SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1994 Commission File Number 1-6028
LINCOLN NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 35-1140070
(State of incorporation) (I.R.S. Employer Identification No.)
200 East Berry Street, Fort Wayne, Indiana 46802-2706
(Address of principal executive offices)
Registrant's telephone number (219) 455-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange on
Title of each class which registered
Common Stock (Without Par Value) New York, Chicago, Pacific,
London and Tokyo Stock
Exchanges
Common Share Purchase Rights New York, Chicago and Pacific
Stock Exchanges
$3.00 Cumulative Convertible Preferred New York and Chicago Stock
Stock, Series A (Without Par Value) Exchanges
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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. [ ]
As of March 3, 1995, 94,505,345 shares of Common Stock were outstanding. The
aggregate market value of such shares (based upon the closing price of these
shares on the New York Stock Exchange) held by nonaffiliates was approximately
$3,803,800,000.
Select materials from the Proxy statement for the Annual meeting of
Shareholders, scheduled for May 11, 1995, have been incorporated by reference
into Part III of this Form 10-K.
The exhibit index to this report is located on page 74.
Page 1 of 247
<PAGE>
2
PART I
Item 1. Business
Lincoln National Corporation ("LNC") is a holding company. Through subsidiary
companies, LNC operates multiple insurance businesses. Operations have been
divided into four major business segments, 1) Property-Casualty, 2) Life
Insurance and Annuities, 3) Life-Health Reinsurance and 4) Employee
Life-Health Benefits. Following the sale of 71% of its direct writer of
employee life-health coverages in the first quarter of 1994, LNC conducted its
business within three business segments. After the sale, the earnings from
the 29% minority interest retained were included in "Other Operations" as
described below. Although one of the subsidiaries held by LNC was formed as
early as 1905, LNC itself was formed in 1968. LNC is an Indiana corporation
with its principal office at 200 East Berry Street, Fort Wayne, Indiana 46802-
2706. As of December 31, 1994, there were 220 persons on the staff of LNC.
Total employment of Lincoln National Corporation at December 31, 1994 on a
consolidated basis was 8,995.
Although acquisition and disposition activity has occurred, there has been no
activity of this nature during the past five years involving all or
predominately all of a business segment except as described above.
Numeric presentations showing revenues, pre-tax income, and assets for LNC's
major business segments and other operations in which LNC engages through its
subsidiaries are included in this report as part of the consolidated financial
statements (see note 9 to the consolidated financial statements on page 57).
The LNC "Other Operations" category includes the financial data for an
unconsolidated affiliate (subsequent to the first quarter of 1994) engaged in
the employee life-health benefits business, LNC's investment management
companies, certain other operations that are not directly related to the
business segments and unallocated corporate items (i.e., corporate investment
income, interest expense on short-term and long-term borrowings, and
unallocated corporate overhead expenses).
Following is a brief description of the four major business segments:
1. Property-Casualty
Property-Casualty insurance includes automobile, boiler and machinery,
workers' compensation, fire and allied lines, inland marine, home-owners,
general casualty, special risks and multiple peril insurance. Fidelity and
surety bonds are also included within property-casualty insurance.
Most of LNC's property-casualty business is conducted through American States
Insurance Company and its property-casualty subsidiaries ("American States"),
headquartered in Indianapolis, Indiana. These companies operate a multi-line
property-casualty insurance business in most states of the United States
through 20 semi-autonomous division offices with broad authority for
underwriting, agency contracting, marketing and claims settlement for most
lines of business. The distribution network involves approximately 5,000
independent local agencies.
Other companies within this business segment include Lincoln National
Specialty Insurance Company ("LNSIC") which underwrites select coverages in
the sports and entertainment market and Linsco Reinsurance Company (formerly
Lincoln National Reinsurance Company) which is licensed to write property-
casualty reinsurance. Both of these property-casualty companies are involved
in servicing closed blocks of business.
Approximately 3,780 employees are involved in this business segment.
<PAGE>
3
2. Life Insurance and Annuities
The primary company within this business segment is The Lincoln National Life
Insurance Company ("LNL"). Other companies within this business segment
include, First Penn-Pacific Life Insurance Company ("First Penn"), American
States Life Insurance Company ("American States Life"), and Lincoln National
(UK) PLC.
LNL, the 4th largest U.S. stockholder-owned life insurance Company (1993
Fortune Rankings of 50 Largest Life Insurance Companies by Assets) is an
Indiana corporation headquartered in Fort Wayne, Indiana. A network of 36
life insurance agencies, independent life insurance brokers, insurance
agencies located within financial institutions and specifically trained
employees sells fixed annuities, variable annuities, pension products,
universal life, variable universal life, disability income and other
individual insurance coverages in most states of the United States and various
foreign countries including Canada. The distribution network includes
approximately 1,800 career agents, 17,000 brokers and access to 48,000
stockbrokers and financial planners.
First Penn, headquartered in Oakbrook Terrace, Illinois, specializes in the
writing and administration of universal life products through independent
marketing companies and the sale of LNL's annuities through insurance agencies
located within financial institutions in most states of the United States.
American States Life is an Indiana corporation headquartered in Indianapolis,
Indiana. Its products, principally universal life and term insurance, are
marketed through independent local agencies (who also offer property-casualty
insurance) in most states of the United States.
Lincoln National (UK) PLC is a United Kingdom company headquartered in
Uxbridge, England, that is licensed to do business throughout the United
Kingdom. The principal products produced by this operation, unit-linked life
and pension products, are similar to U.S. produced universal life products.
Lincoln National (UK) is the 17th largest writer of unit-linked new business
premiums in the UK as measured in 1993 (Money Management Survey-New Business
Trends, published in June 1994). With the addition of an acquisition
completed in January 1995, Lincoln National (UK) advances to the 15th largest
writer of unit-linked new business premiums and is represented by a sales
force of approximately 1,500.
Approximately 4,115 employees are involved in this business segment.
3. Life-Health Reinsurance
The primary companies within this business segment are Lincoln National Life
Reinsurance Company ("LNLR"), Lincoln National Reassurance Company, ("LNRAC"),
Lincoln National Health & Casualty Insurance Company ("LNH&C") and LNL. These
companies are headquartered in Fort Wayne, Indiana. A broad range of risk
management products and services are offered to insurance companies, HMOs,
self-funded employers and other primary market risk accepting organizations
throughout the United States and economically attractive international
markets. Marketing efforts are conducted primarily through the efforts of a
reinsurance sales staff. Some business is presented by reinsurance
intermediaries and brokers. The reinsurance organization is the leading
life-health reinsurer worldwide measured on gross premiums, net of ceded (1994
Swiss Re survey).
LNLR, LNRAC and LNL offer reinsurance programs for individual life, group
life, group medical, disability income, long-term care, personal accident and
annuity products to U.S. and International clients. LNH&C offers group
medical products and services on both a direct and reinsurance basis.
Other companies in this business segment include various general business
corporations and foreign insurance companies. The general business
corporations are used to support the segment's sales, service and
administration efforts. The foreign insurance companies provide specialized
reinsurance programs, including financial reinsurance, asset management and
funded covers, to U.S. and international clients.
Approximately 560 employees are involved in this business segment.
<PAGE>
4
4. Employee Life-Health Benefits
Prior to the sale of 71% of its direct writer of employee life-health
coverages in 1994, LNC used this segment to manufacture and distribute group
life and health insurance, managed health care, dental, disability products
and flexible benefit administrative services with a primary focus on the small
business market (companies with 2-150 employees). Following the sale, the
earnings from the 29% minority interest were included in Other Operations.
Liabilities for claims and claim expenses for the property-casualty
business segment are estimated at the end of each accounting period using
case-basis evaluations and statistical projections. These liabilities
include estimates for the ultimate cost of claims 1) which have been reported
but not settled and 2) which have been incurred but not yet reported. A
provision for inflation is implicitly considered in the estimated liability as
the development of the estimated liability is based on historical data which
reflects past inflation and on other factors which are judged to be
appropriate modifiers of past experience. Adjustments to previously
established estimates are reflected in current operating results along with
initial estimates for claims arising within the current accounting period.
Since January 1, 1993 such estimates no longer recognize the effects of
reinsurance recoverable because such amounts are now recorded as an asset.
A reconciliation of the beginning of year and end of year liability for claims
and claim expenses is included in this report as part of the financial
statements (see note 5 to the consolidated financial statements on page 46).
The liability for claims and claim expenses included in this report is shown
on a basis prescribed by generally accepted accounting principles ("GAAP").
Such liabilities differ from that reported to state insurance regulators. A
reconciliation of the GAAP liability and the corresponding liability reported
to state insurance regulators is as follows:
<TABLE>
<CAPTION>
December 31 (in millions) 1994 1993
<S> <C> <C>
Liability reported to state insurance regulators --- $2,532.1 $2,617.7
Increase (decrease) related to:
Estimated salvage and subrogation recoveries ------- (37.3) (38.3)
Amount recoverable from reinsurers ----------------- 203.1 225.5
Other ---------------------------------------------- 4.6 5.2
Liability reported on a GAAP basis --------------- $2,702.5 $2,810.1
</TABLE>
The table on page 5 shows the development of the estimated liability for claim
and claim expenses for the ten year period prior to 1994. Each column shows
the liability as originally estimated and cumulative data on payments and re-
estimated liabilities for that accident year and all prior accident years,
making up that calendar year-end liability; and all amounts are reflected net
of reinsurance recoverable for all years. As noted above, since 1993 the
liability shown in the financial statements no longer reflects the effects of
reinsurance recoverable. The resulting redundancy (deficiency) is also a
cumulative amount for that year and all prior years. Conditions and trends
that have affected the development of these liabilities in the past may not
necessarily recur in the future; therefore, it would not be appropriate to use
this cumulative history in the projection of future performance.
<PAGE>
5
Analysis of Combined Property-Casualty Claims and Claim Expense Development.
December 31 (in millions)
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
Liability for unpaid claims and claim expenses, net of reinsurance
recoverable:
$760 $1,370 $1,730 $2,020 $2,372 $2,669 $2,246 $2,502 $2,673 $2,585 $2,499
<TABLE>
<CAPTION>
Liability re-estimated as of:
(First column represents number of years later)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 811 1,410 1,692 1,984 2,347 2,690 2,258 2,549 2,634 2,506 2,499
2 846 1,439 1,753 1,990 2,382 2,718 2,303 2,571 2,607
3 860 1,566 1,790 2,026 2,403 2,767 2,384 2,563
4 973 1,595 1,833 2,054 2,443 2,847 2,403
5 1,009 1,636 1,863 2,104 2,538 2,869
6 1,042 1,672 1,910 2,199 2,551
7 1,078 1,713 2,003 2,210
8 1,108 1,805 2,012
9 1,196 1,813
10 1,202
</TABLE>
Cumulative redundancy (deficiency)
(442) (443) (282) (190) (179) (200) (157) (61) 66 79 0
Change in redundancy (deficiency)
(1) 161 92 11 (21) 43 96 127 13 (79)
<TABLE>
<CAPTION>
Cumulative amount of liability paid through:
(First column represents number of years later)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 333 531 571 649 750 1,430* 809 839 849 728
2 517 842 935 1,012 1,650* 1,862 1,253 1,325 1,294
3 638 1,036 1,160 1,568* 1,875 2,088 1,542 1,596
4 684 1,177 1,508* 1,700 1,996 2,255 1,709
5 721 1,390* 1,593 1,776 2,095 2,355
6 862* 1,450 1,647 1,840 2,154
7 903 1,488 1,694 1,877
8 928 1,525 1,721
9 955 1,546
10 968
*Includes the release of reserves for National Reinsurance Corporation due to
the sale of that company during April 1990. The reserves released for LNC's
period of ownership of National Re were $97 million, $139 million, $241
million, $386 million, $526 million and $665 million in 1984, 1985, 1986,
1987, 1988 and 1989, respectively.
</TABLE>
In order to protect itself against losses greater than the amount it is
willing to retain on any one risk or event, LNC's insurance subsidiaries
purchase reinsurance from unaffiliated insurance companies (see note 7 to the
consolidated financial statements on page 51).
In order to maximize returns on its investment portfolio, LNC's investment
personnel continually monitor both current investment income produced by the
portfolio and current market values of the portfolio. The type, maturity,
quality and liquidity of investments selected to place in the segmented
portfolios vary depending on the nature of the underlying liabilities that are
being supported.
All the areas of business activity in which LNC is involved are highly
competitive because of the marketing structure and the large number of
competing companies.
<PAGE>
6
At the end of 1993, the latest year for which data is available, there were
approximately 1,200 groups and unaffiliated individual companies selling
property and casualty insurance. LNC's group of companies writing
property-casualty insurance ranked 29th in net written premiums for 1993 (A.M.
Best Aggregates and Averages) among all such groups and companies.
At the end of 1993 there were more than 1,800 life insurance companies in the
United States and LNL was the 12th largest among the stock and mutual life
insurance companies in the United States based on assets and 16th based on
insurance in-force (1993 Fortune Ranking of 50 Largest Life Insurance
Companies by Assets).
The business of LNC's property-casualty, life insurance and annuities and
life-health reinsurance business segments, in common with those of other
insurance companies, is subject to regulation and supervision by the states,
territories and foreign countries in which they are admitted to do business.
The laws of these jurisdictions generally establish supervisory agencies with
broad administrative powers relative to granting and revoking licenses to
transact business, regulating trade practices, licensing agents, prescribing
and approving policy forms, regulating premium rates for some lines of
business, establishing reserve requirements, regulating competitive matters,
prescribing the form and content of financial statements and reports, and
regulating the type and amount of investments permitted. The ability to
continue an insurance business is dependent upon the maintenance of the
licenses in the various jurisdictions.
Because of the nature of the insurance business, there is no single customer
or group of customers upon whom the business is dependent. Factors such as
backlog, raw materials, patents (including trademarks, licenses, franchises,
and any other concessions held), seasonality, or environmental impact do not
have a material effect upon such business. However, within LNC's Life-Health
Reinsurance segment, Lincoln National Risk Management, Inc. does hold a patent
for "The Method and Apparatus for Evaluating a Potentially Insurable Risk" and
markets multiple knowledge based underwriting products which rely on this
product. LNC does not have a separate unit that conducts market research.
Research activities related to new products or services or the improvement of
existing products or services is completed by persons within the business
segments. Expenses related to such activities are not material. Also, sales
are not dependent upon select geographic areas and foreign sales are not
material in relationship to either LNC's total sales or sales of individual
business segments.
Item 2. Properties
LNC and the various operating businesses headquartered in Fort Wayne lease
approximately 1.3 million square feet of office space in the Fort Wayne area.
Approximately 1.5 million square feet of space is owned or leased by operating
businesses headquartered in Indianapolis, Indiana; Oakbrook Terrace, Illinois;
and Uxbridge, London, England. In addition, branch offices owned or leased
for all of the operating businesses referenced above as well as the space for
some smaller operations total approximately 1.0 million square feet. As shown
in the notes to consolidated financial statements (see note 7 to the
consolidated financial statements on page 51), the rental expense on operating
leases for office space and equipment for continuing operations totaled $51.4
million for 1994 of which $45.4 million was for office space. This discussion
regarding properties does not include information on investment properties.
Item 3. Legal Proceedings
LNC and its subsidiaries are involved in various pending or threatened legal
proceedings arising from the conduct of their business. In some instances,
these proceedings include claims for punitive damages and similar types of
relief in unspecified or substantial amounts, in addition to amounts for
alleged contractual liability or requests for equitable relief. After
consultation with counsel and a review of available facts, it is management's
opinion that these proceedings ultimately will be resolved without materially
affecting the consolidated financial statements of LNC.
<PAGE>
7
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1994, no matters were submitted to security
holders for a vote.
PART II
<TABLE>
<CAPTION>
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Stock Market and Dividend Information
Common Stock Data: (per share) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
1994 Data:
<S> <C> <C> <C> <C>
High -------------------------------- $44.375 $43.875 $43.750 $39.250
Low --------------------------------- 38.375 36.750 35.500 34.625
Dividend declared ------------------- $.41 $.41 $.41 $.43
1993 Data:
High -------------------------------- $40.625 $41.813 $47.875 $48.250
Low --------------------------------- 34.688 37.000 37.125 41.000
Dividend declared ------------------- $.38 $.38 $.38 $.41
</TABLE>
Notes:
1. At December 31, 1994, the number of shareholders of record of LNC's
Common Stock was 13,730.
2. The payment of dividends to shareholders is subject to the restrictions
described in notes 5, Supplemental Financial Data, and 7, Restrictions,
Commitments and Contingencies to the consolidated financial statements (see
pages 45 and 50) and is discussed in the Management's Discussion and Analysis
of Financial Condition (see page 23).
Exchanges: New York, Chicago, Pacific, London and Tokyo.
Stock Exchange Symbol: LNC
Dividend Guideline:
The dividend on LNC's Common Stock is determined each quarter by the
Corporation's Board of Directors. The Board takes into consideration the
financial condition of the Corporation, including current and expected
earnings, projected cash flows and anticipated financing needs. The Board
also considers the ability to maintain the dividend through bad times as well
as good so that the dividend would need to be reduced only under unusual
circumstances. One guideline that the Board has found useful in recent years
is to consider a dividend approximately equal to five percent of the book
value per share with such book value computed excluding the impact of marking
its securities available-for-sale to fair value.
<PAGE>
8
<TABLE>
<CAPTION>
Item 6. Selected Financial Data
(Millions of dollars, except per share data)
Year Ended December 31 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Total revenue ------------------ 6,984.4 8,289.8 8,034.1 9,169.0 8,489.5
Income before cumulative effect
of accounting change* --------- 349.9 415.3 359.2 201.9 176.6
Net income* -------------------- 349.9 318.9 359.2 201.9 176.6
Income before cumulative effect
of accounting change per share*- $3.37 $4.06 $3.86 $2.23 $1.97
Net income per share* ----------- $3.37 $3.12 $3.86 $2.23 $1.97
Dividends per common share* ----- $1.66 $1.55 $1.475 $1.385 $1.315
December 31 1994 1993 1992 1991 1990
Assets* ------------------------ 49,330.1 48,380.4 39,547.3 34,013.1 27,597.3
Long-term debt ----------------- 419.6 335.1 423.0 252.6 378.5
Shareholders' equity* ---------- 3,042.1 4,072.3 2,826.9 2,655.8 2,279.5
Market value of Common Stock* -- $35.00 $43.50 $37.00 $27.37 $21.50
*Factors affecting the comparability of income before cumulative effect of
accounting change and net income for the 1990-1994 period are shown below
(see "Supplemental Data"). Assets and shareholders' equity as of December
31, 1994 and 1993 include the effect of carrying securities available-for-
sale at their fair values (see Consolidated Statements of Shareholders'
Equity on page 34). Per share amounts were affected by the issuance in July
1990, May 1991 and February 1993 of 2,201,443 shares of Series E Preferred
Stock, 2,216,454 shares of Series F Preferred Stock and 9,200,000 shares of
Common Stock, respectively, and the retirement of 500,000 shares of Common
Stock in November of 1994.
</TABLE>
<TABLE>
<CAPTION>
Supplemental Data
Year Ended December 31 (in millions) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Income from operations* -------------- $389.8 $343.5 $240.6 $177.7 $213.8
Realized gain (loss) on investments,
net of related amortization
and taxes --------------------------- (88.7) 170.3 118.6 113.3 (64.9)
Realized gain (loss) on sale of
subsidiaries, net of taxes ---------- 48.8 (98.5) -- (89.1) 27.7
Cumulative effect of accounting
change (postretirement benefits) ---- -- (96.4) -- -- --
Net Income ------------------------ $349.9 $318.9 $359.2 $201.9 $176.6
*Income from operations is defined as "Net Income" less gain (loss) on
investments, gain (loss) on sale of subsidiaries and cumulative effect of
accounting change, all net of taxes.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The pages to follow review LNC's results of operations and financial condi-
tion. Historical financial information is presented and analyzed. Where
appropriate, factors that may affect future financial performance are
identified and discussed.
On pages 9 through 19, the financial results of our business segments,
investments and other operations are presented and discussed. Within these
business segment discussions reference is made to "Income from Operations"
(see definition in item 6 above). Pages 20 through 29 discuss factors that
have affected specific elements of the consolidated financial statements as
well as information pertaining to LNC as a whole.
This "Management's Discussion and Analysis of Financial Condition and Results
of Operations" should be read in conjunction with the audited financial
statements, including the notes thereto, presented on pages 31 through 59.
<PAGE>
9
<TABLE>
<CAPTION>
Review of Operations: Property-Casualty
Year Ended December 31 (in millions) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Underwriting Loss:
Personal Insurance -------------- $(31.8) $(18.4) $(31.8) $(56.7) $(78.7)
Commercial Insurance ------------ (17.9) (63.3) (133.3) (102.1) (49.7)
Reinsurance --------------------- -- -- -- (12.8) (7.1)
Investment Income ----------------- 208.5 217.0 242.4 229.6 221.2
Other ----------------------------- -- (1.4) .3 1.2 4.6
Income from Operations ---------- 158.8 133.9 77.6 59.2 90.3
Realized Gain on Investments* ----- 12.8 91.8 -- -- --
Net Income ---------------------- $171.6 $225.7 $ 77.6 $ 59.2 $ 90.3
Catastrophe Losses $71.9 $ 58.3 $106.9 $ 61.8 $ 70.6
Combined Loss and Expense Ratios**
Personal Insurance --------------- 107.8% 103.0% 105.5% 111.8% 116.3%
Commercial Insurance ------------- 104.4% 110.3% 116.5% 111.0% 105.1%
Reinsurance ---------------------- -- -- -- 124.3% 114.8%
Consolidated Combined Ratio ------ 105.7% 107.5% 112.7% 111.9% 109.2%
Consolidated Combined Ratio
Excluding Catastrophe Losses --- 101.5% 104.3% 107.6% 109.1% 106.1%
*Prior to 1993, all realized gain (loss) on investments was included in
Other Operations (see note 9 to the consolidated financial statements on
page 57).
**The combined loss and expense ratio is the ratio of losses and loss expenses
to earned premiums plus the ratio of underwriting expense to premiums
written.
</TABLE>
In 1994, LNC's Property-Casualty segment, which consists primarily of American
States Insurance Company ("American States"), reported its highest annual
earnings since 1988. Income from operations grew by 19% to $158.8 million.
With 1994 the second worst year on record for catastrophe losses, these
earnings results are exceptional. LNC's losses from the January, 1994,
Northridge, California earthquake were $28.5 million, before taxes.
The combined loss and expense ratio decreased nearly 2 points in 1994 to
105.7% from 107.5%, reflecting improvement in commercial lines underwriting
results. Excluding catastrophes, the combined loss and expense ratio
decreased nearly 3 points.
The improvement, which is counter to the property-casualty industry, is most
notable in commercial lines which achieved a $45.4 million improvement in
underwriting income resulting in an after-tax underwriting loss of only $17.9
million. This is the best underwriting performance for commercial lines in
six years. Personal lines had a $31.8 million underwriting loss,
significantly affected by the Northridge earthquake.
Net investment income contributed $208.5 million to the property-casualty
operating earnings, a slight decline from 1993.
Profit Improvement Program
The level of earnings achieved in 1994 can be directly attributed to the
profit improvement program American States embarked upon beginning in the
second half of 1991. At that time, the company took steps counter to the
general industry and introduced an aggressive program focused on account
selection, risk evaluation and the establishment of appropriate premiums.
This included an emphasis on maintaining and, when possible, accumulating
business in those product lines and regions which have historically provided
better than average returns. At the same time, American States de-emphasized
product lines and regions with less profitable experience.
The cost of following this strategy has been a significant reduction in
written premiums, particularly in commercial lines. For 1994, total net
written premiums for the segment declined 29% from 1990 levels and 6% from
1993. This decline in premium, accompanied by an even greater decline in risk
exposure, is directly responsible for the increased earnings American States
has contributed to LNC over the last three years.
<PAGE>
10
Personal Lines
The Personal Lines improvement American States gained in 1993 was masked in
1994 by the level of weather related losses and catastrophes, principally the
Northridge earthquake. More than 90% of American States' losses from the
earthquake were in personal lines. While the disaster occurred in January
1994, losses continued to mount during the year as further investigation of
claim sites revealed significant structural damage that was not apparent on
earlier surveys.
For the property-casualty segment, the Personal Lines combined ratio increased
to 107.8% from 103.0%, but excluding catastrophes it was only 1.6 points worse
than in 1993. Personal Lines represents approximately 40% of total net
written premiums, with preferred private passenger automobile and homeowners
representing more than 82% of the personal lines business.
The private passenger automobile market has improved industry-wide in the last
two years, inviting competition to the marketplace. American States will
continue to write its new business in the preferred sector but anticipates a
leveling off of profitability as pricing becomes more competitive.
Homeowners continues to be a significantly underpriced line of business for
American States and the property-casualty industry. American States is now in
its third year of a program to address the profitability issues in the
homeowners line by focusing on the preferred sector, tightening underwriting
and evaluating each homeowners policy to ensure the coverage purchased is
appropriate for the property value.
Commercial Lines
Commercial Lines represents 60% of the property-casualty segment's total net
written premiums. Typical commercial lines business is often described as
"main street", which refers to the type of small and mid-sized commercial
accounts which line the main street of small towns. Most of this business is
actually found in suburban and more urban settings, but it does exhibit the
low hazard characteristics of a more rural orientation.
The combined loss and expense ratio in Commercial Lines improved nearly 6
points to 104.4%. This improvement reflects the success of the pricing and
underwriting actions taken in the last several years. On a product line
basis, workers' compensation and commercial automobile continue to recover
while commercial multi-peril remains profitable.
Distribution Network
American States' structure of 20 divisional offices is designed specifically
to maximize customer service and enhance efficiency across the United States.
Each office is managed by people with market knowledge specific to their
region, familiarity with the local sales force and insight into their states'
regulatory issues. These offices maintain general oversight for
underwriting, agency contracting, marketing and claims settlement within their
regions. This wide-reaching system allows American States to sustain
relationships with approximately 5,000 independent local agencies. American
States continues working toward 100% electronic interface with the agencies.
It is currently introducing a new customer file and a new account billing
system that will generate a single customer statement for all American States'
policies.
Management
American States has offered an enhanced retirement option to 22 executives.
These individuals may have elected to participate before the option expired on
March 1, 1995. We expect at least half of those eligible will take advantage
of the option and retire. The president and executive vice president of
American States are not eligible for this plan. American States has
identified highly qualified internal successors for any of these positions
that are vacated due to this program. As a result of this plan, American
States expects to eliminate some positions and to accelerate the development
of some high potential executives. No adverse business consequences are
expected from these management changes.
<PAGE>
11
Outlook
The steps American States has taken have significantly improved its results
compared with the property-casualty industry. Its profit improvement program
is largely completed; the culmination of which is to emphasize growth in those
product lines and regions which promise the best long-term returns. We
anticipate that the decline in written premium will reverse and expect a
small increase for 1995. This growth would be consistent with our outlook for
the industry in those markets which we serve and are now emphasizing. Absent
catastrophes and unusual weather-related losses, 1995 earnings are expected to
continue to increase. Substantial growth in premium volume and significant
improvement in profits beyond 1995 will require improvement in market
conditions.
<TABLE>
<CAPTION>
Review of Operations: Life Insurance and Annuities
Year Ended December 31 (in millions) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Lincoln Life/First Penn - Annuities - $120.0 $ 96.5 $ 73.9 $ 45.5 $ 39.4
Lincoln Life - Pensions ------------- 22.4 30.6 15.5 12.8 15.8
Lincoln Life/First Penn - Insurance - 34.2 37.8 46.8 31.5 25.6
Lincoln Life - Disability Income ---- (14.9) 3.5 (19.6) (1.6) 3.8
American States Life ---------------- 12.4 12.1 11.1 10.2 10.6
Lincoln National (UK) --------------- 17.2 11.8 9.2 14.3 13.3
Security-Connecticut Life ----------- -- 16.6 21.4 16.7 7.9
Other ------------------------------- (5.5) (33.6) (7.4) (11.4) (6.9)
Income from Operations* ----------- 185.8 175.3 150.9 118.0 109.5
Realized Gain (Loss) on Investments** (91.7) 59.3 -- -- --
Net Income* ----------------------- $ 94.1 $234.6 $150.9 $118.0 $109.5
</TABLE>
<TABLE>
<CAPTION>
December 31 (in billions) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Account Values:
Lincoln Life/First Penn - Annuities -$23.068 $20.233 $16.120 $12.362 $ 8.576
Lincoln Life - Pensions ------------- 7.323 6.832 6.192 5.455 4.897
Lincoln Life/First Penn - Universal
and Variable Life Insurance ------- 2.348 2.178 1.942 1.757 1.546
American States Life ---------------- .198 .174 .153 .133 .112
Total U.S. Account Values --------- 32.937 29.417 24.407 19.707 15.131
Lincoln National (UK) - Unit-linked-- 1.320 1.235 .652 .669 .588
Total Account Values --------------$34.257 $30.652 $25.059 $20.376 $15.719
*Income from operations and net income of the annuities and pension sub-
segments for 1993 include the impact of a change in estimate of net
investment income (see note 2 to the consolidated financial statement on
page 40).
**Prior to 1993, all realized gain (loss) on investments was included in
Other Operations (see note 9 to the consolidated financial statements on
page 57).
</TABLE>
The Life Insurance and Annuities segment reported its fifth consecutive year
of record earnings in 1994. Income from operations increased 6% to $185.8
million, compared with earnings of $175.3 million in 1993. This increase was
fueled by a 14% increase in annuity account values and a 24% increase in
annuity earnings.
Profile
The Life Insurance and Annuities segment includes the direct operations of
Lincoln National Life ("Lincoln Life"), First Penn-Pacific ("First Penn"),
Lincoln National (UK) PLC and American States Life.
The Lincoln National Life Insurance Co. is the 12th largest life insurer in
the United States as measured by assets (Best's Review, Life-Health Edition,
August 1994). Lincoln Life offers a broad range of asset accumulation and
<PAGE>
12
income protection products to meet the lifetime needs of its customers. These
products include: fixed and variable annuities, universal and variable
universal life, disability income, long-term care insurance, 401(k) plans and
Guaranteed Interest Contracts. Lincoln Financial Group is a network of 37
regional career agency offices that sells Lincoln Life products through more
than 1,800 career agents. It markets to individual consumers, business
owners, and employees of hospital and educational institutions across 49
states and Guam. Lincoln Life's distribution system also includes 17,000
insurance brokers and more than 48,000 stockbrokers and financial planners.
First Penn is a mid-sized insurance company with specialized skills in
customizing interest sensitive products for its financial services sales
channels. First Penn complements Lincoln Life operations by serving niche
markets and non-traditional distribution channels. This operation sells
universal life, universal life with long-term care riders and fixed annuities.
Its products are marketed to individuals through banks, S&Ls, broker/dealers,
stockbrokers and financial planners.
American States Life sells universal and term life insurance and annuity
products through the American States network of 5,000 independent property-
casualty agencies.
Lincoln National (UK), based in the United Kingdom, is the 15th largest unit-
linked life insurer in the U.K. by 1993 premiums of those companies writing
predominately life and pension business (Money Management New Business Survey,
June 1994). Unit-linked business is comparable to variable life policies in
the United States. Through a network of approximately 1,500 sales
representatives and independent financial advisors, Lincoln National (UK)
sells a variety of life insurance, investment and income protection, and
retirement planning products to individuals across the United Kingdom.
Annuities
Earnings from the combined Lincoln Life and First Penn annuities operations
grew 24% to a record $120 million in 1994. This earnings growth flows from a
14% increase in annuity account values, which reached $23 billion. Annuity
deposits were $3.6 billion, a 3% increase over the prior year. Lincoln Life
was the nation's leading writer of individual annuities in the United States
in 1993 (Best's Review, Life-Health Edition, October 1994).
Lincoln Life's career agents produced 45% of the new annuity deposits in 1994.
Stockbrokers and financial planners, generating 42% of new annuity deposits,
continue to be the dominant distributors of the variable annuity product. In
1994, bank distribution produced 13% of the segment's new annuity deposits.
Distribution through banks and other financial institutions represents a
significant opportunity for growth. We view the January, 1995, U.S. Supreme
Court's decision confirming the authority of banks to market annuities as an
opportunity for future growth of this market.
Pensions
Income from operations in Lincoln Life's Pension business decreased to $22.4
million from $30.6 million in 1993. Pension earnings were up 18% after
excluding the benefit from adjustment of discount amortization on mortgage-
backed securities in 1993 of $9.4 million and a $2.6 million charge in 1994.
Strong sales from Lincoln Life's 401(k) product drove pension account values
to $7.3 billion, a 7% increase over 1993.
Life Insurance
Earnings from the life insurance operations of Lincoln Life and First Penn
were $34.2 million, a slight decrease from 1993 earnings which had also been
positively affected by the mortgage-backed securities adjustment. The sale of
stand alone insurance protection products has been supplemented with products
offering protection with a variable investment component. Lincoln Life and
First Penn's combined universal life and variable universal life account
values increased 8% in 1994 to $2.3 billion. Variable universal life
represents an increasing portion of new sales because it is attractive to
individuals who seek higher returns than those generally available from fixed
income investing.
<PAGE>
13
Disability Income
In 1992, following a period of deteriorating disability income claim
experience, management took action to improve experience in this business.
This included pricing increases on new business issued, the establishment of
more restrictive underwriting rules, and an enhanced program to speed the
closure of claims on all business. Profitability returned to this business in
1993.
In 1994, however, the disability income business experienced additional losses
of $14.9 million. As a result of many factors, including the losses
experienced on this business, significant changes were made during the fourth
quarter of 1994 in the disability income product that Lincoln Life will be
selling in the future.
By the end of 1995, Lincoln Life expects most new business will be issued on a
guaranteed renewable basis. Lincoln Life will discontinue selling the non-
cancelable product as the new product is approved for sale by each state. In
addition, several other changes were implemented including a new lower
maximum coverage limit, the elimination of lifetime benefits, the elimination
of the "Own Occupation" definition of disability beyond two years of benefits,
and tighter underwriting.
The existing disability income business is a very long-term business with
coverage extending 30 years or more. The future results of this business are
not currently susceptible to estimation due to the variability of past
experience. The product changes discussed in the previous paragraph will
allow us to go forward with a profitable product that has appeal to a broader
market and is less subject to the degree of variability of results inherent in
the products we have previously sold. Management will continue to closely
track the existing disability income business and take reserve and other
action as deemed necessary.
For more in-depth discussion of the disability income business, see the
discussion in the Life-Health Reinsurance segment on page 16 and note 7 to the
consolidated financial statements on page 51.
American States Life
American States Life reported earnings of $12.4 million in 1994, a slight
increase from 1993 earnings. Account values were up about 14% for the third
year in a row reaching $198 million at December 31, 1994.
Lincoln National (UK)
Income from operations for Lincoln National (UK) grew 46% to $17.2 million in
1994. These strong results reflect a full year of earnings from the Citibank
Life acquisition and a smaller acquisition completed in 1993. In fact, these
earnings would have been $9 million higher except for a provision made for
liabilities established to cover pension transfers and opt-outs. This
provision pertains to pension policies sold following the implementation of
the Social Security Act of 1986 under which it was made unlawful for an
employer in the U.K. to require employees to join their employer sponsored
plans. British insurance companies are now being required to audit these
pension plans sold to individuals and, if it appears that a replacement was
made on the advise of the insurance company which was not in the participant's
best interest, companies must make the participant whole.
In early 1995, Lincoln National (UK) completed the acquisition of Liberty Life
Assurance Company Limited, yet another step in LNC's strategy to build its
position in the U.K. life insurance and pensions market through acquisition.
As a result of the transaction, account values have increased to more than
$1.8 billion and the sales force has expanded to approximately 1,500
representatives.
<PAGE>
14
Outlook
Lincoln Life has adopted a new vision statement: To be the best customer-
focused service-led company in the Americas. A number of efforts are underway
to achieve this vision. Every process is being analyzed for its value-added
to the customer relationship. The Lincoln Life of the future will be able to
meet customers changing needs efficiently and at less cost.
In addition, two significant actions were taken during 1994 to bring greater
focus to the identity of Lincoln Life as a brand name. First, the company
began a process to gather its career agency offices under the common banner,
Lincoln Financial Group. Second, it introduced its first national advertising
campaign in more than 15 years to build name recognition and awareness.
These actions support Lincoln Life's renewed efforts to grow its life
insurance operations through increased sales from its career agency network
and its ongoing drive to be a primary provider of annuities and asset
accumulation products.
Continued sales growth is expected in variable annuity, variable universal
life and 401(k) products. Increased sales of fixed annuities distributed
through banks and other financial institutions is also expected. The Lincoln
National (UK) operation should continue to grow through acquisitions as that
market continues to consolidate.
<TABLE>
<CAPTION>
Review of Operations: Life-Health Reinsurance
Year Ended December 31 (in millions) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Individual and Group Markets ------- $50.2 $44.2 $44.4 $22.7 $27.0
International Markets -------------- 12.8 9.9 4.5 5.6 4.1
Financial Reinsurance -------------- 15.5 20.5 16.3 14.4 20.6
Disability Income ------------------ (10.0) (54.0) (7.3) (8.2) 3.9
Other ------------------------------ (1.9) (1.7) .4 (1.5) (3.4)
Income from Operations* ---------- 66.6 18.9 58.3 33.0 52.2
Realized Gain (Loss) on Investments** .5 (1.6) -- -- --
Net Income ----------------------- $67.1 $17.3 $58.3 $33.0 $52.2
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Sales and In-Force
Individual Life Sales (in billions) $19.9 $17.3 $14.0 $17.0 $19.1
December 31 (in billions) 1994 1993 1992 1991 1990
Life Insurance In-Force ------------ $125.6 $118.0 $113.6 $102.2 $101.4
*Income from operations and net income for 1993 include the impact of a
change in estimate of the reserve level needed for LNC's reinsurance
disability income business (see note 2 to the consolidated financial
statements on page 40).
**Prior to 1993, all realized gain (loss) on investments was included in
Other Operations (see note 9 to the consolidated financial statements on
page 57).
</TABLE>
In 1994, the Lincoln National Reinsurance Cos. ("LNRC") reported record income
from operations of $66.6 million. Favorable mortality and morbidity in the
Individual and Group Markets and growth in the International line contributed
$8.9 million of the $47.7 million increase over 1993 earnings. A year ago,
favorable mortality and morbidity were also present, but were offset by a
reserve strengthening for disability income. Life reinsurance in-force grew
to $125.6 billion, a 6% increase over the prior year representing growth in
both individual and group life.
LNRC Profile
LNRC is currently the leading life-health reinsurer worldwide, based on net
premium income (Swiss Re, Economic Studies, September, 1994). It has built
unique competencies in life/health insurance risk management, knowledge
management and customer focus which enable it to compete on a basis other
than price alone. LNRC manages a portfolio of diversified risks, applies its
competencies to understand the risk management needs of its customers and
responds with unique solutions. LNRC's solutions focus on providing
assistance to clients in managing their risks by risk transfer, capital
management, and the delivery of knowledge and alliance partnerships, all on a
foundation of long-term business relationships.
<PAGE>
15
LNRC provides a full range of risk management solutions to insurance companies
in the U.S. and select international markets, health maintenance
organizations, self-funded employer groups with risk management needs, and
other primary risk-accepting organizations. Account executives and sales
specialists distribute LNRC products exclusively with a consultative client
approach. LNRC also accepts business from reinsurance intermediaries in
select specialty markets.
Individual and Group Markets
Individual and Group Markets contributed especially strong operating results
of $50.2 million in 1994. This is the third consecutive year of favorable
mortality and morbidity in these markets. Individual and Group Markets
includes all LNRC's business written in the United States except for Financial
Reinsurance and Disability Income Reinsurance.
Despite an increasingly competitive marketplace, individual life sales volume,
as measured by face amount of new business, grew by 15% to $19.9 billion and
group markets annualized premium increased 28% in 1994.
LNRC continues to differentiate itself in this marketplace by providing
superior customer service, particularly in the area of information flow. For
example, 95% of the cases LNRC underwrote in 1994 were processed on LNRC's
patented Life Underwriting System ("LUS"), resulting in a faster, more
efficient application process for customers. During 1994, LNRC licensed LUS
to eight more life insurance companies, bringing the number who have LUS
licenses to 44.
International Markets
The international markets have been an area of recent growth for LNRC. 1994
operating results increased 29% to $12.8 million. LNRC pursues a niche
marketing strategy globally, leveraging strengths across LNRC and developing
partnerships and alliances as new opportunities are identified. In 1994,
LNRC expanded its personal accident business in the U.K., grew its business
produced through a direct response marketing partnership, and participated in
the emerging pension market in Argentina.
Financial Reinsurance
Financial Reinsurance continues to contribute a significant level of earnings
to LNRC and generated $15.5 million in 1994. Regulatory pressures continue to
suppress demand for new business, but LNRC has persisted in adding new
products and programs. Annuity reinsurance is an area of opportunity where
LNRC is capitalizing on the growth of asset accumulation products in the
direct marketplace.
Disability Income
Within the past several years, the reinsurance industry's profitability in the
disability income business has been adversely affected by several external
factors. These include consolidation among the direct disability income
writers, lower portfolio yields, and the white-collar recession's effect on
the professional market. The key competitive factors which led to problems in
the marketplace became large amounts of monthly income replacement and liberal
benefit definitions for non-cancelable policies which do not provide any means
to correct underpricing.
In 1990, LNRC began to perceive problems developing in the market. LNRC took
action to apply its risk management skills to the aspects of the business it
could positively affect. This included increasing rates and tightening
underwriting standards. One consequence of these actions was a reduction in
new disability income business of 75% since 1990.
Because of the inability to correct pricing on existing in-force business, and
in order to manage its exposure, LNRC expanded its aggressive program to help
client companies with claims management and claims closure.
In the fourth quarter of 1993, management recognized that, despite these
efforts, disability income experience was not improving. At that time, an
in-depth analysis was undertaken of the disability income block of business
within LNRC. Based on this analysis, disability income reserves were
increased $50.5 million, pre-tax.
<PAGE>
16
The assumptions underlying these reserves were based on a review of both
long-term historical experience and more recent experience. Termination,
lapse and interest assumptions are consistent with recent experience. The
incidence assumptions are based on a combination of historical and recent
experience. Historical incidence experience is considerably better than
recent experience. If incidence levels do not improve or if claim termination
rates deteriorate, substantial reserve additions may be required in the
future.
A review of experience in 1994 indicated that incidence experience was less
favorable than that assumed in the 1993 reserve strengthening. While the
incidence rates began to stabilize, they did not improve. The fact that
actual incidence experience in 1994 was worse than that assumed in 1993
resulted in an additional loss of $10.0 million reported in 1994.
In the second half of 1994, there were a number of announcements from major
writers of disability income regarding their intentions to significantly
change the kind of products they sell. This adds a significant additional
uncertainty since the policies currently reinsured will be much more difficult
to replace, creating an expectation of greater policy persistency. Higher
persistency in this line can produce improved results under certain
circumstances. However, the current conditions have no clear precedent and it
is far too early to identify any changes in policy persistency trends or
results therefrom.
Small changes in assumptions have significant impacts on expected results of
this business and thus reserves carried on it. This is a very long-term
business, 30 years or more, and we will not know the outcome for many years.
We will continue to monitor the experience of this block of business and take
such action as may be necessary.
Nearly two-thirds of the 1994 disability income premium assumed by LNRC came
from one major writer of disability income insurance. That company is
currently under formal regulatory supervision by the insurance department of
its state of domicile. There is a reasonable possibility that the business
will generate additional future losses but it is not possible to estimate the
amount of those losses at this time.
Outlook
In 1995, LNRC will continue to provide creative solutions to customers'
problems and build long-term relationships. Fee based income is expected to
be enhanced through three initiatives: 1) introduction of a life and
disability income claims management expert system; 2) emphasis on asset
management services to reinsurance customers; and, 3) expansion of
underwriting management fee income in Group Markets and Financial Reinsurance.
Risk based income is expected to grow through expansion of existing customer
relationships and greater penetration in selected foreign markets.
LNRC is an organization of problem solvers for entities that assume primary
life and health insurance risk. As such, it seeks to apply its competencies
of risk management, knowledge management and customer focus to its customers'
problems. LNRC has challenged its organization to broadly and creatively
apply these skills across life-health reinsurance business lines in order to
expand its range of products and services. LNRC expects its strategy of
competing in a broad range of markets with expertise and customer focus will
continue to be a formula for success in 1995 and beyond.
<PAGE>
17
Review of Operations: Investment Management
A general discussion of investment results is included within the Review of
Consolidated Operations and Financial Condition on pages 20 to 27. Investment
management is expected to become LNC's fourth business segment during 1995.
Profile
The investment management operations of LNC are represented by Lincoln
National Investment Management Company, Lynch & Mayer and Vantage Global
Advisors. The investment professionals within these organizations provide a
variety of asset management services to LNC and its affiliates as well as to
an increasing number of institutional and retail customers. Our external
clients include other insurance companies, pension plans, college endowment
funds, individuals, and trusts.
Active Management for Total Return
Many insurance companies invest on a buy-and-hold basis and seek to maximize
current income by selecting assets with high nominal yields. We actively
manage our clients' assets and seek to optimize total return on those assets
in relation to the underlying liabilities. We use asset-liability management
techniques to achieve optimum performance of assets in relation to liabilities
while limiting risk.
Investment Markets
In 1994, the financial markets were affected by the U.S. Federal Reserve's
series of interest rate increases, which were largely in response to the Fed's
inflation concerns. Uncertainty about the direction of U.S. interest rates
and inflation dominated the financial markets while the stock market began to
show signs of improved performance in the last six months of 1994. However,
total return in 1994 was markedly lower than in prior years. In 1994, LNC's
fixed maturity securities portfolio produced a total return of -2.85% compared
with the -3.51% return produced by the Lehman Brothers, Government/Corporate
Bond Index, a recognized industry measure. The total return on LNC's entire
portfolio of invested assets was -1.43%.
Tax Loss Program
In 1994, LNC reported $88.7 million of net realized investment losses. An
active total return strategy carries with it a degree of turnover in
investment portfolios as new securities are identified which can better meet
portfolio needs. Significant interest rate changes impact investment
decisions and reported investment results. We would generally expect the
reported results to include more realized gains during periods of falling
interest rates and more realized losses during periods of rising interest
rates. Overlaying our 1994 investment strategy was the fact that by realizing
losses we were able to recover capital gains taxes which had been paid over
the past three years.
Commercial Mortgages and Real Estate
During 1994, LNC completed two bulk sales of performing and non-performing
mortgage loans and real estate holdings. The selling price for these holdings
was $30.6 million in excess of the carrying value. At December 31, 1994,
mortgage loans with more than one payment delinquent were only 2.2% of total
mortgage loans, a notable improvement from the 7.0% delinquency rate at the
end of 1993. Commercial mortgage loans represented 11% of the general
investment portfolio at year end 1994.
Mutual Funds
In 1994, LNC introduced Lincoln Advisor Fund, Inc., a new retail mutual fund
with nine investment portfolio choices available to fundholders. The
portfolios have five equity and four fixed income portfolio options, managed
by specialized investment managers and have flexibility in fee arrangements to
meet customer needs.
<PAGE>
18
Acquisition of Delaware Management Holdings, Inc.
In late 1994, LNC announced an agreement to acquire Delaware Management
Holdings, Inc., ("Delaware") one of the nation's premier investment advisers.
Delaware is a "value" investor that concentrates on equities with low
price/earnings ratios and high dividends. LNC's other investment managers use
differing investment strategies. Lincoln National Investment Management
Company is a fixed income investment manager. Lynch & Mayer is predominately
a "growth" equity investor while Vantage Global Advisors selects equities on
quantitative models.
The addition of Delaware will allow us to offer a wider range of investment
skills and strategies to better meet our customers' needs. Delaware also
brings us an international investment capability through their London office,
which currently manages over $2 billion of global equities and debt.
Delaware will operate autonomously from its offices in Philadelphia and
London.
Outlook
We anticipate the acquisition of Delaware will be completed in the second
quarter of 1995, following required approvals. After completion of the
transaction, we plan to report our investment management operations as a
fourth business segment. This new segment will include the results of
Delaware, Lynch & Mayer, Vantage Global Advisors and Lincoln National
Investment Management Co.
We view the investment management business as one with an attractive potential
rate of growth which complements our present businesses and diversifies LNC's
earnings sources. We will explore opportunities to offer Delaware's products
through our distribution systems. LNC will also continue to develop its
international presence through Delaware's strong international asset
management capabilities.
<TABLE>
<CAPTION>
Review of Operations: Employee Life-Health Benefits
Year Ended December 31 (in millions) 1994* 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Employers Health Insurance Company $14.1 $54.3 $40.8 $39.5 $34.2
Managed Health Care -------------- -- -- -- 4.0 19.0
Income from Operations --------- 14.1 54.3 40.8 43.5 53.2
Realized Gain on Investments ----- .3 1.0 -- -- --
Net Income --------------------- $14.4 $55.3 $40.8 $43.5 $53.2
*Results for 1994 include operations through the date of the sale of 71% of
its direct writer of employee life-health coverages (see note 11 to the
consolidated financial statements on page 59). Following the sale, the
earnings from the 29% ownership of this company were included in "Other
Operations" (see "Review of Other Operations" on page 19).
