UNITED STATES
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 Fiscal Year Ended Commission File Number
December 31, 1994 1-8233
USF&G CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 52-1220567
(State of Incorporation) (IRS Employer Identification No.)
100 Light Street, Baltimore, Maryland 21202
(Address of principal executive offices) (zip code)
Telephone: 410-547-3000
Securities registered pursuant to Section 12(b) of the Act:
$4.10 Series A Convertible Exchangeable Preferred Stock, Registered-New York
Stock Exchange
Par Value $50 Registered-Pacific
Stock Exchange
$5.00 Series C Cumulative Convertible Preferred Stock, Registered-New York
Stock Exchange
Par Value $50 Registered-Pacific
Stock Exchange
Preferred Share Purchase Rights Registered-New York
Stock Exchange
Registered-Pacific
Stock Exchange
Common Stock, Par Value $2.50 Registered-New York
Stock Exchange
Registered-Pacific
Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 twelve (12) months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 28, 1995, was $1,416,793,672.
Voting stock held by any persons who may be deemed to be affiliates under Rule
405 would be immaterial.
The number of shares outstanding of the issuer's common stock as of March 28,
1995:
Common Stock, Par Value $2.50; 101,199,548 Shares outstanding.
Documents Incorporated by Reference:
Portions of the 1994 Annual Report to Shareholders are incorporated by
reference into Parts I and II.
Portions of the definitive proxy statement for the annual meeting
scheduled for May 17, 1995, are incorporated by reference into
Part III.
Exhibit Index is on page 18.
USF&G Corporation
Index
Part I
Item 1. Description of Business
1.1. General 1
1.2. Business Segments 1
1.3. Distribution Systems 6
1.4. Competition 6
1.5. Investments 7
1.6. Property/Casualty Loss Reserves 7
1.7. Life Benefit Reserves 11
1.8. Geographical Distribution 11
1.9. Executive Officers of the Registrant 12
Item 2. Business Properties 13
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Part II
Item 5. Market for Registrant's Common Equity and
Related Shareholder Matters 14
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 14
Part III
Item 10.Executive Officers and Directors of the Registrant 15
Item 11.Executive Compensation 15
Item 12.Security Ownership of Certain Beneficial Owners
and Management 15
Item 13.Certain Relationships and Related Transactions 15
Part IV
Item 14.Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 16
USF&G Corporation
Part I
Item 1. Description of Business
1.1. GENERAL
USF&G Corporation (the "Corporation") is a holding corporation organized in 1981
as a Maryland corporation. United States Fidelity and Guaranty Company ("USF&G
Company"), organized in 1896 under Maryland law, is the predecessor registrant
of the Corporation. The term "Corporation" as used in the Form 10-K refers to
the Corporation and all of its subsidiaries. As of December 31, 1994, the
Corporation had approximately 6,300 employees.
The Corporation, through its subsidiaries, is primarily engaged in the business
of insurance. Property/casualty insurance is its primary business. USF&G
Company, the Corporation's largest subsidiary, is the 24th largest
property/casualty insurer among over 2,400 insurers in the United States based
on 1993 statutory net premiums written. Life insurance and annuity products are
sold by Fidelity and Guaranty Life Insurance Company ("F&G Life"). Noninsurance
operations are composed of the parent company, asset management, and management
consulting services.
1.2. BUSINESS SEGMENTS
Financial information about the Corporation's business segments is set forth in
Note 14 of the Notes to Consolidated Financial Statements in the Corporation's
1994 Annual Report to Shareholders (hereinafter referred to as "Consolidated
Financial Statements") and incorporated herein by reference. A description of
the Corporation's principal business segments begins with the Property/Casualty
Insurance Segment on page 1, and continues with the Life Insurance Segment on
page 4, and Parent and Noninsurance Operations on page 5 of this Form 10-K.
1.2a. Property/Casualty Insurance Segment
USF&G Company currently underwrites most forms of property/casualty insurance.
USF&G Company's property/casualty business is grouped into four business
categories: commercial, personal, reinsurance, and fidelity/surety. In 1994,
the property/casualty segment accounted for 84 percent of the Corporation's
total revenues and 67 percent of its total assets. Selected financial data for
the property/casualty insurance segment are as follows:
(dollars in millions)
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
Operating Results:
Premiums earned
$2,283 $2,327 $2,533 $3,018 $3,330 $3,532 $3,613 $3,746 $3,539 $2,962
Losses and loss expenses
1,691 1,758 2,088 2,545 2,763 2,732 2,648 2,734 2,765 2,623
Underwriting expenses
792 796 872 988 1,089 1,136 1,129 1,108 1,049 920
Underwriting loss
$(200) $(227) $(427) $(515) $(522) $(336) $(164) $(96) $(275) $(581)
Net investment income
$423 $433 $475 $498 $576 $623 $621 $607 $565 $348
Net income (loss)
493 281 193 (40) (192) 200 318 331 310 (116)
Financial Position:
Investments
$6,300 $6,916 $6,948 $7,599 $6,983 $7,479 $7,416 $6,649 $6,026 $4,997
Assets
9,281 9,565 8,253 9,353 8,959 9,443 9,294 8,483 7,772 6,775
Unpaid losses and loss expenses*
6,100 6,329 5,540 5,704 5,630 5,461 5,256 4,774 4,112 3,521
Operating Ratios-GAAP:
Loss ratio
74.0 75.6 82.4 84.3 83.0 77.3 73.3 73.0 78.1 88.6
Expense ratio
34.7 34.2 34.4 32.7 32.7 32.2 31.2 29.6 29.6 31.0
Combined ratio
108.7 109.8 116.8 117.0 115.7 109.5 104.5 102.6 107.7 119.6
Statutory Data:
Premiums written
$2,312 $2,429 $2,420 $3,032 $3,631 $3,698 $3,892 $3,845 $3,696 $3,151
Policyholders' surplus (USF&G Company)
1,566 1,541 1,467 1,404 1,352 1,417 1,395 1,242 1,240 913
Operating Ratios-Statutory:
Loss ratio
73.1 75.4 82.0 84.1 81.9 76.5 73.1 73.2 79.1 90.7
Expense ratio
35.0 33.7 34.9 33.1 32.9 32.8 31.1 30.1 29.1 30.0
Combined ratio
108.1 109.1 116.9 117.2 114.8 109.3 104.2 103.3 108.2 120.7
Policyholders' dividend ratio
.3 .3 .3 .5 .5 .6 .6 .9 .8 1.0
*USF&G adopted SFAS No. 133 in 1993 which requires the effects of reinsurance
activity to be reported on a gross basis. Prior to 1993 information presented
for property/casualty insurance segment is net of applicable reinsurance
amounts.
USF&G Company reinsures portions of its policy risks with other insurance
companies or underwriters and remains contingently liable under these contracts
(ceded reinsurance). In addition, it assumes policy risks from other insurance
companies and through participation in pools and associations (assumed
reinsurance). (Refer to the Assumed Reinsurance Category discussion on page 3 of
this Form 10-K.)
Ceded reinsurance allows USF&G Company to obtain indemnification against losses
associated with insurance contracts it has written by entering into a
reinsurance contract with another insurance enterprise (the reinsurer). USF&G
Company pays (cedes) an amount to the reinsurer who agrees to reimburse USF&G
Company for a specified portion of any claims paid on business under the
reinsured contracts. Reinsurance gives USF&G Company the ability to write
certain individually large risks or groups of risks, and control its exposure to
losses by ceding a portion of such large risks. USF&G Company's ceding
reinsurance agreements are generally structured on a treaty basis whereby all
risks meeting a certain criteria are automatically reinsured.
USF&G Company may also use supplemental facultative reinsurance based on an
underwriter's evaluation of characteristics of a specific insured risk. The
following table summarizes the approximate extent of the Company's reinsurance
coverages.
Coverage
Risk Type Percentage Retention Coverage
Property Cat Program (a) 95% $75 million $140 million
Property Per Risk (b) 100 Variable 50 million
Fidelity 100 2 million 13 million
Surety (c) 100 5 million 30 million
Workers' Compensation (d) 100 1 million 525 million
Commercial Umbrella 100 15 million 5 million
(a) Second Event Coverage purchased lowers retention to $50 million for second
catastrophe.
(b) Retention of individual property losses are $1 million, but can be increased
to $4 million subject to underwriting criteria.
(c) Represents limits at December 31, 1994. Fourth layer canceled for 1995,
reducing limit to $25 million.
(d) Represents limits at December 31, 1994. Accident and Health Workers'
Compensation Catastrophe Coverage canceled for 1995, reducing limit to $425
million.
Commercial Category: Commercial coverages provide protection related to property
loss, liability claims and workers' compensation benefits to businesses and
other institutions. This type of insurance protects against loss from damage to
the insured's covered properties and protects against legal liability for
injuries to other persons or damage to their property arising from the insured's
business operations. Workers' compensation provides benefits to employees, as
mandated by state laws, for employment-related accidents, injuries or illnesses.
Selected data for the commercial category are as follows:
(dollars in millions) 1994 1993 1992
Automobile:
Premiums written $376 $391 $413
Statutory combined ratio 86.6 86.9 96.5
General Liability:
Premiums written $352 $365 $366
Statutory combined ratio 133.3 118.9 137.6
Property:
Premiums written $329 $326 $315
Statutory combined ratio 111.8 100.0 115.6
Workers' Compensation:
Premiums written $142 $165 $261
Statutory combined ratio 151.6 232.2 150.0
Total Commercial:
Premiums written $1,199 $1,247 $1,355
Underwriting loss* (186) (223) (343)
Percent of total premiums written 52% 51% 56%
GAAP Underwriting Ratios:
Loss ratio 78.1 83.0 87.8
Expense ratio 37.5 35.3 35.4
Combined ratio 115.6 118.3 123.2
Statutory Underwriting Ratios:
Loss ratio 78.1 83.0 86.9
Expense ratio 36.2 34.4 36.3
Combined ratio 114.3 117.4 123.2
*Reported in accordance with Generally Accepted Accounting Principles ("GAAP")
Personal Category: Personal coverages for automobile and homeowners insurance
include aspects of property loss and liability risks. Automobile policies cover
liability to third-parties for bodily injury and property damage, and cover
physical damage to the insured's own vehicle resulting from collision and
various other perils. Homeowners policies protect against loss of dwellings and
contents arising from a variety of perils, as well as liability arising from
ownership or occupancy. Selected data for the personal category are as follows:
(dollars in millions) 1994 1993 1992
Automobile:
Premiums written $402 $493 $512
Statutory combined ratio 99.6 99.9 103.5
Homeowners:
Premiums written $124 $139 $169
Statutory combined ratio 150.2 115.4 143.0
Other Property:
Premiums written $38 $26 $45
Statutory combined ratio 105.2 131.4 110.0
Total Personal:
Premiums written $564 $658 $726
Underwriting loss* (60) (28) (110)
Percent of total premiums written 24% 27% 30%
GAAP Underwriting Ratios:
Loss ratio 74.2 70.6 80.9
Expense ratio 36.3 33.5 33.1
Combined ratio 110.5 104.1 114.0
Statutory Underwriting Ratios:
Loss ratio 74.2 70.7 80.0
Expense ratio 36.8 33.7 33.2
Combined ratio 111.0 104.4 113.2
*Reported in accordance with GAAP
Assumed Reinsurance Category: USF&G Company operates a separate reinsurance
division which underwrites treaty reinsurance and is composed of various wholly-
owned subsidiaries. The lead company in this group, F&G Re, Inc., acts as the
reinsurance underwriting manager and solicits and services assumed reinsurance
for USF&G Company. F&G Re, Inc., writes reinsurance in North America and in
specific foreign countries (mainly in Western Europe and Japan). Reinsurance
prices and conditions are not normally subject to the same state regulation
applicable to the primary insurance market because reinsurers contract solely
with other insurance companies. Selected data for the reinsurance category are
as follows:
(dollars in millions) 1994 1993 1992
Premiums written $415 $403 $243
Underwriting gain* 40 32 20
Percent of total premiums written 18% 17% 10%
GAAP Underwriting Ratios:
Loss ratio 73.2 66.7 75.0
Expense ratio 16.5 22.6 12.1
Combined ratio 89.7 89.3 87.1
Statutory Underwriting Ratios:
Loss ratio 67.9 67.3 76.9
Expense ratio 22.7 24.6 17.0
Combined ratio 90.6 91.9 93.9
*Reported in accordance with GAAP
Fidelity/Surety Category: Fidelity bonds indemnify employers against the
dishonesty or default of employees in their employment. These types of bonds are
written for mercantile businesses, financial institutions, and public officials.
Surety bonds guarantee the performance of a principal who undertakes contractual
or statutory obligations, and indemnify third-party obligees for damages caused
by the principal's failure to perform. Selected data for the fidelity/surety
category are as follows:
(dollars in millions) 1994 1993 1992
Fidelity:
Premiums written $21 $19 $18
Statutory combined ratio 74.5 108.8 75.8
Surety:
Premiums written $113 $102 $91
Statutory combined ratio 93.8 105.8 100.1
Total Fidelity/Surety:
Premiums written $134 $121 $109
Underwriting gain (loss)* 6 (8) 6
Percent of total premiums written 6% 5% 4%
GAAP Underwriting Ratios:
Loss ratio 36.7 50.2 32.3
Expense ratio 57.9 56.6 62.6
Combined ratio 94.6 106.8 94.9
Statutory Underwriting Ratios:
Loss ratio 36.7 50.2 32.0
Expense ratio 54.2 56.0 64.0
Combined ratio 90.9 106.2 96.0
*Reported in accordance with GAAP
1.2b. Life Insurance Segment
The life insurance segment ("F&G Life") sells many forms of annuity and life
insurance products. In 1994, F&G Life segment accounted for 15 percent of the
Corporation's total revenues and 33 percent of its total assets. Selected
financial data for the life insurance segment are as follows:
(dollars in millions)
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
Operating Results:
Premium income
$152 $129 $104 $169 $186 $165 $178 $133 $79 $67
Net investment income
317 321 349 370 348 273 159 88 67 50
Net income (loss)
12 10 (5) 31 (16) 31 14 37 20 27
Life Insurance Sales:
Annuities
$274 $199 $144 $266 $1,032 $934 $962 $221 $67 $104
Permanent
9 4 9 12 17 20 106 51 10 9
Term and group
3 2 2 2 5 6 9 6 6 6
Total
$286 $205 $155 $280 $1,054 $960 $1,077 $278 $83 $119
Financial Position:
Investments
$4,202 $4,540 $4,512 $4,672 $4,308 $3,372 $2,240 $1,086 $707 $535
Assets
4,575 4,848 4,856 5,012 4,721 3,645 2,471 1,194 784 607
Policy benefit reserves
3,804 3,973 3,896 3,773 3,924 2,838 1,875 795 501 402
Statutory surplus
326 316 310 283 254 245 169 107 82 56
Life Insurance in Force:
Permanent
$6,348 $6,733 $6,769 $6,937 $7,014 $6,038 $4,930 $3,979 $3,035 $2,228
Term
5,467 5,347 5,549 5,854 6,463 6,438 6,603 6,579 6,648 6,338
Group
27 30 42 586 4,373 4,605 4,058 2,834 2,687 2,737
Total
$11,842 $12,110 $12,360 $13,377 $17,850 $17,081 $15,591 $13,392 $12,370 $11,303
F&G Life Products: Life insurance and annuity sales (premiums and deposits) by
product type are as follows:
(in millions) 1994 1993 1992
Structured settlement annuities $88 $66 $37
Single premium deferred annuities 82 44 33
Tax-sheltered annuities 63 35 -
Other annuities 41 54 74
Life insurance 12 6 11
Total $286 $205 $155
Single premium deferred annuities ("SPDAs") offer the owner the option of
receiving a lump sum distribution at a future date or a series of fixed payments
over a specified period. Tax-sheltered annuity ("TSA") products, which provide
retirement income, are a type of deferred annuity. Other annuities consist of
single premium immediate annuities ("SPIAs"), which provide for payments that
begin within one year after the sale and continue over a fixed period or an
individual's lifetime. Structured settlements are immediate annuities
principally sold through the property/casualty company in settlement of
insurance claims.
Other insurance products include recurring and single premium universal life and
term insurance that generally provide a fixed benefit upon the death of the
insured. These products were sold on an individual and group basis. However,
F&G Life sold its group life business in 1991. Universal life insurance
provides a death benefit for the life of the insured and accumulates cash values
to which interest is credited. Term life insurance provides a fixed death
benefit if the insured dies during the contractual period.
Universal life products, which represent all the permanent life insurance sales
in 1992 through 1994, and have been the majority of permanent life insurance
sales since 1988, also include a cash value component that is credited with
interest at competitive rates. The interest rates are applied to premiums for
one year from receipt; new rates are declared quarterly on recurring premium
policies and semi-monthly on single premium policies. Universal life cash
values are charged for the cost of life insurance coverage and for
administrative expenses. Additional information on the F&G Life's products is
discussed on page 21 of Management's Discussion and Analysis of Financial
Condition and Results of Operations.
1.2c. Parent and Noninsurance Operations
Selected financial data for the parent company and noninsurance operations are
as follows:
(in millions) 1994 1993 1992
Revenues before realized gains:
Management consulting $32 $32 $30
Oil and gas - - 19
Other noninsurance investments 24 10 4
Parent 20 8 14
Total revenues before realized gains$76 $50 $67
Parent company expenses:
Interest expense $(34) $(37) $(35)
Unallocated expense, net (48) (35) (34)
Noninsurance gains (losses):
Management consulting 1 (2) (4)
Oil and gas - - (18)
Other noninsurance investments 2 (9) (13)
Facilities exit costs (211) - -
Realized gains (losses) on investments 14 (45) (50)
Restructuring charges - - (2)
Loss from discontinued operations - - (7)
Other 3 2 3
Total parent/noninsurance net loss$(273) $(126) $(160)
The parent company performs corporate functions including managing the capital
requirements of the Corporation and its subsidiaries. The noninsurance
operations include management consulting services, asset management services,
and discontinued operations. As a result of restructuring, there were no oil and
gas operating losses in 1994 and 1993. During 1992, the investment in oil and
gas properties was merged with another oil and gas exploration and production
company. Discontinued operations included certain investment management,
leasing, marketing, and travel services, and other noninsurance operations.
During 1994, the Corporation committed to a plan to consolidate its home office
operations in Baltimore, Maryland at its Mount Washington facility. The parent
company recognized facilities exit costs of $211 million representing the
present value of the rent and other operating expenses to be incurred under the
lease on the Corporation's principal office building from the time USF&G
vacates the building through the expiration of the lease in 2009. (Refer to
Note 6 of the Notes to Consolidated Financial Statements in the Corporation's
1994 Annual Report to Shareholders.)
1.3. DISTRIBUTION SYSTEMS
The Corporation's subsidiaries market a full range of property/casualty
insurance and life insurance products.
Property/Casualty Insurance: USF&G Company's products have been sold
exclusively by independent agents since its founding in 1896. Independent
agents generally represent multiple insurance companies. USF&G Company's
products are sold through approximately 3,800 independent agencies in the United
States on a commission basis.
As of December 31, 1994, USF&G Company maintained 5 regional offices and 30
branch offices to service its independent agents and policyholders. The regional
offices are located in the Northeast, Southeast, Midwest, and Western areas, and
in Mississippi. The branch offices are located throughout the United States.
These offices support the administration of underwriting standards, the delivery
of policies, and the supervision of the Company's claim offices. In the first
quarter of 1995, the Company eliminated the Midwest regional office and
consolidated its business into the other regional offices. This measure was
taken to save expenses as well as increase efficiency of operations.
Life Insurance: F&G Life's sales by distribution system are as follows:
(in millions) 1994 1993 1992
Direct-structured settlements $88 $66 $37
Property/casualty brokerage 48 49 67
National brokerage 46 14 -
National wholesaler 71 39 -
Other 33 37 51
Total $286 $205 $155
Structured settlements are annuities sold predominantly through the
property/casualty company in settlement of certain of its insurance claims.
Tax-sheltered annuities are sold through a national wholesale distribution
network primarily to teachers. SPDAs are sold primarily through independent
agents and insurance brokers. Prior to 1992, most SPDAs were sold through
securities brokerage firms (New York Stock Exchange member firms and other
financial institutions).
1.4. COMPETITION
Property/Casualty Insurance: The property/casualty insurance industry is highly
competitive with about 2,400 companies nationwide. These insurers are not only
stock companies, but also mutual companies and other underwriting organizations.
USF&G Company ranked 24th in the industry, based on 1993 statutory net premiums
written and 23rd based on 1993 statutory policyholders' surplus. USF&G Company
competes with other property/casualty insurance companies whose products are
distributed through national, regional and local independent agencies, direct
sales and brokers. Consumers may also use self-insurance, which includes captive
insurance subsidiaries.
Pricing is a primary means of competition in the property/casualty industry. The
industry is currently in a period of significant price competition, which
adversely affects USF&G Company's profitability. Availability and quality of
products, quality and speed of service (including claims service), financial
strength, distribution systems and technical expertise are also important
elements of competition. In personal and other lines offered by USF&G Company,
significant price competition is experienced from direct-writing companies that
do not use independent agents and generally have lower policy acquisition costs.
Life Insurance: The Corporation's life insurance subsidiaries operate in a
competitive environment, with approximately 1,300 companies in the industry
including stock and mutual companies. F&G Life ranked 86th in the United States
based on 1993 statutory assets and 97th based on 1993 statutory capital and
surplus.
In the life insurance industry, interest crediting rates, policy features,
financial stability and service quality are important competitive factors. F&G
Life's products compete not only with those offered by other life insurance
companies, but also with other income accumulation-oriented products offered by
other financial institutions. F&G Life has experienced considerable competitive
pressure in recent periods as a result of its relatively lower credit ratings.
Competitive pressures for agency business also have intensified in recent years
because of an increase in the variety of products available in the market and
efforts of competitors to expand their market shares.
Premium Rates: Most states have laws requiring that rate schedules and other
information be filed with a regulatory authority for substantially all property,
casualty, and surety lines. Some states permit insurers to use rates without
prior regulatory approval whereas other states prohibit implementation of new
rates without such approval. The authority may disapprove a filing if it finds
that the rates are inadequate, excessive, or unfairly discriminatory. Rates are
not necessarily uniform for all insurers. In states that require prior approval
of rates, regulators usually require the submission of historical data to
justify rate increases and, accordingly, there is often a time lag between
identifying the need for rate increases and securing such increases. The effect
of this lag is particularly severe in times of rising claims and inflation.
Rates for life insurance are generally not regulated.
1.5. INVESTMENTS
Investing the net cash flows from operations is a major aspect of the
property/casualty and life insurance businesses. The components of the
Corporation's investment portfolio and investment performance are discussed on
pages 23 through 27, 43 through 45, 48 and 49 of the 1994 Annual Report to
Shareholders, which pages are incorporated herein by reference.
1.6. PROPERTY/CASUALTY LOSS RESERVES
1.6a. General
The reserve liabilities for property/casualty losses and loss expenses represent
estimates of the ultimate net cost of all unpaid losses and loss adjustment
expenses incurred through December 31 of each year. The reserves are determined
using adjusters' individual case estimates and actuarially based statistical
projections.
USF&G Company's estimates of losses for reported claims are established
judgmentally on an individual case basis. Such estimates are based on a claim
adjuster's particular expertise with the type of risk involved and knowledge of
circumstances surrounding the individual claims. These estimates are reviewed on
a regular basis and updated as additional facts become known.
The reserves derived from statistical projections are subject to the effects of
trends in claim severity and frequency. Statistical projections are employed in
three specific areas: 1) to calculate bulk reserves for incurred but not
reported ("IBNR") losses and provide for development of case basis loss
reserves; 2) to calculate allocated loss expense reserves; and 3) to calculate
unallocated loss expense reserves.
IBNR and Case Development Reserves: USF&G Company's estimates of IBNR and case
development reserves are derived from analyses of historical patterns of
development of paid and reported losses by accident year for each line of
business. The loss projection procedures used in this analysis contain explicit
provisions for quantifying the effect of inflation on loss payments expected to
be made in the future. This process relies on the basic assumption that past
experience adjusted for the effect of current developments and likely trends is
an appropriate basis for predicting future events.
Loss Expense: USF&G Company's estimates of unpaid loss expenses are based on
analyses of the long-term relationship of projected ultimate loss expense to
projected ultimate losses for each line of business. By using incurred losses as
a base, inflation assumptions applicable to loss reserves apply equally to
allocated expense reserves.
Unallocated Loss Expense: Unallocated loss expense reserves are based on
historical relationships of paid unallocated expenses to paid losses. As with
allocated loss expenses, the inflation assumptions applicable to loss reserves
are presumed to apply equally to unallocated expense reserves.
The process of estimating the liability for unpaid losses and loss expenses is
inherently judgmental. The process is influenced by factors which are subject to
significant variation. Possible sources of variation include changing rates of
inflation (particularly medical cost inflation) as well as changes in other
economic conditions, the legal system and internal claims settlement practices,
among other variables. In many cases significant periods of time may lapse
between the occurrence of an insured event, the reporting of a claim to USF&G
Company and USF&G Company's final settlement of the claim. More than 46 percent
of USF&G Company's loss and loss expense reserves are provided for claims which
have been incurred but not reported and for future development on reported
claims. While USF&G Company reports a single amount as the estimate for unpaid
loss and loss expenses as of each valuation date, the reported reserves should
be considered the best estimate from a range of possible outcomes. It is
unlikely that future losses and loss expenses will develop exactly as projected
and may in fact vary significantly from projections. These estimates are
continually reviewed and updated as experience develops and new information
becomes known. Any resulting adjustments are reflected in current operating
results.
1.6b. Discounted Loss Reserves
The reserves for permanent-total disability benefits and long-term medical care
benefits under workers' compensation insurance are discounted at rates of
interest generally ranging from 3 percent to 5 percent. The carrying amount of
such workers' compensation reserves, net of reinsurance and net of discount, was
$1.60 billion, $1.75 billion, and $1.80 billion at December 31, 1994, 1993, and
1992, respectively. The discount is amortized over the expected lifetimes of the
claimants. Discounted reserves come from three sources: reserves assumed from
the Workers' Compensation Reinsurance Bureau (WCRB), reserves assumed from
residual market pools, and reserves for USF&G Company's net retained business.
(in millions) 1994 1993 1992
Estimated discount, January 1 $508 $680 $683
Estimated (reduction) additional discount accrued (32) (138) 29
Estimated discount amortized (35) (34) (32)
Estimated discount, December 31 $441 $508 $680
The source of the negative discount accrual of $32 million in 1994 results from
an acceleration in the underlying payment pattern of workers' compensation
claims. An increase in the use of structured settlements to resolve claims is
the primary factor affecting the change in the payment stream. The source of
the negative discount accrual of $34 million in 1993 results from the WCRB
commutation and the concurrent reduction in discount rates. Additionally, the
discount was reduced by a redistribution of reserves to states and
re-apportionment on reserves assumed from residual market pools.
1.6c. Roll-Forward of Liability for Loss and Loss Expenses
The following table reconciles the changes in loss and loss expense reserves for
the years presented.
(in millions) 1994 1993 1992
Net balance at January 1 $5,276 $5,540 $ 5,704
Related To:
Current year 1,696 1,696 2,010
Prior years (5) 62 78
Total incurred 1,691 1,758 2,088
Paid Related To:
Current year 613 562 684
Prior years 1,270 1,460 1,568
Total paid 1,883 2,022 2,252
Net balance at December 31 $5,084 $5,276 $5,540
Plus reinsurance recoverables 1,016 1,053 N/A
Total reserve at end of year, gross$6,100 $6,329 $5,540
1.6d. Analysis of Loss and Loss Expense Reserve Development
The following table shows property/casualty loss reserves net of ceded
reinsurance as recorded in the indicated years, subsequent payments made with
respect to such reserves and re-estimates of such reserves. The top line shows
the estimated liability that was recorded at the end of each of the indicated
years for all current and prior year unpaid losses and loss expenses. The upper
portion of the table shows the cumulative amount subsequently paid in succeeding
years. The lower portion of the table shows re-estimates of the original
recorded reserve as of the end of each successive year. Such re-estimations
result from development of additional facts and circumstances pertaining to
unsettled claims. The bottom line shows the dollar amount of the cumulative
change through 1994 that is attributable to the original recorded reserve for
each prior year. Such change has been reflected in income of subsequent years.
A new table, added in 1994, provides data gross of ceded reinsurance for the
carried reserve at year ends 1993 and 1994 and the development of the year end
1993 reserve. This information immediately follows the Analysis of Net Loss and
Net Loss Expense Reserve Development Table. Additional years of development
will be added to the gross of ceded reinsurance table until it reaches the
dimensions of the original table.
Conditions and trends that have affected reserve development in the past have
changed and may not necessarily occur in the future. Therefore, care should be
exercised in extrapolating future reserve redundancies or deficiencies from such
development.
Analysis of Net Loss and Net Loss Expense Reserve Development*
At December 31
(in millions)
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
Liability for unpaid losses and loss expenses
2,817 3,510 4,089 4,741 5,204 5,461 5,630 5,704 5,540 5,276 5,084
Cumulative paid as of:
One year later
1,027 1,251 1,347 1,373 1,537 1,719 1,650 1,568 1,460 1,270
Two years later
1,659 2,040 2,163 2,256 2,611 2,789 2,740 2,524 2,379
Three years later
2,131 2,557 2,777 3,030 3,347 3,587 3,411 3,214
Four years later
2,451 2,971 3,313 3,548 3,935 4,049 3,922
Five years later
2,708 3,362 3,639 3,990 4,261 4,429
Six years later
2,947 3,595 3,863 4,237 4,538
Seven years later
3,112 3,759 4,055 4,454
Eight years later
3,243 3,918 4,233
Nine years later
3,368 4,068
Ten years later
3,497
Liability reestimated:
One year later
3,131 3,696 4,208 4,881 5,233 5,673 5,759 5,782 5,602 5,271
Two years later
3,249 3,914 4,443 4,941 5,481 5,794 5,899 5,911 5,623
Three years later
3,384 4,168 4,585 5,107 5,562 5,954 6,143 5,963
Four years later
3,563 4,341 4,721 5,285 5,757 6,239 6,209
Five years later
3,696 4,457 4,916 5,440 6,025 6,325
Six years later
3,778 4,631 5,048 5,698 6,121
Seven years later
3,932 4,743 5,278 5,786
Eight years later
4,039 4,954 5,364
Nine years later
4,220 5,032
Ten years later
4,288
Cumulative (deficiency) excess
(1,471)(1,522)(1,275)(1,045) (917) (864) (579) (259) (83) 5
<TABLE>
<CAPTION>
Analysis of Gross Loss and Gross Loss Expense Reserve Development*
(in millions) 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net reserve 5,276 5,084
Reinsurance recoverables 1,053 1,016
Gross reserve 6,329 6,100
Net reestimated reserve 5,271
Reestimated reinsurance recoverables 1,043
Gross reestimated reserve 6,314
Gross cumulative excess 15
</TABLE>
*Certain reserves are recorded on a discounted basis to reflect the value of
timing differences between the recording of reserves and subsequent payment.
The amortization of that discount is included in the reserve deficiencies shown
above.
The net development table shows a $5 million decrease in the current year on
prior year incurred loss and loss expenses net of ceded reinsurance. Although
the overall development is flat, there are a number of offsetting occurrences.
Adverse development resulted from discount amortization in workers' compensation
and reserve strengthening in general liability for environmental and asbestos
liabilities. The adverse development was offset by favorable development in
both personal and commercial auto liability.
A decrease of $15 million in the current year on prior year incurred loss and
loss expenses gross of ceded reinsurance is shown on the gross development
table. The gross development table shows more favorable development than the
net development table due to favorable development on losses ceded to
reinsurers.
Effect of Reserve Reestimations on Calendar Year Operations
(increase) decrease in reserves
Total by
(in millions) Accident
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Year
Accident Years
1984 & Prior(314) (118) (135) (179) (133) (82) (154) (107) (181) (68)(1,471)
1985 - (68) (83) (75) (40) (34) (21) (5) (30) (10) (366)
1986 - - 99 19 31 (20) (20) (20) (19) (8) 62
1987 - - - 95 82 (30) 17 (23) (28) (2) 111
1988 - - - - 31 (82) 97 (40) (10) (8) (12)
1989 - - - - - 36 (40) 35 (17) 10 24
1990 - - - - - - (7) 21 41 20 75
1991 - - - - - - - 61 115 14 190
1992 - - - - - - - - 67 31 98
1993 - - - - - - - - - 26 26
Total by calendar year
(314) (186) (119) (140) (29) (212) (128) (78) (62) 5 (1,263)
In the table above all entries are shown net of ceded reinsurance. Each column
total shows reserve reestimates made in the indicated calendar year for each
accident year. Adverse development on accident years prior to 1986 is primarily
attributable to workers' compensation discount amortization and environmental
and asbestos reserve strengthening is concentrated in the older accident years.
Ongoing review of automobile liability reserves indicates more favorable
projections of ultimate incurred loss than previously recognized on accident
years 1991 and subsequent.
1.6e. Loss Portfolio Transfers
Also included in the table "Analysis of Net Loss and Net Loss Expense
Reserve Development" are various loss portfolio transfer transactions. These
transactions are reinsurance contracts that do not involve the same type of risk
as traditional reinsurance. In a loss portfolio reinsurance contract, USF&G
Company assumes another insurer's outstanding loss reserves for a price equal to
their discounted value plus a fee. These contracts generally provide for fixed
loss payments at specified future dates. The financial risk involved is whether
the investment income earned on the cash received will cover the discount
associated with the losses assumed. This financial risk is controlled by the
Corporation's asset/liability management techniques, which involve matching the
maturities of the investment portfolio to expected patterns of future claim and
benefit payments.
Loss portfolio transfers have had no impact on reported reserve deficiencies and
no future loss development, either adverse or favorable, is anticipated. Loss
portfolio transfers included in outstanding reserves were as follows:
(in millions)
1994 $86
1993 110
1992 123
1991 279
1990 324
1989 397
1988 394
1987 355
1.6f. Structured Settlements
Structured settlements represent the settlement of claims through the purchase
of annuities. While they result in accelerated claim payments, structured
settlements generally reduce the ultimate amount of losses paid. Structured
settlements are used primarily in the third-party liability and workers'
compensation lines of business. These types of settlements were not used
extensively on liability lines until 1985. Their use was extended to workers'
compensation claims in 1987. The number of such settlements has grown steadily
and they appear to be having an impact on claim payment patterns. USF&G Company
has developed procedures to ensure that the impact of structured settlements is
given appropriate recognition in estimating ultimate reserve liabilities.
1.6g. Reconciliation of Liability for Loss and Loss Expenses from SAP to GAAP
The following table presents the differences between property/casualty insurance
claim reserves reported in the Consolidated Financial Statements in accordance
with generally accepted accounting principles ("GAAP"), and the consolidated
annual statement filed with state insurance departments in accordance with
statutory accounting practices ("SAP"):
At December 31
(in millions) 1994 1993 1992
SAP basis property/casualty reserves $4,817 $4,961 $5,361
Reserves of foreign subsidiaries (consolidated
for GAAP but not SAP) 267 315 240
Estimated salvage and subrogation recoveries
(primarily on property and surety lines, cash
basis for SAP but accrual basis for GAAP until
1993), plus other material items - - (61)
GAAP basis property/casualty reserves, net 5,084 5,276 5,540
Reinsurance receivable 1,016 1,053 N/A
GAAP basis property/casualty reserves, gross 6,100 6,329 5,540
Reserves of life insurance subsidiaries, net 3,798 3,969 3,896
Reinsurance receivable 6 4 N/A
Reserves of life insurance subsidiaries, gross 3,804 3,973 3,896
Total liability on GAAP basis $9,904 $10,302 $9,436
1.7. LIFE BENEFIT RESERVES
Ordinary life insurance future policy benefit reserves are computed under the
net level premium method using assumptions for future investment yields,
mortality, and withdrawal rates. These assumptions reflect F&G Life's
experience, modified to reflect anticipated trends, and provide for possible
adverse deviation. Reserve interest rate assumptions are graded and range from
4.25 percent to 8.25 percent.
Universal life and annuity reserves are computed on the retrospective deposit
method, which produces reserves equal to the cash value of the contracts. Such
reserves are not reduced for charges that would be deducted from the cash value
of policies surrendered. Reserves on single premium annuities with guaranteed
payments are computed on the prospective deposit method, which produces reserves
equal to the present value of future benefit payments.
The table below shows F&G Life's benefit reserves by policy type.
At December 31
(in millions) 1994 1993 1992
Single premium annuities:
Deferred $1,860 $2,138 $2,077
Immediate 867 815 788
Other annuities 492 462 508
Universal life/term/group life 579 554 523
Total, net $3,798 $3,969 $3,896
Reinsurance receivable 6 4 N/A
Total, gross $3,804 $3,973 $3,896
1.8. GEOGRAPHICAL DISTRIBUTION
The risks insured by the Corporation's insurance subsidiaries are geographically
diversified primarily throughout the United States. The Corporation has
established a subsidiary to market fidelity/surety insurance in Canada.
Reinsurance risks are incurred throughout North America and specific foreign
countries (mainly in Western Europe and Japan). The products marketed by the
Corporation's management consulting subsidiary, a part of noninsurance
operations, are distributed throughout the world. Total assets and revenues of
foreign operations are not material. The tables below show the composition of
statutory voluntary direct premiums written for the Corporation's
property/casualty operations and statutory premium income of its life insurance
operations by region for the year ended 1994.
Property/Casualty
Voluntary Direct Premiums Written
Northeast 29%
Southeast 24
Midwest 21
West 18
Mississippi 8
Total 100%
Life Statutory
Premium Income
Northeast 41%
Northwest 21
South 14
Southwest 13
Midwest 11
Total 100%
1.9. EXECUTIVE OFFICERS OF THE REGISTRANT
Positions and Office with Registrant or
Name Age Significant Subsidiaries
Norman P. Blake, Jr. 53 Chairman of the Board, President, Chief
Executive Officer, and Director
Glenn W. Anderson 42 Executive Vice President-Commercial Lines
Gary C. Dunton 39 Executive Vice President-Field Operations
Dan L. Hale 50 Executive Vice President-Chief Financial
Officer
Kenneth E. Cihiy 48 Senior Vice President-Claim
Paul B. Ingrey 55 President-F&G Re, Inc.
Robert J. Lamendola 50 Senior Vice President-Fidelity/Surety
James R. Lewis 46 Senior Vice President-Personal Lines
Thomas K. Lewis, Jr. 42 Senior Vice President-Chief Information
Officer
John A. MacColl 46 Senior Vice President-General Counsel and
Senior Vice President-Human Resources
Andrew A. Stern 37 Senior Vice President-Strategic Planning,
Corporate Marketing
Harry N. Stout 42 President-F&G Life
John C. Sweeney 50 Chairman-Falcon Asset Management, Inc. and
Senior Vice President-Chief Investment
Officer
All persons in the preceding table are officers of the Registrant except Glenn
W. Anderson, Gary C. Dunton, Kenneth E. Cihiy, Robert J. Lamendola and James R.
Lewis, who are executive officers of United States Fidelity and Guaranty Company
(a wholly owned subsidiary of the Registrant); Paul B. Ingrey who is an
executive officer of F&G Re, Inc.; and Harry N. Stout who is an executive
officer of Fidelity and Guaranty Life Insurance Company.
Mr. Blake was Chairman and Chief Executive Officer of Heller International
Corporation, a world-wide commercial financial services organization, and joined
the Corporation in November 1990. Mr. Anderson was Vice President of Strategic
Target Marketing with Fireman's Fund Insurance Company, a domestic insurance
company, and joined the Corporation in December 1992. Mr. Dunton was Vice
President and Division Manager of Standard Lines with Aetna Life and Casualty
Company and joined the Corporation in December 1992. Mr. Hale was President and
Chief Executive Officer of Chase Manhattan Leasing Company, an international
leasing company, and joined the Corporation in February 1991. Mr. Cihiy was
Resident Vice President of Sacramento Field Operations with Aetna Life and
Casualty Company, an insurance and financial services company, and joined the
Corporation in May 1993. Mr. Ingrey was Resident Vice President and Director of
Prudential Reinsurance Company and joined the Corporation in October 1983.
Mr. Lamendola was Managing Director of Marsh & McLennan, Inc. and joined the
Corporation in June 1992. Mr. James R. Lewis was Senior Vice President and
General Manager of CIGNA and joined the Corporation in October 1992. Mr. Thomas
K. Lewis, Jr. was Vice President and General Manager for Europe, Middle East,
and Africa for Seer Technologies, a joint venture of CS First Boston and IBM,
and joined the Corporation in November 1993. Mr. MacColl was previously a
partner in the Baltimore office of the law firm of Piper and Marbury, and joined
the Corporation in January 1989. Mr. Stern was Partner and Vice President of
Booz Allen & Hamilton, a national business consulting firm, and joined the
Corporation in May 1993. Mr. Stout was Senior Vice President of United Pacific
Life Insurance Company and joined the Corporation in May 1993. Mr. Sweeney was
a Principal and Practice Director with Tillinghast/Towers Perrin, an asset
management and consulting company, and joined the Corporation in November 1992.
Item 2. Business Properties
Real estate owned and used in the regular conduct of business consists of 12
business properties located in various cities throughout the United States. The
Corporation's Mount Washington Center, located in Baltimore, Maryland, is the
principal owned property. This is the headquarters for the life insurance
operations, and the location of the information systems, and training and
development complexes.
In addition, the Corporation leases approximately 120 offices in various cities
in the regular course of business. See Note 6 of Notes to the Consolidated
Financial Statements. The principal leased property is a 40-story home office
building in Baltimore, Maryland, sold in 1984 and leased back by the
Corporation. During 1994, the Corporation committed to a plan to consolidate
its home office operations in Baltimore, Maryland at its Mount Washington
facility. The facilities exit costs of $183 million represent the present value
of the rent and other operating expenses to be incurred under the lease on the
Corporation's principal office building from the time USF&G vacates the building
through the expiration of the lease in 2009. (Refer to Note 6 of the Notes to
Consolidated Financial Statements in the Corporation's 1994 Annual Report to
Shareholders.)
Item 3. Legal Proceedings
The Corporation's insurance subsidiaries are routinely engaged in litigation in
the normal course of their business, including defending claims for punitive
damages. As a liability insurer, they defend third-party claims brought against
their insureds. As an insurer, they defend themselves against coverage claims.
In the opinion of management, such litigation and the litigation described in
Section 8.1 and 8.2 of Management's Discussion and Analysis of Financial
Condition and Results of Operations and Note 13 of the Notes to Consolidated
Financial Statements of the 1994 Annual Report to Shareholders, which section
and note are herein incorporated by reference, is not expected to have a
material adverse effect on USF&G Corporation's consolidated financial position,
although it is possible that the results of operations in a particular quarter
or annual period would be materially affected by an unfavorable outcome.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of 1994.
USF&G Corporation
Part II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters
Market and dividend information for the Corporation's common stock on page 66 of
the Annual Report to Shareholders for 1994 is incorporated herein by reference.
Item 6. Selected Financial Data
Selected financial data of the Corporation on pages 34 and 35 of the Annual
Report to Shareholders for 1994 is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Management's Discussion and Analysis on pages 12 through 33 of the Annual
Report to Shareholders for 1994 is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Consolidated Financial Statements of the Corporation and notes to such
financial statements on pages 36 through 59 of the Annual Report to Shareholders
for 1994 are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
USF&G Corporation
Part III
Item 10. Directors and Executive Officers of the Registrant
Information regarding the Corporation's executive officers can be found on page
12 of this Form 10-K. Information regarding the Corporation's directors is
incorporated herein by reference to the Election of Directors section of the
Corporation's definitive proxy statement for its annual meeting of shareholders
to be held May 17, 1995.
Item 11. Executive Compensation
See the Compensation of Executive Officers and Directors section of the
Corporation's definitive proxy statement for its annual meeting of shareholders
to be held May 17, 1995, which section is incorporated herein by reference.
To the best of the Corporation's knowledge, there were no late filings under
Section 16(a) of the Securities Exchange Act of 1934.
Item 12. Security Ownership of Certain Beneficial Owners and Management
See the Stock Ownership of Certain Beneficial Owners, Directors and Management
section of the Corporation's definitive proxy statement for its annual meeting
of shareholders to be held May 17, 1995, which section is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
See the Other Information-Certain Business Relationships section of the
Corporation's definitive proxy statement for its annual meeting of shareholders
to be held May 17, 1995, which section is incorporated herein by reference.
USF&G Corporation
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Financial Statements
The following Consolidated Financial Statements of USF&G Corporation and its
subsidiaries, included in the annual report of the registrant to its
shareholders for the year ended December 31, 1994, are incorporated by reference
in Item 8:
Consolidated Statement of Operations
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Equity
Notes to Consolidated Financial Statements
Report of Independent Auditors
(2) Schedules
The following consolidated financial statement schedules of USF&G
Corporation and its subsidiaries are included in Item 14(d):
Page 22 Schedule I. Summary of Investments-Other than
Investments in Related Parties
23-25 Schedule II. Condensed Financial Information of
Registrant
26 Schedule III. Supplementary Insurance Information
27 Schedule IV. Reinsurance
28 Schedule VI. Supplemental Information Concerning Consolidated
Property/Casualty Insurance Operations
All other schedules specified by Article 7 of Regulation S-X are not required
pursuant to the related instructions or are inapplicable and, therefore, have
been omitted.
(3) Exhibits
The following exhibits are included in Item 14:
Page 29 Exhibit 11 Computation of Earnings Per Share
30 Exhibit 12 Computation of Ratio of Consolidated Earnings to Fixed
Charges and Preferred Stock Dividends
A copy of all other exhibits not included with this Form 10-K may be obtained
without charge upon written request to the Secretary at the address shown on
page 34 of this Form 10-K.
Exhibit 3A
Charter of USF&G Corporation. Incorporated by reference to Exhibit 3A to the
Registrant's Form 10-K for the year ended December 31, 1993, File No. 1-8233.
Exhibit 3B
Amended By-laws of USF&G Corporation.
Exhibit 4A
Rights agreement dated as of September 18, 1987, between USF&G Corporation and
First Chicago Trust Company of New York (successor to Morgan Shareholder's
Service Trust Company) including Form of Rights Certificate. Incorporated by
reference to Exhibits 1 and 2 to the Registrant's Form 8-A filed September 31,
1987, File No. 1-8233.
Exhibit 4B
Bond issuance and payment agreement dated November 16, 1987, for Swiss Franc
Public Issue of 5 1/2% Bonds 1988-1996 of Swiss Francs 120,000,000.
Incorporated by reference to Exhibit 4M to the Registrant's Form 10-K for the
year ended December 31, 1987, File No. 1-8233.
Exhibit 4C
Indenture dated January 28, 1994 between USF&G Corporation and Chemical Bank.
Incorporated by reference to Exhibit 4E to the Registrant's Form 10-K for the
year ended December 31, 1993, File No. 1-8233.
Exhibit 4D
Indenture dated January 28, 1994 between USF&G Corporation and Signet Bank.
Exhibit 4E
Form of Note dated March 3, 1994, for Zero Coupon Convertible Subordinated Notes
due 2009. Incorporated by reference to Exhibit 4 to the Registrant's Form 8-K
dated March 3, 1994, File No. 1-8233.
Exhibit 4F
Form of Note dated June 30, 1994, for 8 3/8% Senior Notes due 2001.
Incorporated by reference to Exhibit 4 to the Registrant's Form 8-K dated
June 30, 1994, File No. 1-8233.
Exhibit 4G
Credit Agreement dated as of September 30, 1994 among USF&G Corporation and
Morgan Guaranty Trust Company of New York as agent. Incorporated by reference to
Exhibit 10 to the Registrant's Form 10-Q for the quarter ended September 30,
1994, File No. 1-8233.
Exhibit 4H
Credit Agreement dated as of December 1, 1994, among USF&G Corporation and
Deutsche Bank AG, as agent.
Exhibit 4I
Letter of Credit Agreement dated as of October 25, 1994, among USF&G Corporation
and The Bank of New York, as agent.
Exhibit 10A
1994 Stock Plan For Employees of USF&G.
Exhibit 10B
Stock Option Plan of 1987. Incorporated by reference to Exhibit 4.1 to the
Registrant's Form S-8 dated July 28, 1987, File No. 33-16111.
Exhibit 10C
Employment Agreement dated November 20, 1990, between the Registrant and Norman
P. Blake, Jr. Incorporated by reference to Exhibit 10A to the Registrant's Form
10-K for the year ended December 31, 1990, File No. 1-8233.
Exhibit 10D
USF&G Supplemental Executive Retirement Agreement between the Registrant and
Norman P. Blake, Jr., dated November 20, 1990. Incorporated by reference to
Exhibit 10B to the Registrant's Form 10-K for the year ended December 31, 1990,
File No. 1-8233.
Exhibit 10E
Stock Option Plan of 1990. Incorporated by reference to Exhibit 4 to the
Registrant's Form S-8 Registration Statement as filed December 7, 1990, File No.
33-38113. Certified Copy of the Board Resolution adopted on December 6, 1990,
amending the Stock Option Plan of 1990. Incorporated by reference to Exhibit
10G to the Registrant's Form 10-K for the year ended December 31, 1990, File No.
1-8233.
Exhibit 10F
Description of Management Incentive Plan. Incorporated by reference to Exhibit
10J to the Registrant's Form 10-K for the year ended December 31, 1990, File
No. 1-8233.
Exhibit 10G
Description of Long-Term Cash Incentive Compensation Plan. Incorporated by
reference to Exhibit 10K to the Registrant's Form 10-K for the year ended
December 31, 1990, File No. 1-8233.
Exhibit 10H
Stock Incentive Plan of 1991. Incorporated by reference to Exhibit 4(a) to the
Registrant's Form S-8 Registration Statement as filed February 11, 1992, File
No. 33-45664.
Exhibit 10I
Form of Stock Option Agreement used in connection with the Stock Option Plan of
1987, Stock Option Plan of 1990, and Stock Incentive Plan of 1991. Incorporated
by reference to Exhibit 10I to the Registrant's Form 10-K for the year ended
December 31, 1993, File No. 1-8233.
Exhibit 10J
1993 Stock Plan for Non-Employee Directors. Incorporated by reference to Exhibit
10N to the Registrant's Form 10-K for the year ended December 31, 1992, File
No. 1-8233.
Exhibit 10K
Employment Agreement dated November 10, 1993, between the Registrant and Norman
P. Blake, Jr. Incorporated by reference to Exhibit 10K to the Registrant's Form
10-K for the year ended December 31, 1993, File No. 1-8233.
Exhibit 10L
Stock Option Agreement dated November 10, 1993, between the Registrant and
Norman P. Blake, Jr. Incorporated by reference to Exhibit 10L to the
Registrant's Form 10-K for the year ended December 31, 1993, File No. 1-8233.
Exhibit 10M
Stock Option Agreement dated November 10, 1993, between the Registrant and
Norman P. Blake, Jr. Incorporated by reference to Exhibit 10M to the
Registrant's Form 10-K for the year ended December 31, 1993, File No. 1-8233.
Exhibit 10N
Waiver dated November 10, 1993, between the Registrant and Norman P. Blake, Jr.
Incorporated by reference to Exhibit 10N to the Registrant's Form 10-K for the
year ended December 31, 1993, File No. 1-8233.
Exhibit 10O
First Amendment to USF&G Supplemental Executive Retirement Agreement between
the registrant and Norman P. Blake, Jr. dated November 10, 1993. Incorporated by
reference to Exhibit 10O to the Registrant's Form 10-K for the year ended
December 31, 1993, File No. 1-8233.
Exhibit 10P
Letter dated November 19, 1992, describing Employment Arrangement between the
Registrant and Gary C. Dunton. Incorporated by reference to Exhibit 10K to the
Registrant's Form 10-K for the year ended December 31, 1993, File No. 1-8233.
Exhibit 10Q
USF&G Supplemental Retirement Plan. Incorporated by reference to Exhibit 10-Q to
the Registrant's Form 10-K for the year ended December 31, 1994, File No.
1-8233.
Exhibit 10R
Amended and Restated Stock Incentive Plan of 1991.
Exhibit 10S
Long-Term Incentive Plan.
Exhibit 11
Computation of earnings per share.
Exhibit 12
Computation of ratio of consolidated earnings to fixed charges and preferred
stock dividends.
Exhibit 13
1994 Annual Report to Shareholders.
Exhibit 21
Subsidiaries of the registrant.
Exhibit 23
Consent of Independent auditors.
Exhibit 28
Information from reports furnished to state insurance regulatory authorities.
All other exhibits specified by Item 601 of Regulation S-K are not required
pursuant to the related instructions or are inapplicable and, therefore, have
been omitted.
(b) Reports on Form 8-K
The registrant filed a Form 8-K on October 28, 1994, reporting under Item 5,
Other Events, a press release announcing call of shares of Series C Cumulative
Convertible Preferred Stock. The registrant filed Form 8-K on December 21,
1994, reporting under Item 5, Other Events, press release announcing the signing
of a definitive agreement by which USF&G will acquire all of the outstanding
Victoria Financial Corporation ("Victoria") stock for approximately $55.3
million of USF&G common stock. The registrant filed a Form 8-K
on January 12, 1995, reporting under Item 5, Other Events, a press
release announcing the signing of a definitive agreement by which USF&G will
acquire all of the outstanding Discover Re equity for approximately $78.5
million of USF&G common stock and options. The registrant filed a Form 8-K on
January 20, 1995, reporting under Item 5, Other Events, a press release
announcing information as to fourth quarter earnings expectations in addition to
an announcement relating to plans to consolidate its Baltimore facilities. The
registrant filed a Form 8-K on January 25, 1995, reporting under Item 5, Other
Events, a press release announcing its call for redemption of all
outstanding shares of Series C Cumulative Convertible Preferred Stock.
USF&G Corporation
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
USF&G CORPORATION
NORMAN P. BLAKE, JR.
Norman P. Blake, Jr.
Chairman of the Board, President,
and Chief Executive Officer
Dated at Baltimore, Maryland
March 31, 1995
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 dates indicated.
Principal Executive Officer:
NORMAN P. BLAKE, JR.
Norman P. Blake, Jr.
Chairman of the Board, President,
Chief Executive Officer, and Director
Principal Financial and Accounting Officer:
DAN L. HALE
Dan L. Hale
Executive Vice President and
Chief Financial Officer
Dated at Baltimore, Maryland
March 31, 1995
Directors
H. FURLONG BALDWIN
H. Furlong Baldwin
MICHAEL J. BIRCK
Michael J. Birck
GEORGE L. BUNTING, JR.
George L. Bunting, Jr.
ROBERT E. DAVIS
Robert E. Davis
DALE F. FREY
Dale F. Frey
ROBERT E. GREGORY, JR.
Robert E. Gregory, Jr.
ROBERT J. HURST
Robert J. Hurst
WILBUR G. LEWELLEN
Wilbur G. Lewellen
HENRY A. ROSENBERG, JR.
Henry A. Rosenberg, Jr.
LARRY P. SCRIGGINS
Larry P. Scriggins
ANNE MARIE WHITTEMORE
Anne Marie Whittemore
Schedule I. Summary of Investments - Other Than Investments in Related Parties
At December 31, 1994
Amount at which
shown in the
Statement of
Market Financial
(in millions) Cost Value Position
Fixed Maturities
Bonds:
Held to maturity:
United States Government and government
agencies and authorities $1,291 $1,211 $1,291
States, municipalities, and
political subdivisions 98 93 98
Foreign governments 15 14 15
Public utilities 265 240 265
All other corporate bonds 2,981 2,717 2,981
Total fixed maturities held
to maturity 4,650 4,275 4,650
Available for sale:
United States Government agencies
and authorities 763 732 732
States, municipalities, and political
subdivisions 190 188 188
Foreign governments 108 92 92
Public utilities 143 136 136
All other corporate bonds 2,956 2,833 2,833
Total fixed maturities
available for sale 4,160 3,981 3,981
Total fixed maturities $8,810 $8,256 $ 8,631
Equity securities
Common stocks:
Banks, trust, and insurance
companies $ 2 $ 1 $ 1
Industrial, miscellaneous, and all
other 49 43 43
Total common stocks 51 44 44
Nonredeemable preferred stocks 26 26 26
Total equity securities $ 77 $ 70 $ 70
Short-term investments 421 421 421
Mortgage loans 349 331 349
Real estate 662 662
Other invested assets 288 288
Total investments $10,607 $10,421
USF&G Corporation
Schedule II. Condensed Financial Information of Registrant - Statement of
Financial Position (Parent Company)
At December 31
(in millions) 1994 1993 1992
Assets
Cash $1 $2 $10
Investment in subsidiaries, at equity 2,431 2,354 2,097
Due from subsidiaries 131 127 135
Other assets 24 23 34
Total assets $2,587 $2,506 $2,276
Liabilities
Debt (short-term, 1994, $215; 1993, $395;
1992, $375) $586 $574 $574
Dividends payable to shareholders 14 16 16
Due to subsidiaries 310 322 335
Other liabilities 308 83 81
Total liabilities 1,218 995 1,006
Shareholders' Equity
Preferred stock 331 455 455
Common stock 239 212 211
Paid-in capital 1,062 963 957
Net unrealized gains (losses) on investments (144) 190 (29)
Minimum pension liability (63) (85) -
Retained earnings (deficit) (56) (224) (324)
Total shareholders' equity 1,369 1,511 1,270
Total liabilities and shareholders'
equity $2,587 $2,506 $2,276
See Note to Condensed Financial Statements
USF&G Corporation
Schedule II. Condensed Financial Information of Registrant - Statement of
Operations (Parent Company)
At December 31
(in millions) 1994 1993 1992
Revenues
Net investment income:
Dividends from subsidiaries $125 $125 $125
Interest expense on loans from subsidiaries (8) (6) (7)
Other (1) - -
Other revenues:
From subsidiaries 7 7 9
From others 5 5 22
Total revenues 128 131 149
Expenses
Facilities exit costs 211 - -
Interest expense 34 37 43
Lease expense 30 21 21
Other operating expense 24 19 20
299 77 84
Foreign currency losses - - 1
Total expenses 299 77 85
Income (loss) from continuing operations before
income taxes and equity in earnings of
subsidiaries and cumulative effect of adopting
new accounting standards (171) 54 64
Provision for income taxes - - -
Income (loss) from continuing operations before
equity in earnings of subsidiaries and cumulative
effect of adopting new accounting standards (171) 54 64
Equity in undistributed earnings of subsidiaries:
Continuing operations 403 73 (29)
Discontinued operations - - (7)
Income from cumulative effect of adopting new
accounting standards - 38 -
Net income $232 $165 $28
See Note to Condensed Financial Statements
USF&G Corporation
Schedule II. Condensed Financial Information of Registrant - Statement of Cash
Flows (Parent Company)
For the Years Ended December 31
(in millions) 1994 1993 1992
Net Cash Provided From Operating Activities $129 $58 $71
Investing Activities
Purchases of short-term investments - - (23)
Sales or maturities of short-term investments - - 23
Other, net (4) (4) (12)
Net cash used in investing activities (4) (4) (12)
Financing Activities
Repayments of short-term borrowings (160) - -
Intercompany advances, net (51) (2) 49
Long-term borrowings 270 - -
Repayments of long-term borrowings (120) - (36)
Issuances of common stock 14 6 3
Redemption of preferred stock (13) - -
Cash dividends paid to shareholders (66) (66) (66)
Net cash provided from (used in)
financing activities (126) (62) (50)
Increase (decrease) in cash (1) (8) 9
Cash at beginning of year 2 10 1
Cash at end of year $1 $2 $10
See Note to Condensed Financial Statements
Note to Condensed Financial Statements
The accompanying condensed financial statements should be read in conjunction
with the Consolidated Financial Statements and Notes thereto of the 1994 Annual
Report to Shareholders incorporated herein by reference. Certain amounts have
been reclassified to conform to the 1994 presentation. The parent company's
provision for income taxes is based on the Corporation's consolidated federal
income tax allocation policy.
USF&G Corporation
Schedule III. Supplementary Insurance Information
<TABLE>
<CAPTION>
At December 31 For the Years Ended December 31
Deferred Unpaid Unearned Other Premium Net Losses, Amortization Other Premiums
policy losses, premiums policy- revenue investment loss of deferred operating written
acquisition loss (b) holders' income (a) expenses policy expenses (a)
costs expenses funds (a) & policy acquisition
& policy benefits costs
(in millions) benefits (b)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994
Property/casualty
insurance:
Commercial $161 $3,891 $455 $1,189 $929 $354 $97 $1,200
Personal 71 471 253 575 427 151 45 565
Reinsurance 9 668 41 395 289 67 27 415
Fidelity/surety 30 54 65 124 46 60 17 134
Reinsurance receivable - 1,016 117 - - - - -
Other - - - - - - - (2)
Property/casualty 271 6,100 931 $ 7 2,283 $ 423 1,691 632 186 2,312
Life insurance 224 3,804 - 79 152 317 388 21 45 N/A
Total $495 $9,904 $931 $ 86 $2,435 $ 740 $2,079 $653 $231 $2,312
1993
Property/casualty
insurance:
Commercial $168 $4,108 $444 $1,223 $1,014 $359 $71 $1,239
Personal 69 553 264 681 481 175 46 653
Reinsurance 6 559 29 305 204 71 28 403
Fidelity/surety 28 56 56 118 59 59 9 120
Reinsurance receivable - 1,053 124 - - - - -
Other - - - - - - - 14
Property/casualty 271 6,329 917 $ 7 2,327 $ 433 1,758 664 154 2,429
Life insurance 164 3,973 - 67 129 321 395 9 50 N/A
Total $435 $10,302 $917 $ 74 $2,456 $ 754 $2,153 $673 $204 $2,429
1992
Property/casualty
insurance:
Commercial $170 $4,348 $420 $1,480 $1,299 $426 $86 $1,356
Personal 76 626 286 785 635 210 42 727
Reinsurance 3 511 11 157 118 22 25 243
Fidelity/surety 28 55 53 111 36 55 19 109
Other - - - - - - - (15)
Property/casualty 277 5,540 770 $ 9 2,533 $475 2,088 713 172 2,420
Life insurance 189 3,896 - 56 104 349 377 25 51 N/A
Total $466 $9,436 $770 $65 $2,637 $824 $2,465 $738 $223 $2,420
</TABLE>
N/A - Not applicable to life insurance pursuant to Rule 12-16 of Regulation S-X.
(a) Other policyholders' funds, net investment income, and other operating
expenses are not allocated to property/casualty categories.
(b) Unpaid losses and loss expenses reflect the implementation of SFAS No. 113,
"Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration
Contracts," which increased liabilities by $1.2 billion with a corresponding
increase in assets at December 31, 1993. This standard requires reinsurance
receivables and prepaid reinsurance premiums to be reported separately as assets
instead of the previous practice of netting such receivables against the related
loss and unearned premium liabilities.
USF&G Corporation
Schedule IV. Reinsurance
For the Years Ended December 31
(in millions)
Ceded to Assumed Percentage
Gross other from other Net of
amount companies companies amount amount
assumed to
net
1994
Life insurance in force $11,683 $1,350 $160 $10,493 1.5%
Premiums earned:
Life insurance 155 4 - 151 -%
Accident/health insurance - - 1 1 98.5
Property/casualty insurance 2,232 515 566 2,283 24.8
Total 2,387 519 567 2,435 23.3%
1993
Life insurance in force $11,955 $1,404 $155 $10,706 1.4%
Premiums earned:
Life insurance $133 $5 $- $128 -%
Accident/health insurance - - 1 1 99.1
Property/casualty insurance 2,338 517 506 2,327 21.7
Total $2,471 $522 $507 $2,456 20.6%
1992
Life insurance in force $12,228 $1,444 $132 $10,916 1.2%
Premiums earned:
Life insurance $107 $5 $1 $103 .3%
Accident/health insurance - - 1 1 94.0
Property/casualty insurance 2,692 535 376 2,533 14.8
Total $2,799 $540 $378 $2,637 14.3%
USF&G Corporation
Schedule VI. Supplemental Information Concerning Consolidated Property/Casualty
Insurance Operations
At December 31
(in millions) 1994 1993 1992
Deferred policy acquisition costs $271 $271 $277
Reserves for unpaid losses and loss expenses (a) 6,100 6,329 5,540
Discount deducted from reserves (b) 441 508 680
Unearned premiums (a) 931 917 770
(a) Reserves for unpaid claims and claim adjustments reflect the implementation
of SFAS No. 113, "Accounting and Reporting for Reinsurance of Short-Duration and
Long-Duration Contracts," which increased liabilities by $1.2 billion with a
corresponding increase in assets at December 31, 1993. This standard requires
reinsurance receivables and prepaid reinsurance premiums to be reported
separately as assets instead of the previous practice of netting such
receivables against the related loss and unearned premium liabilities.
(b) Certain long-term disability payments for workers' compensation are
discounted at rates ranging from 3% to 5%.
At December 31
(in millions) 1994 1993 1992
Earned premiums $2,283 $2,327 $2,533
Net investment income 423 433 475
Losses and loss expenses incurred related to:
Current year 1,696 1,696 2,010
Prior years (5) 62 78
Amortization of deferred policy acquisition costs 632 664 713
Paid losses and loss expenses 1,883 2,022 2,252
Premiums written 2,312 2,429 2,420
Exhibit 3B
USF&G CORPORATION
BY-LAWS
ARTICLE I.
STOCKHOLDERS
SECTION 1.01. Annual Meeting.
The Corporation shall hold an annual meeting of its stockholders to
elect directors and transact any other business within its powers at such time
and on such day within the month of May as shall be fixed by the Board of
Directors. Except as the Articles of Incorporation or statute provides
otherwise, any business may be considered at an annual meeting without the
purpose of the meeting having been specified in the notice. Failure to hold an
annual meeting does not invalidate the Corporation's existence or affect any
otherwise valid corporate acts.
SECTION 1.02. Special Meeting.
At any time in the interval between annual meetings, a special meeting
of the stockholders may be called by the Chairman of the Board or the President
or by a majority of the Board of Directors by vote at a meeting or in writing
(addressed to the Secretary of the Corporation) with or without a meeting.
SECTION 1.03. Place of Meetings.
Meetings of stockholders shall be held at such place in the United
States as is set from time to time by the Board of Directors.
SECTION 1.04. Notice of Meetings; Waiver of Notice.
Not less than ten (10) nor more than ninety (90) days before each
stockholders' meeting, the Secretary shall give written notice of the meeting to
each stockholder entitled to notice of the meeting. The notice shall state the
time and place of the meeting and, if the meeting is a special meeting or notice
of the purpose is required by statute, the purpose of the meeting. Notice is
given to a stockholder when it is personally delivered to him, left at his
residence or usual place of business, or mailed to him at his address as it
appears on the records of the Corporation. Notwithstanding the foregoing
provisions, each person who is entitled to notice waives notice if he before or
after the meeting signs a waiver of the notice which is filed with the records
of stockholders' meetings, or is present at the meeting in person or by proxy.
Any meeting of stockholders, annual or special, may adjourn from time to time to
reconvene at the same or some other place, and no notice need be given of any
such adjourned meeting other than by announcement.
SECTION 1.05. Quorum; Voting.
Unless statute or the Articles of Incorporation provides otherwise, at a
meeting of stockholders the presence in person or by proxy of stockholders
entitled to cast a majority of all the votes entitled to be cast at the meeting
constitutes a quorum and a majority of all the votes cast at a meeting at
which a quorum is present is sufficient to approve any matter which properly
comes before the meeting. In the absence of a quorum, the stockholders present
in person or by proxy, by majority vote and without notice other than by
announcement, may adjourn the meeting from time to time until a quorum shall
attend. At any such adjourned meeting at which a quorum shall be present, any
business may be transacted at the meeting as originally notified. In the event
that at any meeting a quorum exists for the transaction of some business but
does not exist for the transaction of other business, the business as to which
a quorum is present may be transacted by the holders of stock present in person
or by proxy who are entitled to vote thereon.
SECTION 1.06. General Right to Vote; Proxies.
Unless the Articles of Incorporation provides for a greater or lesser
number of votes per share or limits or denies voting rights, each outstanding
share of stock, regardless of class, is entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. In all elections for
directors, each share of stock may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted. A stockholder may vote the stock he owns of record either in person or
by written proxy signed by the stockholder or by his duly authorized attorney in
fact. Unless a proxy provides otherwise, it is not valid more than eleven
(11) months after its date.
SECTION 1.07. List of Stockholders.
At each meeting of stockholders, a full, true and complete list
of all stockholders entitled to vote at such meeting, showing the number and
class of shares held by each and certified by the transfer agent for such class
or by the Secretary, shall be furnished by the Secretary.
SECTION 1.08. Conduct of Voting.
At all meetings of stockholders, unless the voting is conducted by
judges, the proxies and ballots shall be received, and all questions touching
the qualification of votes and the validity of proxies and the acceptance or
rejection of votes shall be decided, by the chairman of the meeting. If
demanded by stockholders, present in person or by proxy, entitled to cast
ten percent (10%) in number of votes entitled to be cast, or if ordered by the
chairman, the vote upon any election or question shall be taken by ballot and,
upon like demand or order, the voting shall be conducted by two inspectors, in
which event the proxies and ballots shall be received, and all questions
touching the qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided, by such inspectors. Unless
so demanded or ordered, no vote need be by ballot and voting need not be
conducted by inspectors. The stockholders at any meeting may choose an
inspector or inspectors to act at such meeting, and in default of such
election the chairman of the meeting may appoint an inspector or inspectors. No
candidate for election as a director at a meeting shall serve as an inspector
thereat.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.01. Function of Directors.
The business and affairs of the Corporation shall be managed under the
direction of its Board of Directors. All powers of the Corporation may be
exercised by or under authority of the Board of Directors, except as conferred
on or reserved to the stockholders by statute or by the Articles of
Incorporation or By-Laws.
SECTION 2.02. Number of Directors.
The Corporation shall have at least three (3) directors at all times;
provided that, if there is no stock outstanding, the number of directors may be
less than three (3) but not less than one (1), and, if there is stock
outstanding and so long as there are less than three (3) stockholders, the
number of directors may be less than three (3) but not less than the number of
stockholders. The Corporation shall have the number of directors provided in
the Articles of Incorporation until changed as herein provided. A majority of
the entire Board of Directors may alter the number of directors set by the
Articles of Incorporation to not exceeding twenty-five (25) nor less than
the minimum number then permitted herein, but the action may not affect the
tenure of office of any director.
SECTION 2.03. Election and Tenure of Directors.
At each annual meeting, the stockholders shall elect directors to hold
office until the next annual meeting and until their successors are elected and
qualify.
SECTION 2.04. Removal of Director.
The stockholders may remove any director, with or without cause, by the
affirmative vote of a majority of all the votes entitled to be cast for the
election of directors.
SECTION 2.05. Vacancy on Board.
The stockholders may elect a successor to fill a vacancy on the Board of
Directors which results from the removal of a director. A majority of the
remaining directors, whether or not sufficient to constitute a quorum, may fill
a vacancy on the Board of Directors which results from any cause except an
increase in the number of directors and a majority of the entire Board of
Directors may fill a vacancy which results from an increase in the number of
directors. A director elected by the Board of Directors to fill a vacancy
serves until the next annual meeting of stockholders and until his successor is
elected and qualifies. A director elected by the stockholders to fill a
vacancy which results from the removal of a director serves for the balance of
the term of the removed director.
SECTION 2.06. Regular Meetings.
After each meeting of stockholders at which a Board of Directors shall
have been elected, the Board of Directors so elected shall meet as soon as
practicable for the purpose of organization and the transaction of other
business; and in the event that no other time is designated by the stockholders,
the Board of Directors shall meet one hour after the time for such stockholders'
meeting or immediately following the close of such meeting, whichever is later,
on the day of such meeting. Such first regular meeting shall be held at any
place in or out of the State of Maryland as may be designated by the
stockholders, or in default of such designation at the place designated by the
Board of Directors for such first regular meeting, or in default of such
designation at the place of the holding of the immediately preceding meeting of
stockholders. No notice of such first meeting shall be necessary if held as
hereinabove provided. Any other regular meeting of the Board of Directors
shall be held on such date and at any place in or out of the State of Maryland
as may be designated from time to time by the Board of Directors.
SECTION 2.07. Special Meeting.
Special meetings of the Board of Directors may be called at any time by
the Chairman of the Board or the President or by a majority of the Board of
Directors by vote at a meeting, or in writing with or without a meeting. A
special meeting of the Board of Directors shall be held on such date and at any
place in or out of the State of Maryland as may be designated from time to time
by the Board of Directors. In the absence of such designation such meeting
shall be held at such place as may be designated in the call.
SECTION 2.08. Notice of Meeting.
Except as provided in Section 2.06, the Secretary shall give notice to
each director of each regular and special meeting of the Board of Directors.
The notice shall state the time and place of the meeting. Notice is given to a
director when it is delivered personally to him, left at his residence or usual
place of business, or sent by telegraph or telephone, at least twenty-four (24)
hours before the time of the meeting or, in the alternative by mail to his
address as it shall appear on the records of the Corporation, at least seventy-
two (72) hours before the time of the meeting. Unless the By-Laws or a
resolution of the Board of Directors provide otherwise, the notice need not
state the business to be transacted at or the purposes of any regular or special
meeting of the Board of Directors. No notice of any meeting of the Board of
Directors need be given to any director who attends, or to any director who, in
writing executed and filed with the records of the meeting either before or
after the holding thereof, waives such notice. Any meeting of the Board of
Directors, regular or special, may adjourn from time to time to reconvene at the
same or some other place, and no notice need be given of any such adjourned
meeting other than by announcement.
SECTION 2.09. Action by Directors.
Unless statute or the Articles of Incorporation or By-Laws require a
greater proportion, the action of a majority of the directors present at a
meeting at which a quorum is present is action of the Board of Directors. A
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business. In the absence of a quorum, the directors present
by majority vote and without notice other than by announcement may adjourn the
meeting from time to time until a quorum shall attend. At any such adjourned
meeting at which a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally notified. Any action
required or permitted to be taken at a meeting of the Board of Directors may be
taken without a meeting, if a unanimous written consent which sets forth the
action is signed by each member of the Board and filed with the minutes of
proceedings of the Board.
SECTION 2.10. Meeting by Conference Telephone.
Members of the Board of Directors may participate in a meeting by means
of a conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.
Participation in a meeting by these means constitutes presence in person at a
meeting.
SECTION 2.11. Compensation.
By resolution of the Board of Directors a fixed sum and expenses, if
any, for attendance at each regular or special meeting of the Board of Directors
or of committees thereof, and other compensation for their services as such or
on committees of the Board of Directors, may be paid to directors (excluding
directors who are officers of the Corporation). A director who serves the
Corporation in any other capacity also may receive compensation for such other
services, pursuant to a resolution of the directors.
SECTION 2.12. Advisory Directors.
The Board of Directors may appoint, from time to time, Advisory
Directors to provide advice to, and to serve as a resource for, the Board of
Directors and management. Such Advisory Directors shall serve solely at the
pleasure of the Board of Directors and may attend meetings of the Board of
Directors, or selected portions thereof; in an observer capacity on a regular or
selected basis as may be determined from time to time by the Board of Directors
or the Chairman of the Board. Advisory Directors shall not constitute members
of the Board of Directors for any purpose and accordingly shall not count
towards a quorum of the Board of Directors or have any vote with respect to any
action taken or required to be taken by the Board of Directors, or otherwise
have any responsibilities or rights of members of the Board. Advisory Directors
may be paid such fees and may be reimbursed for expenses incurred in connection
with attendance of regular or special meetings as the Board of Directors shall
authorize by resolution.
ARTICLE III.
COMMITTEES
SECTION 3.01. Committees.
The Board of Directors may appoint from among its members an Executive
Committee and other committees composed of two (2) or more directors and
delegate to these committees any of the powers of the Board of Directors, except
the power to declare dividends or other distributions on stock, elect directors,
issue stock other than as provided in the next sentence, recommend to the
stockholders any action which requires stockholder approval, amend the By-Laws,
or approve any merger or share exchange which does not require stockholder
approval. If the Board of Directors has given general authorization for
the issuance of stock, a committee of the Board, in accordance with a general
formula or method specified by the Board by resolution or by adoption of a stock
option or other plan, may fix the terms of stock subject to classification or
reclassification and the terms on which any stock may be issued, including all
terms and conditions required or permitted to be established or authorized by
the Board of Directors.
SECTION 3.02. Procedure.
Each committee may fix rules of procedure for its business. A majority
of the members of a committee shall constitute a quorum for the transaction of
business and the act of a majority of those present at a meeting at which a
quorum is present shall be the act of the committee. The members of a committee
present at any meeting, whether or not they constitute a quorum, may appoint a
director to act in the place of an absent member. Any action required or
permitted to be taken at a meeting of a committee may be taken without a
meeting, if a unanimous written consent which sets forth the action is signed by
each member of the committee and filed with the minutes of the committee. The
members of a committee may conduct any meeting thereof by conference telephone
in accordance with the provisions of Section 2.10.
SECTION 3.03. Emergency.
In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the
Corporation by its directors and officers as contemplated by the Articles of
Incorporation and the By-Laws, any two (2) or more available members of the then
incumbent Executive Committee shall constitute a quorum of that Committee for
the full conduct and management of the affairs and business of the Corporation
in accordance with the provisions of Section 3.01. In the event of the
unavailability, at such time, of a minimum of two (2) members of the then
incumbent Executive Committee, the available directors shall elect an Executive
Committee consisting of any two (2) members of the Board of Directors, whether
or not they be officers of the Corporation, which two (2) members shall
constitute the Executive Committee for the full conduct and management of the
affairs of the Corporation in accordance with the foregoing provisions of this
Section. This Section shall be subject to implementation by resolution of the
Board of Directors passed from time to time for that purpose, and any provisions
of the By-Laws (other than this Section) and any resolutions which are contrary
to the provisions of this Section or to the provisions of any such implementary
resolutions shall be suspended until it shall be determined by any interim
Executive Committee acting under this Section that it shall be to the advantage
of the Corporation to resume the conduct and management of its affairs and
business under all the other provisions of the By-Laws.
ARTICLE IV.
OFFICERS
SECTION 4.01. Executive Officers.
The Corporation shall have a Chairman of the Board, who shall be a
director of the Corporation, a President, who shall be a director of the
Corporation, a Secretary and a Treasurer. It may also have one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers. A person may hold more than
one office in the Corporation but may not serve concurrently as both
President and Vice President of the Corporation.
SECTION 4.02. Chairman of the Board.
The Chairman of the Board shall preside at all meetings of the Board of
Directors and of the stockholders at which he shall be present. He shall have
and may exercise such powers as are from time to time assigned to him by the
Board of Directors.
SECTION 4.03. President.
In the absence of the Chairman of the Board, the President shall preside
at all meetings of the stockholders and of the Board of Directors at which he
shall be present; he shall have charge and supervision of the assets and affairs
of the Corporation; he may sign and execute, in the name of the Corporation, all
authorized deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall have been expressly
delegated to some other officer or agent of the Corporation; and, in general, he
shall perform all duties incident to the office of a president of a
corporation, and such other duties as are from time to time assigned to him by
the Board of Directors.
SECTION 4.04. Vice Presidents.
The Vice President or Vice Presidents, at the request of the President,
or in his absence, or during his inability to act, shall perform the duties and
exercise the functions of the President, and when so acting shall have the
powers of the President. If there be more than one Vice President, the Board
of Directors may determine which one or more of the Vice Presidents shall
perform any of such duties or exercise any of such functions, or if such
determination is not made by the Board of Directors, the President may make such
determination; otherwise any of the Vice Presidents may perform any of such
duties or exercise any of such functions. The Vice President or Vice Presidents
shall have such other powers and perform such other duties, and have such
additional descriptive designations in their titles (if any), as are from time
to time assigned to them by the Board of Directors or the President.
SECTION 4.05. Secretary.
The Secretary shall keep the minutes of the meetings of the
stockholders, of the Board of Directors and of any committees, in books provided
for the purpose; he shall see that all notices are duly given in accordance with
the provisions of the By-Laws or as required by law; he shall be custodian of
the records of the Corporation; he shall witness all documents on behalf of the
Corporation, the execution of which is duly authorized, see that the corporate
seal is affixed where such document is required to be under its seal, and, when
so affixed, may attest the same; and, in general, he shall perform all duties
incident to the office of a secretary of a corporation, and such other duties as
are from time to time assigned to him by the Board of Directors or the
President.
SECTION 4.06. Treasurer.
The Treasurer shall have charge of and be responsible for all funds,
securities, receipts and disbursements of the Corporation, and shall deposit, or
cause to be deposited, in the name of the Corporation, all moneys or other
valuable effects in such banks, trust companies or other depositories as shall,
from time to time, be selected by the Board of Directors; he shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; and, in general he shall perform all the
duties incident to the office of a treasurer of a corporation, and such other
duties as are from time to time assigned to him by the Board of Directors or the
President.
SECTION 4.07. Assistant Officers.
The Assistant Vice Presidents shall have such duties as are from time to
time assigned to them by the Board of Directors or the President. The Assistant
Secretaries shall have such duties as are from time to time assigned to them by
the Board of Directors or the Secretary. The Assistant Treasurers shall have
such duties as are from time to time assigned to them by the Board of Directors
or the Treasurer.
SECTION 4.08. Other Officers.
The Corporation may have such other officers as the Board of Directors
may from time to time deem desirable. Each such officer shall hold office for
such period and perform such duties as the Board of Directors, the President or
the committee or officer designated pursuant to Section 4.10 may prescribe.
SECTION 4.09. Compensation.
The Board of Directors shall have power to fix the salaries and other
compensation and remuneration, of whatever kind, of all officers of the
Corporation. It may authorize any committee or officer, upon whom the power of
appointing other officers may have been conferred, to fix the salaries,
compensation and remuneration of such subordinate officers.
SECTION 4.10. Election, Tenure and Removal of Officers.
The Board of Directors shall elect the officers. The Board of Directors
may from time to time authorize any committee or officer to appoint other
officers. An officer serves for one year and until his successor is elected and
qualifies. If the Board of Directors in its judgment finds that the best
interests of the Corporation will be served, it may remove any officer or
agent of the Corporation. The removal of an officer or agent does not prejudice
any of his contract rights. The Board of Directors (or any committee or officer
authorized by the Board of Directors) may fill a vacancy which occurs in any
office for the unexpired portion of the term.
ARTICLE V.
STOCK
SECTION 5.01. Certificates of Stock.
Each stockholder is entitled to certificates which represent and certify
the shares of stock he holds in the Corporation. Each stock certificate shall
include on its face the name of the corporation that issues it, the name of the
stockholder or other person to whom it is issued, and the class of stock and
number of shares it represents. It shall be in such form, not inconsistent with
law or with the Articles of Incorporation, as shall be approved by the Board of
Directors or any officer or officers designated for such purpose by resolution
of the Board of Directors. Each stock certificate shall be signed by the
Chairman of the Board, the President, or a Vice President, and countersigned by
the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer.
Each certificate may be sealed with the actual corporate seal or a facsimile of
it or in any other form and the signatures may be either manual or facsimile
signatures. A certificate is valid and may be issued whether or not an officer
who signed it is still an officer when it is issued.
SECTION 5.02. Transfers.
The Board of Directors shall have power and authority to make such rules
and regulations as it may deem expedient concerning the issue, transfer and
registration of certificates of stock; and may appoint transfer agents and
registrars thereof. The duties of transfer agent and registrar may be combined.
SECTION 5.03. Record Date and Closing of Transfer Books.
The Board of Directors may set a record date or direct that the stock
transfer books be closed for a stated period for the purpose of making any
proper determination with respect to stockholders, including which stockholders
are entitled to notice of a meeting, vote at a meeting, receive a dividend, or
be allotted other rights. The record date may not be more than sixty (60) days
before the date on which the action requiring the determination will be taken;
the transfer books may not be closed for a period longer than twenty (20) days;
and, in the case of a meeting of stockholders, the record date of the closing of
the transfer books shall be at least ten (10) days before the date of the
meeting.
SECTION 5.04. Stock Ledger.
The Corporation shall maintain a stock ledger which contains the name
and address of each stockholder and the number of shares of stock of each class
which the stockholder holds. The stock ledger may be in written form or in any
other form which can be converted within a reasonable time into written form for
visual inspection. The original or a duplicate of the stock ledger shall be
kept at the offices of a transfer agent for the particular class of stock,
within or without the State of Maryland, or, if none, at the principal office or
the principal executive offices of the Corporation in the State of Maryland.
SECTION 5.05. Lost Stock Certificates.
The Board of Directors of the Corporation may determine the conditions
for issuing a new stock certificate in place of one which is alleged to have
been lost, stolen, or destroyed, or the Board of Directors may delegate such
power to any officer or officers of the Corporation. In their discretion, the
Board of Directors or such officer or officers may refuse to issue such
new certificate save upon the order of some court having jurisdiction in the
premises.
ARTICLE VI.
FINANCE
SECTION 6.01. Checks, Drafts, Etc.
All checks, drafts and orders for the payment of money, notes and other
evidences of indebtedness, issued in the name of the Corporation, shall, unless
otherwise provided by resolution of the Board of Directors, be signed by the
President, a Vice President or an Assistant Vice President and countersigned by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
SECTION 6.02. Annual Statement of Affairs.
There shall be prepared annually a full and correct statement of the
affairs of the Corporation, to include a balance sheet and a financial statement
of operations for the preceding fiscal year. The statement of affairs shall be
submitted at the annual meeting of the stockholders and, within twenty (20) days
after the meeting, placed on file at the Corporation's principal
office.
SECTION 6.03. Fiscal Year.
The fiscal year of the Corporation shall be the twelve calendar months
period ending December 31 in each year, unless otherwise provided by the Board
of Directors.
ARTICLE VII.
SUNDRY PROVISIONS
SECTION 7.01. Books and Records.
The Corporation shall keep correct and complete books and records of its
accounts and transactions and minutes of the proceedings of its stockholders and
Board of Directors and of any executive or other committee when exercising any
of the powers of the Board of Directors. The books and records of the
Corporation may be in written form or in any other form which can be converted
within a reasonable time into written form for visual inspection. Minutes shall
be recorded in written form but may be maintained in the form of a reproduction.
SECTION 7.02. Corporate Seal.
The Board of Directors shall provide a suitable seal, bearing the name
of the Corporation, which shall be in the charge of the Secretary. The Board of
Directors may authorize one or more duplicate seals and provide for the custody
thereof.
SECTION 7.03. Bonds.
The Board of Directors may require any officer, agent or employee of the
Corporation to give a bond to the Corporation, conditioned upon the faithful
discharge of his duties, with one or more sureties and in such amount as may be
satisfactory to the Board of Directors.
SECTION 7.04. Voting Upon Shares in Other Corporations.
Stock of other corporations or associations, registered in the name of
the Corporation, may be voted by the President, a Vice President, or a proxy
appointed by either of them. The Board of Directors, however, may by resolution
appoint some other person to vote such shares, in which case such person shall
be entitled to vote such shares upon the production of a certified copy of
such resolution.
SECTION 7.05. Mail.
Any notice or other document which is required by these By-Laws
to be mailed shall be deposited in the United States mails, postage prepaid.
SECTION 7.06. Execution of Documents.
A person who holds more than one office in the Corporation may not act
in more than one capacity to execute, acknowledge, or verify an instrument
required by law to be executed, acknowledged, or verified by more than one
officer.
SECTION 7.07. Amendments.
Subject to the special provisions of Section 2.02, any and all
provisions of these By-Laws may be altered, amended, repealed, or added to by a
majority vote of a quorum at any regular or special meeting of the stockholders
or of the Board of Directors.
SECTION 7.08. Charter Documents.
For the purpose of these By-Laws the term "Articles of Incorporation"
includes all charter documents.
I hereby certify that the foregoing is a true copy of the By-Laws of
USF&G Corporation.
In testimony whereof, I have hereunto set my hand and the seal
of the Corporation, in the City of Baltimore, State of Maryland, this _____ day
of ____________________, 19____.
_______________________________
Secretary
Exhibit 4D
USF&G CORPORATION
TO
SIGNET TRUST COMPANY,
TRUSTEE
INDENTURE
Dated as of January 28, 1994
Senior Debt Securities
USF&G CORPORATION
Reconciliation and tie between certain Sections of
this Indenture, dated as of January 28, 1994, and
Sections 310 through 318, inclusive, of
the Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
Section 310(a)(1) . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . 608
610
Section 311(a) . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . 701
. . . . . . . . . . . . . . . . . . 702(a)
(b) . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . 703(b)
Section 314(a) . . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . . 101
1004
(b) . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . 514
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
Section 316(a) . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . 502
512
(a)(1)(B) . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . 104(c)
Section 317(a)(1) . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . 107
TABLE OF CONTENTS
PAGE
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions. . . . . . . . . . . . . . . . . 1
Act. . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . 3
Common Stock . . . . . . . . . . . . . . . . 3
Company. . . . . . . . . . . . . . . . . . . 3
Company Request; Company Order . . . . . . . 3
Conversion Price . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . 3
Corporation. . . . . . . . . . . . . . . . . 3
Covenant Defeasance. . . . . . . . . . . . . 4
Defaulted Interest . . . . . . . . . . . . . 4
Defeasance . . . . . . . . . . . . . . . . . 4
Depositary . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . 4
Exchange Act . . . . . . . . . . . . . . . . 4
Floating or Adjustable Rate Provision. . . . 4
Floating or Adjustable Rate Security . . . . 4
Foreign Government Obligations . . . . . . . 4
Global Security. . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . 4
Indenture. . . . . . . . . . . . . . . . . . 4
Interest . . . . . . . . . . . . . . . . . . 5
NOTE: This table of contents shall not, for any purpose, be deemed to
be a part of the Indenture.
Interest Payment Date. . . . . . . . . . . . 5
Maturity . . . . . . . . . . . . . . . . . . 5
Notice of Default. . . . . . . . . . . . . . 5
Officers' Certificate. . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . 5
Original Issue Discount Security . . . . . . 5
Outstanding. . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . 7
Person . . . . . . . . . . . . . . . . . . . 7
Place of Payment . . . . . . . . . . . . . . 7
Predecessor Security . . . . . . . . . . . . 7
Principal Insurance Subsidiary . . . . . . . 7
Redempton Date . . . . . . . . . . . . . . . 7
Redemption Price . . . . . . . . . . . . . . 8
Regular Record Date. . . . . . . . . . . . . 8
Responsible Officer. . . . . . . . . . . . . 8
Securities . . . . . . . . . . . . . . . . . 8
Security Register and Security Registrar . . 8
Special Record Date. . . . . . . . . . . . . 8
Stated Maturity. . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . 8
Trustee. . . . . . . . . . . . . . . . . . . 9
Trust Indenture Act. . . . . . . . . . . . . 9
U.S. Government Obligations. . . . . . . . . 9
Vice President . . . . . . . . . . . . . . . 9
Section 102. Compliance Certificates and Opinions . . . . 9
Section 103. Form of Documents Delivered to Trustee . . . 10
Section 104. Acts of Holders; Record Dates. . . . . . . . 11
Section 105. Notices, Etc., to Trustee and Company. . . . 12
Section 106. Notice to Holders; Waiver. . . . . . . . . . 13
Section 107. Conflict with Trust Indenture Act. . . . . . 13
Section 108. Effect of Headings and Table of Contents . . 14
Section 109. Successors and Assigns . . . . . . . . . . . 14
Section 110. Separability Clause. . . . . . . . . . . . . 14
Section 111. Benefits of Indenture. . . . . . . . . . . . 14
Section 112. Governing Law. . . . . . . . . . . . . . . . 14
Section 113. Legal Holidays . . . . . . . . . . . . . . . 14
Section 114. Personal Immunity from Liability for
Incorporators, Stockholders, Etc . . . . . . 15
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally. . . . . . . . . . . . . . . 15
Section 202. Form of Face of Security . . . . . . . . . . 16
Section 203. Form of Reverse of Security. . . . . . . . . 18
Section 204. Form of Legend for Global Securities . . . . 24
Section 205. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . . 24
Section 206. Form of Conversion Notice. . . . . . . . . . 24
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series . . . . 26
Section 302. Denominations. . . . . . . . . . . . . . . . 29
Section 303. Execution, Authentication, Delivery
and Dating . . . . . . . . . . . . . . . . . 30
Section 304. Temporary Securities . . . . . . . . . . . . 32
Section 305. Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . . 32
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . . 34
Section 307. Payment of Interest; Interest Rights
Preserved . . . . . . . . . . . . . . . . . 35
Section 308. Persons Deemed Owners. . . . . . . . . . . . 37
Section 309. Cancellation . . . . . . . . . . . . . . . . 37
Section 310. Computation of Interest. . . . . . . . . . . 38
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture. . . 38
Section 402. Application of Trust Fund. . . . . . . . . . 40
ARTICLE FIVE
REMEDIES
Section 501. Events of Default. . . . . . . . . . . . . . 40
Section 502. Acceleration of Maturity; Rescission
and Annulment. . . . . . . . . . . . . . . . 43
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . . 45
Section 504. Trustee May File Proofs of Claim . . . . . . 46
Section 505. Trustee May Enforce Claims Without
Possession of Securities . . . . . . . . . . 46
Section 506. Application of Money Collected . . . . . . . 47
Section 507. Limitation on Suits. . . . . . . . . . . . . 47
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest
and to Convert . . . . . . . . . . . . . . . 48
Section 509. Restoration of Rights and Remedies . . . . . 48
Section 510. Rights and Remedies Cumulative . . . . . . . 49
Section 511. Delay or Omission Not Waiver . . . . . . . . 49
Section 512. Control by Holders . . . . . . . . . . . . . 49
Section 513. Waiver of Past Defaults. . . . . . . . . . . 50
Section 514. Undertaking for Costs. . . . . . . . . . . . 51
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and Responsibilities. . . . . 51
Section 602. Notice of Defaults . . . . . . . . . . . . . 51
Section 603. Certain Rights of Trustee. . . . . . . . . . 52
Section 604. Not Responsible for Recitals or
Issuance of Securities . . . . . . . . . . . 53
Section 605. May Hold Securities. . . . . . . . . . . . . 53
Section 606. Money Held in Trust. . . . . . . . . . . . . 54
Section 607. Compensation and Reimbursement . . . . . . . 54
Section 608. Disqualification; Conflicting
Interests. . . . . . . . . . . . . . . . . . 55
Section 609. Corporate Trustee Required; Eligibility. . . 55
Section 610. Resignation and Removal; Appointment
of Successor . . . . . . . . . . . . . . . . 55
Section 611. Acceptance of Appointment by Successor . . . 57
Section 612. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . 59
Section 613. Preferential Collection of Claims
Against Company. . . . . . . . . . . . . . . 59
Section 614. Appointment of Authenticating Agent. . . . . 59
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and
Addresses of Holders . . . . . . . . . . . . 61
Section 702. Preservation of Information;
Communications to Holders. . . . . . . . . . 62
Section 703. Reports by Trustee . . . . . . . . . . . . . 62
Section 704. Reports by Company . . . . . . . . . . . . . 62
ARTICLE EIGHT
CONSOLIDATION, MERGER OR SALE OF ASSETS
Section 801. Company May Consolidate, Etc., Only on
Certain Terms. . . . . . . . . . . . . . . . 63
Section 802. Successor Substituted. . . . . . . . . . . . 64
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent
of Holders . . . . . . . . . . . . . . . . . 65
Section 902. Supplemental Indentures with Consent
of Holders . . . . . . . . . . . . . . . . . 66
Section 903. Execution of Supplemental Indentures . . . . 68
Section 904. Effect of Supplemental Indentures. . . . . . 68
Section 905. Conformity with Trust Indenture Act. . . . . 69
Section 906. Reference in Securities to Supplemental
Indentures . . . . . . . . . . . . . . . . . 69
Section 907. Waiver of Compliance by Holders. . . . . . . 69
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest. 69
Section 1002. Maintenance of Office or Agency . . . . . . 69
Section 1003. Money for Securities Payments to be
Held in Trust . . . . . . . . . . . . . . . 69
Section 1004. Statement by Officers as to Default . . . . 72
Section 1005. Limitations on Liens on Common Stock of
Principal Insurance Subsidiaries. . . . . . 72
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article. . . . . . . . . . 72
Section 1102. Election to Redeem, Notice to Trustee . . . 72
Section 1103. Selection by Trustee of Securities
to Be Redeemed. . . . . . . . . . . . . . . 73
Section 1104. Notice of Redemption. . . . . . . . . . . . 74
Section 1105. Deposit of Redemption Price . . . . . . . . 75
Section 1106. Securities Payable on Redemption Date . . . 75
Section 1107. Securities Redeemed in Part . . . . . . . . 75
ARTICLE TWELVE
CONVERSION OF SECURITIES
Section 1201. Applicability of Article . . . . . . . . . 76
Section 1202. Exercise of Conversion Privilege . . . . . 76
Section 1203. No Fractional Shares . . . . . . . . . . . 78
Section 1204. Adjustment of Conversion Price . . . . . . 78
Section 1205. Notice of Certain Corporate Actions. . . . 79
Section 1206. Reservation of Shares of Common Stock. . . 80
Section 1207. Payment of Certain Taxes Upon Conversion . 80
Section 1208. Nonassessability . . . . . . . . . . . . . 80
Section 1209. Effect of Consolidation or Merger on
Conversion Privilege . . . . . . . . . . . 81
Section 1210. Duties of Trustee Regarding Conversion . . 82
Section 1211. Repayment of Certain Funds Upon Conversion 83
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Company's Option to Effect Defeasance
or Covenant Defeasance . . . . . . . . . . 83
Section 1302. Defeasance and Discharge . . . . . . . . . 83
Section 1303. Covenant Defeasance. . . . . . . . . . . . 84
Section 1304. Conditions to Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . 84
Section 1305. Deposited Money and U.S. Government
Obligations or Foreign Government
Obligations to be Held in Trust;
Other Miscellaneous Provisions . . . . . . 88
Section 1306. Reinstatement. . . . . . . . . . . . . . . 89
ARTICLE FOURTEEN
SINKING FUNDS
Section 1401. Applicability of Article . . . . . . . . . 89
Section 1402. Satisfaction of Sinking Fund Payments
with Securities. . . . . . . . . . . . . . 90
Section 1403. Redemption of Securities for Sinking Fund. 90
TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . 91
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . 91
ACKNOWLEDGMENTS. . . . . . . . . . . . . . . . . . . . . 92
INDENTURE, dated as of January 28, 1994, between USF&G
CORPORATION, a Maryland corporation (herein called the "Company"),
having its principal office at 100 Light Street, Baltimore, Maryland 21202,
and SIGNET TRUST COMPANY, a banking association incorporated and existing
under the laws of the
Commonwealth of Virginia, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its debentures,
notes or other evidences of indebtedness (herein called the "Securities"),
to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series
thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture and of any indenture supplemental
hereto, except as otherwise expressly provided or unless the context otherwise
requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act or the Securities Act of 1933, as amended, either
directly or by reference therein, have the meanings assigned to them
therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the
term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of such computation;
(4) the words "Article" and "Section" refer to an Article and Section,
respectively, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either (i) the board of directors of the
Company, the executive committee of such board of directors or any
other duly authorized committee of directors and/or officers appointed by such
board of directors or executive committee, or (ii) one or more duly authorized
officers of the Company to whom the board of directors of the Company or
a committee thereof has delegated the authority to act with respect to the
matters contemplated by this Indenture.
"Board Resolution" means (i) a copy of a resolution certified by
the Corporate Secretary or an Assistant Corporate Secretary of the Company to
have been duly adopted by the Board of Directors or a committee thereof and to
be in full force and effect on the date of such certification or (ii) a
certificate signed by the authorized officer or officers of the Company to
whom the board of directors of the Company or a committee thereof has delegated
its authority (as described in the definition of Board of Directors), and in
each case, delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in that Place of Payment are authorized or
obligated by law, regulation or executive order to close.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" means, with respect to the Company, its common stock,
$2.50 par value per share, or any other shares of capital stock of the Company
into which the Common Stock shall be reclassified or changed and with
respect to any Principal Insurance Subsidiary, stock of any class, however
designated, except stock which is non-participating beyond fixed dividend and
liquidation preferences and the holders of which have either no voting rights
or limited voting rights entitling them, only in the case of certain
contingencies, to elect less than a majority of the directors (or persons
performing similar functions) of such Principal Insurance Subsidiary, and
shall include securities of any class, however designated, which are convertible
into such Common Stock.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by (i) any two of the following individuals:
the Chairman, the President, an Executive Vice President or a Vice President
or (ii) by one of the foregoing individuals and by any other Vice
President, the Treasurer, an Assistant Treasurer, the Corporate Secretary or
an Assistant Corporate Secretary or any other individual authorized by the
Board of Directors for such purpose, and delivered to the Trustee.
"conversion price" means the amount of Common Stock issuable upon
conversion of any Securities and, in the case of any specific series of
Securities may be expressed in terms of either a conversion price or a
conversion rate.
"Corporate Trust Office" means the principal office of the Trustee
currently located at 7 St. Paul Street, Baltimore, Maryland 21202 at
which at any particular time its corporate trust business shall be
administered.
"Corporation" means a corporation, association, company, joint-stock
company, partnership or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as
Depositary for such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute thereto.
"Floating or Adjustable Rate Provision" means a formula or provision,
specified in or pursuant to a Board Resolution or an indenture supplemental
hereto, providing for the determination, whether pursuant to objective factors
or pursuant to the sole discretion of any Person (including the Company),
and periodic adjustment of the interest rate borne by a Floating or Adjustable
Rate Security.
"Floating or Adjustable Rate Security" means any Security which
provides for interest thereon at a periodic rate that may vary from time to
time over the term thereof in accordance with a Floating or Adjustable Rate
Provision.
"Foreign Government Obligations" has the meaning specified in Section
1304.
"Global Security" means a Security that evidences all or part of the
Securities of any series and is authenticated and delivered to, and registered
in the name of, the Depositary for such Securities or a nominee thereof.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", when used with respect to any Security,
means the Stated Maturity of an instalment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an instalment of principal becomes
due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 501(4).
"Officers' Certificate" means a certificate signed by (i)
any two of the following individuals: the Chairman, the President, an
Executive Vice President or a Vice President, or (ii) by one of the foregoing
individuals and by any other Vice President, the Treasurer, an Assistant
Treasurer, the Corporate Secretary or an Assistant Corporate Secretary, of the
Company, or any other individual authorized by the Board of Directors for
such purpose, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel to the Company or other counsel, and who is reasonably
satisfactory to the Trustee.
"Original Issue Discount Security" means any Security which provides for
an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own Paying Agent)
for the
Holders of such Securities; provided that, if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee has
been made;
(iii) Securities as to which Defeasance has been effected pursuant to
Section 1302; and
(iv) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of
the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, (A)
the principal amount of an Original Issue Discount Security that shall be
deemed to be Outstanding shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof pursuant to Section 502, (B) the
principal amount of a Security denominated in one or more foreign currencies
or currency units shall be the U.S. dollar equivalent, determined in
the manner provided as contemplated by Section 301 on the date of original
issuance of such Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent on the date of
original issuance of such Security of the amount determined as provided in
(A) above) of such Security, and (C) Securities owned by the Company or any
other obligor upon the Securities or any Subsidiary of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities
which the Trustee knows to be so owned shall be so disregarded. Securities
so owned which have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is not
the Company or any other obligor upon the Securities or any Subsidiary
of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed,
lost or stolen Security.
"Principal Insurance Subsidiary" means only United States Fidelity and
Guaranty Company and Fidelity and Guaranty Life Insurance Company, and any
other Subsidiary of the Company which shall hereafter succeed by merger or
otherwise to a major part of
the business of one or more of the Principal Insurance Subsidiaries.
The decision as to whether a Subsidiary shall have succeeded to a major part of
the business of one or more of the Principal Insurance Subsidiaries shall be
made in good faith by the board of directors of the Company or a committee
thereof by the adoption of a resolution so stating, and the Company shall
within 30 days of the date of the adoption of such resolution deliver to the
Trustee a copy thereof, certified by the Corporate Secretary or an Assistant
Corporate Secretary of the Company.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or
any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer,
the cashier, any assistant cashier, any trust officer or assistant trust
officer, the controller or any assistant controller or any other officer of
the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the
particular subject.
"Securities" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities authenticated
and delivered under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
instalment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security or such instalment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the voting power of
which is controlled, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting power" means the
power to vote for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder,
and if at any time there is more than one such Person, "Trustee" as used
with respect to the Securities of any series shall mean the Trustee with
respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"U.S. Government Obligations" has the meaning specified in Section 1304.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and
opinions as may be required under the Trust Indenture Act. Each such
certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (excluding certificates provided for in
Section 1004) shall include
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
such individual has made such examination or investigation as is
necessary to enable such individual to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which its certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Any certificate, statement or opinion of an officer of the Company or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate, opinion or representation by an accountant or firm of accountants
in the employ of the Company, unless such officer or counsel, as the case
may be, knows, or in the exercise of reasonable care should know, that the
certificate, opinion or representation with respect to such accounting matters
upon which its certificate, statement or opinion may be based is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Where such execution is by a signer acting in a capacity other than such
signer's individual capacity, such certificate or affidavit
shall also constitute sufficient proof of such signer's
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to
vote on any action, authorized or permitted to be given or taken by
Holders of Outstanding Securities of such
series. If not set by the Company prior to the first solicitation
of a Holder of Securities of such series made by any Person in respect of any
such action, or, in the case of any such vote, prior to such vote, the record
date for any such action or vote shall be the 30th day (or, if later, the date
of the most recent list of Holders required to be provided pursuant to
Section 701) prior to such first solicitation or vote, as the case may be.
With regard to any record date for action to be taken by the Holders of one
or more series of Securities, only the Holders of Securities of such series on
such date (or their duly designated proxies) shall be entitled to give or
take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register or by a certificate of the Security Registrar.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is
made upon such Security.
(f) Without limiting the foregoing, a Holder entitled hereunder to
give or take any action hereunder with regard to any particular Security may do
so with regard to all or any part of the principal amount of such Security
or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any different part of
such principal amount.
Section 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in
the first paragraph of this instrument, Attention: Treasurer, (until
another address is furnished in writing to the Trustee by the Company).
Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the Security Register, not
later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice; provided, however, that
the Company or the Trustee, upon a good faith determination that mailing is
in the circumstances impractical, may give such notice by any other method
which, in the reasonable belief of the Company or, in the case of the
Trustee, of the Company and the Trustee, is likely to be received by the
Holders. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of
and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as
the case may be.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York, but without regard to
principles of conflicts of laws.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last day on which a Holder has the right
to convert a Security at a particular conversion price shall not be a
Business Day at any Place of Payment, then (notwithstanding any other
provision of this Indenture or of the Securities (other than a provision of
the Securities of any series which specifically states that such provision
shall apply in lieu of this Section)) payment of interest or principal
(and premium, if any) or conversion need not be made at such Place of Payment
on such date, but may be made on the next succeeding Business Day at such
Place of Payment with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity, provided that no
interest shall accrue with respect to such payment for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.
Section 114. Personal Immunity from Liability for Incorporators,
Stockholders, Etc.
No recourse shall be had for the payment of the principal of or premium,
if any, or interest, if any, on any Security, or for any claim based thereon, or
otherwise in respect of any Security, or based on or in respect of this
Indenture or any indenture supplemental hereto, against any incorporator, or
against any past, present or future stockholder, director or officer, as
such, of the Company or of any successor corporation, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being expressly waived
and released as a condition of, and as consideration for, the execution of this
Indenture and the issue of the Securities.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant
to a Board Resolution or in one or more indentures supplemental hereto, in
each case with such
appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistent herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established
by action taken pursuant to a Board Resolution, a copy of an appropriate
record of such action shall be certified by the Corporate Secretary or an
Assistant Corporate Secretary of the Company and delivered to the Trustee at
or prior to the delivery of the Company Order contemplated by Section 303 for
the authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
Section 202. Form of Face of Security.
