SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
[FEE REQUIRED]
For fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period from to
Commission File Number 0-5562
HOME BENEFICIAL CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0884714
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
3901 West Broad Street, Richmond, Virginia 23230
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 804-358-843l
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
None on which registered
Securities registered pursuant to Section 12(g) of the Act:
CLASS B COMMON STOCK
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
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. [ ]
The Registrant's Class A Voting Common Stock is closely held and is not
publicly traded. The aggregate market value of Class B Non-Voting Common
Stock held by nonaffiliates of the Registrant was $203,443,363 as of March
11, 1994.
Number of shares outstanding of each of the Registrant's classes of common
stock as of March 11, 1994:
Class Shares
Class A Common Stock 8,476,576
$.3125 Par Value
Class B Common Stock 9,462,482
$.3125 Par Value
Documents Incorporated by Reference
Part I and Part II of this Form 10-K incorporate certain information by
reference from the Registrant's Annual Report to Stockholders for the year
ended December 31, 1993.
<PAGE>
TABLE OF CONTENTS
PART I
PAGE
ITEM 1. Business
HOME BENEFICIAL CORPORATION .................................... 4
BUSINESS OF THE LIFE COMPANY
General .................................................... 4
Life Insurance Underwriting ................................ 5
Accident and Health Insurance .............................. 5
Assets and Investment Policy ............................... 5
Reserves ................................................... 6
Reinsurance ................................................ 7
Territory Served and Regulation ............................ 7
Competition ................................................ 11
Dependence Upon Single or a Few Customers .................. 11
Agency Force and Employees ................................. 11
Industry Segment and Other Information ..................... 11
Foreign Business ........................................... 11
ITEM 2. Properties ................................................ 12
ITEM 3. Legal Proceedings ......................................... 12
ITEM 4. Submission of Matters to a Vote of Security Holders ....... 12
<PAGE>
PART II
PAGE
ITEM 5. Market for the Registrants' Common Equity and
Related Stockholder Matters ................................... 13
ITEM 6. Selected Consolidated Financial Data .......................... 13
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................... 13
ITEM 8. Financial Statements and Supplementary Data ................... 13
ITEM 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosures ......................................... 13
PART III
ITEM 10. Directors and Executive Officers of the Registrant ............ 14
ITEM 11. Executive Compensation ........................................ 16
ITEM 12. Security Ownership of Certain Beneficial Owners and Management. 20
ITEM 13. Certain Relationships and Related Transactions ................ 25
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 26
SIGNATURES ............................................................. 34
<PAGE>
PART I
ITEM 1. Business
HOME BENEFICIAL CORPORATION
Home Beneficial Corporation ("the Corporation") was incorporated in
Virginia on March 5, 1970, for the purpose of becoming a holding company
for Home Beneficial Life Insurance Company ("the Life Company"), which
originated in 1899. On December 31, 1970, pursuant to a Plan of
Reorganization proposed by the Board of Directors and approved by the
stockholders of the Life Company, the Corporation acquired all of the
issued and outstanding capital stock of the Life Company by merger of the
Life Company into a wholly-owned subsidiary of the Corporation, the name
of which was immediately changed to Home Beneficial Life Insurance
Company. At the present time, the Life Company, which is engaged in the
life and accident and health insurance business, is the major subsidiary
of the Corporation.
There was no material change in the nature of business done by the
Corporation during 1993.
BUSINESS OF THE LIFE COMPANY
General
The Life Company sells group life insurance and substantially all of
the forms of ordinary insurance, including universal life, whole life,
term, and annuities, together with accidental death and disability
riders. Prior to December 1, 1979, the Life Company also sold weekly
premium industrial life insurance, and this line was replaced by a new
ordinary line which provides the policyowners more flexibility in
selecting the mode of payment which best suits their life style.
Prior to 1960, the Life Company, as primary insurer, had group life
insurance in force only for the group insurance issued on the lives of
its own employees. Since January 1, 1960, the Life Company has written
or reinsured regular group insurance which, as of December 31, 1993,
represented approximately 99% of the $5.5 billion group life insurance
then in force. Group life insurance in force is subject to wide
fluctuation due to varying increases and decreases in the number of
employees and coverage per employee under the various group reinsurance
programs in which the Life Company participates.
Life Insurance Underwriting
Underwriting policy for ordinary applications requires medical exami-
nations above certain prescribed maximum amounts which are graduated
according to the age of the applicant; the maximum non-medical limit for
ages 0 to 30 is $100,000, with lesser amounts at higher ages. Medical
examinations are generally required for all applicants over age 56. The
Life Company accepts certain substandard risks for which it charges a
higher premium.
Accident and Health Insurance
The Life Company currently writes individual accident policies with
accidental death and dismemberment benefits. The accident policies
accounted for approximately 32% of total accident and health premiums for
1993.
The individual accident coverage presently offered by the Life
Company provides for lump-sum benefits for accidents occurring before age
70. The Life Company offers no major medical coverage other than to its
own employees.
A significant proportion of the Life Company's group accident and
health insurance is attributable to medical expense benefit coverage
provided for its own employees and their dependents under the Life
Company's Protection and Retirement Plan. In recent years, the Life
Company has increased the cost to its employees for the dependents'
medical expense benefit coverage provided by the Plan.
Assets and Investment Policy
The investment of the Life Company's funds and assets is determined
by an Investment Committee. Generally, investments made must meet
requirements established by the applicable investment statutes of the
Commonwealth of Virginia governing the nature and quality of investments
which may be made by life insurance companies.
The following table shows investments of the Life Company at December
31, 1993. Fixed maturities (bonds, notes and redeemable preferred
stocks), mortgage loans on real estate, and short-term investments are
stated at cost adjusted where appropriate for amortization of premium or
discount; equity securities (nonredeemable preferred and common stocks)
are stated at market and policy loans are stated at unpaid balances.
Asset Value
Amount Percent
(000's) of Total
<TABLE>
<CAPTION>
<S> <C> <C>
Fixed Maturities:
Bonds and notes:
United States government and govern-
ment agencies and authorities $ 26,851 2.4%
States, municipalities and political
subdivisions 249,926 21.9
Foreign government 24,818 2.2
Public utilities 256,163 22.4
All other corporate 137,483 12.0
Certificates of deposit 9,442 .8
Redeemable preferred stocks 1,000 .1
Total fixed maturities 705,683 61.8
Equity Securities:
Nonredeemable preferred stocks 817 .1
Common stocks 26,464 2.3
Mortgage loans 316,372 27.7
Policy loans 52,738 4.6
Short-term investments 33,947 3.0
Other 5,721 .5
$1,141,742 100.0%
</TABLE>
The Life Company's mortgage portfolio consists of approximately 2600
conventional first mortgages on a wide range of residential, commercial
and industrial properties located primarily in those mid-Atlantic states
in which the Life Company conducts its insurance business. At December
31, 1993, the aggregate carrying value of mortgage loans was
$316,371,747, broken down by category as follows:
Residential $171,972,307
Commercial 144,399,440
Commercial loans include loans on apartments, shopping centers, office
buildings and warehouses. Generally, commercial loans range from
$250,000 to $3,500,000 in principal amount. The Life Company also makes
some mortgage loans to churches. Every property is inspected by a staff
under-writer prior to the issuance of a loan commitment. On commercial
loans of more than $250,000, the property is inspected every two years
after the loan is closed as long as the balance exceeds $250,000. As of
December 31, 1993, approximately 1% of the Life Company's mortgages,
constituting less than 1% of the aggregate mortgage portfolio book value,
consisted of government insured or guaranteed mortgages.
The Life Company's mortgage lending business is heavily concentrated
in the states of Virginia and North Carolina. At December 31, 1993,
approximately 73% of the Life Company's mortgages, constituting approxi-
mately 73% of the total book value of the Life Company's mortgage port-
folio, were on residential or commercial properties located in the State
of Virginia. Additionally, at the same date approximately 17% of the
Life Company's mortgages, constituting approximately 15% of the total
book value of the Life Company's mortgage portfolio, were on properties
in North Carolina. The relatively high percentage of mortgage loans made
in these two states reflects the geographical concentration of the Life
Company's insurance business activities in the same two states. Although
the Life Company's mortgage loan portfolio is heavily concentrated in
Virginia and North Carolina, the economies of those states have become
increasingly diversified since World War II, and the Life Company does
not believe its mortgage loan portfolio reflects undue risk from the
large percentage of its loans originated in those two states.
Although the economic downturn during 1990 and 1991 was characterized
by troubled real estate loans in the portfolios of many financial
institutions operating in the Life Company's market, the Life Company's
mortgage loan portfolio has not reflected the widely-publicized
experience of other financial institutions. The Life Company presently
holds two real estate parcels acquired through foreclosure with a
carrying value in the financial statements of $665,000. No mortgage
loans were in foreclosure proceedings at December 31, 1993. Except as
indicated below, there were no mortgage loans otherwise not performing in
accordance with the contractual terms; there were no mortgage loans whose
terms had been restructured; nor, is the Life Company aware of any
potential problem loans.
At December 31, 1993, the aging schedule for delinquent mortgage
loans in terms of past due days was as follows:
Past due days
30-60 60-90 Over 90 Total
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal $6,794,9981 $443,537 $ -0- $7,238,535
Percent of total
mortgage loans 2.2% .1% - 2.3%
</TABLE>
130-60 days past due includes a substantial amount of loan payments that
have been received by the Life Company's brokers after their December,
1993 cut-off reporting date to the Life Company. These amounts will be
included in their next remittance report.
The Life Company believes the quality of its loan portfolio is
attributable to its relatively stringent underwriting standards which
have been in force for many years. At the present time, and for a number
of years, the Life Company's lending policies have restricted mortgage
loans to a maximum loan to value ratio of 75%, based on the lower of cost
or appraisal, except for purchase money mortgages and insured or
guaranteed mortgages. The Life Company's policy is to place mortgage
loans on non-accrual status where any mortgage payment is 90 days or more
past due.
During the period 1986-1993, the Life Company experienced only five
foreclosures on real estate loans, one in each of the years 1986, 1989
and 1990, two in 1992 and none in 1993. The total of the unpaid
principal balances of loans in these five foreclosures was $986,477. The
Life Company disposed of three properties acquired in foreclosure
proceedings prior to 1993 without loss. The respective market value of
properties acquired in 1992 exceeds foreclosed balances, and the Life
Company anticipates that they will be disposed of timely without loss.
The Corporation does not provide a provision for loan losses in its
financial statements. Based upon the de minimis loss experience of the
mortgage loan portfolio over many years and the continuing satisfactory
performance of its portfolio, the Corporation's management does not feel
that a provision is required.
In 1993 the Life Company had net investment income from interest and
dividends of $85.5 million constituting 42% of total Life Company
revenues excluding realized investment gains. The Life Company's return
on invested assets after investment expenses, but before federal taxes,
was 7.77% for 1993 compared to 8.47% for 1992, both figures having been
based on net investment income and investment balances determined in
accordance with generally accepted accounting principles.
See Investment Operations, Note 2 of Notes to Consolidated Financial
Statements, which is incorporated herein by reference from pages 12, 13,
and 14 of the 1993 Annual Report to Stockholders, and Schedule I included
in Part IV elsewhere herein, for additional information concerning the
Corporation's consolidated investment portfolio.
Reserves
The Life Company, as a legal reserve company, is required by the
various laws of the states in which it is licensed to transact business
to carry as liabilities aggregate policy reserves which are considered
adequate to meet its obligations on insurance policies in force. Such
required reserves are considered statutory reserves because the methods
and assumptions used in their calculation are explicitly prescribed by
the laws of the various states. The liabilities shown herein for all
policies issued in 1948 and subsequently are based on guidelines
prescribed by the American Institute of Certified Public Accountants and
have been calculated in accordance with generally accepted accounting
principles. Such liabilities are calculated by the use of assumptions as
to mortality rates, interest rates, withdrawal rates and expense rates in
effect at the time the gross premiums were calculated. Liabilities on
paid-up policies include a liability for future maintenance expenses
which the Life Company expects to incur.
See Revenues, Benefits, Claims and Expenses, Note 1 of the Notes to
Consolidated Financial Statements, which is incorporated herein by
reference from page 11 of the 1993 Annual Report to Stockholders for
additional information relating to the Life Company's reserves.
Reinsurance
The Life Company, as do many other companies engaged in selling
insurance, reinsures with other companies portions of the individual life
insurance policies it has underwritten. The primary purpose of
reinsurance is to enable an insurance company to write a policy in an
amount larger than the risk it is willing to assume for itself. A
contingent liability exists on insurance ceded to the reinsurer since the
Life Company would be liable in the event that the reinsurer is unable to
meet obligations assumed by it under the reinsurance agreement.
The maximum amount of ordinary insurance presently retained by the
Life Company without reinsurance is $150,000 plus an additional $75,000
coverage for accidental death. This maximum is scaled down according to
the age and physical classification of the insured. The total amount of
life insurance in force at December 31, 1993 reinsured by the Life
Company with other companies aggregated $100 million representing 1% of
the Life Company's life insurance in force on that date.
The Life Company acts as a reinsurer on an automatic basis to the
extent of its participation in several group life insurance programs.
Group life reinsurance does not have a material impact on the Life
Company's profitability. The Life Company also assumes reinsurance on a
facultative basis on a yearly renewable ordinary term plan from two other
life companies.
As of December 31, 1993, life insurance assumed represented approxi-
mately 55% of life insurance in force and 17% of life premium income.
Territory Served and Regulation
The Life Company writes insurance in six states and the District of
Columbia. The following table sets forth the geographic distribution of
premiums received (direct business only) during 1993 as well as the year
in which the Life Company began writing insurance in each state:
<TABLE>
<CAPTION>
Premiums Year
Received Operations
Jurisdiction (000's) (1) Commenced
<S> <C> <C>
Delaware $ 2,653 1940
District of Columbia 3,103 1913
Maryland 16,359 1923
North Carolina 9,886 1949
Tennessee 22,120 1925
Virginia 40,937 1899
West Virginia 1,219 1960
</TABLE>
(1) Gross cash premiums received, before premiums on
reinsurance ceded or assumed.
The Life Company, in common with other insurance companies, is
subject to regulation and supervision in each of the states in which it
does business. Although the extent of such regulation varies from state
to state, in general, the insurance laws of the respective states
delegate broad administrative powers to supervisory agencies. These
powers relate to the granting and revocation of licenses to transact
business, the licensing of agents, the approval of the forms of policies
used, reserve requirements, and the type and concentration of investments
permitted. In addition, the supervisory agencies have power over the
form and content of required financial statements and reports, including
requirements regarding accounting practices to be employed in the
presentation of such statements and reports. Certain of the required
accounting practices vary from generally accepted accounting principles.
See Notes 1 and 7 of the Notes to Consolidated Financial Statements,
which Notes are incorporated herein by reference from pages 11, 12 and 17
of the 1993 Annual Report to Stockholders.
