 204,164
Joint venture mortgage loans 373,511 351,359
Third-party mortgage loans 289,136 318,682
Other real estate-related investments 250,487 237,242
Policy loans 278,903 277,743
Other invested assets 25,051 25,760
---------- ----------
Total investments 4,910,237 4,893,449
Cash 1,709 23,189
Accrued investment income 126,301 125,543
Deferred insurance acquisition costs 318,592 310,465
Fixed assets, at cost less accumulated depreciation 2,538 3,735
Receivable for securities sold 22,725 -
Reinsurance recoverable 603,067 642,801
Other assets and receivables 26,164 29,914
Assets held in separate accounts 1,578,325 1,507,984
---------- ----------
Total assets $ 7,589,658 $ 7,537,080
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Future policy benefits $ 4,709,586 $ 4,843,690
Ceded future policy benefits 603,067 642,801
Payable for securities purchased 368 574
Other accounts payable and liabilities 66,532 66,687
Deferred income taxes 48,885 41,364
Liabilities related to separate accounts 1,578,325 1,507,984
---------- ----------
Total liabilities 7,006,763 7,103,100
---------- ----------
Commitments and contingent liabilities
Stockholder's equity:
Capital stock - $10 par value,
authorized 300,000 shares;
outstanding 250,000 shares 2,500 2,500
Additional paid-in capital 491,994 491,994
Net unrealized loss on investments (102,458) (236,443)
Retained earnings 190,859 175,929
---------- ----------
Total stockholder's equity 582,895 433,980
---------- ----------
Total liabilities and stockholder's equity $ 7,589,658 $ 7,537,080
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 4
Kemper Investors Life Insurance Company and Subsidiaries
Consolidated Statement of Operations
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1995 1994
-------- --------
<S> <C> <C>
REVENUE
Net investment income $ 90,163 $ 82,260
Realized investment gains (losses) (1,376) 6,025
Fees and other income 8,938 7,994
------- -------
Total revenue 97,725 96,279
------- -------
BENEFITS AND EXPENSES
Benefits and interest credited to policyholders 61,425 62,607
Commissions, taxes, licenses and fees 5,811 7,676
Operating expenses 4,862 6,188
Deferral of insurance
acquisition costs (9,484) (11,854)
Amortization of insurance
acquisition costs 12,799 5,992
------- -------
Total benefits and expenses 75,413 70,609
------- -------
Income before income tax expense 22,312 25,670
------- -------
Income tax expense (benefit)
Current 3,862 14,715
Deferred 3,517 (5,823)
------- -------
Total income tax expense 7,379 8,892
------- -------
Net income $ 14,933 $ 16,778
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
- 4 -
<PAGE> 5
Kemper Investors Life Insurance Company and Subsidiaries
Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31
--------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income $ 14,933 $ 16,778
Reconcilement of net income to net cash provided:
Realized investment losses (gains) 1,376 (6,025)
Interest credited and other charges 59,831 61,033
Deferred insurance acquisition costs 3,315 (5,863)
Amortization of discount and premium
on investments 878 680
Deferred income taxes 3,517 (5,828)
Other, net (3,872) 14,257
------- -------
Net cash provided from operating activities 79,978 75,032
------- -------
Cash flows from investing activities
Cash from investments sold or matured:
Fixed maturities held to maturity 29,447 14,957
Fixed maturities sold prior to maturity 55,238 287,794
Mortgage loans, policy loans and other
invested assets 39,706 203,051
Net change in fixed assets 1,197 735
Cost of investments purchased or loans originated:
Fixed maturities (23,661) (637,361)
Mortgage loans, policy loans and
other invested assets (43,456) (68,360)
Short-term investments, net 54,367 239,026
Net change in receivable and payable
for securities transactions (22,931) (71,812)
------- -------
Net cash provided by (used in)
investing activities 89,907 (31,970)
------- -------
Cash flows from financing activities
Policyholder account balances:
Deposits 50,826 61,559
Withdrawals (243,729) (147,003)
Capital contributions - 30,000
Other 1,538 6,998
------- -------
Net cash used in financing activities (191,365) (48,446)
Net decrease in cash (21,480) (5,384)
Cash at the beginning of the period 23,189 7,487
------- -------
Cash at the end of the period $ 1,709 $ 2,103
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
- 5 -
<PAGE> 6
Kemper Investors Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
1. In the opinion of management, all necessary adjustments
consisting of normal recurring accruals have been made for
a fair statement of the results of Kemper Investors Life
Insurance Company ("KILICO") for the periods included in these
financial statements. These financial statements should be
read in conjunction with the financial statements and
related notes in the 1994 Annual Report on Form 10-K.
2. The change in unrealized gains (losses), net of applicable
taxes, on fixed maturities and equity securities is not
reflected as a component of KILICO's net income.
3. Pursuant to Statement of Financial Accounting Standards ("SFAS") 109,
"Accounting for Income Taxes," deferred tax assets are recognized if future
realization of the tax benefit is more likely than not, with a valuation
allowance for the portion that is not likely to be realized. KILICO has
established a valuation allowance to reduce the deferred federal tax asset
related to real estate and other investments to the amount that, based upon
available evidence, is, in management's judgment, more likely than not
to be realized. Any reversals of the valuation allowance are contingent upon
the recognition of future capital gains in Kemper Corporation's ("Kemper")
consolidated federal income tax return or a change in circumstances which
causes the recognition of the benefits to become more likely than not.
During the first three months of 1995, the valuation allowance was decreased
by $44.3 million. This decrease in the valuation allowance solely
relates to the decrease in the deferred federal tax asset from unrealized
losses on investments.