[Insert any legend required by the Internal Revenue Code and the
regulations thereunder.]
USF&G CORPORATION
No. $
USF&G CORPORATION, a Maryland corporation (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby
promises to pay to , or
registered assigns, the principal sum of
dollars. If other than Dollars, substitute other currency or
currency unit. If the Security is to bear interest prior to
Maturity, insert -- , and to pay interest thereon from or from the
most recent Interest Payment Date to which interest has been paid or
duly provided for,] semi-annually on ............ and ............ in
each year. [If other than semi-annual payments, insert frequency of
payments and payment dates,
commencing , at] if the Security is to bear interest at a fixed
rate, insert - the rate of ....% per annum if the Security is a Floating or
Adjustable Rate Security, insert -- a rate per annum computed-determined in
accordance with, -- insert defined name of Floating or Adjustable Rate
Provision set forth below. If the security is to bear interest at a rate
determined with reference to an index, refer to description of index below]
until the principal hereof is paid or made available for payment if applicable,
insert -- , and (to the extent that the payment of
such interest shall be legally enforceable) at the rate of % per annum on
any overdue principal and premium and on any overdue instalment of interest.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name
this Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date
for such interest, which shall be the or (whether or
not a Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities of this series may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
[If the Securities are Floating or Adjustable Rate Securities
with respect to which the principal of or any premium or interest may be
determined with reference to an index, insert the text of the Floating or
Adjustable Rate Provision.]
[If the Security is not to bear interest prior to Maturity, insert -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at
Stated Maturity and in such case the overdue principal of this Security
shall bear interest
at the rate of % per annum compounded semi-annually (to the extent that
the payment of such interest shall be legally enforceable), which shall
accrue from the date of such default in payment to the date payment of such
principal, including interest thereon, has been made or duly provided for. All
interest on any overdue principal shall be payable on demand. Any such
interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of ......% per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date
of such demand for payment to the date payment of such interest has been made or
duly provided for, and such interest shall also be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert -- any such interest on this Security will be made at the office or
agency of the Company maintained for that
purpose in , in such coin or currency of the United States of
America. If the Security is denominated in a currency other than U.S. dollars,
specify other currency or currency unit in which payment of the principal of
and any premium or interest may be made as at the time of payment is legal
tender for payment of public and private debts, if applicable, insert -- ;
provided, however, that at the option of the Company payment of interest may
be made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register.]
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
USF&G CORPORATION
By
Attest:
Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of
the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture,
dated as of (herein called the "Indenture"),
between the Company and , as Trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations of rights,
obligations, duties and immunities thereunder of the Company, the Trustee and
the Holders of the Securities and of the terms upon which the Securities
are, and are to be, authenticated and delivered. This Security is one of the
series designated on the face hereof[,
limited in aggregate principal amount to $ ].
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' nor more than 60 days' notice by
mail, [if applicable, insert -- (1) on in any year commencing with the
year ...... and ending
with the year through operation of the sinking fund for this series
at a Redemption Price equal to 100% of the principal
amount, and (2) at any time [on or after , 19.., as a whole or in
part, at the election of the Company, at the following Redemption Prices
(expressed as percentages of the
principal amount): If redeemed [on or before , %, and if
redeemed] during the 12-month period beginning of the years indicated,
Redemption Redemption
Year Price Year Price
and thereafter at a Redemption Price equal to % of the principal
amount, together in the case of any such redemption. If applicable, insert
- -- (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption
Date, but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities,
of record at the close of business on the relevant Record Dates referred to
on the face hereof, all as provided in the Indenture.]
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' nor more than
60 days' notice by mail, (1) on in any year
commencing with the year and ending with the year through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth
in the table below, and (2) at any time on or after , as a whole
or in part, at the election of the Company, at the Redemption
Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages
of the principal amount) set forth in the table below: If
redeemed during the 12-month period beginning of the years
indicated.
Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
and thereafter at a Redemption Price equal to % of the principal
amount, together in the case of any such redemption (whether through
operation of the sinking fund or otherwise) with
accrued interest to the Redemption Date, but interest installments
whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture. The sinking
fund for this series provides for the redemption on
in each year beginning with the year
and ending with the year of not
less than $ ("mandatory sinking fund") and not more
than $ aggregate principal amount of Securities of this
series. Securities of this series acquired or redeemed by the Company
otherwise than through mandatory sinking fund payments
may be credited against subsequent mandatory sinking fund payments
otherwise required to be made in the inverse order in which they become due.
[If the Security is subject to redemption, insert -- In the event of
redemption of this Security in part only, a new Security or Securities of this
series and of like tenor for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.]
The Indenture contains provisions for defeasance at any time of (1) the
entire indebtedness of this Security or (2) certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth in the Indenture.
[If the Security is convertible into Common Stock of the Company,
insert -- Subject to the provisions of the Indenture, the Holder of this
Security is entitled, at its option, at any
time on or before (except that, in case this Security or
any portion hereof shall be called for redemption, such right shall
terminate with respect to this Security or portion hereof, as the case may
be, so called for redemption at the close of business on the date fixed
for redemption as provided in the Indenture unless the Company defaults in
making the payment due upon redemption), to convert the principal amount of
this Security (or any portion hereof which is $1,000 or an integral multiple
thereof), into fully paid and non-assessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of the Common Stock of the
Company, as said shares shall be constituted at the date of conversion, at the
conversion price of $_____ principal amount of Securities for each share of
Common Stock, or at the adjusted conversion price in effect at the date of
conversion determined as provided in the Indenture, upon surrender of this
Security, together with the conversion notice hereon duly executed, to the
Company at the designated
office or agency of the Company in __________________, accompanied
(if so required by the Company) by instruments of transfer, in form
satisfactory to the Company and to the Trustee, duly executed by the Holder or
by its duly authorized attorney in
writing. Such surrender shall, if made during any period beginning at
the close of business on a Regular Record Date and ending at the opening of
business on the Interest Payment Date next following such Regular Record Date
(unless this Security or the portion being converted shall have been called for
redemption on a Redemption Date during such period), also be accompanied by
payment in funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the
principal amount of this Security then being converted. Subject to the
aforesaid requirement for payment and, in the case of a conversion after the
Regular Record Date next preceding any Interest Payment Date and on or
before such Interest Payment Date, to the right of the Holder of this
Security (or any Predecessor Security) of record at such Regular Record Date
to receive an installment of interest (with certain exceptions provided
in the Indenture), no adjustment is to be made on conversion for interest
accrued hereon or for dividends on shares
of Common Stock issued on conversion. The Company is not required to
issue fractional shares upon any such conversion, but shall make adjustment
therefor in cash on the basis of the current market value of such
fractional interest as provided in the Indenture. The conversion price is
subject to adjustment as provided in the Indenture. In addition, the
Indenture provides
that in case of certain consolidations, mergers or share exchanges to
which the Company is a party or the sale of substantially all of the
assets of the Company, the Indenture
shall be amended, without the consent of any Holders of securities, so
that this Security, if then outstanding, will be convertible thereafter,
during the period this Security shall be convertible as specified above, only
into the kind and amount of
securities, cash and other property receivable upon the consolidation,
merger, share exchange or sale by a holder of the number of shares of Common
Stock into which this Security might have been converted immediately prior
to such consolidation, merger, share exchange or sale (assuming such holder
of Common Stock failed to exercise any rights of election and received per
share the kind and amount received per share by a plurality of non-electing
shares) [, assuming if such consolidation, merger,
share exchange or sale is prior to , 19 , that this Security were
convertible at the time of such consolidation, merger, share exchange or
sale at the initial conversion price
specified above as adjusted from , 19 to such time pursuant
to the Indenture. In the event of conversion of this Security in part only, a
new Security or Securities for the unconverted portion hereof shall be issued
in the name of the Holder hereof upon the cancellation hereof.
[If the Security is convertible into other securities of the Company,
specify the conversion features.]
[If the Security is not an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and
be continuing, the principal of the Securities of this series may be declared
due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and
be continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for determining
the amount. Upon payment (i) of the amount of principal so declared due
and payable and (ii) of interest on any overdue principal and overdue
interest (in each case to the extent that the payment of such interest shall
be legally enforceable), all of the Company's obligations in respect of the
payment of the principal of and interest, if any, on the Securities of
this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Securities of each series
to be affected under the Indenture at any time by the Company and the Trustee
with the consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium
and interest on this Security at the times, place and rates, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable, duly
endorsed by, or
accompanied by a written instrument of transfer in form satisfactory
to the Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities of this series are issuable only in
registered form without coupons in denominations of $ and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable
for a like aggregate principal amount of Securities of this series and of
like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse shall be had for the payment of the principal of (and premium,
if any) or interest on this Security, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture or
any indenture supplemental
thereto, against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issue hereof, expressly waived and released.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Section 204. Form of Legend for Global Securities.
Every Global Security authenticated and delivered hereunder shall bear a
legend in substantially the following form or such other legends as may be
required:
This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary
or a nominee thereof. This Security may not be transferred to, or
registered or exchanged for Securities registered in the name of, any
Person other than the Depositary or a nominee thereof and no such transfer
may be registered, except in the limited circumstances described in the
Indenture. Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, this Security shall be a
Global Security subject to the foregoing, except in such limited
circumstances.
Section 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
As Trustee
By
Authorized Officer
Section 206. Form of Conversion Notice.
To USF&G Corporation
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof
(which is $1,000 or an integral multiple thereof) below designated,
into shares of Common Stock of the Company in accordance with the terms
of the Indenture referred to in this Security, and directs that the shares
issuable and deliverable upon the conversion, together with any check in
payment for fractional shares and any Securities representing any unconverted
principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. If this
Notice is being delivered on a date after the close of business on a Regular
Record Date and prior to the opening of business on the related Interest
Payment Date (unless this Security or the portion thereof being converted has
been called for redemption on a Redemption Date within such
period), this Notice is accompanied by payment, in funds acceptable to
the Company, of an amount equal to the interest payable on such Interest
Payment Date of the principal of this Security to be converted. If shares are
to be issued in the name of a person other than the undersigned, the
undersigned will pay
all transfer taxes payable with respect hereto. Any amount
required to be paid by the undersigned on account of interest accompanies
this Security.
Principal Amount to be Converted
(in an integral multiple of
$1,000, if less than all):
$____________
Dated
Signature
Signature(s) must be
guaranteed by a commercial bank or trust company
or a member firm of a national stock exchange
if shares of Common Stock are to be
delivered, or Securities to be issued, other
than to and in the name of the registered
holder.
Signature Guarantee
Fill in for registration of shares of Common Stock and Security if to
be issued otherwise than to the registered holder.
Social Security or other Taxpayer
(Name) Identifying Number
(Address)
Please print Name and
Address (including zip
code number)
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution or established in one or
more indentures supplemental hereto, prior to the issuance of Securities of any
series,
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from Securities of
any other series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and
delivered under this Indenture (except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Securities of the series pursuant to Sections 304, 305,
306, 906 or 1107 and except for any Securities which, pursuant to
Section 303, are deemed never to have been authenticated and
delivered hereunder);
(3) the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of the Securities of
the series is payable;
(5) the rate or rates at which the Securities of the series shall
bear interest, if any, or the Floating or Adjustable Rate Provision
pursuant to which such rates shall be determined, the date or dates from
which such interest shall accrue, the Interest Payment Dates on which
any such interest shall be payable and the Regular Record Date for any
interest payable on any Interest Payment Date;
(6) whether the Securities of the series would be secured
pursuant to Section 901(6);
(7) the place or places where the principal of and any premium and
interest on Securities of the series shall be payable;
(8) the period or periods within which, the price or prices at
which (including premium, if any) and the terms and conditions upon which
Securities of the series may be redeemed, in whole or in part, at the
option of the Company pursuant to a sinking fund or otherwise;
(9) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(10) the terms of any right to convert Securities of the series
into shares of Common Stock of the Company or other securities or
property;
(11) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which Securities of
the series shall be issuable;
(12) the currency or currencies, including composite currencies,
or currency units in which payment of the principal of and any
premium and interest on any Securities of the series shall be payable if
other than the currency of the United States of America and the manner of
determining the equivalent thereof in the currency of the United States of
America for purposes of the definition of "Outstanding" in Section 101;
(13) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined with reference
to one or more indices, the manner in which such amounts shall be
determined;
(14) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the
Company or a Holder thereof, in one or more currencies, including
composite currencies, or currency units other than that or those in
which the Securities are stated to be payable, the currency, currencies,
including composite currencies, or currency units in which payment of the
principal of and any premium and interest on Securities of such series as
to which such election is made shall be payable, and the periods within
which and the terms and conditions upon which such election is to be
made;
(15) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
502 or provable under any applicable federal or state bankruptcy or
similar law pursuant to Section 503;
(16) if and as applicable, that the Securities of the series shall
be issuable in whole or in part in the form of one or more Global
Securities and, in such case, the Depositary or Depositaries for
such Global Security or Global Securities and any circumstance other
than those set forth in Section 305 in which any such Global Security
may
be transferred to, and registered and exchanged for Securities
registered in the name of, a Person other than the Depositary for such
Global Security or a nominee thereof and in which any such transfer may be
registered;
(17) any other event or events of default applicable with respect
to the Securities of the series in addition to those provided in Section
501(1) through (7);
(18) any other covenant or warranty included for the benefit of
Securities of the series in addition to (and not inconsistent with) those
included in this Indenture for the benefit of Securities of all series,
or any other covenant or warranty included for the benefit of Securities
of the series in lieu of any covenant or warranty included in this
Indenture for the benefit of Securities of all series, or any provision
that any covenant or warranty included in this Indenture for the benefit of
Securities of all series shall not be for the benefit of Securities of
the series, or any combination of such covenants, warranties or
provisions;
(19) any restriction or condition on the
transferability of the Securities of the series;
(20) any authenticating or paying agents, registrars, conversion
agents or any other agents with respect to the Securities of the series;
and
(21) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or
pursuant to the Board Resolution referred to above or in any such indenture
supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of such action shall be delivered to the Trustee.
Section 302. Denominations.
The Securities of each series shall be issuable in registered
form without coupons in such denominations as shall be specified as contemplated
by Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman,
its President, any Executive Vice President, any Vice President, its Treasurer
or Assistant Treasurer, under its corporate seal reproduced thereon attested
by its Corporate
Secretary or one of its Assistant Corporate Secretaries. The signature of
any of these officers on the Securities may be manual or facsimile.
The seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the
Securities. Securities bearing the manual or facsimile signatures of
individuals who were at any time the
proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such
Securities. Minor typographical and other minor errors in the text of any
Security or minor defects in the seal or facsimile signature on any Security
shall not affect the validity or enforceability of such Security if it has
been duly authenticated and delivered by the Trustee.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of
any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with the
Company Order shall authenticate and deliver such Securities. If the form or
terms of the Securities of the series have been established in or pursuant to
one or more Board Resolutions as permitted by Sections 201 and 301, in
authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 601)
shall be fully protected in relying upon, an Opinion of Counsel stating,
(a) if the form of such Securities has been
established by or pursuant to a Board Resolution as
permitted by Section 201, that such form has been established
in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been
established by or pursuant to a Board Resolution as
permitted by Section 301, that such terms have been established
in conformity with the provisions of this Indenture; and
(c) that such Securities, when authenticated and delivered by
the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute
valid and legally binding obligations of the Company enforceable in
accordance
with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, rehabilitation
and similar laws of general applicability relating to or affecting
creditors' rights generally or the rights of creditors of insurance
companies or insurance
holding companies generally and to general equity principles.
The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in
good faith by its board of directors, executive committee, or a trust committee
of directors or responsible officers of the Trustee shall determine that such
action would expose the Trustee to personal liability to existing Holders of
Securities.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at
one time, it shall not be necessary to deliver the Board Resolution
otherwise required pursuant to Section 301 or the Company Order and Opinion
of Counsel otherwise required pursuant to such preceding paragraph at or prior
to the time of authentication of each Security of such series if such
documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication substantially
in the form provided for herein executed by the Trustee by manual
signature, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. Notwithstanding the foregoing, if any
Security shall have been authenticated and delivered hereunder but never
issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such
Securities. Every temporary Security shall be executed by the Company and
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary
Securities of such series at the office or agency of the Company in a
Place of
Payment for that series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of
any series, the Company shall execute and the Trustee shall authenticate
and deliver in exchange therefor one or more definitive Securities of the
same series, of any authorized denominations and of a like aggregate
principal amount and tenor. Until so exchanged the temporary Securities of
any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it or the Trustee may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities.
The Trustee is hereby appointed "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any series
at the office or agency in a Place of Payment for that series, the Company
shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and
of a like aggregate principal amount and tenor, upon surrender of the
Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate
and deliver, the Securities which the Holder making the exchange is entitled
to receive and bearing numbers not contemporaneously outstanding.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer,
exchange, redemption or payment shall (if so required
by the Company or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory
to the Company and the Security Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company
or the Trustee may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 304, 906 or 1107 not involving any transfer.
Neither the Company nor the Trustee shall be required (i) to issue,
register the transfer of or exchange Securities of any series during a
period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of Securities of that series selected for
redemption under Section 1103 and ending at the close of business on the
day of such mailing, or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
Notwithstanding any other provision in this Indenture, no Global
Security may be transferred to, or registered or exchanged for Securities
registered in the name of, any Person other than the Depositary for such
Global Security or any nominee thereof,
and no such transfer may be registered, unless (1) such Depositary
(A) notifies the Company and the Trustee that it is unwilling or unable to
continue as Depositary for such Global Security or (B) ceases to be a
clearing agency registered under the Exchange Act, (2) the Company executes
and delivers to the Trustee a Company Order that such Global Security shall
be so transferable, registrable and exchangeable, and such transfers shall
be registrable, (3) there shall have occurred and be continuing an Event
of Default with respect to the Securities evidenced by such Global Security
or (4) there shall exist such other circumstances, if any, as have been
specified for this purpose as contemplated by Section 301. Notwithstanding any
other provision in this Indenture, a Global Security to which the
restriction set forth in the preceding sentence shall have ceased to apply may
be transferred only to, and may be registered and exchanged for Securities
registered only in the name or names of, such Person or Persons as the
Depositary for such Global Security shall have directed and no transfer
thereof other than such a transfer may be registered.
Every Security authenticated and delivered upon registration of transfer
of, or in exchange for or in lieu of, a Global Security to which the
restriction set forth in the first sentence of the preceding paragraph shall
apply, whether pursuant to this Section, Section 304, 306, 906 or 1107 or
otherwise, shall be authenticated and delivered in the form of, and shall
be, a Global Security.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If there shall be delivered to the Company and the Trustee (i) a
mutilated Security, or (ii) evidence to their satisfaction of the destruction,
loss or theft of any Security and in either case such security or indemnity as
may be required by either of them to save each of them and any agent of
either of them harmless, then, in the absence of notice to the Company or
the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such mutilated, destroyed,
lost or stolen Security, a new Security of the same series and of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
or the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of (but shall be subject to
all the limitations of rights set forth in) this Indenture equally and
proportionately with any and all other Securities of that series duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect
to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date
shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in
each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the date
of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest
as in this Clause provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 15 days after the receipt by the
Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-
class postage prepaid, to each Holder of Securities of such series at its
address as it appears in the Security Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities of any series in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such notice as
may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this Clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Subject to the provisions of Section 1202, in the case of any Security
which is converted after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date (other than any Security the principal of (or
premium, if any, on) which shall become due and payable, whether at a Stated
Maturity or by declaration of acceleration, call for redemption, or
otherwise, prior to such Interest Payment Date), interest whose Stated
Maturity is on such Interest Payment Date shall be payable on such Interest
Payment Date notwithstanding such conversion and such interest (whether or
not punctually paid or duly provided for) shall be paid to the Person in whose
name that Security (or any one or more Predecessor Securities) is registered
at the
close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in
the case of any Security which is converted, interest whose Stated
Maturity is after the date of conversion of such Security shall not be payable.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any premium
and (subject to Section 307) any interest on such Security and for all
other purposes whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, registration
of transfer or exchange or for credit against any sinking fund or analogous
payment or for conversion shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and may deliver to the Trustee
(or to any other Person for delivery to
the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as
provided in this
Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of as directed by a Company
Order. Acquisition by the Company of any Security shall not operate as a
redemption or satisfaction of the indebtedness represented by such Security
unless and until the same is delivered to the Trustee for cancellation.
Section 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of conversion, registration of
transfer or exchange of Securities of a series herein expressly provided for)
with respect to Securities of any series, and the Trustee, at the expense of
the Company, shall
execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to a series, when
(1) either
(A) all Securities of such series theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306 and (ii)
Securities of such
series for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities of such series not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements reasonably satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee in trust
for the purpose (A) money (either in United States dollars or such other
currency or currency unit in which the Securities of any series may be
payable) in an amount, or (B) U.S. Government Obligations (or
Foreign Government Obligations if the Securities are denominated in a
foreign currency or currencies) that through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment,
money in an amount,
or (C) a combination thereof, sufficient to pay and discharge the
entire indebtedness on such Securities of such
series not theretofore delivered to the Trustee for cancellation,
for principal of (and premium, if any) and interest to the date of
such deposit (in the case of Securities of such series which have
become due and payable) or to the Stated Maturity or Redemption Date, as
the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture with respect to such series have been complied with.
In the event there are Securities of two or more series outstanding
hereunder, the Trustee shall be required to execute an instrument
acknowledging satisfaction and discharge of this Indenture only if requested
to do so with respect to Securities of a particular series as to which it is
Trustee and if the other conditions thereto are met. In the event that there
are two or more Trustees hereunder, then the effectiveness of any such
instrument shall be conditioned upon receipt of such instruments from all
Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to a particular series, the obligations of the Company to the Trustee
under Section 607, the obligations of the Trustee to any Authenticating Agent
under Section 614 and, if money shall have been deposited with the Trustee
pursuant to subclause (B) of Clause (1) of this Section, the obligations of
the Trustee under Section 402 and the last paragraph of Section 1003 shall
survive until there are no Securities Outstanding with respect to a particular
series and the obligations of the Company and the Trustee with respect to all
other series of Securities shall survive.
Section 402. Application of Trust Fund.
Subject to provisions of the last paragraph of Section 1003, all amounts
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee
may determine, to the Persons entitled thereto, of the principal and any
premium and interest for whose payment such funds have been deposited with the
Trustee.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default" whenever used with respect to Securities of a series
means any one of the following events and such other events as may be
established with respect to the Securities of such series as contemplated by
Section 301 hereof:
(1) Default in the payment of any instalment of interest upon any of
the Securities of such series as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or
(2) Default in the payment of the principal of or premium, if any, on
any of the Securities of such series as and when the same shall become
due and payable either at maturity, upon redemption, by declaration or
otherwise; or
(3) Default in the making of any sinking fund payment, whether
mandatory or optional, as and when the same shall become due and
payable by the terms of the Securities of such series; or
(4) Failure on the part of the Company duly to observe or perform in
any material respect any other of the covenants or agreements on the part
of the Company contained in this Indenture or in the Securities (other
than those set forth exclusively in the terms of any other particular
series of Securities established as contemplated by this Indenture for the
benefit of such other series) and written notice of such failure, stating
that such notice is a "Notice of Default" hereunder, and requiring the
Company to remedy the same, shall have been given by registered or
certified mail, return receipt requested, to the Company by the Trustee,
or to the Company and the Trustee by the holders of at least
25% in aggregate principal amount of the Outstanding Securities of
that series, and such failure shall have continued unremedied for a
period of 90 days after the date of the Company's receipt of such Notice
of Default; or
(5) An event of default, as defined in any indenture or instrument
evidencing or under which the Company or any
Principal Insurance Subsidiary shall have outstanding indebtedness
for borrowed money in a principal amount in excess of $50,000,000,
shall happen and be continuing and such indebtedness shall have been
accelerated so that the same shall be or become due and payable prior to
the date on which the same would otherwise have become due and payable or
the Company or any Principal Insurance Subsidiary shall default in the
payment at final maturity of outstanding indebtedness for borrowed
money in a principal amount in excess of $50,000,000, and such
acceleration or default at maturity shall not be waived, rescinded or
annulled within 30 days after written notice thereof, stating that
such notice is a "Notice of Default" hereunder, shall have been given to
the Company by the Trustee (if such event be known to it), or to the
Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the Outstanding
Securities of that series; provided, however, that if such acceleration
under such indenture or instrument or default at maturity shall be
remedied or cured by the
Company or Principal Insurance Subsidiary, or waived, rescinded or
annulled by the requisite holders of such indebtedness, then the Event
of Default hereunder by reason thereof shall be deemed likewise to have
been thereupon remedied, cured or waived without further action upon
the part of either the Trustee or any of the Holders; and
provided further, that, subject to the provisions of Sections 601
and 602, the Trustee shall not be charged with knowledge of any such
default unless written notice thereof shall have been given to the Trustee
by the Company, by the holder of any such indebtedness or an agent of the
holder of any such indebtedness, by the trustee then acting under any such
indenture or other instrument under which such default shall have
occurred, or by the holders of at least 25% in aggregate principal amount
of the Outstanding Securities of that series; or
(6) A decree or order by a court having jurisdiction in the premises
shall have been entered adjudging the Company or any Principal Insurance
Subsidiary a bankrupt or insolvent,
or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of the Company
or any Principal Insurance Subsidiary under any applicable Federal or State
bankruptcy or similar law, and such decree or order shall have continued
undischarged and unstayed for a period of 90 days; or a decree or order of
a
court having jurisdiction in the premises for the appointment
of a receiver, liquidator, trustee, assignee, sequestrator or similar
official in bankruptcy or insolvency of the Company or any Principal
Insurance Subsidiary or of all or substantially all of its property, or
for the winding up or liquidation of its affairs, shall have been
entered, and such decree or order shall have continued undischarged and
unstayed for a period of 90 days; or
(7) The Company or any Principal Insurance Subsidiary shall
institute proceedings to be adjudicated a voluntary bankrupt, or
shall consent to the filing of a bankruptcy proceeding against it, or
shall file a petition or answer or consent seeking reorganization,
arrangement, adjustment or composition under any applicable Federal or
State bankruptcy or similar law, or shall consent to the filing of any
such petition, or shall consent to the appointment of a receiver,
liquidator, trustee, assignee, sequestrator or similar official in
bankruptcy or insolvency of the Company or any Principal Insurance
Subsidiary or of all or substantially all of its property, or shall
make an assignment for the
benefit of creditors, or shall admit in writing its inability to
pay its debts generally as they become due and its willingness to be
adjudged a bankrupt, or corporate action shall be taken by the
Company or any Principal Insurance Subsidiary in furtherance of any of
the aforesaid purposes.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if any of the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if
given by Holders), and upon any such declaration such principal amount (or
specified amount) shall become immediately due and payable; provided, however,
that if an Event of Default specified in Section 501(6) or (7) occurs and is
continuing, such principal amount of all such Securities shall ipso facto
become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holders; provided, further, that except
in the case of a default in the payment of the principal of (or premium, if
any) or interest on any Security or in the payment of any sinking fund payment,
the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the
Holders of such Securities.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of
the Outstanding Securities of that series, by written notice to the Company
and the Trustee, may waive all defaults and may rescind and annul such
declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than by
such declaration of acceleration and any interest thereon at the
rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel due the Trustee under Section
607;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of and interest, if any, on
the Securities of that series which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon written demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and any premium and interest and, to
the extent that payment of such interest shall be legally enforceable, interest
on any overdue principal and premium and on any overdue interest, at the rate
or rates prescribed therefor in such Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, except such costs and expenses as are a result of
negligence or bad faith on the part of the
Trustee. Until such demand is made by the Trustee, the Company may pay the
principal of and premium, if any, and interest, if any, on the Securities of
any series to the registered holders, whether or not the Securities of such
series are overdue.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders
of Securities of such series by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any
such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such
claims and to distribute the same; and
any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due it for the
reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding;
provided, however, that the Trustee may, on behalf of the Holders, vote
for the election of a trustee in bankruptcy or similar official and be a
member of a creditors' or other similar committee.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel due the
Trustee under Section 607, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal or
any premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof
if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities in respect of
which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and any premium
and interest, respectively; and
THIRD: To the payment of the remainder, if any, to the Company or
any other Person lawfully entitled thereto.
Section 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory in form and substance to the Trustee against the
costs, expenses and liabilities to be incurred in compliance with such
request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right
under this Indenture, except in the manner herein provided and for the equal
and ratable benefit of all of such Holders.
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Section
307) any interest on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to convert such Securities in accordance with Article Twelve and to
institute suit for the enforcement of any such payment or such right of
conversion, and such rights shall not be impaired without the consent of such
Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy given hereunder
or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence
therein. Subject to Section 507, every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders of such series
not joining therein.
Upon receipt by the Trustee of any such direction with respect to
Securities of any series, a record date shall be set for determining the
Holders of Outstanding Securities of such series entitled to join in such
direction, which record date shall be the close of business on the day the
Trustee receives such direction. The Holders of Outstanding Securities of
such series on such record date (or their duly appointed agents), and only
such Persons, shall be entitled to join in such direction, whether or not
such Holders remain Holders after such record date; provided that, unless
such direction shall have become effective by virtue of Holders of at
least a majority in principal amount of Outstanding Securities of such series
on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such record date, such direction
shall automatically and without any action by any Person be cancelled and
of no further effect. Nothing in this paragraph shall prevent a Holder (or
a duly appointed agent thereof) from giving, before or after the expiration
of such 90-day period, a direction contrary to or different from, or, after
the expiration of such period, identical to, a direction that has been cancelled
pursuant to the proviso to the preceding sentence, in which event a new record
date in respect thereof shall be set pursuant to this paragraph.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past
default hereunder with respect to such series and its consequences,
except a default
(1) in the payment of the principal of or any premium or interest on
any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the
Trust Indenture Act; provided that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Company.
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it. Whether or not therein expressly so
provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
Section 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any
event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to Securities of such series.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity
reasonably satisfactory in form and substance to the Trustee against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall upon reasonable notice to the Company
be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney at a time and place
reasonably acceptable to the Company; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
Except as otherwise required by the Trust Indenture Act, the
Trustee undertakes to perform only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Company, and neither the Trustee nor any
Authenticating Agent assumes any responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except
as otherwise agreed with the Company.
Section 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its written request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this
Indenture (including the reasonable compensation, and reasonable
expenses and disbursements of its agents and outside counsel), except
any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder,
including the reasonable costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee, in its capacity as Trustee
(but not in any other capacity), except funds held in trust for the
payment of principal of (or premium, if any) or interest on particular
Securities or any coupons. The provisions of this Section shall survive the
termination of this Identure.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(6) or (7), the expenses
(including reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
Section 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject
to the provisions of, the Trust Indenture Act and this Indenture.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000 or is a subsidiary of a
corporation which shall be a Person that has a combined capital and surplus
of at least $50,000,000 and which unconditionally guarantees the obligations
of the Trustee hereunder. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be deemed to
be its combined capital and surplus as set forth in its most recent report
of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
Section 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514,
any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of itself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor Trustee or
Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the Securities
of one or more or all of such series and that at any time there shall be
only one Trustee with respect to the Securities of any particular series)
and shall comply with the
applicable requirements of Section 611. If, within one year
after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities of any Series
shall be appointed by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the Company
and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 611, become the successor Trustee with
respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by
the Company. If no successor Trustee with respect to the Securities of
any Series shall have been so appointed by the Company or the Holders and
accepted appointment in the manner required by Section 611, any Holder who
has been a bona fide Holder of a Security of such series for at least six
months may, on behalf of itself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series to all Holders of Securities of such series in the manner provided in
Section 106. Each notice shall include the name of the successor Trustee with
respect to the Securities of such series and the address of its Corporate
Trust Office.
Section 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee; but,
on the request of the Company or the successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of
the retiring Trustee and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder, subject nevertheless to its claim, if any, provided for in Section
607.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of such series shall execute and deliver an indenture supplemental
hereto wherein each successor Trustee shall accept such appointment and which
(1) shall contain such provisions as shall be necessary or desirable to
transfer the rights, powers, trust and duties of the retiring Trustee with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates, (2) if the retiring Trustee is not
retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is
not retiring shall continue to be vested in the retiring Trustee, and (3)
shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustee co-trustees of
the same trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring
Trustee shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates; but, on request of the
Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates,
subject nevertheless to its claim, if any, provided for in Section 607.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraphs (a) and (b) of this Section, as the case may be.
(d) No successor shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this
Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation
to which the Trustee shall be a party, or any corporation succeeding to all
or substantially all the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of
the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 614. Appointment of Authenticating Agent.
The Trustee may with the consent of the Company appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon original issue and upon exchange, registration of
transfer, partial conversion or partial redemption thereof or pursuant to
Section 306, and Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the
Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to
the Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section, such Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation
to which such Authenticating Agent shall be a party, or any corporation
succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such corporation shall be otherwise eligible under this Section, without
the execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee or the
Company may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the
Company or the Trustee, as the case may be. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating
Agent shall cease to be eligible in accordance with the provisions of
this Section, the Trustee may appoint a successor Authenticating Agent which
shall be acceptable to the Company and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve, as
their names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder,
with like effect as if
originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
SIGNET TRUST COMPANY,
As Trustee
By: , As
Authenticating Agent
By: , Authorized
Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than 10 days after each Regular Record
Date in each year, a list for each series of Securities, in such form
as the Trustee may reasonably require, of the names and addresses of
the Holders of Securities of such series as of the preceding Regular
Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto. To the extent that any such report is required by the Trust
Indenture Act with respect to any 12 month period, such report shall cover
the 12 month period ending May 15 and shall be transmitted by the next
succeeding July 15.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock
exchange upon which any Securities are listed, with the Commission
and with the Company. The Company will notify the Trustee when any
Securities are listed on any stock exchange.
Section 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times
and in the manner
provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, OR SALE OR ASSETS
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person
or convey, transfer, lease or sell its properties and assets as, or
substantially as, an entirety to any Person, and the Company shall not permit
any Person to consolidate with or merge into the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or sell its properties and assets as, or substantially as,
an entirety to any Person, the Person formed by such consolidation
or into which the
Company is merged or the Person which acquires by conveyance,
transfer, lease or sale of the properties and assets of the Company as,
or substantially as, an entirety shall be a corporation, partnership or
trust, shall be organized and validly existing under the laws of the
United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all of the obligations of the Company under the
Securities, including without limitation, the due and punctual payment of
the principal of and any premium and interest on all the Securities and
the
performance or observance of every covenant of this Indenture on
the part of the Company to be performed or observed and the
conversion rights, if any, shall be
provided for in accordance with Article Twelve, by supplemental
indenture satisfactory in form to the Trustee, executed and delivered to
the Trustee, by the Person (if other than the Company) formed by such
consolidation or into
which the Company shall have been merged or by the
corporation which shall have acquired or leased the Company's
assets;
(2) immediately after giving effect to such transaction,
no Event of Default shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance, transfer,
lease or sale and, if a supplemental indenture is
required in connection with such transaction, such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of the properties and assets of United States Fidelity and
Guaranty Company (other than to the Company or another Subsidiary), which, if
such assets were owned by the Company, would constitute all or substantially
all of the properties and assets of the Company, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
Section 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any sale of the properties and assets of the Company as,
or substantially as, an entirety in accordance with Section 801, the successor
Person formed by such consolidation or into which the Company is merged or
to which such sale is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and thereafter, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance
of Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons, or to permit or
facilitate the issuance of Securities in uncertificated form, or to
permit or facilitate the issuance of Original Issue Discount
Securities; or
(5) to add to, change or eliminate any of the provisions of
this Indenture in respect of one or more series of Securities,
provided that any such addition, change or elimination (i) shall
neither (A) apply to any Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit of
such provision nor (B) modify the rights of the Holder of any such
Security with respect to such provision or (ii) shall become effective
only when there is no such Security Outstanding; or
(6) to secure the Securities pursuant to the requirements
of Section 1005, or to otherwise secure the Securities of any series; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611(b); or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with
respect to matters or questions arising under this Indenture,
provided that such action pursuant to this clause (9) shall not adversely
affect the interests of the Holders of Securities of any series in any
material respect; or
(10) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article Twelve, including
providing for the conversion of the securities into any security
(other than the Common Stock of the Company) or property of the Company; or
(11) to conform to any mandatory provisions of law.
Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority of principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights
of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding
Security affected thereby,
(1) change the Stated Maturity of the principal of, or any instalment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon (including any change
in the Floating or Adjustable Rate Provision pursuant to which such
rate is determined that would reduce such rate for any period) or any
premium payable upon the redemption thereof, or reduce the amount of the
principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502, or change any Place of Payment where, or the
coin or currency in which, any Security or any premium or interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture, or
(3) if applicable, make any change that adversely affects the
right to convert any security to which the provisions of Article
Twelve are applicable or, except as provided in this Indenture, decrease
the conversion rate or increase the conversion price of any such security,
or
(4) modify any of the provisions of this Section, Section 513
or Section 907, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby, provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to changes in
the references to "the Trustee" and concomitant changes in this Section and
Section 907, or the deletion of
this proviso, in accordance with the requirements of Sections
611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and
such supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee
as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities of such series.
Section 907. Waiver of Compliance by Holders.
Anything in this Indenture to the contrary notwithstanding, any of the
acts which the Company is required to do, or is prohibited from doing, by
any of the provisions of this Indenture may, to the extent that such
provisions might be changed or eliminated by a supplemental indenture
pursuant to Section 902 upon consent of holders of not less than a majority
in aggregate principal amount of the then Outstanding Securities of the series
affected, be omitted or done by the Company, if there is obtained the prior
consent or waiver of the holders of at least a majority in aggregate principal
amount of the then Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay or cause to be paid the
principal of and any premium and interest on the Securities of that series in
accordance with the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
So long as any Securities are Outstanding, the Company will maintain in
each Place of Payment for any series of Securities an office or agency where
Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or
exchange, where Securities of that series may be surrendered for conversion
and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the
Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series
of Securities, it will, prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided
by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (i) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, and upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium
or interest on any Security of any
series and remaining unclaimed for two years after such principal,
premium or interest has become due and payable shall be paid to the Company
on Company Request, or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, the City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee within 120 days after the end
of each fiscal year of the Company ending after the date hereof, a
certificate signed by the Company's principal executive officer, principal
financial officer or principal accounting officer stating whether or not to
the best knowledge of the signer thereof the Company is in compliance with
all terms, conditions and covenants of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and if
the signer has obtained knowledge of any continuing default by the Company
in the performance, observation
or fulfillment of any such term, condition or covenant, specifying
each such default and the nature thereof.
Section 1005. Limitations on Liens on Common Stock of Principal Insurance
Subsidiaries.
As long as any of the Securities remains outstanding, the Company will
not, and will not permit any Principal Insurance Subsidiary to, issue, assume,
incur or guarantee any indebtedness for borrowed money secured by a mortgage,
pledge, lien or other encumbrance, directly or indirectly, on any of the
Common Stock of a Principal Insurance Subsidiary, which Common Stock is owned
by the Company or by any Principal Insurance Subsidiary, unless
the Securities and, if the Company so elects, any other indebtedness
of the Company ranking on a parity with the Securities, shall be secured
equally and ratably with, or prior to, such secured indebtedness for borrowed
money so long as it is outstanding.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except
as otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.
Section 1102. Election to Redeem; Notice to Trustee.
In case of any redemption at the election of the Company of less than all
the Securities of any series, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of Securities of such series to be redeemed and, if
applicable, of the tenor of the Securities to be redeemed. In the case of
any redemption of Securities prior to the expiration of any restriction on
such redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction.
Section 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed
(unless all of the Securities of such series and of a specified tenor are to
be redeemed), the particular Securities to be redeemed shall be selected not
more than 45 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series not previously called for redemption,
by such method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities of
that series. If less than all of the Securities of such series and of a
specified tenor are to be redeemed, the particular Securities to be
redeemed shall be selected not more than 45 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities of such series and
specified tenor not previously called for redemption in accordance with the
preceding sentence.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to be redeemed
shall be treated by the Trustee as Outstanding for the purpose of such
selection.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
Section 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at its address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption
of any Securities, the principal amounts) of the particular Securities to
be redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after said
date,
(5) if applicable, the conversion price, and that the date on
which the right to convert the principal of the Securities or the
portions thereof to be redeemed will terminate will be the Redemption
Date and the place or
places where such Securities may be surrendered for conversion,
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
(7) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date, other than any Securities called for
redemption on that date which have been converted prior to the date of such
deposit.
If any Security or portion thereof called for redemption is converted,
any money deposited with the Trustee or with any Paying Agent or so
segregated and held in trust for the redemption of such Security or
portion thereof shall (subject to any right of the Holder of such Security
or any Predecessor Security to receive interest as provided in the last
paragraph of Section 307) be paid to the Company upon Company Request or, if
then held by the Company, shall be discharged from such trust.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of
any such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that, unless otherwise
specified as contemplated by Section 301, installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
Section 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory
to the Company and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series and of like
tenor, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
ARTICLE TWELVE
CONVERSION OF SECURITIES
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to the Securities of
any series which are convertible into shares of Common Stock of the Company,
and the issuance of such shares of Common Stock upon the conversion of such
Securities, except as otherwise specified as contemplated by Section 301
for the Securities of such series.
Section 1202. Exercise of Conversion Privilege.
In order to exercise a conversion privilege, the Holder of a Security of a
series with such a privilege shall surrender such Security to the Company at
the office or agency maintained for that purpose pursuant to Section 1002,
accompanied by written notice to the Company that the Holder elects to
convert such Security or a specified portion thereof. Such notice shall also
state, if different from the name and address of such Holder, the name or
names (with address) in which the certificate or certificates for shares
of Common Stock which shall be issuable on such conversion shall be issued.
Securities surrendered for conversion shall (if so required by the Company or
the Trustee) be duly endorsed by or accompanied by instruments of transfer in
forms satisfactory to the Company and the Trustee duly executed by the
registered Holder or its attorney duly authorized in writing; and Securities
so surrendered for conversion during the period from the close of business on
any Regular Record Date to the opening of business on the next succeeding
Interest Payment
Date (excluding Securities or portions thereof called for redemption
during such period) shall also be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of such Security then
being converted, and such
interest shall be payable to such registered Holder
notwithstanding the conversion of such Security, subject to the provisions of
Section 307 relating to the payment of Defaulted Interest by the Company. As
promptly as practicable after the receipt of such notice and of any payment
required pursuant to a Board Resolution and, subject to Section 303, set
forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto setting forth
the terms of such series of Security, and the surrender of such Security
in accordance with such reasonable regulations as the Company may prescribe,
the Company shall issue and shall deliver, at the office or agency at which such
Security is surrendered, to such Holder or on its written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such Security (or specified portion thereof),
in accordance with the provisions of such Board Resolution, Officers'
Certificate or supplemental indenture, and cash as provided therein in
respect of any fractional share of such Common Stock otherwise issuable
upon such conversion. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which such notice
and such payment, if required, shall have been received in proper order for
conversion by the Company and such Security shall have been surrendered as
aforesaid (unless such Holder shall have so surrendered such Security and
shall have instructed the Company to effect the conversion on a
particular date following such surrender and such Holder shall be entitled to
convert such Security on such date, in which case such conversion shall be
deemed to be effected immediately prior to the close of business on such
date) and at such time the rights of the Holder of such Security as such
Security Holder shall cease and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock of the Company
shall be issuable upon such conversion shall be deemed to have become the
Holder or Holders of record of the shares represented thereby. Except as
set forth above and subject to the final paragraph of Section 307, no
payment or adjustment shall be made upon any conversion on account of any
interest accrued on the Securities surrendered for conversion or on
account of any dividends on the Common Stock of the Company issued upon
such conversion.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to or on the order of the Holder thereof, at the expense of the
Company, a new Security or Securities of the same series, of authorized
denominations, in aggregate principal amount equal to the unconverted portion
of such Security.
Section 1203. No Fractional Shares.
No fractional share of Common Stock of the Company shall be
issued upon conversions of Securities of any series. If more than one
Security shall be surrendered for conversion at one time by the same Holder,
the number of full shares which shall be issuable upon conversion shall be
computed on the basis of the aggregate principal amount of the Securities
(or specified portions thereof to the extent permitted hereby) so surrendered.
If, except for the provisions of this Section 1203, any Holder of a Security or
Securities would be entitled to a fractional share of Common Stock of the
Company upon the conversion of such Security or Securities, or specified
portions thereof, the Company shall pay to such Holder an amount in cash equal
to the current market value of such fractional share computed, (i) if such
Common Stock is listed or admitted to unlisted trading privileges on a
national securities exchange, on the basis of the last reported sale price
regular way on such exchange on the last trading day prior to the date of
conversion upon which such a sale shall have been effected, or (ii) if such
Common Stock is not at the time so listed or admitted to unlisted
trading privileges on a national securities exchange, on the basis of the
average of the bid and asked prices of such Common Stock in the over-the-
counter market, on the last trading day prior to the date of conversion,
as reported by the National Association of Securities Dealers Automated
Quotation System, or if not so available, the fair market price as
determined by the Board of
Directors. For purposes of this Section, "trading day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday other than any day on which
the Common Stock is not traded on the New York Stock Exchange, or if the Common
Stock is not traded on the New York Stock Exchange, on the principal exchange
or market on which the Common Stock is traded or quoted.
Section 1204. Adjustment of Conversion Price.
The conversion price of Securities of any series that is convertible
into Common Stock of the Company shall be adjusted
for any stock dividends, stock splits, reclassification, combinations
or similar transactions in accordance with the terms of the supplemental
indenture or Board Resolutions setting forth the terms of the Securities of such
series.
Whenever the conversion price is adjusted, the Company shall compute the
adjusted conversion price in accordance with terms of the applicable Board
Resolution or supplemental indenture and shall prepare an Officers'
Certificate setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 1002 and, if
different, with the Trustee. The Company shall forthwith cause a notice
setting forth the adjusted conversion price to be mailed, first class postage
prepaid, to each Holder of Securities of such series at its address appearing
on the Security Register and to any conversion agent other than the Trustee.
Section 1205. Notice of Certain Corporate Actions.
In Case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock (other than dividends or distributions which will
not require an adjustment of the conversion price of Securities of any
series pursuant to Section 1204); or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights, options or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other rights
(other than any such grant for which approval of any shareholders of the
Company is required or which will not require an adjustment of the
conversion price of Securities of any series pursuant to Section 1204);
or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock, or of any consolidation, merger or share exchange to which
the Company is a party and for which approval of any shareholders of the
Company is required or which will not require an adjustment of the
conversion price of Securities of any series pursuant to Section 1204),
or of the sale of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Trustee, and shall cause
to be mailed to all Holders at their last addresses as they shall appear in the
Securities Register, at least 20 days (or 10 days in any case specified in
clause (a) or (b) above) prior to the applicable record date hereinafter
specified, a notice stating (i) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights, options or warrants, or,
if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, rights,
options or warrants are to be determined, or (ii) the date on which such
reclassification,
consolidation, merger, share exchange, sale, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, share
exchange, sale, dissolution, liquidation or winding up. If at any time the
Trustee shall not be the conversion agent, a copy of such notice shall also
forthwith be filed by the Company with the conversion agent.
Section 1206. Reservation of Shares of Common Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares
of Common Stock of the Company then issuable upon the conversion of all
outstanding Securities of any series that have conversion rights.
Section 1207. Payment of Certain Taxes Upon Conversion.
The Company will pay any and all taxes that may be payable in respect of
the issue or delivery of shares of its Common Stock on conversion of Securities
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of its Common Stock in a name other than that of the
Holder of the Security or Securities to be converted, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax, or has established, to the
satisfaction of the Company, that such tax has been paid.
Section 1208. Nonassessability.
The Company covenants that all shares of its Common Stock which may be
issued upon conversion of Securities will upon issue in accordance with the
terms hereof be duly and validly issued and fully paid and nonassessable.
Section 1209. Effect of Consolidation or Merger on Conversion Privilege.
In case of any consolidation of the Company with, or merger of the Company
into or with any other Person, or in the case of a statutory share exchange to
which the Company is a party or in case of any sale or conveyance of all or
substantially all of the properties or assets of the Company (including cash),
the Company or the Person formed by such consolidation or the Person into
which the Company shall have been merged or the Person which shall have
acquired such assets, or the surviving entity in such share exchange, as the
case may be, shall execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Security then outstanding of any series that
is convertible into Common Stock of the Company shall have the right, which
right shall be the exclusive conversion right thereafter available to
said Holder (until the expiration of the conversion right of such Security), to
convert such Security into the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such
consolidation, merger, share exchange, conveyance or sale by a holder of the
number of shares of Common Stock of the Company into which such Security
might have been converted immediately prior to such
consolidation, merger, share exchange, conveyance or sale,
subject to compliance with the other provisions of this
Indenture, such Security and such supplemental indenture. Such supplemental
indenture shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in such Security. The
above provisions of this Section shall similarly apply to successive
consolidations, mergers, share exchanges, conveyances or sales. It is
expressly agreed and understood that anything in this Indenture to the
contrary notwithstanding, if, pursuant to such merger, consolidation,
share exchange, conveyance or sale, holders of outstanding shares of Common
Stock of the Company do not receive shares of common stock of the surviving
corporation but receive other securities, cash or other property or any
combination thereof, Holders of Securities shall not have the right to
thereafter convert their Securities into common stock of the
surviving corporation or the corporation which shall have acquired such
assets, but rather, shall have the right upon such conversion to receive the
other securities, cash or other property receivable by a holder of the
number of shares of Common Stock of the Company into which the Securities
held by such holder might have been converted immediately prior to such
consolidation, merger, share exchange, conveyance or sale, all as more fully
provided in the first sentence of this Section 1209. Anything in this
Section 1209 to the contrary notwithstanding, the provisions of this Section
1209 shall not apply to a merger or consolidation of another corporation with
or into the Company or any share exchange to which the Company is a party
pursuant to which both of the following conditions are applicable: (i) the
Company is the surviving or successor corporation and (ii) the outstanding
shares of Common Stock of the Company are not changed or converted into any
other securities or property (including cash) or changed in number or
character or reclassified pursuant to the terms of such merger, consolidation or
share exchange.
As evidence of the kind and amount of shares of stock or
other securities or property (including cash) into which
Securities may properly be convertible after any such consolidation,
merger, share exchange, conveyance or sale, or as
to the appropriate adjustments of the conversion prices applicable
with respect thereto, the Trustee shall be furnished with and may accept the
certificate or opinion of an independent certified public accountant with
respect thereto; and, in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely thereon, and shall not be responsible
or accountable to any Holder of Securities for any provision in conformity
therewith or approved by such independent certified accountant which may be
contained in said supplemental indenture.
Section 1210. Duties of Trustee Regarding Conversion.
Neither the Trustee nor any conversion agent shall at any time be
under any duty or responsibility to any Holder of Securities of any series
that is convertible into Common Stock of the Company to determine whether any
facts exist which may require any adjustment of the conversion price, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, whether herein or in any supplemental
indenture, any resolutions of the Board of Directors or written instrument
executed by one or more officers of the Company provided to be employed in
making the same. Neither the Trustee nor any conversion agent shall be
accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock of the Company, or of any securities or property,
which may at any time be issued or delivered upon the conversion of any
Securities and neither the Trustee nor any conversion agent makes any
representation with respect thereto. Subject to the provisions of Section 601,
neither the Trustee nor any conversion agent shall be responsible for any
failure of the Company to issue, transfer or deliver any shares of its Common
Stock or stock certificates or other securities or property upon the surrender
of any Security for the purpose of conversion or to comply with any of the
covenants of the Company contained in this Article Twelve or in the
applicable supplemental indenture, resolutions of the Board of Directors
or written instrument executed by one or more duly authorized officers of the
Company.
Section 1211. Repayment of Certain Funds Upon Conversion.
Any funds which at any time shall have been deposited by the Company or
on its behalf with the Trustee or any other paying agent for the purpose of
paying the principal of, and premium, if any, and interest, if any, on any of
the Securities (including funds deposited for the sinking fund referred to in
Article Three hereof) and which shall not be required for such purposes because
of the conversion of such Securities as provided in this Article Twelve shall
after such conversion be repaid to the Company by the Trustee upon the
Company's written request.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at any time, to have either Section 1302 or
Section 1303 applied to the Outstanding Securities of any series, upon
compliance with the conditions set forth below in this Article Thirteen.
Section 1302. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section 1301
to have this Section 1302 applied to the Outstanding Securities of any series,
the Company shall be deemed to have
been discharged from its obligations with respect to the Outstanding
Securities of such series as provided in this Section on and after the date
the conditions set forth in Section 1304
are satisfied (hereinafter called "Defeasance"). For this purpose, such
Defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the Outstanding Securities of such
series and to have satisfied all its other obligations under the Securities
of such series and this Indenture insofar as the Securities of such
series are concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), subject to the
following which shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of Securities of such series to receive,
solely from the trust fund described in Section 1304 and as more fully set
forth in such Section, payments in respect of the principal of and any premium
and interest on such Securities of such series when payments are due, (2)
the Company's obligations with respect to the Securities of such series under
Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts, duties
and immunities of the Trustee hereunder, including, without limitation, its
rights under Section 607 and (4) this Article Thirteen. Subject to compliance
with this Article Thirteen, the Company may exercise its option provided
in Section 1301 to have this Section
1302 applied to the Outstanding Securities of any series
notwithstanding the prior exercise of its option provided in Section 1301
to have Section 1303 applied to the Outstanding Securities of such series.
Section 1303. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section 1301
to have this Section 1303 applied to the outstanding Securities of any series,
(1) the Company shall be released from its obligations under Section 1005
and Section 801 and any provision of a supplemental indenture specified
for release pursuant to the terms thereof and (2) the occurrence of any event
specified in Sections 501(3), 501(4) (with respect to Section 1005 and
Section 801) and 501(5) shall be deemed not to be or result in an Event of
Default, in each case with respect to the Outstanding Securities of such series
as provided in this Section on and after the date the conditions set forth in
Section 1304
are satisfied (hereinafter called "Covenant Defeasance"). For this purpose,
such Covenant Defeasance means that the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such specified Section (to the extent so specified in the
case of Section
501(4)), whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or by reason of any reference in any
such Section to any other provision herein or in any other document, but the
remainder of this Indenture and the Securities of such series shall be
unaffected thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
1302 or Section 1303 to the Outstanding Securities of any series:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee that satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article Thirteen applicable to it) as trust funds in
trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of Outstanding Securities of such series, (A)
in the case of Securities of such series denominated in U.S. dollars,
(i) money in an amount, or (ii) U.S. Government Obligations that
through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount, or (iii) a
combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or any such
other qualifying trustee) to pay and discharge, the principal of and any
premium and interest on the Securities of such series on the
respective Stated Maturities, in accordance with the terms of this
Indenture and the Securities of such series. As used herein, "U.S.
Government Obligation" means (x) any security that is (i) a direct
obligation of the United States of America for the payment of which full
faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an
agency or instrumentality for the United States of America the payment
of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case (i) or
(ii), is not callable or redeemable at the option of the issuer thereof,
and (y) any depositary receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act of 1933, as amended) as custodian with
respect to any specific payment of principal of or interest on any such
U.S. Government
Obligation specified in Clause (x) and held by such custodian for
the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of
or interest on any such U.S. Government Obligation, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the Holder of such depositary
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or interest
evidenced by such depositary receipt; or (B) in the case of Securities
of such series denominated in a currency other than the U.S. dollar,
(i) money in such
currency in an amount, or (ii) Foreign Government Obligations
that through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, money in such currency in an
amount, or (iii) a combination thereof, in each case sufficient, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or any such other qualifying trustee) to pay and discharge, the
principal of and any premium and interest on the Securities of such
series on the respective Stated Maturities, in accordance with the
terms of this Indenture and the Securities of such
series. As used herein, "Foreign Government Obligation" means (x)
any security that is (i) a direct obligation of the government that issued
such currency for the payment of which full faith and credit of such
government is pledged or (ii) an obligation of a Person controlled or
supervised by
and acting as an agency or instrumentality for such
government the payment of which is unconditionally guaranteed as
a full faith and credit obligation by such government, which, in either
case (i) or (ii), is not callable or redeemable at the option of the
issuer thereof, and (y) any depositary receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act of 1933, as
amended) as custodian with respect to any specific payment of principal
of or interest on any such Foreign Government
Obligation specified in Clause (x) and held by such custodian for
the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of
or interest on any such Foreign Government Obligation, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the Holder of such depositary
receipt from any amount received by the custodian in respect of the
Foreign Government Obligation or the specific payment of principal or
interest evidenced by such depositary receipt.
(2) In the case of an election under Section 1302, the Company shall
have delivered to the Trustee an Opinion of
Counsel stating that the Holders of the Outstanding Securities of
such series will not recognize gain or loss for Federal income tax
purposes as a result of the deposit, Defeasance and discharge to be
effected with respect to the Securities of such series and will be
subject to Federal income tax on the same amount, in the same manner and
at the same times as would be the case if such deposit, Defeasance and
discharge were not to occur.
(3) In the case of an election under Section 1303, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that
the Holder of the Outstanding Securities of such series will not
recognize gain or loss for Federal income tax purposes as result of the
deposit and Covenant Defeasance to be effected with respect to the
Securities of such series and will be subject to Federal income tax on
the same amount, in the same manner and at the same times as would be the
case if such deposit and Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities of such series, if then
listed on any securities exchange, will not be delisted as a result of such
deposit.
(5) No Event of Default or event that (after notice or lapse of
time or both) would become an Event of Default shall have occurred and
be continuing at the time of such deposit or, with regard to any Event of
Default or any such event specified in Sections 501(6) and 501(7), at any
time on or prior to the 90th day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until after
such 90th day).
(6) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or Covenant
Defeasance have been complied with.
(7) Such Defeasance or Covenant Defeasance shall not result in
the trust arising from such deposit constituting an investment company
within the meaning of the Investment Company Act of 1940, as amended,
unless such trust shall be
qualified under such Act or exempt from regulation thereunder.
Section 1305. Deposited Money and U.S. Government Obligations or Foreign
Government Obligations to be Held In Trust; Other
Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations or Foreign Government Obligations
(including the proceeds thereof) deposited with the Trustee or other qualifying
trustee (solely for purposes of this Section and Section 1306, the Trustee and
any such other trustee are referred to collectively as the "Trustee") pursuant
to Section 1304 in respect of the Securities of any Defeasible Series shall
be held in trust and applied by the Trustee, in accordance with the
provisions of the Securities of such series and this Indenture, to the
payment, either directly or through any such Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Holders of Securities of such series, of all sums due and to become due
thereon in respect of principal and any premium and interest, but money so
held in trust need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S.
Government Obligations or Foreign Government Obligations deposited
pursuant to Section 1304 or the principal and interest received in respect
thereof other than any such tax, fee or other charge that by law is for
the account of the Holders of Outstanding Securities.
Anything in this Article Thirteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request any money or U.S. Government Obligations or
Foreign Government Obligations held by it as provided in Section 1304 with
respect to Securities of any Defeasible Series that, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Defeasancseries.
series.
Section 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article Thirteen with respect to the Securities of any
series by reason of any order or judgment of any court or governmental
authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations
under this Indenture and the Securities of such series shall be revived
and reinstated as though no deposit had occurred pursuant to this Article
Thirteen with respect to Securities of such series until such time as the
Trustee or Paying Agent is permitted to apply all money held in trust
pursuant to Section 1305 with respect to Securities of such series in
accordance with this Article Thirteen; provided, however, that if the
Company makes any payment of principal of or any premium or interest on any
Security of such series following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of Securities of
such series to receive such payment from the money so held in trust.
ARTICLE FOURTEEN
SINKING FUNDS
Section 1401. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified
as contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional
sinking fund
payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as
provided in Section 1402. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
Section 1402. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been converted pursuant to Article Twelve
or Securities of a series which have been acquired or redeemed either at the
election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to
the terms of such Securities or otherwise, in each case in satisfaction of
all or any part of any sinking fund payment with respect to the Securities
of such series required to be made pursuant to the terms of such Securities as
provided for by the terms of such series; provided that such Securities have
not been previously so credited. Such Securities shall be received and
credited for such purpose by the Trustee at the Redemption Price specified
in such Securities for redemption through operation of the sinking fund and
the amount of such sinking fund payment shall be reduced accordingly.
Section 1403. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that
series pursuant to Section 1402 and will also deliver to the Trustee any
Securities to be so delivered. Not less than 15 nor more than 45 days before
each such sinking fund payment date the Trustee shall select the Securities to
be redeemed upon such sinking fund payment date in the manner specified in
Section 1103 and cause notice of the redemption thereof to be given in the
name of and at the expense of the Company in the manner provided
in Section 1104. Such notice having been duly given, the redemption of
such Securities shall be made upon the terms and in the manner stated in
Sections 1106 and 1107.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
USF&G CORPORATION
By:
Name:
Title:
Attest::
SIGNET TRUST COMPANY
By:
Name:
Title:
Attest:
STATE OF )
) ss.:
COUNTY OF )
On the day of January, 1994, before me personally
came , to me known, who, being by me duly
sworn, did depose and say that (s)he is of USF&G
CORPORATION, one of the corporations described in and which executed the
foregoing instrument; that (s)he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that
(s)he signed her/his name thereto by like authority.
Notary Public
My Commission expires:
STATE OF )
) ss.:
COUNTY OF )
On the day of January, 1994, before me personally
came , to me known, who, being by me duly
sworn, did depose and say that (s)he is of SIGNET
TRUST COMPANY, one of the corporations described in and which executed the
foregoing instrument; that (s)he knows the
seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that (s)he signed her/his name thereto by
like authority.
Notary Public
My Commission expires:
Exhibit 4H
$100,000,000
CREDIT AGREEMENT
dated as of
December 1, 1994
among
USF&G Corporation
The Banks Listed Herein
and
Deutsche Bank AG,
New York and/or Cayman Island Branches,
as Agent
TABLE OF CONTENTS(*)
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions..................................... 1
SECTION 1.02. Accounting Terms and Determinations............. 16
SECTION 1.03. Types of Borrowings............................. 16
ARTICLE II
THE CREDITS
(*)The Table of Contents is not a part of this Agreement.
SECTION 2.01. Commitments to Lend............................. 17
SECTION 2.02. Notice of Committed Borrowing................... 17
SECTION 2.03. Money Market Borrowings......................... 18
SECTION 2.04. Notice to Banks; Funding of Loans............... 22
SECTION 2.05. Euro-Currency Loans in an Alternative Currency.. 23
SECTION 2.06. Notes........................................... 24
SECTION 2.07. Maturity of Loans............................... 24
SECTION 2.08. Interest Rates.................................. 25
SECTION 2.09. Facility Fees................................... 30
SECTION 2.10. Optional Termination or Reduction of Commitments 31
SECTION 2.11. Mandatory Termination of Commitments............ 31
SECTION 2.12. Mandatory and Optional Prepayments.............. 31
SECTION 2.13. General Provisions as to Payments............... 32
SECTION 2.14. Funding Losses.................................. 33
SECTION 2.15. Computation of Interest and Fees................ 33
SECTION 2.16. Judgment Currency............................... 34
SECTION 2.17. Extension of Termination Date................... 34
ARTICLE III
CONDITIONS
SECTION 3.01. Closing......................................... 36
SECTION 3.02. Borrowings...................................... 37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power................... 38
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention................................. 38
SECTION 4.03. Binding Effect.................................. 38
SECTION 4.04. Financial Information........................... 38
SECTION 4.05. Litigation...................................... 40
SECTION 4.06. Compliance with ERISA........................... 40
SECTION 4.07. Environmental Matters........................... 40
SECTION 4.08. Taxes........................................... 41
SECTION 4.09. Subsidiaries.................................... 41
SECTION 4.10. Not an Investment Company....................... 41
SECTION 4.11. Full Disclosure................................. 41
ARTICLE V
COVENANTS
SECTION 5.01. Information..................................... 42
SECTION 5.02. Payment of Obligations.......................... 44
SECTION 5.03. Maintenance of Property; Books and Records;
Insurance..................................... 45
SECTION 5.04. Conduct of Business and Maintenance of
Existence..................................... 45
SECTION 5.05. Compliance with Laws............................ 46
SECTION 5.06. Negative Pledge................................. 46
SECTION 5.07. Consolidations, Mergers and Sales of Assets;
Ownership by USF&G Corporation................ 47
SECTION 5.08. Use of Proceeds................................. 48
SECTION 5.09. Ratio of Debt to Adjusted Consolidated Tangible
Net Worth..................................... 48
SECTION 5.10. Minimum Consolidated Tangible Net Worth......... 48
SECTION 5.11. Transactions with Affiliates.................... 48
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default............................... 49
SECTION 6.02. Notice of Default............................... 51
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization................... 52
SECTION 7.02. Agent and Affiliates............................ 52
SECTION 7.03. Action by Agent................................. 52
SECTION 7.04. Consultation with Experts....................... 52
SECTION 7.05. Liability of Agent.............................. 52
SECTION 7.06. Indemnification................................. 53
SECTION 7.07. Credit Decision................................. 53
SECTION 7.08. Successor Agent................................. 53
SECTION 7.09. Agent's Fee..................................... 54
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair..................................... 54
SECTION 8.02. Illegality...................................... 55
SECTION 8.03. Increased Cost and Reduced Return............... 55
SECTION 8.04. Taxes........................................... 57
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed
Rate Loans.................................... 59
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices......................................... 60
SECTION 9.02. No Waivers...................................... 61
SECTION 9.03. Expenses; Indemnification....................... 61
SECTION 9.04. Sharing of Set-Offs............................. 61
SECTION 9.05. Amendments and Waivers.......................... 62
SECTION 9.06. Successors and Assigns.......................... 62
SECTION 9.07. Collateral...................................... 64
SECTION 9.08. Governing Law; Submission to Jurisdiction....... 64
SECTION 9.09. Counterparts; Integration; Effectiveness........ 65
SECTION 9.10. WAIVER OF JURY TRIAL............................ 65
Pricing Schedule
Schedule I
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of the General Counsel of the Borrower
Exhibit F - Opinion of Counsel to the Borrower
Exhibit G - Opinion of Special Counsel for the Agent
Exhibit H - Assignment and Assumption Agreement
CREDIT AGREEMENT
AGREEMENT dated as of December 1, 1994 among USF&G CORPORATION,
the BANKS listed on the signature pages hereof and DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLAND BRANCHES, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market
Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in Section 2.08(b).
"Adjusted Consolidated Tangible Net Worth" means at any date
the consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries (1) plus any unrealized holding losses (or less any unrealized
holding gains, net of relevant adjustments for deferred policy acquisition
costs) on account of available-for-sale debt securities to the extent
reflected therein (together with other adjustments, all as determined in
accordance with Statement of Financial Accounting Standards No. 115 of the
Financial Accounting Standards Board, as amended from time to time, or any
successor provision thereto) and (2) less their consolidated Intangible
Assets, all determined as of such date. For purposes of this definition
"Intangible Assets" means the amount (to the extent reflected in determining
such consolidated stockholders' equity) of (i) all write-ups (other than
write-ups resulting from foreign currency translations, write-ups of assets of
a going concern business made within twelve months after the acquisition of
such business and changes made in accordance with generally accepted
accounting principles in the book value of any Investments in Persons other
than the Borrower and its Consolidated Subsidiaries) subsequent to December
31, 1993 in the book value of any asset owned by the Borrower or a
Consolidated Subsidiary and (ii) all unamortized debt discount and expense,
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, organization or developmental expenses and other
intangible assets (other than deferred policy acquisition costs and net
deferred tax assets).
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.08(c).
"Administrative Questionnaire" means, with respect to each
Bank, an administrative questionnaire in the form prepared by the Agent and
submitted to the Agent (with a copy to the Borrower) duly completed by such
Bank.
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower (a "Controlling
Person") or (ii) any Person (other than the Borrower or a Subsidiary) which is
controlled by or is under common control with a Controlling Person. As used
herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Deutsche Bank AG, New York and/or Cayman Island
Branches in its capacity as agent for the Banks hereunder, and its successors
in such capacity.
"Alternative Currency" means each of Canadian Dollars, Deutsche
Marks, French Francs, Japanese Yen, Pound Sterling and Swiss Francs so long as
it is freely transferable and convertible into United States Dollars, and any
other currency (other than United States Dollars) designated as such by the
Borrower and, pursuant to Section 9.05(iv), the Banks.
"Applicable Lending Office" means, with respect to any Bank,
(i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in
the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office, (iii) in
the case of its Money Market Loans, its Money Market Lending Office and (iv)
in the case of its Euro-Currency Loans, its Euro-Currency Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.08(b).
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 9.06(c), and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus
the Federal Funds Rate for such day.
"Base Rate Loan" means a Committed Loan to be made by a Bank as
a Base Rate Loan in accordance with the applicable Notice of Committed
Borrowing or pursuant to Article VIII.
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means USF&G Corporation, a Maryland corporation, and
its successors.
"Borrower's 1993 Form 10-K" means the Borrower's annual report
on Form 10-K for 1993, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly
report on Form 10-Q for the quarter ended September 30, 1994, as filed with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.08(b).
"CD Loan" means a Committed Loan to be made by a Bank as a CD
Loan in accordance with the applicable Notice of Committed Borrowing.
"CD Margin" has the meaning set forth in Section 2.08(b).
"CD Reference Banks" means Deutsche Bank AG, New York Branch,
Credit Lyonnais, New York Branch, and Morgan Guaranty Trust Company of New
York.
"Closing Date" means the date on or after the Effective Date on
which the Agent shall have received the documents specified in or pursuant to
Section 3.01.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof, as such
amount may be increased from time to time as contemplated by Section 2.17 or
reduced from time to time pursuant to Sections 2.10 and 2.11.
"Committed Loan" means a loan made by a Bank pursuant to
Section 2.01.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable, agents'
commissions and other similar charges and expenses arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all non-contingent obligations (and, for purposes of Section 5.06 and the
definitions of Material Debt and Material Financial Obligations, all contingent
obligations) of such Person to reimburse any bank or other Person in respect
of amounts paid under a letter of credit or similar instrument, (vi) all Debt
secured by a Lien on any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person (but excluding any such Debt to the
extent such Debt exceeds the fair market value of such assets (such fair
market value to be established by the Borrower to the reasonable satisfaction
of the Required Banks), unless such Debt is assumed), (vii) all obligations of
such Person to purchase securities (or other property) which arise out of or
in connection with the sale of the same or substantially similar securities or
property and (viii) all Debt of others Guaranteed by such Person, provided
that obligations of any Person referred to only in clauses (i) through (iii),
inclusive, above shall constitute Debt of such Person only to the extent that
they are, or are required to be, recorded on the financial statements of such
Person as a liability under generally accepted accounting principles.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations
(other than obligations incurred as a result of writing futures, options,
swaps or other derivative transactions in respect of, or based upon, insurance
products or risks, including the futures and options contracts relating to
catastrophic losses traded on the Chicago Board of Trade or otherwise) of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions.
"Dollar Amount" means in relation to any Euro-Currency
Borrowing denominated in an Alternative Currency, the amount designated by the
Borrower as the Dollar Amount of such Euro-Currency Borrowing in the related
Notice of Committed Borrowing. Each Euro-Currency Borrowing denominated in an
Alternative Currency shall be deemed a utilization of the Commitments in an
amount equal to the Dollar Amount thereof.
"Dollars" and the sign "$" mean lawful money of the United
States of America.
"Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City are authorized by law
to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Agent; provided that any Bank
may so designate separate Domestic Lending Offices for its Base Rate Loans, on
the one hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such Bank shall be deemed
to refer to either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.08(b).
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 9.09.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and other governmental restrictions
relating to the environment, the effect of the environment on human health or
to emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"Equivalent Amount" means, on any date, the amount of
Alternative Currency converted from Dollars at the Agent's spot buying rate
(based on the London interbank market rate then prevailing) for Dollars
against such Alternative Currency as of approximately 9:00 A.M. (New York
time) three Euro-Currency Business Days before such date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary, are treated as a single employer under Section 414
of the Internal Revenue Code.
"Euro-Currency Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in Dollar deposits) in London, and, where funds are to be paid or made
available in an Alternative Currency, on which commercial banks are open for
domestic and international business (including dealings in deposits in such
Alternative Currency) in both London and the place where such funds are paid
or made available.
"Euro-Currency Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Euro-Currency Lending Office) or such other office,
branch or affiliate of such Bank as it may hereafter designate as its
Euro-Currency Lending Office by notice to the Borrower and the Agent.
"Euro-Currency Loan" means a Loan to be made by a Bank as a
Euro-Currency Loan pursuant to the applicable Notice of Committed Borrowing.
"Euro-Currency Margin" has the meaning set forth in Section
2.08(f).
"Euro-Currency Reference Banks" means the principal London
offices of Deutsche Bank AG, Credit Lyonnais, and Morgan Guaranty Trust
Company of New York.
"Euro-Currency Reserve Percentage" has the meaning set forth in
Section 2.08(f).
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to
each Bank, its office, branch or affiliate located at
its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Euro-Dollar Lending Office) or such
other office, branch or affiliate of such Bank as it may hereafter designate
as its Euro-Dollar Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Committed Loan to be made by a Bank
as a Euro-Dollar Loan in accordance with the applicable Notice of Committed
Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section
2.08(c).
"Euro-Dollar Reference Banks" means the principal London
offices of Deutsche Bank AG, Credit Lyonnais, and Morgan Guaranty Trust
Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.08(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Excluded Subsidiary" means any Subsidiary other than any (i)
Insurance Company Subsidiary and (ii) "Significant Subsidiary", as defined in
Section 210.1-02(v) of Regulation S-X, as amended from time to time,
promulgated by the Securities and Exchange Commission (17 C.F.R. Section
210.1-02(v)).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to Deutsche
Bank AG, New York Branch on such day on such transactions as determined by the
Agent.
"Fixed Rate Loans" means CD Loans or Euro-Currency Loans or
Euro-Dollar Loans or Money Market Loans (excluding Money Market LIBOR Loans
bearing interest at the Base Rate pursuant to Section 8.01(a)) or any
combination of the foregoing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include (i) endorsements for collection or deposit in the ordinary course
of business or (ii) if such Person is an insurance company, surety bonds and
insurance contracts (including financial guarantee insurance policies) in each
case issued in the ordinary course of such Person's business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Initial Banks" has the meaning set forth in Section 2.17.
"Insurance Company Subsidiary" means any Subsidiary domiciled
in the United States of America (including the District of Columbia) and its
territories and possessions or any State thereof and licensed or authorized
to do an insurance business in any of the foregoing.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two or three (or, subject to availability, six or nine months) thereafter, as
the Borrower may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each CD Borrowing, the period commencing on the date
of such Borrowing and ending 30, 60, 90 or 180 days thereafter, as the
Borrower may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day;
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 90 days
thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market LIBOR Borrowing, the period commencing
on the date of such Borrowing and ending such whole number of months
thereafter as the Borrower may elect in accordance with Section 2.03; provided
that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(5) with respect to each Money Market Absolute Rate Borrowing, the period
commencing on the date of such Borrowing and ending such number of days
thereafter (but not less than seven days) as the Borrower may elect in
accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(6) with respect to each Euro-Currency Borrowing, the period commencing on the
date of such Euro-Currency Borrowing and ending one, two or three (or, subject
to availability, six or nine) months thereafter, as the Borrower may elect in
the applicable Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Currency Business Day shall be extended to the
next succeeding Euro-Currency Business Day unless such Euro-Currency
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Currency
Business Day;
(b) any Interest Period which begins on the last Euro-Currency
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (c) below, end on the
last Euro-Currency Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit or otherwise.
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other
type of preferential arrangement that has the practical effect of creating a
security interest, in respect of such asset. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Currency Loan or a
Euro-Dollar Loan or a Money Market Loan and "Loans" means Domestic Loans or
Euro-Currency Loans or Euro-Dollar Loans or Money Market Loans or any
combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.08(c).
"Material Adverse Effect" means a material adverse effect on
the business, financial position, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
"Material Debt" means Debt (other than the Notes) of the
Borrower and/or one or more of its Subsidiaries (other than an Excluded
Subsidiary), arising in one or more related or unrelated transactions, in an
aggregate principal or face amount exceeding $30,000,000.
"Material Financial Obligations" means a principal or face
amount of Debt and/or the then-owed payment obligations in respect of
Derivatives Obligations of the Borrower and/or one or more of its Subsidiaries
(other than an Excluded Subsidiary), arising in one or more related or
unrelated transactions, exceeding in the aggregate $30,000,000.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $5,000,000.
"Money Market Absolute Rate" has the meaning set forth in
Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made by a
Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its
Domestic Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from time to time by
notice to the Borrower and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which case all references
herein to the Money Market Lending Office of such Bank shall be deemed to
refer to either or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank
pursuant to a LIBOR Auction (including such a loan bearing interest at the
Base Rate pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section
2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"Non-Recourse Debt" means Debt, secured only by real property
(including fixtures and personal property used therein or thereon and the
rents, profits and proceeds arising therefrom), in respect of which the holder
of such Debt has no recourse against the Borrower or any Subsidiary (other
than a Subsidiary the only assets of which consist of such real property
(including fixtures and personal property used therein or thereon and the
rents, profits and proceeds therefrom) or any asset of the Borrower or any
Subsidiary (except such real property (including fixtures and personal
property used therein or thereon and the rents, profits and proceeds arising
therefrom)), provided that if, at any time, the aggregate amount of gross
equity real estate Investments of the Borrower and its Subsidiaries shall
exceed $826,657,000, the amount of such excess shall constitute Debt other
than Non-Recourse Debt to the extent that the then existing aggregate
principal amount of Non-Recourse Debt shall exceed the sum of (i) $100,000,000
and (ii) the amount of such Non-Recourse Debt, but not to exceed $50,000,000,
outstanding as of the date hereof.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as
defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in
Section 2.03(f)).
"Officer's Certificate" means a certificate signed by the
President, any Vice-President responsible for financial matters, the Treasurer
or the Controller of the Borrower.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to,
by any Person which was at such time a member of the ERISA Group for employees
of any Person which was at such time a member of the ERISA Group.
"Pricing Schedule" means the Schedule attached hereto
identified as such.
"Prime Rate" means the rate of interest publicly announced by
Deutsche Bank AG, New York Branch from time to time as its Prime Rate.
"Reference Banks" means the CD Reference Banks or the
Euro-Currency Reference Banks or the Euro-Dollar Reference Banks, as the
context may require, and "Reference Bank" means any one of such Reference
Banks.
"Refunding Borrowing" means a Committed Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Committed Loans made by any Bank.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least 60% of
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 60% of the aggregate unpaid
principal amount of the Loans.
"Revolving Credit Period" means the period from and including
the Effective Date to and including the Termination Date.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person; unless otherwise specified, "Subsidiary" means a Subsidiary of
the Borrower.
"Termination Date" means the third anniversary of the
Effective Date or, if such day is not a Euro-Dollar Business Day, the next
preceding Euro-Dollar Business Day, subject to extension as provided in
Section 2.17.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined
as of the then most recent valuation date for such Plan, but only to the
extent that such excess represents a potential liability of a member of the
ERISA Group to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories and
possessions.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for changes concurred in
by the Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Borrower notifies
the Agent that the Borrower wishes to amend any covenant in Article V to
eliminate the effect of any change in generally accepted accounting principles
on the operation of such covenant (or if the Agent notifies the Borrower that
the Required Banks wish to amend Article V for such purpose), then the
Borrower's compliance with such covenant shall be determined on the basis of
generally accepted accounting principles in effect immediately before the
relevant change in generally accepted accounting principles became effective,
until either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower and the Required Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing"
denotes the aggregation of Loans of one or more Banks to be made to the
Borrower pursuant to Article II on a single date and for a single Interest
Period. Borrowings are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by
reference to the provisions of Article II under which participation therein is
determined (i.e., a "Committed Borrowing" is a Borrowing under Section 2.01
or 2.05 in which all Banks participate in proportion to their Commitments,
while a "Money Market Borrowing" is a Borrowing under Section 2.03 in which
the Bank participants are determined on the basis of their bids in accordance
therewith).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. During the Revolving
Credit Period, each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to make loans to the Borrower pursuant to this
Section from time to time in amounts such that the aggregate principal amount
of Committed Loans by such Bank at any one time outstanding shall not exceed
the amount of its Commitment. Each Borrowing under this Section 2.01 shall be
in an aggregate principal amount of $5,000,000 or any larger multiple of
$1,000,000 (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.02(c)) and shall be made from the
several Banks ratably in proportion to their respective Commitments. Within
the foregoing limits, the Borrower may borrow under this Section 2.01, repay,
or to the extent permitted by Section 2.11, prepay Loans and reborrow at any
time during the Revolving Credit Period under this Section 2.01.
SECTION 2.02. Notice of Committed Borrowing. The Borrower
shall give the Agent notice (a "Notice of Committed Borrowing") not later than
10:30 A.M. (New York City time) on (w) the Domestic Business Day before each
Base Rate Borrowing, (x) the second Domestic Business Day before each CD
Borrowing, (y) the fourth Euro-Currency Business Day before each Euro-Currency
Borrowing and (z) the third Euro-Dollar Business Day before each Euro-Dollar
Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Currency
Business Day in the case of a Euro-Currency Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing,
(b) the aggregate amount (in Dollars) of such Borrowing,
(c) whether the Loans comprising such Borrowing are to be CD
Loans, Base Rate Loans or Euro-Currency Loans or Euro-Dollar Loans,
and, if Euro-Currency Loans, the currency thereof in accordance with
the provisions of Section 2.05, and
(d) in the case of a Fixed Rate Borrowing, the duration of
the Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed
Borrowings pursuant to Section 2.01, the Borrower may, as set forth in this
Section, request the Banks during the Revolving Credit Period to make offers
to make Money Market Loans in United States Dollars only to the Borrower. The
Banks may, but shall have no obligation to, make such offers and the Borrower
may, but shall have no obligation to, accept any such offers in the manner set
forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section, it shall
transmit to the Agent by telex or facsimile transmission a Money Market Quote
Request substantially in the form of Exhibit B hereto so as to be received no
later than 10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar
Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date
of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon
receipt of a Money Market Quote Request, the Agent shall send to the Banks by
telex or facsimile transmission an Invitation for Money Market Quotes
substantially in the form of Exhibit C hereto, which shall constitute an
invitation by the Borrower to each Bank to submit Money Market Quotes offering
to make the Money Market Loans to which such Money Market Quote Request
relates in accordance with this Section.
(d) Submission and Contents of Money Market Quotes. (i)
Each Bank may submit a Money Market Quote containing an offer or offers to
make Money Market Loans in response to any Invitation for Money Market Quotes.
Each Money Market Quote must comply with the requirements of this subsection
(d) and must be submitted to the Agent by telex or facsimile transmission at
its offices specified in or pursuant to Section 9.01 not later than (x) 2:00
P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M.
(New York City time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to
the Banks not later than the date of the Money Market Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the Agent (or any
affiliate of the Agent) in the capacity of a Bank may be submitted, and may
only be submitted, if the Agent or such affiliate notifies the Borrower of the
terms of the offer or offers contained therein not later than (x) one hour
prior to the deadline for the other Banks, in the case of a LIBOR Auction or
(y) 15 minutes prior to the deadline for the other Banks, in the case of an
Absolute Rate Auction. Subject to Articles III and VI, any Money Market Quote
so made shall be irrevocable except with the written consent of the Agent
given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the
form of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x)
must be $5,000,000 or a larger multiple of $1,000,000, (y) may not
exceed the principal amount of Money Market Loans for which offers
were requested and (z) may be subject to an aggregate limitation as
to the principal amount of Money Market Loans for which offers being
made by such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below
the applicable London Interbank Offered Rate (the "Money Market
Margin") offered for each such Money Market Loan, expressed as a
percentage (specified to the nearest 1/10,000th of 1%) to be added to
or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%) (the
"Money Market Absolute Rate") offered for each such Money Market
Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto
or does not specify all of the information required by subsection
(d)(ii);
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (x) of any Money Market Quote submitted by a Bank that
is in accordance with subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market
Quote submitted by such Bank with respect to the same Money Market Quote
Request. Any such subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted solely to correct
a manifest error in such former Money Market Quote. The Agent's notice to the
Borrower shall specify (A) the aggregate principal amount of Money Market
Loans for which offers have been received for each Interest Period specified
in the related Money Market Quote Request, (B) the respective principal
amounts and Money Market Margins or Money Market Absolute Rates, as the case
may be, so offered and (C) if applicable, limitations on the aggregate
principal amount of Money Market Loans for which offers in any single Money
Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30
A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to
the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the
proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date
of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective), the Borrower shall notify
the Agent of its acceptance or non-acceptance of the offers so notified to it
pursuant to subsection (e). In the case of acceptance, such notice (a "Notice
of Money Market Borrowing") shall specify the aggregate principal amount of
offers for each Interest Period that are accepted. The Borrower may accept
any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the
related Money Market Quote Request,
(ii) the principal amount of each Money Market Borrowing must
be $5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be, and
(iv) the Borrower may not accept any offer that is described
in subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more
Banks with the same Money Market Margins or Money Market Absolute Rates, as
the case may be, for a greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related Interest Period, the
principal amount of Money Market Loans in respect of which such offers are
accepted shall be allocated by the Agent among such Banks as nearly as
possible (in multiples of $1,000,000, as the Agent may deem appropriate) in
proportion to the aggregate principal amounts of such offers. Determinations
by the Agent of the amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share (if
any) of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the
date of each Borrowing, each Bank participating therein shall (except as
provided in subsection (c) of this Section) make available its share of such
Borrowing, in Federal or other funds immediately available in New York City,
to the Agent at its address referred to in Section 9.01 or, subject to the
provisions of Section 2.05, if such Borrowing is to be made in an Alternative
Currency, make available the Equivalent Amount of such Alternative Currency
on that day (in such funds as may then be customary for the settlement of
international transactions in such Alternative Currency) to the account of the
Agent at such place in the country whose currency is the relevant Alternative
Currency or such other country as is mutually agreed to by the Borrower and
the Agent as shall have been notified by the Agent to the Banks by not less
than four Domestic Business Days' notice. Unless the Agent determines that any
applicable condition specified in Article III has not been satisfied, the
Agent will make the funds so received from the Banks available to the Borrower
at the Agent's aforesaid address.
(c) If any Bank makes a new Loan hereunder on a day on which
the Borrower is to repay all or any part of an outstanding Loan denominated in
the same currency from such Bank, such Bank shall apply the proceeds of its
new Loan to make such repayment and only an amount equal to the difference (if
any) between the amount being borrowed and the amount being repaid shall be
made available by such Bank to the Agent as provided in subsection (b), or
remitted by the Borrower to the Agent as provided in Section 2.12, as the case
may be.
(d) Unless the Agent shall have received notice from a Bank
prior to the date of any Borrowing that such Bank will not make available to
the Agent such Bank's share of such Borrowing, the Agent may assume that such
Bank has made such share available to the Agent on the date of such Borrowing
in accordance with subsections (b) and (c) of this Section 2.04 and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Bank shall not
have so made such share available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, a rate per annum equal to the
interest rate applicable thereto pursuant to Section 2.08 and (ii) in the case
of such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute such Bank's
Loan included in such Borrowing for purposes of this Agreement. Nothing in
this subsection (d) shall be deemed to relieve any Bank from its obligation to
extend Loans hereunder or to prejudice any rights which the Borrower may have
against any Bank as a result of any default by such Bank hereunder. The
failure of any Bank to make Loans hereunder shall not relieve any other Bank
from its obligation to make the Loans required to be made by it hereunder.
SECTION 2.05. Euro-Currency Loans in an Alternative Currency.
(a) Each Bank severally agrees to make Euro-Currency Loans
pursuant to Section 2.01 in an Alternative Currency upon receipt by the Agent
of a notice from the Borrower, such receipt to be not less than four
Euro-Currency Business Days prior to the date of Borrowing, requesting that
such Euro-Currency Loan be denominated in the Alternative Currency specified
in such notice for the Interest Period specified in such notice.
(b) Any Borrowing pursuant to Section 2.01 which is to be made
in an Alternative Currency shall be advanced in the Equivalent Amount of the
Dollar Amount thereof and shall be repaid or prepaid in such Alternative
Currency in the amount of the Alternative Currency borrowed. Interest payable
on any Loan denominated in an Alternative Currency shall be paid in such
Alternative Currency.
(c) Notwithstanding the satisfaction of all conditions
referred to in subsection (a) above with respect to any Borrowing, if there
shall occur on or prior to the date of such Borrowing any material change in
political conditions or change in exchange controls which would make it
impracticable for the Euro-Currency Loans comprising such Borrowing to be
denominated in the Alternative Currency specified by the Borrower, then the
Agent shall forthwith give notice thereof to the Borrower and the Banks, and
such Loans shall not be denominated in such Alternative Currency but shall be
made on the date of such Borrowing in Dollars as Base Rate Loans, unless the
Borrower notifies the Agent forthwith that it elects not to borrow on such
date.
SECTION 2.06. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the account
of its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans
of the relevant type. Each reference in this Agreement to the "Note" of such
Bank shall be deemed to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to Section
3.01(a), the Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount, type and maturity of each Loan made by it and the
date and amount of each payment of principal made by the Borrower with respect
thereto and, in the case of Euro-Currency Loans denominated in an Alternative
Currency, the currency, amount and Dollar Amount of such Loans, and may, if
such Bank so elects in connection with any transfer or enforcement of its Note,
endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by
the Borrower so to endorse its Note and to attach to and make a part of its
Note a continuation of any such schedule as and when required.
SECTION 2.07. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
SECTION 2.08. Interest Rates. (a) Each Base Rate Loan shall
bear interest on the outstanding principal amount thereof, for each day from
the date such Loan is made until it becomes due, at a rate per annum equal to
the Base Rate for such day. Such interest shall be payable for each Interest
Period on the last day thereof. Any overdue principal of or interest on any
Base Rate Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of 2% plus the rate otherwise applicable
to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for each day during the Interest Period applicable
thereto, at a rate per annum equal to the sum of the CD Margin for such day
plus the Adjusted CD Rate applicable to such Interest Period; provided that if
any CD Loan or any portion thereof shall, as a result of clause (2)(b) of the
definition of Interest Period, have an Interest Period of less than 30 days,
such portion shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than 90 days, at intervals of 90 days after the first day
thereof. Any overdue principal of or interest on any CD Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the sum of 2% plus the higher of (i) the sum of the CD Margin for such day
plus the Adjusted CD Rate applicable to the Interest Period for such Loan and
(ii) the rate applicable to Base Rate Loans for such day.
"CD Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum
bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable)
on the first day of such Interest Period by two or more New York certificate
of deposit dealers of recognized standing for the purchase at face value from
each CD Reference Bank of its certificates of deposit in an amount comparable
to the principal amount of the CD Loan of such CD Reference Bank to which such
Interest Period applies and having a maturity comparable to such Interest
Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars
in respect of new non-personal time deposits in dollars in New York City
having a maturity comparable to the related Interest Period and in an amount
of $100,000 or more. The Adjusted CD Rate shall be adjusted automatically on
and as of the effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate
in effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.3(e) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted automatically on and as
of the effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during the Interest Period
applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar
Margin for such day plus the Adjusted London Interbank Offered Rate applicable
to such Interest Period. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day thereof.
"Euro-Dollar Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days
before the first day of such Interest Period in an amount approximately equal
to the principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference
Bank to which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank
of the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of any Bank to United States residents). The Adjusted London
Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar
Loan shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin
for such day plus the Adjusted London Interbank Offered Rate applicable to the
Interest Period for such Loan and (ii) the sum of 2% plus the Euro-Dollar
Margin for such day plus the quotient obtained (rounded upward, if necessary,
to the next higher 1/100 of 1%) by dividing (x) the average (rounded upward,
if necessary, to the next higher 1/16 of 1%) of the respective rates per annum
at which one day (or, if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of time not longer than
six months as the Agent may select) deposits in Dollars in an amount
approximately equal to such overdue payment due to each of the Euro-Dollar
Reference Banks are offered to such Euro-Dollar Reference Bank in the London
interbank market for the applicable period determined as provided above by (y)
1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 8.01 shall exist, at a rate per
annum equal to the sum of 2% plus the rate applicable to Base Rate Loans for
such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan
shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the sum of
the London Interbank Offered Rate for such Interest Period (determined in
accordance with Section 2.08(c) as if the related Money Market LIBOR Borrowing
were a Committed Euro-Dollar Borrowing) plus (or minus) the Money Market
Margin quoted by the Bank making such Loan in accordance with Section 2.03.
Each Money Market Absolute Rate Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a
rate per annum equal to the Money Market Absolute Rate quoted by the Bank
making such Loan in accordance with Section 2.03. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three months, at intervals of three months after the
first day thereof. Any overdue principal of or interest on any Money Market
Loan shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the sum of 2% plus the Base Rate for such day.
(f) Each Euro-Currency Loan shall bear interest on the
outstanding principal amount thereof, for each day during the Interest Period
applicable thereto, at a rate per annum equal to the sum of the Euro-Currency
Margin for such day plus the Adjusted London Interbank Offered Rate applicable
to such Interest Period. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day thereof.
"Euro-Currency Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Currency
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which deposits in the relevant
Alternative Currency are offered to each of the Euro-Currency Reference Banks
in the London interbank market at approximately 11:00 A.M. (London time) two
Euro-Currency Business Days before the first day of such Interest Period in an
amount approximately equal to the principal amount of the Euro-Currency Loan
of such Euro-Currency Reference Bank to which such Interest Period is to apply
and for a period of time comparable to such Interest Period.
"Euro-Currency Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank
of the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which
the interest rate on Euro-Currency Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of any Bank to United States residents). The Adjusted London
Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Currency Reserve Percentage.
(g) Any overdue principal of or interest on any Euro-Currency
Loan shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the higher of (i) the sum of 2% plus the Euro-Currency
Margin for such day plus the Adjusted London Interbank Offered Rate applicable
to the Interest Period for such Loan and (ii) the sum of 2% plus the
Euro-Currency Margin for such day plus the quotient obtained (rounded upward,
if necessary, to the next higher of 1/100 of 1%) by dividing (x) the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Currency Business Days, then for such other period
of time not longer than six months as the Agent may select) deposits in the
relevant Alternative Currency in an amount approximately equal to such overdue
payment due to each of the Euro-Currency Reference Banks are offered to such
Euro-Currency Reference Bank in the London interbank market for the applicable
period determined as provided above by (y) 1.00 minus the Euro-Currency
Reserve Percentage (or, if the circumstances described in clause (a) or (b) of
Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the
rate applicable to Base Rate Loans for such day).
(h) The Agent shall determine each interest rate applicable
to the Loans hereunder. The Agent shall give prompt notice to the Borrower
and the participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(i) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
SECTION 2.09. Facility Fees. The Borrower shall pay to the
Agent for the account of the Banks ratably a facility fee at the Facility Fee
Rate (determined daily in accordance with the Pricing Schedule). Such
facility fee shall accrue (i) from and including the Closing Date to but
excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety), on the daily aggregate amount of the
Commitments (whether used or unused) and (ii) from and including the
Termination Date or such earlier date of termination to but excluding the date
the Loans shall be repaid in their entirety, on the daily aggregate
outstanding principal amount of the Loans. Accrued fees under this Section
shall be payable quarterly on each March 31, June 30, September 30 and
December 31 and upon the date of termination of the Commitments in their
entirety (and, if later, the date the Loans shall be repaid in their entirety).
SECTION 2.10. Optional Termination or Reduction of
Commitments. The Borrower may, upon at least three Domestic Business Days'
notice to the Agent, (i) terminate the Commitments at any time, if no Loans
are outstanding at such time or (ii) ratably reduce from time to time by an
aggregate amount of $5,000,000 or any larger multiple of $1,000,000, the
aggregate amount of the Commitments in excess of the aggregate outstanding
principal amount of the Loans.
SECTION 2.11. Mandatory Termination of Commitments. The
Commitments shall terminate on the Termination Date, and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable
on such date.
SECTION 2.12. Mandatory and Optional Prepayments. (a) If, on
any March 31, June 30, September 30 or December 31, the sum of (i) the
aggregate outstanding principal amount of the Loans (except Euro-Currency
Loans) and (ii) the aggregate Dollar Equivalent of all outstanding
Euro-Currency Borrowings exceeds 105% of the aggregate amount of the
Commitments, then the Borrower shall prepay, first, any Borrowing bearing
interest at the Base Rate and, second, any other Borrowing or Borrowings, in
each case as the Borrower may elect in a notice to the Agent, to an extent
such that the sum of (i) and (ii) above does not exceed 100% of the aggregate
amount of the Commitments.
(b) Subject in the case of any Fixed Rate Borrowing to Section
2.14, the Borrower may, upon at least three Domestic Business Days' notice to
the Agent, prepay any Domestic Borrowing (or any Money Market Borrowing
bearing interest at the Base Rate pursuant to Section 8.01(a)) or upon at
least three Euro-Currency Business Days' or Euro-Dollar Business Days' notice
to the Agent, prepay any Euro-Currency Borrowing or Euro-Dollar Borrowing, as
the case may be, in each case in whole at any time, or from time to time in
part in amounts aggregating $5,000,000 or any larger multiple of $1,000,000,
by paying the principal amount to be prepaid together with accrued interest
thereon to the date of prepayment. Each such optional prepayment shall be
applied to prepay ratably the Loans of the several Banks included in such
Borrowing.
(c) Except as provided in Section 2.12(a) or (b), the
Borrower may not prepay all or any portion of the principal amount of any
Money Market Loan prior to the maturity thereof.
(d) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share (if any) of such prepayment and such notice shall
not thereafter be revocable by the Borrower.
SECTION 2.13. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans
and of fees hereunder, not later than 12:00 Noon (New York City time) on the
date when due, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. The Agent will
promptly distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or of fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall
be extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the Euro-Currency Loans or the
Euro-Dollar Loans shall be due on a day which is not a Euro-Currency Business
Day or a Euro-Dollar Business Day, as the case may be, the date for payment
thereof shall be extended to the next succeeding Euro-Currency Business Day
or Euro-Dollar Business Day, as the case may be, unless such Euro-Currency
Business Day or Euro-Dollar Business Day, as the case may be, falls in another
calendar month, in which case the date for payment thereof shall be the next
preceding Euro-Currency Business Day or Euro-Dollar Business Day, as the case
may be. Whenever any payment of principal of, or interest on, the Money
Market Loans shall be due on a day which is not a Euro-Dollar Business Day,
the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable
for such extended time.
(b) All payments to be made by the Borrower hereunder or under
the Notes in an Alternative Currency pursuant to Section 2.05 shall be made in
such Alternative Currency in such funds as may then be customary for the
settlement of international transactions in such Alternative Currency for the
account of the Agent, at such time and either in London, England or at such
other place as shall have been agreed upon by the Agent and the Borrower and
notified by the Agent to the Borrower and the Banks by not less than four
Euro-Currency Business Days' notice. The Agent will promptly cause such
payments to be distributed to each Bank in like funds.
(c) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Agent may assume
that the Borrower has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank.
If and to the extent that the Borrower shall not have so made such payment,
each Bank shall repay to the Agent forthwith on demand such amount distributed
to such Bank together with interest thereon, for each day from the date such
amount is distributed to such Bank until the date such Bank repays such amount
to the Agent, at the Federal Funds Rate.
SECTION 2.14. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan (pursuant to Article
II, VI or VIII or otherwise) on any day other than the last day of the
Interest Period applicable thereto, or the last day of an applicable period
fixed pursuant to Section 2.07(d), or if the Borrower fails to borrow or
prepay any Fixed Rate Loans (including a failure to borrow in a specified
Alternative Currency due to the occurrence of any event described in Section
2.05(c), unless the Borrower elects not to make any such Borrowing in
accordance with the provisions of Section 2.05(c)) after notice has been given
to any Bank in accordance with Section 2.04(a) or 2.11(c), the Borrower shall
reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or failure to borrow or prepay,
provided that such Bank shall have delivered to the Borrower a certificate as
to the amount of such loss or expense, which certificate shall specify in
reasonable detail the nature and calculation of the amount claimed and shall
be conclusive in the absence of manifest error.
SECTION 2.15. Computation of Interest and Fees. Interest
based on the Prime Rate hereunder shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
interest and fees shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the first day but
excluding the last day).
SECTION 2.16. Judgment Currency. If for the purposes of
obtaining judgment in any court it is necessary to convert a sum due from the
Borrower hereunder or under any of the Notes in the currency expressed to be
payable herein or under the Notes (the "specified currency") into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase the
specified currency with such other currency at the Agent's New York office on
the Euro-Currency Business Day preceding that on which final judgment is
given. The obligations of the Borrower in respect of any sum due to any Bank
or the Agent hereunder or under any Note shall, notwithstanding any judgment
in a currency other than the specified currency, be discharged only to the
extent that on the Euro-Currency Business Day following receipt by such Bank
or the Agent (as the case may be) of any sum adjudged to be so due in such
other currency such Bank or the Agent (as the case may be) may in accordance
with normal banking procedures purchase the specified currency with such other
currency; if the amount of the specified currency so purchased is less than
the sum originally due to such Bank or the Agent, as the case may be, in the
specified currency, the Borrower agrees, to the fullest extent that it may
effectively do so, as a separate obligation and notwithstanding any such
judgment, to indemnify such Bank or the Agent, as the case may be, against
such loss, and if the amount of the specified currency so purchased exceeds
(a) the sum originally due to any Bank or the Agent, as the case may be, in
the specified currency and (b) any amounts shared with other Banks as a result
of allocations of such excess as a disproportionate payment to such Bank under
Section 9.04, such Bank or the Agent, as the case may be, agrees to remit such
excess to the Borrower.
SECTION 2.17. Extension of Termination Date. The Termination
Date may be extended, in the manner set forth below, on the last day of the
Revolving Credit Period (determined without regard to the last clause in the
definition thereof) and on each anniversary thereof (such day and each such
anniversary thereof being hereinafter referred to as an "Extension Date") for
a period of one year after the date on which the Termination Date would
otherwise have occurred. If the Borrower wishes to request an extension of
the Termination Date as of any Extension Date, it shall give notice to that
effect to the Agent not less than 90 nor more than 120 days prior to such
Extension Date, whereupon the Agent shall notify each of the Banks of such
request. Each Bank will use its best efforts to respond to such request,
whether affirmatively or negatively, within 15 days. If all of the Banks
respond affirmatively, then, subject to receipt by the Agent prior to such
Extension Date of counterparts of an extension agreement in form and substance
satisfactory to the parties hereto, the Termination Date shall be extended,
effective on such Extension Date, for a period of one year. If less than all
of the Banks respond affirmatively, then, subject to the affirmative response
of Deutsche Bank AG, New York and/or Cayman Island Branches, (1) the Borrower
may replace any or all of the Banks which did not respond affirmatively with
one or more other banks (including any of the Banks (an "Existing Bank")) so
long as each such bank (other than an Existing Bank) is reasonably acceptable
to the Agent and the aggregate commitment of such banks (including the increase
in the Commitment of each Existing Bank) equals the aggregate Commitments of
the Banks which did not respond affirmatively, at which time (I) the Borrower,
the Agent, the Banks which did respond affirmatively and such other bank or
banks shall execute and deliver an extension agreement, in form and substance
satisfactory to the parties thereto, pursuant to which the Termination Date
shall be so extended for a period of one year, and (II) the Borrower, the
Agent, the Banks which did not respond affirmatively and such other bank or
banks (including each Existing Bank which has agreed to increase its
Commitment) shall execute and deliver one or more Assignment and Assumption
Agreements as contemplated by Section 9.05(c) with respect to the Commitments
of the Banks which did not respond affirmatively which are being assumed by
such other bank or banks (including each Existing Bank which has agreed to
increase its Commitment) or, if the provisions of clause (1) are not
operative, (2) the Agent will promptly notify each of the Banks which did so
respond affirmatively of the names of the other Banks which so responded
affirmatively and of the aggregate amount of their then existing Commitments.
In the event that clause (2) is operative, each Bank (including Deutsche Bank
AG, New York and/or Cayman Island Branches, the "Initial Banks") which
initially responded affirmatively and subsequently receives such a notice from
the Agent will use its best efforts to respond to the Agent, whether
affirmatively or negatively, within 15 days as to whether it will agree to
extend the Termination Date for a period of one year for its then existing
Commitment, but with an aggregate Commitment equal to the sum of the then
existing Commitment of each Initial Bank. If each Initial Bank responds
affirmatively, then, subject to receipt by the Agent prior to such Extension
Date of counterparts of an extension agreement in form and substance
satisfactory to the parties thereto, the Termination Date shall be extended,
effective on such Extension Date, for a period of one year, but with an
aggregate Commitment equal to the sum of the Commitment of each Initial Bank,
provided that such extension shall be effective only if all amounts owing
hereunder to the Banks are paid in full on such Extension Date. If any
Initial Bank does not so respond affirmatively within such 15 days, then the
Termination Date shall not be so extended. No Bank shall incur any liability
or responsibility as a result of the failure of it or any other Bank or the
Agent to respond to any request made by the Agent pursuant to this Section
2.17 or otherwise to comply with any provision of this Section 2.17 and the
Agent shall not be liable or responsible for any failure by it or any Bank to
use its best efforts or otherwise comply with any provision of this Section
2.17.
ARTICLE III
CONDITIONS
SECTION 3.01. Closing. The closing hereunder shall occur upon
receipt by the Agent of the following documents, each dated the Closing Date
unless otherwise indicated:
(a) a duly executed Note for the account of each Bank dated
on or before the Closing Date complying with the provisions of
Section 2.06;
(b) an opinion of the General Counsel of the Borrower,
substantially in the form of Exhibit E hereto and covering such
additional matters relating to the transactions contemplated hereby
as the Required Banks may reasonably request;
(c) an opinion of Piper & Marbury, counsel for the Borrower,
substantially in the form of Exhibit F hereto and covering such
additional matters relating to the transactions contemplated hereby
as the Required Banks may reasonably request;
(d) an opinion of Davis Polk & Wardwell, special counsel for
the Agent, substantially in the form of Exhibit G hereto and covering
such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(e) all documents the Agent may reasonably request relating
to the existence of the Borrower, the corporate authority for and the
validity of this Agreement and the Notes, and any other matters
relevant hereto, all in form and substance satisfactory to the Agent.