The Life Company is also required under these laws to file detailed
annual reports with the supervisory agencies in each of the states in
which it does business. Its business and accounts are also subject to
examination by such agencies. Under the laws of Virginia and procedures
established by the National Association of Insurance Commissioners, the
Life Company is examined periodically by one or more of the state
supervisory agencies and is required to have an annual independent audit
performed by a qualified certified public accountant. Under Virginia
law, the Life Company must be examined at least every five years. The
most recently completed examination, covering the years 1989 through
1991, was conducted by insurance department representatives from the
state of Virginia. Such regulation is primarily for the benefit of the
policyholders of the Life Company rather than the stockholders.
Several jurisdictions in which the Life Company does business includ-
ing its domiciliary state of Virginia, have enacted legislation providing
for specific regulation of the relationship between licensed insurers and
their holding companies and among affiliated members of a holding company
group. These statutes vary in substance from state to state, but
generally speaking, vest administrative control in the insurance
regulatory authority. Among the provisions found in these statutes are
provisions for the filing of registration statements by insurers which
are members of a holding company group, provisions that the holding
company will be subject to reporting requirements and to visitation by
the insurance regulatory authorities, standards as to transactions
between insurers and their holding companies or between members of a
holding company group, and control over the payment of extraordinary
dividends. See Stockholders' Equity and Restrictions, Note 7 of the
Notes to Consolidated Financial Statements, which is incorporated herein
by reference from page 17 of the 1993 Annual Report to Stockholders for
additional information concerning transactions between the Life Company
and its affiliates.
Competition
The life insurance business is intensely competitive and the Life
Company competes with many other companies, both stock and mutual, in the
states in which it is licensed. The American Council of Life Insurance
in its "1993 Fact Book", estimates that of the 2,065 life companies doing
business in the United States at the beginning of 1993, approximately
1,948 were stock companies.
According to figures reported in the July 1993 issue of Best's
Review, Life/Health Edition, calculated on a statutory accounting basis,
the Life Company ranks in the top 10% of all stock companies in the
United States based on total admitted assets as of December 31, 1992.
Dependence Upon Single or a Few Customers
No material portion of the business of the Life Company is dependent
upon a single customer or a very few customers. The group life insurance
sold by the Life Company consists largely of reinsurance participations
described under "Business of the Life Company -- Reinsurance" above.
Agency Force and Employees
The Life Company offers its insurance through its own agency force
and at December 31, 1993, the agency force consisted of approximately
1,150 full-time personnel assigned to some 47 districts and 13 smaller
offices located in principal cities and towns.
In addition to its agency force, at the end of 1993 there were some
270 supervisory, administrative, clerical and other personnel employed in
the home office. The Life Company's employees are not represented by
labor unions and the Life Company considers its relations with its agents
and other personnel to be good.
Industry Segment and Other Information
The Corporation's only industry segment is the business of the Life
Company, and its operations have contributed over 98% of the total
consolidated revenues and income before income taxes for each of the past
three years.
Foreign Business
Neither the Corporation nor any of its subsidiaries engage in
material operations outside of the United States, or derives material
business from customers outside the United States.
<PAGE>
ITEM 2. Properties
The principal office of the Corporation is located at 3901 West Broad
Street, Richmond, Virginia 23230, which also serves as the home office
premises of the Life Company. The home office building, which contains
approximately 110,000 square feet of office space, was originally
completed in 1950 with a 30,000 square foot addition completed in 1990.
The building is used solely for company purposes.
The Life Company presently leases space for 60 district and detached
offices in Delaware, Maryland, the District of Columbia, West Virginia,
Virginia, Tennessee and North Carolina. The termination dates on these
leases range from 1994 to 2003; all of the longer term leases being for
district office purposes. The maximum annual rent paid under any lease
is $25,550. The annualized rent under all leases in effect on December
31, 1993 was approximately $795,000.
ITEM 3. Legal Proceedings
As of the date of this report, neither the Corporation nor any of
its subsidiaries was a party to any material pending legal proceedings.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Corporation's security
holders during the fourth quarter of its fiscal year ended December 31,
1993.
<PAGE>
PART II
ITEM 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Incorporated herein by reference from the 1993 Annual Report to
Stockholders, page 21.
ITEM 6. Selected Consolidated Financial Data
Incorporated herein by reference from the 1993 Annual Report to
Stockholders, page 22.
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Incorporated herein by reference from the 1993 Annual Report to
Stockholders, pages 4, 5, 19 and 20.
ITEM 8. Financial Statements and Supplementary Data
Consolidated financial statements of the Corporation at December 31,
1993 and 1992 and for each of the three years in the period ended
December 31, 1993 and the auditor's report thereon and the Corporation's
unaudited quarterly financial data for the two year period ended December
31, 1993 are incorporated herein by reference from the 1993 Annual Report
to Stock-holders, pages 6 through 18 and 21.
ITEM 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosures
None.
<PAGE>
PART III
ITEM 10. Directors and Executive Officers of the Registrant
(a) and (b) The following table gives the name and age of each of the
directors (all of whom, except C. M. Glenn, Jr., L. W. Richardson, and
Dianne N. Collins are executive officers of the Corporation and the Life
Company) and their positions and offices with the Corporation and the
Life Company and the dates first elected to those positions with the
Corporation.
Position and Offices with the Corporation
and the Life Company and Date Elected to
Name Age Corporation Officer Position
Dianne N. Collins 48 Director of the Life Company and the
Corporation and Community Volunteer
H. D. Garnett 51 Vice President (since 1979), Controller
(since 1974) and a director of the
Corporation and the Life Company
C. M. Glenn, Jr. 77 Retired Vice President-Treasurer and a
director of the Corporation and the
Life Company
W. G. Hancock 43 Counsel (since 1984) and a director of
the Corporation and the Life Company
G. T. Richardson 41 Vice President (since 1983) and a director
of the Corporation and the Life Company
L. W. Richardson 74 Retired Vice President and a director of
the Corporation and the Life Company
J. M. Wiltshire, Jr. 68 Vice President (since 1972), Counsel
(since 1982), Secretary (since 1994)
and a director of the Corporation
and the Life Company
R. W. Wiltshire 72 Chairman of the Board (since 1983) and a
director of the Corporation and the Life
Company
R. W. Wiltshire, Jr. 48 President (since 1988), Chief Executive
Officer (since 1992) and a director of
the Corporation and the Life Company
W. B. Wiltshire 45 Vice President (since 1983) and a director
of the Corporation and the Life Company
Mrs. Collins was first elected to the Board of Directors of the
Corporation on February 15, 1994, Messrs. Garnett, Hancock, G. T.
Richardson, and W. B. Wiltshire were first elected to the Board in 1983,
and Messrs. R. W. Wiltshire, Jr. and J. M. Wiltshire, Jr. were first
elected to the Board in 1976 and 1971, respectively, all to fill then
existing vacancies on the Board. The remaining persons named in the
foregoing table have served as directors of the Corporation since its
organization in 1970.
All of the above persons serve one year terms as both executive
officers and directors, or in the case of Messrs. Glenn and Richardson
and Mrs. Collins, as directors only, which expire April 5, 1994. There
are no executive officers of the Corporation who are not directors.
(c) Not applicable.
(d) C. M. Glenn, Jr. is the uncle of W. G. Hancock. L. W. Richardson is
the father of G. T. Richardson and the first cousin of R. W. Wiltshire.
R. W. Wiltshire is the father of R. W. Wiltshire, Jr. and W. B. Wiltshire
and the first cousin of J. M. Wiltshire, Jr.
(e)(1) Except as set forth below, each of the persons named in (a) and
(b) above has been principally employed by the Corporation and the Life
Company in the present or a comparable position for more than the past
five years. Dianne N. Collins has been a Trustee of the 1984 Voting
Trust described in Item 12 below since January 4, 1994 and a volunteer in
the Richmond, Virginia community for more than the past five years. C.
M. Glenn, Jr. and L. W. Richardson retired at the end of 1986 and 1987,
respectively, each having served in the office shown for more than five
years immediately prior to his retirement. W. G. Hancock has been a
partner of the law firm of Mays & Valentine, Richmond, Virginia since
1981 specializing in real estate and mortgage lending, insurance company
regulation and general business matters. He was designated as Counsel to
the Corporation and the Life Company effective June 13, 1984. J. M.
Wiltshire, Jr. was elected to the additional office of Secretary of the
Corporation and Life Company effective January 18, 1994. R. W.
Wiltshire, Jr. was elected President of the Life Company and Corporation
in 1988. Effective April 7, 1992, he was elected Chief Executive Officer
of the Life Company and the Corporation to succeed R. W. Wiltshire who
had served in that office for more than five years immediately prior
thereto. Prior to his election as Chief Executive Officer, R. W.
Wiltshire, Jr. was responsible for the general management of the
operations of the Corporation and the Life Company. R. W. Wiltshire
retired as an employee and salaried officer of the Corporation and the
Life Company effective September 6, 1993.
(e)(2) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) The Corporation's directors and executive officers are required to
file reports with the Securities and Exchange Commission (the
"Commission") concerning their initial ownership of shares of the
Corporation's Class A and Class B Common Stock and any subsequent changes
in that ownership, and the Corporation traditionally has assisted its
directors and executive officers in the filing of these reports. In
making these reports, the Corporation has relied on written
representation of its directors and executive officers and copies of the
reports that they have filed with the Commission. The Corporation
believes that these filing requirements were satisfied in 1993 with the
following exception. Three family trusts of which W. G. Hancock is one
of the trustees inadvertently filed their initial reports of ownership
eight days late. These family trust holdings, however, were included in
individual reports which were timely filed by Mr. Hancock in his
individual capacity.
<PAGE>
ITEM 11. Executive Compensation
(a) and (b) Summary Compensation Table
The following Summary Compensation Table sets forth certain
information concerning cash compensation paid to or contributed for the
benefit of the six individuals named below for services rendered to the
Corporation and its subsidiaries as executive officers during each of the
three years in the period ended December 31, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Principal Annual All Other
Position (1) Year Compensation-Salary (2) Compensation(3)
<S> <C> <C> <C>
R. W. Wiltshire 1993 $121,275 $33,688(5)
Chairman of the 1992 178,070 3,561
Board(4)(5) 1991 168,105 3,362
J. M. Wiltshire, Jr. 1993 125,434 3,763
Vice President and 1992 121,201 2,424
Counsel 1991 112,309 2,246
R. W. Wiltshire, Jr. 1993 118,512 3,555
President and Chief 1992 108,528 2,171
Executive Officer(4) 1991 99,302 1,986
H. D. Garnett 1993 112,422 3,373
Vice President and 1992 107,937 2,159
Controller 1991 99,294 1,986
W. B. Wiltshire 1993 105,403 3,162
Vice President 1992 99,986 2,000
1991 91,413 1,828
G. T. Richardson 1993 105,174 -
Vice President 1992 98,991 1,980
1991 90,902 1,833
(1) Offices shown are of both the Corporation and the Life Company.
(2) The amounts shown include pre-tax employee contributions to the
Thrift Plan.
(3) All of the amounts shown (except the 1993 figure for R. W.
Wiltshire) reflect matching contributions by the Corporation and the
Life Company to the Thrift Plan. The Thrift Plan is a defined
contribution plan available to substantially all salaried employees.
Participants may make thrift contributions to the plan in any whole
percentage of 2-14% of their compensation, and the Corporation and
the Life Company will make a matching contribution to the plan in an
amount equal to three-fourths of the first 4% of each eligible
employee's thrift contributions for the year. All matching amounts
shown for each executive officer are fully vested. Benefits under
the Thrift Plan are payable at death, retirement or other termination
of employment (or at January of the calendar year of age 70 1/2, if
earlier).
(4) Effective April 7, 1992, R. W. Wiltshire, Jr. was elected Chief
Executive Officer of the Corporation and the Life Company to succeed
R. W. Wiltshire who served in that office during the rest of the
three year period shown.
(5) Effective September 6, 1993, R. W. Wiltshire retired from active
service as an employee and salaried officer of the Corporation and
the Life Company. The amount shown for Mr. Wiltshire includes a
matching contribution to the Thrift Plan of $3,638 for the period
prior to his retirement, as well as $30,000 paid to him under a
supplemental compensation agreement for the period from September 6
through December 31, 1993 and a $50 cash Christmas gift payable to
all retirees. See "Compensation of Directors" below for additional
information regarding the supplemental compensation agreement with
Mr. Wiltshire.
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) Pension and Postretirement Medical Benefits Plans
The Corporation's Retirement Plan, a defined benefit pension plan,
covers substantially all employees of the Corporation and the Life
Company with six months of service. The Plan provides a retirement
annuity, payable by the Life Company as the insurer under the Plan, to
each employee who is credited with five years of service, who attains his
normal retirement age (which is age 65 or, if the employee becomes a
participant at or after age 60, his fifth anniversary of becoming a
participant) while employed by the Corporation or the Life Company, or
who is totally and permanently disabled while an employee. The
retirement annuity is earned in the form of a single life annuity for the
life of the employee, commencing at the employee's normal retirement age,
and is equal to the sum of retirement annuity credits earned by the
employee for each calendar year he is credited with a year of service.
Retirement annuity benefits under the plan can be paid as early as age 55
if the employee retires with at least ten years of service (or at
disability retirement, if earlier) and must be paid starting in January
of the calendar year the employee reaches age 70 1/2, even though he has
not then retired. The annuity is payable monthly and is subject to
actuarial reduction in the event the employee commences to receive his
retirement annuity prior to his normal retirement age (other than as a
result of disability retirement) or receives his retirement annuity in a
joint and survivor rather than a single life annuity form of payment. A
survivor annuity benefit is provided to the employee's spouse in certain
cases if the employee dies before his retirement annuity payments begin.
The annual annuity credit for years after 1988 is equal to 2% of the
first $10,000 of the employee's compensation for the year, plus 2.5% of
the employee's compensation for the year in excess of $10,000. Once an
employee is credited with 35 years of service, whether before or after
1989, the annual annuity credit after 1988 becomes 2.5% of the employee's
compensation for the year. Prior to 1989, several different benefit
formulas applied, and employees who were participants before 1989 will
retain their annuity credits as determined through December 31, 1988
based on those earlier formulas. Covered compensation for purposes of
the Plan is aggregate cash compensation up to $200,000 per year
(decreasing to $150,000 per year in 1994), as adjusted from time to time
under the Internal Revenue Code of 1986, as amended, which in the case of
each executive officer is identical to the amount shown as salary in the
Summary Compensation Table appearing in Item 11(a) and (b).
The estimated annual benefits payable under the Plan for each of the
individuals listed in the Summary Compensation Table, other than R. W.
Wiltshire, are as follows: J. M. Wiltshire, Jr. - $41,131, R. W.
Wiltshire, Jr. - $76,950, H. D. Garnett - $68,792, W. B. Wiltshire -
$77,427, and G. T. Richardson - $84,892. The benefits as shown are
estimated on the basis that the persons named will continue to receive,
until the end of the calendar year in which they reach age 65 or, if
already age 65, until the end of the current calendar year, salaries at
the same rates in effect during 1993 and will then retire and elect a
single life rather than a joint and survivor annuity form of payment. R.