</TABLE>
<PAGE>
19
<TABLE>
<CAPTION>
Review of Other Operations:
Year Ended December 31 (in millions) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Earnings from Unconsolidated Affiliate $ 14.8 $ -- $ -- $ -- $ --
Investment Management ---------------- 7.1 6.1 4.7 2.3 2.9
LNC Financing ------------------------ (31.7) (26.7) (33.8) (34.2) (37.2)
LNC Operations ----------------------- (21.8) (22.3) (18.2) (16.3) (19.5)
Other Corporate ---------------------- (3.9) 4.0 (3.1) 11.8 5.5
Corporate Equity Investments --------- -- -- (36.6) (39.6) (43.1)
Income (Loss) from Operations ------ (35.5) (38.9) (87.0) (76.0) (91.4)
Realized Gain(Loss) on Investments* -- (10.6) 19.8 118.6 113.3 (64.9)
Gain (Loss) on Sale of Subsidiaries -- 48.8 (98.5) -- (89.1) 27.7
Cumulative Effect of Accounting
Change (Postretirement Benefits) ---- -- (96.4) -- -- --
Net Income (Loss) ----------------- $ 2.7 $(214.0) $ 31.6 $(51.8)$(128.6)
*Prior to 1993, all realized gain (loss) on investments was included in
Other Operations (see note 9 to consolidated financial statements on page
57).
</TABLE>
The income (loss) from operations shown above includes the earnings from LNC's
investment in an unconsolidated affiliate engaged in the employee life-health
benefits business, earnings from LNC's investment management companies,
certain other operations that are not directly related to the business
segments and unallocated corporate revenues and expenses (i.e., corporate
investment income, interest expense on short-term and long-term borrowings,
and corporate overhead expenses).
The Investment Management operations reported above include Lincoln National
Investment Management Company, Lynch & Mayer, Inc. and Vantage Global
Advisors, Inc. These investment advisors provide investment advisory services
and asset management services to LNC's annuity, pension and insurance
customers as well as for LNC's corporate portfolios. In addition to managing
these accounts, their services are provided to outside, institutional clients
and high net worth individuals.
Corporate interest expense included within the LNC financing line above was
more for 1994 than 1993 as the result of increases in short-term interest
rates and an addition to long-term debt (see liquidity and cash flow
discussion on page 28).
Net income shown above for "Other Operations" includes the items described
above under income from operations plus the cumulative effect of the 1993
accounting change for the consolidated group of companies related to
postretirement benefits, the gain (loss) on sale of subsidiaries (see note 11
to the consolidated financial statements on page 59) and certain realized gain
(loss) on sale of investments.
<PAGE>
20
<TABLE>
<CAPTION>
REVIEW OF CONSOLIDATED OPERATIONS AND FINANCIAL CONDITION
Summary Information Increase
(Decrease)
Year Ended December 31 (in millions) 1994 1993 1992 1994 1993
<S> <C> <C> <C> <C> <C>
Insurance premiums:
Property-casualty --------------- $1,710.6 $1,841.4 $2,083.0 (7%) (12%)
Health -------------------------- 1,085.7 1,927.0 1,857.7 (44%) 4%
Life and annuity ---------------- 1,647.9 1,588.4 1,358.2 4% 17%
Insurance fees ------------------ 449.6 470.4 409.5 (4%) 15%
Net investment income ----------- 2,011.3 2,146.5 1,987.3 (6%) 8%
Equity in earnings of
unconsolidated affiliates ------ 14.7 -- --
Realized gain (loss)
on investments ----------------- (130.8) 268.4 176.9 52%
Gain (Loss) on sale
of subsidiaries ---------------- 48.8 (98.5) --
Other revenue ------------------- 146.6 146.1 161.5 (10%)
Insurance benefits and expenses:
Property-casualty --------------- 1,262.5 1,406.8 1,717.6 (10%) (18%)
Health -------------------------- 848.9 1,478.6 1,428.6 (43%) 4%
Life and annuity ---------------- 2,737.8 2,742.9 2,554.2 7%
Expenses:
Operating expenses -------------- 1,709.3 2,029.3 1,855.2 (16%) 9%
Interest ------------------------ 49.5 44.3 53.8 12% (18%)
Federal income taxes ------------ 26.4 172.5 65.5
</TABLE>
REVIEW OF CONSOLIDATED OPERATIONS
As indicated in the "Notes to Consolidated Financial Statements" (see note 11
on page 59), LNC completed the sale of a life insurance subsidiary and the
sale of 71% of its direct writer of employee life-health coverages in 1994.
As noted in the following "Review of Consolidated Operations" and "Review of
Consolidated Financial Condition" these sales have affected the comparability
of select line items within the Consolidated Statements of Income and
Consolidated Balance sheets.
Insurance Premiums
Property-casualty premiums decreased 7% in 1994 and 12% in 1993. The
decreases in 1994 and 1993 are primarily the result of reevaluating
underwriting actions, focusing on account selection, risk evaluation and the
establishment of appropriate premiums. The volume of premium that this
segment will produce in 1995 is dependent upon whether the pricing within the
property-casualty insurance market place allows price increases that are
necessary to maintain and improve profitability.
Excluding the impact of the subsidiary sold in 1994 (see note 11 to the
consolidated financial statements on page 59), LNC's health premiums,
increased $83.4 million or 12% in 1994 as the result of increased volumes of
business in the Life-Health Reinsurance segment. Health premiums increased
$69.3 million or 4% in 1993 as the result of increased volumes of business and
rate increases implemented in 1993.
Excluding the impact of the subsidiaries sold in 1994 (see note 11 to the
consolidated financial statements on page 59), life and annuity premiums
increased 8% in 1994. This increase is the result of an increase in the
volume of transactions by the Life Insurance and Annuity segment. Life and
annuity premiums increased 17% in 1993. This increase resulted from increases
in the volume of transactions by the Life Insurance and Annuities and Life-
Health Reinsurance segments. Barring the passage of unfavorable tax
legislation that would eliminate the tax-advantages for some of LNC's life and
annuity products, LNC expects life and annuity premium growth in 1995 similar
to the growth for 1994.
<PAGE>
21
Insurance Fees
Excluding the impact of the life subsidiary sold in 1994 (see note 11 to the
consolidated financial statements on page 59), insurance fees from the sale of
universal life, other interest-sensitive life insurance contracts and variable
life insurance contracts increased $83.4 million or 22% in 1994. These fees
increased $60.9 million or 15% in 1993. The growth in fees from this business
is expected to continue in 1995.
Net Investment Income
Net investment income decreased $135.2 million or 6% in 1994. This is the net
result of a 4% increase in mean invested assets (on a cost basis) less the
impact of the overall yield on investments dropping from 7.93% to 7.14%. The
increase in mean invested assets is the net result of increased volumes of
business in the Life Insurance and Annuity segment being partially offset by
decreases due to the sale of subsidiaries (see note 11 to the consolidated
financial statements on page 59) and reduced volumes of business in the
Property-Casualty segment. Net investment income increased 8% in 1993 as the
result of a 12% increase in mean invested assets (on a cost basis) being
partially offset by a decrease in the yield on investments from 8.24% to
7.93%. Lower net investment income for 1993 in the Property-Casualty segment,
due to lower volumes of business, was more than offset by increases in the
other business segments.
Equity in Earnings of Unconsolidated Affiliates
This line was added to the statements of income in 1994 to report the
earnings from the remaining 29% ownership following LNC's sale of 71% of the
ownership of its primary writer of employee life-health benefit coverages (see
note 11 to the consolidated financial statements on page 59).
Net Realized Gain (Loss) on Investments
Net realized gain (loss) on investments in 1994 and 1993 was $(130.8) million
and $268.4 million, respectively. The gain (loss) in 1994 and 1993 was
$(88.7) million and $170.3 million, after taxes, respectively. These gains
and losses were the result of the sale of investments, write-downs and
provisions for losses. The losses in 1994 were the result of net realized
investment gains being more than offset by 1) realized investment losses and
2) writedowns of security investments and provisions for losses for mortgage
loans and real estate. The investment losses, primarily in the second and
third quarters, were the result of realizing investment losses to recover
capital gains taxes paid in prior years. The write-downs of fixed maturity
and equity securities were recorded when the securities were deemed to have
declines in value that were other than temporary. The fixed maturity
securities to which these write-downs apply were generally of investment grade
quality at the time of purchase but, with the exception of interest only
mortgage-backed securities, were classified as "below investment grade" at the
time of the write-downs. Provision for losses on mortgage loans on real
estate, real estate and other investments were established when the underlying
value of the property was deemed to be less than the carrying value. The
amount of these write-downs and provisions for losses is disclosed within the
notes to the accompanying financial statements (see note 3 to the consolidated
financial statements on page 43).
During 1994, LNC completed two bulk sales of performing and non-performing
mortgage loan and real estate holdings through a sealed bid process. The
selling price for these holdings was $30.6 million in excess of the carrying
value resulting in a gain on sale.
Gain (Loss) on Sale of Subsidiaries
In 1994, LNC sold 71% of its interest in its primary writer of employee life-
health benefits. In 1993, LNC recorded a provision for loss on the sale of a
life insurance subsidiary. See note 11 to the consolidated financial
statements on page 59 for additional information.
<PAGE>
22
Other Revenue
Excluding the impact of the subsidiaries sold in 1994, other revenue increased
16% in 1994. This increase is the result of an increase from the Life
Insurance and Annuity segment. Other revenue decreased 10% in 1993 as a
result of a decrease in the Property-Casualty segment due to the sale of an
agency company that specialized in the sports and entertainment market.
Insurance Benefits and Expenses
Property-casualty benefits decreased by $144.3 million or 10% in 1994 compared
to 1993. This decrease is the net result of reduced volumes of insurance
being partially offset by an increase in catastrophe and storm losses.
Property-casualty benefits decreased by 18% in 1993 compared with 1992. This
decrease was the result of reduced volumes of insurance as indicated by the
reduction in insurance premiums and a decrease in weather-related claims.
Assuming an average catastrophe and storm loss year in 1995, the increase in
property-casualty benefits is expected to be lower than any increase in
property-casualty premiums.
Excluding the impact of the subsidiary sold in 1994 (see note 11 to the
consolidated financial statements on page 59), health benefits increased $65.3
million or 11% in 1994 compared with 1993. This increase was the result of
increased volumes of business in the Life-Health Reinsurance segment. Health
benefits increased 4% in 1993 compared to 1992. This increase was the result
of higher volumes of business and the impact of establishing higher reserve
levels for the Life-Health Reinsurance segment disability income business
being partially offset by moderating claims in the Employee Life-Health
Benefits segment.
Excluding the impact of the life subsidiary sold in 1994 (see note 11 to the
consolidated financial statement on page 59), life and annuity benefits and
settlement expenses increased $168.7 million or 7% in 1994. This increase was
the result of increased volumes of business in the Life Insurance and
Annuities segment. Life and Annuity benefits and settlement expenses
increased 7% in 1993 as the result of increased volumes in the Life Insurance
and Annuities and Life-Health Reinsurance segments. The increase in life and
annuity benefits expense in 1995 is expected to parallel the growth in life
and annuity premiums.
Expenses
Excluding the impact of the various subsidiaries sold, underwriting,
acquisition, insurance and other expenses decreased $35.4 million or 2% in
1994. This decrease was the net result of lower expenses in the Property-
Casualty segment and lower volume related expenses in the Life-Health
Reinsurance segment being partially offset by increases in the Life Insurance
and Annuity segment. In 1993, these expenses increased 9% compared to 1992.
This increase was the result of inflation, higher volumes of insurance and
higher costs for postretirement benefits. In 1995, LNC's segments will
continue to adjust staff levels as appropriate to match business volumes.
Interest expense increased $5.2 million or 12% in 1994 compared to 1993. This
increase was the net result of higher average debt outstanding and higher
interest rates on debt outstanding being partially offset by the reduction in
interest expense which resulted from the calling of the 8% notes (due in 1997)
in March 1994. Interest expense decreased $9.5 million or 18% in 1993
compared to 1992 as a result of decreases in the average debt outstanding.
The average debt was lower due to the use of the proceeds of the February 1993
Common Stock offering to pay down debt (see note 10 to the consolidated
financial statements on page 58). Interest expense is expected to increase in
1995 due to 1)the assumption of debt in connection with the acquisition of an
investment management company (see note 12 to the consolidated financial
statements on page 59 and additional MD&A discussion on page 28) and 2)the
expectation that average interest rates will be higher in 1994 than in 1995.
Federal Income Taxes
LNC's federal income taxes decreased $146.1 million in 1994 compared to 1993.
This decrease is primarily the result of lower pre-tax earnings in 1994 and
the lack of tax expense on the gain on sale of 71% of its direct writer of
employee life-health benefit coverages in 1994. An additional item affecting
this comparison is the fact that LNC did not receive a tax benefit from the
loss on sale of a life insurance subsidiary in 1993. The reduction in pre-tax
earnings is the result of the absence of earnings from subsidiaries sold (see <PAGE>
<PAGE>
23
note 11 to the consolidated financial statements on page 59) and the
realization of losses on the sale of investments during 1994 versus the
realization of gains on investments in 1993. The tax benefits from the
realized losses result from the carryback of such losses to realized gains
recognized in prior years. Federal income taxes increased $107.0 million in
1993 compared to 1992. This increase is primarily the result of increased
pre-tax earnings and the lack of any tax benefit on the 1993 loss on sale of a
life insurance subsidiary. This increase was partially offset by an increase
in tax-exempt investment income. The increase in the prevailing Corporate
federal income tax rate from 34% to 35% during 1993 increased 1993 current
taxes by approximately $5 million. However, this increase was offset by a
one-time increase to LNC's deferred tax recoverable (see note 4 to the
consolidated financial statements on page 44).
Summary
Net income for 1994 was $349.9 million compared with $318.9 million in 1993.
Excluding realized gain (loss) on investments, gain (loss) on sale of
subsidiaries and the cumulative effect of implementing the postretirement
accounting change in 1993, all net of taxes, LNC earned $389.8 million for
1994 compared to $343.5 million in 1993. All the business segments
contributed to this increase. Net income for 1993 was $318.9 million compared
with $359.2 million in 1992. Excluding realized gain on investments, loss on
sale of subsidiary and the cumulative effect of the accounting change referred
to above, all net of tax, LNC earned $343.5 million for 1993 compared to
$240.6 million in 1992. All the business segments except for Life-Health
Reinsurance contributed to this increase.
REVIEW OF CONSOLIDATED FINANCIAL CONDITION
Investments
The investment portfolio, excluding cash and invested cash, is comprised of
fixed maturity securities; equities; mortgage loans on real estate; real
estate, either wholly owned or joint ventures; and other long-term
investments. LNC purchases investments which have yield, duration and other
characteristics which take into account the liabilities of the products being
supported. The total investment portfolio decreased $2.8 billion in 1994.
The removal of the investments of the two subsidiaries sold (see note 11 to
the consolidated financial statements on page 59) accounted for $2.1 billion
of this decrease. The remainder of the decrease is the net result of
decreases in the fair value of securities available-for-sale being partially
offset by new purchases of investments from cash flow generated by the
business units.
LNC maintains a high-quality fixed maturity securities portfolio. As of
December 31, 1994, $10.3 billion or 48% of its fixed maturity securities
portfolio had ratings of AA or better and only $1.2 billion or 5.8% had
ratings below investment grade (BB or less) (see note 3 to the consolidated
financial statements on page 42). The below investment grade fixed maturity
securities represent only 4.6% LNC's total investment portfolio. The interest
rates available on these below investment grade securities are significantly
higher than are available on other corporate debt securities. Also, the risk
of loss due to default by the borrower is significantly greater with respect
to such below investment grade securities because these securities are
generally unsecured, often subordinated to other creditors of the issuer and
issued by companies that usually have high levels of indebtedness. LNC
attempts to minimize the risks associated with these below investment grade
securities by limiting the exposure to any one issuer and by closely
monitoring the credit worthiness of such issuers. For the year ended December
31, 1994, the aggregate cost of such investments purchased was $678.5 million.
Aggregate proceeds from such investments sold were $466.6 million, resulting
in a realized pre-tax loss at the time of sale of $2.1 million.
LNC's entire fixed maturity securities portfolio is classified as "available-
for-sale" and is carried at fair value. Equity securities available-for-sale
are also carried at fair value. Changes in fair values, net of related
deferred acquisition costs, amounts required to satisfy policyholder
commitments and taxes (to the extent deemed recoverable through capital loss
carrybacks), are charged or credited directly to shareholders' equity. Note 3
to the Consolidated Financial Statement (see page 41) shows the gross
unrealized gains and losses as of December 31, 1994.
<PAGE>
24
LNC's fixed maturity securities available-for-sale includes mortgage-backed
bonds. The mortgage-backed bonds are subject to risks associated with
variable prepayments or delayed repayments. This may result in these
securities having a different actual cash flow and maturity than planned at
the time of purchase. Securities that have an amortized cost greater than par
which are backed by mortgages that prepay faster than expected will incur a
reduction in yield or a loss. Those securities that have an amortized cost
lower than par that prepay faster than expected will generate an increase in
yield or a gain. Repayments occurring slower than expected have the opposite
impact. The degree to which a security is susceptible to either gains or
losses is influenced by the difference between its amortized cost and par, the
relative sensitivity of the underlying mortgages backing the assets to
prepayment or delayed repayments in a changing interest rate environment and
the repayment priority of the securities in the overall securitization
structure.
LNC limits the extent of its risk on mortgage-backed securities by generally
avoiding securities whose cost significantly exceeds par, by purchasing
securities which are backed by stable collateral, and by concentrating on
securities with enhanced priority in their trust structure. Such securities
with reduced risk typically have a lower yield (but higher liquidity) than
higher-risk mortgage-backed securities. At selected times, higher-risk
securities may be purchased if they do not compromise the safety of the
general portfolio. At December 31, 1994, LNC did not have a significant
amount of higher-risk mortgage-backed securities. There are negligible
default risks in the mortgage-backed securities portfolio as a whole as the
vast majority of the assets are either guaranteed by U.S. government-sponsored
entities or are supported in the securitization structure by junior securities
enabling the assets to achieve high investment grade status. See note 3 to
the consolidated financial statements on page 42 for additional detail about
the underlying collateral.
Mortgage loans on real estate represented 10.6% of the total investment
portfolio as of December 31, 1994, while real estate owned represented 2.6%.
As of December 31, 1994, the underlying properties supporting the mortgage
loans on real estate consisted of 24% in commercial office buildings, 28% in
retail stores, 19% in apartments, 15% in industrial buildings, 3% in
hotels/motels and 11% in other. In addition to the dispersion by type of
property, the mortgage loan portfolio is geographically diversified throughout
the United States.
Although the deterioration in the commercial mortgage loan market in 1994
slowed versus 1993, LNC continued to add to its provision for mortgage loans
on real estate (see note 3 to the consolidated financial statements on page
43). The reserve level and the ratio of reserves to impaired loans both
decreased in 1994 as the increase in reserves was more than offset by the
removal of amounts associated with two bulk sales of performing and non-
performing mortgage loans and real estate properties in 1994.
Investment in Unconsolidated Affiliates
This line was added to the balance sheet following LNC's sale of 71% of the
ownership of its primary writer of employee life-health coverages (see note 11
to the consolidated financial statements on page 59).
Cash and Invested Cash
Cash and invested cash increased by $331.9 million in 1994. This increase is
primarily the result of the receipts of the proceeds from the sale of
subsidiaries (see note 11 to the consolidated financial statements on page
59). These funds are expected to be used for general corporate purposes which
may include additional investments in existing businesses or financing of
acquisitions.
Assets Held in Separate Accounts
Excluding the December 31, 1993 balance of the subsidiaries that were sold
(see note 11 to the consolidated financial statements on page 59), this asset
account as well as the corresponding liability account increased by $1.9
billion, reflecting a continued increase in annuity and pension funds under
management.
<PAGE>
25
Federal Income Taxes
Federal income taxes recoverable at December 31, 1994 of $396.9 million
represents a change of $547.9 million compared to the federal income taxes
payable at December 31, 1993. This is primarily the result of recoverable
deferred taxes applicable to LNC's available-for-sale securities which were in
an unrealized loss position at December 31, 1994 compared to an unrealized
gain position at December 31, 1993. Other factors affecting this change
relate to deferred taxes from life insurance reserve differences, discounting
of unpaid losses, changes in investment reserves and postretirement
obligations, and the current taxes recoverable related to the realization of
losses on securities during 1994. A significant portion of the deferred tax
benefits related to the December 31, 1994, unrealized loss on securities was
not recognized due to the establishment of a valuation allowance (see note 4
to the consolidated financial statements on page 44).
Amount Recoverable from Reinsurers
The increase in amounts recoverable from reinsurers was the result of an
increased volume of business ceded in the Life Insurance and Annuities
segment.
Goodwill
The decrease in goodwill of $82.8 million is primarily the result of the sale
of subsidiaries during 1994 (see note 11 to the consolidated financial
statements on page 59). Goodwill is expected to increase in 1995 due to the
expected acquisition of an investment management company (see note 12 to the
consolidated financial statements on page 59).
Total Liabilities
Excluding the December 31, 1993 balances of the subsidiaries that were sold
(see note 11 to the consolidated financial statements on page 59) of $1.9
billion, total liabilities increased by $3.9 billion in 1994. This increase
reflects 1)an increase in business activity as evidenced by an increase in
policy liabilities and accruals of $143.1 million, an increase of $2.2
billion in contractholder funds, an increase of $1.9 billion in the
liabilities related to separate accounts and 2)an increase in debt of $14.7
million. These increases are partially offset by a decrease in all other
liabilities of $248.1 million.
Policy liabilities at December 31, 1994 and 1993 included liabilities for
environmental claims of $201.0 million and $204.0 million, respectively.
These amounts include approximately $81.0 million and $82.0 million of reserve
for claims that have been incurred but not reported and approximately $37.0
million and $35.0 million of related claim expenses. Because of the limited
coverages that have been written by LNC, these environmental claims represent
only 8% of LNC's total property-casualty policy liabilities (4% based on claim
counts of direct business) and less than 2% of LNC's total policy liabilities.
Paid environmental claims and claim expense totalled approximately $15.0
million in 1994 compared with approximately $12.0 million in 1993.
The percentages and amounts referenced above are at these levels due to LNC's
concentration on writing coverages for small to medium size companies rather
than the larger companies that tend to incur most of the environmental and
product liability claims. LNC's management challenges environmental claims in
cases of questionable liability and reviews the level of the environmental
liabilities on an on-going basis to help insure that the liability maintained
is adequate. Nonetheless, establishing liabilities for environmental claims is
subject to significant uncertainties because of the long reporting delays,
lack of historical data and the unresolved complex legal and regulatory issues
that are involved (see note 7 to the consolidated financial statements on page
50). However, based on available information, it is management's judgement
that the appropriate level of liabilities have been recorded and that any
unrecorded liability would not be material to LNC's future results of
operations, liquidity or financial condition.
The increase in other liabilities relates to an increase in the expected
payouts for security investments purchased in the last few days of 1994 versus
a lower volume of such transactions late in 1993. Debt is expected to
increase in 1995 as a result of the acquisition of an investment management
company (see note 12 to the consolidated financial statements on page 59 and
additional MD&A discussion on page 28).
<PAGE>
26
Shareholders' Equity
Total shareholders' equity decreased $1.0 billion during the year ended
December 31, 1994. Excluding the decrease of $1.2 billion related to
unrealized loss on securities available-for-sale, shareholders' equity
increased $195.8 million. This increase was the net result of increases due
to $349.9 million of net income, $30.0 million from the issuance of Common
Stock related to benefit plans, $8.1 million related to an increase in the
accumulated foreign exchange gain and decreases of $174.1 million related to
the declaration of dividends to stockholders and $18.4 million for the
retirement of Common Stock.
Capital adequacy is a primary measure used by insurance regulators to
determine the financial stability of an insurance company. In the U.S., risk-
based capital guidelines are used by the National Association of Insurance
Commissioners to determine the amount of capital that represents minimum
acceptable operating amounts related to insurance and investment risks.
Regulatory action is triggered when an insurer's statutory-basis capital falls
below the formula-produced capital level. At December 31, 1994, statutory-
basis capital for each of LNC's life and property-casualty insurance
subsidiaries was substantially in excess of regulatory action levels of risk-
based capital required by the jurisdiction of domicile except for two
property-casualty companies which are involved in servicing closed blocks of
business.
FAS 115. Effective December 31, 1993, LNC adopted Financial Accounting
Standard 115 ("FAS 115") which results in the inclusion in Shareholders'
Equity of the unrealized gain or loss on fixed-income securities, subject to
certain adjustments. The December 31, 1994 book value of $29.35 per share
included $3.00 of unrealized losses on securities and the December 31, 1993
book value of $39.39 per share included $8.85 of unrealized gains on
securities.
Gains or losses, whether realized or unrealized, on securities that support
long-term life insurance, pension and annuity contracts are expected to be
applied to contract benefits. Net Income and Shareholders' Equity now
include, respectively, realized and unrealized gains and losses on securities,
part of which will be used in determining contract benefits. Current
accounting standards do not require or permit adjustment of policyholder
reserves to recognize the full effect of these realized and unrealized gains
and losses on future benefit payments in the absence of a contractual
obligation requiring their attribution to policyholders.
We believe that an appropriate adjustment of these future benefits would
change policy reserves and increase Shareholders' Equity by $166.6 million or
$1.61 per share at December 31, 1994 compared with a decrease of $665.3
million or $6.45 per share at December 31, 1993. Shareholders' Equity
calculated on this adjusted basis would be $30.96 and $32.94 per share at
December 31, 1994 and December 31, 1993, respectively. These adjustments
reflect the reversal of interest related fixed income unrealized losses and
the deferral and amortization of such unrealized losses from portfolios
supporting life insurance, pension and annuity products.
Derivatives
As indicated in note 7 to the consolidated financial statements (see page 53),
LNC has entered into derivative transactions to reduce its exposure to
interest rate fluctuations, the widening of bond yield spreads over comparable
maturity U.S. Government obligations and foreign exchange risk. LNC has three
significant programs in place primarily within its Life Insurance and Annuity
segment and a fourth program in Other Operations as follows:
1)LNC uses interest rate cap agreements to hedge against the negative impact
of a significant and sustained rise in interest rates. Interest rate caps are
contracts that require counterparties to pay LNC at specified future dates the
amount, if any, by which a specified market interest rate exceeds the cap rate
stated in the agreements, applied to a notional amount. As of December 31,
1994, LNC had agreements with notional amounts of $4.4 billion with cap rates
ranging from 42 to 258 basis points above prevailing interest rates. These
agreements expire in 1997 - 2003. The cap rates in some contracts increase
over time.
<PAGE>
27
2)LNC uses spread-lock agreements to hedge a portion of the value of its fixed
maturity securities against the risk of widening in the spreads between their
yields and the yields of comparable maturity U.S. Government obligations. The
actual risk being hedged is the potential widening of bond spreads that would
be caused by widening swap spreads. Under each of these agreements, LNC
assumes the right and the obligation to enter into an interest rate swap at a
future date in which LNC would pay a fixed rate equal to a contractually
specified spread over the yield of a specified U.S. Treasury security and
receive a floating rate. As of December 31, 1994, LNC had spread-lock
agreements with an aggregate notional amount of $1.3 billion with one to ten
months remaining in the exercise periods.
3)LNC uses exchange-traded financial futures contracts and options on
financial futures to hedge against interest rate risks and to manage duration
of a portion of its fixed maturity securities. The short positions in
financial futures contracts obligate LNC to sell a financial instrument at a
specified future date for a specified price and may be settled in cash or
through delivery of the financial instrument. Cash settlements on the change
in market values of financial futures contracts are made daily. Put options
on a financial futures contract give LNC the right, but not the obligation, to
assume a short position in the futures contract at a specific price during a
specific time period. As of December 31, 1994, LNC has financial futures
contracts with aggregate notional amounts of $354.3 million.
4)LNC uses foreign exchange forward contracts to hedge against foreign
exchange risk related to LNC's investment in its foreign subsidiary, Lincoln
National (U.K.). The foreign exchange forward contracts obligate LNC to
deliver a specified amount of currency at a future date at a specified
exchange rate. As of December 31, 1994, LNC had a short position in foreign
exchange forward contracts with a notional amount of $138.3 million.
The first three programs discussed above are designed to help LNC achieve more
stable margins while providing competitive crediting rates to policyholders
during periods when interest rates are rising or corporate bond spreads are
widening. Failure to maintain competitive crediting rates could result in
policyholders withdrawing their funds for placement in more competitive
products.
LNC is depending on the ability of derivative product dealers and their
guarantors to honor their obligations to pay the contract amounts under
interest rate cap agreements and other over-the-counter derivative products
such as spread-lock agreements and foreign currency exchange contracts. In
order to minimize the risk of default losses, LNC diversifies its exposures
among several dealers and limits the amount of exposure in accordance with the
credit rating of each dealer or its guarantor. At December 31, 1994, the
dealers providing interest rate caps or their guarantors were rated single A
or better by Standard & Poors and Moody's and 80% of the notional amount of
caps were from dealers which, giving effect to guarantees, were rated AA or
better by those agencies.
In addition to continuing existing programs, LNC may use derivative products
in other strategies to limit risk and enhance returns, particularly in the
management of investment spread businesses. LNC has established policies,
guidelines and internal control procedures for the use of derivatives as tools
to enhance management of the overall portfolio of risks assumed in LNC's
operations.
See note 7 to the consolidated financial statements (see pages 53 and 54) for
a discussion of the effects of changes in interest rates and spreads on its
hedge programs using interest rate cap agreements, spread-lock agreements,
financial futures contracts and options on financial futures, and of changes
in foreign currency exchange rates on its hedge program using foreign exchange
forward contracts.
<PAGE>
28
LIQUIDITY AND CASH FLOW
Liquidity refers to the ability of an enterprise to generate adequate amounts
of cash from its normal operations to meet cash requirements with a prudent
margin of safety. Because of the interval of time from receipt of a deposit
or premium until payment of benefits or claims, LNC and other insurers employ
investment portfolios as an integral element of operations. By segmenting its
investment portfolios along product lines, LNC enhances the focus and
discipline it can apply to managing the liquidity as well as the interest rate
and credit risk of each portfolio commensurate with the profile of the
liabilities. For example, portfolios backing products with less certain cash
flows and/or withdrawal provisions are kept more liquid than portfolios
backing products with more predictable cash flows.
The Consolidated Statements of Cash Flows on page 36 indicate that operating
activities provided cash of $1.2 billion, $1.0 billion and $870 million in
1994, 1993 and 1992, respectively. This statement also classifies the other
sources and uses of cash by investing activities and financing activities and
discloses the amount of cash available at the end of the year to meet LNC's
obligations.
Although LNC generates adequate cash flow to meet the needs of its normal
operations, periodically LNC may issue debt or equity securities to fund
internal expansion, acquisitions, investment opportunities and the retirement
of LNC's debt and equity. In 1994, LNC filed a shelf registration for $500
million with the Securities Exchange Commission that would allow LNC to issue
debt or equity securities. In 1994, LNC issued $200 million of debt pursuant
to this shelf and as of December 31, 1994 has remaining authority to issue up
to $300 million of debt, Preferred Stock, Common Stock or any combination
thereof. Also, cash funds are available from LNC's revolving credit agreement
which provides for borrowing up to $500 million (see note 5 to the
consolidated financial statements on page 47).
Transactions such as those described in the preceding paragraph that occurred
recently included a public stock offering in 1993 which netted $316.1 million
after expenses (see note 10 to the consolidated financial statements on page
58). The proceeds from this offering were used to paydown short-term debt
pending application for general corporate purposes. In another transaction in
March 1994, LNC redeemed its $100 million of 8% notes payable due in 1997.
This redemption was funded with additional short-term debt. Also, as noted in
the previous paragraph, LNC issued $200 million of 9 1/8% debt securities with
and effective date of October 1, 1994 and payable in 2024. Proceeds from this
issue were used to reduce short-term debt with a weighted average interest
rate of 4.82%. Finally, in November 1994, LNC purchased and retired 500,000
shares of Common Stock at a cost of $18.4 million.
The assumption of debt in connection with the expected acquisition of an
investment management company (see note 12 to the consolidated financial
statements on page 59) will add approximately $180 million to LNC's total
long-term debt in 1995. The remainder of the purchase price is expected to be
available at the holding company level as the result of dividends from
existing subsidiaries and/or the sale of holding company assets to the
subsidiaries for cash.
In order to maximize the use of available cash, the holding company (Lincoln
National Corporation) maintains a facility where subsidiaries can borrow from
the holding company to meet their short-term needs and can invest their
short-term funds with the holding company. Depending on the overall cash
availability or need, the holding company invests excess cash in short-term
investments or borrows funds in the external financial markets. In addition
to facilitating the management of cash, the holding company receives dividends
from its subsidiaries, invests in operating companies, maintains an investment
portfolio and pays shareholder dividends and certain corporate expenses.
<PAGE>
29
<TABLE>
<CAPTION>
Holding Company Cash Flow
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Dividends from subsidiaries:
American States Insurance ---------------------- $ 215.0 $ 60.0 $ 64.0
Lincoln National Life -------------------------- 125.0 12.0 --
Other ------------------------------------------ 4.5 4.0 12.3
Net investment income ---------------------------- 1.2 4.3 8.0
Operating expenses ------------------------------- (33.7) (19.5) (34.9)
Interest ----------------------------------------- (44.3) (39.0) (43.2)
Net sales (purchases) of investments ------------- (22.1) 31.6 86.5
Increase (decrease) in cash collateral on
loaned securities ------------------------------- 14.3 9.5 (31.7)
Sale of subsidiaries ----------------------------- -- -- 145.3
Pre-closing dividend from subsidiaries sold ------ -- -- 40.9
Additional investment in existing subsidiaries --- (2.7) (105.8) (103.1)
Investment in unconsolidated affiliate ----------- (103.5) -- --
Net increase (decrease) in debt ------------------ 15.9 (207.2) (59.1)
Decrease (increase) in receivables from
subsidiaries ------------------------------------ (3.9) (14.2) 40.7
Increase (decrease) in loans from subsidiaries --- 271.8 (127.6) 113.4
Decrease (increase) in loans to subsidiaries ----- (20.5) 34.7 50.1
Federal income taxes received (paid) ------------- 65.6 (270.0) (171.1)
Net tax receipts from (payments to) subsidiaries - (61.1) 319.8 204.9
Dividends paid to shareholders ------------------- (172.2) (156.2) (139.2)
Public offering of Common Stock ------------------ -- 316.1 --
Retirement of Common Stock ----------------------- (18.4) -- --
Other -------------------------------------------- 20.5 (2.8) (24.2)
Cash and invested cash - December 31 ------------- $ 523.1 $ 271.7 $ 422.0
Other investments - December 31 ------------------ 28.7 43.9 58.4
Debt - December 31 ------------------------------- 1,227.5 939.8 1,274.6
</TABLE>
The table above shows the cash flow activity for the holding company from
1992 through 1994. The line, "net tax receipts from (payments to)
subsidiaries", recognizes that the holding company receives tax payments from
subsidiaries, pays the consolidated tax liability and reimburses subsidiaries
for the tax effect of any taxable operating and capital losses.
As of December 31, 1994, $1.0 billion of consolidated shareholders' equity
represents net assets of the consolidated insurance subsidiaries that is
limited as to transfer in the form of dividends, loans or advances to the
holding company (see note 7 to the consolidated financial statements on page
50). However, this restriction poses no short-term liquidity concerns for the
holding company. The financial strength and stability of the subsidiaries
permit ready access to short-term or long-term credit sources for the holding
company.
Effect of Inflation
As indicated earlier in this review of consolidated operations, inflation
affects LNC's revenues and expenses. LNC's insurance affiliates, as well as
other companies in the insurance industry, attempt to minimize the effect of
inflation by anticipating inflationary trends in the pricing of their
products. Inflation, except for changes in interest rates, does not have a
significant effect on LNC's balance sheet due to the minimal amount of
dollars invested in property, plant and equipment and the absence of
inventories.
<PAGE>
30
<TABLE>
<CAPTION>
Item 8. Financial Statements and Supplementary Data
Operating Results by Quarter
(in millions, except per share) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
1994 Data
<S> <C> <C> <C> <C>
Premiums and other considerations --- $1,422.8 $1,118.4 $1,125.8 $1,388.1
Net investment income --------------- 501.8 487.6 510.0 511.9
Realized gain (loss) on investments - 38.1 (66.3) (74.2) (28.4)
Gain on sale of subsidiary ---------- 44.1 4.7 -- --
Net income -------------------------- 151.0 46.8 58.4 93.7
Net income per share ---------------- $1.46 $.45 $ .56 $ .90
1993 Data
Premiums and other considerations --- $1,417.8 $1,332.4 $1,644.0 $1,579.1
Net investment income --------------- 511.8 523.6 521.6 589.5
Realized gain on investments -------- 9.4 45.9 161.8 51.3
Loss on sale of subsidiary ---------- -- -- -- (98.5)
Income before cumulative effect
of accounting change --------------- 69.0 127.2 187.5 31.6
Net income (loss) ------------------- (27.4) 127.2 187.5 31.6
Income before cumulative effect of
accounting change per share -------- $.69 $1.23 $1.82 $.31
Net income (loss) per share --------- (.28) 1.23 1.82 .31
</TABLE>
Operating results in the first quarter of 1993 were affected by the adoption
of FAS 106 and FAS 114 (see note 2 to the consolidated financial statements on
pages 39 and 40) and in the fourth quarter of 1993 by a provision for the loss
on sale of a life insurance subsidiary which was completed in February 1994
(see note 11 to the consolidated financial statements on page 59). Income
before cumulative effect of accounting change and net income for the fourth
quarter of 1993 include two changes in estimates which essentially offset each
other (see note 2 to the consolidated financial statements on page 40).
Consolidated Financial Statements
The consolidated financial statements of Lincoln National Corporation and
Subsidiaries follow on pages 31 through 59.
<PAGE>
31
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31 (000'S omitted) 1994 1993
ASSETS
Investments:
<S> <C> <C>
Securities available-for-sale, at fair value:
Fixed maturity
(cost: 1994-$22,194,079; 1993-$22,219,285) - $21,644,154 $23,964,335
Equity
(cost: 1994-$948,135; 1993-$896,477) ------- 1,038,617 1,080,301
Mortgage loans on real estate ---------------- 2,853,083 3,300,951
Real estate ---------------------------------- 706,854 633,103
Policy loans --------------------------------- 553,272 595,085
Other investments ---------------------------- 175,121 158,170
Total Investments ------------------------ 26,971,101 29,731,945
Investment in unconsolidated affiliates -------- 97,054 --
Cash and invested cash ------------------------- 1,041,583 709,664
Property and equipment ------------------------- 185,471 233,467
Deferred acquisition costs --------------------- 2,444,215 2,011,131
Premiums and fees receivable ------------------- 564,779 601,883
Accrued investment income ---------------------- 429,059 413,144
Assets held in separate accounts --------------- 14,301,684 12,430,577
Federal income taxes --------------------------- 396,888 --
Amounts recoverable from reinsurers ------------ 2,207,727 1,460,038
Goodwill --------------------------------------- 145,744 228,530
Other assets ----------------------------------- 544,755 559,982
Total Assets ----------------------------- $49,330,060 $48,380,361
</TABLE>
See notes to consolidated financial statements on pages 37 - 59.
<PAGE>
32
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
-CONTINUED-
December 31 (000's omitted) 1994 1993
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Liabilities:
Policy liabilities and accruals:
Future policy benefits, claims
and claim expenses ------------------------- $11,216,312 $12,652,036
Unearned premiums --------------------------- 806,987 858,805
Total Policy Liabilities and Accruals ----- 12,023,299 13,510,841
Contractholder funds -------------------------- 17,025,623 14,872,141
Liabilities related to separate accounts ------ 14,301,684 12,430,577
Federal income taxes -------------------------- -- 150,951
Short-term debt ------------------------------- 275,310 351,418
Long-term debt -------------------------------- 419,607 335,097
Other liabilities ----------------------------- 2,242,477 2,657,015
Total Liabilities ------------------------- 46,288,000 44,308,040
Shareholders' Equity:
Series A Preferred Stock
(1994 liquidation value - $3,457) ------------ 1,420 1,553
Series E Preferred Stock
(1994 liquidation value - $151,569) ---------- 151,206 151,206
Series F Preferred Stock
(1994 liquidation value - $158,707) ---------- 158,707 158,707
Common Stock ---------------------------------- 555,382 543,659
Earned surplus -------------------------------- 2,479,532 2,303,731
Foreign currency translation adjustment ------- 6,890 (1,214)
Net unrealized gain (loss) on
securities available-for-sale ---------------- (311,077) 914,679
Total Shareholders' Equity ---------------- 3,042,060 4,072,321
Total Liabilities and
and Shareholders' Equity ----------------- $49,330,060 $48,380,361
See notes to consolidated financial statements on pages 37 - 59.
</TABLE>
<PAGE>
33
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31 (000's omitted) 1994 1993 1992
<S> <C> <C> <C>
Revenue:
Insurance premiums ------------------ $4,444,148 $5,356,797 $5,298,892
Insurance fees ---------------------- 449,643 470,395 409,474
Net investment income --------------- 2,011,351 2,146,519 1,987,296
Equity in earnings of
unconsolidated affiliates ---------- 14,652 -- --
Realized gain (loss) on investments - (130,820) 268,422 176,948
Gain (loss) on sale of subsidiaries - 48,842 (98,500) --
Other ------------------------------- 146,534 146,124 161,493
Total Revenue --------------------- 6,984,350 8,289,757 8,034,103
Benefits and Expenses:
Benefits and settlement expenses ---- 4,849,243 5,628,279 5,700,443
Underwriting, acquisition,
insurance and other expenses ------- 1,709,306 2,029,348 1,855,167
Interest expense -------------------- 49,520 44,301 53,794
Total Benefits and Expenses ------- 6,608,069 7,701,928 7,609,404
Income Before Federal Income
Taxes and Cumulative Effect
of Accounting Change ------------- 376,281 587,829 424,699
Federal income taxes ------------------ 26,383 172,546 65,528
Income Before Cumulative Effect
of Accounting Change ------------- 349,898 415,283 359,171
Cumulative effect of accounting
change (postretirement benefits) ----- -- (96,431) --
Net Income ------------------------ $ 349,898 $ 318,852 $ 359,171
Earnings Per Share:
Income before cumulative
effect of accounting change ---------- $3.37 $4.06 $3.86
Cumulative effect of accounting
change (postretirement benefits) ----- -- (.94) --
Net Income ------------------------ $3.37 $3.12 $3.86
See notes to consolidated financial statements on pages 37 - 59.
</TABLE>
<PAGE>
34
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Year Ended December 31 (000's omitted) 1994 1993 1992
<S> <C> <C> <C>
Preferred Stock:
Series A Preferred Stock:
Balance at beginning of year ----------- $ 1,553 $ 1,896 $ 2,208
Conversion into Common Stock ----------- (133) (343) (312)
Balance at End of Year --------------- 1,420 1,553 1,896
Series E Preferred Stock:
Balance at Beginning
and End of Year --------------------- 151,206 151,206 151,206
Series F Preferred Stock:
Balance at Beginning
and End of Year --------------------- 158,707 158,707 158,707
Common Stock:
Balance at beginning of year ------------ 543,659 200,986 179,656
Conversion of Series A Preferred Stock -- 133 343 312
Public offering of Common Stock --------- -- 316,100 --
Issued for benefit plans ---------------- 30,616 26,930 22,095
Shares forfeited under benefit plans ---- (631) (700) (1,077)
Retirement of Common Stock -------------- (18,395) -- --
Balance at End of Year --------------- 555,382 543,659 200,986
Earned Surplus:
Balance at beginning of year ------------ 2,303,731 2,147,691 1,929,263
Net income ------------------------------ 349,898 318,852 359,171
Dividends declared:
Series A Preferred Stock -------------- (134) (146) (181)
Series E Preferred Stock -------------- (8,336) (8,336) (8,336)
Series F Preferred Stock -------------- (8,729) (8,729) (8,729)
Common Stock -------------------------- (156,898) (145,601) (123,497)
Balance at End of Year --------------- 2,479,532 2,303,731 2,147,691
Foreign Currency Translation Adjustment:
Accumulated adjustment at
beginning of year ---------------------- (1,214) 3,643 24,710
Change during the year ------------------ 8,104 (4,857) (21,067)
Balance at End of Year --------------- 6,890 (1,214) 3,643
Net Unrealized Gain (Loss) on Securities
Available-for-sale:
Balance at beginning of year ----------- 914,679 162,742 210,082
Cumulative effect of accounting change - -- 768,419 --
Other change during the year ---------- (1,225,756) (16,482) (47,340)
Balance at End of Year --------------- (311,077) 914,679 162,742
Total Shareholders' Equity
at End of Year ---------------------- $3,042,060 $4,072,321 $2,826,871
See notes to consolidated financial statements on pages 37 - 59.
</TABLE>
<PAGE>
35
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - continued
Year Ended December 31 (Number of Shares) 1994 1993 1992
<S> <C> <C> <C>
Preferred Stock:
(10,000,000 shares authorized)
Series A Preferred Stock:
Balance at beginning of year -------- 47,289 57,716 67,208
Conversion into Common Stock -------- (4,071) (10,427) (9,492)
Balance Issued and Outstanding
at End of Year ------------------- 43,218 47,289 57,716
Series E Preferred Stock:
Balance Issued and Outstanding
at Beginning and End of Year ----- 2,201,443 2,201,443 2,201,443
Series F Preferred Stock:
Balance Issued and Outstanding
at Beginning and End of Year ----- 2,216,454 2,216,454 2,216,454
Common Stock:
(Shares authorized: 1994 - 800,000,000;
1993 and 1992 - 400,000,000)
Balance at beginning of year ---------- 94,183,190 84,142,458 83,174,370
Conversion of Series A Preferred Stock- 32,568 83,416 75,936
Public offering of Common Stock ------- -- 9,200,000 --
Issued for benefit plans -------------- 778,587 786,192 896,350
Shares forfeited under benefit plans -- (16,403) (28,876) (4,198)
Retirement of Common Stock ------------ (500,000) -- --
Balance Issued and Outstanding
at End of Year --------------------- 94,477,942 94,183,190 84,142,458
Common Stock (assuming conversion of
Series A, E and F Preferred Stock):
End of Year -------------------------- 103,659,480 103,397,296 93,439,980
Average for the Year ----------------- 103,863,196 102,307,356 92,977,312
Dividends Per Share:
Series A Preferred Stock -------------- $3.00 $3.00 $3.00
Series E Preferred Stock -------------- 3.79 3.79 3.79
Series F Preferred Stock -------------- 3.94 3.94 3.94
Common Stock -------------------------- 1.66 1.55 1.475
See notes to consolidated financial statements on pages 37 - 59.
</TABLE>
<PAGE>
36
<TABLE>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31 (000's omitted) 1994 1993 1992
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income ------------------------------ $ 349,898 $ 318,852 $ 359,171
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred acquisition costs ----------- (154,419) (203,661) (146,010)
Premiums and fees receivable --------- 11,223 189,699 134,033
Accrued investment income ------------ (44,671) 23,141 (5,734)
Policy liabilities and accruals ------ (155,813) 361,397 256,237
Contractholder funds ----------------- 1,774,688 1,177,229 636,088
Amounts recoverable from reinsurers--- (776,408) (710,038) --
Federal income taxes ----------------- (59,611) (96,469) (128,074)
Equity in undistributed earnings of
unconsolidated affiliates ----------- 12,408 -- --
Provisions for depreciation ---------- 58,689 58,893 60,142
Realized (gain) loss on investments -- 212,201 (292,153) (176,948)
(Gain) loss on sale of subsidiaries -- (48,842) 98,500 --
Cumulative effect of accounting
change ------------------------------ -- 96,431 --
Other -------------------------------- 6,667 (8,725) (118,406)
Net Adjustments -------------------- 836,112 694,244 511,328
Net Cash Provided by
Operating Activities -------------- 1,186,010 1,013,096 870,499
Cash Flows from Investing Activities:
Securities available-for-sale:
Purchases ----------------------------- (13,383,236) (9,158,159) (8,553,010)
Sales --------------------------------- 10,352,938 8,834,823 8,472,278
Maturities ---------------------------- 1,106,687 45,937 17,645
Fixed maturity securities held for investment:
Purchases ----------------------------- -- (6,626,937) (7,773,996)
Sales --------------------------------- -- 3,205,203 4,245,048
Maturities ---------------------------- -- 1,858,044 1,446,902
Purchase of other investments ----------- (1,694,970) (1,362,579) (1,181,106)
Sale or maturity of other investments --- 1,755,113 733,585 916,652
Sale of subsidiaries -------------------- 417,367 -- 145,270
Increase (decrease) in cash collateral on
loaned securities ---------------------- (149,597) 30,906 275,614
Other ----------------------------------- 72,166 145,343 (159,964)
Net Cash Used in Investing Activities-- (1,523,532) (2,293,834) (2,148,667)
Cash Flows from Financing Activities:
Principal payments on long-term debt ---- (109,552) (2,805) (32,855)
Issuance of long-term debt -------------- 199,382 14,819 204,042
Net decrease in short-term debt --------- (75,155) (181,989) (243,899)
Universal life and investment
contract deposits ---------------------- 2,429,113 2,467,540 3,162,277
Universal life and investment
contract withdrawals ------------------- (1,613,780) (1,509,108) (1,218,461)
Public offering of Common Stock --------- -- 316,100 --
Common Stock issued for benefit plans --- 29,985 26,230 21,018
Retirement of Common Stock -------------- (18,395) -- --
Dividends paid to shareholders ---------- (172,157) (156,235) (139,151)
Net Cash Provided by Financing
Activities --------------------------- 669,441 974,552 1,752,971
Net Increase (Decrease) in Cash ------- 331,919 (306,186) 474,803
Cash at Beginning of Year --------------- 709,664 1,015,850 541,047
Cash at End of Year ------------------- $1,041,583 $ 709,664 $1,015,850
See notes to consolidated financial statements on pages 37 - 59.