The Agent shall promptly notify the Borrower and the Banks of the Closing
Date, and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any Bank to make
a Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) the fact that the Closing Date shall have
occurred on or prior to December 31, 1994;
(b) receipt by the Agent of a Notice of Borrowing as required
by Section 2.02 or 2.03, as the case may be;
(c) the fact that, immediately after such Borrowing, the sum
of (i) the aggregate outstanding principal amount of the Loans (other
than Euro-Currency Loans) and (ii) the aggregate Dollar Amount of all
Euro-Currency Loans (on such date in each case after taking into
account such Borrowing and the use of the proceeds thereof) will not
exceed the aggregate amount of the Commitments;
(d) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(e) the fact that, immediately after such Borrowing, the sum
of (i) the aggregate outstanding principal amount of the Loans (other
than Euro-Currency Loans) and (ii) the aggregate Dollar Equivalent of
all Euro-Currency Loans (on such date in each case after taking into
account such Borrowing and the use of the proceeds thereof) will not
exceed 105% of the aggregate amount of the Commitments; and
(f) the fact that the representations and warranties of the
Borrower contained in this Agreement (except, in the case of a
Refunding Borrowing, the representations and warranties set forth in
Sections 4.04(c) and 4.05, as to any matter which has theretofore
been disclosed in writing by the Borrower to the Banks, including
items disclosed in writing by the Borrower to the Banks by virtue of
any information provided pursuant to Section 5.01 of this Agreement)
shall be true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty
by the Borrower on the date of such Borrowing as to the facts specified in
clauses (c), (d), (e) and (f) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is
a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Maryland, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, other than such licenses,
authorizations, consents and approvals which, if not held or obtained by the
Borrower, do not, in the aggregate, have a Material Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of
this Agreement and the Notes are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, require no action by
or in respect of, or filing with, any governmental body, agency or official
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the articles of incorporation or by-laws of
the Borrower or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or any of its Subsidiaries or result in
the creation or imposition of any Lien on any asset of the Borrower or any of
its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower and each Note, when executed and
delivered in accordance with this Agreement, will constitute a valid and
binding obligation of the Borrower, in each case enforceable in accordance
with its terms.
SECTION 4.04. Financial Information.
(a) The consolidated statement of financial position and
shareholders' equity of the Borrower and its Consolidated Subsidiaries as of
December 31, 1993 and the related consolidated statements of operations and
cash flows for the fiscal year then ended, reported on by Ernst & Young and
set forth in the Borrower's 1993 Form 10-K, a copy of which has been delivered
to each of the Banks, fairly present, in conformity with generally accepted
accounting principles, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such date and their consolidated results
of operations and cash flows for such fiscal year.
(b) The unaudited consolidated statement of financial
position and shareholders' equity of the Borrower and its Consolidated
Subsidiaries as of September 30, 1994 and the related unaudited consolidated
statements of operations and cash flows for the nine months then ended, set
forth in the Borrower's Latest Form 10-Q, a copy of which has been delivered
to each of the Banks, fairly present, in conformity with generally accepted
accounting principles applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of
such date and their consolidated results of operations and cash flows for such
nine month period (subject to normal year-end adjustments).
(c) Except as disclosed in the Borrower's latest Form 10-Q or
in any Form 8-K filed by the Borrower under the Securities Exchange Act of
1934 after the Borrower's latest Form 10-Q and provided to the Banks prior to
the date of this Agreement, since December 31, 1993 there has been no material
adverse change in the business, financial position, results of operations or
prospects of the Borrower and its Consolidated Subsidiaries, considered as a
whole.
(d) A copy of a duly completed and signed Annual Statement or
other similar report of or for each Insurance Company Subsidiary in the form
filed with the governmental body, agency or official which regulates insurance
companies in the jurisdiction in which such Insurance Company Subsidiary is
domiciled for the year ended December 31, 1993 has been delivered to the Agent
on behalf of each of the Banks and fairly presents, in accordance with
statutory accounting principles, the information contained therein.
(e) A copy of a duly completed and signed Quarterly Statement
or other similar report of or for United States Fidelity and Guaranty Company
and Fidelity and Guaranty Life Insurance Company in the form filed with the
governmental body, agency or official which regulates insurance companies in
the jurisdiction in which such companies are respectively domiciled for the
quarter ended September 30, 1994 has been delivered to the Agent on behalf of
each of the Banks and fairly presents, in accordance with statutory accounting
principles, the information contained therein.
SECTION 4.05. Litigation. Subject to matters disclosed in the
financial statements referred to in Section 4.04(a), (b) and (c), there is no
action, suit or proceeding pending against, or to the knowledge of the Borrower
threatened against or affecting, the Borrower or any of its Subsidiaries
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable expectation of an adverse decision which
reasonably could be expected to have a Material Adverse Effect or which in any
manner draws into question the validity of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions
of ERISA and the Internal Revenue Code with respect to each Plan. No member
of the ERISA Group has (i) sought a waiver of the minimum funding standard
under Section 412 of the Internal Revenue Code in respect of any Plan, (ii)
failed to make any contribution or payment to any Plan or Multiemployer Plan
or in respect of any Benefit Arrangement, or made any amendment to any Plan or
Benefit Arrangement, which in either case would trigger the provisions of
Section 412(n) or 401(a)(29) of the Internal Revenue Code (or any
corresponding provisions of ERISA) or (iii) incurred any liability under Title
IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course
of its business, the Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital
or operating expenditures required for clean-up or closure of properties
presently or previously owned, any capital or operating expenditures required
to achieve or maintain compliance with environmental protection standards
imposed by law or as a condition of any license, permit or contract, any
related constraints on operating activities, including any periodic or
permanent shutdown of any facility or reduction in the level of or change in
the nature of operations conducted thereat, any costs or liabilities in
connection with off-site disposal of wastes or Hazardous Substances, and any
actual or potential liabilities to third parties, including employees, and any
related costs and expenses). On the basis of this review, the Borrower has
reasonably concluded that such associated liabilities and costs, including the
costs of compliance with Environmental Laws, are unlikely to have a Material
Adverse Effect.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the
Borrower or any Subsidiary, other than any such assessments being contested in
good faith by appropriate proceedings and for which any reserves required
under generally accepted accounting principles have been established. The
charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate in all material respects.
SECTION 4.09. Subsidiaries. Each of the Borrower's corporate
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
SECTION 4.10. Not an Investment Company. The Borrower is not
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
SECTION 4.11. Full Disclosure. All information heretofore
furnished by the Borrower to the Agent or any Bank for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Borrower to the Agent or any
Bank will be, true and accurate in all material respects on the date as of
which such information is stated or certified. The Borrower has disclosed to
the Banks in writing any and all facts which materially and adversely affect
or may affect (to the extent the Borrower can now reasonably foresee), the
business, operations or financial condition of the Borrower and its
Consolidated Subsidiaries, taken as a whole, or the ability of the Borrower to
perform its obligations under this Agreement.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each
of the Banks:
(a) as soon as available and in any event within 95 days
after the end of each fiscal year of the Borrower, a consolidated
statement of financial position and shareholders' equity of the
Borrower and its Consolidated Subsidiaries as of the end of such
fiscal year and the related consolidated statements of operations and
cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by Ernst & Young or other independent public accountants
of nationally recognized standing;
(b) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year
of the Borrower, a consolidated statement of financial position and
shareholders' equity of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related
consolidated statements of operations and cash flows for such quarter
and for the portion of the Borrower's fiscal year ended at the end of
such quarter, setting forth in the case of such consolidated
statements of operations and cash flows in comparative form the
figures for the corresponding quarter and the corresponding portion
of the Borrower's previous fiscal year, all certified (subject to
normal year-end adjustments) as to fairness of presentation, generally
accepted accounting principles and consistency by the chief financial
officer or the chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, an Officer's
Certificate (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.09 and 5.10 on the date of such financial
statements and (ii) stating whether any Default exists on the date of
such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm
of independent public accountants which reported on such statements
(i) whether anything has come to their attention in the course of
their examination of the financial statements of the Borrower and its
Subsidiaries to cause them to believe that any Default existed on the
date of such statements and (ii) confirming the calculations set
forth in the officer's certificate delivered simultaneously therewith
pursuant to clause (c) above;
(e) within five days after any officer of the Borrower
obtains knowledge of any Default, if such Default is then continuing,
an Officer's Certificate setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto;
(f) within 120 days after the end of each fiscal year of each
Insurance Company Subsidiary, a copy of a duly completed and signed
Annual Statement (or any successor form thereto) required to be filed
by such Insurance Company Subsidiary with the governmental body,
agency or official which regulates insurance companies in the
jurisdiction in which such Insurance Company Subsidiary is domiciled,
in the form submitted to such governmental body, agency or official;
(g) within 60 days after the end of the second fiscal quarter
of United States Fidelity and Guaranty Company and Fidelity and
Guaranty Life Insurance Company, respectively, a copy of a duly
completed and signed Quarterly Statement (or any successor form
thereto) required to be filed by each such company with the
governmental body, agency or official which regulates insurance
companies in the jurisdiction in which such company is domiciled, in
the form submitted to such governmental body, agency or official;
(h) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports
and proxy statements so mailed;
(i) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower
shall have filed with the Securities and Exchange Commission;
(j) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan, other
than a reportable event for which 30-day notice to the PBGC has been
waived, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of
the notice of such reportable event given or required to be given to
the PBGC; (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a
copy of such notice; (iii) receives notice from the PBGC under Title
IV of ERISA of an intent to terminate, impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code, a copy of such application; (v) gives notice
of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC; (vi)
gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement or makes any amendment to any Plan or Benefit
Arrangement which in either case would trigger the provisions of
Section 412(n) or 401(a)(29) of the Internal Revenue Code (or any
corresponding provisions of ERISA), a certificate of the chief
financial officer or the chief accounting officer of the Borrower
setting forth details as to such occurrence and action, if any, which
the Borrower or applicable member of the ERISA Group is required or
proposes to take; and
(k) from time to time such additional information regarding
the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Bank, may reasonably
request.
SECTION 5.02. Payment of Obligations. The Borrower will pay
and discharge, and will cause each Subsidiary (other than an Excluded
Subsidiary) to pay and discharge, at or before maturity, all their respective
material obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith by
appropriate proceedings, and will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Books and Records;
Insurance.
(a) The Borrower will keep, and will cause each Subsidiary to
keep, all property useful and necessary in its business in good working order
and condition, ordinary wear and tear excepted.
(b) The Borrower will keep, and will cause each Subsidiary to
keep, proper books of record and account in which full, true and correct
entries shall be made of all dealings and transactions in relation to its
business and activities.
(c) The Borrower will maintain or cause to be maintained with
financially sound and reputable insurers or through self-insurance programs
appropriate to the type and amount of the risk insured, insurance with respect
to its properties and business, and the properties and business of its
Subsidiaries, against loss or damage of the kinds customarily insured against
by reputable companies in the same or similar businesses, such insurance to be
of such types and in such amounts (with such deductible amounts) as is
customary for such companies under similar circumstances. The Borrower will
furnish to the Banks, upon request from the Agent, information presented in
reasonable detail as to the insurance so carried.
SECTION 5.04. Conduct of Business and Maintenance of
Existence. The Borrower will continue, and will cause each Subsidiary (other
than any Excluded Subsidiary) to continue, to engage in all material respects
in business of the same general type as now conducted by the Borrower and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary (other than any Excluded Subsidiary) to preserve,
renew and keep in full force and effect, their respective corporate existence
and their respective rights, privileges and franchises necessary or desirable
in the normal conduct of business, other than such corporate existences,
rights, privileges and franchises which, if not preserved, renewed or kept in
force, will not have, in the aggregate, a Material Adverse Effect.
SECTION 5.05. Compliance with Laws. The Borrower will comply,
and cause each Subsidiary to comply, with all applicable laws, ordinances,
rules, regulations, and requirements of governmental authorities (including,
without limitation, Environmental Laws and ERISA and the rules and regulations
thereunder) except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings or where the failure to comply with such
laws, ordinances, rules, regulations and requirements will not, in the
aggregate, have a Material Adverse Effect.
SECTION 5.06. Negative Pledge. Neither the Borrower nor any
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing
Debt outstanding on the date of this Agreement in an aggregate
principal or face amount not exceeding $100,000,000 and identified on
Schedule I hereto;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring
such asset, provided that such Lien attaches to such asset
concurrently with or within 90 days after the acquisition thereof;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the
Borrower or a Subsidiary and not created in contemplation of such
event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Subsidiary and not created in
contemplation of such acquisition;
(f) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing clauses or clause (j) below of this Section,
provided that such Debt is not increased and is not secured by any
additional assets;
(g) Liens arising in the ordinary course of its business
(including Liens arising in the ordinary course of its insurance
business) which (i) do not secure Debt or Derivatives Obligations,
(ii) do not secure any obligation (except obligations arising in the
ordinary course of its insurance business) in an amount exceeding
$50,000,000 and (iii) do not in the aggregate materially detract from
or impair the use or value of the asset or assets subject thereto in
the operation of its business;
(h) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $25,000,000;
(i) Liens securing obligations of the type referred to in
clause (vii) of the definition of Debt as long as such Liens arise in
the ordinary course of the Borrower's or the Subsidiary's, as the
case may be, business and such Liens are in amounts and otherwise are
on terms consistent with then existing practices in the repurchase
business;
(j) Liens securing Non-Recourse Debt (including Non-Recourse
Debt constituting Debt (other than Non-Recourse Debt) as provided in
the proviso to the definition of Non-Recourse Debt);
(k) Liens on securities or cash of any Insurance Company
Subsidiary which secure its obligations as a reinsurer (as opposed to
a ceding insurance company) under reinsurance contracts entered into
with Persons which are licensed or authorized to do an insurance
business in any jurisdiction; and
(l) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal or face amount
at any date not to exceed 5% of Adjusted Consolidated Tangible Net
Worth.
SECTION 5.07. Consolidations, Mergers and Sales of Assets;
Ownership by USF&G Corporation. The Borrower will not (i) consolidate or
merge with or into any other Person, other than a merger in which the Borrower
is the surviving corporation or a merger solely for the purpose of
reincorporating the Borrower in another jurisdiction, in each case provided no
Default shall exist at, or immediately after, such merger, or (ii) sell, lease
or otherwise transfer, directly or indirectly, all or substantially all of the
assets of the Borrower and its Subsidiaries, taken as a whole, to any other
Person. The Borrower will at all times own all of the outstanding voting
securities of United States Fidelity and Guaranty Company.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans made
under this Agreement will be used by the Borrower for general corporate
purposes. None of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying any
"margin stock" within the meaning of Regulation U.
SECTION 5.09. Ratio of Debt to Adjusted Consolidated Tangible
Net Worth. The aggregate amount of Debt (other than Non-Recourse Debt) of the
Borrower and its Subsidiaries shall at no time exceed 55% of Adjusted
Consolidated Tangible Net Worth.
SECTION 5.10. Minimum Consolidated Tangible Net Worth.
Adjusted Consolidated Tangible Net Worth will at no time be less than the sum
of (i) $1,050,000,000 plus (ii) 50% of the consolidated net income of the
Borrower and its Consolidated Subsidiaries for the period commencing on
October 1, 1994 and ending at the end of the Borrower's then most recent
fiscal quarter (treated for this purpose as a single accounting period). For
purposes of this Section, if consolidated net income of the Borrower and its
Consolidated Subsidiaries for any period shall be less than zero, the amount
calculated pursuant to clause (ii) above for such period shall be zero.
SECTION 5.11. Transactions with Affiliates. The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, pay any
funds to or for the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any Debt,
or otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate unless such payment, investment, lease, sale, transfer, disposition,
participation or transaction is on terms and conditions at least as favorable
to the Borrower or such Subsidiary as the terms and conditions which would
apply in a similar transaction with a Person not an Affiliate; provided,
however, that the foregoing provisions of this Section shall not prohibit the
Borrower from declaring or paying any lawful dividend or distribution so long
as, after giving effect thereto, no Default shall have occurred and be
continuing.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Loan or shall fail to pay within five days of the due date
thereof any interest on any Loan or any fees or any other amount
(other than the principal of any Loan) payable hereunder;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.06 to 5.11, inclusive;
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those
covered by clause (a) or (b) above) for 30 days after notice thereof
has been given to the Borrower by the Agent at the request of any
Bank;
(d) any representation, warranty, certification or statement
made by the Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect
when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any
payment owed by it in respect of any Material Financial Obligations
when due or within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or,
with the giving of notice or lapse of time or both, would enable) the
holder of such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof;
(g) the Borrower or any Subsidiary (other than an Excluded
Subsidiary) shall commence a voluntary case or other proceeding
seeking rehabilitation, dissolution, conservation, liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, rehabilitator, dissolver, conservator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary (other than an
Excluded Subsidiary) seeking rehabilitation, dissolution,
conservation, liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, rehabilitator, dissolver,
conservator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or
any Subsidiary (other than an Excluded Subsidiary) under the federal
bankruptcy laws as now or hereafter in effect; or any governmental
body, agency or official shall apply for, or commence a case or other
proceeding to seek, an order for the rehabilitation, conservation,
dissolution or other liquidation of the Borrower or any Subsidiary
(other than an Excluded Subsidiary) or of the assets or any
substantial part thereof of the Borrower or any such Subsidiary or
any other similar remedy;
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 which it
shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Material Plan shall be filed under Title IV of
ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans which could
cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $5,000,000;
(j) enforceable judgments or orders for the payment of money
in excess of $10,000,000 in the aggregate shall be rendered and
entered against the Borrower or any Subsidiary (other than an Excluded
Subsidiary) and such judgments or orders shall continue unsatisfied
and unstayed for a period of 30 days; or
(k) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of 30% or more of the outstanding shares of common stock of the
Borrower; or, during any period of twelve consecutive calendar
months, individuals who were directors of the Borrower on the first
day of such period shall cease to constitute a majority of the board
of directors of the Borrower;
then, and in every such event, the Agent shall (i) if requested by Banks
having more than 50% in aggregate amount of the Commitments, by notice to the
Borrower terminate the Commitments and they shall thereupon terminate, and
(ii) if requested by Banks holding Notes evidencing more than 50% in aggregate
principal amount of the Loans, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the Notes shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower;
provided that, in the case of any of the Events of Default specified in clause
(g) or (h) above with respect to the Borrower, without any notice to the
Borrower or any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (together with accrued interest thereon)
shall become immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice
to the Borrower under Section 6.01(c) promptly upon being requested to do so
by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Notes as
are delegated to the Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Deutsche Bank AG, New
York and/or Cayman Island Branches shall have the same rights and powers under
this Agreement as any other Bank and may exercise or refrain from exercising
the same as though it were not the Agent, and Deutsche Bank AG, New York
and/or Cayman Island Branches and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower
or any Subsidiary or affiliate of the Borrower as if it were not the Agent
hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any
action with respect to any Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable
for any action taken or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any
of its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required
Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its affiliates nor any of their
respective directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with this Agreement or any
borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article III, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex, facsimile transmission or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any
action taken or omitted by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent
or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any
time by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent, subject, provided that no Default shall have occurred and be
continuing, to the Borrower's approval, not to be unreasonably withheld or
delayed. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the
Agent for its own account fees in the amounts and at the times previously
agreed upon between the Borrower and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period for any
Fixed Rate Borrowing:
(a) the Agent is advised by the Reference Banks that deposits
in the applicable currency and amounts are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having 50% or
more of the aggregate amount of the Commitments advise the Agent that
the Adjusted CD Rate or the Adjusted London Interbank Offered Rate,
as the case may be, as determined by the Agent will not adequately
and fairly reflect the cost to such Banks of funding their CD Loans
or Euro-Currency Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
CD Loans or Euro-Currency Loans or Euro-Dollar Loans, as the case may be,
shall be suspended. Unless the Borrower notifies the Agent at least two
Domestic Business Days before the date of any Fixed Rate Borrowing for which a
Notice of Borrowing has previously been given that it elects not to borrow on
such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such
Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such
Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR
Loans comprising such Borrowing shall bear interest for each day from and
including the first day to but excluding the last day of the Interest Period
applicable thereto at the Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Currency
Lending Office or Euro-Dollar Lending Office) with any request or directive
after the date of this Agreement (whether or not having the force of law) of
any such authority, central bank or comparable agency shall make it unlawful
or impossible for any Bank (or its Euro-Currency Lending Office or Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Currency Loans or
Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank to
make Euro-Currency Loans or Euro-Dollar Loans shall be suspended. Before
giving any notice to the Agent pursuant to this Section, such Bank shall
designate a different Euro-Currency Lending Office or Euro-Dollar Lending
Office if such designation will avoid the need for giving such notice and will
not, in the judgment of such Bank, be otherwise disadvantageous to such Bank.
If such Bank shall determine in good faith that it may not lawfully continue
to maintain and fund any of its outstanding Euro-Currency Loans or Euro-Dollar
Loans to maturity and shall so specify in such notice, the Borrower shall
immediately prepay in full the then outstanding principal amount of each such
Euro-Currency Loan or Euro-Dollar Loan, together with accrued interest
thereon. Concurrently with prepaying each such Euro-Currency Loan or
Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Currency Loans or Euro-Dollar
Loans of the other Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or
after (x) the date hereof, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by any Bank (or its Applicable
Lending Office) with any request or directive after such date (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall impose, modify or deem applicable any reserve (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding (i) with respect to any CD Loan any such
requirement included in an applicable Domestic Reserve Percentage and (ii)
with respect to any Euro-Currency Loan or Euro-Dollar Loan any such requirement
included in an applicable Euro-Currency Reserve Percentage or Euro-Dollar
Reserve Percentage, as the case may be), special deposit, insurance assessment
(excluding, with respect to any CD Loan, any such requirement reflected in an
applicable Assessment Rate) or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any Bank (or its Applicable
Lending Office) or shall impose on any Bank (or its Applicable Lending Office)
or on the United States market for certificates of deposit or the London
interbank market any other condition affecting its Fixed Rate Loans, its Note
or its obligation to make Fixed Rate Loans and the result of any of the
foregoing is to increase the cost to such Bank (or its Applicable Lending
Office) of making or maintaining any Fixed Rate Loan, or to reduce the amount
of any sum received or receivable by such Bank (or its Applicable Lending
Office) under this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand
by such Bank (with a copy to the Agent), the Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank for such
increased cost or reduction.
(b) If any Bank shall have determined in good faith that,
after the date hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change in any such law, rule or regulation,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive after
the date hereof regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations hereunder to a level below
that which such Bank (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall, if
submitted in good faith, be conclusive in the absence of manifest error;
provided that any certificate delivered pursuant to this Section 8.03(c) shall
(i) in the case of a certificate in respect of amounts payable pursuant to
Section 8.03(a), set forth in reasonable detail the basis for and the
calculation of such amounts, and (ii) in the case of a certificate in respect
of amounts payable pursuant to Section 8.03(b), set forth at least the same
amount of detail in respect of the calculation of such amounts as such Bank
provides in similar circumstances to other similarly situated borrowers and
also include a statement by such Bank that it has allocated to its Commitment
or outstanding Loans no greater than a substantially proportionate amount of
any reduction of the rate of return on such Bank's capital due to the matters
described in Section 8.03(b) as it has allocated to each of its other
commitments to lend or any outstanding loans to similarly situated borrowers
that are affected similarly by such adoption or change. Subject to the
foregoing, in determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 8.04. Taxes. (a) For purposes of this Section 8.04,
the following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any
payment by the Borrower pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, excluding (i) in the case of each Bank and
the Agent, taxes imposed on its income, and franchise or similar taxes imposed
on it, by a jurisdiction under the laws of which such Bank or the Agent (as
the case may be) is organized or in which its principal executive office is
located or, in the case of each Bank, in which its Applicable Lending Office
is located, or, in the case of the Agent and each Bank, such taxes which would
not have been imposed on the Agent or such Bank but for any present or former
connection between the Agent or such Bank and the jurisdiction imposing such
tax (other than any such connection arising from the Agent or the Bank having
executed, delivered or performed its obligations or received a payment under,
or enforced, this Agreement or the Notes) and (ii) in the case of each Bank,
any United States withholding tax imposed on such payments but only to the
extent that such Bank (a) is subject to United States withholding tax at the
time such Bank first becomes a party to this Agreement or (b) subsequently
becomes subject to United States withholding tax solely by reason of the change
of its Applicable Lending Office by such Bank.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies
(other than franchise taxes or taxes imposed on the net income of a Bank or
the Agent), which arise from any payment made pursuant to this Agreement or
under any Note or from the execution or delivery of, or otherwise with respect
to, this Agreement or any Note.
(b) Any and all payments by the Borrower to or for the
account of any Bank or the Agent hereunder or under any Note shall be made
without deduction for any Taxes or Other Taxes; provided that, if the Borrower
shall be required by law to deduct any Taxes or Other Taxes from any such
payments, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 8.04) such Bank or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts
payable under this Section 8.04) paid by such Bank or the Agent (as the case
may be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be paid within
15 days after such Bank or the Agent (as the case may be) makes demand
therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank listed on the signature
pages hereof and on or prior to the date on which it becomes a Bank in the
case of each other Bank, and from time to time thereafter if requested in
writing by the Borrower (but only so long as such Bank remains lawfully able
to do so), shall provide the Borrower with Internal Revenue Service form 1001
or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Bank is entitled to benefits under an
income tax treaty to which the United States is a party which exempts the Bank
from United States withholding tax or reduces the rate of withholding tax on
payments of interest for the account of such Bank or certifying that the
income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States.
(e) For any period with respect to which a Bank has failed to
provide the Borrower with the appropriate form pursuant to Section 8.04(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(b) or (c) with respect to Taxes imposed by the United States; provided
that if a Bank, which is otherwise exempt from or subject to a reduced rate
of withholding tax, becomes subject to Taxes because of its failure to deliver
a form required hereunder, the Borrower shall take such steps as such Bank
shall reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Bank pursuant to this Section 8.04, then such Bank
will change the jurisdiction of its Applicable Lending Office if, in the
judgment of such Bank, such change (i) will eliminate or reduce any such
additional payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed
Rate Loans. If (i) the obligation of any Bank to make Euro-Currency Loans or
Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Bank
has demanded compensation under Section 8.03 or 8.04 with respect to any of
its CD Loans or Euro-Currency Loans or Euro-Dollar Loans and the Borrower
shall, by at least five Euro-Currency Business Days' (in the case of
Euro-Currency Loans) or Euro-Dollar Business Days' (in all other cases) prior
notice to such Bank through the Agent, have elected that the provisions of
this Section shall apply to such Bank, then, unless and until such Bank
notifies the Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as
CD Loans or Euro-Currency Loans or Euro-Dollar Loans, as the case may
be, shall be made instead as Base Rate Loans (on which interest and
principal shall be payable contemporaneously with the related Fixed
Rate Loans of the other Banks), and
(b) after each of its CD Loans or Euro-Currency Loans or
Euro-Dollar Loans, as the case may be, has been repaid, all payments
of principal which would otherwise be applied to repay such Fixed
Rate Loans shall be applied to repay its Base Rate Loans instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, facsimile transmission or similar writing) and shall be given to
such party: (x) in the case of the Borrower or the Agent, at its address,
facsimile number or telex number set forth on the signature pages hereof, (y)
in the case of any Bank, at its address, facsimile number or telex number set
forth in its Administrative Questionnaire or (z) in the case of any party,
such other address, facsimile number or telex number as such party may
hereafter specify for the purpose by notice to the Agent and the Borrower.
Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified
in this Section and the appropriate answerback is received, (ii) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (iii) if given by mail,
72 hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Agent under Article II or Article VIII shall not be effective until
received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under any
Note shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower
shall pay (i) all out-of-pocket expenses of the Agent, including the
reasonable fees and disbursements of special counsel for the Agent, in
connection with the preparation and administration of this Agreement, any
waiver or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket
expenses incurred by the Agent and each Bank, including (without duplication)
the reasonable fees and disbursements of outside counsel in connection with
such Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought
or threatened relating to or arising out of this Agreement or any actual or
proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall
have the right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction and provided, further, that no Bank shall have the right to be
indemnified hereunder in any such proceeding wherein the parties thereto are
only such Bank and any other Person to whom such Bank shall have granted a
participation in, or assigned all or a proportionate part of, its Commitment
or its Loans or Notes or its rights or obligations hereunder or under its
Notes.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if
it shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest due with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of
principal and interest due with respect to any Note held by such other Bank,
the Bank receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other
adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Notes held by the Banks shall be
shared by the Banks pro rata; provided that nothing in this Section shall
impair the right of any Bank to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness hereunder. The
Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the
Borrower in the amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the
Required Banks (and, if the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or waiver shall,
unless signed by all the Banks, (i) increase or decrease the Commitment of any
Bank (except for a ratable decrease in the Commitments of all Banks) or
subject any Bank to any additional obligation, (ii) reduce the principal of or
rate of interest on any Loan or any fees hereunder, except as provided below,
(iii) postpone the date fixed for any payment of principal of or interest on
any Loan or any fees hereunder or for any reduction or termination of any
Commitment, (iv) designate any currency as an Alternative Currency pursuant to
the last clause of the definition thereof and (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
number of Banks (including, without limitation, the Initial Banks), which
shall be required for the Banks or any of them to take any action under this
Section or any other provision of this Agreement.
SECTION 9.06. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant") participating interests in its
Commitment or any or all of its Loans. In the event of any such grant by a
Bank of a participating interest to a Participant, whether or not upon notice
to the Borrower and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Borrower hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this Agreement;
provided that such participation agreement may provide that such Bank will not
agree to any modification, amendment or waiver of this Agreement described in
clause (i), (ii), (iii) or (iv) of Section 9.05 without the consent of the
Participant. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, but subject to Section 9.06(e) below,
be entitled to the benefits of Article VIII with respect to its participating
interest. An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or
other financial institutions (each an "Assignee") all, or a proportionate part
(equivalent to an initial Commitment of not less than $10,000,000, and
provided that after giving effect thereto the Commitment of the assigning Bank
is equivalent to an initial Commitment of not less than $10,000,000) of all,
of its rights and obligations under this Agreement and the Notes, and such
Assignee shall assume such rights and obligations, pursuant to an Assignment
and Assumption Agreement in substantially the form of Exhibit H hereto
executed by such Assignee and such transferor Bank, with (and subject to) the
subscribed consent of the Borrower, which shall not be unreasonably withheld,
and the Agent, which shall not be unreasonably withheld; provided that if an
Assignee is an affiliate of such transferor Bank or was a Bank immediately
prior to such assignment, no such consent shall be required; and provided
further that such assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Money Market Loans. Upon execution
and delivery of such instrument and payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, such Assignee shall be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank with a Commitment as
set forth in such instrument of assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank, the Agent and the Borrower shall make appropriate arrangements so that,
if required, a new Note is issued to the Assignee. In connection with any
such assignment, the transferor Bank shall pay to the Agent an administrative
fee for processing such assignment in the amount of $2,500. If the Assignee
is not incorporated under the laws of the United States of America or a state
thereof, it shall deliver to the Borrower and the Agent certification as to
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment under Section
8.03 or 8.04 than such Bank would have been entitled to receive with respect
to the rights transferred, unless such transfer is made with the Borrower's
prior written consent or by reason of the provisions of Section 8.02, 8.03 or
8.04 requiring such Bank to designate a different Applicable Lending Office
under certain circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
SECTION 9.07. Collateral. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying upon
any "margin stock" (as defined in Regulation U) as collateral in the extension
or maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
SECTION 9.09. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the Agent of
counterparts hereof signed by each of the parties hereto (or, in the case of
any party as to which an executed counterpart shall not have been received,
receipt by the Agent in form satisfactory to it of telegraphic, telex,
facsimile or other written confirmation from such party of execution of a
counterpart hereof by such party).
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
USF&G CORPORATION
By /s/ Dan L. Hale
Title: Executive Vice
President & Chief
Financial Officer
100 Light Street
Baltimore, MD 21202
Facsimile number: (410) 234-2056
Commitments
$20,000,000 DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLAND BRANCHES
By: /s/ Johnston deF. Whitman
Title: Director
By: /s/ Clinton M. Johnson
Title: Vice President
$15,000,000 CIBC INC.
By: /s/ Gail M. Golightly
Title: Vice President
$15,000,000 CREDIT LYONNAIS, NEW YORK BRANCH
By: /s/ Renaud D'Herbes
Title: First Vice President
CREDIT LYONNAIS, CAYMAN ISLAND
BRANCH
By: /s/ Renaud D'Herbes
Title: Authorized Signer
$15,000,000 MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ Patricia Merritt
Title: Vice President
$15,000,000 NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Katie Howland
Title: Vice President
$10,000,000 THE BANK OF NEW YORK
By: /s/ Stratton R. Heath
Title: Vice President
$10,000,000 CITIBANK, N.A.
By: /s/ Daniel J. Brill
Title: Managing Director
_________________
Total Commitments
$100,000,000
=================
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLAND BRANCHES, as Agent
By: /s/ Johnston deF. Whitman
Title: Director
By: /s/ Clinton M. Johnson
Title: Vice President
31 West 52nd Street
New York, New York 10019
Attention: Susan A. Maros
Telex number: 429166
Facsimile number: (212) 474-8108
PRICING SCHEDULE
The "Euro-Currency Margin" and "Euro-Dollar Margin", "Base Rate
Margin", "CD Margin", and "Facility Fee Rate" for any day are the respective
percentages set forth below in the applicable row under the column
corresponding to the Status that exists on such day:
Status Level I Level II Level III Level IV Level V
Euro-Currency 0.35% 0.35% 0.40% 0.55% 1.375%
Margin and
Euro-Dollar
Margin
Base Rate 0.0% 0.0% 0.0% 0.0% 1.00%
Margin
CD Margin 0.475% 0.475% 0.525% 0.675% 1.50%
Facility Fee 0.20% 0.25% 0.25% 0.45% 0.625%
Rate
For purposes of this Schedule, the following terms have the
following meanings:
"Level I Status" exists at any date if, at such date, the
Borrower's long-term debt is rated BBB or higher by S&P and Baa2 or higher by
Moody's.
"Level II Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated BBB- or higher by S&P and Baa3 or higher by
Moody's and (ii) Level I Status does not exist.
"Level III Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated BBB- or higher by S&P or Baa3 or higher by
Moody's and (ii) neither Level I Status nor Level II Status exists.
"Level IV Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated BB or higher by S&P and Ba2 or higher by
Moody's and (ii) none of Level I Status, Level II Status and Level III Status
exists.
"Level V Status" exists at any date if, at such date, no other
Status exists.
"Moody's" means Moody's Investors Service, Inc.
"S&P" means Standard & Poor's Ratings Group.
"Status" refers to the determination of which of Level I
Status, Level II Status, Level III Status, Level IV Status or Level V Status
exists at any date.
The credit ratings to be utilized for purposes of this Schedule
are those assigned to the senior unsecured long-term debt securities of the
Borrower without third-party credit enhancement (the "Long-Term Securities"),
and any rating assigned to any other debt security of the Borrower shall be
disregarded. The rating in effect at any date is that in effect at the close
of business on such date. For purposes of determining Status: (i) if at any
date the rating of the Long-Term Securities by Moody's shall be higher or
lower than the comparable rating by S&P by one rating level (it being
understood that for these purposes an S&P rating of A+ is comparable to a
Moody's rating of A1, an S&P rating of A is comparable to a Moody's rating of
A2, and so forth), then the rating of the Long-Term Securities by each of
Moody's and S&P shall be deemed to be the higher of the two ratings; and (ii)
if at any date the rating of the Long-Term Securities by Moody's shall be
higher or lower than the comparable rating by S&P by two or more rating levels
(it being understood that for these purposes an S&P rating of A+ is comparable
to a Moody's rating of A1, an S&P rating of A is comparable to a Moody's
rating of A2, and so forth), then the rating of the Long-Term Securities by
each of Moody's and S&P shall be deemed to be the comparable S&P and Moody's
ratings at the midpoint between the two actual ratings, or, if there shall be
no rating at the midpoint, the next higher rating from the midpoint between
the two actual ratings. For example, if the Long-Term Securities are rated
BBB by S&P and Ba1 by Moody's, the Long-Term Securities shall be deemed to be
rated BBB- by S&P and Baa3 by Moody's; and if the Long-Term Securities are
rated BBB+ by S&P and Ba1 by Moody's, the Long-Term Securities shall be deemed
to be rated BBB by S&P and Baa2 by Moody's.
EXHIBIT A
NOTE
New York, New York
, 19
For value received, USF&G CORPORATION, a Maryland corporation
(the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the last day of the Interest Period
relating to such Loan. The Borrower promises to pay interest on the unpaid
principal amount of each such Loan on the dates and at the rate or rates and
in the currencies provided for in the Credit Agreement. All such payments of
principal and interest shall be made (i) in lawful money of the United States
in Federal or other immediately available funds at the office of Deutsche Bank
AG, New York Branch, New York, New York or (ii) if in an Alternative Currency,
in such funds as may then be customary for the settlement of international
transactions in such Alternative Currency at the place specified for payment
thereof pursuant to the Credit Agreement.
All Loans made by the Bank, the respective types and maturities
thereof and, in the case of Euro-Currency Loans, the currency and Dollar
Amounts thereof, and all repayments of the principal thereof shall be recorded
by the Bank and, if the Bank so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding may be endorsed by
the Bank on the schedule attached hereto, or on a continuation of such
schedule attached to and made a part hereof; provided that the failure of the
Bank to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of December 1, 1994 among the Borrower, the banks listed on
the signature pages thereof and Deutsche Bank AG, New York and/or Cayman Island
Branches, as Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the
same meanings. Reference is made to the Credit Agreement for provisions for
the prepayment hereof and the acceleration of the maturity hereof.
USF&G CORPORATION
By________________________
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
_________________________________________________________________________
Type, If
Currency Alternative
and Currency, Amount of
Amount of Dollar Principal Maturity Notation
Date Loan Amount Repaid Date Made By
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Deutsche Bank AG, New York and/or
Cayman Island Branches
(the "Agent")
From: USF&G Corporation
Re: Credit Agreement (the "Credit Agreement") dated as of December
1, 1994 among the Borrower, the Banks listed on the signature
pages thereof and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount(*) Interest Period(**)
$
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
(*)Amount must be $5,000,000 or a larger multiple of $1,000,000.
(**)Not less than one month (LIBOR Auction) or not less than 7 days (Absolute
Rate Auction), subject to the provisions of the definition of Interest Period.
Terms used herein have the meanings assigned to them in the
Credit Agreement.
USF&G CORPORATION
By________________________
Title:
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to
USF&G Corporation (the "Borrower")
Pursuant to Section 2.03 of the Credit Agreement dated as of
December 1, 1994 among the Borrower, the Banks parties thereto and the
undersigned, as Agent, we are pleased on behalf of the Borrower to invite you
to submit Money Market Quotes to the Borrower for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
Please respond to this invitation by no later than [2:00 P.M.]
[9:30 A.M.] [other time agreed upon by the Borrower and the Agent] (New York
City time) on [date].
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLAND
BRANCHES
By______________________
Authorized Officer
EXHIBIT D
Form of Money Market Quote
To: Deutsche Bank AG, New York and/or Cayman Island Branches
as Agent
Re: Money Market Quote to USF&G Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
__________ __, 199_, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed
$____________.]**
__________
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the individual
offers exceeds the amount the Bank is willing to lend. Bids must be made for
$5,000,000 or a larger multiple of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in the
Credit Agreement dated as of December 1, 1994 among the Borrower, the Banks
listed on the signature pages thereof and yourselves, as Agent, irrevocably
obligates us to make the Money Market Loan(s) for which any offer(s) are
accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
__________
*** Not less than one month or not less than 7 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined for the
applicable Interest Period. Specify percentage (to the nearest 1/10,000 of
1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
EXHIBIT E
OPINION OF THE
GENERAL COUNSEL OF THE BORROWER
To the Banks and the Agent
Referred to Below
c/o Deutsche Bank AG, New York and/or
Cayman Island Branches, as Agent
31 West 52nd Street
New York, New York 10019
Dear Sirs:
I am General Counsel for USF&G Corporation (the "Borrower") and
have acted in such capacity in connection with the Credit Agreement (the
"Credit Agreement") dated as of December 1, 1994 among the Borrower, the banks
listed on the signature pages thereof and Deutsche Bank AG, New York and/or
Cayman Island Branches, as Agent. Terms defined in the Credit Agreement are
used herein as therein defined. This opinion is being rendered to you at the
request of my client pursuant to Section 3.01(b) of the Credit Agreement.
I have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as I have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower has all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted,
other than such licenses, authorizations, consents and approvals which, if not
held or obtained by the Borrower, do not, in the aggregate, have a Material
Adverse Effect.
2. To the best of my knowledge after responsible inquiry, the
execution, delivery and performance by the Borrower of the Credit Agreement
and the Notes do not contravene, or constitute a default under, any provision
of any material agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or any of its Subsidiaries or result in
the creation or imposition of any material Lien on any asset of the Borrower
or any of its Subsidiaries.
3. To the best of my knowledge after responsible inquiry,
there is no action, suit or proceeding pending or threatened against or
affecting the Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official, in which there is a
reasonable possibility of an adverse decision which could have a Material
Adverse Effect or which in any manner draws into question the validity of the
Credit Agreement or the Notes, except as may have been disclosed in the
financial statements referred to in Section 4.04(a), (b) or (c) of the Credit
Agreement.
4. Each of the Borrower's corporate Subsidiaries is a
corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, other than such licenses,
authorizations, consents and approvals which, if not held or obtained by the
Borrower or such Subsidiary, do not, in the aggregate, have a Material Adverse
Effect.
Very truly yours,
EXHIBIT F
OPINION OF PIPER & MARBURY,
COUNSEL FOR THE BORROWER
To the Banks and the Agent
Referred to Below
c/o Deutsche Bank AG, New York and/or
Cayman Island Branches, as Agent
31 West 52nd Street
New York, New York 10019
Dear Sirs:
We have acted as counsel for USF&G Corporation (the "Borrower")
in connection with the Credit Agreement (the "Credit Agreement") dated as of
December 1, 1994 among the Borrower, the banks listed on the signature pages
thereof and Deutsche Bank AG, New York and/or Cayman Island Branches, as
Agent. Terms defined in the Credit Agreement are used herein as therein
defined. This opinion is being rendered to you at the request of our client
pursuant to Section 3.01(c) of the Credit Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Maryland, and has all
corporate powers required to carry on its business as now conducted.
2. The execution, delivery and performance by the Borrower of
the Credit Agreement and the Notes are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, require no action
by the Borrower by or in respect of, or filing by the Borrower with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower.
3. The Credit Agreement constitutes a valid and binding
agreement of the Borrower and each Note constitutes a valid and binding
obligation of the Borrower, in each case enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and by general principles of equity
(including public policy limitations on the indemnification provisions
thereof).
Very truly yours,
EXHIBIT G
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
To the Banks and the Agent
Referred to Below
c/o Deutsche Bank AG, New York and/or
Cayman Island Branches, as Agent
31 West 52nd Street
New York, New York 10019
Dear Sirs:
We have participated in the preparation of the Credit Agreement
(the "Credit Agreement") dated as of December 1, 1994 among USF&G Corporation,
a Maryland corporation (the "Borrower"), the banks listed on the signature
pages thereof (the "Banks") and Deutsche Bank AG, New York and/or Cayman
Island Branches, as Agent (the "Agent"), and have acted as special counsel for
the Agent for the purpose of rendering this opinion pursuant to Section
3.01(d) of the Credit Agreement. Terms defined in the Credit Agreement are
used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that the
Credit Agreement constitutes a valid and binding agreement of the Borrower and
each Note constitutes a valid and binding obligation of the Borrower, in each
case enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York and the
federal laws of the United States of America. In giving the foregoing
opinion, we express no opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any Bank is located which
limits the rate of interest that such Bank may charge or collect. Insofar as
the foregoing opinion involves matters governed by the laws of Maryland, we
have relied, without independent investigation, upon the opinion of Piper &
Marbury, counsel for the Borrower, a copy of which has been delivered to you.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other
purpose or relied upon by any other person without our prior written consent.
Very truly yours,
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), USF&G CORPORATION (the "Borrower")
and DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLAND BRANCHES, as Agent (the
"Agent").
W I T N E S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Credit Agreement dated as of December 1, 1994
among the Borrower, the Assignor and the other Banks party thereto, as Banks,
and the Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor
has a Commitment to make Loans to the Borrower in an aggregate principal
amount at any time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________
are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Committed
Loans, and the Assignee proposes to accept assignment of such rights and
assume the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Credit
Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Credit Agreement
to the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount,
including the purchase from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor outstanding at
the date hereof. Upon the execution and delivery hereof by the Assignor, the
Assignee[, the Borrower and the Agent] and the payment of the amounts
specified in Section 3 required to be paid on the date hereof (i) the Assignee
shall, as of the date hereof, succeed to the rights and be obligated to
perform the obligations of a Bank under the Credit Agreement with a Commitment
in an amount equal to the Assigned Amount, and (ii) the Commitment of the
Assignor shall, as of the date hereof, be reduced by a like amount and the
Assignor released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor
on the date hereof in Federal funds the amount heretofore agreed between
them.(*) It is understood that commitment and/or facility fees accrued to the
date hereof are for the account of the Assignor and such fees accruing from
and including the date hereof are for the account of the Assignee. Each of
the Assignor and the Assignee hereby agrees that if it receives any amount
under the Credit Agreement which is for the account of the other party hereto,
it shall receive the same for the account of such other party to the extent of
such other party's interest therein and shall promptly pay the same to such
other party.
[SECTION 4. Consent of the Borrower and the Agent. This
Agreement is conditioned upon the consent of the Borrower and the Agent
pursuant to Section 9.06(c) of the Credit Agreement. The execution of this
(*) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion
of any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
Agreement by the Borrower and the Agent is evidence of this consent. Pursuant
to Section 9.06(c) the Borrower agrees to execute and deliver a Note payable
to the order of the Assignee to evidence the assignment and assumption
provided for herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition, or
statements of the Borrower, or the validity and enforceability of the
obligations of the Borrower in respect of the Credit Agreement or any Note.
The Assignee acknowledges that it has, independently and without reliance on
the Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
first above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
USF&G CORPORATION
By__________________________
Title:
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLAND
BRANCHES
By__________________________
Title:
By__________________________
Title:
Exhibit 4I
LETTER OF CREDIT AGREEMENT
by and among
USF&G CORPORATION,
THE BANKS PARTY HERETO,
AND
THE BANK OF NEW YORK,
AS AGENT AND AS ISSUING BANK
________________
$100,000,000
________________
Dated as of October 25, 1994
TABLE OF CONTENTS
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1
1.1. Definitions 1
1.2. Principles of Construction 11
2. AMOUNT AND TERMS OF LETTERS OF CREDIT 12
2.1. Issuance of Letters of Credit 12
2.2. Letter of Credit Participation and Funding
Commitments 14
2.3. Interest Rate 15
2.4. Termination or Reduction of Commitment 15
2.5. Amendments to Each Letter of Credit 16
2.6. Extension of Commitment and Termination Date 16
2.7. Extension of the Stated Expiration Date of Each
Letter of Credit 17
2.8. Obligations Absolute 17
2.9. No Liability of the Issuing Bank 18
2.10. Increased Costs; Capital Adequacy 19
2.11. Taxes 20
2.12. Agent's Records 22
2.13. Use of Proceeds 23
2.14. Cash Collateralization 23
2.15. Replacement of Banks 23
3. FEES; PAYMENTS 24
3.1. Commitment Fee 24
3.2. Letter of Credit Commissions 24
4. REPRESENTATIONS AND WARRANTIES 25
4.1. Corporate Existence and Power 25
4.2. Corporate and Governmental Authorization; No
Contravention 25
4.3. Binding Effect 26
4.4. Financial Information 26
4.5. Litigation 27
4.6. Compliance with ERISA 27
4.7. Environmental Matters 28
4.8. Taxes 28
4.9. Subsidiaries 28
4.10. Not an Investment Company 29
4.11. Full Disclosure 29
5. CONDITIONS TO THE ISSUANCE OF FIRST LETTERS OF CREDIT 29
5.1. Evidence of Action 29
5.2. This Agreement 29
- - -
5.3. Litigation 30
5.4. Approvals 30
5.5. Opinion of Counsel to the Applicant 30
5.6. Opinion of Special Counsel 30
5.7. Fees 31
5.8. Fees and Expenses of Special Counsel 31
6. CONDITIONS FOR ISSUANCE OF ALL LETTERS OF CREDIT 31
6.1. Compliance 31
6.2. Documents 31
6.3. Letter of Credit Request 31
7. AFFIRMATIVE COVENANTS 32
7.1. Information 32
7.2. Payment of Obligations 34
7.3. Maintenance of Property; Insurance 35
7.4. Conduct of Business and Maintenance of
Existence 35
7.5. Compliance with Laws 35
8. NEGATIVE COVENANTS 36
8.1. Negative Pledge 36
8.2. Consolidations, Mergers and Sales of Assets;
Ownership by USF&G Corporation 37
8.3. Ratio of Debt to Adjusted Consolidated Tangible
Net Worth 38
8.4. Minimum Consolidated Tangible Net Worth 38
8.5. Transactions with Affiliates 38
9. DEFAULT 38
9.1. Events of Default 38
10. THE AGENT 42
10.1. Appointment 42
10.2. Delegation of Duties 43
10.3. Exculpatory Provisions 43
10.4. Reliance by Agent 43
10.5. Notice of Default 44
10.6. Non-Reliance on Agent and Other Banks 44
10.7. Indemnification 45
10.8. Agent in Its Individual Capacity 46
10.9. Successor Agent 46
11. OTHER PROVISIONS 47
11.1. Amendments and Waivers 47
11.2. Notices 48
11.3. No Waiver; Cumulative Remedies 49
11.4. Survival of Representations and Warranties 49
11.5. Payment of Expenses and Taxes 50
11.6. Assignments and Participations 51
11.7. Counterparts 52
11.8. Adjustments; Set-off 53
11.9. Construction 54
11.10. Indemnity 54
11.11. Governing Law 55
11.12. Headings Descriptive 55
11.13. Severability 55
11.14. Integration 55
11.15. Consent to Jurisdiction 56
11.16. Service of Process 56
11.17. No Limitation on Service or Suit 56
11.18. WAIVER OF TRIAL BY JURY 56
EXHIBITS
Exhibit A - Commitment Percentages
Exhibit B - Form of Assignment and Acceptance Agreement
Exhibit C - Form of Letter of Credit Request
Exhibit D - Form of Letter of Credit
Exhibit E -Form of Opinion of General Counsel to the Applicant
Exhibit F - Form of Opinion of Counsel to the Applicant
Exhibit G - Form of Opinion of Special Counsel
SCHEDULES
Schedule 1.1 - List of Addresses for Notices
Schedule 8.1 - List of Existing Liens
LETTER OF CREDIT AGREEMENT, dated as of October 24, 1994, by and
among USF&G CORPORATION, a Maryland corporation (the "Applicant"), each
subsidiary of the Applicant which is or may become a party hereto (each a
"Co-Applicant"), each of the banks or other lending institutions party
hereto (together with their respective assigns, the "Banks", each a
"Bank") and THE BANK OF NEW YORK, as agent for itself and the other
Banks (in such capacity, the "Agent"), and as issuing bank (in such
capacity, the "Issuing Bank") for the Letters of Credit (as defined in
Article 1).
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
1.1. Definitions
As used in this Agreement, terms defined in the preamble
have the meanings therein indicated, and the following terms have the
following meanings:
"Adjusted Consolidated Tangible Net Worth": means at any date
the consolidated stockholders' equity of the Applicant and
its Consolidated Subsidiaries (1) plus any unrealized holding losses (or
less any unrealized holding gains, net of relevant adjustments, for
deferred policy acquisition costs) on account of available-for-sale debt
securities to the extent reflected therein (together with other
adjustments, all as determined in accordance with Statement of Financial
Accounting Standards No. 115 of the Financial Accounting Standards
Board, as amended from time to time, or any successor provision thereto)
and (2) less their consolidated Intangible Assets, all determined as of
such date. For purposes of this definition "Intangible Assets" means
the amount (to the extent reflected in determining such consolidated
stockholders' equity) of (i) all write-ups (other than write-ups
resulting from foreign currency translations, write-ups of assets of a
going concern business made within twelve months after the acquisition of
such business and changes made in accordance with generally accepted
accounting principles in the book value of any Investments in Persons
other than the Applicant and its Consolidated Subsidiaries) subsequent
to December 31, 1993 in the book value of any asset owned by the
Applicant or a Consolidated Subsidiary and (ii) all unamortized debt dis-
count and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, organization or
developmental expenses and other intangible assets (other than deferred
policy acquisition costs and net deferred tax assets).
"Affected Bank": as defined in Section 2.15.
- - - "Affiliate": means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the Applicant (a
"Controlling Person") or (ii) any Person (other than the Applicant or a
Subsidiary) which is controlled by or is under common control with a
Controlling Person. As used herein, the term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of
the management or policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" means BNY in its capacity as agent for the Banks
hereunder, and its successors in such capacity.
"Agreement": this Letter of Credit Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate": on any date, a rate of interest per
annum equal to the higher of (i) the Federal Funds Rate in effect on such
date plus 1/2 of 1% or (ii) the BNY Rate in effect on such date.
"Applicant": means USF&G Corporation, a Maryland corporation,
and its successors.
"Applicant's 1993 Form 10-K": means the Applicant's annual
report on Form 10-K for 1993, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
"Applicant's Latest Form 10-Q": means the Applicant's
quarterly report on Form 10-Q for the quarter ended June 30, 1994, as
filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
"Assignment and Acceptance Agreement": an assignment and
acceptance agreement executed by a Bank and an Eligible Assignee
substantially in the form of Exhibit B.
"Assignment Fee": as defined in Section 11.6(b).
"Authorized Signatory": as to (i) any Person which is a
corporation, the chairman of the board, the president, any vice presi-
dent, the chief financial officer or any other duly authorized officer
(acceptable to the Agent) of such Person and (ii) any Person which is
not a corporation, the general partner or other managing Person thereof.
"Available Amount": at any time shall mean the amount of the
Commitment less the Letter of Credit Exposure.
"Bank": means each bank listed on the signature pages hereof,
and each assignee which becomes a Bank pursuant to Section 11.6, and
their respective assigns, each of which shall meet the criteria of
"Eligible Assignee" hereunder.
"Benefit Arrangement": means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by
any member of the ERISA Group.
"Benefited Bank": as defined in Section 11.8.
"BNY": The Bank of New York.
"BNY Rate": a rate of interest per annum equal to the rate of
interest publicly announced in New York City by BNY from time to time as
its prime commercial lending rate, such rate to be adjusted automatically
(without notice) on the effective date of any change in such publicly
announced rate.
"Business Day": any day other than a Saturday, a Sunday or a
day on which commercial banks located in New York City and Baltimore,
Maryland are authorized or required by law or other governmental action
to close.
"Cash Collateral Account": shall have the meaning set forth
in Section 2.14 hereof.
"Co-Applicant": means each Subsidiary of the Applicant which
is or becomes a party hereto.
"Code": the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"Commitment": the commitment of BNY, as Issuing Bank, to
issue Letters of Credit having an aggregate outstanding face amount up
to $100,000,000, and with respect to each of the Banks shall mean their
commitment to participate in the Letter of Credit Exposure in an amount
equal to their respective Commitment Percentages as set forth in Sec-
tion 2.2.
"Commitment Fee": as defined in Section 3.1.
"Commitment Percentage": as to any Bank, the percentage set
forth opposite the name of such Bank in Exhibit A under the heading
"Commitment Percentage".
"Commitment Period": the period from the Effective Date
through the day preceding the Termination Date.
"Consolidated": the Applicant and its Subsidiaries which are
consolidated for financial reporting purposes.
"Consolidated Subsidiary": means at any date any Subsidiary
or other entity the accounts of which would be consolidated with those
of the Applicant in its consolidated financial statements if such
statements were prepared as of such date.
"Credit Documents": collectively, this Agreement, the Fee
Letter and each Letter of Credit Request.
"Credit Party": the Applicant, each Co-Applicant and each
other party (other than the Agent, the Issuing Bank and the Banks) that
is a signatory to a Credit Document.
"Date of Issuance": any Business Day specified in a Letter of
Credit Request as a date on which the Applicant and, if applicable, a
Co-Applicant, requests the issuance by the Issuing Bank of a Letter of
Credit.
"Debt": of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts
payable, agents' commissions and other similar charges and expenses
arising in the ordinary course of business, (iv) all obligations of such
Person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all non-contingent obligations (and,
for purposes of Section 8.1 and the definitions of Material Debt and
Material Financial Obligations, all contingent obligations) of such
Person to reimburse any bank or other Person in respect of amounts paid
under a letter of credit or similar instrument, (vi) all Debt secured by
a Lien on any asset of such Person, whether or not such Debt is oth-
erwise an obligation of such Person (but excluding any such Debt to the
extent such Debt exceeds the fair market value of such assets (such fair
market value to be established by the Applicant to the reasonable
satisfaction of the Required Banks), unless such Debt is assumed), (vii)
all obligations of such Person to purchase securities (or other property)
which arise out of or in connection with the sale of the same or
substantially similar securities or property and (viii) all Debt of
others Guaranteed by such Person, provided that obligations of any
Person referred to only in clauses (i) through (iii), inclusive, above
shall constitute Debt of such Person only to the extent that they are, or
are required to be, recorded on the financial statements of such Person
as a liability under generally accepted accounting principles.
"Default": means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or
both would, unless cured or waived, become an Event of Default.
"Derivatives Obligations": of any Person means all
obligations (other than obligations incurred as a result of writing
futures, options, swaps or other derivative transactions in respect of,
or based upon, insurance products or risks, including the futures and
options contracts relating to catastrophic losses traded on the Chicago
Board of Trade or otherwise) of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing
transactions.
"Dollars" and "$": lawful currency of the United States of
America.
"Effective Date": October 25, 1994.
"Eligible Assignee": shall mean and include a commercial
bank or other financial institution with a minimum long-term deposit
rating or long-term unsecured debt rating from Standard & Poor's Ratings
Group or Moody's Investors Service, Inc. of not less than A- or A3, re-
spectively, and acceptable to the Issuing Bank and the Agent.
"Environmental Laws": means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and other
governmental restrictions relating to the environment, the effect of the
environment on human health or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or
the clean-up or other remediation thereof.
"ERISA": means the Employee Retirement Income Security Act
of 1974, as amended, or any successor statute.
"ERISA Group": means the Applicant, any Subsidiary and all
members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which,
together with the Applicant or any Subsidiary, are treated as a single
employer under Section 414 of the Internal Revenue Code
"Event of Default" has the meaning set forth in Section 9.1.
"Excluded Subsidiary": means any Subsidiary other than any
(i) Insurance Company Subsidiary and (ii) "Significant Subsidiary", as
defined in Section 210.1-02(v) of Regulation S-X, as amended from time
to time, promulgated by the Securities and Exchange Commission (17 C.F.R.
Section 210.1-02(v)).
"Extension Consent Period": the period beginning on the 44th
day after the receipt by the Agent of an Extension Request and ending on
the 45th day thereafter, provided that if such day is not a Business Day,
such date shall be extended to the immediately succeeding Business Day.
"Extension Request": as defined in Section 2.6.
"Federal Funds Rate": for any day, a rate per annum
(expressed as a decimal, rounded upwards, if necessary, to the next
higher 1/100 of 1%), equal to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (i) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (ii) if such
rate is not so published for any day, the Federal Funds Rate for such day
shall be the average of the quotations for such day on such transactions
received by BNY as determined by BNY and reported to the Agent.
"Fee Letter": means the fee letter, dated the Effective
Date, from BNY, as Agent and Issuing Bank to, and accepted by, the
Applicant.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator.
"Guarantee": by any Person means any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement conditions
or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include (i)
endorsements for collection or deposit in the ordinary course of business
or (ii) if such Person is an insurance company, surety bonds and
insurance contracts (including financial guarantee insurance policies) in
each case issued in the ordinary course of such Person's business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any
constituent elements displaying any of the foregoing characteristics.
"Indemnified Person": as defined in Section 11.10.
"Insurance Company Subsidiary": means any Subsidiary
domiciled in the United States of America (including the District of
Columbia) and its territories and possessions or any State thereof and
licensed or authorized to do an insurance business in any of the
foregoing.
"Internal Revenue Code": means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Investment": means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit or
otherwise.
"Issuing Bank": means BNY in its capacity as issuing bank
hereunder, and its successors in such capacity.
"Letters of Credit": shall mean letters of credit issued by
the Issuing Bank for the account of the Applicant and any Co-Applicant as
defined in Section 2.1.
"Letter of Credit Commissions": as defined in Section 3.2.
"Letter of Credit Exposure": at any date, (i) in respect of
all the Banks, the sum, without duplication, of (x) the aggregate undrawn
face amount of the outstanding Letters of Credit at such date, (y) the
aggregate amount of unpaid drafts drawn on all Letters of Credit at such
date, and (z) the aggregate unpaid reimbursement obligations in respect
of the Letters of Credit at such date, and (ii) in respect of any Bank,
an amount equal to such Bank's Commitment Percentage multiplied by the
amount determined under clause (i) of this definition.
"Letter of Credit Request": a request from the Applicant, or
from the Applicant and a Co-Applicant, for the issuance of a Letter of
Credit, substantially in the form of Exhibit C.
"Letter of Credit Obligations": any and all obligations of
every description of the Applicant and Co-Applicants in connection with
the Letters of Credit, including, without limitation, the reimbursement
obligations (whether absolute or contingent) under any Letter of Credit
or Credit Document, and all obligations in respect of related fees or
expenses then due and owing.
"Lien": means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind, or
any other type of preferential arrangement that has the practical effect
of creating a security interest, in respect of such asset. For the
purposes of this Agreement, the Applicant or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to
such asset.
"Material Adverse Effect": means a material adverse effect on
the business, financial position, results of operations or prospects of
the Applicant and its Consolidated Subsidiaries, considered as a whole.
"Material Debt": means Debt of the Applicant and/or one or
more of its subsidiaries (other than an Excluded Subsidiary), arising in
one or more related or unrelated transactions, in an aggregate principal
or face amount exceeding $30,000,000.
"Material Financial Obligations": means a principal or face
amount of Debt and/or the then owed payment obligations in respect of
Derivatives Obligations of the Applicant and/or one or more of its
Subsidiaries (other than an Excluded
Subsidiary), arising in one or more
related or unrelated transactions, exceeding in the aggregate
$30,000,000.
"Material Plan": means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $5,000,000.
"Multiemployer Plan": means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which
any member of the ERISA Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be
a member of the ERISA Group during such five year period.
"Non-Recourse Debt": means Debt, secured only by real
property (including fixtures and personal property used therein or
thereon and the rents, profits and proceeds arising therefrom), in
respect of which the holder of such Debt has no recourse against the
Applicant or any Subsidiary (other than a Subsidiary the only assets of
which consist of such real property (including fixtures and personal
property used therein or thereon and the rents, profits and proceeds
therefrom)) or any asset of the Applicant or any Subsidiary (except such
real property (including fixtures and personal property used therein or
thereon and the rents, profits and proceeds arising therefrom)), provided
that if, at any time, the aggregate amount of gross equity real estate
Investments of the Applicant and its Subsidiaries shall exceed
$826,657,000, the amount of such excess shall constitute Debt other than
Non-Recourse Debt to the extent that the then existing aggregate
principal amount of Non-Recourse Debt shall exceed the sum of (i)
$100,000,000 and (ii) the amount of such Non-Recourse Debt, but not to
exceed $50,000,000, outstanding as of the date hereof.
"Officer's Certificate": means a certificate signed by the
President, any Vice-President responsible for financial matters, the
Treasurer or the Controller of the Applicant.
"Other Taxes": as defined in Section 2.11.
"Outstanding Letters of Credit": shall mean at any time the
Letters of Credit outstanding at such time.
"PBGC": means the Pension Benefit Guaranty corporation or
any entity succeeding to any or all of its functions under ERISA.
"Person": means an individual, a corporation, a partnership,
an association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"Plan": means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and either (i) is maintained, or contributed to,
by any member of the ERISA Group for employees of any member of the ERISA
Group or (ii) has at any time within the preceding five years been
maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which was at such
time a member of the ERISA Group.
"Property": all types of real, personal, tangible, intan-
gible or mixed property.
"Regulation U": means Regulation U of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
"Replaced Bank": as defined in Section 2.15.
"Required Banks": at any time Banks representing at least 51%
of the Commitment or, if the Commitment shall have been terminated, at
least 51% of the Letter of Credit Exposure at such time.
"SEC": the Securities and Exchange Commission or any
Governmental Authority succeeding to the functions thereof.
"Special Counsel": Emmet, Marvin & Martin, special counsel to
the Agent.
"Stated Expiration Date": means, with respect to each Letter
of Credit, the date occurring one year after the date of issuance, as
such date may be extended in accordance with the terms of this Agreement.
"Subsidiary": means, as to any Person, any corporation or
other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person; unless otherwise specified, "Subsidiary"
means a Subsidiary of the Applicant.
"Taxes": as defined in Section 2.11.
"Termination Date": the date which is 364 days after the
Effective Date, or such earlier date on which the Commitment is
terminated, or if the Commitment is extended with the consent of the
Banks pursuant to Section 2.6, such later date.
"Unfunded Liabilities": means, with respect to any Plan at
any time, the amount (if any) by which (i) the value of all benefit
liabilities under such Plan, determined on a plan termination basis using
the assumptions prescribed by the PBGC for purposes of Section 4044 of
ERISA, exceeds (ii) the fair market value of all Plan assets allocable to
such liabilities under Title IV of ERISA (excluding any accrued but
unpaid contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States": means the United States of America,
including the States and the District of Columbia, but excluding its
territories and possessions.
1.2. Principles of Construction
(a) All terms defined in a Credit Document shall have the
meanings given such terms therein when used in the other Credit Documents
or any certificate, opinion or other document made or delivered
pursuant thereto, unless otherwise defined therein.
(b) Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with generally
accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the
Applicant's independent public accountants) with the most recent audited
consolidated financial statements of the Applicant and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Applicant
notifies the Agent that the Applicant wishes to amend any covenant in
Section 7 or 8 to eliminate the effect of any change in generally
accepted accounting principles on the operation of such covenant (or if
the Agent notifies the Applicant that the Required Banks wish to amend
Section 7 or 8 for such purpose), then the Applicant's compliance with
such covenant shall be determined on the basis of generally accepted
accounting principles in effect immediately before the relevant change
in generally accepted accounting principles became effective, until
either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Applicant and the Required Banks.
(c) The words "hereof", "herein", "hereto" and "hereunder"
and similar words when used in a Credit Document shall refer to such
Credit Document as a whole and not to any
particular provision thereof,
and Section, schedule and exhibit references contained therein shall
refer to Sections thereof or schedules or exhibits thereto unless
otherwise expressly provided therein.
(d) The phrase "may not" is prohibitive and not permissive.
(e) Unless the context otherwise requires, words in the
singular number include the plural, and words in the plural include the
singular.
(f) Unless specifically provided in a Credit Document to
the contrary, references to a time shall refer to New York City time.
(g) Unless specifically provided in a Credit Document to
the contrary, in the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including" and
the words "to" and "until" each means "to but excluding".
(h) References in any Credit Document to a fiscal period
shall refer to that fiscal period of the Applicant.
2. AMOUNT AND TERMS OF LETTERS OF CREDIT
2.1. Issuance of Letters of Credit
(a) Subject to the terms and conditions of this Agreement,
the Issuing Bank agrees, in reliance on the agreement of the other
Banks set forth in Section 2.2, to issue standby letters of credit (the
"Letters of Credit"; each, individually, a "Letter of Credit") during
the Commitment Period for the account of the Applicant, or jointly and
severally for the account of the Applicant and each Co-Applicant
delivering a Letter of Credit Request. The aggregate face amount of
Outstanding Letters of Credit issued during the Commitment Period shall
not at any time exceed the amount of the Commitment. Each Letter of
Credit issued pursuant to this Section shall have a Stated Expiration
Date. No Letter of Credit shall be issued if the conditions set forth
in Section 6 have not been satisfied.
(b) Each Letter of Credit shall be issued for the account
of the Applicant, individually, or for the account of the Applicant and a
Co-Applicant, jointly and severally, in support of an obligation of the
Applicant or of the Applicant and a Co-Applicant in favor of a
beneficiary which has requested the issuance of such Letter of Credit
as a condition to a transaction entered into in connection with the
Applicant's or the Co-Applicant's reinsurance business. The Applicant,
and any Co-Applicant, as the case may be, shall give the Agent a Letter
of Credit Request for the issuance of each Letter of Credit by 11:00
A.M., three Business Days prior to the requested Date of Issuance.
Each Letter of Credit Request executed by a Co-Applicant shall provide
that such Co-Applicant shall be, from and after the Date of Issuance of
the Letter of Credit which is requested, a party hereto and shall have
all the rights and obligations of a Co-Applicant under this Agreement
and under the other Credit Documents to which it is a party. Such Letter
of Credit Request shall specify (i) the beneficiary of such Letter of
Credit and the obligations of the Applicant and/or Co-Applicant in
respect of which such Letter of Credit is to be issued, (ii) the
Applicant's proposal as to the conditions under which a drawing may be
made under such Letter of Credit and the documentation to be required
in respect thereof, (iii) the maximum amount to be available under such
Letter of Credit, and (iv) the requested Date of Issuance. Upon receipt
of such Letter of Credit Request, the Agent shall promptly notify the
Issuing Bank and each other Bank thereof. The Issuing Bank shall, on
the proposed Date of Issuance and subject to the other terms and con-
ditions of this Agreement, issue the requested Letter of Credit. Each
Letter of Credit shall be in form and substance reasonably satisfactory
to the Issuing Bank, with such provisions with respect to the condi-
tions under which a drawing may be made thereunder and the documen-
tation required in respect of such drawing as the Issuing Bank shall
reasonably require. The parties agree that a Letter of Credit
substantially in the form of Exhibit D shall be deemed to be in form and
substance reasonably satisfactory to the Issuing Bank; provided, how-
ever, that Letters of Credit issued pursuant hereto need not be in the
form of said Exhibit D. Each Letter of Credit shall be used solely for
the purposes described therein.
(c) Each payment by the Issuing Bank of a draft drawn under
a Letter of Credit shall give rise to an immediate obligation on the part
of the Applicant, or to an immediate joint and several obligation on the
part of the Applicant and the Co-Applicant, as the case may be, to
reimburse the Issuing Bank for the amount thereof on the Business Day on
which the Issuing Bank shall have notified the Applicant that payment
of such draft has been made to the beneficiary, provided that a failure
to reimburse the Issuing Bank shall not constitute an Event of Default
hereunder until the date occurring two Business Days after the Issuing
Bank's giving notice to Applicant of demand for payment of such draft,
provided that the Applicant shall by such date have paid the full
amount of such draft, together with interest thereon for each day elapsed
from the date of payment of such draft, calculated at the rate set forth
in Section 2.3.
2.2. Letter of Credit Participation and Funding Commitments
(a) Each Bank hereby unconditionally and ir-
revocably, severally for itself only and without any notice to or the
taking of any action by such Bank, takes an undivided participating
interest in the obligations of the Issuing Bank under and in connection
with each Letter of Credit in an amount equal to such Bank's Commitment
Percentage of the amount of such Letter of Credit. Each Bank shall be
liable to the Issuing Bank for its Commitment Percentage of the
unreimbursed amount of any draft drawn and honored under each Letter of
Credit. Each Bank shall also be liable for an amount equal to the
product of its Commitment Percentage and any amounts paid by the
Applicant or any Co-Applicant that are subsequently rescinded or
avoided, or must otherwise be restored or returned. Such liabilities
shall be unconditional and without regard to the occurrence of any
Default or Event of Default or the compliance by the Applicant or any
Co-Applicant with any of their obligations under the Credit Documents.
(b) The Agent will promptly notify each Bank (which notice
shall be promptly confirmed in writing) of the date and the amount of any
draft presented under any Letter of Credit with respect to which full
reimbursement of payment is not made by the Applicant or any Co-Applicant
immediately, and forthwith upon receipt of such notice, such Bank (other
than the Issuing Bank) shall make available to the Agent for the account
of the Issuing Bank its Commitment Percentage of the amount of such
unreimbursed draft at the office of the Agent specified in Section 11.2,
in lawful money of the United States and in immediately available
funds, before 4:00 P.M., on the day such notice was given by the Agent,
if the relevant notice was given by the Agent at or prior to 1:00 P.M.,
on such day, and before 12:00 Noon, on the next Business Day, if the
relevant notice was given by the Agent after 1:00 P.M., on such day. The
Agent shall distribute the payments made by each Bank (other than the
Issuing Bank) pursuant to the immediately preceding sentence to the
Issuing Bank promptly upon receipt thereof in like funds as received.
Each Bank shall indemnify and hold harmless the Agent and the Issuing
Bank from and against any and all losses, liabilities (including li-
abilities for penalties), actions, suits, judgments, demands, costs
and expenses (including, without limitation, reasonable attorneys'
fees and expenses) resulting from any failure on the part of such Bank
to provide, or from any delay in providing, the Agent with such Bank's
Commitment Percentage of the amount of any payment made by the Issuing
Bank under a Letter of Credit in accordance with this clause (b) above
(except in respect of losses, liabilities or other obligations
suffered
by the Issuing Bank resulting from the gross negligence or willful mis-
conduct of the Issuing Bank). If a Bank does not make available to the
Agent when due such Bank's Commitment Percentage of any unreimbursed
payment made by the Issuing Bank under a Letter of Credit (other than
payments made by the Issuing Bank by reason of its gross negligence
or willful misconduct), such Bank shall be required to pay interest to
the Agent for the account of the Issuing Bank on such Bank's Commitment
Percentage of such payment at a rate of interest per annum equal to the
Federal Funds Rate plus 1% from the date such Bank's payment is due
until the date such payment is received by the Agent. The Agent shall
distribute such interest payments to the Issuing Bank upon receipt
thereof in like funds as received.
(c) Whenever the Agent is reimbursed by the Applicant or
any Co-Applicant, for the account of the Issuing Bank, for any payment
under a Letter of Credit and such payment relates to an amount
previously paid by a Bank in respect of its Commitment Percentage of the
amount of such payment under such Letter of Credit, the Agent will pay
over such payment to such Bank (i) before 4:00 P.M. on the day such pay-
ment from the Applicant or the Co-Applicant is received, if such payment
is received at or prior to 1:00 P.M. on such day, or (ii) before 12:00
Noon on the next succeeding Business Day, if such payment from the
Applicant or the Co-Applicant is received after 1:00 P.M. on such day.
2.3. Interest Rate
If all or any portion of any reimbursement obligation in
respect of a Letter of Credit shall not be paid on the Business Day on
which the Issuing Bank shall have notified the Applicant that payment of
such draft has been made, such overdue amount shall bear interest at a
rate per annum equal to the Alternate Base Rate plus 2% from the date of
such nonpayment until paid in full (whether before or after the entry of
a judgment thereon). All such interest shall be payable on demand.
Interest computed with reference to the Federal Funds Rate shall be
calculated on the basis of a 360 day year for the actual number of days
elapsed, and interest computed with reference to the BNY Rate shall be
computed on the basis of a 365 or 366 day year, as applicable, for the
actual number of days elapsed.
2.4. Termination or Reduction of Commitment
The Applicant shall have the right, upon at least three
Business Days' prior written notice to the Agent, at any time to
terminate or reduce the amount of the Commitment in an amount of
$10,000,000 or such amount plus multiples of
$5,000,000 in excess
thereof, provided that after giving effect thereto, the Commitment
shall not be less than the Letter of Credit Exposure at such time. Any
reduction of the Commitment shall be applied pro rata according to the
Commitment Percentage of each Bank. Simultaneously with any reduction
of the Commitment the Applicant shall pay the Commitment Fee accrued on
the amount by which the Commitment has been reduced.
2.5. Amendments to Each Letter of Credit
(a) At any time during the Commitment Period, upon at
least three Business Days' prior written notice to the Agent, the
Applicant, together with the Co-Applicant, if any, and the beneficiary of
an Outstanding Letter of Credit, shall have the right to request that
such Letter of Credit be amended, including an amendment to increase or
reduce the undrawn face amount thereof and/or to extend for up to one
year from the date of such amendment the then Stated Expiration Date.
Provided that no Default or Event of Default shall exist and be
continuing, the Agent shall request that the Issuing Bank amend such
Letter of Credit to give effect to such increase, reduction and/or ex-
tension, and the Issuing Bank shall, upon presentation of the Letter of
Credit, either amend such Letter of Credit or issue a substitute Letter
of Credit containing such amended terms.
(b) Following the Termination Date, upon at least three
Business Days' prior written notice to the Agent, the Applicant,
together with the Co-Applicant, if any, and the beneficiary of an
Outstanding Letter of Credit, may request that such Outstanding Letter of
Credit be amended, including an amendment to increase or reduce the
undrawn face amount thereof, provided that any such increase in the face
amount, after giving effect to any reductions requested to take effect on
the same date as such increase, shall not cause an increase in the
aggregate undrawn face amount of Outstanding Letters of Credit at such
date. Provided that no Default or Event of Default shall exist and be
continuing, the Agent shall request that the Issuing Bank amend such
Letter of Credit to give effect to such amendment, and the Issuing Bank,
shall upon presentation of the Letter of Credit, either amend such
Letter of Credit or issue a substitute Letter of Credit containing such
amended terms.
2.6. Extension of Commitment and Termination Date
Provided that no Default or Event of Default shall exist and
be continuing, the Applicant may request that the Commitment be extended
for an additional period of 364 days by giving written notice of such
request (an "Extension Request") to the Agent during the period not more
than 180 days but not less than 60 days prior to the then Termination
Date, and upon
the receipt of such notice, the Agent shall promptly no-
tify each Bank of such request. If each Bank consents to such Ex-
tension Request during the Extension Consent Period by giving written
notice thereof to the Applicant and the Agent, then effective on the
first day of the Extension Consent Period, the then applicable
Termination Date shall be extended by 364 days. If all of the Banks have
not consented to such Extension Request during the Extension Consent
Period and such non-consenting Bank or Banks have not been replaced
pursuant to Section 2.16 during the Extension Consent Period, the Termina-
tion Date shall not be extended.
2.7. Extension of the Stated Expiration Date of Each Letter of Credit
The Stated Expiration Date of each Letter of Credit shall be
one year from its Date of Issuance hereunder, or, if extended during the
Commitment Period as provided in Section 2.5, such later date. In
addition, if each Bank so consents, the Stated Expiration Date of each
Letter of Credit may be extended for one additional year from the then
Stated Expiration Date. The Agent will notify each Bank not less than 80
days prior to the then Stated Expiration Date with respect to each
Outstanding Letter of Credit that such Letter of Credit will be
automatically extended for one year unless any Bank shall notify the
Agent not less than 71 days prior to the then Stated Expiration Date that
such Bank does not consent to such extension. If any Bank shall so
notify the Agent that it does not so consent, the Agent shall notify the
Applicant not less than 70 days prior to the then Stated Expiration Date
that such Letter of Credit shall not be extended. Upon receipt of
such notification, the Applicant may obtain a replacement Bank for each
such non-consenting Bank pursuant to Section 2.16. If each such
non-consenting Bank has not been replaced pursuant to Section 2.16 on or
prior to 46 days prior to the Stated Expiration Date, the Agent shall
notify the beneficiary of the Letter of Credit not less than 45 days
prior to the Stated Expiration Date that the Stated Expiration Date will
not be extended. If no Bank notifies the Agent that it does not con-
sent to such extension of the Letter of Credit, the Stated Expiration
Date of the Letter of Credit will be automatically extended for one
year, without further action. Each Letter of Credit may be extended in
the manner set forth an unlimited number of times.
2.8. Obligations Absolute
(a) The obligations of the Applicant and each Co-Applicant under
this Agreement and the Credit Documents to which it is a party shall be
absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with
the terms of this Agreement, irrespective of
any circumstances, including, without limitation, the
following:
(i) any lack of validity or enforceability of any
Letter of Credit;
(ii) any amendment or waiver of, or consent to
departure from, all or any of the other Credit Documents;
(iii) the existence of any claim, set-off, defense or
other right which the Applicant, any Co-Applicant, or any other
Person may have at any time against any beneficiary or any trans-
feree of a Letter of Credit (or any Person or entity for whom any
such beneficiary or any such transferee may be acting), the Issu-
ing Bank, the Agent, any Bank, any participant or assignee, or
any other Person or entity, whether in connection with this
Agreement, any other Credit Document or any unrelated transaction;
(iv) any statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(v) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or certificate which does
not comply with the terms of the Letter of Credit; or
(vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
2.9. No Liability of the Issuing Bank
It is understood that in making any payment under a Letter of
Credit (a) the Issuing Bank's exclusive reliance on the documents
presented to it under such Letter of Credit as to any and all matters set
forth therein, including reliance on the amount of any draft presented
under such Letter of Credit, whether or not the amount due to the
beneficiary equals the amount of such draft and whether or not any docu-
ment presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be
in order, and whether or not any other statement or any other document
presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever; and (b) any noncompliance of the documents presented
in an immaterial respect under a Letter of Credit with the terms
thereof
shall in each case not be deemed wilful misconduct or gross negligence of
the Issuing Bank.
2.10. Increased Costs; Capital Adequacy
(a) If on or after the date hereof the adoption of any
applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by the Issuing Bank or any Bank with any request
or directive after such date (whether or not having the force of law) of
any such authority, central bank or comparable agency shall impose,
modify or deem applicable any reserve (including, without limitation, any
such requirement imposed by the Board of Governors of the Federal
Reserve System), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, the Issuing Bank or any Bank or shall impose on any
Bank any other condition affecting its Commitment or the term thereof or
its obligation to issue or participate in Letters of Credit and the
result of any of the foregoing is to increase the cost to the Issuing
Bank or such Bank of issuing or maintaining the Letters of Credit or its
obligations pursuant to Section 2.2, or to reduce the amount of any sum
received or receivable by the Issuing Bank or such Bank under this
Agreement with respect thereto, by an amount deemed by the Issuing Bank
or such Bank to be material, then, within 15 days after demand by such
Issuing Bank or Bank (with a copy to the Agent), the Applicant shall pay
to the Issuing Bank or such Bank such additional amount or amounts as
will compensate the Issuing Bank or such Bank for such increased cost or
reduction.
(b) If the Issuing Bank or any Bank shall have determined
in good faith that, after the date hereof, the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any
change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive after the date hereof
regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on capital of the Issuing Bank
or such Bank (or its parent) as a consequence of such Issuing Bank's or
Bank's obligations hereunder to a level below that which the Issuing
Bank or such Bank (or its parent) could have achieved but for such adop-
tion, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such
Issuing Bank or Bank to be material, then from time to time, within 15
days after demand by such Issuing Bank or Bank (with a copy to the
Agent), the Applicant shall pay to the Issuing Bank or such Bank such
additional amount or amounts as will compensate the Issuing Bank or such
Bank (or its parent) for such reduction.
(c) The Issuing Bank and each Bank will promptly notify the
Applicant and the Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle the Issuing Bank or such Bank
to compensation pursuant to this Section. A certificate of the Issuing
Bank or any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall,
if submitted in good faith, be conclusive in the absence of manifest
error; provided that any certificate delivered pursuant to this Section
2.10(c) shall (i) in the case of a certificate in respect of amounts
payable pursuant to Section 2.10(a), set forth in reasonable detail the
basis for and the calculation of such amounts, and (ii) in the case of a
certificate in respect of amounts payable pursuant to Section 2.10(b),
set forth at least the same amount of detail in respect of the
calculation of such amounts as Issuing Bank or Bank provides in similar
circumstances to other similarly situated applicants for letters of
credit and also include a statement by the Issuing Bank or such Bank that
it has allocated to its Commitment hereunder no greater than a substan-
tially proportionate amount of any reduction of the rate of return on
such Issuing Bank's or Bank's capital due to the matters described in
Section 2.10(b) as it has allocated to its other commitments to issue or
participate in letters of credit to similarly situated applicants for
letters of credit that are affected similarly by such adoption or change.
Subject to the foregoing, in determining such amount, the Issuing Bank
or such Bank may use any reasonable averaging and attribution methods.
2.11. Taxes
(a) For purposes of this Section 2.11, the following terms
have the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any
payment by the Applicant or any Co-Applicant pursuant to this Agreement,
and all liabilities with respect thereto, excluding (i) in the case of
the Issuing Bank, each Bank and the Agent, taxes imposed on its income,
and franchise or similar taxes imposed on it, by a jurisdiction under
the laws of which the Issuing Bank, such Bank or the Agent (as the case
may be) is organized or in which its principal executive office is
located or, in the case of the Issuing Bank, the Agent and each Bank,
such taxes which would
not have been imposed on the Issuing Bank, the
Agent or such Bank but for any present or former connection between the
Issuing Bank, the Agent or such Bank and the jurisdiction imposing such
tax (other than any such connection arising from the Agent, the Issuing
Bank or the Bank having executed, delivered or performed its obligations
or received a payment under, or enforced, this Agreement) and (ii) in the
case of the Issuing Bank and each Bank, any United States withholding tax
imposed on such payments but only to the extent that the Issuing Bank or
such Bank (a) is subject to United States withholding tax at the time
such Issuing Bank or Bank first becomes a party to this Agreement or (b)
subsequently becomes subject to United States withholding tax solely by
reason of the change of any lending office by such Bank.
"Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property taxes, or similar
charges or levies (other than franchise taxes or taxes imposed on the net
income of the Issuing Bank, the Agent or a Bank), which arise from any
payment made pursuant to this Agreement or from the execution or delivery
of, or otherwise with respect to, this Agreement.
(b) Any and all payments by the Applicant or any
Co-Applicant to or for the account of the Issuing Bank, any Bank or the
Agent hereunder shall be made without deduction for any Taxes or Other
Taxes; provided that, if the Applicant or Co-Applicant shall be required
by law to deduct any Taxes or Other Taxes from any such payments, (i) the
sum payable shall be increased as necessary so that after making all re-
quired deductions (including deductions applicable to additional sums
payable under this Section 2.11) such Issuing Bank, Bank or the Agent (as
the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Applicant or
Co-Applicant shall make such deductions, (iii) the Applicant or
Co-Applicant shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv)
the Applicant or Co-Applicant shall furnish to the Agent, at its address
referred to in Section 11.2, the original or a certified copy of a re-
ceipt evidencing payment thereof.
(c) The Applicant and any Co-Applicant agrees to indemnify
the Issuing Bank, each Bank and the Agent for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this
Section 2.11) paid by such Issuing Bank, Bank or the Agent (as the case
may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall
be paid within 15 days after such Issuing Bank, Bank or the Agent (as the
case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank listed on the
signature pages hereof and on or prior to the date on which it becomes a
Bank in the case of each other Bank, and from time to time thereafter if
requested in writing by the Applicant (but only so long as such Bank re-
mains lawfully able to do so), shall provide the Applicant with Internal
Revenue Service form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Bank is
entitled to benefits under an income tax treaty to which the United
States is a party which exempts the Bank from United States withholding
tax or reduces the rate of withholding tax on payments of interest for
the account of such Bank or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a
trade or business in the United States.
(e) For any period with respect to which a Bank has failed
to provide the Applicant with the appropriate form pursuant to Section
2.11(d) (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which such form originally
was required to be provided), such Bank shall not be entitled to
indemnification under Section 2.11(b) or (c) with respect to Taxes
imposed by the United States; provided that if a Bank, which is otherwise
exempt from or subject to a reduced rate of withholding tax, becomes
subject to Taxes because of its failure to deliver a form required
hereunder, the Applicant shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(f) If the Applicant is required to pay additional amounts
to or for the account of any Bank pursuant to this Section 2.11, then
such Bank will change the jurisdiction of its lending office if, in the
judgment of such Bank, such change (i) will eliminate or reduce any such
additional payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank.
2.12. Agent's Records
The Agent's records regarding the amount of each Letter of
Credit, each payment by the Applicant or any Co-Applicant of
reimbursement obligations in respect of Letters of Credit and other
information relating to the Letters of Credit shall be presumptively
correct absent manifest error.
2.13. Use of Proceeds
The Applicant and Co-Applicants will use the Letters of
Credit only to collateralize reinsurance liabilities assumed by direct
and indirect Subsidiaries of the Applicant. Notwithstanding anything to
the contrary contained in any Credit Document, the Applicant and each
Co-Applicant agrees that no part of the proceeds of any Letters of
Credit will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "margin
stock" within the meaning of Regulation U.
2.14. Cash Collateralization
If any Event of Default shall occur and be continuing, the
Applicant shall on the Business Day it receives notice from the Agent,
deposit in an account with the Agent, for the benefit of the Issuing Bank
and the Banks, an amount in cash equal to the Letter of Credit Exposure
as of such date. Such deposit shall be held by the Agent as collateral
for the payment and performance of all obligations of the Applicant and
Co-Applicants hereunder and under the other Credit Documents. The Agent
shall have exclusive domain and control over such account. Moneys in
such account shall (a) automatically be applied by the Agent to reimburse
the Issuing Bank for Letter of Credit payments and disbursements, and
(b) be held for the satisfaction of the reimbursement obligations of the
Applicant and Co-Applicants for the then outstanding Letter of Credit
Exposure. If the Applicant is required to provide an amount of cash col-
lateral hereunder as a result of an Event of Default, such amount (to the
extent not applied as aforesaid) shall be returned to the Applicant
within five Business Days after all Events of Default have been cured or
waived.
2.15. Replacement of Banks
(a) If any Bank refuses to consent to an Extension Request
pursuant to Section 2.6 or notifies the Agent that it refuses to consent
to the extension of any Stated Expiration Date with respect to any
Outstanding Letter of Credit pursuant to Section 2.7, the Borrower shall
have the right, if no Default or Event of Default then exists, to
replace such Bank (any such Bank being referred to herein as a "Replaced
Bank") with one or more Eligible Assignee or Assignees, each of which
shall be acceptable to the Agent and the Issuing Bank, and such Replaced
Bank shall assign to such Eligible Assignee or Assignees who are willing
to so purchase the same for such Replaced Bank, all (but not less than
all) of such Replaced Bank's rights and obligations under this Agreement,
provided that such Eligible Assignee or Assignees shall pay to such
Replaced Bank, an amount equal to all interest, fees and other
amounts
owing or accrued to such Replaced Bank to the date of such assignment,
but without any premium.
(b) In the event that any Bank no longer meets the criteria
contained in the definition of "Eligible Assignee" (any such Bank being
referred to herein as an "Affected Bank"), the Agent shall have the
right, upon notice to such Affected Bank, to require such Affected Bank,
pursuant to Section 11.6 hereof, to assign to one or more Eligible
Assignee or Assignees who are willing to so purchase the same from such
Affected Bank, all (but not less than all) of such Affected Bank's rights
and obligations under this Agreement, provided that such Eligible
Assignee or Assignees shall pay to such Affected Bank, an amount equal to
all interest, fees and other amounts owing or accrued to such Affected
Bank to the date of such assignment, but without any premium. The fact
that any Bank no longer meets the definition of an Eligible Assignee does
not affect the Issuing Bank's obligation to issue Letters of Credit
hereunder.
(c) For each assignment, the parties shall execute and
deliver to the Agent an Assignment and Acceptance Agreement. Upon such
execution and delivery, from and after the effective date specified in
such Assignment and Acceptance Agreement, the assignee thereunder shall
be a party hereto and the assignor Bank released from its obligations
hereunder to the extent provided therein.
3. FEES; PAYMENTS
3.1. Commitment Fee
The Applicant agrees to pay to the Agent, for the account of
the Banks in accordance with each Bank's Commitment Percentage, a fee
(the "Commitment Fee"), during the Commitment Period, equal to 0.20% per
annum on the average daily Available Amount. The Commitment Fee shall be
payable quarterly in arrears on the last day of each March, June,
September and December of each year, commencing on the first such day
following the Effective Date, and ending on the Termination Date or
other date on which the Commitment shall expire or otherwise terminate,
and upon each reduction of the Available Amount. The Commitment Fee
shall be calculated on the basis of a 360-day year for the actual number
of days elapsed.
3.2. Letter of Credit Commissions
The Applicant agrees to pay to the Agent, for the account of
the Banks in accordance with each Bank's Commitment Percentage,
commissions (the "Letter of Credit Commissions") with respect to each
Letter of Credit for the period from and
including the Date of Issuance
thereof to and including the expiration date thereof (including any
expiration or cancellation prior to the Stated Expiration Date), at a
rate per annum equal to 0.65% per annum on the average daily amount
available to be drawn under such Letter of Credit. The Letter of
Credit Commissions shall be (i) calculated on the basis of a 360-day
year for the actual number of days elapsed, (ii) payable quarterly in
arrears on the last day of each March, June, September and December of
each year and on the date that the Commitment shall expire and (iii)
nonrefundable. In addition to the Letter of Credit Commissions, the
Applicant agrees to pay to the Issuing Bank, for its own account, its
standard fees and charges customarily charged to customers similar to
the Applicant with respect to any Letter of Credit.
4. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Banks to enter into this
Agreement and the Issuing Bank to issue the Letters of Credit and the
Banks to participate therein, the Applicant makes the following
representations and warranties to the Agent, each Bank and the Issuing
Agent:
4.1. Corporate Existence and Power
The Applicant is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Maryland,
and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business
as now conducted, other than such licenses, authorizations, consents and
approvals which, if not held or obtained by the Applicant, do not, in the
aggregate, have a Material Adverse Effect.
4.2. Corporate and Governmental Authorization; No Contravention
The execution, delivery and performance by the Applicant of
this Agreement and the other Credit Documents to which it is or will be a
party are within the Applicant's corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the articles of incorporation or by-
laws of the Applicant or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Applicant or any of its
Subsidiaries or result in the creation or imposition of any Lien on any
asset of the Applicant or any of its Subsidiaries.
4.3. Binding Effect
This Agreement constitutes a valid and binding agreement of
the Applicant and each Credit Document, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding
obligation of the Applicant and each Co-Applicant party thereto, in each
case enforceable in accordance with its terms.
4.4. Financial Information
(a) The consolidated statement of financial position and
shareholders' equity of the Applicant and its Consolidated Subsidiaries
as of December 31, 1993 and the related consolidated statements of
operations and cash flows for the fiscal year then ended, reported on by
Ernst & Young and set forth in the Applicant's 1993 Form 10-K, a copy of
which has been delivered to each of the Banks, fairly present, in con-
formity with generally accepted accounting principles, the consolidated
financial position of the Applicant and its Consolidated Subsidiaries as
of such date and their consolidated results of operations and cash flows
for such fiscal year.
(b) The unaudited consolidated statement of financial
position and shareholders' equity of the Applicant and its Consolidated
Subsidiaries as of June 30, 1994 and the related unaudited consolidated
statements of operations and cash flows for the six months then ended,
set forth in the Applicant's Latest Form 10-Q, a copy of which has been
delivered to each of the Banks, fairly present, in conformity with
generally accepted accounting principles applied on a basis consistent
with the financial statements referred to in subsection (a) of this
Section, the consolidated financial position of the Applicant and its
Consolidated Subsidiaries as of such date and their consolidated results
of operations and cash flows for such six month period (subject to normal
year-end adjustments).
(c) Except as disclosed in the Applicant's Latest Form 10-Q
or in any Form 8-K filed by the Applicant under the Securities Exchange
Act of 1934 after the Applicant's Latest Form 10-Q and provided to the
Banks prior to the date of this Agreement, since December 31, 1993 there
has been no material adverse change in the business, financial position,
results of operations or prospects of the Applicant and its Consolidated
Subsidiaries, considered as a whole.
(d) A copy of a duly completed and signed Annual Statement
or other similar report of or for each Insurance Company Subsidiary in
the form filed with the governmental body, agency or official which
regulates insurance companies in the jurisdiction in which such Insurance
Company Subsidiary
is domiciled for the year ended December 31, 1993 has
been delivered to the Agent on behalf of each of the Banks and fairly
presents, in accordance with statutory accounting principles, the
information contained therein.
(e) A copy of a duly completed and signed Quarterly
Statement or other similar report of or for United States Fidelity and
Guaranty Company and Fidelity and Guaranty Life Insurance Company in the
form filed with the governmental body, agency or official which regulates
insurance companies in the jurisdiction in which such companies are
respectively domiciled for the quarter ended June 30, 1994 has been de-
livered to the Agent on behalf of each of the Banks and fairly presents,
in accordance with statutory accounting principles, the information
contained therein.
4.5. Litigation
Subject to matters disclosed in the financial statements
referred to in Section 4.04(a), there is no action, suit or proceeding
pending against, or to the knowledge of the Applicant threatened against
or affecting, the Applicant or any of its Subsidiaries before any court
or arbitrator or any governmental body, agency or official in which
there is a reasonable expectation of an adverse decision which
reasonably could be expected to have a Material Adverse Effect or which
in any manner draws into question the validity of this Agreement or the
Credit Documents.
4.6. Compliance with ERISA
Each member of the ERISA Group has fulfilled its obligations
under the minimum funding standards of ERISA and the Internal Revenue
Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA
Group has (i) sought a waiver of the minimum funding standard under Sec-
tion 412 of the Internal Revenue Code in respect of any Plan, (ii) failed
to make any contribution or payment to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement, or made any amendment to any Plan
or Benefit Arrangement, which in either case would trigger the provisions
of Section 412(n) or 401(a)(29) of the Internal Revenue Code (or any cor-
responding provisions of ERISA) or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for premiums
under Section 4007 of ERISA.
4.7. Environmental Matters
In the ordinary course of its business, the Ap-
plicant conducts an ongoing review of the effect of Environmental Laws
on the business, operations and properties of the Applicant and its
Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any
capital or operating expenditures required for clean-up or closure of
properties presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with
environmental protection standards imposed by law or as a condition of
any license, permit or contract, any related constraints on operating
activities, including any periodic or permanent shutdown of any facility
or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection
with off-site disposal of wastes or Hazardous Substances, and any actual
or potential liabilities to third parties, including employees, and any
related costs and expenses). On the basis of this review, the Applicant
has reasonably concluded that such associated liabilities and costs,
including the costs of compliance with Environmental Laws, are unlikely
to have a Material Adverse Effect.
4.8. Taxes
The Applicant and its Subsidiaries have filed all United
States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the
Applicant or any Subsidiary, other than any such assessments being
contested in good faith by appropriate proceedings and for which any
reserves required under generally accepted accounting principles have
been established. The charges, accruals and reserves on the books of
the Applicant and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Applicant,
adequate in all material respects.
4.9. Subsidiaries
Each of the Applicant's corporate Subsidiaries, including
without limitation, each Co-Applicant which is a corporation, is a
corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted.
4.10. Not an Investment Company
Neither the Applicant nor any Co-Applicant is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
4.11. Full Disclosure
All information heretofore furnished by the Ap-
plicant to the Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Applicant to the Agent or any Bank
will be, true and accurate in all material respects on the date as of
which such information is stated or certified. The Applicant has
disclosed to the Banks in writing any and all facts which materially and
adversely affect or may affect (to the extent the Applicant can now
reasonably foresee), the business, operations or financial condition of
the Applicant and its Consolidated Subsidiaries, taken as a whole, or
the ability of the Applicant to perform its obligations under this
Agreement.
5. CONDITIONS TO THE ISSUANCE OF FIRST LETTERS OF CREDIT
In addition to the conditions precedent set forth in Section
6, the obligation of the Issuing Bank to issue the first Letter of
Credit on its Date of Issuance and the Banks to participate therein shall
be subject to the fulfillment of the following conditions precedent:
5.1. Evidence of Action
The Agent shall have received a certificate, dated the first
Date of Issuance, of the Secretary or Assistant Secretary of the
Applicant (i) attaching a true and complete copy of the resolutions of
its Board of Directors and of all documents evidencing other necessary
corporate action (in form and substance satisfactory to the Agent)
taken by it to authorize the Credit Documents to which it is a party and
the transactions contemplated thereby, (ii) attaching a true and com-
plete copy of its Certificate of Incorporation and By-Laws, (iii)
setting forth the incumbency of its officer or officers who may sign
such Documents, including therein a signature specimen of such of-
ficer or officers and (iv) attaching a certificate of good standing of
the Applicant from the Maryland Department of Assessments and Taxation.
5.2. This Agreement
The Agent shall have received counterparts of this Agreement
signed by each of the parties hereto (or receipt by
the Agent from a
party hereto of a fax signature page signed by such party which shall
have agreed to promptly provide the Agent with originally executed
counterparts hereof).
5.3. Litigation
There shall be no injunction, writ, preliminary restraining
order or other order of any nature issued by any Governmental Authority
in any respect affecting the transactions provided for herein and no
action or proceeding by or before any Governmental Authority shall have
been commenced and be pending or, to the knowledge of the Applicant,
threatened, seeking to prevent or delay the transactions contemplated
by the Credit Documents or challenging any other terms and provisions
hereof or thereof or seeking any damages in connection therewith, and the
Agent shall have received a certificate of an Authorized Signatory of
the Applicant to the foregoing effects.
5.4. Approvals
The Agent shall have received a certificate of an Authorized
Signatory of the Applicant to the effect that all approvals and consents
of all Persons required to be obtained in connection with the consumma-
tion of the transactions contemplated by the Credit Documents have been
duly obtained and are in full force and effect, and that all required
notices have been given and all required waiting periods have expired.
5.5. Opinion of Counsel to the Applicant
The Agent shall have received an opinion of John A. MacColl,
general counsel to the Applicant, addressed to the Agent, the Banks and
Special Counsel, and dated the first Date of Issuance, substantially in
the form of Exhibit E and an opinion of Piper & Marbury, counsel to the
Applicant, addressed to the Agent, the Banks and Special Counsel, and
dated the first Date of Issuance, substantially in the form of Exhibit
F, and covering such additional matters as the Required Banks may rea-
sonably request. It is understood that such opinions are being deliv-
ered to the Agent and the Banks upon the direction of the Applicant and
that the Agent and the Banks may and will rely upon such opinion.
5.6. Opinion of Special Counsel
The Agent shall have received an opinion of Special Counsel,
addressed to the Agent and the Banks and dated the first Date of Issuance
substantially in the form of Exhibit G.
5.7. Fees
All fees payable to the Agent on the Effective Date shall
have been paid.
5.8. Fees and Expenses of Special Counsel
The fees and expenses of Special Counsel in connection with
the preparation, negotiation and closing of this Agreement and the other
the Credit Documents shall have been paid.
6. CONDITIONS FOR ISSUANCE OF ALL LETTERS OF CREDIT
The obligation of the Issuing Bank to issue any Letter of Credit on
a Date of Issuance and each Bank to participate therein is subject to the
satisfaction of the following conditions precedent as of such Date of
Issuance :
6.1. Compliance
On each Date of Issuance and after giving effect to the
Letters of Credit to be issued thereon, (a) there shall exist no Default
or Event of Default, (b) the representations and warranties contained
in this Agreement shall be true and correct with the same effect as
though such representations and warranties had been made on such Date of
Issuance and (c) the aggregate outstanding face amount of the Letters of
Credit will not exceed the Commitment. Each request by the Applicant
for the issuance of a Letter of Credit shall constitute a certifica-
tion by the Applicant as of such Borrowing Date that each of the
foregoing matters is true and correct in all respects.
6.2. Documents
All documents required by the provisions of the Credit
Documents to be executed or delivered to the Agent on or before the
applicable Date of Issuance shall have been executed and shall have been
delivered at the office of the Agent set forth in Section 11.2 on or
before such Date of Issuance.
6.3. Letter of Credit Request
With respect to the issuance of each Letter of Credit, the
Agent shall have received a Letter of Credit Request duly executed by
an Authorized Signatory of the Applicant and, if
applicable, the Co-Applicant.
7. AFFIRMATIVE COVENANTS
The Applicant agrees that, so long as this Agreement is in effect,
any reimbursement obligations (contingent or otherwise) in respect of
any Letter of Credit remain outstanding and unpaid, or any other amount
is owing under any Credit Document to the Issuing Bank, any Bank or the
Agent:
7.1. Information
The Applicant will deliver to each of the Banks:
(a) as soon as available and in any event within 95 days
after the end of each fiscal year of the Applicant, a consolidated
statement of financial position and shareholders' equity of the
Applicant and its Consolidated Subsidiaries as of the end of such
fiscal year and the related consolidated statements of operations
and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
commission by Ernst & Young or other independent public accountants
of nationally recognized standing;
(b) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal
year of the Applicant, a consolidated statement of financial
position and shareholders' equity of the Applicant and its
Consolidated Subsidiaries as of the end of such quarter and the
related consolidated statements of operations and cash flows for
such quarter and for the portion of the Applicant's fiscal year
ended at the end of such quarter, setting forth in the case of such
consolidated statements of operations and cash flows in comparative
form the figures for the corresponding quarter and the
corresponding portion of the Applicant's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness
of presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting
officer of the Applicant;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above, an
Officer's Certificate (i) setting forth in reasonable detail the
calculations required to establish whether the Applicant was in
compliance with the requirements of Sections 8.3 and 8.4 on the
date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default
then exists, setting forth the details thereof and
the action which
the Applicant is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of
financial statements referred to in clause (a) above, a statement
of the firm of independent public accountants which reported on
such statements (i) whether anything has come to their attention in
the course of their examination of the financial statements of the
Applicant and its Subsidiaries to cause them to believe that any De-
fault existed on the date of such statements and (ii) confirming
the calculations set forth in the Officer's Certificate delivered
simultaneously therewith pursuant to clause (c) above;
(e) within five days after any officer of the Applicant
obtains knowledge of any Default, if such Default is then
continuing, an Officer's Certificate setting forth the details
thereof and the action which the Applicant is taking or proposes
to take with respect thereto;
(f) within 120 days after the end of each fiscal year of
each Insurance Company Subsidiary, a copy of a duly completed and
signed Annual Statement (or any successor form thereto) required
to be filed by such Insurance Company Subsidiary with the
governmental body, agency or official which regulates insurance
companies in the jurisdiction in which such Insurance Company
Subsidiary is domiciled, in the form submitted to such govern-
mental body, agency or official;
(g) within 60 days after the end of the first, second and
third fiscal quarters of United States Fidelity and Guaranty Com-
pany and Fidelity and Guaranty Life Insurance Company,
respectively, a copy of a duly completed and signed Quarterly
Statement (or any successor form thereto) required to be filed by
each such company with the governmental body, agency or official
which regulates insurance companies in the jurisdiction in which
such company is domiciled, in the form submitted to such gov-
ernmental body, agency or official;
(h) promptly upon the mailing thereof to the shareholders
of the Applicant generally, copies of all financial statements,
reports and proxy statements so mailed;
(i) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports
on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the
Applicant shall have filed with the Securities and Exchange
Commission;
(j) if and when any member of the ERISA Group (i) gives or
is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan,
other than a reportable event for which 30-day notice to the PBGC
has been waived, or knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete
or partial withdrawal liability under Title IV of ERISA or notice
that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan,
a copy of such notice; (iv) applies for a waiver of the minimum
funding standard under Section 412 of the Internal Revenue Code, a
copy of such application; (v) gives notice of intent to terminate
any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy
of such notice; or (vii) fails to make any payment or contribution
to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Ar-
rangement which in either case would trigger the provisions of
Section 412(n) or 401(a)(29) of the Internal Revenue Code (or any
corresponding provisions of ERISA), a certificate of the chief
financial officer or the chief accounting officer of the Applicant
setting forth details as to such occurrence and action, if any,
which the Applicant or applicable member of the ERISA Group is re-
quired or proposes to take; and
(k) from time to time such additional information regarding
the financial position or business of the Applicant and its
Subsidiaries as the Agent, at the request of any Bank, may
reasonably request.
7.2. Payment of Obligations
The Applicant will pay and discharge, and will cause each
Subsidiary (other than any Excluded Subsidiary) to pay and discharge, at
or before maturity, all their respective material obligations and li-
abilities, including, without limitation, tax liabilities, except where
the same may be contested in good faith by appropriate proceedings, and
will
maintain, and will cause each Subsidiary (other than an Excluded
Subsidiary) to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
7.3. Maintenance of Property; Insurance
(a) The Applicant will keep, and will cause each Subsidiary
to keep, all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted.