W. Wiltshire retired as an employee and salaried officer of the
Corporation and the Life Company effective September 6, 1993 and is
entitled to an annual benefit of $55,002 under the Plan.
Amounts payable under the Plan are not subject to deduction for
social security benefits under the Federal Social Security Act.
The Corporation has a postretirement medical benefits plan consisting
of defined benefit medical coverage for pre-1993 retirees and defined
contribution medical coverage for post-1992 retirees who were active
employees on December 31, 1992. The pre-1993 retiree program covers all
employees who had retired under the Corporation's pension plan as of
December 31, 1992. The post-1992 retiree program covers all full time
active employees as of December 31, 1992 who retire under the
Corporation's pension plan thereafter. Employees who joined the
Corporation after December 31, 1992 are not eligible for participation in
either program under the postretirement medical benefits plan.
The pre-1993 retiree program reimburses its participants for actual
covered costs subject to specified deductibles and coinsurance. The pre-
1993 retiree program is contributory and participant contribution
requirements may be increased from time to time and benefits may be
modified or terminated by the Corporation. The post-1992 retiree program
is noncontrib-utory and reimburses its participants for the cost of
health insurance and other health care coverage premiums up to a maximum
benefit amount (stated in terms of health care spending credits)
determined in accordance with the plan based on years of service as of
December 31, 1992. The unused maximum benefit amount, initially
determined as of December 31, 1992, is increased thereafter only for
interest from January 1, 1993 until it is fully expended.
R. W. Wiltshire, who retired on September 6, 1993, is a participant
in the post-1992 retiree program and has a spending account credit
balance as of December 31, 1993, after reimbursement to him for premiums
paid subsequent to his retirement, of $42,723. All current salaried
executive officers of the Corporation, upon their retirement, will also
be covered under the post-1992 retiree program. The spending account
credit balances determined as of December 31, 1993 (without interest to
be credited thereafter) for each of them are as follows: J. M.
Wiltshire, Jr. - $28,943, R. W. Wiltshire, Jr. - $26,370, H. D. Garnett-
$24,441, W. B. Wiltshire - $27,014 and G. T. Richardson - $24,441
The Corporation is self insured with respect to benefits under the
post-retirement medical benefits plan.
(g) Compensation of Directors
All directors of the Corporation (other than Messrs. Glenn, L. W.
Richardson, R. W. Wiltshire and Hancock and Mrs. Collins) are salaried
executive officers. Messrs. Glenn, L. W. Richardson and R. W. Wiltshire
have retired as salaried executive officers of the Corporation and the
Life Company. Upon his retirement on December 31, 1986 after more than
48 years of service, Mr. Glenn was asked to serve at the pleasure of the
Board of Directors as a Consultant to the Corporation and its
subsidiaries for which he receives $30,000 per year in addition to his
normal retirement benefit of $26,495 under the Corporation's Retirement
Plan. Under the terms of the contract, Mr. Glenn has agreed to perform
such services of a consulting and advisory nature as may be requested of
him from time to time by the Chairman of the Board of the Corporation.
Messrs. Richardson and Wiltshire retired on December 31, 1987, and
September 6, 1993, respectively, and in considera-tion of their past
services to the Corporation and the Life Company over a continuous period
of more than 42 years in the case of Mr. Richardson and 47 years in the
case of Mr. Wiltshire, the Corporation agreed to pay Mr. Richardson
$30,000 per year and Mr. Wiltshire $90,000 per year in addition to their
respective pension benefits of $34,109 and $55,002 under the Retirement
Plan. The Corporation's agreements with each of Messrs. Glenn,
Richardson and Wiltshire provide that they will not compete with the
Corporation or its subsidiaries, directly or indirectly, on a full time
or a part time or on a consulting or advisory basis. Mr. Hancock is a
partner in the law firm of Mays & Valentine. The amount of legal fees
paid to that firm by the Corporation and its subsidiaries and affiliates
in 1993, including amounts for legal services provided by Mr. Hancock,
did not exceed 5% of the firm's gross revenues for its last fiscal year.
No director of the Corporation receives any additional compensation in
the form of directors' fees or otherwise for attendance at meetings of
the Board or committees thereof, or other services performed solely in
his or her capacity as a director.
(h) Employment Contracts and Termination of Employment and Change-in-
Control Arrangements
(1) Not applicable
(2) See Item 10(g) above for a description of the Corporation's
supplemental compensation agreement with R. W. Wiltshire effective
upon his retirement as a salaried executive officer on September 6,
1993
(i) Not applicable
(j) Board of Director Interlocks and Insider Participation
The Corporation has no formal compensation committee, and all final
decisions as to executive officer compensation are made by the entire
Board of Directors. All members of the Board of Directors, except Mrs.
Collins, are present or retired officers of the Corporation. Messrs. J.
M. Wiltshire, Jr., R. W. Wiltshire, Jr., Garnett, W. B. Wiltshire, and G.
T. Richardson are salaried executive officers of the Corporation. R. W.
Wiltshire retired as an employee of the Corporation on September 6, 1993
and thereafter continued to serve as an unsalaried executive officer in
the capacity of Chairman of the Board. Messrs. Glenn and L. W.
Richardson are retired executive officers of the Corporation. Mr.
Hancock is an unsalaried executive officer of the Corporation and a
partner in the law firm of Mays & Valentine which is general counsel to
the Corporation.
<PAGE>
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
(a) and (b) As of March 11, 1994, 5,401,024 shares of Class A Common
Stock of the Corporation, constituting 63.7% of the 8,476,576 shares then
outstanding, were held by trustees under a voting trust agreement dated
as of May 1, 1984, which, by virtue of a voting trust extension agreement
dated as of May 1, 1987, continues in force until May 11, 1997 (1984
Voting Trust). The Voting Trustees, each of whom is a director of the
Corporation and the Life Company are R. W. Wiltshire, L. W. Richardson,
R. W. Wiltshire, Jr., G. T. Richardson, and Dianne N. Collins (as the
current successor to M. D. Nunnally, Jr. one of the original Voting
Trustees, who died several years ago) (together, the Trustees). Their
mailing address is 3901 West Broad Street, Richmond, Virginia 23230. The
Trustees are given exclusive voting power of the Class A Common Stock
subject to the 1984 Voting Trust, but must vote or execute consents in
accordance with the instructions of the holders of voting trust
certificates with respect to any action submitted to a vote of the
holders of Class A Common Stock as to which a majority of the Trustees
then in office favor an affirmative vote, where such action, if approved
by the holders of Class A Common Stock in accordance with and to the
extent required by law and the Corporation's Articles of Incorporation,
would result in: (a) the increase or decrease of the authorized number of
shares of Class A Common Stock; (b) an exchange, reclassification, or
cancellation of all or part of the shares of Class A Common Stock; (c) an
exchange, or right of exchange, of all or any part of the shares of
another class into the shares of Class A Common Stock; (d) any change
that may be adverse to the designations, preferences, limitations, voting
rights or relative to other rights of any nature of the shares of Class
A Common Stock; (e) any change of the shares of Class A Common Stock into
a different number of shares of the same class or into the same or a
different number of shares, either with or without par value, of other
classes of stock; (f) the creation of a new class of stock, or change of
a class with subordinate and inferior rights into a class having rights
and preferences prior and superior to shares of Class A Common Stock, or
any increase of the rights and preferences of any class having rights and
preferences prior or superior to shares of Class A Common Stock; (g) any
limitation or denial of preemptive rights of shares of Class A Common
Stock; (h) the sale, lease, exchange, mortgage, pledge or other
disposition of all, or substantially all, the property and assets of the
Corporation; (i) the merger or consolidation of the Corporation with or
into any other corporation, or of any other corporation with or into the
Corporation; or (j) the dissolution of the Corporation. If a majority of
the Trustees shall oppose any such matter, the Trustees need not solicit,
obtain or follow directions from the holders of the voting trust
certificates, and such majority of Trustees opposing any such proposal
are authorized and empowered to vote all the shares of Class A Common
Stock held by the Trustees under the 1984 Voting Trust against such
proposal. A majority vote of the Trustees controls actions to be taken
by them; they may vote in person or by proxy to another Trustee with or
without direction how to vote. They may vote for themselves as directors
and officers of the Corporation and fix their compensation provided it be
commensurate with the duties and responsibilities of the office or
position held. They may name successor trustees in event of death,
resignation, removal from the Commonwealth of Virginia or incapacity of
any Trustee. They receive no compensation for their services as
Trustees. In the event that by virtue of a stock dividend, stock split,
reclassification of stock or subscription, the Trustees receive further
Class A Common Stock, it is to be held by them subject to all of the
provisions of the 1984 Voting Trust. In the event that as a result of
any merger, consolidation, sale of assets or property, exchange or other
cause, the shares of Class A Common Stock of the Corporation held by the
Trustees should be converted into and become shares of another
corporation, the 1984 Voting Trust shall be terminated automatically
unless the amount of voting stock in such other corporation received as
a result of the conversion would thereafter represent more than one-third
of the issued and outstanding voting stock of such other corporation if
it has no class of stock registered under the Securities Exchange Act of
1934, or more than one-twentieth of the issued and outstanding voting
stock of such other corporation if it has a class of stock so registered,
in either of which cases the 1984 Voting Trust shall continue in force
according to its terms.
Class B Common Stock, which has no vote on most matters, is publicly
traded in the over-the-counter market and is not subject to the 1984
Voting Trust.
Due to the substantial number of shares of Class A Common Stock held
subject to the 1984 Voting Trust, the Trustees individually and
collective-ly may be deemed to be "control persons" of the Corporation
under rules and regulations of the Securities and Exchange Commission.
As of March 11, 1994, the Trustees under the 1984 Voting Trust
beneficially owned, directly or indirectly, voting trust certificates
evidencing an aggregate of 827,646 shares of Class A Common Stock subject
thereto, as well as another 165,281 shares of Class A Common Stock that
are not subject to the 1984 Voting Trust.
The following table shows as of March 11, 1994, the beneficial owner-
ship of all Class A and Class B Common Stock by each director of the
Corpo-ration, and the beneficial ownership of the Corporation's Class A
Common Stock by any other person or entity known to the Corporation to
own more than 5% of the outstanding shares of such class. The
Corporation has no executive officers who are not directors. The amounts
shown for Class A Common Stock include beneficial ownership evidenced by
voting trust certificates of the 1984 Voting Trust, but exclude Class A
shares held by the Trustees thereunder.
Directors
</TABLE>
<TABLE>
<CAPTION>
Amount
Title of Beneficially Percent of
Name of Director Class Owned(1) Class(2)
<S> <C> <C> <C>
Dianne N. Collins Class A 13,536(3)(4)(5) *
Class B 7,264(4) *
H. D. Garnett Class A - -
Class B 2,600 (6) *
C. M. Glenn, Jr. Class A 307,826 (5)(7)(8)(9) 3.63
Class B 100,711 (7)(8)(9) 1.06
W. G. Hancock Class A 89,560 (9)(10)(11) 1.06
Class B 4 *
G. T. Richardson Class A 52,784 (3)(5) *
Class B 10,274 *
L. W. Richardson Class A 262,161 (3)(5)(9)(12) 3.09
Class B 89,179 (9)(12) *
J. M. Wiltshire, Jr. Class A - -
Class B 6,000 *
R. W. Wiltshire Class A 636,100 (3)(5)(9)(13) 7.50
Class B 153,312 (9)(13) 1.62
R. W. Wiltshire, Jr. Class A 28,346 (3)(5)(13) *
Class B 41,443 (9)(13) *
W. B. Wiltshire Class A 28,186 (5)(13) *
Class B 30,550 (9)(13) *
</TABLE>
5% Class A Stockholders
(Other Than Directors and Trustees)
<TABLE>
<CAPTION>
Amount
Name and Address of Beneficially Percent of
5% Class A Stockholder Owned (1) Class
<S> <C> <C>
Dixie Company 2,561,336 (5)(14) 30.22
Richmond, Virginia
Doris G. Hancock 449,574 (8)(15) 5.30
Richmond, Virginia
Estate of Mary Morton Parsons 1,174,427 (5)(16) 13.85
Richmond, Virginia
George L. Richardson 499,100 (5) 5.89
Richmond, Virginia
</TABLE>
(1) Beneficial ownership has been determined in accordance with Rule 13d-
3 under the Securities Exchange Act of 1934.
(2) Where an asterisk is shown, the percentage is less than 1%.
(3) 5,401,024 shares of Class A Common Stock constituting 63.7% of the
8,476,576 shares outstanding are held by R. W. Wiltshire, L. W.
Richardson, R. W. Wiltshire, Jr., G. T. Richardson and Dianne N.
Collins, as Trustees under the 1984 Voting Trust.
(4) All of the voting trust certificates for Class A shares and the Class
B shares are held of record by Dixie Company and may be acquired by
Mrs. Collins pursuant to her power to revoke an inter vivos trust.
Such voting trust certificates are also included in the table for
Dixie Company.
(5) Some portion or all of the Class A shares shown for each of the
indicated directors or stockholders are subject to the 1984 Voting
Trust, and their beneficial ownership as to those shares is evidenced
by voting trust certificates that have been issued to them
thereunder. The number of Class A shares deposited in the 1984
Voting Trust by each of them is as follows: Dianne N. Collins -
13,536; C. M. Glenn, Jr. - 150,164; G. T. Richardson - 22,510; L. W.
Richardson - 250,708; R. W. Wiltshire - 539,016; R. W. Wiltshire, Jr.
- 1,876; W. B. Wiltshire - 1,728; Dixie Company - 2,423,800; Estate
of Mary Morton Parsons - 1,174,427; and George L. Richardson -
404,600.
(6) All of the Class B shares shown for Mr. Garnett are owned jointly
with his wife.
(7) Includes 165,520 shares of Class A (of which 90,000 shares are
evidenced by voting trust certificates of the 1984 Voting Trust) and
23,280 shares of Class B Common Stock held in trust by Crestar Bank
as trustee for the benefit of Mr. Glenn during his lifetime, with
remainder to his issue.
(8) Includes 80,822 shares of Class A and, in the case of Mr. Glenn,
3,644 shares of Class B Common Stock, held by Mr. Glenn and his
sister, Doris G. Hancock and another sister, as trustees under the
will of Hazel C. Glenn for the benefit of his daughter.
(9) Includes an aggregate of 6,216 shares of Class A (of which 2,696
shares are evidenced by voting trust certificates of the 1984 Voting
Trust) and 14,094 shares of Class B Common Stock held by directors as
trustees or custodians for the benefit of children (that are not
described in other footnotes to this table), or by their wives, and
with respect to which beneficial ownership is or will be disclaimed
by individual directors in ownership reports filed with the
Securities and Exchange Commission.
(10) The ownership shown for Mr. Hancock excludes 188,800 shares of Class
A Common Stock held in trust by Crestar Bank for the benefit of his
mother, Doris G. Hancock, with remainder to Mrs. Hancock's issue, in
which Mr. Hancock has a vested one-third beneficial interest subject
to partial divestment upon any further children of Mrs. Hancock.