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<PAGE> 7
The tax effects of temporary differences that give rise to
significant portions of KILICO's net deferred federal tax
liability are as follows:
<TABLE>
<CAPTION>
(in thousands) March 31 December 31
1995 1994
-------- -----------
<S> <C> <C>
Deferred federal tax assets:
Life policy reserves $ 48,567 $ 51,519
Unrealized losses on investments 41,040 85,331
Real estate-related 39,140 39,360
Other investment-related 6,727 7,435
Other 5,738 6,415
------- -------
Total deferred federal tax assets 141,212 190,060
Valuation allowance (56,241) (100,532)
------- -------
Total deferred federal tax assets
after valuation allowance 84,971 89,528
------- -------
Deferred federal tax liabilities:
Deferred insurance acquisition costs 111,507 108,663
Depreciation and amortization 19,141 18,878
Other 3,208 3,351
------- -------
Total deferred federal tax
liabilities 133,856 130,892
------- -------
Net deferred federal tax liability $(48,885) $(41,364)
======= =======
</TABLE>
The tax returns through the year 1986 have been examined by the
Internal Revenue Service ("IRS"). Changes proposed are not
material to KILICO's financial position. The tax returns for
the years 1987 through 1990 are currently under examination by
the IRS.
4. On April 10, 1995, Kemper entered into an agreement in principle to be
acquired in a merger transaction. See "Management's Discussion and Analysis"
on the following page.
- 7 -
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
During 1994, Kemper Corporation ("Kemper") faced both an unsolicited suitor and
an unsuccessful merger agreement. The resulting distractions and uncertainties
negatively impacted certain of the operations of Kemper and its subsidiaries
including Kemper Investors Life Insurance Company ("KILICO"). The Kemper
board of directors has directed its management to take all appropriate actions
to maximize value for Kemper stockholders, which process continued through the
first quarter of 1995.
On April 10, Kemper entered into an agreement in principle whereby Kemper,
including KILICO, would be acquired by an investor group comprised of Zurich
Insurance Company, Insurance Partners, L.P. and Insurance Partners Offshore
(Bermuda), L.P. in a merger transaction. As of May 8, 1995, the parties agreed
to extend until May 15, 1995 the May 8, 1995 termination date originally in the
agreement in principle. Although there can be no assurance that a definitive
agreement will be reached as expected in May, the transaction would be expected
to close in the fourth quarter of 1995.
RESULTS OF OPERATIONS
KILICO reported net income in the first quarter of 1995 of $14.9 million,
compared with net income of $16.8 million in the first quarter of 1994. The
decline in net income in the first quarter of 1995, compared with the first
quarter of 1994, was primarily due to realized investment losses in 1995,
compared with realized investment gains in 1994.
The following table reflects the major components of realized
investment gains (losses) included in net income:
Realized investment gains (losses):
(in millions)
<TABLE>
<CAPTION>
Three months ended
March 31
------------------
1995 1994
---- ----
<S> <C> <C>
Real estate-related losses $ - $(13.8)
Fixed maturity write-downs - (.1)
Other gains (losses), net (1.4) 19.9
----- -----
Realized investment gains (losses) (1.4) 6.0
Income tax expense (benefit) (.5) 2.1
----- -----
Net realized investment gains (losses) $ (.9) $ 3.9
===== =====
</TABLE>
- 8 -
<PAGE> 9
Operating earnings (net income excluding realized investment results) improved
to $15.8 million in the first quarter of 1995, compared with $12.9 million in
the first quarter of 1994, primarily due to increased spread income and lower
operating expenses. These improvements were partially offset by an increase in
the amortization of insurance acquisition costs.
Continuing a strategy implemented during 1992, KILICO improved spread income by
both increasing investment income and reducing crediting rates on certain
existing blocks of fixed annuity and interest-sensitive life insurance products
through most of 1994. Operating earnings improved as crediting rates declined
at a faster rate than KILICO's investment income. Beginning in late 1994, as a
result of rising interest rates and other competitive market factors, KILICO
increased crediting rates on such products. Although KILICO continues to
manage spread revenue, future increases in crediting rates could adversely
impact future operating earnings but could also help to improve sales and the
overall persistency of such products.
Investment income was positively impacted in the first quarter of 1995,
compared with the first quarter of 1994, from the benefits of $82.5 million of
capital contributions to KILICO in 1994, and from reductions in the level of
nonperforming real estate-related investments, primarily from the sales of
certain real estate-related investments to affiliated non-life realty
companies. These sales totaled $3.5 million in the first quarter of 1995 and
$154.0 million in 1994 and resulted in no realized gain or loss to KILICO.
Investment income in 1995 also benefited from rising investment yields on new
money and from a repositioning of KILICO's fixed maturity investment portfolio
in September 1994. The repositioning of KILICO's investment portfolio resulted
in the sale of $330.7 million of fixed maturity investments, which consisted of
lower yielding investment-grade corporate securities and collateralized
mortgage obligations. The $306.9 million of proceeds from the repositioning,
together with $275.0 million of cash and short-term investments, was reinvested
into higher yielding U.S. government and agency guaranteed mortgage
pass-through securities issued by the Government National Mortgage Association
and the Federal National Mortgage Association. See "INVESTMENTS" below.