(b) The Applicant will maintain or cause to be maintained
with financially sound and reputable insurers or through self-insurance
programs appropriate to the type and amount of the risk insured,
insurance with respect to its properties and business, and the properties
and business of its Subsidiaries, against loss or damage of the kinds
customarily insured against by reputable companies in the same or
similar businesses, such insurance to be of such types and in such
amounts (with such deductible amounts) as is customary for such companies
under similar circumstances. The Applicant will furnish to the Banks,
upon request from the Agent, information presented in reasonable detail
as to the insurance so carried.
7.4. Conduct of Business and Maintenance of Existence
The Applicant will continue, and will cause each Subsidiary
(other than any Excluded Subsidiary) to continue, to engage in all
material respects in business of the same general type as now conducted
by the Applicant and its subsidiaries, and will preserve, renew and keep
in full force and effect, and will cause each Subsidiary (other than any
Excluded Subsidiary) to preserve, renew and keep in full force and ef-
fect, their respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct
of business, other than such corporate existences, rights, privileges and
franchises which, if not preserved, renewed or kept in force, will not
have, in the aggregate, a Material Adverse Effect.
7.5. Compliance with Laws
The Applicant will comply, and cause each Subsidiary to
comply, with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations thereunder)
except where the necessity of compliance therewith is contested in good
faith by appropriate proceedings or where the failure to
comply with such
laws, ordinances, rules, regulations and requirements
will not, in the aggregate, have a Material Adverse Effect.
8. NEGATIVE COVENANTS
The Applicant agrees that, so long as this Agreement is in effect,
any reimbursement obligations (contingent or otherwise) in respect of
any Letter of Credit remain outstanding and unpaid, or any other amount
is owing under any Credit Document to the Issuing Bank, any Bank or the
Agent:
8.1. Negative Pledge
Neither the Applicant nor any Subsidiary will create, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired
by it, except:
(a) Liens existing on the date of this Agreement securing
Debt outstanding on the date of this Agreement in an aggregate
principal or face amount not exceeding $100,000,000 and identified
on Schedule 8.1 hereto;
(b) any Lien existing on any asset of any corporation at
the time such corporation becomes a Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of
acquiring such asset, provided that such Lien attaches to such
asset concurrently with or within 90 days after the acquisition
thereof;
(d) any Lien on any asset of any corporation existing at
the time such corporation is merged or consolidated with or into
the Applicant or a Subsidiary and not created in contemplation of
such event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Applicant or a Subsidiary and not created in
contemplation of such acquisition;
(f) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by
any of the foregoing clauses or clause (j) below of this Section,
provided that such Debt is not increased and is not secured by
any additional assets;
(g) Liens arising in the ordinary course of its business
(including Liens arising in the ordinary course of its insurance
business) which (i) do not secure Debt
or Derivatives Obligations,
(ii) do not secure any obligation (except obligations arising in
the ordinary course of its insurance business) in an amount
exceeding $50,000,000 and (iii) do not in the aggregate materially
detract from or impair the use or value of the asset or assets
subject thereto in the operation of its business;
(h) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed
$25,000,000;
(i) Liens securing obligations of the type referred to in
clause (vii) of the definition of Debt as long as such Liens arise
in the ordinary course of the Applicant's or the Subsidiary's, as
the case may be, business and such Liens are in amounts and
otherwise are on terms consistent with then existing practices in
the repurchase business;
(j) Liens securing Non-Recourse Debt (including Non-
Recourse Debt constituting Debt (other than Non-Recourse Debt) as
provided in the proviso to the definition of Non-Recourse Debt);
(k) Liens on securities or cash of any Insurance Company
Subsidiary which secure its obligations as a reinsurer (as opposed
to a ceding insurance company) under reinsurance contracts entered
into with Persons which are licensed or authorized to do an
insurance business in any jurisdiction; and
(l) Liens not otherwise permitted by the foregoing clauses
of this Section securing Debt in an aggregate principal or face
amount at any date not to exceed 5% of Adjusted Consolidated
Tangible Net Worth.
8.2. Consolidations, Mergers and Sales of Assets; Ownership by USF&G
Corporation
The Applicant will not (i) consolidate or merge with or into
any other Person, other than a merger in which the Applicant is the
surviving corporation or a merger solely for the purpose of
reincorporating the Applicant in another jurisdiction, in each case
provided no Default shall exist at, or immediately after, such merger,
or (ii) sell, lease or otherwise transfer, directly or indirectly, all
or substantially all of the assets of the Applicant and its Subsidiaries,
taken as a whole, to any other Person. The Applicant will at all times
own all of the outstanding voting securities of United States Fidelity
and Guaranty Company.
8.3. Ratio of Debt to Adjusted Consolidated Tangible Net Worth
The aggregate amount of Debt (other than Non-Recourse Debt)
of the Applicant and its Subsidiaries shall at no time exceed 55% of
Adjusted Consolidated Tangible Net Worth.
8.4. Minimum Consolidated Tangible Net Worth
Adjusted Consolidated Tangible Net Worth will at no time be
less than the sum of (i) $1,050,000,000 plus (ii) 50% of the consolidated
net income of the Applicant and its Consolidated Subsidiaries for the
period commencing on July 1, 1994 and ending at the end of the
Applicant's then most recent fiscal quarter (treated for this purpose as
a single accounting period). For purposes of this Section, if
consolidated net income of the Applicant and its Consolidated
Subsidiaries for any period shall be less than zero, the amount
calculated pursuant to clause (ii) above for such period shall be zero.
8.5. Transactions with Affiliates
The Applicant will not, and will not permit any Subsidiary
to, directly or indirectly, pay any funds to or for the account of, make
any investment (whether by acquisition of stock or indebtedness, by loan,
advance, transfer of property, guarantee or other agreement to pay,
purchase or service, directly or indirectly, any Debt, or otherwise) in,
lease, sell, transfer or otherwise dispose of any assets, tangible or in-
tangible, to, or participate in, or effect any transaction in connection
with any joint enterprise or other joint arrangement with, any Affiliate
unless such payment, investment, lease, sale, transfer, disposition,
participation or transaction is on terms and conditions at least as
favorable to the Applicant or such Subsidiary as the terms and conditions
which would apply in a similar transaction with a Person not an Af-
filiate; provided, however, that the foregoing provisions of this Section
shall not prohibit the Applicant from declaring or paying any lawful
dividend or distribution so long as, after giving effect thereto, no
Default shall have occurred and be continuing.
9. DEFAULT
9.1. Events of Default
If one or more of the following events ("Events of Default")
shall have occurred and be continuing:
(a) The failure of the Applicant or any Co-Applicant to pay
any reimbursement obligations in respect of any Letter of Credit
within two Business Days after demand; or
(b) The failure of the Applicant or any Co-Applicant to pay
any interest or any other fees or expenses payable under any
Credit Document to the Agent with respect to the credit facilities
established hereunder within three Business Days of the date
when due and payable; or
(c) The issuance of any Letter of Credit for a purpose
inconsistent with or in violation of Section 2.1(b) or the use of
the proceeds of any Letter of Credit in a manner inconsistent
with or in violation of Section 2.13; or
(d) The Applicant shall fail to observe or perform any
covenant contained in Sections 8.1 to 8.5, inclusive;
(e) The Applicant or any Co-Applicant shall fail to observe
or perform any covenant or agreement contained in this Agreement or
any Credit Document (other than those covered by clauses (a), (b),
(c) or (d) above) for 30 days after notice thereof has been given
to the Applicant by the Agent at the request of any Bank;
(f) Any representation, warranty, certification or
statement made by the Applicant or any Co-Applicant in this
Agreement or in any Credit Document or any certificate, financial
statement or other document delivered pursuant to this Agreement
shall prove to have been incorrect in any material respect when
made (or deemed made);
(g) The Applicant or any Subsidiary shall fail to make any
payment owed by it in respect of any Material Financial Obligations
when due or within any applicable grace period;
(h) Any event or condition shall occur which results in
the acceleration of the maturity of any Material Debt or enables
(or, with the giving of notice or lapse of time or both, would
enable) the holder of such Debt or any Person acting on such
holder's behalf to accelerate the maturity thereof;
(i) The Applicant, any Co-Applicant (other than an Excluded
Subsidiary) or any Subsidiary (other than an Excluded Subsidiary)
shall commence a voluntary case or other proceeding seeking
rehabilitation, dissolution,
conservation, liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, rehabilitator, dissolver, conservator, custo-
dian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(j) An involuntary case or other proceeding shall be
commenced against the Applicant, any Co-Applicant (other than an
Excluded Subsidiary) or any Subsidiary (other than an Excluded
Subsidiary) seeking rehabilitation, dissolution, conservation,
liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, rehabilitator, dissolver, conservator,
custodian or other similar official of it or any substantial part
of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or
an order for relief shall be entered against the Applicant, any
Co-Applicant (other than an Excluded Subsidiary) or any Subsidiary
(other than an Excluded Subsidiary) under the federal bankruptcy
laws as now or hereafter in effect; or any governmental body,
agency or official shall apply for, or commence a case or other
proceeding to seek, an order for the rehabilitation,
conservation, dissolution or other liquidation of the Applicant,
any Co-Applicant (other than an Excluded Subsidiary) or any
Subsidiary (other than an Excluded Subsidiary) or of the assets or
any substantial part thereof of the Applicant, any Co-Applicant
(other than an Excluded Subsidiary) or any such Subsidiary (other
than an Excluded Subsidiary) or any other similar remedy;
(k) Any member of the ERISA Group shall fail to pay when
due an amount or amounts aggregating in excess of $5,000,000 which
it shall have become liable to pay under Title IV of ERISA; or
notice of intent to terminate a Material Plan shall be filed under
Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate,
to impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or to cause a trustee to be appointed to
administer any Material Plan; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or
more Multiemployer Plans which could cause one or more members of
the ERISA Group to incur a current payment obligation in excess of
$5,000,000;
(l) Enforceable judgments or orders for the payment of
money in excess of $10,000,000 in the aggregate shall be rendered
and entered against the Applicant, any Co-Applicant (other than an
Excluded Subsidiary) or any Subsidiary (other than an Excluded Sub-
sidiary) and such judgments or orders shall continue unsatisfied
and unstayed for a period of 30 days; or
(m) Any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of 30% or more of the outstanding shares
of common stock of the Applicant; or, during any period of twelve
consecutive calendar months, individuals who were directors of the
Applicant on the first day of such period shall cease to constitute
a majority of the board of directors of the Applicant.
Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, (a) if such event is an Event
of Default specified in clause (i) or (j) above, the Commitment shall
immediately and automatically terminate and any reimbursement
obligations owing or contingently owing in respect of all Outstanding
Letters of Credit and all other amounts owing under the Credit Documents
shall immediately become due and payable, and if not
previously deposited, the Applicant shall forthwith deposit pursuant to
Section 2.14 an amount equal to the Letter of Credit Exposure in the
Cash Collateral Account with and under the exclusive control of the
Agent, and the Agent may, and, upon the direction of the Required Banks
shall, exercise any and all remedies and other rights provided in the
Credit Documents, and (b) if such event is any other Event of Default,
any or all of the following actions may be taken: (i) with the consent
of the Required Banks, the Agent may, and upon the direction of the
Required Banks shall, by notice to the Applicant, declare the Commitment
to be terminated forthwith, whereupon the Commitment shall im-
mediately terminate, and (ii) with the consent of the Required Banks, the
Agent may, and upon the direction of the Required Banks shall, by notice
of default to the Applicant, declare any reimbursement obligations
owing or contingently owing in respect of all Outstanding Letters of
Credit and all other amounts owing under the Credit Documents to be due
and payable forthwith, whereupon the same shall im-
mediately become due and payable, and if not previously deposited, the
Applicant shall forthwith deposit pursuant to Section 2.14 an amount
equal to the Letter of Credit Exposure in the Cash Collateral Account
with and under the exclusive control of the Agent, and the Agent may,
and upon the direction of the Required Banks shall, exercise any and all
remedies and other rights provided pursuant to the Credit Documents.
Except as otherwise provided in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
Each Credit Party hereby further expressly waives and covenants not to
assert any appraisement, valuation, stay, extension, redemption or simi-
lar laws, now or at any time hereafter in force which might delay,
prevent or otherwise impede the performance or enforcement of any
Credit Document.
In the event that the Commitment shall have been terminated
pursuant to the provisions of this Section, any funds received by the
Agent and the Banks from or on behalf of the Applicant shall be applied
by the Agent and the Banks in liquidation of the obligations of the Ap-
plicant under the Credit Documents in such manner and order as the Agent
shall in its discretion determine and any funds received by the Agent and
the Banks from and or behalf of any Co-Applicant shall be applied by the
Agent and the Banks in liquidation of the obligations of such
Co-Applicant with respect to Letters of Credit requested by such
Co-Applicant in such manner and order as the Agent in its discretion
shall determine.
10. THE AGENT
10.1. Appointment
Each Bank and the Issuing Bank hereby irrevocably desig-
nates and appoints BNY as Agent hereunder and under the other Credit
Documents and each such Bank and the Issuing Bank hereby irrevocably
authorizes the Agent to take such action on its behalf under the
provisions of the Credit Documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms
of the Credit Documents, together with such other powers as are rea-
sonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in any Credit Document, the Agent shall not have any
duties or responsibilities other than those expressly set forth
therein, or any fiduciary relationship with any Bank or the Issuing
Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read
into the Credit Documents or
otherwise exist against the Agent.
10.2. Delegation of Duties
The Agent may execute any of its duties under the Credit
Documents by or through agents or attorneys-in-fact and shall be entitled
to rely upon the advice of counsel concerning all matters pertaining to
such duties.
10.3. Exculpatory Provisions
Neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable
for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with the Credit Documents (except the Agent
for its own gross negligence or willful misconduct), or (ii) responsible
in any manner to any of the Banks for any recitals, statements, rep-
resentations or warranties made by any Credit Party or any of-
ficer thereof contained in the Credit Documents or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Agent under or in connection with, the Credit Documents
or for the value, validity, effectiveness, genuineness, perfection,
enforceability or sufficiency of any of the Credit Documents or for
any failure of any Credit Party or any other Person to perform its obli-
gations thereunder. The Agent shall not be under any obligation to any
Bank or the Issuing Bank to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions
of, the Credit Documents, or to inspect the properties, books or
records of any Credit Party. The Agent shall not be under any liability
or responsibility whatsoever, as Agent, to any Credit Party or any
other Person as a consequence of any failure or delay in performance,
or any breach, by any Bank or the Issuing Bank of any of its obliga-
tions under any of the Credit Documents.
10.4. Reliance by Agent
The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, opinion, letter, cablegram, telegram, fax, telex
or teletype message, statement, order or other document or conversa-
tion believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to
any Credit Party), independent accountants and other experts se-
lected by the Agent. The Agent may treat each Bank and the Issuing Bank,
or the Person designated in the last notice filed with it under this
Section, as the holder of all of the interests of such Bank or Issuing
Bank hereunder until written notice of transfer, signed by such Bank or
Issuing Bank (or the Person designated in the last notice filed with the
Agent) and by the Person designated in such written notice of transfer,
in form and substance satisfactory to the Agent, shall have been filed
with the Agent. The Agent shall not be under any duty to examine or
pass upon the validity, effectiveness, enforceability, perfection or
genuineness of the Credit Documents or any instrument, document or com-
munication furnished pursuant thereto or in connection therewith, and
the Agent shall be entitled to assume that the same are valid, effective
and genuine, have been signed or sent by the proper parties and are what
they purport to be. The Agent shall be fully justified in failing or
refusing to take any action under the Credit Documents unless it shall
first receive such advice or concurrence of the Required Banks as it
deems appropriate. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Credit Documents in ac-
cordance with a request or direction of the Required Banks, and such
request or direction and any action taken or failure to act pursuant
thereto shall be binding upon all the Banks, including all future Banks
and the Issuing Bank.
10.5. Notice of Default
The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default unless the Agent has
received written notice thereof from the Issuing Bank, a Bank or the
Applicant or any Co-Applicant. In the event that the Agent receives such
a notice, the Agent shall promptly give notice thereof to the Issuing
Bank, the Banks and the Applicant. The Agent shall take such action
with respect to such Default or Event of Default as shall be directed
by the Required Banks, provided, however, that unless and until the
Agent shall have received such directions, the Agent may (but shall not
be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem to be
in the best interests of the Banks.
10.6. Non-Reliance on Agent and Other Banks
Each Bank and the Issuing Bank expressly acknowledges that
neither the Agent nor any of its respective officers, directors, employ-
ees, agents, attorneys-in-fact or affiliates has made any rep-
resentations or warranties to it and that no act by the Agent
hereinafter, including any review of the affairs of any Credit Party,
shall be deemed to constitute any representation or warranty by the
Agent to any Bank or the Issuing Bank. Each Bank and the Issuing Bank
represents to the Agent that it has, independently and without re-
liance upon the Agent or any other Bank or the Issuing Bank, and based on
such documents and information as it has deemed appropriate, made its
own evaluation of and investigation into the business, operations,
Property, financial and other condition and creditworthiness of the
Credit Parties and made its own decision to enter into this Agreement.
Each Bank and the Issuing Bank also represents that it will,
independently and without reliance upon the Agent or any other Bank, and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, evaluations and
decisions in taking or not taking action under any Credit Document, and
to make such investigation as it deems necessary to inform itself as
to the business, operations, Property, financial and other condition
and creditworthiness of the Credit Parties. Each Bank further
represents that it meets the criteria contained in the definition of a
"Eligible Assignee" hereunder. Except for notices, reports and other
documents expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Bank or the Issuing Bank with any credit or other information
concerning the business, operations, Property, financial and other
condition or creditworthiness of the Credit Parties which may come into
the possession of the Agent or any of its officers, directors, employ-
ees, agents, attorneys-in-fact or affiliates.
10.7. Indemnification
Each Bank agrees to indemnify and reimburse the Agent in its
capacity as such (to the extent not promptly reimbursed by the Applicant
and without limiting the obligation of any Credit Party to do so), in the
amount of its pro rata share (based on its Commitment Percentage
hereunder), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever including, without limitation,
any amounts paid to the Banks (through the Agent) by the Applicant or any
Co-Applicant pursuant to the terms of the Credit Documents, that are
subsequently rescinded or avoided, or must otherwise be restored or
returned) which may at any time be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of the Credit
Documents or any other documents contemplated by or referred to therein
or the transactions contemplated thereby or any action taken or omitted
to be taken by the Agent under or in connection with any of the
foregoing; provided, however, that no Bank shall be liable for the pay-
ment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting solely from the finally adjudicated gross neg-
ligence or willful misconduct of the Agent. Without limitation of the
foregoing, each Bank agrees to reimburse the Agent promptly upon demand
for its pro rata share of any unpaid fees owing to the Agent, and any
costs and expenses (including, without limitation, reasonable fees and
expenses of counsel) payable by the Applicant under Section 11.5, to the
extent that the Agent has not been paid such fees or has not be reim-
bursed for such costs and expenses, by the Applicant or any other Credit
Party. The failure of any Bank to reimburse the Agent promptly upon
demand for its pro rata share of any amount required to be by the Banks
to the Agent as provided in this Section shall not relieve any other
Bank of its obligation hereunder to reimburse the Agent for its pro
rata share of such amount, but no Bank shall be responsible for the fail-
ure of another Bank to reimburse the Agent for such other Bank's pro rata
share of such amount. The agreements in this Section shall survive the
payment of all amounts payable under the Credit Documents.
10.8. Agent in Its Individual Capacity
The Agent and its respective affiliates may make loans to,
accept deposits from, issue letters of credit for the account of, and
generally engage in any kind of business with, any Credit Party as
though the Agent were not Agent hereunder. With respect to its
commitment and participation as Bank with respect to Letters of Credit,
the Agent, in its individual capacity and not as Agent, shall have the
same rights and powers under the Credit Documents as any Bank and may
exercise the same as though it were not the Agent, and the terms "Bank"
and "Banks" shall in each case include the Agent in its individual
capacity and not as Agent.
10.9. Successor Agent
If at any time the Agent deems it advisable, in its sole
discretion, it may submit to each of the Banks and the Issuing Bank a
written notice of its resignation as Agent under the Credit Documents,
such resignation to be effective upon the earlier of (i) the written
acceptance of the duties of the Agent under the Credit Documents by a
successor Agent and (ii) on the 30th day after the date of such notice.
Upon any such resignation, the Required Banks shall have the right to ap-
point from among the Banks a successor Agent. If no successor Agent
shall have been so appointed by the Required Banks and accepted such ap-
pointment in writing within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which successor Agent shall be a com-
mercial bank organized under the laws of the United States of America
or any State thereof and having a combined capital, surplus, and
undivided profits of at least $100,000,000. Upon the ac-
ceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent's rights, powers, privileges and duties as Agent under
the Credit Documents shall be terminated. The Applicant, Co-Applicant,
Issuing Bank and the Banks shall execute such documents as shall be
necessary to effect such appointment. After any retiring Agent's
resignation as Agent, the provisions of the Credit Documents shall inure
to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under the Credit Documents. If at any time there
shall not be a duly appointed and acting Agent, the Applicant agrees to
make each payment due under the Credit Documents directly to the Issuing
Bank and the Banks entitled thereto during such time.
11. OTHER PROVISIONS
11.1. Amendments and Waivers
With the written consent of the Required Banks, the Agent and
the appropriate Credit Parties may, from time to time, enter into writ-
ten amendments, supplements or modifications of the Credit Documents
and, with the consent of the Required Banks, the Agent on behalf of the
Banks may execute and deliver to any such parties a written instrument
waiving or a consent to a departure from, on such terms and conditions
as the Agent may specify in such instrument, any of the requirements of
the Credit Documents or any Default or Event of Default and its con-
sequences; provided, however, that:
(a) no such amendment, supplement, modification, waiver or
consent shall, without the consent of all of the Banks, (i) increase the
Commitment Percentage of any Bank or the Commitment, (ii) extend the
Termination Date or, subject to Section 2.5, the Stated Expiration Date
of any Letter of Credit, (iii) reduce interest, any fees or other amounts
payable hereunder, (iv) postpone any date fixed for payment of
reimbursement obligations, interest or any fees or other amounts payable
hereunder, (v) change the provisions of Sections 2.11, 2.12, 11.1 or
11.6(a) or (vi) change the definition of Required Banks;
(b) without the written consent of the Issuing Bank, no
such amendment, supplement, modification or waiver shall change the
Commitment, change the amount or the time of payment of the Letter of
Credit Commissions or change any other term or provision which relates
to the Commitment or the Letters of Credit; and
(c) without the written consent of the Agent, no such
amendment, supplement, modification or waiver shall
amend, modify or
waive any provision of Section 10 or otherwise change any of the rights
or obligations of the Agent hereunder or under the Credit Documents.
Any such amendment, supplement, modification or waiver shall
apply equally to each of the Banks and shall be binding upon the parties
to the applicable Credit Document, the Banks, the Agent, the Issuing
Bank and all future Banks. In the case of any waiver, the parties to the
applicable Credit Document, the Banks and the Agent shall be restored
to their former position and rights hereunder and under the other Credit
Documents to the extent provided for in such waiver, and any Default or
Event of Default waived shall not extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
The Credit Documents may not be amended orally or by any course of
conduct.
11.2. Notices
All notices, requests and demands to or upon the respective
parties to the Credit Documents to be effective shall be in writing and,
unless otherwise expressly provided therein, shall be deemed to have been
duly given or made when delivered by hand, or, in the case of notice by
fax, when sent, addressed as follows in the case of the Applicant, the
Issuing Bank, the Agent and to the address of a Bank designated as such
on Schedule 1.1 hereto and to the address of a Credit Party set forth in
a Credit Document, or to such other addresses as to which the Agent may
be hereafter notified by the respective parties thereto:
The Applicant:
USF&G Corporation
100 Light Street
Baltimore, MD 21202
Attention: Treasurer
Telephone: (410) 547-3328
Fax: (410) 234-2056
with a copy to:
Corporate Secretary
Fax: (410) 547-3914
The Agent:
The Bank of New York
One Wall Street
Agency Function Administration
18th Floor
New York, New York 10286
Attention: Torry Berntsen,
Vice President
Telephone: (212) 635-7887
Fax: (212) 635-8268
The Issuing Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Manager,
Standby Letter of Credit Department
Telephone: (212) 815-4346
Fax: (212) 815-3955,
except that any notice, request or demand by the Applicant to or upon the
Agent, the Issuing Bank or the Banks pursuant to Sections 2.1, 2.5 or 2.6
shall not be effective until received, and any notice of
payment or demand for payment under Section 2.1(c) shall not be effective
until received at the fax number designated above for the Applicant. Any
party to a Credit Document may rely on signatures of the parties thereto
which are transmitted by fax or other electronic means as fully as if
originally signed.
11.3. No Waiver; Cumulative Remedies
No failure to exercise and no delay in exercising, on the
part of the Agent, the Issuing Bank or any Bank, any right, remedy, power
or privilege under any Credit Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege under any Credit Document preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges under the Credit
Documents are cumulative and not exclusive of any rights, remedies, pow-
ers and privileges provided by law.
11.4. Survival of Representations and Warranties
All representations and warranties made under the Credit
Documents and in any document, certificate or statement delivered pursu-
ant thereto or in connection therewith shall survive the execution and
delivery of the Credit Documents.
11.5. Payment of Expenses and Taxes
The Applicant agrees, promptly upon presentation of a
statement or invoice therefor, and whether any Letter of Credit is issued
(i) to pay or reimburse the Agent for all its out-of-pocket costs and ex-
penses reasonably incurred in connection with the development, prepara-
tion and execution of, the Credit Documents and any amendment,
supplement or modification thereto (whether or not executed), any
documents prepared in connection therewith and the consummation of
the transactions contemplated thereby, including syndication, and,
including, without limitation, the reasonable fees and disbursements
of Special Counsel, (ii) to pay or reimburse the Agent, the Issuing Bank
and the Banks for all of their respective costs and expenses, in-
cluding, without limitation, reasonable fees and disbursements of
counsel, incurred in connection with (A) any Default or Event of Default
and any enforcement or collection proceedings resulting therefrom or
in connection with the negotiation of any restructuring or "work-out"
(whether consummated or not) of the obligations of the Credit Parties un-
der any of the Credit Documents, (B) the enforcement of this Section,
(iii) to pay, indemnify, and hold each Bank, the Issuing Bank and the
Agent harmless from and against, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay
in paying, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution
and delivery of, or consummation of any of the transactions con-
templated by, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, the Credit Documents and any
such other documents, and (iv) to pay, indemnify and hold each Bank,
the Issuing Bank and the Agent and each of their respective officers,
directors and employees harmless from and against any and all other li-
abilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including, without limitation, reasonable counsel fees and
disbursements) with respect to the enforcement and performance of
the Credit Documents, the use of the proceeds of the Letter of Credit
(all the foregoing, collectively, the "indemnified li-
abilities") and, if and to the extent that the foregoing indemnity may
be unenforceable for any reason, the Applicant agrees to make the
maximum payment permitted or not prohibited under applicable law; pro-
vided, however, that the Applicant shall have no obligation hereunder to
pay indemnified liabilities to the Agent, the Issuing Bank or any Bank
arising from the finally adjudicated gross negligence or willful
misconduct of the Agent, the Issuing Bank or such Bank or claims between
one indemnified party and another indemnified party. The agreements in
this Section shall survive the termination of the Commitment and the
payment of all amounts payable under the Credit Documents.
11.6. Assignments and Participations
(a) The Credit Documents shall be binding upon and inure to
the benefit of the Applicant, the Co-Applicants, the Banks, the Issuing
Bank, the Agent, all future Banks and their respective successors and
assigns, except that no Credit Party may assign, delegate or transfer
any of its rights or obligations under the Credit Documents without the
prior written consent of the Agent and each Bank.
(b) Each Bank shall have the right at any time, upon
written notice to the Agent of its intent to do so, to sell, assign,
transfer or negotiate all or any part of such Bank's rights under the
Credit Documents to one or more of its affiliates which would otherwise
be Eligible Assignees, to one or more of the other Banks (or to affili-
ates of such other Banks which would be an Eligible Assignee) or, with
the prior written consent of the Applicant, the Issuing Bank and the
Agent (which consent shall not be unreasonably withheld and shall not be
required upon the occurrence and during the continuance of an Event of
Default), to sell, assign, transfer or negotiate all or any part of
such Bank's rights and obligations under the Credit Documents to any
other bank, insurance company, pension fund, mutual fund or other finan-
cial institution which meets the criteria of Eligible Assignee,
provided that (i) each such sale, assignment, transfer or negotiation
(other than sales, assignments, transfers or negotiations to affiliates
of such Bank shall be in a minimum amount of $3,000,000, provided that
the assigning Bank retains a Commitment Percentage equivalent to
$5,000,000 following such assignment, and (ii) there shall be paid to
the Agent by the assigning Bank a fee (the "Assignment Fee") of $3,000.
For each assignment, the parties to such assignment shall execute and
deliver to the Agent for its acceptance and recording an Assignment and
Acceptance Agreement. Upon such execution, delivery, acceptance and
recording by the Agent, from and after the effective date specified in
such Assignment and Acceptance Agreement, the assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment
and Acceptance Agreement, the assignor Bank thereunder shall be re-
leased from its obligations under the Credit Documents. Upon any such
sale, assignment or other transfer, the Commitment Percentages set
forth in Exhibit A shall be adjusted accordingly by the Agent and a new
Exhibit A shall be distributed by the Agent to the Applicant and each
Bank.
(c) Each Bank may grant participations in all or any part
of its Commitment Percentage to one or more banks, insurance companies,
financial institutions, pension funds or mutual funds, provided that
(i) such Bank's obligations under the Credit Documents shall remain
unchanged, (ii) such Bank
shall remain solely responsible to the other
parties to the Credit Documents for the performance of such obligations,
(iii) the Applicant, the Issuing Bank, the Agent and the other Banks
shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under the Credit Documents, (v)
no sub-participations shall be permitted and (vi) the voting rights of
any holder of any participation shall be limited to decisions that only
do any of the following: (A) subject the participant to any additional
obligation, (B) reduce interest, any fees or other amounts payable
hereunder, or (C) postpone any date fixed for the payment of
reimbursement obligations, interest or any fees or other amounts payable
hereunder. The Applicant acknowledges and agrees that any such
participant shall for purposes of Sections 2.11 and 2.12 be deemed to
be a "Bank"; provided, however, the Applicant shall not, at any
time, be obligated to pay any participant in any interest of any Bank
hereunder any sum in excess of the sum which the Applicant would have
been obligated to pay to such Bank in respect of such interest had such
Bank not sold such participation.
(d) No Bank shall, as between and among the Applicant, any
Co-Applicant, the Issuing Bank, the Agent and such Bank, be relieved of
any of its obligations under the Credit Documents as a result of any
sale, assignment, transfer or negotiation of, or granting of par-
ticipations in, all or any part of its Commitment Percentage, except that
a Bank shall be relieved of its obligations to the extent of any such
sale, assignment, transfer, or negotiation of any part of its Com-
mitment Percentage.
(e) Notwithstanding anything to the contrary contained in
this Section, any Bank may at any time or from time to time assign all or
any portion of its rights under the Credit Documents to a Federal Reserve
Bank, provided that any such assignment shall not release such assignor
from its obligations thereunder.
11.7. Counterparts
Each Credit Document may be executed by one or more of the
parties thereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the
same document. It shall not be necessary in making proof of any Credit
Document to produce or account for more than one counterpart signed by
the party to be charged. A counterpart of any Credit Document or to any
document evidencing, and of any an amendment, modification, consent or
waiver to or of any Credit Document transmitted by fax shall be deemed to
be an originally executed counterpart. A set of the copies of the
Credit Documents signed by all the parties thereto shall be deposited
with each of the Applicant
and the Agent. Any party to a Credit Document
may rely upon the signatures of any other party thereto which are
transmitted by fax or other electronic means to the same extent as if
originally signed.
11.8. Adjustments; Set-off
(a) If any Bank (a "Benefited Bank") shall at any time
receive any payment or collateral in respect of the Letter of Credit
Obligations in excess of its pro rata share (based on its Commitment
Percentage) (whether voluntarily or involuntarily, by set-off, pursuant
to events or proceedings of the nature referred to in Section 9.1 (i) or
(j), or otherwise), such Benefited Bank shall purchase from each of the
other Banks such portion of each such other Bank's participation in the
Letter of Credit Obligations, and shall provide each of such other Banks
with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Bank to share the excess pay-
ment or benefits of such collateral or proceeds ratably with each of
the Banks, provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefited Bank,
such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. The Ap-
plicant and Co-Applicants agree that each Bank so purchasing a portion
of another Bank's percentage of Letter of Credit Obligations may exercise
all rights of payment (including, without limitation, rights of set-off,
to the extent not prohibited by law) with respect to such portion as
fully as if such Bank were the direct holder of such portion.
(b) In addition to any rights and remedies of the Banks
provided by law, upon the occurrence of and during the continuance of an
Event of Default, under Section 9.1(a) or (b), each Bank shall have the
right, without prior notice to the Applicant, any such notice being
expressly waived by each Credit Party to the extent not prohibited by
applicable law, to set-off and apply against any indebtedness, whether
contingent, matured or unmatured, of such Credit Party to such Bank, any
amount owing from such Bank to such Credit Party, at, or at any time af-
ter, the happening of any of the above-mentioned events. To the extent
not prohibited by applicable law, the aforesaid right of set-off may be
exercised by such Bank against such Credit Party or against any trustee
in bankruptcy, custodian, debtor in possession, assignee
for the benefit of creditors, receiver, or execution, judgment or attach-
ment creditor of such Credit Party, or against anyone else claiming
through or against such Credit Party or such trustee in bankruptcy,
custodian, debtor in possession, assignee for the
benefit of creditors, receiver, or execution, judgment or attachment
creditor, notwithstanding the fact that such right
of set-off shall not
have been exercised by such Bank prior to the making, filing or issu-
ance, or service upon such Bank of, or of notice of, any such petition,
assignment for the benefit of creditors, appointment or application for
the appointment of a receiver, or issuance of execution, subpoena,
order or warrant. Each Bank agrees promptly to notify the applicable
Credit Party, the Issuing Bank and the Agent after any such set-off and
application made by such Bank, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
11.9. Construction
Each Credit Party represents that it has been represented by
counsel in connection with the Credit Documents and the transactions
contemplated thereby and that the principle that agreements are to be
construed against the draftsman shall be inapplicable.
11.10. Indemnity
The Applicant agrees to indemnify and hold harmless the
Agent, the Issuing Bank and each Bank and their respective affiliates,
directors, officers, employees, attorneys and agents (each an
"Indemnified Person") from and against any loss, cost, liability, dam-
age or expense (including the reasonable fees and disbursements of
counsel of such Indemnified Person, including all local counsel hired by
any such counsel) incurred by such Indemnified Person in investigating,
preparing for, defending against, or providing evidence, producing
documents or taking any other action in respect of, any commenced or
threatened litigation, administrative proceeding or investigation under
any federal securities law or any other statute of any jurisdiction, or
any regulation, or at common law or otherwise, which is alleged to
arise out of or is based upon (i) any untrue statement or alleged
untrue statement of any material fact by any Credit Party in any document
or schedule executed or filed with any Governmental Authority by or on
behalf of any Credit Party; (ii) any omission or alleged omission to
state any material fact required to be stated in such document or sched-
ule, or necessary to make the statements made therein, in light of the
circumstances under which made, not misleading; or (iii) any acts,
practices or omissions or alleged acts, practices or omissions of any
Credit Party or its agents relating to the use of the proceeds of any
or all Letters of Credit made by the Applicant which are alleged to be
in violation of Section 2.13, or in violation of any federal securities
law or of any other statute, regulation or other law of any jurisdic-
tion applicable thereto. The indemnity set
forth herein shall be in addition to any other obligations or li-
abilities of the Applicant and/or Co-Applicant to each Indemnified Person
under the Credit Documents or at common law or otherwise, and shall
survive any termination of the Credit Documents, the expiration of the
Commitment and the payment of all obligations of the Applicant and
Co-Applicants under the Credit Documents, provided that the Applicant
shall have no obligation under this Section to an Indemnified Person
with respect to any of the foregoing to the extent found in a final
judgment of a court having jurisdiction to have resulted primarily out
of the gross negligence or wilful misconduct of such Indemnified Person
or arising solely from claims between one such Indemnified Person and
another such Indemnified Person.
11.11. Governing Law
The Credit Documents and the rights and obligations of the
parties thereunder shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York, without
regard to principles of conflict of laws.
11.12. Headings Descriptive
Section headings have been inserted in the Credit Documents
for convenience only and shall not be construed to be a part thereof.
11.13. Severability
Every provision of the Credit Documents is intended to be
severable, and if any term or provision thereof shall be invalid, il-
legal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions thereof shall not be affected
or impaired thereby, and any invalidity, illegality or unenforceability
in any jurisdiction shall not affect the validity, legality or en-
forceability of any such term or provision in any other jurisdiction.
11.14. Integration
All exhibits to a Credit Document shall be deemed to be a
part thereof. The Credit Documents embody the entire agreement and
understanding among the Credit Parties, the Agent, the Issuing Bank and
the Banks with respect to the subject matter thereof and supersede all
prior agreements and understandings among the Credit Parties, the Agent,
the Issuing Bank and the Banks with respect to the subject matter
thereof.
11.15. Consent to Jurisdiction
Each Credit Party hereby irrevocably submits to the
jurisdiction of any New York State or Federal court sitting in the City
of New York over any suit, action or proceeding arising out of or
relating to the Credit Documents. Each Credit Party hereby irrevocably
waives, to the fullest extent permitted or not prohibited by law, any
objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding brought in such a court and any
claim that any such suit, action or proceeding brought in such a court
has been brought in an inconvenient forum. Each Credit Party hereby
agrees that a final judgment in any such suit, action or proceeding
brought in such a court, after all appropriate appeals, shall be
conclusive and binding upon it.
11.16. Service of Process
Each Credit Party hereby irrevocably consents to the service
of process in any suit, action or proceeding by sending the same by
first class mail, return receipt requested or by overnight courier ser-
vice, to the address of such Credit Party set forth in or referred to in
Section 11.2 or in the applicable Credit Document executed by such Credit
Party. Each Credit Party hereby agrees that any such service (i) shall
be deemed in every respect effective service of process upon it in any
such suit, action, or proceeding, and (ii) shall to the fullest extent
enforceable by law, be taken and held to be valid personal service upon
and personal delivery to it.
11.17. No Limitation on Service or Suit
Nothing in the Credit Documents or any modification, waiver,
consent or amendment thereto shall affect the right of the Agent or any
Bank to serve process in any manner permitted by law or limit the right
of the Agent, the Issuing Bank or any Bank to bring proceedings against
any Credit Party in the courts of any jurisdiction or jurisdic-
tions in which such Credit Party may be served.
11.18. WAIVER OF TRIAL BY JURY
THE AGENT, THE ISSUING BANK, THE BANKS AND EACH CREDIT PARTY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF,
UNDER OR IN CONNECTION WITH THE CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREIN. FURTHER, EACH CREDIT PARTY HEREBY CERTIFIES THAT
NO REPRESENTATIVE OR AGENT OF THE AGENT, THE ISSUING BANK, OR THE BANKS,
OR COUNSEL TO THE AGENT OR THE BANKS, HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE AGENT, THE ISSUING BANK OR THE BANKS WOULD NOT, IN
THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
JURY TRIAL PROVISION. EACH CREDIT PARTY ACKNOWLEDGES THAT THE AGENT, THE
ISSUING BANK AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, INTER ALIA, THE PROVISIONS OF THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
USF&G CORPORATION
By: ___________________________
Name: _________________________
Title: ________________________
THE BANK OF NEW YORK,
Individually, and as Agent
and Issuing Bank
By: ___________________________
Name: _________________________
Title: ________________________
CIBC INC.
By: ___________________________
Name: _________________________
Title: ________________________
CORESTATES BANK, N.A.
By: ___________________________
Name: _________________________
Title: ________________________
CREDIT LYONNAIS NEW YORK BRANCH
By: ___________________________
Name: _________________________
Title: ________________________
CREDIT SUISSE
By: ___________________________
Name: _________________________
Title: ________________________
By: ___________________________
Name: _________________________
Title: ________________________
DEUTSCHE BANK AG, NEW YORK BRANCH
and/or CAYMAN ISLAND BRANCH
By: ___________________________
Name: _________________________
Title: ________________________
FIRST INTERSTATE BANK OF
CALIFORNIA
By: ___________________________
Name: _________________________
Title: ________________________
THE FUJI BANK, LIMITED
NEW YORK BRANCH
By: ___________________________
Name: _________________________
Title: ________________________
MELLON BANK, N.A.
By: ___________________________
Name: _________________________
Title: ________________________
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: ___________________________
Name: _________________________
Title: ________________________
THE FIRST NATIONAL BANK OF
MARYLAND
By: ___________________________
Name: _________________________
Title: ________________________
USF&G EXHIBIT A
COMMITMENT PERCENTAGES
Bank Commitment Percentage
The Bank of New York 14%
Canadian Imperial Bank of Commerce 9%
CoreStates Bank, N.A. 9%
Credit Lyonnais New York Branch 9%
Credit Suisse 9%
Deutsche Bank AG, New York Branch 9%
and/or Cayman Island Branch
First Interstate Bank of California 9%
The Fuji Bank, Limited, New York Branch 9%
Mellon Bank, N.A. 9%
Morgan Guaranty Trust Company of New York 9%
The First National Bank of Maryland 5%
USF&G EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This Assignment and Acceptance Agreement is made and entered into
as of _____ __, 19__, by and between ____________ (the "Assignor") and
____________ (the "Assignee").
R E C I T A L S
A. The Assignor, certain other banks (together with any prior
assignees, the "Banks") and The Bank of New York, as agent (the "Agent")
and as issuing bank (the "Issuing Bank"), are parties to that certain
Letter of Credit Agreement dated as of October 25, 1994 (the "Agreement")
with USF&G Corporation, a Maryland corporation (the "Applicant") and
certain subsidiaries of the Applicant party thereto. Pursuant to the
Agreement, the Banks agreed to participate in Letters of Credit issued by
the Issuing Bank under the Agreement in accordance with their Commitment
Percentage. The Assignor's Commitment (without giving effect to the
assignment effected hereby or to other assignments thereof which have
not yet become effective) is specified in Item 1 of Schedule 1 hereto.
The Assignor's percentage of the Letter of Credit Exposure (without giv-
ing effect to the assignment effected hereby or to other assignments
thereof which have not yet become effective) is specified in Item 2 of
Schedule 1 hereto. All capitalized terms not otherwise defined herein
are used herein as defined in the Agreement.
B. The Assignor wishes to sell and assign to the Assignee, and
the Assignee wishes to purchase and assume from the Assignor, the portion
of the Assignor's Commitment specified in Item 3 of Schedule 1 hereto
(the "Assigned Commitment").
The parties agree as follows:
1. Assignment. Subject to the terms and conditions set forth
herein and in the Agreement, the Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the
Assignor, without recourse, on the date set forth above (the "Assignment
Date") all obligations of the Assignor under the Agreement with respect
to the Assigned Commitment. As consideration for the assignment and sale
contemplated hereby, the Assignee shall pay to the Assignor on the date
hereof the amount heretofore agreed between them.
2. Representation and Warranties. Each of the Assignor and the
Assignee represents and warrants to the other that (a) it has full power
and legal right to execute and deliver this Agreement and to perform the
provisions of this Agreement; (b) the execution, delivery and performance
of this Agreement have been authorized by all action, corporate or
otherwise, and do not violate any provisions of its charter or by-laws or
any contractual obligations or requirement of law binding on it; and (c)
this Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms. The Assignor
further represents that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim created by the Assignor. The Assignee
further represents that it is an "Eligible Assignee" as said term is
defined in the Agreement.
3. Condition Precedent. The obligations of the Assignor and the
Assignee hereunder shall be subject to the fulfillment of the condition
that the Assignor shall have complied with the other applicable
provisions of Section 11.6 of the Agreement.
4. Notice of Assignment. The Assignor agrees to give notice of
the assignment and assumption of the Assigned Commitment to the Agent,
the Issuing Bank and the Applicant and hereby instructs the Agent, the
Issuing Bank and the Applicant to make all payments with respect to the
Assigned Commitment directly to the Assignee at the applicable office
specified on Schedule 2 hereto; provided, however, that the Applicant,
the Agent and the Issuing Bank all shall be entitled to continue to deal
solely and directly with the Assignor in connection with the interests so
assigned until the Agent, the Issuing Bank and the Applicant, to the
extent required by Section 11.6 of the Agreement, shall have received
notice of the assignment, the Applicant (and if required, the Agent and
the Issuing Bank) shall have consented in writing thereto, and the Agent
shall have recorded and accepted this Agreement and received the
Assignment Fee required to be paid pursuant to Section 11.6 of the
Agreement. From and after the date (the "Effective Date") on which the
Agent shall notify the Applicant and the Assignor that the requirements
set forth in the foregoing sentence shall have occurred and all consents
(if any) required shall have been given, (i) the Assignee shall be deemed
to be a party to the Agreement and, to the extent that rights and
obligations thereunder shall have been assigned to Assignee as provided
in such notice of assignment to the Agent, shall have the rights and
obligations of a Bank under the Agreement, and (ii) the Assignee shall be
deemed to have appointed the Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Documents as are
delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto. After the Effective Date, the Agent
shall make all payments in respect of the interest assigned hereby
(including payments of interest, fees and other amounts) to the
Assignee. The Assignor and Assignee shall make all ap-
propriate adjustment in payments under the Assigned Commitment for
periods prior to the Effective Date hereof directly between themselves.
If the Assignee is not a United States Person as defined in Section
7701(a)(30) of the Code, the Assignee shall deliver herewith the forms
required by Section 2.11(d) of the Agreement to evidence the Assignee's
complete exemption from United States withholding taxes with respect to
payments under the Credit Documents.
5. Independent Investigation. The Assignee acknowledges that it
is purchasing the Assigned Commitment from the Assignor totally without
recourse and, except as provided in Section 2 hereof, without represen-
tation or warranty. The Assignee further acknowledges that it has made
its own independent investigation and credit evaluation of the Applicant
and any Co-Applicant in connection with its purchase of the Assigned
Commitment. Except for the representations or warranties set forth in
Section 2, the Assignee acknowledges that it is not relying on any
representation or warranty of the Assignor, expressed or implied, in-
cluding without limitation, any representation or warranty relating to
the legality, validity, genuineness, enforceability,
collectibility, interest rate, repayment schedule or status of the
Assigned Commitment, the legality, validity, genuineness or
enforceability of the Agreement, or any other Credit Document referred to
in or delivered pursuant to the Agreement, or financial condition or
creditworthiness of the Applicant, any Co-Applicant or any other Person.
The Assignor has not and will not be acting as either the
representative, agent or trustee of the Assignee with respect to matters
arising out of or relating to the Agreement or this Agreement. From and
after the Effective Date, except as set forth in Section 4 above, the
Assignor shall have no rights or obligations with respect to the Assigned
Commitment.
6. Consent of the Applicant.
Pursuant to the provisions of Section 11.6 of the Agreement,
and to the extent required thereby, the Applicant, by signing below,
consents to this Agreement and to the assignment contemplated herein.
7. Method of Payment. Any payments to be made by either party
hereunder shall be in funds available at the place of payment on the same
day and shall be made by wire transfer to the account designated by the
party to receive payment.
8. Integration. This Agreement shall supersede any prior
agreement or understanding between the parties (other than the Agreement)
as to the subject matter hereof.
9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall
be binding upon both parties, their successors and assigns.
10. Headings. Section headings have been inserted herein for
convenience only and shall not be construed to be a part hereof.
11. Amendments; Waivers. This Agreement may not be amended,
changed, waived or modified except by a writing executed by the parties
hereto, and may not be amended, changed, waived or modified in any manner
inconsistent with Section 11.7 of the Agreement without the prior written
consent of the Agent.
12. Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of, the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the day and year first above
written.
________________, as Assignor
By: _________________________
Name: _______________________
Title: ______________________
________________, as Assignee
By: _________________________
Name: _______________________
Title: ______________________
Consented to:
USF&G CORPORATION
By: _________________________
Name: _______________________
Title: ______________________
Accepted:
THE BANK OF NEW YORK, as Agent
By: _________________________
Name: _______________________
Title: ______________________
THE BANK OF NEW YORK, as Issuing Bank
By: _________________________
Name: _______________________
Title: ______________________
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT
between
_____________________, as Assignor
and
_____________________, as Assignee
relating to
Agreement among
USF&G Corporation,
the Banks party thereto,
and
The Bank of New York, as Agent,
dated as of October 25, 1994
Item 1. (a) Assignor's Commitment
Percentage: %
(b) Assignor's Commitment: $
Item 2. Assignor's Letter of
Credit Exposure: $
(the Assignor's Commitment Percentage
times the Letter of Credit Exposure)
Item 3. Assigned Commitment:
SCHEDULE 2
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT
between
_____________________, as Assignor
and
_____________________, as Assignee
relating to
Agreement among
USF&G Corporation,
the Banks party thereto,
and
The Bank of New York, as Agent,
dated as of October 25, 1994
Address for Notices
______________________
______________________
Attention: ___________
___________
Telephone: (___) ___-____
Fax: (___) ___-____
USF&G EXHIBIT C
FORM OF LETTER OF CREDIT REQUEST
_____________, 19__
The Bank of New York, as Agent
One Wall Street
New York, New York 10286
Attention: Agency Function Administration
The Bank of New York, as Issuing Bank
101 Barclay Street
New York, New York 10286
Attention: Manager,
Standby Letter of Credit Department
Re:Letter of Credit Agreement, dated as of October 25, 1994, by
and among USF&G CORPORATION (the "Applicant"), each
Subsidiary of the Applicant which is a party thereto (each,
a "Co-Applicant"), the Banks party thereto, and THE BANK OF
NEW YORK, as Agent and Issuing Bank (the "Agreement")
Capitalized terms used herein that are defined in the Agreement
shall have the meanings therein defined.
1. Pursuant to Section 2.1 and 6.4 of the Agreement, the
undersigned Applicant [and, if applicable, ______________ (the
"Co-Applicant")] hereby requests that the Issuing Bank issue the
Letter(s) of Credit in accordance with the information annexed hereto as
Annex A, which contains the verbatim text of the proposed letter(s) of
credit including the proposed terms and conditions and a precise
description of the documentation required to be complied with and
submitted by the beneficiary, which, if complied with by the beneficiary
on or prior to the Stated Expiration Date, would require the Issuing
Agent to make payment under the Letter of Credit.
2. The Applicant hereby certifies that on the date hereof and
on the Date of Issuance set forth in Annex A, and
after giving effect to
the Letter(s) of Credit requested hereby:
(a) The Applicant is and shall be in compliance with all
of the terms, covenants and conditions of the Credit Documents.
(b) There exists and there shall exist no Default or Event
of Default under the Agreement.
(c) Each of the representations and warranties contained
in the Agreement which is required to be made on such Date of Issuance
is and shall be true and correct.
(d) After giving effect to the Letters of Credit requested
to be issued hereby, the aggregate outstanding principal balance of
the Letter of Credit Exposure does not exceed the Commitment.
[(e) The undersigned Co-Applicant acknowledges that it has
received a copy of the Agreement and acknowledges and agrees that from
and after the Date of Issuance of the Letter(s) of Credit requested
hereby, the undersigned shall be jointly and severally liable with the
Applicant for all obligations with respect to the Letter(s) of Credit
requested hereby and that the undersigned shall be a party to the
Agreement and the other Credit Documents as a Co-Applicant with all the
rights and obligations of a Co-Applicant under the Agreement and Credit
Documents with respect to the Letter(s) of Credit requested hereby, and
each and every reference in the Agreement and in any other Credit
Document to "Co-Applicant" shall mean and be a reference to include the
undersigned. The undersigned will at the request of the Agent execute a
copy of the Agreement and such other Credit Documents as may be
required.]
[(f) The undersigned Co-Applicant represents and warrants
that the Agreement and each Credit Document executed by the undersigned
Co-Applicant constitutes a legal, valid and binding obligation of the
undersigned Co-Applicant in each case enforceable in accordance with its
terms.]
[(g) The undersigned Co-Applicant specifically acknowledges
that certain provisions of the Agreement, including, without limitation,
Section 11.6 (Amendments and Waivers), 11.3 (No Waiver; Cumulative
Remedies), 11.6 (Assignments and Participation), 11.7 (Counterparts),
11.11 (Governing Law), 11.13 (Severability), 11.14 (Integration, 11.15
(Consent to Jurisdiction), 11.16 (Service of Process), 11.17 (No
Limitation on Service or Suit) and 11.18 (Waiver of Trial by Jury)
thereof, are made applicable to the Co-Applicant.]
IN WITNESS WHEREOF, the Applicant [and Co-Applicant, if
applicable] has caused this certificate to be executed by its duly
authorized officer(s) as of the date and year first written above.
USF&G CORPORATION
By: __________________________
Name: ________________________
Title: _______________________
[CO-APPLICANT]
By: __________________________
Name: ________________________
Title: _______________________
Annex A
LETTER OF CREDIT INFORMATION
1. Name of Beneficiary: __________________________________.
2. Address of Beneficiary to which Letter of Credit will be sent:
_________________________________________
______________________________________________________________.
3. Conditions under which a drawing may be made (specify the required
documentation): _____________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
_____________________________________________________________.
4. Maximum amount to be available under such Letter of Credit:
$___________.
5. Requested Date of Issuance: ___________ __, 199_.
6. Stated Expiration Date: ___________ __, 199_.
7. Text of Letter of Credit: _______________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
_____________________________________________________________.
8. Name and address of Co-Applicant, if any.
USF&G Exhibit D
The Bank of New York
Letter of Credit Department
Church St. Station
P.O.Box 11238
New York, N.Y. 10286-1238
Our Ref. No. Date
Beneficiary Applicant
(address) USF&G Corporation on behalf
of (address)
Gentlemen/Ladies:
Our reference No.
Account of:
USF&G Corporation on behalf of
(address)
Available with: Ourselves by payment
Drafts at sight drawn on the Bank of New York, New York, New York, as indicated
below.
To the extent of: ***USD ***
Expiry date:
Place of expiry: our counters
Additional details:
We hereby establish this irrevocable letter of credit in your favor for
drawings up to US$____________________, effective (date) and expiring at our
office at 101 Barclay Street, New York, New York 10007, with our close of
business on (date).
We hereby undertake to promptly honor your sight draft(s), marked "drawn under
letter of credit no.____", for all or any part of this letter of credit if
presented at our 101 Barclay Street office, New York, New York 10007 on or
before the expiry date or any automatically extended date.
Except as stated herein, this undertaking is not subject to any condition
or qualification. The obligation of the Bank of New York under this letter of
credit is the individual obligation of our letter of credit ____________ USF&G
Corporation on behalf of
The Bank of New York, and is in no way contingent upon reimbursement with
respect thereto. It is a condition of this letter of credit that it is
deemed to be automatically extended, without amendment, for one year from
the expiry date or any future expiration date, unless at least forty-five
days prior to any expiration date we notify you by registered mail that we
elect not to consider this letter of credit renewed for any such additional
period.
This letter of credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 revision), International Chamber of Commerce,
Publication No. 500.
Yours very truly,
USF&G EXHIBIT E
FORM OF OPINION OF
GENERAL COUNSEL OF THE APPLICANT
______________, 1994
To the Parties Listed
On Schedule A Hereto
Re:Letter of Credit Agreement, dated as of October 25, 1994, by
and among USF&G CORPORATION (the "Applicant"), each
Subsidiary of the Applicant which is a party thereto (each,
a "Co-Applicant"), the Banks party thereto, and THE BANK OF
NEW YORK, as Agent and Issuing Bank (the "Agreement")
Dear Sirs:
I am General Counsel for USF&G Corporation (the "Applicant")
and have acted in such capacity in connection with the Letter of Credit
Agreement (the "Agreement") dated as of October 25, 1994 among the
Applicant, the Co-Applicants, if any, listed on the signature pages
thereof, the banks listed on the signature pages thereof and The Bank of
New York, as Agent and Issuing Bank. Terms defined in the Credit
Agreement are used herein as therein defined. This opinion is being
rendered to you at the request of my client pursuant to Section 5.5 of
the Agreement.
I have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have
conducted such other investigations of fact and law as I have deemed
necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Applicant has all governmental licenses,
authorizations, consents and approvals required to carry on its business
as now conducted, other than such licenses, authorizations, consents and
approvals which, if not held or obtained by the Applicant, do not, in
the aggregate, have a Material Adverse Effect.
2. To the best of my knowledge after responsible inquiry,
the execution, delivery and performance by the Applicant of the
Agreement and each other Credit Document to which it is a party do not
contravene, or constitute a default under, any provision of any material
agreement, judgment, injunction, order, decree or other instrument
binding upon the Applicant or any of its Subsidiaries or result in the
creation or imposition of any material Lien on any asset of the
Applicant or any of its Subsidiaries.
3. To the best of my knowledge after responsible inquiry,
there is no action, suit or proceeding pending or threatened against or
affecting the Applicant or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official, in which there
is a reasonable possibility of an adverse decision which could
materially adversely affect the business, consolidated financial
position or consolidated results of operations of the Applicant and its
Consolidated Subsidiaries, considered as a whole or which in any manner
draws into question the validity of the Agreement except as may have
been disclosed in the financial statements referred to in Section 4.4(a)
of the Agreement.
4. Each of the Applicant's corporate Subsidiaries is a
corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, other than such
licenses, authorizations, consents and approvals which, if not held or
obtained by the Applicant, do not, in the aggregate, have a Material
Adverse Effect.
Very truly yours,
USF&G EXHIBIT F
FORM OF OPINION OF
COUNSEL FOR THE APPLICANT
__________________,1994
To the Parties Listed
on Schedule A Hereto
Re:Letter of Credit Agreement, dated as of October 25, 1994, by
and among USF&G CORPORATION (the "Applicant"), each
Subsidiary of the Applicant which is a party thereto (each,
a "Co-Applicant"), the Banks party thereto, and THE BANK OF
NEW YORK, as Agent and Issuing Bank (the "Agreement")
Dear Sirs:
We have acted as counsel for USF&G Corporation (the
"Applicant") in connection with the Letter of Credit Agreement (the
"Agreement") dated as of October 25, 1994 among the Applicant, the
Co-Applicants, if any, listed on the signature pages thereof, the banks
listed on the signature pages thereof and The Bank of New York, as Agent
and as Issuing Bank. Terms defined in the Agreement are used herein as
therein defined. This opinion is being rendered to you at the request
of our client pursuant to Section 5.5 of the Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have
conducted such other investigations of fact and law as we have deemed
necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The Applicant is a corporation validly existing and in
good standing under the laws of Maryland, and has all corporate powers
required to carry on its business as now conducted.
2. The execution, delivery and performance by the
Applicant of the Agreement and each other Credit Document to which it is
a party are within the Applicant's corporate powers, have been duly
authorized by all necessary corporate action, require no action by the
Applicant by or in respect of, or filing by the Applicant with, any
governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the
Applicant.
3. The Agreement constitutes a valid and binding
agreement of the Applicant and each other Credit Document delivered on
the Effective Date constitutes a valid and binding obligation of the
Applicant, in each case enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general principles of
equity (including public policy limitations on the indemnification
provisions thereof).
Very truly yours,
USF&G EXHIBIT G
FORM OF OPINION OF SPECIAL COUNSEL
_____________, 1994
To the Parties Listed
on Schedule A Hereto
Re:Letter of Credit Agreement, dated as of October 25, 1994, by
and among USF&G CORPORATION (the "Applicant"), each
Subsidiary of the Applicant which is a party thereto (each, a
"Co-Applicant"), the Banks party thereto, and THE BANK OF NEW
YORK, as Agent and Issuing Bank (the "Agreement")
We have acted as Special Counsel to the Agent in connection with
the Agreement. Capitalized terms used herein which are defined in the
Agreement shall have the meanings therein defined, unless the context
hereof otherwise requires.
We have examined originals or copies certified to our satisfaction
of the documents required to be delivered pursuant to the provisions of
Sections 5 and 6 of the Agreement. In conducting such examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to originals
of all documents submitted to us as copies.
Based upon the foregoing examination, and relying with your
permission upon the opinions of John Lummis, general counsel to the
Applicant and Piper & Marbury, counsel to the Applicant, we are of the
opinion that all legal preconditions to the issuance of the first Letter
of Credit have been satisfactorily met.
This opinion is rendered solely for your benefit in
connection with the transactions referred to herein and may not be relied
upon by any other Person.
In rendering the foregoing opinion, we express no opinion as
to laws other than the laws of the State of New York and the federal laws
of the United States of America.
Very truly yours,
EMMET, MARVIN & MARTIN
- - -
SCHEDULE A
The Bank of New York
One Wall Street
New York, NY 10286
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, NY 10017
CoreStates Bank N.A.
P.O. Box 7618
1339 Chestnut Street
Philadelphia, PA 19101-7618
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Credit Suisse
12 E. 49th Street
42nd Floor
New York, NY 10017
Deutsche Bank AG,
New York and/or Cayman Islands Branches
31 West 52nd Street
New York, NY 10019
First Interstate Bank of California
707 Wilshire Boulevard, W16-14
Los Angeles, CA 90017
The First National Bank of Maryland
25 South Charles Street
Baltimore, MD 21201
The Fuji Bank, Limited, New York Branch
Two World Trade Center
New York, NY 10048
Mellon Bank, N.A.
One Mellon Bank Center
Room 370
Pittsburgh, PA 15256
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
USF&G SCHEDULE 1.1
TO LETTER OF CREDIT AGREEMENT DATED OCTOBER 25, 1994
LIST OF ADDRESSES FOR NOTICES
1. The Bank of New York
One Wall Street
New York, NY 10286
Attention: Stratton R. Heath, III,
Vice President
Telephone: (212) 635-6466
Telecopier: (212) 809-9520
2.Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, NY 10017
Attention: Gail M. Golightly
Financial Institutions
Telephone: (212) 856-3512
Telecopier: (212) 856-3613
3.CoreStates Bank N.A.
P.O. Box 7618
1339 Chestnut Street
Philadelphia, PA 19101-7618
Attention: Kathleen Petrelli
Telephone: (215) 973-3632
Telecopier: (215) 786-4114
4.Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attention: Peter Rasmussen
Financial Institutions
Telephone: (212) 261-7718
Telecopier (212) 261-3401
5.Credit Suisse
12 E. 49th Street
42nd Floor
New York, NY 10017
Attention: Dawn K. Rubinstein
Telephone: (212) 238-5364
Telecopier: (212) 238-5389
- - -
6.Deutsche Bank AG,
New York and/or Cayman Islands Branches
31 West 52nd Street
New York, NY 10019
Attention: Susan A. Maros
Vice President
Financial Institutions
Telephone: (212) 474-8104
Telecopier: (212) 474-8108
7.First Interstate Bank of California
707 Wilshire Boulevard, W16-14
Los Angeles, CA 90017
Attention: Tim Helotes
Vice President
U.S. Banking Division -
Financial Institutions Area
Telephone: (213) 614-4122
Telecopier: (213) 614-2569
8.The First National Bank of Maryland
25 South Charles Street
Baltimore, MD 21201
Attention: Kimberly Cantwell
Corporate Banking
Telephone: (410) 244-4979
Telecopier: (410) 244-4294
9.The Fuji Bank, Limited, New York Branch
Two World Trade Center
New York, NY 10048
Attention: W. Scott Harwood
Assistant Vice President
U.S. Corporate Finance
Telephone: (212) 898-2138
Telecopier: (212) 912-0516
10.Mellon Bank, N.A.
One Mellon Bank Center
Room 151-350
Pittsburgh, PA 15258
Attention: Robert E. Brandenstein
Institutional Banking
Telephone: (412) 234-1158
Telecopier: (412) 234-8087
11.Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Attention: Patricia Merritt
Vice President
Telephone: (212) 648-6744
Telecopier: (212) 648-5249
Schedule 8.1
The following amounts of debt are outstanding and such debt is secured by
various liens:
Amount Transaction
$13,000,000 Chancellor Capital Holdings
10,995,000 Norwest
1,445,000 Oklahoma Mortgage
7,585,000 Orangewood
6,685,000 Northmark
4,979,000 Breezewood Mews
460,000 Charleston
9,800,000 Laurel Village
45,000,000 Others
Exhibit 10A
USF&G CORPORATION
ENABLING RESOLUTIONS TO ESTABLISH
1994 STOCK PLAN FOR EMPLOYEES OF USF&G
WHEREAS, the Board of Directors has previously considered and approved
in concept various employee recognition and bonus programs, including the VIP
(Value-Involvement-Performance) Program, RAVE (Recognize a Valued Employee),
Chairman's Club T.R.I.P. and WIN, pursuant to which employees of the Corporation
or its subsidiaries may receive options to purchase shares of the Corporation's
Common Stock (all such programs, together with similar all-employee programs
approved by the Compensation Committee from time to time, are hereinafter
referred to as the "Employee Stock Option Programs");
WHEREAS, the Board desires to formally authorize and reserve for
issuance shares of Common Stock to be issued under such Employee Stock Option
Programs;
NOW, WHEREFORE, it is hereby:
RESOLVED, that the Corporation grant, from time to time pursuant to the Employee
Stock Option Programs, options for the purchase of Common Stock of the
Corporation; provided, however, that all such grants shall: (i) be made only to
employees of the Corporation or its subsidiaries as designated by the
Compensation Committee; (ii) not be made to any person subject to Section 16 of
the Securities Exchange Act of 1934; (iii) provide for an option exercise price
per share as determined by the Compensation Committee from time to time, but in
no instance shall such price be less than the fair market value of a share
of authorized and issued Common Stock of the Corporation on the date the option
is granted (fair market value shall be the average of the high and low sale
prices quoted on the New York Stock Exchange composite listing on the date in
question or if there were no quotations on such date, on the next preceding
trading day on which there were such quotations); (iv) provide for a period for
exercising such options of not more than ten years and one day from the date of
grant; (v) not constitute incentive stock options intended to qualify under
Section 422 of the Internal Revenue Code of 1986, as amended; (vi) provide that
no share of Common Stock shall be issued until full payment therefor has been
made to the Corporation and that the holder of the option shall have none of the
rights of a shareholder until the shares are actually issued; (vii) be non-
transferable and non-assignable (including by pledge or hypothecation), except
that valid option rights may be transferred by testamentary instrument or by
laws of descent and distribution; (viii) during such holder's lifetime, be
exercisable only by the grantee and not be transferable or assignable; (ix)
otherwise be on such terms, conditions, restrictions and limitations as shall be
established from time to time by the Compensation Committee, including, without
limitation, any provisions regarding vesting, exercise, termination, and
forfeiture; and (x) be made only as and when approved by the Compensation
Committee.
RESOLVED, that there be and hereby are approved and reserved for issuance
pursuant to any such Employee Stock Option Programs, subject to further action
of the Compensation Committee to authorize such issuance, an aggregate of up to
2,500,000 shares of Common Stock of the Corporation, and such shares, upon
issuance thereof pursuant to any of the Employee Stock Option Programs as
provided in the immediately preceding resolution, shall constitute duly
authorized, validly issued, fully paid and non-assessable shares of Common Stock
of the Corporation.
RESOLVED, that in the event of changes in the Common Stock of the Corporation by
reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares and the like, the
Compensation Committee shall make such adjustments as shall be just and
equitable in the number and kind of shares reserved for purchase under the
Employee Stock Option Programs, the number and kind and option price of shares
covered by options granted, and in any other matters which relate to the options
and which are affected by any such changes.
RESOLVED, that any shares subject to an option which remain unpurchased at the
expiration, termination or cancellation of an option and options or shares which
are otherwise forfeited, surrendered or reacquired, shall again be available for
use under the Employee Stock Option Programs.
RESOLVED, that the President, any Executive Vice President, Senior Vice
President, Vice President or the Secretary (hereinafter "Officers of the
Corporation"), as they deem appropriate, make application to the New York Stock
Exchange, Inc., the Pacific Stock Exchange, Inc., the London Stock Exchange and
the Stock Exchanges of Basle, Geneva, and Zurich, Switzerland for the listing,
subject to official notice of issuance, of up to 2,500,000 shares of Common
Stock reserved for issuance under the Employee Stock Option Programs; and the
Secretary be and hereby is authorized to prepare, execute and deliver an
appropriate listing application, to appear before the respective exchanges and
to do any and all other things which are necessary or desirable in connection
therewith.
RESOLVED, that the Officers of the Corporation be and they are hereby authorized
and directed to prepare, with the cooperation of counsel and accountants for the
Corporation, and to file with the Securities and Exchange Commission such
registration statements on Form S-8 under the Securities Act of 1933, as
amended, and any required amendments and supplements thereto, as may be
necessary from time to time to register the shares of Common Stock of the
Corporation or any other securities required to be registered in connection with
the Employee Stock Option Programs (all such securities, including the Common
Stock, is hereinafter collectively referred to as the "Securities"), all
to the extent the appropriate officers of the Corporation deem appropriate.
RESOLVED, that the Chairman of the Board of Directors and President, any
Executive Vice President, or the Senior Vice President-General Counsel, and each
of them, be and they are hereby authorized and empowered to execute from time to
time by and in the name of the Corporation the registration statements referred
to above and any amendments and supplements thereto and to file the same with
the Securities and Exchange Commission; and the execution of such registration
statements and of any amendments and supplements thereto by the officers and
directors of the Corporation either personally or by any one of Norman P.
Blake, Jr., Dan L. Hale or John A. MacColl acting as attorney-in-fact of such
officers or directors pursuant to a power or powers of attorney, be and the same
is hereby specifically authorized.
RESOLVED, that John A. MacColl, be and he is hereby designated as "agent for
service" of the Corporation in connection with any such registration statements
and the filing thereof with the Securities and Exchange Commission.
RESOLVED, that the Officers of the Corporation are each authorized and directed
in the name and on behalf of the Corporation to take any and all action which
they may deem necessary or advisable in order to obtain a permit, register, or
qualify the Securities for issuance under the Employee Stock Option Programs in
accordance with the terms thereof or to request an exemption from registration
of the Securities or to register or obtain a license for the Corporation as
dealer or broker under the securities laws of such of the states of the
United States of America as such officers may deem advisable, and in connection
with such registrations, permits, licenses, qualifications, and exemptions to
execute, acknowledge, verify, deliver, file, and publish all such applications,
reports, issuer's covenants, resolutions, irrevocable consents to service
of process, powers of attorney, and other papers and instruments as may be
required under such laws, and to take any and all further action which they may
deem necessary or advisable in order to maintain such registrations in effect
for as long as they may deem to be in the best interest of the Corporation.
RESOLVED, that it is desirable and in the best interest of the Corporation that
to the extent required by law the Securities be qualified or registered for sale
in various states; that the Officers of the Corporation are each authorized to
determine the states in which appropriate action shall be taken to qualify or
register for sale all or such part of the Securities as said Officers may deem
advisable; that said Officers are hereby authorized to perform on behalf of the
Corporation any and all such acts as they deem necessary or advisable in order
to comply with the applicable laws of any such states, and in connection
therewith to execute and file all requisite papers and documents, including, but
not limited to, applications, reports, surety bonds, irrevocable consents, and
appointments of attorneys for service of process; and the execution of any such
Officer of any such paper or document or with the doing by him of any act in
connection with the foregoing matters shall conclusively establish his or her
authority therefor from the Corporation and the approval and ratification by the
Corporation of the papers and documents so executed and the act so taken.
RESOLVED, that if in any such state where any of the Securities are to be
registered or qualified for issuance under the Employee Stock Option Programs in
accordance with the terms thereof, or where the Corporation is to be registered
in connection with the Employee Stock Option Programs, a prescribed form of
resolution or resolutions is required to be adopted by the Board of Directors,
each such resolution shall be deemed to have been, and is adopted by this
resolution; and the Secretary or an Assistant Secretary of the Corporation is
hereby authorized to certify the adoption of all such resolutions as
though such resolutions were now presented to and adopted at this meeting, all
such resolutions to be inserted in the minute book of the Corporation on pages
next following the minutes of this meeting and initialed by an Officer of the
Corporation.
Exhibit 10R
USF&G CORPORATION
STOCK INCENTIVE PLAN OF 1991
As Amended and Restated
Purpose and Types of Awards
The purpose of the USF&G Corporation Stock Incentive Plan of 1991, as
amended and restated herein (the "Plan"), is to provide officers and other key
employees (collectively, "Key Persons") of USF&G Corporation and designated
subsidiaries (collectively, the "Corporation") with additional incentives to
continue and increase their efforts with respect to the Corporation and to
develop a personal and active interest in the broader growth and greater
financial success of the Corporation.
The Plan provides for granting Key Persons options, stock appreciation
rights, stock awards and performance awards (collectively, "Awards"). Awards
may be granted separately or in tandem with other Awards, or in lieu of other
compensation or other Awards otherwise payable to a Key Person either at the
election of the Committee or, under rules approved by the Committee from time to
time, at the election of the Key Person.
ARTICLE I - Administration
(a) The Plan shall be administered by the Compensation Committee
(the "Committee") appointed by the Board of Directors, consisting of not less
than two members, each of whom qualifies as a "disinterested" and "outside"
director pursuant to Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and regulations promulgated by the Internal Revenue Service
under section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), respectively.
(b) Subject to the terms of the Plan, the Committee shall have full
and complete authority in its discretion to grant Awards under the Plan,
prescribe agreements evidencing such Awards and establish programs for granting
Awards, and to take all other actions necessary to carry out the purpose and
intent of the Plan, including, but not limited to, the authority to determine
(i) the Key Persons to whom, and the time or times at which Awards shall be
granted, (ii) the types of Awards to be granted, (iii) the number of shares to
be covered by each Award, and (iv) all terms and conditions with respect to each
Award.
(c) The Committee shall have full and complete authority to
administer and interpret the Plan and all agreements evidencing Awards under the
Plan and all programs providing for Awards, to prescribe, amend and rescind
rules and regulations relating to it, to determine the terms and provisions of
the respective agreements entered into (which agreements need not be identical)
with respect to Awards, to establish various programs for granting Awards under
the Plan and to make all other determinations deemed necessary or desirable for
the operation and administration of the Plan.
(d) The Committee shall have the power to designate which of the
present and future affiliated and subsidiary corporations the Key Persons of
which shall be eligible to participate in the Plan.
(e) The Committee shall have the authority to accelerate the
time in which any Award may be exercised or becomes payable and to waive, in
whole or in part, any restriction or condition with respect to such Award,
including, but not limited to, any restriction or condition with respect to the
vesting or exercisability of any Award following termination of any Key
Person's employment.
(f) All determinations made by the Committee shall be final and
conclusive.
ARTICLE II - Participation in the Plan
(a) Participation in the Plan shall be limited to such Key Persons
of the Corporation as shall from time to time be designated by the Committee.
At the discretion of the Committee, an employee may be deemed to be a Key Person
as a result of his status or position with the Corporation or as a result of
individual efforts in connection with a specific project.
(b) No member of the Board of Directors who is not also an officer
or employee of the Corporation shall be eligible to participate in the Plan.
ARTICLE III - Common Stock Subject to the Plan
(a) Subject to the provisions of Sections (c) and (d) of this
Article, the total number of shares of the authorized Common Stock of the
Corporation which may be issued under the Plan pursuant to Awards granted on or
after April 1, 1994 shall be 4,000,000 shares; provided, however, that the
number of shares of Common Stock that may be issued under the Plan pursuant to
incentive stock options intended to qualify under section 422 of the Code,
shall be determined without regard to Section (d) of this Article. In no event,
however, shall there be issued under the Plan on or after April 1, 1994, more
than 2,000,000 shares of restricted stock, subject to adjustment under Section
(c) but without regard to Section (d) of this Article III. The total number of
shares of Common Stock subject to issuance under the Plan, and any balance
remaining unoptioned or unawarded, shall be reserved for those purposes during
the life of the Plan.
(b) Subject to the provisions of Section (c) of this Article, from
and after April 1, 1994 and until this Plan shall terminate pursuant to Article
XVI, no Key Person shall be eligible to receive an Award or Awards under the
Plan for, in the aggregate, more than 500,000 shares of Common Stock. Awards to
any such person which are subsequently terminated, canceled, forfeited, or
reacquired shall nevertheless be counted when determining whether such maximum
number of shares has been issued. No Key Person shall be eligible to receive an
Award or Awards granted under the Plan before April 1, 1994, for, in the
aggregate, more than 700,000 shares.
(c) In the event of changes in the Common Stock of the Corporation
by reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares and the like, the Board of
Directors shall make such appropriate adjustments in the number and kind of
shares reserved for purchase by or Award to Key Persons under the Plan, the
number and kind and the price of shares covered by Awards granted, the maximum
number of shares for which any one person shall be eligible to receive or
exercise Awards, the minimum number of shares as to which Awards shall be
exercisable at any one time, and in any other matters which relate to Awards
and which are affected by the changes referred to above.
(d) If for any reason an Award or portion of an Award expires or is
terminated, surrendered, canceled, forfeited or reacquired pursuant to rights
reserved upon issuance thereof, then the number of shares of Common Stock
covered by the Award or portion of the Award shall be restored to the number of
shares available for Awards under the Plan as if the Award or portion of the
Award had never been issued, except to the extent shares are actually issued and
such restoration is restricted by Section 16 of the Exchange Act. In the event
an Award is exercised and paid in cash, any shares subject to such Award shall
again be subject to issuance pursuant to Awards granted under the Plan, except
to the extent shares are actually issued and such restoration is restricted by
Section 16 of the Exchange Act.
ARTICLE IV - Options
(a) The Committee in its discretion may grant options to any Key
Person on such terms and conditions as it shall, in its discretion, deem
advisable, subject to Section (b) of this Article IV. Options granted under the
Plan may be either incentive stock options intended to qualify under section 422
of the Code, or non-qualified stock options not intended to so qualify.
(b) The option exercise price per share with respect to each option
shall be determined by the Committee from time to time, but in no instance shall
such price be less than the fair market value of a share of the authorized and
issued Common Stock of the Corporation on the date the option is granted. Fair
market value shall be the average of the high and low sales prices quoted on the
New York Stock Exchange composite listing on the date in question or if there
were no quotations on such date, on the next preceding trading day on which
there were such quotations.
(c) The terms of an option may provide for the award of a new option
when the exercise price has been paid by tendering shares of Common Stock,
provided that such replenishment feature shall be limited to any extent required
by rules, regulations, or interpretations under the Exchange Act with respect to
any particular grant in the case of a Key Person who is or becomes subject to
Section 16 of the Exchange Act. Any option which would automatically be granted
pursuant to this Section (c) without any further Committee action may cover not
more than the number of shares tendered and shall have an exercise price set
at the then fair market value of such shares. ARTICLE V - Stock Appreciation
Rights
(a) The Committee in its discretion may grant stock appreciation
rights to any Key Person on such terms and conditions as it shall, in its
discretion, deem advisable.
(b) A stock appreciation right shall entitle the holder to receive
the number of shares of Common Stock determined under Section (c) below, without
payment to the Corporation. In lieu of issuing shares upon exercise of a stock
appreciation right, the Committee may elect to make a cash payment equal to the
fair market value on the exercise date of the shares determined under Section
(c) below, or make such payment partially in shares and partially in cash in
such proportions as the Committee determines.
(c) The number of shares to be issued upon the exercise of a stock
appreciation right shall be determined by dividing:
(l) the number of shares subject to or specified by the
stock appreciation right as of the exercise date multiplied by the amount by
which the fair market value of a share of Common Stock on the exercise date
exceeds the exercise price specified by such stock appreciation right; by
(2) the fair market value of a share of Common Stock on the
exercise date; provided, however, that the total number of shares that may be
received pursuant to any stock appreciation right issued in tandem with any
option shall not exceed the total number of shares subject to such option.
ARTICLE VI - Stock Awards
(a) The Committee in its discretion may grant stock awards to any
Key Person on such terms and conditions as it shall, in its discretion, deem
advisable, subject to the limitations set forth in Section (a) of Article III
and Section (b) of this Article VI. A stock award may be denominated in shares
of Common Stock, units of Common Stock or stock-equivalent units, and may be
paid in Common Stock, in cash, or in a combination of Common Stock and cash.
(b) The issuance of restricted stock shall be pursuant to restricted
stock agreements approved by the Committee. In each restricted stock agreement,
the participant shall agree to remain in the employment of the Corporation for a
specified period (which shall be at least one year from the date of the award),
at the pleasure of the Corporation, and at such compensation as the Corporation
shall determine from time to time. In the event that a participant is
permanently separated from the Corporation for any reason other than death,
retirement, permanent disability, or other events specified by the Committee,
within the period of time stated in the restricted stock agreement, the
restricted stock shall be forfeited or shall be subject to repurchase at the
prices specified in such agreements unless, at the discretion of the Committee,
which discretion shall be exercised within 30 days after the separation, the
forfeiture or repurchase is waived by the Committee.
ARTICLE VII - Performance Awards
The Committee may in its discretion make performance awards payable in
Common Stock, cash or a combination thereof on account of attainment of one or
more performance goals established by the Committee. Performance goals
established by the Committee may be based on the Corporation's operating income
or one or more other business criteria selected by the Committee that apply to
an individual or group of individuals, a business unit or the Corporation as a
whole, over such performance period as the Committee may designate. The
Committee in its discretion may recommend to the Board of Directors that the
material terms of any performance award or program with respect to some or all
Key Persons be submitted for approval by the shareholders.
ARTICLE VIII - Amendment and Discontinuance
The Board of Directors may amend, modify or discontinue the Plan or
waive any of its provisions, except that no such amendment, modification, waiver
or discontinuance shall revoke or alter the terms of any valid Award previously
granted in accordance with the Plan without the consent of the holder of
the Award, except as permitted under Article IX below. The Board of Directors
and the Committee may not take any action to increase or decrease the exercise
price of any outstanding options granted under Article IV, except as provided in
Section (c) of Article III. To the extent required under Rule 16b-3
with respect to persons subject to Section 16 of the Exchange Act, and, with
respect to incentive stock options, to the extent required by the Code, no
action by the Board of Directors which materially modifies the Plan shall become
effective without the approval of the shareholders of the Corporation.
ARTICLE IX - Government Regulations
The obligations of the Corporation to issue any Common Stock under this
Plan shall be subject to all applicable laws, rules and regulations and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee. The Board of Directors of the
Corporation may make such changes as may be necessary or appropriate to comply
with the rules and regulations of any governmental authority.
ARTICLE X - Payment of Exercise or Purchase Price
(a) The exercise or purchase price for any Award shall be payable
(i) in U.S. dollars in cash or by check, bank draft or money order payable to
the Corporation, (ii) in the discretion of the Committee, through the delivery
of Common Stock or other securities issued by the Corporation with a fair market
value on the date the Award is exercised or purchased equal to the total amount
due, or (iii) for any other lawful consideration as determined by the Committee.
A holder of an Award shall have none of the rights of a shareholder until the
shares of Common Stock covered by the Award are issued to him or her.
(b) The Committee may authorize the Corporation to grant loans or to
guarantee loans from a third party to holders of Awards in conjunction with such
Awards, upon such terms as the Committee deems appropriate.
ARTICLE XI - Transferability of Awards
Awards under the Plan shall be nontransferable (including by pledge,
assignment or otherwise) other than (i) by will or law of descent and
distribution, and (ii) to the extent allowable under Rule 16b-3 with respect to
persons subject to Section 16 of the Exchange Act.
ARTICLE XII - Withholding Taxes
Key Persons shall pay to the Corporation, or make provision satisfactory
to the Committee for payment of, any taxes required by law to be withheld in
respect of Awards under the Plan no later than the date of the event creating
the tax liability. In the Committee's discretion, such tax obligations may be
paid in whole or in part in shares of Common Stock, including shares retained
from the Award creating the tax obligation, valued at their fair market value on
the date of delivery. The Corporation may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to
the holder of an Award.
ARTICLE XIII - Applicable Law
The validity, interpretation and administration of this Plan and any
rules, regulations, determinations or decisions made hereunder, and the rights
of any and all persons having or claiming to have any interest herein or
hereunder, shall be determined exclusively in accordance with the laws of the
State of Maryland, without regard to the choice of laws provisions
thereof, except to the extent federal law controls.
ARTICLE XIV - Effect on Prior Awards
All awards made under the Plan prior to the effective date of this
amended and restated Plan shall continue in accordance with the terms of the
Plan prior to the effective date of such amendments, except that such awards
shall be treated as Awards under this amended and restated Plan for purposes of
Section (d) of Article III and any shares of Common Stock which become available
for regrant shall be added to the maximum number of shares issuable under the
Plan on or after April 1, 1994.
ARTICLE XV - No Employment Contract Implied
Except as may otherwise be determined in writing by the Committee,
nothing in this Plan, any agreement executed in connection with this Plan or any
Award, or by virtue of a grant of an Award, shall be construed or deemed to
create or imply any contract of employment with any Key Person or create any
rights except as specifically provided in writing.
ARTICLE XVI - Effective Date and Termination of Plan
The Plan as amended and restated herein shall be effective as of April
1, 1994, subject to approval by the affirmative vote of a majority of the votes
cast in person or by proxy, at the Annual Shareholders' Meeting to be held on
May 4, 1994, or any adjournment thereof. If the amended and restated Plan is
not approved by shareholders as contemplated herein, then the Plan, prior to
such amendment and restatement, shall continue in accordance with its terms.
The Plan will terminate on May 22, 2001, unless sooner terminated by the Board
of Directors.
Exhibit 10S
USF&G CORPORATION
LONG-TERM INCENTIVE PROGRAM
Established Pursuant to the
USF&G CORPORATION
STOCK INCENTIVE PLAN OF 1991 (as amended and restated)
April 1, 1994
Purpose and Type of Awards
This Long-Term Incentive Program (the "Program") has been established by
the Compensation Committee of the Board of Directors (the "Committee") pursuant
to the USF&G Corporation Stock Incentive Plan of 1991, as amended and restated
(the "Plan"), for the purpose of granting "Performance Awards" pursuant to
Article VII of the Plan. Performance Awards granted under the Program are
intended to serve as an incentive for performance to occur over a period of
three fiscal years measured by reference to financial performance of USF&G
Corporation (the "Corporation"), as set forth herein.
ARTICLE I - Definitions
All capitalized terms not defined in the Program shall have the meaning
assigned to them by the Plan.
(a) "Administrator" means the Head-Human Resources Department of the
Corporation.
(b) "Adjusted Average CAT Loss" means the average annual catastrophe
loss incurred by the Corporation's property/casualty operations (including
property/casualty reinsurance operations) during the five-year period which
includes the three fiscal years in the designated Performance Period and the two
fiscal years immediately prior thereto; provided, however, the Committee may
designate particular catastrophe losses to be excluded from such calculation if
such losses are incurred in the two fiscal years immediately prior to the
beginning of the designated Performance Period and such designation is made on
or prior to the date that the Performance Goals are established.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Cumulative Operating Income of the Corporation for the
Performance Period" means net income from continuing operations on a
consolidated basis for a designated Performance Period adjusted (i) to exclude
net realized gains or losses on investments, other than such gains or losses of
or impairment provisions for investments in (1) real estate, (2) Private
Placements and (3) consolidated subsidiaries or minority owned investments
accounted for using the equity method, in each case other than Excluded
Investments; (ii) to exclude federal income tax benefits arising from net
operating loss carryforwards or adjustments to the valuation allowance on
deferred tax assets if such tax benefits exceed what would otherwise be the
federal tax expense on income for such Performance Period; and (iii) to
substitute for the actual amount of catastrophe losses reported during such
Performance Period, an amount equal to the product obtained by multiplying three
(3) by the Adjusted Average CAT Loss. The calculation described above shall be
determined under generally accepted accounting principles ("GAAP") on a basis
consistent with the Corporation's audited financial statements for the fiscal
year ending on the day before the first day of such Performance Period.
(e) "Earned Performance Award" means an actual award of a specified
number of Stock Units which the Committee has determined have been earned and
are payable for a particular Performance Period.
(f) "Excluded Investments" means any investments included in
subclauses (1), (2) or (3) of clause (i) of Section (d) of this Article I which
the Committee designates to be excluded from the calculation of net realized
gains and losses for the indicated Performance Period, provided such designation
is made on or prior to the date that the Performance Goals for such
Performance Period are established.
(g) "Fundamental Corporate Transaction" means, and shall be deemed
to occur on, the date (i) of the first purchase of shares of the Common Stock of
the Corporation pursuant to a tender offer or an exchange offer (other than one
made by the Corporation or holding company for the Corporation) for all or
any part of the Corporation's Common Stock, (ii) of approval of the shareholders
of the Corporation of a merger, consolidation, sale, statutory or other share
exchange, or disposition of all or substantially all of the Corporation's assets
in which the Corporation (or holding company for the Corporation) will not
survive as a publicly-owned corporation operating the business it operated prior
to such transaction, or (iii) on which any entity, person or group acquires
beneficial ownership of shares of the Corporation's Common Stock (whether in one
or a series of transactions), directly or indirectly, amounting to 30% or more
of the outstanding shares of such class. A "holding company for the
Corporation" means, in the foregoing sentence, an entity that becomes a holding
company for the Corporation without altering or planning to alter in any
material respect the shareholders of the Corporation or the business of the
Corporation and its subsidiaries as a whole, other than a case in which an
acquisition of another company by the Corporation or the holding company is
being accomplished concurrently.
(h) "Participant" shall mean Key Persons (as defined in the Plan)
selected by the Committee to participate in this Program for a stipulated
Performance Period.
(i) "Payment Deferral Election" shall mean a payment deferral
election of a Participant with respect to a Stock Unit.
(j) "Performance Goal" shall mean a specified target for Cumulative
Operating Income of the Corporation for a Performance Period, as specified by
the Committee.
(k) "Performance Period" shall mean a period of time covering three
(3) fiscal years of the Corporation, as specified by the Committee.
(l) "Permanent Disability" means the Participant's inability to
substantially perform the essential duties of his or her occupation in the usual
and customary way due to bodily injury, mental or psychological impairment, or
disease, which inability is reasonably expected to last not less than two (2)
years. Determination of whether or not a Participant's condition constitutes
Permanent Disability as defined herein shall be in the sole discretion of the
Committee.
(m) "Private Placements" means the Corporation's investments in
Chancellor Capital Management, Inc. and in any other investment made on or after
January 1, 1994 in a class of securities the offering of which was not
registered at the time of such investment under the Securities Act of 1933 (the
"Securities Act") nor acquired pursuant to an offering under Rule 144 or
Rule 144A of the Securities Act, or were otherwise not publicly traded at the
time of issuance and were offered only to one or more qualified investors at the
time the investment was first made by the Corporation. "Private Placements"
shall not include investments which are included under clauses (i)(1) or (i)(3)
of Section (d) of this Article I.
(n) "Pro Rata Basis" means a method of allocating Stock Units in the
event a Participant does not complete a full Performance Period but is
nevertheless eligible to receive Stock Units with respect to such Performance
Period. In such event, the Participant shall be eligible for such number of
Stock Units as he or she would have received if such Participant had completed
such Performance Period multiplied by a fraction, the numerator of which is the
number of whole months in such Performance Period completed by such Participant,
and the denominator of which is 36.
(o) "Restricted Participant" means any Participant who is a "covered
person" under section 162(m) of the Code. Determination of whether or not a
Participant is a Restricted Participant shall be made based upon the year any
Stock Units are to be actually paid under the Program, without regard to any
Payment Deferral Election. A "Named Restricted Participant" is any Participant
who, in the Committee's judgment, could be a Restricted Participant. The
determination of which Key Persons could be Restricted Participants is made
solely for purposes of ensuring that any compensation subsequently payable to
such Participant under the Program is not disqualified from deductibility from
gross income for federal income tax purposes under section 162(m) of the Code
and consequently shall be made liberally.
(p) "Stock Unit" shall mean a unit which represents one share
of Common Stock of the Corporation, par value of $2.50 per share, and which is
valued by reference to, and is otherwise based upon, one share of Common Stock.
Stock Units shall not represent an actual ownership interest in Common Stock and
the Participant shall have no voting or other rights as a shareholder in respect
of the Stock Units, or, except as specifically provided in Article V, any right
to payment on account of dividends or distributions in respect of the Common
Stock.
(q) "Stock Unit Account" shall mean a bookkeeping account
established by the Corporation for each Participant which may be credited with
Stock Units earned pursuant to one or more Earned Performance Awards and
deferred pursuant to a Payment Deferral Election.
(r) "Target Performance Award" shall mean a targeted award of a
specified number of Stock Units which may be earned and payable based upon the
Performance Goal for a particular Performance Period, all as determined by the
Committee. The Target Performance Award shall be a factor in the Committee's
ultimate determination of the Earned Performance Award.
(s) "Unforeseeable Emergency" shall mean a severe financial hardship
to the Participant resulting from a sudden and unexpected illness or accident of
the Participant or a dependent (as defined in section 152(a) of the Code) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that will
constitute an Unforeseeable Emergency will depend upon the facts of each case,
but, in any case, an Unforeseeable Emergency shall not exist to the extent that
such hardship is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise, (ii) by liquidation of the Participant's assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship, or (iii) by termination of further deferrals under this Program.
Unforeseeable Emergency does not include the need to send a Participant's child
to college or the desire to purchase a home.
ARTICLE II - Administration and Agreements with Participants
(a) Except to the extent provided herein with respect to the
Administrator, this Program shall be supervised and administered by the
Committee. The Committee shall have all authority provided in the Plan to
operate and administer this Program and any and all determinations by the
Committee shall be final and conclusive.
(b) This Program and any Awards (as defined in the Plan)
granted hereunder shall be subject to such additional conditions, restrictions
and limitations, including any regarding vesting and forfeiture, as shall be
approved from time to time by the Committee or included in any agreements
regarding such Awards with the Participants.
ARTICLE III - Performance Awards
(a) As soon as reasonably practicable and with respect to each
Performance Period, the Committee shall determine (i) the Participants in the
Plan for such Performance Period, (ii) the Performance Goal to be used for the
Target Performance Award, (iii) the number of Stock Units subject to each Target
Performance Award, and (iv) any other material terms relating to the Target
Performance Award.
(b) Notwithstanding Section (a) of this Article III, the
determinations required above shall be made: (i) prior to the first day of each
Performance Period or by such later date as may be permitted under regulations,
interpretations or guidance provided under section 162(m) of the Code, with
respect to Named Restricted Participants and (ii) at such other time as the
Committee deems appropriate with respect to any Participant who was not eligible
to participate in the Program at the time that Target Performance Awards were
made to other Participants, but who became eligible thereafter. The Committee
shall at the time of the determinations made under clause (i) of this Section
(b), identify any Named Restricted Participants.
(c) Within 120 days after the end of each Performance Period, the
Committee will determine whether the Performance Goal was met. The Committee
shall certify, in writing, that the Performance Goal and other material terms of
the Target Performance Award were in fact satisfied. The Committee's
determination of all such matters shall be final and conclusive.
(d) At the same time as the Committee makes the certification
required by Section (c) of this Article III or as soon thereafter as
practicable, the Committee shall determine the Earned Performance Award for each
Participant. Such determination may result in an increase or decrease in the
number of Stock Units payable based upon such Participant's Target Performance
Award, and shall be based upon such factors as the Committee shall determine in
its sole discretion, but including the Target Performance Award and the
performance of the Participant's unit and the Participant's individual
performance during the Performance Period.
(e) Stock Units earned by a Participant as determined by the
Committee shall be paid in an equal number of shares of Common Stock as soon as
practicable after the determination by the Committee required pursuant to
Section (d) of this Article, unless the Participant has properly executed and
delivered a Payment Deferral Election in accordance with Section (a) of
Article V. If the Participant is then a person subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and has not
made an effective Payment Deferral Election, and payment of any Stock Unit is
made within six (6) months of the Committee's certification referred to in
Section (d) of this Article with respect to such Stock Unit, then the
certificate for such shares shall be held by the Corporation for a period of six
(6) months from the date of the Committee's determination and delivered as soon
as practicable following the expiration of such six-month period. During such
six-month period, the Participant shall have all of the rights of a shareholder
with respect to such Common Stock, except that such Common Stock shall not be
transferable by the Participant except as provided in Article XI of the Plan.
Payment of Stock Units is also subject to the mandatory Payment Deferral
Election provided for under Section (i) of Article V.
(f) In the event the Corporation shall during any Performance Period
make a material acquisition of assets or businesses which was not contemplated
at the time that the Committee established the Performance Goal for such
Performance Period, the Committee may, in its sole discretion, elect to exclude
from the calculation of Cumulative Operating Income of the Corporation for the
Performance Period any income, gains, losses or other affects of or relating to
such acquired assets or businesses. In the event the Corporation shall during
any Performance Period make a material disposition of assets or businesses which
relate to the Corporation's core insurance operations and which was not
contemplated at the time that the Committee established the Performance Goal for
such Performance Period, the Committee may, in its sole discretion, elect to
adjust the Performance Goal for such Performance Period to take into account any
increase or decrease in operating income which may result from such disposition
of assets or businesses, offset by any gains or losses realized upon such
disposition.
(g) In the event of a Fundamental Corporate Transaction, the
Committee may, in its sole discretion, elect to terminate any Performance
Periods not then completed and make a payment of Stock Units on a Pro Rata
Basis.
(h) In the event of a Participant's death, Permanent Disability
or retirement under the Corporation's tax-qualified defined benefit plan, in
each case while the Participant is employed by the Corporation, the Committee
shall provide for payment of Stock Units with respect to any Performance Period
which began but was not completed at the time of such death, Permanent
Disability or retirement. Such Stock Units shall be paid on a Pro Rata Basis at
the same time as Stock Units are paid to other Participants with respect to that
particular Performance Period.
(i) The Committee shall have the authority to make such further
changes to a Participant's Target Performance Award, the Performance Goal or
other matters as it deems appropriate, as the result of unforeseen events or
otherwise, in the manner and to the extent determined by the Committee in its
sole discretion.
(j) Notwithstanding any discretion permitted the Committee to
increase or decrease the number of Stock Units payable to a Participant upon the
completion of a Performance Period, adjust Target Performance Awards or the
Performance Goal, or with respect to other matters, the Committee's discretion
shall be limited as follows: (i) no action may be taken hereunder which
would result in an Earned Performance Award larger than the Target Performance
Award granted to (x) any Named Restricted Participant or (y) any other
Participant if as a result of such action and the application of section 162(m)
of the Code, compensation deemed payable hereunder to such Participant with
respect to such Performance Period would become an expense to the Corporation
which would not be deductible from gross income for federal income tax purposes
(although any such action may be effective with respect to all other
Participants); (ii) the aggregate Earned Performance Awards awarded with respect
to a Performance Period shall not exceed the aggregate Target Performance Awards
to Participants who are eligible to receive Stock Units at the completion of the
Performance Period; and (iii) no single Participant shall be eligible to receive
more than 60,000 Stock Units with respect to a single Performance
Period.
ARTICLE IV - Tax Withholding
The Corporation may withhold any applicable federal, state or local
taxes at such time and upon such terms and conditions as required by law or
determined by the Corporation. Subject to compliance with any requirements of
applicable law, including requirements of Section 16 of the Exchange Act, the
Committee may permit or require a Participant to have any portion of any
withholding taxes payable in respect of a distribution of Common Stock satisfied
through the retention by the Corporation of shares of Common Stock having a fair
market value equal to the withholding amount.
ARTICLE V - Payment Deferral Election
(a) A Participant may defer receipt of Stock Units with respect
to all or any integral part of an Earned Performance Award by executing and
delivering to the Administrator a Payment Deferral Election. Such Payment
Deferral Election: (i) must specify the date or dates on which payment of any
Stock Units earned with respect to a Performance Period shall be made (which
date shall not be less than six (6) months from the date payment would
otherwise have been made); (ii) must be submitted before the first day of the
second year of the Performance Period to which the deferral relates or on such
other date as may be specified in writing by the Committee; (iii) must be made
in writing on a form provided by the Administrator; and (iv) is subject to such
other conditions, restrictions or limitations as may be specified from time to
time by the Administrator or the Committee.
(b) In the event a Participant makes a Payment Deferral Election,
the Administrator shall establish and maintain a Stock Unit Account with respect
to such Participant. At the time that an Earned Performance Award would
otherwise be paid in shares of Common Stock as provided in Section (e) of
Article III, the number of Stock Units earned under such Earned Performance
Award and deferred pursuant to a Payment Deferral Election shall be credited to
the Participant's Stock Unit Account and paid on the payment date specified by
such Payment Deferral Election.
(c) As and when any cash dividends are paid in respect of the
Common Stock, each Participant who has made a Payment Deferral Election shall be
entitled to receive, with respect to all Stock Units credited to his or her
Stock Unit Account, a cash payment in an amount equal to the dividend which
would have been paid to the Participant if such Stock Units actually had
represented shares of Common Stock. The right to this cash dividend-equivalent
payment shall apply to cash dividends paid on account of any record date during
which the Stock Unit is credited to the Participant's Stock Unit Account, and
shall be paid directly to the Participant.
(d) Appropriate adjustment shall be made to the number of Stock
Units in any Stock Unit Account in the event of changes in the Common Stock of
the Corporation by reason of stock dividends, split-ups, recapitalization,
mergers, consolidations, combinations or exchanges of shares and the like, to
the extent contemplated by and in accordance with Section (c) of Article
III of the Plan.
(e) In the event of any other distribution of property to holders of
the Common Stock not covered by Sections (c) and (d) of this Article V, then the
Committee may, in its sole discretion, provide for a fair market value
equivalent payment directly to Participants on account of Stock Units credited
to such Participant's Stock Unit Account on the record date for such
distribution. Any such distribution shall be at such time, in such amount and
in such form (including cash, securities or other property) as the Committee
shall determine.
(f) Except as provided in Section (i) of this Article V, a Payment
Deferral Election shall cease to be effective and all Stock Units credited to a
Participant's Stock Unit Account shall become immediately due and payable in the
event of a Participant's death or Permanent Disability, or in the event the
Committee exercises its discretion under Section (g) of Article III, in the
event of a Fundamental Corporate Transaction. The Committee may, upon a
determination of Unforeseeable Emergency by the Committee, in its sole
discretion, permit a Participant to withdraw all or a portion of the Stock Units
credited to his or her Stock Unit Account.
(g) Each Participant shall have the right, at any time, to designate
a person or trust as beneficiary or beneficiaries (both primary and contingent)
to whom payments of Stock Units credited to his or her Stock Unit Account shall
be made if the Participant dies before all such Stock Units have been
distributed. Any beneficiary(ies) designation shall be made in writing on a
form prescribed by the Committee and filed with the Administrator, shall become
effective only when received and accepted by the Administrator and may be
changed by filing a new designation with the Administrator on a prescribed form.
The filing of a new beneficiary designation will cancel all beneficiary
designations previously filed.
(h) If a Participant who has Stock Units credited to his or her
Stock Unit Account fails to designate a beneficiary as provided above, or if
all designated beneficiaries predecease the Participant, then payment of any
Stock Units shall be made to the Participant's personal representative, executor
or administrator.
(i) Notwithstanding any other provision in this Article V and
unless specifically determined otherwise by the Committee, if at the time of
any payment of Stock Units to a Participant under this Program (including if the
time of such payment is determined as a result of a Payment Deferral Election)
any compensation deemed payable hereunder would be an expense to the Corporation
which would not be deductible from gross income for federal income tax purposes
as a result of the application of section 162(m) of the Code, then such
Participant shall automatically be deemed to have elected a Payment Deferral
Election with respect to any portion of such payment which would be non-
deductible, and such Payment Deferral Election shall continue from year to year
with respect to any such non-deductible payments. In such event the Participant
shall be entitled to all rights he or she would have had if a Payment
Deferral Election had been made.
ARTICLE VI - Nontransferability
A person's rights and interests under the Program prior to the delivery
of certificates for Common Stock in full payment of all Stock Units shall be
solely the rights of a general unsecured creditor of the Corporation and such
rights may not be assigned, pledged, or transferred in any manner except, in the
event of a Participant's death, to his designated beneficiary as provided
herein with respect to Stock Units credited in a Stock Unit Account, or, by will
or the laws of descent and distribution. Stock certificates shall only be
delivered to the Participants or beneficiaries entitled to receive them or to
their authorized legal representatives.
ARTICLE VII - Modification and Waiver
The Board of Directors may amend, modify or discontinue the Program or
waive any of its provisions, except that no such amendment, modification, waiver
or discontinuance shall revoke or alter the terms of any valid Earned
Performance Award or Stock Unit previously granted in accordance with the
Program without the consent of the holder thereof, except as permitted under
Article III or Article VIII below. To the extent required under Rule 16b-3 with
respect to persons subject to Section 16 of the Exchange Act, and to the extent
required by section 162(m) of the Code with respect to Restricted Participants,
no action by the Board of Directors which materially modifies the Plan shall
become effective without the approval of the shareholders of the Corporation.
ARTICLE VIII - Government Regulations
The obligations of the Corporation to issue any Stock Units or Common
Stock under the Program shall be subject to all applicable laws, rules and
regulations and the obtaining of all such approvals by governmental agencies as
may be deemed necessary or appropriate by the Committee. The Board of Directors
of the Corporation may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any governmental authority.
ARTICLE IX - Plan Governs
In the event of any conflict between the Program and the Plan,
the terms of the Plan shall govern.
USF&G Corporation
Exhibit 11 - Computation of Earnings Per Share
For the Years Ended December 31
(dollars in millions except per share data) 1994 1993 1992
Net Income Available to Common Stock
Primary:
Income from continuing operations before
cumulative effect of adopting new accounting
standards $232 $127 $35
Less preferred stock dividend requirements 46 48 48
Income from continuing operations before
cumulative effect of adopting new accounting
standards available to common stock 186 79 (13)
Loss from discontinued operations - - (7)
Income from cumulative effect of adopting new
accounting standards - 38 -
Net income (loss) available to common
stock $186 $117 $(20)
Fully diluted:
Income (loss) from continuing operations before
cumulative effect of adopting new accounting
standards $232 $127 $35
Less preferred stock dividend requirements 16 16 48
Add interest expense on zero coupon bonds 5 - -
Income (loss) from continuing operations before
cumulative effect of adopting new accounting
standards available to common stock 221 111 (13)
Loss from discontinued operations - - (7)
Income from cumulative effect of adopting new
accounting standards - 38 -
Net income (loss) available to common
stock $221 $149 $(20)
Weighted Average Shares Outstanding
Primary common shares (A): 86,955,992 84,780,283 84,355,431
Fully diluted (B):
Common shares 86,955,992 84,780,283 84,355,431
Assumed conversion of preferred stock 24,950,202 26,611,211 -
Assumed exercise of stock options 705,895 1,301,361 -
Assumed conversion of zero coupon bonds 6,022,712 - -
Total fully diluted 118,634,801 112,692,855 84,355,431
Earnings Per Common Share
Primary (A):
Income (loss) from continuing operations
before cumulative effect of adopting
new accounting standards $2.14 $.93 $(.16)
Loss from discontinued operations - - (.08)
Income from cumulative effect of adopting
new accounting standards - .45 -
Net Income (loss) $2.14 $1.38 $(.24)
Fully diluted (B):
Income (loss) from continuing operations
before cumulative effect of adopting new
accounting standards $1.86 $.98 $(.16)
Loss from discontinued operations - - (.08)
Income from cumulative effect of adopting
new accounting standards - .34 -
Net Income (loss) $1.86 $1.32 $(.24)
(A) Shares issuable under stock options (691,776 shares in 1994, 1,301,361
shares in 1993, 613,974 shares in 1992) have not been used as common stock
equivalents in the computation of primary earnings per common share presented on
the face of the Consolidated Statement of Operations because the dilutive effect
is not material.