(11) Includes 2,400 shares of Class A Common Stock held by Mr. Hancock and
his brother and sister as trustees under inter vivos trusts created
by their mother for the benefit of her six grandchildren, three of
whom are children of Mr. Hancock.
(12) Includes 25,538 shares of Class A Common Stock evidenced by voting
trust certificates of the 1984 Voting Trust and 36,912 shares of
Class B Common Stock held by Mr. Richardson, as trustee with sole
voting and shared investment power, for the benefit of a member of
his immediate family.
(13) 55,500 shares of Class A Common Stock, voting trust certificates for
94,976 shares of Class A Common Stock subject to the 1984 Voting
Trust and 86,964 shares of Class B Common Stock are held by the
Estate of Essie Lee Wiltshire for the life of R. W. Wiltshire with a
vested remainder interest in the children of R. W. Wiltshire. R. W.
Wiltshire is the sole executor of the Estate of Essie Lee Wiltshire.
During the life of R. W. Wiltshire the income from the foregoing
shares is paid to the children of R. W. Wiltshire. In addition, R.
W. Wiltshire has a life estate in voting trust certificates
evidencing 403,264 shares of Class A Common Stock subject to the 1984
Voting Trust and 47,260 shares of Class B Common Stock, with
remainder to the children of R. W. Wiltshire. R. W. Wiltshire, Jr.
and W. B. Wiltshire have vested one-fourth beneficial interests in
all the foregoing shares, subject to partial divestment upon any
further children of R. W. Wiltshire. The ownership shown includes
such shares for R. W. Wiltshire and excludes all such shares for R.
W. Wiltshire, Jr. and W. B. Wiltshire. Both R. W. Wiltshire, Jr. and
W. B. Wiltshire also have the same vested one-fourth remainder
interests subject to partial divestment in another 140,836 shares of
Class B Common Stock in which various children and grandchildren of
R. W. Wiltshire residing in other households have an interest for his
life. The ownership shown for R. W. Wiltshire, R. W. Wiltshire, Jr.
and W. B. Wiltshire does not reflect any of such shares, except in
the case of R. W. Wiltshire, Jr. for 26,445 shares held by him as
custodian for his minor children and another 8,764 shares held for
his own benefit and in the case of W. B. Wiltshire for 17,630 shares
held by him as custodian for his minor children and another 8,764
shares held for his own benefit.
(14) Dixie Company is the nominee of Jefferson National Bank which holds
137,536 Class A shares and voting trust certificates for another
2,423,800 Class A shares in a number of fiduciary accounts that it
administers (including voting trust certificates for 13,536 Class A
shares previously reported in the table for Mrs. Collins).
(15) Includes 188,800 shares of Class A Common Stock held in trust by
Crestar Bank as trustee for the benefit of Mrs. Hancock during her
lifetime with remainder to her issue. Also includes 18,205 Class A
shares held by Mrs. Hancock's husband.
(16) Clinton Webb and NationsBank of Virginia, N.A. are the co-executors
of the Estate of Mary Morton Parsons.
As of March 11, 1994, executive officers and directors of the
Corporation as a group beneficially owned 1,418,499 shares or 16.7%
of the Class A (including beneficial ownership evidenced by voting
trust certificates of, but exclusive of shares held by the Trustees
under, the 1984 Voting Trust) and 441,337 shares or 4.7% of the Class
B Common Stock of the Corporation, respectively.
(c) The Corporation has no knowledge of any contractual arrangement which
may at a subsequent date result in a change of control of the
Corporation, except that the 1984 Voting Trust is scheduled to expire on
May 11, 1997. Upon its expiration, the shares of Class A Common Stock of
the Corporation now held by the Trustees under the 1984 Voting Trust will
be held by per-sons presently holding voting trust certificates
representing those shares.
<PAGE>
ITEM 13. Certain Relationships and Related Transactions
(a) On May 10, 1993, the Corporation repurchased 365,838 shares of its
Class B Common Stock from the Estate of Mary Morton Parsons at a price of
$9,008,761 or $24.625 per share. At the time of the repurchase, the
Estate of Mary Morton Parsons was the beneficial owner of more than 5% of
the Corporation's outstanding Class A Common Stock.
In the case of the above purchase, the price paid by the Corporation was
below the then applicable bid price for the Corporation's Class B Common
Stock in the over-the-counter market. Prior to the purchase, the Board
of Directors determined that reacquisition of the shares was in the best
interest of the Corporation and its stockholders when compared with
alternative investments available to the Corporation. Immediately upon
their reacquisition, all of the shares became authorized but unissued
shares under Virginia law.
(b) W. G. Hancock is a partner in the law firm of Mays & Valentine which
provided legal services as general counsel to the Corporation and its
subsidiaries and affiliates during 1993, and is expected to serve in the
same capacity in 1994. The amount of legal fees paid to that firm by the
Corporation and its subsidiaries and affiliates for 1993 did not exceed
5% of the firm's gross revenues for its last full fiscal year.
(c) Not applicable.
(d) Not applicable.
<PAGE>
Part IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. and 2. Financial Statements and Financial Statement Schedules
The financial statements and financial statement schedules listed in
the accompanying Index to Financial Statements and Financial
Statement Schedules on page 27 are filed as part of this annual
report.
3. Exhibits
The exhibits listed in the accompanying Index to Exhibits are filed
as part of this annual report.
(b) Reports on Form 8-K
None
<PAGE>
HOME BENEFICIAL CORPORATION
Index to Financial Statements
and Financial Statement Schedules
(Item 14(a))
Annual
Form Report to
10-K Stockholders
Consolidated Financial Statements:
Report of Ernst & Young, Independent Auditors 18
Consolidated Balance Sheet at December 31, 1993 and 1992 6-7
Consolidated Statement of Income for each of the three
years in the period ended December 31, 1993 8
Consolidated Statement of Retained Earnings for each of
the three years in the period ended December 31, 1993 9
Consolidated Statement of Cash Flows for each of the
three years in the period ended December 31, 1993 10
Notes to Consolidated Financial Statements 11-17
Supplementary information--
Quarterly financial information (unaudited) 21
Financial Statement Schedules:
I - Summary of investments - other than investments
in related parties at December 31, 1993
(Consolidated) 29
III - Condensed Financial Information of Registrant
(Parent Company):
Balance Sheet at December 31, 1993 and 1992 30
Statement of Income for each of the three years
in the period ended December 31, 1993 31
Statement of Cash Flows for each of the three
years in the period ended December 31, 1993 32
VI - Reinsurance for each of the three years in the
period ended December 31, 1993 (Consolidated) 33
All other schedules are omitted since the required information is not
present, or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.
The consolidated financial statements and supplementary information
listed in the above index, which are included in the Annual Report to
Stockholders for Home Beneficial Corporation for the year ended December 31,
1993, are incorporated herein by reference.
<PAGE>
CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report(Form
10-K) of Home Beneficial Corporation of our report dated February 10, 1994,
included in the 1993 Annual Report to Stockholders of Home Beneficial
Corporation.
Our audits also included the financial statement schedules of Home
Beneficial 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 therein.
ERNST & YOUNG
Richmond, Virginia
February 10, 1994
<PAGE>
Schedule I
HOME BENEFICIAL CORPORATION
(CONSOLIDATED)
SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
At December 31, 1993
<TABLE>
<CAPTION>
Column A Column B Column C Column D
Amount at
which shown in
Type of Investment Cost Value balance sheet
<S> <C> <C> <C>
Fixed maturities:
Bonds and notes:
United States Government and
government agencies and
authorities $ 26,851,211 $ 32,086,409 $ 26,851,211
States, municipalities and
political subdivisions 249,926,041 260,177,698 249,926,041
Foreign governments 24,818,059 26,310,376 24,818,059
Public utilities 256,162,592 263,484,437 256,162,592
All other corporate 137,483,053 145,228,209 137,483,053
Certificates of deposit 9,442,430 9,613,442 9,442,430
Redeemable preferred stocks 1,000,000 1,065,625 1,000,000
Total fixed maturities 705,683,386 $737,966,196 705,683,386
Equity securities:
Common stocks:
Public utilities 1,460,765 $ 4,546,073 4,546,073
Banks, trust and insurance
companies 923,311 6,648,557 6,648,557
Industrial, miscellaneous and
other 3,773,750 15,269,243 15,269,243
Nonredeemable preferred stocks 764,963 817,258 817,258
Total equity securities 6,922,789 $27,281,131 27,281,131
Mortgage loans on real estate 316,371,747 316,371,747
Policy loans 52,738,134 52,738,134
Other long-term investments 6,360,115 6,360,115
Short-term investments 35,506,190 35,506,190
Total investments $1,123,582,361 $1,143,940,703
</TABLE>
<PAGE>
Schedule III
HOME BENEFICIAL CORPORATION
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET
December 31, 1993 and 1992
<TABLE>
<CAPTION>
1993 1992
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,580,496 $ 389,175
Investment in subsidiaries, at equity 466,132,836 454,360,284
Other assets 5,628,327 5,726,206
$473,341,659 $460,475,665
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities $ 79,267 $ 34,269
Stockholders' equity (*)
Capital stock:
Class A Common Stock, voting, $.3125 par
value 12,800,000 shares authorized;
8,476,576 issued at December 31, 1993
and December 31, 1992 2,648,930 2,648,930
Class B Common Stock, non-voting,
$.3125 par value, 19,200,000 shares
authorized; 9,462,482 issued at
December 31, 1993 and 10,050,320
issued at December 31, 1992 2,957,025 3,140,725
Total capital stock 5,605,955 5,789,655
Net unrealized gains on equity securities of
subsidiaries less deferred income taxes 14,258,342 15,894,829
Retained earnings 453,398,095 438,756,912
Total stockholders' equity 473,262,392 460,441,396
$473,341,659 $460,475,665
</TABLE>
(*) See Notes 6 and 7 to Consolidated Financial Statements
<PAGE>
Schedule III
HOME BENEFICIAL CORPORATION
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF INCOME
Years Ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Revenues:
Dividends from subsidiaries $29,216,000 $14,944,000 $23,296,000
Other investment income 1,005,362 944,528 1,009,074
Total Revenues 30,221,362 15,888,528 24,305,074
Expenses:
Operating and administrative 915,949 877,593 785,663
Income before income taxes and
equity in undistributed income
of subsidiaries 29,305,413 15,010,935 23,519,411
Income taxes - current 50,000 25,000 100,000
Income before equity in undistributed
income of subsidiaries 29,255,413 14,985,935 23,419,411
Equity in undistributed income
of subsidiaries 13,359,040 2,047,551 23,942,474
Net income $42,614,453 $17,033,486 $47,361,885
</TABLE>
<PAGE>
Schedule III
HOME BENEFICIAL CORPORATION
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
Years Ended December 31, 1993, 1992 and 1991
Increase (Decrease) in Cash and Cash Equivalents (*)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Operating Activities:
Net income $ 42,614,453 $ 17,033,486 $ 47,361,885
Adjustments to reconcile net
income to net cash provided
from operating activities:
Undistributed net income
of subsidiaries (13,359,040) (2,047,551) (23,942,474)
Dividends declared, but not
paid by subsidiary - - (3,584,000)
Dividends paid by subsidiary
declared prior year - 3,584,000 -
Other 92,878 13,801 92,467
Net cash provided by
operating activities 29,348,291 18,583,736 19,927,878
Financing activities:
Purchase of Common Stock (14,142,511) (4,252,500) (7,892,780)
Cash dividends to stockholders (14,014,459) (14,152,261) (13,017,426)
Net cash used in financing
activities (28,156,970) (18,404,761) (20,910,206)
Increase (Decrease) in cash and cash
equivalents 1,191,321 178,975 (982,328)
Cash and cash equivalents, beginning
of year 389,175 210,200 1,192,528
Cash and cash equivalents, end of year $ 1,580,496 $ 389,175 $ 210,200
</TABLE>
(*) Short-term investments, which consist of investments with maturities of 30
days or less, are considered cash equivalents.
<PAGE>
Schedule VI
HOME BENEFICIAL CORPORATION
(CONSOLIDATED)
REINSURANCE
Years Ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
% of
Ceded Assumed amount
Gross to other from other Net assumed
amount companies companies amount to net
<S> <C> <C> <C> <C>
1993:
Life insurance
in force $4,622,917,075 $101,565,145 $5,467,245,347 $9,988,597,277 54.7%
Premiums:
Life insurance $88,754,881 $452,023 $18,788,760 $107,091,618 17.5%
Accident and
health insurance 8,482,576 2,916 797,843 9,277,503 8.6
Total premiums $97,237,457 $454,939 $19,586,603 $116,369,121 16.8%
1992:
Life insurance
in force $4,640,207,175 $ 99,371,137 $5,250,622,272 $9,791,458,310 53.6%
Premiums:
Life insurance $88,409,010 $383,224 $19,624,622 $107,650,408 18.2%
Accident and
health insurance 9,284,564 2,713 1,014,008 10,295,859 9.8
Total premiums $97,693,574 $385,937 $20,638,630 $117,946,267 17.5%
1991:
Life insurance
in force $4,428,517,391 $111,785,557 $2,231,173,148 $6,547,904,982 34.1%
Premiums:
Life insurance $87,163,298 $442,029 $6,998,782 $93,720,051 7.5%
Accident and
health insurance 9,478,160 2,734 297,145 9,772,571 3.0
Total premiums $96,641,458 $444,763 $7,295,927 $103,492,622 7.0%
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934 the Registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HOME BENEFICIAL CORPORATION
Registrant
By: /s/ H. D. Garnett
H.D. Garnett, Vice President and Controller, March 22, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
/s/ R. W. Wiltshire
R.W. Wiltshire, Chairman of the Board & Director, March 22, 1994
/s/ C. M. Glenn, Jr.
C.M. Glenn, Jr., Retired Vice President, Treasurer & Director, March 22, 1994
/s/ L. W. Richardson
L.W. Richardson, Retired Vice President & Director, March 22, 1994
/s/ R. W. Wiltshire, Jr.
R.W. Wiltshire, Jr., President, Chief Executive Officer & Director, March 22,
1994
/s/ J. M. Wiltshire, Jr.
J.M. Wiltshire, Jr., Vice President, Counsel, Secretary & Director, March 22,
1994
/s/ W. B. Wiltshire
W.B. Wiltshire, Vice President & Director, March 22, 1994
/s/ H. D. Garnett
H.D. Garnett, Vice President, Controller & Director, March 22, 1994
/s/ G. T. Richardson
G.T. Richardson, Vice President & Director, March 22, 1994
/s/ W. G. Hancock
W.G. Hancock, Counsel & Director, March 22, 1994
/s/ Dianne N. Collins
Dianne N. Collins, Director, March 22, 1994
<PAGE>
HOME BENEFICIAL CORPORATION
Index to Exhibits
(Items 14(c))
<TABLE>
<CAPTION>
Sequential
Page Number
EXHIBITS
<S> <C> <C>
2 - Plan of acquisition, reorganization, arrangement, liquidation or
succession - Not applicable -
3(a) - Restated Articles of Incorporation 59-62
(b) - Bylaws incorporated herein by reference from December 31, 1992
Form 10-K -
4 - Instruments defining the rights of security holders, including
indentures - See Article III of the Restated Articles of Incorporation
filed as Exhibit 3(a) hereto -
9 - Voting Trust Agreement dated May 1, 1984, effective May 31, 1984,
and Voting Trust Extension Agreement dated May 1, 1987, effective
May 11, 1987 incorporated herein by reference from December 31, 1992
Form 10-K -
10 - Material Contracts - Consulting and compensation agreements with C. M.