</TABLE>
<PAGE>
37
LINCOLN NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation. The accompanying consolidated financial statements
include Lincoln National Corporation ("LNC") and its majority-owned
subsidiaries. Less than majority-owned entities in which LNC has at least a
20% interest are reported on the equity basis. These consolidated financial
statements have been prepared in conformity with generally accepted accounting
principles.
Investments. Recognizing LNC's need for the ability to respond to changes in
market conditions and tax position, LNC has classified its fixed maturity and
equity securities (common and non-redeemable preferred stocks) as available-
for-sale and, accordingly, such securities are carried at fair value. The
cost of fixed maturity securities is adjusted for amortization of premiums and
discounts. The cost of fixed maturity and equity securities is adjusted for
declines in value that are other than temporary.
For the mortgage-backed securities portion of the fixed maturity securities
portfolio, LNC recognizes income using a constant effective yield based on
anticipated prepayments and the estimated economic life of the securities.
When actual prepayments differ significantly from anticipated prepayments, the
effective yield is recalculated to reflect actual payments to date and
anticipated future payments. The net investment in the securities is adjusted
to the amount that would have existed had the new effective yield been applied
since the acquisition of the securities. This adjustment is reflected in net
investment income.
Mortgage loans on real estate are carried at the outstanding principal
balances less unaccrued discounts. Property and equipment owned for company
use are carried at cost less allowances for depreciation. Policy loans are
carried at the aggregate unpaid balances. All such investments are carried
net of reserves for declines in value that are other than temporary. The
change in these reserves is reported as realized gain (loss) on investments.
Investment real estate is carried at cost less allowances for depreciation.
Such real estate is carried net of reserves for declines in value that are
other than temporary. Real estate acquired through foreclosure proceedings
is recorded at fair value at the date of acquisition which establishes a new
cost basis. If a subsequent valuation of a foreclosed property indicates the
fair value less estimated costs to sell is lower than the value at
acquisition, the carrying value is adjusted to the lower amount.
Cash and invested cash are carried at cost and include all highly liquid debt
instruments purchased with a maturity of three months or less.
Realized gain (loss) on investments are recognized in net income, net of
related amortization of deferred acquisition costs, using the specific
identification method. Changes in the fair values of securities carried at
fair value are reflected directly in shareholders' equity after deductions for
related adjustments for deferred acquisition costs and amounts required to
satisfy policyholder commitments that would have been recorded if these
securities would have been sold at their fair value, and after deferred taxes
or credits to the extent deemed recoverable.
Derivatives. LNC hedges certain portions of its exposure to fluctuations in
interest and foreign exchange risks by entering into derivative transactions.
The premium paid for interest rate caps is deferred and amortized on a
straight-line basis over the term of the interest rate caps against investment
income. Any settlement received in accordance with the terms of the interest
rate caps is recorded as investment income. Spread-lock agreements, interest
rate swaps, mortgage-backed securities total return swaps, financial futures
contracts, options on financial futures, and United Kingdom forward swaps,
which hedge fixed maturity securities available-for-sale, are carried at fair
value with the change in fair value reflected directly in shareholders'
equity. Realized gain (loss) from the settlement of such derivatives are
deferred and amortized over the life of the hedged assets as an adjustment to
the yield. Foreign exchange forward contracts, which hedge LNC's investment
<PAGE>
38
in its foreign subsidiary, Lincoln National (UK), are carried at fair value
with the change in fair value and realized gain (loss) on such contracts
reflected directly in the foreign currency translation adjustment component of
stockholders' equity.
Premiums and Fees. Property-casualty and group health premiums are prorated
over the contract term of the policies. Revenue for universal life and other
interest-sensitive life insurance policies consist of policy charges for the
cost of insurance, policy initiation and administration, and surrender
charges that have been assessed. Traditional individual life-health and
annuity premiums are recognized as revenue over the premium-paying period of
the policies.
Assets Held in Separate Accounts/Liabilities Related to Separate Accounts.
These assets and liabilities represent segregated funds administered and
invested by LNC's insurance subsidiaries for the exclusive benefit of pension
and variable life and annuity contractholders. LNC receives fees for services
performed for these separate accounts. These fees are included in LNC's
consolidated statement of income.
Deferred Acquisition Costs. Commissions and other costs of acquiring
property-casualty insurance, group health insurance, universal and variable
universal life insurance, and traditional life insurance and annuities, which
vary with and are primarily related to the production of new business, have
been deferred to the extent recoverable. Deferred acquisition costs for
property-casualty policies are amortized over the contract term of the
policies; property-casualty acquisition costs that are not recoverable from
future premiums and related investment income are expensed. Acquisition costs
for universal and variable universal life insurance policies are being
amortized over the lives of the policies in relation to the incidence of
estimated gross profits from surrender charges and investment, mortality, and
expense margins, and actual realized gain (loss) on investments. That
amortization is adjusted retrospectively when estimates of current or future
gross profits to be realized from a group of products are revised. The
traditional life-health and annuity acquisition costs are being amortized over
the premium-paying period of the related policies using assumptions consistent
with those used in computing policy reserves.
Expenses. Expenses for universal and variable universal life insurance
policies include interest credited to policy account balances and benefit
claims incurred during the period in excess of policy account balances.
Interest crediting rates associated with funds invested in the insurance
company's general account during 1992 through 1994 ranged from 6.1% to 8.7%.
Intangible Assets. The present value of acquired insurance in-force, which is
classified with other assets on the balance sheet, is amortized over the
premium recognition period of the policies acquired. The costs of acquired
subsidiaries in excess of the fair value of net assets (goodwill) are
amortized using the straight-line method over periods that correspond with the
benefits expected to be derived from the acquisitions (generally over 20-25
years). The carrying value of intangible assets is reviewed regularly for
indicators of impairment in value.
Policy Liabilities and Accruals. The liability for unpaid property-casualty
claims is based on estimates of payments to be made for individual claims
reported and unreported claims, reduced by estimated recoveries from salvage
and subrogation. These estimates are continually reviewed and, as experience
develops and new information becomes known, the liability is adjusted as
necessary; such adjustments are included in current operations. The
liabilities for future policy benefits and expenses for universal and variable
universal life insurance policies consist of policy account balances that
accrue to the benefit of the policyholders, excluding surrender charges. The
liabilities for future policy benefits and expenses for traditional
life-health policies and annuities are computed using a net level premium
method and assumptions for investment yields, mortality, morbidity, and
withdrawals based principally on company experience projected at the time of
policy issue, with provision for possible adverse deviations. Interest
assumptions for traditional direct individual life reserves for all policies
range from 2.3% to 11.7% graded to 5.7% after 30 years depending on time of
policy issue. Interest rate assumptions for reinsurance reserves range from
5.0% to 11.0% graded to 8.0% after 20 years.
<PAGE>
39
Reinsurance. LNC's insurance companies enter into reinsurance agreements with
other companies in the normal course of their business. LNC's insurance
subsidiaries may assume reinsurance from unaffiliated companies and/or cede
reinsurance to such companies. Assets and liabilities from reinsurance
agreements written on a funds withheld basis have been netted on the balance
sheet since there is a right of offset. Assets and liabilities from other
reinsurance agreements are reported on a gross basis. Reinsurance agreements
are reported gross in the accompanying income statement, except that initial
reserves are netted against premiums when an in-force block of business is
reinsured.
Depreciation. Provisions for depreciation of investment real estate and
property and equipment owned for company use are computed principally on the
straight-line method over the estimated useful lives of the assets.
Postretirement Medical and Life Insurance Benefits. Effective January 1,
1993, LNC changed its method of accounting for its postretirement medical and
life insurance benefits to the full accrual method (see note 2 below). Prior
to January 1, 1993, LNC accounted for such benefits on a pay-as-you-go method.
Foreign Exchange. LNC's foreign subsidiaries' balance sheet accounts and
income statement items are translated at the current exchange and average
exchange rates for the year, respectively. Resulting translation adjustments
are reported as a component of shareholders' equity. Other translation
adjustments for foreign currency transactions that affect cash flows are
reported in earnings.
2. Changes in Accounting Principles and Changes in Estimates
Postretirement Benefits Other than Pensions. Effective January 1, 1993, LNC
changed its method of accounting for postretirement medical and life insurance
benefits for its eligible employees and agents from a pay-as-you-go method to
a full accrual method in accordance with Financial Accounting Standard No. 106
entitled "Employers' Accounting for Postretirement Benefits Other Than
Pensions" ("FAS 106"). This full accrual method recognizes the estimated
obligation for retired employees and agents and active employees and agents
who are expected to retire in the future. The effect of the change for 1993
was to increase net periodic postretirement benefit cost by $9,200,000 and
decrease income before cumulative effect of accounting change by $6,000,000
($.06 per share). The implementation of FAS 106 resulted in a one-time charge
to first quarter 1993 net income of $96,400,000 ($146,100,000 pre-tax) or $.94
per share for the cumulative effect of the accounting change. Prior year data
has not been restated for the accounting change. See note 6 on page 49 for
additional disclosures regarding postretirement benefits other than pensions.
Accounting by Creditors for Impairment of a Loan. Financial Accounting
Standard No. 114 entitled "Accounting by Creditors for Impairment of a Loan"
(FAS 114") issued in May 1993, was adopted by LNC effective January 1, 1993.
FAS 114 requires that if an impaired mortgage loan's fair value as described
in note 3 on page 42 is less than the recorded investment in the loan, the
difference is recorded in the mortgage loan allowance for losses account. The
adoption of FAS 114 resulted in additions to the mortgage loan allowance for
losses account and reduced first quarter 1993 income before cumulative effect
of accounting change and net income by $42,300,000 or $.41 per share
($64,100,000 pre-tax). See note 3 on page 43 for further mortgage loan
disclosures. Most of the effect of this change in accounting was within the
Life Insurance and Annuities segment.
Accounting for Certain Investments in Debt and Equity Securities. Financial
Accounting Standard No. 115 entitled "Accounting for Certain Investments in
Debt and Equity Securities" ("FAS 115") issued in May 1993, was adopted by LNC
as of December 31, 1993. In accordance with the new rules, the prior year
financial statements have not been restated to reflect the change in
accounting principle. Under FAS 115, securities can be classified as
available-for-sale, trading or held-to-maturity according to the holders
intent. LNC classified its entire fixed maturity securities portfolio as
"available-for-sale." Securities classified as available-for-sale are carried
at fair value and unrealized gains and losses on such securities are carried
as a separate component of shareholders' equity. The ending balance of
<PAGE>
40
shareholders' equity was increased by $768,400,000 (net of $384,600,000 of
related adjustments to deferred acquisition costs, $62,900,000 of policyholder
commitments and $412,400,000 in deferred income taxes, all of which would have
been recognized if those securities would have been sold at their fair value,
net of amounts applicable to Security-Connecticut Corporation) to reflect the
net unrealized gain on fixed maturity securities classified as available-for-
sale previously carried at amortized cost. Prior to the adoption of FAS 115,
LNC carried a portion of its fixed maturity securities at fair value with
unrealized gains and losses carried as a separate component of stockholders'
equity. The remainder of such securities were carried at amortized cost.
Change in Estimate for Net Investment Income Related to Mortgage-backed
Securities. At December 31, 1993, LNC had $6,062,000,000 invested in
mortgage-backed securities. As indicated in note 1 on page 37, LNC recognizes
income on these securities using a constant effective yield based on
anticipated prepayments. With the implementation of new investment software
in December 1993, LNC was able to significantly refine its estimate of the
effective yield on such securities to better reflect actual prepayments and
estimates of future prepayments. This resulted in an increase in the
amortization of purchase discount on these securities of $58,600,000 and,
after related amortization of deferred acquisition costs ($18,500,000) and
income taxes ($14,100,000), increased 1993's income before cumulative effect
of accounting change and net income by $26,000,000 or $0.25 per share. Most
of the effect of this change in estimate was within the Life Insurance and
Annuities business segment.
Change in Estimate for Reinsurance Disability Income Reserves. During
December 1993, income before cumulative effect of accounting change and net
income decreased by $32,800,000 or $0.32 per share as the result of
strengthening reinsurance disability income reserves by $50,500,000. The need
for this reserve increase within the Life-Health Reinsurance segment was
identified as the result of management's assessment of current expectations
for morbidity trends and the impact of lower investment income due to lower
interest rates.
3. Investments
<TABLE>
<CAPTION>
The major categories of net investment income are as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Fixed maturity securities --------------------- $1,614.9 $1,757.6 $1,608.6
Equity securities ----------------------------- 29.9 28.9 25.6
Mortgage loans on real estate ----------------- 277.2 297.2 296.6
Real estate ----------------------------------- 104.4 82.3 54.1
Policy loans ---------------------------------- 34.0 37.3 35.2
Invested cash --------------------------------- 55.8 39.6 31.1
Other investments ----------------------------- 54.5 33.4 60.0
Investment revenue -------------------------- 2,170.7 2,276.3 2,111.2
Investment expense ---------------------------- 159.4 129.8 123.9
Net investment income ----------------------- $2,011.3 $2,146.5 $1,987.3
The realized gain (loss) on investments is as follows:
Year Ended December 31 (in millions) 1994 1993 1992
Fixed maturity securities available-for-sale:
Gross gain ------------------------------------ $ 87.8 $142.3 $111.2
Gross loss ------------------------------------ (331.2) (13.3) (45.4)
Equity securities available-for-sale:
Gross gain ------------------------------------ 92.6 225.8 136.2
Gross loss ------------------------------------ (80.8) (69.1) (52.7)
Fixed maturity securities held for investment:
Gross gain ------------------------------------ -- 248.9 210.7
Gross loss ------------------------------------ -- (75.8) (37.5)
Other investments------------------------------ 19.6 (166.7) (145.6)
Related restoration (amortization) of
deferred acquisition costs ------------------- 81.2 (23.7) --
Total -------------------------------------- $(130.8) $268.4 $176.9
</TABLE>
<PAGE>
41
<TABLE>
Provisions for write-downs and provisions for losses, which are included in
the realized gain (loss) on investments shown above, are as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Fixed maturity securities (interest only
mortgage-backed securities ------------------- $ .9 $ 40.6 $ --
Fixed maturity securities (other) ------------- 18.6 19.4 19.4
Equity securities ----------------------------- 8.7 1.6 3.8
Mortgage loans on real estate ----------------- 18.2 140.6 91.9
Real estate ----------------------------------- 14.9 33.4 36.1
Other long-term investments ------------------- 1.7 4.3 20.3
Guarantees ------------------------------------ 2.5 1.4 6.9
Total --------------------------------------- $ 65.5 $241.3 $178.4
The change in unrealized appreciation (depreciation) on investments in fixed
maturity and equity securities is as follows:
Year Ended December 31 (in millions) 1994 1993 1992
Fixed maturity securities available-for-sale - $(2,295.1) $1,717.5 $ (72.0)
Equity securities available-for-sale --------- (93.3) (32.7) (6.7)
Fixed maturity securities held for investment -- (1,130.3) (99.5)
Total -------------------------------------- $(2,388.4) $ 554.5 $(178.2)
The cost, gross unrealized gain and loss and fair value of securities
available-for-sale are as follows:
Fair
December 31 (in millions) Cost Gain Loss Value
1994:
Corporate bonds ------------------- $12,166.7 $170.8 $ 544.9 $11,792.6
U.S. Government bonds ------------- 1,673.1 7.5 47.8 1,632.8
Foreign governments bonds --------- 624.3 6.1 18.5 611.9
Mortgage-backed securities -------- 5,215.5 92.3 201.4 5,106.4
State and municipal bonds --------- 2,386.2 46.2 54.7 2,377.7
Redeemable preferred stocks ------- 128.3 -- 5.6 122.7
Total fixed maturity securities - 22,194.1 322.9 872.9 21,644.1
Equity securities ----------------- 948.1 135.2 44.7 1,038.6
Total --------------------------- $23,142.2 $458.1 $ 917.6 $22,682.7
1993:
Corporate bonds ------------------- $11,688.8 $1,129.5 $ 73.5 $12,744.8
U.S. Government bonds ------------- 1,657.3 48.3 14.3 1,691.3
Foreign governments bonds --------- 493.7 61.9 4.0 551.6
Mortgage-backed securities -------- 5,685.7 453.0 76.7 6,062.0
State and municipal bonds --------- 2,558.2 214.3 .8 2,771.7
Redeemable preferred stocks ------- 135.6 18.0 10.6 143.0
Total fixed maturity securities - 22,219.3 1,925.0 179.9 23,964.4
Equity securities ----------------- 896.5 201.1 17.3 1,080.3
Total --------------------------- $23,115.8 $2,126.1 $197.2 $25,044.7
</TABLE>
<TABLE>
<CAPTION>
Future maturities of fixed maturity securities available-for-sale are as
follows:
1994
Fair
December 31 (in millions) Cost Value
<S> <C> <C>
Due in one year or less ------------------------------ $ 288.5 $ 291.1
Due after one year through five years ---------------- 4,083.5 4,046.4
Due after five years through ten years --------------- 6,321.3 6,130.0
Due after ten years ---------------------------------- 6,285.3 6,070.2
Subtotal ------------------------------------------- 16,978.6 16,537.7
Mortgage-backed securities --------------------------- 5,215.5 5,106.4
Total ---------------------------------------------- $22,194.1 $21,644.1
The foregoing data is based on stated maturities. Actual maturities will
differ in some cases because borrowers may have the right to call or pre-pay
obligations.
</TABLE>
<PAGE>
42
<TABLE>
<CAPTION>
At December 31, 1994, the current par, amortized cost and estimated fair value
of investments in mortgage-backed securities summarized by interest rates of
the underlying collateral are as follows:
Current Fair
December 31 (in millions) Par Cost Value
<S> <C> <C> <C>
Below 7% ------------------------------- $ 94.0 $ 82.8 $ 78.4
7% - 8% -------------------------------- 1,383.1 1,350.5 1,260.0
8% - 9% -------------------------------- 1,744.1 1,682.1 1,632.0
Above 9% ------------------------------- 2,200.0 2,100.1 2,136.0
Total -------------------------------- $5,421.2 $5,215.5 $5,106.4
</TABLE>
<TABLE>
<CAPTION>
The fixed maturity securities available-for-sale quality ratings are as
follows:
December 31 1994
<S> <C>
Treasuries and AAA ----------------------------------- 37.3%
AA --------------------------------------------------- 10.8
A ---------------------------------------------------- 25.6
BBB -------------------------------------------------- 20.5
BB --------------------------------------------------- 3.3
Less than BB ----------------------------------------- 2.5
</TABLE>
100.0%
Mortgage loans on real estate are considered impaired when, based on current
information and events, it is probable that LNC will be unable to collect all
amounts due according to the contractual terms of the loan agreement. When
LNC determines that a loan is impaired a provision for loss is established for
the difference between the carrying value of the mortgage loan and the
estimated value. Estimated value is based on either the present value of
expected future cash flows discounted at the loan's effective interest rate,
the loan's observable market price or the fair value of the collateral. The
provision for losses is reported as realized gain (loss) on investments.
Mortgage loans deemed to be uncollectible are charged against the provision
for losses and subsequent recoveries, if any, are credited to the provision
for losses.
The provision for losses is maintained at a level believed adequate by
management to absorb estimated probable credit losses. Management's periodic
evaluation of the adequacy of the provision for losses is based on LNC's past
loan loss experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay (including the
timing of future payments), the estimated value of the underlying collateral,
composition of the loan portfolio, current economic conditions and other
relevant factors. This evaluation is inherently subjective as it requires
estimating the amounts and timing of future cash flows expected to be received
on impaired loans that may be susceptible to significant change.
<TABLE>
<CAPTION>
Impaired loans included along with the related provision for losses is as
follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Impaired loans with provision for losses --------- $275.8 $726.0
Provision for losses ----------------------------- (62.7) (226.6)
Impaired loans with no provision for losses ------ 2.3 7.8
Net Impaired Loans ----------------------------- $215.4 $507.2
</TABLE>
Impaired loans with no provision for losses are a result of direct write-downs
or for collateral dependent loans where the fair value of the collateral is
greater than the recorded investment in loans.
<PAGE>
43
<TABLE>
<CAPTION>
A reconciliation of the mortgage loan provision for losses for these impaired
mortgage loans is as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Balance at beginning of year -------------------- $226.6 $134.5 $ 72.0
Provisions for losses --------------------------- 18.2 76.5 91.9
Provision for adoption of FAS 114 --------------- -- 64.1 --
Releases due to sales --------------------------- (163.2) (12.4) (7.0)
Releases due to foreclosures -------------------- (18.9) (36.1) (22.4)
Balance at End of Year ------------------------ $ 62.7 $226.6 $134.5
</TABLE>
<TABLE>
The average recorded investment in impaired loans and the interest income
recognized on impaired loans were as follows:
Year Ended December 31 (in millions) 1994 1993
<S> <C> <C>
Average recorded investment in impaired loans --------- $498.1 $734.4
Interest income recognized on impaired loans ---------- 38.3 48.5
All interest income on impaired loans was recognized on the cash basis of
income recognition.
</TABLE>
As of December 31, 1994 and 1993, LNC had restructured loans of $36,200,000
and $88,900,000, respectively. LNC recorded $800,000 and $6,600,000 interest
income on these restructured loans in 1994 and 1993, respectively. Interest
income in the amount of $3,900,000 and $9,600,000 would have been recorded on
these loans according to their original terms in 1994 and 1993, respectively.
As of December 31, 1993, LNC had commitments to lend $132,000 on restructured
loans. No such commitments were outstanding as of December 31, 1994.
As of December 31, 1994, LNC's investment commitments for fixed maturity
securities (primarily private placements), mortgage loans on real estate and
real estate were $327,200,000.
Fixed maturity securities available-for-sale, mortgage loans on real estate
and real estate with a combined carrying value at December 31, 1994 of
$41,200,000 were non-income producing for the year ended December 31, 1994.
<TABLE>
<CAPTION>
The cost information for mortgage loans on real estate, real estate and other
long-term investments are net of provisions for losses. The balance sheet
account for other liabilities includes a reserve for guarantees of third-party
debt. The amount of provisions and reserves for such items is as follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Mortgage loans on real estate ------------------------- $ 62.7 $226.6
Real estate ------------------------------------------- 78.6 121.4
Other long-term investments --------------------------- 23.8 27.2
Guarantees -------------------------------------------- 13.1 18.5
</TABLE>
4. Federal Income Taxes
<TABLE>
The federal income tax expense (benefit) before cumulative effect of
accounting change is as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Current -------------------------------------- $(93.9) $308.2 $222.9
Deferred ------------------------------------- 120.3 (135.7) (157.4)
Total -------------------------------------- $ 26.4 $172.5 $ 65.5
Cash paid for federal income taxes in 1994, 1993 and 1992 was $70,900,000,
$279,700,000 and $195,300,000 respectively.
</TABLE>
<PAGE>
44
The Omnibus Reconciliation Act of 1993 ("1993 Act") changed LNC's prevailing
corporate federal income tax rate from 34% to 35% effective January 1, 1993.
The application of this new tax rate to the December 31, 1992 deferred tax
recoverable balance resulted in a decrease in federal income taxes of
$4,900,000 for 1993.
<TABLE>
<CAPTION>
The effective tax rate on pre-tax income before cumulative effect of
accounting change is lower than the prevailing corporate federal income tax
rate. A reconciliation of this difference is as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Tax rate times pre-tax income ----------------- $131.7 $205.7 $144.4
Effect of:
Tax-exempt investment income ------------------ (74.0) (75.8) (59.2)
Loss (gain) on sale of subsidiary ------------- (17.1) 34.5 --
Other items ----------------------------------- (14.2) 8.1 (19.7)
Provision for income taxes ------------------ $ 26.4 $172.5 $ 65.5
Effective tax rate -------------------------- 7% 29% 15%
</TABLE>
<TABLE>
<CAPTION>
The federal income tax recoverable (liability) is as follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Current ----------------------------------------------- $ 94.4 $ (83.0)
Deferred ---------------------------------------------- 302.5 (68.0)
Total ----------------------------------------------- $ 396.9 $(151.0)
</TABLE>
<TABLE>
<CAPTION>
Significant components of LNC's net deferred tax asset (liability) are as
follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Deferred tax assets:
Policy liabilities and accruals and
contractholder funds --------------------------------- $ 696.2 $ 772.3
Net operating loss ------------------------------------ 143.9 109.3
Loss on investments ----------------------------------- 30.1 149.0
Sale of subsidiaries ---------------------------------- -- 20.1
Net unrealized loss on securities available-for-sale -- 159.3 --
Postretirement benefits other than pensions ----------- 54.6 54.8
Other ------------------------------------------------- 131.3 68.0
Total deferred tax assets --------------------------- 1,215.4 1,173.5
Valuation allowance for deferred tax assets ----------- (135.6) --
Net deferred tax assets ----------------------------- 1,079.8 1,173.5
Deferred tax liabilities:
Deferred acquisition costs ---------------------------- 741.3 520.2
Premiums and fees receivable -------------------------- 32.8 32.7
Net unrealized gain on securities available-for-sale--- -- 656.5
Other ------------------------------------------------- 3.2 32.1
Total deferred tax liabilities ---------------------- 777.3 1,241.5
Net deferred tax asset (liability) ------------------ $ 302.5 $ (68.0)
</TABLE>
At December 31, 1994, LNC had net operating loss carryforwards of $411,000,000
for income tax purposes related to its foreign life reinsurance companies that
expire in years 1999 through 2009.
LNC is required to establish a "valuation allowance" for any portion of its
deferred tax assets which are unlikely to be realized. At December 31, 1994,
$159,300,000 of deferred tax assets relating to net unrealized capital losses
on fixed maturity and equity securities available-for-sale were available to
be recorded in shareholders' equity before considering a valuation allowance.
For federal income tax purposes, capital losses may only be used to offset
capital gains in the current year or during a three year carryback and five
year carryforward period. Due to these restrictions, and the uncertainty of
future capital gains, these deferred tax assets have been substantially offset <PAGE>
<PAGE>
45
by a valuation allowance of $135,600,000. With the exception of the deferred
tax assets relating to unrealized capital losses on available-for-sale
securities, management believes it is more likely than not that LNC will
realize the benefit of its deferred tax assets. Accordingly, a valuation
allowance was established in shareholders' equity as of December 31, 1994
relating to unrealized capital losses on available-for-sale securities.
Prior to 1984, a portion of the life companies' current income was not subject
to current income tax, but was accumulated for income tax purposes in a
memorandum account designated as "policyholders' surplus." The total of the
life companies' balances in their respective "policyholders' surplus" accounts
at December 31, 1983 of $222,400,000 was "frozen" by the Tax Reform Act of
1984 and, accordingly, there have been no additions to the accounts after that
date. That portion of current income on which income taxes have been paid
will continue to be accumulated in a memorandum account designated as
"shareholders' surplus," and is available for dividends to shareholders
without additional payment of tax. The December 31, 1994 total of the life
companies' account balances for their "shareholders' surplus" was
$1,551,700,000. Should dividends to shareholders for each life company exceed
its respective "shareholders' surplus," amounts would need to be transferred
from its respective "policyholders' surplus" and would be subject to federal
income tax at that time. In connection with the 1993 sale of a life insurance
affiliate (see note 11 on page 59) $8,800,000 was transferred from
policyholders' surplus to shareholders' surplus and current income tax of
$3,100,000 was paid. Under existing or foreseeable circumstances, LNC neither
expects nor intends that distributions will be made from the remaining balance
in "policyholders' surplus" of $213,600,000 that will result in any such tax.
Accordingly, no provision for deferred income taxes has been provided by LNC
on its "policyholders' surplus" account. In the event that such excess
distributions were made, it is estimated that income taxes of approximately
$74,800,000 would be due.
Undistributed earnings of certain LNC foreign subsidiaries that are considered
to be indefinitely reinvested amounted to approximately $135,000,000 at
December 31, 1994. Accordingly, no provisions for U.S. income taxes have been
provided thereon. Upon distribution of those earnings in the form of
dividends or otherwise, LNC would be subject to both U.S. income taxes
(subject to adjustments for foreign tax credits) and withholding taxes payable
to the applicable foreign countries. Determination of the amount of
unrecognized deferred U.S. income tax liability is not practicable because of
the complexities associated with its hypothetical calculations.
5. Supplemental Financial Data
<TABLE>
<CAPTION>
The balance sheet captions, "Real Estate" and "Property and Equipment," are
shown net of allowances for depreciation as follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Real estate ----------------------------------------- $ 41.9 $ 37.1
Property and equipment ------------------------------ 221.0 252.4
</TABLE>
<TABLE>
<CAPTION>
Details underlying the balance sheet caption, "Contractholder Funds," are as
follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Premium deposit funds ------------------------------- $16,757.8 $14,546.8
Undistributed earnings on participating business ---- 63.5 88.0
Other ----------------------------------------------- 204.3 237.3
Total --------------------------------------------- $17,025.6 $14,872.1
</TABLE>
<PAGE>
46
<TABLE>
<CAPTION>
A reconciliation of the beginning of year and end of year liability for
property-casualty claims and claim expenses is as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Total liability reported at beginning of year --- $2,810.1 $2,672.5 $2,502.4
Reinsurance recoverable following the
adoption of FAS 113 in 1993 -------------------- 225.5 -- --
Liability for claims and claim expenses
at beginning of year, net of reinsurance ---- 2,584.6 2,672.5 2,502.4
Plus:
Provision for claims and claim expenses arising
in the current year, net of reinsurance -------- 1,340.6 1,433.3 1,670.6
Increase (decrease) in estimated claims and
claim expenses arising in prior years,
net of reinsurance ----------------------------- (78.2) (26.5) 47.0
Total incurred claims and claim expenses,
net of reinsurance -------------------------- 1,262.4 1,406.8 1,717.6
Less:
Claims and claim expense payments arising
in the current year, net of reinsurance -------- 619.4 633.5 709.1
Payments for claims and claim expenses
arising in prior years, net of reinsurance ----- 728.2 861.2 838.4
Total payments, net of reinsurance ----------- 1,347.6 1,494.7 1,547.5
Total liability for claims and claim expenses
at end of year, net of reinsurance ---------- 2,499.4 2,584.6 2,672.5
Reinsurance recoverable following the
adoption of FAS 113 in 1993 -------------------- 203.1 225.5 --
Total liability reported at end of year ------ $2,702.5 $2,810.1 $2,672.5
</TABLE>
The reconciliation shows an increase (decrease) of $(78,200,000),
($26,500,000), and $47,000,000 million to the December 31, 1993, 1992 and 1991
liability for claims and claim expenses, respectively, arising in prior years.
Such reserve adjustments, which affected current operations during 1994, 1993
and 1992, respectively, resulted from developed claims for prior years being
different than were anticipated when the liabilities for claims and claim
expenses were originally estimated.
<TABLE>
<CAPTION>
Details underlying the balance sheet captions, "Short-term and Long-term
Debt," are as follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Short-term debt:
Commercial paper ------------------------------------ $107.2 $212.7
Other short-term notes ------------------------------ 67.8 37.2
Current portion of long-term debt ------------------- 100.3 101.5
Total short-term debt ----------------------------- $275.3 $351.4
Long-term debt less current portion:
9 3/4% notes payable, due 1995 ---------------------- $ -- 100.3
7 1/8% notes payable, due 1999 ---------------------- 99.2 99.1
7 5/8% notes payable, due 2002 ---------------------- 99.1 98.9
9 1/8% notes payable, due 2024 ---------------------- 199.1 --
Mortgages and other notes payable ------------------- 22.2 36.8
Total long-term debt ------------------------------ $419.6 $335.1
</TABLE>
The commercial paper outstanding at December 31, 1994 and 1993, had a weighted
average interest rate of approximately 5.90% and 3.35%, respectively.
Future maturities of long-term debt are as follows (in millions):
1995 - $100.3 1997 - $ .1 1999 - $100.1
1996 - .3 1998 - .1 Thereafter - 319.0
<PAGE>
47
LNC has a revolving credit agreement with a group of domestic and foreign
banks in the aggregate amount of $500,000,000. This agreement, which expires
in June 1997, provides for interest on borrowings based on various money
market indices. Under the terms of this agreement, LNC must maintain a
prescribed level of tangible net worth and debt levels below 50% of tangible
net worth, and is restricted in its ability to place additional liens against
LNC's assets. At December 31, 1994, LNC had no outstanding borrowings under
this agreement. During 1994, 1993 and 1992, fees paid under this agreement
amounting to $1,000,000, $1,300,000, and $1,700,000, respectively.
LNC's United Kingdom subsidiary also has a revolving credit agreement with a
United Kingdom bank in an aggregate amount of $117,400,000. This agreement
has outstanding short-term borrowings of $43,800,000 as of December 31, 1994.
Cash paid for interest for 1994, 1993 and 1992 was $47,900,000, $44,200,000,
and $48,500,000, respectively.
<TABLE>
<CAPTION>
Reinsurance transactions included in the income statement caption, "Insurance
Premiums," are as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Reinsurance assumed ------------------------- $1,979.4 $1,895.5 $1,960.2
Reinsurance ceded --------------------------- 482.9 291.1 286.2
Net reinsurance premiums ------------------ $1,496.5 $1,604.4 $1,674.0
</TABLE>
The income statement caption, "Benefits and Settlement Expenses," is net of
reinsurance recoveries of $284,700,000, $174,000,000 and $218,200,000 for the
years ended December 31, 1994, 1993 and 1992, respectively.
The income statement caption, "Underwriting, Acquisition, Insurance and Other
Expenses," includes amortization of deferred acquisition costs of
$598,300,000, $571,800,000 and $563,700,000 for the years ended December 31,
1994, 1993 and 1992, respectively. An additional $81,200,000 and
($23,700,000) of deferred acquisition costs was restored (amortized) and
netted against "Realized Gain (Loss) on Investments" for the years ended
December 31, 1994 and 1993, respectively.
6. Employee Benefit Plans
Pensions Plans - U.S. LNC maintains funded defined benefit pension plans for
most of its U.S. employees and, prior to January 1, 1995, full time agents.
The benefits for employees are based on total years of service and the highest
60 months of compensation during the last 10 years of employment. The
benefits for agents were based on a percentage of each agents' yearly
earnings. The plans are funded by contributions to tax-exempt trusts. LNC's
funding policy is consistent with the funding requirements of federal law and
regulations. Contributions are intended to provide not only the benefits
attributed to service to date, but also those expected to be earned in the
future. Plan assets consist principally of listed equity securities and
corporate obligations and Government bonds.
All benefits applicable to the funded defined benefit plan for agents were
frozen as of December 31, 1994. The curtailment of this plan did not have a
significant effect on net pension cost for 1994. Effective January 1, 1995,
pension benefits for agents will be provided by a new defined contribution
plan. Contributions to this plan will be based on 2.3% of an agent's earnings
up to the social security wage base and 4.6% of any excess.
LNC also sponsors three types of unfunded, nonqualified, defined benefit plans
for certain U.S. employees and agents. A supplemental retirement plan
provides defined benefit pension benefits in excess of limits imposed by
federal tax law. A salary continuation plan provides certain officers of LNC
defined pension benefits based on years of service and final monthly salary
upon death or retirement. A retirement plan for directors provides benefits
based on years of service and the amount of the retainer paid during the last
year of service.
<PAGE>
48
<TABLE>
<CAPTION>
The status of the funded defined benefit pension plans and the amounts
recognized on the balance sheets are as follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefits ---------------------------------------- $(287.9) $(310.5)
Nonvested benefits ------------------------------------- (16.1) (14.7)
Accumulated benefit obligation ----------------------- (304.0) (325.2)
Effect of projected future compensation increases ------ (63.3) (82.7)
Projected benefit obligation ------------------------- (367.3) (407.9)
Plan assets at fair value ------------------------------ 356.1 372.3
Projected benefit obligations in
excess of plan assets ------------------------------- (11.2) (35.6)
Unrecognized transition asset -------------------------- -- (7.6)
Unrecognized net loss ---------------------------------- 6.8 26.1
Unrecognized prior service cost ------------------------ 3.1 8.5
Accrued pension cost included in other liabilities --- $ (1.3) $ (8.6)
The status of the unfunded defined benefit pension plans and the amounts
recognized on the balance sheets are as follows:
December 31 (in millions) 1994 1993
Actuarial present value of benefit obligation:
Vested benefits --------------------------------------- $(18.1) $(18.7)
Nonvested benefits ------------------------------------ (3.1) (3.8)
Accumulated benefit obligation ---------------------- (21.2) (22.5)
Effect of projected future compensation increases ----- (6.7) (5.0)
Projected benefit obligation ------------------------ (27.9) (27.5)
Unrecognized transition obligation -------------------- .3 .7
Unrecognized net loss --------------------------------- 1.7 5.6
Unrecognized prior service cost (reduction in benefits) .5 (3.5)
Accrued pension cost included in other liabilities -- $(25.4) $(24.7)
</TABLE>
<TABLE>
<CAPTION>
The determination of the projected benefit obligation for the defined benefit
plans was based on the following assumptions:
December 31 1994 1993 1992
<S> <C> <C> <C>
Weighted-average discount rate ---------------------- 8.0% 7.0% 7.5%
Rate of increase in compensation:
Salary continuation plan ---------------------------- 6.5 6.0 6.5
All other plans ------------------------------------- 5.0 5.0 5.5
Expected long-term rate of return on plan assets ---- 9.0 9.0 9.0
</TABLE>
<TABLE>
<CAPTION>
The components of net pension cost for the defined benefit pension plans are
as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Service cost-benefits earned during the year -------- $22.1 $20.3 $20.6
Interest cost on projected benefit obligation ------- 30.0 27.9 24.3
Actual return on plan assets ------------------------ 9.7 (42.1) (13.9)
Net amortization (deferral)-------------------------- (40.2) 11.8 (15.1)
Net pension cost ---------------------------------- $21.6 $17.9 $15.9
</TABLE>
Pension Plan - Non U.S. The employees of LNC's primary foreign subsidiary are
covered by a defined benefit pension plan. The plan provides death and
pension benefits based on final pensionable salary. At December 31, 1994 and
1993, the projected benefit obligation exceeded plan assets by $3,631,000 and
$3,051,000, respectively, and was included with other liabilities in LNC's
balance sheet. Net pension cost for the foreign plans were $633,000,
$1,112,000 and $1,113,000, for 1994, 1993 and 1992, respectively.
<PAGE>
49
401k Plan. LNC and its subsidiaries also sponsor contributory defined
contribution plans for eligible U.S. employees and agents. LNC's
contributions to the plans are equal to a participant's pre-tax contribution,
not to exceed 6% of base pay, multiplied by a percentage, ranging from 25% to
150%, which varies according to certain incentive criteria as determined by
LNC's Board of Directors. Expense for these plans amounted to $29,400,000,
$26,300,000 and $15,200,000 in 1994, 1993 and 1992, respectively.
Postretirement Medical and Life Insurance Benefit Plans. LNC sponsors unfunded
defined benefit plans that provide postretirement medical and life insurance
benefits to full-time U.S. employees and agents who, depending on the plan,
have worked for LNC 10 to 15 years and attained age 55 to 60. Medical
benefits are also available to spouses and other dependents of employees and
agents. For medical benefits, limited contributions are required from
individuals retired prior to November 1, 1988; contributions for later
retirees, which can be adjusted annually, are based on such items as years of
service at retirement and age at retirement. The life insurance benefits are
noncontributory, although participants can elect supplemental contributory
benefits.
<TABLE>
<CAPTION>
The status of the postretirement medical and life insurance benefit plans and
the amount recognized on the balance sheet is as follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees -------------------------------------------- $ 86.6 $ 91.3
Fully eligible active plan participants ------------- 21.6 25.1
Other active plan participants ---------------------- 34.0 48.2
Accumulated postretirement benefit obligation ----- 142.2 164.6
Unrecognized net gain (loss) ------------------------ 12.6 (8.1)
Accrued plan cost included in other liabilities --- $154.8 $156.5
</TABLE>
<TABLE>
<CAPTION>
The components of periodic postretirement benefit cost are as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C>
Service cost ------------------------------------------- $ 4.3 $ 5.0
Interest cost ------------------------------------------ 10.4 10.7
Amortized cost ----------------------------------------- .3 --
Net periodic postretirement benefit cost ------------- $15.0 $15.7 $6.5
</TABLE>
The costs for postretirement benefits for year ended December 31, 1992 shown
above is prior to the adoption of FAS 106 (see note 2 on page 39) and,
therefore, represents the total amount of claims and premiums actually paid.
The calculation of the accumulated postretirement benefit obligation assumes a
weighted-average annual rate of increase in the per capita cost of covered
benefits (i.e. health care cost trend rate) of 10.0% for 1995 gradually
decreasing to 5.5% by 2004 and remaining 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 rates by
one percentage point each year would increase the accumulated postretirement
benefit obligation as of December, 1994 and 1993 by $10,300,000 and
$13,600,000, respectively, and the aggregate of the estimated service and
interest cost components of net periodic postretirement benefit cost for the
year ended December 31, 1994 by $1,200,000. The calculation assumes a
long-term rate of increase in compensation of 5.0% for both December 31, 1994
and 1993. The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 8.0% and 7.0% for December
31, 1994 and 1993, respectively.
Incentive Plans. LNC has various incentive plans for key employees of LNC and
its subsidiaries which provides for the issuance of stock options, stock
appreciation rights, restricted stock awards and stock incentive awards.
These plans are comprised primarily of stock option incentive plans. Stock
options granted under the stock option incentive plans are at the market value
at the date of grant and, subject to termination of employment, expire ten
years from the date of grant. Such options are not transferable other than on
death and are exercisable one year from date of grant for options issued prior
to 1992. Options issued subsequent to 1991 are exercisable in 25% increments
on the option issuance anniversary in the four years following issuance.
<PAGE>
<TABLE>
<CAPTION>
Information with respect to the incentive plans involving stock options is as
follows:
Shares Options Outstanding
Available Average
for Grant Shares Option Price
<S> <C> <C> <C>
Balance at January 1, 1992 2,539,946 2,657,306 $23.77
Granted ------------------------ (528,500) 528,500 27.74
Exercised ---------------------- -- (996,632) 22.55
Expired ------------------------ 27,540 (38,340)
Restricted stock awarded ------- (50,336) --
Balance at December 31, 1992 - 1,988,650 2,150,834 25.29
Granted ------------------------ (570,600) 570,600 39.75
Exercised ---------------------- -- (260,756) 24.21
Expired ------------------------ 17,826 (18,826)
Restricted stock awarded ------- (144,154) --
Balance at December 31, 1993 - 1,291,722 2,441,852 28.75
Additional authorized ---------- 7,650,000
Granted ------------------------ (442,100) 442,100 39.49
Exercised ---------------------- (122,963) 25.43
Expired ------------------------ 139,099 (88,800)
Restricted stock awarded ------- (215,614) --
Balance at December 31, 1994 - 8,423,107 2,672,189 30.56
</TABLE>
Shares under options that were exercisable at December 31, 1994 totaled
1,615,839.
7. Restrictions, Commitments and Contingencies
Shareholders' Equity Restrictions
Generally, the net assets of LNC's insurance subsidiaries available for
transfer to the parent company are limited to the amounts that the insurance
subsidiaries' net assets, as determined in accordance with statutory
accounting practices, exceed minimum statutory capital requirements; however,
payments of such amounts as dividends may be subject to approval by regulatory
authorities. As of December 31, 1994, $1,000,000,000 of consolidated
shareholders' equity represents net assets of the LNC's insurance subsidiaries
that cannot be transferred in the form of dividends, loans or advances to the
parent company without prior approval of such regulatory authorities.
<TABLE>
<CAPTION>
Statutory Information
Net income as determined in accordance with statutory accounting practices for
LNC's insurance subsidiaries was as follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Life-health insurance --------------------- $411.7 $229.7 $163.7
Property-casualty insurance --------------- 167.9 247.6 84.1
</TABLE>
Life-health insurance statutory net income for 1994, 1993 and 1992, excluding
LNC's foreign life reinsurance companies, was $411,100,000, $267,200,000 and
$202,600,000, respectively.
<TABLE>
<CAPTION>
Shareholders' equity as determined in accordance with statutory accounting
practices for LNC's insurance subsidiaries was as follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Life-health insurance --------------------- $1,966.7 $1,626.7
Property-casualty insurance --------------- 955.7 1,061.7
</TABLE>
Estimates Related to Certain Liabilities
The liability for future policy benefits, claims and claim expenses at
December 31, 1994 and 1993 included a liability for environmental losses of
$201,000,000 and $204,000,000, respectively. In establishing liabilities for
claims and claim expenses related to environmental matters, management
considers facts currently known and the current state of the law and coverage
litigation. Liabilities are recognized for known claims (including the cost
<PAGE>
51
of related litigation) when sufficient information has been developed to
indicate the involvement of a specific insurance policy and management can
reasonably estimate its liability. In addition, liabilities have been
established to cover additional exposures on both known and unasserted claims.
Estimates of the liabilities are reviewed and updated continually. Developed
case law and adequate claim history do not exist for a portion of LNC's
environmental exposure, especially because significant uncertainty exists
about the outcome of coverage litigation and whether past claims experience
will be representative of future claims experience.
Included in the liability for future policy benefits, claims and claim
expenses and the asset for amounts recoverable from reinsurers at December 31,
1994 and 1993 is a net liability for disability income business of
$730,600,000 and $815,800,000, respectively. If incidence levels do not
improve, or claim termination rates deteriorate, substantial reserve additions
may be required in the future. It is not possible to provide a meaningful
range of estimates of possible additional losses at this time. LNC reviews
and updates the level of these reserves on an on-going basis.
Leases
Certain of LNC's subsidiaries lease their home office properties through
sale-leaseback agreements. The agreements provide for a 25 year lease period
with options to renew for six additional terms of five years each. The
agreements also provide LNC with the right of first refusal to purchase the
properties during the term of the lease, including renewal periods, at a price
as defined in the agreements. In addition, LNC has the option to purchase the
leased properties at fair market value as defined in the agreements on the
last day of the initial 25 year lease period ending in 2009 or the last day of
any of the renewal periods.
Total rental expense on operating leases in 1994, 1993 and 1992 was
$51,400,000, $55,900,000 and $62,300,000, respectively. Future minimum rental
commitments are as follows (in millions):
1995 - $44.9 1997 - $38.9 1999 - $ 33.6
1996 - 43.5 1998 - 35.1 Thereafter - 324.4
Reinsurance Ceded and Assumed
LNC's insurance companies cede reinsurance to other companies. The portion of
risks exceeding each company's retention limit is reinsured with other
insurers. Since 1993, catastrophe reinsurance arrangements for property-
casualty coverages provided for a recovery of an average of approximately 85%
of losses in excess of $30,000,000 up to $180,000,000 per occurrence. The
same limits are in effect for 1994 and 1995 with average recovery of 93% of
losses. Also, LNC seeks reinsurance coverage within the business segments
that sell life insurance that limits its liabilities on an individual insured
to $3,000,000. To cover products other than property-casualty and life
insurance, LNC acquires other reinsurance coverages with retentions and limits
which management believes are appropriate for the circumstances. The
accompanying financial statements reflect premiums, benefits and settlement
expenses and deferred acquisition costs, net of reinsurance ceded (see note 5
on page 47). LNC's insurance companies remain liable if their reinsurers are
unable to meet their contractual obligations under the applicable reinsurance
agreements.
LNC's insurance companies assume reinsurance from other companies. At
December 31, 1994, LNC's insurance companies have granted $776,300,000 of
statutory surplus to other insurance companies under reinsurance transactions.
Generally, such amounts are offset by corresponding receivables from the
ceding company, which are secured by future profits on the reinsured business.
However, LNC's insurance companies are subject to the risk that the ceding
company may become insolvent and the right of offset would not be permitted.
Associated with these transactions, LNC's foreign insurance companies have
obtained letters of credit in favor of various unaffiliated insurance
companies from which LNC assumes business. This allows the ceding companies
to take statutory reserve credit. The letters of credit issued by the banks
represent a guarantee of performance under the reinsurance agreements. At
December 31, 1994, there were $638,000,000 of outstanding bank letters of
credit. In exchange for the letters of credits, LNC paid the banks
approximately $1,000,000 in fees in 1994.