(B) Fully diluted earnings per common share amounts are calculated assuming the
conversion of all securities whose contingent issuance would have a dilutive
effect on earnings. The effect of assuming conversion of the preferred stock
(30,959,211 shares in 1992) is antidilutive and, therefore, the amounts
presented in the Consolidated Statement of Operations for primary and fully
diluted earnings per share are the same. Shares issuable under stock options
(852,627 in 1992) have not been used as common stock equivalents because the
dilutive effect is not material.
USF&G Corporation
Exhibit 12 - Computation of Ratio of Consolidated Earnings to Fixed Charges and
Preferred Stock Dividends
For the Years Ended December 31
(dollars in millions) 1994 1993 1992
Fixed Charges
Interest expense $37 $41 $40
Interest capitalized - - 8
Portion of rents representative of interest (A) 159 27 28
Total fixed charges 196 68 76
Preferred stock dividend requirements (B) 46 48 48
Combined Fixed Charges and Preferred Stock
Dividends $242 $116 $124
Consolidated Earnings Available for Fixed
Charges and Preferred Stock Dividends
Income (loss) from continuing operations
before income taxes and cumulative effect
of adopting new accounting standards $(49) $99 $35
Adjustments:
Fixed charges 196 68 76
Less interest capitalized during the
period - - (8)
Consolidated earnings available for fixed
charges and preferred stock dividends $147 $167 $103
Ratio of Consolidated Earnings to Fixed
Charges (C)(D) 0.7 2.5 1.4
Ratio of Consolidated Earnings to Combined Fixed
Charges and Preferred Stock Dividends (C)(D) 0.6 1.4 0.8
(A) Includes approximately $130 million net present value of rents
representative of interest included in facilities exit costs in 1994.
(B) Preferred stock dividend requirements of $46 million in 1994 and $48
million in both 1993 and 1992 divided by 100% less the effective income tax rate
of 0% in 1994, 1993, and 1992.
(C) In 1994, the ratio of consolidated earnings before facilities exit costs to
fixed charges was 3.0, and the ratio of consolidated earnings before facilities
exit costs to combined fixed charges and preferred stock dividends was 1.8.
(D) In 1994, earnings were inadequate to cover fixed charges by $49 million
and combined fixed charges and preferred stock dividends by $95 million.
<PAGE> 1
Exhibit 13
USF&G Corporation
Financial Highlights
Years Ended December 31
(dollars in millions except per share data) 1994 1993 1992
Consolidated Results
Revenues $ 3,221 $ 3,249 $ 3,660
Premiums earned 2,435 2,456 2,637
Net investment income 743 749 817
Net realized gains on investments 5 6 148
Facilities exit costs (183) - -
Income tax benefits 281 28 -
Income from continuing operations before
cumulative effect of adopting new
accounting standards 232 127 35
Loss from discontinued operations - - (7)
Cumulative effect of adopting new
accounting standards - 38 -
Net income 232 165 28
Results Per Common Share
Income (loss) from continuing operations
before cumulative effect of adopting
new accounting standards $ 2.14 $ .93 $ (.16)
Loss from discontinued operations - - (.08)
Cumulative effect of adopting new
accounting standards - .45 -
Net income (loss) $ 2.14 $ 1.38 $ (.24)
Dividends declared $ .20 $ .20 $ .20
At December 31
1994 1993 1992
Consolidated Financial Position
Assets $13,774 $14,335 $13,134
Debt 616 618 616
Shareholders' equity 1,369 1,511 1,270
Debt-to-equity 45% 41% 49%
Book value per share $ 10.17 $ 11.66 $ 8.87
Market price per share 13 5/8 14 3/4 12 3/8
Common shares outstanding 95,616,460 85,009,482 84,512,758
Chart 1 (with caption)
Chart 2 (with caption)
*Operating income (loss) is defined as income from continuing operations
before realized gains, facilities exit costs, certain income tax benefits,
and cumulative effect of accounting changes. The information presented
in this manner is not intended to conform with GAAP.
**Includes Policyholders' Dividends, 1994 industry ratios are estimates
provided by A.M. Best.
<PAGE> 2
PHOTO (caption)
Chairman, President, and
Chief Executive Officer
Norman P. Blake, Jr.
<PAGE> 3
USF&G Corporation
Chairman's Letter
Introduction
We entered 1994, the initial year of our "build with vision" phase of
development, after establishing a viable business platform during three
arduous years of restructuring our company. In 1994 we continued to achieve
strong earnings growth and improved returns. We further strengthened our
balance sheet, refined corporate and business segment strategies, and
implemented a broad array of new product, market, and technology
development initiatives.
1994 Performance
Consolidated
Net income in 1994 was $232 million, compared with $165 million in 1993.
On an earnings per share basis, we earned $2.14/share in 1994, which
compares favorably with $1.38/share in 1993. The primary drivers of this
improvement were growth in consolidated operating income and recognition
of income tax benefits. Consolidated operating income in 1994 was $130
million, representing a 35 percent growth over $96 million in 1993. USF&G
defines operating income as income from continuing operations before
realized gains and losses, facilities exit costs, the cumulative effect
of accounting changes, and certain income tax benefits. This performance
resulted from the continued improvement in property/casualty underwriting
results combined with life insurance profits. Consolidated revenues and
controllable expenses remained essentially flat compared with 1993. The
property/casualty ("P/C") company earned $194 million in operating income
in 1994 and reported a 108.4 combined ratio, outperforming the estimated
industry average (including policyholder dividends) of 109.4 and
our 1993 combined ratio, also 109.4. F&G Life returned to profitability,
earning $12 million in operating income after three consecutive years of
operating losses.
Property/Casualty Company
Our P/C company is pursuing a hybrid "regional/specialist" strategy.
The "regional" aspect of this strategy requires each of our 30
entrepreneurially managed branch operations to develop and execute a
winning game plan for its respective markets. The product/market scope of
each branch is dictated by its own discrete strategy. Specific agency
management and market development plans are established by setting
priorities and determining the required level of product and service support.
In particular, personal lines and small business commercial lines are
pursuing highly focused regional strategies driven by branches focused on
penetrating high-density markets to achieve scale and leverage distribution
costs.
The "specialist" aspect of this strategy involves our middle market
commercial lines and our specialty businesses. In the first case, we
have developed a broad array of customized market capabilities
to differentiate ourselves from our competitors. The resulting products
are designed to penetrate targeted industry sub-segments. In 1994, middle
market businesses grew direct written premium by 10 percent, while
maintaining strong underwriting and price discipline and
<PAGE> 4
realizing a 12 point improvement in renewal retentions. As a result of this
market strategy, a shift toward more profitable product lines, and improved risk
management, middle market underwriting performance has continued to improve,
with its calendar year loss ratio lowered six points to 78.7 percent.
Our specialty businesses, Fidelity/Surety and F&G Re (reinsurance), achieved
net written premium growth in their most profitable lines and impressive
underwriting profits. Each business is pursuing market extension strategies.
Fidelity/Surety ("F/S") grew its net written premium by 11 percent as a
result of improved marketing effectiveness both domestically and
internationally. It expanded its market scope by establishing a Canadian
subsidiary (Northern Indemnity), a strategic alliance in Mexico, and
increased capability to serve international clients doing business in
North America. F/S reported a 90.9 percent combined ratio.
F&G Re grew written premium in its most profitable product line, traditional
risk, by 52 percent. Much of this growth is a result of the establishment in
1993 of a London liaison office which has improved our ability to compete in
the international market. F&G Re's other product line, finite risk, suffered
a decline in growth because the imposition of new regulatory guidelines
(SFAS 113) resulted in less demand for this product. We anticipate, however,
regaining sales momentum for this line as a result of new product development
efforts. F&G Re achieved a 90.6 percent combined ratio.
In summary, our middle market commercial lines and specialty businesses made
significant progress in achieving growth and improving profitability.
Personal lines and small business commercial lines experienced a decline in
net written premium as each business underwent market repositioning and
efforts to improve cost competitiveness.
Life Company
In 1994, F&G Life returned to profitability as a result of the fundamental
restructuring of this business in 1992. We significantly reduced structural
costs, substantially improved the overall quality of management and the skill
base, and embarked upon a comprehensive upgrade of information systems,
migrating to a more advanced platform. In addition, we completely redesigned
and expanded the entire product line to improve competitiveness and margins
while establishing new channels of distribution. The culmination of all these
efforts is reflected in our 1994 performance. New business grew 40 percent
on the strength of new higher-margin products sold through the new
distribution channels. Product spreads have improved as a result of the
steady run-off of unprofitable mature books of business and more effective
asset/liability management. The overall investment portfolio also improved
as a result of a reduction in nonperforming or under-performing assets.
Looking forward, I anticipate sustained earnings growth from F&G Life.
Industry Overview
Balance sheet quality is becoming increasingly more important as the
PHOTO (caption)
Gil Tognarelli
General Adjuster-Claim
USF&G's number one core value is "customer first." Fair and prompt claim
settlement allows us to demonstrate this. Gil operates out of the Denver area
and is one of seven general adjusters strategically placed throughout the
country to settle our customers' largest, most complex claims. Having highly
recognized specialists like Gil enables USF&G to attract and retain substantial
accounts.
<PAGE> 5
confluence of market and regulatory forces is placing significant strain on
the financial strength of P/C insurance companies. Since 1992, P/C companies
have incurred unprecedented high levels of catastrophic losses which have
depleted surplus. Compounding this pressure has been the growing recognition
of the industry's need to strengthen overall reserves for environmental and
asbestos liabilities. It has been estimated that the industry reserves are
inadequate by amounts ranging from $60 billion to $90 billion. Concomitant
with the reserve questions has been the issuance of two regulations, Risk
Based Capital ("RBC") and SFAS 115, that place further strain on the balance
sheet and earnings power of insurance companies.
These market and regulatory forces are defining relative balance sheet
quality as a competitive benchmark. Since 1991 USF&G has been steadily
improving the quality of its balance sheet without compromising its strong
reserve position. In addition, our surplus is well above RBC standards,
providing confidence in our capacity to write new business and withstand
unforeseen adversity.
Corporate Strategy
An important strategy consideration as we build with vision is the outlook
for our major business segments' earnings growth and return characteristics.
Our accountability to you as a shareowner is to establish complementary
sources of earnings and a predictable and attractive earnings stream. USF&G
has four major sources of earnings with distinctive growth and return
characteristics.
The P/C company possesses three major sources of earnings: high frequency/
low severity business lines (i.e., personal and small business commercial
lines), middle market commercial lines, and specialty businesses. The high
frequency/low severity businesses experience high volumes of transactions
with limited levels of individual policy exposures. These businesses are
commodity prone with increasing price sensitivity. They require intense
management focus to gain cost competitiveness and economies of scale. If
competitively managed, these businesses should contribute high
earnings growth and moderate returns.
Our middle market commercial lines compete in a market that is constantly
redefined in terms of price/value differentiation. Regional and national multi-
line carriers converge to compete in this segment. USF&G's refined
market segmentation allows for development of customized product packages
that achieve competitive value differentiation by targeting specific industry
markets. This earnings source contributes a moderate rate of growth and
higher returns than the high frequency/low severity businesses.
The third source of P/C earnings are the specialty lines of business. F&G Re,
Fidelity/Surety, and certain commercial product lines (i.e., inland marine
and excess property) currently comprise USF&G's specialty businesses. These
businesses, which underwrite very specialized risks, compete based upon
financial strength and expertise of their skilled professionals.
Characteristically, these
PHOTO (caption)
John Umberger
Branch Vice President
Each USF&G branch office is a discrete business with profit and loss
accountability. A 20-year USF&G veteran, John has effectively transformed his
branch into a highly competitive business comprised of an outstanding cadre of
insurance professionals. In fact, in recent years, his branch has won the "Most
Improved Service Award" from the Independent Insurance Agents of America in New
Jersey.
<PAGE> 6
businesses contribute a more volatile and less predictable source of earnings
growth, but at higher rates of return.
F&G Life provides a growing and more predictable source of earnings which
should realize operating leverage as it continues to grow. Historically,
F&G Life's profitability has been compromised by the quality of its
investment portfolio and narrow spreads. Prospectively, growth and returns
should improve as a result of the successful development and marketing of
higher margin products through newly established channels of distribution.
Better asset/liability management should improve spreads as well.
1995 Outlook
Company-wide
I anticipate consolidated operating income to continue to grow and related
returns to improve, despite a significant incremental investment in
developing our information systems. Consolidated revenues should grow
modestly, while controllable expenses will be managed consistently with
revenue growth. The company's overall earnings power should be enhanced in
future years by the successful completion of two pending acquisitions,
Victoria Financial Corporation and Discover Re Managers, Inc.
Acquisitions
Both pending acquisitions (Victoria Financial and Discover Re), should
financially and strategically enhance our future performance. Each has
met our rigorous evaluation criteria: is nondilutive on an operating earnings
per share basis, grows at a faster rate than the industry and earns a 15
percent ROE or greater, makes an underwriting profit, provides operating
synergies, possesses strong management and skill base, represents superior
"buy" versus "make" economics, and is culturally compatible. Victoria
Financial participates in the nonstandard personal auto market. It has grown
successfully since its inception in 1986 and consistently had a combined
ratio under 100 percent. It has strong management, systems, and skill base.
The integration of a nonstandard auto product line into our existing
operations will provide our agents a single market for both standard and
nonstandard auto, and allow the leveraging of distribution costs to help
drive down our expense ratio. It additionally will protect our existing book
of business from intrusion by other nonstandard auto product providers
attempting to penetrate the standard auto insurance market.
Discover Re participates in the alternative risk transfer ("ART") market, one
of the fastest growing segments of the commercial insurance market. The ART
market serves the self-insurance market which has been steadily displacing
the traditional risk transfer market over the last couple of decades.
Discover Re accesses the self-insured market through agents and brokers. It
structures reinsurance facilities and intermediates the distribution of risk.
It offers consulting services, participates in the reinsurance facility at
the layer just above the primary risk taken by the client, and provides
administrative
PHOTO (caption)
Jim Hughes
Vice President-Information Services
We are an information-based company. Our competitiveness as a company is very
much determined by how we effectively leverage new technology to enhance
decision making and to improve our cost and quality of service. Jim, along with
other members of the Information Services management team, is pursuing a highly
innovative approach to migrating away from our current mainframe environment.
<PAGE> 7
oversight for third-party risk management services. It has
grown significantly since its founding four years ago and reported an
underwriting profit in 1994. Discover Re also represents a new market for our
excess property and workers' compensation product lines.
As the P/C industry continues to undergo a shake-out and further
consolidation, we stand ready to benefit from this market instability. In
1994, we considerably strengthened the management and technical skill base of
our branch operations. Also, we expanded our market coverage by adding five
satellite underwriting offices and improved our overall agency sales
management practices.
High Frequency/Low Severity Businesses
The high frequency/low severity businesses (i.e., personal and small business
commercial lines) will continue to penetrate targeted regional markets,
introduce new products, and improve cost effectiveness through reengineering
and automation.
Personal lines will continue to roll-out its new agency interface system and
penetrate attractive high density/regional markets. It will also integrate
Victoria Financial's nonstandard auto line into our existing distribution
channels, further strengthening the franchise with our agents.
Small business commercial lines will continue to focus on penetrating
targeted regional markets. In addition, we will be introducing a completely
reengineered product and supporting systems capability. This is part of our
long-term reengineering and automation efforts to improve cost effectiveness.
Middle Market Commercial Lines Business
Middle market commercial lines will benefit from the considerable increase
of skilled loss control engineers and underwriting specialists placed in
field operations last year. In addition, we expect to benefit from the
introduction of five major customized product packages in 1994 targeted at
the construction, manufacturing, and services market segments. We plan to
introduce additional products this year to fill out our broad array of highly
competitive products.
Speciality Businesses
The specialty businesses portfolio will be further expanded with the
inclusion of Discover Re, as well as the planned startup of an excess and
specialty risk company. These new businesses, along with Fidelity/Surety and
F&G Re, represent a formidable assembly of high growth/high return
businesses. We expect to continue to build this major business segment
through selective acquisitions and internal business ventures.
Fidelity/Surety, after achieving impressive growth in 1994, is expected to
continue to grow. We will emphasize Fidelity/Surety's underwriting
profitability while broadening its international market presence.
We expect F&G Re to continue growing premium by improving our international
PHOTO (caption)
Shelly Diegel
Agency Automation Manager
Agency interface allows us to leverage technology to produce significant cost
savings and service enhancements. Shelly made interface, the cornerstone of our
personal lines strategy, a reality for over 100 agencies in '94-with
significantly more planned for '95. She researched and designed the interface
process, then led implementation teams in a dizzying timeframe.
<PAGE> 8
marketing effectiveness and enhancing our finite risk product.
Prospectively, our strategy is to expand our portfolio of specialty
businesses and invest in marketing and cost/service quality effectiveness of
our high frequency/low severity businesses. We additionally plan to improve
the competitiveness of our value-added approach to the commercial lines
middle market.
F&G Life
F&G Life's new business growth and profitability should be further enhanced
by its entry into the "Senior" market. It has developed new product
capabilities in this area and has recently established a new strategic
alliance with a major regional broker to penetrate this market. In addition,
continued improvement in the quality of its investment portfolio and product
spreads should be realized.
Reengineering/Systems Initiatives
Despite much effort over the last several years to improve our cost
competitiveness, much progress still needs to be made. We need to redesign
our business processes to achieve competitive cost parity. To accomplish
this, we formed a senior management task force to reengineer our business
processes over the next several years. To facilitate this effort, we are
migrating our current mainframe systems to a client server system. The impact
of these efforts should begin to materialize in 1996, with the full benefit
of efficiency and cost effectiveness being realized in 1997-1998 and beyond.
Conclusion
Our resolve to maximize earnings in order to increase shareholder value is
firm. In 1994 we entered the "build with vision" phase. We developed new
products and business lines. We broadened and enhanced the earnings power of
our company. We also recognized the critical need to become more cost
competitive and embarked on a major effort to accomplish this. In 1995 we
should benefit from our company's enhanced competitiveness and ability to
capitalize upon market instability. Looking forward, I anticipate continued
improvement in earnings quality and growth.
Throughout this letter you have seen outstanding USF&G professionals who are
making a difference in the successful building of our company. They represent
the creative energy and dedication of our people to be the best. On behalf of
all of the people of USF&G, I wish to express our appreciation for the
confidence you have placed in us. We will continue to build a superior
company worthy of your investment.
(Signature - Norm Blake)
Norman P. Blake, Jr.
Chairman, President, and
Chief Executive Officer
March 10, 1995
PHOTO (caption)
Dave Kaiser (left)
Vice President-Commercial Lines
Greg Doman (right)
Assistant Vice President-Fidelity/Surety
Our future success will include leveraging our expertise in new markets. Dave
and Greg did just that by focusing on the total insurance needs of financial
institutions. Their teamwork produced a comprehensive package of bond,
directors and officers liability, and commercial insurance products that protect
against a host of potential exposures unique to financial institution customers.
Business Overview: Products and Target Markets
Products Target Markets
Property/Casualty
Insurance
Commercial Lines
Middle Market
- General, umbrella, Mid- to large-sized businesses:
professional liability
- Primary, excess, and highly - Manufacturers, technology
protected risk (HPR) property and wholesale industries
- Inland marine, crime, boiler - Contractors
- Commercial auto - Transportation
- Workers' compensation - Financial/educational
institutions
- Municipalities
- Real estate holdings
Small Business
- Businessowners policies Small businesses:
- Property and inland marine - Service
- General, umbrella liability - Retail
- Commercial auto - Wholesale
- Workers' compensation - Contracting
- Finance/insurance/
real estate
Personal Lines
- Auto Individuals/families insuring:
- Property - Homes
- Personal excess - Condominiums
- Watercraft - Automobiles
- Personal articles
- Watercraft
Fidelity/Surety
- Surety bonds - Contractors
- Judicial, public official, - Financial institutions
miscellaneous bonds
- Financial institution bonds - Credit unions
- Financial institution directors
and officers liability - Commercial businesses
- Commercial crime
- Kidnap and ransom
F&G Re
Treaty reinsurance: Broker market:
- Traditional risk - U.S. companies
- Finite risk - Foreign companies
Life Insurance
- Structured settlements - Structured settlement
candidates
- Tax-sheltered annuities - Teachers (K through grade 12)
- Single-premium deferred - Individuals above age 55,
annuities retirees
- Other annuities - Individuals requiring income
flow
- Term and universal life - Rural markets
Chart #1 Chart #2
Business Overview: 1994 Accomplishments and 1995 Strategic Initiatives
1994 Accomplishments 1995 Strategic Initiatives
Property/Casualty
Insurance
Commercial Lines
Middle Market
- Implemented focused growth strategies - Continue penetrating high
- Opened five new commercial lines growth/high return market
offices segments
- Launched new proprietary programs - Launch new "A Plus" Education
and capabilities: Institution and Wholesalers
- "Blue Print" Contractors Program "Market Link" Programs
- "Tier One" Financial Institutions - Expand into Excess and Surplus
Program Lines market
- "Visionary" Technology Program
- Municipality Program
- Specialty Trucking Program
- Excess Property Program
Small Business
- Continued service improvements and - Implement focused growth
productivity gains in regional strategies in targeted states
underwriting/processing centers
- Established network of Small Business - Implement new small business
Marketing Managers product and Phase I system with
key agents
- Began development of new small - Continue rapid development of
businessowners product state-of- Phase II system initiatives
the-art processing centers
Personal Lines
- Launched new Personal Excess and - Improve financial performance
Watercraft programs
- Enhanced customer service/processing - Continue cost reduction
through roll-out of agency automation initiatives
- Introduced an insurance-to-value - Integrate nonstandard auto
program for homeowners insurance program
- Launch new technology platform
with automated underwriting,
single entry interface
- Increase sales from key producers
- Accelerate insurance-to-value
program
Fidelity/Surety
- Launched D&O program for financial - Develop fiduciary and employment
institutions practices liability product
- Launched kidnap and ransom product - Enhance claims handling
- Launched "Tier One" Financial - Expand commercial surety products
Institutions Program and service
- Entered international market
for surety
F&G Re
- Increased overall written premium - Encourage innovative products
by 3% specialized for clients/markets
- Produced combined ratio of 90.6% - Aggressively evaluate
- Increased market profile in EEC and opportunities for marketing
Pacific rim finite risk to foreign companies
- Review possibilities for
international strategic alliance
Life Insurance
- Increased sales by 40 percent to - Tap "Seniors" market via new
$286 million while operating expenses life and annuity products
were flat
- Returned to profitability with net - Develop private label versions
operating income of $12 million of new annuities to target
- Retained 50 percent of the broker/ niche markets
dealer SPDA book - Repackage annuity and higher
- Launched successful reengineered margin life offerings to increase
annuity penetration of P/C brokerage
- Strengthened balance sheet through market
careful asset/liability management - Continue aggressive conservation
and reduction of real estate program to minimize product
investments lapse rates
Management's Responsibility for Financial Reporting
Financial Statements
Management is responsible for the financial
statements and other information presented in this annual
report. The financial statements are prepared in conformity with
generally accepted accounting principles. Informed judgments and
estimates are used to measure transactions not concluded by
year-end.
Internal Controls
Management is also responsible for the system
of internal control. The system of internal control encompasses
the organizational structure, selection and training of
personnel, communication and enforcement of policies and
procedures, and an ongoing internal audit program. The internal
controls are designed to provide reasonable assurance that
financial records are reliable for preparing financial
statements, that transactions are completed as authorized, and
that assets are safeguarded. Management and USF&G's internal
auditors regularly review these controls and assess their
adequacy and effectiveness.
Audit Committee
The Board of Directors maintains an audit
committee of directors who are not employees of USF&G. The
committee meets regularly with management, internal auditors,
and independent auditors to review internal control and
financial reporting matters. Both the internal and independent
auditors have full and free access to the audit committee.
Independent Auditors
USF&G engages Ernst & Young LLP to conduct
independent audits of the financial statements in accordance
with generally accepted auditing standards. Their audits
include reviews and tests of internal controls, transactions,
and other information they consider necessary to express an
opinion on the financial statements.
Norman P. Blake, Jr. Dan L. Hale
Chairman, President, and Executive Vice President and Chief
Chief Executive Officer Financial Officer
February 24, 1995
Index to Financial Information
Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Eleven-Year Summary of Selected Financial Data 34
Consolidated Statement of Operations 36
Consolidated Statement of Financial Position 37
Consolidated Statement of Cash Flows 38
Consolidated Statement of Shareholders' Equity 39
Notes to Consolidated Financial Statements 40
Report of Independent Auditors 60
Management's Discussion and Analysis of Financial Condition and Results
of Operations
This section provides management's assessment of financial
results and material changes in financial position for USF&G
Corporation and its two primary subsidiaries, United States
Fidelity and Guaranty Company ("USF&G Company") and Fidelity and
Guaranty Life Insurance Company ("F&G Life"), (collectively,
"USF&G" or "the Corporation") and discusses the results of
operations for the year ended December 31, 1994. The analysis
focuses on the performance of USF&G's business segments and its
investment portfolio.
(Note: A glossary of certain terms used in this discussion can be
found at the end of this section. The terms are italicized the
first time they appear in the text.)
Index
1. Consolidated Results 12
2. Property/Casualty Insurance Operations 13
3. Life Insurance Operations 21
4. Parent and Noninsurance Operations 23
5. Investments 23
6. Financial Condition 27
7. Liquidity 28
8. Regulation 29
9. Income Taxes 32
10. Glossary of Terms 33
1. Consolidated Results
1.1. Summary of net income
The table below shows the major components of net income.
(in millions) 1994 1993 1992
Income (loss) from continuing
operations before realized gains,
facilities exit costs, income taxes
and cumulative effect of adopting
new accounting standards $ 129 $ 93 $(113)
Net realized gains on investments 5 6 148
Facilities exit costs (183) - -
Loss from discontinued operations - - (7)
Income tax benefit 281 28 -
Income (loss) from cumulative effect of
adopting new accounting standards:
Income taxes - 90 -
Postretirement benefits - (52) -
Net income $ 232 $ 165 $ 28
The table below shows the components by major business segment
of income (loss) from continuing operations before realized
gains, facilities exit costs, income taxes and cumulative effect
of adopting new accounting standards.
(in millions) 1994 1993 1992
Property/casualty insurance $194 $182 $ (3)
Life insurance 14 (6) (4)
Parent and noninsurance (79) (83) (106)
Income (loss) from continuing
operations before realized gains,
facilities exit costs, income taxes
and cumulative effect of adopting
new accounting standards $129 $ 93 $(113)
Property/casualty insurance segment income (loss) from
continuing operations before realized gains, facilities exit
costs, income taxes and cumulative effect of adopting new
accounting standards increased $12 million from 1993 to 1994 due
to improved underwriting results. The life insurance segment's
$20 million improvement from 1993 to 1994 was due to the
combined effects of higher product sales and improved spreads on
annuity products. The major factors influencing the improvement
in the parent and noninsurance segment for 1994 are the
improved results from noninsurance subsidiaries and reduced
interest expense partially offset by a loss on long-term
subleases.
Other items affecting net income include a $183 million charge
related to the planned consolidation of the Corporation's
Baltimore headquarters facilities (refer to Section 1.2 of this
Analysis). Also included in net income is a $281 million income
tax benefit primarily related to the recognition of deferred
tax assets (refer to Section 9 of this Analysis).
The $137 million improvement in net income from 1992 to 1993 was
driven by a $200 million improvement in property/casualty
underwriting results. The 1992 net income included $51 million
in restructuring charges related to branch office consolidation
which has been completed.
1.2. Facilities exit costs
As a result of USF&G's restructuring activities in the early
1990s and ongoing efforts to improve the overall cost effectiveness
of the Corporation, USF&G's available headquarters office space
significantly exceeds it needs, particularly at the 40-story office
building ("the Tower") in downtown Baltimore. USF&G sold the Tower
in 1984 and subsequently leased it back. Since 1991, the total headquarters
staff has decreased by approximately 28 percent, including a 48
percent decrease in the number of employees who are located at
the Tower. During 1994, USF&G developed and committed to a plan
to consolidate its Baltimore headquarters facilities. The plan
encompasses relocating all USF&G personnel currently residing at
the Tower to the Mount Washington facilities in Baltimore which
USF&G owns. Implementation of the plan began in January 1995.
The relocation of Tower personnel will begin in mid-1995 and is
expected to be completed by the end of 1996. The lease on the
Tower, which expires in September 2009, will not be terminated.
Approximately 30 percent of the Tower is currently sublet and
USF&G intends to sublet the remaining space as it is vacated.
The facilities exit costs of $183 million recorded in the fourth
quarter of 1994 represent the present value of the rent and
other operating expenses incurred under the Tower lease from the
time USF&G vacates the Tower through the expiration of the lease
in 2009. Approximately $28 million of unamortized deferred gain
arising from the 1984 sale-leaseback was also recognized upon
adoption of the facilities exit plan. Potential future sublease
income was not considered in calculating the facilities exit
costs. To the extent that additional or extended subleases are
signed in the future, the present value of income to be received
over the term of such a sublease will be recognized in the
period the sublease is signed.
2. Property/Casualty Insurance Operations
Property/casualty insurance operations, the principal business
segment, accounted for 84 percent of USF&G's revenues in 1994,
compared with 85 percent and 88 percent in 1993 and 1992, respectively,
and 67 percent of its assets at December 31, 1994 and 1993, compared
with 63 percent at December 31, 1992. Financial results for this
segment are as follows:
(in millions) 1994 1993 1992
Premiums earned* $ 2,283 $ 2,327 $ 2,533
Losses and loss expenses (1,691) (1,758) (2,088)
Underwriting expenses (792) (796) (872)
Net underwriting losses (200) (227) (427)
Net investment income 423 433 475
Restructuring charges - - (46)
Other revenues and (expenses), net (29) (24) (5)
Income (loss) from continuing
operations before realized gains,
facilities exit costs,income taxes
and cumulative effect of adopting
new accounting standards $ 194 $ 182 $ (3)
*See Glossary of Terms
Improved underwriting results were the primary
reason for the increase in property/casualty income in 1994 when
compared with 1993 and 1992 (refer to Section 2.2 of this
Analysis). The decrease in net investment income is
attributable to an investment base which declined in order to
meet cash flow needs (refer to Section 5.1 of this Analysis).
The 1993 fluctuation in other revenues and expenses primarily
reflects the decision to eliminate certain policyholders'
dividends in 1992 and the reversal in that year of previously
accrued but unpaid dividends. Restructuring charges relating to
branch office consolidations also affected results in 1992.
2.1. Premiums earned
Premiums earned totaled $2.3 billion in 1994 and 1993,
compared with $2.5 billion in 1992. The table below shows
the major components of premiums earned and premiums written.
1994 1993 1992
Premiums Premiums Premiums
(in millions) Earned Written Earned Written Earned Written
Branch
Office Vol-
untary Production:
Direct $1,919 $1,968 $1,949 $1,929 $2,272 $2,128
Ceded reinsurance (150) (162) (124) (124) (85) (85)
Net branch office
voluntary 1,769 1,806 1,825 1,805 2,187 2,043
Voluntary pools and
associations 41 37 45 46 41 44
Involuntary pools and
associations 83 70 152 133 163 147
Other premium
adjustments (5) (16) - 42 (15) (57)
Total primary 1,888 1,897 2,022 2,026 2,376 2,177
Assumed Reinsurance:
Finite risk 172 180 169 249 74 171
Traditional risk 223 235 136 154 83 72
Total assumed 395 415 305 403 157 243
Total $2,283 $2,312 $2,327 $2,429 $2,533 $2,420
Direct voluntary premiums written increased two percent in 1994
in response to management's strategies to grow business in
targeted market segments. These growth strategies follow
planned actions to exit unprofitable markets and product lines
in 1993 which had reduced premium production by nine percent in
that year. The increase in ceded reinsurance is primarily the
result of risk management as part of USF&G's strategy to enter
the excess property market in commercial lines. Additionally,
USF&G ceded $5 million of catastrophe reinsurance premiums under
an assessment by the Florida Hurricane Catastrophe Fund which
was established in response to 1992's Hurricane Andrew. Premiums
from involuntary pools and associations decreased 47 percent in
1994, after a 10 percent decrease in 1993, as USF&G continued to
reduce exposure in these unprofitable markets. Other premium
adjustments relate primarily to changes in earned but not
reported premiums and unbilled installment premiums. Traditional
risk assumed reinsurance premiums increased substantially in
1994 as USF&G expanded into international reinsurance markets,
while the demand for finite risk reinsurance has decreased as a
result of the new accounting requirements of Statement of
Financial Accounting Standards ("SFAS") No. 113 and Emerging
Issues Task Force ("EITF") 93-6 which were issued in 1993.
The table below shows net premiums earned and the statutory loss
ratios by lines of property/casualty insurance including results
from voluntary and involuntary pools and associations. The table
illustrates the changes in premium mix from 1992 to 1994.
Management's focus on reducing exposure to less profitable lines
of insurance has been a key factor in the improved underwriting
results. The most dramatic examples are the workers'
compensation line and assumed reinsurance. Workers' compensation
has a cumulative three-year statutory loss ratio of 143.8 and
represented 13 percent of total property/casualty premiums
earned in 1992 but only 5 percent in 1994. Assumed reinsurance
premiums increased from 6 percent of total premiums earned in
1992 to 17 percent in 1994, with a cumulative three-year
statutory loss ratio of 69.9 as of December 31, 1994.
In 1995, management will continue to develop strategies to
achieve a more profitable mix of business by further penetrating
target markets, implementing new products and services, and
enhancing underwriting and customer service structures through
improved technology and performance.
1994 1993 1992
Premiums Statutory Premiums Statutory Premiums Statutory
Earned % Loss Ratio Earned % Loss Ratio Earned % Loss Ratio
(dollars in millions)
Commercial Lines:
Auto $ 380 17% 58.8 $ 399 17% 54.8 $ 442 18% 64.5
General
liability 357 16 89.4 351 15 80.5 388 15 99.2
Property 326 14 71.8 321 14 60.4 332 13 69.5
Workers'
compensation 126 5 121.0 152 7 210.8 318 13 121.0
Total commercial
lines 1,189 52 78.1 1,223 53 83.0 1,480 59 86.9
Fidelity/Surety:
Fidelity 17 1 29.6 18 1 55.7 19 1 24.6
Surety 107 5 37.8 100 4 49.2 92 3 33.5
Total fidelity/
surety 124 6 36.7 118 5 50.2 111 4 32.0
Personal Lines:
Auto 410 18 66.5 504 22 70.3 551 22 73.6
Homeowners 126 5 107.3 149 6 73.3 184 7 102.2
Other personal 39 2 49.1 28 1 65.6 50 2 67.9
Total personal
lines 575 25 74.2 681 29 70.7 785 31 80.0
Assumed Reinsurance:
Finite risk 172 7 71.9 169 7 70.1 74 3 78.9
Traditional risk 223 10 64.8 136 6 62.1 83 3 72.8
Total assumed
reinsurance 395 17 67.9 305 13 67.3 157 6 76.9
Total $2,283 100% 73.1 $2,327 100% 75.4 $2,533 100% 82.0
2.2. Underwriting results
Underwriting results represent premiums earned less incurred losses,
loss expenses and underwriting expenses. It is not unusual for
property/casualty insurance companies to have underwriting losses
that are offset by investment income.
Underwriting gains (losses) by major business category are as
follows:
(in millions) 1994 1993 1992
Commercial $(186) $(223) $(343)
Fidelity/surety 6 (8) 6
Personal (60) (28) (110)
Total primary (240) (259) (447)
Assumed reinsurance 40 32 20
Net underwriting losses $(200) $(227) $(427)
Voluntary $(179) $(176) $(390)
Involuntary (21) (51) (37)
Net underwriting losses $(200) $(227) $(427)
Consolidated property/casualty underwriting ratios, calculated
based on generally accepted accounting principles ("GAAP") and
statutory accounting practices, are as follows:
1994 1993 1992
GAAP Underwriting Ratios:
Loss ratio 74.0 75.6 82.4
Expense ratio* 34.7 34.2 34.4
Combined ratio 108.7 109.8 116.8
Statutory Underwriting Ratios:
Loss ratio 73.1 75.4 82.0
Expense ratio 35.0 33.7 34.9
Combined ratio 108.1 109.1 116.9
*See Glossary of Terms
Statutory underwriting ratios exclude the effects of
policyholder dividends which, if included, would increase the
ratios by 0.3 each year.
Underwriting results improved $27 million from 1993 to 1994 and
$200 million from 1992 to 1993. The improvements generally
resulted from management's actions to improve product/market
mix, apply stricter underwriting standards, and improve claims
practices, as well as from lower incurred catastrophe losses in
1994 and 1993 when compared to 1992 (refer to Section 2.4 of
this Analysis). The rate of improvement in 1994 was not as
dramatic as that seen in 1993 since net catastrophe losses were
relatively consistent from 1993 to 1994 after decreasing $72
million from 1992 to 1993. Additionally, significant weather
related losses not designated as catastrophe losses had an
adverse effect on 1994 results, particularly in personal lines.
The statutory loss ratio has improved 8.9 points overall since
1992, and 6.7 points in that same period when catastrophe losses
are excluded. The overall improvement of $16 million in
involuntary underwriting results since 1992 reflects
management's actions to reduce exposure to involuntary business
in states with substantial involuntary market burdens. The major
impact of these actions was felt in 1992 when involuntary
underwriting results improved more than $100 million when
compared to previous years. While management will remain focused
on controlling involuntary underwriting losses, the degree of
improvement is expected to be less than that realized in
previous years. The increase in involuntary underwriting losses
in 1993 over 1992 was primarily due to an assessment of loss
reserves from involuntary workers' compensation insurance pools.
Improved premium mix and reduced costs have been the main
reason for the improved underwriting results since 1990, despite
continuing competitive pressures. Management intends to monitor
the premium mix and costs and implement other strategies with
the goal of continuing the improvement in underwriting results,
although such improvements cannot be assured. These strategies
include the introduction of specialty products, continued
penetration of targeted industries and market segments, further
development of underwriting expertise, reduced catastrophe
exposure and investments in technological advancements.
Management will also continue to focus on improving product
pricing, although intense competitive pressures in the
property/casualty insurance industry, especially in the pricing
of commercial lines products, is expected to continue to
restrict underwriting results.
Commercial Lines
Commercial lines products include property,
auto, inland marine, workers' compensation, and general and
umbrella liability coverage for businesses. The commercial lines
business has two distinct market segments--middle market and
small business. USF&G has further defined the middle market into
three strategic business units in an effort to better service
customers and improve profitability: service businesses,
contractors, and manufacturers.
The following table shows the components of underwriting
results for commercial lines:
(in millions) 1994 1993 1992
Premiums Written:
Branch office voluntary direct $ 1,210 $ 1,165 $ 1,303
Other, net of ceded reinsurance (11) 82 52
Total premiums written $ 1,199 $ 1,247 $ 1,355
Premiums earned $ 1,189 $ 1,223 $ 1,480
Losses (929) (1,014) (1,299)
Expenses (446) (432) (524)
Net underwriting losses $ (186) $ (223) $ (343)
Voluntary $ (181) $ (187) $ (316)
Involuntary (5) (36) (27)
Net underwriting losses $ (186) $ (223) $ (343)
GAAP and statutory underwriting ratios are as follows:
1994 1993 1992
GAAP Underwriting Ratios:
Loss ratio 78.1 83.0 87.8
Expense ratio 37.5 35.3 35.4
Combined ratio 115.6 118.3 123.2
Statutory Underwriting Ratios:
Loss ratio 78.1 83.0 86.9
Expense ratio 36.2 34.4 36.3
Combined ratio 114.3 117.4 123.2
Commercial lines branch office voluntary direct premiums written
increased 4 percent in 1994, compared with decreases of 11
percent and 20 percent in 1993 and 1992, respectively. The
increase is primarily the result of new business growth in
targeted market segments. Although net premiums written in the
commercial lines business have declined, the largest components
of the decline have been the reduced participation in voluntary
pools and the decrease in involuntary premium, both of which
have benefited net underwriting results. The involuntary
business losses were $31 million less in 1994 than in 1993,
after increasing $9 million from 1992 to 1993. The improved
involuntary results arose primarily from management actions to
reduce workers' compensation premiums which led to reduced
participation in the involuntary workers' compensation pools.
Underwriting results in the commercial lines category improved
$37 million over 1993 and $120 million from 1992 to 1993. This
improvement is primarily the result of the change in the mix of
business and the application of stricter underwriting standards,
as well as lower catastrophe losses in 1994 and 1993.
In commercial lines, the mix of the least profitable line of
business, workers' compensation, with a 1994 statutory loss
ratio of 121.0, has decreased from 21 percent of commercial
lines premiums earned in 1992 to 11 percent in 1994, while the
mix of the two most profitable lines of business, auto and core
property, has increased. Commercial auto, with a statutory loss
ratio of 58.8 in 1994, increased from 30 percent of commercial
lines premiums earned in 1992 to 32 percent in 1994. USF&G's
core commercial property business consists of fire/allied and
inland marine products, which had a statutory loss ratio of 62.1
in 1994. Premiums from these product lines increased from 15
percent of commercial lines premiums earned in 1992 to 19
percent in 1994.
The statutory loss ratio for commercial lines improved 4.9
points in 1994 from 1993 and 8.8 points in 1994 from 1992.
Management believes the improved loss ratio trend is evidence of
the positive effects of the strategies implemented to improve
underwriting results. Also contributing to the improvement over
1992 is the reduction in catastrophe losses (refer to Section
2.4 of this Analysis). Losses incurred from Hurricane Andrew
represented approximately 1.6 points of the 1992 commercial
lines statutory loss ratio.
In January 1995, USF&G entered into a definitive agreement to
purchase all of the outstanding equity of Discover Re Managers,
Inc. ("Discover Re"). The transaction is expected to close in
the second quarter of 1995. Discover Re provides insurance,
reinsurance and related services to the alternative risk
transfer ("ART") market, primarily in the municipalities,
transportation, education and retail sectors. The ART market
represents approximately 30 percent of the commercial insurance
market. This acquisition facilitates USF&G's access to the ART
market and, management believes, provides increased growth
potential by augmenting certain of the existing core commercial
lines insurance operations.
Fidelity/Surety
The fidelity/surety segment provides contract
and non-contract surety bonds to construction companies,
commercial businesses and individuals; financial institution
bonds to banks, stockbrokers and credit unions; and fidelity
bonds to commercial businesses and governmental entities.
The following table shows the components of underwriting results
for fidelity/surety:
(in millions) 1994 1993 1992
Premiums Written:
Branch office voluntary direct $169 $148 $137
Other, net of ceded reinsurance (35) (27) (28)
Total premiums written $134 $121 $109
Premiums earned $124 $118 $111
Losses (46) (59) (36)
Expenses (72) (67) (69)
Net underwriting gains (losses) $ 6 $ (8) $ 6
Voluntary $ 6 $ (8) $ 6
Involuntary - - -
Net underwriting gains (losses) $ 6 $ (8) $ 6
GAAP and statutory underwriting ratios are as follows:
1994 1993 1992
GAAP Underwriting Ratios:
Loss ratio 36.7 50.2 32.3
Expense ratio 57.9 56.6 62.6
Combined ratio 94.6 106.8 94.9
Statutory Underwriting Ratios:
Loss ratio 36.7 50.2 32.0
Expense ratio 54.2 56.0 64.0
Combined ratio 90.9 106.2 96.0
Fidelity/surety experienced an improvement in underwriting
results in 1994 due to increased premiums and decreased losses.
The regionalization of USF&G's surety business in 1993 led to
further penetration of existing contract surety markets in 1994,
while new products and further expansion into financial
institutions markets resulted in premium growth in the fidelity
lines. Losses decreased in 1994 after a $23 million increase in
1993 which was primarily a result of unfavorable loss
developments on a limited number of prior years' claims.
Personal Lines
Personal lines products include auto, homeowners, watercraft
and personal excess insurance for individuals and families.
The following table shows the components of underwriting results
for personal lines:
(in millions) 1994 1993 1992
Premiums Written:
Branch office voluntary direct $ 589 $ 616 $ 688
Other, net of ceded reinsurance (25) 42 38
Total premiums written $ 564 $ 658 $ 726
Premiums earned $ 575 $ 681 $ 785
Losses (427) (481) (635)
Expenses (208) (228) (260)
Net underwriting losses $ (60) $ (28) $(110)
Voluntary $ (44) $ (13) $(100)
Involuntary (16) (15) (10)
Net underwriting losses $ (60) $ (28) $(110)
GAAP and statutory underwriting ratios are as follows:
1994 1993 1992
GAAP Underwriting Ratios:
Loss ratio 74.2 70.6 80.9
Expense ratio 36.3 33.5 33.1
Combined ratio 110.5 104.1 114.0
Statutory Underwriting Ratios:
Loss ratio 74.2 70.7 80.0
Expense ratio 36.8 33.7 33.2
Combined ratio 111.0 104.4 113.2
Branch office voluntary premium has declined only 4 percent in
1994, after declining 10 percent in 1993. In 1994, the net
premium decrease resulted from management's plans to improve the
agency force and exit certain involuntary markets, and from
increased ceded reinsurance. The net premium decreases in 1993
were a result of planned management actions to exit certain
unprofitable markets and to reduce writings in high risk
catastrophe areas.
The increased underwriting loss in 1994 is primarily due to
increased losses from the homeowners line of business which was
adversely affected in 1994 by significantly higher than normal
first quarter weather related losses not designated as
catastrophe losses. Winter storms and the Northridge earthquake
in the first quarter of 1994 produced most of the $32 million in
catastrophe losses for the personal lines business, primarily
in homeowners. Exclusive of these catastrophe losses, the
homeowners statutory loss ratio was 84.2 in 1994, compared with
107.3 when catastrophe losses are included. Although the
personal lines statutory loss ratio increased 3.5 points in
1994, almost half of that increase is the result of catastrophe
losses. The personal lines statutory loss ratio improved 9.3
points from 1992 to 1993 (a 3.5 point improvement excluding
Hurricane Andrew in 1992).
Management's strategies to reduce exposure in unprofitable
markets and lines of business, including reunderwriting the auto
book of business, applying stricter underwriting standards,
reducing exposure in certain high risk catastrophe areas and
introducing new products, have improved the underwriting results
and statutory loss ratios of the auto and other personal lines
of business since 1992. These strategies are currently being
applied to the homeowners line, and are anticipated to result
in improvements in 1995 in selected target markets.
Underwriting losses from involuntary markets were relatively
consistent from 1993 to 1994, and increased $5 million from 1992
to 1993. The increase in 1993 losses was due to unfavorable
development on prior years' claims and costs associated with
third party administrators managing the assigned risk
involuntary business.
In December 1994, USF&G entered into a definitive agreement to
purchase all of the outstanding stock of Victoria Financial
Corporation ("Victoria"). The transaction is expected to close
in the second quarter of 1995. Victoria is an insurance holding
company which specializes in nonstandard auto coverage.
Management believes that this acquisition will allow USF&G to
enhance premium retention and grow the personal lines business
through an expanded product portfolio.
Assumed Reinsurance
Reinsurance products are managed by F&G Re
and marketed through national and international reinsurance
brokers. The reinsurance segment has historically produced
underwriting gains.
The following table shows the components of underwriting
results for assumed reinsurance lines:
(in millions) 1994 1993 1992
Premiums written $ 415 $ 403 $ 243
Premiums earned $ 395 $ 305 $ 157
Losses (290) (204) (118)
Expenses (65) (69) (19)
Net underwriting gains $ 40 $ 32 $ 20
Finite risk $ 12 $ 9 $ 14
Traditional risk 28 23 6
Net underwriting gains $ 40 $ 32 $ 20
GAAP and statutory underwriting ratios are as follows:
1994 1993 1992
GAAP Underwriting Ratios:
Loss ratio 73.2 66.7 75.0
Expense ratio 16.5 22.6 12.1
Combined ratio 89.7 89.3 87.1
Statutory Underwriting Ratios:
Loss ratio 67.9 67.3 76.9
Expense ratio 22.7 24.6 17.0
Combined ratio 90.6 91.9 93.9
Underwriting results in this category continue to be favorably
affected by increased premiums due to the strong demand for
reinsurance. Recent large catastrophe losses, such as Hurricane
Andrew in 1992 and the Northridge earthquake in 1994, have
increased the demand for traditional risk reinsurance in both
the international and domestic property catastrophe markets.
Net premiums written in the international market for traditional
risk assumed reinsurance increased to $120 million in 1994 from
$49 million in 1993. This growth in international writings
accounts for over 87 percent of the increase in traditional risk
premiums written. This increase is offset by the reduced demand
for finite risk assumed reinsurance as a result of the
accounting requirements of SFAS No. 113 and EITF 93-6 which were
issued in 1993.
2.3. Losses incurred and loss reserves
Losses and loss expenses incurred totaled $1.7 billion in 1994,
compared with $1.8 billion and $2.1 billion in 1993 and 1992,
respectively. The reduction is due primarily to lower premium
volume and actions taken to better manage claims and claim costs
and reduce exposures in undesirable markets. The reduction from 1992 to
1993 is also due to lower catastrophe losses. Reserves for
unpaid losses and loss expenses totaled $6.1 billion at December
31, 1994, a decrease of $229 million from December 31, 1993. The
impact of adopting SFAS No. 113 increased reserves by $1.2
billion at December 31, 1993 when compared with December 31,
1992. This new accounting standard eliminated the previous
practice of reporting assets and liabilities net of the effect
of reinsurance. Excluding the effects of SFAS No. 113, reserves
in 1993 declined $264 million from 1992.
Selected claims information for the property/casualty segment is
as follows:
(dollars in millions) 1994 1993 1992
At December 31:
Net reserves $5,084 $5,276 $5,540
Number of outstanding claims 81,024 91,285 103,952
For the year ended December 31:
Losses paid $1,883 $2,022 $2,252
Number of new claims 342,292 352,194 395,697
Although reserve levels have been reduced, the 8 percent
decrease in net reserves since 1992 is significantly less than
the decreases in earned premiums, losses paid and claim activity
over the same period. Earned premiums decreased $250 million, or
10 percent, since 1992, while losses paid decreased 16 percent
over the same period. The number of outstanding claims at
December 31, 1994 declined by 22 percent compared with December
31, 1992, and the number of new claims reported (excluding
catastrophe claims) declined 13 percent from 1992 to 1994.
USF&G categorizes environmental, asbestos and other long-term
exposures where multiple claims relate to a similar cause of
loss (excluding catastrophes) as "common circumstance claims."
Reserves for losses that have been reported and certain legal
expenses are established on the "case basis." Common
circumstance claims which have emerged, while substantial, are a
relatively small portion of total claim payments and reserves.
Case reserves for these claims are approximately three percent
of the total reserves for unpaid losses and loss expenses at
December 31, 1994 and 1993.
The most significant common circumstance claim exposures include
negligent construction, environmental, and asbestos claims. Case
reserves for these exposures represent 82 percent of total
common circumstance case reserves at December 31, 1994. Other
common circumstance claim categories stem from a variety of
situations such as lead paint, toxic fumes, breast implants,
sexual molestation and other disparate causes, provisions for
which are included in the total common circumstance case
reserves.
The following tables set forth selected information for each of
the three primary categories of common circumstance claims, net
of ceded reinsurance.
Negligent
(in millions) Construction Environmental Asbestos
Total reserves at
December 31, 1991 $ 48 $184 $106
Losses incurred 25 30 33
Claims paid (3) (27) (13)
Total reserves at
December 31, 1992 70 187 126
Losses incurred 14 99 22
Claims paid (10) (37) (23)
Total reserves at
December 31, 1993 74 249 125
Losses incurred (6) 106 5
Claims paid (13) (26) (5)
Total reserves at
December 31, 1994 $ 55 $329 $125
Total Reserves at December 31
(in millions) 1994 1993 1992
Negligent Construction:
Case reserves $ 18 $ 14 $ 14
Bulk reserves 37 60 56
Total $ 55 $ 74 $ 70
Environmental:
Case reserves $ 65 $ 61 $ 43
Bulk reserves 264 188 144
Total $329 $249 $187
Asbestos:
Case reserves $ 25 $ 45 $ 46
Bulk reserves 100 80 80
Total $125 $125 $126
The increase in environmental incurred losses is primarily due
to an increased allocation of bulk reserves from other lines of
business based on enhancements in the actuarial database with
respect to such claims. This reallocation did not effect
management's assessment of the overall adequacy of the reserve
position. Management believes that USF&G's reserve position is
adequate relative to its exposure to environmental and asbestos
matters, and compares favorably to other large property/casualty
insurers. USF&G's customer base generally does not include large
manufacturing companies, which tend to incur most of the known
environmental and asbestos exposures. Many of USF&G's
environmental claims relate to small industrial or
transportation accidents which individually are unlikely to
involve material exposures. In addition, USF&G has traditionally
been a primary coverage carrier, having written relatively
little high-level excess coverage; therefore, liability
exposures are generally restricted to primary coverage limits.
USF&G's net paid losses and loss expenses for environmental and
asbestos claims have averaged approximately $35 million per year
over the last five years, or less than two percent of the
estimated industry level as of December 31, 1994, while USF&G's
related reserves at the end of 1994 are three percent of the
estimated industry total. In a study published in 1994, A.M.
Best Company, Inc., an insurance industry rating agency,
measured the environmental and asbestos reserves held by
property/ casualty insurers in terms of the number of years the
reserves could fund the average rate of payments, described as
the "survival ratio." USF&G's survival ratio of approximately 13
years for environmental and asbestos losses is almost double
A.M. Best's estimated 1994 industry average.
In 1994, approximately 28 percent of paid environmental claims
related to matters under which a USF&G insured was a potentially
responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act, commonly referred to
as "Superfund", but many of these PRPs were only peripherally
involved. In 1993, 35 percent of the environmental claims paid
related to Superfund.
The level of loss reserves for both current and prior years'
claims is continually monitored and adjusted for changing
economic, social, judicial and legislative conditions, as well
as for changes in historical trends as information regarding
such conditions and actual claims develops. Management believes
that loss reserves are adequate, but establishing appropriate
reserves, particularly with respect to environmental, asbestos
and other long-term exposure claims, is highly judgmental and an
inherently uncertain process. It is possible that, as conditions
change and claims experience develops, additional reserves may
be required in the future. There can be no assurance that such
adjustments will not have a material adverse effect on USF&G's
results of operations or financial condition.
2.4. Catastrophe losses
Gross catastrophe losses totaled $73 million in 1994,
compared with $81 million in 1993 and $292
million in 1992. These losses, net of losses ceded to
reinsurers, were $67 million in 1994, $68 million in 1993 and
$140 million in 1992. Catastrophe losses, net of reinsurance,
represented three percent of premiums earned for the years ended
December 31, 1994 and 1993, compared with six percent for 1992.
Net catastrophe losses in 1994 included $23 million from the
Northridge earthquake in February, as well as approximately $26
million from winter storms in the first quarter of the year,
while 1993's net catastrophe losses included $27 million from
the East Coast blizzard in March 1993. The 1992 losses, the
highest in USF&G's history, were primarily from Hurricane Andrew
in Florida and hailstorms and tornadoes in Kansas and Oklahoma.
2.5. Ceded reinsurance
USF&G reinsures portions of its policy
risks with other insurance companies or underwriters.
Reinsurance allows USF&G to obtain indemnification against
losses associated with insurance contracts it has written by
entering into a reinsurance contract with another insurance
enterprise (the reinsurer). USF&G pays (cedes) an amount to the
reinsurer which in turn agrees to reimburse USF&G for a
specified portion of any claims paid under the reinsured
contracts. Reinsurance gives USF&G the ability to write certain
individually large risks or groups of risks, and helps to
control its exposure to losses by ceding a portion of such large
risks. USF&G's ceding reinsurance agreements are generally
structured on a treaty basis whereby all risks meeting a certain
criteria are automatically reinsured. Shrinking capacity in the
reinsurance market and the high catastrophe losses in recent
years have increased prices and reduced the availability of
catastrophe reinsurance. Property catastrophe reinsurance costs
were $34 million in 1994 (including a $5 million assessment from
the Florida Hurricane Catastrophe Fund), compared with $30
million and $26 million in 1993 and 1992, respectively. The
current catastrophe structure shows improvement from prior years
by increasing USF&G's total reinsurance protection from $205
million in 1993 to $215 million in 1994, and by providing
greater protection in all treaty layers through increased
reinsurance placement. USF&G's property catastrophe loss
retention level at December 31, 1994 is $75 million, which in
the event of a second loss, is lowered to $50 million. Loss
retention levels for 1993 and 1992 were $50 million and $23
million, respectively, and did not include any "second event"
protection.
2.6. Capacity
A key measure of both strength and growth capacity
for property/ casualty insurers is the ratio of premiums written
to statutory policyholders' surplus. At the end of 1994 and
1993, USF&G's premium-to-surplus ratio was 1.4:1, compared with
1.5:1 at the end of 1992. The industry average is approximately
1.3:1. Insurance regulators generally accept a ceiling for this
ratio of 3.0:1; therefore, at its current ratio, USF&G has the
capacity to grow by writing new business.
3. Life Insurance Operations s
Life insurance operations (F&G Life) represent 15
percent of USF&G's total revenues in 1994, compared with 14
percent and 13 percent in 1993 and 1992, respectively. F&G Life
also represents 33 percent of the assets at December 31, 1994,
compared with 34 percent and 37 percent at December 31, 1993 and
1992, respectively.
Financial results for F&G Life are as follows:
Years Ended December 31
(in millions) 1994 1993 1992
Premiums $ 152 $ 129 $ 104
Net investment income 317 321 349
Policy benefits (388) (395) (377)
Underwriting and operating expenses (67) (61) (77)
Restructuring charges - - (3)
Income (loss) from continuing operations
before realized gains, facilities exit
costs, income taxes and cumulative effect
of adopting new accounting standards $ 14 $ (6) $ (4)
Income for the year ended December 31, 1994 improved when
compared with 1993 and 1992 as a result of continued positive
sales trends and improved profit margins, partially offset by
higher sales related expenses. The increase in sales is
attributed to the new product initiatives and refocused
distribution channels (refer to Section 3.2 of this Analysis).
Profit margins improved during the year as current and
projected spreads between investment income and interest
credited to policyholders improved compared with 1993 levels.
This resulted from lower rates being credited to annuities where
the guaranteed rate period has expired and improved spread
management on new and renewal business. The higher profit
margins are also attributable to the favorable retention of the
single premium deferred annuity ("SPDA") block, originally sold
in 1988 through 1990 by investment brokers (refer to Section 3.3
of this Analysis). The declining trend in net investment income
is primarily due to SPDA surrenders which are reducing the level
of invested assets. This trend is likely to continue in 1995.
This trend was partially offset in 1994 by the recognition of
$8 million from the sale of a timber investment.
3.1. Products
F&G Life issues annuity and life insurance
products. F&G Life's principal products are structured
settlements, deferred annuities (including tax sheltered
annuities), immediate annuities and life insurance products.
Structured settlements are immediate annuities principally sold
to the property/casualty company in settlement of insurance
claims.
Deferred annuity products accumulate cash values to which
interest is credited. In 1994, deferred annuities were credited
with interest rates that ranged between 4.0 and 9.5 percent,
depending upon the year of issue and interest guarantee
duration. The majority of deferred annuities in force were
issued with initial interest guarantees from one to six years,
with most of these written between 1988 and 1990 with a six year
interest guarantee. The deferred annuities also include
provisions for charges if the annuitant chooses to surrender the
policy (see Section 3.3 of this Analysis). After the interest
guarantee expires, the interest crediting rates can be adjusted
annually on a policy's anniversary date.
Deferred annuity products are sold through independent agents,
insurance brokers and national wholesale distributors. F&G
Life's tax sheltered annuity products ("TSAs") are deferred
annuities that provide retirement income. TSAs are sold through
a national wholesale distribution network primarily to teachers.
Other annuities sold by F&G Life primarily consist of single
premium immediate annuities ("SPIAs"). SPIAs provide a fixed
stream of payments over a fixed period of time or over an
individual's lifetime.
F&G Life markets universal life ("UL") and term life insurance
products, primarily through independent agents. UL insurance
provides a death benefit for the life of the insured and
accumulates cash values to which interest is credited. Term life
insurance provides a fixed death benefit if the insured dies
during the contractual period.
3.2. Sales
The following table shows life insurance and annuity sales
(premiums and deposits) by distribution system and product type:
(in millions) 1994 1993 1992
Distribution System:
Direct-structured settlements $ 88 $ 66 $ 37
Property/casualty brokerage 48 49 67
National brokerage 46 14 -
National wholesaler 71 39 -
Other 33 37 51
Total $286 $205 $155
Product Type:
Structured settlement annuities $ 88 $ 66 $ 37
Single premium deferred annuities 82 44 33
Tax sheltered annuities 63 35 -
Other annuities 41 54 74
Life insurance 12 6 11
Total $286 $205 $155
Sales in 1994, led by structured settlement annuities, single
premium deferred annuities, and tax sheltered annuities, have
increased 40 percent over 1993 sales and 85 percent over 1992
sales. In its effort to continue the improvement in sales and
profitability, F&G Life intends to continue to concentrate on
the expansion of its existing distribution channels while also
developing other marketing networks. F&G Life is also continuing
the development of selected products, and modifying current
product offerings to meet customer needs. Despite F&G Life's
attention to expanding its distribution channels and to product
development, demand for its products is affected by fluctuating
interest rates and the relative attractiveness of alternative
investment, annuity or insurance products, as well as its credit
ratings. As a result, there is no assurance that the improved
sales trend will continue at the same level. Total life
insurance in force was $11.8 billion at December 31, 1994,
compared with $12.1 billion and $12.4 billion at December 31,
1993 and 1992, respectively.
3.3. Policy surrenders
Deferred annuities and universal life
products are subject to surrender. Nearly all of F&G Life's
surrenderable annuity policies allow a refund of the cash value
balance less a surrender charge. The surrender charge varies by
product. Single premium deferred annuities, which represent 67
percent of surrenderable business, have surrender charges that
decline from six percent in the first policy year to zero
percent in the seventh and later policy years. Newer products
that have been issued during 1994 have surrender charges that
decline from nine percent in the first policy year to zero
percent in the tenth and later policy years. Such built-in
surrender charges provide protection against premature policy
surrender.
Policy surrenders totaled $576 million for the year ended
December 31, 1994. This compares with $211 million and $192
million for 1993 and 1992, respectively. Surrender activity has
increased as a result of expiring surrender charges, primarily
on the investment broker block of SPDA, as policyholders seek
other investment alternatives.
During 1994, management had in place a policy conservation
program that provided policyholders with a competitive renewal
option within F&G Life once their surrender charge period had
expired. Through December 31, 1994, policyholders representing
approximately 27 percent of the expiring block elected this
option. An additional 23 percent of the expiring block was
retained under the terms of the original contract, free of
surrender charges and at short-term interest rates which are
adjusted annually.
The total account value of F&G Life's deferred annuities is
$2.3 billion, 15 percent of which is surrenderable at current
account value (i.e., without surrender charges). The surrender
charge period on an additional $1.3 billion of F&G Life's single
premium deferred annuity products expires through the end of
1997, of which $515 million expires during 1995. The experience
thus far for $693 million of SPDAs where the surrender charge
period expired in the fourth quarter of 1993 through the fourth
quarter of 1994 indicates that on average, 50 percent of the
expiring block may surrender; however, in the future, a larger
percentage may surrender should interest rates continue their
upward trend. While this will put pressure on F&G Life's ability
to increase assets, given the relatively high interest rates
credited when these annuities were issued, overall profit
margins would continue to improve as they surrender or rollover
to new products with lower rates. Management believes that F&G
Life, with liquid assets equal to 124 percent of the surrender
value of surrenderable business at December 31, 1994, continues
to maintain a high degree of liquidity and has the ability to
meet surrender obligations for the foreseeable future.
3.4. Deferred policy acquisition costs ("DPAC")
Costs to acquire and issue annuities and life insurance policies are
generally deferred and amortized in future periods in relationship to
expected gross profits. The recoverability of these amounts is
regularly reviewed by management through monitoring of surrender
experience, projected investment spreads and other criteria.
Policy acquisition costs unfavorably affected results as $4
million, $8 million and $10 million of normally deferrable costs
were expensed in 1994, 1993 and 1992, respectively, because
surrender experience and sales levels did not support the
continued deferral of such costs.
During the year ended December 31, 1994, $26 million of current
year expense has been deferred compared with $12 million and $11
million for the years ended December 31, 1993 and 1992,
respectively. The increase in the deferral is due to the higher
level of sales and improved future spread income during 1994
compared with 1993 and 1992. Amortization of the beginning DPAC
balance was $21 million, $10 million and $25 million for the
years ended 1994, 1993 and 1992, respectively. The rate of
amortization in future periods would be accelerated if
surrender activity increases and/or product margins permanently
narrow.
4. Parent and Noninsurance Operations
Parent company interest and other unallocated expenses
and net losses from noninsurance operations were as follows:
Years Ended December 31
(in millions) 1994 1993 1992
Parent Company Expenses:
Interest expense $ (34) $ (37) $ (35)
Unallocated expense, net (48) (35) (34)
Noninsurance Operations:
Management consulting 1 (2) (4)
Oil and gas - - (18)
Other noninsurance investments 2 (9) (13)
Restructuring charges - - (2)
Income (loss) from continuing operations
before realized gains, facilities exit
costs, income taxes and cumulative effect
of adopting new accounting standards $ (79) $ (83) $(106)
The results for the parent company and noninsurance operations
improved slightly when compared to 1993. This improvement was
primarily a result of recognizing $6 million of dividend income
from an investment in an asset management company, as well as
improvements in management consulting operations and certain
real estate investments. Unallocated expenses increased over
1993 due primarily to a $9 million non-recurring loss on
long-term subleases. Interest expense was slightly lower in 1994
than 1993; however, interest expense is expected to increase in
1995 due to higher short-term interest rates (refer to Section 6
of this Analysis). The $18 million loss in 1992 related to an
oil and gas subsidiary which was merged with another oil and gas
company converting USF&G's interest into an equity investment of
the successor company.
5. Investments
USF&G's investment mix continues to reflect a
concentration in high quality fixed-income securities. Long-term
fixed maturities comprised 83 percent of total investments at
December 31, 1994, compared with 84 percent and 81 percent at
December 31, 1993 and 1992, respectively. Total investments have
decreased due to unrealized losses in the available for sale
portfolio, as well as the use of proceeds from sales and
repayments of fixed maturities to meet cash flow needs,
primarily from SPDA surrenders. The following table shows the
distribution of USF&G's investment portfolio.
At December 31
(dollars in millions) 1994 1993 1992
Total investments $10,421 $11,377 $11,346
Fixed Maturities:
Held to maturity 45% 41% 64%
Available for sale 38 43 17
Total fixed maturities 83 84 81
Common and preferred stocks 1 1 1
Short-term investments 4 3 5
Mortgage loans and real estate 10 9 9
Other invested assets 2 3 4
Total 100% 100% 100%
5.1. Net investment income
The following table shows the components of net investment income.
Years Ended December 31
(dollars in millions) 1994 1993 1992
Net Investment Income From:
Fixed maturities $669 $721 $739
Equity securities 7 9 12
Options - - 37
Short-term investments 13 9 27
Mortgage loans and real estate 58 41 50
Other, less expenses (4) (31) (48)
Total $743 $749 $817
Average Yields:
Total investments 6.9% 6.7% 7.3%
Fixed maturities 7.4% 7.7% 8.6%
Investment income for the period ended December 31, 1994
decreased $6 million or one percent, and $74 million or nine
percent when compared to the same periods of 1993 and 1992,
respectively. The decrease in investment income from fixed
maturities is primarily due to an investment base which declined
in order to meet SPDA surrenders and other cash flow needs. In
addition, given the relatively low long-term interest rate
environment, proceeds from sales, maturities or repayments of
fixed maturities during 1993 and 1994 were reinvested in fixed
maturities with lower yields. Overall, investment income in
fixed maturities decreased by seven percent and ten percent when
compared to 1993 and 1992, respectively. Although interest rates
have increased in 1994, new purchases of fixed maturities
totaling $693 million were not significant enough to affect the
average yield.
The increase in net investment income from short-term
investments since 1993 primarily reflects the higher short-term
interest rate environment. Real estate and mortgage loan
investment income has increased as a result of the sale of
timberland investments, prepayment of a mortgage loan, and a new
loan program whereby USF&G is investing a greater percentage of
capital in commercial mortgage loans versus equity real estate.
Other income less expenses improved primarily due to USF&G's
share of earnings from an equity interest in Renaissance
Reinsurance Ltd. ("Renaissance Re"), an offshore reinsurance
company. USF&G recorded $17 million of net investment income
from Renaissance Re during 1994 and $5 million during 1993.
Future income from the investment in Renaissance Re is subject
to volatility and exposure to catastrophe losses and other risks
inherent in the property/casualty reinsurance industry. Reduced
interest expense accrued on ceded premiums held by USF&G
accounts for the remainder of the improvement in other net
investment income.
5.2. Net realized gains on investments
The components of net realized gains include the following:
Years Ended December 31
(in millions) 1994 1993 1992
Net Gains From Sales:
Fixed maturities $ 3 $ 79 $179
Equities and options - 5 44
Real estate and other 12 6 16
Total net gains 15 90 239
Impairments:
Fixed maturities (1) (10) (20)
Equities - (8) -
Real estate and other (9) (66) (71)
Total impairments (10) (84) (91)
Net realized gains $ 5 $ 6 $148
Realized gains from real estate and other investments for 1994
resulted from the sale of timberland investments and USF&G's
portion of realized gains from investments in limited
partnerships. The $79 million in realized gains on fixed
maturities in 1993 is primarily due to USF&G's repositioning a
portion of its fixed maturity investments to more effectively
match the duration of its life insurance liabilities. The $179
million in realized gains in 1992 is the result of investment
sales to offset declines in capital and statutory surplus caused
by catastrophe losses in 1992. In 1992, USF&G realized $52
million of gains on equities and reallocated the proceeds to
relatively less volatile fixed maturities.
To reflect the impairments in the value of certain investments,
USF&G made provisions for impairment of $10 million in 1994
compared with $84 million in 1993 and $91 million in 1992. Real
estate impairments in 1994 primarily related to specific
properties whose recent appraisal values reflected other than
temporary impairments. Real estate impairments were taken in
1993 to write down to net realizable value properties that were
sold or expected to be sold in the near term. Real estate
impairments in 1992 reflect both changes in circumstances
related to specific properties and general real estate market
deterioration. The impairment of fixed maturities relates to
specific investments whose impairment is considered other than
temporary. The 1993 impairments on equities related to specific
equity holdings which were sold shortly thereafter.
5.3. Unrealized gains (losses)
The components of the changes in unrealized gains (losses)
were as follows:
Years Ended December 31
(in millions) 1994 1993 1992
Fixed maturities available for sale $(401) $222 $ -
Deferred policy acquisition
costs adjustment 63 (30) -
Equity securities 3 23 (39)
Options, foreign currency and other 1 4 21
Total $(334) $219 $(18)
USF&G adopted SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," in the fourth quarter of 1993.
SFAS 115 requires that the portion of fixed maturity investments
classified as "available for sale" be recorded at market value
with the unrealized gains/losses reported as a component of
shareholders' equity. Prior to the adoption of SFAS No. 115,
fixed maturities available for sale were recorded at lower of
cost or market with no effect on shareholders' equity.
Unrealized gains on fixed maturities at December 31, 1993
reflects the low interest rate environment of 1993. However,
rising interest rates during 1994 resulted in a decrease in the
unrealized gain on fixed maturities available for sale from $222
million at December 31, 1993 to an unrealized loss of $179
million at December 31, 1994. This was partially offset by a
related change in the DPAC adjustment from the prior year's
unrealized loss of $30 million to an unrealized gain of $33
million at December 31, 1994. This adjustment is made to reflect
assumptions about the effect of potential asset sales of fixed
maturities available for sale on future DPAC amortization.
5.4. Fixed maturity investments
The tables below detail the composition of the fixed maturity portfolio.
At December 31
1994
Net
Amortized Market Unrealized
(in millions) Cost Value (Loss)
Fixed Maturities:
Held to maturity $4,650 $4,275 $(375)
Available for sale 4,160 3,981 (179)
Total $8,810 $8,256 $(554)
At December 31
1993
Net
Amortized Market Unrealized
(in millions) Cost Value Gain
Fixed Maturities:
Held to maturity $4,661 $4,796 $135
Available for sale 4,681 4,903 222
Total $9,342 $9,699 $357
At December 31
1992
Net
Amortized Market Unrealized
(in millions) Cost Value Gain
Fixed Maturities:
Held to maturity $7,218 $7,290 $72
Available for sale 1,987 2,029 42
Total $9,205 $9,319 $114
At December 31
(dollars in millions) 1994 % 1993 % 1992 %
Corporate investment-grade bonds $5,017 57 $4,866 52 $3,103 34
Mortgage-backed securities 1,915 22 2,403 26 3,824 42
Asset-backed securities 931 10 1,149 12 995 11
U.S. Government bonds 277 3 308 3 554 6
High-yield bonds* 616 7 562 6 522 5
Tax-exempt bonds 47 1 48 1 71 1
Other 7 - 6 - 136 1
Total fixed maturities at
amortized cost 8,810 100 9,342 100 9,205 100
Total market value of
fixed maturities 8,256 9,699 9,319
Net unrealized gains (losses) $ (554) $ 357 $ 114
Percent market-to-amortized cost 94 104 101
* See Glossary of Terms
Increasing interest rates, which resulted in declining bond
prices, were responsible for the 10 percent decrease in the
fixed maturity portfolio's overall market-to-amortized cost
ratio from December 31, 1993. Interest rates rose an average 270
basis points during 1994.
Investments in mortgage-backed securities declined 20 percent
and 50 percent when compared with holdings at December 31, 1993
and 1992, respectively, due primarily to prepayments of the
underlying mortgages. While subject to prepayment risk, credit
risk related to USF&G's mortgage-backed securities portfolio at
December 31, 1994 is believed to be minimal since 99 percent of
such securities have AAA ratings or are collateralized by
obligations of the U.S. Government or its agencies.
Asset-backed securities declined 19 percent and six percent when
compared with holdings at December 31, 1993 and 1992,
respectively, as a result of sales and maturities. The net
proceeds from sales, maturities and prepayments in 1994 were
generally reinvested into corporate investment-grade bonds.
Investment-grade bonds, including debt obligations of the U.S.
Government and its agencies, comprised 93 percent of the
portfolio at December 31, 1994, compared with 94 percent and 93
percent at December 31, 1993 and 1992, respectively. The table
below shows the credit quality of the long-term fixed maturity
portfolio as of December 31, 1994.
Percent Market-
Amortized Market to-Amortized
(dollars in millions) Cost Percent Value Cost
U.S. Government and
U.S. Government
Agencies $2,075 23% $1,952 94%
AAA 1,368 16 1,324 97
AA 1,317 15 1,191 90
A 2,395 27 2,244 94
BBB 1,039 12 973 94
Below BBB 616 7 572 93
Total $8,810 100% $8,256 94%
USF&G's holdings in high-yield bonds comprised seven percent of
the total fixed maturity portfolio at December 31, 1994,
compared with six percent at both December 31, 1993 and 1992. Of
the total high-yield bond portfolio, 72 percent is held by the
life insurance segment, representing 10 percent of its total
investments. The table below illustrates the credit quality of
USF&G's high-yield bond portfolio at December 31, 1994.
Percent Market-
Amortized Market to-Amortized
(dollars in millions) Cost Percent Value Cost
BB $366 60% $337 92%
B 248 40 233 94
CCC and lower 2 - 2 100
Total $616 100% $572 93%
The information on credit quality in the preceding two tables is
based upon the higher of the rating assigned to each issue by
either Standard & Poor's or Moody's. Where neither Standard &
Poor's nor Moody's has assigned a rating to a particular fixed
maturity issue, classification is based on 1) ratings available
from other recognized rating services; 2) ratings assigned by
the NAIC; or 3) an internal assessment of the characteristics of
the individual security, if no other rating is available.
At December 31, 1994, USF&G's five largest investments in
high-yield bonds totaled $88 million in amortized cost and had a
market value of $72 million. None of these investments
individually exceeded $30 million. USF&G's largest single
high-yield bond exposure represented five percent of the
high-yield portfolio and 0.3 percent of the total fixed
maturity portfolio.
5.5. Real estate
The table below shows the components of USF&G's
real estate portfolio.
At December 31
(in millions) 1994 1993 1992
Mortgage loans $ 349 $ 302 $ 186
Equity real estate 760 793 926
Reserves (98) (108) (108)
Total $1,011 $ 987 $1,004
The increase in mortgage loans reflects USF&G's strategy of
maintaining a generally consistent level of real estate assets
while changing the mix to more traditional mortgage loans and
less equity real estate investments. This strategy is designed
to reduce risk and increase yields in the real estate portfolio.
USF&G's real estate investment strategy emphasizes
diversification by geographic region, property type and stage
of development. The diversification of USF&G's mortgage loan and
real estate portfolio is as follows:
At December 31
1994 1993 1992
Geographic Region:
Pacific/Mountain 34% 33% 33%
Midwest 20 18 19
Mid-Atlantic 17 19 17
Southeast 16 22 22
Southwest 8 5 6
Northeast 5 3 3
Type of Property:
Office 37% 37% 33%
Land 26 27 28
Apartments 24 19 16
Retail/other 7 6 10
Industrial 6 9 11
Timberland/agriculture - 2 2
Development Stage:
Operating property 75% 73% 72%
Land development 15 16 17
Land packaging 10 11 11
Real estate investments are generally appraised at least once
every three years. Appraisals are obtained more frequently under
certain circumstances such as when there have been significant
changes in property performance or market conditions. All of
these appraisals are performed by professionally certified
appraisers.
At December 31, 1994, USF&G's five largest real estate
investments had a book value of $325 million. The largest single
investment was a land development project located in San Diego,
California with a book value of $93 million, or nine percent of
the total real estate portfolio.
Mortgage loans and real estate investments not performing in
accordance with contractual terms, or performing significantly
below expectation, are categorized as nonperforming.
Nonperforming real estate investments at December 31, 1994
declined 16 percent and 40 percent when compared with December
31, 1993 and 1992, respectively. This decline in nonperforming
real estate was a result of the combination of the sale of a
nonperforming real estate property, write-downs on other
specific properties, and reclassifications.
The book value of the components of nonperforming real estate
are as follows:
At December 31
(dollars in millions) 1994 1993 1992
Restructured loans and investments* $ - $ 4 $ 4
Real estate held as in-substance
foreclosure* - 14 15
Real estate acquired through foreclosure
or deed-in-lieu of foreclosure* 117 121 190
Land investments* 56 57 71
Nonperforming equity investments* 35 53 66
Total nonperforming real estate $ 208 $ 249 $ 346
Real estate reserves $ (98) $ (108) $ (108)
Reserves/nonperforming real estate 47% 43% 31%
*See Glossary of Terms
Valuation allowances are established for impairments of mortgage
loans and equity real estate values based on periodic
evaluations of the operating performance of the properties and
their exposure to declines in value. The allowance totaled $98
million, or nine percent of the entire real estate portfolio, at
December 31, 1994, compared with $108 million, or 10 percent of
the total real estate portfolio, at both December 31, 1993 and
1992. The decrease in the reserves on real estate investments is
a result of applying the reserve to specific properties where
permanent impairment has occurred. In light of USF&G's current
plans with respect to the portfolio, management believes the
allowance at December 31, 1994 continues to adequately reflect
the current condition of the portfolio. Should deterioration
occur in the general real estate market or with respect to
individual properties in the future, additional reserves may be
required. Although USF&G anticipates that any sales of real
estate will be in an orderly fashion as and when market
conditions permit, if USF&G was required to dispose of a
significant portion of its real estate in the near term, it is
likely that it would recover amounts substantially less than the
related carrying values. Prospectively, efforts will continue to
reduce risk and increase yields in the real estate portfolio by
selling equity real estate when it is advantageous to do so and
reinvesting the proceeds in medium-term mortgage loans.
6. Financial Condition
6.1. Assets
USF&G's assets totaled $13.8 billion at December 31, 1994,
compared with $14.3 billion and $13.1 billion at the end of
1993 and 1992, respectively. The $561 million reduction in 1994
is primarily due to a $401 million reduction in the market value
of the fixed maturity investments classified as available for sale.
In addition, proceeds from the sale of investments were used to meet
cash flow needs.
6.2. Debt
USF&G's corporate debt totaled $586 million at
December 31, 1994, compared with $574 million at December 31,
1993 and 1992. The increase in corporate debt is mainly
attributable to foreign currency translation adjustments of $13
million from non-U.S. dollar denominated debt. As a result of
entering into forward contracts, there was no effect on net
income from the translation of non-U.S. dollar denominated debt.
Proceeds from two debt offerings in 1994 were used to retire
other portions of USF&G Corporation's debt. During the first
quarter of 1994, proceeds of $126 million from the issuance of
Zero Coupon Convertible Notes were used to redeem higher
interest bearing medium and long-term notes. USF&G also issued
$150 million 8 3/8% Senior Notes due 2001 in the second quarter
of 1994, the proceeds from which were used to repay a portion of
the short-term bank credit facility (see Section 7 of this
Analysis).
USF&G's real estate and other debt totaled $30 million at
December 31, 1994, compared with $44 million and $42 million at
December 31, 1993 and 1992, respectively. Real estate debt
increased as a result of the restructuring of a real estate
partnership where USF&G became a controlling general partner.
Shortly thereafter, USF&G defeased all but $9 million of such
debt. Real estate debt was reduced by $11 million as a result of
a deed-in-lieu of foreclosure, whereby property in which USF&G
has a partnership interest was conveyed back to the lender, and
further reduced by the early payoff of a $11 million real estate
loan.
6.3. Shareholders' equity
USF&G's shareholders' equity totaled
$1.4 billion at December 31, 1994, $1.5 billion at December 31,
1993 and $1.3 billion at December 31, 1992. The decrease was
primarily the result of the $401 million decline in unrealized
gains on fixed maturity investments available for sale reduced
by a $63 million change in the related life insurance segment's
DPAC adjustment. Net income of $232 million less common and
preferred dividends of $64 million partially offset the
reduction in equity.
6.4. Regulatory risk-based capital
The National Association of Insurance Commissioners ("NAIC")
has adopted model regulations which establish minimum capitalization
requirements based on a "risk-based capital" formula. These regulations,
which were first effective for property/casualty companies for the year
ended December 31, 1994 and for life insurance companies for the
year ended December 31, 1993, establish four levels at which
corrective action must be taken. These levels are: (1) the
"company action level," at which the company must submit a
comprehensive financial plan with specific proposals to address
certain financial problems; (2) the "regulatory action level,"
at which the appropriate regulatory authorities will perform a
financial analysis and order certain corrective actions; (3) the
"authorized control level," at which the regulatory authorities
may place the company under regulatory control; and (4) the
"mandatory control level," at which the regulatory authorities
must place the company under regulatory control.
Application of these levels depends upon the insurer's "adjusted
risk-based capital" as a percentage of the "minimum risk-based
capital." Risk-based capital is calculated after adjusting
capital for certain asset, credit, market, underwriting, off
balance sheet and other risks inherent in the assets,
liabilities and business of the insurer. Various levels of
corrective actions are required if the adjusted risk-based
capital is less than 200% of the authorized control level
risk-based capital.
USF&G Company had adjusted risk-based capital of $1.62 billion
as of December 31, 1994, which represented 382% of the
authorized control level risk-based capital. F&G Life had
adjusted risk-based capital of $427 million and $441 million as
of December 31, 1994 and 1993, respectively, which represented
422% and 396% of the authorized control level risk-based capital
as of those dates. Accordingly, as of the dates indicated, both
USF&G Company and F&G Life had adjusted risk-based capital above
the levels which would require corrective action.
6.5. Capital strategy
In January 1994, USF&G filed a shelf
registration statement with the Securities and Exchange
Commission. As of the time this registration statement went
into effect, USF&G had available $647 million of unissued debt,
preferred stock, common stock and warrants to purchase debt and
stock. This registration statement was reduced by $126 million
after the issuance of the Zero Coupon Convertible Notes and by
$149 million after the issuance of the 8 3/8% Senior Notes.
Subject to capital market conditions, USF&G plans to refinance
up to $300 million of debt over the next several years.
During 1994, USF&G called for redemption 2.4 million shares of
its Series C Preferred Stock. The remaining shares were called
for redemption effective February 24, 1995. As a result of these
calls, over 93 percent of the Series C Preferred Stock converted
into 14.7 million shares of common stock in accordance with the
terms of the Series C Preferred Stock. Pursuant to arrangements
the Corporation previously entered into with an unaffiliated
financial institution, USF&G sold 716,600 shares of common stock
to this institution to fund a portion of the cash redemptions
resulting from these calls.
In December 1994, USF&G entered into a definitive agreement to
purchase all of the outstanding stock of Victoria Financial
Corporation for approximately 4.1 million shares or $55.3
million of USF&G's common stock, depending on the average
market price of USF&G common stock over a specified period
preceding the closing of the transaction. Victoria is an
insurance holding company which specializes in nonstandard auto
coverage. Additionally, in January 1995, USF&G entered into a
definitive agreement to purchase all of the outstanding equity
of Discover Re Managers, Inc. for approximately 5.4 million
shares or $78.5 million of USF&G's common stock. Discover Re
provides insurance, reinsurance and related services to the
alternative risk transfer market. Both transactions are
expected to close in the second quarter of 1995.
As further explained in Section 7.2 of this Analysis, USF&G
negotiated a $400 million credit facility in 1994 to replace the
$700 million facility that was due to expire in March 1995.
7. Liquidity
Liquidity is a measure of an entity's ability to
secure enough cash to meet its contractual obligations and
operating needs. USF&G requires cash primarily to pay
policyholders' claims and benefits, debt and dividend
obligations, and operating expenses. USF&G's sources of cash
include cash flow from operations, credit facilities, marketable
securities and sales of other assets. Management believes that
internal and external sources of cash will continue to exceed
USF&G's short-term and long-term needs.
7.1. Cash flow
USF&G had cash flow from operating activities of
$115 million for the year ended December 31, 1994 and $87
million and $97 million for the years ended December 31, 1993
and 1992, respectively. The growth of cash flows from operating
activities for 1994 as compared to 1993 is due primarily to
large repayments made to reinsurers in 1993 because of new
accounting pronouncements that initiated the termination of
several reinsurance contracts. In addition, deposits and
withdrawals of universal life and investment contracts, which
for GAAP reporting purposes are considered financing activities,
had a net cash outflow of $418 million in 1994 as compared to
$196 million and $125 million for 1993 and 1992, respectively.
7.2. Credit facilities
At December 31, 1994, USF&G maintained a
$400 million committed credit facility with a group of foreign
and domestic banks. This represents the renegotiation of a prior
credit facility of $700 million at December 31, 1993. Management
elected to reduce the size of the facility due to the reduction
in borrowings against it and the Corporation's reestablished
access to capital markets. Borrowings outstanding under the
credit facility totaled $215 million at December 31, 1994 and
$375 million at both December 31, 1993 and 1992. The credit
agreement contains restrictive covenants pertaining to
indebtedness, tangible net worth, liens and other matters. USF&G
was in compliance with these covenants at December 31, 1994,
1993 and 1992.
In addition, at December 31, 1994, USF&G maintained a $100
million foreign currency credit facility and a $100 million
letter of credit facility. There were no borrowings on the
foreign currency credit facility or the letter of credit
facility at December 31, 1994.
7.3. Marketable securities
USF&G's fixed-income, equity security
and short-term investment portfolios are liquid and represent
substantial sources of cash. The market value of its
fixed-income securities was $8.3 billion at December 31, 1994
which represents 94 percent of its amortized cost. At December
31, 1994, equity securities, which are reported at market value
on the balance sheet, totaled $70 million. Short-term
investments totaled $421 million.
7.4. Liquidity restrictions
There are certain restrictions on
payments of dividends by insurance subsidiaries that may limit
USF&G's ability to receive funds from its subsidiaries. The
Maryland Insurance Code requires the Maryland Insurance
Commissioner's prior approval for any dividend payments during a
12 month period from a Maryland insurance subsidiary, such as
USF&G Company, to its holding company which exceeds 10 percent
of policyholders' surplus as of the prior calendar year end. In
addition, notice of any other dividend must be given to the
Maryland Insurance Commissioner prior to payment, and the
Commissioner has the right to prevent payment of such dividend
if it is determined that such payment could impair the insurer's
surplus or financial condition. Dividends of approximately $157
million are currently available for payment to USF&G Corporation
from USF&G Company during 1995 without prior regulatory
approval. Dividends paid to USF&G Corporation from USF&G Company
totaled $125 million in 1994, 1993 and 1992. USF&G's insurance
subsidiaries' admitted assets for statutory purposes included a
total of approximately $244 million in receivables from the
parent and affiliated companies.
7.5. Technology upgrades
USF&G has initiated a plan to upgrade
its information technology and convert its mainframe based
systems to a client server based system. During 1995, USF&G
plans to invest over $20 million in this project. Total
expenditures over the next three years on this project are
estimated to be approximately $50 million. USF&G's plan is to
recover this investment through future cost savings and
competitive advantages.
8. Regulation
USF&G's insurance subsidiaries are subject to
extensive regulatory oversight in the jurisdictions where they
do business. This regulatory structure, which generally operates
through state insurance departments, involves the licensing of
insurance companies and agents, limitations on the nature and
amount of certain investments, restrictions on the amount of
single insured risks, approval of policy forms and rates,
setting of capital requirements, limitations on dividends,
limitations on the ability to withdraw from certain lines of
business such as personal lines and workers' compensation, and
other matters. From time to time, the insurance regulatory
framework has been the subject of increased scrutiny. At any one
time there may be numerous initiatives within state legislatures
or state insurance departments to alter and, in many cases,
increase state authority to regulate insurance companies and
their businesses. Proposals to adopt a federal regulatory
framework have also been discussed. It is not possible to
predict the future impact of increasing state or potential
federal regulation on USF&G's operations. Additional
information regarding legal and regulatory contingencies may be
found in Note 13, "Legal Contingencies," to the consolidated
financial statements.
8.1. Proposition 103
In November 1988, voters in the State of
California passed Proposition 103, which required insurers doing
business in California to rollback most property/casualty
premium prices in effect between November 1988 and November 1989
to November 1987 levels, less an additional 20 percent discount,
unless an insurer could establish that such rate levels
threatened its solvency. In May 1989, the California Supreme
Court ruled that an insurer does not have to face insolvency in
order to qualify for an exemption from the rollback requirements
and is entitled to a "fair and reasonable return."
The California Insurance Department's authority to establish
regulations setting forth a basis for determining what
constitutes a "fair and reasonable return" has been the subject
of significant controversy. In August 1994, the California
Supreme Court issued its opinion in 20th Century Insurance
Company v. Garamendi, affirming the California Insurance
Department's authority to establish a broad industry-wide
formula for implementing Proposition 103. The 20th Century
Insurance Company subsequently settled the matter with the
California Insurance Department, and on February 22, 1995, the
United States Supreme Court denied the writ of certiorari filed
by the other litigants in the proceedings. It is not clear how
the current regulations adopted by the California Insurance
Department will apply to USF&G, and there are many issues which
remain unsettled. The range of liability to USF&G could be from
less than $10 million up to approximately $31 million,
including interest. The ultimate outcome of this issue is not
expected to have a material adverse effect on USF&G's results
of operations or financial position since any such liability is
not expected to materially exceed amounts already reserved.
8.2. Maine "Fresh Start" litigation
In 1987, the State of Maine
adopted workers' compensation reform legislation which was
intended to rectify historic rate inadequacies and encourage
insurance companies to reenter the Maine voluntary workers'
compensation market. This legislation, which was popularly known
as "Fresh Start," required the Maine Superintendent of Insurance
to annually determine whether the premiums collected for
policies written in the involuntary market and related
investment income were adequate on a policy-year basis. The
Superintendent was required to assess a surcharge on policies
written in later policy years if it was determined that rates
were inadequate. Assessments were to be borne by workers'
compensation policyholders, except that for policy years
beginning in 1989 the Superintendent could require insurance
carriers to absorb up to 50 percent of any deficits if the
Superintendent found that insurance carriers failed to make good
faith efforts to expand the voluntary market and depopulate the
residual market. Insurance carriers which served as servicing
carriers for the involuntary market would be obligated to pay 90
percent of the insurance industry's share. The Maine Fresh Start
statute requires the Superintendent to annually estimate each
year's deficit for seven years before making a final
determination with respect to that year.
In March 1993, the Superintendent affirmed a prior Decision and
Order (known as the "1992 Fresh Start Order") in which he found,
among other things, that there were deficits for the 1988, 1989
and 1990 policy years, and that insurance carriers had not made
a good faith effort to expand the voluntary market and
consequently were required to bear 50 percent of any deficits
relating to the 1989 and 1990 policy years. The Superintendent
further found that a portion of these deficits were attributable
to servicing carrier inefficiencies and poor investment
practices and ordered that these costs be absorbed by insurance
carriers. Also, in May 1993, the Superintendent found that
insurance carriers would be liable for 50 percent of any
deficits relating to the 1991 policy year (the "1993 Fresh Start
Order"), but indicated that he would make no further
determinations regarding the portions of any deficits
attributable to alleged servicing carrier inefficiencies and
poor investment practices until his authority to make such
determinations was clarified in the various suits involving
prior Fresh Start orders.
USF&G was a servicing carrier for the Maine residual market in
1988 through 1991. USF&G withdrew from the Maine voluntary
market and as a servicing carrier effective December 31, 1991.
USF&G joined in an appeal of the 1992 Fresh Start Order which
was filed April 5, 1993 in the Maine Superior Court. In
addition to The Hartford Accident and Indemnity Company and
USF&G, the National Council of Compensation Insurance ("NCCI")
and several other insurance companies which were servicing
carriers during this time frame have instituted similar appeals.
Similar appeals of the Superintendent's 1993 Fresh Start Order
have been filed by USF&G, the NCCI and several other servicing
carriers in the same court. The appeals of the 1993 Fresh Start
Order will be heard on a consolidated basis.
On October 17, 1994, the Superior Court of Maine upheld the
Superintendent's finding in the 1992 Fresh Start Order that the
insurance carriers failed to exercise their good faith best
efforts to expand the voluntary market and consequently were
required to bear 50 percent of the deficit relating to the 1989
and 1990 policy years. The Superior Court also held that the
Superintendent improperly held that $40 million of the deficit
should be attributed to the carriers due to servicing carrier
inefficiencies and poor investment practices. USF&G and the
other parties challenging the Superintendent's order have
appealed to the Maine Law Court, the highest court in Maine, the
Superior Court's ruling on the carriers' lack of good faith, and
the Superintendent may likewise appeal the Superior Court ruling
that it was improper to shift $40 million of the deficit to
carriers due to alleged inefficiencies and poor investment
practices.
Estimates of the potential deficits vary widely and are
continuously revised as loss and claims data matures. If the
Superintendent were to prevail on all issues, then the range of
ultimate liability for USF&G, based on the most recent estimates
provided by the Superintendent and the NCCI, respectively, could
range from approximately $12 million to approximately $21
million.
8.3. Involuntary market plans
Most states require insurers to
provide coverage for less desirable risks through participation
in mandatory programs. USF&G's participation in assigned risk
pools and similar plans, mandated now or in the future, creates
and is expected to create downward pressure on earnings.
8.4. Withdrawal from business lines
Some states have adopted
legislation or regulations restricting or otherwise limiting an
insurer's ability to withdraw from certain lines of business.
Such restrictions are most often found in personal lines and
workers' compensation insurance. They include prohibitions on
mid-term cancellations and limiting reasons based upon which an
insurer may non-renew policies, requirements for amendments to
underwriting standards, rates and policy forms to be approved by
state regulators, specifications of a maximum percentage of a
book of business which may be non-renewed within the state
within any 12 month period, and prohibitions on exiting a single
line of business within a state (thus requiring an insurer to
either continue an unprofitable line or give up all lines of
business and withdraw from a state entirely). Such restrictions
limit USF&G's ability to manage its exposure to unprofitable
lines and adversely affects earnings to the extent USF&G is
required to continue writing unprofitable business.
8.5. Guaranty funds
Insurance guaranty fund laws have been
adopted in most states to protect policyholders in case of an
insurer's insolvency. Insurers doing business in those states
can be assessed for certain obligations of insolvent companies
to policyholders and claimants. These assessments, under certain
circumstances, can be credited against future premium taxes. Net
of such tax credits, USF&G incurred $9 million of guaranty fund
expense in 1994 and $15 million and $13 million in 1993 and
1992, respectively.
Financial difficulties of certain insurance companies over the
past several years are expected to result in additional
assessments that could have a negative impact on future
earnings. State laws limit the amount of annual assessments
which are based on percentages (generally two percent) of
assessable annual premiums in the year of insolvency. The
ultimate amount of these assessments cannot be reasonably
estimated, but are not expected to have a material adverse
effect on USF&G's financial position.
8.6. NAIC proposals
The National Association of Insurance
Commissioners ("NAIC") has proposed several model laws and
regulations which are in varying stages of discussion. The NAIC
has adopted model regulations which establish minimum
capitalization requirements based on a "risk-based capital"
formula (refer to Section 6.4 of this Analysis). The NAIC has
also proposed a Model Investment Law and amendments to the Model
Holding Company System Regulatory Act. These model acts address
investments which are permissible for property/casualty and life
insurers to hold, and investments in subsidiaries and
affiliates, respectively. Adoption of these model laws is
targeted for 1995. It is not expected that the final adoption of
these regulations by the NAIC will result in any material
adverse effect on USF&G's liquidity or financial position.
8.7. National health care
President Clinton and Congress have
considered various proposals to enact a comprehensive national
health care system. Enactment of certain of these proposals
would result in the coordination of the medical payment system
for workers' compensation and the medical payments component of
automobile insurance within a reformed national health care
system or a merger of workers' compensation and automobile
medical coverage into a reformed health care system. Although
some form of national health care may be enacted, it is unclear
whether or to what extent such legislation will address
workers' compensation or personal automobile insurance. No
reliable prediction can be made at this time as to the ultimate
outcome of the legislative deliberations regarding national
health care reform or the effect such legislation may have on
USF&G.
8.8. Superfund
The Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), more commonly known
as "Superfund," is scheduled to be reauthorized in 1995.
Insurance companies, other businesses, environmental groups and
municipalities are advocating a variety of reform proposals to
revise the cleanup and liability provisions of CERCLA. No
reliable prediction can be made as to the ultimate outcome of
the legislative deliberations regarding the reauthorization of
CERCLA or the effect such revisions may have on USF&G.
8.9. Insurance regulatory information system
The NAIC's Insurance Regulatory Information System ("IRIS") ratios are
intended to assist state insurance departments in their review
of the financial condition of insurance companies operating
within their respective states. IRIS specifies eleven industry
ratios and establishes a "usual range" for each ratio.
Significant departure from a number of ratios may lead to
inquiries from state insurance regulators. As of December 31,
1994, USF&G was within the "usual range" for all IRIS ratios.
8.10. Taxation of deferred annuities
From time to time, various proposals have been considered by Congress, the
Office of Management and Budget and the Department of the Treasury to
include within current taxable income all or a portion of the
interest payments which accrue on certain deferred annuity
products, including some deferred annuity products sold by F&G
Life. Currently, such interest is not taxed until the time of
distribution. All such proposals have focused exclusively on
deferred annuities and have not included annuities issued in
connection with structured settlements of claims or on tax
sheltered annuities. No reliable prediction can be made at this
time as to the outcome of any such proposals or the effect such
proposals may have on F&G Life.
8.11. Federal antitrust legislation
Congress has considered various proposals to revise
the McCarran-Ferguson Act of 1945. This act has historically
provided the insurance industry with broad antitrust exemptions.
Various proposals have been made which would repeal many of
those exemptions, although "safe harbors" may be preserved for
data collection, loss development, common policy forms, residual
market pooling arrangements and other areas essential to the
property/casualty insurance industry. No reliable prediction
can be made at this time as to the outcome of any of these
proposals or the effect they may have on USF&G.
9. Income Taxes
Effective January 1, 1993, USF&G changed its
method of accounting for income taxes as required by SFAS No.
109, "Accounting for Income Taxes." This standard requires
recognition of future tax benefits attributable to net
operating loss carry-forwards ("NOLs") and to deductible
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. A valuation allowance is required
if it is more likely than not that some or all of the deferred
tax asset may not be realized. The valuation allowance is
established based on an evaluation of positive and negative
evidence as to the likelihood of realizing some or all of the
deferred tax assets.
At December 31, 1993, USF&G had recorded a $119 million net
deferred tax asset, as it was the opinion of management it was
more likely than not that there would be sufficient future
taxable income to result in the realization of this benefit. The
primary negative evidence that existed at December 31, 1993 was
the cumulative pretax net losses for the years 1991 through
1993. The primary positive evidence at that time was forecasted
taxable income sufficient to recover a portion of the tax
benefit within three to five years and a tax planning strategy
to generate future taxable income to utilize such NOLs, if
necessary.
At December 31, 1994, the net deferred tax asset increased to
$416 million, primarily based on the increasing weight of
positive evidence which resulted in a $203 million net decrease
in the valuation allowance. Management reviews the valuation
allowance on a quarterly basis. Throughout 1994, the weight of
evidence became increasingly more positive as the core earnings
trend improved each quarter. As 1994 progressed, the negative
evidence of cumulative losses which were caused by 1991 results
became increasingly less of a factor. By the end of 1994,
cumulative pretax net income was positive from 1992 through
1994. Given the substantially reduced degree of negative
evidence and management's increased confidence in the
sustainability of the improved earnings of the core insurance
segments and, therefore, its enhanced ability to forecast future
taxable income, it became appropriate to reduce the valuation
allowance beginning in the second quarter of 1994. The largest
adjustment to the valuation allowance occurred in the fourth
quarter of 1994 as the Corporation continued to achieve its
forecasted results. This coincided with the elimination of the
negative evidence of three-year cumulative net losses and with
the completion of the Corporation's budgeting and mid-range
forecasting process, allowing for more reliable projections of
future taxable income.
USF&G has NOLs of $750 million which expire as follows: $147
million in 2005 and $603 million in 2006. The NOLs available for
future utilization were generated primarily by the noninsurance
businesses of USF&G and nonrecurring charges related to the
business restructuring program. A majority of these noninsurance
businesses that caused a significant drain on prior earnings
have been sold, divested or liquidated by USF&G.
Future levels of net income and taxable income from the core
insurance operations are dependent on several factors, including
general economic and specific insurance industry conditions,
competitive pressures, catastrophe losses, adverse involuntary
loss experience, etc. Because of these risk factors, as well as
other factors beyond the control of management, no assurance can
be given that sufficient taxable income will be generated to
utilize the NOLs or otherwise realize the deferred tax assets.
However, management has considered these factors in reaching
its conclusion that it is more likely than not that there will
be sufficient future taxable income to result in the realization
of the recorded $416 million deferred tax asset. This
realization is dependent, in whole or in part, on USF&G+s
ability to generate future taxable income from ordinary and
recurring operations. Based on USF&G's evaluations,
approximately $1.2 billion of future taxable income would need
to be generated to realize the $416 million deferred tax asset.
If 1994 pretax net income before realized gains and facilities
exit costs of $129 million is assumed to be an average taxable
income for future years, then USF&G will be able to realize
enough income within nine years to fully recognize the net
deferred tax asset. This is well within the tax carry-forward
period. Further, management's three to five year forecast, which
reflects management's expectations as to earnings growth,
indicates sufficient future taxable income to, more likely than
not, realize the recorded asset.
USF&G's tax returns have not been reviewed by the Internal
Revenue Service ("IRS") since 1989 and the availability of the
NOLs could be challenged by the IRS upon review of returns
through 1993. Management believes, however, that IRS challenges
that would limit the recoverability of $416 million in tax
benefits are unlikely, and adjustments to the tax liability, if
any, for years through 1994 will not have a material adverse
effect on USF&G's financial position.
10. Glossary of Terms
Account value: Deferred annuity cash value available to
policyholders before the assessment of surrender charges.
Catastrophe losses: Property/casualty insurance claim losses
resulting from a sudden calamitous event, such as a severe
storm, are categorized as "catastrophes" when they meet certain
severity and other criteria determined by a national organization.
Expense ratio: The ratio of underwriting expenses to net
premiums written, if determined in accordance with statutory
accounting practices ("SAP"), or the ratio of underwriting
expenses (adjusted by deferred policy acquisition costs) to
earned premiums, if determined in accordance with GAAP.
High-yield bonds: Fixed maturity investments with a credit
rating below the equivalent of Standard & Poor's "BBB." In
addition,nonrated fixed maturities that, in the judgment of USF&G, have
credit characteristics similar to those of a fixed maturity
rated below BBB are considered high-yield bonds.
Involuntary pools and associations: Property/casualty insurance
companies are required by state laws to participate in a number
of assigned risk pools, automobile reinsurance facilities, and
similar mandatory plans ("involuntary market plans"). These
plans generally require coverage of less desirable risks,
principally for workers' compensation and automobile liability,
that do not meet the companies' normal underwriting standards. As
mandated by legislative authorities, insurers generally participate
in such plans based upon their shares of the total writings of certain
classes of insurance.
Liquid assets to surrender value: Liquid assets (publicly
traded bonds, stocks, cash and short-term investments) divided by
surrenderable policy liabilities, net of surrender charges. A
measure of an insurance company's ability to meet liquidity
needs in case of annuity surrenders.
Loss ratio: The ratio of incurred losses and loss expenses to
earned premiums, determined in accordance with SAP or GAAP, as
applicable. The difference between SAP and GAAP relates to
deposit accounting for GAAP related to certain financial
reinsurance assumed.
Nonperforming real estate: Mortgage loans and real estate
investments that are not performing in accordance with their
contractual terms or that are performing at an economic level
significantly below expectations. Included in the table of
nonperforming real estate are the following terms:
Deed-in-lieu of foreclosure: Real estate to which title has
been obtained in satisfaction of a mortgage loan receivable in
order to prevent foreclosure proceedings.
In-substance foreclosure: Collateral for a mortgage loan is
in-substance foreclosed when the borrower has little or no
equity in the collateral, does not have the ability to repay the loan,
and has effectively abandoned control of the collateral to USF&G.
Land investments: Land investments that are held for future
development where, based on current market conditions, returns
are projected to be significantly below original expectations.
Nonperforming equity investments: Equity investments with cash
and GAAP return on book value less than five percent, but
excluding land investments.
Restructured loans and investments: Loans and investments
whose terms have been restructured as to interest rates,
participation, and/or maturity date such that returns are
projected to be significantly below original expectations.
Policyholders' surplus: The net assets of an insurer as
reported to regulatory agencies based on accounting practices
prescribed or permitted by the National Association of Insurance
Commissioners and the state of domicile.
Premiums earned: The portion of premiums written applicable to
the expired period of policies.
Premiums written: Premiums retained by an insurer, after the
assumption and cession of reinsurance.
Underwriting results: Property/casualty pretax operating
results excluding investment results, policyholders' dividends,
and noninsurance activities; generally, premiums earned less losses
and loss expenses incurred and "underwriting" expenses incurred.