Glenn, Jr. and L. W. Richardson who are present Directors of the
Corporation incorporated herein by reference from December 31, 1992
Form 10-K. Supplemental Compensation Agreement with R. W. Wiltshire,
Chairman of the Board of Directors of the Corporation incorporated
herein by reference from September 30, 1993 Form 10-Q -
11 - Statement reference computation of per share earnings - Not applicable -
12 - Statement reference computation of ratios - Not applicable -
13 - Annual Report to Security Holders
With the exception of the information incorporated by reference into
Items 1, 5, 6, 7 and 8 of this Form 10-K, the 1993 Annual Report to
Stockholders is not deemed filed as part of this report 36-58
16 - Letter reference change in certifying accountant - Not applicable -
18 - Letter reference change in accounting principles - Not applicable -
21 - Subsidiaries of the Registrant incorporated herein by reference from
December 31, 1989 Form 10-K -
22 - Published report regarding matters submitted to vote of security
holders - Not applicable -
23 - Consents of experts and counsel 28
24 - Power of Attorney - Not applicable -
28 - Information from reports furnished to state insurance regulatory
authorities - Not applicable -
99 - Additional exhibits - Not applicable -
<PAGE>
</TABLE>
Restated Articles of Incorporation
of
Home Beneficial Corporation
Article I
The name of the Corporation is HOME BENEFICIAL CORPORATION.
Article II
The purpose of the Corporation is to buy or otherwise acquire, own,
manage and dispose of the capital stock and other securities of insurance
companies and other corporations. In addition, it shall have all other
powers not forbidden by law or required to be stated in the Articles of
Incorporation.
Article III
The aggregate number of shares which the Corporation shall have
authority to issue shall be 32,000,000 shares of common stock divided into
12,800,000 shares designated "Class A Common Stock" and 19,200,000 shares
designated "Class B Common Stock." The par value of the shares of both
classes of common stock shall be $.3125.
The preferences, limitations and voting rights and relative rights in
respect of the shares of each class of stock of the Corporation are as
follows:
A. Voting Rights
Except as otherwise required by the laws of the State of
Virginia, the holders of Class A Common Stock, to the exclusion
of the holders of Class B Common Stock, shall have the sole power
to vote for the election of directors and for all other purposes
without limitation.
B. Pre-Emptive Rights
The holders of Class A Common Stock shall have pre-emptive rights
with respect to Class A Common Stock, but such rights shall not
extend to treasury stock, stock issued for services or property
(other than money) or to stock issued to officers or employees
pursuant to a plan approved by the stockholders. The holders of
Class A Common Stock shall have no pre-emptive rights with
respect to Class B Common Stock and the holders of Class B Common
Stock shall have no pre-emptive rights with respect to either
Class A Common Stock or Class B Common Stock.
C. Dividends and Distributions
The holders of Class A Common Stock and Class B Common Stock of
the Corporation shall participate equally, share for share, in
any dividends in stock, cash or property which may be declared
from time to time by the Board of Directors, except that in the
case of a dividend in stock, the holders of Class B Common Stock
shall receive only Class B Common Stock while the holders of
Class A Common Stock may be issued on an equal share for share
basis either Class A Common Stock or Class B Common Stock or any
combination thereof in the discretion of the Board of Directors.
D. Other Rights
In all other respects, including but not by way of limitation ,
the right to share in the property or business of the Corporation
in the event of its liquidation in whole or in part and the right
to share in the assets of the Corporation in the event of its
dissolution or the distribution of its assets by way of return of
capital, each share of stock of the Corporation, whether Class A
Common Stock or Class B Common Stock shall rank equally and be
identical.
Article IV
A. To the full extent permitted by the Virginia Stock Corporation
Act, as it exists on the date hereof or may hereafter be amended, each
director and officer shall be indemnified by the Corporation against
liabilities, fines, penalties and claims imposed upon or asserted against him
(including amounts paid in settlement) by reason of having been such director
or officer, whether or not then continuing so to be, and against all expenses
(including counsel fees) reasonably incurred by him in connection therewith,
except in relation to matters as to which he shall have been finally adjudged
liable by reason of his willful misconduct or a knowing violation of criminal
law in the performance of his duty as such director or officer. The
determination that the indemnification under this Section A is permissible
shall be made as provided by law. The right of indemnification hereby
provided shall not be exclusive of any other rights to which any director or
officer may be entitled.
B. To the full extent permitted by the Virginia Stock Corporation
Act, as it exists on the date hereof or may hereafter by amended, in any
proceeding brought by a shareholder of the Corporation in the right of the
Corporation or brought by or on behalf of shareholders of the Corporation,
the liability of, and the damages assessed against, a director or officer of
the Corporation arising out of or resulting from a single transaction,
occurrence or course of conduct shall be limited and shall not exceed the
amount of $1.00, provided that the limitation of liability herein set forth
shall not be applicable if the director or officer engaged in willful
misconduct or a knowing violation of the criminal law.
C. The Board of Directors is hereby empowered, by a majority vote of
a quorum of disinterested directors, to indemnify or contract in advance to
indemnify any person not specified in Section A of this Article against
liabilities, fines, penalties and claims imposed upon or asserted against him
(including amounts paid in settlement) by reason of having been an employee,
agent or consultant of the Corporation, whether or not then continuing so to
be, and against all expenses (including counsel fees) reasonably incurred by
him in connection therewith, to the same extent as if such person were
specified as one to whom indemnification is granted in Section A of this
Article.
D. Every reference in this Article to director, officer, employee,
agent or consultant shall include (i) every director, officer, employee,
agent or consultant of the Corporation or any corporation the majority of the
voting stock of which is owned directly or indirectly by the Corporation,
(ii) every former director, officer, employee, agent or consultant of the
Corporation, (iii) every person who may have served at the request of or on
behalf of the Corporation as director, officer, partner, employee, agent,
consultant or trustee of another corporation, partnership, joint venture,
trust or other entity, and (iv) in all of such cases, his heirs, executors
and administrators.
E. The provisions of this Article IV shall be applicable from and
after its adoption even though some or all of the underlying conduct or
events relating to such a proceeding may have occurred before such adoption.
No amendment, modification or repeal of this Article IV shall diminish the
rights provided hereunder to any person arising from conduct or events
occurring before the adoption of such amendment, modification or repeal.
F. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or
omission with respect to which indemnification is claimed, any determination
as to indemnification and advancement of expenses with respect to any claim
for indemnification made pursuant to Section A of this Article IV shall be
made by special legal counsel agreed upon by the Board of Directors and the
proposed indemnitee. If the Board of Directors and the proposed indemnitee
are unable to agree upon such legal counsel, the Board of Directors and the
proposed indemnitee each shall select a nominee, and the nominees shall
select such special legal counsel.
Article V
A. The affirmative vote of the holders of not less than 80% of
shares of Class A Common Stock of the Corporation shall be required for the
adoption or authorization of any business combination (as hereinafter
defined) with another party, if, as of the record date for the determination
of holder of the Corpora- ton's Class A Common Stock entitled to notice
thereof and to vote thereon, such other party is the beneficial owner,
directly or indirectly, of 10% or more of the outstanding shares of any class
of capital stock of the Corporation; provided that the foregoing shall not
apply to any such business combination which was approved by the Board of
Directors of the Corporation prior to the acquisition of the beneficial
ownership of 10% or more of the outstanding shares of any class of the
Corporation's capital stock by such other party.
B. The affirmative vote of the holders of not less than 80% of the
shares of Class A Common Stock of the Corporation shall be required for the
approval of any reclassification of securities, recapitalization or other
transaction (except redemptions permitted by the terms of the security
redeemed or repurchases of the securities for cancellation or the
Corporation's treasury) designed to decrease the number of holders of the
Corporation's Class A Common Stock remaining after any corporation, person or
other entity has acquired beneficial ownership of 10% or more of the
outstanding shares of any class of the Corporation's capital stock, unless
such transaction is unanimously recommended to the holders of Class A Common
Stock by the Board of Directors of the Corporation.
C. For the purposes of this Article V,
(1) the term "party" shall include any corporation, person or
entity;
(2) in determining the number of shares of capital stock of the
Corporation beneficially owned by another party to any such business
combination under Section A hereof or by any corporation, person or
other entity pursuant to Section B hereof, there shall be included any
such shares (i) which it has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or options,
or otherwise, and (ii) which are beneficially owned, directly or
indirectly (including shares deemed owned through application of clause
(i) above) by any other corporation, person or entity with which it has
any agreement, arrangement or understanding with respect to the
acquisition, holding voting or disposing of stock of the Corporation,
or which is its "affiliate" or "associate" as those terms are defined
in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934 as in effect on January 1, 1978;
(3) the outstanding shares of any class of capital stock of the
Corporation shall be deemed to include shares beneficially owned
through application of clause 2(i) above (including any application
thereof pursuant to clause 2(ii) above) but shall not include any other
shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise; and
(4) the term "business combination" shall include any merger or
consolidation of the Corporation with or into, or the exchange of
shares of Class A Common Stock of the Corporation for cash or property
or other securities or obligations of, any other corporation, or the
sale or lease of all or substantially all of the property and assets of
the Corporation to, or any sale or lease to the Corporation or any
subsidiary thereof in exchange for Class A Common Stock of the
Corporation of any assets (except assets having an aggregate fair
market value of less than $2 million) of, any other corporation, person
or other entity.
D. Any determination made in good faith by the Board of Directors,
on the basis of information at the time available to it, as to whether (i)
any corporation, person or other entity is the beneficial owner, directly or
indirectly, of 10% or more of the outstanding shares of any class of capital
stock of the Corporation, (ii) any corporation, person or other entity is an
"affiliate" or "associate" of, or has an agreement, arrangement or
understanding with, another, or (iii) the assets being acquired by the
Corporation, or any subsidiary thereof, have an aggregate fair market value
of less than $2 million, shall be conclusive and binding for all purposes of
this Article V.
E. No amendment to the Articles of Incorporation of the Corporation
shall change, repeal or make inoperative any of the provisions of this
Article V, unless such amendment receives the affirmative vote of the holders
of not less than 80% of the shares of Class A Common Stock of the
Corporation, provided that this Section E shall not apply to, and such 80%
vote shall not be required for, any such amendment unanimously recommended to
the holders of Class A Common Stock by the Board of Directors of the
Corporation.
F. Nothing herein shall be deemed to affect any voting rights
imposed by law in favor of the Class B Common stock of the Corporation.
ARTCORP
<PAGE>
1993 ANNUAL REPORT
HOME BENEFICIAL CORPORATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Life insurance in force (In 000's) $ 9,988,596 $ 9,791,458
Total assets $1,280,233,898 $1,248,432,740
Stockholders' equity $ 473,262,392 $ 460,441,396
Total revenues $ 213,243,445 $ 211,529,375
Net income $ 42,614,453 $ 17,033,486
Per Share
Net income $ 2.35 $ .92
Dividends paid $ .775 $ .76
Book value $ 26.38 $ 24.85
</TABLE>
<PAGE>
CONTENTS
<TABLE>
<S> <C>
Financial Highlights................................................................. 1
The Business of Home Beneficial Corporation.......................................... 3
A Message to Our Stockholders........................................................ 4
Consolidated Financial Statements.................................................... 6
Notes to Consolidated Financial Statements........................................... 11
Report of Ernst & Young, Independent Auditors........................................ 18
Management's Discussion and Analysis of
Financial Condition and Results of Operations..................................... 19
Quarterly Financial Information and Market and
Dividend Information.............................................................. 21
Record of Growth of Insurance and Selected Consolidated Financial Data............... 22
Directors and Officers............................................................... 23
</TABLE>
2
<PAGE>
THE BUSINESS OF HOME BENEFICIAL CORPORATION
Home Beneficial Corporation is a holding company domiciled in the state of
Virginia with one principal operating subsidiary, Home Beneficial Life Insurance
Company (the Life Company), which is engaged in the life and accident and health
insurance business. The Life Company sells group life insurance and
substantially all the forms of ordinary insurance, including universal life,
whole life, term, and annuities, together with accidental death and disability
riders. The Life Company's business is concentrated in six Mid-Atlantic states
and the District of Columbia and its policies are marketed through its own sales
force of approximately 1150 full time personnel.
ANNUAL MEETING
The Annual Meeting of the stockholders of Home Beneficial Corporation will be
held on Tuesday, April 5, 1994 at 10:00 a.m. at the Corporation's Home Office,
3901 West Broad Street, Richmond, Virginia 23230.
(logo) HOME BENEFICIAL CORPORATION
HOME OFFICE TRANSFER AGENT AND REGISTRAR
3901 West Broad Street First Union National Bank of North Carolina
P.O. Box 27572 Shareholders Services Group -- 1154
Richmond, Virginia 23261 230 S. Tryon Street -- 10th Floor
Charlotte, North Carolina 28288-1154
3
<PAGE>
A MESSAGE TO OUR STOCKHOLDERS
[PLACE PICTURE HERE]
R. W. Wiltshire, Jr.
lthough your Corporation, as well as the rest of the life insurance
industry, continued to operate in a very difficult environment during 1993,
we are pleased to report some important areas of progress and comment on some of
the challenges that affected our results for the year.
A
As can be seen from our Financial Highlights Page, Home Beneficial Corporation
continued making progress in 1993 by achieving record performance in many of the
categories used to measure the growth and financial strength of a life insurance
company.
Our life insurance in force reached a new high, coming very close to achieving
the $10 billion mark for the first time in the Company's history.
The quality of our assets remained strong, growing by $32 million over the
previous year and reaching an all-time high of $1.28 billion. It should be noted
that assets would have increased an additional $14 million, however, the
Corporation used those funds to repurchase its own common stock at a cost below
its book value per share. Net yield on invested assets for 1993 was 7.77%, which
compares favorably with the American Council's estimated rate for United States
life insurance companies.
One of the most important questions frequently asked by the average stockholder
is what is the true value of my stock. Total stockholders' equity at the end of
1993 amounted to over $473 million and breaks down to a value of $26.38 per
share. (This per share amount compares to $24.85 per share for 1992, a 6.1%
increase.) As you know, this amount does not include a dollar value for the
enviable reputation which Home Beneficial has enjoyed since 1899 nor does it
include any value for its sales force of successful full time agents, staff
managers and managers.