<PAGE>
52
Other Contingency Matters
LNC and its subsidiaries are involved in various pending or threatened legal
proceedings arising from the conduct of their business. In some instances,
these proceedings include claims for punitive damages and similar types of
relief in unspecified or substantial amounts, in addition to amounts for
alleged contractual liability or requests for equitable relief. After
consultation with counsel and a review of available facts, it is management's
opinion that these proceedings ultimately will be resolved without materially
affecting the consolidated financial statements of LNC.
Operations in the U.K. include the sale of pension products to individuals.
Regulatory agencies have raised questions as to what constitutes appropriate
advice to individuals who bought pension products as an alternative to
participation in an employer sponsored plan. In cases of inappropriate
advice, LNC may have to do extensive investigation and put the individual in a
position similar to what would have been attained if the individual had
remained in the employer sponsored plan. A liability has been established for
the estimated cost of this issue following regulatory guidance as to
activities to be undertaken. Although the provision is based on various
estimates which are subject to considerable uncertainty and, accordingly, may
prove to be deficient or excessive, it is management's opinion that such
future development will not materially affect the consolidated results of
operation.
Tax authorities have recently focused increased attention on compliance of
qualified annuity plans marketed by insurance companies. If sponsoring
employers cannot demonstrate compliance and the insurance company is held
responsible due to its marketing efforts, LNC and other insurers may be
subject to potential liability. It is not possible to provide a meaningful
estimate of the range of possible liability at this time. In addition, LNC is
analyzing the extent to which insurance coverage may offset any liability
which may develop. Management continues to monitor this matter and to take
steps to minimize any potential liability.
The number of insurance companies that are under regulatory supervision has
resulted and is expected to continue to result in assessments by state
guaranty funds to cover losses to policyholders of insolvent or rehabilitated
companies. Mandatory assessments may be partially recovered through a
reduction in future premium taxes in some states. LNC has accrued
for expected assessments net of estimated future premium tax deductions.
Guarantees
LNC has guarantees with off-balance-sheet risks whose contractual amounts
represent credit exposure. Outstanding guarantees with off-balance-sheet
risks, shown in notional or contract amounts along with their carrying value
and estimated fair values, are as follows:
<TABLE>
<CAPTION>
Assets (Liabilities)
Notional or Carrying Fair Carrying Fair
Contract Amounts Value Value Value Value
December 31 (in millions) 1994 1993 1994 1994 1993 1993
<S> <C> <C> <C> <C> <C> <C>
Industrial revenue bonds ------ $100.9 $130.2 $(13.1)$(12.5)$(16.3) $(12.5)
Real estate partnerships ------ 20.8 43.8 -- -- (2.2) (3.8)
Mortgage loan pass-through
certificates ----------------- 78.2 96.0 -- -- -- --
Total Guarantees ----------- $199.9 $270.0 $(13.1)$(12.5)$(18.5) $(16.3)
</TABLE>
Certain subsidiaries of LNC have invested in real estate partnerships which
use industrial revenue bonds to finance their projects. LNC has guaranteed
the repayment of principal and interest on these bonds. Certain subsidiaries
of LNC are also involved in other real estate partnerships that use
conventional mortgage loans. In some cases, the terms of these arrangements
involve guarantees by each of the partners to indemnify the mortgagor in the
event a partner is unable to pay its principal and interest payments. In
addition, certain subsidiaries of LNC have sold commercial mortgage loans
through grantor trusts which issued pass-through certificates. These
subsidiaries have agreed to repurchase any mortgage loans which remain
delinquent for 90 days at a repurchase price substantially equal to the
outstanding principal balance plus accrued interest thereon to the date of
repurchase. It is management's opinion that the value of the properties
underlying these commitments is sufficient that in the event of default the
impact would not be material to LNC.
<PAGE>
53
Derivatives
LNC has derivatives with off-balance-sheet risks whose notional or contract
amounts exceed the credit exposure. LNC has entered into derivative
transactions to reduce its exposure to fluctuations in interest rates and
foreign exchange risks. In addition, LNC is subject to the risks associated
with changes in the value of its derivatives; however, such changes in the
value generally are offset by changes in the value of the items being hedged
by such contracts. Outstanding derivatives with off-balance-sheet risks,
shown in notional or contract amounts along with their carrying value and
estimated fair values, are as follows:
<TABLE>
<CAPTION>
Assets (Liabilities)
Notional or Carrying Fair Carrying Fair
Contract Amounts Value Value Value Value
December 31 (in millions) 1994 1993 1994 1994 1993 1993
<S> <C> <C> <C> <C> <C> <C>
Interest Rate Derivatives:
Interest rate cap agreements -- $4,400.0 $3,800.0 $ 23.4 $34.5 $24.4 $ 18.5
Spread-lock agreements -------- 1,300.0 1,700.0 3.2 3.2 -- (5.6)
Financial futures contracts:
Portfolio duration hedges --- 354.3 -- (7.4) (7.4) -- --
Other ----------------------- 28.2 33.1 (.1) (.1) -- --
Interest rate swaps ----------- 5.0 57.0 .2 .2 -- (1.2)
United Kingdom forward swaps -- -- 20.0 -- -- -- .4
Mortgage-backed securities
total return swaps ----------- -- 47.6 -- -- -- .9
Total Derivatives - Interest
Rate Contracts ------------ 6,087.5 5,657.7 19.3 30.4 24.4 13.0
Foreign exchange forward
contract derivatives:
Hedge of foreign subsidiary - 138.3 101.3 (8.7) (8.7) .8 .8
Other ----------------------- 21.2 -- .2 .2 -- --
Total Derivatives --------- $6,247.0 $5,759.0 $ 10.8 $ 21.9 $25.2 $ 13.8
</TABLE>
<TABLE>
<CAPTION>
A reconciliation and discussion of the notional or contract amounts for the
significant programs using derivative agreements and contracts is as follows:
Interest
Rate Caps Spread Locks
December 31 (in millions) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Balance at beginning of year -------- $3,800.0 $1,200.0 $1,700.0 $ 600.0
New contracts ----------------------- 600.0 2,600.0 -- 2,000.0
Terminated contracts ---------------- -- -- (400.0) (900.0)
Balance at End of Year ------------ $4,400.0 $3,800.0 $1,300.0 $1,700.0
</TABLE>
<TABLE>
<CAPTION>
Foreign
Options on Exchange
Financial Financial Forward
Futures Futures Contracts
December 31 (in millions) 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year-- $ -- $ -- $ -- $ -- $101.3 $ 43.8
New contracts ---------------- 404.3 -- 308.0 -- 37.0 101.3
Terminated contracts --------- (50.0) -- (308.0) -- -- (43.8)
Balance at End of Year ----- $354.3 $ -- $ -- $ -- $138.3 $101.3
</TABLE>
Interest Rate Caps. The interest rate cap agreements, which expire in 1997
through 2003, entitle LNC to receive payments from the counterparties on
specified future reset dates, contingent on future interest rates. For each
cap, the amount of such quarterly payments, if any, is determined by the
excess of a market interest rate over a specified cap rate times the notional
amount divided by four. The purpose of LNC's interest rate cap agreement
program is to protect its annuity line of business from the effect of
fluctuating interest rates. The premium paid for the interest rate caps is
included in other assets ($23,400,000 as of December 31, 1994) and is being
amortized over the terms of the agreements and is included in net investment
income.
<PAGE>
54
The revenue that LNC receives from interest rate caps depends on the future
levels of interest rates on U.S. Treasury securities with maturities of two,
five, seven and ten years and on U.S. dollar swap rates for similar
maturities. The table below analyzes the amount of cap revenue LNC would
receive if those rates were 1%, 2% 3%, or 4% higher than they were at December
31, 1994 and remain at those levels throughout the remaining lives of the caps
owned by LNC. In relation to the level of these rates at December 31, 1994,
the cap rates were from .42% to 2.58% out of the money, i.e., higher. Revenue
from interest rate caps under these scenarios is as follows:
<TABLE>
Year Ended December 31, (in millions) 1995 1996 1997 1998 1999 Thereafter
<S> <C> <C> <C> <C> <C> <C>
No change $ -- $ -- $ -- $ -- $ -- $ --
Up 1% 7.1 4.2 1.5 .5 -- --
Up 2% 30.1 28.3 24.2 15.5 3.7 --
Up 3% 66.5 67.0 62.3 44.2 16.5 6.4
Up 4% 104.8 107.5 102.5 76.4 34.0 17.6
</TABLE>
Spread Locks. Spread-lock agreements expire in 1994 and 1995. Spread-lock
agreements provide for a lump sum payment to or by LNC depending on whether
the spread between the swap rate and a specified U.S. Treasury note is larger
or smaller than a contractually specified spread. Cash payments are based on
the product of the notional amount, the spread between the swap rate and the
yield of an equivalent maturity U.S. Treasury security and the price
sensitivity of the swap at that time, expressed in dollars per basis point.
The purpose of LNC's spread-lock program is to protect a portion of its fixed
maturity securities against widening spreads.
Over the past five years, swap spreads have typically traded within an annual
range of 30 basis points, i.e., a range of plus or minus 15 basis points
around the mean level. At December 31, 1994, the cash-settlement value of the
spread locks would have changed by approximately $11,200,000 for each 15 basis
point change in swap spreads.
Financial Futures and Options on Financial Futures. LNC uses exchange-traded
financial futures contracts and options on those financial futures to hedge
against interest rate risks and to manage duration of a portion of its fixed
maturity securities. Short positions in financial futures contracts obligate
LNC to sell a financial instrument at a specified future date for a specified
price and may be settled in cash or through delivery of the financial
instrument. Cash settlements on the change in market values of financial
futures contracts are made daily. Options on financial futures give LNC the
right, but not the obligation, to assume a short position in the underlying
futures at a specified price during a specified time period.
At December 31, 1994, LNC had short positions in the March 1995 five year
note, ten year note, and bond futures with an aggregate face amount of
$354,300,000. As the yields on the underlying Treasury securities rise
(fall), the value of these short positions to LNC will increase (decrease) by
approximately $2,700,000 million for each 10 basis point parallel shift in the
yield curve.
Foreign Exchange Forward Contracts. LNC uses foreign exchange forward
contracts, which are traded over-the-counter, to hedge the foreign exchange
risk assumed with LNC's investment in its UK subsidiary, Lincoln National
(UK). LNC hedges its exposure to sterling in excess of $100,000,000 of its
investment in Lincoln National (UK). The foreign exchange forward contracts
obligate LNC to deliver a specified amount of currency at a future date at a
specified exchange rate.
The value of the foreign exchange forward contracts at any given point
fluctuate according to the underlying level of exchange rate and interest rate
differentials. Based on LNC's notional amount of contracts in place at
December 31, 1994 of $138,300,000, as the exchange rate on these contracts
rise (fall), assuming no difference in the underlying interest rates, the
value of these contracts to LNC will change by approximately $1,380,000 for
each 1% change in the exchange rate.
<PAGE>
55
Additional Derivative Information. Expenses for the agreements and contracts
described above amounted to $7,400,000 and $4,400,000 in 1994 and 1993,
respectively. Deferred losses of $2,700,000 as of December 31, 1994,
resulting from 1)terminated and expired spread-lock agreements 2)financial
futures contracts and 3)options on financial futures, are included with the
related fixed maturity securities to which the hedge applied and are being
amortized over the life of such securities.
LNC is exposed to credit loss in the event of nonperformance by counterparties
on interest rate cap agreements, spread-lock agreements, interest rate swaps,
United Kingdom forward swaps, foreign exchange forward contracts and mortgage-
backed securities total return swaps, but LNC does not anticipate
nonperformance by any of these counterparties. The credit risk associated
with such agreements is minimized by purchasing such agreements from financial
institutions with long-standing, superior performance records. The amount of
such exposure is essentially their replacement cost, which is approximated by
the unrealized gains in such contracts, which was $29,300,000 at December 31,
1994.
At December 31, 1994, LNC did not have a material concentration of financial
instruments in a single investee, industry or geographic location.
8. Fair Value of Financial Instruments
The following discussion outlines the methodologies and assumptions used to
determine the estimated fair value of LNC's financial instruments.
Considerable judgement is required to develop these fair values and,
accordingly, the estimates shown are not necessarily indicative of the amounts
that would be realized in a one time, current market exchange of all of LNC's
financial instruments.
Fixed Maturity and Equity Securities. Fair values for fixed maturity
securities 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 coupon rate, credit quality, and
maturity of the investments. The fair values for equity securities are based
on quoted market prices.
Mortgage Loans on Real Estate. The estimated fair value of mortgage loans on
real estate was established using a discounted cash flow method based on
rating, maturity and future income when compared to the expected yield for
mortgages having similar characteristics. The rating for mortgages in good
standing are based on property type, location, market conditions, occupancy,
debt service coverage, loan to value, caliber of tenancy, borrower and payment
record. Fair values for impaired mortgage loans are measured based either on
the present value of expected future cash flows discounted at the loan's
effective interest rate, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent.
Policy Loans. The estimated fair value of investments in policy loans was
calculated on a composite discounted cash flow basis using Treasury interest
rates consistent with the maturity durations assumed. These durations were
based on historical experience.
Other Investments, and Cash and Invested Cash. The carrying value for assets
classified as other investments, and cash and invested cash in the
accompanying balance sheet approximates their fair value.
Investment Type Insurance Contracts. The balance sheet captions, "Future
Policy Benefits, Claims and Claim Expenses" and "Contractholder Funds,"
include investment type insurance contracts (i.e. deposit contracts and
guaranteed interest contracts). The fair values for the deposit contracts and
certain guaranteed interest contracts are based on their approximate surrender
values. The fair values for the remaining guaranteed interest and similar
contracts are estimated using discounted cash flow calculations based on
interest rates currently being offered on similar contracts with maturities
consistent with those remaining for the contracts being valued.
<PAGE>
56
The remainder of the balance sheet captions, "Future Policy Benefits, Claims
and Claim Expenses" and "Contractholder Funds," that do not fit the definition
of "investment type insurance contracts" are considered insurance contracts.
Fair value disclosures are not required for these insurance contracts and have
not been determined by LNC. It is LNC's position that the disclosure of the
fair value of these insurance contracts is important in that readers of these
financial statements could draw inappropriate conclusions about LNC's
shareholders' equity determined on a fair value basis if only the fair value
of assets and liabilities defined as financial instruments are disclosed. LNC
and other companies in the insurance industry are monitoring the related
actions of the various rule-making bodies and attempting to determine an
appropriate methodology for estimating and disclosing the "fair value" of
their insurance contract liabilities.
Short-term and Long-term Debt. Fair values for long-term debt issues are
estimated using discounted cash flow analysis based on LNC's current
incremental borrowing rate for similar types of borrowing arrangements. For
short-term debt, the carrying value approximates fair value.
Guarantees. LNC's guarantees include guarantees related to industrial revenue
bonds, real estate partnerships and mortgage loan pass-through certificates.
Based on historical performance where repurchases have been negligible and the
current status, which indicates none of the loans are delinquent, the fair
value liability for the guarantees related to the mortgage loan pass-through
certificates is insignificant. Fair values for all other guarantees are based
on fees that would be charged currently to enter into similar agreements,
taking into consideration the remaining terms of the agreements and the
counterparties' credit standing.
Derivatives. LNC's derivatives include interest rate cap agreements, spread-
lock agreements, foreign currency exchange contracts, financial futures
contracts, options on financial futures, interest rate swaps, United Kingdom
forward swaps and mortgage-backed securities total return swaps. Fair values
for these contracts is based on current settlement values. The current
settlement values are based on quoted market prices for the foreign currency
exchange contracts, financial future contracts and options on financial
futures, and on brokerage quotes, which utilized pricing models or formulas
using current assumptions, for all other swaps and agreements.
Investment Commitments. Fair values for commitments to make investments in
fixed maturity securities (primarily private placements), mortgage loans on
real estate and real estate are based on the difference between the value of
the committed investments as of the date of the accompanying balance sheets
and the commitment date, which would take into account changes in interest
rates, the counterparties' credit standing and the remaining terms of the
commitments.
<TABLE>
<CAPTION>
The carrying values and estimated fair values of LNC's financial instruments
are as follows:
Carrying Fair Carrying Fair
Value Value Value Value
December 31 (in millions) 1994 1994 1993 1993
Assets (liabilities):
<S> <C> <C> <C> <C>
Fixed maturities securities -------- $21,664.1 $21,664.1 $23,964.4 $23,964.4
Equity securities ------------------ 1,038.6 1,038.6 1,080.3 1,080.3
Mortgage loans on real estate ------ 2,853.1 2,776.7 3,301.0 3,466.7
Policy loans ----------------------- 553.3 532.4 595.1 626.4
Other investments ------------------ 175.1 175.1 158.2 158.2
Cash and invested cash ------------- 1,041.6 1,041.6 709.7 709.7
Investment type insurance contracts:
Deposit contracts and certain
guaranteed interest contracts --- (14,294.7)(14,052.5)(12,517.2)(11,960.4)
Remaining guaranteed interest
and similar contracts ----------- (2,485.5) (2,423.9) (2,419.5) (2,564.3)
Short-term debt -------------------- (275.3) (275.3) (351.4) (351.4)
Long-term debt --------------------- (419.6) (408.9) (335.1) (360.6)
Guarantees ------------------------- (13.1) (12.5) (18.5) (16.3)
Derivatives ------------------------ 10.8 21.9 25.2 13.8
Investment commitments ------------- -- (.5) -- (2.4)
</TABLE>
<PAGE>
57
As of December 31, 1994 and 1993, the carrying value of the deposit contracts
and certain guaranteed contracts is net of deferred acquisition costs of
$399,000,000 and $297,800,000, respectively, excluding adjustments for
deferred acquisition costs applicable to changes in fair value of securities.
The carrying values of these contracts are stated net of deferred acquisition
costs in order that they be comparable with the fair value basis.
9. Segment Information
LNC has four major business segments: Property-Casualty, Life Insurance and
Annuities, Life-Health Reinsurance and Employee Life-Health Benefits. The
Property-Casualty segment writes both commercial and personal coverages
through a network of independent agents. The Life Insurance and Annuities
segment offers universal life, pension products and other individual coverages
through a network of career agents, independent general agencies, and
insurance agencies located within a variety of financial institutions.
Life-Health Reinsurance sells reinsurance products and services to insurance
companies, HMOs, self-funded employers and other primary risk accepting
organizations in the U.S. and economically attractive international markets.
Prior to the sale of 71% of the ownership of its primary writer of employee
life-health benefit coverages in 1994 (see note 11 on page 59), the Employee
Life-Health Benefits segment distributed group life and health insurance,
managed health care and other related coverages through career agents and
independent general agencies. Activity which is not included in the major
business segments is shown as "Other Operations."
"Other Operations" includes an unconsolidated affiliate engaged in the
employee life-health benefits business, LNC's investment management companies,
certain other operations not directly related to the business segments and
unallocated corporate items (i.e., corporate investment income, interest
expense on corporate debt and unallocated overhead expenses). Prior to 1993,
all realized gain (loss) on investments was included in Other Operations and
corporate investment income was net of amounts allocated to the business
segments in lieu of realized gain (loss) on investments.
<TABLE>
<CAPTION>
The revenue, pre-tax income and assets by segment for 1992 through 1994 are as
follows:
Year Ended December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Revenue:
Property-Casualty ---------------------- $1,971.4 $2,240.6 $2,408.7
Life Insurance and Annuities ----------- 2,615.4 2,858.3 2,438.7
Life-Health Reinsurance ---------------- 2,001.9 1,930.5 1,781.8
Employee Life-Health Benefits ---------- 314.9 1,297.3 1,241.6
Other Operations ----------------------- 80.8 (36.9) 163.3
Total Revenue ------------------------ $6,984.4 $8,289.8 $8,034.1
Income (loss) before income taxes and
cumulative effect of accounting change:
Property-Casualty ---------------------- $ 177.2 $257.6 $ 22.1
Life Insurance and Annuities ----------- 106.7 344.3 197.0
Life-Health Reinsurance ---------------- 102.9 27.5 84.3
Employee Life-Health Benefits ---------- 22.9 86.0 62.9
Other Operations ----------------------- (33.4) (127.6) 58.4
Total Income Before Income Taxes
and Cumulative Effect of
Accounting Change ------------------- $ 376.3 $587.8 $424.7
</TABLE>
<TABLE>
<CAPTION>
December 31 (in millions) 1994 1993 1992
<S> <C> <C> <C>
Assets:
Property-Casualty ---------------------- $ 4,966.6 $ 5,550.5 $ 5,101.3
Life Insurance and Annuities ----------- 40,758.4 38,711.7 30,519.6
Life-Health Reinsurance ---------------- 3,118.8 3,227.2 2,402.9
Employee Life-Health Benefits ---------- -- 679.7 558.1
Other Operations ----------------------- 486.3 211.3 965.4
Total Assets ------------------------- $49,330.1 $48,380.4 $39,547.3
</TABLE>
Provisions for depreciation and capital additions were not material.
<PAGE>
58
10. Shareholders' Equity
LNC's common and preferred stock is without par value.
All of the issued and outstanding Series A Preferred Stock is $3 Cumulative
Convertible and is convertible at any time into shares of Common Stock at a
conversion rate of eight shares of Common Stock for each share of Series A
Preferred Stock, subject to adjustment for certain events. The Series A
Preferred Stock is redeemable at the option of the Corporation at $80 per
share plus accrued and unpaid dividends.
Each share of the Series E and F Preferred Stock is 5 1/2% Cumulative
Convertible Exchangeable Preferred Stock and is convertible into two shares of
LNC's Common Stock. The Series E and Series F Preferred Stock issued at
$68.85 and $71.604 per share, respectively, are owned by Dai-ichi Mutual Life
Insurance Company.
The Series A, E and F Preferred Stock have full voting rights, subject to
adjustment if LNC is in default as to the payment of dividends. If LNC is
liquidated or dissolved, holders of Series A, E and F Preferred Stock will be
entitled to payments of $80.00, $68.85 and $71.604 per share, respectively.
The difference between the aggregate preference on liquidation value and the
financial statement balance for the Series A and E Preferred Stock was
$2,000,000 and $400,000, respectively, at December 31, 1994. Series A, E and
F Preferred Stock have parity with respect to liquidating distributions.
LNC has outstanding one Common Share Purchase Right ("Rights") on each
outstanding share of LNC's Common Stock. A Right will also be issued with
each share of LNC's Common Stock that becomes outstanding prior to the time
the Rights become exercisable or expire. If a person or group acquires
beneficial ownership of 20% or more or announces an offer that would result in
beneficial ownership of 30% or more of LNC's outstanding Common Stock, the
Rights become exercisable and each Right will entitle its holder to purchase
one share of LNC's Common Stock for $75. If LNC is acquired in a business
combination transaction, each Right will entitle its holder to purchase, for
$75, common shares of the acquiring company having a market value of $150.
Alternatively, if a 20% holder were to acquire LNC by means of a reverse
merger in which LNC and its stock survive or were to engage in certain
"self-dealing" transactions, each Right not owned by the 20% holder would
entitle its holder to purchase, for $75, Common Stock of LNC having a market
value of $150. LNC can redeem each Right for one cent at any time prior to
its becoming exercisable. The Rights expire in November 1996. As of December
31, 1994, there were 94,477,942 Rights outstanding.
During February 1993, LNC issued 9,200,000 shares of Common Stock. The
proceeds from this offering, net of issuance and distribution costs, were
$316,100,000. During November 1994, LNC purchased and retired 500,000 shares
of Common Stock at a total cost of $18,400,000.
During May 1994, LNC's Articles of Incorporation were amended to increase the
number of authorized shares of Common Stock from 400,000,000 to 800,000,000.
Earnings per share are computed based on the average number of common shares
outstanding during each year (1994 - 103,863,196; 1993 - 102,307,356; 1992 -
92,977,312) after assuming conversion of the Series A, E and F Preferred
Stock. The effect of stock options is not dilutive in the computation of
earnings per share.
<PAGE>
59
<TABLE>
<CAPTION>
Details underlying the balance sheet caption "Net Unrealized Gain (Loss) on
Securities Available-for-Sale," are as follows:
December 31 (in millions) 1994 1993
<S> <C> <C>
Fair value of securities available-for-sale ------------- $22,682.7 $25,044.7
Cost of securities available-for-sale ------------------- 23,142.2 23,115.8
Unrealized Gain (Loss) -------------------------------- (459.5) 1,928.9
Adjustments to deferred acquisition costs --------------- 162.1 (429.2)
Amounts required to satisfy policyholder commitments ---- 14.1 (58.3)
Amounts related to disposal of subsidiary included in
other liabilities -------------------------------------- -- (30.1)
Deferred income credits (taxes) ------------------------- 107.8 (496.6)
Valuation allowance for deferred tax assets ------------- (135.6) --
Net Unrealized Gain (Loss) on Securities
Available-for-Sale ----------------------------------- $ (311.1) $ 914.7
</TABLE>
Adjustments to deferred acquisition costs and amounts required to satisfy
policyholder commitments are netted against the Deferred Acquisition Costs
asset account and included with the Future Policy Benefits, Claims and Claim
Expenses liability account on the balance sheet, respectively.
11. Sale of Subsidiaries
In December 1993, LNC recorded a provision for loss of $98,500,000 (also
$98,500,000 after-tax) in the "Other Operations" segment for the sale of
Security-Connecticut Corporation ("Security-Connecticut"). The sale was
completed on February 2, 1994 through an initial public offering and LNC
received cash and notes, net of related expenses, totaling $237,700,000. The
loss on sale and disposal expenses did not differ materially from the estimate
recorded in the fourth quarter of 1993. For the years ended December 31, 1993
and 1992, Security-Connecticut, which operated in the Life Insurance and
Annuities segment, had revenues of $274,500,000 and $252,400,000,
respectively, and net income of $24,000,000 and $26,200,000, respectively. As
of December 31, 1993, Security-Connecticut had assets of $1,830,600,000 and
liabilities of $1,504,900,000.
In 1994, LNC completed the sale of 71% of EMPHESYS (parent company of
Employers Health Insurance Company, which comprised LNC's Employee Life-Health
Benefit segment) for $244,700,000 of cash, net of related expenses, and a
$50,000,000 promissory note. A gain on sale of $48,800,000 (also $48,800,000
after-tax) was recognized in 1994 in "Other Operations". For the years ended
December 31, 1993 and 1992, EMPHESYS had revenues of $1,304,700,000 and
$1,247,600,000, and net income of $55,300,000 and $43,900,000, respectively.
EMPHESYS had revenues and net income of $314,900,000 and $14,400,000,
respectively, during the three months of ownership in 1994. As of December
31, 1993, EMPHESYS had assets of $793,700,000 and liabilities of $453,400,000.
12. Subsequent Event
In December 1994, LNC announced that it had signed a definitive agreement to
acquire an investment management company, Delaware Management Holdings, Inc.
("Delaware"). The purchase price, including LNC's expected expenses
associated with the acquisition, is approximately $305,000,000 plus contingent
payments of $22,500,000 which are based on the level of Delaware's future
investment management revenues. Also, the assumption of debt in connection
with this acquisition includes approximately $25,000,000 of short-term debt
and will add $180,000,000 (face amount) to consolidated long-term debt. This
transaction, which is expected to close in the second quarter of 1995, will be
accounted for on the basis of purchase accounting and, accordingly, the
results of their operation will be included in LNC's consolidated financial
statements from the closing date. Although purchase accounting adjustments
have not been finalized, management does not believe that consolidated results
would have been materially different had this acquisition been completed at
the beginning of 1994.
<PAGE>
60
Report of Ernst & Young LLP, Independent Auditors
Board of Directors
Lincoln National Corporation
We have audited the accompanying consolidated balance sheets of Lincoln
National Corporation as of December 31, 1994 and 1993, and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1994. Our audits
also included the financial statement schedules listed in the Index at Item
14(a). These financial statements and schedules are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on
these financial statements and schedules 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 Lincoln National
Corporation at December 31, 1994 and 1993, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedules,
when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
As discussed in note 2 to the consolidated financial statements, in 1993 the
Corporation changed its method for accounting for postretirement benefits
other than pensions, accounting for impairment of loans, and accounting for
certain investments in debt and equity securities.
Ernst & Young LLP
Fort Wayne, Indiana
February 8, 1995
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
There have been no disagreements with LNC's independent auditors which are
reportable pursuant to Item 304 of Regulation S-K.
<PAGE>
61
PART III
Item 10. Directors and Executive Officers of the Registrant
Information for this item relating to directors of LNC is incorporated by
reference to the sections captioned "NOMINEES FOR DIRECTOR", "DIRECTORS
CONTINUING IN OFFICE", and "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934", of LNC's Proxy Statement for the Annual Meeting
scheduled for May 11, 1995.
Executive Officers of the Registrant as of December 31, 1994 were as follows:
Name Position with LNC and Business Experience
(Age) During the Past Five Years
Ian M. Rolland Chairman and Director, LNC since 1992.
(61) President and Director, LNC (1975-1991). Chief
Executive Officer, LNC since 1977.
Robert A. Anker President, Chief Operating Officer and Director,
(53) LNC since 1992. President and Chief Executive
Officer, American States* (1990-1991). President
and Chief Operating Officer, American States*
(1985-1990).
Jon A. Boscia President, Chief Operating Officer, LNL* since
(43) May 1994. Executive Vice President, LNC (1991-
May 1994). President, Lincoln National Investment
Management Company ("LNIMC")* (1991-May 1994).
Executive Vice President, LNIMC* (1985-1991).
George E. Davis Senior Vice President, LNC since 1993.
(52) Vice President, Eastman Kodak Co. (1985-1993).
P. Kenneth Dunsire Executive Vice President, LNC since 1986. [Retired
(63) January 1995]
Jack D. Hunter Executive Vice President, LNC since 1986. General
(58) Counsel since 1971.
Barbara S. Kowalczyk Senior Vice President, LNC since May 1994.
(44) Senior Vice President, LNIMC* (1992-May 1994). Vice
President LNIMC* (1985-1992).
F. Cedric McCurley President and Chief Executive Officer, American
(60) States* since 1992. Executive Vice President,
American States* (1986-1991).
H. Thomas McMeekin Executive Vice President, LNC since May 1994.
(41) President, LNIMC* since May 1994. Senior Vice
President, LNC (1992-May 1994). Executive Vice
President, LNIMC* (February 1992-November 1992).
Senior Vice President, LNIMC* (1987-1992).
Richard S. Robertson Executive Vice President, LNC since 1986.
(52)
Gabriel L. Shaheen Executive Vice President, LNL* since May 1994.
(41) Senior Vice President, LNL* 1991-May 1994), Vice
President, LNL* (1987-1991).
Richard C. Vaughan Executive Vice President and Chief Financial
(45) Officer, LNC since January 1995. Senior Vice
President and Chief Financial Officer, LNC (1992-
January 1995). Senior Vice President, LNL* (1990-
1992). Vice President, EQUICOR, Inc. (1988-1990).
Donald L. Van Wyngarden Second Vice President & Controller, LNC since 1975.
(55)
*Denotes a subsidiary of LNC
<PAGE>
62
There is no family relationship between any of the foregoing executive
officers, all of whom are elected annually.
Item 11. Executive Compensation
Information for this item is incorporated by reference to the section cap-
tioned "EXECUTIVE COMPENSATION" of LNC's Proxy Statement for the Annual
Meeting scheduled for May 11, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information for this item is incorporated by reference to the sections
captioned "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" and "SECURITY
OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS" of LNC's Proxy
Statement for the Annual Meeting scheduled for May 11, 1995.
Item 13. Certain Relationships and Related Transactions
Information for this item is incorporated by reference to the section cap-
tioned "TERMINATION OF EMPLOYMENT ARRANGEMENT" of LNC's Proxy Statement for
the Annual Meeting scheduled for May 11, 1995.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
Item 14(a)(1) Financial Statements
The following consolidated financial statements of Lincoln National Corpora-
tion and subsidiaries are included in Item 8:
Consolidated Balance Sheets - December 31, 1994 and 1993
Consolidated Statements of Income - Years ended December 31, 1994, 1993 and
1992
Consolidated Statements of Shareholders' Equity - Years ended December 31,
1994, 1993 and 1992
Consolidated Statements of Cash Flows - Years ended December 31, 1994, 1993
and 1992
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
Item 14(a)(2) Financial Statement Schedules
The following consolidated financial statement schedules of Lincoln National
Corporation and subsidiaries are included in Item 14(d):
I - Summary of Investments - Other than Investments in Related Parties
II - Condensed Financial Information of Registrant
III - Supplementary Insurance Information
IV - Reinsurance
V - Valuation and Qualifying Accounts
VI - Supplementary Information Concerning Property-Casualty Insurance
Operations
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions, are inapplicable, or the required information is
included in the consolidated financial statements, and therefore have been
omitted.
<PAGE>
63
Item 14(a)(3) Listing of Exhibits
The following exhibits of Lincoln National Corporation and subsidiaries are
included in Item 14(c) - (Note: The numbers preceding the exhibits correspond
to the specific numbers within Item 601 of Regulation S-K.):
3(a) The Articles of Incorporation of LNC as last amended May 12,
1994 are incorporated by reference to LNC's Form S-3/A (File No.
33-55379) filed with the Commission on September 15, 1994.
3(b) The Bylaws of LNC as last amended January 1, 1992 are
incorporated by reference to Exhibit 3(b) of LNC's Form 10-K for
the year ended December 31, 1991 filed with the Commission on
March 27, 1992.
4(a) Indenture of LNC dated as of January 15, 1987.
4(b) First Supplemental Indenture dated as of July 1, 1992, to
Indenture of LNC dated as of January 15, 1987, and Specimen
Notes for LNC's 7 1/8% Notes due July 15, 1999 are incorporated
by reference to Annex B and Annex C of LNC's Form 8-K filed with
the Commission on July 7, 1992.
4(c) First Supplemental Indenture dated as of July 1, 1992, to
Indenture of LNC dated as of January 15, 1987, and Specimen
Notes for LNC's 7 5/8% Notes due July 15, 2002 are incorporated
by reference to Annex B and Annex D of LNC's Form 8-K filed
with the Commission on July 7, 1992.
4(d) Fiscal Agency Agreement related to sale of $100,000,000
aggregate principal amount of 9 3/4% Notes of LNC due October 20,
1995 and the specimen of 9 3/4% Notes are incorporated by
reference to Exhibit 4(d) of LNC's Form 10-K for the year ended
December 31, 1993, filed with the Commission on March 30, 1994.
4(e) Rights Agreement dated November 7, 1986.
4(f) Rights Agreement date July 5, 1990 is incorporated by reference
to Exhibit No. 28 of LNC's Registration Statement on Form S-3,
(File No. 33-55652), filed with the Commission on December 11,
1992.
4(g) Indenture for LNC's 9 1/8% Debentures due October 1, 2024 are
incorporated by reference to Exhibits No. 4(c) of LNC's S-3/A
(File No. 33-55379), filed with the Commission on September 15,
1994.
4(h) Specimen Debenture of LNC's 9 1/8% Debentures due October 1, 2024
is incorporated herein by reference to Schedule I of LNC's Form
8-K filed with the Commission on September 29, 1994.
1994.
10(a)* The Lincoln National Corporation 1986 Stock Option Incentive
Plan as last amended and restated is incorporated by reference to
Exhibit No.1 of LNC's Proxy filed with the Commission on March
31, 1994.
10(b)* The Lincoln National Corporation 1982 Stock Option Incentive
Plan as last amended May 7, 1987 is incorporated by reference to
Exhibit 10(b) of LNC's Form 10-K for the year ended December 31,
1993, filed with the Commission on March 30, 1994.
10(c)* The Lincoln National Corporation Executives' Salary Continuation
Plan as last amended January 1, 1992 is incorporated by reference
to Exhibit 10(c) of LNC's Form 10-K for the year ended December
31, 1992, filed with the Commission on March 30, 1993.
<PAGE>
64
10(d)* The Lincoln National Corporation Executive Value Sharing Plan is
incorporated by reference to Exhibit No. 4 of LNC's Proxy filed
with the Commission on March 31, 1993.
10(e)* Lincoln National Corporation Executives' Severance Benefit Plan
as last amended January 10, 1990, is incorporated by reference
to Exhibit 10(f) of LNC's Form 10-K for the year ended December
31, 1990, filed with the Commission on March 28, 1991.
10(f)* The Lincoln National Corporation Outside Directors Retirement
Plan as last amended March 15, 1990, is incorporated by reference
to Exhibit 10(g) of LNC's Form 10-K for the year ended December
31, 1990, filed with the Commission on March 28, 1991.
10(g)* The Lincoln National Corporation Outside Directors Benefits Plan
is incorporated by reference to Exhibit 10(h) of LNC's Form 10-K
for the year ended December 31, 1992, filed with the Commission
on March 30, 1993.
10(h)* Descriptions of compensation arrangements with Executive
Officers is incorporated by reference to Exhibit 10(m) of LNC's
Form 10-K for the year ended December 31, 1993, filed with the
Commission on March 30, 1994.
10(i)* The Lincoln National Corporation Executives' Supplemental
Pension Benefit Plan is incorporated by reference to Exhibit
10(n) of LNC's Form 10-K for the year ended December 31, 1992,
filed with the Commission on March 30, 1993.
10(j)* Lincoln National Corporation Executive Savings and Profit
Sharing Plan as amended January 1, 1992 is incorporated by
reference to Exhibit 10(o) of LNC's Form 10-K for the year ended
December 31, 1992, filed with the Commission on March 30, 1993.
10(k)* Lincoln National Corporation 1993 Stock Plan for Non-Employee
Directors is incorporated by reference to Exhibit 10(q) of LNC's
Form 10-K for the year ended December 31, 1993, filed with the
Commission on March 30, 1994.
10(l)* Lincoln National Corporation Executives' Excess Compensation
Benefit Plan is incorporated by reference to Exhibit 10(r) of
LNC's Form 10-K for the year ended December 31, 1993, filed with
the Commission on March 30, 1994.
10(m) Lease and Agreement dated August 1, 1984, with respect to the
American States' Home Office property, is incorporated by
reference to Exhibit 10(i) of LNC's Form 10-K for the year ended
December 31, 1990, filed with the Commission on March 28, 1991.
10(n) Lease and Agreement dated August 1, 1984, with respect to LNL's
Home Office properties located at Clinton Street and Harrison
Street, Fort Wayne, Indiana, is incorporated by reference to
Exhibit 10(j) of LNC's Form 10-K for the year ended December 31,
1990, filed with the Commission on March 28, 1991.
10(o) Lease and Agreement dated August 1, 1984, with respect to LNL's
Home Office property located at Magnavox Way, Fort Wayne, Indiana
is incorporated by reference to Exhibit No. 10(i) of LNC's Form
10-K for the year ended December 31, 1990, filed with the
Commission March 28, 1991. [Former lessee name was Lincoln
National Pension Insurance Company which was merged with LNL,
effective January 1, 1989.]
<PAGE>
65
10(p) Lease and Agreement dated December 1, 1994 with respect to LNC's
Corporate Office located at 200 East Berry Street, Fort Wayne,
Indiana.
*This exhibit is a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this form
pursuant to Item 14(c) of this report.
11 Computation of Per Share Earnings.
21 List of Subsidiaries of LNC.
23 Consent of Ernst & Young LLP, Independent Auditors.
27 Financial Data Schedule.
28 Information from Reports Furnished to State Insurance.
Regulatory Authorities.
Item 14(b) - During the fourth quarter of the year ended
December 31, 1994, no reports on Form 8-K were
filed with the Commission.
Item 14(c) - The exhibits of Lincoln National Corporation
and subsidiaries are listed in Item 14(a)(3)
above.
Item 14(d) - The financial schedules for Lincoln National
Corporation and subsidiaries follow on pages
through 31-59.
<PAGE>
66
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS
IN RELATED PARTIES
December 31, 1994 (000's omitted)
Col. A Col. B Col. C Col. D
Amount at
Which Shown
in the
Type of Investment Cost Value Balance Sheet
<S> <C> <C> <C>
Fixed maturity securities
available-for-sale:
Bonds:
United States Government
and government agencies
and authorities ------------- $ 1,673,071 $ 1,632,779 $ 1,632,779
States, municipalities and
political subdivisions ------ 2,386,211 2,377,707 2,377,707
Mortgage-backed securities --- 5,215,536 5,106,408 5,106,408
Foreign governments ---------- 624,348 611,893 611,893
Public utilities ------------- 2,734,853 2,608,830 2,608,830
Convertibles and bonds
with warrants attached ------ 115,539 117,591 117,591
All other corporate bonds ---- 9,316,299 9,066,223 9,066,223
Redeemable preferred stocks ---- 128,222 122,723 122,723
Total ----------------------- 22,194,079 21,644,154 21,644,154
Equity securities available-for-sale:
Common stocks:
Public utilities ------------- 29,506 29,195 29,195
Banks, trusts and
insurance companies --------- 72,722 110,526 110,526
Industrial, miscellaneous
and all other --------------- 573,344 639,107 639,107
Nonredeemable preferred stocks - 272,563 259,789 259,789
Total Equity Securities ----- 948,135 1,038,617 1,038,617
Mortgage loans on real estate ---- 2,915,758 2,853,083(A)
Real estate:
Investment properties ---------- 571,912 571,912
Acquired in
satisfaction of debt ---------- 213,580 134,942(A)
Policy loans --------------------- 553,272 553,272
Other investments ---------------- 198,897 175,121(A)
Total Investments ----------- $27,595,633 $26,971,101
</TABLE>
(A) Investments which are deemed to have declines in value that are
other than temporary are written down or reserved for to reduce their
carrying value to their estimated realizable value.
<PAGE>
67
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
Lincoln National Corporation (Parent Company Only)
December 31 (000's omitted) 1994 1993
<S> <C> <C>
Assets:
Investments in subsidiaries* ------------------ $3,779,282 $4,870,705
Investments ----------------------------------- 28,726 43,868
Investment in unconsolidated affiliate -------- 114,345 --
Cash and invested cash ------------------------ 523,132 271,721
Property and equipment ------------------------ 9,895 5,941
Accrued investment income --------------------- 211 16
Receivable from subsidiaries* ----------------- 66,724 62,835
Loans to subsidiaries* ------------------------ 36,480 16,025
Dividends receivable from subsidiaries* ------- 45,000 80,000
Goodwill -------------------------------------- 9,355 10,008
Other assets ---------------------------------- 10,184 116,215
Total Assets -------------------------------- $4,623,334 $5,477,334
Liabilities and Shareholders' Equity
Liabilities:
Cash collateral on loaned securities ---------- $ 203,531 $ 189,256
Dividends payable ----------------------------- 40,531 38,591
Short-term debt ------------------------------- 229,444 312,867
Long-term debt -------------------------------- 397,705 298,422
Loans from subsidiaries* ---------------------- 600,308 328,467
Federal income taxes (recoverable) payable ---- (2,387) 30,717
Accrued expenses and other liabilities -------- 112,142 206,693
Total Liabilities --------------------------- 1,581,274 1,405,013
Shareholders' Equity:
Series A Preferred Stock --------------------- 1,420 1,553
Series E Preferred Stock --------------------- 151,206 151,206
Series F Preferred Stock --------------------- 158,707 158,707
Common Stock --------------------------------- 555,382 543,659
Earned surplus ------------------------------- 2,479,532 2,303,731
Foreign currency translation adjustment ------ 6,890 (1,214)
Net unrealized gain (loss) on investment
securities available-for-sale [including
unrealized gain (loss) of subsidiaries:
1994 - (325,366,000), 1993 - $891,971,000] -- (311,077) 914,679
Total Shareholders' Equity ---------------- 3,042,060 4,072,321
Total Liabilities and
Shareholders' Equity --------------------- $4,623,334 $5,477,334
*Eliminated in consolidation.
</TABLE>
These condensed financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes of Lincoln
National Corporation and subsidiaries (see pages 31 through 59).
<PAGE>
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Continued)
STATEMENTS OF INCOME
Lincoln National Corporation (Parent Company Only)
Year Ended December 31 (000's omitted) 1994 1993 1992
<S> <C> <C> <C>
Revenue:
Dividends from subsidiaries* --------------- $309,460 $155,980 $ 60,324
Interest from subsidiaries* ---------------- 1,080 1,730 1,799
Pre-closing dividend from subsidiaries sold- -- -- 40,917
Equity in earnings of
unconsolidated affiliate ------------------ 13,119 -- --
Net investment income ---------------------- 20,376 14,634 22,610
Realized gain (loss) on investments -------- (20,016) 27,106 49,807
Other -------------------------------------- 1,373 (61) 1,235
Total Revenue ---------------------------- 325,392 199,389 176,692
Expenses:
Operating and administrative --------------- 40,919 21,682 32,078
Interest-subsidiaries* --------------------- 23,815 13,811 18,246
Interest-other ----------------------------- 45,976 41,136 51,861
Total Expenses --------------------------- 110,710 76,629 102,185
Income before Federal Income Tax benefits,
Equity in Undistributed Net Income of
Subsidiaries and Cumulative Effect
of Accounting Change -------------------- 214,682 122,760 74,507
Federal income tax benefits ------------------ (36,574) (6,032) (7,521)
Income Before Equity in
Undistributed Net Income of
Subsidiaries and Cumulative
Effect of Accounting Change ------------- 251,256 128,792 82,028
Equity in undistributed net income of
subsidiaries -------------------------------- 98,642 286,491 277,143
Income Before Cumulative Accounting
Change ---------------------------------- 349,898 415,283 359,171
Cumulative effect of accounting change:
Parent company ------------------------------ -- (8,006) --
Subsidiaries -------------------------------- -- (88,425) --
Total Accounting Change ------------------ -- (96,431) --
Net Income ------------------------------- $349,898 $318,852 $359,171
*Eliminated in consolidation.
</TABLE>
These condensed financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes of Lincoln
National Corporation and subsidiaries (see pages 31 through 59).
<PAGE>
69
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Continued)
STATEMENTS OF CASH FLOWS
Lincoln National Corporation (Parent Company Only)
Year Ended December 31 (000's omitted) 1994 1993 1992
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income ----------------------------------- $349,898 $318,852 $359,171
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed net income
of subsidiaries* ------------------------- (63,642) (278,065) (264,833)
Equity in undistributed earnings of
unconsolidated affiliate ----------------- (13,119) -- --
Realized (gain) loss on investments ------- 20,016 (27,106) (49,807)
Cumulative effect of accounting change ---- -- 8,006 --
Other ------------------------------------- (32,757) 23,375 10,088
Net Adjustments ------------------------- (89,502) (273,790) (304,552)
Net Cash Provided by
Operating Activities ------------------- 260,396 45,062 54,619
Cash Flows from Investing Activities:
Net sales (purchases) of investments ------- (22,106) 31,648 86,448
Cash collateral on loaned securities ------- 14,275 9,547 (31,746)
Net investment in subsidiaries* ------------ (2,744) (105,846) (103,149)
Sale of subsidiaries ----------------------- -- -- 145,270
Investment in unconsolidated affiliate ----- (103,470) -- --
Net (purchase) sale of property
and equipment ----------------------------- (5,109) (5,563) 5,141
Other -------------------------------------- 7,379 3,147 (24,079)
Net Cash Provided by (Used in)
Investing Activities -------------------- (111,775) (67,067) 77,885
Cash Flows from Financing Activities:
Principal payments on long-term debt ------- (100,717) -- (31,283)
Issuance of long-term debt ----------------- 200,000 -- 197,737
Net decrease in short-term debt ------------ (83,423) (207,231) (225,503)
Increase (decrease) in loans from
subsidiaries* ----------------------------- 271,841 (127,602) 113,436
Decrease (increase) in loans to
subsidiaries* ----------------------------- (20,455) 34,725 50,091
Decrease (increase) in receivables from
subsidiaries* ----------------------------- (3,889) (14,235) 40,735
Public offering of Common Stock ------------ -- 316,100 --
Common Stock issued for benefit plans ------ 29,985 26,230 21,018
Retirement of Common Stock ----------------- (18,395) -- --
Dividends paid to shareholders ------------- (172,157) (156,235) (139,151)
Net Cash Provided by (Used in)
Financing Activities -------------------- 102,790 (128,248) 27,080
Net Increase (Decrease) in Cash ---------- 251,411 (150,253) 159,584
Cash at beginning of year -------------------- 271,721 421,974 262,390
Cash at End of Year ---------------------- $523,132 $271,721 $421,974
*Eliminated in consolidation.
</TABLE>
These condensed financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes of Lincoln
National Corporation and subsidiaries (see pages 31 through 59).