- 9 -
<PAGE> 10
Sales
(in millions)
<TABLE>
<CAPTION>
Three months ended
March 31
------------------
1995 1994
---- ----
<S> <C> <C>
Annuities:
General account $ 50.8 $ 61.1
Separate account 48.4 77.4
----- -----
Total annuities 99.2 138.5
Interest-sensitive life insurance - .5
----- -----
Total $ 99.2 $139.0
===== =====
</TABLE>
Sales of annuity products consist of deposits received. The decreases in
general account (fixed annuity) sales and interest-sensitive life insurance
sales reflected KILICO's continuing strategy to direct its sales efforts toward
separate account (variable annuity) products, which increase administrative
fees earned and pose minimal investment risk for KILICO as policyholders invest
in one or more of several underlying investment funds. Despite this strategy,
separate account sales declined in the first quarter of 1995, compared with the
first quarter of 1994. This decline was due to competitive conditions in
certain distribution channels, in part reflecting KILICO's financial strength
and performance ratings, uncertainty concerning KILICO's ownership and the
underlying investment fund performance.
Included in fees and other income are administrative fees received from
KILICO's separate account products of $5.1 million in the first quarter of
1995, compared with $5.2 million in the first quarter of 1994. Other income
also included surrender charge revenue of $2.7 million in the first quarter of
1995, compared with $1.6 million in the first quarter of 1994, as total general
account and separate account policyholder surrenders and withdrawals increased
to $310.4 million in the first quarter of 1995, compared with $163.2 million in
the first quarter of 1994. Policyholder withdrawals increased reflecting
rising interest rates which caused KILICO's renewal crediting rates to be lower
than new money crediting rates and uncertainty concerning KILICO's ownership.
KILICO's crediting rate increases in late 1994 and in 1995 were designed to
reduce the level of future withdrawals.
Operating expenses decreased by $1.3 million, or 21.4 percent, in the first
quarter of 1995, compared with the first quarter of 1994, as a result of
expense control and the sale of one of KILICO's majority owned subsidiaries in
the fourth quarter of 1994.
- 10 -
<PAGE> 11
Commissions, taxes, licenses and fees and the deferral of insurance acquisition
costs were lower in the first quarter of 1995, compared with the first quarter
of 1994, primarily reflecting lower annuity sales. The amortization of
insurance acquisition costs increased in the first quarter of 1995, compared
with the first quarter of 1994, primarily as a result of an increase in
policyholder withdrawals and increasing renewal crediting rates. Policyholder
withdrawals and increasing renewal crediting rates adversely impact the
amortization of insurance acquisition costs as both would be expected to
decrease KILICO's projected future estimated gross profits.
Since year-end 1990, KILICO has taken many steps to improve its earnings,
financial strength and competitive marketing position. These steps included
adjustments in crediting rates, reductions of operating expenses, reductions of
below investment-grade securities, a strategy not to embark on new real estate
projects, additional provisions for real estate-related losses, sales of $646.0
million of certain real estate-related investments to affiliated non-life
realty companies through March 31, 1995, third-party sales and refinancings of
certain mortgage and other real estate loans, approximately $900 million in
annuity reinsurance transactions with an affiliated mutual life insurance
company, a parental guarantee of indebtedness, and capital contributions of
$342.5 million through March 31, 1995. KILICO's statutory surplus ratio
improved to 10.9 percent at March 31, 1995 from 10.2 percent at December 31,
1994, 8.2 percent at December 31, 1993, 6.6 percent at December 31, 1992, 6.5
percent at December 31, 1991, and 4.0 percent at year-end 1990.
- 11 -
<PAGE> 12
INVESTMENTS
KILICO's principal investment strategy is to maintain a balanced,
well-diversified portfolio supporting the insurance contracts written. KILICO
makes shifts in its investment portfolio depending on, among other factors, the
interest rate environment, liability durations and changes in market and
business conditions.
Invested assets and cash
(in millions)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C> <C> <C>
Cash and short-term investments $ 152 3.1% $ 227 4.6%
Fixed maturities:
Investment-grade:
NAIC(1) Class 1 2,622 53.4 2,569 52.2
NAIC(1) Class 2 769 15.7 760 15.5
Performing below investment-grade (2) 138 2.8 135 2.8
Equity securities 15 .3 15 .3
Joint venture mortgage loans(3) 374 7.6 351 7.1
Third-party mortgage loans(3) 289 5.9 319 6.5
Other real estate-related investments 250 5.1 237 4.8
Policy loans 279 5.7 278 5.7
Other 24 .4 26 .5
----- ----- ----- -----
Total(4) $4,912 100.0% $4,917 100.0%
===== ===== ===== =====
</TABLE>
(1) National Association of Insurance Commissioners ("NAIC").
- Class 1 = A- and above
- Class 2 = BBB- through BBB+
(2) Excludes $49.9 million, or 1.0 percent, at both March 31, 1995 and
December 31, 1994, of bonds carried in other real
estate-related investments.
(3) A joint venture mortgage loan is recharacterized in the current period
as a third-party mortgage loan when KILICO and its affiliates
have disposed of their related equity interest in that venture.
(4) See table captioned "Summary of gross and net real estate investments"
below.
Fixed maturities
KILICO is carrying its fixed maturity investment portfolio, which it considers
available for sale, at estimated market value, with the aggregate unrealized
appreciation or depreciation being recorded as a separate component of
stockholder's equity, net of any applicable income tax expense. The aggregate
unrealized depreciation on fixed maturities at March 31, 1995 was $117.1
million, compared with unrealized depreciation of $243.6 million at December
31, 1994. KILICO has not recorded a net deferred tax benefit for the aggregate
unrealized depreciation on investments. Market values are sensitive to
movements in interest rates and other economic developments and can be expected
to fluctuate, at times significantly, from period to period.
At March 31, 1995, investment-grade fixed maturities and cash and short-term
investments accounted for 72.2 percent of KILICO's invested assets and cash,
compared with 72.3 percent at December 31, 1994. Approximately 70 percent of
KILICO's NAIC Class 1 bonds are rated AAA or equivalent at March 31, 1995.