The Corporation's 1993 revenues totaled $213.2 million which compares to $211.5
million for the 1992 period. Premium income of $116.4 million was down 1.3% from
the $117.9 million for 1992 due primarily to reduced sales in 1993. Investment
income, net of expenses, increased during 1993 to $96.9 million with $10.8
million ($.37 per share) being attributed to realized investment gains versus
$93.6 million of which $2.9 million ($.10 per share) were realized gains during
1992. Excluding realized investment gains
4
<PAGE>
from both periods, net investment income for 1993 was down 5.1%.
The downward trend in our investment income resulting from lower yielding bonds
and mortgages continued throughout the year. However, in spite of interest rates
for most of the year being at their lowest yields in more than two decades, the
Corporation's consolidated net income amounted to $42.6 million or $2.35 per
share. This compares to $46.5 million or $2.50 per share before the cumulative
effect of the 1992 accounting change, and $17 million or $.92 per share after
the change.
Your Corporation continues to be among a very few elite companies in the United
States with such a long record of consecutive yearly dividend increases. The
Corporation and its predecessor, Home Beneficial Life Insurance Company, have
paid dividends without interruption for 87 years and cash dividend payments have
been increased for 30 consecutive years. Dividends to stockholders in 1993
amounted to $.775 per share, an increase over the $.76 per share paid in 1992.
As you may recall from our 1992 report, we began to make a major investment in
new technology. During 1993 we implemented some major steps in its use and
considerably more implementation will continue during 1994. While this has been
disruptive and time consuming for our agency force and has been partially
responsible for a slowdown in our life insurance sales, over the long term, the
Corporation, our agents, and our policyowners will all be beneficiaries of these
technolog-ical advances which will keep us competitive in today's constantly
changing marketplace.
We hope that as stockholders you share our pride in knowing that only 2% of the
2,000 legal reserve life insurance companies in the United States have been in
business as long as Home Beneficial Life Insurance Company, which is now in its
ninety-fifth year of operation. Also, you should know that long time insurance
authority A. M. Best Company has assigned Home Beneficial Life Insurance Company
to its highest category of Superior, which category only includes 13.3% of the
1708 life/health insurers evaluated. Home Beneficial was assigned the rating of
A+ Superior. In its rating A. M. Best Company acknowledges the excellent quality
and performance of the investment portfolio, the Company's continued
profitability, and the exceptionally strong capitalization position.
Although these are challenging times, given our financial strength and our
dedicated employees, these are also times of opportunity.
R. W. Wiltshire
Chairman of the Board
R. W. Wiltshire, Jr.
President and
Chief Executive Officer
5
<PAGE>
HOME BENEFICIAL CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993 AND 1992
ASSETS
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
INVESTMENTS -- Note 2
Fixed maturities, at amortized cost (approximate
market: 1993, $737,966,196; 1992, $591,893,538)......................... $ 705,683,386 $ 561,658,877
Equity securities, at market
(cost: 1993, $6,922,789; 1992, $5,846,946).............................. 27,281,131 28,566,775
Mortgage loans on real estate.............................................. 316,371,747 382,507,665
Policy loans............................................................... 52,738,134 52,073,734
Short-term investments..................................................... 35,506,190 90,402,480
Other...................................................................... 6,360,115 1,200,581
Total investments....................................................... 1,143,940,703 1,116,410,112
CASH......................................................................... 6,039,294 3,345,413
ACCRUED INVESTMENT INCOME.................................................... 16,688,448 15,106,542
RECEIVABLES -- uncollected premiums.......................................... 5,065,577 4,926,048
DEFERRED POLICY ACQUISITION COSTS............................................ 96,368,346 95,818,280
PROPERTY AND EQUIPMENT, AT COST
(less accumulated depreciation: 1993, $6,160,296;
1992, $5,727,110).......................................................... 8,264,073 8,509,731
DEFERRED CHARGES AND OTHER ASSETS............................................ 3,867,457 4,316,614
$1,280,233,898 $1,248,432,740
</TABLE>
See accompanying notes.
6
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
LIABILITIES
Policy liabilities and accruals -- Note 1
Future policy benefits.................................................. $ 649,964,396 $ 636,966,417
Unearned premiums....................................................... 25,934,028 25,443,064
Policy claims and benefits payable...................................... 10,160,984 9,773,158
Total policy liabilities and accruals................................. 686,059,408 672,182,639
Other policyholder funds................................................... 61,246,483 54,986,336
Income taxes -- Notes 2 and 5
Current................................................................. 1,345,269 1,195,269
Deferred................................................................ 1,287,500 5,362,500
Total income taxes.................................................... 2,632,769 6,557,769
Other liabilities.......................................................... 57,032,846 54,264,600
Total liabilities..................................................... 806,971,506 787,991,344
COMMITMENTS AND CONTINGENT LIABILITIES -- Note 3
STOCKHOLDERS' EQUITY -- Notes 2, 6 and 7
Capital stock
Class A Common Stock, Voting, $.3125 par value, 12,800,000
shares authorized; 8,476,576 issued at December 31, 1993 and
December 31, 1992..................................................... 2,648,930 2,648,930
Class B Common Stock, Non-Voting, $.3125 par value,
19,200,000 shares authorized; 9,462,482 issued at December 31, 1993
and 10,050,320 issued at December 31, 1992............................ 2,957,025 3,140,725
Total capital stock................................................... 5,605,955 5,789,655
Net unrealized gains on equity securities less deferred
income taxes............................................................ 14,258,342 15,894,829
Retained earnings.......................................................... 453,398,095 438,756,912
Total stockholders' equity............................................ 473,262,392 460,441,396
$1,280,233,898 $1,248,432,740
</TABLE>
7
<PAGE>
HOME BENEFICIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
REVENUES
Premiums...................................................... $116,369,121 $117,946,267 $103,492,622
Net investment income -- Note 2............................... 96,874,324 93,583,108 93,913,440
Total revenues........................................... 213,243,445 211,529,375 197,406,062
BENEFITS, CLAIMS AND EXPENSES
Benefits and claims........................................... 94,609,539 88,416,743 76,095,778
Underwriting, acquisition and insurance expenses
Amortization of deferred policy acquisition
costs.................................................... 14,191,104 17,379,387 14,125,030
Commissions and related sales expenses..................... 10,758,965 7,646,474 8,624,129
General, administrative and other.......................... 29,769,384 29,358,401 27,699,240
Total benefits, claims and expenses...................... 149,328,992 142,801,005 126,544,177
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE...................... 63,914,453 68,728,370 70,861,885
INCOME TAXES -- Note 5
Current....................................................... 24,650,000 21,825,000 23,350,000
Deferred...................................................... (3,350,000) 425,000 150,000
Total income taxes....................................... 21,300,000 22,250,000 23,500,000
Income Before Cumulative Effect of Change in Accounting
Principle..................................................... 42,614,453 46,478,370 47,361,885
Cumulative Effect of Change in Accounting for Postretirement
Medical Benefits -- Notes 1 and 4............................. -- (29,444,884) --
NET INCOME...................................................... $ 42,614,453 $ 17,033,486 $ 47,361,885
</TABLE>
<TABLE>
<S> <C> <C> <C>
NET INCOME PER SHARE OF COMMON STOCK
(Average shares outstanding:
1993, 18,126,135; 1992, 18,600,224; and 1991,
18,869,342) -- Notes 4 and 6...............................
Income Before Cumulative Effect of Change in Accounting
Principle.................................................. $2.35 $2.50 $2.51
Cumulative Effect of Change in Accounting for Postretirement
Medical Benefits........................................... -- (1.58) --
Net Income...................................................... $2.35 $ .92 $2.51
</TABLE>
See accompanying notes.
8
<PAGE>
HOME BENEFICIAL CORPORATION
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Balance at beginning of year.................................... $438,756,912 $436,513,105 $413,496,621
Additions (deductions)
Net income.................................................... 42,614,453 17,033,486 47,361,885
Dividends declared to stockholders (per share:
1993, $.775; 1992, $.57; 1991, $.88) (14,014,459) (10,596,241) (16,573,446)
Purchase and retirement of Class A and Class B
Common Stock -- Note 6..................................... (13,958,811) (4,193,438) (7,771,955)
Balance at end of year.......................................... $453,398,095 $438,756,912 $436,513,105
</TABLE>
See accompanying notes.
9
<PAGE>
HOME BENEFICIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
Increase (decrease) in cash
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Operating Activities
Net income.................................................... $ 42,614,453 $ 17,033,486 $ 47,361,885
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization.............................. 1,260,484 1,155,903 1,119,508
Amortization of discount and premium on
investments, net......................................... (1,627,782) (2,387,396) (2,215,947)
Increase in policy liabilities and accruals................ 13,876,769 10,403,969 10,258,382
Decrease in income tax liability........................... (3,200,000) (17,110,000) (1,372,000)
Policy acquisition costs deferred.......................... (14,741,170) (21,814,363) (21,788,073)
Amortization of deferred policy acquisition costs.......... 14,191,104 17,379,387 14,125,030
Cumulative effect of accounting change..................... -- 44,644,884 --
Realized investment gains.................................. (10,802,968) (2,857,454) (61,092)
Other...................................................... 904,443 (3,371,660) (3,364,017)
Net cash provided by operating activities 42,475,333 43,076,756 44,063,676
Investing Activities
Proceeds from sales, calls or maturities of investments
Fixed maturities........................................... 138,353,688 80,226,637 54,351,742
Mortgage loans on real estate.............................. 121,053,918 163,348,543 71,863,643
Policy loans............................................... 10,173,381 10,187,598 8,990,521
Short term investments, net................................ 54,896,290 -- -- 46,531,253
Other...................................................... 3,600,772 2,801,011 2,818,965
Total proceeds........................................... 328,078,049 256,563,789 138,024,871
Costs of investments acquired
Fixed maturities........................................... 273,007,658 177,434,305 84,801,355
Mortgage loans on real estate.............................. 54,762,575 56,330,146 42,408,117
Short term investments, net................................ -- 38,739,935 26,929,219
Policy loans............................................... 10,837,781 11,502,287 11,629,733
Property and equipment and other........................... 7,354,663 1,597,951 119,743
Total costs.............................................. 345,962,677 285,604,624 165,888,167
Net cash used in investing activities................. (17,884,628) (29,040,835) (27,863,296)
Financing Activities
Dividends paid................................................ (14,014,459) (14,152,261) (13,017,426)
Purchase of Class A and Class B Common Stock.................. (14,142,511) (4,252,500) (7,892,780)
Other......................................................... 6,260,146 5,139,732 5,960,266
Net cash used in financing activities.................... (21,896,824) (13,265,029) (14,949,940)
Net increase in cash............................................ 2,693,881 770,892 1,250,440
Cash at beginning of year....................................... 3,345,413 2,574,521 1,324,081
Cash at end of year............................................. $ 6,039,294 $ 3,345,413 $ 2,574,521
</TABLE>
<TABLE>
<S> <C> <C> <C>
Supplemental disclosure of cash flow information
Income tax payments........................................... $24,500,000 $24,160,000 $24,872,000
</TABLE>
See accompanying notes.
10
<PAGE>
HOME BENEFICIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1992 and 1991
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation -- The consolidated financial statements include the accounts
of the Corporation, its principal subsidiary, Home Beneficial Life Insurance
Company (the Life Company), and its other subsidiaries. All significant
intercompany accounts and transactions are eliminated. The Corporation is
engaged predominantly in the life and accident and health insurance business.
Basis of Presentation -- The accompanying consolidated financial statements
have been prepared on the basis of generally accepted accounting principles
(GAAP), which reflect certain major adjustments to the Life Company's
financial statements as filed with insurance regulatory authorities
(statutory basis). See Note 7.
Investments -- Fixed maturities (bonds, notes and redeemable preferred
stocks), mortgage loans on real estate, and short-term investments are stated
at cost adjusted where appropriate for amortization of premium or discount;
equity securities (nonredeemable preferred and common stocks) are stated at
market and policy loans are stated at unpaid balances. Realized investment
gains and losses are included as a component of net investment income and
unrealized investment gains and losses applicable to equity securities, less
related deferred income taxes are included as a separate component of
stockholders' equity. The cost of investments sold is generally determined
under the specific identification method. Fixed maturities are generally held
until maturity and not actively traded.
Fair Value Disclosures -- The following methods and assumptions were used by
the Corporation in estimating its fair value disclosure for financial
investments: The carrying amounts of cash and short-term investments reported
in the balance sheet approximate their fair values. Fair values for fixed
maturity securities (including redeemable preferred stocks) are based on
quoted market prices, where available. For fixed maturity securities not
actively traded, fair values are estimated using values obtained from
independent pricing services or, in the case of private placements, are
estimated by discounting expected future cash flows using a current market
rate applicable to the yield, credit quality, and maturity of the
investments. The fair values for equity securities are based on quoted market
prices and are recognized in the balance sheet. The fair values for mortgage
loans and policy loans are estimated using 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. Fair values for the
Corporation's liabilities under investment-type insurance contracts (included
with policy liabilities and accruals in the balance sheet) approximate
recorded values.
Revenues, Benefits, Claims, and Expenses
Traditional Life Insurance Products -- Traditional life insurance products
include those products with fixed and guaranteed premiums and benefits and
consist principally of whole life and limited-payment life insurance
policies. Premiums are recognized as revenues when due. Liabilities for
policy benefits and expenses for traditional life insurance policies are
computed using a net level premium method including assumptions as to
investment yields, mortality, withdrawals, and other assumptions which were
appropriate at the time the policies were issued based on the Company's
experience modified as necessary to reflect anticipated trends and to include
provisions for possible unfavorable deviations. Investment yield assumptions
are graded and range from 9% to 3% and the weighted average assumed
investment yield was approximately 4 1/2% for 1993. Unearned premiums include
certain deferred profits on limited-payment policies which are being
recognized in income over the estimated lives of the policies.
11
<PAGE>
Interest-Sensitive Insurance Products -- Premiums for interest-sensitive
policies are recorded in a policyholder account as a liability. Premium
revenue is recognized as amounts are assessed against the policyholder
account for mortality coverage and policy administration. Surrender benefits
reduce the account value. Policy benefits and claims that are charged to
expense include interest credited to policyholder accounts and benefit claims
incurred in excess of the account balances. Interest credit rates for
interest-sensitive insurance products range from 7% to 5 1/2%. A liability
equal to the current value of the policyholder accounts is included in other
policyholder funds.
Deferred Policy Acquisition Costs -- The costs of acquiring new business,
principally commissions and certain policy underwriting and issue costs,
which generally vary with and are primarily related to the production of new
business have been deferred to the extent such costs are deemed recoverable
from future premiums. Costs deferred related to traditional life insurance
are being amortized over the premium paying period of the related policies
using assumptions consistent with those used in computing future policy
benefits. Costs deferred related to interest-sensitive policies are being
amortized over the lives of the policies, in relation to the present value of
estimated gross profits from mortality, investment and expense margins.