<PAGE>
70
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
Column A Column B Column C Column D Column E Column F Column G
Future Policy Other
Benefits, Policy
Deferred Claims and Claims and Net
Acquisition Claim Unearned Benefits Premium Investment
Segment Costs Expenses(A) Premiums(A) Payable Revenue (B) Income (C)
--------------------------------(000's Omitted)---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1994
Property-Casualty ------------ $ 140,122 $ 2,702,537 $732,101 $ $1,710,563 $ 241,096
Life Insurance and Annuities - 1,638,751 6,357,449 11,201 1,030,010 1,635,891
Life-Health Reinsurance ------ 665,342 2,222,657 65,202 1,853,880 125,447
Employee Life-Health Benefits(D) -- -- -- 299,338 10,838
Other (incl. consol. adj's.) - (66,331) (1,517) (1,921)
Total ---------------------- $2,444,215 $11,216,312 $806,987 $ -- $4,893,791 $2,011,351
Year Ended December 31, 1993
Property-Casualty ------------ $ 153,073 $ 2,810,037 $777,011 $ $1,841,363 $ 250,633
Life Insurance and Annuities - 1,176,852 7,305,262 6,527 969,579 1,717,503
Life-Health Reinsurance ------ 681,206 2,340,654 76,606 1,787,644 124,856
Employee Life-Health Benefits- 320,189 1,228,606 42,931
Other (incl. consol. adj's.) - (124,107) (1,339) 10,596
Total ---------------------- $2,011,131 $12,652,035 $858,805 $ -- $5,827,192 $2,146,519
Year Ended December 31, 1992
Property-Casualty ------------ $ 172,378 $ 2,672,503 $840,349 $ $2,082,953 $ 287,224
Life Insurance and Annuities - 1,430,790 6,617,403 4,587 789,796 1,572,744
Life-Health Reinsurance ------ 509,453 1,497,314 135,543 1,651,166 108,713
Employee Life-Health Benefits- 269,044 13 1,184,183 37,775
Other (incl. consol. adj's.) - 5,275 68,296 5 268 (19,160)
Total ---------------------- $2,117,896 $11,124,560 $980,497 $ -- $5,708,366 $1,987,296
</TABLE>
<TABLE>
<CAPTION>
Column A Column H Column I Column J Column K
Amortiza-
Benefits, tion of
Claims, Deferred
and Policy Ac- Other
Claim quisition Operating Premiums
Segment Expenses Costs Expenses (C) Written
----------------------(000's Omitted)-----------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1994
Property-Casualty ------------ $1,262,400 $361,195 $ 169,049 $1,664,483
Life Insurance and Annuities - 1,904,352 89,916 514,384
Life-Health Reinsurance ------ 1,463,819 147,226 289,488
Employee Life-Health Benefits(D) 218,672 73,355
Other (incl. consol. adj's.) - 114,213
Total ---------------------- $4,849,243 $598,337 $1,160,489
Year Ended December 31, 1993
Property-Casualty ------------ $1,406,781 $384,185 $ 187,654 $1,766,649
Life Insurance and Annuities - 1,883,656 139,824 371,756
Life-Health Reinsurance ------ 1,421,329 42,549 561,790
Employee Life-Health Benefits- 916,513 294,810
Other (incl. consol. adj's.) - 5,274 85,807
Total ---------------------- $5,628,279 $571,832 $1,501,817
Year Ended December 31, 1992
Property-Casualty ------------ $1,721,802 $435,353 $ 229,426 $2,003,534
Life Insurance and Annuities - 1,723,165 122,652 395,874
Life-Health Reinsurance ------ 1,349,444 (3,955) 352,025
Employee Life-Health Benefits- 902,096 276,616
Other (incl. consol. adj's.) - 3,936 9,621 91,349
Total ---------------------- $5,700,443 $563,671 $1,345,290
(A) Following the adoption of FAS 113 in 1993, the 1993 and 1994 amounts are presented on a gross-of-reinsurance basis;<PAGE>
the 1992 amounts are presented on a net-of-reinsurance basis.
(B) Includes insurance fees on universal life and other interest sensitive products.
(C)
The allocation of expenses between investments and other operations are based on a number of assumptions and estimates.
Results would change if different methods were applied.
(D) Includes data through the March 21, 1994 date of sale of the direct writer of employee life-health coverages.
</TABLE>
<PAGE>
71
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE IV - REINSURANCE (A)
Column A Column B Column C Column D Column E Column F
Ceded Assumed Percentage of
Gross to Other from Other Net Amount Assumed
Amount Companies Companies Amount to Net
-------------------------(000's Omitted)-----------------------
Year Ended December 31, 1994
<S> <C> <C> <C> <C> <C>
Life insurance in force ------------ $93,505,000 $35,366,000 $106,161,000 $164,300,000 64.7%
Premiums:
Property-casualty insurance ------ $1,689,070 $ 78,381 $ 99,874 $1,710,563 5.8%
Life insurance (B) --------------- 1,040,134 47,022 1,104,464 2,097,576 52.7
Health insurance ----------------- 668,091 357,536 775,097 1,085,652 71.4
Total -------------------------- $3,397,295 $482,939 $1,979,435 $4,893,791
Year Ended December 31, 1993
Life insurance in force ------------ $144,054,000 $46,255,000 $89,712,000 $187,511,000 47.8%
Premiums:
Property-casualty insurance ------ $1,760,560 $ 71,472 $ 152,275 $1,841,363 8.3%
Life insurance (B) --------------- 1,086,349 139,013 1,129,235 2,076,571 54.4
Health insurance ----------------- 1,376,038 80,731 613,951 1,909,258 32.2
Total -------------------------- $4,222,947 $291,216 $1,895,461 $5,827,192
Year Ended December 31, 1992
Life insurance in force ------------ $131,104,000 $46,938,000 $86,881,000 $171,047,000 50.8%
Premiums:
Property-casualty insurance ------ $1,954,569 $ 99,858 $ 228,242 $2,082,953 11.0%
Life insurance (B) --------------- 895,004 151,975 1,024,593 1,767,622 58.0
Health insurance ----------------- 1,184,817 34,391 707,365 1,857,791 38.1
Total -------------------------- $4,034,390 $286,224 $1,960,200 $5,708,366
(A) Special-purpose bulk reinsurance transactions have been excluded.
(B) Includes insurance fees on universal life and other interest sensitive
products.
</TABLE>
<PAGE>
72
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
Col. A Col. B Col. C Col. D Col. E
Additions
Balance at (1) (2) Balance at
Beginning Charged to Charged to Other Deductions- End of
Description of Period Costs & Expenses Accounts-Describe(A) Describe(B) Period
------------------------------(000's Omitted)--------------------------------
Year Ended December 31, 1994
<S> <C> <C> <C> <C>
Deducted from Asset Accounts:
Reserve for Mortgage Loans
on Real Estate -------------------- $226,639 $ 18,232 $(182,196) $ 62,675
Reserve for Real Estate ------------ 121,427 14,861 (57,650) 78,638
Reserve for Other Long-term
Investments ----------------------- 27,196 1,726 (5,146) 23,776
Included in Other Liabilities:
Investment Guarantees -------------- 18,535 2,480 (7,939) 13,076
Year Ended December 31, 1993
Deducted from Asset Accounts:
Reserve for Mortgage Loans
on Real Estate -------------------- $134,476 $140,568 $(48,405) $226,639
Reserve for Real Estate ------------ 131,060 33,389 (43,022) 121,427
Reserve for Other Long-term
Investments ----------------------- 40,307 4,321 (17,432) 27,196
Included in Other Liabilities:
Investment Guarantees -------------- 30,033 1,427 (12,925) 18,535
Year Ended December 31, 1992
Deducted from Asset Accounts:
Reserve for Mortgage Loans
on Real Estate -------------------- $ 72,094 $ 91,909 $(22,540) $ (6,987) $134,476
Reserve for Real Estate ------------ 92,000 36,034 22,540 (19,514) 131,060
Reserve for Other Long-term
Investments ----------------------- 23,220 20,341 (3,254) 40,307
Included in Other Liabilities:
Investment Guarantees -------------- 24,950 6,883 (1,800) 30,033
(A) Transfer between investment classifications.
(B) Deductions reflect sales or foreclosures of the underlying holdings.
</TABLE>
<PAGE>
73
<TABLE>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE VI - SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY
INSURANCE OPERATIONS
Column A Column B Column C Column D Column E Column F Column G
Deferred Reserves for Discount,
Affiliation Policy Unpaid Claims if any Net
with Acquisition and Claim Deducted in Unearned Earned Investment
Registrant Costs Expenses(A) Column C Premiums(A) Premium Income
----------------------------(000's Omitted)-----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated subsidiaries:
Year Ended December 31, 1994 $140,122 $2,702,537 $ -- $732,101 $1,710,563 $241,096
Year Ended December 31, 1993 $153,073 $2,810,037 $ -- $777,011 $1,841,363 $250,633
Year Ended December 31, 1992 $172,378 $2,672,503 $ -- $840,349 $2,082,953 $287,224
</TABLE>
<TABLE>
<CAPTION>
Column A Column H Column I Column J Column K
Claims and Claim
Expenses (Credits) Amortization
Incurred Related to of Deferred Paid
Affiliation (1) (2) Policy Claims
with Current Prior Acquisition and Claim Premium
Registrant Year Years Costs Expenses Written
----------------------(000's omitted)--------------------------
<S> <C> <C> <C> <C> <C>
Consolidated subsidiaries:
Year Ended December 31, 1994 $1,340,600 $(78,200) $361,195 $1,347,600 $1,664,483
Year Ended December 31, 1993 $1,433,270 $(26,489) $384,185 $1,494,764 $1,766,649
Year Ended December 31, 1992 $1,670,603 $ 46,965 $435,353 $1,547,486 $2,003,534
(A) Following the adoption FAS 113 in 1993, the 1993 and 1994 amounts are presented on a gross-of-reinsurance basis;
the 1992 amounts are presented on a net-of-reinsurance basis.
</TABLE>
<PAGE>
74
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX FOR THE ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 1994
Exhibit
Number Page
3(a) Articles of Incorporation of LNC as last amended
May 12, 1994.*
3(b) Bylaws of LNC as last amended January 1, 1992.*
4(a) Indenture of LNC due January 15, 1987. 76
4(b) Indenture for 7 1/8% due July 15, 1999 and
Specimen Notes.*
4(c) Indenture for 7 5/8% Notes due July 15, 2002 and
Specimen Notes.*
4(d) Fiscal Agency Agreement for 9 3/4% Notes due
October 30, 1995, and Specimen Notes.*
4(e) Rights Agreement dated November 7, 1986. 110
4(f) Right Agreement date July 5, 1990.*
4(g) Indenture for 9 1/8% Notes due October 1, 2024 and
Specimen Notes.*
4(h) Specimen Debenture for 9 1/8% Notes due October 1, 2024.*
10(a) Lincoln National Corporation 1986 Stock Option
Incentive Plan.*
10(b) Lincoln National Corporation 1982 Stock Option
Incentive Plan.*
10(c) The Lincoln National Corporation Executives'
Salary Continuation Plan.*
10(d) The Lincoln National Corporation Executive Value
Sharing Plan.*
10(e) Lincoln National Corporation Executives' Severance
Benefit Plan as last amended January 10, 1990.*
10(f) The Lincoln National Corporation Outside Directors
Retirement Plan.*
10(g) The Lincoln National Corporation Outside Directors
Benefits Plan.*
10(h) Descriptions of Compensation Arrangements with
Executive Officers.*
10(i) The Lincoln National Corporation Executives'
Supplemental Pension Benefit Plan.*
10(j) The Lincoln National Corporation Executive Savings and
Profit Sharing Plan as last amended January 1, 1992.*
10(k) Lincoln National Corporation 1993 Stock Plan for Non-
Employee Directors.*
10(l) Lincoln National Corporation Executives' Excess
Compensation Benefit Plan.*
10(m) Lease and Agreement dated August 1, 1984, with respect
to the American States' home office property.*
10(n) Lease and Agreement dated August 1, 1984, with respect
to LNL's home office property.*
10(o) Lease and Agreement dated August 1, 1984, with respect
to additional LNL home office property.*
10(p) Lease dated February 14, 1991, with respect to LNC's
Corporate Offices. 145
11 Computation of Per Share Earnings. 169
21 List of Subsidiaries of LNC. 170
23 Consent of Ernst & Young LLP, Independent Auditors. 180
27 Financial Data Schedule. 181
28 Information from Reports Furnished to State Insurance
Regulatory Authorities. [Data shown on this report is on 182
a "Combined" basis and does not include data for
subsidiaries sold.]
*Incorporated by Reference
<PAGE>
75
Signature Page
LINCOLN NATIONAL CORPORATION
Pursuant to the requirements
of Section 13 or 15(d) of
the Securities Exchange Act By /s/ Ian M. Rolland March 9, 1995
of 1934, LNC has duly caused Ian M. Rolland,
this report to be signed on (Chairman, Chief Executive Officer and
behalf by the under- Director)
signed, thereunto duly
authorized. By /s/ Robert A. Anker March 9, 1995
Robert A. Anker,
(President, Chief Operating Officer and
Director)
By /s/ Richard C. Vaughan March 9, 1995
Richard C. Vaughan,
(Executive Vice President and Chief
Financial Officer)
By /s/ Donald L. Van Wyngarden March 9, 1995
Donald L. Van Wyngarden
(Second Vice President and Controller)
Pursuant to the requirements By /s/ J. Patrick Barrett March 9, 1995
of the Securities Exchange J. Patrick Barrett
Act of 1934, this report
has been signed below by By /s/ Thomas D. Bell, Jr. March 9, 1995
the following Directors Thomas D. Bell, Jr
of LNC on the date indicated.
By /s/ Daniel R. Efroymson March 9, 1995
Daniel R. Efroymson
By /s/ Harry L. Kavetas March 9, 1995
Harry L. Kavetas
By /s/ M. Leanne Lachman March 9, 1995
M. Leanne Lachman
By /s/ Leo J. McKernan March 9, 1995
Leo J. McKernan
By /s/ Earl L. Neal March 9, 1995
Earl L. Neal
By /s/ John M. Pietruski March 9, 1995
John M. Pietruski
By /s/ Jill S. Ruckelshaus March 9, 1995
Jill S. Ruckelshaus
By /s/ Gordon A. Walker March 9, 1995
Gordon A. Walker
By /s/ Gilbert R. Whitaker,Jr. March 9, 1995
Gilbert R. Whitaker,Jr.
EXHIBIT 4(a)
LINCOLN NATIONAL CORPORATION
Debt Securities
INDENTURE
Dated as of January 15, 1987
Morgan Guaranty Trust Company of New York, Trustee
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1) 7.10
310(a)(2) 7.10
310(a)(3) N.A.
310(a)(4) N.A.
310(b) 7.08; 7.10
310(c) N.A.
311(a) 7.11
311(b) 7.11
311(c) N.A.
312(a) 2.05
312(b) 10.03
312(c) 10.03
313(a) 7.06
313(b)(1) N.A.
313(b)(2) 7.06
313(c) 7.06
313(d) 7.06
314(a) 4.04
314(b) N.A.
314(c)(1) 10.04
314(c)(2) 10.04
314(c)(3) N.A.
314(d) N.A.
314(e) 10.05
314(f) N.A.
315(a) 7.01(b)
315(b) 7.05
315(c) 7.01(a)
315(d) 7.01(c)
315(e) 6.11
316(a)(last sentence) 10.06
316(a)(1)(A) 6.05
316(a)(1)(B) 6.04
316(a)(2) N.A.
316(b) 6.07
-i-
317(a)(1) 6.08
317(a)(2) 6.09
317(b) 2.04
318(a) 10.01
_______________
N.A. means Not Applicable.
Note: This cross-reference table is not part of the
Indenture.
ARTICLE ONE Definitions and Incorporation by Reference 1
SECTION 1.01. Definitions 1
SECTION 1.02. Other Definitions 4
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act 4
SECTION 1.04. Rules of Construction 4
SECTION 1.05. Acts of Securityholders 5
ARTICLE TWO The Securities 5
SECTION 2.01. Terms and Form 5
SECTION 2.02. Execution and Authentication 6
SECTION 2.03. Registrar and Paying Agent 7
SECTION 2.04. Paying Agent to Hold Money in Trust 7
SECTION 2.05. Securityholder Lists 7
SECTION 2.06. Transfer, Registration and Exchange 8
SECTION 2.07. Replacement Securities 8
SECTION 2.08. Outstanding Securities 9
SECTION 2.09. Temporary Securities 9
SECTION 2.10. Cancellation 9
SECTION 2.11. Defaulted Interest 9
ARTICLE THREE REDEMPTION 10
SECTION 3.01. Applicability of Article 10
SECTION 3.02. Notices to Trustee 10
SECTION 3.03. Selection of Securities to be Redeemed11
SECTION 3.04. Notice of Redemption 11
SECTION 3.05. Effect of Notice of Redemption 12
SECTION 3.06. Deposit of Redemption Price or
Securities 12
SECTION 3.07. Securities Redeemed in Part 12
ARTICLE FOUR Covenants 12
SECTION 4.01. Payment of Securities 12
SECTION 4.02. Payment of Taxes and Other Claims 12
SECTION 4.03. Corporate Existence 13
SECTION 4.04 SEC Reports 13
SECTION 4.05. Statement as to Compliance 13
SECTION 4.06. Limitation on Liens on Stock of
Restricted Subsidiaries 14
SECTION 4.07. Limitations on Issue or Disposition
of Stock of Restricted Subsidiaries 14
SECTION 4.08. Waiver of Certain Covenants 14
ARTICLE FIVE Successor Corporation 15
SECTION 5.01. When Company May Merge, etc 15
SECTION 5.02. Successor Corporation Substituted 15
ARTICLE SIX Defaults and Remedies 15
SECTION 6.01. Events of Default 15
SECTION 6.02. Acceleration 17
SECTION 6.03. Other Remedies 17
SECTION 6.04. Waiver of Past Defaults 17
SECTION 6.05. Control by Majority 18
SECTION 6.06. Limitation on Suits 18
SECTION 6.07. Rights of Holders to Receive Payment 18
-ii-
SECTION 6.08. Collection Suit by Trustee 19
SECTION 6.09. Trustee May File Proofs of Claim 19
SECTION 6.10. Priorities 19
SECTION 6.11. Undertaking for Costs 20
ARTICLE SEVEN Trustee 20
SECTION 7.01. Duties of Trustee 20
SECTION 7.02. Rights of Trustee 21
SECTION 7.03. Individual Rights of Trustee 21
SECTION 7.04. Trustee's Disclaimer 21
SECTION 7.05. Notice of Defaults 21
SECTION 7.06. Reports by Trustee to Holders 22
SECTION 7.07. Compensation and Indemnity 22
SECTION 7.08. Replacement of Trustee 23
SECTION 7.09. Successor Trustee by Merger, etc 23
SECTION 7.10. Eligibility; Disqualification 23
SECTION 7.11. Preferential Collection of Claims
Against Company. 24
ARTICLE EIGHT Discharge of Indenture 24
SECTION 8.01. Termination of Company's Obligations 24
SECTION 8.02. Termination of Company's
Obligations Under Certain Circumstances 25
SECTION 8.03. Application of Trust Money 26
SECTION 8.04. Repayment to Company 26
SECTION 8.05. Indemnity for Government Obligations 27
ARTICLE NINE Amendments, Supplements and Waivers 27
SECTION 9.01. Without Consent of Holders 27
SECTION 9.02. With Consent of Holders 27
SECTION 9.03. Compliance with Trust Indenture Act 28
SECTION 9.04. Revocation and Effect of Consents 28
SECTION 9.05. Notation on or Exchange of Securities 28
SECTION 9.06. Trustee to Sign Amendments, etc 28
ARTICLE TEN Miscellaneous 28
SECTION 10.01. Trust Indenture Act Controls 28
SECTION 10.02. Notices 29
SECTION 10.03. Communication by Holders with Other
Holders 29
SECTION 10.04. Certificate and Opinion as to
Conditions Precedent 30
SECTION 10.05. Statements required in Certificate or
Opinion 30
SECTION 10.06. When Treasury Securities Disregarded 30
SECTION 10.07. Legal Holidays 31
SECTION 10.08. Governing Law 31
SECTION 10.09. No Adverse Interpretation of Other
Agreements 31
SECTION 10.10. Successors 31
SECTION 10.11. Duplicate Originals 31
SECTION 10.12. Securities in Foreign Currencies 31
SECTION 10.13. Effect of Headings and Table of
Contents 31
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INDENTURE dated as of January 15, 1987, between Lincoln
National Corporation, an Indiana corporation ("Company"), and
Morgan Guaranty Trust Company of New York, a New York trust
company, as trustee hereunder ("Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the
Company's Securities issued hereunder:
ARTICLE ONE
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Agent" means any Registrar, Paying Agent or co-Registrar or
agent for service of notice and demands. See Section 2.03.
"Authorized Newspaper" means a newspaper printed in the
English language and customarily published at least once a day on
each business day in each calendar week and of general
circulation in New York, New York, whether or not such newspaper
is published on Legal Holidays, or, with respect to the
Securities of any series, such other newspaper(s), as may be
specified in the Board Resolution or supplement to this Indenture
pursuant to which such series of Securities is issued. Whenever,
under the provisions of this Indenture or a Board Resolution, two
or more publications of a notice or other communication are
required or permitted, such publications may be in the same or
difference newspapers. If, because of temporary or permanent
suspension of publication or general circulation of any newspaper
or for any other reason, it is impossible or impracticable to
publish any notices required by this Indenture or a Board
Resolution in the manner provided, then such publication in lieu
thereof or such other notice as shall be made with the approval
of the Trustee shall constitute a sufficient publication of such
notice.
"Board of Directors" means the Board of Directors of the
Company, or the Executive Committee or any other committee of the
Board of Directors duly authorized to act for it hereunder.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company as
properly adopted by the Board of Directors and to be in full
force and effect and delivered to the Trustee.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the Indenture and
thereafter means the successor.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall
be principally administered.
"Default" means any event which is, or after notice or
passage of time would be, an Event of Default.
"Domestic Subsidiary" means any Subsidiary except a
Subsidiary (a) which neither transacts any substantial portion of
its business nor regularly maintains any substantial portion of
its fixed assets within the United States of America, or
(b) which is engaged primarily in financing the operations of the
Company and its Subsidiaries, or any of them, outside the United
States of America.
"Government Obligations" with respect to any series of
Securities means direct noncallable obligations of the government
which issued the currency in which the Securities of that series
are denominated, noncallable obligations the payment of the
principal of and interest on which is fully guaranteed by such
government, and noncallable obligations on which the full faith
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and credit of such government is pledged to the payment of the
principal thereof and interest thereon, and shall also include a
depositary receipt issued by a bank or trust company as custodian
with respect to any such Government Obligation or a specific
payment of interest on or principal of any such Government
Obligation held by such custodian for the account of the holder
of a depositary receipt, provided that (except as required by
law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depositary receipt from
any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of
the Government Obligation evidenced by such depositary receipt.
"Holder" or "Securityholder" means with respect to a
Registered Security, a person in whose name such Security is
registered on the books of the Registrar and, with respect to an
unregistered Security, the bearer thereof.
"Indenture" means this Indenture, as it may from time to
time be amended or supplemented.
"Officer" means the Chairman of the Board, the President or
any Vice President.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and the Treasurer, the Secretary, an
Assistant Treasurer or any Assistant Secretary of the Company.
See Sections 10.04 and 10.05.
"Opinion of Counsel" means a written opinion from the
General Counsel of the Company or any other legal counsel, who
may be another employee of or counsel to or for the Company, or
any other legal counsel acceptable to the Trustee.
"Original Issue Discount Security" means any Security which
provides that an amount less than its principal amount is due and
payable upon acceleration after an Event of Default.
"principal", whenever used with reference to the Securities
or any Security or any portion thereof, shall be deemed to
include "and premium, if any," and, whenever used with reference
to any Security which by its terms provides (or as to which
mandatory provisions of law provide) that less than the principal
amount thereof shall be due and payable upon a declaration of the
acceleration of the maturity thereof, and in the contexts of such
a declaration, of proving a claim under bankruptcy, insolvency or
similar laws, or of determining whether the holders of the
requisite aggregate principal amount of the Securities of any or
all series then outstanding have concurred in any request,
demand, authorization, direction, notice, consent, waiver or
other action by Securityholders hereunder, shall mean the portion
of such principal amount so provided to be due and payable upon a
declaration of acceleration of the maturity thereof.
"Redemption Date" means the date fixed for redemption of any
Security to be redeemed pursuant to this Indenture.
"Redemption Price" means the principal amount of any
Security to be redeemed.
"Registered Security" means any Security registered in the
Registrar's books.
"Restricted Subsidiary" means each of American States
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Insurance Company, The Lincoln National Life Insurance Company,
Lincoln National Pension Insurance Company, Security-Connecticut
Life Insurance Company and The Western Casualty and Surety
Company and any successor to all or a principal part of the
business or properties of any thereof and any other Subsidiary
which the Board of Directors by Board Resolution designates as a
Restricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities" means the debt securities, as amended or
supplemented from time to time pursuant to this Indenture, that
are issued under this Indenture.
"Subsidiary" means any corporation of which at the time of
determination the Company and/or one or more Subsidiaries owns or
controls directly or indirectly more than 50% of the shares of
Voting Stock.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Section 77aaa-77bbbb) as in effect on the date of this Indenture,
except as provided in Section 9.03.
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and
thereafter means the successor.
"Trust Officer" means any officer or assistant officer of
the Trustee assigned by the Trustee to administer its corporate
trust matters.
"Voting Stock" means stock of a corporation of the class or
classes having general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers
or trustees of such corporation (irrespective of whether or not
at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any
contingency).
"Yield to Maturity" means the yield to maturity on any
Security which by its terms provides (or as to which mandatory
provisions of law provide) that less than the principal amount
thereof shall be due and payable upon a declaration of
acceleration of the maturity thereof, calculated at the time of
issuance of such Security, or, if applicable, at the most recent
redetermination of interest on such Security, and calculated in
accordance with either the constant interest method or such other
method as is specified in the terms of such Security established
pursuant to Section 2.01.
SECTION 1.02. Other Definitions.
Term Defined in Section
"Bankruptcy Law" 6.01
"Custodian" 6.01
"Debt" 4.06
"Discharged" 8.02
"Event of Default" 6.01
"Legal Holiday" 10.07
"Paying Agent" 2.03
"Registrar" 2.03
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
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<PAGE>
Whenever this Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or
defined by SEC rule have the meanings assigned to them.
SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and in
the plural include the singular; and
(4) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles.
SECTION 1.05. Acts of Securityholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Securityholders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effect when such instrument or
instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Company. Proof of execution of any
such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to
Section 7.01) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be provided by the affidavit of a
witness of such execution or by the certificate of any notary
public or other officer authorized by law to take acknowledgments
of deeds, certifying to him the execution thereof. Where such
execution is by an officer of a corporation or a member of a
partnership, on behalf of such corporation or partnership, such
certificate or affidavit shall also constitute sufficient proof
of this authority. The fact and date of the execution of any
such instrument or writing, or the authority of the person
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<PAGE>
executing the same, may also be provided in any other manner
which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security register or by a certificate of the Registrar.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other act of the Holder of any Security shall
bind every future Holder of the same Security and the Holder of
every Security issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such
action is made upon such Security.
ARTICLE TWO
The Securities
SECTION 2.01. Terms and Form.
The Securities may be issued in one or more series of
Securities and shall bear the title, interest, if any, at the
rates, from the dates, shall mature at the times, may be
redeemable at the prices and upon the terms, shall be denominated
and payable at the place or places and in the currency or
currencies (which may be other than United States dollars),
including composite currencies, and shall contain or be subject
to all terms as shall be approved by or pursuant to a Board
Resolution or in one or more supplements to this Indenture.
The Securities of each series hereunder shall be in one or
more forms approved from time to time by or pursuant to a Board
Resolution or in one or more supplements to this Indenture. If
the form of the Security of any series is approved by or pursuant
to a Board Resolution, an Officers' Certificate shall state that
all conditions precedent relating to the authentication and
delivery of such Security have been complied with and shall be
accompanied by a copy of the Board Resolution by or pursuant to
which the form of such Security has been approved. The
Securities may have notations, legends or endorsements required
by law, stock exchange rule or usage. Each Security shall be
dated the date of its authentication. Each Security may contain
any other terms as are not inconsistent with this Indenture.
The Securities of each series may be issued as Registered
Securities without coupons or, if provided by the terms of the
instrument establishing such series of Securities, as
unregistered Securities, with or without coupons. Unless the
form of a Security of a series provides otherwise or when the
Securities are denominated in a currency other than United States
dollars, the Securities of such series shall be issued in
denominations of $1,000 or integral multiples thereof.
All Securities of any one series shall be substantially
identical except as to denomination or except as may otherwise be
provided in or pursuant to the Board resolution or supplement to
this Indenture approving the terms of the Securities of such
series.
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SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by
facsimile signatures. The Company's seal, if any, shall be
reproduced on the Securities.
If an Officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless.
The aggregate principal amount of Securities outstanding
hereunder at any time shall be unlimited except that such
outstanding amount may not exceed the amount authorized from time
to time by the Board of Directors and except as provided in
Section 2.07. The Trustee shall authenticate Securities for
original issue upon a written order of the Company signed by two
Officers or by an Officer and the Secretary, the Treasurer, an
Assistant Secretary or an Assistant Treasurer of the Company.
A Security shall not be valid until the Trustee manually
signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been
authenticated under this Indenture. The Trustee's authentication
shall be in the following form:
This is one of the Securities of the series designated
herein referred to in the within mentioned Indenture.
Morgan Guaranty Trust Company of New
York,
as Trustee
By:
SECTION 2.03. Registrar and Paying Agent.
The Company shall designate a Registrar who shall maintain
an office or agency where Securities may be presented for
registration of transfer and where each series of Registered
Securities may be presented for exchange ("Registrar") and a
Paying Agent who shall maintain an office or agency where
Securities and coupons may be presented for payment ("Paying
Agent") and an office or agency where notices and demands to or
upon the Company in respect of the Securities and this Indenture
may be served. The Registrar shall keep a register of each
series of Registered Securities and of their transfer and
exchange. The Company may have one or more co-Registrars and one
or more additional paying agents. The term "Paying Agent"
includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement
shall implement the provisions of this Indenture that relate to
such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent or agent for service of notices and
demands, or fails to give the foregoing notice, the Trustee shall
act as such.
The Company initially appoints the Trustee to be the
Registrar, Paying Agent and agent for service of notices and
demands.
SECTION 2.04. Paying Agent to Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent
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for the payment of principal of or interest on the Securities,
and shall notify the Trustee of any default by the Company (or
any other obligor on the Securities) in making any such payment.
If the Company or a Subsidiary acts as Paying Agent, it shall on
or before each due date of the principal of or any interest on
any Securities segregate the money and hold it as a separate
trust fund. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee and the Trustee may at
any time during the continuance of any payment default, upon
written request to a Paying Agent, require such Paying Agent to
pay to the Trustee all sums so held in trust by such Paying
Agent. Upon doing so the Paying Agent shall have no further
liability for the money.
SECTION 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Registered Securityholders. If the
Trustee is not the Registrar, the Company shall furnish to the
Trustee from information in the possession or control of the
Company (a) on or before each interest payment date for any
series of Securities, (b) pursuant to the form of Security for
each series of non-interest bearing Securities and (c) at such
other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders, provided that if the
provisions of (a) or (b) do not provide for the furnishing of
such information at stated intervals of not more than six months,
at least as frequently as semiannually, not later than May 15 and
November 15 of each year.
SECTION 2.06. Transfer, Registration and Exchange.
When a Registered Security is presented to the Registrar or
a co-Registrar in proper form for registration of transfer with a
request to register a transfer, the Registrar or co-Registrar
shall register the transfer as requested.
At the option of the Securityholder, Securities of any
series may be exchanged for Securities of the same series of like
aggregate principal amount and stated maturity and of other
authorized denominations. The Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor the
Security or Securities which the Securityholder making the
exchange shall be entitled to receive.
Every Security presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the
Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and
the Registrar duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit transfers and exchanges,
the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-Registrar's request. The
Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed for any exchange
or transfer.
The Company shall not be required (a) to issue, register the
transfer of or exchange any Securities of any series for a period
of 15 days next preceding any selection of Securities of such
series to be redeemed, or (b) to register the transfer of or
exchange any Securities of any series selected, called or being
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called for redemption in whole or in part except, in the case of
any Security to be redeemed in part, the portion thereof not so
to be redeemed.
SECTION 2.07. Replacement Securities.
If the Holder of a mutilated Security surrenders such
Security to the Trustee or if the Holder of a Security presents
evidence to the satisfaction of the Company and the Trustee that
the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a
replacement Security of the same series. In case any such
Security has or is about to become due and payable, the Company
may pay the Security instead of issuing a new Security. If
required by the Trustee or the Company, an indemnity bond must be
provided which is sufficient in the judgment of the Company and
the Trustee to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Security is replaced.
The Company and the Trustee may charge the Holder for their fees
and expenses in replacing a Security.
Every replacement Security is an additional obligation of
the Company and shall be entitled to all of the benefits of this
Indenture equally and proportionately with any and all other
Securities of that series duly issued under this Indenture.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all Securities
authenticated by the Trustee except for those cancelled by it and
those described in this Section. A Security does not cease to be
outstanding because the Company or one of its affiliates holds
the Security.
If a Security is replaced pursuant to Section 2.07, it
ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Security is held by a bona
fide purchaser.
If the Paying Agent holds on a redemption date or maturity
date money sufficient to pay Securities payable on that date,
then on and after that date such Securities cease to be
outstanding and interest on them ceases to accrue.
If the Company is deemed to be discharged from its
obligations with respect to the Securities of any series pursuant
to Section 8.01 or 8.02(a), the Securities of such series shall
cease to be outstanding.
SECTION 2.09. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the
form of definitive Securities but may have variations that the
Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Securities in exchange for
temporary Securities.
SECTION 2.10. Cancellation.
The Company at any time may deliver Securities or coupons to
the Trustee for cancellation. The Registrar and Paying Agent
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shall forward to the Trustee any Securities surrendered to them
for transfer, exchange or payment and all coupons surrendered for
payment. The Trustee shall cancel and destroy all Securities
surrendered for transfer, exchange, payment or cancellation and
all coupons surrendered for payment. The Company may not issue
new Securities to replace Securities that it has paid or
delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest.
If the Company defaults in a payment of interest on any
series of Registered Securities, and so long as the Trustee deems
the following procedure practicable, the Company shall pay the
defaulted interest to persons who are Holders of Registered
Securities of such series on a subsequent special record date in
the following manner. The Company shall fix the special record
date for the payment of such defaulted interest on such
Securities (which shall be between 10 and 30 days before the
payment date) and payment date for such defaulted interest. At
least 15 days before the special record date, the Company shall
mail each Holder of Registered Securities a notice that states
the special record date, the payment date and the amount of
defaulted interest to be paid. The Company may pay defaulted
interest in any other lawful manner.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Applicability of Article.
This Article shall apply to the Securities of each series,
if any, that by their terms are subject to redemption at the
option of the Company or pursuant to the operation of a sinking
fund. If the terms of any Security shall conflict with any
provision of this Article, the terms of such Security shall
govern.
SECTION 3.02. Notices to Trustee.
If the Company wants to redeem Securities of any series
pursuant to the terms of the Securities of that series, the
Company shall notify the Trustee of the redemption date and the
principal amount of the Securities to be redeemed. Each such
notice shall be accompanied by an Officers' Certificate stating
that any conditions to such redemption as provided in such
Security and in this Article have been complied with. If the
Company elects to redeem less than all of the Securities of a
series, the Company shall notify the Trustee of such redemption
date and of the principal amount of such Securities to be
redeemed and shall deliver to the Trustee such documentation and
records as shall enable the Trustee to select the Securities to
be redeemed pursuant to Section 3.03.
If Securities of any series by its terms is redeemable
pursuant to the operation of a sinking fund, the Company shall
notify the Trustee by an Officers' Certificate of the amount of
the next sinking fund payment and the portion of such payment
which is to be satisfied by delivering and crediting Securities
of the same series pursuant to Section 3.06.
If the Company wants to reduce the principal amount of
Securities to be redeemed pursuant to the terms of such
Securities, it shall notify the Trustee by Officers' Certificate
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of the amount of the reduction and the basis for it. If the
Company wants to credit against any such redemption Securities of
the same series it has not previously delivered to the Trustee
for cancellation, it shall deliver the Securities with such
Officers' Certificate.
The Company shall give each notice or Officers' Certificate
provided for in this Section at least 50 days before the
Redemption Date (unless shorter notice is satisfactory to the
Trustee).
SECTION 3.03. Selection of Securities to be Redeemed.
If less than all the Securities of a series are to be
redeemed, the Trustee shall select the Securities to be redeemed
by a method the Trustee considers fair and appropriate. The
Trustee shall make the selection from Securities of such series
outstanding not previously called for redemption. The Trustee
may select for redemption portions of the principal of Securities
of such series that have denominations larger than the minimum
authorized denomination of Securities of that series. Securities
and portions thereof the Trustee selects shall be in amounts
equal to the smallest authorized denominations or an integral
multiple thereof. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of
Securities called for redemption.
SECTION 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before a
Redemption Date, the Company shall give notice of such redemption
to the Holders of the Securities to be redeemed as a whole or in
part, with respect to Registered Securities, by mailing a notice
of such redemption by first-class mail to each Holder of
Registered Securities to be redeemed and, with respect to
unregistered Securities, by publishing in an Authorized Newspaper
notice of such redemption on two separate days.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the Redemption Date;
(2) the Redemption Price and accrued interest, if any;
(3) if less than all Securities of a series outstanding are
to be redeemed, the identification (and, if any Security is
to be redeemed in part, the principal amount) of the
particular Security to be redeemed;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price and accrued interest, if any;
(6) that interest on Securities called for redemption
ceases to accrue on and after the Redemption Date; and
(7) that the redemption is pursuant to a sinking fund, if
such is the case.
At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at its expense.
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SECTION 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at
the applicable Redemption Price. Upon surrender to the Paying
Agent, such Securities shall be paid at the applicable Redemption
Price, plus accrued interest to the Redemption Date; provided,
however, that any regular payment of interest becoming due on the
Redemption Date shall be payable to the Holders of such
Securities in accordance with their terms.
SECTION 3.06. Deposit of Redemption Price or Securities.
On or before the Redemption Date, the Company shall deposit
with the Paying Agent (or if the Company is its own Paying Agent,
shall segregate and hold in trust) money sufficient to pay the
Redemption Price of and accrued interest on all Securities to be
redeemed on that date.
If any Security by its terms permits any sinking fund
payment obligation to be satisfied by delivering and crediting
Securities, the Company shall deliver such Securities to the
Trustee for crediting against such payment obligation in
accordance with the terms of such Securities and this Indenture.
SECTION 3.07. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder a new Security of the
same series equal in principal amount to the unredeemed portion
of the Security surrendered.
ARTICLE FOUR
Covenants
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and any interest on
the Securities of each series on the dates and in the manner
provided in the Securities and this Indenture. At the Company's
option, it can pay any interest on Registered Securities of any
series by mailing checks or drafts to the holders of such
Securities at their addresses as shown on the Registrar's books.
The Company shall pay interest on overdue principal of any
Security at the rate borne by such Security (or, such Security's
yield to maturity, if applicable); it shall pay interest on
overdue installments of interest at the same rate to the extent
lawful.
SECTION 4.02. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all
taxes, assessments and governmental charges levied or imposed
upon the Company or any Domestic Subsidiary or upon the income,
profits or property of the Company or any Domestic Subsidiary,
and (2) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of
the Company or any Domestic Subsidiary; provided, however, that
the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in
good faith by appropriate proceedings.
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SECTION 4.03. Corporate Existence.
Subject to Article Five, the Company will do or cause to be
done all things necessary to preserve and keep in full force and
effect its corporate existence, rights (charter and statutory)
and franchises; provided, however, that the Company shall not be
required to preserve any such right or franchise if the Company
shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that
the loss thereof is not disadvantageous in any material respect
to the Holders.
SECTION 4.04 SEC Reports.
The Company shall file with the Trustee within 15 days after
it files them with the SEC copies of the annual reports and of
the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with
the SEC pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. The Company also shall comply with the
other provisions of TIA Sect. 314(a).
SECTION 4.05. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year, a written statement, which
need not comply with Section 10.05 hereof, signed by the Chairman
of the Board, the President or a Vice President and by the
Treasurer, an Assistant Treasurer, the Controller or an Assistant
Controller of the Company, stating, as to each signer thereof,
that
(1) a review of the activities of the Company during
such year and of performance under this Indenture has been
made under his supervision, and
(2) to the best of his knowledge, based on such
review, (a) the Company has fulfilled all its obligations
under this Indenture throughout such year, or, if there has
been a default in the fulfillment of any such obligation,
specifying each such default known to him and the nature and
status thereof, and (b) no event has occurred and is
continuing which is, or after notice or lapse of time or
both would become, an Event of Default under clause (3) or
(4) of Section 6.01, or, if such an event has occurred and
is continuing, specifying each such event known to him and
the nature and status thereof.
SECTION 4.06. Limitation on Liens on Stock of Restricted
Subsidiaries.
The Company will not, and will not permit any Restricted
Subsidiary to, issue, assume or guarantee any debt for money
borrowed (hereafter in this Section referred to as "Debt")
secured by a mortgage, security interest, pledge, lien or other
encumbrance upon any shares of stock of any Restricted Subsidiary
(whether such shares of stock are now owned or hereafter
acquired) without in any such case effectively providing
concurrently with the issuance, assumption or guarantee of any
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such Debt that the Securities (together with, if the Company
shall so determine, any other indebtedness of or guarantee by the
Company ranking equally with the Securities and then existing or
thereafter created) shall be secured equally and ratably with
such Debt.
SECTION 4.07. Limitations on Issue or Disposition of Stock of
Restricted Subsidiaries.
The Company will not, and will not permit any Restricted
Subsidiary to, issue, sell, assign, transfer or otherwise dispose
of, directly or indirectly, any of the capital stock (other than
nonvoting preferred stock) of any Restricted Subsidiary (except
to the Company or to one or more Restricted Subsidiaries or for
the purpose of qualifying directors); provided, however, that
this covenant shall not apply if:
(1) the entire capital stock of a Registered
Subsidiary is disposed of in a single transaction, or in a
series of related transactions, for a consideration
consisting of cash or other property which is at least equal
to the fair value of such capital stock, as determined by
the Board of Directors; or
(2) the issuance, sale, assignment, transfer or other
disposition is required to comply with the order of a court
or regulatory authority of competent jurisdiction, other
than an order issued at the request of the Company or of one
of its Restricted Subsidiaries; or
(3) after giving effect to the issuance, sale,
assignment, transfer or other disposition, the Company and
its Restricted Subsidiaries would own directly or indirectly
at least 80% of the issued and outstanding capital stock of
such Restricted Subsidiary and such issuance, sale,
assignment, transfer or other disposition is made for a
consideration consisting of cash or other property which is
at least equal to the fair value of such capital stock, as
determined by the Board of Directors.
SECTION 4.08. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply
with any covenant or condition set forth in Section 4.02, 4.03,
4.06 or 4.07, if before or after the time for such compliance the
Holders of at least a majority in principal amount of all
outstanding Securities, and the Holders of at least a majority in
principal amount of the outstanding Securities of each series to
be affected, if the Holders of one or more but less than all the
series of outstanding Securities are to be affected, shall either
waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to
the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties
of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.
ARTICLE FIVE
Successor Corporation
SECTION 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge into, or
transfer all or substantially all of its assets to, another
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corporation unless the successor or transferee corporation, which
shall be a corporation organized and existing under the laws of
the United States or a State thereof or the District of Columbia,
assumes by supplemental indenture all the obligations of the
Company under the Securities and this Indenture and the Company
shall have delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture comply with
this Indenture. Thereafter all such obligations of the
predecessor corporation shall terminate.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with
Section 5.01, the successor corporation formed by such
consolidation or into which the Company is merged or to which
such transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor corporation
had been named as the Company herein.
ARTICLE SIX
Defaults and Remedies
SECTION 6.01. Events of Default.
An "Event of Default" occurs with respect to the Securities
of any series if:
(1) the Company defaults in the payment of interest, if
any, on any Security of such series when the same becomes due and
payable and the default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security of such series when the same becomes due and payable
at maturity, upon redemption (if applicable) or otherwise;
(3) the Company fails to comply with any of its other
covenants, conditions or agreements in the Securities of such
series or this Indenture, unless such covenants, conditions or
agreements are solely for the benefit of the Securities of a
different series, and the default continues for the period and
after the notice specified below;
(4) a default under any other indebtedness of the Company
for money borrowed having unpaid principal in excess of
$1,000,000 or under any indenture or other instrument under which
any such indebtedness has been issued or by which it is governed,
whether now existing or hereafter created, shall happen and
result in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due
and payable, without such acceleration being rescinded or
annulled within the period and after the notice specified below;
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
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(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) fails generally to pay its debts as they become
due;
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case,
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company, and the
order or decree remains unstayed and in effect for 90 days; or
(7) any other event shall occur constituting an Event of
Default with respect to the Securities of such series.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or State law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
A default with respect to the Securities of any series under
clause (3) or clause (4) is not an Event of Default until the
Trustee notifies the Company or the Holders of at least 25% in
principal amount of the outstanding Securities of such series
notify the Company and the Trustee of the default and the Company
does not cure the default within 60 days in the case of clause
(3) and 30 days in the case of clause (4) after receipt of the
notice. The notice must specify the default, demand that it be
remedied and state that the notice is a "Notice of Default."
Subject to the provisions of Sections 7.01 and 7.02, the
Trustee shall not be charged with knowledge of any default unless
written notice thereof shall have been given to the Trustee
pursuant to Section 10.02 by the Company, the Paying Agent, the
Holder of a Security or an agent of such Holder.
SECTION 6.02. Acceleration.
If an Event of Default with respect to the Securities of any
series occurs and is continuing, the Trustee by notice to the
Company, or the Holders of at least 25% in principal amount of
the outstanding Securities of such series by notice to the
Company and the Trustee, may declare the principal of and accrued
interest, if any, on all the Securities of such series to be due
and payable immediately. Upon such declaration such principal
and interest, if any, shall be due and payable immediately. The
Holders of a majority in principal amount of the outstanding
Securities of such series by notice to the Company and the
Trustee may rescind an acceleration and its consequences if all
existing Events of Default with respect to the Securities of such
series, other than the non-payment of the principal of the
Securities which have become due solely by such declaration of
acceleration, have been cured or waived, if interest on overdue
principal which has become due otherwise than by such declaration
of acceleration, and to the extent that payment of such interest
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is lawful, interest on overdue installments of interest, in each
case at the rate, if any, borne (or Yield to Maturity if Original
Issue Discount Securities) by the Securities of such series, have
been paid, and if the rescission would not conflict with any
judgment or decree. No such rescission shall have any affect on
any subsequent default or impair any right consequent thereon.
SECTION 6.03. Other Remedies.
If an Event of Default with respect to the Securities of any
series occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities of such
series or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities of such series or does not produce
any of them in the proceeding. A delay or omission by the
Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of
Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults.
Subject to Section 6.02 and Section 9.02, the Holders of a
majority in principal amount of the outstanding Securities of any
series on behalf of the Holders of all the Securities of such
series by notice to the Trustee may waive an existing Default or
Event of Default and its consequences. When a Default or Event
of Default is waived, it is cured and stops continuing, but no
such waiver shall extend to any subsequent or other default, or
impair any right consequent thereon.
SECTION 6.05. Control by Majority.
The Holders of a majority in principal amount of the
outstanding Securities of any series may direct the time, method
and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on it
with respect to the Securities of such series. The Trustee,
however, may refuse to follow any direction (a) that conflicts
with law or this Indenture, (b) that the Trustee determines is
unduly prejudicial to the rights of another Holder of Securities
of such series or (c) that would involve the Trustee in personal
liability. The Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
SECTION 6.06. Limitation on Suits.
A Holder of Securities of any series may not pursue any
remedy with respect to this Indenture or the Securities of such
series unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities of such series make a written request to
the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
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satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the outstanding
Securities of such series.
A Holder may not use this Indenture to prejudice any other
Holder or to obtain a preference or priority over any other
Holder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal
of and any interest on the Security, on or after the respective
due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or
affected without the consent of the Holder.
Nothing in this Indenture is deemed to authorize the Trustee
to authorize, consent to, accept or adopt on behalf of any Holder
of Securities of any series any plan of reorganization,
arrangement, adjustment or composition affecting the Securities
of such series or the rights of any Holder thereof or to
authorize the Trustee to vote with respect to the claims of any
such Holder in any such proceeding.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of interest or principal
specified in Section 6.01(1) or (2) occurs and is continuing for
the Securities of any series, the Trustee may recover judgment in
its own name and as trustee of an express trust against the
Company or any other obligor on the Securities of such series for
the whole amount of principal and interest remaining unpaid on
the Securities of such series together with interest on overdue
principal and to the extent that payment of such interest is
lawful, interest on overdue installments of interest, in each
case at the rate borne (or Yield to Maturity if Original Issue
Discount Securities) by the Securities and such further amount as
shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and any predecessor
Trustee, their agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have
the claims of the Trustee and any predecessor Trustee (including
any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and any predecessor
Trustee, their agents and counsel) and the Holders of Securities
allowed in any judicial proceedings relative to the Company or
any other obligor upon the Securities of any series, its
creditors or its property. The Trustee shall be entitled and
empowered to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
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same. Any Custodian in any such judicial proceeding is hereby
authorized by each Holder of Securities of such series to make
such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the
Holders of Securities, to pay to the Trustee and any predecessor
Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee and any
predecessor Trustee, their agents and counsel, and any other
amounts due the Trustee and any predecessor Trustee under Section
7.07.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article
with respect to the Securities of any series, it shall pay out
the money in the following order:
First: to the Trustee and any predecessor Trustee for
amounts due under Section 7.07;
Second: to Holders of Securities of such series for amounts
due and unpaid on the Securities for principal and any interest,
ratably, without preference or priority of any kind, according to
the amounts due and payable on the Securities for principal and
any interest, respectively; and
Third: to the Company.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07
or a suit by Holders of more than 10% in principal amount of the
outstanding Securities of any series.