- 12 -
<PAGE> 13
Approximately 49.5 percent of KILICO's investment-grade fixed maturities at
March 31, 1995 were mortgage-backed securities. These investments consist
primarily of marketable mortgage pass-through securities issued by the
Government National Mortgage Association, the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation and other
investment-grade securities collateralized by mortgage pass-through securities
issued by these entities. KILICO has not made any material investments in
interest-only or other similarly volatile tranches of mortgage-backed
securities. KILICO's mortgage-backed investments are generally of AAA credit
quality, and the markets for these investments have been and are expected to
remain liquid.
Future investment income from mortgage-backed securities may be affected by the
timing of principal payments and the yields on reinvestment alternatives
available at the time of such payments. Due to the fact that KILICO's
investments in mortgage-backed securities predominately date since 1992, the
current interest rate environment is not expected to cause any material
extension of the average maturities of these investments. With the exception
of many of KILICO's September 1994 purchases of such investments, most of these
investments were purchased by KILICO at discounts. Prepayment activity on such
securities is not expected to result in any material losses to KILICO because
prepayments would generally accelerate the reporting of the discounts as
investment income. Prepayment activity resulting from a decline in interest
rates on such securities purchased at a premium would accelerate the
amortization of premiums which would result in reductions of investment income
related to such securities. At March 31, 1995, KILICO has unamortized
discounts and premiums of $19.5 million and $14.1 million, respectively,
related to mortgage-backed securities. Given the credit quality, liquidity and
anticipated payment characteristics of KILICO's investments in mortgage-backed
securities, KILICO believes that the associated risk can be managed without
material adverse consequences on its consolidated financial statements.
Below investment-grade securities holdings (NAIC classes 3 through 6)
(representing securities of 11 issuers at March 31, 1995) totaled less than
three percent of cash and invested assets at March 31, 1995 and at December 31,
1994. Below investment-grade securities are generally unsecured and often
subordinated to other creditors of the issuers. These issuers may have
relatively higher levels of indebtedness and be more sensitive to adverse
economic conditions than investment-grade issuers. Over the last four years,
KILICO significantly reduced its exposure to below investment-grade securities.
This strategy takes into account the more conservative nature of today's
consumer and the resulting demand for higher-quality investments in the life
insurance and annuity marketplace.
- 13 -
<PAGE> 14
Real estate-related investments
The $913 million real estate portfolio held by KILICO constituted 18.6 percent
of cash and invested assets at March 31, 1995, compared with $907 million, or
18.4 percent, at December 31, 1994. The real estate portfolio consists of
joint venture and third-party mortgage loans and other real estate-related
investments. The majority of KILICO's real estate loans are on properties or
projects where KILICO, Kemper, Lumbermens Mutual Casualty Company
("Lumbermens") or their respective affiliates have taken ownership positions in
joint ventures with a small number of partners.
Summary of gross and net real estate investments
(in millions)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
Investments before reserves, write-downs
and net joint venture operating losses:
Joint venture mortgage loans $ 380 $ 358
Third-party mortgage loans 320 353
Other real estate-related investments 362 350
------- -----
Subtotal 1,062 1,061
Reserves (40) (43)
Write-downs (94) (97)
Cumulative net operating losses of joint
ventures owned (15) (14)
-------- ------
Net real estate investments $ 913 $ 907
======== ======
</TABLE>
As reflected in the "Real estate portfolio" table on the following page, KILICO
has continued to fund both existing projects and legal commitments. The future
legal commitments were $351.2 million at March 31, 1995. This amount
represented a net decrease of $24.9 million since December 31, 1994, largely
due to fundings in first-quarter 1995. As of March 31, 1995, KILICO expects to
fund approximately $70.2 million of these commitments, along with providing
capital to existing projects. The disparity between total legal commitments
and the amount expected to be funded relates principally to standby financing
arrangements that provide credit enhancements to certain tax-exempt bonds,
which KILICO does not presently expect to fund. The total legal commitments,
along with estimated working capital requirements, are considered in KILICO's
evaluation of reserves and write-downs.
Generally, at the inception of a real estate loan, KILICO anticipated that it
would roll over the loan and reset the interest rate at least one time in the
future, although KILICO is not legally committed to do so. As a result of the
continued weakness in the real estate markets and fairly restrictive lending
practices by other lenders in this environment, KILICO expects that all or most
loans maturing in 1995 will be rolled over, restructured or foreclosed.
- 14 -
<PAGE> 15
Excluding the $64.2 million of real estate owned and $49.2 million in KILICO's
net equity investments in joint ventures, KILICO's real estate loans (including
real estate-related bonds) totaled $799.7 million at March 31, 1995, after
reserves and write-downs. Of this amount, $595.7 million are on accrual status
with a weighted average interest rate of approximately 8.1 percent. Of these
accrual loans, 51.2 percent have terms requiring current periodic payments of
their full contractual interest, 34.7 percent require only partial payments or
payments to the extent of cash flow of the borrowers, and 14.1 percent defer
all interest to maturity.
The equity investments in real estate, at March 31, 1995, consisted of $41.2
million of loans to Spanish projects (described below), $16.6 million in
KILICO's other equity investments in joint ventures and $8.6 million of
reserves. The equity investments include KILICO's share of periodic operating
results. KILICO, as an equity owner or affiliate thereof, has the ability to
fund, and historically has elected to fund, operating requirements of certain
joint ventures.
KILICO's real estate owned included $56.7 million of deeds in lieu of
foreclosure, $3.7 million of foreclosed properties and $3.8 million of certain
purchased properties at March 31, 1995. Real estate owned was net of $68.2
million of write-downs at March 31, 1995.