Income Taxes -- Income taxes have been provided using the liability method in
accordance with SFAS No. 109, Accounting for Income Taxes. Under that method,
deferred tax assets and liabilities are determined based on the difference
between their financial reporting and their tax bases and are measured using
the enacted tax rates.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities, effective for fiscal years
beginning after December 15, 1993. Under the new rules, debt securities that
the Corporation has both the positive intent and ability to hold to maturity
are carried at amortized cost. Debt securities that the Corporation does not
have the positive intent and ability to hold to maturity and all marketable
equity securities are classified as available-for-sale or trading and carried
at fair value. Unrealized holding gains and losses on securities classified
as available-for-sale are carried as a separate component of stockholders'
equity. Unrealized holding gains and losses on securities classified as
trading are reported in earnings. The Corporation will apply the new rules
starting in the first quarter of 1994. Presently, the Corporation classifies
its debt securities as held-for-investment and carries them at amortized
cost. The Corporation does not anticipate that any of its debt or equity
securities would be classified as trading under the new Statement. At
December 31, 1993, gross unrealized gains and gross unrealized losses on
fixed maturities were $42 million and $10 million, respectively. The
Corporation is in the process of analyzing its portfolio to determine the
classification of specific securities under the new Statement.
2. INVESTMENT OPERATIONS
The amortized cost and estimated market values of fixed maturities at
December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
1993 COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
US Treasury securities and obligations of
US government corporations and
agencies $ 26,851,211 $ 5,339,258 $ 104,060 $ 32,086,409
Obligations of states and political
subdivisions 249,926,041 14,077,275 3,825,618 260,177,698
Debt securities issued by foreign
governments 24,818,059 1,592,771 100,454 26,310,376
Corporate securities 404,088,075 21,200,388 5,896,750 419,391,713
Totals $705,683,386 $42,209,692 $9,926,882 $737,966,196
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
1992 Cost Gains Losses Value
<S> <C> <C> <C> <C>
US Treasury securities and obligations of
US government corporations and
agencies $ 34,303,978 $ 4,867,840 $ 31,577 $ 39,140,241
Obligations of states and political
subdivisions 122,347,292 5,588,385 384,177 127,551,500
Debt securities issued by foreign
governments 21,436,375 687,122 168,393 21,955,104
Corporate securities 383,571,232 22,564,628 2,889,167 403,246,693
Totals $561,658,877 $33,707,975 $3,473,314 $591,893,538
</TABLE>
The amortized cost and estimated market value of fixed maturities at December
31, 1993 and 1992, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
1993 1992
ESTIMATED Estimated
AMORTIZED MARKET Amortized Market
COST VALUE Cost Value
<S> <C> <C> <C> <C>
Due in one year or less $ 16,477,258 $ 16,869,328 $ 21,917,763 $ 22,499,710
Due after one year through five years 135,783,789 143,101,438 121,022,089 127,430,197
Due after five years through ten years 455,504,674 471,802,055 300,696,372 313,897,054
Due after ten years 79,313,005 82,902,905 92,457,697 98,125,586
687,078,726 714,675,726 536,093,921 561,952,547
US government mortgage backed securities 18,604,660 23,290,470 25,564,956 29,940,991
Totals $705,683,386 $737,966,196 $561,658,877 $591,893,538
</TABLE>
There were no sales of investments in fixed maturities in 1993 or 1992. All
proceeds were from calls or maturities.
The fair values of the Corporation's equity investments, which also represent
the carrying amounts, are as follows at December 31, 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Common stocks $26,463,873 $ 27,821,793
Non-redeemable preferred stocks 817,258 744,982
$27,281,131 $ 28,566,775
</TABLE>
The carrying amounts and fair values of the Corporation's investments in
mortgage loans and policy loans were as follows at December 31, 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
CARRYING FAIR Carrying Fair
AMOUNT VALUE Amount Value
<S> <C> <C> <C> <C>
Commercial Mortgages $144,399,440 $160,149,343 $146,038,819 $156,959,968
Residential Mortgages 171,972,307 187,226,892 236,468,846 258,496,723
$316,371,747 $347,376,235 $382,507,665 $415,456,691
Policy Loans $ 52,738,134 $ 53,515,890 $ 52,073,734 $ 50,482,481
</TABLE>
13
<PAGE>
Details of net investment income follow:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Fixed maturities $ 48,541,194 $44,811,324 $41,618,594
Equity securities 975,218 1,098,826 1,158,271
Mortgage loans on real estate 33,667,861 42,680,116 49,155,460
Short-term investments 3,596,291 3,031,855 2,292,163
Realized investment gains 10,802,968 2,857,454 61,092
Other 3,305,772 3,070,378 2,864,458
Total investment income 100,889,304 97,549,953 97,150,038
Investment expenses (4,014,980) (3,966,845) (3,236,598)
Net investment income $ 96,874,324 $93,583,108 $93,913,440
</TABLE>
Realized gains (losses) and unrealized gains (losses) representing the change in
difference between value and cost (principally amortized cost for fixed
maturities) on fixed maturities, equity securities and other investments for the
three years ended December 31, 1993 are summarized below:
<TABLE>
<CAPTION>
Investment Gains (Losses)
Change in
Realized Unrealized Net
<S> <C> <C> <C>
1993
Fixed maturities $ 7,898,182 $ 2,048,149 $ 9,946,331
Equity securities 2,904,686 (1,636,487)(1) 1,268,199
Other 100 -- 100
$10,802,968 $ 411,662 $11,214,630
(1)Net of $725,000, deferred income tax benefit.
1992
Fixed maturities $ 2,387,462 $(4,070,822) $(1,683,360)
Equity securities 469,877 1,323,466(1) 1,793,343
Other 115 -- 115
$ 2,857,454 $(2,747,356) $ 110,098
(1)Net of $650,000 deferred income taxes.
1991
Fixed maturities $ (319,695) $28,831,907 $28,512,212
Equity securities 325,044 3,911,164(1) 4,236,208
Other 55,743 -- 55,743
$ 61,092 $32,743,071 $32,804,163
(1)Net of $1,950,000 deferred income taxes.
</TABLE>
At December 31, 1993 gross unrealized gains relating to equity securities were
$20,358,342, and there were no gross unrealized losses. The net unrealized gain
of $14,258,342 included in stockholders' equity at December 31, 1993 is after
reduction of $6,100,000 for deferred income taxes.
As of December 31, 1993 approximately 54% of the mortgage loans on real estate
were on single family homes and 46% were on commercial properties such as
apartments, shopping centers, office buildings and warehouses. Approximately 73%
and 15%, respectively, of the mortgage loans are on properties geographically
dispersed throughout Virginia and North Carolina. The Corporation manages the
credit risk on its mortgage loan portfolio by, among other items, generally
restricting loan to collateral value ratios to a maximum of 75% at the time the
loan is made, limiting the total amount of loans outstanding by individual
borrower and monitoring the type of loans and extent of geographic concentration
within the region in which the Life Company operates.
No investment in any person or affiliates of the Corporation exceeded ten
percent of stockholders' equity at December 31, 1993.
14
<PAGE>
3. REINSURANCE
Future policy benefits and claims are stated after deducting benefits
applicable to life insurance reinsured by other companies. The contingent
liability for such deducted benefits was less than 1% of future policy
benefits at December 31, 1993. Premiums related to such reinsurance are
insignificant.
The Life Company participates in several group life insurance programs as a
reinsurer and also assumes reinsurance on a facultative (individual risk)
basis from two other life insurance companies. Life insurance assumed relates
principally to group life and represented approximately 17%, 18% and 7% of
premium income for 1993, 1992 and 1991, respectively.
4. PENSION PLAN AND HEALTH AND LIFE INSURANCE BENEFITS
A noncontributory defined benefit pension plan covers substantially all
employees. The benefits are based on years of service and the employee's
compensation. The pension liabilities and reserves are included in future
policy benefits and held by the Life Company. No separate portfolio of
related plan assets is maintained. The following table sets forth the plan's
status as of the indicated actuarial valuation dates:
<TABLE>
<CAPTION>
December 31
1993 1992
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested $70,236,026 $65,117,503
Nonvested 871,087 890,651
Total accumulated benefit obligations $71,107,113 $66,008,154
Projected benefit obligation $76,779,672 $71,504,154
Unrecognized net transition asset $ 5,665,037 $ 6,373,168
</TABLE>
The weighted-average discount rates used in determining the actuarial present
value of the above projected benefit obligations were 7% and 7 1/2%,
respectively, at December 31, 1993 and 1992. The rate of increase used for
future compensation was 4.5% for both 1993 and 1992. The unrecognized net
loss on the projected benefit obligation was $3,105,631 and $675,000 at
December 31, 1993 and 1992, respectively.
The components of net pension expense for 1993, 1992 and 1991 are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Service cost -- benefits earned $2,051,748 $1,961,296 $1,444,809
Interest cost on projected benefit obligation 5,044,206 4,989,612 4,692,135
Net amortization and deferral (708,131) (708,331) (1,059,103)
Net pension expense $6,387,823 $6,242,577 $5,077,841
</TABLE>
In addition to the Corporation's defined benefit pension plan, the
Corporation has two defined benefit postretirement plans. The postretirement
medical benefits plan covers all employees who were full time active
employees at December 31, 1992, and all employees who had retired under the
Corporation's pension plan as of that date. Employees who joined the
Corporation on January 1, 1993 and subsequently are not eligible for
participation in the postretirement medical benefits plan. The postretirement
life insurance benefits plan covers all personnel who retire under the
pension plan.
The postretirement medical benefits plan reimburses plan participants who
retired prior to January 1, 1993, for actual covered costs subject to
specified deductibles and coinsurance. The Plan is contributory and
participant contribution requirements may be increased periodically. With
respect to active plan participants, the Plan will reimburse participants who
reach retirement age while in an active employment status for the cost of
health care insurance premiums up to a maximum benefit amount determined in
accordance with the Plan based on years of service as of December 31, 1992.
This maximum benefit amount determined as of December 31, 1992, is increased
for interest only from January 1, 1993
15
<PAGE>
until it is fully expended. The Corporation is self insured with respect to
benefits under both the medical and the life insurance benefits plans.
Effective January 1, 1992, the Corporation adopted SFAS No. 106, Employers
Accounting for Postretirement Benefits Other Than Pensions. The cumulative
effect of this accounting change for years prior to 1992, which is shown
separately in the statement of income for 1992, was a charge of $29,444,884
(after related income taxes of $15,200,000). Excluding the cumulative effect,
this change decreased net income for 1992 by $850,000.
The following is an analysis of the Corporation's accumulated postretirement
benefit obligation for postretirement medical and life insurance benefit
plans as reflected in the consolidated balance sheet at December 31, 1993 and
1992:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Retirees $40,127,381 $38,038,957
Fully eligible active plan participants 9,588,889 9,267,702
Other active plan participants 5,526,141 5,649,141
Total $55,242,411 $52,955,800
</TABLE>
The weighted-average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., health care cost trend rate) at January 1, 1993
for the medical plan is 15% for participants under age 65, and 10.4% for
participants over age 65. The trend rate for both groups is assumed to
decrease gradually to 5 1/2% over approximately 17 years and remain at that
level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rate by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of
December 31, 1993 by $2,800,000, and the net periodic postretirement benefit
cost for 1993 by $200,000.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation at December 31, 1993 and 1992 was 7% and
8%, respectively. Postretirement benefits expense was $4 million and $3.8
million for 1993 and 1992, respectively. This expense primarily represents
interest expense on the accumulated postretirement benefit obligation.
5. FEDERAL INCOME TAXES
Under the tax law in effect prior to 1984, $78,000,000 has been accumulated
in a Policyholders' Surplus Account which has not been subject to taxation.
Amounts, if any, distributed to stockholders from the account or exceeding
prescribed balance limitations will become taxable at the then current
federal income tax rates. Under the present circumstances, the Corporation
does not anticipate such account becoming taxable and no provision has been
made for the related deferred income taxes of $27,300,000.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Corporation's deferred tax liabilities and assets as of
December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Deferred tax liabilities:
Deferred policy acquisition expenses $27,578,411 $27,984,652
Discount on fixed maturities 2,401,946 3,109,414
Unrealized gain on equity securities 7,110,810 7,630,111
Other -- net 1,307,018 1,966,697
38,398,185 40,690,874
Deferred tax assets
Postretirement benefit obligation 16,836,828 15,605,408
Policy liabilities 16,623,005 16,024,256
Other -- net 3,650,852 3,698,710
37,110,685 35,328,374
Net deferred tax liabilities $ 1,287,500 $ 5,362,500
</TABLE>
16
<PAGE>
The provision for income taxes differs from amounts computed by applying the
statutory tax rate to income before income taxes, and these differences arise
from the following:
<TABLE>
<CAPTION>
1993 1992 1991
PERCENT OF Percent of Percent of
PRE-TAX Pre-Tax Pre-Tax
AMOUNT INCOME Amount Income Amount Income
<S> <C> <C> <C> <C> <C> <C>
Tax computed at the
prevailing statutory rate $22,400,000 35.0% $23,350,000 34.0% $24,100,000 34.0%
Deduct tax effect of:
Special Life Company
deductions (775,000) (1.2) (685,000) (1.0) (800,000) (1.1)
Other (325,000) (.5) (415,000) (.6) 200,000 .3
(1,100,000) (1.7) (1,100,000) (1.6) (600,000) (.8)
Provision for income taxes $21,300,000 33.3% $22,250,000 32.4% $23,500,000 33.2%
</TABLE>
6. CAPITAL STOCK
The Corporation purchased 587,838 shares of its Class B Common Stock in 1993
at a cost of $14,142,511. The cost was allocated to reduce Class B Common
Stock par value and retained earnings by $183,700 and $13,958,811,
respectively.
During 1992 the Corporation purchased 189,000 shares of its Class B Common
Stock at a cost of $4,252,500. The cost was allocated to reduce Class B
Common Stock par value and retained earnings by $59,062 and $4,193,438,
respectively.
In 1991 the Corporation purchased 186,640 shares of its Class A Common Stock
at a cost of $3,892,780 and 200,000 shares of its Class B Common Stock at a
cost of $4,000,000. The costs were allocated to reduce Class A and Class B
Common Stock par values by $58,325 and $62,500, respectively; and retained
earnings by $7,771,955.
7. STOCKHOLDERS' EQUITY AND RESTRICTIONS
Consolidated stockholders' equity at December 31, 1993 includes $128,250,000
representing GAAP adjustments and minimum statutory capital and surplus
requirements of the Life Company that cannot be transferred in the form of
dividends, loans or advances to the Corporation.
In addition, the Corporation and the Life Company are subject to the
provisions of the Insurance Holding Company Act of the State of Virginia,
which governs transactions between the Corporation and the Life Company. The
Act, among other things, (1) requires that transactions among affiliates be
fair and reasonable, and (2) assures maintenance of reasonable statutory
capital and surplus in relation to the insurer's outstanding liabilities and
its other financial needs. Also the Act requires the prior approval of the
State Corporation Commission for transactions among affiliates that exceed
three percent of the insurer's admitted assets or twenty-five percent of the
insurer's statutory capital and surplus, whichever is the lesser, and, at
December 31, 1993 the maximum amount available under this provision without
prior approval approximated $36,000,000. The payment of dividends in any one
year by the Life Company without approval by the State Corporation Commission
is limited to the lesser of (1) ten percent of the insurer's prior year end
statutory capital and surplus, or (2) prior year statutory net gain from
operations before realized capital gains or losses.