ARTICLE SEVEN
Trustee
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise its rights and powers and use the same
degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that
are specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming
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to the requirements of this Indenture. The Trustee, however,
shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a responsible officer or officers
of the Trustee, which may include Trust Officers, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts.
(3) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b) and (c)
of this Section.
(e) The Trustee may refuse to perform any duty or exercise
any right or power unless it receives indemnity satisfactory to
it against any loss, liability or expense.
(f) Money held by the Trustee in trust hereunder need not
be segregated except to the extent required by law. The Trustee
shall not be liable for interest on any money received by it
except as the Trustee may agree with the Company.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The
Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized
or within its rights or powers.
(e) Any demand, request, direction or notice from the
Company mentioned herein shall, unless otherwise specifically
provided, be sufficiently evidenced by a demand, request,
direction or notice signed by an Officer of the Company.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal
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with the Company or its affiliates with the same rights it would
have if it were not Trustee. Any Agent may do the same with like
rights. The Trustee, however, must comply with Sections 7.10 and
7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representations as to the validity or
adequacy of this Indenture or the Securities; it shall not be
accountable for the Company's use of the Securities or the
proceeds from the Securities; and it shall not be responsible for
any statement in the Securities other than its certificate of
authentication.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing with respect to
Securities and if it is known to the Trustee, the Trustee shall
give to each Holder of Securities of any series to which such
default relates, in the manner and to the extent provided in TIA
Sect. 313(c), and otherwise as provided in Section 10.02 of this
Indenture, notice of the Default within 90 days after it occurs.
Except in the case of a default in payment of principal of or
interest on a Security of any series, or in the payment of any
sinking or purchase fund installment, the Trustee may withhold
the notice if and so long as the board of directors of the
Trustee, the executive committee or a trust committee of
directors and/or of responsible officers, which may include Trust
Officers, of the Trustee in good faith determines that
withholding the notice is in the interests of Holders of
Securities of such Series.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to
each Securityholder a brief report dated as of such May 15 that
complies with TIA Sect. 313(a). The Trustee also shall comply with
TIA Section 313(b)(2). Reports to Holders pursuant to this Section
7.06 shall be transmitted in the manner and to the extent
provided in TIA Section 313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock
exchange on which the Securities of such series are listed.
The Company agrees to notify the Trustee whenever the
Securities of any series become listed on any stock exchange.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services (which compensation
shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust). The Company
shall reimburse the Trustee and any predecessor trustee upon
request for all reasonable out-of-pocket expenses and advances
incurred or made by it. Such expenses shall include the
reasonable compensation and expenses of the Trustee's agents and
counsel. The Company shall indemnify each of the Trustee and any
predecessor Trustee against any loss or liability (including
legal fees and expenses) incurred by it in connection with the
acceptance and administration of the trust and the performance of
its duties hereunder, including the costs and expenses of
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defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of any
claim asserted against it for which it may seek indemnity;
provided, however, that the failure to give the Company any
notice of any claim shall not in any way affect the rights of the
Trustee hereunder to indemnification for such claim. The Company
need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee or any predecessor Trustee to
the extend due to its own negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all
money or property held or collected by the Trustee, except that
held in trust to pay principal of and interest on the Securities.
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.01(5) or 6.01(6)
occurs, the expenses and the compensation for services are
intended to constitute expenses of administration under any
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the removed
Trustee and may appoint a successor Trustee with respect to the
Securities. The Company may remove the Trustee with respect to
all Securities if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Immediately after that, the retiring Trustee shall, upon payment
of its charges, transfer all property held by it as Trustee to
the successor Trustee, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall give notice of its
succession to each Holder of Securities.
If a successor Trustee does not take office within 45 days
after the retiring Trustee resigns or is removed, the retiring
Trustee, the Company or the Holders of a majority in principal
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amount of the outstanding Securities may petition any court of
competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
SECTION 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $5,000,000 as set forth
in its most recent published annual report of condition. If any
series of Securities is admitted to trading on the New York Stock
Exchange, Inc., or any successor thereto, the Trustee shall
maintain an office or agency in The Borough of Manhattan, The
City of New York as long as such series of Securities shall be so
admitted. The Trustee shall comply with TIA Section 310(b), including
the optional provision permitted by the second sentence of TIA
Section 310(b)(9); provided, however, that there shall be excluded from
the operation of TIA Sect. 310(b) the Indenture dated as of
September 15, 1982 between the Company and Morgan Guaranty Trust
Company of New York, as Trustee, for the Company's 13-7/8% Notes
due September 15, 1992.
SECTION 7.11. Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
ARTICLE EIGHT
Discharge of Indenture
SECTION 8.01. Termination of Company's Obligations.
The Company may terminate all of its obligations under the
Securities of any series and this Indenture with respect to such
series if all Securities of such series previously authenticated
and delivered (other than destroyed, lost or stolen Securities of
such series which have been replaced or paid) have been delivered
to the Trustee for cancellation or if:
(1) the Securities of such series mature within one
year or all of them are to be called for redemption within
one year under arrangements satisfactory to the Trustee for
giving the notice of redemption; and
(2) the Company irrevocably deposits in trust with the
Trustee money sufficient to pay principal of and any
interest on the Securities of such series to maturity or
redemption, as the case may be (other than moneys paid to
the Company or discharged from trust in accordance with
Section 8.04).
The Company's obligations in Sections 2.03, 2.04, 2.05,
2.06, 2.07, 7.07, 7.08, 8.03 and 10.10 with respect to the
Securities of such series, however, shall survive so long as any
principal of or interest, if any, on the Securities of such
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series remains unpaid. Thereafter the Company's obligations in
Sections 7.07 and 10.10 shall survive.
After a deposit of such moneys, the Trustee upon request
shall acknowledge in writing the discharge of the Company's
obligations under the Securities of such series and this
Indenture with respect to the Securities of such series except
for those surviving obligations specified above.
SECTION 8.02. Termination of Company's Obligations Under Certain
Circumstances.
Unless otherwise provided in an indenture supplemental
hereto with respect to the Securities of any series, the Company,
at its option, either (a) shall be deemed to have been Discharged
(as defined below) from its obligations with respect to the
Securities of any series on the ninety-first day after the
applicable conditions set forth below have been satisfied or
(b) shall cease to be under any obligation to comply with any
term, provision or condition set forth in Sections 4.02, 4.03,
4.06 and 4.07 with respect to the Securities of any series and
any other covenants provided in a Board Resolution delivered to
the Trustee pursuant to Section 2.01 or an indenture supplemental
hereto with respect to the Securities of such series at any time
after the applicable conditions set forth below have been
satisfied:
(1) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee as trust funds in
trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities of
such series (A) money in an amount, or (B) Government
Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms
will provide, not later than one day (or, if such day is a
Legal Holiday, the first day preceding such day which is not
a Legal Holiday) before the due date of any payment, money
in an amount, or (C) a combination of (A) and (B),
sufficient, in the opinion of a nationally recognized firm
of independent public accountants selected by the Company
expressed in a written certification thereof delivered to
the Trustee, to pay and discharge each installment of
principal (including mandatory sinking fund payments) of and
interest, if any, on the outstanding Securities of such
series on the dates such installments of principal and
interest, if any, are due (taking into account any
redemption pursuant to optional sinking fund payments notice
of which redemption is provided to the Trustee at the time
of the deposit referred to in this paragraph (1));
(2) if the Securities of such series are then listed
on the New York Stock Exchange, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect
that the Company's exercise of its option under this
paragraph would not cause such Securities to be delisted;
(3) no Event of Default, or event which with the
giving of notice or lapse of time, or both, would become an
Event of Default, with respect to the Securities of such
series under Sections 6.01(1), 6.01(2), 6.01(3), 6.01(5) or
6.01(6) of this Indenture shall have occurred and be
continuing on the date of such deposit and the Company shall
have furnished to the Trustee an Officers' Certificate to
such effect; and
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(4) the Company shall have delivered to the Trustee
the following: (a) either (i) an Opinion of Counsel or
(ii) a ruling from, or published by, the Internal Revenue
Service, whichever of (i) or (ii) the Company shall
determine, to the effect that Holders of the Securities of
such series will not recognize income, gain or loss for
Federal income tax purposes as a result of the Company's
exercise of its option under this Section 8.02 and will be
subject to Federal income tax on the same amount and in the
same manner and at the same times as would have been the
case if such option had not been exercised and (b) either
(i) an Opinion of Counsel or (ii) a no-action letter from,
or issued by, the Securities and Exchange Commission,
whichever of (i) or (ii) the Company shall determine, to the
effect that the deposit with the Trustee of money and/or
Government Securities as trust funds as provided in this
Section 8.02 will not be considered an investment company
required to be registered under the Investment Company Act
of 1940, as amended.
"Discharged" means, for purposes of this Section 8.02, that
the Company shall be deemed to have paid and discharged the
entire indebtedness represented by, and obligations under, the
Securities of any series and to have satisfied all the
obligations under this Indenture relating to the Securities of
such series (and the Trustee, at the expense of the Company,
shall execute such instruments as may be requested by the Company
acknowledging the same), except (A) the rights of Holders of
Securities of such series to receive, solely from the trust fund
described above, payment of the principal of and interest, if
any, on such Securities when such payments are due; (B) the
Company's obligations with respect to such Securities under
Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.03 and
10.10; and (C) the rights, powers, duties and immunities of the
Trustee hereunder. Notwithstanding the satisfaction and
discharge of this Indenture with respect to any series of
Securities, the obligations of the Company to the Trustee and any
predecessor Trustee under Section 7.07 and 10.10 shall survive.
SECTION 8.03. Application of Trust Money.
All moneys and Government Obligations deposited with the
Trustee pursuant to Section 8.01 and 8.02 and, with respect to
Government Obligations, the principal and interest in respect
thereof, shall be held irrevocably in trust and applied by it to
the payment in accordance with the provisions of the Securities
of any series and this Indenture, either directly or through any
Paying Agent (including the Company if acting as its own Paying
Agent), to the Holders of the Securities of such series for the
payment or redemption of which such money has been deposited with
the Trustee, of all sums due and to become due thereon for
principal and interest, if any, but such money need not be
segregated from other funds except to the extent required by law.
SECTION 8.04. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the
Company upon request any excess money or securities held by them
at any time. Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of or interest on any Security and remaining
unclaimed for two years after such principal or interest has
become due and payable shall be paid to the Company on request,
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or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent
with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease.
SECTION 8.05. Indemnity for Government Obligations.
The Corporation shall pay and shall indemnify the Trustee
against any tax, fee or other charge imposed on or assessed
against deposited Government Obligations or the principal and
interest received on such Government Obligations.
ARTICLE NINE
Amendments, Supplements and Waivers
SECTION 9.01. Without Consent of Holders.
The Company may amend or supplement this Indenture or the
Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.01;
(3) to provide for uncertificated Securities in
addition to or in place of certificated Securities;
(4) to establish the form or terms of Securities of
any series permitted by Section 2.01; or
(5) to make any change that does not adversely affect
the rights of any Securityholder in a material manner.
SECTION 9.02. With Consent of Holders.
The Company may amend or supplement this Indenture or the
Securities without notice to any Securityholder but with the
written consent of the Holders of at least 66-2/3% in principal
amount of the outstanding Securities of each series affected by
such indenture supplement or amendment voting as one class. The
Holders of a majority in principal amount of the outstanding
Securities of each such series affected may waive compliance by
the Company in a particular instance with any provision of this
Indenture or the Securities of such series without notice to any
Holder of Securities of such series. Without the consent of each
Securityholder affected, however, an amendment, supplement or
waiver, including a rescission pursuant to Section 6.02 or waiver
pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment
of interest, if any, on any Security;
(3) reduce the principal of or extend the fixed
maturity of any Security;
(4) change the amount or time of any payment required
by any Security;
(5) waive a default in the payment of the principal of
or interest on any Security; or
(6) make any Security payable in money other than that
stated in the Security.
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed
supplement, but it shall be sufficient if such consent approves
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the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
A consent to an amendment, supplement or waiver or to any
other action hereunder by a Holder of a Security of any series
shall bind the Holder and every subsequent Holder of a Security
or portion of a Security of that series that evidences the same
debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. Any such Holder or
subsequent Holder, however, may revoke the consent as to his
Security or portion of a Security. Such revocation shall be
effective only if the Trustee receives the notice of revocation
before the date the amendment, supplement or waiver or other
action becomes effective.
After an amendment, supplement or waiver with respect to a
series of Securities becomes effective, it shall bind every
Holder of Securities of that series.
SECTION 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may request the Holder of the Security to
deliver it to the Trustee. The Trustee may then place an
appropriate notation on the Security about the changed terms and
return it to the Holder. Alternatively, if the Company so
determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects
the changed terms.
SECTION 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplement
authorized pursuant to this Article if the amendment or
supplement does not adversely affect the rights, duties,
liabilities (present or potential), or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing
such amendment or supplement, the Trustee shall be entitled to
receive, and (subject to Sections 7.01 and 7.02) shall be fully
protected in relying upon an Opinion of Counsel stating that such
amendment or supplement is authorized or permitted by this
Indenture.
ARTICLE TEN
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be included
in this Indenture by the TIA Section 310 to 317, inclusive, the
required provision shall control.
SECTION 10.02. Notices.
Any notice or communication shall be sufficiently given if
in writing and delivered in person or mailed by first-class mail
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addressed as follows:
if to the Company:
Lincoln National Corporation
1300 South Clinton Street
Fort Wayne, Indiana 46801
Attention: Treasurer
if to the Trustee:
Morgan Guaranty Trust Company of New York
30 West Broadway
New York, New York 10015
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent
notices or communications. Any notice or communication mailed to
a Holder of a Registered Security shall be mailed to him by first
class mail at his address as it appears on the registration books
of the Registrar and shall be sufficiently given to him if so
mailed within the time prescribed.
Any notice required or permitted to be given to a Holder of
unregistered Securities of any series shall be deemed to be
properly given if such notice is published in an Authorized
Newspaper on two separate days.
Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders. If a notice
or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
In case, by reason of the suspension of regular mail service
or by reason of any other cause, it shall be impossible to mail
any notice as required by this Indenture, then such method of
notification as shall be made with the approval of the Trustee
shall constitute a sufficient mailing of such notice.
SECTION 10.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Sect. 312(b)
with other Securityholders with respect to their rights under
this Indenture or the Securities. The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, except in the
case of any request or application as to which the furnishing of
such documents is specifically required by any provision of this
Indenture relating to such particular request or application no
additional certificate or opinion need be furnished, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed
action have been complied with; and
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(2) an Opinion of Counsel stating that, in the opinion
of such counsel, all such conditions precedent have been
complied with.
SECTION 10.05. Statements required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the person making such
certificate or opinion has read such covenant or condition
and the definitions relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of such person,
he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied
with; and
(4) a statement as to whether or not, in the opinion
of such person, such condition or covenant has been complied
with.
SECTION 10.06. When Treasury Securities Disregarded.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or
consent, Securities owned by the Company or any other obligor
upon the Securities or by any person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Company or such obligor shall be disregarded,
except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or
consent, only Securities which the Trustee knows are so owned
shall be so disregarded. Securities so owned which have been
pledged in good faith shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to the Securities and that the
pledgee is not the Company or any other obligor upon the
Securities or any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the
Company or such obligor.
SECTION 10.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions are not required to be open. If a payment
date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 10.08. Governing Law.
The laws of the State of New York shall govern this
Indenture and the Securities. Unless the form of Security
provides otherwise, all money or dollar amounts expressed herein
or in the Securities refer to United States dollars.
SECTION 10.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
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indenture, loan or debt agreement of the Company or a Subsidiary.
Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 10.10. Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor and assigns, whether so
expressed or not. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 10.11. Duplicate Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together
represent the same agreement.
SECTION 10.12. Securities in Foreign Currencies.
Wherever this Indenture provides for any action by, or the
determination of any of the rights of, or any distribution to,
Holders of Securities denominated in United States dollars and in
any other currency, in the absence of any provision to the
contrary in the form of Security of any particular series, any
amount in respect of any Security denominated in a currency other
than United States dollars shall be treated for any such action,
determination or distribution as that amount of United States
dollars that could be obtained for such amount on such reasonable
basis of exchange and as of such date as the Company may specify
in a written notice to the Trustee.
SECTION 10.13. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and do not constitute a part of
this Indenture and shall not affect the meaning, construction or
effect of this Indenture.
SIGNATURES
Dated: as of January 15, 1987
LINCOLN NATIONAL CORPORATION
By: /s/ Max A. Roesler
Vice President
Attest:
/s/ Marilyn A. Vachon
Secretary (SEAL)
Dated: as of January 15, 1987
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ R. E. Sparrow
Vice President
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Attest:
/s/ W. A. Spooner
Assistant Secretary (SEAL)
EXHIBIT 4(e)
LINCOLN NATIONAL CORPORATION
and
THE FIRST NATIONAL BANK OF BOSTON
Rights Agent
Rights Agreement
Dated as of November 7, 1986
TABLE OF CONTENTS
Page
Section 1. Certain Definitions .............. 1
Section 2. Appointment of Rights Agent ...... 6
Section 3. Issue of Right Certificates ...... 6
Section 4. Form of Right Certificates ....... 9
Section 5. Countersignature and Registration 10
Section 6. Transfer, Split-Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates ...... 11
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights ...... 13
Section 8. Cancellation and Destruction of
Right Certificates ............. 15
Section 9. Reservation and Availability of
Common Shares .................. 16
Section 10. Common Shares Record Date ........ 17
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights ..... 18
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares ............ 34
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning power ..... 34
Section 14. Fractional Rights and Fractional
Shares ......................... 36
Section 15. Rights of Action ................. 38
Section 16. Agreement of Right Holders ....... 39
Section 17. Right Certificate Holder Not
Deemed a Shareholder ........... 40
-i-
Page
Section 18. Concerning the Rights Agent ...... 41
Section 19. Merger or Consolidation or Change
of Name of Rights Agent ........ 42
Section 20. Duties of Rights Agent ........... 43
Section 21. Change of Rights Agent ........... 48
Section 22. Issuance of New Right Certificates 50
Section 23. Redemption ....................... 50
Section 24. Notice of Certain Events ......... 52
Section 25. Notices .......................... 53
Section 26. Supplements and Amendments ....... 55
Section 27. Successors ....................... 55
Section 28. Benefits of this Agreement ....... 55
Section 29. Severability ..................... 56
Section 30. Governing Law .................... 56
Section 31. Counterparts ..................... 56
Section 32. Descriptive Headings ............. 57
Signatures .................................. 57
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Common Shares
-ii-
RIGHTS AGREEMENT
Agreement, dated as of November 7, 1986, between Lincoln
National Corporation, an Indiana corporation (the "Company"),
and The First National Bank of Boston, a national banking
association (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one common share purchase right (a
"Right") for each Common Share (as hereinafter defined) of
the Company outstanding as of the close of business on
November 21, 1986, each Right representing the right to
purchase one share of Common Stock, par value $1.25, upon the
terms and subject to the conditions herein set forth, and has
further authorized the issuance of one Right with respect to
each Common Share that shall become outstanding between
November 21, 1986 and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with
all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of
20% or more of the Common Shares then outstanding, but
shall not include the Company, any wholly-owned Subsidiary
(as such term is hereinafter defined) of the Company or any
employee benefit plan of the Company or any Subsidiary of
the Company, or any entity holding Common Shares for or
pursuant to the terms of any such plan.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on November 6, 1986.
(c) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly
or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or
understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person
in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person
or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except to
the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the
Company.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in
the State of New York are authorized or obligated by law
or executive order to close.
(e) "Close of Business" on any given date shall mean
5:00 P.M., New York City time, on such date; provided,
however, that if such date is not a Business Day it shall
mean 5:00P.M., New York City time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the
Company shall mean the shares of Common Stock, par value
$1.25 per share, of the Company. "Common Shares" when used
with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set
forth in Section 3 hereof.
(h) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(i) "Person" shall mean any individual, firm,
corporation or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(j) "Redemption Date" shall have the meaning set forth
in Section 7 hereof.
(k) "Shares Acquisition Date" shall mean the first
date of public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such.
(l) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the
voting power of the voting equity securities or equity
interest is owner, directly or indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and
the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the
holders of the Common Shares) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the tenth day after the Shares Acquisition
Date or (ii) the tenth day after the date of the commencement
of, or first public announcement of the intent of any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of
the Company or any entity holding Common Shares for or
pursuant to the terms of any such Plan) to commence, a tender
or exchange offer the consummation of which would result in
beneficial ownership by a Person of 30% or more of the
outstanding Common Shares (including any such date which is
after the date of this Agreement and prior to the issuance of
the Rights; the earlier of such dates being herein referred
to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for Common Shares registered
in the names of the holders thereof (which certificates shall
also be deemed to be Right Certificates (as hereinafter
defined)) and not by separate Right Certificates, and (y) the
right to receive Right Certificates will be transferable only
in connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and
the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares
as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, a
Right Certificate, in substantially the form of Exhibit A
hereto (a "Right Certificate"), evidencing one Right for each
Common Share so held. For the purpose of this Agreement, any
beneficial holder of Common Shares identified by the Company
in a notice addressed to the Rights Agent as having properly
elected to receive dividends directly pursuant to a duly
adopted recognition procedure of the Company, as authorized
in IND. CODE Sect. 23-1-30-4(a) (Cum. Supp. 1986) or any statute
of similar effect, shall be deemed to be a "record holder".
As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) As soon as practicable after November 21, 1986, the
Company will send a copy of a "Summary of Rights to Purchase
Common Stock", in substantially the form of Exhibit B hereto
(the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close
of business on November 21, 1986, at the address of such
holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the close of
business on November 21, 1986, until the Distribution Date
the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with a copy of
the Summary of Rights. Until the Distribution Date (or the
earlier of the Redemption Date or Final Expiration Date), the
surrender for transfer of any certificate for Common Shares
outstanding as of the close of business on November 21, 1986,
with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates issued for Common Shares (including,
without limitation, certificates issued upon transfer or
exchange of Common Shares and certificates for reacquired
Common Shares referred to in the last sentence of this
paragraph (c)) after November 21, 1986 but prior to the
earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a
Rights Agreement between Lincoln National
Corporation and The First National Bank of
Boston, dated as of November 7, 1986 (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of
which is on file at the principal executive
offices of Lincoln National Corporation. Under
certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. Lincoln National
Corporation will mail to the holder of this
certificate a copy of the Rights Agreement
without charge after receipt of a written request
therefor. Under certain circumstances, Rights
beneficially owned by Acquiring Persons (as
defined in the Rights Agreement) may become null
and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date the Rights associated
with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases
or acquires any Common Shares after November 21, 1986 but
prior to the Distribution Date, any Rights associated with
such Common Shares shall he deemed cancelled and retired so
that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Common
Shares, certificate and assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A
hereto and may have such marks of identification or
designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as
are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase
such number of Common Shares as shall be set forth therein at
the price per Common Share set forth therein (the "Purchase
Price"), but the number of such Common Shares and the Purchase
Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by
its Chief Executive Officer or a vice president of any class
and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal
or a facsimile thereof. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be
valid for any purpose unless countersigned. In case any
officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and
issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company
to sign such Right Certificate, although at the date of the
execution of this Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or another
office designated for such purpose, books for registration
and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right
Certificates, the certificate number and the date of each of
the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates. Subject to the provisions of Section 14
hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on
the earlier of the Redemption Date or the Final Expiration
Date (as such terms are defined in Section 7 hereof), any
Right Certificate or Right Certificates may be transferred,
split-up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to
purchase a like number of Common Shares as the Right
Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right
Certificates to te transferred, split-up, combined or
exchanged, with the form of assignment duly executed, at the
principal office of the Rights Agent or at its office or
agency in New York, New York. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed
and signed the certificate following the form of assignment
on the reverse side of such Right Certificate and shall have
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company or the Rights Agent shall
reasonably request. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split-up,
combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case
of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a
new Right Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights. (a) The registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except
as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase and
certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, or
at its office or agency in New York, New York, together with
payment of the Purchase Price for each Common Share as to
which the Rights are exercised, at or prior to the close of
business on the earlier of (i) the close of business on
November 21, 1996 (the "Final Expiration Date"), or (ii) the
time at which the Rights are redeemed as provided in Section
23 hereof (the "Redemption Date").
(b) The Purchase Price for each Common Share pursuant to
the exercise of a Right shall initially be $150.00, shall be
subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money
of the United States of America in accordance with paragraph
(c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and
certificate duly executed, accompanied by payment of the
Purchase Price for the Common Shares to be purchased and an
amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance
with Section 9 hereof in cash, or by certified check or
cashier's check payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) either (A)
requisition from any transfer agent of the Common Shares
certificates for the number of Common Shares to he purchased
and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) requisition
from the depositary agent depositary receipts representing
such number of Common Shares as are to be purchased (in which
case certificates for the Common Shares represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in
accordance with Section 14, (iii) after receipt of such
certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as
may be designated by such holder, and (iv) when appropriate,
after receipt, promptly deliver such cash to or upon the Order
of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a
new Right Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split-up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall
be cancelled by it, and no Right Certificates shall be issued
in lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares.
The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and
unissued Common Shares or any Common Shares held in its
treasury the number of Common Shares that will be sufficient
to permit the exercise in full of all outstanding Rights.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares
delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Common Shares (subject
to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any
Common Shares upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for the
Common Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered
for exercise or to issue or deliver any certificates or
depositary receipts for Common Shares upon the exercise of
any Rights until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each person in
whose name any certificate for Common Shares is issued upon
the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date
upon which the Common Shares transfer books of the Company
are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall
be dated, the next succeeding Business Day on which the Common
Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a
Right Certificate, as such, shall not be entitled to any
rights of a holder of Common Shares for which the Rights
shall be exercisable, including, without limitation, the
right to vote, or to receive dividends or other
distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number of Common
Shares or Number of Rights. The Purchase Price, the number of
Common Shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the
Common Shares payable in Common Shares, (B) subdivide the
outstanding Common Shares, (C) combine the outstanding Common
Shares into a smaller number of Common Shares or (D) issue
any shares of its capital stock in a reclassification of the
Common Shares (including any such reclassification in
connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price
in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when
the Common Shares transfer books of the Company were open, he
would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination
or reclassification. If an event occurs which would require
an adjustment under both this Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event:
A. Any Acquiring Person or any Associate or
Affiliate of any Acquiring person, at any time after
the date of this Agreement, directly or indirectly,
(1) shall merge into the Company or otherwise combine
with the Company and the Company shall be the
continuing or surviving corporation of such merger or
combination and the Common Shares of the Company shall
remain outstanding and not be changed into or
exchanged for stock or other securities of any other
Person or the Company or cash or any other property,
(2) shall, in one or more transactions, other than the
exercise of Rights or in connection with the exercise
or conversion of securities exchangeable or
convertible into capital stock of the Company or any
of its Subsidiaries, transfer any assets to the Company
or any of its Subsidiaries in exchange (in whole or
in part) for shares of any class of capital stock
of the Company or any of its Subsidiaries or for
securities exercisable for or convertible into shares
of any class of capital stock of the Company or any of
its Subsidiaries or otherwise obtain from the Company
or any of its Subsidiaries, with or without
consideration, any additional shares of any class of
capital stock of the Company or any of its Subsidiaries
or securities exercisable for or convertible into
shares of any class of capital stock of the Company or
any of its Subsidiaries (other than as part of a pro
rata distribution to all holders of such shares of any
class of capital stock of the Company or any of its
Subsidiaries), (3) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise
dispose (in one or more transactions), to, from, with
or of, as the case may be, the Company or any of its
Subsidiaries, assets (including securities) on terms
and conditions less favorable to the Company than the
Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (4) shall
receive any compensation from the Company or any of
its Subsidiaries other than compensation at rates
in accordance with the Company's (or its Subsidiaries')
past practices, or (5) shall receive the benefit,
directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax
credits or other tax advantage provided by the Company
or any of its Subsidiaries; or
B. During such time as there is an Acquiring
Person, there shall be any reclassification of
securities (including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any Subsidiaries
of the Company (whether or not with or into or
otherwise involving an Acquiring Person) which has the
effect, directly or indirectly, of increasing by more
than 1% the proportionate share of the outstanding
shares of any class of equity securities or of
securities exercisable for or convertible into
securities of the Company or any of its Subsidiaries
which is directly or indirectly owned by any Acquiring
Person or any Associate or Affiliate of any Acquiring
Person.
then, and in each such case, proper provision shall be made so
that each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof in
accordance with the terms of this Agreement, such number of
Common Shares as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of
Common Shares for which a Right is then exercisable and
dividing that product by (y) 50% of the current per share
market price of the Common Shares (determined pursuant to
Section 11(d)) on the fifth day after the earlier of the date
of the occurrence or the date of the first public
announcement of any one of the events listed above in this
Section 11(a)(ii); provided, however, that if the transaction
that would otherwise give rise to the foregoing adjustment is
also subject to the provisions of Section 13 hereof, then
only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
Notwithstanding the foregoing, upon the occurrence of any of
the events listed above in this Section 11(a)(ii), any Rights
that are or were on or after the earlier of the Distribution
Date or Shares Acquisition Date beneficially owned by an
Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) shall become void and any holder of such
Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. The Company shall not
enter into any transaction of the kind listed in this Section
11(a)(ii) if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or
any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or
otherwise substantially diminish the benefits intended to be
afforded by the Rights. Any Right Certificate issued
pursuant to Section 3 hereof that represents Rights
beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Right Certificate issued at any
time upon the transfer of any Rights to an Acquiring Person
or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate, and any Right
Certificate issued pursuant to Section 6, 7(d) or 22 hereof
or this Section 11 upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this
sentence, shall contain the following legend:
The Rights represented by this Right Certificate
were issued to a Person who was an Acquiring
Person or an Affiliate or an Associate of an
Acquiring Person (as such terms are defined in the
Rights Agreement). This Right Certificate and
the Rights represented hereby may become void
in the circumstances specified in Section
11(a)(ii) of the Rights Agreement;
provided that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would
require the imposition of such legend but shall be required
to impose such legend only if instructed to do so by the
Company or if a holder fails to certify upon transfer or
exchange in the certificate on the reverse side of the Right
Certificate that such holder is not an Acquiring Person or an
Affiliate or Associate thereof.
(iii) In the event that there shall not be sufficient
treasury or authorized but unissued Common Shares to permit
the exercise in full of the Rights in accordance with Section
11(a)(ii), the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance
upon exercise of the Rights.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of
Common Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or
purchase Common Shares or securities convertible into Common
Shares at a price per Common Share (or having a conversion
price per share, if a security convertible into Common
Shares) less than the then current per share market price of
the Common Shares (as defined in Section 11(d)) on such record
date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common
Shares which the aggregate offering price of the total number
of Common Shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to
be offered) would purchase at such current per share market
price and the denominator of which shall be the number of
Common Shares outstanding on such record date plus the number
of additional Common Shares to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription
price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent.
Common Shares owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Common Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Common Shares) or
subscription rights or warrants (excluding those referred to
in Section 11(b)), the Purchase Price to be in effect after
such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then
current per share market price of the Common Shares (as
defined in Section 11(d)) on such record date, less the fair
market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the
portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrant
applicable to one Common Share and the denominator of which
shall be such current per share market price of the Common
Shares. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again
be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current per share market price" of the Common Shares on any
date shall be deemed to be the average of the daily closing
prices per share of such Common Shares for the 30 consecutive
Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the
event that the current per share market price of the
Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (A) a
dividend or distribution on such Common Shares payable in
such Common Shares or securities convertible into such Common
Shares, or (B) any subdivision, combination or
reclassification of such Common Shares, and prior to the
expiration of 30 Trading Days after the ex-dividend date for
such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per
Common Share equivalent. The closing price for each day
shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Common Shares are not
then listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on which
the Common Shares are listed or admitted to trading or, if
the Common Shares are not listed or admitted to trading on
any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use,
or, if on any such date the Common Shares are not quoted by
any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker
making a market in the Common Shares selected by the Board of
Directors of the Company. The term "Trading Day" shall mean
a day on which the principal national securities exchange on
which the Common Shares are listed or admitted to trading is
open for the transaction of business or, if the Common Shares
are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Shares
are not publicly held or so listed or traded, "current per
share market price" shall earn the fair value per share as
determined in good faith by the Board of Directors of the
Company, whose determination shall he described in a
statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided. however, that
any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a Common Share or other share as the
case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment otherwise required by this
Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which requires
such adjustment or (ii) the date of the expiration of the
right to exercise any Rights.
(f) If, as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock
of the Company other than Common Shares, thereafter the number
of such other shares so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Shares contained in
Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10 and 13 hereof with respect to the Common
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase
Price, the number of Common Shares purchasable from time to
time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in
Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase
Price, that number of Common Shares (calculated to the
nearest one ten-thousandth of a share) obtained by (i)
multiplying (x) the number of Common Shares covered by a
Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment
of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of
Rights, in substitution for any adjustment in the number of
Common Shares purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of Common
Shares for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued,
shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held
by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Common Shares issuable upon
the exercise of the Rights, the Right Certificates theretofore
and thereafter issued may continue to express the Purchase
Price and the number of Common Shares which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if
any, of the Common Shares issuable upon exercise of the
Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and
nonassessable Common Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as
of a record date for a specified event, the Company may elect
to defer until the occurrence of such event the issuing to
the ho1der of any Right exercised after such record date of
the Common Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above
the Common Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment:
provided, however, that the Company shall deliver to such holder
due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence
of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of
the Common Shares, issuance wholly for cash of any of the
Common Shares at less than the current market price, issuance
wholly for cash or Common Shares or securities which by their
terms are convertible into or exchangeable for Common Shares,
dividends on Common Shares payable in Common Shares or
issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company
to holders of its Common Shares shall not be taxable to such
shareholders.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided
in Sections 11 and 13 hereof, the Company shall promptly
(a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent
for the Common Shares a copy of such certificate and (c) mail
a brief summary thereof to each holder of a Right Certificate
(or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance
with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to bear
knowledge of any adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event, directly or
indirectly, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, or (c)
the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one
or more transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person
other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof in accordance with the
terms of this Agreement, such number of Common Shares of such
other Person (including the Company as successor thereto or
as the surviving corporation) as shall be equal to the result
obtained by (x) multiplying the then current Purchase Price
by the number of Common Shares for which a Right is then
exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii) hereof) and
dividing that product by (y) 50% of the current per share
market price of the Common Shares of such other Person
(determined pursuant to Section 11(d)) on the date of
consummation of such consolidation, merger, sale or transfer;
(ii) the issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such
issuer; and (iv) such issuer shall take such steps
(including, but not limited to, the reservation of a
sufficient number of its Common Shares) in connection with
such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such
issuer shall have executed and delivered to the Rights Agent
a supplemental agreement so providing. The Company shall not
enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or
otherwise substantially diminish the benefits intended to be
afforded by the Rights. The provisions of this Section 13
shall similarly apply to successive mergers or consolidations
or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a)
The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right.
For the purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted
to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported
by NASDAQ or such other system then in use or, if on any such
date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of
Common Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Common Shares. In
lieu of fractional Common Shares, the Company shall pay to
the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one
Common Share. For purposes of this Section 14(h), the
current market value of a Common Share shall be the closing
price of a Common Share (as determined pursuant to Section
11(d) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights
or any fractional Common Shares upon exercise of a Right
(except as provided above).
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested
in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares): and any registered
holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent
of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to
specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
Common Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the principal office of
the Rights Agent, or at its office or agency in New York,
New York, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and
treat the Person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on
the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the
Company not the Rights Agent shall be affected by any
notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the Common Shares or any other
securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate,
as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to
receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the
premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or
certificate for the Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document
reasonably believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger
or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding
to the corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of
any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either
in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force and effect provided in
the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and
deliver Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name;
and in all such cases such Right Certificates shall have the
full force and effect provided in the Right Certificates and
in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Right Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by any one of the Chief Executive Officer,
a vice president of any class, the Treasurer or the Secretary
of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of
any Right Certificate (except its countersignature thereof);
nor shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including any
rights becoming void pursuant to Section 11(a)(ii) hereof) or
any adjustment in the terms of the Rights (including the
manner. method or amount thereof) provided for in Section 3,
11, 13 or 23, or the ascertaining of the existence of facts
that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the
authorization or reservation of any Common Shares to be
issued pursuant to this Agreement or any Right Certificate or
as to whether any Common Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its
duties hereunder from any one of the Chief Executive Officer,
a vice president of any class, the Secretary or the Treasurer
of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not
be liable for any action taken or suffered by it in good faith
in accordance with instructions of any such officer. Any
application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the
Rights Agent with respect to its duties or obligations under
this Rights Agreement and the date on and/or after which such
action shall be taken or omitted and the Rights Agent shall
not be liable for any action taken or omitted in accordance
with a proposal included in any such application on or after
the date specified therein (which date shall not be less than
five business days after the date any such officer actually
receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to
taking or omitting any such action, the Rights Agent has
received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to
the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its duly appointed
attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to
the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the
selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in
writing mailed to the Company and to each transfer agent of
the Common Shares by registered or certified mail, and to the
holders of the Right Certificates (and prior to the
Distribution Date, the Common Shares) by first-class mail.
The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Shares by registered
or certified mail, and to the holders of the Right
Certificates (and prior to the Distribution Date, the Common
Shares) by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (and
prior to the Distribution Date, a Common Share) (who shall,
with such notice, submit his Right Certificate for inspection
by the Company), then the registered holder of any Right
Certificate (and prior to the Distribution Date, any Common
Share) may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the
laws of the United States or of the State of New York or
Indiana (or of any other state of the United States so long
as such corporation is authorized to do business as a banking
institution in the Commonwealth of Massachusetts or in the
State of New York of Indiana), in good standing, having an
office in the Commonwealth of Massachusetts or in the State
of New York or Indiana, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision
or examination by federal or state authority and which either
(A) has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million, or (B)
is a member of a bank holding company system, which bank
holding company system has an aggregate combined capital and
surplus of at least $50 million, provided that such
corporation's separate capital and surplus shall at all times
be at least $10 million. After appointment, the successor
Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares,
and mail a notice thereof in writing to the registered
holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares). Failure to give any
notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or
kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance
with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors of the
Company may, at its option, at any time prior to such time as
any Person becomes an Acquiring Person redeem all but not
less than all the then outstanding Rights at a redemption
price of $.01 per Right, adjusted proportionately to reflect
any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price").
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, and
without any further action and without any notice, the right
to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the action of the
Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the holders
of the then outstanding Rights by mailing such notice to all
such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer
agent for the Common Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any
of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23, and
other than in connection with the purchase of Common Shares
prior to the Distribution Date.
Section 24. Notice of Certain Events. In case the Company
shall propose (a) to pay any dividend payable in stock of any
class to the holders of its Common Shares or to make any
other distribution to the holders of its Common Shares (other
than a regular quarterly cash dividend) or (b) to offer to
the holders of its Common Shares rights or warrants to
subscribe for or to purchase any additional Common Shares or
shares of stock of any class or any other securities, rights
or options, or (c) to effect any reclassification of its
Common Shares, or (d) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, or (e)
to effect the liquidation, dissolution or winding up of the
Company, or (f) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in
Common Shares), then, in each such case, the Company shall
give to each holder of a Right Certificate (and, prior to the
Distribution Date, the Common Shares), in accordance with
Section 25 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock
dividend, or distribution of rights or Warrants, or the date
on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of
the Common Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by
clause (a) or (b) above at least 20 days prior to the record
date for determining holders of the Common Shares for
purposes of such action, and in the case of any such other
action, at least 20 days prior to the date of the taking of
such proposed action or the date of participation therein by
the holders of the Common Shares, whichever shall be the
earlier.
In case any of the events set forth in Section 11(a)(ii) of
this Agreement shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to each
holder of a Right Certificate (or prior to the Distribution
Date, a Common Share), in accordance with Section 25 hereof, a
notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate (or prior to the Distribution
Date, a Common Share) to or on the Company shall be
sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Lincoln National Corporation
1300 South Clinton Street
P.O. Box 1110
Fort Wayne, Indiana 46801
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by
the Company or by the holder of any Right Certificate (or
prior to the Distribution Date, a Common Share) to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
The First National Bank of Boston
50 Morrissey Boulevard
Dorchester, Massachusetts 02125
Attention: Shareholder Services Division
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate (or prior to the Distribution Date, a
Common Share) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books
of the Company.
Section 26. Supplements and Amendments. The Company and
the Rights Agent may from time to time supplement or amend this
Agreement without the approval of any holders of Right
Certificates (or prior to the Distribution Date, Common
Shares) in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or
to make any other provisions in regard to matters or
questions arising hereunder, which the Company and the Rights
Agent may deem necessary or desirable, including but not
limited to extending the Final Expiration Date and, provided
that at the time of such amendment there is no Acquiring
Person, extending the period of time during which the Rights
may be redeemed, and which shall not adversely affect the
interests of the holders of Right Certificates.
Section 27. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 28. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than
the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date,
the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares).
Section 29. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated.
Section 30. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Indiana and for all
purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be
made and performed entirely within such State.
Section 31. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the
same instrument.
Section 32. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day
and year first above written.
LINCOLN NATIONAL CORPORATION
Attest:
By By
Title: Ian M. Rolland, President
and Chief Executive Officer
THE FIRST NATIONAL BANK OF BOSTON
Attest:
By By
Title:
Exhibit A
[Form of Right Certificate]
Certificate No. R Rights
NOT EXERCISABLE AFTER NOVEMBER 21, 1996 OR EARLIER IF NOTICE
OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE
RIGHTS REPRESENTED BY THIS CERTIFICATE WERE ISSUED TO A
PERSON WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 11(a)(ii) OF THE RIGHTS
AGREEMENT.]*
Right Certificate
LINCOLN NATIONAL CORPORATION
This certifies that , or registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject
to the terms, provisions and conditions of the Rights
Agreement dated as of November 7, 1986 (the "Rights
Agreement") between Lincoln National Corporation, an Indiana
corporation (the "Company"), and The First National Bank of
Boston (or any successor Rights Agent under the Rights
Agreement, hereinafter referred to as the "Rights Agent"), to
purchase from the Company at any time after the Distribution
Date (as such term
*The portion of the legend in brackets shall be inserted
only if applicable.
is defined in the Rights Agreement) and prior to 5:00 P.M. (New
York City time) on November 21, 1996, at the principal office
of the Rights Agent, or at its office or agency in New York,
New York, one fully paid, non-assessable share of the Common
Stock (the "Common Stock") of the Company, at a purchase price
of $150.00 per share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of
Election to Purchase and certificate duly executed. The number
of Rights evidenced by this Right Certificate (and the number
of shares of Common Stock which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set
forth above, ate the number and Purchase Price as of November
21, 1986, based on the shares of Common Stock outstanding as of
the close of business on such date.
As provided in the Rights Agreement, the Purchase Price and
the number of shares of Common Stock which may be purchased
upon the exercise of the Rights evidenced by this Right
Certificate ate subject to modification and adjustment upon
the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which
terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof, and to which
Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the
above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, or at its office or agency in New York, New
York, with the form of assignment and certificate duly
executed, may to exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
shares of Common Stock as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption price of $.01 per Right.
No fractional shares of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, but in
lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the
holder of shares of Common Stock or of any other securities
of the Company which may at any time be issuable on the
exercise hereof, not shall anything contained in the Rights Agreement
or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate
shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of ,
19 .
ATTEST: LINCOLN NATIONAL CORPORATION
By
Secretary Title:
Countersigned:
THE FIRST NATIONAL BANK OF
BOSTON
By
Authorized Signature
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificates.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the
within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: , 19
Signature
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms ate defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is,
was or became an Acquiring Person or an Affiliate or
Associate thereof.
Dated: , 19
Signature
Signature Guaranteed:
NOTICE
The signatures on the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To LINCOLN NATIONAL CORPORATION:
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate
to purchase the shares of Common Stock issuable upon the
exercise of such Rights and requests that certificates for
such shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the
name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: , 19
Signature
(Signature must conform in
all respects to name of holder
as specified on the face of
this Right Certificate)
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate thereof
(as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is,
was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.
Dated: , 19
Signature
Signature Guaranteed:
2941X
<PAGE>
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On November 6, 1986, the Board of Directors of Lincoln
National Corporation (the "Company") declared a dividend
distribution of one Right for each outstanding share of
common stock, pat value $1.25 per share (the "Common Stock"),
of the Company. The distribution is payable on November 21,
1986 to the shareholders of record on November 21, 1986.
Each Right entitles the registered holder to purchase from
the Company one share of Common Stock at a price of $150.00
pet share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and
The First National Bank of Boston, as Rights Agent (the
"Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") acquired, or
obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding Common Stock or (ii) 10 days
following the commencement or announcement of an intention to
make a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or
group of affiliated or associated persons of 30% or more of
such outstanding Common Stock (the earlier of such dates being
called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Stock
certificates outstanding as of November 21, 1986, by such
Common Stock certificate with a copy of this Summary of
Rights attached thereto. The Rights Agreement provides that
until the Distribution Date the Rights will be transferred
with and only with the Common Stock. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after November 21, 1986 upon
transfer or new issuance of the Common Stock will contain a
notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Common Stock outstanding as of November 21,
1986, even without a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such
certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on November 21, 1996, unless
earlier redeemed by the Company as described below.
The Purchase Price payable, and the number of shares of
Common Stock or other securities or property issuable, upon
exercise of the Rights ate subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the
Common Stock, (ii) upon the grant to holders of the Common
Stock of certain rights or warrants to subscribe for Common
Stock or convertible securities at less than the current
market Price of the Common Stock, or (iii) upon the
distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding regular periodic cash
dividends out of earnings or retained earnings at a rate not
in excess of 125% of the rate of the last cash dividend
theretofore paid or dividends payable in Common Stock) or of
subscription rights or Warrants (other than those referred to
above).
In the event that the Company were acquired in a merger or
other business combination transaction in which mote than 50%
of its assets or earning power were sold, proper provision
shall be made so that each holder of a Right shall thereafter
have the tight to receive, upon the exercise thereof at the
then current exercise price of the Right, that number of
shares of common stock of the acquiring company which at the
time of such transaction would have a market value of two
times the exercise price of the Right. In the event that the
Company were the surviving corporation in a merger and its
Common Stock were not changed or exchanged, or in the event
that an Acquiring Person engages in one of a number of
self-dealing transactions specified in the Rights Agreement,
proper provision shall be made so that each holder of a
Right, other than Rights that were beneficially owned by the
Acquiring Person on the earlier of the Distribution Date or
the date of the public announcement that an Acquiring Person
acquired 20% or more of the outstanding Common Shares, will
thereafter have the tight to receive upon exercise that
number of shares of Common Stock having a market value of two
times the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No
fractional shares will be issued and in lieu thereof an
adjustment in cash will be made based on the market price of
the Common Stock on the last trading date prior to the date
of exercise.
At any time prior to the time that a person or group of
affiliated or associated persons has acquired beneficial
ownership of 20% or mote of the outstanding Common Stock, the
Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price").
Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights, the Company shall make
an announcement thereof, and upon such election, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to
receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated November 6, 1986. A
copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby
incorporated herein by reference.