Real estate portfolio
(in millions)
<TABLE>
<CAPTION>
Mortgage loans Other real estate-related investments
--------------- --------------------------------------------
Other Real
Joint Third- Bonds loans estate Equity
venture party (2) (3) owned investments Total
------- ------ ------ ------ ------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $351.4 $318.7 $ 49.9 $ 84.6 $ 57.3 $ 45.4 $ 907.3(1)
Additions (deductions):
Fundings 16.0 1.4 - .9 2.2 6.0 26.5
Interest added to principal 1.8 - - - - - 1.8
Sales/paydowns/distributions (13.5) (5.3) - (.2) (1.6) (1.5) (22.1)
Sold to KFC Portfolio Corp. (1.7) (1.1) - (.8) - - (3.6)
Operating loss - - - - - (.2) (.2)
Transfers to real estate owned (3.6) - - - 3.6 - -
Realized investment gain (loss) (1.2) (.1) - .8 (.4) .9 -
Net transfers from third party to
joint venture mortgages and loans 24.8 (25.4) - .6 - - -
Other transactions, net (.5) .9 - 1.3 3.1 (1.4) 3.4
----- ----- ----- ----- ----- ----- -------
Balance, March 31, 1995 $373.5 $289.1 $ 49.9 $ 87.2 $ 64.2 $ 49.2 $ 913.1(4)
===== ===== ===== ===== ===== ===== =======
</TABLE>
(1) Net of $139.6 million reserve and write-downs. Excludes $29.8 million of
real estate-related accrued interest.
(2) KILICO's real estate-related bonds, all of which are presently rated below
investment-grade, are generally unsecured and were issued to KILICO by
real estate finance or development companies generally to provide
financing for Kemper's or KILICO's joint ventures for such purposes as
land acquisitions, construction/development, refinancing debt, interest
and other operating expenses.
(3) The other real estate loans are notes receivable evidencing financing,
primarily to joint ventures, for purposes similar to those funded by real
estate-related bonds.
(4) Net of $133.5 million reserve and write-downs. Excludes $30.9 million of
real estate-related accrued interest.
- 15 -
<PAGE> 16
As reflected in the preceding table, cash fundings during the first quarter of
1995 exceeded cash received from sales/paydowns/distributions by $4.4 million.
Real estate concentrations
KILICO's real estate portfolio is distributed by geographic location and
property type, as shown in the following two tables:
<TABLE>
<CAPTION>
Geographic distribution as of March 31, 1995 Distribution by property type as of March 31, 1995
<S> <C>
California 27.4% Office 20.0%
Illinois 25.5 Land 19.8
Texas 10.9 Retail 14.8
Ohio 6.4 Industrial 14.5
Spain 4.5 Hotel 12.2
Colorado 3.7 Apartment 5.0
Indiana 3.0 Residential 2.1
Oregon 2.9 Mixed use 2.1
Washington 2.7 Other 9.5
Hawaii 2.6 -----
Virginia 2.3 Total 100.0%
Florida 2.1 =====
Other (1) 6.0
-----
Total 100.0%
=====
</TABLE>
______________
(1) No other single location exceeded 2.0 percent.
Real estate markets have been depressed in recent periods in areas where most
of KILICO's real estate portfolio is located. Approximately one-half of
KILICO's real estate holdings are in California and Illinois. Southern
California shows signs of improvement, although real estate market conditions
there have continued to be worse than in many other areas of the country.
Northern California and Illinois currently reflect some stabilization and
improvement.
At March 31, 1995, KILICO's real estate portfolio also included $41.2 million
of loans carried as equity investments in real estate related to land for
office and retail development and residential projects located in Barcelona,
Spain. The Spanish projects accounted for $4.6 million of net fundings during
the first quarter of 1995 and represented approximately 4.5 percent of KILICO's
real estate portfolio at March 31, 1995. These investments, which began in the
late 1980s, accounted for $14.7 million of the March 31, 1995,
off-balance-sheet legal commitments, of which KILICO expects to fund
approximately $7.3 million.
- 16 -
<PAGE> 17
Undeveloped land, including the Spanish projects, represented approximately
19.8 percent of KILICO's real estate portfolio at March 31, 1995. To maximize
the value of certain land and other projects, additional development is
proceeding or is planned. Such development of existing projects may continue
to require substantial funding, either from KILICO or third parties. In the
present real estate markets, third-party financing can require credit enhancing
arrangements (e.g., standby financing arrangements and loan commitments) from
KILICO. The values of development projects are dependent on a number of
factors, including Kemper's and KILICO's plans with respect thereto, obtaining
necessary permits and market demand for the permitted use of the property.
There can be no assurance that such permits will be obtained as planned or at
all, nor that such expenditures will occur as scheduled, nor that Kemper's and
KILICO's plans with respect to such projects may not change substantially.
At March 31, 1995, KILICO's loans to and investments in projects with the Prime
Group, Inc. or its affiliates, based in Chicago, represented approximately
$243.3 million, or 26.6 percent, of KILICO's real estate portfolio (including
the previously mentioned Spanish projects, which are Prime Group-related).
This amount reflects $5.1 million in fundings during first-quarter 1995.
KILICO also received cash, from Prime Group-related
sales/paydowns/distributions, totaling $1.0 million in the first quarter 1995.
Prime Group-related commitments accounted for $200.1 million of the
off-balance-sheet legal commitments at March 31, 1995, of which KILICO expects
to fund $27.3 million.