USF&G Corporation
Eleven-Year Summary of Selected Financial Data
Years Ended December 31
(dollars in millions
except per share data) 1994 1993 1992 1991
Consolidated Results
Premiums earned $ 2,435 $ 2,456 $ 2,637 $ 3,187
Revenues 3,221 3,249 3,660 4,172
Income (loss) from continuing
operations before cumulative
effect of adopting new
accounting standards 232 127 35 (144)
Income (loss) from discontinued
operations - - (7) (32)
Cumulative effect of adopting
new accounting standards - 38 - -
Net income (loss) 232 165 28 (176)
Per Share Results
Income (loss) from continuing
operations before cumulative
effect of adopting new
accounting standards $ 2.14 $ .93 $ (.16) $ (2.15)
Income (loss) from discontinued
operations - - (.08) (.38)
Cumulative effect of adopting
new accounting standards - .45 - -
Net income (loss) 2.14 1.38 (.24) (2.53)
Book value 10.17 11.66 8.87 9.53
Investment Results
Net investment income $ 743 $ 749 $ 817 $ 877
Realized gains (losses) 5 6 148 38
Change in unrealized gains
(losses) (334) 219 (18) 37
Financial Position
Assets $13,774 $14,335 $13,134 $ 14,486
Investments 10,421 11,377 11,346 12,167
Corporate debt 586 574 574 617
Real estate and other debt 30 44 42 60
Shareholders' equity 1,369 1,511 1,270 1,323
Common Stock
Market high $16 1/8 $19 5/8 $ 15 $ 12 1/2
Market low 11 11/16 11 1/8 7 1/8 5 5/8
Market close 13 5/8 14 3/4 12 3/8 7 1/4
Cash dividends declared .20 .20 .20 .20
Common shares outstanding 95,616,460 85,009,482 84,512,758 84,273,327
Property/Casualty Insurance
Premiums earned $ 2,283 $ 2,327 $ 2,533 $ 3,018
Net income (loss) 493 281 193 (40)
Statutory premiums written 2,312 2,429 2,420 3,032
Statutory loss ratio 73.1 75.4 82.0 84.1
Statutory expense ratio 35.0 33.7 34.9 33.1
Statutory combined ratio 108.1 109.1 116.9 117.2
Life Insurance
Sales $ 286 $ 205 $ 155 $ 280
Premium income 152 129 104 169
Net income (loss) 12 10 (5) 31
Noninsurance Operations
Revenues $ 90 $ 5 $ 17 $ 38
Net loss (273) (126) (160) (167)
1990 1989 1988 1987 1986 1985 1984
$ 3,516 $ 3,697 $ 3,791 $ 3,880 $ 3,619 $ 3,029 $ 2,273
4,171 4,636 4,548 4,491 4,310 3,587 2,628
(433) 148 251 263 277 (109) (64)
(136) (31) (20) 2 (2) 1 -
- - - - - - -
(569) 119 247 279 296 (108) (64)
$ (5.37) $ 1.58 $ 2.91 $ 3.41 $ 4.14 $ (1.83) $ (1.18)
(1.62) (.37) (.25) .03 (.03) .02 -
- - - - - - -
(6.99) 1.24 2.85 3.63 4.43 (1.81) (1.18)
11.97 21.60 22.57 19.53 20.19 18.91 19.08
$ 929 $ 911 $ 795 $ 699 $ 619 $ 392 $ 369
(354) (36) (92) (133) 53 150 (23)
(30) 32 185 (282) (105) 118 (10)
$13,902 $13,551 $12,326 $10,158 $ 8,934 $ 7,672 $ 6,099
11,221 10,894 9,775 7,892 6,824 5,688 4,142
659 543 448 407 348 197 146
120 87 41 22 3 3 3
1,205 2,007 2,054 1,724 1,576 1,214 1,045
$30 3/8 $ 34 $34 3/8 $48 3/4 $46 3/4 $41 1/2 $30 7/8
7 28 1/4 28 1/2 26 1/4 36 1/4 25 5/8 17 5/8
7 1/2 29 28 1/2 28 3/8 39 3/4 39 27 1/2
2.44 2.80 2.64 2.48 2.32 2.20 2.08
83,958,222 83,664,506 82,155,209 78,027,916 68,153,799 64,206,487 54,758,184
$ 3,330 $ 3,532 $ 3,613 $ 3,746 $ 3,539 $ 2,962 $ 2,215
(192) 200 318 331 310 (116) (69)
3,631 3,698 3,892 3,845 3,696 3,151 2,318
81.9 76.5 73.1 73.2 79.1 90.7 90.5
32.9 32.8 31.1 30.1 29.1 30.0 31.4
114.8 109.3 104.2 103.3 108.2 120.7 121.9
$ 1,054 $ 960 $ 1,077 $ 278 $ 83 $ 119 $ 80
186 165 178 133 79 67 58
(16) 31 14 37 20 27 18
$ 22 $ 84 $ 114 $ 112 $ 8 $ 41 $ 33
(361) (112) (85) (88) (86) (23) (13)
USF&G Corporation
Consolidated Statement of Operations
Years Ended December 31
(dollars in millions except
per share data) 1994 1993 1992
Revenues
Premiums earned $ 2,435 $ 2,456 $ 2,637
Net investment income 743 749 817
Other 38 38 58
Revenues before net realized
gains 3,216 3,243 3,512
Net realized gains on
investments 5 6 148
Total revenues 3,221 3,249 3,660
Expenses
Losses, loss expenses and
policy benefits 2,079 2,153 2,465
Underwriting, acquisition and
operating expenses 971 956 1,069
Interest expense 37 41 40
Restructuring charges - - 51
Facilities exit costs 183 - -
Total expenses 3,270 3,150 3,625
Income (loss) from continuing
operations before income taxes
and cumulative effect of
adopting new accounting standards (49) 99 35
Provision for income taxes (benefit) (281) (28) -
Income from continuing operations
before cumulative effect of
adopting new accounting standards 232 127 35
Loss from discontinued operations - - (7)
Income (loss) from cumulative effect
of adopting new accounting standards:
Income taxes - 90 -
Postretirement benefits - (52) -
Net income $ 232 $ 165 $ 28
Preferred stock dividend
requirements 46 48 48
Net income (loss) available
to common stock $ 186 $ 117 $ (20)
Primary Earnings Per Common Share
Income (loss) from continuing
operations before cumulative
effect of adopting new
accounting standards $ 2.14 $ .93 $ (.16)
Loss from discontinued operations - - (.08)
Income from cumulative effect
of adopting new accounting
standards - .45 -
Net income (loss) $ 2.14 $ 1.38 $ (.24)
Fully Diluted Earnings Per Common Share
Income (loss) from continuing
operations before cumulative
effect of adopting new
accounting standards $ 1.86 $ .98 $ (.16)
Loss from discontinued operations - - (.08)
Income from cumulative
effect of adopting new
accounting standards - .34 -
Net income (loss) $ 1.86 $ 1.32 $ (.24)
Weighted average common shares
outstanding:
Primary 86,955,992 84,780,283 84,355,431
Fully diluted 118,634,801 112,692,855 84,355,431
See Notes to Consolidated Financial Statements.
USF&G Corporation
Consolidated Statement of Financial Position
At December 31
(dollars in millions
except per share data) 1994 1993 1992
Assets
Investments:
Fixed maturities:
Held to maturity, at amortized cost
(market, 1994, $4,275; 1993, $4,796;
1992, $7,290) $ 4,650 $ 4,661 $ 7,218
Available for sale, at market* (cost, 1994,
$4,160; 1993, $4,681; market, 1992, $2,029) 3,981 4,903 1,987
Common stocks, at market (cost, 1994, $51;
1993, $80; 1992, $162) 44 66 124
Preferred stocks, at market (cost, 1994, $26;
1993, $23; 1992, $24) 26 23 29
Short-term investments 421 322 518
Mortgage loans 349 302 186
Real estate 662 685 818
Other invested assets 288 415 466
Total investments 10,421 11,377 11,346
Cash 67 17 25
Accounts, notes and other receivables 697 656 725
Reinsurance receivables 554 573 -
Servicing carrier receivables 706 719 -
Deferred policy acquisition costs 495 435 466
Other assets 834 558 572
Total assets $13,774 $14,335 $ 13,134
Liabilities
Unpaid losses, loss expenses and
policy benefits $ 9,904 $10,302 $ 9,436
Unearned premiums 931 917 770
Corporate debt 586 574 574
Real estate and other debt 30 44 42
Other liabilities 954 987 1,042
Total liabilities 12,405 12,824 11,864
Shareholders' Equity
Preferred stock, par value $50.00
(12,000,000 shares authorized;
shares issued, 1994, 6,627,896; 1993,
9,099,910; 1992, 9,100,000) 331 455 455
Common stock, par value $2.50
(240,000,000 shares authorized;
shares issued, 1994, 95,616,460; 1993,
85,009,482; 1992, 84,512,758) 239 212 211
Paid-in capital 1,062 963 957
Net unrealized gains (losses) on
investments and foreign currency (144) 190 (29)
Minimum pension liability (63) (85) -
Retained earnings (deficit) (56) (224) (324)
Total shareholders' equity 1,369 1,511 1,270
Total liabilities and shareholders' equity $13,774 $14,335 $ 13,134
* 1992 amounts are at amortized cost (See Note 1.3).
See Notes to Consolidated Financial Statements.
USF&G Corporation
Consolidated Statement of Cash Flows
Years Ended December 31
(in millions) 1994 1993 1992
Operating Activities
Direct premiums collected $ 1,952 $ 2,050 $ 2,312
Net investment income collected 744 770 841
Direct losses, loss expenses and
policy benefits paid (1,849) (1,890) (2,114)
Net reinsurance activity 22 (114) (106)
Underwriting and operating expenses paid (761) (750) (826)
Interest paid 31 41 43
Income taxes paid (9) (3) (9)
Other items, net (15) (17) (42)
Net cash provided from continuing operations 115 87 99
Net cash used in discontinued operations - - (2)
Net cash provided from operating activities 115 87 97
Investing Activities
Net sales and maturities of short-term
investments (100) 197 61
Purchases of fixed maturities held to maturity (400) (1,912) (6,945)
Sales of fixed maturities held to maturity 65 462 1,116
Maturities/repayments of fixed maturities
held to maturity 347 941 323
Purchases of fixed maturities available for
sale (293) (1,203) (458)
Sales of fixed maturities available for sale 326 1,252 4,796
Repayments of fixed maturities available for
sale 474 308 772
Purchases of equities and other investments (433) (255) (438)
Sales, maturities and repayments of equities
and other investments 482 398 842
Sales of subsidiaries - - 17
Purchases of property and equipment (31) (28) (12)
Disposals of property and equipment 4 4 7
Net investing activities of discontinued
operations - - 2
Net cash provided from investing activities 441 164 83
Financing Activities
Deposits for universal life and investment
contracts 246 168 164
Withdrawals of universal life and investment
contracts (664) (364) (289)
Net short-term repayments (172) - (1)
Long-term borrowings 270 - -
Repayments of long-term borrowings (121) (3) (53)
Issuances of common stock 14 6 3
Redemptions of preferred stock (13) - -
Cash dividends paid to shareholders (66) (66) (66)
Net cash used in financing activities (506) (259) (242)
Increase (decrease) in cash 50 (8) (62)
Cash at beginning of year 17 25 87
Cash at end of year $ 67 $ 17 $ 25
See supplemental cash flow information at Note 1.12.
See Notes to Consolidated Financial Statements.
USF&G Corporation
Consolidated Statement of Shareholders' Equity
Years Ended December 31
(in millions except per share data) 1994 1993 1992
Preferred Stock
Balance at beginning of year $ 455 $ 455 $ 455
Par value of shares issued:
Series C shares converted to common shares (111) - -
Series C shares redeemed (13) - -
Balance at end of year 331 455 455
Common Stock
Balance at beginning of year 212 211 211
Par value of shares issued 4 1 -
Par value of shares issued for conversion
of Series C shares 23 - -
Balance at end of year 239 212 211
Paid-In Capital
Balance at beginning of year 963 957 955
Excess of proceeds over par value of
shares issued 13 6 2
Excess of proceeds over par value of
Series C shares converted 86 - -
Balance at end of year 1,062 963 957
Net Unrealized Gains (Losses) on Investments
and Foreign Currency
Balance at beginning of year 190 (29) (11)
Net change in unrealized gains (losses) (334) 219 (18)
Balance at end of year (144) 190 (29)
Minimum Pension Liability
Balance at beginning of year (85) - -
Change in unfunded accumulated benefits 22 (85) -
Balance at end of year (63) (85) -
Retained Earnings (Deficit)
Balance at beginning of year (224) (324) (287)
Net income 232 165 28
Common stock dividends declared
(per share, 1994, 1993, and 1992, $.20) (18) (17) (17)
Preferred stock dividends declared
(per share, 1994, 1993 and 1992,
Series A, $4.10, Series B,
$10.25, Series C, $5.00) (46) (48) (48)
Balance at end of year (56) (224) (324)
Total shareholders' equity $1,369 $1,511 $1,270
See Notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies
1.1. Basis of presentation
The consolidated financial statements are prepared
in accordance with generally accepted accounting principles
("GAAP"). These statements include the accounts of USF&G
Corporation and its subsidiaries ("USF&G," or "the
Corporation"). Intercompany transactions are eliminated in
consolidation. Certain prior year amounts have been reclassified
to conform to the 1994 presentation.
1.2. Permitted statutory accounting practices
Reporting practices for insurance subsidiaries prescribed or permitted
by state regulatory authorities (statutory accounting) differ from
GAAP. Statutory amounts for USF&G's insurance operations are as
follows:
Years Ended December 31
(in millions) 1994 1993 1992
Statutory Net Income:
Property/casualty insurance $ 167 $ 199 $ 216
Reinsurance subsidiaries and affiliates 3 1 1
Life insurance 30 5 23
At December 31
(in millions) 1994 1993 1992
Statutory Surplus:
Property/casualty insurance* $1,566 $1,541 $1,467
Reinsurance subsidiaries and affiliates 211 147 152
Life insurance 326 316 310
*This amount includes the surplus of the life insurance
subsidiary and certain reinsurance subsidiaries and affiliates.
USF&G's primary insurance subsidiaries, United States Fidelity
and Guaranty Company ("USF&G Company") and Fidelity and Guaranty
Life Insurance Company ("F&G Life"), are domiciled in the State
of Maryland and prepare their statutory financial statements in
accordance with accounting practices prescribed or permitted by
the Maryland Insurance Administration. Prescribed statutory
accounting practices include state laws, regulations and general
administrative rules issued by the State of Maryland as well as
a variety of publications and manuals of the National
Association of Insurance Commissioners ("NAIC"). Permitted
statutory accounting practices encompass all accounting
practices not so prescribed.
Property/Casualty Insurance: USF&G Company received written
approval from the Maryland Insurance Administration to extend
the required disposal period for real property acquired as
security for loans or other obligations. Under the current
Maryland Insurance Code, these assets are required to be
disposed of within five years from the date of acquisition. The
Maryland Insurance Administration extended this time period for
certain properties up to no later than December 31, 1997. As of
December 31, 1994, this permitted transaction increased
statutory surplus by $19 million over what it would have been
had prescribed accounting practices been followed.
Life Insurance: F&G Life has received permission from the
Maryland Insurance Administration to reduce non-admitted assets
by the associated asset valuation reserve subcomponent ending
balance. As of December 31, 1994, this permitted accounting
practice had the effect of increasing statutory surplus by $15
million over what it would have been had prescribed accounting
practices been followed.
Since Maryland does not specifically prescribe by law or
regulation reserves for universal life policies or group
annuities, F&G Life follows reserving practices which are
permitted by the State of Maryland. These practices are as
follows:
Universal Life: For older generation universal life ("UL")
policies, the full account value is held as a reserve. For newer
generation universal life policies, reserves are held based on a
calculation according to the NAIC UL Model Regulation, which has
been adopted by many states. The reserves calculated according
to the NAIC UL Model Regulation equal the account value at the
end of the surrender charge period which varies from 8 to 15
years.
Group Annuities: Many of the group annuities are used to fund
qualified pension and/or profit sharing plans. For these
annuities, the funds are not allocated to individual
participants. The full account value is held as the reserve for
these annuities. For the group annuities where the funds and/or
benefits are allocated to the individual certificate holder,
reserves are calculated according to the laws prescribed for
individual annuities.
1.3. Investments
Fixed Maturities: USF&G classifies fixed
maturities as "held to maturity" if it has both the positive
intent and ability to hold the securities until maturity or near
enough to maturity such that interest rate risk is substantially
eliminated as a pricing factor. Fixed maturities held to
maturity are carried at amortized cost. Changes in the market
values of these investments are generally not recognized in the
financial statements. Specific write-downs are taken when an
impairment is deemed other than temporary.
Fixed maturities that are bought and held principally for the
purpose of selling them in the near term are classified as
"trading securities." USF&G has no securities classified as
trading securities.
Fixed maturities not classified as either "held to maturity" or
"trading securities" are classified as "available for sale."
These securities are held for an indefinite period of time and
may be sold in response to changes in interest rates and the
yield curve, prepayment risk, liquidity needs, or other factors.
Effective December 31, 1993, upon the adoption of Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," available
for sale fixed maturities are carried at market value, with
unrealized gains and losses recorded as a separate component of
shareholders' equity. Unrealized gains or losses on fixed
maturities available for sale are offset by an adjustment to
life insurance deferred policy acquisition costs which is made
on a proforma basis as if the unrealized gains or losses on
those assets which match certain life insurance liabilities were
realized. At December 31, 1992, before adoption of SFAS No. 115,
fixed maturities available for sale were carried at the lower of
aggregate amortized cost or market value. Market value exceeded
amortized cost at December 31, 1992; therefore, there were no
unrealized losses reported in shareholders' equity.
Equity Securities and Options: Investments in common and
preferred stocks are carried at market value with the resulting
unrealized gains or losses reported directly in shareholders'
equity. In 1992 premiums received on options written were
recorded as liabilities. The premiums paid on options purchased
were recorded as assets. Outstanding option positions were
carried at market value, and the resulting unrealized gains or
losses were reported directly in shareholders' equity. There
were no outstanding options at December 31, 1994 and 1993.
Securities Lending: USF&G participates in a securities lending
program where certain securities from its portfolio are loaned
to other institutions for short periods of time. A fee is paid
to USF&G by the borrower. Collateral that exceeds the market
value of the loaned securities is invested by the lending agent
to represent USF&G's interest. USF&G's interest in securities
lending is reported in other invested assets. USF&G's invested
assets and other liabilities include $6 million, $141 million
and $206 million at December 31, 1994, 1993 and 1992,
respectively, related to its interest in the securities lending
program.
Mortgage Loans and Real Estate: Mortgage loans are carried at
unpaid principal balances. Real estate investments are reported
at cost adjusted for equity participation. Real estate acquired
through foreclosure or deed-in-lieu of foreclosure is initially
recorded at estimated market value. Valuation allowances are
provided for probable impairments in estimated net realizable
value based on periodic evaluations. Specific write-downs are
taken when an impairment is deemed other than temporary.
Interest and Dividend Income: Interest on fixed maturity
investments is recorded as income when earned and is adjusted
for any amortization of purchase premium or discount. Dividends
on equity securities are recorded as income on ex-dividend
dates.
Realized Gains and Losses: Realized gains and losses on
the sale of investments are determined based on specific cost.
Realized losses are also recorded when an investment's net
realizable value is below cost and the decline is considered
other than temporary.
1.4. Recognition of premium revenues
Property/Casualty Insurance: Property/casualty insurance premiums
are earned principally on a pro rata basis over the lives of the policies
and include accruals for ultimate premium revenue anticipated
under auditable and retrospectively rated policies. Unearned
premiums represent the portion of premiums written applicable to
the unexpired terms of policies in force. Unearned premiums also
include estimated and unbilled premium adjustments.
Life Insurance: Premiums on life insurance policies with fixed
and guaranteed premiums and benefits, and premiums on annuities
with significant life contingencies are recognized when due.
Universal life policies and annuity contracts are issued on both
a single premium and recurring premium basis. Revenues for these
contracts consist of policy charges assessed against benefit
account balances during the period for the cost of insurance,
policy administration and surrenders.
1.5. Unpaid losses, loss expenses and policy benefits
Property/Casualty Insurance: The liability for unpaid
property/casualty insurance losses and loss expenses is based on
an evaluation of reported losses and on estimates of incurred
but unreported losses. The reserve liabilities are determined
using adjusters' individual case estimates and statistical
projections. The liability was reported net of estimated salvage
and subrogation recoverables of $116 million, $139 million and
$138 million at December 31, 1994, 1993 and 1992, respectively.
Adjustments to the liability based on subsequent developments or
other changes in the estimate are reflected in results of
operations in the period in which such adjustments become known.
Certain liabilities for unpaid losses and loss expenses related
to workers' compensation coverage are discounted to present
value. The carrying amount of such workers' compensation
liabilities, net of reinsurance and net of discount, was $1,598
million, $1,752 million and $1,798 million at December 31, 1994,
1993 and 1992, respectively. Interest rates used to discount
these liabilities generally ranged from 3 percent to 5 percent.
Life Insurance: Ordinary life insurance reserves are computed
under the net level premium method using assumptions for future
investment yields, mortality and withdrawal rates. These
assumptions reflect USF&G's experience, modified to reflect
anticipated trends, and provide for possible adverse deviation.
Reserve interest rate assumptions are graded and range from 4.25
percent to 8.25 percent. Universal life and deferred annuity
reserves are computed on the retrospective deposit method,
which produces reserves equal to the cash value of the
contracts. Such reserves are not reduced for charges that would
be deducted from the cash value of policies surrendered.
Reserves on immediate annuities with guaranteed payments are
computed on the prospective deposit method, which produces
reserves equal to the present value of future benefit payments.
1.6. Deferred policy acquisition costs
Acquisition costs, consisting of commissions, brokerage, and other
expenses incurred at policy issuance, are generally deferred. Anticipated
losses, loss expenses, policy benefits and remaining costs of
servicing the policies are considered in determining the amount
of costs to be deferred. Anticipated investment income is
considered in determining whether a premium deficiency exists
related to short-duration contracts. Amortization of deferred
policy acquisition costs totaled $653 million, $673 million and
$738 million for the years ended December 31, 1994, 1993 and
1992, respectively, and are included in underwriting,
acquisition and operating expenses in the Consolidated Statement
of Operations.
Property/Casualty Insurance: Property/casualty insurance
acquisition costs are amortized over the period that related
premiums are earned.
Life Insurance: Life insurance acquisition costs are amortized
based on assumptions consistent with those used for computing
policy benefit reserves. Acquisition costs on ordinary life
business are amortized over their assumed premium paying
periods. Universal life and investment annuity acquisition costs
are amortized in proportion to the present value of their
estimated gross profits over the products' assumed durations,
which are regularly evaluated and adjusted as appropriate.
1.7. Property and equipment
Property and equipment is carried at cost less accumulated depreciation.
At December 31, 1994, 1993 and 1992, $186 million, $194 million and
$200 million, respectively, of property and equipment was included in
other assets. Depreciation is computed on the straight-line basis over
the estimated useful lives of the assets. For the years ended
December 31, 1994, 1993 and 1992, depreciation expense of $23
million, $21 million and $25 million, respectively, is included
in underwriting, acquisition and operating expenses.
1.8. Foreign currency translation
The functional currency for USF&G's foreign operations is the
applicable local currency. Foreign currency balance sheet accounts
are translated to U.S. dollars using exchange rates in effect at the
balance sheet date. Revenue and expense accounts are translated using
the average exchange rates prevailing during the year. The
unrealized gains or losses, net of applicable deferred income
taxes, resulting from translation are included in shareholders'
equity.
Foreign currency gains and losses on transactions denominated in
a currency other than the entity's functional currency are
generally recorded in operations. Such gains and losses may be
reduced or effectively eliminated by certain financial
instruments used by USF&G to reduce its foreign exchange
exposure.
1.9. Earnings per common share
Primary earnings per common share are computed by subtracting dividends
on preferred stock from net income and then dividing by the weighted
average common shares outstanding during the period. The effect of
common stock equivalents is excluded from the calculations because their
effect is not material. Fully diluted earnings per common share
assume the conversion of all securities whose contingent
issuance would have a dilutive effect on earnings.
1.10. Facilities exit costs
During 1994, USF&G committed to a plan to consolidate its home office
operations in Baltimore, Maryland at its Mount Washington facility.
The facilities exit costs of $183 million represent the present value
of the rent and other operating expenses to be incurred under the lease
on the Corporation's principal office building from the time USF&G
vacates the building through the expiration of the lease in
2009. (See Note 6.)
1.11. Acquisitions
In December 1994 and January 1995, respectively, USF&G signed definitive
agreements with two insurance holding companies, Victoria Financial
Corporation and Discover Re Managers, Inc., whereby USF&G will acquire
all of the outstanding shares and equity of the respective companies.
These transactions are subject to approval by the shareholders
of the companies to be acquired, and are expected to close in
the second quarter of 1995.
1.12. Supplemental cash flow information The Consolidated
Statement of Cash Flows is presented using the "direct method,"
which reports major classes of cash receipts and cash payments.
A reconciliation of net income to net cash provided from
operating activities is as follows:
Years Ended December 31
(in millions) 1994 1993 1992
Net income $ 232 $ 165 $ 28
Adjustments to reconcile net income
to net cash provided from operating
activities:
Loss from discontinued operations - - 7
Cumulative effect of adopting new
accounting standards - (38) -
Facilities exit costs 183 - -
Provision for income taxes (benefit) (281) (28) -
Net realized gains on investments (5) (6) (148)
Change in insurance liabilities 45 36 37
Change in deferred policy acquisition costs (60) 31 68
Change in receivables (16) 60 149
Change in other liabilities (30) (56) (74)
Change in other assets 38 (101) (17)
Change in other items, net 9 24 49
Net cash provided from continuing
operations 115 87 99
Net cash used in discontinued operations - - (2)
Net cash provided from operating
activities $ 115 $ 87 $ 97
Note 2 Investments
2.1. Components of net investment income
Years Ended December 31
(in millions) 1994 1993 1992
Interest on fixed maturities $669 $721 $739
Equity security dividends 7 9 12
Option income - - 37
Short-term interest 13 9 27
Real estate and mortgage loans 58 41 50
Other investment income and (expenses) (4) (31) (48)
Net investment income $743 $749 $817
2.2. Net realized gains on investments
Years Ended December 31
(in millions) 1994 1993 1992
Gains (Losses) on Sales:
Fixed maturities $ 3 $ 79 $ 179
Equity securities and options - 5 44
Real estate and other 12 6 16
Net gains on sales 15 90 239
Impairments:
Fixed maturities (1) (10) (20)
Equity securities and options - (8) -
Real estate and other (9) (66) (71)
Total impairments (10) (84) (91)
Net realized gains on investments $ 5 $ 6 $ 148
2.3. Gross unrealized gains (losses)
At December 31
(in millions) 1994 1993 1992
Unrealized Gains:
Fixed maturities available for sale $ 9 $ 224 $ -
Deferred policy acquisition costs
adjustment 33 - -
Equity securities 2 14 16
Options, foreign currency and other 15 10 5
Gross unrealized gains 59 248 21
Unrealized Losses:
Fixed maturities available for sale (188) (2) -
Deferred policy acquisition costs
adjustment - (30) -
Equity securities (8) (23) (48)
Options, foreign currency and other (7) (3) (2)
Gross unrealized losses (203) (58) (50)
Net unrealized gains (losses) $(144) $ 190 $ (29)
2.4. Change in net unrealized gains (losses)
Years Ended December 31
(in millions) 1994 1993 1992
Fixed maturities available for sale $ (401) $ 222 $ -
Deferred policy acquisition costs
adjustment 63 (30) -
Equity securities 3 23 (39)
Options, foreign currency and other 1 4 21
Net change $ (334) $ 219 $ (18)
2.5. Estimated market values of fixed maturity investments
The increase (decrease) in the difference between cost and market
value of fixed maturity investments for the years ended December
31, 1994, 1993 and 1992, was $(911) million, $243 million and
$(259) million, respectively. The cost and market value of total
fixed maturities are as follows:
At December 31
1994
Gross Unrecognized/
Unrealized Market
(in millions) Cost Gains Losses Value
Fixed maturities held to maturity $4,650 $32 $(407) $4,275
Fixed maturities available for sale 4,160 9 (188) 3,981
Total $8,810 $41 $(595) $8,256
At December 31
1993
Gross Unrecognized/
Unrealized Market
(in millions) Cost Gains Losses Value
Fixed maturities held to maturity $4,661 $191 $(56) $4,796
Fixed maturities available for sale 4,681 224 (2) 4,903
Total $9,342 $415 $(58) $9,699
At December 31
1992
Gross Unrecognized/
Unrealized Market
(in millions) Cost Gains Losses Value
Fixed maturities held to maturity $7,218 $171 $ (99) $7,290
Fixed maturities available for sale 1,987 49 (7) 2,029
Total $9,205 $220 $(106) $9,319
The cost and market value of fixed maturities held to maturity
are as follows:
At December 31
1994
Gross
Unrecognized Market
(in millions) Cost Gains Losses Value
U.S. Government bonds $ 13 $ - $ (2) $ 11
Mortgage/asset-backed securities 1,496 19 (105) 1,410
Corporate bonds 2,637 6 (268) 2,375
High-yield bonds 483 6 (31) 458
Tax-exempt bonds 14 1 (1) 14
Other 7 - - 7
Total $4,650 $ 32 $ (407) $4,275
At December 31
1993
Gross
Unrecognized Market
(in millions) Cost Gains Losses Value
U.S. Government bonds $ 4 $ - $ (1) $ 3
Mortgage/asset-backed securities 1,669 70 (19) 1,720
Corporate bonds 2,463 79 (30) 2,512
High-yield bonds 505 37 (6) 536
Tax-exempt bonds 14 3 - 17
Other 6 2 - 8
Total $4,661 $ 191 $ (56) $4,796
At December 31
1992
Gross
Unrecognized Market
(in millions) Cost Gains Losses Value
U.S. Government bonds $ 348 $ 3 $ - $ 351
Mortgage/asset-backed securities 3,535 88 (47) 3,576
Corporate bonds 2,660 48 (40) 2,668
High-yield bonds 511 24 (12) 523
Tax-exempt bonds 55 4 - 59
Other 109 4 - 113
Total $7,218 $ 171 $ (99) $7,290
The cost and market value of fixed maturities available for
sale are as follows:
At December 31
1994
Gross
Unrealized Market
(in millions) Cost Gains Losses Value
U.S. Government bonds $ 264 $ - $ (12) $ 252
Mortgage/asset-backed securities 1,350 3 (51) 1,302
Corporate bonds 2,380 5 (105) 2,280
High-yield bonds 133 - (19) 114
Tax-exempt bonds 33 1 (1) 33
Other - - - -
Total $4,160 $ 9 $ (188) $3,981
At December 31
1993
Gross
Unrealized Market
(in millions) Cost Gains Losses Value
U.S. Government bonds $ 304 $ 20 $ - $ 324
Mortgage/asset-backed securities 1,883 73 - 1,956
Corporate bonds 2,403 126 - 2,529
High-yield bonds 57 2 (2) 57
Tax-exempt bonds 34 3 - 37
Other - - - -
Total $4,681 $ 224 $ (2) $4,903
At December 31
1992
Gross
Unrealized Market
(in millions) Cost Gains Losses Value
U.S. Government bonds $ 206 $ 3 $ - $ 209
Mortgage/asset-backed securities 1,284 39 (4) 1,319
Corporate bonds 443 7 (1) 449
High-yield bonds 11 - (1) 10
Tax-exempt bonds 16 - (1) 15
Other 27 - - 27
Total $1,987 $ 49 $ (7) $2,029
2.6. Stated due dates of fixed maturities
The table below shows the stated due dates of fixed maturities
held to maturity.
At December 31, 1994
Market
(in millions) Cost Value
In 1995 $ 18 $ 18
1996 through 1999 338 321
2000 through 2004 1,814 1,678
After 2004 984 848
Subtotal 3,154 2,865
Mortgage/asset-backed securities 1,496 1,410
Fixed maturities held to maturity $4,650 $4,275
The table below shows the stated due dates of fixed maturities
available for sale.
At December 31, 1994
Market
(in millions) Cost Value
In 1995 $ 151 $ 150
1996 through 1999 1,424 1,374
2000 through 2004 698 666
After 2004 537 489
Subtotal 2,810 2,679
Mortgage/asset-backed securities 1,350 1,302
Fixed maturities available for sale $4,160 $3,981
Expected maturities may differ from stated due dates as
borrowers may have the right to call or prepay obligations.
During 1994, USF&G received proceeds from sales or repayments of
fixed maturities of $1.2 billion. The table below illustrates
the source of 1994 proceeds.
Gross Gross
(in millions) Cost Proceeds Gains Losses
Proceeds From Sales of Fixed Maturities:
Held to maturity $ 65 $ 65 $1 $ (1)
Available for sale 328 326 2 (4)
Subtotal 393 391 3 (5)
Proceeds from Maturities/Repayments:
Held to maturity 343 347 5 (1)
Available for sale 473 474 1 -
Subtotal 816 821 6 (1)
Total proceeds $1,209 $1,212 $9 $ (6)
Sales in 1994 of fixed maturities classified as held to
maturity involved 21 different issuers and were based on
evidence of significant deterioration of the issuers'
creditworthiness. The determination of significant credit
deterioration was based upon current developments related
specifically to the issuers. USF&G performed a detailed analysis
of the issuers' operating trends, cash flows and its ability to
meet debt service. USF&G's analysts continually monitor news
events, published financial results, rating agency reports and
other related financial information. Sales of fixed maturities
under such circumstances are not inconsistent with their
original classifications as held to maturity. Prior to the
adoption of SFAS No. 115 in 1993, proceeds from sales of fixed
maturities held to maturity totaled $462 million with gross
gains of $20 million and gross losses of $12 million and
occurred primarily due to repositioning a portion of the
portfolio to more effectively match the duration of life
insurance liabilities. Proceeds from sales of fixed maturities
available for sale were $1.3 billion in 1993 with gross gains of
$73 million and gross losses of $2 million. In 1992, proceeds
from sales of fixed maturities held to maturity totaled $1.1
billion with gross gains of $68 million and gross losses of $9
million. Proceeds from sales of fixed maturities available for
sale were $4.8 billion in 1992 with gross gains of $293 million
and gross losses of $193 million.
2.7. Investment commitments
USF&G has outstanding commitments to provide permanent financing for
various real estate development projects. The funded amounts of these
commitments are collateralized by the real estate projects. At December 31,
1994, unfunded commitments totaled approximately $7 million,
with approximately $3 million of this expected to be funded in
1995. USF&G has a potential commitment to fund $12 million under
the terms of a participatory note investment if certain
collateralization tests are not met.
2.8. Nonincome-producing investments
Fixed maturities held at December 31, 1994, for which no income
was recorded during 1994, totaled $2 million. In addition, nonperforming
real estate, defined as mortgage loans and real estate investments that
are not performing in accordance with their contractual terms or are
performing significantly below expectations, totaled $208
million at December 31, 1994.
Note 3 Insurance Liabilities
3.1.Property/casualty insurance reserves - unpaid losses and loss expenses
Activity in the unpaid losses and loss expenses for the
property/casualty segment is summarized as follows:
(in millions) 1994 1993 1992
Total reserve at beginning of year, gross $6,329 $5,540 $5,704
Less reinsurance recoverables 1,053 N/A N/A
Net balance at January 1 5,276 5,540 5,704
Incurred Related To:
Current year 1,696 1,696 2,010
Prior years (5) 62 78
Total incurred 1,691 1,758 2,088
Paid Related To:
Current year 613 562 684
Prior years 1,270 1,460 1,568
Total paid 1,883 2,022 2,252
Net balance at December 31 5,084 5,276 5,540
Plus reinsurance recoverables 1,016 1,053 N/A
Total reserve at end of year, gross $6,100 $6,329 $5,540
Loss and loss expenses recorded in the current period financial
statements are affected by changes in estimates of insured
events occurring in prior periods. Losses incurred in 1994 but
related to prior years were a reduction of $5 million, or less
than 1 percent of 1994 incurred losses. Losses incurred but
related to prior years were $62 million in 1993, primarily as a
result of the strengthening of the unallocated loss expense
reserve for voluntary and servicing carrier business, and
increased by $78 million in 1992 primarily because of adverse
development on reinsurance assumed from underwriting pools and
associations.
Reserves for asbestos-related illnesses and environmental claims
cannot be estimated with traditional loss reserving techniques.
Liabilities are established for known claims (including the cost
of litigation) when sufficient information has been developed to
indicate the involvement of a specific insurance policy, and
management can reasonably estimate its liability. In addition,
liabilities have been established to cover additional exposures
on both known and unasserted claims. Estimates of the
liabilities are reviewed and updated continually. Developed case
law and adequate claim history do not exist for such claims,
especially because significant uncertainty exists about the
outcome of coverage litigation and whether past claim experience
will be representative of future loss experience.
3.2. Life benefit reserves
The table below shows F&G Life's benefit reserves by policy type.
At December 31
(in millions) 1994 1993 1992
Single Premium Annuities:
Deferred $1,860 $2,138 $2,077
Immediate 867 815 788
Other annuities 492 462 508
Universal life/term/group life 579 554 523
Net balance 3,798 3,969 3,896
Reinsurance receivable 6 4 -
Total reserve at end of year, gross $3,804 $3,973 $3,896
Note 4 Debt and Credit Arrangements
4.1. Debt outstanding
At December 31
(in millions) 1994 1993 1992
Corporate:
Short-term $215 $395 $375
Long-term:
9.98% and 10.1% Universal
Medium-Term Notes due 1994 - - 20
8 7/8% Notes due 1996 - 99 99
5 1/2% Swiss Franc Bonds due 1996 92 80 80
Zero Coupon Convertible Notes due 2009 130 - -
8 3/8% Senior Notes due 2001 149 - -
Total corporate debt 586 574 574
Real Estate and Other:
Short-term - 12 3
Long-term:
8% Secured Note due 1995 - 11 11
9 3/8% Secured Note due 1994 - - 11
9.96% Secured Notes due through 1999 14 14 15
Other 16 7 2
Total real estate and other debt 30 44 42
Total debt outstanding $616 $618 $616
4.2. Short-term debt
For general corporate purposes, USF&G
maintained a committed, standby credit facility with a group of
foreign and domestic banks totaling $400 million at December 31,
1994. This new facility, which expires in 1997, represents the
renegotiation of a prior credit facility of $700 million which
was available at December 31, 1993. USF&G pays facility fees on
the total amount of the commitments which are based on its
long-term debt credit ratings. In order to minimize facility
fees, and due to the reduced borrowings against it, the
Corporation elected to reduce the size of the facility to its
current level. Borrowings against the facilities totaled $215
million at December 31, 1994 and $375 million at December 31,
1993 and 1992. Interest rates are based on current market rates.
USF&G was in compliance with the covenants contained in these
agreements at December 31, 1994, 1993 and 1992. The most
restrictive covenants require USF&G to maintain a tangible net
worth of at least $1.1 billion plus 50 percent of the net income
earned during the commitment period and an
indebtedness-to-capital ratio below 55 percent.
In 1994, USF&G also entered into agreements under which a $100
million foreign currency credit facility and a $100 million
letter of credit facility are available. USF&G pays facility
fees on the total amount of each commitment. There were no
borrowings against these facilities at December 31, 1994.
4.3. Debt extinguishments
With proceeds from the issuance of the
Zero Coupon Convertible Notes issued in March 1994, USF&G
extinguished $99 million principal of the Corporation's 8 7/8%
Notes due 1996 and $20 million principal of Medium-Term Notes
due 1994. Proceeds from the issuance of the 8 3/8% Senior Notes
in June 1994 were used to reduce the short-term credit facility
borrowings by $147 million. Real estate debt was reduced by $11
million as the result of prepaying notes due in 1995 and further
reduced $11 million as a result of a deed-in-lieu of foreclosure
whereby property in which USF&G had a partnership interest was
conveyed back to the lender. Real estate debt increased by $63
million as a result of the restructuring of a real estate
partnership whereby USF&G became a controlling general partner.
Shortly thereafter, $54 million of this partnership debt was
defeased, reducing the amount that would otherwise have been
consolidated as a result of this restructuring to $9 million.
4.4. Shelf registrations
In January 1994, USF&G filed a shelf
registration statement with the Securities and Exchange
Commission. As of the time this registration statement went
into effect, USF&G had available $647 million of unissued debt,
preferred stock, common stock and warrants to purchase debt and
stock. This registration statement was reduced by $126 million
by the issuance of the Zero Coupon Convertible Notes and $149
million by the issuance of the 8 3/8% Senior Notes.
4.5. Redeemable debt
In 1994 and thereafter, the 5 1/2% Swiss Franc Bonds are redeemable
at par plus accrued interest. The Zero Coupon Convertible Notes are
redeemable beginning in 1999 for an amount equal to the original
issue price plus amortized original issue discount.
4.6. Currency swaps
USF&G entered into currency swap agreements
in 1989 to hedge its foreign currency exposure on the SwF120
million 5 1/2% Swiss Franc Bonds. This hedge was canceled in
September 1994 and USF&G received a payment of approximately $19
million. USF&G then rehedged the repayment of the SwF120 million
Swiss Franc debt and interest payments with forward contracts.
4.7. Interest rate swaps
As of December 31, 1993, USF&G had outstanding an interest rate swap for
the notional amount of $25 million to exchange variable rate debt into
a fixed rate of 9.405%. During 1994, USF&G entered into a new floating-for-
fixed-rate swap to reduce the floating rate
exposure created by the prior swap. In conjunction with the
issuance of the 8 3/8% Senior Notes, USF&G entered into two
interest rate swaps with a total notional amount of $150 million
which convert the fixed interest payments from the debt issuance
to floating rate debt for the first three years of the seven
year term of the debt.
These agreements involve, to varying degrees, interest rate and
credit risk. The notional amount represents the amount of the
underlying debt to which the swap applies, not future cash
requirements. The maximum credit risk related to the swap
agreements is the amount related to periodic settlements, which
is not material at December 31, 1994. USF&G seeks to manage the
credit risk through monitoring procedures and investigation of
counterparties to the transactions.
4.8. Interest
Interest expense incurred in the years ended
December 31, 1994, 1993 and 1992 was $37 million, $41 million
and $40 million, respectively. Interest incurred and capitalized
in 1992 was $8 million. There was no interest capitalized in
1993 or 1994.
4.9. Maturities of long-term debt
Real Estate
(in millions) Corporate and Other
1995 $ - $ -
1996 92 -
1997 - -
1998 - -
1999 - 24
Note 5 Financial Instruments and Derivatives
Fair value information is based on quoted market prices where available.
In cases where quoted market prices are not available, fair values
are based on internal estimates using present value or other
valuation techniques. Those techniques are significantly
affected by the assumptions used, such as applicable discount
rate and estimated future cash flows. Therefore, the derived
fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in
immediate settlement of the instrument. Fair value disclosure
requirements exclude certain financial instruments and all
nonfinancial instruments. The fair value of many insurance
related liabilities do not require disclosure. However, in its
strategy of asset/liability matching, USF&G takes into
consideration the future cash requirements of its insurance
related liabilities. Had a presentation of these liabilities
been made, due to their long-term nature, the fair value of
insurance related liabilities would have been significantly less
than their carrying value.
5.1. Financial instruments
Cash and Short-Term Investments: The carrying amounts reported in the
Consolidated Statement of Financial Position for these instruments
approximate their fair values.
Fixed Maturity Investments: Fair values for publicly traded
fixed maturity investments are based on quoted market prices.
For privately placed fixed maturities, estimated fair values are
derived by discounting expected future cash flows using a
current market rate applicable to the yield, credit quality and
maturity of the investment. At December 31, 1994, the amortized
cost, carrying amounts and fair values of fixed maturity
investments were as follows:
Amortized Carrying Fair
(in millions) Cost Amount Value
Publicly traded $8,580 $8,404 $8,038
Private placements 230 227 218
Total fixed maturity investments $8,810 $8,631 $8,256
The preceding table includes fixed maturities available for sale
with a market and carrying value of $4.0 billion and amortized
cost of $4.2 billion. Such investments are reported in the
Consolidated Statement of Financial Position at market value.
Equity Investments: The carrying values of equity securities as
reported in the Consolidated Statement of Financial Position are
based on quoted market prices and reflect their fair values.
Mortgage Loans and Policy Loans: The fair values for mortgage
loans and policy loans are estimated based on discounted cash
flow analyses, using interest rates currently being offered for
similar loans to borrowers with similar credit ratings. Loans
with similar characteristics are aggregated for purposes of the
calculations. At December 31, 1994, the carrying amounts and
fair values of investments in mortgage loans and policy loans
were as follows:
Carrying Fair
(in millions) Amount Value
Mortgage loans $349 $331
Policy loans 61 55
Other Assets and Other Liabilities: Other invested assets
considered financial instruments include equity interests in
minority ownership investments, interests in limited
partnerships and related notes receivable. It is not practicable
to estimate their fair value due to the closely-held nature of
these investments.
Other assets and liabilities considered financial instruments
include agents' balances receivable, prepaid and accrued
expenses and other receivables generally of a short-term nature.
It is assumed the carrying value of these financial instruments
approximates their fair value.
Short and Long-Term Debt: The carrying amount of USF&G's
short-term borrowings approximates its fair value. The fair
value of long-term debt is based on market quotes or estimated
discounted cash flow analyses, based on USF&G's current
incremental borrowing rates for similar types of borrowing
arrangements. The carrying amounts and estimated fair value of
debt instruments at December 31, 1994 were as follows:
Carrying Fair
(in millions) Amount Value
Corporate:
Short-term $215 $215
Long-term 371 349
Real estate and other 30 32
Total $616 $596
Investment Contracts: Fair values for F&G Life's single
premium deferred annuities, other deferred annuities, single
premium immediate annuities and supplementary contracts are
primarily derived by estimating the cost to extinguish its
liabilities under an assumption reinsurance transaction. The
estimated statutory profits the assuming company would realize
from the transaction are discounted at a typical internal rate
of return objective. If such a transaction were to occur, GAAP
would require the unamortized balance of deferred acquisition
costs associated with these liabilities be immediately expensed.
The amount of the related unamortized deferred acquisition costs
was approximately $98 million at December 31, 1994. The fair
values of the remaining liabilities under investment contracts
are estimated using discounted cash flow calculations, based on
interest rates currently being offered for like contracts with
similar maturities. The carrying amounts and estimated fair
values of F&G Life's liabilities for investment contracts at
December 31, 1994 are as follows:
Carrying Fair
(in millions) Amount Value
Single premium deferred annuities $1,870 $1,818
Other deferred annuities 349 319
Single premium immediate annuities
and supplementary contracts 121 116
Funding agreements 1 1
Group annuities 130 124
Total $2,471 $2,378
Off-Balance Sheet Financial Instruments: The fair values of
USF&G's unfunded real estate commitments and its financial
commitment on investments are estimated using discounted cash
flow analyses, based on USF&G's current incremental borrowing
rate for similar types of borrowing arrangements. The estimates
of the fair value of USF&G's interest rate swaps were obtained
from the counterparties to the agreement or were derived by
discounting the expected future cash flows. The estimated fair
values of USF&G's off-balance sheet financial instruments at
December 31, 1994, are as follows:
Fair
(in millions) Value
Liabilities:
Unfunded real estate commitments $ 6
Commitment on investments 13
Debt-related Derivatives:
Interest rate swaps 7
Currency forwards 2
5.2. Derivatives
USF&G uses derivative instruments to manage
foreign exchange and interest rate risk, reduce borrowing costs
and minimize the impact of rate fluctuations on the settlement
of debt and other financial instruments. USF&G is subject to the
risk that the counterparties will fail to perform. However,
these risks are mitigated by the credit quality of the
counterparties and the gains and losses of the underlying
instruments. USF&G does not use derivative instruments for
trading purposes.
Foreign Exchange Rate Instruments: The Corporation relies
predominantly on natural hedges to manage foreign exchange rate
risk by maintaining offsetting foreign asset and foreign
liability positions wherever possible, without sacrificing other
financing objectives. Foreign exchange derivative instruments in
use as of December 31, 1994 were two currency forward contracts
to purchase Swiss Francs for the principal and interest payment
associated with USF&G's SwF120 million 5 1/2% Swiss Franc Bonds
due 1996. The difference between the spot rate at the initiation
of the forward contract and the forward rate is amortized over
the life of the forward contract as foreign currency expense.
Interest Rate Instruments: The Corporation uses interest rate
derivatives selectively to enable it to maintain a certain
fixed/floating rate exposure given the current and projected
interest rate environment. The interest rate environment in 1994
was one in which short-term floating rate obligations initially
provided lower cost financing, but entailed greater interest
rate risk and provided only short duration liquidity. At the
outset of 1994, USF&G had approximately 61 percent floating rate
debt ($375 million) and 39 percent fixed rate debt ($243
million). In June 1994, USF&G issued $150 million of 8 3/8%
Senior Notes due 2001, proceeds of which were used to repay a
portion of the floating rate debt. USF&G subsequently entered
into two interest rate swaps with a total notional amount of
$150 million in which it pays floating interest rates and
receives a fixed interest rate to maintain an appropriate
fixed/floating rate exposure. At December 31, 1994, USF&G had
approximately 59 percent floating rate debt ($364 million) and
41 percent fixed rate debt ($252 million).
Additionally, in 1994, USF&G entered into a $25 million
floating-for-fixed-rate swap to reduce the exposure created by a
1990 fixed-for-floating-rate swap. The new
floating-for-fixed-rate swap has terms similar to the remaining
terms of the 1990 transaction.
Other Instruments: USF&G has issued financial instruments with
a maximum contingent liability of $2 million depending on the
market price of USF&G's common stock at the maturity of the
instruments.
Note 6 Leases
USF&G occupies office facilities under lease agreements that expire
at various dates through 2009. In addition, data processing, office
and transportation equipment is leased under agreements that expire
at various dates through 1999.
Most leases contain renewal options that may provide for rent
increases based on prevailing market conditions. Some leases
also may contain purchase options based on fair market values or
contractual values, if greater. All leases are accounted for as
operating leases. Rent expense for the years ended December 31,
1994, 1993 and 1992 was $62 million, $54 million and $58
million, respectively. Rent expense in 1994 included a $9
million loss on long-term subleases.
The table below shows the future minimum payments to be made
under noncancelable leases at December 31, 1994.
Home Other
Office Office
(in millions) Building Space Equipment Total
1995 $ 16 $17 $11 $ 44
1996 16 12 6 34
1997 16 10 3 29
1998 16 8 2 26
1999 19 6 - 25
After 1999 250 6 - 256
Total $333 $59 $22 $414
USF&G is also the lessor under various subleases on its office
facilities. The minimum rentals to be received in the future
under noncancelable subleases is $33 million at December 31,
1994.
USF&G's principal office lease involves a 40-story office
building ("the Tower") which the Corporation sold in 1984 and
subsequently leased back. During 1994, USF&G developed and
committed to a plan to consolidate its Baltimore headquarters
facilities. The plans encompass relocating all USF&G personnel
currently residing at the Tower to the Mount Washington
facilities in Baltimore which USF&G owns. Implementation of the
plan began in January 1995. The relocation of Tower personnel
will begin in mid-1995 and is expected to be completed by the
end of 1996. The facilities exit costs of $183 million recorded
in the fourth quarter of 1994 represent the present value of the
acceleration of net expenses, including rent and operating
expenses, to be incurred under the Tower lease from the time
USF&G vacates the Tower through the expiration of the lease in
2009. The lease on the Tower, which provides for rent increases
every five years through its expiration in September 2009, will
not be terminated. USF&G will continue to make rental payments
under the lease.
The deferred gain arising from the sale-leaseback was being
amortized over the noncancelable lease term prior to the
recognition of the facilities exit costs. For each of the years
ended December 31, 1994, 1993 and 1992, amortization of
approximately $2 million is netted with underwriting,
acquisition and operating expenses. The unamortized amount of
the deferred gain of $30 million and $31 million at December 31,
1993 and 1992, respectively, is included in other liabilities.
The unamortized deferred gain of $28 million at December 31,
1994 was recognized upon adoption of the facilities exit plan
and is netted against the lease expenses included in the
facilities exit costs.
Note 7 Shareholders' Equity
7.1. Classes of stock
USF&G is authorized to issue 12 million shares of $50 par value
preferred stock and 240 million shares of $2.50 par value common
stock.
7.2. Preferred stock
USF&G has 4 million shares of $4.10 Series
A Convertible Exchangeable Preferred Stock ("Series A Preferred
Stock"), 1.3 million shares of $10.25 Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock"), and
1.3 million shares of $5.00 Series C Cumulative Convertible
Preferred Stock ("Series C Preferred Stock") issued and
outstanding at December 31, 1994. USF&G had 4 million shares of
Series A Preferred Stock, 1.3 million shares of Series B
Preferred Stock, and 3.8 million shares of Series C Preferred
Stock issued and outstanding at December 31, 1993 and 1992.
During 1994, USF&G called for redemption 2.4 million shares of
its Series C Preferred Stock. The remaining shares were called
for redemption effective February 24, 1995. As a result of these
calls, over 93 percent of the Series C Preferred Stock converted
into 14.7 million shares of common stock in accordance with the
terms of the Series C Preferred Stock. Pursuant to arrangements
the Corporation previously entered into with an unaffiliated
financial institution, USF&G sold 716,600 shares of common stock
to this institution to fund a portion of the cash redemptions
resulting from these calls.
Each share of the Series A Preferred Stock entitles the holder
to an annual cumulative dividend of $4.10 and a liquidation
preference of $50 plus accrued and unpaid dividends. Each share
of Series B Preferred Stock entitles the holder to an annual
cumulative dividend of $10.25 and a liquidation preference of
$100 plus accrued and unpaid dividends. At December 31, 1994, at
the option of the holder, subject to adjustment under certain
conditions, each share of Series A and Series B Preferred Stock
is convertible to 1.192 and 8.316 shares, respectively, of
USF&G's common stock. The Series A Preferred Stock is
exchangeable in whole at USF&G's option on any dividend payment
date for 8.2% Convertible Subordinated Debentures due in 2011 at
a rate of $50 principal amount per share. Series B Preferred
Stock is not exchangeable.
Shares of the Series A Preferred Stock are redeemable for cash,
in whole or in part, at USF&G's option at $50.82 per share plus
accrued and unpaid dividends to the redemption date. The
redemption price declines to $50 per share in 1996. One half of
the outstanding shares of Series B Preferred Stock are
redeemable for cash, in part, at USF&G's option commencing in
1994 at $100 per share plus accrued and unpaid dividends and a
premium that declines ratably to zero per share in 2001. The
remainder is redeemable beginning in 1995 and 1996. No
redemption may be made prior to 1997 unless the closing price of
the common stock exceeds 150 percent of the Series B Preferred
Stock conversion price and subject to certain other conditions.
In addition, if a change in control event should occur, then at
the election of each holder of Series B Preferred Stock, USF&G
will issue and sell additional nonredeemable equity securities
and apply the net proceeds thereof to redeem these shares, but
only if and to the extent any such proceeds are raised.
Holders of the preferred stock are not entitled to vote, except
that they may vote separately with respect to certain matters
including the authorizations of any additional classes of
capital stock that would rank senior to the preferred stock. In
the event that six quarterly dividends for Series A Preferred
Stock or two quarterly dividends for Series B Preferred Stock
are unpaid, USF&G's Board of Directors will be increased by two
members, and holders of preferred stock may elect two directors
until all such dividends in arrears have been paid.
7.3. Dividend restrictions
Payment of dividends to USF&G Corporation by its insurance subsidiary
is subject to certain restrictions. The Maryland Insurance Code requires
the Maryland Insurance Commissioner's prior approval for any dividend
payments during a twelve month period from a Maryland insurance
subsidiary, such as USF&G Company, to its holding company which
exceeds 10 percent of policyholders' surplus. In addition,
notice of any other dividend must be given to the Maryland
Insurance Commissioner prior to payment, and the Commissioner
has the right to prevent payment of such dividend if it is
determined that such payment could impair the insurer's surplus
of financial condition. At December 31, 1994, $157 million of
dividends is currently available for payment to USF&G
Corporation from its insurance subsidiary during 1995 without
prior regulatory approval. At December 31, 1993, $154 million in
dividends was available for payment to USF&G Corporation from
its insurance subsidiary without restriction, of which $125
million of dividends was paid during 1994.
7.4. Changes in common stock shares
Years Ended December 31
1994 1993 1992
Common Stock:
Outstanding, January 1 85,009,482 84,512,758 84,273,327
Shares issued 10,606,978 496,724 239,431
Outstanding, December 31 95,616,460 85,009,482 84,512,758
USF&G issued 9.9 million shares of common stock during 1994
related to the conversion of Series C Preferred Stock. Another
5.5 million common stock shares were issued in February 1995 for
the conversion of the remaining Series C Preferred Stock.
Additionally, USF&G expects to issue approximately 4.1 million
and 5.4 million shares of common stock in exchange for all of
the outstanding shares of Victoria Financial Corporation and
Discover Re Managers, Inc., respectively, when those merger
transactions close in the second quarter of 1995.
7.5. Shareholder rights plan
USF&G has a shareholder rights plan ("the plan") to deter coercive or
unfair takeover tactics and to prevent a potential purchaser from gaining
control of USF&G without offering a fair price to all of the Corporation's
shareholders. Under the plan, each outstanding share of USF&G's
common stock has one preferred share purchase right (a "right")
expiring in 1997. Each right entitles the registered holder to
purchase 1/100 of a share of a new class of junior preferred
stock for $140. The rights cannot be exercised unless certain
events occur that might lead to a concentration in ownership of
common shares. At that time, the rights may be exercised for
common stock having a value of twice the exercise price. Under
certain conditions, the rights also become exercisable into
shares of common stock of a purchaser having a value of twice
the exercise price. USF&G will generally be entitled to redeem
the rights, at $.05 per right, any time before the tenth day
after a 20 percent position is acquired.
Note 8 Stock Ownership Plans
8.1. Stock options and stock purchase plans
Stock Options: Stock options have been granted
to full-time officers and key employees under four incentive
plans: Long-Term Incentive Plan, Stock Option Plan of 1987,
Stock Option Plan of 1990, and Stock Incentive Plan of 1991. In
addition, the Employee Stock Option Plan of 1992 and the 1994
Stock Plan For Employees of USF&G granted eligible employees,
other than officers and key employees participating in other
stock incentive plans, options to purchase shares based on
market quotations at the time of grant. Activity under the stock
option plans is as follows:
1994 1993 1992
Outstanding, January 1 4,162,224 4,473,572 2,816,748
Granted 2,245,500 1,143,282 2,590,295
Exercised (483,590) (338,940) (26,868)
Surrendered or cancelled (677,595) (1,115,690) (906,603)
Outstanding, December 31 5,246,539 4,162,224 4,473,572
Expiration dates 1/95-12/2004 1/94-12/2003 1/93-12/2002
Exercise and surrender prices $6.25-30.82 $6.25-30.82 $6.25-30.82
Shares reserved and available
for grant 8,767,941 2,985,959 3,026,179
Stock Purchase Plans: Shares had been offered to employees
under the Employees' Stock Purchase Plans of 1985 and 1990. None
were offered in 1992, 1993 or 1994. The purchase price was 85
percent of the market value of USF&G's common stock on the grant
date or the end of the two-year purchase period, whichever was
less. Activity under the stock purchase plans is as follows:
1994 1993 1992
Outstanding, January 1 - - 133,379
Granted - - -
Shares purchased - - (98,882)
Cancelled - - (34,497)
Outstanding, December 31 - - -
Expiration dates - - N/A
Purchase prices - - $11.16
Shares reserved - - N/A
Proceeds from the shares sold under the stock option and stock
purchase plans are credited to common stock and paid-in capital.
USF&G makes no charges to income for the plans. The number of
shares under the plans are adjusted for any future stock
dividends, stock splits or similar changes.
8.2. Directors stock plan
The Corporation adopted the 1993 Stock Plan for Non-Employee Directors
(the "Directors Stock Plan") on May 12, 1993. Only the Corporation's
outside directors are eligible to participate, and participation is
mandatory. The Directors Stock Plan has two components: (i) annual
retainer awards, and (ii) retirement awards. The Directors Stock Plan
authorizes the issuance of up to 300,000 shares of the Corporation's
common stock, par value $2.50 per share. Activity
under the Directors Stock Plan is as follows:
1994 1993
Outstanding, January 1 113,585 -
Stock units awarded 17,115 135,885
Stock issued (34,198) (22,300)
Outstanding, December 31 96,502 113,585
USF&G records compensation expense equal to the market value at
grant date of the vested stock or stock units awarded under the
Directors Stock Plan. In 1993, $2 million of compensation
expense was recognized relating to this plan. The 1994
compensation expense related to these plans was minimal and is
expected to continue to be so in future years.
Note 9 Retirement Benefits
9.1. Retirement plans
USF&G has noncontributory retirement plans covering
most regular full-time employees of the Corporation and its affiliates.
An employee's pension benefit is based on salary, years of service and
Social Security benefits. USF&G makes contributions to the retirement
plans based on amounts required to be funded under provisions of
the Employee Retirement Income Security Act of 1974. The plans'
funded status and amounts recognized in the consolidated
financial statements are as follows:
At December 31
(dollars in millions) 1994 1993 1992
Actuarial Present Value of:
Accumulated benefit obligation $303 $338 $263
Vested benefits 291 322 249
Plan assets at fair value $289 $297 $265
Projected benefit obligation 313 351 278
Funded status (24) (54) (13)
Unrecognized net loss 98 123 55
Unrecognized prior service cost (benefit) (22) (25) (28)
Adjustment for minimum pension liability (63) (85) -
Net prepaid (accrued) pension cost $(11) $(41) $ 14
Actuarial Assumptions:
Weighted average discount rate 8.75% 7.50% 8.75%
Average rate of increase in future
compensation levels 5.0 5.0 6.0
Expected long-term rate of return on assets 8.5 8.5 9.5
As a result of the higher interest rate environment, USF&G
increased the discount rate assumption as of December 31, 1994,
which caused the accumulated benefit obligation to decrease. In
accordance with SFAS No. 87, USF&G recorded a minimum pension
liability for the underfunded amount, representing the
accumulated benefit obligation in excess of the fair value of
the plans' assets, plus the amount of prepaid pension costs. The
minimum pension liability is reported as a separate reduction to
shareholders' equity.
The assets held by the plan consist primarily of fixed-income
and equity securities. USF&G classifies prepaid pension cost
with other assets and accrued pension cost with other
liabilities in the Consolidated Statement of Financial Position.
The components of net pension expense are as follows:
Years Ended December 31
(in millions) 1994 1993 1992
Service cost $ 6 $ 4 $ 5
Interest cost 26 25 23
Actual return on plan assets 10 (19) (15)
Net amortization and deferral (29) - (10)
Net periodic pension expense $ 13 $ 10 $ 3
9.2. Postretirement benefits
USF&G sponsors a defined dollar postretirement health care plan
(medical and dental) and noncontributory life insurance plan covering
most regular full-time employees of the Corporation and its affiliates.
USF&G's contributions and costs are determined based on the
annual salary and the type of coverage elected by covered
employees. USF&G's contributions to the plan are a percentage of
plan costs based on age and service of employees at retirement.
Additionally, the plan costs are capped at projected 1995 cost
levels, and retiree contributions are increased for the total
medical costs over the projected levels.
Effective January 1, 1993, USF&G adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions." This statement requires USF&G to accrue a liability
for the cost of health care, life insurance and other retiree
benefits when the employees' services are rendered. As permitted
under the new standard, the transition obligation of $52 million
at January 1, 1993 was recognized as an immediate charge to net
income by including the cumulative effect of adopting this
accounting standard. USF&G continues to fund the health care and
life insurance benefit costs principally on a pay-as-you-go
basis. The pay-as-you-go expenditures for postretirement
benefits were $5 million in 1994 and 1993, and $4 million in
1992.
The plans' combined funded status and amounts recognized
in the consolidated financial statements are as follows:
At December 31
(in millions) 1994 1993
Accumulated Postretirement Benefit Obligation:
Retirees $(45) $(46)
Fully eligible active plan participants (1) (4)
Other active plan participants (6) (8)
(52) (58)
Plan assets at fair value - -
Funded status (52) (58)
Unrecognized net loss (gain) (1) 6
Accrued postretirement benefit cost $(53) $(52)
USF&G classifies accrued postretirement benefit cost with other
liabilities in the Consolidated Statement of Financial Position.
The components of the net periodic postretirement benefit cost
are as follows:
Years Ended December 31
(in millions) 1994 1993
Service cost $1 $1
Interest cost 4 4
Net periodic postretirement benefit cost $5 $5
The weighted average annual assumed rate of increase in per
capita cost of covered benefits (i.e., medical trend rate) for
the plans is 9.0 percent for 1995 (10.5 percent assumed for
1994) and is assumed to decrease to 5.5 percent in 2002 for
participants age 65 or younger, and 7.75 percent for 1995 (8.0
percent for 1994), decreasing to 5.5 percent for participants
over age 65, and remain at that level thereafter. Increasing the
assumed medical trend rate by one percentage point in each year
would increase the accumulated postretirement benefit
obligation by approximately $4 million and the aggregate of the
service and interest cost components of net periodic
postretirement benefit cost for the year by approximately $0.4
million. The weighted average discount rate used in determining
the accumulated postretirement benefit obligation was 8.75
percent at December 31, 1994 and 7.5 percent at December 31,
1993.
Note 10 Federal Income Taxes
USF&G Corporation and its subsidiaries file a consolidated federal
income tax return. The provision for income taxes gives effect to
permanent differences between income before income taxes and taxable
income. Deferred federal income taxes are provided on temporary
differences and net operating loss carry-forwards (for 1994 and 1993)
and timing differences (for 1992) between financial and taxable income.
Effective January 1, 1993, USF&G changed its method of
accounting for income taxes as required by SFAS No. 109,
"Accounting for Income Taxes." Under the standard, a deferred
tax liability or asset is recognized for the estimated future
tax effects attributable to net operating loss carry-forwards
("NOLs") and to temporary differences between the tax basis and
GAAP basis of an asset or a liability. A valuation allowance is
required if, based on the weight of available evidence, it is
more likely than not that some or all of the deferred tax asset
will not be realized. As permitted under SFAS No. 109, 1992
financial statements have not been restated.
At December 31, 1994, the net deferred tax asset of $416 million
recorded by USF&G is supported by a combination of forecasted
taxable income and a tax strategy that USF&G would implement to
prevent NOLs from expiring. A valuation allowance of $279
million has been recognized to offset the gross deferred tax
assets.
10.1. Significant components of deferred tax assets and liabilities
At December 31
(in millions) 1994 1993
Deferred Tax Liabilities:
Deferred policy acquisition costs $162 $140
Other invested assets 6 44
Other 4 -
Total deferred tax liabilities 172 184
Deferred Tax Assets:
Facilities exit costs 74 -
Unpaid losses and loss expenses 246 304
Unearned premiums 43 45
Foreign reinsurance 50 49
Real estate 25 30
Future policy benefits 54 50
Net unrealized losses 50 -
Other 62 85
Net operating loss carry-forwards 263 222
Total deferred tax assets 867 785
Valuation allowance for deferred tax assets 279 482
Deferred tax assets, net of valuation allowance 588 303
Net deferred tax assets $416 $119
At December 31, 1994, the net deferred tax asset increased to
$416 million, primarily based on the increasing weight of
positive evidence which resulted in a $203 million net decrease
in the valuation allowance. Throughout 1994, the weight of
evidence became increasingly more positive as the core earnings
trend improved each quarter. As 1994 progressed, the negative
evidence of cumulative losses which were caused by 1991 results
became increasingly less of a factor. Given the substantially
reduced degree of negative evidence and management's increased
confidence in the sustainability of the improved earnings of
the core insurance segments and, therefore, its enhanced ability
to forecast future taxable income, it became appropriate to
reduce the valuation allowance. During 1993, the net decrease in
the valuation allowance was $56 million reflecting the change in
the realizability of the deferred tax asset. In addition, the
valuation allowance was increased $15 million in 1993 due to
the tax rate change enacted in that year.
10.2. Components of provision for income taxes (benefits)
Years Ended December 31
Liability Liability Deferred
Method Method Method
(in millions) 1994 1993 1992
Current tax $ 30 $ 38 $ 22
NOL Utilization (22) (31) (16)
Current tax, net of NOL utilization 8 7 6
Deferred tax (benefit) (22) 24 (6)
Adjustment for enacted change in tax rates - (3) -
Adjustment of the beginning of the
year valuation allowance (267) (56) -
Provision for income taxes (benefit) $(281) $ (28) $ -
Income taxes paid $ 9 $ 3 $ 9
10.3. Tax effects of timing differences between financial and
taxable income
Year Ended December 31
(in millions) 1992
Tax Effect (Benefit):
Deferred policy acquisition costs $ (15)
Unbilled premium adjustments (4)
Adjustment of life policy benefit reserves (1)
Adjustment of property/casualty loss reserves 3
Adjustment of property/casualty unearned premium reserves (4)
Deferred realized gains and losses (2)
Unrecognized benefit of net losses 19
Other, net (2)
Provision for income taxes (benefit) $ (6)
10.4. Tax effects of permanent differences
Years Ended December 31
Liability Liability Deferred
Method Method Method
(in millions) 1994 1993 1992
Tax at federal rates $ (18) $ 35 $ 12
Tax Effect (Benefit):
Adjustment of the beginning of the
year valuation allowance (267) (56) -
Effect of change in tax rates - (3) -
Dividend received deduction - - (3)
Tax-exempt interest income (2) (2) (3)
Proration adjustment on non-taxable
investment income - - 1
Adjustment of property/casualty salvage
and subrogation accruals (fresh start) 6 - -
Adjustment of property/casualty
loss reserves (fresh start) - - (9)
Other - (2) 2
Provision for income taxes (benefit) $ (281) $ (28) $ -
10.5. Net operating loss carry-forwards
At December 31, 1994, USF&G had NOLs remaining for tax return purposes
expiring in years 2005 and 2006. The amount and timing of recognizing
the benefit of these NOLs depends on future taxable income and
limitations imposed by tax laws. The approximate amounts of
USF&G's NOLs on a regular tax basis and an alternative minimum
tax ("AMT") basis at December 31, 1994 were as follows:
(in millions) Tax Return
Regular tax basis $750
AMT basis 553
Note 11 Reinsurance
During 1993, USF&G adopted SFAS No. 113,
"Accounting and Reporting for Reinsurance of Short-Duration and
Long-Duration Contracts." This standard requires the effects of
reinsurance activity to be reported on a gross basis.
Reinsurance receivables and prepaid reinsurance premiums are
reported separately as assets, instead of the previous practice
of reporting such receivables net of the related loss and
unearned premium liabilities. The standard also establishes the
conditions required for a contract to be accounted for as
reinsurance and prescribes income recognition and reporting
standards for those contracts. The initial adoption of this
standard had no effect on net income, but increased assets and
liabilities by approximately $1.2 billion at December 31, 1993.
USF&G reinsures portions of its policy risks with other
insurance companies or underwriters, and assumes policy risks
from other insurance companies and through participation in
pools and associations. Reinsurance gives USF&G the ability to
write larger risks and control its exposure to losses from
catastrophes or other events that cause unfavorable underwriting
results. USF&G's ceding reinsurance agreements are generally
structured on a treaty basis whereby all risks meeting a certain
criteria are automatically reinsured. Amounts recoverable from
reinsurers are estimated in a manner consistent with the claim
liability associated with the reinsured policy. Reinsurance
contracts do not relieve USF&G from its obligation to
policyholders. Failure of reinsurers to honor their obligation
could result in losses to USF&G. USF&G evaluates the financial
condition of its reinsurers and monitors concentrations of
credit risks arising from similar economic characteristics of
the reinsurers to minimize its exposure to significant losses
from reinsurer insolvencies.
At December 31, 1994 and 1993, reinsurance receivables totaled
$554 million and $573 million, respectively. Of these amounts,
approximately $122 million and $150 million, respectively, were
associated with the Workers' Compensation Reinsurance Bureau
("WCRB"), a single voluntary reinsurance association of primary
workers' compensation insurers formed for the purpose of
providing excess of loss reinsurance to its members. USF&G is a
member of this pool. Each member is required to hold collateral,
for the benefit of all member companies, in the form of
investment-grade securities equaling 115 percent of the member's
share of outstanding receivables of the WCRB. This collateral
requirement mitigates the risk of WCRB becoming insolvent. Risk
of loss is minimal for the remainder of receivables due to
similar pool arrangements with collateral requirements, other
contracts where funds are withheld, or letters of credit
maintained. Credit risk is also diversified among numerous
reinsurers. Additionally, USF&G is active in the involuntary
market as a servicing carrier whereby USF&G processes business
for a pool but takes no direct underwriting risk because it is
directly reimbursed for the cost of processing policies and
settling any related claims. Servicing carrier receivables of
$706 million and $719 million associated with this business are
separately disclosed in the Consolidated Statement of Financial
Position at December 31, 1994 and 1993, respectively.
1994
Premiums Losses Unpaid Unearned
(in millions) Written Earned Incurred Losses Premiums
Property/Casualty:
Direct $2,252 $2,232 $1,624 $ 4,802 $ 833
Assumed 567 566 390 1,298 98
Gross 2,819 2,798 2,014 6,100 931
Ceded (507) (515) (323) (1,016) (116)
Net 2,312 2,283 1,691 5,084 815
Life N/A 152 388 3,804 N/A
Total $2,312 $2,435 $2,079 $ 8,888 $ 815
1993
Premiums Losses Unpaid Unearned
(in millions) Written Earned Incurred Losses Premiums
Property/Casualty:
Direct $2,345 $2,338 $1,472 $ 5,078 $ 813
Assumed 593 506 83 1,251 104
Gross 2,938 2,844 1,555 6,329 917
Ceded (509) (517) 203 (1,053) (124)
Net 2,429 2,327 1,758 5,276 793
Life N/A 129 395 3,973 N/A
Total $2,429 $2,456 $2,153 $ 9,249 $ 793
1992
Premiums Losses Unpaid Unearned
(in millions) Written Earned Incurred Losses Premiums
Property/Casualty:
Direct $2,472 $2,692 $2,182 $ 5,593 $ 805
Assumed 259 376 385 1,555 98
Gross 2,731 3,068 2,567 7,148 903
Ceded (311) (535) (479) (1,608) (133)
Net 2,420 2,533 2,088 5,540 770
Life N/A 104 377 3,896 N/A
Total $2,420 $2,637 $2,465 $ 9,436 $ 770
Included in assumed unpaid losses in the above table are $86
million, $110 million and $123 million related to loss portfolio
transfer agreements at December 31, 1994, 1993 and 1992,
respectively. USF&G has not entered into any such agreements to
cede its unpaid losses.
The ceded unpaid losses and assumed unpaid losses for 1993 were
reduced $464 million and $267 million, respectively, from 1992
due to a commutation involving the WCRB. At year end 1993, WCRB
members commuted the lowest layer of reinsurance for accident
years 1980 to 1992. As a result, USF&G was required to take back
all reserves previously ceded into the layer and return reserves
previously assumed.
Note 12 Financial Guarantees
12.1. Insurance guarantees
USF&G has underwritten and reinsured financial guarantee bonds for
principal and interest payments or installment notes when due.
The obligations guaranteed were issued by limited partnerships,
municipalities and commercial enterprises. Assessment is made of
the likelihood of loss in connection with these guarantees, and
at December 31, 1994, 1993 and 1992, the reserve for such losses
was not material. The risk of loss under these guarantees is
diminished through reinsurance agreements and collateral.
As of December 31, 1994, USF&G was contingently liable for par
value amounts totaling less than $500 million on financial
guarantee exposures ceded through reinsurance agreements with a
monoline insurance company in which USF&G formerly had a
minority ownership interest. In addition, USF&G has other
financial guarantee obligations where the par value guaranteed
totaled $27 million at December 31, 1994, maturing in 1995.
12.2. Corporate guarantees
USF&G has also guaranteed the obligations of certain limited
partnerships where it has an equity interest. The risk of loss under these
guarantees is diminished by collateral in the underlying projects. The
guarantees totaled $13 million at December 31, 1994, with
maturities ranging from 1995 to 1999. In addition, USF&G has
line of credit commitments outstanding totaling $55 million.
Note 13 Legal Contingencies
USF&G's insurance subsidiaries are
routinely engaged in litigation in the normal course of their
businesses, including defending claims for punitive damages. As
a liability insurer, they defend third-party claims brought
against their insureds. As an insurer, they defend themselves
against coverage claims. Additional information regarding
contingencies that may arise from insurance regulatory matters
and regulatory litigation matters may be found in the Regulation
section of Management's Discussion and Analysis of Financial
Condition and Results of Operations.
In the opinion of management, such litigation and the litigation
described below is not expected to have a material adverse
effect on USF&G's consolidated financial position, although it
is possible that the results of operations in a particular
quarter or annual period would be materially affected by an
unfavorable outcome.
13.1. North Carolina workers' compensation litigation
On November 24, 1993, N.C. Steel, Inc. and six other North Carolina
employers filed a class action in the General Court of Justice,
Superior Court Division, Wake County, North Carolina against the
National Council on Compensation Insurance ("NCCI"), North
Carolina Rate Bureau, USF&G and eleven other insurance companies
which served as servicing carriers for the North Carolina
involuntary workers' compensation market. On January 20, 1994,
the plaintiffs filed an amended complaint seeking to certify a
class of all employers who purchased workers' compensation
insurance in the State of North Carolina after November 24,
1989. The amended complaint, which is captioned N.C. Steel,
Inc., et al., v. National Council on Compensation Insurance, et
al., alleges that the defendants conspired to suppress
competition with respect to the North Carolina voluntary and
involuntary workers' compensation business, thereby artificially
inflating the rates in such markets and the fees payable to the
insurers. The complaint also alleges that the carriers agreed to
improperly deny qualified companies from acting as servicing
carriers, improperly encourage agents to place employers in the
assigned risk pool, and improperly promote inefficient claims
handling. USF&G has acted as a servicing carrier in North
Carolina since 1990. The plaintiffs are pursuing their claims
under various legal theories, including violations of the North
Carolina antitrust laws, unlawful conspiracy, breach of
fiduciary duty, breach of implied covenant of good faith and
fair dealing, unfair competition, constructive fraud, and unfair
and deceptive trade practices. The plaintiffs seek unspecified
compensatory damages, punitive damages for the alleged
constructive fraud and treble damages under the North Carolina
antitrust laws. On February 14, 1995, the trial court granted
the defendant's motion to dismiss the complaint. The plaintiffs
have appealed the trial court's dismissal of the case. USF&G
believes that it has meritorious defenses and has determined to
defend the action vigorously.
13.2. Texas workers' compensation litigation
On April 18, 1994, Mi-De-Pizza, Inc. and ten other Texas insureds filed
an amended class action in the District Court of Dallas County, Texas
against the NCCI and all insurance companies and certain
insurance brokers that wrote workers' compensation insurance in
Texas during the period 1987 to 1991. The case, which was
subsequently consolidated with another case to which USF&G was
not a party and is now captioned Weatherford Roofing Company, et
al., v. Employers National Insurance Company, et al., alleges
that the defendants utilized rates and forms that had the effect
of charging premium rates in excess of the rates approved by
law. The plaintiffs are pursuing recovery of these alleged
excess charges under various legal theories, including breach of
contract, fraud, civil conspiracy and violation of the Texas
Insurance Code and the Texas Business and Commerce Code. USF&G
believes that it has meritorious defenses and has determined to
defend the action vigorously.
13.3. South Carolina workers' compensation litigation
On August 22, 1994, the Attorney General of the State of South Carolina
filed suit in the County of Greenville, South Carolina on behalf
of South Carolina employers that have allegedly been damaged as
a result of alleged unfair and deceptive trade practices.
Specifically, the Attorney General alleges that the NCCI, the
National Workers' Compensation Reinsurance Pool, USF&G and seven
other insurance companies which served as servicing carriers for
the South Carolina involuntary workers' compensation market,
conspired to fix servicing carrier fees at unreasonably high and
noncompetitive levels in violation of the South Carolina Uniform
Trade Practices Act, allegedly causing inflated deficits in the
involuntary market and an excessive expansion of the residual
market. The Attorney General alleges that the conspiracy
occurred for an unspecified period of time prior to January
1994. The Attorney General has indicated that he intends to
pursue recovery on behalf of all South Carolina employers who
have suffered an ascertainable loss as a result of such alleged
conduct, civil penalties of $5,000 for each willful violation,
and temporary and permanent injunctive relief. USF&G believes
that it has meritorious defenses and has determined to defend
the action vigorously.
13.4. Alabama workers' compensation litigation
On September 14, 1994, three Alabama employers filed a class
action captioned Four Way Plant Farm, Inc., et al., v. National Council on
Compensation Insurance, et al., in the Circuit Court of Bullock
County, Alabama on behalf of all Alabama employers that have
allegedly been damaged as a result of an alleged conspiracy by
the NCCI, the National Workers' Compensation Reinsurance Pool,
USF&G and numerous other insurance companies which served as
servicing carriers for the Alabama involuntary workers'
compensation market, to fix servicing carrier fees at
unreasonably high and noncompetitive levels in violation of
Alabama law. The plaintiffs allege that the conspiracy occurred
during the period January 1, 1985 to January 1, 1994, and caused
inflated deficits in the involuntary market and an alleged
excessive expansion of the workers' compensation residual
market. The plaintiffs seek unspecified damages on behalf of
each member of the proposed class action. USF&G believes that it
has meritorious defenses and has determined to defend the action
vigorously.
Note 14 Information on Business Segments
USF&G's principal business segments are property/casualty insurance
and life insurance.
14.1. Operations
The insurance business is geographically
diversified throughout the United States and Canada. Reinsurance
and noninsurance operations are located in the United States,
Europe and various foreign countries. Foreign operations, in
total, are not material. Summarized financial information for
the business segments is as follows:
Years Ended December 31
Income (Loss) from
Continuing Operations
Revenues Before Income Taxes
(in millions) 1994 1993 1992 1994** 1993 1992***
Property/Casualty Insurance:
Commercial $1,189 $1,223 $1,480 $(186) $(223) $(343)
Personal 575 681 785 (60) (28) (110)
Reinsurance 395 305 157 40 32 20
Fidelity/surety 124 118 111 6 (8) 6
Property/casualty
categories 2,283 2,327 2,533 (200) (227) (427)
Net investment
income* 423 433 475 423 433 475
Net realized gains (losses)
on investments* (9) 31 199 (9) 31 199
Other - - 1 (1) (24) (51)
Total property/casualty
insurance 2,697 2,791 3,208 213 213 196
Life Insurance:
Premium income 152 129 104
Net investment income 317 321 349
Realized gains (losses)
on investments - 20 (1)
Other 1 1 2
Total life insurance 470 471 454 14 14 (5)
Noninsurance operations
and eliminations 54 (13) (2) (276) (128) (156)
Consolidated total $3,221 $3,249 $3,660 $ (49) $ 99 $ 35
*Net investment income and net realized gains (losses) on
investments are not allocated to property/casualty categories.
**Income (loss) from continuing operations before income taxes
for 1994 includes facilities exit costs by segment as follows:
Property/casualty, $28 million; and Noninsurance operations,
$(211) million. ***Income (loss) from continuing operations
before income taxes for 1992 includes restructuring charges by
segment as follows: Property/casualty, $46 million; Life, $3
million; and Noninsurance operations, $2 million.
14.2. Assets
The assets of the insurance operations are primarily
investments. Foreign assets are not material. Assets of the
business segments are as follows:
At December 31
(in millions) 1994 1993 1992
Property/casualty insurance $ 9,281 $ 9,565 $ 8,253
Life insurance 4,575 4,848 4,856
Noninsurance operations and eliminations (82) (78) 25
Consolidated total $13,774 $14,335 $13,134
Note 15 Interim Financial Data (Unaudited)
Quarter
(in millions except per share data) First Second Third Fourth
Summary Quarterly Results:*
Revenues 1994 $766 $791 $ 811 $853
1993 875 820 755 799
1992 941 906 1,011 802
Income from continuing operations 1994 23 73 74 62
before cumulative effect of adopting 1993 23 25 20 59
new accounting standards 1992 4 7 11 13
Loss from discontinued operations 1994 - - - -
1993 - - - -
1992 - (1) (6) -
Income from cumulative effect of 1994 - - - -
adopting new accounting standards 1993 38 - - -
1992 - - - -
Net income 1994 23 73 74 62
1993 61 25 20 59
1992 4 6 5 13
Primary Earnings per Common Share:*
Income (loss) from continuing 1994 $.13 $.72 $.72 $.57
operations before cumulative effect 1993 .13 .15 .10 .55
of adopting new accounting standards 1992 (.09) (.06) (.02) .01
Loss from discontinued operations 1994 - - - -
1993 - - - -
1992 - (.01) (.07) -
Income from cumulative effect of 1994 - - - -
adopting new accounting standards 1993 .45 - - -
1992 - - - -
Net income (loss) 1994 .13 .72 .72 .57
1993 .58 .15 .10 .55
1992 (.09) (.07) (.09) .01
Fully Diluted Earnings per Common Share:*
Income (loss) from continuing 1994 $.13 $.59 $.61 $.50
operations before cumulative effect 1993 .17 .15 .10 .49
of adopting new accounting standards 1992 (.09) (.06) (.02) .01
Loss from discontinued operations 1994 - - - -
1993 - - - -
1992 - (.01) (.07) -
Income from cumulative effect of 1994 - - - -
adopting new accounting standards 1993 .34 - - -
1992 - - - -
Net income (loss) 1994 .13 .59 .61 .50
1993 .51 .15 .10 .49
1992 (.09) (.07) (.09) .01
*The fourth quarter 1994 results reflect $183 million in facilities exit
costs as discussed in Note 6, and a $210 million tax benefit as discussed
in Note 10. The first quarter 1993 results include a $38 million net benefit
of adopting two new accounting standards. The third quarter 1992
results reflect $142 million in realized gains on investments,
$80 million of catastrophe losses as a result of Hurricane
Andrew, and $51 million of restructuring charges. The sum of
quarterly income (loss) per share amounts may not equal the full
year's amount due to stock issuances during presented periods.
Report of Independent Auditors
Board of Directors
USF&G Corporation
We have audited the accompanying consolidated statement of
financial position of USF&G Corporation as of December 31, 1994,
1993, and 1992, and the related consolidated statements of
operations, shareholders' equity, and cash flows for the years
then ended. These financial statements are the responsibility of
the Corporation's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of USF&G Corporation at December 31, 1994,
1993, and 1992 and the consolidated results of its operations
and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
In 1993, as a result of adopting new accounting standards and as
discussed in Notes 1, 2, 9, and 10 to the consolidated financial
statements, the Corporation changed its methods of accounting
for certain investments in debt and equity securities,
postretirement benefits other than pensions, and income taxes.
ERNST & YOUNG LLP
Baltimore, Maryland
February 24, 1995
USF&G Corporation
Directors and Committees of the Board
Directors
H. Furlong Baldwin (63)
Chairman of the Board and
Chief Executive Officer
Mercantile Bankshares Corporation
1981*
Michael J. Birck (57)
President and Chief Executive Officer
Tellabs, Inc.
1993*
Norman P. Blake, Jr. (53)
Chairman of the Board, President, and
Chief Executive Officer
USF&G Corporation
1990*
George L. Bunting, Jr. (54)
President and Chief Executive Officer
Bunting Management Group
1981*
Robert E. Davis (63)
Managing Director
Axess Corporation
1990*
Dale F. Frey (62)
Chairman of the Board and President
General Electric Investment Corporation
1991*
Robert E. Gregory, Jr. (52)
President and Chief Executive Officer
London Fog Corporation
1988*
Robert J. Hurst (49)
Partner Goldman, Sachs & Co.
1988*
Dr. Wilbur G. Lewellen (57)
Herman C. Krannert
Distinguished Professor of Management
Graduate School of Management
Purdue University
1992*
Henry A. Rosenberg, Jr. (65)
Chairman of the Board and
Chief Executive Officer
Crown Central Petroleum Corporation
1981*
Larry P. Scriggins (58)
Partner
Piper & Marbury
1981*
Anne Marie Whittemore (48)
Partner
McGuire Woods Battle & Boothe
1993*
Advisory Member of the Board
Randolph Screen
Chairman, National Agency Council
Beall, Garner, Screen and Geare, Inc.
1995*
* Date indicates year of original election
Committees of the Board
Executive Committee
Norman P. Blake, Jr. Chairman
H. Furlong Baldwin
George L. Bunting, Jr.
Dale F. Frey
Robert E. Gregory, Jr.
Robert J. Hurst
Finance Committee
H. Furlong Baldwin Chairman
Dale F. Frey
Wilbur G. Lewellen
Larry P. Scriggins
Anne Marie Whittemore
Audit Committee
Robert E. Gregory, Jr. Chairman
Michael J. Birck
Robert E. Davis
Dale F. Frey
Henry A. Rosenberg, Jr.
Compensation Committee
George L. Bunting, Jr. Chairman
Michael J. Birck
Robert E. Davis
Robert E. Gregory, Jr.
Wilbur G. Lewellen
Henry A. Rosenberg, Jr.
Nominating Committee
Robert J. Hurst Chairman
H. Furlong Baldwin
George L. Bunting, Jr.
Robert E. Davis
Larry P. Scriggins
Anne Marie Whittemore
*Date indicates year of original election.
Officers
Executive Management Committee
Norman P. Blake, Jr. (53) PHOTO
Chairman, president, and chief executive officer since 1990
Previously chairman and chief executive officer, Heller
International; executive vice president-Financing Operations,
General Electric Credit Corporation B.S.; M.A.-Purdue University
Glenn W. Anderson (42) PHOTO
Executive vice president-Commercial Lines
since 1994 Previously senior vice president-USF&G Commercial
Lines; vice president-Commercial Lines, Fireman's Fund
B.A.-Stanford University
Gary C. Dunton (39) PHOTO
Executive vice president-Field Operations
since 1994 Previously executive vice president-USF&G Commercial
Lines; vice president-Standard Commercial Accounts, Aetna Life &
Casualty B.S.-Northeastern University; M.B.A.-Harvard University
Dan L. Hale (50) PHOTO
Executive vice president-chief financial
officer since 1993 Previously executive vice president-USF&G
Diversified Insurance and Investment Operations; president,
Chase Manhattan Leasing Company B.A.-Yale University
Kenneth E. Cihiy (48) PHOTO
Senior vice president-Claim since 1993
Previously resident vice president, Aetna Life & Casualty
B.S.-Wilkes University
Paul B. Ingrey (55) PHOTO
President-F&G Re, Inc. since 1983 Previously
senior vice president and director, Prudential Reinsurance
Company B.A.-Colgate University; M.B.A.-College of Insurance
Robert J. Lamendola (50) PHOTO
Senior vice president-Fidelity/Surety
since 1992 Previously managing director, Marsh & McLennan, Inc. B.A.-State
University College at Buffalo, New York
James R. Lewis (46) PHOTO
Senior vice president-Personal Lines since
1994 Previously Northeast Region vice president-USF&G Field
Operations; senior vice president and general manager, CIGNA
B.A.-Berea College
Thomas K. Lewis (42) PHOTO
Senior vice president-chief information
officer since 1993 Previously vice president-general manager for
Europe, Middle East, and Africa, Seer Technologies, Inc. B.S.; M.S.-
University of New Haven
John A. MacColl (46) PHOTO
Senior vice president-general counsel since
1989 and senior vice president-Human Resources since 1994
Previously partner, Piper & Marbury B.A.-Princeton University; LL.B.-
Georgetown University
Andrew A. Stern (37) PHOTO
Senior vice president-Strategic Planning/Corporate Marketing since 1993
Previously partner and vice president, Booz Allen & Hamilton, Inc. B.S.S.C.-
Massachusetts Institute of Technology;
M.B.A.-University of Chicago
Harry N. Stout (42) PHOTO
President-F&G Life since 1994 Previously senior vice president-Business and
Product Development-F&G Life; senior vice president-United Pacific Life
Insurance Company
B.S.-Drexel University
John C. Sweeney (50) PHOTO
Chairman-Falcon Asset Management since 1994
and senior vice president-chief investment officer-USF&G since
1992 Previously principal and practice director, Tillinghast/
Towers Perrin B.S.-St. Joseph's University; M.S.-The College of
William and Mary
Officers
USF&G Insurance
President
Norman P. Blake, Jr.
Claim
Senior Vice President
Kenneth E. Cihiy
Vice President
G. Jay Erbe, Jr.
Robert S. Kines
Thomas W. Salinsky
Charles M. Stapleton
Thomas M. Trezise
Commercial Lines
Executive Vice President
Glenn W. Anderson
Senior Vice President
Frank Kotarba
Stephen W. Lilienthal
Robert W. Mueller
Vice President
Robert A. Bernatchez
Alan K. Crater
Jeff J. Gans
Ronald L. Goldberg
David P. Kaiser
Steven A. LaShier
Paul C. Martin
Kevin M. Nish
Kenneth R. Solomon
Fidelity/Surety
Senior Vice President
Robert J. Lamendola
Vice President
Frederick J. Gurba
Michael P. Hammond
John A. Huss
David L. Hussey
David G. Olson
Brent E. Snelgrove
Scott A. Williams
Gary A. Wilson
Field Operations
Executive Vice President
Gary C. Dunton
Regional Vice President
Paul H. Beil
Anthony D. Everett
Kenneth F. May
Kim B. Rich
Vice President
Peter T. Bothwell
Marilyn G. Norman
Finance
Executive Vice President
Chief Financial Officer
Dan L. Hale
Vice President
Francis X. Bossle
Thomas A. Bradley
Richard P. Campagna
Duane M. Danielsen
Diane Olmstead
Gary R. Preysner
Jon B. Savage
Patricia J. Scarff
Richard H. Snader
James E. Stangroom
Charles R. Werhane
Joseph A. Wesolowski
Human Resources
Senior Vice President
John A. MacColl
Vice President
Jerome Adams
Edward W. Gold
Charles Conley
Information Services
Senior Vice President
Chief Information Officer
Thomas K. Lewis, Jr.
Vice President
James Hughes
James C.R. Graham
Gregory J. Richardson
Legal
Senior Vice President/ General Counsel
John A. MacColl
Vice President/Deputy General Counsel
J. Kendall Huber
Vice President
John A. Andryszak
John D. Corse
Vance C. Gudmundsen
John M. Lummis
Rosemary Quinn
Personal Lines
Senior Vice President
James R. Lewis
Vice President
Eileen O'Shea Auen
Earnest E. Hines
Roy G. Shrum
Strategic Planning/Corporate Marketing
Senior Vice President
Andrew A. Stern
Vice President
Kerrie Burch-DeLuca
W. Glenn Kenney
John M. Lummis
Subsidiary Companies
Falcon Asset Management
Chairman
John C. Sweeney
President
Geoffrey C. Getman
Executive Vice President
Salvatore Correnti
Senior Vice President
Amy P. Williams
F&G Life
President
Harry N. Stout
Senior Vice President
Gene F. Gaines
Vice President
Gary L. Burke
Michel G. Perreault
Bruce H. Saul
F&G Re
President
Paul B. Ingrey
Executive Vice President
John R. Berger
Senior Vice President
Dwight R. Evans
Roland W. Jackson
Timothy J. Olson
Wayne C. Paglieri
David S. Skurnick
Alan M. Willemsen
Vice President
Thomas L. Angle
Paul J. Brauner
Peter A. Dodge
Donald C. Kelly
Edward F. Konikowski
Douglas B. Morrison
Michael J. O'Brien, Jr.
Charles B. Penruddocke
John F. Rathgeber
John H. Reimer
Rolf Schmidt
Jeffrey O. Smith
Arthur S. Underwood
Vice President/Counsel
Andrew Nosal
Regional and Branch Offices
Regional Offices
Northeast Region
Paul H. Beil
Northeast Building
5801 Smith Avenue
Baltimore, MD 21209
(410) 578-2302
Southeast Region
Kenneth F. May
9000 Central Park West
Suite 700
Atlanta, GA 30328
(404) 390-5500
Mississippi Region
Anthony D. Everett
USF&G Building
143 LeFleur's Square
Jackson, MS 39211
(601) 982-5555
West Region
Kim B. Rich
1700 Lincoln Street
Suite 1750
Denver, CO 80203
(303) 832-8680
Branch Offices
California
Brian F. Quinn
2290 North First Street
Suite 100
San Jose, CA 95131
(408) 435-0650
Colorado
Anita Devan
370 Seventeenth Street
Suite 2800
Denver, CO 80202
(303) 893-1166
Connecticut
Terence J. Welsh
175 Capital Boulevard
Rocky Hill, CT 06067
(203) 563-8011
Florida
M. Lee Patkus
600 N. Westshore Boulevard
Suite 400
Tampa, FL 33609
(813) 289-4589
Georgia
Robert R. Southard
9000 Central Park West
Suite 600
Atlanta, GA 30328
(404) 390-5500
Illinois
Hernando Madronero
Corporetum Office Campus
850 Warrenville Road
2nd Floor
Lisle, IL 60532
(708) 968-4500
Indiana
Terry A. Toohey
135 N. Pennsylvania Street
Suite 1000
Indianapolis, IN 46204
(317) 267-2700
Iowa
Charles D. Wright
4200 Corporate Drive
West Des Moines, IA 50266
(515) 223-5700
Kentucky
R. Paul Feemster
USF&G Building
9911 Shelbyville Road
Suite 200
Louisville, KY 40223
(502) 429-7000
Maryland
Marita Zuraitis
Northeast Building
5801 Smith Avenue
Baltimore, MD 21209
(410) 578-2000
Michigan
Derrick D. Iseler
1900 West Big Beaver Road
Troy, MI 48084
(810) 643-6433
Mississippi
Anthony D. Everett
USF&G Building
143 LeFleur's Square
Jackson, MS 39211
(601) 982-5555
Missouri
Charles E. Foura
7500 College Boulevard
Suite 300
Overland Park, KS 66210
(913) 661-9700
L. Bud Roberts
910 North Eleventh Street
St. Louis, MO 63101
(314) 241-9190
Montana
Glen E. Dye
1625 Eleventh Avenue
Helena, MT 59601
(406) 442-2270
New York
William R. Cossari
2500 Westchester Avenue
Purchase, NY 10577
(914) 251-2300
John J. Murphy, Jr.
5786 Widewaters Parkway
DeWitt, NY 13214
(315) 449-5100
North Carolina
Louis R. Snage, Jr.
7415 Pineville-Matthews Road
Suite 300
Charlotte, NC 28226-3267
(704) 544-0400
Ohio
Joseph J. Brossard
4936 Blazer Parkway
P.O. Box 7188
Dublin, OH 43017-0788
(614) 793-1500
Oklahoma
Larry W. Fitch
3500 Northwest 56th Street
Oklahoma City, OK 73112
(405) 946-6440
Oregon
Thomas G. Iverson
Five Centerpointe Drive
3rd Floor
Lake Oswego, OR 97035
(503) 684-0880
Pennsylvania
John A. Umberger
930 Harvest Drive
Suite 400
P.O. Box 3007
Blue Bell, PA 19422
(215) 540-2700
Leonard H. Allen
3211 North Front Street
Harrisburg, PA 17110
(717) 234-7941
Richard W. Ramell
One Mellon Bank Center
500 Grant Street
Pittsburgh, PA 15219
(412) 261-2550
Tennessee
Stephen A. Nafe
100 Westwood Place
Suite 200
Brentwood, TN 37027
(615) 370-8400
Utah
Melvin R. Workman
1100 East 6600 South
Salt Lake City, UT 84121
(801) 269-5656
Virginia
John H. Jennings, Jr.
2819 Parham Road
Richmond, VA 23294
(804) 747-0300
Washington
Janet D. Frank
Suite 300-North Tower
100 West Harrison Plaza
Seattle, WA 98119
(206) 285-3636
West Virginia
Charles W. Kincaid, Jr.
1409 Greenbrier Street
Charleston, WV 25311
(304) 344-1692
Wisconsin
Robert D. Prunty
2525 North Mayfair Road
Milwaukee, WI 53226
(414) 476-3600
Underwriting Offices
Alabama
1200 Corporate Drive
Suite 300
Birmingham, AL 35242
(205) 995-9606
Arizona
2228 West Northern Avenue
Suite B 110
Phoenix, AZ 85021
(602) 864-2550
Arkansas
1 Shakleford Drive
Little Rock, AR 72211
(501) 224-5200
Illinois
101 West Second Street
Dixon, IL 61021
(815) 284-5500
Louisiana
2450 Severn Avenue
Suite 302
Metarie, LA 70001
(504) 837-9970
Massachusetts
300 Crown Colony Drive
Quincy, MA 02169
(617) 786-0087
Minnesota
7300 Metro Boulevard
Suite 645
Edina, MN 55439
(612) 831-6504
Mississippi
2680 North Hill Street
Meridian, MS 39303
(601) 693-1731
North Carolina
3117 Poplarwood Court
Suite 300
Raleigh, NC 27604
(919) 872-1313
Texas
4099 McEwen
Suite 250
Dallas, TX 75244
(214) 386-4542
USF&G Corporation
Shareholders' Information
Corporate Headquarters/Home Office
100 Light Street
Baltimore, Maryland 21202
(410) 547-3000
Annual Meeting
The Annual Meeting of Shareholders will be held
Wednesday, May 17, 1995, at 9:00 a.m. at the Sheraton Inner
Harbor Hotel, 300 South Charles Street, Baltimore, Maryland.
Reports Filed with the Securities and Exchange Commission
A copy of USF&G Corporation's Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, as filed with the Securities and Exchange
Commission, may be obtained without charge upon request to John
F. Hoffen, Jr., corporate secretary at the corporate headquarters.
Stock Exchange Listing
Common Stock: USF&G Corporation's common stock (ticker: FG) is listed
on the New York Stock Exchange. The common stock appears in the NYSE Composite
Listing as USFG. The common stock is also listed on the
Pacific Stock Exchange, the London Stock Exchange, and the Stock Exchanges of
Basle, Geneva, and Zurich, Switzerland.
Preferred Stock: USF&G Corporation's $4.10 Series A Convertible Exchangeable
Preferred Stock (ticker: FGpA) is listed on the New
York Stock Exchange. The preferred stock appears in the NYSE
Composite Listing as USFGpf, and is also listed on the Pacific
Stock Exchange.
Transfer Agent/Registrar
First Chicago Trust Company of New York
is transfer agent, registrar, and dividend disbursing agent for
USF&G Corporation's common and preferred stock. Inquiries
regarding stock transfer requirements, dividend payments, the
Dividend Reinvestment and Stock Purchase Plan, or address
changes should be addressed to:
First Chicago Trust Company of New York
P.O. Box 2500 Jersey City, NJ 07303-2500
Attention: Shareholders' Relations Department 1-800-446-2617
Stock and Dividend Information
The following tabulation
presents 1994 and 1993 data on the sale prices of USF&G
Corporation's common stock on the New York Stock Exchange
Composite Listing by quarter, and the dividends paid per share
of common stock. At February 24, 1995, there were 33,689
shareholders of record and the closing price was $14 7/8.
Sale Price
High Low Dividends Paid
1994
First quarter $16 1/8 $ 13 $.05
Second quarter 14 11 11/16 .05
Third quarter 14 12 1/8 .05
Fourth quarter 14 5/8 12 5/8 .05
1993
First quarter $17 5/8 $ 11 1/8 $.05
Second quarter 19 5/8 15 3/4 .05
Third quarter 19 5/8 13 7/8 .05
Fourth quarter 15 1/4 12 3/8 .05
Dividend Reinvestment and Stock Purchase Plan
The plan provides
shareholders with a convenient way to invest cash dividends and
to make optional cash investments in additional shares of USF&G Corporation's
common stock without payment of any charges for
brokerage commissions or fees. First Chicago Trust Company of
New York administers the plan and additional information may be
obtained from them by written request.
For Additional Information
Any investors and analysts requesting
additional information regarding USF&G Corporation may dial our
new toll-free number, 1-800-335-USFG (8734) or call directly:
Jennifer Macke
Investor Relations Department
(410) 547-3939
Independent Auditors
Ernst & Young LLP
One North Charles Street
Baltimore, Maryland 21201
<PAGE>
APPENDIX TO ELECTRONIC FORMAT DOCUMENT
(*List of graphic and image material in 1994 Annual Report)
*Inside of Front Cover
----------------------------------------------------------------------
| Fix the --> Build with --> Leverage |
| Foundation Vision Leadership |
|---------------------------------------------------------------------|
Profit | Mission | Culture/Core Values | |
(x axis)| Strategy | Market/Customer | |
| Leadership | Orientation | Extend from |
| Competitive Resources | Competitive | positions of |
| | Differentiation | leadership |
| Economic Structure | | |
---------------------------------------------------------------------
(y axis) 1990 1993 1996
(caption) "In 1994, the initial year of our 'build with vision' phase of
development, we further strengthened our balance sheet, refined
corporate and business segment strategies, and implemented a broad
array of new product, market, and technology development
initiatives." --Norm Blake
*Page 1
GRAPH Strong Earnings Growth and Improved Returns
(in millions except return on equity)
Net Income Operating Income Net Income ROE
1990 $(569) $ (49) (31.8)%
1991 (176) (122) (13.6)
1992 28 (61) 2.1
1993 165 96 12.3
1994 232 130 17.3
(footnote) Operating income(loss) is defined as income from continuing
operations before realized gains, facilities exit costs, certain
income tax adjustments, and cumulative effect of accounting changes.
The information presented in this manner is not intended to conform
with GAAP.
GRAPH Continued Improvement in Property/Casualty
(in percent)
USF&G Industry USF&G Industry
Combined Combined Loss Loss
Ratio # Ratio # Ratio Ratio
1990 115.3 109.6 81.9 82.3
1991 117.7 108.8 84.1 81.1
1992 117.2 115.7 82.0 88.1
1993 109.4 107.3 75.4 79.8
1994 108.4 109.4 73.1 82.3
(footnote) #Includes Policyholders' Dividends, 1994 industry ratios are
estimates.
*Page 2 PHOTO described in respective page of Annual Report
*Page 4 PHOTO described in respective page of Annual Report
*Page 5 PHOTO described in respective page of Annual Report
*Page 6 PHOTO described in respective page of Annual Report
*Page 7 PHOTO described in respective page of Annual Report
*Page 8 PHOTO described in respective page of Annual Report
*Page 9
GRAPH Property/Casualty Insurance (pie chart)
% of P/C Premiums Written
Commercial Lines 52%
Personal Lines 24
Fidelity/Surety 6
F&G Re 18
GRAPH Life Insurance (pie chart)
% of Life Sales
Structured Settlements 31%
Tax-sheltered annuities 22
Single-premium deferred
annuities 29
Other annuities 14
Term and universal life 4
*Page 62 PHOTOS(13) described in respective page of Annual Report
USF&G Corporation
Exhibit 21 - Subsidiaries of the Registrant
Name of Subsidiary State of Incorporation
United States Fidelity and Guaranty Company Maryland
Fidelity & Guaranty Life Insurance Company Maryland
The names of other subsidiaries have been omitted because, when considered in
the aggregate as a single subsidiary, they would not constitute a significant
subsidiary as defined by Regulation S-X.
USF&G Corporation
Exhibit 23 - Consent of Independent Auditors
USF&G Corporation
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of USF&G Corporation of our report dated February 24, 1995, included in the 1994
Annual Report to Shareholders of USF&G Corporation.
Our audit also included the financial statement schedules of USF&G Corporation
listed in Item 14 (a). These schedules are the responsibility of the
Corporation's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth herein.
We also consent to the incorporation by reference in the Registration Statements
Number 33-20449, 33-9405, 33-33271, 33-21132, 33-50825, and 33-51859 on
Form S-3, and Number 2-72026, 2-61626, 2-98232, 33-16111, 33-38113, 33-35095,
33-43132, 33-45664, 33-45665, 33-61965, 33-55667, 33-55669, and 33-55671 on
Form S-8, of USF&G Corporation, of our report dated February 24, 1995, with
respect to the consolidated financial statements incorporated herein by
reference, and our report included in the pre ceding paragraph with respect to
the financial statement schedules included in this Annual Report (Form 10-K) of
USF&G Corporation.