2940X
EXHIBIT 10(p)
OFFICE SPACE LEASE
Tenant: Lincoln National Corporation
Lessor: CBD Investment Group
Effective Date: September 1, 1994
ARTICLE # PAGE #
PREMISES 1 ------------------------- 1
TERM 2 ------------------------- 1
USE 3 ------------------------- 2
RENT 4 ------------------------- 2
SERVICE AND UTILITIES 5 ------------------------- 6
COMMON AREAS 6 ------------------------- 8
ALTERATIONS 7 ------------------------- 8
REPAIRS AND MAINTENANCE 8 ------------------------- 9
PRIOR LEASE 9 ------------------------- 10
CASUALTY 10 ------------------------ 10
INDEMNITY AND INSURANCE 11 ------------------------ 11
LAWS AND REGULATIONS 12 ------------------------ 13
CONDEMNATION 13 ------------------------ 13
INSOLVENCY 14 ------------------------ 14
LESSOR'S REMEDIES FOR
TENANT'S DEFAULT 15 ------------------------ 14
ENTRY AND INSPECTION 16 ------------------------ 15
ASSIGNMENT AND TRANSFER
BY TENANT 17 ------------------------ 16
ASSIGNMENT AND TRANSFER BY LESSOR 18 ------------------------ 16
TENANT'S CERTIFICATE 19 ------------------------ 17
SUCCESSORS 20 ------------------------ 18
WAIVER 21 ------------------------ 18
RIGHT TO CONSTRUCT FIFTH FLOOR 22 ------------------------ 18
RIGHT OF FIRST REFUSAL 23 ------------------------ 19
SIGNS 24 ------------------------ 20
QUIET ENJOYMENT 25 ------------------------ 21
SEVERABILITY 26 ------------------------ 21
GOVERNING LAW 27 ------------------------ 21
HEADINGS 28 ------------------------ 21
ENTIRE AGREEMENT 29 ------------------------ 21
TIME 30 ------------------------ 21
INCLUSIVE LANGUAGE 31 ------------------------ 21
NOTICES 32 ------------------------ 21
ARBITRATION OF DISPUTES 33 ------------------------ 22
EMERGENCY REPAIRS 34 ------------------------ 23
SATELLITE DISH 35 ------------------------ 23
RESTRICTED ALTERATIONS 36 ------------------------ 24
CONSENT 37 ------------------------ 24
VACATE 38 ------------------------ 24
HAZARDOUS OR TOXIC CHEMICAL,
WASTE OR OTHER SUBSTANCES 39 ------------------------ 25
PROVISIONS REGARDING PARKING
FACILITIES 40 ------------------------ 25
RENEWAL OPTIONS 41 ------------------------ 27
TENANT'S REMEDIES FOR LESSOR'S
DEFAULT 42 ------------------------ 27
SHORT FORM LEASE 43 ------------------------ 28
BROKERS 44 ------------------------ 28
LESSOR'S AUTHORITY 45 ------------------------ 28
29180
EXHIBIT A LEASE DATA SHEET
1. Lease Execution Date: December 1, 1994
2. Parties: Lessor CBD Investment Group
7500 West Jefferson Boulevard
P. O. Box 12925
Fort Wayne, Indiana 46866
Tenant Lincoln National Corporation
200 East Berry Street
Fort Wayne, Indiana 46802
3. Suite: Entire Building Renaissance Square
(Exc. Lincoln National 200 East Berry Street
Foundation, Inc. Portion) Fort Wayne, Indiana
Area: 208,759.56 square feet
4. Term:
Twenty (20) Years
Effective Date - December 1, 1994
Termination Date - November 30, 2014
5. *Rent:
Premises:
(a) Total Annual $1,805,770.20
(b) Total Monthly $ 150,480.85
(c) Annual Rate Per Square Foot $ 8.65 (triple net)
Parking Facilities:
(d) Total Annual $ 365,285.76
(e) Total Monthly $ 30,440.48
(f) No. Spaces 584
Combined Rent - Premises and Parking Facilities
(g) Total Annual $2,171,055.96
(h) Total Monthly $ 180,921.33
*Rent subject to periodic adjustment as described in Lease.
6. Payee: CBD Investment Group
Wire Union Federal Savings Bank of Indianapolis;
Routing Number 274070484;
Credit CBD Investment Group
Account Number 560000653
7. Lessor's Taxpayer Identification Number: 35-1682861
8. Parking Facilities
Location No. Spaces Rent/Space/Mo.
No. & Adjacent to
Renaissance Square 87 53.06
Lot - SEC Clinton/Wayne 101 42.45
Lot - SWC Barr/Jefferson 93 31.83
Lot - E. of Hist. Museum 73 37.14
*Town Center Garage 230 68.98
*Parking rent to be increased from time to time as described in Lease.
Term of Parking Facilities: Twenty (20) years.
9. Not applicable.
10. Not applicable.
11. Not applicable.
12. Renewal Option(s): (a) number of periods: two.
(b) years of each period: five.
(c) Notice by February 28, 2014 (1st renewal).
(d) Notice by February 28, 2019 (2d renewal).
(e) Escalation base year: Not Applicable.
13. Escalation - Operating Expenses: Not applicable - triple net lease.
14. Escalation - Taxes: Not applicable - triple net lease.
CBD INVESTMENT GROUP LINCOLN NATIONAL CORPORATION
By: Union Holding Co., Inc.
Partner
By: __________________________
By:___________________________________
Richard D. Waterfield, President P. Kenneth Dunsire, Executive Vice
President
Lessor Tenant
9213
-4-
<PAGE>
LEASE
THIS LEASE is made and entered into on the date set forth at Item 1 on
Exhibit A, attached hereto and made a part hereof (hereinafter referred to as
the Lease Data Sheet), by and between the parties set forth at Item 2 on the
Lease Data Sheet.
ARTICLES
ARTICLE 1. PREMISES. For and in consideration of the rental hereinafter
specified and in further consideration of all the covenants and agreements
herein contained, the Lessor leases to the Tenant and the Tenant hereby leases
from the Lessor space, which size has been determined using current BOMA
Standards, as set forth at Item 3 on the Lease Data Sheet, hereinafter called
Premises, and also the Parking Facilities as hereafter described and defined.
The Premises and the Parking Facilities are described on the exhibit
attached hereto, marked Exhibit A-1, and by reference made a part hereof.
ARTICLE 2. TERM.
(A) The term of this Lease shall be for a period of twenty (20) years.
The term of the Lease shall commence on the Effective Date as shown on the
Lease Data Sheet. The Lease will terminate at 12:00 o'clock midnight twenty
(20) years from the Effective Date, unless this Lease shall be earlier
terminated as provided by this Lease.
Should the Tenant hold over and remain in possession of the Premises or
the Parking Facilities after the expiration of the applicable Lease Term or
any extension thereof, it shall not be deemed or be construed to be a renewal
or extension of this Lease, but shall operate to create a month-to-month
tenancy which may be terminated by the Lessor or the Tenant at the end of any
month upon thirty (30) days' prior written notice. Such holding over shall
be on the terms and conditions specified in this Lease; provided, that in the
event that Tenant holds over, rent during such hold-over period shall be 1.5
times the rent in effect at termination of the Lease. This shall not be
construed to permit or authorize holding over by Tenant.
(B)
Definitions:
"Lease Date" - the date that this Lease is signed by both parties.
"Adjustment Dates" - March 1, 2002; March 1, 2005; March 1, 2008;
and March 1, 2011.
"Effective Date" - December 1, 1994.
"Termination Date" - The last day of November, 2014.
"Lease Year" - each twelve month period beginning with the
Effective Date.
(C) Tenant has been and is an occupant of the Premises and Parking
Facilities, is familiar with them, and has had an opportunity to fully inspect
all portions thereof. Upon the Effective Date, Tenant shall be deemed to have
accepted the Premises. Tenant agrees that it will accept the Premises "as
is". Except as otherwise expressly set forth in this Lease, Lessor does not
make, nor has it made, any representation or warranty respecting the Premises,
or the Parking Facilities, or the condition thereof, including without
limitation, any warranties of habitibility or fitness for use, all of which
are expressly waived by Tenant.
(D) This Lease includes the fixtures located in the Premises.
ARTICLE 3. USE.
(A) Tenant represents and covenants that the Premises shall be used only
for the purpose of a business office and related uses reasonably deemed
necessary by Tenant to conduct its business.
(B) The Tenant shall not use or occupy or permit the leased property to
be used or occupied, nor do or permit anything to be done in or on the leased
property, in any manner which will in any way violate any certificate of
occupancy affecting the leased property, or make void or voidable any
insurance then in force with respect thereto, or which will make it impossible
to obtain fire or other insurance required to be furnished hereunder, or which
will cause or be likely to cause structural damage to the building or any part
thereof or which will constitute a public or private nuisance, and shall not
use or occupy or permit the Premises or the Parking Facilities to be used or
occupied in any manner which will violate any present or future laws or
regulations of any governmental authority. Tenant shall have the right within
the Premises to enforce a "no smoking" policy and to post appropriate signs
or notices regarding same.
ARTICLE 4. RENT.
(A) The Premises. The total annual rental for the Premises during the
term of this Lease, is shown at Item 5 on the Lease Data Sheet, and Tenant
covenants and agrees to pay such rental in equal monthly installments in the
dollar amount shown at Item 5 of the Lease Data Sheet, each in advance on the
first day of each month, commencing on the Effective Date.
(i) The total annual rent and monthly rent for the space in the
Premises is calculated as follows:
-6-
<PAGE>
1st Floor
17,941.62 s.f. x $8.65 = $155,195.02
2nd Floor
50,524 s.f. x $8.65 = $437,032.60
3rd Floor
50,621 s.f. x $8.65 = $437,871.65
4th Floor
50,494 s.f. x $8.65 = $436,773.10
Garden Level
37,212.94 s.f. x $8.65 = $321,891.93
Penthouse
1,966 s.f. x $8.65 = $17,005.90
Totals 208,759.56 s.f. x $8.65 = $1,805,770.20
divided by: 12 = $150,480.85
(B) The rent for the Premises shall be subject to adjustment, from time
to time during the term of the Lease, and any renewal thereof. The first
rental adjustment shall occur on March 1, 2002, and subsequent rental
adjustments shall be made on the first day of March during 2005, 2008, 2011
(the "Adjustment Dates"), and on the first day of any renewal period of this
Lease. Upon each Adjustment Date, the annual rate of rent per square foot
shall be increased as follows:
(i) Determine "prevailing market rental" which is defined to be an
average of the net rental per square foot then in effect and
charged to new partial floor tenants (on a triple net basis) in
Fort Wayne Bank Building, Summit Square, and Standard Federal
Building in downtown Fort Wayne, Indiana.
-7-
<PAGE>
(ii) If either the Fort Wayne Bank Building, Summit Square, or Standard
Federal Building are no longer used for commercial offices at the
time of calculation, then Norwest Center shall be substituted. If
there are not at least three of the above four buildings used for
commercial offices, then the calculation shall be based upon the
three most desirable downtown Fort Wayne office buildings then
providing first class office space, as determined by the parties,
and in the absence of agreement, then as determined pursuant to the
arbitration provisions of Article 33 of this Lease.
(iii)Multiply the result times two-thirds. In no event shall rent
be adjusted to an amount less than the rent specified at the
beginning of this Lease.
(C) Parking Facilities. This Lease includes the rental by Lessor
to Tenant of certain Parking Facilities, and Tenant agrees to pay rent for
same as shown in Item 5 on the Lease Data Sheet, in addition to the rent above
provided with respect to the Premises. The Parking Facilities are described
on Exhibit A-1. Parking rent shall be calculated and paid in advance on a
monthly basis based upon the number of spaces and monthly rent per space.
Parking rent payments will commence on the Effective Date.
(i) The total annual rent and monthly rent for the Parking Facilities
is calculated as follows:
-8-
<PAGE>
Location No. SpacesMonthly Rent/Space Monthly Total Rent
Surface Lot - North
and adjacent to
Renaissance Square 87 x 53.06 = 4,616.22
Surface Lot - SEC
Clinton and Wayne 101 x 42.45 = 4,287.45
Surface Lot - SWC
Barr and Jefferson 93 x 31.83 = 2,960.19
Surface Lot - Berry
East of Historical
Museum 73 x 37.14 = 2,711.22
Town Center Garage 230 x 68.98 = 15,865.40
Totals 584 30,440.48
Total Annual Parking Rent $365,285.76
(ii) Parking rent for the 230 spaces in Town Center Garage will be
increased at the rate of 2% per year, commencing on September 1, 1995,
and on September 1 of each year thereafter, until February 28, 2002.
(iii) Commencing March 1, 2002, parking rent for all parking spaces
shall be subject to adjustment on each Adjustment Date. On each
Adjustment Date, rent for such spaces shall be increased to market rates
prevailing for comparable parking spaces at that time, taking into
consideration the volume of spaces being rented; provided, that in no
event shall any such rent be less than the rent specified for such spaces
on the last day of February, 2002.
(D) Late Charges. Tenant agrees that if any monthly payment of rent due
under this Article 4 has not been paid to Lessor within fifteen (15) days
after it is due, there shall be due and owing, in addition to all other rent
due hereunder, a late charge equal to One and One-Half Per Cent (1.5%) of all
rent due for the month. Repeated late payments shall, at the election of
Lessor, be an event of default under the terms of this Lease.
(E) All sums due to Lessor shall be due and payable without relief from
valuation or appraisement laws, with attorney fees, and with interest at
-9-
<PAGE>
Eighteen Per Cent (18%) per annum after default. All rental is payable at the
financial institution of Lessor shown at Item 6 of the Lease Data Sheet, or
such other institution as Lessor may hereafter designate in writing. Lessor's
Taxpayer I.D. Number is shown at Item 7 on the Lease Data Sheet.
(F) This is a fully net Lease and Lessor shall not be required to
provide any services, make any payment or do any act or thing with respect to
the Premises, or the four surface parking lots that are a part of the Parking
Facilities, or the buildings and improvements thereon, or appurtenances
thereto, and the rent reserved herein shall be paid to Lessor without any
claim on the part of Tenant for diminution, setoff or abatement, and nothing
shall suspend, abate or reduce any rent to be paid hereunder, except that rent
can be abated, deducted or set off if Lessor fails to perform its obligations
as provided in this Lease.
ARTICLE 5. SERVICES AND UTILITIES. For the purposes of this Article 5,
the term "Premises" shall be defined as the entire Renaissance Square
Building, including that portion occupied by other tenants. As a part of the
consideration for this Lease, Tenant agrees to pay the following costs and
perform the following obligations for the entire building, even though Tenant
will not occupy the entire building.
(A) Tenant agrees to pay all operating expenses with respect to the
Premises. Tenant shall be responsible to furnish, at its own expense, all
necessary heat and air conditioning, all electric current, natural gas, water
and sewerage, janitorial services including trash removal and vacuuming of
carpet, building management, and all necessary building security. Tenant
further agrees to secure and maintain common areas that are used by or
available to other tenants.
(B) The heating and air conditioning shall be well maintained using good
quality parts and equipment.
(C) The Tenant shall not be liable to Lessor whenever the failure to
supply such services and utilities shall be due to necessary repairs or
improvements to the building or machinery therein deemed desirable by Tenant,
or any reason beyond Tenant's control including strikes, power shortages,
power failures, or other emergencies or governmental regulations having a
direct effect on the supplying of such services or utilities. Nonetheless,
Tenant agrees to make every reasonable effort to restore such services and to
maintain such standards as quickly and efficiently as possible in the event
of a stoppage excused hereunder. Furthermore, Tenant agrees that any repairs
or alterations shall be reasonably calculated to avoid repeated breakdowns of
a similar nature in the future.
-10-
<PAGE>
(D) Whenever Tenant shall be in default of its obligations hereunder,
and if such default shall not be excused by the previous paragraphs, Lessor
may give Tenant written notice to correct or begin to correct said default
within five (5) working days. If Tenant has not begun to correct or corrected
said default within fifteen (15) working days, Lessor may correct same and add
the cost thereon to future rents due.
(E) Lessor will cause tax invoices for the Premises and the four surface
parking lots to be furnished to Tenant at least fourteen (14) days prior to
due dates. Tenant agrees to pay, promptly when due, all real estate taxes,
personal property taxes, and all other taxes, assessments or charges of any
kind which may be or become a lien upon or assessed against the Premises or
the four surface parking lots (other than liens occasioned by acts of Lessor),
or for the payment of which Lessor or Tenant are or shall become liable by
reason of their estate or interest in the Premises or any part thereof, or by
reason of any right or interest under this Lease, or by reason of or in any
manner connected with or arising out of the possession, ownership, or use of
the Premises. Subject to Lessor having furnished invoices within the required
time, Tenant further agrees to pay any penalty, interest or other charge that
may be assessed because of failure to make timely payment when due. Upon
request, Tenant will furnish Lessor with proof of payment of such charges.
If Tenant shall fail to pay any amount required as aforesaid on or before the
last day upon which it may be paid without the imposition of interest or
penalty, Lessor may at its election pay the same with any interest or
penalties lawfully imposed and any amounts so paid by Lessor shall become
immediately due and payable by Tenant as additional rent. This clause is not
intended to indemnify Lessor against liability for its own state or federal
income taxes.
Tenant at its expense may contest by appropriate legal proceedings
conducted in good faith and with due diligence, the amount, validity or
application of any of the above impositions provided that (a) the proceedings
shall not interfere with the payment of rent, (b) neither the Premises or any
interest therein or any rent would be in any danger of being sold, forfeited
or lost, (c) Lessor would not be in any danger of civil or criminal liability
for failure to comply (d) in the case of any unpaid taxes, such proceedings
shall suspend delivery of a tax deed for the Premises or any part thereof, and
(e) failure of Tenant to comply would not affect the validity of any insurance
required to be maintained with regard to the Premises. Lessor will cooperate
with Tenant, at Tenant's expense, in pursuing any such contest.
ARTICLE 6. COMMON AREAS.
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(A) The parties agree that the Tenant and Tenant's customers, employees
and/or visitors, shall have the right throughout the term hereof to use, in
common with others entitled to similar use thereof, all of the interior common
areas of the building of which the Premises are a part, including all
hallways, rest rooms, loading dock, stairways, doorways and skybridge for
ingress and egress to and from the Premises and the exterior common areas to
the total premises, streets, service drives and sidewalks for ingress and
egress to and from the Premises and to and from the public streets and
highways; provided, that this shall be interpreted to refer only to the
loading dock and common areas located on the garden level and first floor,
together with ingress and egress, to the extent applicable to Lincoln National
Foundation, Inc. ("Lincoln Foundation") Lease.
(B) The Tenant shall adequately maintain and repair in good and usable
condition throughout the term of this Lease all such common areas, shall be
responsible for snow and ice removal in all exterior common areas, and shall
maintain adequate illumination of all common areas both exterior and interior.
(C) The obligations of Tenant under this Article 6 shall be defined to
include the entire Renaissance Square building, even though Tenant will not
occupy all of the building.
ARTICLE 7. ALTERATIONS. Any alteration, addition, or improvement made
by the Tenant, and any fixtures installed as part thereof, shall become the
property of the Lessor upon the expiration or other sooner termination of this
Lease (the term "fixtures" does not include light fixtures in the Board Room
on the fourth floor). The Tenant shall keep the Premises free from any and
all liens arising out of any work performed, materials furnished, or
obligations incurred by Tenant. Tenant may make alterations, additions or
improvements; provided, that no such alteration, addition, or improvement
shall weaken or endanger the structural soundness of the Premises or violate
any law, ordinance, order, governmental rule or regulation.
ARTICLE 8. REPAIRS AND MAINTENANCE. For the purposes of this Article 8,
the term "Premises" shall be defined as the entire Renaissance Square
Building, including that portion occupied by other tenants. As a part of the
consideration for this Lease, Tenant agrees to pay the following costs and
perform the following obligations for the entire building, even though Tenant
will not occupy the entire building.
(A) Tenant agrees at its expense to make all necessary repairs or
replacements to the Premises and to keep the same in a state of good repair;
to perform all maintenance and to maintain the Premises in a good, clean and
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safe condition, and to make any replacements or restoration that may from time
to time be necessary upon the Premises. Tenant agrees to do these things in
a good and workmanlike manner and to promptly pay all costs and expenses
incurred for same as and when due. Tenant's obligations to repair, maintain,
replace and restore the Premises extends to all parts of the Premises,
interior and exterior, above or below the ground, and including the sky bridge
and areas appurtenant to the Premises that are under the control of Tenant.
(B) The repair, maintenance and replacement obligations of Tenant under
this Lease include all equipment and facilities located within or used as a
part of the Premises including, without limitation, the equipment listed on
Exhibit C, attached hereto.
Between one hundred eighty (180) days and ninety (90) days before
termination of the Lease Term and again not less than fifteen (15) days prior
to such termination, Lessor may at its expense inspect the equipment and
facilities listed on Exhibit C to determine that they are in good repair and
working order. If any material defects, other than normal wear and tear, are
discovered, Tenant shall correct same at its expense prior to termination of
the initial Lease Term or extended term, as applicable.
As consideration for Tenant undertaking full responsibility for the
equipment and facilities described on Exhibit C, and the exterior walls, roof,
skylight and structural portions of the Premises, Tenant shall be entitled to
an annual rent credit in the sum of Twenty Thousand Dollars ($20,000.00), to
be credited against and deducted from the regular monthly rental during the
last month of each Lease Year during the initial term and any renewals of this
Lease.
Any dispute between the parties regarding the rights provided in this
subparagraph shall be resolved in accordance with the arbitration provisions
of this Lease.
(C) Tenant agrees to perform all required repairs, maintenance,
restoration or replacement to the Premises, whether necessitated by normal
use, passage of time, or for any other reason or cause whatever, foreseen or
unforeseen. Tenant shall not commit physical waste upon the Premises.
(D) At the end of the Lease Term, Tenant agrees to return the Premises
to Lessor in as good condition as when received, reasonable wear and tear
excepted.
(E) If at any time during the term of this Lease and any renewal or
extension thereof there shall be a default in or other noncompliance with any
of the duties imposed upon Tenant by this Article, and so long as any such
default continues for five working days after written notice has been sent to
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Tenant and Tenant has not reasonably commenced to cure such default within
those five working days, Lessor may at its election remedy or attempt to
remedy any such default or other noncompliance and expend any reasonable sums
necessary therefor at the cost and expense of the Tenant, and the sums so
expended shall be added to future rents with the next installment due and
payable to Lessor.
ARTICLE 9. PRIOR LEASE.
Reference is made to an existing lease between the parties dated February
14, 1991 (the "Prior Lease"), which Prior Lease encompasses a part of the same
Premises and Parking Facilities included in this Lease. It is the intent of
the parties that the Prior Lease will terminate on the Effective Date, and
will be replaced by this Lease. The parties therefore agree that upon the
Effective Date, the Prior Lease shall be deemed to be terminated. Any prepaid
or unpaid rent under the Prior Lease at the time of cancellation shall be
credited to or paid by Tenant, as the case may be. There shall be no
duplication of rent liability under the two leases. Notwithstanding
termination of the Prior Lease, Tenant shall continue to be responsible for
its obligations under the Prior Lease for the time prior to the Effective Date
of this Lease.
ARTICLE 10. CASUALTY. For the purposes of this Article 10, the term
"Premises" shall be defined as the entire Renaissance Square Building,
including that portion occupied by other tenants. As a part of the
consideration for this Lease, Tenant agrees to pay the following costs and
perform the following obligations for the entire building, even though Tenant
will not occupy the entire building.
(A) If any building, fixture or other improvement or personal property
now or hereafter situated on or part of the Premises should at any time during
the term of this Lease be damaged or destroyed by fire or otherwise, the
Tenant shall at its sole cost and expense restore and rebuild the Premises as
nearly as possible to the condition they were in immediately prior to such
damage or destruction, and such restoration and rebuilding, prosecuted with
reasonable diligence, shall be completed as soon as reasonably possible. The
manner of disbursement of any insurance proceeds shall be satisfactory to both
Lessor and Tenant. No damage or destruction of the Premises or any part
thereof or any of the fixtures or other property therein shall be grounds for
the termination of this Lease or relieve the Tenant from any obligation
created or imposed by virtue of this Lease, including, without limitation,
Tenant's obligation to pay rent and all other charges on the part of Tenant
to be paid, and the Tenant's obligations to perform all other covenants and
agreements required to be performed by Tenant under this Lease.
Notwithstanding the foregoing, if 75% or more of Renaissance Square is
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destroyed within 12 months of the end of the lease term, or within 12 months
of the end of a renewal term, Tenant may elect to terminate the Lease on
condition that Tenant shall assign all insurance proceeds to Lessor and, if
the insurance proceeds received by Lessor are less than sufficient to
reimburse Lessor for the full replacement cost of the damaged property, Tenant
shall pay Lessor any difference; and on the further condition that Tenant
shall notify Lessor in writing of its election within ten (10) days after such
destruction occurs.
ARTICLE 11. INDEMNITY AND INSURANCE. For the purposes of this Article
11, the term "Premises" shall be defined as the entire Renaissance Square
Building, including that portion occupied by other tenants. As a part of the
consideration for this Lease, Tenant agrees to pay the following costs and
perform the following obligations for the entire building, even though Tenant
will not occupy the entire building.
(A) All Tenant's personal property of any kind that may be on or about
the Premises shall be at the sole risk of Tenant and with the exception of
loss or damage caused by Lessor's intentional acts, Lessor shall have no
liability to Tenant for any loss or damage thereto.
(B) The entire Renaissance Square building and the Skybridge shall be
at the sole risk of Tenant, and with the exception of loss or damage caused
by Lessor's intentional acts, Lessor shall have no liability to Tenant for any
loss or damage thereto.
(C) Tenant will indemnify and save harmless Lessor and its partners from
and against any and all loss or liability arising from injury or claim of
injury during the term of this Lease to person or property of any kind arising
from or in connection with the occupation, possession, use, management or
control of the Premises and the four surface lots that are a part of the
Parking Facilities, including the buildings and improvements thereon, the
skybridge, facilities, and equipment therein, and adjoining sidewalks, or
arising out of Tenant's failure to perform Tenant's obligations under this
Lease. The covenants of Tenant to indemnify Lessor shall not apply to willful
or negligent acts of Lessor; provided, that this shall not be construed to
relieve Tenant from its obligations to maintain insurance for the benefit of
Lessor as otherwise provided in this Lease.
(D) At all times during the term of this Lease Tenant shall:
(i) Keep the buildings and improvements now erected and those which may
hereafter be erected on or be a part of the Premises or the four
surface lots that are a part of the Parking Facilities, and all
personal property thereon, insured in the name of Lessor and
Tenant, as their interest may appear, with insurance companies
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satisfactory to Lessor, against loss or damage by all risk of
physical loss, including flood and earthquake, in an amount
representing not less than 100% of the insurable replacement cost
(agreed to be $25,000,000.00 on the Effective Date), subject to
reasonable deductibles. Five years after the Effective Date, and
each five years thereafter, Lessor shall notify Tenant of insurable
replacement cost as of that date, and Tenant shall cause the
insurance amount to be adjusted accordingly;
(ii) Effect and maintain with insurance companies satisfactory to
Lessor, boiler insurance, if the same shall be appropriate, in the
amount of $1,000,000.00, and also general liability insurance on
the Premises and the four surface lots that are a part of the
Parking Facilities for the benefit of Lessor and Tenant and
covering any liability that Lessor or Tenant may have regarding the
Premises or the four surface lots that are a part of the Parking
Facilities for a total of $20,000,000.00 in respect to any one
accident, occurrence or disaster, and $2,000,000.00 in respect of
injuries, liability or damage to any person, and $1,000,000.00 in
respect to property damage; and
(iii)In the event of restoration, alterations or construction in the
Premises or the four surface lots that are a part of the
Parking Facilities that may be made by Tenant in excess of
$100,000.00 per job, also provide and keep in force for the
benefit of the Lessor, contingent liability and builder's risk
insurance in the usual form and in insurance companies
satisfactory to the Lessor as to the amount of each policy
and the identity of the respective insurers. Tenant agrees to
deliver to Lessor if requested certificates from insurance
companies with respect to the insurance coverages provided for
herein, at the commencement of the term of this Lease and from
time to time thereafter as new policies are issued. Tenant
agrees to satisfy the conditions of such policies.
(E) Lessor and Tenant each hereby waive all rights of recovery against
the other on account of loss or damage occasioned to such waiving party for
its property or the property of others under its control to the extent that
such loss or damage is insured against for the benefit of the waiving party
under any insurance policy which may be in force at the time of such loss or
damage.
ARTICLE 12. LAWS AND REGULATIONS.
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Tenant agrees at its own cost and expense to promptly comply with and
observe all laws, ordinances, statutes, regulations and orders of any
governmental body or authority, which may be applicable to the Premises or the
activities of Tenant in or about the Premises, or the use of the Premises.
ARTICLE 13. CONDEMNATION. If the whole or any part of the Renaissance
Square Building shall be taken by any public authority under the power of
eminent domain, then the term of this Lease shall cease on the part so taken
on the date possession shall be required for public use. Any rent prepaid in
advance of such date shall be refunded to Tenant, and if the amount taken is
material then Lessor and Tenant shall each have the right to terminate this
Lease upon written notice to the other, which notice shall be delivered within
thirty (30) days following the date notice is received of such taking. In the
event that neither party hereto shall terminate this Lease, Lessor shall make
all necessary repairs to the Premises and the Building in which they are
located to render and restore the same to a complete architectural unit and
Tenant shall continue in possession of the portion of the Premises not taken
under the power of eminent domain, under the same terms and conditions as are
herein provided, except that the rent reserved herein shall be reduced in
direct proportion to the amount of the Premises so taken. All damages awarded
for such taking shall belong to and be the property of the Lessor, whether
such damages be awarded as compensation for diminution in value of the
leasehold or to the fee of the Premises or the Building, provided, however,
Lessor shall not be entitled to any portion of the award made to Tenant for
removal and reinstallation of trade fixtures, loss of its business, or moving
expenses.
ARTICLE 14. INSOLVENCY. If either party to the Lease (herein called the
First Party) shall file a Petition in voluntary bankruptcy or be adjudged
bankrupt in involuntary proceedings, or make an assignment for benefit of
creditors or like arrangement or composition, or file a petition in the
federal court for reorganization, or otherwise seek relief pursuant to the
provisions of any state or federal insolvency or bankruptcy law, or to be
placed in the hands of a receiver or trustee, then the remaining party may,
at its election, terminate this Lease by written notice to the First Party;
provided, however, if the order of Court creating such disability shall not
be final by reason of pendency of such proceedings, or appeal from such order,
then the remaining party shall not have the right to terminate this Lease so
long as the First Party performs its obligations hereunder.
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ARTICLE 15. LESSOR'S REMEDIES FOR TENANT'S DEFAULT. In the event of
failure to pay any rent when due, and after fifteen (15) days' written notice
from Lessor, then Lessor, besides any other rights or remedies it may have by
law or otherwise, shall have the immediate right of re-entry and may remove
all persons and property from the Premises. Such property may be removed and
stored at the cost of and for the account of Tenant. Tenant shall have the
right to immediate access to any such property upon payment to Lessor of all
costs of removal and/or storage of such property. Should Lessor elect to
re-enter as herein provided, or should Lessor take possession pursuant to
legal proceedings or pursuant to any notice provided for by law, Lessor may
either terminate this Lease or may, from time to time, without terminating
this Lease, relet said Premises or any part thereof for such term or terms
(which may be for a term extending beyond the term of this Lease) and at such
rental or rentals and upon such other terms and conditions as Lessor in the
exercise of Lessor's sole discretion may deem advisable with the right to make
alterations and repairs to said Premises. Upon each such reletting (a) Tenant
shall be immediately liable to pay to Lessor, in addition to any indebtedness
other than rent due hereunder, the cost and expense of such reletting and of
such alterations and repairs incurred by Lessor, and the amount if any by
which the rent reserved in this Lease for the period of such reletting (up to
but not beyond the term of this Lease) exceeds the amount agreed to be paid
as rent for the Premises for such period of such reletting; or (b) at the
option of Lessor rents received by Lessor from such reletting shall be applied
first, to the payment of any indebtedness, other than rent due hereunder from
Tenant to Lessor; second, to the payment of any costs and expenses of such
reletting and of such alterations and repairs; third, to the payment of rent
due and unpaid hereunder; and the residue, if any, shall be held by Lessor and
applied in payment of future rent as the same may become due and payable
hereunder.
In the event of default by Tenant under any of the other terms and
conditions of this Lease (other than failure to pay rent), then Lessor may
give Tenant written notice of such default, and Tenant shall correct same
within thirty (30) days thereafter. If Tenant fails to correct such a
default, then the Arbitrator in any arbitration proceedings shall have the
authority to award Lessor any or all of the remedies as above enumerated in
this Article 15; provided, that default shall not be declared so long as
Tenant is making a reasonable effort to correct the problem. Should Lessor
at any time terminate this Lease for any breach, in addition to any other
remedy Lessor may have, Lessor may recover from Tenant all damages Lessor may
incur by reason of such breach, including the cost of recovering the Premises,
and including the rent reserved and charged in this Lease for the remainder
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of the stated term, all of which amounts shall be immediately due and payable
along with attorney's fees from Tenant to Lessor, and Lessor shall have no
obligation to relet.
Lessor's remedies are intended to be cumulative and, in addition to those
above set forth, Lessor shall have such other remedies as may be provided at
law or in equity.
ARTICLE 16. ENTRY AND INSPECTION.
(A) Lessor or Lessor's agents shall have the right to enter the Premises
and the Parking Facilities at all reasonable times for any of the following
purposes: to inspect the Premises; to make such repairs or additions as the
Lessor is obligated or may elect to make; and to show the Premises to a
prospective mortgagee. Any such entry shall be done at such hours and in such
manner as not to unreasonably interfere with Tenant's normal business
operations. In addition, except in the event of an emergency, Lessor shall
get Tenant's prior consent to any such entry and such consent shall not be
unreasonably withheld.
(B) Lessor or Lessor's agents may show the Premises to any prospective
tenant at any reasonable time beginning nine (9) months prior to the end of
the lease term after obtaining Tenant's consent. Such consent will not be
unreasonably withheld.
ARTICLE 17. ASSIGNMENT AND TRANSFER BY TENANT. Tenant shall not make
any assignment of this Lease nor sublet the Premises or the Parking
Facilities, or any part thereof, except to subsidiary or affiliate companies
of Tenant (meaning companies subject to common control with Tenant or
controlled by Tenant) without the prior written consent of the Lessor, which
consent will not be unreasonably withheld. Without limitation, Lessor may
reasonably withhold consent to any assignment or subletting if same would
cause Lessor to be in violation of any lease or if the proposed use by the
assignee or sublessee would be other than as permitted by this Lease. If the
rental to be paid by any permitted assignee or sublessee is higher than the
rent provided in this Lease, Lessor and Tenant shall each be entitled to
one-half of any such excess rent. Any assignment or sublease shall not
relieve or release Tenant from liability under this Lease.
ARTICLE 18. ASSIGNMENT AND TRANSFER BY LESSOR.
(A) Tenant agrees that Lessor may at any time, and from time to time,
transfer and assign its interest in this Lease either in connection with a
sale and transfer of title to the real estate in which the Premises are
situated or for the purpose of mortgaging, pledging or hypothecating said
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Lease as security for a mortgage loan on the real estate where the Premises
are located. Tenant agrees to subordinate this Lease to such mortgage, or to
agree to an attornment in event of foreclosure, if required by the mortgagee,
provided the mortgagee is a bank, insurance company, or other financial or
lending institution and further provided the holder thereof shall agree that
in the event of foreclosure the right of Tenant to possession hereunder shall
remain undisturbed so long as Tenant is not in default in the performance or
observance of the terms, covenants and conditions of this Lease. Lessor
agrees that any mortgage placed upon the Premises after the date of this Lease
shall be subject to the requirement that the proposed Mortgagee shall agree
to an attornment and nondisturbance agreement with Tenant, subject to Tenant
performing its obligations under this Lease.
(B) Lessor agrees to give timely and proper notice of any such transfer
through a duly authorized officer of Lessor. If such transfer will
necessitate a change in to whom the rent is paid, Lessor will give to Tenant
written notice of such change of payee with an original signature of Lessor
on such notice.
(C) Lessor agrees to request any mortgagee which is prior to this Lease
to execute a non-disturbance agreement recognizing Tenant's right to
possession in the event of foreclosure upon request of Tenant, and cause the
same to be recorded in the office in which such mortgages are recorded.
(D) In the event of a sale or conveyance by Lessor of Lessor's Building,
the same shall operate to release Lessor from any future liability upon any
of the covenants or conditions, express or implied, herein contained in favor
of Tenant, and in such event Tenant agrees to look solely to the
successor-in-interest of Lessor for performance of such covenants and
conditions; provided, that Lessor shall remain responsible for any default
that occurred prior to such sale or conveyance. This Lease shall not be
affected by any such sale, and Tenant agrees to recognize and attorn to
Lessor's successor-in-interest as the landlord hereunder; provided, that
Lessor's successor-in-interest agrees to recognize and not disturb Tenant's
right to possession so long as Tenant is not in default under the terms of the
Lease.
ARTICLE 19. TENANT'S CERTIFICATE. From time to time after the Effective
Date and when requested by Lessor, tenant shall execute and deliver to Lessor
within fifteen (15) days following such request a written certificate:
(a) Expressing the Effective Date and termination date hereof;
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(b) Certifying that this Lease is in full force and effect and to
the best of Tenant's knowledge has not been assigned, modified or amended
(except by such writings as shall be described);
(c) Stating that all conditions under this Lease to be performed
by Lessor have to Tenant's best knowledge been so performed or have been
waived by Tenant (or stating which conditions remains unsatisfied);
(d) Stating that there are no defenses and offsets as are then
claimed by Tenant to Tenant's best knowledge (except as set forth on
attached Exhibit, if any);
(e) Stating the amount of any advance rentals then paid by Tenant;
(f) Stating the date to which rentals have been paid.
Lessor, Lessor's mortgage lenders and any purchasers of the Premises or any
of the Parking Facilities shall be entitled to rely upon such certificate.
Tenant shall not be required to furnish a Tenant's Certificate as provided in
this Article 19 more often than twice 0in any consecutive twelve-month period.
ARTICLE 20. SUCCESSORS. All rights and liabilities herein given to or
imposed upon either of the parties to this Lease shall extend to, be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
ARTICLE 21. WAIVER. The failure of Lessor or Tenant to insist upon
strict performance of any of the covenants or conditions of this Lease shall
not be construed as a waiver for the future of any such covenants or
conditions, but the same shall be and remain in full force and effect.
ARTICLE 22. RIGHT TO CONSTRUCT FIFTH FLOOR. Tenant is granted the
right, during the initial term or any renewal of this Lease, to construct a
fifth floor on the Renaissance Square Building. Upon completion of any such
construction such additional space shall become a part of the Premises subject
to the terms of this Lease.
(a) In the event of such construction, Tenant shall thereafter be
responsible for the maintenance, repair, and replacement of all of the
building, including the part constructed by Tenant.
(b) Prior to commencing such construction, Tenant shall furnish
detailed plans and specifications for same to Lessor, for inspection by
Lessor and its representatives, and construction shall not commence until
Lessor shall have indicated its written approval for same, which approval
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shall not be unreasonably withheld. Lessor shall have forty-five (45)
working days within which to respond, and failure to do so shall be
deemed approval. If Lessor gives approval, such approval shall not be
construed to subject Lessor to liability of any kind with respect to such
construction, or to waive or alter any of Lessor's rights under this
Lease.
(c) Any such construction shall be at Tenant's sole risk, and
Tenant shall indemnify Lessor and save it harmless against any loss or
liability arising in connection therewith.
(d) In conducting such construction, Tenant shall comply with all
applicable laws, rules or regulations, shall be responsible for obtaining
all licenses or permits, and shall obtain and furnish builder's risk,
general liability, and workmen's compensation insurance, insuring Lessor
and Tenant as their interests may appear, upon such terms and in such
amounts as Lessor may reasonably require. Any damage to the remainder
of the Premises caused in connection with such construction shall be
promptly repaired by Tenant at its sole cost. In no event shall Tenant
permit such construction to damage or lessen the structural soundness and
integrity of the remainder of the building. Tenant will use all
reasonable means not to interfere with rights or business of other
tenants during construction.
(e) Any improvements constructed shall become a part of the
Premises for all purposes under this Lease. Upon termination of the
Lease all improvements constructed pursuant to this Article shall revert
to Lessor.
(f) Tenant agrees that if it commences construction of a fifth
floor on the Premises, such construction shall be fully completed on or
before the end of the Lease Term.
(g) If Tenant constructs a fifth floor on the Premises, Tenant
shall not be obligated to pay rent for same during the first ten (10)
years after a Certificate of Occupancy is issued for the newly
constructed space, but shall commence paying rent, and shall continue to
pay rent so long as this Lease remains in effect thereafter. Such rent
shall be calculated in the same manner as herein provided with respect
to other space in the Premises, based upon the number of square feet,
determined in accordance with BOMA standards.
ARTICLE 23. RIGHT OF FIRST REFUSAL. If, at any time during the term of
this Lease, Lessor desires to sell its interest in the Renaissance Square
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Building and/or one or more of the four surface parking lots that are a part
of the Parking Facilities (the "Real Estate") Lessor shall first offer to sell
the Real Estate to Tenant on the same terms and conditions as proposed in
writing by any other bona fide third party purchaser. Lessor shall submit a
copy of the written offer from such other purchaser and Tenant shall have a
period of ten (10) days from receipt in which to exercise its right to
purchase the Real Estate on the same terms and conditions. To exercise its
right of first refusal, Tenant shall advise Lessor in writing, stating that
Tenant unconditionally agrees to purchase the Real Estate on all of the
identical terms and conditions set forth in the submitted offer. If the offer
includes the Renaissance Square Building, Tenant shall also agree to pay an
additional One Hundred Thousand Dollars ($100,000.00) in cash at closing, over
and above the purchase price stated in the submitted, proposed offer. If the
submitted proposed offer includes only surface parking lots, Tenant shall, in
addition to accepting the other terms of such offer, agree to pay a premium
of Ten Thousand Dollars ($10,000.00) over the proposed purchase price if the
lot is North of and adjacent to Renaissance Square or the SEC Clinton/Wayne
lot, and a premium of Five Thousand Dollars ($5,000.00) if the offer pertains
to one of the other surface parking lots. If Tenant does not provide written
indication of its intent to exercise its right of first refusal, then Lessor
shall be entitled to complete the sale of the Real Estate to the original
proposed purchaser. None of the foregoing provisions regarding a right of
first refusal shall be applicable to:
(i) Lessor's granting of any mortgage, deed of trust, security
interest, collateral assignment, or similar interest with respect to the
Real Estate or this Lease;
(ii) Any sale, at a foreclosure sale or by a deed in lieu of
foreclosure, to a bona fide Mortgagee or to the bona fide holder of any
such mortgage, deed of trust, security interest, collateral assignment,
or a similar interest or to any other bona fide purchaser;
(iii) Any sale or other transfer of a partnership or other interest
in Lessor or in any Partner of Lessor; or
(iv) Any sale or other transfer of the Leased Premises after the
initial term of the Lease. The provisions hereof shall not preclude
preliminary discussions, whether oral or in writing, and negotiations
between Lessor and any prospective purchaser concerning terms and
conditions for the sale or other transfer of Lessor's interest in the
Real Estate.
If Tenant declines its right of first refusal with respect to any proposed
offer, and that proposed sale does not close for any reason, then Tenant shall
continue to have its right of first refusal to a subsequent proposed offer for
the same property.
-23-
<PAGE>
ARTICLE 24. SIGNS. Tenant may, at its sole cost and expense, install
signs on the Renaissance Square Building, grounds, and skybridge. No such
signs shall be installed until the plans and specifications for same have been
submitted to Lessor, and Lessor has given its written consent, which consent
shall not be unreasonably withheld. Lessor shall notify Tenant of its consent
or denial of consent within thirty (30) days after receipt of plans and
specifications; provided, that if Lessor does not respond within such thirty
(30) days, it will be deemed to have given its consent. In no event, however,
shall the placement of signs conflict with the rights of any other tenant in
Renaissance Square. Notwithstanding the foregoing, the parties agree that
Tenant may not change the name of Renaissance Square. Tenant shall not
without Lessor's permission alter or modify any of the four exterior monuments
at Renaissance Square. Tenant may place an electric or permanent sign on the
Skybridge, and if so, any such sign shall remain as a part of the Premises
upon expiration of this Lease. Lessor reserves the right to place temporary
signs on the Skybridge from time to time; provided, that such signs shall not
interfere with signs placed by Tenant; and further provided that Lessor shall
first obtain Tenant's consent, which shall not be unreasonably withheld.
ARTICLE 25. QUIET ENJOYMENT. Lessor hereby warrants peaceful and quiet
possession of the Premises against all parties claiming adverse interest
thereto or under Lessor.
ARTICLE 26. SEVERABILITY. The invalidity of any provision or clause
herein contained shall not serve to render the balance of this Lease
ineffective or void and the same shall be construed as if such had not been
herein set forth.
ARTICLE 27. GOVERNING LAW. Any interpretation of this Lease, or any
other determination of the rights or liabilities of the parties hereto shall
be governed by the law of the State of Indiana.
ARTICLE 28. HEADINGS. The captions and table of contents are inserted
solely as a matter of convenience and for reference and shall not constitute
a part of this Lease, shall not affect its meaning or effect, nor shall they
define, limit, or describe the scope or intent of this Lease.
ARTICLE 29. ENTIRE AGREEMENT. This Lease shall constitute the entire
agreement of the parties hereto. This Lease cannot be changed, modified, or
discharged orally, but only by an agreement in writing, signed by the party
against whom enforcement of the change, modification or discharge is sought.
ARTICLE 30. TIME. Time is of the essence for all the provisions of this
Lease
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<PAGE>
ARTICLE 31. INCLUSIVE LANGUAGE. Use of inclusive language in this Lease
shall be construed to mean by example, and not to be limiting.
ARTICLE 32. NOTICES.
(A) Any notice which Lessor is required or desires to give Tenant shall
be deemed sufficiently given or rendered if it is in writing and is sent by
Registered, Certified or overnight mail, addressed to Tenant at: 1300 South
Clinton Street, Fort Wayne, Indiana, 46801, attention: Assistant Vice
President-Director Facilities; together with a copy to the attention of
Manager, Investment Section, Law Division, 200 East Berry Street, Fort Wayne,
Indiana, 46802.
(B) Any notice which Tenant desires or is required to give to Lessor
shall be deemed sufficiently given or rendered if it is in writing and is sent
by Registerd, Certified or overnight mail addressed to Lessor, P. O. Box
12925, 7500 West Jefferson Boulevard, Fort Wayne, Indiana, 46866, attention:
Mr. Richard D. Waterfield, with a copy to Howard L. Chapman, Esq., 215 East
Berry Street, Fort Wayne, Indiana, 46802.
(C) The proper address or person designated for receipt of any notices
may be changed by Tenant or by Lessor upon written notice to the other party
of such change in the manner above provided.
(D) Notices shall be deemed to have been received and effective three
(3) business days after mailing.
ARTICLE 33. ARBITRATION OF DISPUTES. In the event of any dispute,
controversy or claim between the parties involving this Lease, or the breach
thereof, or involving the Premises or the Parking Facilities, or involving the
rights and obligations of the parties arising from the tenancy created, either
before, during, or after termination of this Lease, the parties agree to
submit the dispute, at the election of either party, to binding arbitration.
Arbitration shall be the sole means of resolving such disputes.
(A) Arbitration shall be commenced by either party filing a written
demand with any appropriate office of the American Arbitration Association
(AAA). If the AAA no longer exists, the parties shall use any successor to
AAA and, if none, then such other organization as the parties may agree upon
and, in the absence of such agreement, then such organization as may be
selected by the Judge of the Circuit Court of Allen County, Indiana, upon
request of either party.
(B) The selection of the Arbitrator and the arbitration proceedings
shall be conducted in accordance with the Commercial Rules and Regulations of
the American Arbitration Association.
-25-
<PAGE>
(C) Any arbitration hearing shall be conducted in Allen County, Indiana.
(D) The Arbitrator shall be authorized to employ such experts as he may
deem necessary to assist with the arbitration, and the costs of such experts
shall be included as a part of the costs of arbitration.
(E) Each party shall bear its own costs in connection with any
arbitration proceedings, including its attorney fees; provided, that the costs
and fees of the Arbitrator shall be borne equally by the parties.
(F) At any arbitration hearing, the party that requested arbitration
shall carry the burden of proof and shall present its evidence first. The
Arbitrator may provide such remedy as he may deem appropriate; provided, that
the Arbitrator shall have no authority to award penalties or damages in the
nature of punitive damages, the right to claim such punitive damages being
expressly waived by both parties. The Arbitrator shall render a written
decision setting out the reasons for his conclusions.
(G) The decision of the Arbitrator shall be final, conclusive, and
binding on all parties. The parties shall faithfully observe, abide by and
perform the terms of any award by the Arbitrator. If any party shall
wrongfully refuse to submit any dispute to arbitration, or to comply with the
decision of the Arbitrator, the other party shall be entitled to recover its
costs, including reasonable attorney fees, in enforcing these arbitration
provisions.
ARTICLE 34. EMERGENCY REPAIRS. If an emergency situation occurs and
is in need of immediate remedy, either party may take appropriate steps to
make needed repairs. If it is later determined that the other party was
responsible for the cost of such repairs under the terms of this Lease, then
the responsible party shall reimburse the other party for such costs..
ARTICLE 35. SATELLITE DISH. Notwithstanding anything to the contrary
contained in the Lease, Tenant may erect a satellite dish or similar type
structure (item) on top of the Building provided the following: (1) it shall
provide and install such item at its sole cost and expense; (2) it shall
submit to the Lessor for its review and approval its plans and specifications
of such an item and the desired location and placement for the erection
thereof and shall install such item in a good and workmanlike manner and in
accordance with the reasonable directions of Lessor relative thereto; (3) it
shall have obtained all the necessary permits and approvals which may be
required from all lawful authorities (including those responsible for
overseeing historic structures) to erect and install such item. Tenant may
continue to keep and maintain said item on the Building and shall be
-26-
<PAGE>
responsible to pay for all costs associated with the maintenance and operation
of such item and shall insure against all damages and liabilities arising
therefrom throughout the term of this Lease. If Lessor has not notified
Tenant regarding its written approval or refusal to approve plans and
specifications as above provided within thirty (30) business days after
receipt from Tenant, they shall be deemed approved by Lessor.
Any such item erected by Tenant shall be removed by Tenant in a good and
workmanlike manner upon the expiration or sooner termination of this Lease.