Effective January 1, 1993, Kemper and its subsidiaries, including KILICO,
formed a master limited partnership (the "MLP") with Lumbermens and its
subsidiaries. The assets of the MLP consist of the equity interests each
partner or its subsidiaries previously owned in projects with Peter B. Bedford
or his affiliates ("Bedford"), a California-based real estate developer. As
MLP partners, Kemper and Lumbermens have participated in funding certain cash
needs of the MLP projects. During first-quarter 1995, KILICO provided $17.7
million of fundings to the MLP projects. KILICO also received cash from
MLP-related sales/paydowns/distributions of $12.2 million in first-quarter
1995. At March 31, 1995, projects in the MLP accounted for $37.1 million of
KILICO's off-balance-sheet legal commitments, of which KILICO expects to fund
$29.8 million. Kemper's affected equity interests in real estate are held
almost entirely by the real estate subsidiaries of Kemper. Of KILICO's real
estate portfolio at March 31, 1995, approximately $259.6 million, or 28.4
percent, represented loans to and investments in MLP-owned joint ventures.
- 17 -
<PAGE> 18
Pursuant to agreements entered into in January 1994, Bedford transferred to the
MLP and Fidelity Life Association ("FLA"), an affiliated mutual life insurance
company, all of Bedford's ownership interests in ventures in which Bedford,
Kemper, FLA, Lumbermens and their respective subsidiaries previously shared
ownership interests. Bedford was released from certain recourse liabilities
owed to the MLP, the ventures, FLA, Lumbermens, Kemper and certain of their
respective subsidiaries. Because Kemper's and KILICO's reserve methodology did
not take any credit for such recourse, this transaction, which simplified the
management of Kemper's portfolio, did not have any material adverse impact on
Kemper's or KILICO's results of operations or financial condition.
Provisions for real-estate-related losses
KILICO monitors its real estate portfolio and identifies changes in the
relevant real estate marketplaces, the economy and each borrower's
circumstances. KILICO establishes its provisions for real estate-related
losses (both reserves and write-downs) on the basis of its valuations of the
related real estate, estimated in light of current economic conditions taking
into consideration the effects of recourse to, and subordination of loans held
by, affiliated non-life realty companies and calculated in conformity with
Statement of Financial Accounting Standards ("SFAS") 114, "Accounting by
Creditors for Impairment of a Loan". KILICO evaluates its real estate-related
assets (including accrued interest) by estimating the probabilities of loss
utilizing various projections that include several factors relating to the
borrower, property, term of the loan, tenant composition, rental rates, other
supply and demand factors and overall economic conditions. Because KILICO's
real estate review process includes estimates, there can be no assurance that
current estimates will prove accurate over time due to changing economic
conditions and other factors.
KILICO's real estate reserve was allocated as follows:
Real estate reserve
(in millions)
<TABLE>
<CAPTION>
Joint venture Third-party Other real
mortgage mortgage estate-related
loans loans investments Total
------------- ----------- -------------- -----
<S> <C> <C> <C> <C>
Balance at 12/31/94 $ 7.1 $ 10.4 $ 25.5 $ 43.0
Change in reserve ( .7) - (2.5) (3.2)
----- ------ ----- -----
Balance at 3/31/95 $ 6.4 $ 10.4 $ 23.0 $ 39.8
===== ====== ===== =====
</TABLE>
- 18 -
<PAGE> 19
In addition to the reserve, KILICO's provision for real estate-related losses
(on assets held at the respective period end) included cumulative write-downs
(both by KILICO and including KILICO's share of write-downs by joint ventures)
totaling $93.7 million at March 31, 1995, and $96.6 million at December 31,
1994. The 1995 decrease in reserves was primarily due to write-downs which
increased in 1995 as reserves for general real estate risks were allocated to
certain specific loans and equity investments in real estate.
Real estate outlook
KILICO's real estate experience could continue to be adversely affected by
overbuilding and weak economic conditions in certain real estate markets and by
fairly restrictive lending practices by banks and other lenders. Stagnant or
worsening economic conditions in the areas in which KILICO has made loans, or
additional adverse information becoming known to KILICO through its regular
reviews or otherwise, could result in higher levels of problem loans or
potential problem loans, reductions in the value of real estate collateral and
adjustments to the real estate reserve. KILICO's net income and stockholder's
equity could be materially reduced in future periods if real estate market
conditions remain stagnant or worsen in areas where KILICO's portfolio is
located.
Current conditions in the real estate markets have been adversely affecting the
financial resources of certain of KILICO's joint venture partners. Each
partner, however, remains active in the control of its respective joint
ventures. In evaluating a partner's ability to meet its financial commitments,
KILICO considers the amount of all applicable debt and the value of all
properties within that portion of KILICO's portfolio consisting of loans to and
investments in joint ventures with such partner.
- 19 -
<PAGE> 20
The following table is a summary of KILICO's troubled real estate-related
investments:
Troubled real estate-related investments
(before reserves and write-downs, except for real estate owned)
(in millions)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
Potential problem loans(1) $ 58.0 $ 57.9
Nonaccrual loans(2) 264.0 274.6
Restructured loans (currently performing)(3) 45.2 50.5
Real estate owned (4) 64.2 57.3
------ ------
Total(5)(6) $ 431.4 $ 440.3
====== ======
</TABLE>
(1) These are real estate-related investments where KILICO, based on known
information, has serious doubts about the borrowers' abilities to comply
with present repayment terms and which KILICO anticipates may go into
nonaccrual, past due or restructured status.
(2) KILICO does not accrue interest on real estate-related investments when
it judges that the likelihood of collection of interest is doubtful.
(3) KILICO defines a "restructuring" of debt as an event whereby KILICO, for
economic or legal reasons related to the debtor's financial
difficulties, grants a concession to the debtor it would not otherwise
consider. Such concessions either stem from an agreement between KILICO
and the debtor or are imposed by law or a court. By this definition,
restructured loans do not include any loan that, upon the expiration of
its term, both repays its principal and pays interest then due from the
proceeds of a new loan that KILICO, at its option, may extend (roll
over).