ERNST & YOUNG LLP
Baltimore, Maryland
March 30, 1995
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<DEBT-HELD-FOR-SALE> 3,981
<DEBT-CARRYING-VALUE> 4,650
<DEBT-MARKET-VALUE> 4,275
<EQUITIES> 70
<MORTGAGE> 349
<REAL-ESTATE> 662
<TOTAL-INVEST> 10,421
<CASH> 67
<RECOVER-REINSURE> 554
<DEFERRED-ACQUISITION> 495
<TOTAL-ASSETS> 13,774
<POLICY-LOSSES> 9,893
<UNEARNED-PREMIUMS> 931
<POLICY-OTHER> 11
<POLICY-HOLDER-FUNDS> 85
<NOTES-PAYABLE> 616
<COMMON> 239
0
331
<OTHER-SE> 799
<TOTAL-LIABILITY-AND-EQUITY> 13,774
2,435
<INVESTMENT-INCOME> 743
<INVESTMENT-GAINS> 5
<OTHER-INCOME> 38
<BENEFITS> 2,079
<UNDERWRITING-AMORTIZATION> 653
<UNDERWRITING-OTHER> 318
<INCOME-PRETAX> (49)
<INCOME-TAX> (281)
<INCOME-CONTINUING> 232
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 232
<EPS-PRIMARY> 2.14
<EPS-DILUTED> 1.86
<RESERVE-OPEN> 5,276
<PROVISION-CURRENT> 1,696
<PROVISION-PRIOR> (5)
<PAYMENTS-CURRENT> 613
<PAYMENTS-PRIOR> 1,270
<RESERVE-CLOSE> 5,084
<CUMULATIVE-DEFICIENCY> (5)
</TABLE>
page: 72
<TABLE>
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
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.
Part 5 - history of claims.
Part 6 - history of premiums earned.
Schedule P Interrogatories
(2) Lines of business A through M, R, and S 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)
SCHEDULE P - PART 1 - SUMMARY
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| | Premiums Earned | Loss and Loss Expense Payments
| 1 |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 155,501 | 79,683 | 32,973 | 9,413 | 13,655 |
|`2.`1985` | 3,142,333 | 416,447 | 2,725,886 | 2,581,423 | 435,556 | 202,820 | 19,090 | 111,857 |
|`3.`1986` | 3,844,761 | 469,224 | 3,375,537 | 2,301,124 | 307,045 | 188,480 | 12,758 | 100,918 |
|`4.`1987` | 4,131,013 | 563,250 | 3,567,763 | 2,301,288 | 397,943 | 175,280 | 16,957 | 92,051 |
|`5.`1988` | 4,332,667 | 758,689 | 3,573,978 | 2,374,890 | 502,526 | 173,030 | 14,977 | 92,367 |
|`6.`1989` | 4,327,680 | 986,791 | 3,340,889 | 2,594,939 | 638,705 | 165,360 | 14,897 | 87,770 |
|`7.`1990` | 4,261,322 | 927,403 | 3,333,919 | 2,327,777 | 582,202 | 173,440 | 17,499 | 101,952 |
|`8.`1991` | 3,682,715 | 699,588 | 2,983,127 | 1,847,732 | 366,876 | 125,042 | 9,496 | 63,135 |
|`9.`1992` | 3,156,709 | 696,137 | 2,460,572 | 1,669,771 | 541,097 | 77,066 | 12,531 | 43,069 |
|10.`1993` | 2,959,792 | 883,225 | 2,076,567 | 1,007,460 | 260,425 | 38,862 | 2,732 | 29,836 |
|11.`1994` | 2,777,987 | 580,355 | 2,197,632 | 603,794 | 78,874 | 12,763 | 1,136 | 15,278 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 19,765,699 | 4,190,932 | 1,365,116 | 131,486 | 751,888 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| 12 |
10 | 11 | |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
<C> <C> <C>
| | |
5,446 | 104,824 | X X X X |
112,309 | 2,441,906 | X X X X |
119,988 | 2,289,789 | X X X X |
114,732 | 2,176,400 | X X X X |
120,047 | 2,150,464 | X X X X |
128,757 | 2,235,454 | X X X X |
137,076 | 2,038,592 | X X X X |
140,908 | 1,737,310 | X X X X |
124,108 | 1,317,317 | X X X X |
90,734 | 873,899 | X X X X |
60,424 | 596,971 | X X X X |
- --------------|--------------|--------------|
1,154,529 | 17,962,926 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 544,838 | 143,827 | 338,296 | 94,079 | 0 | 0 | 126,377 | 4,395 |
|`2.`1985` | 109,149 | 32,599 | 68,584 | 5,432 | 0 | 0 | 25,388 | 603 |
|`3.`1986` | 91,771 | 13,181 | 75,594 | 7,854 | 0 | 0 | 29,089 | 865 |
|`4.`1987` | 111,895 | 23,986 | 97,978 | 8,233 | 0 | 0 | 33,924 | 911 |
|`5.`1988` | 201,044 | 85,800 | 126,336 | 22,834 | 0 | 0 | 42,893 | 843 |
|`6.`1989` | 243,972 | 106,256 | 156,573 | 21,289 | 0 | 0 | 52,313 | 1,842 |
|`7.`1990` | 317,483 | 131,161 | 173,442 | 28,067 | 0 | 0 | 75,681 | 2,959 |
|`8.`1991` | 257,242 | 48,058 | 221,390 | 59,033 | 0 | 0 | 93,811 | 4,456 |
|`9.`1992` | 324,903 | 77,703 | 237,659 | 92,249 | 0 | 0 | 102,866 | 3,573 |
|10.`1993` | 339,617 | 92,041 | 359,893 | 141,266 | 0 | 0 | 120,130 | 4,438 |
|11.`1994` | 513,478 | 106,694 | 627,315 | 152,685 | 0 | 0 | 150,211 | 14,255 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 3,055,392 | 861,306 | 2,483,060 | 633,021 | 0 | 0 | 852,683 | 39,140 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct |
Anticipated | Unpaid | Unpaid | and Assumed |
- --------------|--------------|--------------|-------------|
<C> <C> <C> <C>
| | | |
(8,018)| 24,885 | 792,095 | X X X X |
(4,216)| 6,218 | 170,705 | X X X X |
(3,939)| 6,479 | 181,033 | X X X X |
(4,819)| 7,829 | 218,496 | X X X X |
(7,517)| 10,059 | 270,855 | X X X X |
(8,062)| 13,054 | 336,525 | X X X X |
(11,079)| 17,291 | 421,710 | X X X X |
(13,101)| 20,254 | 481,150 | X X X X |
(13,231)| 24,800 | 516,703 | X X X X |
(15,175)| 30,825 | 612,720 | X X X X |
(26,958)| 48,288 | 1,065,658 | X X X X |
- --------------|--------------|--------------|-------------|
(116,115)| 209,982 | 5,067,650 | X X X X |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <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 | 81,517 | 6,514 |
|`2.`1985` | 3,105,891 | 493,280 | 2,612,611 | 98.8 | 118.4 | 95.8 | 16,254 | 2,413 |
|`3.`1986` | 2,812,525 | 341,703 | 2,470,822 | 73.2 | 72.8 | 73.2 | 14,468 | 2,416 |
|`4.`1987` | 2,842,926 | 448,030 | 2,394,896 | 68.8 | 79.5 | 67.1 | 14,149 | 2,722 |
|`5.`1988` | 3,048,299 | 626,980 | 2,421,319 | 70.4 | 82.6 | 67.7 | 16,986 | 3,243 |
|`6.`1989` | 3,354,968 | 782,989 | 2,571,979 | 77.5 | 79.3 | 77.0 | 19,732 | 3,958 |
|`7.`1990` | 3,222,190 | 761,888 | 2,460,302 | 75.6 | 82.2 | 73.8 | 18,967 | 4,228 |
|`8.`1991` | 2,706,379 | 487,919 | 2,218,460 | 73.5 | 69.7 | 74.4 | 15,658 | 3,972 |
|`9.`1992` | 2,561,173 | 727,153 | 1,834,020 | 81.1 | 104.5 | 74.5 | 9,678 | 3,995 |
|10.`1993` | 1,987,521 | 500,902 | 1,486,619 | 67.2 | 56.7 | 71.6 | 5,243 | 3,449 |
|11.`1994` | 2,016,273 | 353,644 | 1,662,629 | 72.6 | 60.9 | 75.7 | 0 | 1,088 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|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 | 212,652 | 37,998 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
Inter-Company |--------------#--------------|
Pooling | 34 | 35 |
Participation | Losses |Loss Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|---------------
<C> <C> <C>
| | |
X X X X | 563,711 | 140,353 |
0.0 | 123,448 | 28,590 |
0.0 | 131,862 | 32,287 |
0.0 | 163,505 | 38,120 |
0.0 | 201,760 | 48,866 |
0.0 | 253,268 | 59,567 |
0.0 | 312,730 | 85,785 |
0.0 | 355,883 | 105,637 |
0.0 | 382,932 | 120,098 |
0.0 | 460,960 | 143,068 |
0.0 | 881,414 | 183,156 |
- --------------|--------------|--------------|
X X X X | 3,831,473 | 985,527 |
| | |
- -------------->-------------->-------------->
Page 73
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 2 - SUMMARY
<CAPTION>
!-------------------#---------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported At Year End (000 omitted)
| Years in Which |---------------------------#-------------#-------------#-------------#-------------#-------------#-------------
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | 1992
|-------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------
| | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 2,020,586 | 2,118,881 | 2,263,719 | 2,437,117 | 2,583,202 | 2,757,848 | 2,879,831 | 2,966,543
|``2.```1985` | 2,142,607 | 2,245,106 | 2,282,630 | 2,361,121 | 2,417,339 | 2,482,675 | 2,504,166 | 2,516,665
|``3.```1986` | X X X X | 2,411,082 | 2,341,214 | 2,318,178 | 2,279,204 | 2,330,633 | 2,349,777 | 2,367,338
|``4.```1987` | X X X X | X X X X | 2,438,545 | 2,317,450 | 2,230,906 | 2,284,996 | 2,261,356 | 2,286,080
|``5.```1988` | X X X X | X X X X | X X X X | 2,331,366 | 2,272,482 | 2,393,038 | 2,294,603 | 2,326,986
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 2,484,773 | 2,462,974 | 2,513,285 | 2,469,398
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 2,436,245 | 2,427,489 | 2,403,989
|``8.```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 | 2,286,833 | 2,214,445
|``9.```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 | 1,837,632
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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
|
<-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------#-----------------------------#
| Development |
#-------------#-------------|--------------#--------------|
| 10 | 11 | 12 | 13 |
| 1993 | 1994 | One Year | Two Year |
|-------------|-------------|--------------|--------------|
| | | | |
<C> <C> <C> <C>
| | | | |
| 3,094,660 | 3,121,383 | 26,723 | 154,840 |
| 2,508,329 | 2,509,119 | 790 | (7,546)|
| 2,361,246 | 2,359,673 | (1,573)| (7,665)|
| 2,290,880 | 2,286,866 | (4,014)| 786 |
| 2,308,609 | 2,307,955 | (654)| (19,031)|
| 2,467,653 | 2,449,162 | (18,491)| (20,236)|
| 2,342,293 | 2,323,317 | (18,976)| (80,672)|
| 2,090,395 | 2,069,306 | (21,089)| (145,139)|
| 1,741,753 | 1,692,589 | (49,164)| (145,043)|
| 1,407,819 | 1,368,982 | (38,837)| X X X X |
| X X X X | 1,554,294 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
| (125,285)| (269,706)|
| | |
- ---------------------------->-------------->-------------->
SCHEDULE P - PART 3 - SUMMARY
<CAPTION>
!-------------------#---------------------------------------------------------------------------------------------------------------
| |
| 1 | Cumulative Paid Losses and Allocated Expenses At Year End (000 omitted)
| Years in Which |-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
| Losses Were | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | 1992
| | | | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 610,747 | 1,060,513 | 1,369,338 | 1,618,387 | 1,833,740 | 1,970,743 | 2,079,921
|``2.```1985` | 877,117 | 1,477,411 | 1,772,308 | 1,966,184 | 2,105,231 | 2,197,999 | 2,252,315 | 2,279,081
|``3.```1986` | X X X X | 823,675 | 1,342,052 | 1,633,087 | 1,829,361 | 1,964,805 | 2,053,589 | 2,110,387
|``4.```1987` | X X X X | X X X X | 623,238 | 1,087,547 | 1,349,137 | 1,725,565 | 1,892,354 | 1,971,535
|``5.```1988` | X X X X | X X X X | X X X X | 729,935 | 1,260,773 | 1,543,332 | 1,756,160 | 1,896,074
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 770,924 | 1,361,936 | 1,687,467 | 1,885,933
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 751,137 | 1,301,579 | 1,578,159
|``8.```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 | 726,068 | 1,175,879
|``9.```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 | 612,444
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
- ---------------------------#--------------#--------------#
| 12 | 13 |
| Number of | Number of |
#-------------#-------------| Claims | Claims |
| 10 | 11 | Closed With | Closed |
| 1993 | 1994 | Loss | Without Loss |
| | | Payment | Payment |
|-------------|-------------|--------------|--------------|
<C> <C> <C> <C>
| | | | |
| 2,185,750 | 2,285,128 | X X X X | X X X X |
| 2,309,398 | 2,329,598 | X X X X | X X X X |
| 2,142,303 | 2,169,800 | X X X X | X X X X |
| 2,025,215 | 2,061,668 | X X X X | X X X X |
| 1,971,662 | 2,030,417 | X X X X | X X X X |
| 2,016,227 | 2,106,696 | X X X X | X X X X |
| 1,776,001 | 1,901,516 | X X X X | X X X X |
| 1,427,667 | 1,596,402 | X X X X | X X X X |
| 998,141 | 1,193,210 | X X X X | X X X X |
| 489,488 | 783,165 | X X X X | X X X X |
| X X X X | 536,548 | X X X X | X X X X |
| | | | |
>------------->------------->-------------->-------------->
SCHEDULE P - PART 4 - SUMMARY
<CAPTION>
!-------------------#-------------------------------------------------------------------------------------------------
| 1 | Bulk and Incurred But Not Reported Reserves on Losses and Allocated Expenses at
| Years in Which |-------------#-------------#-------------#-------------#-------------#-------------#-------------
| Losses | 2 | 3 | 4 | 5 | 6 | 7 | 8
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991
|-------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
````````````|``1.`````Prior` | 708,173 | 420,833 | 271,261 | 225,629 | 222,807 | 280,654 | 301,982
``````````````|``2.`````1985` | 713,681 | 358,461 | 191,786 | 136,709 | 105,938 | 124,537 | 119,515
``````````````|``3.`````1986` | X X X X | 1,047,584 | 608,162 | 377,661 | 212,452 | 178,951 | 132,433
``````````````|``4.`````1987` | X X X X | X X X X | 1,143,801 | 651,481 | 386,088 | 315,649 | 175,577
``````````````|``5.`````1988` | X X X X | X X X X | X X X X | 1,043,348 | 588,535 | 504,699 | 257,546
``````````````|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 1,092,267 | 644,732 | 460,780
``````````````|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 1,070,045 | 665,496
``````````````|``8.`````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 | 953,453
``````````````|``9.`````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
``````````````|`10.`````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
``````````````|`11.`````1994` | X X X X | 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>
- -------------------------------------------#
Year End (000 omitted) |
#-------------#-------------#--------------|
| 9 | 10 | 11 |
| 1992 | 1993 | 1994 |
|-------------|-------------|--------------|
<C> <C> <C>
| | | |
| 356,040 | 442,702 | 374,296 |
| 129,659 | 126,504 | 94,371 |
| 125,429 | 132,241 | 101,637 |
| 168,827 | 164,297 | 129,230 |
| 223,953 | 183,152 | 150,266 |
| 312,733 | 250,602 | 195,553 |
| 477,407 | 320,209 | 227,926 |
| 641,678 | 373,665 | 258,749 |
| 724,041 | 418,843 | 248,869 |
| X X X X | 555,438 | 337,379 |
| X X X X | X X X X | 610,587 |
| | | |
>------------->------------->-------------->
Page: Page 74
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C> |
| | | | | | | | | |
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 163 | 0 | 57 | 0 | 8 |
|`2.`1985` | 227,650 | 16,606 | 211,044 | 182,072 | 22,379 | 4,625 | (97)| 1,585 |
|`3.`1986` | 246,295 | 15,410 | 230,885 | 140,046 | 4,910 | 4,053 | (103)| 2,178 |
|`4.`1987` | 244,766 | 5,446 | 239,320 | 121,500 | 444 | 3,808 | 62 | 1,507 |
|`5.`1988` | 228,322 | 4,738 | 223,584 | 120,628 | 11 | 3,999 | 66 | 2,356 |
|`6.`1989` | 221,373 | 4,005 | 217,368 | 154,552 | 8,744 | 4,437 | 274 | 2,235 |
|`7.`1990` | 221,970 | 6,038 | 215,932 | 132,800 | (49)| 5,383 | 51 | 1,599 |
|`8.`1991` | 223,033 | 5,060 | 217,973 | 157,115 | 351 | 4,459 | 104 | 1,769 |
|`9.`1992` | 205,577 | 9,150 | 196,427 | 246,509 | 72,430 | 3,547 | 2,692 | 1,024 |
|10.`1993` | 174,684 | 19,202 | 155,482 | 102,058 | 7,802 | 1,290 | 73 | 499 |
|11.`1994` | 165,494 | 31,054 | 134,440 | 98,769 | 7,540 | 587 | 37 | 254 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 1,456,212 | 124,562 | 36,245 | 3,159 | 15,014 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
<C> | <C> | <C> |
| | |
| | |
8 | 228 | X X X X |
11,819 | 176,234 | 84,681 |
15,286 | 154,578 | 67,406 |
13,886 | 138,688 | 62,506 |
12,647 | 137,197 | 59,153 |
15,946 | 165,917 | 75,045 |
16,787 | 154,968 | 66,752 |
18,261 | 179,380 | 74,331 |
18,718 | 193,652 | 65,183 |
15,490 | 110,963 | 54,836 |
13,216 | 104,995 | 56,371 |
- --------------|--------------|--------------|
152,064 | 1,516,800 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 90 | 12 | (6)| 0 | 0 | 0 | 65 | 0 |
|`2.`1985` | 66 | 0 | 88 | 1 | 0 | 0 | 102 | 1 |
|`3.`1986` | 461 | 0 | 211 | 0 | 0 | 0 | 108 | 0 |
|`4.`1987` | 763 | 0 | 1,038 | 0 | 0 | 0 | 192 | 0 |
|`5.`1988` | 628 | 0 | 570 | 1 | 0 | 0 | 269 | 1 |
|`6.`1989` | 996 | 0 | 672 | 57 | 0 | 0 | 437 | 1 |
|`7.`1990` | 2,183 | 10 | 459 | 1 | 0 | 0 | 886 | 2 |
|`8.`1991` | 3,352 | 0 | 956 | 0 | 0 | 0 | 1,291 | 0 |
|`9.`1992` | 5,990 | 537 | 1,007 | 2 | 0 | 0 | 2,125 | 3 |
|10.`1993` | 5,866 | 608 | 1,651 | 9 | 0 | 0 | 2,272 | 59 |
|11.`1994` | 25,575 | 2,329 | 8,612 | 1,908 | 0 | 0 | 3,196 | 77 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 45,970 | 3,496 | 15,258 | 1,979 | 0 | 0 | 10,943 | 144 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
(6)| 4 | 141 | 8 |
(6)| 9 | 263 | 3 |
(9)| 21 | 801 | 5 |
(23)| 21 | 2,014 | 8 |
(42)| 28 | 1,493 | 19 |
(85)| 54 | 2,101 | 35 |
(268)| 133 | 3,648 | 72 |
(285)| 217 | 5,816 | 145 |
(540)| 404 | 8,984 | 267 |
(744)| 495 | 9,608 | 421 |
(970)| 2,053 | 35,122 | 3,931 |
- --------------|--------------|--------------|-------------|
(2,978)| 3,439 | 69,991 | 4,914 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 198,781 | 22,284 | 176,497 | 87.3 | 134.2 | 83.6 | 0 | 0 |
|`3.`1986` | 160,186 | 4,807 | 155,379 | 65.0 | 31.2 | 67.3 | 0 | 0 |
|`4.`1987` | 141,208 | 506 | 140,702 | 57.7 | 9.3 | 58.8 | 0 | 0 |
|`5.`1988` | 138,769 | 79 | 138,690 | 60.8 | 1.7 | 62.0 | 0 | 0 |
|`6.`1989` | 177,094 | 9,076 | 168,018 | 80.0 | 226.6 | 77.3 | 0 | 0 |
|`7.`1990` | 158,631 | 15 | 158,616 | 71.5 | 0.2 | 73.5 | 0 | 0 |
|`8.`1991` | 185,651 | 455 | 185,196 | 83.2 | 9.0 | 85.0 | 0 | 0 |
|`9.`1992` | 278,300 | 75,664 | 202,636 | 135.4 | 826.9 | 103.2 | 0 | 0 |
|10.`1993` | 129,122 | 8,551 | 120,571 | 73.9 | 44.5 | 77.5 | 0 | 0 |
|11.`1994` | 152,008 | 11,891 | 140,117 | 91.9 | 38.3 | 104.2 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 72 | 69 |
0.0 | 153 | 110 |
0.0 | 672 | 129 |
0.0 | 1,801 | 213 |
0.0 | 1,197 | 296 |
0.0 | 1,611 | 490 |
0.0 | 2,631 | 1,017 |
0.0 | 4,308 | 1,508 |
0.0 | 6,458 | 2,526 |
0.0 | 6,900 | 2,708 |
0.0 | 29,950 | 5,172 |
- --------------|--------------|--------------|
X X X X | 55,753 | 14,238 |
| | |
- -------------->-------------->-------------->
Page: Page 75
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 3,066 | 1,465 | 250 | 8 | 477 |
|`2.`1985` | 362,303 | 27,468 | 334,835 | 339,473 | 25,932 | 17,495 | 577 | 5,783 |
|`3.`1986` | 375,875 | 28,452 | 347,423 | 331,212 | 28,071 | 17,240 | 905 | 6,292 |
|`4.`1987` | 384,704 | 37,207 | 347,497 | 327,861 | 38,085 | 15,423 | 1,137 | 5,821 |
|`5.`1988` | 398,017 | 55,787 | 342,230 | 329,104 | 48,134 | 16,477 | 1,578 | 6,276 |
|`6.`1989` | 416,775 | 61,260 | 355,515 | 343,253 | 50,673 | 16,467 | 2,007 | 6,976 |
|`7.`1990` | 440,104 | 57,837 | 382,267 | 324,557 | 44,253 | 16,961 | 1,900 | 8,621 |
|`8.`1991` | 450,711 | 26,970 | 423,741 | 296,820 | 15,872 | 18,116 | 745 | 7,227 |
|`9.`1992` | 366,643 | 8,381 | 358,262 | 187,730 | 3,875 | 8,869 | 103 | 5,857 |
|10.`1993` | 337,348 | 5,911 | 331,437 | 136,947 | 2,720 | 5,627 | 26 | 3,049 |
|11.`1994` | 275,727 | 4,647 | 271,080 | 65,832 | 803 | 1,821 | 8 | 1,134 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 2,685,855 | 259,883 | 134,746 | 8,994 | 57,513 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
<C> <C> <C>
63 | 1,906 | X X X X |
16,852 | 347,311 | 158,056 |
17,480 | 336,956 | 147,546 |
15,655 | 319,717 | 133,532 |
13,047 | 308,916 | 126,177 |
14,795 | 321,835 | 123,081 |
18,304 | 313,669 | 114,717 |
23,506 | 321,825 | 103,349 |
26,702 | 219,323 | 80,781 |
21,273 | 161,101 | 63,294 |
12,583 | 79,425 | 53,346 |
- --------------|--------------|--------------|
180,260 | 2,731,984 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 27,845 | 10,606 | 1,308 | 15 | 0 | 0 | 1,856 | 319 |
|`2.`1985` | 2,752 | 2,618 | 1,747 | 16 | 0 | 0 | 161 | 1 |
|`3.`1986` | 1,186 | 361 | 1,582 | 86 | 0 | 0 | 219 | 11 |
|`4.`1987` | 1,391 | 37 | 1,663 | 116 | 0 | 0 | 301 | 14 |
|`5.`1988` | 3,066 | 139 | 1,325 | 199 | 0 | 0 | 605 | 52 |
|`6.`1989` | 6,622 | 639 | 1,882 | 287 | 0 | 0 | 1,211 | 131 |
|`7.`1990` | 11,914 | 869 | 3,481 | 361 | 0 | 0 | 3,056 | 242 |
|`8.`1991` | 22,865 | 982 | 7,046 | 258 | 0 | 0 | 5,257 | 240 |
|`9.`1992` | 36,232 | 386 | 10,376 | 144 | 0 | 0 | 6,847 | 102 |
|10.`1993` | 61,108 | 752 | 20,555 | 241 | 0 | 0 | 9,423 | 153 |
|11.`1994` | 77,667 | 753 | 57,575 | 748 | 0 | 0 | 11,391 | 135 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 252,648 | 18,142 | 108,540 | 2,471 | 0 | 0 | 40,327 | 1,400 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
<C> <C> <C> <C>
| | | |
(84)| 762 | 20,831 | 183 |
23 | 117 | 2,142 | 46 |
123 | 170 | 2,699 | 33 |
132 | 197 | 3,385 | 50 |
92 | 245 | 4,851 | 125 |
16 | 410 | 9,068 | 234 |
(182)| 811 | 17,790 | 475 |
(651)| 1,568 | 35,256 | 1,151 |
(1,113)| 2,363 | 55,186 | 1,903 |
(1,849)| 3,931 | 93,871 | 3,439 |
(3,005)| 7,260 | 152,257 | 12,199 |
- --------------|--------------|--------------|-------------|
(6,498)| 17,834 | 397,336 | 19,838 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 378,597 | 29,144 | 349,453 | 104.5 | 106.1 | 104.4 | 0 | 0 |
|`3.`1986` | 369,089 | 29,434 | 339,655 | 98.2 | 103.5 | 97.8 | 0 | 0 |
|`4.`1987` | 362,491 | 39,389 | 323,102 | 94.2 | 105.9 | 93.0 | 0 | 0 |
|`5.`1988` | 363,869 | 50,102 | 313,767 | 91.4 | 89.8 | 91.7 | 0 | 0 |
|`6.`1989` | 384,640 | 53,737 | 330,903 | 92.3 | 87.7 | 93.1 | 0 | 0 |
|`7.`1990` | 379,084 | 47,625 | 331,459 | 86.1 | 82.3 | 86.7 | 0 | 0 |
|`8.`1991` | 375,178 | 18,097 | 357,081 | 83.2 | 67.1 | 84.3 | 0 | 0 |
|`9.`1992` | 279,119 | 4,610 | 274,509 | 76.1 | 55.0 | 76.6 | 0 | 0 |
|10.`1993` | 258,864 | 3,892 | 254,972 | 76.7 | 65.8 | 76.9 | 0 | 0 |
|11.`1994` | 234,129 | 2,447 | 231,682 | 84.9 | 52.7 | 85.5 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
<C> <C> <C>
X X X X | 18,532 | 2,299 |
0.0 | 1,865 | 277 |
0.0 | 2,321 | 378 |
0.0 | 2,901 | 484 |
0.0 | 4,053 | 798 |
0.0 | 7,578 | 1,490 |
0.0 | 14,165 | 3,625 |
0.0 | 28,671 | 6,585 |
0.0 | 46,078 | 9,108 |
0.0 | 80,670 | 13,201 |
0.0 | 133,741 | 18,516 |
- --------------|--------------|--------------|
X X X X | 340,575 | 56,761 |
| | |
- -------------->-------------->-------------->
Page: Page 76
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
|
|`1.`Prior` | X X X X | X X X X | X X X X | 701 | 32 | 1,365 | 0 | 12 |
|`2.`1985` | 347,749 | 43,409 | 304,340 | 353,597 | 46,101 | 24,288 | 279 | 4,132 |
|`3.`1986` | 451,376 | 29,279 | 422,097 | 305,136 | 21,605 | 22,930 | 356 | 3,982 |
|`4.`1987` | 504,537 | 27,137 | 477,400 | 298,947 | 26,203 | 25,610 | 1,679 | 3,158 |
|`5.`1988` | 461,136 | 39,794 | 421,342 | 290,842 | 34,360 | 23,736 | 2,505 | 4,374 |
|`6.`1989` | 424,657 | 43,290 | 381,367 | 278,210 | 37,292 | 22,195 | 3,370 | 2,997 |
|`7.`1990` | 419,676 | 42,803 | 376,873 | 246,464 | 33,944 | 21,102 | 2,743 | 3,645 |
|`8.`1991` | 384,380 | 39,874 | 344,506 | 184,253 | 17,341 | 16,021 | 1,661 | 2,688 |
|`9.`1992` | 319,764 | 39,044 | 280,720 | 125,676 | 16,583 | 10,257 | 1,338 | 2,271 |
|10.`1993` | 259,903 | 30,644 | 229,259 | 68,978 | 11,020 | 4,536 | 425 | 1,336 |
|11.`1994` | 232,561 | 29,388 | 203,173 | 29,478 | 4,000 | 1,877 | 89 | 747 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 2,182,282 | 248,481 | 173,917 | 14,445 | 29,342 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
<C> <C> <C>
40 | 2,074 | X X X X |
15,925 | 347,430 | 92,814 |
13,371 | 319,476 | 79,779 |
12,742 | 309,417 | 73,859 |
13,319 | 291,032 | 66,851 |
12,758 | 272,501 | 61,475 |
13,501 | 244,380 | 56,559 |
13,062 | 194,334 | 46,838 |
14,064 | 132,076 | 40,575 |
11,489 | 73,558 | 33,124 |
6,617 | 33,883 | 27,677 |
- --------------|--------------|--------------|
126,888 | 2,220,161 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 4,373 | 0 | 270 | 3 | 0 | 0 | 1,419 | 0 |
|`2.`1985` | 5,513 | 7,442 | 553 | 4 | 0 | 0 | 653 | 231 |
|`3.`1986` | 1,738 | 719 | 1,093 | 15 | 0 | 0 | 564 | 13 |
|`4.`1987` | 2,814 | 99 | 4,537 | 35 | 0 | 0 | 1,281 | 23 |
|`5.`1988` | 7,606 | 1,444 | 1,920 | 69 | 0 | 0 | 1,551 | 258 |
|`6.`1989` | 10,777 | 2,785 | 3,575 | 126 | 0 | 0 | 2,420 | 644 |
|`7.`1990` | 22,609 | 5,772 | 3,735 | 231 | 0 | 0 | 3,685 | 982 |
|`8.`1991` | 30,978 | 4,518 | 8,242 | 522 | 0 | 0 | 6,071 | 1,072 |
|`9.`1992` | 53,453 | 7,284 | 11,242 | 805 | 0 | 0 | 8,325 | 1,309 |
|10.`1993` | 53,625 | 6,765 | 31,672 | 1,536 | 0 | 0 | 10,002 | 1,155 |
|11.`1994` | 57,020 | 8,326 | 51,751 | 3,937 | 0 | 0 | 10,472 | 1,005 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 250,506 | 45,154 | 118,590 | 7,283 | 0 | 0 | 46,443 | 6,692 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
--------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
--------------|--------------|--------------|-------------|
<C> <C> <C> <C>
(10)| 33 | 6,092 | 42 |
(9)| 33 | (925)| 23 |
(43)| 79 | 2,727 | 30 |
(42)| 220 | 8,695 | 65 |
(189)| 294 | 9,600 | 133 |
(178)| 528 | 13,745 | 217 |
(255)| 929 | 23,973 | 425 |
(290)| 1,512 | 40,691 | 777 |
(494)| 2,582 | 66,204 | 1,435 |
(691)| 3,455 | 89,298 | 1,907 |
(834)| 4,847 | 110,822 | 5,772 |
--------------|--------------|--------------|-------------|
(3,035)| 14,512 | 370,922 | 10,826 |
| | | |
-------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 400,562 | 54,057 | 346,505 | 115.2 | 124.5 | 113.9 | 0 | 0 |
|`3.`1986` | 344,911 | 22,708 | 322,203 | 76.4 | 77.6 | 76.3 | 0 | 0 |
|`4.`1987` | 346,151 | 28,039 | 318,112 | 68.6 | 103.3 | 66.6 | 0 | 0 |
|`5.`1988` | 339,268 | 38,636 | 300,632 | 73.6 | 97.1 | 71.4 | 0 | 0 |
|`6.`1989` | 330,463 | 44,217 | 286,246 | 77.8 | 102.1 | 75.1 | 0 | 0 |
|`7.`1990` | 312,025 | 43,672 | 268,353 | 74.3 | 102.0 | 71.2 | 0 | 0 |
|`8.`1991` | 260,139 | 25,114 | 235,025 | 67.7 | 63.0 | 68.2 | 0 | 0 |
|`9.`1992` | 225,599 | 27,319 | 198,280 | 70.6 | 70.0 | 70.6 | 0 | 0 |
|10.`1993` | 183,757 | 20,901 | 162,856 | 70.7 | 68.2 | 71.0 | 0 | 0 |
|11.`1994` | 162,062 | 17,357 | 144,705 | 69.7 | 59.1 | 71.2 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
<C> <C> <C>
X X X X | 4,640 | 1,452 |
0.0 | (1,380)| 455 |
0.0 | 2,097 | 630 |
0.0 | 7,217 | 1,478 |
0.0 | 8,013 | 1,587 |
0.0 | 11,441 | 2,304 |
0.0 | 20,341 | 3,632 |
0.0 | 34,180 | 6,511 |
0.0 | 56,606 | 9,598 |
0.0 | 76,996 | 12,302 |
0.0 | 96,508 | 14,314 |
- --------------|--------------|--------------|
X X X X | 316,659 | 54,263 |
| | |
- -------------->-------------->-------------->
Page: Page 77
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1D - WORKERS' COMPENSATION
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
|`1.`Prior` | X X X X | X X X X | X X X X | 71,585 | 18,779 | 2,020 | 31 | 10,023 |
|`2.`1985` | 598,607 | 100,934 | 497,673 | 600,628 | 105,844 | 26,558 | 616 | 22,533 |
|`3.`1986` | 618,623 | 67,684 | 550,939 | 538,112 | 74,226 | 23,720 | 323 | 17,665 |
|`4.`1987` | 622,801 | 81,301 | 541,500 | 568,719 | 123,782 | 22,322 | 381 | 15,171 |
|`5.`1988` | 747,889 | 111,269 | 636,620 | 597,833 | 125,538 | 25,677 | 254 | 15,153 |
|`6.`1989` | 791,969 | 158,717 | 633,252 | 653,511 | 143,446 | 27,907 | 306 | 14,256 |
|`7.`1990` | 883,078 | 188,951 | 694,127 | 588,409 | 165,657 | 27,258 | 403 | 11,812 |
|`8.`1991` | 754,958 | 251,311 | 503,647 | 456,809 | 168,607 | 21,996 | 378 | 6,687 |
|`9.`1992` | 625,431 | 305,456 | 319,975 | 314,188 | 153,071 | 14,238 | 166 | 2,504 |
|10.`1993` | 457,088 | 306,269 | 150,819 | 159,274 | 104,036 | 6,947 | 106 | 653 |
|11.`1994` | 351,303 | 224,832 | 126,471 | 54,612 | 34,684 | 1,991 | 32 | 257 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 4,603,680 | 1,217,670 | 200,634 | 2,996 | 116,714 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------
<C> <C> <C>
| | |
3,167 | 57,962 | X X X X |
11,438 | 532,164 | 51,673 |
10,690 | 497,973 | 47,306 |
9,229 | 476,107 | 43,931 |
12,727 | 510,445 | 47,184 |
12,467 | 550,133 | 49,722 |
12,315 | 461,922 | 46,529 |
12,954 | 322,774 | 40,842 |
(9,597)| 165,592 | 32,214 |
(17,419)| 44,660 | 21,352 |
(12,252)| 9,635 | 14,939 |
- --------------|--------------|--------------|
45,719 | 3,629,367 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
|`1.`Prior` | 426,921 | 120,081 | 161,821 | 10,885 | 0 | 0 | 16,891 | 10 |
|`2.`1985` | 83,836 | 19,513 | 49,064 | 5,515 | 0 | 0 | 4,871 | 5 |
|`3.`1986` | 64,727 | 10,768 | 56,418 | 7,818 | 0 | 0 | 5,096 | 0 |
|`4.`1987` | 84,022 | 22,779 | 61,135 | 7,936 | 0 | 0 | 6,093 | 0 |
|`5.`1988` | 81,747 | 8,755 | 82,454 | 22,310 | 0 | 0 | 7,548 | 2 |
|`6.`1989` | 110,776 | 28,269 | 99,954 | 19,907 | 0 | 0 | 9,867 | 13 |
|`7.`1990` | 119,363 | 39,095 | 110,960 | 25,947 | 0 | 0 | 11,507 | 6 |
|`8.`1991` | 100,133 | 28,616 | 127,003 | 54,176 | 0 | 0 | 11,757 | 1 |
|`9.`1992` | 125,661 | 60,046 | 130,256 | 85,587 | 0 | 0 | 14,016 | 3 |
|10.`1993` | 100,376 | 64,119 | 149,569 | 116,498 | 0 | 0 | 13,614 | 21 |
|11.`1994` | 113,558 | 66,419 | 150,635 | 109,708 | 0 | 0 | 14,354 | 730 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 1,411,120 | 468,460 | 1,179,269 | 466,287 | 0 | 0 | 115,614 | 791 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
(6,857)| 12,323 | 486,980 | 3,096 |
(3,033)| 4,208 | 116,946 | 423 |
(3,056)| 4,220 | 111,875 | 478 |
(3,337)| 4,773 | 125,308 | 499 |
(4,492)| 5,547 | 146,229 | 697 |
(5,667)| 7,070 | 179,478 | 944 |
(6,530)| 7,663 | 184,445 | 1,295 |
(5,669)| 7,477 | 163,577 | 1,799 |
(4,165)| 8,470 | 132,767 | 2,444 |
(2,194)| 8,740 | 91,661 | 3,016 |
(1,786)| 9,658 | 111,348 | 6,318 |
- --------------|--------------|--------------|-------------|
(46,786)| 80,149 | 1,850,614 | 21,009 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 81,517 | 6,514 |
|`2.`1985` | 780,603 | 131,493 | 649,110 | 130.4 | 130.3 | 130.4 | 16,254 | 2,413 |
|`3.`1986` | 702,983 | 93,135 | 609,848 | 113.6 | 137.6 | 110.7 | 14,468 | 2,416 |
|`4.`1987` | 756,293 | 154,878 | 601,415 | 121.4 | 190.5 | 111.1 | 14,149 | 2,722 |
|`5.`1988` | 813,533 | 156,859 | 656,674 | 108.8 | 141.0 | 103.2 | 16,986 | 3,243 |
|`6.`1989` | 921,552 | 191,941 | 729,611 | 116.4 | 120.9 | 115.2 | 19,732 | 3,958 |
|`7.`1990` | 877,475 | 231,108 | 646,367 | 99.4 | 122.3 | 93.1 | 18,967 | 4,228 |
|`8.`1991` | 738,129 | 251,778 | 486,351 | 97.8 | 100.2 | 96.6 | 15,658 | 3,972 |
|`9.`1992` | 597,232 | 298,873 | 298,359 | 95.5 | 97.8 | 93.2 | 9,678 | 3,995 |
|10.`1993` | 421,101 | 284,780 | 136,321 | 92.1 | 93.0 | 90.4 | 5,243 | 3,449 |
|11.`1994` | 332,556 | 211,573 | 120,983 | 94.7 | 94.1 | 95.7 | 0 | 1,088 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|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 | 212,652 | 37,998 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| |
<C> <C> <C>
X X X X | 376,259 | 22,690 |
0.0 | 91,618 | 6,661 |
0.0 | 88,091 | 6,900 |
0.0 | 100,293 | 8,144 |
0.0 | 116,150 | 9,850 |
0.0 | 142,822 | 12,966 |
0.0 | 146,314 | 14,936 |
0.0 | 128,686 | 15,261 |
0.0 | 100,606 | 18,488 |
0.0 | 64,085 | 18,884 |
0.0 | 88,066 | 22,194 |
- --------------|--------------|--------------|
X X X X | 1,442,990 | 156,974 |
| | |
- -------------->-------------->-------------->
Page: Page 78
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1E - COMMERCIAL MULTIPLE PERIL
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 2,422 | (1)| 1,603 | 29 | 76 |
|`2.`1985` | 286,242 | 28,453 | 257,789 | 178,839 | 10,391 | 28,478 | 536 | 7,804 |
|`3.`1986` | 387,822 | 37,262 | 350,560 | 156,188 | 11,053 | 32,585 | 352 | 5,906 |
|`4.`1987` | 387,310 | 18,374 | 368,936 | 156,259 | 592 | 24,960 | 102 | 5,516 |
|`5.`1988` | 650,932 | 26,143 | 624,789 | 242,635 | 6,281 | 41,560 | 128 | 11,826 |
|`6.`1989` | 738,672 | 18,418 | 720,254 | 323,724 | 20,979 | 46,661 | 365 | 10,564 |
|`7.`1990` | 731,950 | 13,795 | 718,155 | 289,835 | 4,235 | 54,685 | 125 | 8,970 |
|`8.`1991` | 674,236 | 4,649 | 669,587 | 243,601 | 8,184 | 34,880 | 311 | 6,249 |
|`9.`1992` | 608,782 | 4,166 | 604,616 | 245,624 | 44,420 | 23,249 | 3,407 | 5,039 |
|10.`1993` | 601,391 | 5,797 | 595,594 | 179,717 | 9,355 | 9,639 | 211 | 4,158 |
|11.`1994` | 636,937 | 5,964 | 630,973 | 134,723 | 5,967 | 2,533 | 239 | 2,838 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 2,153,567 | 121,456 | 300,833 | 5,805 | 68,946 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
25 | 4,022 | X X X X |
10,613 | 207,003 | 45,195 |
11,231 | 188,599 | 37,058 |
13,103 | 193,628 | 33,836 |
27,972 | 305,758 | 59,664 |
35,388 | 384,429 | 79,725 |
35,772 | 375,932 | 78,761 |
31,888 | 301,874 | 74,750 |
35,242 | 256,288 | 68,667 |
34,291 | 214,081 | 72,256 |
23,820 | 154,870 | 72,121 |
- --------------|--------------|--------------|
259,345 | 2,586,484 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 7,273 | 20 | 2,759 | 3 | 0 | 0 | 7,560 | 3 |
|`2.`1985` | 1,927 | 0 | 1,484 | 3 | 0 | 0 | 2,071 | 2 |
|`3.`1986` | 5,242 | 0 | 1,177 | 2 | 0 | 0 | 3,176 | 2 |
|`4.`1987` | 4,449 | 0 | 1,730 | 1 | 0 | 0 | 5,275 | 0 |
|`5.`1988` | 12,727 | 0 | 10,911 | 2 | 0 | 0 | 14,563 | 2 |
|`6.`1989` | 21,821 | 0 | 18,173 | 19 | 0 | 0 | 23,353 | 3 |
|`7.`1990` | 49,075 | 1,068 | 22,992 | 5 | 0 | 0 | 35,660 | 3 |
|`8.`1991` | 55,132 | 169 | 35,437 | 4 | 0 | 0 | 46,066 | 4 |
|`9.`1992` | 65,419 | 537 | 40,854 | 9 | 0 | 0 | 50,857 | 21 |
|10.`1993` | 64,106 | 867 | 69,096 | 31 | 0 | 0 | 59,072 | 25 |
|11.`1994` | 101,631 | 2,652 | 119,055 | 79 | 0 | 0 | 69,564 | 15 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 388,802 | 5,313 | 323,668 | 158 | 0 | 0 | 317,217 | 80 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
(120)| 509 | 18,075 | 190 |
(178)| 117 | 5,594 | 56 |
(184)| 195 | 9,786 | 94 |
(665)| 187 | 11,640 | 120 |
(1,375)| 1,747 | 39,944 | 303 |
(1,265)| 3,031 | 66,356 | 568 |
(1,597)| 5,023 | 111,674 | 1,111 |
(2,190)| 6,221 | 142,679 | 1,602 |
(2,626)| 8,181 | 164,744 | 2,403 |
(3,332)| 10,918 | 202,269 | 3,684 |
(5,510)| 17,410 | 304,914 | 12,961 |
- --------------|--------------|--------------|-------------|
(19,042)| 53,539 | 1,077,675 | 23,092 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 223,529 | 10,932 | 212,597 | 78.1 | 38.4 | 82.5 | 0 | 0 |
|`3.`1986` | 209,794 | 11,409 | 198,385 | 54.1 | 30.6 | 56.6 | 0 | 0 |
|`4.`1987` | 205,963 | 695 | 205,268 | 53.2 | 3.8 | 55.6 | 0 | 0 |
|`5.`1988` | 352,115 | 6,413 | 345,702 | 54.1 | 24.5 | 55.3 | 0 | 0 |
|`6.`1989` | 472,151 | 21,366 | 450,785 | 63.9 | 116.0 | 62.6 | 0 | 0 |
|`7.`1990` | 493,042 | 5,436 | 487,606 | 67.4 | 39.4 | 67.9 | 0 | 0 |
|`8.`1991` | 453,225 | 8,672 | 444,553 | 67.2 | 186.5 | 66.4 | 0 | 0 |
|`9.`1992` | 469,426 | 48,394 | 421,032 | 77.1 | 1,161.6 | 69.6 | 0 | 0 |
|10.`1993` | 426,839 | 10,489 | 416,350 | 71.0 | 180.9 | 69.9 | 0 | 0 |
|11.`1994` | 468,736 | 8,952 | 459,784 | 73.6 | 150.1 | 72.9 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 10,009 | 8,066 |
0.0 | 3,408 | 2,186 |
0.0 | 6,417 | 3,369 |
0.0 | 6,178 | 5,462 |
0.0 | 23,636 | 16,308 |
0.0 | 39,975 | 26,381 |
0.0 | 70,994 | 40,680 |
0.0 | 90,396 | 52,283 |
0.0 | 105,727 | 59,017 |
0.0 | 132,304 | 69,965 |
0.0 | 217,955 | 86,959 |
- --------------|--------------|--------------|
X X X X | 706,999 | 370,676 |
| | |
- -------------->-------------->-------------->
Page: Page 79
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE
<CAPTION> (000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
|`1.`Prior` | X X X X | X X X X | X X X X | 866 | 0 | 965 | 0 | 318 |
|`2.`1985` | 6,544 | 97 | 6,447 | 3,398 | 500 | 1,657 | 0 | 959 |
|`3.`1986` | 97 | 38 | 59 | 1 | 0 | 3 | 0 | 8 |
|`4.`1987` | 660 | 0 | 660 | 9 | 0 | 8 | 0 | 0 |
|`5.`1988` | 548 | 0 | 548 | 143 | 0 | 33 | 0 | 0 |
|`6.`1989` | 88 | 0 | 88 | 140 | 0 | 27 | 0 | 0 |
|`7.`1990` | 84 | 0 | 84 | 377 | 0 | 51 | 0 | 0 |
|`8.`1991` | 56 | 0 | 56 | 113 | 0 | 19 | 0 | 0 |
|`9.`1992` | 60 | 0 | 60 | 1 | 0 | 14 | 0 | 0 |
|10.`1993` | 1 | 0 | 1 | 0 | 0 | 0 | 0 | 0 |
|11.`1994` | 1 | 0 | 1 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 5,048 | 500 | 2,777 | 0 | 1,285 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
42 | 1,873 | X X X X |
602 | 5,157 | 301 |
6 | 10 | 2 |
78 | 95 | 5 |
15 | 191 | 4 |
8 | 175 | 4 |
10 | 438 | 4 |
10 | 142 | 1 |
8 | 23 | 0 |
0 | 0 | 1 |
0 | 0 | 0 |
- --------------|--------------|--------------|
779 | 8,104 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 6,267 | 0 | 1,393 | 0 | 0 | 0 | 4,436 | 0 |
|`2.`1985` | 100 | 0 | 177 | 0 | 0 | 0 | 236 | 0 |
|`3.`1986` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`4.`1987` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`5.`1988` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`6.`1989` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`7.`1990` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`8.`1991` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`9.`1992` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|10.`1993` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|11.`1994` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 6,367 | 0 | 1,570 | 0 | 0 | 0 | 4,672 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
0 | 630 | 12,726 | 85 |
0 | 32 | 545 | 7 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
- --------------|--------------|--------------|-------------|
0 | 662 | 13,271 | 92 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 6,202 | 500 | 5,702 | 94.8 | 515.5 | 88.4 | 0 | 0 |
|`3.`1986` | 10 | 0 | 10 | 10.3 | 0.0 | 16.9 | 0 | 0 |
|`4.`1987` | 95 | 0 | 95 | 14.4 | 0.0 | 14.4 | 0 | 0 |
|`5.`1988` | 191 | 0 | 191 | 34.9 | 0.0 | 34.9 | 0 | 0 |
|`6.`1989` | 175 | 0 | 175 | 198.9 | 0.0 | 198.9 | 0 | 0 |
|`7.`1990` | 438 | 0 | 438 | 521.4 | 0.0 | 521.4 | 0 | 0 |
|`8.`1991` | 142 | 0 | 142 | 253.6 | 0.0 | 253.6 | 0 | 0 |
|`9.`1992` | 23 | 0 | 23 | 38.3 | 0.0 | 38.3 | 0 | 0 |
|10.`1993` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|11.`1994` | 0 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 7,660 | 5,066 |
0.0 | 277 | 268 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
- --------------|--------------|--------------|
X X X X | 7,937 | 5,334 |
| | |
- -------------->-------------->-------------->
Page: Page 80
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE
<CAPTION> (000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 0 | 0 | 0 | 801 | 0 | 144 | 0 | 93 |
|`3.`1986` | 0 | 0 | 0 | 7 | 0 | 25 | 0 | 0 |
|`4.`1987` | 117 | 0 | 117 | 19 | 0 | 5 | 0 | 0 |
|`5.`1988` | 219 | 0 | 219 | 99 | 0 | 42 | 0 | 0 |
|`6.`1989` | 228 | 0 | 228 | 203 | 0 | 52 | 0 | 0 |
|`7.`1990` | 256 | 0 | 256 | 230 | 0 | 36 | 0 | 0 |
|`8.`1991` | 299 | 0 | 299 | 1 | 0 | 9 | 0 | 0 |
|`9.`1992` | 255 | 0 | 255 | 0 | 0 | 3 | 0 | 0 |
|10.`1993` | 66 | 0 | 66 | 0 | 0 | 0 | 0 | 0 |
|11.`1994` | (2)| 0 | (2)| 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 1,360 | 0 | 316 | 0 | 93 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
0 | 0 | X X X X |
0 | 945 | 20 |
0 | 32 | 8 |
0 | 24 | 0 |
0 | 141 | 0 |
0 | 255 | 2 |
0 | 266 | 0 |
0 | 10 | 0 |
0 | 3 | 0 |
0 | 0 | 0 |
0 | 0 | 0 |
- --------------|--------------|--------------|
0 | 1,676 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`3.`1986` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`4.`1987` | 0 | 0 | 64 | 0 | 0 | 0 | 0 | 0 |
|`5.`1988` | 100 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`6.`1989` | 34 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`7.`1990` | 11 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`8.`1991` | 4 | 0 | 125 | 0 | 0 | 0 | 0 | 0 |
|`9.`1992` | 170 | 0 | 2 | 0 | 0 | 0 | 0 | 0 |
|10.`1993` | 12 | 0 | 36 | 0 | 0 | 0 | 0 | 0 |
|11.`1994` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 331 | 0 | 227 | 0 | 0 | 0 | 0 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ---------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
--------------|--------------|--------------|-------------|
<C> <C> <C> <C>
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 64 | 0 |
0 | 0 | 100 | 0 |
0 | 0 | 34 | 0 |
0 | 0 | 11 | 0 |
0 | 0 | 129 | 0 |
0 | 0 | 172 | 0 |
0 | 0 | 48 | 0 |
0 | 0 | 0 | 0 |
--------------|--------------|--------------|-------------|
0 | 0 | 558 | 0 |
| | | |
-------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 945 | 0 | 945 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`3.`1986` | 32 | 0 | 32 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`4.`1987` | 88 | 0 | 88 | 75.2 | 0.0 | 75.2 | 0 | 0 |
|`5.`1988` | 241 | 0 | 241 | 110.0 | 0.0 | 110.0 | 0 | 0 |
|`6.`1989` | 289 | 0 | 289 | 126.8 | 0.0 | 126.8 | 0 | 0 |
|`7.`1990` | 277 | 0 | 277 | 108.2 | 0.0 | 108.2 | 0 | 0 |
|`8.`1991` | 139 | 0 | 139 | 46.5 | 0.0 | 46.5 | 0 | 0 |
|`9.`1992` | 175 | 0 | 175 | 68.6 | 0.0 | 68.6 | 0 | 0 |
|10.`1993` | 48 | 0 | 48 | 72.7 | 0.0 | 72.7 | 0 | 0 |
|11.`1994` | 0 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
X X X X | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 64 | 0 |
0.0 | 100 | 0 |
0.0 | 34 | 0 |
0.0 | 11 | 0 |
0.0 | 129 | 0 |
0.0 | 172 | 0 |
0.0 | 48 | 0 |
0.0 | 0 | 0 |
- --------------|--------------|--------------|
X X X X | 558 | 0 |
| | |
- -------------->-------------->-------------->
Page: Page 81
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE,
AIRCRAFT (ALL PERILS), BOILER AND MACHINERY)
<CAPTION> (000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 234 | 97 | 294 | 214 | 0 |
|`2.`1985` | 51,313 | 26,552 | 24,761 | 46,120 | 28,361 | 3,686 | 2,366 | 966 |
|`3.`1986` | 105,321 | 55,944 | 49,377 | 58,774 | 31,467 | 4,568 | 2,684 | 402 |
|`4.`1987` | 123,309 | 70,752 | 52,557 | 67,292 | 40,026 | 6,172 | 4,050 | 1,103 |
|`5.`1988` | 103,314 | 60,212 | 43,102 | 60,714 | 38,694 | 5,375 | 3,738 | 242 |
|`6.`1989` | 69,557 | 42,614 | 26,943 | 51,906 | 30,622 | 4,252 | 2,599 | 827 |
|`7.`1990` | 63,446 | 36,143 | 27,303 | 47,531 | 29,527 | 4,339 | 3,017 | 146 |
|`8.`1991` | 42,601 | 31,190 | 11,411 | 49,758 | 33,311 | 3,757 | 2,698 | 213 |
|`9.`1992` | 41,704 | 26,431 | 15,273 | 23,990 | 15,387 | 1,779 | 1,068 | 56 |
|10.`1993` | 49,333 | 34,173 | 15,160 | 18,029 | 9,988 | 1,233 | 661 | 40 |
|11.`1994` | 55,170 | 32,328 | 22,842 | 14,409 | 5,649 | 657 | 444 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 438,757 | 263,129 | 36,112 | 23,539 | 3,995 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0 | 217 | X X X X |
261 | 19,340 | X X X X |
102 | 29,293 | X X X X |
88 | 29,476 | X X X X |
72 | 23,729 | X X X X |
72 | 23,009 | X X X X |
90 | 19,416 | X X X X |
77 | 17,583 | X X X X |
95 | 9,409 | X X X X |
224 | 8,837 | X X X X |
22 | 8,995 | X X X X |
- --------------|--------------|--------------|
1,103 | 189,304 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
|`1.`Prior` | 3,941 | 3,319 | 54 | 54 | 0 | 0 | 240 | 229 |
|`2.`1985` | 446 | 367 | 1 | 1 | 0 | 0 | 5 | 4 |
|`3.`1986` | 809 | 384 | 190 | 5 | 0 | 0 | 25 | 22 |
|`4.`1987` | 1,402 | 485 | 778 | 11 | 0 | 0 | 46 | 46 |
|`5.`1988` | 11,924 | 10,581 | 1,048 | 14 | 0 | 0 | 68 | 64 |
|`6.`1989` | 2,200 | 1,245 | 584 | 38 | 0 | 0 | 169 | 159 |
|`7.`1990` | 4,779 | 3,767 | 234 | 97 | 0 | 0 | 443 | 410 |
|`8.`1991` | 3,007 | 2,017 | 188 | 69 | 0 | 0 | 302 | 197 |
|`9.`1992` | 3,309 | 2,162 | 331 | 125 | 0 | 0 | 265 | 222 |
|10.`1993` | 6,839 | 4,277 | 1,084 | 271 | 0 | 0 | 772 | 537 |
|11.`1994` | 13,599 | 5,565 | 5,611 | 315 | 0 | 0 | 7,042 | 5,949 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 52,255 | 34,169 | 10,103 | 1,000 | 0 | 0 | 9,377 | 7,839 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ---------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
--------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
0 | 0 | 633 | 0 |
0 | 0 | 80 | 0 |
0 | 0 | 613 | 0 |
0 | 12 | 1,696 | 2 |
0 | 2 | 2,383 | 1 |
0 | 2 | 1,513 | 1 |
0 | 1 | 1,183 | 3 |
0 | 2 | 1,216 | 1 |
0 | 6 | 1,402 | 2 |
0 | 22 | 3,632 | 11 |
0 | 21 | 14,444 | 18 |
--------------|--------------|--------------|-------------|
0 | 68 | 28,795 | 39 |
| | | |
-------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 50,519 | 31,099 | 19,420 | 98.5 | 117.1 | 78.4 | 0 | 0 |
|`3.`1986` | 64,468 | 34,562 | 29,906 | 61.2 | 61.8 | 60.6 | 0 | 0 |
|`4.`1987` | 75,790 | 44,618 | 31,172 | 61.5 | 63.1 | 59.3 | 0 | 0 |
|`5.`1988` | 79,203 | 53,091 | 26,112 | 76.7 | 88.2 | 60.6 | 0 | 0 |
|`6.`1989` | 59,185 | 34,663 | 24,522 | 85.1 | 81.3 | 91.0 | 0 | 0 |
|`7.`1990` | 57,417 | 36,818 | 20,599 | 90.5 | 101.9 | 75.4 | 0 | 0 |
|`8.`1991` | 57,091 | 38,292 | 18,799 | 134.0 | 122.8 | 164.7 | 0 | 0 |
|`9.`1992` | 29,775 | 18,964 | 10,811 | 71.4 | 71.7 | 70.8 | 0 | 0 |
|10.`1993` | 28,203 | 15,734 | 12,469 | 57.2 | 46.0 | 82.2 | 0 | 0 |
|11.`1994` | 41,361 | 17,922 | 23,439 | 75.0 | 55.4 | 102.6 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
X X X X | 622 | 11 |
0.0 | 79 | 1 |
0.0 | 610 | 3 |
0.0 | 1,684 | 12 |
0.0 | 2,377 | 6 |
0.0 | 1,501 | 12 |
0.0 | 1,149 | 34 |
0.0 | 1,109 | 107 |
0.0 | 1,353 | 49 |
0.0 | 3,375 | 257 |
0.0 | 13,330 | 1,114 |
- --------------|--------------|--------------|
X X X X | 27,189 | 1,606 |
| | |
- -------------->-------------->-------------->
Page: Page 82
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 33,335 | 18,298 | 21,359 | 3,179 | 423 |
|`2.`1985` | 269,235 | 21,900 | 247,335 | 182,201 | 18,459 | 48,292 | 887 | 5,334 |
|`3.`1986` | 435,955 | 15,114 | 420,841 | 165,485 | 8,959 | 42,532 | 718 | 4,940 |
|`4.`1987` | 624,510 | 133,069 | 491,441 | 240,651 | 80,902 | 40,350 | 1,698 | 4,966 |
|`5.`1988` | 526,043 | 132,411 | 393,632 | 159,813 | 63,632 | 29,606 | 1,136 | 3,674 |
|`6.`1989` | 290,819 | 66,258 | 224,561 | 107,049 | 44,335 | 18,589 | 725 | 2,791 |
|`7.`1990` | 261,224 | 55,253 | 205,971 | 102,416 | 42,444 | 17,026 | 1,656 | 983 |
|`8.`1991` | 177,601 | 27,428 | 150,173 | 39,682 | 8,105 | 10,306 | 442 | 1,190 |
|`9.`1992` | 116,299 | 28,885 | 87,414 | 14,142 | 794 | 3,472 | 169 | 210 |
|10.`1993` | 99,208 | (1,216)| 100,424 | 8,194 | 397 | 1,368 | 98 | 85 |
|11.`1994` | 102,421 | 17,926 | 84,495 | 4,453 | 167 | 253 | 30 | 111 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 1,057,421 | 286,492 | 233,153 | 10,738 | 24,707 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ------------------------------#--------------#
| |
--------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
--------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
405 | 33,622 | X X X X |
12,202 | 223,349 | 39,924 |
11,882 | 210,222 | 32,195 |
11,549 | 209,950 | 28,470 |
8,292 | 132,943 | 21,232 |
5,745 | 86,323 | 14,612 |
5,923 | 81,265 | 15,425 |
4,820 | 46,261 | 10,898 |
3,991 | 20,642 | 6,377 |
2,284 | 11,351 | 4,371 |
1,324 | 5,833 | 3,516 |
--------------|--------------|--------------|
68,417 | 1,061,761 | X X X X |
| | |
-------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
| | | | | | | | | |
|`1.`Prior` | 49,038 | 8,350 | 74,077 | 437 | 0 | 0 | 73,321 | 2,808 |
|`2.`1985` | 11,240 | 2,552 | 11,957 | 120 | 0 | 0 | 15,072 | 138 |
|`3.`1986` | 10,088 | 822 | 11,055 | 110 | 0 | 0 | 15,772 | 150 |
|`4.`1987` | 9,155 | 367 | 16,515 | 131 | 0 | 0 | 15,964 | 114 |
|`5.`1988` | 10,842 | 179 | 18,541 | 237 | 0 | 0 | 14,386 | 73 |
|`6.`1989` | 10,467 | 1,345 | 21,790 | 379 | 0 | 0 | 11,521 | 242 |
|`7.`1990` | 20,445 | 651 | 25,256 | 1,130 | 0 | 0 | 15,192 | 284 |
|`8.`1991` | 20,102 | 2,655 | 30,466 | 2,955 | 0 | 0 | 16,990 | 1,920 |
|`9.`1992` | 14,662 | 1,316 | 24,724 | 2,253 | 0 | 0 | 12,231 | 408 |
|10.`1993` | 14,121 | 2,102 | 27,528 | 2,856 | 0 | 0 | 13,778 | 619 |
|11.`1994` | 6,243 | 241 | 38,116 | 4,873 | 0 | 0 | 14,514 | 1,102 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 176,403 | 20,580 | 300,025 | 15,481 | 0 | 0 | 218,741 | 7,858 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ---------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
--------------|--------------|--------------|-------------|
<C> <C> <C> <C>
| | | |
(694)| 7,668 | 192,509 | 717 |
(305)| 1,226 | 36,685 | 135 |
(365)| 1,168 | 37,001 | 143 |
(523)| 1,631 | 42,653 | 164 |
(451)| 1,700 | 44,980 | 168 |
(345)| 1,643 | 43,455 | 238 |
(346)| 2,206 | 61,034 | 371 |
(310)| 2,514 | 62,542 | 459 |
(224)| 2,017 | 49,657 | 418 |
(217)| 2,320 | 52,170 | 407 |
(303)| 2,817 | 55,474 | 816 |
--------------|--------------|--------------|-------------|
(4,083)| 26,910 | 678,160 | 4,036 |
| | | |
-------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <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 | 0 |
|`2.`1985` | 282,190 | 22,156 | 260,034 | 104.8 | 101.2 | 105.1 | 0 | 0 |
|`3.`1986` | 257,982 | 10,759 | 247,223 | 59.2 | 71.2 | 58.7 | 0 | 0 |
|`4.`1987` | 335,815 | 83,212 | 252,603 | 53.8 | 62.5 | 51.4 | 0 | 0 |
|`5.`1988` | 243,180 | 65,257 | 177,923 | 46.2 | 49.3 | 45.2 | 0 | 0 |
|`6.`1989` | 176,804 | 47,026 | 129,778 | 60.8 | 71.0 | 57.8 | 0 | 0 |
|`7.`1990` | 188,464 | 46,165 | 142,299 | 72.1 | 83.6 | 69.1 | 0 | 0 |
|`8.`1991` | 124,880 | 16,077 | 108,803 | 70.3 | 58.6 | 72.5 | 0 | 0 |
|`9.`1992` | 75,239 | 4,940 | 70,299 | 64.7 | 17.1 | 80.4 | 0 | 0 |
|10.`1993` | 69,593 | 6,072 | 63,521 | 70.1 | (499.3)| 63.3 | 0 | 0 |
|11.`1994` | 67,720 | 6,413 | 61,307 | 66.1 | 35.8 | 72.6 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
<C> <C> <C>
| | |
| | |
X X X X | 114,328 | 78,181 |
0.0 | 20,525 | 16,160 |
0.0 | 20,211 | 16,790 |
0.0 | 25,172 | 17,481 |
0.0 | 28,967 | 16,013 |
0.0 | 30,533 | 12,922 |
0.0 | 43,920 | 17,114 |
0.0 | 44,958 | 17,584 |
0.0 | 35,817 | 13,840 |
0.0 | 36,691 | 15,479 |
0.0 | 39,245 | 16,229 |
- --------------|--------------|--------------|
X X X X | 440,367 | 237,793 |
| | |
- -------------->-------------->-------------->
Page: Page 83
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <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 | 0 |
|`2.`1985` | 0 | 0 | 0 | 143 | 16 | 27 | 9 | 11 |
|`3.`1986` | 0 | 0 | 0 | 895 | 516 | 53 | (2)| 5 |
|`4.`1987` | 68 | 0 | 68 | 0 | 0 | (6)| 0 | 0 |
|`5.`1988` | 1,993 | 0 | 1,993 | 609 | 28 | 50 | 6 | 13 |
|`6.`1989` | 2,406 | 0 | 2,406 | 626 | 0 | 136 | 0 | 18 |
|`7.`1990` | 2,190 | 286 | 1,904 | 872 | 0 | 112 | 0 | 11 |
|`8.`1991` | 3,137 | 42 | 3,095 | 314 | 0 | 156 | 0 | 17 |
|`9.`1992` | 2,122 | 270 | 1,852 | 757 | 0 | 158 | 0 | 6 |
|10.`1993` | 1,550 | 517 | 1,033 | 79 | 0 | 62 | 0 | 17 |
|11.`1994` | 1,834 | 480 | 1,354 | 83 | 0 | 41 | 0 | 3 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 4,378 | 560 | 789 | 13 | 101 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
1,562 | 1,562 | X X X X |
119 | 264 | 5 |
222 | 656 | 6 |
230 | 224 | 2 |
198 | 823 | 114 |
185 | 947 | 191 |
189 | 1,173 | 155 |
247 | 717 | 160 |
545 | 1,460 | 137 |
356 | 497 | 103 |
102 | 226 | 63 |
- --------------|--------------|--------------|
3,955 | 8,549 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 0 | 0 | 0 | 0 | 0 | 0 | 76 | 0 |
|`2.`1985` | 84 | 0 | 0 | 0 | 0 | 0 | 58 | 55 |
|`3.`1986` | 178 | 0 | 0 | 0 | 0 | 0 | 186 | 98 |
|`4.`1987` | 0 | 0 | 0 | 0 | 0 | 0 | 187 | 0 |
|`5.`1988` | 0 | 0 | 0 | 0 | 0 | 0 | 30 | 0 |
|`6.`1989` | 81 | 0 | 0 | 0 | 0 | 0 | 44 | 0 |
|`7.`1990` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`8.`1991` | 150 | 0 | 0 | 0 | 0 | 0 | 80 | 0 |
|`9.`1992` | 80 | 0 | 0 | 0 | 0 | 0 | 164 | 0 |
|10.`1993` | 119 | 0 | 0 | 0 | 0 | 0 | 127 | 0 |
|11.`1994` | 358 | 0 | 0 | 0 | 0 | 0 | 521 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 1,050 | 0 | 0 | 0 | 0 | 0 | 1,473 | 153 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ----------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
--------------|--------------|--------------|-------------|
<C> <C> <C> <C>
| | | |
| | | |
0 | 26 | 102 | 0 |
0 | 5 | 92 | 1 |
0 | 13 | 279 | 2 |
0 | 12 | 199 | 0 |
0 | 2 | 32 | 0 |
0 | 0 | 125 | 1 |
0 | 2 | 2 | 0 |
0 | 10 | 240 | 2 |
0 | 13 | 257 | 4 |
0 | 4 | 250 | 26 |
0 | 2 | 881 | 27 |
--------------|--------------|--------------|-------------|
0 | 89 | 2,459 | 63 |
| | | |
-------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 436 | 80 | 356 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`3.`1986` | 1,547 | 612 | 935 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`4.`1987` | 423 | 0 | 423 | 622.1 | 0.0 | 622.1 | 0 | 0 |
|`5.`1988` | 889 | 34 | 855 | 44.6 | 0.0 | 42.9 | 0 | 0 |
|`6.`1989` | 1,072 | 0 | 1,072 | 44.6 | 0.0 | 44.6 | 0 | 0 |
|`7.`1990` | 1,175 | 0 | 1,175 | 53.7 | 0.0 | 61.7 | 0 | 0 |
|`8.`1991` | 957 | 0 | 957 | 30.5 | 0.0 | 30.9 | 0 | 0 |
|`9.`1992` | 1,717 | 0 | 1,717 | 80.9 | 0.0 | 92.7 | 0 | 0 |
|10.`1993` | 747 | 0 | 747 | 48.2 | 0.0 | 72.3 | 0 | 0 |
|11.`1994` | 1,107 | 0 | 1,107 | 60.4 | 0.0 | 81.8 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
<C> <C> <C>
| | |
| | |
X X X X | 0 | 102 |
0.0 | 84 | 8 |
0.0 | 178 | 101 |
0.0 | 0 | 199 |
0.0 | 0 | 32 |
0.0 | 81 | 44 |
0.0 | 0 | 2 |
0.0 | 150 | 90 |
0.0 | 80 | 177 |
0.0 | 119 | 131 |
0.0 | 358 | 523 |
- --------------|--------------|--------------|
X X X X | 1,050 | 1,409 |
| | |
- -------------->-------------->-------------->
Page: Page 84
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT)
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 18,835 | 5,089 | 1,836 | 607 | 1,160 |
|`2.`1993` | 164,585 | 47,656 | 116,929 | 76,700 | 7,482 | 1,516 | 109 | 1,442 |
|`3.`1994` | 188,550 | 50,671 | 137,879 | 57,803 | 3,190 | 1,114 | 60 | 284 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | X X X X | X X X X | X X X X | 153,338 | 15,761 | 4,466 | 776 | 2,886 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ------------------------------#--------------#
| |
--------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
--------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
57 | 15,032 | X X X X |
5,576 | 76,201 | X X X X |
2,753 | 58,420 | X X X X |
--------------|--------------|--------------|
8,386 | 149,653 | X X X X |
| | |
-------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 16,640 | 1,416 | 10,973 | 75 | 0 | 0 | 1,383 | 127 |
|`2.`1993` | 10,384 | 5,145 | 884 | 66 | 0 | 0 | 627 | 89 |
|`3.`1994` | 36,689 | 8,490 | 7,654 | 1,580 | 0 | 0 | 3,360 | 1,803 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | 63,713 | 15,051 | 19,511 | 1,721 | 0 | 0 | 5,370 | 2,019 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
(1,168)| 152 | 27,530 | 0 |
(555)| 81 | 6,676 | 0 |
(921)| 1,023 | 36,853 | 0 |
- --------------|--------------|--------------|-------------|
(2,644)| 1,256 | 71,059 | 0 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1993` | 95,768 | 12,891 | 82,877 | 58.2 | 27.1 | 70.9 | 0 | 0 |
|`3.`1994` | 110,396 | 15,123 | 95,273 | 58.5 | 29.8 | 69.1 | 0 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 26,122 | 1,408 |
0.0 | 6,057 | 619 |
0.0 | 34,273 | 2,580 |
- --------------|--------------|--------------|
X X X X | 66,452 | 4,607 |
| | |
- -------------->-------------->-------------->
Page: Page 85
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1J - AUTO PHYSICAL DAMAGE
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 950 | (49)| 989 | 83 | 3,147 |
|`2.`1993` | 251,550 | 16,407 | 235,143 | 126,133 | 10,649 | 1,882 | 136 | 16,687 |
|`3.`1994` | 231,922 | 25,976 | 205,946 | 109,029 | 6,117 | 1,291 | 56 | 9,604 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | X X X X | X X X X | X X X X | 236,112 | 16,717 | 4,162 | 275 | 29,438 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
37 | 1,942 | X X X X |
14,358 | 131,588 | 109,016 |
11,409 | 115,556 | 95,929 |
- --------------|--------------|--------------|
25,804 | 249,086 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 4,532 | 74 | 6,240 | 19 | 0 | 0 | 1,396 | 63 |
|`2.`1993` | 1,100 | 59 | (1,084)| 8 | 0 | 0 | 720 | 11 |
|`3.`1994` | 16,799 | 673 | 1,013 | 367 | 0 | 0 | 1,260 | 33 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | 22,431 | 806 | 6,169 | 394 | 0 | 0 | 3,376 | 107 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ---------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
--------------|--------------|--------------|-------------|
<C> <C> <C> <C>
| | | |
| | | |
(2,932)| 36 | 12,048 | 62 |
(2,333)| 41 | 699 | 103 |
(8,845)| 1,222 | 19,221 | 4,020 |
--------------|--------------|--------------|-------------|
(14,110)| 1,299 | 31,968 | 4,185 |
| | | |
-------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1993` | 143,150 | 10,863 | 132,287 | 56.9 | 66.2 | 56.3 | 0 | 0 |
|`3.`1994` | 142,023 | 7,246 | 134,777 | 61.2 | 27.9 | 65.4 | 0 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 10,679 | 1,369 |
0.0 | (51)| 750 |
0.0 | 16,772 | 2,449 |
- --------------|--------------|--------------|
X X X X | 27,400 | 4,568 |
| | |
- -------------->-------------->-------------->
Page: Page 86
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS AFFI
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1K - FIDELITY/SURETY
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 20,430 | 10,572 | 10,094 | 2,317 | 8,740 |
|`2.`1993` | 142,388 | 27,994 | 114,394 | 36,725 | 12,656 | 4,004 | 969 | 1,868 |
|`3.`1994` | 156,346 | 32,641 | 123,705 | 8,554 | 1,569 | 440 | 68 | 41 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | X X X X | X X X X | X X X X | 65,709 | 24,797 | 14,538 | 3,354 | 10,649 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
<C> <C> <C>
| | |
| | |
2,730 | 20,365 | X X X X |
2,619 | 29,723 | X X X X |
806 | 8,163 | X X X X |
- --------------|--------------|--------------|
6,155 | 58,251 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
| | | | | | | | | |
|`1.`Prior` | 17,641 | 2,413 | (11,658)| (4,858)| 0 | 0 | 18,741 | 5,091 |
|`2.`1993` | 7,952 | 3,069 | (6,091)| (1,400)| 0 | 0 | 7,571 | 1,565 |
|`3.`1994` | 7,166 | 1,655 | 8,539 | 1,379 | 0 | 0 | 11,420 | 2,526 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | 32,759 | 7,137 | (9,210)| (4,879)| 0 | 0 | 37,732 | 9,182 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
(8,449)| 1,162 | 23,240 | 1,436 |
(3,241)| 469 | 6,667 | 832 |
(4,762)| 1,607 | 23,172 | 609 |
- --------------|--------------|--------------|-------------|
(16,452)| 3,238 | 53,079 | 2,877 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1993` | 53,249 | 16,859 | 36,390 | 37.4 | 60.2 | 31.8 | 0 | 0 |
|`3.`1994` | 38,532 | 7,197 | 31,335 | 24.6 | 22.0 | 25.3 | 0 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
<C> <C> <C>
| | |
| | |
X X X X | 8,428 | 14,812 |
0.0 | 192 | 6,475 |
0.0 | 12,671 | 10,501 |
- --------------|--------------|--------------|
X X X X | 21,291 | 31,788 |
| | |
- -------------->-------------->-------------->
Page: Page 87
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 35 | 17 | 1 | 0 | 2 |
|`2.`1993` | 14 | 5 | 9 | 0 | 0 | 0 | 0 | 0 |
|`3.`1994` | 15 | 6 | 9 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | X X X X | X X X X | X X X X | 35 | 17 | 1 | 0 | 2 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0 | 19 | X X X X |
0 | 0 | X X X X |
0 | 0 | X X X X |
- --------------|--------------|--------------|
0 | 19 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 212 | 133 | 0 | 0 | 0 | 0 | 17 | 13 |
|`2.`1993` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`3.`1994` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | 212 | 133 | 0 | 0 | 0 | 0 | 17 | 13 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
0 | 24 | 107 | 5 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
- --------------|--------------|--------------|-------------|
0 | 24 | 107 | 5 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <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 | 0 |
|`2.`1993` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`3.`1994` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 79 | 28 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
- --------------|--------------|--------------|
X X X X | 79 | 28 |
| | |
- -------------->-------------->-------------->
Page: Page 88
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1M - INTERNATIONAL
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`3.`1986` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`4.`1987` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`5.`1988` | 19,649 | 337 | 19,312 | 13,707 | 90 | 390 | 1 | 0 |
|`6.`1989` | 14,651 | 122 | 14,529 | 10,250 | 24 | 329 | 0 | 0 |
|`7.`1990` | 12,386 | 63 | 12,323 | 10,451 | 212 | 339 | 0 | 0 |
|`8.`1991` | 9,982 | 69 | 9,913 | 7,316 | 46 | 223 | (2)| 0 |
|`9.`1992` | 4,683 | 39 | 4,644 | 3,248 | 11 | 45 | (8)| 0 |
|10.`1993` | 12,988 | 0 | 12,988 | 4,207 | 1 | 3 | 0 | 0 |
|11.`1994` | 77,224 | 0 | 77,224 | 11,021 | 0 | 7 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 60,200 | 384 | 1,336 | (9)| 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0 | 0 | X X X X |
0 | 0 | X X X X |
0 | 0 | X X X X |
0 | 0 | X X X X |
0 | 14,006 | X X X X |
0 | 10,555 | X X X X |
0 | 10,578 | X X X X |
0 | 7,495 | X X X X |
0 | 3,290 | X X X X |
0 | 4,209 | X X X X |
0 | 11,028 | X X X X |
- --------------|--------------|--------------|
0 | 61,161 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`3.`1986` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`4.`1987` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`5.`1988` | 551 | 0 | 1,280 | 0 | 0 | 0 | 0 | 0 |
|`6.`1989` | 697 | 0 | 1,383 | 0 | 0 | 0 | 0 | 0 |
|`7.`1990` | 310 | 0 | 840 | 0 | 0 | 0 | 0 | 0 |
|`8.`1991` | 408 | 0 | 1,573 | 0 | 0 | 0 | 0 | 0 |
|`9.`1992` | 191 | 0 | 893 | 0 | 0 | 0 | 0 | 0 |
|10.`1993` | 2,537 | 0 | 3,344 | 0 | 0 | 0 | 0 | 0 |
|11.`1994` | 17,127 | 0 | 31,206 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 21,821 | 0 | 40,519 | 0 | 0 | 0 | 0 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 1,831 | 0 |
0 | 0 | 2,080 | 0 |
0 | 0 | 1,150 | 0 |
0 | 0 | 1,981 | 0 |
0 | 0 | 1,084 | 0 |
0 | 0 | 5,881 | 0 |
0 | 0 | 48,333 | 0 |
- --------------|--------------|--------------|-------------|
0 | 0 | 62,340 | 0 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`3.`1986` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`4.`1987` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`5.`1988` | 15,928 | 91 | 15,837 | 81.1 | 27.0 | 82.0 | 0 | 0 |
|`6.`1989` | 12,659 | 24 | 12,635 | 86.4 | 19.7 | 87.0 | 0 | 0 |
|`7.`1990` | 11,940 | 212 | 11,728 | 96.4 | 336.5 | 95.2 | 0 | 0 |
|`8.`1991` | 9,520 | 44 | 9,476 | 95.4 | 63.8 | 95.6 | 0 | 0 |
|`9.`1992` | 4,377 | 3 | 4,374 | 93.5 | 7.7 | 94.2 | 0 | 0 |
|10.`1993` | 10,091 | 1 | 10,090 | 77.7 | 0.0 | 77.7 | 0 | 0 |
|11.`1994` | 59,361 | 0 | 59,361 | 76.9 | 0.0 | 76.9 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 1,831 | 0 |
0.0 | 2,080 | 0 |
0.0 | 1,150 | 0 |
0.0 | 1,981 | 0 |
0.0 | 1,084 | 0 |
0.0 | 5,881 | 0 |
0.0 | 48,333 | 0 |
- --------------|--------------|--------------|
X X X X | 62,340 | 0 |
| | |
- -------------->-------------->-------------->
Page: Page 89
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1N - REINSURANCE A
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`1988` | 34,707 | 1,738 | 32,969 | 11,995 | 955 | 389 | 86 | 0 |
|`2.`1989` | 25,922 | 2,056 | 23,866 | 13,940 | 1,859 | 438 | (188)| 0 |
|`3.`1990` | 79,740 | 60,145 | 19,595 | 51,663 | 42,048 | 945 | 85 | 0 |
|`4.`1991` | 60,073 | 34,454 | 25,619 | 24,959 | 19,098 | 383 | (67)| 0 |
|`5.`1992` | 56,589 | 10,089 | 46,500 | 20,693 | 17,353 | 265 | 137 | 0 |
|`6.`1993` | 61,844 | 10,382 | 51,462 | 4,384 | 1,727 | 76 | 17 | 0 |
|`7.`1994` | 54,527 | 18,639 | 35,888 | 2,699 | 1,204 | 77 | 19 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`8.`Totals` | X X X X | X X X X | X X X X | 130,333 | 84,244 | 2,573 | 89 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0 | 11,343 | X X X X |
0 | 12,707 | X X X X |
0 | 10,475 | X X X X |
0 | 6,311 | X X X X |
0 | 3,468 | X X X X |
0 | 2,716 | X X X X |
0 | 1,553 | X X X X |
- --------------|--------------|--------------|
0 | 48,573 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`1988` | 1,288 | 8 | 3,223 | 9 | 0 | 0 | 55 | 0 |
|`2.`1989` | 1,943 | 6 | 2,995 | 21 | 0 | 0 | 99 | 0 |
|`3.`1990` | 708 | 58 | 2,653 | 19 | 0 | 0 | 16 | 0 |
|`4.`1991` | 3,270 | 1,323 | 4,634 | 82 | 0 | 0 | 48 | (1)|
|`5.`1992` | 3,140 | 827 | 8,826 | 823 | 0 | 0 | 43 | 0 |
|`6.`1993` | 3,941 | 1,146 | 37,911 | 8,490 | 0 | 0 | 66 | 1 |
|`7.`1994` | 4,380 | 1,242 | 53,355 | 13,507 | 0 | 0 | 106 | 8 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`8.`Totals` | 18,670 | 4,610 | 113,597 | 22,951 | 0 | 0 | 433 | 8 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
0 | 0 | 4,549 | X X X X |
0 | 0 | 5,010 | X X X X |
0 | 0 | 3,300 | X X X X |
0 | 0 | 6,548 | X X X X |
0 | 0 | 10,359 | X X X X |
0 | 0 | 32,281 | X X X X |
0 | 0 | 43,084 | X X X X |
- --------------|--------------|--------------|-------------|
0 | 0 | 105,131 | X X X X |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
| | | | | | | | | |
|`1.`1988` | 16,950 | 1,058 | 15,892 | 48.8 | 60.9 | 48.2 | 0 | 0 |
|`2.`1989` | 19,415 | 1,698 | 17,717 | 74.9 | 82.6 | 74.2 | 0 | 0 |
|`3.`1990` | 55,985 | 42,210 | 13,775 | 70.2 | 70.2 | 70.3 | 0 | 0 |
|`4.`1991` | 33,294 | 20,435 | 12,859 | 55.4 | 59.3 | 50.2 | 0 | 0 |
|`5.`1992` | 32,967 | 19,140 | 13,827 | 58.3 | 189.7 | 29.7 | 0 | 0 |
|`6.`1993` | 46,378 | 11,381 | 34,997 | 75.0 | 109.6 | 68.0 | 0 | 0 |
|`7.`1994` | 60,617 | 15,980 | 44,637 | 111.2 | 85.7 | 124.4 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`8.`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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0.0 | 4,494 | 55 |
0.0 | 4,911 | 99 |
0.0 | 3,284 | 16 |
0.0 | 6,499 | 49 |
0.0 | 10,316 | 43 |
0.0 | 32,216 | 65 |
0.0 | 42,986 | 98 |
- --------------|--------------|--------------|
X X X X | 104,706 | 425 |
| | |
- -------------->-------------->-------------->
Page: Page 90
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1O - REINSURANCE B
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`1988` | 155,207 | 139,405 | 15,802 | 103,094 | 97,106 | 1,093 | 170 | 0 |
|`2.`1989` | 443,293 | 419,913 | 23,380 | 234,747 | 223,086 | 2,527 | 85 | 0 |
|`3.`1990` | 321,700 | 308,404 | 13,296 | 173,624 | 167,731 | 1,962 | 339 | 0 |
|`4.`1991` | 150,161 | 142,532 | 7,629 | 70,243 | 68,453 | 927 | 193 | 0 |
|`5.`1992` | 193,065 | 175,005 | 18,060 | 188,468 | 177,590 | 204 | 88 | 0 |
|`6.`1993` | 331,591 | 372,114 | (40,523)| 83,995 | 82,410 | 174 | (151)| 0 |
|`7.`1994` | 238,226 | 101,075 | 137,151 | 12,234 | 8,007 | 65 | 16 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`8.`Totals` | X X X X | X X X X | X X X X | 866,405 | 824,383 | 6,952 | 740 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0 | 6,911 | X X X X |
0 | 14,103 | X X X X |
0 | 7,516 | X X X X |
0 | 2,524 | X X X X |
0 | 10,994 | X X X X |
0 | 1,910 | X X X X |
0 | 4,276 | X X X X |
- --------------|--------------|--------------|
0 | 48,234 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`1988` | 65,170 | 64,409 | 1,713 | 178 | 0 | 0 | 46 | 0 |
|`2.`1989` | 72,460 | 71,078 | 1,999 | 405 | 0 | 0 | 88 | 0 |
|`3.`1990` | 79,018 | 78,761 | 1,316 | 352 | 0 | 0 | 14 | 0 |
|`4.`1991` | 6,764 | 5,874 | 4,294 | 1,555 | 0 | 0 | 44 | 1 |
|`5.`1992` | 3,696 | 3,046 | 7,301 | 2,405 | 0 | 0 | 40 | 2 |
|`6.`1993` | 4,179 | 2,203 | 21,377 | 12,540 | 0 | 0 | 56 | 2 |
|`7.`1994` | 35,007 | 8,144 | 90,857 | 12,849 | 0 | 0 | 89 | 6 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`8.`Totals` | 266,294 | 233,515 | 128,857 | 30,284 | 0 | 0 | 377 | 11 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
0 | 0 | 2,342 | X X X X |
0 | 0 | 3,064 | X X X X |
0 | 0 | 1,235 | X X X X |
0 | 0 | 3,672 | X X X X |
0 | 0 | 5,584 | X X X X |
0 | 0 | 10,867 | X X X X |
0 | 0 | 104,954 | X X X X |
- --------------|--------------|--------------|-------------|
0 | 0 | 131,718 | X X X X |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`1988` | 171,116 | 161,863 | 9,253 | 110.3 | 116.1 | 58.6 | 0 | 0 |
|`2.`1989` | 311,821 | 294,654 | 17,167 | 70.3 | 70.2 | 73.4 | 0 | 0 |
|`3.`1990` | 255,934 | 247,183 | 8,751 | 79.6 | 80.1 | 65.8 | 0 | 0 |
|`4.`1991` | 82,272 | 76,076 | 6,196 | 54.8 | 53.4 | 81.2 | 0 | 0 |
|`5.`1992` | 199,709 | 183,131 | 16,578 | 103.4 | 104.6 | 91.8 | 0 | 0 |
|`6.`1993` | 109,781 | 97,004 | 12,777 | 33.1 | 26.1 | (31.5)| 0 | 0 |
|`7.`1994` | 138,252 | 29,022 | 109,230 | 58.0 | 28.7 | 79.6 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`8.`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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0.0 | 2,296 | 46 |
0.0 | 2,976 | 88 |
0.0 | 1,221 | 14 |
0.0 | 3,629 | 43 |
0.0 | 5,546 | 38 |
0.0 | 10,813 | 54 |
0.0 | 104,871 | 83 |
- --------------|--------------|--------------|
X X X X | 131,352 | 366 |
| | |
- -------------->-------------->-------------->
Page: Page 91
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1P - REINSURANCE C
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`1988` | 1,548 | (3)| 1,551 | 387 | 0 | 7 | 0 | 0 |
|`2.`1989` | 1,673 | 0 | 1,673 | 0 | 0 | 0 | 0 | 0 |
|`3.`1990` | 365 | 330 | 35 | 0 | 0 | 0 | 0 | 0 |
|`4.`1991` | 1,068 | 1,068 | 0 | 0 | 0 | 0 | 0 | 0 |
|`5.`1992` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`6.`1993` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`7.`1994` | 16 | 0 | 16 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`8.`Totals` | X X X X | X X X X | X X X X | 387 | 0 | 7 | 0 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -------------------------------#--------------#
| |
--------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
--------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0 | 394 | X X X X |
0 | 0 | X X X X |
0 | 0 | X X X X |
0 | 0 | X X X X |
0 | 0 | X X X X |
0 | 0 | X X X X |
0 | 0 | X X X X |
--------------|--------------|--------------|
0 | 394 | X X X X |
| | |
-------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`1988` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`2.`1989` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`3.`1990` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`4.`1991` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`5.`1992` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`6.`1993` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`7.`1994` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`8.`Totals` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ----------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
--------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | X X X X |
0 | 0 | 0 | X X X X |
0 | 0 | 0 | X X X X |
0 | 0 | 0 | X X X X |
0 | 0 | 0 | X X X X |
0 | 0 | 0 | X X X X |
0 | 0 | 0 | X X X X |
--------------|--------------|--------------|-------------|
0 | 0 | 0 | X X X X |
| | | |
-------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`1988` | 394 | 0 | 394 | 25.5 | 0.0 | 25.4 | 0 | 0 |
|`2.`1989` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`3.`1990` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`4.`1991` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`5.`1992` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`6.`1993` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`7.`1994` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`8.`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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
- --------------|--------------|--------------|
X X X X | 0 | 0 |
| | |
- -------------->-------------->-------------->
Page: Page 92
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1Q - REINSURANCE D
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 39,389 | 39,389 | 0 | 0 | 0 |
|`2.`1985` | 48,980 | 27,823 | 21,157 | 26,546 | 8,386 | 284 | (34)| 0 |
|`3.`1986` | 101,003 | 61,408 | 39,595 | 54,136 | 25,703 | 681 | 221 | 0 |
|`4.`1987` | 49,262 | 5,704 | 43,558 | 33,524 | 4,128 | 851 | (169)| 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`5.`Totals` | X X X X | X X X X | X X X X | 153,595 | 77,606 | 1,816 | 18 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0 | 0 | X X X X |
0 | 18,478 | X X X X |
0 | 28,893 | X X X X |
0 | 30,416 | X X X X |
- --------------|--------------|--------------|
0 | 77,787 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 0 | 0 | 85,945 | 85,945 | 0 | 0 | 0 | 0 |
|`2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`3.`1986` | 466 | 0 | 332 | 0 | 0 | 0 | 0 | 0 |
|`4.`1987` | 1,381 | 6 | 1,960 | 0 | 0 | 0 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`5.`Totals` | 1,847 | 6 | 88,237 | 85,945 | 0 | 0 | 0 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | X X X X |
0 | 0 | 0 | X X X X |
0 | 0 | 798 | X X X X |
0 | 0 | 3,335 | X X X X |
- --------------|--------------|--------------|-------------|
0 | 0 | 4,133 | X X X X |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 26,830 | 8,352 | 18,478 | 54.8 | 30.0 | 87.3 | 0 | 0 |
|`3.`1986` | 55,615 | 25,924 | 29,691 | 55.1 | 42.2 | 75.0 | 0 | 0 |
|`4.`1987` | 37,716 | 3,965 | 33,751 | 76.6 | 69.5 | 77.5 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`5.`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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 798 | 0 |
0.0 | 3,335 | 0 |
- --------------|--------------|--------------|
X X X X | 4,133 | 0 |
| | |
- -------------->-------------->-------------->
Page: Page 93
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | 3,852 | 1,406 | 4,247 | 5,797 | 82 |
|`2.`1985` | 29,241 | 6,615 | 22,626 | 18,434 | 2,001 | 9,790 | 678 | 745 |
|`3.`1986` | 58,624 | 17,080 | 41,544 | 18,685 | 2,323 | 9,848 | 898 | 337 |
|`4.`1987` | 69,307 | 20,533 | 48,774 | 23,571 | 7,040 | 12,466 | 2,514 | 984 |
|`5.`1988` | 45,670 | 15,513 | 30,157 | 12,086 | 2,020 | 6,842 | 622 | 430 |
|`6.`1989` | 29,430 | 10,438 | 18,992 | 12,424 | 3,691 | 5,731 | 1,604 | 313 |
|`7.`1990` | 24,424 | 8,559 | 15,865 | 7,013 | 1,997 | 2,758 | 688 | 43 |
|`8.`1991` | 17,168 | 5,206 | 11,962 | 5,552 | 1,300 | 3,092 | 713 | 81 |
|`9.`1992` | 12,044 | 3,459 | 8,585 | 1,420 | 278 | 726 | 144 | 124 |
|10.`1993` | 11,626 | 5,243 | 6,383 | 1,709 | 183 | 275 | 51 | 4 |
|11.`1994` | 8,042 | 3,169 | 4,873 | 68 | 11 | 9 | 12 | 5 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 104,814 | 22,250 | 55,784 | 13,721 | 3,148 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ------------------------------#--------------#
| |
--------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
--------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
30 | 926 | X X X X |
1,282 | 26,827 | 1,546 |
1,169 | 26,481 | 1,442 |
1,253 | 27,736 | 1,251 |
822 | 17,108 | 901 |
585 | 13,445 | 975 |
521 | 7,607 | 948 |
520 | 7,151 | 623 |
579 | 2,303 | 459 |
191 | 1,941 | 231 |
24 | 78 | 89 |
--------------|--------------|--------------|
6,976 | 131,603 | X X X X |
| | |
-------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 15,136 | 134 | 13,687 | 229 | 0 | 0 | 19,525 | 844 |
|`2.`1985` | 907 | 102 | 3,666 | 8 | 0 | 0 | 1,542 | 14 |
|`3.`1986` | 3,593 | 46 | 2,651 | 6 | 0 | 0 | 2,375 | 7 |
|`4.`1987` | 1,728 | 55 | 3,576 | 3 | 0 | 0 | 2,541 | 6 |
|`5.`1988` | 3,862 | 194 | 2,116 | 6 | 0 | 0 | 2,597 | 24 |
|`6.`1989` | 2,106 | 540 | 1,217 | 17 | 0 | 0 | 1,276 | 65 |
|`7.`1990` | 2,429 | 705 | 1,256 | 23 | 0 | 0 | 1,449 | 76 |
|`8.`1991` | 5,516 | 1,210 | 2,143 | 51 | 0 | 0 | 1,799 | 106 |
|`9.`1992` | 2,905 | 611 | 1,849 | 49 | 0 | 0 | 1,565 | 48 |
|10.`1993` | 1,899 | 929 | 2,362 | 121 | 0 | 0 | 1,134 | 79 |
|11.`1994` | 636 | 202 | 1,955 | 95 | 0 | 0 | 2,798 | 742 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 40,717 | 4,728 | 36,478 | 608 | 0 | 0 | 38,601 | 2,011 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
(75)| 2,828 | 49,969 | 485 |
(30)| 436 | 6,427 | 50 |
(36)| 541 | 9,101 | 68 |
(80)| 549 | 8,330 | 98 |
(56)| 469 | 8,820 | 57 |
(46)| 227 | 4,204 | 27 |
(41)| 259 | 4,589 | 42 |
(50)| 544 | 8,635 | 67 |
(34)| 346 | 5,957 | 56 |
(20)| 292 | 4,558 | 18 |
(23)| 222 | 4,572 | 32 |
- --------------|--------------|--------------|-------------|
(491)| 6,713 | 115,162 | 1,000 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 36,057 | 2,803 | 33,254 | 123.3 | 42.4 | 147.0 | 0 | 0 |
|`3.`1986` | 38,862 | 3,280 | 35,582 | 66.3 | 19.2 | 85.6 | 0 | 0 |
|`4.`1987` | 45,684 | 9,618 | 36,066 | 65.9 | 46.8 | 73.9 | 0 | 0 |
|`5.`1988` | 28,794 | 2,866 | 25,928 | 63.0 | 18.5 | 86.0 | 0 | 0 |
|`6.`1989` | 23,566 | 5,917 | 17,649 | 80.1 | 56.7 | 92.9 | 0 | 0 |
|`7.`1990` | 15,685 | 3,489 | 12,196 | 64.2 | 40.8 | 76.9 | 0 | 0 |
|`8.`1991` | 19,166 | 3,380 | 15,786 | 111.6 | 64.9 | 132.0 | 0 | 0 |
|`9.`1992` | 9,390 | 1,130 | 8,260 | 78.0 | 32.7 | 96.2 | 0 | 0 |
|10.`1993` | 7,862 | 1,363 | 6,499 | 67.6 | 26.0 | 101.8 | 0 | 0 |
|11.`1994` | 5,712 | 1,062 | 4,650 | 71.0 | 33.5 | 95.4 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 28,460 | 21,509 |
0.0 | 4,463 | 1,964 |
0.0 | 6,192 | 2,909 |
0.0 | 5,246 | 3,084 |
0.0 | 5,778 | 3,042 |
0.0 | 2,766 | 1,438 |
0.0 | 2,957 | 1,632 |
0.0 | 6,398 | 2,237 |
0.0 | 4,094 | 1,863 |
0.0 | 3,211 | 1,347 |
0.0 | 2,294 | 2,278 |
- --------------|--------------|--------------|
X X X X | 71,859 | 43,303 |
| | |
- -------------->-------------->-------------->
Page: Page 94
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`3.`1986` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`4.`1987` | 14 | 0 | 14 | 0 | 0 | 0 | 0 | 0 |
|`5.`1988` | 234 | 0 | 234 | 6 | 0 | 7 | 0 | 1 |
|`6.`1989` | 310 | 0 | 310 | 9 | 0 | 10 | 0 | 0 |
|`7.`1990` | 294 | 0 | 294 | 82 | 0 | 345 | 0 | 0 |
|`8.`1991` | 285 | 0 | 285 | 102 | 0 | 74 | 0 | 9 |
|`9.`1992` | 104 | 0 | 104 | 8 | 0 | 24 | 0 | 1 |
|10.`1993` | 118 | 0 | 118 | 331 | 0 | 229 | 0 | 0 |
|11.`1994` | 62 | 0 | 62 | 26 | 0 | 1 | 0 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | X X X X | X X X X | X X X X | 564 | 0 | 690 | 0 | 11 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0 | 0 | X X X X |
0 | 0 | 0 |
0 | 0 | 0 |
2 | 2 | 0 |
11 | 24 | 6 |
15 | 34 | 2 |
40 | 467 | 8 |
44 | 220 | 13 |
201 | 233 | 6 |
2 | 562 | 81 |
0 | 27 | 56 |
- --------------|--------------|--------------|
315 | 1,569 | X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`3.`1986` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`4.`1987` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`5.`1988` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`6.`1989` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`7.`1990` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`8.`1991` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|`9.`1992` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|10.`1993` | 1,452 | 0 | 0 | 0 | 0 | 0 | 767 | 0 |
|11.`1994` | 25 | 0 | 0 | 0 | 0 | 0 | 17 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|12.`Totals` | 1,477 | 0 | 0 | 0 | 0 | 0 | 784 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- ---------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
--------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 1 | 1 | 0 |
0 | 47 | 47 | 0 |
0 | 55 | 2,274 | 38 |
0 | 0 | 42 | 33 |
--------------|--------------|--------------|-------------|
0 | 103 | 2,364 | 71 |
| | | |
-------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <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 | 0 |
|`2.`1985` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`3.`1986` | 0 | 0 | 0 | 0.0 | 0.0 | 0.0 | 0 | 0 |
|`4.`1987` | 2 | 0 | 2 | 14.3 | 0.0 | 14.3 | 0 | 0 |
|`5.`1988` | 24 | 0 | 24 | 10.3 | 0.0 | 10.3 | 0 | 0 |
|`6.`1989` | 34 | 0 | 34 | 11.0 | 0.0 | 11.0 | 0 | 0 |
|`7.`1990` | 467 | 0 | 467 | 158.8 | 0.0 | 158.8 | 0 | 0 |
|`8.`1991` | 221 | 0 | 221 | 77.5 | 0.0 | 77.5 | 0 | 0 |
|`9.`1992` | 280 | 0 | 280 | 269.2 | 0.0 | 269.2 | 0 | 0 |
|10.`1993` | 2,836 | 0 | 2,836 | 2,403.4 | 0.0 | 2,403.4 | 0 | 0 |
|11.`1994` | 69 | 0 | 69 | 111.3 | 0.0 | 111.3 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 0 |
0.0 | 0 | 1 |
0.0 | 0 | 47 |
0.0 | 1,452 | 822 |
0.0 | 25 | 17 |
- --------------|--------------|--------------|
X X X X | 1,477 | 887 |
| | |
- -------------->-------------->-------------->
Page: Page 95
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 1S - FINANCIAL GUARANTY/MORTGAGE GUARANTY
<CAPTION>
(000 omitted)
!-------------#-----------------------------------------#---------------------------------------------------------------------------
| 1 | Premiums Earned | Loss and Loss Expense Payments
| |-------------#-------------#-------------|-----------------------------#-----------------------------#--------------#
| Years | 2 | 3 | 4 | Loss Payments | Allocated Loss | 9 |
| in Which | | | | | Expense Payments | |
|Premiums Were| | | |--------------#--------------|--------------#--------------| Salvage |
| Earned and | Direct | | Net | 5 | 6 | 7 | 8 | and |
| Losses Were | and | Ceded | (2 - 3) | Direct | | Direct | | Subrogation |
| Incurred | Assumed | | | and Assumed | Ceded | and Assumed | Ceded | Received |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | X X X X | X X X X | X X X X | (1,052)| (539)| 271 | 89 | 1,040 |
|`2.`1993` | 2,518 | 2,127 | 391 | 0 | 0 | 0 | 1 | 0 |
|`3.`1994` | 1,611 | 1,558 | 53 | 0 | (33)| 0 | 24 | 0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | X X X X | X X X X | X X X X | (1,052)| (572)| 271 | 114 | 1,040 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- -----------------------------#--------------#
| |
- --------------#--------------| |
10 | 11 | 12 |
| | Number of |
Unallocated | Total | Claims |
Loss | Net Paid | Reported - |
Expense | (5 - 6 + 7 | Direct and |
Payments | - 8 + 10) | Assumed |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
0 | (331)| X X X X |
0 | (1)| X X X X |
0 | 9 | X X X X |
- --------------|--------------|--------------|
0 | (323)| X X X X |
| | |
- -------------->-------------->-------------->
<CAPTION>
!-------------#--------------------------------------------------------#-----------------------------------------------------------#
| | Losses Unpaid | Allocated Loss Expenses Unpaid |
| |---------------------------#----------------------------|-----------------------------#-----------------------------|
| | Case Basis | Bulk + IBNR | Case Basis | Bulk + IBNR |
| |-------------#-------------|-------------#--------------|--------------#--------------|--------------#--------------|
| | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
| | Direct | | Direct | | Direct | | Direct | |
| | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded | and Assumed | Ceded |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
| | | | | | | | | |
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | | |
|`1.`Prior` | 0 | 3 | 275 | 0 | 0 | 0 | 952 | 583 |
|`2.`1993` | 0 | 0 | 0 | 0 | 0 | 0 | 128 | 120 |
|`3.`1994` | 0 | 0 | 1,382 | 1,340 | 0 | 0 | 107 | 123 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
|`4.`Totals` | 0 | 3 | 1,657 | 1,340 | 0 | 0 | 1,187 | 826 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#--------------#--------------#-------------#
| | | |
21 | 22 | 23 | 24 |
| | | Number of |
Salvage | Unallocated | Total | Claims |
and | Loss | Net Losses |Outstanding -|
Subrogation | Expenses | and Expenses | Direct and |
Anticipated | Unpaid | Unpaid | Assumed |
- --------------|--------------|--------------|-------------|
| | | |
<C> <C> <C> <C>
| | | |
0 | 0 | 641 | 0 |
0 | 0 | 8 | 0 |
0 | 148 | 174 | 0 |
- --------------|--------------|--------------|-------------|
0 | 148 | 823 | 0 |
| | | |
- -------------->-------------->-------------->------------->
<CAPTION>
!-------------#-----------------------------------------#--------------------------------------------#-----------------------------#
| | Total Losses and | Loss and Loss Expense Percentage | Discount for Time |
| | Loss Expenses Incurred | (Incurred/Premiums Earned) | Value of Money |
| |-------------#-------------#-------------|--------------#--------------#--------------|--------------#--------------|
| | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 |
| | | | | | | | | |
| | Direct | | | Direct | | | | Loss |
| | and Assumed | Ceded | Net | and Assumed | Ceded | Net | Loss | Expense |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|--------------|
<C> <C> <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 | 0 |
|`2.`1993` | 128 | 121 | 7 | 5.1 | 5.7 | 1.8 | 0 | 0 |
|`3.`1994` | 1,637 | 1,454 | 183 | 101.6 | 93.3 | 345.3 | 0 | 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 | 0 |
| | | | | | | | | |
<------------->------------->------------->------------->-------------->-------------->-------------->-------------->-------------->
<CAPTION>
- --------------#-----------------------------#
| Net Balance Sheet Reserves |
33 | After Discount |
|--------------#--------------|
Inter-Company | 34 | 35 |
Pooling | | Loss |
Participation | Losses | Expenses |
Percentage | Unpaid | Unpaid |
- --------------|--------------|--------------|
| | |
<C> <C> <C>
| | |
X X X X | 272 | 369 |
0.0 | 0 | 8 |
0.0 | 42 | 132 |
- --------------|--------------|--------------|
X X X X | 314 | 509 |
| | |
- -------------->-------------->-------------->
Page 96
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 2A - HOMEOWNERS/FARMOWNERS
<CAPTION>
!-------------------#---------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 omitted)
| |-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
| Losses Were | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | 1992
| Incurred | | | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 23,305 | 21,759 | 23,102 | 23,070 | 23,086 | 23,328 | 23,328 | 23,286
|``2.```1985` | 163,293 | 161,780 | 163,183 | 163,943 | 163,699 | 163,870 | 163,968 | 164,046
|``3.```1986` | X X X X | 150,891 | 140,466 | 141,188 | 141,094 | 140,779 | 140,166 | 140,140
|``4.```1987` | X X X X | X X X X | 145,362 | 133,500 | 131,436 | 129,910 | 126,780 | 126,913
|``5.```1988` | X X X X | X X X X | X X X X | 136,735 | 127,851 | 127,629 | 126,023 | 125,826
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 161,136 | 152,034 | 150,820 | 151,861
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 148,750 | 139,518 | 140,024
|``8.```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 | 177,601 | 165,548
|``9.```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 | 193,601
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
- -----------------------------#-----------------------------#
| Development |
#-------------#-------------|--------------#--------------|
| 10 | 11 | 12 | 13 |
| 1993 | 1994 | One Year | Two Year |
| | | | |
|-------------|-------------|--------------|--------------|
<C> <C> <C> <C>
| | | | |
| 23,271 | 23,452 | 181 | 166 |
| 164,437 | 164,668 | 231 | 622 |
| 140,049 | 140,071 | 22 | (69)|
| 126,790 | 126,794 | 4 | (119)|
| 125,748 | 126,015 | 267 | 189 |
| 151,951 | 152,018 | 67 | 157 |
| 140,055 | 141,695 | 1,640 | 1,671 |
| 165,009 | 166,717 | 1,708 | 1,169 |
| 181,168 | 183,515 | 2,347 | (10,086)|
| 110,806 | 104,587 | (6,219)| X X X X |
| X X X X | 124,849 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| 248 | (6,300)|
| | |
>----------------------------->
SCHEDULE P - PART 2B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<CAPTION>
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 172,717 | 182,800 | 189,612 | 197,948 | 202,658 | 203,200 | 211,649 | 212,965
|``2.```1985` | 281,456 | 314,605 | 322,512 | 328,421 | 332,819 | 333,041 | 332,261 | 337,846
|``3.```1986` | X X X X | 310,271 | 313,575 | 321,444 | 317,969 | 320,962 | 320,731 | 325,471
|``4.```1987` | X X X X | X X X X | 301,420 | 306,677 | 308,344 | 308,884 | 304,696 | 308,511
|``5.```1988` | X X X X | X X X X | X X X X | 285,941 | 302,310 | 303,811 | 299,676 | 305,696
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 309,260 | 321,455 | 312,009 | 315,294
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 339,210 | 327,128 | 307,879
|``8.```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 | 374,565 | 349,433
|``9.```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 | 272,009
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 219,885 | 217,015 | (2,870)| 4,050 |
| 334,839 | 332,484 | (2,355)| (5,362)|
| 323,967 | 322,005 | (1,962)| (3,466)|
| 309,930 | 307,251 | (2,679)| (1,260)|
| 304,813 | 300,476 | (4,337)| (5,220)|
| 315,019 | 315,698 | 679 | 404 |
| 312,942 | 312,341 | (601)| 4,462 |
| 338,548 | 332,008 | (6,540)| (17,425)|
| 265,017 | 245,444 | (19,573)| (26,565)|
| 235,858 | 229,769 | (6,089)| X X X X |
| X X X X | 211,838 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| (46,327)| (50,382)|
| | |
<-------------->-------------->
SCHEDULE P - PART 2C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<CAPTION>
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 226,923 | 231,812 | 230,935 | 240,577 | 246,221 | 246,033 | 251,129 | 254,805
|``2.```1985` | 262,315 | 299,226 | 303,712 | 312,550 | 323,355 | 329,849 | 331,349 | 331,925
|``3.```1986` | X X X X | 344,128 | 333,515 | 315,451 | 302,275 | 320,045 | 308,836 | 310,490
|``4.```1987` | X X X X | X X X X | 391,334 | 355,821 | 314,506 | 308,358 | 303,308 | 302,538
|``5.```1988` | X X X X | X X X X | X X X X | 283,122 | 291,544 | 301,662 | 286,355 | 285,382
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 302,863 | 269,923 | 282,409 | 279,507
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 272,448 | 282,049 | 267,172
|``8.```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 | 263,709 | 247,952
|``9.```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 | 205,427
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 254,102 | 254,488 | 386 | (317)|
| 333,115 | 330,546 | (2,569)| (1,379)|
| 309,908 | 308,753 | (1,155)| (1,737)|
| 305,408 | 305,149 | (259)| 2,611 |
| 284,706 | 287,019 | 2,313 | 1,637 |
| 274,040 | 272,961 | (1,079)| (6,546)|
| 259,560 | 253,921 | (5,639)| (13,251)|
| 228,224 | 220,450 | (7,774)| (27,502)|
| 185,499 | 181,633 | (3,866)| (23,794)|
| 155,709 | 147,911 | (7,798)| X X X X |
| X X X X | 133,240 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| (27,440)| (70,278)|
| | |
<-------------->-------------->
SCHEDULE P - PART 2D - WORKERS' COMPENSATION
<CAPTION>
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 851,261 | 870,163 | 940,574 | 1,024,362 | 1,110,025 | 1,235,167 | 1,276,206 | 1,302,228
|``2.```1985` | 470,321 | 502,002 | 519,924 | 557,240 | 582,918 | 631,717 | 648,866 | 662,460
|``3.```1986` | X X X X | 557,300 | 549,438 | 542,840 | 557,319 | 590,557 | 613,819 | 615,083
|``4.```1987` | X X X X | X X X X | 528,390 | 535,709 | 533,025 | 582,277 | 591,055 | 593,104
|``5.```1988` | X X X X | X X X X | X X X X | 547,255 | 566,395 | 649,353 | 662,294 | 665,861
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 610,914 | 666,961 | 748,530 | 730,721
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 657,094 | 646,861 | 664,560
|``8.```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 | 516,236 | 523,835
|``9.```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 | 323,139
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 1,331,317 | 1,309,710 | (21,607)| 7,482 |
| 651,880 | 648,496 | (3,384)| (13,964)|
| 609,692 | 610,259 | 567 | (4,824)|
| 600,640 | 601,945 | 1,305 | 8,841 |
| 659,412 | 655,142 | (4,270)| (10,719)|
| 741,083 | 729,070 | (12,013)| (1,651)|
| 654,378 | 643,773 | (10,605)| (20,787)|
| 479,995 | 477,928 | (2,067)| (45,907)|
| 314,115 | 306,960 | (7,155)| (16,179)|
| 155,557 | 148,923 | (6,634)| X X X X |
| X X X X | 123,952 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| (65,863)| (97,708)|
| | |
<-------------->-------------->
SCHEDULE P - PART 2E - COMMERCIAL MULTIPLE PERIL
<CAPTION>
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 123,599 | 135,641 | 146,664 | 157,748 | 157,295 | 169,143 | 173,987 | 172,838
|``2.```1985` | 162,765 | 172,620 | 174,674 | 185,429 | 195,720 | 196,477 | 202,923 | 200,964
|``3.```1986` | X X X X | 170,445 | 155,001 | 161,660 | 172,818 | 174,757 | 179,701 | 183,294
|``4.```1987` | X X X X | X X X X | 169,796 | 146,449 | 152,706 | 182,449 | 183,979 | 192,505
|``5.```1988` | X X X X | X X X X | X X X X | 328,658 | 307,656 | 304,487 | 303,271 | 312,866
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 458,116 | 435,566 | 420,114 | 404,101
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 444,097 | 466,286 | 456,981
|``8.```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 | 432,035 | 417,797
|``9.```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 | 417,018
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 177,209 | 184,216 | 7,007 | 11,378 |
| 201,185 | 201,868 | 683 | 904 |
| 184,509 | 186,960 | 2,451 | 3,666 |
| 193,336 | 191,978 | (1,358)| (527)|
| 312,959 | 315,982 | 3,023 | 3,116 |
| 414,981 | 412,365 | (2,616)| 8,264 |
| 446,101 | 446,810 | 709 | (10,171)|
| 413,224 | 406,445 | (6,779)| (11,352)|
| 383,326 | 377,610 | (5,716)| (39,408)|
| 376,986 | 371,140 | (5,846)| X X X X |
| X X X X | 418,555 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| (8,442)| (34,130)|
| | |
<-------------->-------------->
Page 97
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 2F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE
<CAPTION>
!-------------------#---------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 omitted)
| |-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
| Losses Were | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | 1992
| Incurred | | | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 55,188 | 54,264 | 64,354 | 72,219 | 72,424 | 72,811 | 66,528 | 64,771
|``2.```1985` | 10,272 | 11,890 | 8,598 | 6,936 | 7,529 | 6,006 | 5,202 | 4,754
|``3.```1986` | X X X X | 120 | 2 | 8 | 13 | 4 | 4 | 4
|``4.```1987` | X X X X | X X X X | 7 | 123 | 15 | 17 | 17 | 17
|``5.```1988` | X X X X | X X X X | X X X X | 164 | 13 | 37 | 38 | 43
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 10 | 20 | 24 | 24
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 10 | 0 | 356
|``8.```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 | 3 | 0
|``9.```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 | 0
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
- -----------------------------#-----------------------------#
| Development |
#-------------#-------------|--------------#--------------|
| 10 | 11 | 12 | 13 |
| 1993 | 1994 | One Year | Two Year |
| | | | |
|-------------|-------------|--------------|--------------|
<C> <C> <C> <C>
| | | | |
| 68,997 | 71,684 | 2,687 | 6,913 |
| 5,158 | 5,068 | (90)| 314 |
| 4 | 4 | 0 | 0 |
| 17 | 17 | 0 | 0 |
| 43 | 176 | 133 | 133 |
| 24 | 168 | 144 | 144 |
| 358 | 429 | 71 | 73 |
| 35 | 132 | 97 | 132 |
| 0 | 16 | 16 | 16 |
| 0 | 0 | 0 | X X X X |
| X X X X | 0 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| 3,058 | 7,725 |
| | |
<-------------->-------------->
SCHEDULE P - PART 2F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE
<CAPTION>
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
|``2.```1985` | 0 | 0 | 1,178 | 1,020 | 1,037 | 1,037 | 945 | 945
|``3.```1986` | X X X X | 0 | 23 | 30 | 32 | 32 | 32 | 32
|``4.```1987` | X X X X | X X X X | 0 | 0 | 95 | 112 | 88 | 88
|``5.```1988` | X X X X | X X X X | X X X X | 0 | 198 | 409 | 236 | 231
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 176 | 197 | 210 | 378
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 80 | 191 | 333
|``8.```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 | 224 | 224
|``9.```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 | 191
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 0 | 0 | 0 | 0 |
| 945 | 945 | 0 | 0 |
| 32 | 32 | 0 | 0 |
| 48 | 88 | 40 | 0 |
| 295 | 241 | (54)| 10 |
| 424 | 290 | (134)| (88)|
| 304 | 277 | (27)| (56)|
| 224 | 139 | (85)| (85)|
| 191 | 175 | (16)| (16)|
| 40 | 48 | 8 | X X X X |
| X X X X | 0 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| (268)| (235)|
| | |
<-------------->-------------->
SCHEDULE P - PART 2G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT
(ALL PERILS), BOILER AND MACHINERY)
<CAPTION>
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 9,490 | 8,631 | 8,467 | 9,189 | 9,469 | 8,731 | 8,583 | 8,605
|``2.```1985` | 19,026 | 18,592 | 18,763 | 19,218 | 19,379 | 19,455 | 19,406 | 19,177
|``3.```1986` | X X X X | 32,710 | 31,068 | 31,472 | 31,574 | 31,264 | 30,183 | 30,036
|``4.```1987` | X X X X | X X X X | 34,199 | 33,346 | 33,152 | 31,094 | 30,500 | 31,021
|``5.```1988` | X X X X | X X X X | X X X X | 33,994 | 27,941 | 26,529 | 25,407 | 25,698
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 28,336 | 25,561 | 24,421 | 24,419
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 24,440 | 21,880 | 21,355
|``8.```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 | 21,188 | 20,078
|``9.```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 | 14,494
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 8,604 | 8,757 | 153 | 152 |
| 19,176 | 19,159 | (17)| (18)|
| 29,880 | 29,804 | (76)| (232)|
| 31,097 | 31,072 | (25)| 51 |
| 25,583 | 26,038 | 455 | 340 |
| 24,753 | 24,449 | (304)| 30 |
| 20,838 | 20,508 | (330)| (847)|
| 19,310 | 18,720 | (590)| (1,358)|
| 11,410 | 10,709 | (701)| (3,785)|
| 13,251 | 12,223 | (1,028)| X X X X |
| X X X X | 23,396 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| (2,463)| (5,667)|
| | |
<-------------->-------------->
SCHEDULE P - PART 2H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
<CAPTION>
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 408,244 | 458,263 | 488,572 | 523,214 | 573,203 | 594,111 | 647,566 | 699,577
|``2.```1985` | 196,505 | 192,845 | 198,323 | 213,753 | 221,417 | 231,058 | 237,991 | 239,717
|``3.```1986` | X X X X | 257,917 | 270,026 | 260,207 | 226,968 | 224,648 | 236,206 | 241,842
|``4.```1987` | X X X X | X X X X | 304,479 | 290,562 | 251,419 | 237,160 | 243,973 | 257,103
|``5.```1988` | X X X X | X X X X | X X X X | 221,807 | 186,050 | 223,022 | 170,605 | 182,232
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 148,722 | 146,744 | 144,171 | 131,353
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 158,238 | 162,112 | 159,602
|``8.```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 | 117,006 | 118,491
|``9.```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 | 76,240
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X
| | | | | | | | |
<------------------->------------->------------->------------->------------->------------->------------->------------->-------------
````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | |
| 769,470 810,029 | 40,559 | 110,452 |
| 243,285 246,607 | 3,322 | 6,890 |
| 239,809 234,174 | (5,635)| (7,668)|
| 244,529 239,423 | (5,106)| (17,680)|
| 166,662 167,931 | 1,269 | (14,301)|
| 123,285 122,390 | (895)| (8,963)|
| 135,630 134,170 | (1,460)| (25,432)|
| 99,979 101,468 | 1,489 | (17,023)|
| 67,663 64,290 | (3,373)| (11,950)|
| 57,671 58,917 | 1,246 | X X X X |
| X X X X 57,164 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| 31,416 | 14,325 |
| | |
<-------------->-------------->
SCHEDULE P - PART 2H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