On a statutory basis, the net gain from operations of the Life Company was
$28,769,694, $26,349,212 and $31,145,973 for 1993, 1992 and 1991,
respectively; and stockholder's equity (capital and surplus) for 1993, 1992
and 1991 was $325,866,987, $327,212,773 and $327,546,633, respectively.
17
<PAGE>
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Home Beneficial Corporation
We have audited the accompanying consolidated balance sheet of Home Beneficial
Corporation as of December 31, 1993 and 1992, and the related consolidated
statements of income, retained earnings, and cash flows for each of the three
years in the period ended December 31, 1993. 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 Home Beneficial
Corporation at December 31, 1993 and 1992, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
As discussed in Note 4 to the consolidated financial statements, the Corporation
changed its method of accounting for postretirement benefits other than pensions
in 1992.
(\sig\)
Richmond, Virginia
February 10, 1994
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Corporation is primarily engaged in the life insurance business which
historically has provided a positive cash flow. By statute, the Life Company is
required to invest in quality securities which provide ample protection for its
policyholders. Policy liabilities of the Life Company are predominately
long-term in nature and are supported primarily by long-term fixed maturity
investments and mortgage loans on real estate. The market value of fixed
maturities at December 31, 1993 exceeded the carrying value in the financial
statements by $32 million, and there were no principal or interest payments past
due. Over 99% of the mortgage loans on real estate were current for both
principal and interest, and the Corporation is not aware of any potential
problem loans. Cash and invested assets continue to increase and now total $1.2
billion, an increase of 2.7% over the previous year. The Corporation used
approximately $14 million of internally generated funds to acquire 587,838
shares of its common stock during 1993. Cash and invested assets for 1993
exceeded total liabilities by 43%. The Life Company continually matches the
investment portfolio to the cash flow demands of the types of insurance being
written and maintains adequate cash and short-term investments to meet cash
requirements for policy loans and voluntary policy terminations, as well as
investment commitments. Policy loans increased less than $1 million for 1993 and
account for less than 5% of total cash and invested assets.
As disclosed in the Notes to Consolidated Financial Statements at December 31,
1993, $128 million of consolidated stockholders' equity represents net assets of
the Life Company that cannot be transferred in the form of dividends, loans or
advances to the Corporation. However, this poses no liquidity concerns to the
Corporation as it has sufficient cash flow to meet its operational requirements.
In May 1993 the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities, effective for fiscal years beginning
after December 15, 1993. Under the new rules, debt securities that the
Corporation has both the positive intent and ability to hold to maturity are
carried at amortized cost. Debt securities that the Corporation does not have
the positive intent and ability to hold to maturity and all marketable equity
securities are classified as available-for-sale or trading and carried at fair
value. Unrealized holding gains and losses on securities classified as
available-for-sale are carried as a separate component of stockholders' equity.
Unrealized holding gains and losses on securities classified as trading are
reported in earnings. The Corporation will apply the new rules starting in the
first quarter of 1994. Presently, the Corporation classifies its debt securities
as held-for-investment and carries them at amortized cost. The Corporation does
not anticipate that any of its debt or equity securities would be classified as
trading under the new Statement. At December 31, 1993, gross unrealized gains
and gross unrealized losses on fixed maturities were $42 million and $10
million, respectively. The Corporation is in the process of analyzing its
portfolio to determine the classification of specific securities under the new
Statement.
In May 1993, the FASB issued SFAS No. 114, Accounting by Creditors for
Impairment of a Loan. SFAS No. 114 requires that impaired loans be valued at the
present value of expected future cash flows discounted at the loan's effective
interest rate or, as a practical expedient, at the loan's observable market
price, or the fair market value of the collateral if the loan is collateral
dependent. The Corporation will be required to comply with SFAS No. 114
beginning in 1995. Management does not anticipate this Statement to have any
significant effect, as the Corporation is not aware of any impaired loans.
Effective December 31, 1993, the National Association of Insurance Commissioners
adopted Risk-Based Capital (RBC) requirements for life/health insurance
companies to evaluate the adequacy of statutory capital and surplus in relation
to investment and insurance risks such as asset quality, mortality and
morbidity, asset and liability matching, and other business factors. The RBC
formula will be used by states as an early warning tool to identify companies
that potentially are inadequately capitalized for the purpose of initiating
regulatory action. The Corporation's capital is 1421% of the RBC requirements.
19
<PAGE>
RESULTS OF OPERATIONS
Premiums decreased 1.3% for 1993 compared to increases of 14% and 1.2%,
respectively, for 1992 and 1991. The decline in 1993 premium income is due
primarily to reduced individual sales. The majority of the premium increase in
1992 resulted from increased participation in a group reinsurance contract.
Premium growth for 1991 resulted from improved individual life insurance sales
and group premiums. Net investment income, excluding realized investment gains,
decreased 5.1% compared to a decrease of 3.3% for 1992 and an increase of 1% for
1991. Investment income for the aforementioned three years has been affected by
a continuing downward trend in portfolio interest rates. In addition, the
Corporation has used $51 million of internally generated funds to repurchase 2.8
million shares of its common stock since August, 1990. Realized investment gains
amounted to $10.8 million and $2.9 million, respectively, for 1993 and 1992.
These gains resulted principally from calls and maturities of fixed maturity
investments. Realized investment gains for 1991 were insignificant. Benefits and
claims increased 7% and 16%, respectively, for 1993 and 1992, and decreased 2%
in 1991. Individual mortality costs contributed to the 1993 increase, whereas
1992's increase resulted from a group reinsurance contract allocation. The
decrease for 1991 resulted from individual mortality costs. The effective income
tax rate on pretax income increased approximately 1% as a result of a change in
the federal statutory rate effective January 1, 1993 from legislation enacted on
August 10, 1993.
See A Message to Our Stockholders for further discussion and analysis of
financial condition and results of operations.
20
<PAGE>
QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter(1) Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1993
Premium income $ 29,125,783 $ 28,642,455 $ 28,960,706 $ 29,640,177
Net investment income 24,884,917 25,505,119 23,852,186 22,632,102
Income before income
taxes 17,029,491 17,673,931 14,416,080 14,794,951
Net income 11,379,491 11,923,931 9,341,080 9,969,951
Net income per share .61 .66 .52 .56
1992
Premium income $ 26,051,716 $ 25,599,280 $ 26,400,811 $ 39,894,460
Net investment income 24,498,852 23,510,050 23,327,676 22,246,530
Income before income
taxes and accounting
change(1) 16,188,050 17,233,073 17,261,319 18,045,928
Accounting change(1) (29,444,884) -- -- --
Net income (loss) (18,531,834) 11,808,073 11,711,319 12,045,928
Net income per share
Before accounting change .58 .64 .63 .65
Accounting change(1) (1.58) -- -- --
Net (1.00) .64 .63 .65
</TABLE>
(1) 1992 first quarter reflects an after tax charge of $29,444,884 ($1.58 per
share) representing the cumulative effect of a change in accounting for
postretirement medical benefits as of January 1, 1992.
MARKET AND DIVIDEND INFORMATION
The Corporation's Class B Non-Voting Common Stock is traded in the
over-the-counter (OTC) market and is quoted on the National Association of
Securities Dealers Automated Quotations (NASDAQ) under the Symbol HBENB. The
Corporation's Class A Voting Stock is not publicly traded, but is entitled to
the same cash dividend as Class B Non-Voting Common Stock. The approximate
number of record holders of the Corporation's common stock at December 31, 1993
was 1800.
The following table gives the high and low prices of the Corporation's Class B
Non-Voting Common Stock and the cash dividends paid per share for each quarter
in the past two years.
<TABLE>
<CAPTION>
High Low Dividend
<S> <C> <C> <C>
1992
First Quarter $27 3/4 $21 $ .19
Second Quarter 25 22 1/2 .19
Third Quarter 29 22 1/2 .19
Fourth Quarter 26 1/4 21 1/2 .19
1993
First Quarter $26 1/2 $24 $ .19
Second Quarter 25 23 1/2 .195
Third Quarter 26 1/4 23 .195
Fourth Quarter 24 21 1/2 .195
</TABLE>
21
<PAGE>
RECORD OF GROWTH OF INSURANCE
<TABLE>
<CAPTION>
FIVE YEARS ENDED DECEMBER 31 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
ollars
in
sands)
Insurance in force at end of period
Direct Sales
Permanent................................. $3,475,846 $3,493,455 $3,443,609 $3,355,675 $3,365,686
Term...................................... 1,046,115 1,048,076 775,688 726,634 641,216
Total................................... 4,521,961 4,541,531 4,219,297 4,082,309 4,006,902
Group........................................ 5,466,635 5,249,927 2,328,608 2,546,885 2,586,094
Total................................... $9,988,596 $9,791,458 $6,547,905 $6,629,194 $6,592,996
New insurance written
Direct Sales
Permanent................................. $ 600,158 $ 642,629 $ 659,425 $ 605,617 $ 572,672
Term...................................... 196,247 359,406 191,217 142,733 133,792
Total................................... 796,405 1,002,035 850,642 748,350 706,464
Group........................................ 258,174 3,215,242 1,015 31,937 104,049
Total..................................... $1,054,579 $4,217,277 $ 851,657 $ 780,287 $ 810,513
Premium income
Life and annuity............................. $ 107,091 $ 107,650 $ 93,720 $ 93,043 $ 92,402
Accident and health.......................... 9,278 10,296 9,773 9,184 7,165
Total $ 116,369 $ 117,946 $ 103,493 $ 102,227 $ 99,567
</TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
FIVE YEARS ENDED DECEMBER 31 1993 1992 1991 1990
<S> <C> <C> <C> <C>
Premium income........................... $ 116,369,121 $ 117,946,267 $ 103,492,622 $ 102,226,755
Net investment income(1)................. 96,874,324 93,583,108 93,913,440 136,837,263
Net income before accounting change...... 42,614,453 46,478,370 47,361,885 66,618,365
Accounting change(2)..................... -- (29,444,884) -- --
Net income(1)............................ 42,614,453 17,033,486 47,361,885 66,618,365
Net income per share(1)(2)
Before accounting change............... 2.35 2.50 2.51 3.29
Accounting change...................... -- (1.58) -- --
Net................................. 2.35 .92 2.51 3.29
Dividends paid per share................. .775 .76 .69 .645
Investments.............................. 1,143,940,703 1,116,410,112 1,080,540,431 1,045,050,282
Total assets............................. 1,280,233,898 1,248,432,740 1,205,296,739 1,159,842,734
Total liabilities........................ 806,971,506 787,991,344 748,363,554 729,716,372
Stockholders' equity..................... 473,262,392 460,441,396 456,933,185 430,126,362
Book value per share..................... 26.38 24.85 24.41 22.52
<CAPTION>
FIVE YEARS ENDED DECEMBER 31 1989
<S> <C>
Premium income........................... $ 99,566,509
Net investment income(1)................. 87,878,660
Net income before accounting change...... 44,283,448
Accounting change(2)..................... --
Net income(1)............................ 44,283,448
Net income per share(1)(2)
Before accounting change............... 2.13
Accounting change...................... --
Net................................. 2.13
Dividends paid per share................. .59
Investments.............................. 999,867,579
Total assets............................. 1,110,778,378
Total liabilities........................ 707,364,694
Stockholders' equity..................... 403,413,684
Book value per share..................... 19.50
</TABLE>
(1) Net investment income for 1990 includes realized investment gains of
$43,853,598 which resulted primarily from the sale of the Corporation's
interest in a major regional shopping center. Net income for 1990 includes
$28,453,598 ($1.40 per share) of net realized investment gains. Realized
investment gains and losses for 1989 and 1991 were insignificant. Realized
gains were $10,802,968 and $2,857,454 in 1993 and 1992, respectively. The
Corporation adopted Statement of Financial Accounting Standards No. 96,
Accounting for Income Taxes in 1990. Adoption of this standard resulted in
an increase in previously provided deferred income taxes of $8,000,000 ($.39
per share) which was included in income tax expense for the year ended
December 31, 1990.
(2) The Corporation adopted Statement of Financial Accounting Standards (SFAS)
No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions in 1992. Adoption of this Standard was recognized as an accounting
change. See Note 4 of Notes to Consolidated Financial Statements.
22
<PAGE>
DIRECTORS
R. W. WILTSHIRE
W. B. WILTSHIRE, CLU
Chairman of the Board
Vice President
C. M. GLENN, JR.
H. D. GARNETT, CPA
Retired Vice President and
Treasurer
Vice President and Controller
L. W. RICHARDSON
G. T. RICHARDSON
Retired Vice President
Vice President
R. W. WILTSHIRE, JR.
W. G. HANCOCK
President and
Counsel
Chief Executive Officer
Partner, Mays & Valentine
J. M. WILTSHIRE, JR.
DIANNE N. COLLINS
Vice President, Secretary and
Community Volunteer
Counsel
OFFICERS OF HOME BENEFICIAL CORPORATION AND/OR
HOME BENEFICIAL LIFE INSURANCE COMPANY
*R. W. WILTSHIRE
*W. F. COLLINS, FLMI
Chairman of the Board
Auditor
*R. W. WILTSHIRE, JR.
H. H. NASH, FSA
President and
Actuary
Chief Executive Officer
W. C. HANCOCK, M.D.
H. S. BOURNE
Medical Director
Vice President
R. L. STILES
*J. M. WILTSHIRE, JR.
Asst. Vice President
Vice President, Secretary and
W. A. FREELAND, FLMI, MAI
Counsel
Asst. Vice President
*W. B. WILTSHIRE, CLU
R. I. KEMPTON
Vice President
Asst. Vice President
*H. D. GARNETT, CPA
I. S. LLOYD, CLU
Vice President and Controller
Asst. Vice President
*G. T. RICHARDSON
R. G. GILLISPIE, FLMI
Vice President
Asst. Vice President
W. T. MACE
A. N. FASTIGE
Vice President
Asst. Vice President
C. P. PARRISH, FLMI
W. A. SIMMONS
Vice President
Asst. Vice President
E. L. JOHNSON, III, FSA
R. L. STEVENS
Vice President and
Asst. Vice President
Chief Actuary
J. P. WINN
G. E. MOORE, JR., FSA
Asst. Vice President
Vice President and
C. L. MARSH, CFA, CPA, FLMI
Actuary
Asst. Vice President
*B. P. BOYD
R. R. POSA, FSA
Vice President and
Asst. Actuary
Asst. Secretary
H. C. HUTCHERSON
A. O. BENNETT, FLMI
Asst. Actuary
Vice President
G. T. NUCKOLLS, JR.
H. E. ROACH
Asst. Secretary
Vice President
H. J. SMITH
K. H. BOGGS, Jr.
Asst. Secretary
Vice President
*W. G. HANCOCK
*D. M. WESTERHOUSE, JR., CPA
Counsel
Treasurer
*Officers of both the Corporation and the Life Company. Others are officers of
the Life Company.
MAYS & VALENTINE, General Counsel
23