(4) Real estate owned is carried at fair value and includes foreclosures,
deeds in lieu of foreclosure and certain purchased property. Cumulative
write-downs to fair value were $68.2 million and $67.5 million at March
31, 1995 and December 31, 1994, respectively.
(5) Total reserves and cumulative write-downs on properties owned at March
31, 1995 (excluding fair value adjustments to real estate owned) were
15.1 percent of total troubled real-estate related investments and 6.7
percent of KILICO's total real estate portfolio before reserves and
write-downs.
(6) Equity investments in real estate are not defined as part of, and
therefore are not taken into account in calculating, total troubled real
estate. KILICO's equity investments also involve real estate risks.
See "Real estate concentrations" above.
Based on the level of troubled real estate-related investments KILICO has
experienced, KILICO anticipates additional foreclosures and deeds in lieu of
foreclosure in 1995 and beyond. Any consolidation accounting resulting from
foreclosures would add the related ventures' assets and senior third-party
liabilities to KILICO's balance sheet and eliminate KILICO's loans to such
ventures.
- 20 -
<PAGE> 21
Due to the adverse real estate environment affecting KILICO's portfolio in
recent years, KILICO has continued to devote significant attention to its real
estate portfolio, enhancing monitoring of the portfolio and formulating
specific action plans addressing nonperforming and potential problem credits.
Since 1991, KILICO has intensified its attention to evaluating the asset
quality, cash flow and prospects associated with each of its projects. KILICO
continues to analyze various potential transactions designed to reduce both its
joint venture operating losses and the amount of its real estate-related
investments. Specific types of transactions under consideration (and
previously utilized) include loan sales, property sales, mortgage refinancings
and real estate investment trusts. However, there can be no assurance that
such efforts will result in continued improvements in the performance of
KILICO's real estate portfolio.
Net investment income
KILICO's pre-tax net investment income totaled $90.2 million for the
first-quarter of 1995, compared with $82.3 million for the same period in 1994.
Included in pre-tax net investment income is KILICO's share of the operating
income from equity investments in real estate and other income less
depreciation, interest and other expenses. Such operating results exclude
interest expense on loans by KILICO which are on nonaccrual status.
KILICO's total foregone investment income before tax was as follows:
Foregone investment income
(dollars in millions)
<TABLE>
<CAPTION>
Three months ended
March 31
------------------
1995 1994
---- ----
<S> <C> <C>
Real estate-related investments $ 5.2 $ 9.2
===== =====
Basis points 42 71
===== =====
</TABLE>
Foregone investment income from the nonaccrual of real estate-related
investments is net of KILICO's share of interest expense on those loans
excluded from KILICO's share of joint venture operating results. Based on the
level of nonaccrual real-estate related investments at March 31, 1995, KILICO
estimates foregone investment income in 1995 will decrease slightly compared
with the 1994 level. Any nonperforming securities, and either worsening or
stagnant real estate conditions, would increase the expected adverse effect on
KILICO's future investment income and realized investment results.
- 21 -
<PAGE> 22
Future net investment income, results of operations and cash flow will reflect
KILICO's current level of investments in investment-grade securities, real
estate fundings treated as equity investments, nonaccrual real estate loans and
joint venture operating losses. KILICO expects, however, that any adverse
effects should be offset to some extent by certain advantages that it expects
to realize over time from its other investment strategies, its product mix and
its continuing cost-control measures. Other mitigating factors include
marketing advantages that could result from KILICO having lower levels of
investment risk and earnings improvements from KILICO's ability to adjust
crediting rates on annuities and interest-sensitive life products over time.
Realized investment results
Reflected in net income are after-tax realized investment losses of $.9 million
for first-quarter 1995, compared with realized investment gains of $3.9 million
for first-quarter 1994.
Unrealized gains and losses on fixed maturity investments are not reflected in
KILICO's net income. These changes in unrealized value are included within a
separate component of stockholder's equity, net of any applicable income tax
expense. If and to the extent a fixed maturity investment suffers an
other-than-temporary decline in value, however, such security is written down
to net realizable value, and the write-down adversely impacts net income.
KILICO regularly monitors its investment portfolio and as part of this process
reviews its assets for possible impairments of carrying value. Because the
review process includes estimates, there can be no assurance that current
estimates will prove accurate over time due to changing economic conditions and
other factors. Due to the increased quality of KILICO's fixed maturity
portfolio, there were no write-downs during the first quarter of 1995.
A valuation allowance was established upon adoption of SFAS 109 (and is
evaluated as of each reported period end) to reduce the deferred tax asset for
investment losses to the amount that, based upon available evidence, is in
management's judgment more likely than not to be realized.
- 22-
<PAGE> 23
Interest rates
Interest rate fluctuations affect KILICO. In 1994, rapidly rising short-term
interest rates resulted in a much flatter yield curve as the Federal Reserve
Board raised rates five times during 1994 and once during the first quarter of
1995. Interest rates have subsequently declined through the remainder of the
first quarter of 1995.
When maturing or sold investments are reinvested at lower yields in a low
interest rate environment, KILICO can adjust its crediting rates on fixed
annuities and other interest-bearing liabilities. However, competitive
conditions and contractual commitments do not always permit the reduction in
crediting rates to fully or immediately reflect reductions in investment yield,
which can result in narrower spreads.
The rising interest rate environment in 1994 contributed to an increase in net
investment income as well as to both realized and unrealized fixed maturity
investment losses in 1994. Also, lower renewal crediting rates on annuities,
compared with higher new money crediting rates, have influenced certain clients
to seek alternative products. KILICO mitigates this risk somewhat by charging
decreasing surrender fees when annuity holders withdraw funds prior to maturity
on certain annuity products. Approximately one-half of KILICO's fixed annuity
liabilities as of March 31, 1995, however, were no longer subject to
significant surrender fees.