|``2.```1985` | 0 | 0 | (62)| (73)| (28)| (77)| 58 | (113)
|``3.```1986` | X X X X | 0 | 325 | 268 | 207 | (380)| 64 | 435
|``4.```1987` | X X X X | X X X X | 8 | 0 | 0 | (6)| (6)| (6)
|``5.```1988` | X X X X | X X X X | X X X X | 205 | 216 | 295 | 813 | 626
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 652 | 729 | 754 | 756
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 481 | 433 | 443
|``8.```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 | 945 | 576
|``9.```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 | 1,305
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X
| | | | | | | | |
<------------------->------------->------------->------------->------------->------------->------------->------------->-------------
````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 53 | 76 | 23 | 76 |
| (39)| 231 | 270 | 344 |
| 456 | 699 | 243 | 264 |
| (3)| 182 | 185 | 188 |
| 629 | 656 | 27 | 30 |
| 742 | 887 | 145 | 131 |
| 1,068 | 984 | (84)| 541 |
| 749 | 699 | (50)| 123 |
| 1,148 | 1,159 | 11 | (146)|
| 312 | 388 | 76 | X X X X |
| X X X X | 1,002 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| 846 | 1,551 |
| | |
<-------------->-------------->
Page 98
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 2I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT)
<CAPTION>
!-------------------#---------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 omitted)
| |-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
| Losses Were | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | 1992
| Incurred | | | | | | | |
| | | | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------
<C> <C> <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 | 87,450
|``2.```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 | X X X X
|``3.```1994` | X X X X | X X X X | 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>
- -----------------------------#-----------------------------#
| Development |
#-------------#-------------|--------------#--------------|
| 10 | 11 | 12 | 13 |
| 1993 | 1994 | One Year | Two Year |
| | | | |
| | | | |
|-------------|-------------|--------------|--------------|
<C> <C> <C> <C>
| | | | |
| 74,114 | 75,648 | 1,534 | (11,802)|
| 76,206 | 77,219 | 1,013 | X X X X |
| X X X X | 91,497 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
`````````````````4.`Totals``| 2,547 | (11,802)|
| | |
<-------------->-------------->
SCHEDULE P - PART 2J - AUTO PHYSICAL DAMAGE
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <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 | 45,030
|``2.```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 | X X X X
|``3.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X
| | | | | | | | |
<------------------->------------->------------->------------->------------->------------->------------->------------->-------------
````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 31,687 | 31,786 | 99 | (13,244)|
| 126,922 | 117,889 | (9,033)| X X X X |
| X X X X | 122,144 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
`````````````````4.`Totals``| (8,934)| (13,244)|
| | |
<-------------->--------------> SCHEDULE P - PART 2K - FIDELITY/SURETY
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <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 | 50,303
|``2.```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 | X X X X
|``3.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X
| | | | | | | | |
<------------------->------------->------------->------------->------------->------------->------------->------------->-------------
````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````
#-------------#-------------#--------------#--------------#
| | | | |
| 76,192 | 83,025 | 6,833 | 32,722 |
| 28,121 | 33,301 | 5,180 | X X X X |
| X X X X | 28,921 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
`````````````````4.`Totals``| 12,013 | 32,722 |
| | |
<-------------->-------------->
SCHEDULE P - PART 2L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <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 | 149
|``2.```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 | X X X X
|``3.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X
| | | | | | | | |
<------------------->------------->------------->------------->------------->------------->------------->------------->-------------
````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 170 | 141 | (29)| (8)|
| 0 | 0 | 0 | X X X X |
| X X X X | 0 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
`````````````````4.`Totals``| (29)| (8)|
| | |
<-------------->-------------->
SCHEDULE P - PART 2M - INTERNATIONAL
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
|``2.```1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
|``3.```1986` | X X X X | 0 | 0 | 0 | 0 | 0 | 0 | 0
|``4.```1987` | X X X X | X X X X | 0 | 0 | 0 | 0 | 0 | 0
|``5.```1988` | X X X X | X X X X | X X X X | 18,581 | 18,142 | 17,663 | 15,821 | 16,002
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 13,397 | 13,678 | 13,166 | 12,957
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 13,549 | 14,227 | 13,373
|``8.```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 | 12,266 | 11,005
|``9.```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 | 4,919
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X
| | | | | | | | |
<------------------->------------->------------->------------->------------->------------->------------->------------->-------------
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 0 | 0 | 0 | 0 |
| 0 | 0 | 0 | 0 |
| 0 | 0 | 0 | 0 |
| 0 | 0 | 0 | 0 |
| 16,042 | 15,837 | (205)| (165)|
| 12,682 | 12,634 | (48)| (323)|
| 11,855 | 11,729 | (126)| (1,644)|
| 9,587 | 9,475 | (112)| (1,530)|
| 5,134 | 4,373 | (761)| (546)|
| 10,048 | 10,090 | 42 | X X X X |
| X X X X | 59,360 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| (1,210)| (4,208)|
| | |
<-------------->-------------->
Page 99
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 2N - REINSURANCE A
<CAPTION>
!-------------------#---------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 omitted)
| |-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
| Losses Were | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | 1992
| Incurred | | | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```1988` | X X X X | X X X X | X X X X | 34,100 | 28,393 | 25,499 | 15,105 | 14,671
|``2.```1989` | X X X X | X X X X | X X X X | X X X X | 24,435 | 26,489 | 25,917 | 25,756
|``3.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 26,318 | 27,156 | 26,452
|``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 | 36,977 | 30,203
|``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 | 30,035
|``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 | X X X X
|``7.```1994` | X X X X | X X X X | 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>
- -----------------------------#-----------------------------#
| Development |
#-------------#-------------|--------------#--------------|
| 10 | 11 | 12 | 13 |
| 1993 | 1994 | One Year | Two Year |
| | | | |
|-------------|-------------|--------------|--------------|
<C> <C> <C> <C>
| | | | |
| 15,673 | 15,892 | 219 | 1,221 |
| 19,376 | 17,716 | (1,660)| (8,040)|
| 15,630 | 13,776 | (1,854)| (12,676)|
| 14,467 | 12,857 | (1,610)| (17,346)|
| 25,947 | 13,826 | (12,121)| (16,209)|
| 39,518 | 34,997 | (4,521)| X X X X |
| X X X X | 44,637 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
`````````````````8.`Totals``| (21,547)| (53,050)|
| | |
<-------------->-------------->
SCHEDULE P - PART 2O - REINSURANCE B
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```1988` | X X X X | X X X X | X X X X | 21,132 | 18,019 | 15,891 | 8,671 | 8,506
|``2.```1989` | X X X X | X X X X | X X X X | X X X X | 20,774 | 20,740 | 19,070 | 19,009
|``3.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 11,804 | 12,076 | 12,087
|``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 | 13,076 | 12,136
|``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 | 24,264
|``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 | X X X X
|``7.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X
| | | | | | | | |
<------------------->------------->------------->------------->------------->------------->------------->------------->-------------
````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 9,222 | 9,254 | 32 | 748 |
| 17,682 | 17,168 | (514)| (1,841)|
| 9,180 | 8,751 | (429)| (3,336)|
| 6,998 | 6,196 | (802)| (5,940)|
| 21,065 | 16,580 | (4,485)| (7,684)|
| 12,666 | 12,777 | 111 | X X X X |
| X X X X | 109,229 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
`````````````````8.`Totals``| (6,087)| (18,053)|
| | |
<-------------->-------------->
SCHEDULE P - PART 2P - REINSURANCE C
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```1988` | X X X X | X X X X | X X X X | 0 | 200 | 200 | 200 | 200
|``2.```1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 | 0 | 0
|``3.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 | 0 | 0
|``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 | 0 | 0
|``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 | 0
|``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 | X X X X
|``7.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X
| | | | | | | | |
<------------------->------------->------------->------------->------------->------------->------------->------------->-------------
````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 401 | 394 | (7)| 194 |
| 0 | 0 | 0 | 0 |
| 0 | 0 | 0 | 0 |
| 0 | 0 | 0 | 0 |
| 0 | 0 | 0 | 0 |
| 0 | 0 | 0 | X X X X |
| X X X X | 0 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
`````````````````8.`Totals``| (7)| 194 |
| | |
<-------------->-------------->
SCHEDULE P - PART 2Q - REINSURANCE D
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 31,384 | 27,864 | 27,904 | 28,059 | 28,058 | 28,115 | 28,131 | 28,076
|``2.```1985` | 10,843 | 21,295 | 18,969 | 18,942 | 18,927 | 19,225 | 19,028 | 18,879
|``3.```1986` | X X X X | 29,813 | 31,455 | 30,817 | 30,500 | 30,668 | 29,981 | 30,341
|``4.```1987` | X X X X | X X X X | 39,253 | 36,884 | 36,116 | 36,095 | 33,673 | 33,196
| | | | | | | | |
<------------------->------------->------------->------------->---------------------------------------------------------------------
````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 28,074 | 28,074 | 0 | (2)|
| 18,478 | 18,478 | 0 | (401)|
| 29,586 | 29,691 | 105 | (650)|
| 33,746 | 33,752 | 6 | 556 |
| | | | |
- ----------------------------------------------------------|
| | |
`````````````````8.`Totals``| 111 | (497)|
| | |
<-------------->-------------->
Page 100
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 2R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE
<CAPTION>
!-------------------#---------------------------------------------------------------------------------------------------------------
| 1 | Incurred Losses and Allocated Expenses Reported at Year End (000 omitted)
| |-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
| Losses Were | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | 1992
| Incurred | | | | | | | |
| | | | | | | | |
|-------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 54,483 | 65,370 | 84,321 | 102,312 | 111,615 | 126,308 | 140,705 | 146,489
|``2.```1985` | 15,377 | 15,189 | 20,479 | 24,209 | 25,549 | 27,820 | 28,070 | 27,131
|``3.```1986` | X X X X | 38,882 | 30,746 | 31,467 | 26,974 | 25,628 | 27,465 | 26,830
|``4.```1987` | X X X X | X X X X | 31,769 | 30,772 | 32,980 | 34,006 | 29,612 | 28,674
|``5.```1988` | X X X X | X X X X | X X X X | 21,475 | 22,525 | 28,761 | 18,114 | 19,826
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 18,447 | 19,272 | 14,518 | 14,585
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 13,429 | 11,459 | 11,088
|``8.```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 | 10,317 | 11,241
|``9.```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 | 7,732
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
- ----------------------------#-----------------------------#
| Development** |
#-------------#-------------|--------------#--------------|
| 10 | 11 | 12 | 13 |
| 1993 | 1994 | One Year | Two Year |
| | | | |
| | | | |
|-------------|-------------|--------------|--------------|
<C> <C> <C> <C>
| | | | |
| 159,296 | 158,715 | (581)| 12,226 |
| 28,501 | 31,536 | 3,035 | 4,405 |
| 30,128 | 33,872 | 3,744 | 7,042 |
| 32,160 | 34,264 | 2,104 | 5,590 |
| 23,523 | 24,635 | 1,112 | 4,809 |
| 16,861 | 16,836 | (25)| 2,251 |
| 11,645 | 11,419 | (226)| 331 |
| 12,329 | 14,724 | 2,395 | 3,483 |
| 6,729 | 7,334 | 605 | (398)|
| 7,244 | 6,017 | (1,227)| X X X X |
| X X X X | 4,402 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| 10,936 | 39,739 |
| | |
<-------------->-------------->
SCHEDULE P - PART 2R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE
<CAPTION>
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
|``2.```1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
|``3.```1986` | X X X X | 0 | 0 | 0 | 0 | 0 | 0 | 0
|``4.```1987` | X X X X | X X X X | 0 | 0 | 0 | 0 | 0 | 0
|``5.```1988` | X X X X | X X X X | X X X X | 7 | 12 | 13 | 13 | 13
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 1 | 12 | 18 | 18
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 120 | 239 | 340
|``8.```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 | 208 | 164
|``9.```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 | 91
|`10.```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 | X X X X
|`11.```1994` | X X X X | X X X X | 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>
#-------------#-------------#--------------#--------------#
<C> <C> <C> <C>
| | | | |
| 0 | 0 | 0 | 0 |
| 0 | 0 | 0 | 0 |
| 3 | 0 | (3)| 0 |
| 0 | 0 | 0 | 0 |
| 13 | 13 | 0 | 0 |
| 20 | 18 | (2)| 0 |
| 426 | 427 | 1 | 87 |
| 184 | 176 | (8)| 12 |
| 379 | 31 | (348)| (60)|
| 870 | 2,778 | 1,908 | X X X X |
| X X X X | 69 | X X X X | X X X X |
| | | | |
>------------->-------------|--------------|--------------|
| | |
````````````````12.`Totals``| 1,548 | 39 |
| | |
<-------------->-------------->
SCHEDULE P - PART 2S - FINANCIAL GUARANTY/MORTGAGE GUARANTY
!-------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------
<C> <C> <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 | (89)
|``2.```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 | 0
|``3.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X
| | | | | | | | |
<------------------->------------->------------->------------->------------->------------->------------->------------->-------------
````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````
#-------------#-------------#--------------#--------------#
| | | | |
| (1,162)| (521)| 641 | (432)|
| 36 | 7 | (29)| X X X X |
| 0 | 35 | X X X X | X X X X |
| | 0 | | |
>------------->-------------|--------------|--------------|
| | |
`````````````````4.`Totals``| 612 | (432)|
| | |
<-------------->-------------->
Page 101
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY
AND ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 3A - HOMEOWNERS/FARMOWNERS
<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 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 9,689 | 17,092 | 19,921 | 21,110 | 21,969 | 22,601 |
|``2.```1985` | 115,057 | 151,486 | 156,034 | 159,189 | 161,415 | 162,308 | 163,243 |
|``3.```1986` | X X X X | 92,590 | 123,363 | 129,682 | 133,986 | 135,731 | 137,420 |
|``4.```1987` | X X X X | X X X X | 81,167 | 110,930 | 116,296 | 119,779 | 121,830 |
|``5.```1988` | X X X X | X X X X | X X X X | 82,160 | 113,632 | 117,560 | 121,324 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 99,281 | 139,429 | 144,266 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 93,167 | 127,235 |
|``8.```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 | 113,582 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | 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>
- ------------------------------------------#-------------#-------------#
omitted) | 12 | 13 |
-------------#-------------#-------------| Number of | Number of |
| | | Claims | Claims |
9 | 10 | 11 | Closed | Closed |
1992 | 1993 | 1994 | With Loss | Without |
| | | Payment |Loss Payment |
-------------|-------------|-------------|-------------|-------------|
<C> <C> <C> <C> <C>
| | | | |
22,739 | 23,096 | 23,316 | 1,277 | 826 |
163,510 | 163,780 | 164,415 | 68,943 | 15,735 |
138,265 | 138,720 | 139,292 | 53,628 | 13,773 |
123,370 | 124,308 | 124,802 | 48,552 | 13,949 |
122,770 | 124,064 | 124,549 | 45,342 | 13,793 |
147,076 | 149,106 | 149,971 | 58,018 | 16,992 |
132,665 | 135,782 | 138,181 | 50,606 | 16,074 |
151,510 | 157,213 | 161,119 | 56,158 | 18,028 |
126,000 | 167,477 | 174,935 | 48,693 | 16,223 |
X X X X | 74,300 | 95,473 | 40,108 | 14,307 |
X X X X | X X X X | 91,779 | 40,322 | 12,118 |
| | | | |
------------->------------->------------->------------->------------->
SCHEDULE P - PART 3B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<CAPTION>
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 88,243 | 128,085 | 155,770 | 175,752 | 182,652 | 188,795 |
|``2.```1985` | 103,218 | 214,911 | 267,415 | 296,891 | 317,114 | 325,175 | 328,339 |
|``3.```1986` | X X X X | 105,317 | 207,471 | 258,603 | 289,164 | 306,025 | 314,030 |
|``4.```1987` | X X X X | X X X X | 102,959 | 198,718 | 248,056 | 278,173 | 292,406 |
|``5.```1988` | X X X X | X X X X | X X X X | 96,163 | 195,472 | 245,103 | 274,391 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 97,508 | 206,044 | 258,100 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 100,690 | 207,436 |
|``8.```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 | 103,524 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
191,655 | 195,104 | 196,946 | 12,526 | 5,216 |
329,622 | 330,070 | 330,459 | 114,154 | 43,856 |
316,518 | 318,243 | 319,477 | 106,242 | 41,271 |
296,871 | 302,413 | 304,062 | 96,214 | 37,272 |
285,653 | 291,860 | 295,868 | 91,128 | 34,925 |
284,531 | 298,685 | 307,040 | 88,966 | 33,881 |
246,934 | 277,729 | 295,364 | 83,170 | 31,072 |
208,156 | 267,329 | 298,320 | 73,288 | 28,910 |
77,150 | 156,696 | 192,621 | 55,934 | 22,944 |
X X X X | 72,022 | 139,829 | 42,926 | 16,929 |
X X X X | X X X X | 66,842 | 28,739 | 12,408 |
| | | | |
- ------------->------------->------------->------------->------------->
SCHEDULE P - PART 3C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 104,684 | 170,116 | 206,797 | 226,487 | 235,043 | 239,705 |
|``2.```1985` | 67,128 | 161,406 | 228,393 | 267,725 | 296,309 | 313,989 | 322,448 |
|``3.```1986` | X X X X | 66,520 | 148,007 | 214,438 | 255,656 | 283,055 | 294,455 |
|``4.```1987` | X X X X | X X X X | 61,095 | 145,291 | 203,988 | 245,594 | 274,061 |
|``5.```1988` | X X X X | X X X X | X X X X | 60,080 | 139,053 | 201,965 | 243,146 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 51,868 | 127,921 | 193,076 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 51,439 | 132,153 |
|``8.```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 | 43,431 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
244,737 | 246,396 | 248,429 | 7,515 | 3,744 |
328,062 | 330,234 | 331,504 | 66,464 | 26,327 |
301,794 | 304,786 | 306,104 | 56,716 | 23,033 |
285,955 | 292,793 | 296,674 | 52,076 | 21,720 |
260,397 | 268,986 | 277,713 | 47,311 | 19,408 |
229,864 | 248,073 | 259,743 | 43,829 | 17,429 |
177,937 | 211,206 | 230,879 | 39,593 | 16,541 |
104,451 | 150,229 | 181,271 | 31,592 | 14,469 |
31,098 | 72,856 | 118,012 | 26,112 | 13,028 |
X X X X | 25,501 | 62,068 | 20,629 | 10,588 |
X X X X | X X X X | 27,266 | 14,524 | 7,381 |
| | | | |
- ------------->------------->------------->------------->------------->
SCHEDULE P - PART 3D - WORKERS' COMPENSATION
<CAPTION>
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 173,395 | 318,268 | 416,100 | 488,894 | 556,002 | 616,342 |
|``2.```1985` | 125,317 | 272,341 | 352,953 | 405,406 | 438,237 | 463,028 | 482,893 |
|``3.```1986` | X X X X | 129,275 | 256,810 | 336,848 | 385,302 | 419,084 | 444,813 |
|``4.```1987` | X X X X | X X X X | 127,476 | 262,831 | 330,325 | 378,370 | 419,643 |
|``5.```1988` | X X X X | X X X X | X X X X | 132,278 | 279,538 | 367,993 | 424,742 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 132,318 | 307,603 | 412,167 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 131,068 | 279,877 |
|``8.```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 | 102,910 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
663,577 | 711,214 | 766,008 | 22,475 | 3,790 |
497,067 | 510,948 | 520,726 | 47,028 | 4,222 |
461,871 | 470,818 | 487,284 | 42,810 | 4,019 |
440,887 | 453,900 | 466,879 | 39,472 | 3,962 |
461,087 | 481,115 | 497,719 | 42,245 | 4,242 |
471,076 | 511,904 | 537,667 | 44,004 | 4,774 |
365,754 | 420,467 | 449,608 | 40,720 | 4,514 |
208,085 | 270,790 | 309,820 | 34,549 | 4,494 |
66,055 | 137,483 | 175,188 | 25,529 | 4,241 |
X X X X | 30,004 | 62,080 | 15,621 | 2,715 |
X X X X | X X X X | 21,887 | 7,072 | 1,549 |
| | | | |
------------->------------->------------->------------->------------->
SCHEDULE P - PART 3E - COMMERCIAL MULTIPLE PERIL
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 42,934 | 79,934 | 107,765 | 124,982 | 145,825 | 152,339 |
|``2.```1985` | 71,158 | 110,772 | 129,654 | 149,909 | 166,634 | 177,366 | 186,848 |
|``3.```1986` | X X X X | 64,384 | 98,950 | 119,499 | 136,584 | 148,644 | 158,824 |
|``4.```1987` | X X X X | X X X X | 53,661 | 89,211 | 107,156 | 123,977 | 156,006 |
|``5.```1988` | X X X X | X X X X | X X X X | 76,340 | 144,648 | 174,450 | 214,079 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 107,105 | 191,421 | 249,666 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 118,896 | 204,136 |
|``8.```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 | 114,986 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
157,988 | 162,654 | 166,651 | 4,285 | 5,732 |
191,821 | 195,076 | 196,390 | 31,715 | 13,424 |
170,923 | 175,284 | 177,369 | 24,688 | 12,277 |
172,963 | 177,270 | 180,526 | 21,699 | 12,020 |
243,297 | 263,206 | 277,784 | 38,019 | 21,342 |
292,770 | 326,053 | 349,041 | 51,226 | 27,931 |
255,940 | 302,906 | 340,160 | 48,770 | 28,880 |
180,550 | 229,123 | 269,987 | 44,840 | 28,308 |
102,008 | 180,206 | 221,046 | 39,862 | 26,402 |
X X X X | 110,882 | 179,790 | 40,515 | 28,057 |
X X X X | X X X X | 131,051 | 35,299 | 23,861 |
| | | | |
- ------------->------------->------------->------------->------------->
Page 102
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY
AND ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 3F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE
<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 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 16,673 | 28,952 | 39,094 | 46,444 | 52,343 | 53,376 |
|``2.```1985` | 146 | 465 | 1,118 | 2,271 | 3,027 | 3,374 | 3,871 |
|``3.```1986` | X X X X | 7 | 6 | 7 | 8 | 4 | 4 |
|``4.```1987` | X X X X | X X X X | 7 | 7 | 11 | 17 | 17 |
|``5.```1988` | X X X X | X X X X | X X X X | 0 | 0 | 4 | 38 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 8 | 7 | 24 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``8.```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 | 0 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | 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>
-----------------------------------------#-------------#-------------#
omitted) | 12 | 13 |
-------------#-------------#-------------| Number of | Number of |
| | | Claims | Claims |
9 | 10 | 11 | Closed | Closed |
1992 | 1993 | 1994 | With Loss |Without Loss |
| | | Payment | Payment |
-------------|-------------|-------------|-------------|-------------|
<C> <C> <C> <C> <C>
| | | | |
56,399 | 57,756 | 59,587 | 669 | 900 |
3,969 | 4,538 | 4,555 | 105 | 189 |
4 | 4 | 4 | 1 | 1 |
17 | 17 | 17 | 2 | 3 |
43 | 43 | 176 | 2 | 2 |
24 | 24 | 167 | 2 | 2 |
19 | 358 | 428 | 1 | 3 |
0 | 35 | 132 | 1 | 0 |
0 | 0 | 15 | 0 | 0 |
X X X X | 0 | 0 | 0 | 1 |
X X X X | X X X X | 0 | 0 | 0 |
| | | | |
------------->------------->------------->------------->------------->
SCHEDULE P - PART 3F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 0 | 0 | 0 | 0 | 0 | 0 |
|``2.```1985` | 0 | 0 | 662 | 1,018 | 1,037 | 1,037 | 945 |
|``3.```1986` | X X X X | 0 | 10 | 16 | 32 | 32 | 32 |
|``4.```1987` | X X X X | X X X X | 0 | 0 | 0 | 24 | 24 |
|``5.```1988` | X X X X | X X X X | X X X X | 0 | 1 | 101 | 117 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 1 | 9 | 25 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 1 | 10 |
|``8.```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 | 0 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
0 | 0 | 0 | 0 | 0 |
945 | 945 | 945 | 10 | 10 |
32 | 32 | 32 | 5 | 3 |
24 | 24 | 24 | 0 | 0 |
120 | 141 | 141 | 0 | 0 |
240 | 255 | 255 | 0 | 2 |
99 | 266 | 266 | 0 | 0 |
4 | 9 | 10 | 0 | 0 |
0 | 3 | 3 | 0 | 0 |
X X X X | 0 | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 | 0 |
| | | | |
------------->------------->------------->------------->------------->
SCHEDULE P - PART 3G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT
(ALL PERILS), BOILER AND MACHINERY)
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 3,165 | 5,001 | 5,919 | 6,951 | 7,230 | 7,353 |
|``2.```1985` | 8,762 | 14,339 | 16,267 | 17,244 | 18,178 | 18,680 | 19,100 |
|``3.```1986` | X X X X | 13,767 | 20,949 | 24,613 | 27,333 | 29,370 | 29,415 |
|``4.```1987` | X X X X | X X X X | 9,533 | 17,862 | 24,502 | 26,695 | 27,769 |
|``5.```1988` | X X X X | X X X X | X X X X | 9,231 | 16,454 | 19,180 | 20,912 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 11,402 | 16,737 | 19,342 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 7,945 | 14,633 |
|``8.```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 | 9,730 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
7,597 | 7,908 | 8,124 | X X X X | X X X X |
19,025 | 19,068 | 19,078 | X X X X | X X X X |
29,450 | 29,187 | 29,192 | X X X X | X X X X |
28,522 | 28,827 | 29,388 | X X X X | X X X X |
22,588 | 23,225 | 23,657 | X X X X | X X X X |
21,705 | 22,545 | 22,938 | X X X X | X X X X |
16,945 | 18,666 | 19,327 | X X X X | X X X X |
15,533 | 17,363 | 17,506 | X X X X | X X X X |
5,677 | 8,448 | 9,314 | X X X X | X X X X |
X X X X | 5,338 | 8,613 | X X X X | X X X X |
X X X X | X X X X | 8,973 | X X X X | X X X X |
| | | | |
- ------------->------------->------------->------------->------------->
SCHEDULE P - PART 3H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 129,974 | 245,165 | 331,879 | 419,468 | 477,501 | 514,312 |
|``2.```1985` | 17,555 | 47,982 | 88,943 | 124,960 | 153,560 | 176,920 | 192,605 |
|``3.```1986` | X X X X | 18,393 | 45,614 | 82,671 | 120,553 | 150,472 | 172,690 |
|``4.```1987` | X X X X | X X X X | 21,818 | 52,420 | 87,499 | 122,123 | 157,422 |
|``5.```1988` | X X X X | X X X X | X X X X | 10,761 | 27,514 | 48,724 | 72,687 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 8,733 | 21,122 | 36,345 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 11,619 | 25,544 |
|``8.```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 | 5,929 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
549,894 | 591,973 | 625,190 | 9,536 | 14,853 |
197,272 | 206,127 | 211,147 | 24,930 | 14,859 |
185,334 | 195,092 | 198,340 | 19,652 | 12,400 |
173,081 | 190,522 | 198,401 | 16,712 | 11,594 |
102,251 | 114,779 | 124,651 | 12,946 | 8,118 |
52,958 | 65,520 | 80,578 | 8,309 | 6,065 |
48,198 | 65,946 | 75,342 | 8,074 | 6,980 |
15,617 | 27,507 | 41,441 | 5,642 | 4,797 |
3,682 | 8,472 | 16,651 | 3,015 | 2,944 |
X X X X | 3,122 | 9,067 | 2,016 | 1,948 |
X X X X | X X X X | 4,509 | 1,251 | 1,449 |
| | | | |
------------->------------->------------->------------->------------->
SCHEDULE P - PART 3H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 0 | 0 | 0 | 0 | 0 | 0 |
|``2.```1985` | 0 | 0 | 29 | 40 | 58 | 72 | 90 |
|``3.```1986` | X X X X | 0 | 209 | 341 | 389 | 328 | 393 |
|``4.```1987` | X X X X | X X X X | 0 | 0 | 0 | (6)| (6)|
|``5.```1988` | X X X X | X X X X | X X X X | 69 | 111 | 218 | 225 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 248 | 446 | 640 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 143 | 269 |
|``8.```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 | 159 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
0 | 0 | 0 | 0 | 0 |
88 | 99 | 145 | 2 | 2 |
367 | 411 | 434 | 4 | 0 |
(6)| (6)| (6)| 0 | 2 |
626 | 626 | 625 | 70 | 44 |
687 | 730 | 762 | 126 | 64 |
285 | 949 | 984 | 85 | 70 |
234 | 301 | 470 | 72 | 86 |
88 | 854 | 915 | 62 | 71 |
X X X X | 85 | 141 | 34 | 43 |
X X X X | X X X X | 124 | 14 | 22 |
| | | | |
- ------------->------------->------------->------------->------------->
Page 103
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY
AND ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 3I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT)
<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 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<C> <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.```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 |
|``3.```1994` | X X X X | 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>
- -----------------------------------------#---------------------------#
omitted) | 12 | 13 |
- -------------#-------------#-------------| Number of | Number of |
| | | Claims |Claims Closed|
9 | 10 | 11 | Closed With | Without |
1992 | 1993 | 1994 |Loss Payment |Loss Payment |
| | | | |
- -------------|-------------|-------------|-------------|-------------|
<C> <C> <C> <C> <C>
| | | | |
000 | 33,295 | 48,269 | X X X X | X X X X |
X X X X | 51,154 | 70,625 | X X X X | X X X X |
X X X X | X X X X | 55,668 | X X X X | X X X X |
| | | | |
- ------------->------------->------------->------------->------------->
SCHEDULE P - PART 3J - AUTO PHYSICAL DAMAGE
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <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.```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 |
|``3.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
000 | 17,868 | 19,773 | 12,157 | 3,385 |
X X X X | 105,665 | 117,230 | 88,841 | 20,072 |
X X X X | X X X X | 104,146 | 75,082 | 16,827 |
| | | | |
- ------------->------------->------------->------------->------------->
SCHEDULE P - PART 3K - FIDELITY/SURETY
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
| | | | | | | | |
|``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.```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 |
|``3.```1994` | X X X X | 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>
-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
000 | 43,311 | 60,947 | X X X X | X X X X |
X X X X | 8,255 | 27,104 | X X X X | X X X X |
X X X X | X X X X | 7,357 | X X X X | X X X X |
| | | | |
------------->------------->------------->------------->------------->
SCHEDULE P - PART 3L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <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.```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 |
|``3.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
000 | 39 | 57 | 3 | 2 |
X X X X | 0 | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 | 0 |
| | | | |
- ------------->------------->------------->------------->------------->
SCHEDULE P - PART 3M - INTERNATIONAL
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 0 | 0 | 0 | 0 | 0 | 0 |
|``2.```1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.```1986` | X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
|``4.```1987` | X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
|``5.```1988` | X X X X | X X X X | X X X X | 4,610 | 10,615 | 12,406 | 13,164 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 3,850 | 8,531 | 9,812 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 3,585 | 8,889 |
|``8.```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 | 4,478 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
0 | 0 | 0 | X X X X | X X X X |
0 | 0 | 0 | X X X X | X X X X |
0 | 0 | 0 | X X X X | X X X X |
0 | 0 | 0 | X X X X | X X X X |
13,562 | 13,619 | 14,006 | X X X X | X X X X |
10,323 | 10,358 | 10,554 | X X X X | X X X X |
10,293 | 10,486 | 10,579 | X X X X | X X X X |
6,649 | 7,364 | 7,495 | X X X X | X X X X |
1,232 | 2,920 | 3,289 | X X X X | X X X X |
X X X X | 355 | 4,210 | X X X X | X X X X |
X X X X | X X X X | 11,028 | X X X X | X X X X |
| | | | |
- ------------->------------->------------->------------->------------->
Page 104
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY
AND ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 3N - REINSURANCE A
<CAPTION>
!--------------------#--------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000 O
| |-------------#-------------#-------------#-------------#-------------#-------------#-------------#
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 |
| Incurred | | | | | | | |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```1988` | X X X X | X X X X | X X X X | 2,283 | 4,302 | 5,753 | 6,950 |
|``2.```1989` | X X X X | X X X X | X X X X | X X X X | 5,873 | 8,625 | 10,264 |
|``3.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 4,784 | 6,108 |
|``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 | 1,301 |
|``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 |
|``7.```1994` | X X X X | 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>
- -----------------------------------------#-------------#-------------#
mitted) | 12 | 13 |
- -------------#-------------#-------------| Number of | Number of |
9 | 10 | 11 | Claims | Claims |
1992 | 1993 | 1994 | Closed | Closed |
| | | With Loss |Without Loss |
| | | Payment | Payment |
- -------------|-------------|-------------|-------------|-------------|
<C> <C> <C> <C> <C>
| | | | |
9,296 | 10,510 | 11,344 | X X X X | X X X X |
11,671 | 12,053 | 12,706 | X X X X | X X X X |
9,592 | 9,867 | 10,474 | X X X X | X X X X |
4,570 | 5,463 | 6,311 | X X X X | X X X X |
6,875 | 2,140 | 3,467 | X X X X | X X X X |
X X X X | 1,083 | 2,716 | X X X X | X X X X |
X X X X | X X X X | 1,553 | X X X X | X X X X |
| | | | |
- ------------->------------->------------->------------->------------->
SCHEDULE P - PART 3O - REINSURANCE B
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```1988` | X X X X | X X X X | X X X X | 1,108 | 2,954 | 3,793 | 4,770 |
|``2.```1989` | X X X X | X X X X | X X X X | X X X X | 10,817 | 11,867 | 12,902 |
|``3.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 1,567 | 2,232 |
|``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 | 402 |
|``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 |
|``7.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
5,650 | 6,476 | 6,912 | X X X X | X X X X |
13,472 | 13,773 | 14,103 | X X X X | X X X X |
6,826 | 7,073 | 7,516 | X X X X | X X X X |
1,555 | 2,022 | 2,525 | X X X X | X X X X |
10,626 | 10,354 | 10,995 | X X X X | X X X X |
X X X X | 485 | 1,909 | X X X X | X X X X |
X X X X | X X X X | 4,276 | X X X X | X X X X |
| | | | |
------------->------------->------------->------------->------------->
SCHEDULE P - PART 3P - REINSURANCE C
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```1988` | X X X X | X X X X | X X X X | 0 | 200 | 200 | 200 |
|``2.```1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``3.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``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 | 0 |
|``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 |
|``7.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
200 | 401 | 394 | X X X X | X X X X |
0 | 0 | 0 | X X X X | X X X X |
0 | 0 | 0 | X X X X | X X X X |
0 | 0 | 0 | X X X X | X X X X |
0 | 0 | 0 | X X X X | X X X X |
X X X X | 0 | 0 | X X X X | X X X X |
X X X X | X X X X | 0 | X X X X | X X X X |
| | | | |
- ------------->------------->------------->------------->------------->
SCHEDULE P - PART 3Q - REINSURANCE D
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 387 | 725 | 838 | 1,539 | 28,115 | 28,131 |
|``2.```1985` | 1,856 | 11,761 | 17,564 | 18,244 | 18,601 | 18,927 | 19,025 |
|``3.```1986` | X X X X | 8,482 | 20,448 | 24,661 | 26,542 | 27,789 | 28,421 |
|``4.```1987` | X X X X | X X X X | (119,003)| (150,152)| (152,812)| 27,625 | 28,886 |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
28,076 | 28,074 | 28,074 | X X X X | X X X X |
18,879 | 18,478 | 18,478 | X X X X | X X X X |
29,168 | 28,682 | 28,894 | X X X X | X X X X |
29,549 | 29,830 | 30,416 | X X X X | X X X X |
| | | | |
- ------------->------------->------------->------------->------------->
Page 105
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY
AND ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 3R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE
<CAPTION>
!--------------------#--------------------------------------------------------------------------------------------------
| 1 | Cumulative Paid Losses and Allocated Expenses at Year End (000 O
| |-------------#-------------#-------------#-------------#-------------#-------------#-------------#
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Losses Were | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 |
| Incurred | | | | | | | |
| | | | | | | | |
|--------------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 14,056 | 30,957 | 47,570 | 65,887 | 82,899 | 96,493 |
|``2.```1985` | 692 | 2,067 | 5,349 | 10,599 | 15,704 | 20,191 | 22,232 |
|``3.```1986` | X X X X | 535 | 1,397 | 3,706 | 8,522 | 13,765 | 18,809 |
|``4.```1987` | X X X X | X X X X | 1,046 | 3,165 | 6,478 | 13,019 | 19,099 |
|``5.```1988` | X X X X | X X X X | X X X X | 168 | 2,599 | 6,118 | 10,643 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 375 | 2,727 | 5,374 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 459 | 1,290 |
|``8.```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 | 434 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | 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>
- -----------------------------------------#-------------#-------------#
mitted) | 12 | 13 |
- -------------#-------------#-------------| Number of | Number of |
9 | 10 | 11 | Claims | Claims |
1992 | 1993 | 1994 | Closed | Closed |
| | | With Loss |Without Loss |
| | | Payment | Payment |
- -------------|-------------|-------------|-------------|-------------|
<C> <C> <C> <C> <C>
| | | | |
105,791 | 110,679 | 111,575 | 1,093 | 5,513 |
23,153 | 24,247 | 25,544 | 818 | 678 |
21,089 | 24,179 | 25,311 | 652 | 722 |
22,219 | 23,955 | 26,482 | 543 | 610 |
12,598 | 15,102 | 16,285 | 421 | 423 |
8,197 | 11,508 | 12,860 | 483 | 465 |
2,326 | 4,785 | 7,087 | 460 | 446 |
1,152 | 4,246 | 6,632 | 278 | 278 |
205 | 559 | 1,724 | 143 | 260 |
X X X X | 1,218 | 1,751 | 121 | 92 |
X X X X | X X X X | 53 | 27 | 30 |
| | | | |
- ------------->------------->------------->------------->------------->
SCHEDULE P - PART 3R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C> <C> <C> <C>
| | | | | | | | |
|``1.```Prior` | 000 | 0 | 0 | 0 | 0 | 0 | 0 |
|``2.```1985` | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.```1986` | X X X X | 0 | 0 | 0 | 0 | 0 | 0 |
|``4.```1987` | X X X X | X X X X | 0 | 0 | 0 | 0 | 0 |
|``5.```1988` | X X X X | X X X X | X X X X | 1 | 5 | 13 | 13 |
|``6.```1989` | X X X X | X X X X | X X X X | X X X X | 0 | 4 | 18 |
|``7.```1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 20 | 170 |
|``8.```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 | 21 |
|``9.```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 |
|`10.```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 |
|`11.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
-------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
0 | 0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 | 0 |
13 | 13 | 13 | 4 | 2 |
18 | 18 | 18 | 1 | 1 |
291 | 427 | 427 | 5 | 3 |
55 | 167 | 176 | 6 | 7 |
7 | 31 | 31 | 1 | 5 |
X X X X | 20 | 560 | 11 | 32 |
X X X X | X X X X | 28 | 7 | 16 |
| | | | |
------------->------------->------------->------------->------------->
SCHEDULE P - PART 3S - FINANCIAL GUARANTY/MORTGAGE GUARANTY
!--------------------#-------------#-------------#-------------#-------------#-------------#-------------#-------------#
<C> <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.```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 |
|``3.```1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | | |
<-------------------->------------->------------->------------->------------->------------->------------->------------->
- -------------#-------------#-------------#-------------#-------------#
<C> <C> <C> <C> <C>
| | | | |
000 | (831)| (1,162)| X X X X | X X X X |
X X X X | (1)| (1)| X X X X | X X X X |
X X X X | X X X X | 9 | X X X X | X X X X |
| | | | |
- ------------->------------->------------->------------->------------->
Page 106
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 4A - HOMEOWNERS/FARMOWNERS
<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 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 8,127 | 2,871 | 1,350 | 583 | 337 | 440 |
|``2.`````1985` | 21,677 | 3,598 | 2,218 | 1,424 | 489 | 534 |
|``3.`````1986` | X X X X | 26,818 | 8,442 | 6,075 | 3,916 | 2,588 |
|``4.`````1987` | X X X X | X X X X | 34,155 | 14,953 | 10,076 | 6,872 |
|``5.`````1988` | X X X X | X X X X | X X X X | 26,295 | 8,421 | 5,420 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 29,666 | 7,917 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 23,709 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | 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) |
---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
1991 | 1992 | 1993 | 1994 |
| | | |
---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
244 | 134 | 55 | 58 |
200 | 234 | 159 | 188 |
1,079 | 763 | 516 | 318 |
2,075 | 1,617 | 1,208 | 1,229 |
2,061 | 1,322 | 716 | 837 |
3,082 | 2,177 | 918 | 1,051 |
5,481 | 3,249 | 1,085 | 1,342 |
23,758 | 5,380 | 2,233 | 2,246 |
X X X X | 21,121 | 4,065 | 3,128 |
X X X X | X X X X | 13,203 | 3,855 |
X X X X | X X X X | X X X X | 9,823 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 4B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 52,775 | 24,928 | 10,538 | 7,328 | 3,949 | 2,130 |
|``2.`````1985` | 76,623 | 33,084 | 13,453 | 7,756 | 4,835 | 2,605 |
|``3.`````1986` | X X X X | 100,864 | 44,855 | 25,884 | 8,775 | 4,734 |
|``4.`````1987` | X X X X | X X X X | 103,612 | 47,271 | 24,394 | 12,635 |
|``5.`````1988` | X X X X | X X X X | X X X X | 95,979 | 47,928 | 24,340 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 111,634 | 54,405 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 135,402 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
1,476 | 1,569 | 6,860 | 2,830 |
1,133 | 7,293 | 4,015 | 1,890 |
2,021 | 6,250 | 4,162 | 1,704 |
4,094 | 6,719 | 4,856 | 1,834 |
7,862 | 12,097 | 8,460 | 1,680 |
19,073 | 11,678 | 5,459 | 2,674 |
57,174 | 23,091 | 11,912 | 5,933 |
153,113 | 65,878 | 28,461 | 11,805 |
X X X X | 103,343 | 48,345 | 16,977 |
X X X X | X X X X | 79,287 | 29,584 |
X X X X | X X X X | X X X X | 68,083 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 4C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 100,158 | 47,443 | 15,752 | 7,475 | 5,895 | 3,500 |
|``2.`````1985` | 113,446 | 60,304 | 27,174 | 10,184 | 6,271 | 3,557 |
|``3.`````1986` | X X X X | 202,473 | 112,979 | 51,470 | 15,808 | 21,272 |
|``4.`````1987` | X X X X | X X X X | 248,615 | 133,340 | 59,272 | 29,793 |
|``5.`````1988` | X X X X | X X X X | X X X X | 149,682 | 82,498 | 51,411 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 178,608 | 70,725 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 152,903 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
5,082 | 5,000 | 3,866 | 1,685 |
2,446 | 2,725 | 2,960 | 971 |
4,655 | 3,884 | 3,241 | 1,630 |
9,555 | 6,531 | 7,344 | 5,760 |
15,394 | 8,560 | 5,279 | 3,144 |
39,054 | 23,430 | 11,156 | 5,226 |
89,729 | 45,468 | 18,673 | 6,206 |
150,745 | 82,270 | 37,108 | 12,719 |
X X X X | 117,172 | 51,518 | 17,453 |
X X X X | X X X X | 80,775 | 38,983 |
X X X X | X X X X | X X X X | 57,281 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 4D - WORKERS' COMPENSATION
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 195,987 | 107,451 | 83,422 | 79,027 | 112,255 | 188,245 |
|``2.`````1985` | 200,994 | 95,509 | 43,799 | 34,916 | 30,712 | 64,690 |
|``3.`````1986` | X X X X | 284,035 | 159,978 | 86,215 | 60,885 | 67,514 |
|``4.`````1987` | X X X X | X X X X | 241,685 | 124,486 | 69,265 | 87,101 |
|``5.`````1988` | X X X X | X X X X | X X X X | 240,532 | 113,291 | 129,212 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 257,388 | 168,478 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 302,452 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
188,684 | 227,026 | 251,168 | 175,915 |
70,275 | 79,598 | 80,357 | 54,848 |
62,374 | 58,951 | 76,351 | 59,369 |
72,384 | 63,395 | 83,342 | 65,764 |
98,149 | 82,500 | 86,842 | 72,401 |
164,927 | 122,043 | 118,277 | 99,698 |
167,879 | 139,459 | 125,937 | 106,344 |
201,174 | 171,488 | 104,600 | 91,620 |
X X X X | 111,171 | 80,128 | 62,847 |
X X X X | X X X X | 67,534 | 49,724 |
X X X X | X X X X | X X X X | 54,551 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 4E - COMMERCIAL MULTIPLE PERIL
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 50,216 | 38,674 | 26,593 | 19,911 | 15,610 | 11,624 |
|``2.`````1985` | 59,058 | 33,833 | 20,461 | 14,944 | 12,074 | 8,356 |
|``3.`````1986` | X X X X | 70,183 | 33,146 | 21,992 | 18,627 | 13,659 |
|``4.`````1987` | X X X X | X X X X | 79,374 | 34,475 | 27,072 | 42,558 |
|``5.`````1988` | X X X X | X X X X | X X X X | 181,058 | 117,500 | 83,612 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 272,787 | 184,073 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 240,641 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
11,868 | 7,203 | 8,399 | 10,313 |
6,673 | 4,514 | 3,309 | 3,551 |
10,074 | 6,226 | 4,622 | 4,350 |
8,503 | 12,476 | 10,554 | 7,004 |
47,275 | 42,361 | 29,455 | 25,471 |
117,913 | 70,317 | 57,597 | 41,504 |
194,651 | 139,082 | 91,692 | 58,644 |
234,305 | 176,395 | 123,218 | 81,495 |
X X X X | 225,071 | 146,435 | 91,681 |
X X X X | X X X X | 181,370 | 128,112 |
X X X X | X X X X | X X X X | 188,526 |
| | | |
- --------------->--------------->--------------->--------------->
Page 107
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 4F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE
<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 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 28,792 | 17,340 | 11,263 | 11,285 | 8,253 | 7,992 |
|``2.`````1985` | 9,518 | 9,830 | 5,261 | 1,978 | 1,853 | 1,491 |
|``3.`````1986` | X X X X | 68 | (4)| 0 | 1 | 0 |
|``4.`````1987` | X X X X | X X X X | 0 | 96 | 1 | 0 |
|``5.`````1988` | X X X X | X X X X | X X X X | 165 | 4 | 9 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 2 | 4 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 5 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | 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) |
---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
1991 | 1992 | 1993 | 1994 |
| | | |
---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
4,763 | 2,864 | 5,714 | 5,830 |
944 | 730 | 519 | 413 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 88 | 0 | 0 |
3 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 4F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 0 | 0 | 0 | 0 | 0 | 0 |
|``2.`````1985` | 0 | 0 | 134 | 1 | 0 | 0 |
|``3.`````1986` | X X X X | 0 | 4 | 4 | 0 | 0 |
|``4.`````1987` | X X X X | X X X X | 0 | 0 | 94 | 88 |
|``5.`````1988` | X X X X | X X X X | X X X X | 0 | 163 | 280 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 161 | 129 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 73 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
64 | 55 | 24 | 64 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
30 | 0 | 0 | 0 |
212 | 200 | 97 | 125 |
X X X X | 177 | 135 | 2 |
X X X X | X X X X | 40 | 36 |
X X X X | X X X X | X X X X | 0 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 4G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT
(ALL PERILS), BOILER AND MACHINERY)
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 2,338 | 873 | 356 | 280 | 193 | 0 |
|``2.`````1985` | 3,931 | 966 | 333 | 200 | 55 | 22 |
|``3.`````1986` | X X X X | 8,647 | 3,035 | 1,998 | 1,619 | 823 |
|``4.`````1987` | X X X X | X X X X | 11,245 | 5,428 | 3,595 | 1,491 |
|``5.`````1988` | X X X X | X X X X | X X X X | 11,836 | 3,750 | 1,624 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 7,701 | 1,995 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 6,682 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
0 | 13 | 12 | 10 |
2 | 0 | 0 | 2 |
165 | 125 | 215 | 188 |
367 | 383 | 863 | 767 |
353 | 189 | 771 | 1,038 |
617 | 294 | 453 | 556 |
1,759 | 1,050 | 189 | 170 |
5,660 | 2,064 | 318 | 224 |
X X X X | 4,727 | 547 | 248 |
X X X X | X X X X | 3,631 | 1,048 |
X X X X | X X X X | X X X X | 6,389 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 4H - SECTION 1 - OTHER LIABILITY - OCCURRENCE
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 222,583 | 157,927 | 105,488 | 83,130 | 66,854 | 49,343 |
|``2.`````1985` | 140,056 | 95,657 | 65,153 | 52,126 | 41,785 | 36,612 |
|``3.`````1986` | X X X X | 218,982 | 188,844 | 140,570 | 76,095 | 49,571 |
|``4.`````1987` | X X X X | X X X X | 255,083 | 201,512 | 128,329 | 87,279 |
|``5.`````1988` | X X X X | X X X X | X X X X | 188,732 | 130,153 | 145,770 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 124,748 | 104,146 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 125,630 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
69,914 | 86,964 | 133,321 | 144,152 |
34,047 | 30,415 | 31,330 | 26,770 |
43,325 | 41,594 | 35,822 | 26,568 |
61,191 | 63,292 | 42,081 | 32,233 |
66,435 | 61,503 | 36,881 | 32,617 |
82,543 | 55,293 | 41,007 | 32,690 |
109,041 | 90,026 | 55,009 | 39,034 |
98,570 | 87,514 | 55,193 | 42,581 |
X X X X | 64,920 | 46,732 | 34,293 |
X X X X | X X X X | 47,924 | 37,831 |
X X X X | X X X X | X X X X | 46,654 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 4H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 0 | 0 | 0 | 0 | 0 | 0 |
|``2.`````1985` | 0 | 0 | (27)| (33)| (25)| (44)|
|``3.`````1986` | X X X X | 0 | 34 | (21)| (52)| (208)|
|``4.`````1987` | X X X X | X X X X | 2 | 0 | 0 | 0 |
|``5.`````1988` | X X X X | X X X X | X X X X | 40 | 30 | 23 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 116 | 83 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 99 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
0 | 0 | 53 | 76 |
(9)| (57)| 5 | 3 |
(91)| 20 | 31 | 88 |
0 | 0 | 3 | 187 |
162 | 0 | 3 | 30 |
32 | 20 | 0 | 44 |
45 | 45 | 119 | 0 |
217 | 98 | 134 | 80 |
X X X X | 348 | 86 | 164 |
X X X X | X X X X | 13 | 127 |
X X X X | X X X X | X X X X | 521 |
| | | |
- --------------->--------------->--------------->--------------->
Page 108
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 4I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY AND THEFT)
<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 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<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 |
|``2 `````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 |
|``3.`````1994` | 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) |
---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
| | | |
| | | |
---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
X X X X | 37,454 | 13,038 | 12,154 |
X X X X | X X X X | 6,097 | 1,356 |
X X X X | X X X X | X X X X | 7,631 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 4J - AUTO PHYSICAL DAMAGE
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<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 |
|``2 `````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 |
|``3.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
| | | |
X X X X | 17,286 | 6,004 | 7,554 |
X X X X | X X X X | 5,847 | (383)|
X X X X | X X X X | X X X X | 1,873 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 4K - FIDELITY/SURETY
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<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 |
|``2 `````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 |
|``3.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
X X X X | 13,658 | 12,126 | 6,850 |
X X X X | X X X X | 15,066 | 1,314 |
X X X X | X X X X | X X X X | 16,053 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 4L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<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 |
|``2 `````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 |
|``3.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
X X X X | 5 | 4 | 4 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 4M - INTERNATIONAL
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 0 | 0 | 0 | 0 | 0 | 0 |
|``2.`````1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`````1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`````1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`````1988` | X X X X | X X X X | X X X X | 6,976 | 4,332 | 3,098 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 4,930 | 2,760 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 5,303 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
1,388 | 1,425 | 1,694 | 1,280 |
1,775 | 1,523 | 1,444 | 1,383 |
3,754 | 2,259 | 958 | 840 |
5,740 | 3,247 | 1,728 | 1,573 |
X X X X | 2,293 | 1,735 | 893 |
X X X X | X X X X | 4,466 | 3,344 |
X X X X | X X X X | X X X X | 31,206 |
| | | |
- --------------->--------------->--------------->--------------->
Page 109
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 4N - REINSURANCE A
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| | BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED
| 1 |---------------#---------------#---------------#---------------#---------------#---------------#
| | | | | | | |
| Years in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Losses Were | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````1988` | X X X X | X X X X | X X X X | 29,167 | 20,669 | 16,864 |
|``2.`````1989` | X X X X | X X X X | X X X X | X X X X | 14,575 | 13,294 |
|``3.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 17,082 |
|``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 |
|``7.`````1994` | 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) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
1991 | 1992 | 1993 | 1994 |
| | | |
| | | |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
5,599 | 3,332 | 3,611 | 3,268 |
13,088 | 11,443 | 4,941 | 3,073 |
17,746 | 15,433 | 5,074 | 2,651 |
32,597 | 23,320 | 6,916 | 4,601 |
X X X X | 23,417 | 18,544 | 8,047 |
X X X X | X X X X | 34,972 | 29,485 |
X X X X | X X X X | X X X X | 39,946 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 4O - REINSURANCE B
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````1988` | X X X X | X X X X | X X X X | 18,119 | 12,928 | 10,228 |
|``2.`````1989` | X X X X | X X X X | X X X X | X X X X | 6,987 | 5,714 |
|``3.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 5,534 |
|``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 |
|``7.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
2,583 | 1,598 | 1,815 | 1,581 |
4,607 | 3,651 | 2,163 | 1,683 |
5,443 | 4,686 | 1,822 | 978 |
11,202 | 9,182 | 4,041 | 2,781 |
X X X X | 13,249 | 8,686 | 4,935 |
X X X X | X X X X | 9,690 | 8,891 |
X X X X | X X X X | X X X X | 78,091 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 4P - REINSURANCE C
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``2.`````1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``3.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``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 |
|``7.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 4Q - REINSURANCE D
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 3,340 | 179 | 4 | 23 | 0 | 0 |
|``2.`````1985` | 6,413 | 7,117 | 931 | 346 | 125 | 195 |
|``3.`````1986` | X X X X | 15,706 | 7,079 | 3,446 | 2,206 | 1,663 |
|``4.`````1987` | X X X X | X X X X | 20,805 | 10,661 | 6,768 | 5,997 |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
2 | 0 | 0 | 0 |
814 | 590 | 442 | 332 |
2,624 | 2,139 | 2,492 | 1,960 |
| | | |
- --------------->--------------->--------------->--------------->
Page 110
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
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 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
| Incurred | | | | | | |
| | | | | | | |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 29,523 | 17,467 | 13,937 | 12,653 | 8,442 | 15,870 |
|``2.`````1985` | 10,485 | 7,804 | 7,597 | 6,977 | 5,298 | 4,066 |
|``3.`````1986` | X X X X | 26,221 | 19,150 | 16,072 | 9,372 | 5,213 |
|``4.`````1987` | X X X X | X X X X | 24,856 | 18,904 | 15,562 | 11,129 |
|``5.`````1988` | X X X X | X X X X | X X X X | 17,164 | 13,768 | 14,915 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 13,345 | 9,827 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 10,345 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | 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) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
1991 | 1992 | 1993 | 1994 |
| | | |
| | | |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | |
22,008 | 27,576 | 32,709 | 32,138 |
3,226 | 2,847 | 3,452 | 5,186 |
4,975 | 3,763 | 4,275 | 5,013 |
6,489 | 4,705 | 5,581 | 6,108 |
4,998 | 5,183 | 5,022 | 4,682 |
5,407 | 3,061 | 3,546 | 2,410 |
7,066 | 5,154 | 4,032 | 2,607 |
7,951 | 6,021 | 4,756 | 3,787 |
X X X X | 6,687 | 4,483 | 3,316 |
X X X X | X X X X | 5,486 | 3,296 |
X X X X | X X X X | X X X X | 3,916 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 4R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`````Prior` | 0 | 0 | 0 | 0 | 0 | 0 |
|``2.`````1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`````1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`````1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`````1988` | X X X X | X X X X | X X X X | 2 | 2 | 0 |
|``6.`````1989` | X X X X | X X X X | X X X X | X X X X | 0 | 2 |
|``7.`````1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 29 |
|``8.`````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 |
|``9.`````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 |
|`10.`````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 |
|`11.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 3 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 2 | 0 |
19 | 14 | 0 | 0 |
52 | 31 | 12 | 0 |
X X X X | 24 | 348 | 0 |
X X X X | X X X X | 0 | 767 |
X X X X | X X X X | X X X X | 17 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 4S - FINANCIAL GUARANTY/MORTGAGE GUARANTY
!-----------------------------#---------------#---------------#---------------#---------------#---------------#---------------#
<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 |
|``2.`````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 |
|``3.`````1994` | X X X X | X X X X | X X X X | X X X X | X X X X | X X X X |
| | | | | | | |
<----------------------------->--------------->--------------->--------------->--------------->--------------->--------------->
- ---------------#---------------#---------------#---------------#
<C> <C> <C> <C>
| | | |
X X X X | 328 | 131 | 644 |
X X X X | X X X X | 37 | 8 |
X X X X | X X X X | X X X X | 26 |
| | | |
- --------------->--------------->--------------->--------------->
Page # Page 111
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5A - HOMEOWNERS/FARMOWNERS
SECTION 1
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 670 | 958 | 1,103 | 1,176 | 1,220 |
|``2.`1985` | 56,124 | 68,125 | 68,624 | 68,778 | 68,861 | 68,902 |
|``3.`1986` | X X X X | 45,097 | 52,914 | 53,325 | 53,486 | 53,557 |
|``4.`1987` | X X X X | X X X X | 39,975 | 47,811 | 48,266 | 48,429 |
|``5.`1988` | X X X X | X X X X | X X X X | 36,820 | 44,672 | 45,101 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 45,460 | 57,283 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 41,801 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
1,242 | 1,251 | 1,263 | 1,277 |
68,927 | 68,934 | 68,940 | 68,943 |
53,586 | 53,607 | 53,621 | 53,628 |
48,501 | 48,529 | 48,546 | 48,552 |
45,242 | 45,296 | 45,331 | 45,342 |
57,764 | 57,875 | 57,979 | 58,018 |
49,954 | 50,375 | 50,530 | 50,606 |
48,076 | 55,530 | 56,018 | 56,158 |
X X X X | 38,383 | 48,117 | 48,693 |
X X X X | X X X X | 34,670 | 40,108 |
X X X X | X X X X | X X X X | 40,322 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 591 | 306 | 156 | 83 | 39 |
|``2.`1985` | 7,295 | 751 | 307 | 168 | 76 | 32 |
|``3.`1986` | X X X X | 5,403 | 558 | 241 | 127 | 62 |
|``4.`1987` | X X X X | X X X X | 5,333 | 535 | 268 | 121 |
|``5.`1988` | X X X X | X X X X | X X X X | 5,142 | 531 | 202 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 7,258 | 466 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 5,587 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
-------------------------------------------------------------------#
R END |
----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
26 | 23 | 17 | 8 |
15 | 9 | 5 | 3 |
46 | 25 | 12 | 5 |
67 | 38 | 17 | 8 |
91 | 60 | 27 | 19 |
202 | 140 | 73 | 35 |
524 | 255 | 138 | 72 |
6,035 | 688 | 273 | 145 |
X X X X | 8,030 | 671 | 267 |
X X X X | X X X X | 4,769 | 421 |
X X X X | X X X X | X X X X | 3,931 |
| | | |
---------------->---------------->---------------->---------------->
SECTION 3
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 506 | 718 | 806 | 880 | 916 |
|``2.`1985` | 74,936 | 84,045 | 84,428 | 84,555 | 84,628 | 84,654 |
|``3.`1986` | X X X X | 61,390 | 66,812 | 67,150 | 67,315 | 67,363 |
|``4.`1987` | X X X X | X X X X | 56,274 | 61,804 | 62,281 | 62,410 |
|``5.`1988` | X X X X | X X X X | X X X X | 52,744 | 58,574 | 58,952 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 65,825 | 74,342 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 60,292 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
940 | 952 | 965 | 976 |
84,672 | 84,675 | 84,679 | 84,681 |
67,393 | 67,400 | 67,405 | 67,406 |
62,476 | 62,491 | 62,505 | 62,506 |
59,062 | 59,112 | 59,140 | 59,153 |
74,788 | 74,924 | 75,009 | 75,045 |
66,197 | 66,580 | 66,704 | 66,752 |
68,967 | 73,856 | 74,221 | 74,331 |
X X X X | 58,905 | 64,711 | 65,183 |
X X X X | X X X X | 51,745 | 54,836 |
X X X X | X X X X | X X X X | 56,371 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 112
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
SECTION 1
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 6,859 | 9,600 | 10,927 | 11,745 | 12,112 |
|``2.`1985` | 75,654 | 105,763 | 110,693 | 112,488 | 113,443 | 113,859 |
|``3.`1986` | X X X X | 72,779 | 98,335 | 102,896 | 104,904 | 105,715 |
|``4.`1987` | X X X X | X X X X | 65,440 | 88,265 | 93,069 | 95,085 |
|``5.`1988` | X X X X | X X X X | X X X X | 60,276 | 84,265 | 88,657 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 58,537 | 82,969 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 57,017 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
12,310 | 12,412 | 12,481 | 12,526 |
114,014 | 114,102 | 114,135 | 114,154 |
106,046 | 106,145 | 106,212 | 106,242 |
95,822 | 96,030 | 96,162 | 96,214 |
90,296 | 90,774 | 91,029 | 91,128 |
86,851 | 88,079 | 88,694 | 88,966 |
78,203 | 81,290 | 82,606 | 83,170 |
50,382 | 68,301 | 71,784 | 73,288 |
X X X X | 38,264 | 53,079 | 55,934 |
X X X X | X X X X | 31,070 | 42,926 |
X X X X | X X X X | X X X X | 28,739 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 5,402 | 2,782 | 1,490 | 775 | 432 |
|``2.`1985` | 27,723 | 7,121 | 2,996 | 1,433 | 731 | 298 |
|``3.`1986` | X X X X | 25,033 | 6,181 | 2,549 | 1,273 | 543 |
|``4.`1987` | X X X X | X X X X | 21,698 | 5,191 | 2,574 | 1,071 |
|``5.`1988` | X X X X | X X X X | X X X X | 21,769 | 5,259 | 2,169 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 22,439 | 4,753 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 19,451 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
R END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
298 | 238 | 212 | 183 |
170 | 93 | 63 | 46 |
216 | 136 | 63 | 33 |
426 | 231 | 101 | 50 |
908 | 498 | 217 | 125 |
2,065 | 1,155 | 524 | 234 |
4,352 | 2,240 | 1,112 | 475 |
19,215 | 5,461 | 2,580 | 1,151 |
X X X X | 17,055 | 4,428 | 1,903 |
X X X X | X X X X | 13,804 | 3,439 |
X X X X | X X X X | X X X X | 12,199 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 3
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 3,323 | 4,637 | 5,262 | 5,831 | 6,029 |
|``2.`1985` | 131,135 | 153,280 | 156,041 | 157,032 | 157,723 | 157,885 |
|``3.`1986` | X X X X | 125,850 | 142,629 | 145,306 | 146,862 | 147,270 |
|``4.`1987` | X X X X | X X X X | 112,492 | 127,882 | 131,749 | 133,009 |
|``5.`1988` | X X X X | X X X X | X X X X | 106,060 | 122,281 | 124,846 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 103,782 | 119,469 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 98,652 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
6,172 | 6,252 | 6,327 | 6,368 |
157,983 | 158,025 | 158,046 | 158,056 |
147,426 | 147,498 | 147,533 | 147,546 |
133,347 | 133,454 | 133,508 | 133,532 |
125,764 | 126,030 | 126,115 | 126,177 |
121,913 | 122,728 | 122,987 | 123,081 |
111,847 | 113,850 | 114,546 | 114,717 |
90,025 | 100,753 | 102,724 | 103,349 |
X X X X | 71,621 | 79,504 | 80,781 |
X X X X | X X X X | 57,551 | 63,294 |
X X X X | X X X X | X X X X | 53,346 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 113
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 1
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 4,001 | 5,821 | 6,661 | 7,115 | 7,335 |
|``2.`1985` | 44,413 | 61,218 | 64,162 | 65,305 | 65,921 | 66,238 |
|``3.`1986` | X X X X | 39,218 | 52,112 | 54,597 | 55,757 | 56,312 |
|``4.`1987` | X X X X | X X X X | 35,761 | 47,499 | 50,103 | 51,223 |
|``5.`1988` | X X X X | X X X X | X X X X | 32,367 | 43,509 | 45,796 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 29,515 | 40,455 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 27,835 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
7,412 | 7,459 | 7,495 | 7,515 |
66,370 | 66,425 | 66,457 | 66,464 |
56,550 | 56,652 | 56,700 | 56,716 |
51,747 | 51,921 | 52,026 | 52,076 |
46,732 | 47,042 | 47,224 | 47,311 |
42,481 | 43,243 | 43,610 | 43,829 |
37,021 | 38,470 | 39,188 | 39,593 |
22,684 | 29,371 | 30,880 | 31,592 |
X X X X | 18,110 | 24,639 | 26,112 |
X X X X | X X X X | 15,274 | 20,629 |
X X X X | X X X X | X X X X | 14,524 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 3,818 | 1,928 | 1,015 | 490 | 242 |
|``2.`1985` | 12,919 | 4,547 | 2,232 | 1,220 | 604 | 262 |
|``3.`1986` | X X X X | 11,214 | 3,728 | 1,978 | 1,059 | 508 |
|``4.`1987` | X X X X | X X X X | 10,261 | 3,375 | 1,800 | 921 |
|``5.`1988` | X X X X | X X X X | X X X X | 9,402 | 3,217 | 1,536 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 9,352 | 2,848 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 8,573 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
R END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
138 | 103 | 66 | 42 |
133 | 70 | 33 | 23 |
234 | 116 | 58 | 30 |
412 | 231 | 119 | 65 |
787 | 453 | 244 | 133 |
1,498 | 859 | 464 | 217 |
2,638 | 1,579 | 854 | 425 |
7,226 | 2,725 | 1,466 | 777 |
X X X X | 7,938 | 2,747 | 1,435 |
X X X X | X X X X | 6,361 | 1,907 |
X X X X | X X X X | X X X X | 5,772 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 3
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 2,302 | 3,119 | 3,461 | 3,711 | 3,811 |
|``2.`1985` | 73,225 | 89,615 | 91,545 | 92,237 | 92,595 | 92,720 |
|``3.`1986` | X X X X | 65,266 | 76,724 | 78,538 | 79,389 | 79,612 |
|``4.`1987` | X X X X | X X X X | 60,006 | 70,608 | 72,733 | 73,457 |
|``5.`1988` | X X X X | X X X X | X X X X | 54,431 | 64,426 | 65,983 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 50,018 | 59,320 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 47,449 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
3,851 | 3,893 | 3,923 | 3,942 |
92,772 | 92,797 | 92,804 | 92,814 |
79,711 | 79,758 | 79,773 | 79,779 |
73,701 | 73,788 | 73,839 | 73,859 |
66,583 | 66,737 | 66,817 | 66,851 |
60,790 | 61,246 | 61,399 | 61,475 |
54,839 | 56,035 | 56,413 | 56,559 |
39,976 | 45,539 | 46,487 | 46,838 |
X X X X | 34,817 | 39,744 | 40,575 |
X X X X | X X X X | 29,395 | 33,124 |
X X X X | X X X X | X X X X | 27,677 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 114
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5D - WORKERS' COMPENSATION
SECTION 1
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 7,382 | 11,467 | 14,030 | 16,334 | 18,007 |
|``2.`1985` | 21,806 | 37,895 | 42,063 | 44,020 | 45,214 | 45,887 |
|``3.`1986` | X X X X | 21,911 | 34,793 | 38,212 | 40,227 | 41,341 |
|``4.`1987` | X X X X | X X X X | 18,908 | 31,571 | 35,369 | 37,233 |
|``5.`1988` | X X X X | X X X X | X X X X | 20,032 | 34,242 | 38,387 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 19,741 | 35,896 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 19,248 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
19,398 | 20,432 | 21,464 | 22,475 |
46,359 | 46,635 | 46,853 | 47,028 |
41,963 | 42,317 | 42,580 | 42,810 |
38,288 | 38,826 | 39,209 | 39,472 |
40,367 | 41,272 | 41,825 | 42,245 |
40,477 | 42,305 | 43,315 | 44,004 |
34,077 | 37,766 | 39,680 | 40,720 |
17,032 | 29,011 | 32,843 | 34,549 |
X X X X | 11,389 | 22,496 | 25,529 |
X X X X | X X X X | 8,150 | 15,621 |
X X X X | X X X X | X X X X | 7,072 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 11,771 | 8,881 | 7,082 | 6,203 | 5,250 |
|``2.`1985` | 16,598 | 6,939 | 3,857 | 2,289 | 1,655 | 1,172 |
|``3.`1986` | X X X X | 13,723 | 5,864 | 3,441 | 2,281 | 1,439 |
|``4.`1987` | X X X X | X X X X | 13,008 | 5,734 | 3,473 | 2,094 |
|``5.`1988` | X X X X | X X X X | X X X X | 14,481 | 6,706 | 3,546 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 17,171 | 6,963 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 15,274 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
R END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
4,598 | 4,147 | 3,666 | 3,096 |
869 | 711 | 539 | 423 |
1,025 | 830 | 625 | 478 |
1,321 | 961 | 688 | 499 |
2,055 | 1,441 | 1,035 | 697 |
3,593 | 2,299 | 1,504 | 944 |
6,262 | 3,677 | 2,173 | 1,295 |
13,786 | 6,298 | 3,258 | 1,799 |
X X X X | 13,165 | 4,880 | 2,444 |
X X X X | X X X X | 8,770 | 3,016 |
X X X X | X X X X | X X X X | 6,318 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 3
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 2,691 | 4,478 | 5,664 | 7,604 | 8,669 |
|``2.`1985` | 40,038 | 47,785 | 49,313 | 49,964 | 50,752 | 51,049 |
|``3.`1986` | X X X X | 37,431 | 43,552 | 44,924 | 46,102 | 46,523 |
|``4.`1987` | X X X X | X X X X | 33,562 | 40,062 | 42,174 | 42,911 |
|``5.`1988` | X X X X | X X X X | X X X X | 36,462 | 44,202 | 45,575 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 39,142 | 46,631 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 36,715 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
9,712 | 10,501 | 11,303 | 11,930 |
51,313 | 51,500 | 51,591 | 51,673 |
46,837 | 47,067 | 47,189 | 47,306 |
43,348 | 43,639 | 43,814 | 43,931 |
46,342 | 46,771 | 47,023 | 47,184 |
48,338 | 49,103 | 49,486 | 49,722 |
43,982 | 45,523 | 46,185 | 46,529 |
33,106 | 39,069 | 40,361 | 40,842 |
X X X X | 26,820 | 31,289 | 32,214 |
X X X X | X X X X | 18,601 | 21,352 |
X X X X | X X X X | X X X X | 14,939 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 115
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5E - COMMERCIAL MULTIPLE PERIL
SECTION 1
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 1,731 | 2,702 | 3,306 | 3,671 | 3,923 |
|``2.`1985` | 21,333 | 29,292 | 30,368 | 30,950 | 31,316 | 31,508 |
|``3.`1986` | X X X X | 17,140 | 22,607 | 23,424 | 24,053 | 24,374 |
|``4.`1987` | X X X X | X X X X | 14,502 | 19,896 | 20,711 | 21,194 |
|``5.`1988` | X X X X | X X X X | X X X X | 24,852 | 34,936 | 36,452 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 34,266 | 47,796 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 34,042 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
4,049 | 4,188 | 4,241 | 4,285 |
31,612 | 31,670 | 31,700 | 31,715 |
24,540 | 24,622 | 24,662 | 24,688 |
21,465 | 21,596 | 21,667 | 21,699 |
37,210 | 37,606 | 37,863 | 38,019 |
49,649 | 50,367 | 50,889 | 51,226 |
45,817 | 47,250 | 48,210 | 48,770 |
32,875 | 42,314 | 43,958 | 44,840 |
X X X X | 27,463 | 38,307 | 39,862 |
X X X X | X X X X | 30,293 | 40,515 |
X X X X | X X X X | X X X X | 35,299 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 3,395 | 2,612 | 1,446 | 1,087 | 809 |
|``2.`1985` | 5,718 | 2,306 | 1,541 | 969 | 528 | 323 |
|``3.`1986` | X X X X | 4,711 | 1,952 | 1,449 | 857 | 533 |
|``4.`1987` | X X X X | X X X X | 4,465 | 1,698 | 1,166 | 742 |
|``5.`1988` | X X X X | X X X X | X X X X | 8,054 | 2,962 | 1,875 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 10,954 | 3,374 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 10,564 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
R END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
643 | 362 | 260 | 190 |
196 | 118 | 76 | 56 |
355 | 225 | 135 | 94 |
404 | 273 | 181 | 120 |
1,244 | 799 | 459 | 303 |
2,112 | 1,562 | 948 | 568 |
3,526 | 2,762 | 1,779 | 1,111 |
10,376 | 3,991 | 2,550 | 1,602 |
X X X X | 12,436 | 3,789 | 2,403 |
X X X X | X X X X | 12,406 | 3,684 |
X X X X | X X X X | X X X X | 12,961 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 3
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 1,594 | 3,600 | 4,122 | 4,568 | 4,839 |
|``2.`1985` | 34,509 | 43,132 | 44,266 | 44,710 | 44,958 | 45,085 |
|``3.`1986` | X X X X | 29,221 | 35,027 | 36,111 | 36,609 | 36,844 |
|``4.`1987` | X X X X | X X X X | 26,156 | 32,065 | 33,087 | 33,511 |
|``5.`1988` | X X X X | X X X X | X X X X | 45,414 | 56,393 | 58,079 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 62,446 | 76,276 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 63,336 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
4,965 | 5,054 | 5,124 | 5,199 |
45,146 | 45,167 | 45,185 | 45,195 |
36,954 | 36,999 | 37,033 | 37,058 |
33,664 | 33,768 | 33,818 | 33,836 |
58,829 | 59,343 | 59,512 | 59,664 |
78,292 | 79,138 | 79,508 | 79,725 |
75,407 | 77,469 | 78,375 | 78,761 |
62,241 | 71,979 | 73,931 | 74,750 |
X X X X | 56,478 | 66,838 | 68,667 |
X X X X | X X X X | 62,703 | 72,256 |
X X X X | X X X X | X X X X | 72,121 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 116
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5F - MEDICAL MALPRACTICE - OCCURRENCE
SECTION 1A
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 170 | 319 | 436 | 533 | 593 |
|``2.`1985` | 21 | 32 | 46 | 62 | 78 | 95 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 1 |
|``4.`1987` | X X X X | X X X X | 1 | 1 | 1 | 2 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 1 | 1 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
618 | 641 | 658 | 669 |
98 | 103 | 105 | 105 |
1 | 1 | 1 | 1 |
2 | 2 | 2 | 2 |
2 | 2 | 2 | 2 |
2 | 2 | 2 | 2 |
0 | 0 | 1 | 1 |
0 | 0 | 1 | 1 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2A
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 685 | 477 | 280 | 192 | 106 |
|``2.`1985` | 53 | 58 | 55 | 66 | 35 | 16 |
|``3.`1986` | X X X X | 1 | 1 | 1 | 1 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 2 | 1 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 1 | 2 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 1 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 1 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
R END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
75 | 62 | 60 | 85 |
13 | 6 | 7 | 7 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
1 | 1 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 3A
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 278 | 427 | 490 | 583 | 616 |
|``2.`1985` | 129 | 189 | 226 | 270 | 283 | 290 |
|``3.`1986` | X X X X | 2 | 2 | 2 | 2 | 2 |
|``4.`1987` | X X X X | X X X X | 3 | 5 | 5 | 5 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 1 | 4 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 2 | 4 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 1 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
642 | 671 | 717 | 760 |
291 | 295 | 299 | 301 |
2 | 2 | 2 | 2 |
5 | 5 | 5 | 5 |
4 | 4 | 4 | 4 |
4 | 4 | 4 | 4 |
3 | 3 | 4 | 4 |
0 | 0 | 1 | 1 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 1 | 1 |
X X X X | X X X X | X X X X | 0 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 117
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5F - MEDICAL MALPRACTICE - CLAIMS-MADE
SECTION 1B
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 1 | 1 | 4 | 9 | 10 | 10 |
|``3.`1986` | X X X X | 3 | 4 | 4 | 5 | 5 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
-------------------------------------------------------------------#
SUMED AT YEAR END |
----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
10 | 10 | 10 | 10 |
5 | 5 | 5 | 5 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
---------------->---------------->---------------->---------------->
SECTION 2B
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 12 | 11 | 7 | 1 | 0 | 0 |
|``3.`1986` | X X X X | 4 | 1 | 1 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 1 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
-------------------------------------------------------------------#
R END |
----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
---------------->---------------->---------------->---------------->
SECTION 3B
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 20 | 20 | 20 | 20 | 20 | 20 |
|``3.`1986` | X X X X | 8 | 8 | 8 | 8 | 8 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 2 | 2 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
20 | 20 | 20 | 20 |
8 | 8 | 8 | 8 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
2 | 2 | 2 | 2 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 118
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5H - OTHER LIABILITY - OCCURRENCE
SECTION 1A
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 3,549 | 5,976 | 7,373 | 8,252 | 8,812 |
|``2.`1985` | 14,981 | 21,486 | 22,813 | 23,685 | 24,214 | 24,552 |
|``3.`1986` | X X X X | 11,614 | 16,593 | 17,752 | 18,534 | 19,082 |
|``4.`1987` | X X X X | X X X X | 9,884 | 14,181 | 15,216 | 15,909 |
|``5.`1988` | X X X X | X X X X | X X X X | 7,927 | 11,428 | 12,051 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 5,143 | 7,267 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 5,273 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
9,122 | 9,274 | 9,427 | 9,536 |
24,757 | 24,833 | 24,891 | 24,930 |
19,379 | 19,521 | 19,606 | 19,652 |
16,285 | 16,509 | 16,643 | 16,712 |
12,464 | 12,724 | 12,873 | 12,946 |
7,717 | 7,980 | 8,184 | 8,309 |
7,222 | 7,644 | 7,891 | 8,074 |
3,951 | 5,105 | 5,453 | 5,642 |
X X X X | 1,930 | 2,793 | 3,015 |
X X X X | X X X X | 1,402 | 2,016 |
X X X X | X X X X | X X X X | 1,251 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2A
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 11,299 | 5,765 | 2,494 | 1,767 | 1,183 |
|``2.`1985` | 5,370 | 3,198 | 2,381 | 1,488 | 898 | 511 |
|``3.`1986` | X X X X | 4,318 | 2,603 | 1,992 | 1,411 | 767 |
|``4.`1987` | X X X X | X X X X | 3,899 | 2,185 | 1,659 | 1,035 |
|``5.`1988` | X X X X | X X X X | X X X X | 2,553 | 1,459 | 1,065 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 2,080 | 1,015 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 2,133 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
R END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
814 | 704 | 712 | 717 |
285 | 225 | 162 | 135 |
468 | 294 | 218 | 143 |
660 | 400 | 243 | 164 |
723 | 437 | 266 | 168 |
839 | 624 | 381 | 238 |
995 | 842 | 576 | 371 |
1,583 | 888 | 661 | 459 |
X X X X | 1,228 | 612 | 418 |
X X X X | X X X X | 794 | 407 |
X X X X | X X X X | X X X X | 816 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 3A
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 6,179 | 8,902 | 10,101 | 11,126 | 11,746 |
|``2.`1985` | 27,488 | 36,286 | 38,165 | 38,956 | 39,390 | 39,593 |
|``3.`1986` | X X X X | 22,019 | 28,796 | 30,568 | 31,435 | 31,756 |
|``4.`1987` | X X X X | X X X X | 19,496 | 25,692 | 27,216 | 27,866 |
|``5.`1988` | X X X X | X X X X | X X X X | 15,111 | 19,536 | 20,471 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 10,476 | 13,281 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 11,887 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
12,116 | 12,375 | 12,739 | 13,044 |
39,721 | 39,802 | 39,871 | 39,924 |
31,971 | 32,070 | 32,165 | 32,195 |
28,166 | 28,330 | 28,421 | 28,470 |
20,912 | 21,084 | 21,174 | 21,232 |
14,048 | 14,397 | 14,538 | 14,612 |
14,352 | 15,030 | 15,299 | 15,425 |
8,598 | 10,182 | 10,696 | 10,898 |
X X X X | 4,936 | 6,082 | 6,377 |
X X X X | X X X X | 3,429 | 4,371 |
X X X X | X X X X | X X X X | 3,516 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 119
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5H - OTHER LIABILITY - CLAIMS-MADE
SECTION 1B
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 2 | 2 | 2 | 2 | 2 |
|``3.`1986` | X X X X | 0 | 0 | 2 | 3 | 4 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 54 | 68 | 69 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 103 | 118 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 72 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
2 | 2 | 2 | 2 |
4 | 4 | 4 | 4 |
0 | 0 | 0 | 0 |
69 | 70 | 70 | 70 |
124 | 125 | 126 | 126 |
81 | 82 | 84 | 85 |
60 | 68 | 70 | 72 |
X X X X | 47 | 59 | 62 |
X X X X | X X X X | 29 | 34 |
X X X X | X X X X | X X X X | 14 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2B
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 4 | 1 | 1 | 1 | 1 | 1 |
|``3.`1986` | X X X X | 6 | 6 | 4 | 3 | 2 |
|``4.`1987` | X X X X | X X X X | 1 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 34 | 7 | 4 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 36 | 9 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 28 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
R END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
1 | 1 | 1 | 1 |
2 | 2 | 2 | 2 |
0 | 0 | 0 | 0 |
2 | 0 | 0 | 0 |
3 | 2 | 1 | 1 |
4 | 3 | 1 | 0 |
37 | 12 | 5 | 2 |
X X X X | 35 | 9 | 4 |
X X X X | X X X X | 41 | 26 |
X X X X | X X X X | X X X X | 27 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 3B
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 5 | 5 | 5 | 5 | 5 | 5 |
|``3.`1986` | X X X X | 6 | 6 | 6 | 6 | 6 |
|``4.`1987` | X X X X | X X X X | 2 | 2 | 2 | 2 |
|``5.`1988` | X X X X | X X X X | X X X X | 114 | 114 | 114 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 191 | 191 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 155 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
5 | 5 | 5 | 5 |
6 | 6 | 6 | 6 |
2 | 2 | 2 | 2 |
114 | 114 | 114 | 114 |
191 | 191 | 191 | 191 |
155 | 155 | 155 | 155 |
160 | 160 | 160 | 160 |
X X X X | 137 | 137 | 137 |
X X X X | X X X X | 103 | 103 |
X X X X | X X X X | X X X X | 63 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 120
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5R - PRODUCTS LIABILITY - OCCURRENCE
SECTION 1A
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 209 | 430 | 609 | 805 | 923 |
|``2.`1985` | 227 | 369 | 429 | 504 | 617 | 752 |
|``3.`1986` | X X X X | 173 | 317 | 368 | 463 | 536 |
|``4.`1987` | X X X X | X X X X | 153 | 262 | 326 | 410 |
|``5.`1988` | X X X X | X X X X | X X X X | 74 | 217 | 277 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 230 | 352 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 282 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
982 | 1,022 | 1,058 | 1,093 |
774 | 790 | 808 | 818 |
582 | 610 | 628 | 652 |
471 | 499 | 523 | 543 |
362 | 394 | 415 | 421 |
405 | 439 | 468 | 483 |
399 | 414 | 444 | 460 |
171 | 224 | 257 | 278 |
X X X X | 78 | 114 | 143 |
X X X X | X X X X | 82 | 121 |
X X X X | X X X X | X X X X | 27 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2A
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 1,941 | 1,746 | 1,573 | 1,585 | 828 |
|``2.`1985` | 165 | 230 | 315 | 366 | 258 | 101 |
|``3.`1986` | X X X X | 225 | 257 | 306 | 269 | 154 |
|``4.`1987` | X X X X | X X X X | 166 | 265 | 261 | 160 |
|``5.`1988` | X X X X | X X X X | X X X X | 163 | 141 | 161 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 154 | 100 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 131 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
R END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
267 | 260 | 283 | 485 |
70 | 55 | 44 | 50 |
104 | 77 | 76 | 68 |
124 | 95 | 91 | 98 |
96 | 73 | 60 | 57 |
87 | 55 | 43 | 27 |
66 | 67 | 53 | 42 |
70 | 68 | 79 | 67 |
X X X X | 79 | 62 | 56 |
X X X X | X X X X | 45 | 18 |
X X X X | X X X X | X X X X | 32 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 3A
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 475 | 2,182 | 3,272 | 4,152 | 4,378 |
|``2.`1985` | 553 | 889 | 1,101 | 1,295 | 1,422 | 1,446 |
|``3.`1986` | X X X X | 542 | 862 | 1,066 | 1,232 | 1,290 |
|``4.`1987` | X X X X | X X X X | 439 | 760 | 944 | 1,015 |
|``5.`1988` | X X X X | X X X X | X X X X | 299 | 597 | 745 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 576 | 811 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 671 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
4,532 | 4,698 | 4,836 | 5,139 |
1,466 | 1,485 | 1,516 | 1,546 |
1,331 | 1,356 | 1,398 | 1,442 |
1,087 | 1,133 | 1,196 | 1,251 |
802 | 836 | 878 | 901 |
892 | 926 | 959 | 975 |
843 | 889 | 929 | 948 |
408 | 509 | 582 | 623 |
X X X X | 306 | 403 | 459 |
X X X X | X X X X | 186 | 231 |
X X X X | X X X X | X X X X | 89 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 121
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND
ITS AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 5R - PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 1B
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND AS
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 3 | 3 | 4 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 2 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
SUMED AT YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
4 | 4 | 4 | 4 |
1 | 1 | 1 | 1 |
2 | 3 | 5 | 5 |
1 | 3 | 4 | 6 |
X X X X | 0 | 1 | 1 |
X X X X | X X X X | 0 | 11 |
X X X X | X X X X | X X X X | 7 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 2B
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEA
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 3 | 1 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 1 | 1 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 6 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
R END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
5 | 4 | 0 | 0 |
8 | 4 | 2 | 0 |
X X X X | 4 | 0 | 0 |
X X X X | X X X X | 79 | 38 |
X X X X | X X X X | X X X X | 33 |
| | | |
- ---------------->---------------->---------------->---------------->
SECTION 3B
<CAPTION>
!--------------------#-----------------------------------------------------------------------------------------------------
| | CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED AT
| 1 |---------------#----------------#----------------#----------------#----------------#----------------#
| Years | | | | | | |
| in Which | 2 | 3 | 4 | 5 | 6 | 7 |
| Premiums Were | | | | | | |
| Earned and | | | | | | |
| Losses Were | | | | | | |
| Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|--------------------|---------------|----------------|----------------|----------------|----------------|----------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 6 | 6 | 6 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 2 | 2 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 8 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- -------------------------------------------------------------------#
YEAR END |
- ----------------#----------------#----------------#----------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
| | | |
| | | |
1991 | 1992 | 1993 | 1994 |
- ----------------|----------------|----------------|----------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
6 | 6 | 6 | 6 |
2 | 2 | 2 | 2 |
8 | 8 | 8 | 8 |
13 | 13 | 13 | 13 |
X X X X | 6 | 6 | 6 |
X X X X | X X X X | 81 | 81 |
X X X X | X X X X | X X X X | 56 |
| | | |
- ---------------->---------------->---------------->---------------->
Page # Page 122
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 6C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 1
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
R END (000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 223,824 | 256,366 |
X X X X | X X X X | X X X X | 199,424 |
| | | |
- --------------->--------------->--------------->--------------->
SECTION 2
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
---------------------------------------------------------------#
000 OMITTED) |
---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 28,432 | 30,643 |
X X X X | X X X X | X X X X | 26,989 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 6D - WORKERS' COMPENSATION
SECTION 1
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
R END (000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 383,393 | 450,093 |
X X X X | X X X X | X X X X | 304,081 |
| | | |
- --------------->--------------->--------------->--------------->
SECTION 2
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 247,003 | 279,294 |
X X X X | X X X X | X X X X | 187,596 |
| | | |
- --------------->--------------->--------------->--------------->
Page # Page 123
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 6E - COMMERCIAL MULTIPLE PERIL
SECTION 1
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
R END (000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 601,227 | 616,774 |
X X X X | X X X X | X X X X | 620,126 |
| | | |
- --------------->--------------->--------------->--------------->
SECTION 2
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 2,069 | 5,552 |
X X X X | X X X X | X X X X | 2,673 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 6H - OTHER LIABILITY - OCCURRENCE
SECTION 1A
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
R END (000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 100,158 | 104,865 |
X X X X | X X X X | X X X X | 93,567 |
| | | |
- --------------->--------------->--------------->--------------->
SECTION 2A
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 7,981 | 13,699 |
X X X X | X X X X | X X X X | 12,234 |
| | | |
- --------------->--------------->--------------->--------------->
Page # Page 124
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 6H - OTHER LIABILITY - CLAIMS-MADE
SECTION 1B
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
R END (000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 1,447 | 1,559 |
X X X X | X X X X | X X X X | 1,683 |
| | | |
- --------------->--------------->--------------->--------------->
SECTION 2B
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
---------------------------------------------------------------#
000 OMITTED) |
---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 472 | 483 |
X X X X | X X X X | X X X X | 469 |
| | | |
--------------->--------------->--------------->--------------->
SCHEDULE P - PART 6M - INTERNATIONAL
SECTION 1
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
R END (000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 10,941 | 27,440 |
X X X X | X X X X | X X X X | 60,136 |
| | | |
- --------------->--------------->--------------->--------------->
SECTION 2
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
- --------------->--------------->--------------->--------------->
Page # Page 125
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 6N - REINSURANCE A
SECTION 1
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``2.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``3.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``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 |
|``7.`1994` | 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>
- ---------------------------------------------------------------#
R END (000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 56,564 | 64,071 |
X X X X | X X X X | X X X X | 45,979 |
| | | |
- --------------->--------------->--------------->--------------->
SECTION 2
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``2.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``3.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``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 |
|``7.`1994` | 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>
- ---------------------------------------------------------------#
000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 14,662 | 17,076 |
X X X X | X X X X | X X X X | 16,101 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 6O - REINSURANCE B
SECTION 1
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``2.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``3.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``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 |
|``7.`1994` | 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>
- ---------------------------------------------------------------#
R END (000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 274,657 | 303,366 |
X X X X | X X X X | X X X X | 197,695 |
| | | |
- --------------->--------------->--------------->--------------->
SECTION 2
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``2.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``3.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``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 |
|``7.`1994` | 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>
- ---------------------------------------------------------------#
000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 325,349 | 348,256 |
X X X X | X X X X | X X X X | 67,349 |
| | | |
- --------------->--------------->--------------->--------------->
Page # Page 126
Form 2
COMBINED ANNUAL STATEMENT FOR THE YEAR 1994 OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY AND ITS
AFFILIATED FIRE AND CASUALTY INSURERS
SCHEDULE P - PART 6R - PRODUCTS LIABILITY - OCCURRENCE
SECTION 1A
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
R END (000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 5,762 | 9,975 |
X X X X | X X X X | X X X X | 3,942 |
| | | |
- --------------->--------------->--------------->--------------->
SECTION 2A
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 675 | 3,783 |
X X X X | X X X X | X X X X | 60 |
| | | |
- --------------->--------------->--------------->--------------->
SCHEDULE P - PART 6R - PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 1B
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEA
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
---------------------------------------------------------------#
R END (000 OMITTED) |
---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 107 | 107 |
X X X X | X X X X | X X X X | 64 |
| | | |
--------------->--------------->--------------->--------------->
SECTION 2B
<CAPTION>
!-----------------------------#------------------------------------------------------------------------------------------------
| 1 | CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END (
| Years in |---------------#---------------#---------------#---------------#---------------#---------------#
| Which Premiums | | | | | | |
| Were Earned | 2 | 3 | 4 | 5 | 6 | 7 |
| and Losses | | | | | | |
| Were Incurred | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |
|-----------------------------|---------------|---------------|---------------|---------------|---------------|---------------|
<C> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|``1.`Prior` | 000 | 0 | 0 | 0 | 0 | 0 |
|``2.`1985` | 0 | 0 | 0 | 0 | 0 | 0 |
|``3.`1986` | X X X X | 0 | 0 | 0 | 0 | 0 |
|``4.`1987` | X X X X | X X X X | 0 | 0 | 0 | 0 |
|``5.`1988` | X X X X | X X X X | X X X X | 0 | 0 | 0 |
|``6.`1989` | X X X X | X X X X | X X X X | X X X X | 0 | 0 |
|``7.`1990` | X X X X | X X X X | X X X X | X X X X | X X X X | 0 |
|``8.`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 |
|``9.`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 |
|`10.`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 |
|`11.`1994` | 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>
- ---------------------------------------------------------------#
000 OMITTED) |
- ---------------#---------------#---------------#---------------|
| | | |
8 | 9 | 10 | 11 |
| | | |
1991 | 1992 | 1993 | 1994 |
- ---------------|---------------|---------------|---------------|
<C> <C> <C> <C>
| | | |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
0 | 0 | 0 | 0 |
X X X X | 0 | 0 | 0 |
X X X X | X X X X | 0 | 0 |
X X X X | X X X X | X X X X | 0 |
| | | |
- --------------->--------------->--------------->--------------->
</TABLE>