As interest rates rose during 1994, KILICO's capital resources were adversely
impacted by unrealized loss positions from its fixed maturity investments. As
interest rates declined in the first quarter of 1995, KILICO's capital
resources were positively impacted from reductions in its unrealized loss
positions on its fixed maturity investments. KILICO believes that its sales of
fixed-rate annuity products could increase in the current interest rate
environment.
- 23 -
<PAGE> 24
LIQUIDITY AND CAPITAL RESOURCES
KILICO carefully monitors cash and short-term investments to maintain adequate
balances for timely payment of claims, expenses, taxes and customer's account
balances. In addition, regulatory authorities establish minimum liquidity and
capital standards. The major ongoing sources of KILICO's liquidity are
deposits for fixed annuities, investment income, other operating revenue and
cash provided from maturing or sold investments. (See "INVESTMENTS" above.)
Policyholder deposits decreased to $50.8 million during the first quarter of
1995, from $61.6 million for the first quarter of 1994. Policyholder
withdrawals increased to $243.7 million during the first quarter of 1995, from
$147.0 million for the first quarter of 1994, primarily due to higher interest
rates which caused KILICO's renewal crediting rates to be lower than new money
crediting rates, increased competition, and uncertainty regarding KILICO's
ownership. KILICO's late 1994 and early 1995 increases in crediting rates were
designed to produce new policyholder deposits and to reduce future withdrawals.
Ratings
Ratings have become an increasingly important factor in establishing the
competitive position of life insurance companies. Rating organizations
continue to review the financial performance and condition of life insurers and
their investment portfolios, including those of KILICO. Any reductions in
KILICO's claims-paying ability or financial strength ratings could result in
its products being less attractive to consumers. Any reductions in Kemper's
senior debt ratings could adversely impact Kemper's financial flexibility by
limiting Kemper's access to capital or increasing its cost of borrowings.
Ratings reductions for Kemper or its subsidiaries and other financial events
can also trigger obligations to fund certain real estate-related commitments to
take out other lenders. In such events, those lenders can be expected to
renegotiate their loan terms, although they are not contractually obligated to
do so. Such circumstances could accelerate or increase Kemper's purchases of
real estate-related assets from KILICO and Kemper's other life insurance
subsidiary, Federal Kemper Life Assurance Company ("FKLA"), to further support
their respective statutory capital positions.
- 24 -
<PAGE> 25
Each rating is subject to revision or withdrawal at any time by the assigning
organization and should be evaluated independently of any other rating. On
April 11, 1995, following the announcement of an agreement in principle to sell
Kemper, Standard & Poor's Corporation ("S&P") announced that it revised its BBB
senior debt and BB+ preferred stock ratings of Kemper, which S&P had placed
under "CreditWatch with 'negative' implications" in 1994, to BB+ and BB-,
respectively, and placed these ratings on "CreditWatch with 'developing'
implications"; Moody's Investors Service announced that it changed the
direction of its review of its Baa2 senior debt and Baa3 preferred stock
ratings of Kemper and Baa1 insurance financial strength rating of KILICO and
FKLA to under review "with direction uncertain" from "for possible downgrade";
Duff & Phelps Credit Rating Co. advised Kemper that it did not revise its A-
senior debt rating of Kemper, its AA- claims-paying ability rating of FKLA and
its A+ claims-paying ability rating of KILICO from "Rating Watch-Uncertain";
and A.M. Best announced that its A- ratings of FKLA and KILICO remain "under
review with developing implications."
Stockholder's equity
Stockholder's equity totaled $582.9 million at March 31, 1995, compared with
$434.0 million at December 31, 1994. The first-quarter 1995 increase reflects
a $134.0 million reduction in the unrealized loss position of KILICO's fixed
maturity investment portfolio, due to declining interest rates, as well as net
income of $14.9 million in the first quarter of 1995.
- 25 -
<PAGE> 26
PART II OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) EXHIBITS. Not applicable.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the three
months ended March 31, 1995.
- 26 -
<PAGE> 27
Kemper Investors Life Insurance Company
FORM 10-Q
For the fiscal period ended March 31, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Kemper Investors Life Insurance Company
(Registrant)
Date: May 12, 1995 By: JOHN B. SCOTT
------------------------------------
John B. Scott
Chairman and
Chief Executive Officer
Date: May 12, 1995 By: JOSEPH R. SITAR
------------------------------------
Joseph R. Sitar
Principal Accounting Officer
- 27 -
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FIRST
QUARTER FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<DEBT-HELD-FOR-SALE> 3,528,547
<DEBT-CARRYING-VALUE> 3,528,547
<DEBT-MARKET-VALUE> 3,528,547
<EQUITIES> 14,805
<MORTGAGE> 662,647
<REAL-ESTATE> 250,487
<TOTAL-INVEST> 4,910,237
<CASH> 1,709
<RECOVER-REINSURE> 603,067
<DEFERRED-ACQUISITION> 318,592
<TOTAL-ASSETS> 7,589,658
<POLICY-LOSSES> 4,709,586
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 2,500
0
0
<OTHER-SE> 580,395
<TOTAL-LIABILITY-AND-EQUITY> 7,589,658
0
<INVESTMENT-INCOME> 90,163
<INVESTMENT-GAINS> (1,376)
<OTHER-INCOME> 8,938
<BENEFITS> 61,425
<UNDERWRITING-AMORTIZATION> 12,799
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 22,312
<INCOME-TAX> 7,379
<INCOME-CONTINUING> 14,933
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,933
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