Lessor further covenants to exercise best efforts and fully cooperate, at
Tenant's sole cost and expense, to secure the permits which may be required
for the item.
Such a dish shall not be placed on the elevator tower roof nor the
Penthouse roof, or installed in such a way as to adversely affect the
architectural appearance of the building. Tenant shall indemnify Landlord and
save it harmless against any loss or liability arising from or in connection
with such satellite dish. Upon removal, Tenant shall restore the Premises to
their prior condition.
ARTICLE 36. RESTRICTED ALTERATIONS. Tenant agrees that if it alters,
disturbs, removes, or damages those portions of the Premises itemized on
Exhibit F to this Lease, then upon termination of the Lease, such items will
be restored to their original condition by Tenant at its sole expense.
Tenant may make alterations to the First Floor and Garden Level, and
shall not be required to restore such areas to their original condition;
provided, that upon termination of the Lease Tenant shall, in any event, leave
the First Floor and Garden Level in such condition that they are rentable in
a manner consistent with a standard, high-quality office building in Fort
Wayne, Indiana, including rest rooms.
Provisions of this Article shall not be interpreted to apply to interior
space rented by the Lincoln Foundation in Renaissance Square.
ARTICLE 37. CONSENT. Whenever the consent or approval of Lessor and/or
Tenant is required under the terms of this Lease, Lessor and Tenant agree that
such consent or approval shall not be unreasonably withheld.
ARTICLE 38. VACATE. Tenant shall have the right to vacate the premises
at any time and to remove its property therefrom without affecting its right
to use and occupy the Premises or its liability for rental payments as
provided in this Lease, and such vacation or removal will not be deemed a
violation of any covenant or obligation under this Lease nor give rise of
itself to any right of action by Lessor thereunder, so long as Tenant
continues to pay rent and otherwise fulfill all of its obligations under this
Lease.
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<PAGE>
ARTICLE 39. HAZARDOUS OR TOXIC CHEMICAL, WASTE OR OTHER SUBSTANCES.
Lessor represents that, to the best of Lessor's knowledge, neither Lessor, nor
any affiliate, subsidiary, agent or employee of Lessor, has ever caused or
permitted any hazardous or toxic chemical, waste or other substance to be
placed, held, located or disposed on, under or at the Leased Premises or in
the building, and that no concentrations of asbestos are present in the
building or the Premises. For purposes of the foregoing sentence,
"concentrations of asbestos" means either material containing more than 1%
asbestos or the excess of (1) the standards issued by the United States
Environmental Protection Agency ("EPA"), or (2) the "action level" established
by the U.S. Department of Labor, Occupational Health and Safety Administration
("OSHA"), or (3) standards established by applicable state regulatory agency
rules.
Tenant covenants and represents that, to the best of Tenant's knowledge,
neither Tenant, nor any affiliate, subsidiary, agent or employee of Tenant,
has ever caused or permitted any hazardous or toxic chemical, waste or
substance to be placed, held, located or disposed of on, under or at the
Premises, and that no such substances (including asbestos) have been or will
be placed in the Premises or Parking Facilities by Tenant except as may be
used in conducting Tenant's normal business and maintenance, but in any event
in compliance with law. Tenant shall, in its occupation and use of the
Premises and the Parking Facilities, comply with all environmental laws,
orders, rules or regulations and will indemnify Lessor against any loss or
liability caused by Tenant's violation of same.
ARTICLE 40. PROVISIONS REGARDING PARKING FACILITIES. The parties make
the following agreements regarding the Parking Facilities:
(a) The term of the Lease for all Parking Facilities shall be the
same as the term of the Lease.
(b) The Lease for the surface parking lot at the southwest corner
of Barr and Jefferson Streets shall be subject to early termination at
Tenant's election. Any early termination shall occur on an anniversary
of the Effective Date. Tenant may terminate the Lease on that lot by
giving written notice to Lessor not less than sixty (60) days prior to
the first anniversary of the Effective Date, or at least sixty (60) days
prior to any subsequent anniversary date. In the event of such early
termination, Tenant's right of first refusal with respect to such lot (as
set forth in Article 23 of this Lease) shall also terminate.
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<PAGE>
(c) Tenant will pay all repair, maintenance, replacement and other
costs in connection with the four surface parking lots that are a part
of the Parking Facilities. Without limitation, Tenant shall be
responsible for maintenance of gates, plants, resurfacing, striping,
cleaning, snow removal and security. Tenant will make timely payment of
all taxes and assessments that may be imposed on such parking lots.
Subject to timely receipt of invoices from Lessor, Tenant shall pay any
penalties or charges imposed because of late payment of taxes or
assessments. Tenant will not be required to pave the surface lot at the
southwest corner of Barr and Jefferson Streets. If any governmental
authority shall subsequently require that lot to be paved, such paving
shall be at the cost of Lessor.
(i) Tenant will perform the aforesaid services and obligations
for all portions of the four surface parking lots and will honor
the rights of other persons who may be entitled to park on such
lots. This includes 9 spaces on the Museum Lot for benefit of the
Historical Museum. Tenant will receive no rentals for said
Historical Museum spaces.
(ii) At such time as any spaces described in (i) above become
available to Tenant, Tenant shall commence paying rent for same, as
per Exhibit A (the Lease Data Sheet), item 8, and Lessor shall be
relieved of further obligation to reimburse Tenant for the pro-rata
share of expenses allocable to such spaces.
(d) Town Center Garage. Lessor shall make a total of 230 parking
spaces in Town Center Garage available to Tenant. Town Center Garage is
located west of Renaissance Square, being on the Northwest corner of
Clinton and Wayne Streets in Fort Wayne, Indiana.
(i) 230 parking spaces allocated to Tenant shall be reserved to
Tenant as follows: Tenant shall have all of the sixth and seventh floors
of the Garage and approximately one-half of the fifth floor of the
Garage. The portion of the fifth floor allocated to Tenant shall, to the
extent practical, consist of contiguous spaces.
(ii) Tenant may at its cost identify the spaces reserved to it in
the Garage
(g) Diagrams of the four surface parking lots that are a part of the
Parking Facilities are attached as Exhibits H-1, H-2, H-3, and H-4, and made
a part of this Lease.
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<PAGE>
ARTICLE 41. RENEWAL OPTIONS.
(A) The Tenant shall, if it is not in default, have the option to extend
this Lease for a successive period of five (5) years by giving written notice
of its intent to renew to Lessor not less than nine (9) months prior to the
termination of the original Lease Term. If the option to renew is exercised,
all provisions and covenants of this Lease shall be in full force and effect
during such renewal term. At the beginning of such renewal term, the rent
shall be subject to adjustment as provided in Article 4(B) of this Lease. If
the renewal option is exercised, the rent for all Parking Facilities during
such renewal shall be increased to market rates prevailing for comparable
parking spaces at the time that the renewal period begins; provided, that in
no event shall any such rent during the renewal period be less than the rent
in effect at the time of the termination of the original Lease Term.
(B) The Tenant shall, if it has exercised its first five year renewal
option and if it is not in default, have a second option to extend this Lease
for a successive period of five (5) years by giving written notice of its
intent to renew to Lessor not less than nine (9) months prior to the
termination of the prior renewal period. If the option to renew is exercised,
all provisions and covenants of the Lease shall be in full force and effect
during such renewal term. At the beginning of such renewal term, the rent
shall be subject to adjustment as provided in Article 4(B) of this Lease. If
the renewal option is exercised, the rent for all parking facilities during
such renewal shall be increased to market rates prevailing for comparable
parking spaces at the time that the renewal period begins; provided, that in
no event shall any such rent during the renewal period be less than the rent
in effect at the time of termination of the prior renewal period.
ARTICLE 42. TENANT'S REMEDIES FOR LESSOR'S DEFAULT. In the event of
default by Lessor under any of the terms and conditions of this Lease to be
performed by Lessor, then Tenant may give Lessor written notice of such
default, and Lessor shall correct same, or commence reasonable efforts to
commence same, within thirty (30) days thereafter. If Lessor fails to correct
such a default, then the Arbitrator in any arbitration proceeding shall have
the authority to award Tenant any or all remedies that might be provided at
law or in equity; provided that default shall not be declared so long as
Lessor is making a reasonable effort to correct the problem. In addition to
all remedies provided by law and all remedies provided elsewhere in this
Lease, the Arbitrator shall have the authority to award Tenant the following
remedies:
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<PAGE>
1. The right to proportionate abatement of rent;
2. The right to cure such default and to deduct the costs of such
performance from rents subsequently payable under this Lease until
such costs have been fully reimbursed to Tenant; or
3. If the Arbitrator finds that Lessor is in default, has failed to
correct the default, and has not made or is not making a reasonable
effort to correct the default, then the Arbitrator may permit
Tenant to cancel and terminate this Lease by written notice to
Lessor.
ARTICLE 43. SHORT FORM LEASE. At either Tenant's or Lessor's election,
the parties agree to execute and record a Short Form of this Lease.
ARTICLE 44. BROKERS. Tenant warrants that it has had no dealings with
any real estate broker or agent in connection with the negotiation of this
Lease. Tenant knows of no real estate broker or agent who is or might be
entitled to a commission in connection with this Lease. Lessor shall be
responsible for any commissions or fees due to any broker with whom Lessor may
have had dealings.
ARTICLE 45. LESSOR'S AUTHORITY. Lessor covenants and represents that
it is the owner of the Premises and the four surface parking lots that are a
part of the Parking Facilities, and that Lessor has the capacity and authority
to enter into and execute this Lease. Lessor covenants and represents that
it is authorized to make this lease with respect to parking spaces in Town
Center Garage.
EXECUTED at Fort Wayne, Indiana, this day of _____________, 1994.
CBD INVESTMENT GROUP LINCOLN NATIONAL CORPORATION
By: Union Holding Co., Inc.
Partner
By: ____________________________ By:_______________________________________
Richard D. Waterfield, President P. Kenneth Dunsire, Executive Vice
LESSOR
TENANT
8655
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<PAGE>
EXHIBIT A-1
PREMISES
The Premises are located in Renaissance Square, an office building
located on the South half of the block located in downtown Fort Wayne,
Indiana, which block is bounded on the North by Berry Street, on the East by
Barr Street, on the South by Wayne Street, and on the West by Clinton Street.
The address of Renaissance Square is 200 East Berry Street, Fort Wayne,
Indiana, 46802. The Premises include the entire Renaissance Square building
(including the Skybridge) with the exception of portions occupied by other
tenants (approximately 16,450 square feet on the first floor, and 11,181
square feet on the Garden Level, leased to The Lincoln National Foundation,
Inc.). Renaissance Square is legally described as Lots 119 to 124 inclusive
in the Original Plat of Fort Wayne, Indiana.
THE PARKING FACILITIES
1. Surface Lot - North of and adjacent to Renaissance Square - 87 spaces.
Legal description: Lots 113 to 118 inclusive in the Original Plat of
Fort Wayne, Indiana.
2. Surface Lot - Southeast corner Clinton & Wayne - 101 spaces. Legal
description: Lots 173, 174, 175, and 176 in the Original Plat of Fort
Wayne, Indiana.
3. Surface Lot - Southwest corner Barr & Jefferson - 93 spaces. Legal
description: Lots 178, 179, and 180 in Hanna's Addition to Fort
Wayne, Indiana.
4. Surface Lot on Berry, East of Historical Museum - 73 spaces. Legal
description: Lots 64 and 65, Final Plat of County Addition, plus Lot
272 and part of Lot 1 in Final Plat of Samuel Hanna's First Addition,
Fort Wayne, Indiana (the "Museum Lot").
5. Town Center Garage - Northwest corner of Wayne and Clinton Streets -
230 spaces.
9227
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EXHIBIT C
CBD/LINCOLN NATIONAL LEASE
Renaissance Square
Property Management Responsibilities
Preventative Maintenance Check List
1. HVAC System:
Chillers
Boilers
Controls
Fan Coil Units
2. Elevators:
3. Electrical:
Switch gear
Each floor's electrical panels
4. Fire Protection System:
Pumps
Detectors
Electrical panels/Pull stations
5. Sewage Ejector
9236
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<PAGE>
EXHIBIT F
CBD/LINCOLN NATIONAL LEASE
RESTRICTED ALTERATIONS
1. Public restrooms located on the second, third and fourth floors on
either side of the elevators north of the Atrium.
2. The Atrium areas, including roof, openings in floor, railings, and
surrounding walls, and doors required by Code.
3. Exterior of Renaissance Square Building and Skybridge.
In the event Tenant removes any plumbing, wiring, Halon system, or other
facilities, they will be capped at the wall for easy access and re-attachment
at the time of Lease end. Tenant will maintain records, to be available to
Lessor, as to all such locations.
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
Year Ended December 31 1994 1993 1992
PRIMARY
<S> <C> <C> <C>
Average shares outstanding (assuming
conversion of Series A, E and F
Preferred Stock) ---------------------- 103,863,196 102,307,356 92,977,312
Net effect of dilutive stock
options (based on the treasury stock
method using average market price) ---- 506,601 777,468 506,356
Total shares outstanding ------------ 104,369,797 103,084,824 93,483,668
FULLY DILUTED
Average shares outstanding (assuming
conversion of Series A, E and F
Preferred Stock) ---------------------- 103,863,196 102,307,356 92,977,312
Net effect of dilutive stock options
(based on the treasury stock method
using the year-end market price,
if higher than average market price) -- 506,764 876,936 833,948
Total shares outstanding ------------ 104,369,960 103,184,292 93,811,260
DOLLAR INFORMATION (000's Omitted)
Income before cumulative effect
of accounting change ------------------ 349,898 415,283 359,171
Cumulative effect of accounting change - -- (96,431) --
Net Income -------------------------- 349,898 318,852 359,171
PER SHARE INFORMATION
Primary:
Income before cumulative
effect of accounting change --------- $3.35 $4.03 $3.84
Cumulative effect of
accounting change ------------------- -- (.94) --
Net Income ------------------------ $3.35 $3.09 $3.84
Fully Diluted:
Income before cumulative
effect of accounting change --------- $3.35 $4.03 $3.83
Cumulative effect of
accounting change ------------------- -- (.94) --
Net Income ------------------------ $3.35 $3.09 $3.83
Notes: 1. Earnings per share are computed based on the average number of
common shares outstanding during each year after assuming
conversion of the Series A, E and F Preferred Stock.
2. LNC did not include the dilutive impact of the stock option
program in the computation of the earnings per share information
appearing in the consolidated financial statements since it was
immaterial.
</TABLE>
3/8/95
ORGANIZATIONAL CHART OF THE
LINCOLN NATIONAL INSURANCE HOLDING COMPANY SYSTEM
All the members of the holding company system are corporations, with
the exception of American States Lloyds Insurance Company, Lincoln National
Mezzanine Fund, L.P., and Servicios de Evalucion de Riesgos, S. de R.L.
de C.V.
LINCOLN NATIONAL CORPORATION
Indiana - Holding Company
|
|
|--| AMERICAN STATES INSURANCE COMPANY
| 100% - Indiana - Property/Casualty
| |
| |-- American Economy Insurance Company
| | 100% - Indiana -Property/Casualty
| | |
| | American States Insurance
| | Company of Texas
| | 100% - Texas -
| | Property/Casualty
| |
| |-- American States Life Insurance
| | Company
| | 100% - Indiana - Life/Health
| |
| |-- American States Lloyds Insurance
| | Company Lloyds Plan - * - Texas
| | Property/Casualty
| |
| |-- American States Preferred Insurance
| | Company 100% - Indiana -
| | Property/Casualty
| |
| |-- City Insurance Agency, Inc.
| | 100% - Indiana
| |
| |-- Insurance Company of Illinois
| 100% - Illinois - Fire & Casualty
| Insurance
<PAGE>
LINCOLN NATIONAL CORPORATION
Indiana - Holding Company
|
|
|-- Corporate Benefit Systems Services Corporation
| 100% - Delaware - Insurance Agency
|
|
|-- EMPHESYS Financial Group, Inc.
| 29.3% - Delaware - Holding Company
| |
| |-- Employers Health Insurance Company
| | 89% - Wisconsin
| | |
| | Plan Management
| | Administrators, Inc.
| | 100% - Wisconsin - Third
| | Party Administrator
| |
| |-- Wisconsin Employers Group, Inc.
| 100% - Wisconsin - Holding
| Company
| |
| Employers Health
| Insurance Company
| 11% - Wisconsin
| |
| Plan Management
| Administrators, Inc.
| 100% - Wisconsin -
| Third Party
| Administrator
|
|
|-- Heritage Reinsurance, Ltd.
| 100% ** - Bermuda
|
|
|-- The Insurers' Fund, Inc. #
| 100% - Maryland - Inactive
|
|
|-- LNC Administrative Services Corporation
100% - Indiana - Third Party Administrator
<PAGE>
LINCOLN NATIONAL CORPORATION
Indiana - Holding Company
|
|
|-- The Richard Leahy Corporation
| 100% - Indiana - Insurance Agency
| |
| |--The Financial Alternative, Inc.
| | 100% - Utah- Insurance Agency
| |
| |-- Financial Alternative Resources,
| | Inc.- 100% - Kansas - Insurance
| | Agency
| |
| |-- Financial Choices, Inc.
| | 100% - Pennsylvania - Insurance
| | Agency
| |
| |-- Financial Investment Services, Inc.
| | (formerly Financial Services
| | Department, Inc.)
| | 100% - Indiana - Insurance Agency
| |
| |-- Financial Investments, Inc.
| | (formerly Insurance Alternatives,
| | Inc.)
| | 100% - Indiana - Insurance Agency
| |
| |-- The Financial Resources Department,
| | Inc. - 100% - Michigan -
| | Insurance Agency
| |
| |-- Investment Alternatives, Inc.
| | 100% - Pennsylvania - Insurance
| | Agency
| |-- The Investment Center, Inc.
| | 100% - Tennessee - Insurance
| | Agency
| |
| |-- The Investment Group, Inc.
| | 100% - New Jersey - Insurance
| | Agency
| |
| |-- Personal Financial Resources, Inc.
| | 100% - Arizona - Insurance Agency
| |
| |-- Personal Investment Services, Inc.
| 100% - Pennsylvania - Insurance
| Agency
|
|
|-- LincAm Properties, Inc.
| 50% - Delaware - Real Estate Investment
|
|
|-- Lincoln European Reinsurance Company
| 100% - Belgium
<PAGE>
LINCOLN NATIONAL CORPORATION
Indiana - Holding Company
|
|
|-- Lincoln Financial Group, Inc.
| (formerly Lincoln National Sales Corporation)
| 100% - Indiana - Insurance Agency
| |
| |-- LNC Equity Sales Corporation
| | 100% - Indiana - Broker-Dealer
| |
| |-- Corporate agencies: Lincoln
| |Financial Group, Inc. ("LFG")
| |has 32 subsidiaries of which LFG owns
| |from 80%-100% of the common stock (see
| |Attachment #1). These subsidiaries
| |serve as the corporate agency offices
| |for the marketing and servicing of
| |products of The Lincoln National Life
| |Insurance Company. Each subsidiary's
| |assets are less than 1% of the
| |total assets of the ultimate
| |controlling person.
| |
| |-- Professional Financial Planning,
| Inc. 100% - Indiana -
| Financial Planning Services
|
|
|-- Lincoln Life Improved Housing, Inc.
| 100% - Indiana
|
|-- Lincoln National (China) Inc.
| 100% - Indiana - China Representative Office
|
|
|-- Lincoln National Intermediaries, Inc.
| 100% - Indiana - Reinsurance Intermediary
|
|
|-- Lincoln National Investment Management Company
| 100% - Illinois - Mutual Fund Manager and
| Registered Investment Adviser
| |
| |-- Lincoln National Mezzanine
| Corporation - 100% - Indiana -
| General Partner for Mezzanine Financing
| Limited Partnership
| |
| Lincoln National Mezzanine Fund, L.P.
| 50% - Delaware - Mezzanine
| Financing Limited Partnership
<PAGE>
LINCOLN NATIONAL CORPORATION
Indiana - Holding Company
|
|
|-- THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
| 100% - Indiana
| |
| |-- First Penn-Pacific Life Insurance Company
| | 100% - Indiana
| |
| |-- Lincoln National Aggressive Growth Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Bond Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Capital Appreciation Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Equity-Income Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Growth Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Health & Casualty Insurance Company
| | 100% - Indiana
| |
| |-- Lincoln National International Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Life Reinsurance Company
| | | 100% - Indiana
| | |
| | |
| | |-- Special Pooled Risk
| | | Administrators, Inc.
| | 100% - New Jersey - Catastrophe
| | Reinsurance Pool Administrator
| |
| |-- Lincoln National Managed Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Money Market Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Putnam Master Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Social Awareness Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |-- Lincoln National Special Opportunities Fund, Inc.
| 100% - Maryland - Mutual Fund
<PAGE>
LINCOLN NATIONAL CORPORATION
Indiana - Holding Company
|
|
|
|-- Lincoln National Management Services, Inc.
| 100% - Indiana - Underwriting and Management Services
|
|-- Lincoln National Realty Corporation
| 100% - Indiana - Real Estate
|
|-- Lincoln National Reassurance Company
| 100% - Indiana - Life Insurance
|
|-- Lincoln National Reinsurance Company (Barbados) Limited
| 100% - Barbados
|
|-- Lincoln National Risk Management, Inc.
| 100% - Indiana - Risk Management Services
|
|-- Lincoln National Specialty Insurance Company
| 100% ** - Kansas - Property/Casualty
|
|-- Lincoln National Structured Settlement, Inc.
| 100% - New Jersey
|
|-- Lincoln National (UK) PLC
| 100% - England/Wales - Holding Company
| |
| |-- Allied Westminster & Company Limited
| | 100% - England/Wales - Sales Services
| |
| |-- Lincoln Assurance Limited
| | (formerly Cannon Assurance Limited)
| | 100% ** - England/Wales - Life Assurance
| |
| |-- Cannon Fund Managers Limited
| | 100% - England/Wales - Inactive
| |
| |-- Lincoln Fund Managers Limited
| (formerly Cannon Lincoln Fund Managers Limited)
| 100% - England/Wales - Unit Trust Management
|
LINCOLN NATIONAL CORPORATION
Indiana - Holding Company
|
|
|-- Lincoln National (UK) PLC
| 100% - England/Wales - Holding Company
| |
| |-- Lincoln Insurance Services Ltd.
| | (formerly Cannon Lincoln Insurance Services Ltd.)
| | 100% - Holding Company
| | |
| | |-- British National Life Sales Ltd.
| | | 100% - Inactive
| | |
| | |--BNL Trustees Limited
| | | 100% - England/Wales-Corporate Pension
| | | Fund
| | |
| | |-- Lincoln General Insurance Co. Ltd.
| | | (formerly Cannon General Ins Co. Ltd)
| | | 100% - Accident & Health Insurance
| | |
| | |-- Chapel Ash Financial Services Ltd.
| | | 100% - Direct Insurance Sales
| | |
| | |-- P.N. Kemp-Gee & Co. Ltd.
| | 100% - Inactive
| |
| |-- Lincoln Investment Management Limited
| | (formerly Cannon Lincoln Investment Management Ltd.)
| | 100% - England/Wales - Investment Management
| | Services
| | |
| | |-- CL CR Management Ltd.
| | 50% - England/Wales - Administrative
| | Services
| |
| |-- LN Management Limited
| | (formerly Cannon Lincoln Management Limited)
| | 100% - England/Wales - Administrative Services
| | |
| | |-- UK Mortgage Securities Limited
| | 100% - England/Wales - Inactive
| |
| |-- Lincoln National Training Services Limited
| | (formerly Cannon Lincoln Training Services Limited)
| | 100% - England/Wales - Training Company
| |
| |-- Lincoln Pension Trustees Limited
| | (formerly Cannon Pension Trustees Limited)
| | 100% - England/Wales - Corporate Pension Fund
| |
| |-- LN Securities Limited
| (formerly Cannon Securities Limited)
| 100% - England/Wales - Nominee Company
|
LINCOLN NATIONAL CORPORATION
Indiana - Holding Company
|
|
|--Lincoln National (UK) PLC
| 100% - England/Wales -Holding Company
| |
| |-- Culverin Property Services Limited
| | 100% - England/Wales - Property Development Services
| |
| |-- ILI Supplies Limited
| | 100% - England/Wales - Computer Leasing
| |
| |-- Liberty Life Assurance Company Limited
| | 100% - England/Wales - Life Assurance
| |
| |-- Liberty Life Pension Trustee Company Limited
| | 100% - England/Wales - Corporate Pension Fund
| |
| |-- Hansard Unit Trust Managers Limited
| | 100% - England/Wales - Unit Trust Management
| |
| |-- Liberty Press Limited
| | 100% - England/Wales - Printing Services
| |
| |-- Niloda Limited
| 100% - England/Wales - Investment Company
|
|
|-- Linsco Reinsurance Company
| (formerly Lincoln National Reinsurance Company)
| 100% - Indiana - Property/Casualty
|
|
|-- Lynch & Mayer, Inc.
| 100% - Indiana - Investment Adviser
| |
| |-- Lynch & Mayer Asia, Inc.
| | 100% - Delaware - Investment Management
| |
| |-- Lynch & Mayer Securities Corp.
| 100% - Delaware - Securities Broker
|
|
|-- Old Fort Insurance Company, Ltd.
| 100% ** - Bermuda
|
|-- Servicios de Evaluacion de Riesgos, S. de R.L. de C.V.
| 49% - Mexico (a partnership)
|
|
|-- Underwriters & Management Services, Inc.
| 100% - Indiana - Underwriting Services
|
|-- Vantage Global Advisors, Inc.
100% - Delaware - Investment Adviser
Footnotes:
* The funds contributed by the Underwriters were, and continue to be
subject to trust agreements between American States Insurance Company, the
grantor, and each Underwriter, as trustee.
** Except for director-qualifying shares
# Lincoln National Corporation has subscribed for and paid for 100 shares
of Common Stock (with a par value of $1.00 per share) at a price of $10 per
share, as part of the organizing of the fund. As such stock is further sold,
the ownership of voting securities by Lincoln National Corporation will
decline and fluctuate.
ATTACHMENT #1
LINCOLN FINANCIAL GROUP, INC.
CORPORATE AGENCY SUBSIDIARIES
1) Lincoln Financial Group, Inc. (AL)
2) Lincoln Southwest Financial Group, Inc. (Phoenix, AZ)
3) Lincoln Financial and Insurance Services of Northern California, Inc.
(formerly: Lincoln Financial and Insurance Services Corporation)
(Walnut Creek, CA)
3a) California Fringe Benefit and Insurance Marketing Corporation
DBA/California Fringe Benefit Company (Walnut Creek, CA)
4) Lincoln West Financial and Insurance Services Corporation (Orange, CA)
5) Southwest Financial and Insurance Services Corporation (Los Ang., CA)
6) Colorado-Lincoln Financial Group, Inc. (Denver, CO)
7) Lincoln National Sales Corporation of Connecticut (formerly: The
Lincoln Financial Group, Inc.) (Norwalk, CT)
8) Lincoln National Financial Services, Inc. (Lake Worth, FL)
9) Lincoln Financial Services, Inc. (Jacksonville, FL)
10) Lincoln National Sales Corporation of Georgia (Atlanta, GA)
11) CMP Financial Services, Inc. (Chicago, IL)
12) Lincoln National Sales Corporation of Indiana, Inc. (Indianapolis, IN)
13) Lincoln Financial Group of Northern Indiana, Inc. (Fort Wayne, IN)
14) The Financial Group, Inc. (Mission, KS)
14a) Financial Planning Partners, Ltd. (Mission, KS)
15) Lincoln National Midsouth Corporation (Louisville, KY)
16) The Lincoln National Financial Group of Louisiana, Inc. (Shreveport,
LA)
17) Benefits Marketing Group, Inc. (D.C. & Chevy Chase, MD)
18) Morgan Financial Group, Inc. (Baltimore, MD)
19) Lincoln National of New England Insurance Agency, Inc. (Worcester, MA)
20) Lincoln Financial Group of Michigan, Inc. (Troy, MI)
20a) Financial Consultants of Michigan, Inc. (Troy, MI)
21) Lincoln National Financial Group, Inc. (Minneapolis, MN)
22) Lincoln Financial Group of Missouri, Inc. (formerly: John J. Moore &
Associates, Inc.) (St. Louis, MO)
23) Financial Associates, Inc. (Omaha, NE)
24) Beardslee & Associates, Inc. (Clifton, NJ)
25) Lincoln Financial Group, Inc. (formerly Resources/Financial, Inc.)
(Albuquerque, NM)
26) Lincoln Financial Group/Carolinas, Inc. (Charlotte, NC)
27) Lincoln National Financial Planning, Inc. (Columbus, OH)
28) Lincoln Cascades, Inc. (Portland, OR)
29) Lincoln Financial Services, Inc. (Pittsburgh, PA)
30) Lincoln National Financial Group of Philadelphia, Inc.
(Philadelphia, PA)
30a) Cavalier Financial Planners, Inc. (Philadelphia, PA)
31) Lincoln Financial Group, Inc. (Salt Lake City, (UT)
32) Lincoln Financial Services of Virginia, Inc. (Norfolk, VA)
(DBA/Group Concepts Unlimited)
EXHIBIT 23
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statements on
Forms S-3 and S-8 (Securities and Exchange Commission Registration Numbers 33-
51415, 33-51721, 33-58113, 33-52667, 33-55379, 33-4711, 33-13445, 2-77594, and
2-77599) of Lincoln National Corporation and in the related Prospectuses of
our report dated February 8, 1995, with respect to the consolidated financial
statements and schedules of Lincoln National Corporation included in this
Annual Report (Form 10-K) for the year ended December 31, 1994.
Fort Wayne, Indiana
March 23, 1995
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0000059558
<NAME> Lincoln National Corporation
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-START> Jan-01-1994
<PERIOD-END> Dec-31-1994
<DEBT-HELD-FOR-SALE> 21,644,154,000
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 1,038,617,000
<MORTGAGE> 2,853,083,000
<REAL-ESTATE> 706,854,000
<TOTAL-INVEST> 26,971,101,000
<CASH> 1,041,583,000
<RECOVER-REINSURE> 2,207,727,000
<DEFERRED-ACQUISITION> 2,444,215,000
<TOTAL-ASSETS> 49,330,060,000
<POLICY-LOSSES> 11,216,312,000
<UNEARNED-PREMIUMS> 806,987,000
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 17,025,623,000
<NOTES-PAYABLE> 694,917,000
<COMMON> 555,382,000
0
311,333,000
<OTHER-SE> 2,175,345,000
<TOTAL-LIABILITY-AND-EQUITY> 49,330,060,000
4,893,791,000
<INVESTMENT-INCOME> 2,011,351,000
<INVESTMENT-GAINS> (130,820,000)
<OTHER-INCOME> 161,186,000
<BENEFITS> 4,849,243,000
<UNDERWRITING-AMORTIZATION> 598,337,000
<UNDERWRITING-OTHER> 1,110,969,000
<INCOME-PRETAX> 376,281,000
<INCOME-TAX> 26,383,000
<INCOME-CONTINUING> 349,898,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 349,898,000
<EPS-PRIMARY> 3.37
<EPS-DILUTED> 3.37
<RESERVE-OPEN> 2,584,600,000
<PROVISION-CURRENT> 1,340,600,000
<PROVISION-PRIOR> (78,200,000)
<PAYMENTS-CURRENT> 619,400,000
<PAYMENTS-PRIOR> 728,200,000
<RESERVE-CLOSE> 2,499,400,000
<CUMULATIVE-DEFICIENCY> 79,000,000
</TABLE>
SCHEDULE P - ANALYSIS OF LOSSES AND LOSS EXPENSES
NOTES TO SCHEDULE P
1. The parts of Schedule P:
Part 1 - detailed informtion on losses and loss expenses.
Part 2 - history of incurred losses and allocated expenses.
Part 3 - history of loss and allocated expense payments.
Part 4 - history of bulk and incurred but not reported reserves.
Part 5 - history of claims.
Part 6 - history of premiums earned.
2. Lines of business A through M, R and S are groupings of the lines
of business used on Page 14, the State page.
3. Reinsurance A,B,C, and D (Lines N to Q ) are:
Reinsurance A = nonproportional property (1988 and subsequent)
Reinsurance B = nonproportional liability (1988 and subsequent)
Reinsurance C =financial lines (1988 and subsequent)
Reinsurance D = old Schedule O Line 30 (1987 and prior)
<TABLE>
<CAPTION>
SCHEDULE P - PART 1 SUMMARY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 12232 4378 5093 289 194 1111 13769 0
1985 1219611 138008 1081603 875495 87615 65391 3140 24452 54066 904197 0
1986 1437420 138904 1298516 804717 65525 53833 837 24945 53872 846060 0
1987 1837984 350718 1487266 939894 145720 62185 9557 26548 56318 903120 0
1988 2064554 247166 1817388 1116593 36029 75986 3365 33397 72367 1225552 0
1989 1991101 54624 1936477 1291737 44826 80943 2714 34616 77314 1402454 0
1990 2181300 67507 2113793 1429844 104627 83297 7807 34525 78930 1479637 0
1991 2228837 79752 2149085 1293587 51450 62611 1451 32306 88386 1391683 0
1992 2154109 102238 2051871 1143067 69677 40627 985 27148 85661 1198693 0
1993 1978243 80319 1897924 853829 12320 19643 95 20644 84555 945612 0
1994 1872396 92874 1779522 571752 11117 6917 5 12016 72986 640533 0
TOTAL 0 0 0 10332747 633284 556526 30245 270791 725566 10951310 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 204429 57508 73843 10449 17270 3975 3443 0 0 3587 230640 0
1985 22469 1606 6956 0 2292 129 1120 0 0 798 31900 0
1986 18782 5206 5941 0 2294 344 1338 0 0 960 23765 0
1987 26193 1472 9739 0 4507 269 2049 0 0 1619 42366 0
1988 45458 7411 16732 1318 6978 994 2526 0 0 2340 64311 0
1989 74501 5938 27167 819 12417 493 6266 0 0 4766 117867 0
1990 113176 12523 46742 2321 17260 611 11026 0 0 7505 180254 0
1991 154847 8928 73676 2686 32373 417 19661 281 0 10693 278938 0
1992 190463 8889 101129 2511 37167 1200 22981 158 0 13387 352369 0
1993 259582 10560 143617 2132 38493 1607 29851 28 0 19355 476571 0
1994 365492 15863 315475 8340 37800 1505 44631 0 0 34067 771757 0
TOTAL 1475392 135904 821017 30576 208851 11544 144892 467 0 99077 2570738 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 210315 20325
1985 1028584 92490 936094 84.3 67.0 86.5 0 0 0.0 27819 4081
1986 941738 71911 869827 65.5 51.8 67.0 0 0 0.0 19517 4248
1987 1102437 156950 945487 60.0 44.8 63.6 0 0 0.0 34460 7906
1988 1338979 49114 1289865 64.9 19.9 71.0 0 0 0.0 53461 10850
1989 1575110 54791 1520319 79.1 100.3 78.5 0 0 0.0 94911 22956
1990 1787779 127889 1659890 82.0 189.4 78.5 0 0 0.0 145074 35180
1991 1735837 65215 1670622 77.9 81.8 77.7 0 0 0.0 216909 62029
1992 1634483 83418 1551065 75.9 81.6 75.6 0 0 0.0 280192 72177
1993 1448925 26742 1422183 73.2 33.3 74.9 0 0 0.0 390507 86064
1994 1449119 36831 1412288 77.4 39.7 79.4 0 0 0.0 656764 114993
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 2129929 440809
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2 SUMMARY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 487586 487344 511962 535477 552051 576527 609384 638516 722110 727179 5069 88663
1985 758354 829049 867506 870956 862992 862532 866890 876470 879271 881231 1960 4761
1986 0 900747 793011 800430 811200 811366 808529 813487 813730 814995 1265 1508
1987 0 0 1012021 931308 884029 882419 880283 884101 885633 887552 1919 3451
1988 0 0 0 1255850 1215709 1223885 1223729 1214740 1212888 1215158 2270 418
1989 0 0 0 0 1462554 1444578 1444062 1450409 1429271 1438241 8970 -12168
1990 0 0 0 0 0 1609189 1591118 1587918 1578082 1573455 -4627 -14463
1991 0 0 0 0 0 0 1664771 1639354 1593562 1571542 -22020 -67812
1992 0 0 0 0 0 0 0 1556085 1486128 1452016 -34112 -104069
1993 0 0 0 0 0 0 0 0 1390700 1318274 -72426 0
1994 0 0 0 0 0 0 0 0 0 1305237 0 0
TOTAL -111732 -99711
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3 SUMMARY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 174033 296587 365485 387073 430500 463850 468933 487468 500124 0 0
1985 376884 585997 678851 738272 782045 810589 827425 835037 843934 850130 0 0
1986 0 362770 569214 646813 709918 742164 764366 777823 785282 792190 0 0
1987 0 0 391524 577311 694014 760818 804449 823652 837382 846803 0 0
1988 0 0 0 531430 828523 973882 1061892 1103499 1132467 1153186 0 0
1989 0 0 0 0 616621 976210 1135986 1230150 1285179 1325139 0 0
1990 0 0 0 0 0 660059 1060666 1232367 1334786 1400709 0 0
1991 0 0 0 0 0 0 671258 1035286 1198342 1303295 0 0
1992 0 0 0 0 0 0 0 611508 949286 1113032 0 0
1993 0 0 0 0 0 0 0 0 577527 861057 0 0
1994 0 0 0 0 0 0 0 0 0 567547 0 0
TOTAL
</TABLE>
<TABLE>
<CAPTION >
SCHEDULE P - PART 4 SUMMARY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 69040 42140 19836 16767 10101 12013 22171 36162 78093 66838
1985 151905 38908 32825 24070 11292 4258 5797 7277 7022 8075
1986 0 314338 48448 15182 11210 12363 5200 8088 6319 7281
1987 0 0 350270 102590 40115 26827 16839 15213 11005 11788
1988 0 0 0 381478 118488 63064 36970 27002 22881 17939
1989 0 0 0 0 438887 168430 90298 67289 38887 32614
1990 0 0 0 0 0 489662 194704 105544 76526 55447
1991 0 0 0 0 0 0 541097 228581 124203 90371
1992 0 0 0 0 0 0 0 515529 180942 121442
1993 0 0 0 0 0 0 0 0 414845 171309
1994 0 0 0 0 0 0 0 0 0 351764
TOTAL
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1A HOMEOWNERS/FARMOWNERS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 218 3 33 0 3 9 257 0
1985 146207 12938 133269 101068 6713 3775 426 1129 6745 104449 59067
1986 148207 10296 137911 85608 2689 2949 26 876 6186 92028 50702
1987 179365 31872 147493 97313 10514 3333 810 976 6364 95686 60589
1988 202488 24754 177734 120118 1202 3966 28 1240 8755 131609 66318
1989 186277 2778 183499 142155 878 3603 -86 1429 9442 154408 76366
1990 199302 4117 195185 158760 5242 4239 172 1401 10888 168473 89470
1991 211353 3969 207384 166578 1100 5046 39 1030 12746 183231 84375
1992 212355 3183 209172 156859 967 3844 6 775 13173 172903 66287
1993 209900 6878 203022 152782 20 2216 1 741 14496 169473 67009
1994 206789 8475 198314 124897 0 1067 0 279 12951 138915 53641
TOTAL 0 0 0 1306356 29328 34071 1422 9879 101755 1411432 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 813 9 78 12 107 0 2 0 0 27 1006 13
1985 69 0 0 0 12 0 0 0 0 5 86 4
1986 517 201 11 0 44 14 0 0 0 28 385 8
1987 277 1 8 0 25 0 0 0 0 21 330 11
1988 915 18 16 0 64 1 1 0 0 59 1036 18
1989 1127 6 44 0 81 0 3 0 0 82 1331 31
1990 2978 1 106 0 216 0 8 0 0 228 3535 57
1991 4099 206 254 0 797 22 53 0 0 308 5283 121
1992 7576 218 576 0 1684 30 141 0 0 567 10296 226
1993 8987 11 3507 0 1214 0 480 0 0 936 15113 469
1994 24851 31 21083 0 1724 2 1113 0 0 3079 51817 2322
TOTAL 52209 702 25683 12 5968 69 1801 0 0 5340 90218 3280
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 870 136
1985 111673 7140 104533 76.4 55.2 78.4 0 0 0.0 69 17
1986 95344 2929 92415 64.3 28.4 67.0 0 0 0.0 327 58
1987 107343 11324 96019 59.8 35.5 65.1 0 0 0.0 284 46
1988 133895 1251 132644 66.1 5.1 74.6 0 0 0.0 913 123
1989 156540 797 155743 84.0 28.7 84.9 0 0 0.0 1165 166
1990 177425 5415 172010 89.0 131.5 88.1 0 0 0.0 3083 452
1991 189880 1369 188511 89.8 34.5 90.9 0 0 0.0 4147 1136
1992 184421 1221 183200 86.8 38.4 87.6 0 0 0.0 7934 2362
1993 184619 33 184586 88.0 0.5 90.9 0 0 0.0 12483 2630
1994 190766 33 190733 92.3 0.4 96.2 0 0 0.0 45903 5914
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 77178 13040
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 -1982 843 51 36 17 -277 -3087 0
1985 174382 4244 170138 156409 1186 7497 -6 2511 10600 173326 57786
1986 181252 7162 174090 146418 2018 6103 92 3149 9993 160404 55383
1987 252408 56837 195571 201687 43464 9117 3786 4053 10351 173905 77961
1988 261214 18944 242270 217425 2343 8997 92 4585 14950 238937 84154
1989 251280 3395 247885 225836 1941 8876 78 4875 15028 247721 85156
1990 272473 4731 267742 254714 8872 10671 623 5238 14608 270498 82073
1991 296004 7593 288411 224990 2042 7699 17 4766 14892 245522 68016
1992 293313 7733 285580 186795 974 5499 0 3874 14652 205972 60825
1993 295028 6302 288726 146980 617 2960 0 2518 16197 165520 59161
1994 284933 6008 278925 77699 778 995 0 1384 13903 91819 52172
TOTAL 0 0 0 1836971 65078 68465 4718 36970 134897 1970537 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 19066 6801 20 0 495 309 1 0 0 191 12663 30
1985 449 516 3 0 30 33 0 0 0 3 -64 10
1986 536 0 11 0 34 0 0 0 0 25 606 18
1987 556 78 27 0 36 5 2 0 0 25 563 20
1988 2762 182 46 0 182 12 3 0 0 125 2924 43
1989 6225 0 34 0 410 0 2 0 0 295 6966 92
1990 9697 1524 134 0 640 100 9 0 0 408 9264 180
1991 15308 680 610 0 2225 142 89 0 0 722 18132 417
1992 27046 403 4472 0 3310 73 541 0 0 1466 36359 1007
1993 57957 197 8333 0 5270 25 768 0 0 3105 75211 2714
1994 103591 927 30904 0 6836 62 2040 0 0 6272 148654 10536
TOTAL 243193 11308 44594 0 19468 761 3455 0 0 12637 311278 15067
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 12285 378
1985 174994 1730 173264 100.4 40.8 101.8 0 0 0.0 -64 0
1986 163123 2109 161014 90.0 29.4 92.5 0 0 0.0 547 59
1987 221802 47333 174469 87.9 83.3 89.2 0 0 0.0 505 58
1988 244491 2629 241862 93.6 13.9 99.8 0 0 0.0 2626 298
1989 256709 2020 254689 102.2 59.5 102.7 0 0 0.0 6259 707
1990 290884 11118 279766 106.8 235.0 104.5 0 0 0.0 8307 957
1991 266539 2881 263658 90.0 37.9 91.4 0 0 0.0 15238 2894
1992 243778 1449 242329 83.1 18.7 84.9 0 0 0.0 31115 5244
1993 241571 838 240733 81.9 13.3 83.4 0 0 0.0 66093 9118
1994 242240 1767 240473 85.0 29.4 86.2 0 0 0.0 133568 15086
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 276479 34799
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 540 120 107 3 1 18 542 0
1985 106041 2854 103187 80100 1875 5830 70 660 5017 89002 27822
1986 152762 5699 147063 97846 4931 8115 90 1076 5898 106838 27710
1987 211249 31536 179713 117318 7708 8087 464 1165 6608 123841 32560
1988 243931 35502 208429 137994 2114 9676 115 1085 6308 151749 39090
1989 231779 2843 228936 165557 6464 11236 417 1293 7556 177468 42284
1990 268927 9688 259239 184409 18389 12832 1420 1284 7196 184628 40826
1991 278804 21243 257561 161242 13215 9756 667 1533 7962 165078 37422
1992 259991 13759 246232 120128 8364 5548 417 1097 7127 124022 28629
1993 221041 6964 214077 73964 1732 2523 66 776 6617 81306 26194
1994 196567 3874 192693 35738 357 714 3 524 6842 42934 22588
TOTAL 0 0 0 1174836 65269 74424 3732 10494 67149 1247408 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 1744 47 785 6 68 -11 0 0 0 33 2588 28
1985 157 0 0 0 16 0 0 0 0 7 180 8
1986 1107 262 6 0 77 16 0 0 0 43 955 14
1987 845 0 102 3 60 0 5 0 0 41 1050 22
1988 1961 177 619 414 133 22 6 0 0 81 2187 37
1989 8338 119 587 278 556 15 15 0 0 392 9476 158
1990 14967 1581 1349 709 887 19 30 0 0 633 15557 1036
1991 23616 1914 4747 513 2682 19 477 169 0 1075 29982 519
1992 32291 1196 12549 479 3514 41 1508 84 0 1850 49912 626
1993 63855 1751 23214 407 5263 70 1722 28 0 3900 95698 1328
1994 72641 771 41076 1084 4771 27 2733 0 0 5214 124553 3885
TOTAL 221522 7818 85034 3893 18027 218 6496 281 0 13269 332138 7661
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 2476 112
1985 91128 1945 89183 85.9 68.1 86.4 0 0 0.0 157 23
1986 113094 5299 107795 74.0 93.0 73.3 0 0 0.0 851 104
1987 133054 8163 124891 63.0 25.9 69.5 0 0 0.0 944 106
1988 156780 2844 153936 64.3 8.0 73.9 0 0 0.0 1989 198
1989 194237 7294 186943 83.8 256.6 81.7 0 0 0.0 8528 948
1990 222302 22117 200185 82.7 228.3 77.2 0 0 0.0 14026 1531
1991 211553 16496 195057 75.9 77.7 75.7 0 0 0.0 25936 4046
1992 184513 10581 173932 71.0 76.9 70.6 0 0 0.0 43165 6747
1993 181059 4054 177005 81.9 58.2 82.7 0 0 0.0 84911 10787
1994 169730 2241 167489 86.3 57.8 86.9 0 0 0.0 111862 12691
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 294845 37293
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1D WORKERS' COMPENSATION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 3369 309 167 -84 9 206 3517 0
1985 118894 7234 111660 106987 8078 5507 42 3309 7226 111600 39422
1986 148620 16543 132077 118431 19117 4008 -809 2391 7659 111790 40622
1987 188202 24841 163361 126636 8895 5812 545 1961 7874 130882 52081
1988 232751 26962 205789 156993 1435 6800 79 2202 9014 171293 63689
1989 248591 1424 247167 171442 2413 7237 110 1900 9029 185185 66644
1990 273705 1939 271766 184601 5289 7612 489 2254 9229 195664 59005
1991 277049 2356 274693 158224 422 5786 5 1535 9620 173203 49578
1992 241105 2438 238667 101053 254 3459 6 612 7751 112003 36058
1993 225021 1856 223165 74366 206 1857 3 262 6502 82516 27422
1994 205194 1321 203873 25944 16 475 0 34 5566 31969 21673
TOTAL 0 0 0 1228046 46434 48720 386 16469 79676 1309622 0
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 50784 29247 4591 0 3051 1989 41 0 0 1344 28575 403
1985 5102 246 891 0 259 17 7 0 0 211 6207 72
1986 10881 4194 1957 0 575 285 5 0 0 306 9245 102
1987 11559 538 3474 0 546 36 11 0 0 441 15457 130
1988 14576 251 4856 0 670 17 18 0 0 562 20414 202
1989 22462 1578 6312 0 1094 107 22 0 0 862 29067 257
1990 33541 2149 8121 0 1744 146 38 0 0 1394 42543 482
1991 36479 678 13175 0 2159 153 379 0 0 1781 53142 844
1992 32672 84 20227 0 1859 21 838 0 0 1843 57334 1008
1993 43295 309 24238 0 2354 69 815 0 0 2338 72662 1583
1994 47776 2592 55157 0 2825 176 2054 0 0 3953 108997 4236
TOTAL 309127 41866 142999 0 17136 3016 4228 0 0 15035 443643 9319
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 26128 2447
1985 126190 8381 117809 106.1 115.9 105.5 0 0 0.0 5747 460
1986 143822 22786 121036 96.8 137.7 91.6 0 0 0.0 8644 601
1987 156352 10015 146337 83.1 40.3 89.6 0 0 0.0 14495 962
1988 193487 1781 191706 83.1 6.6 93.2 0 0 0.0 19181 1233
1989 218459 4208 214251 87.9 295.5 86.7 0 0 0.0 27196 1871
1990 246280 8075 238205 90.0 416.5 87.7 0 0 0.0 39513 3030
1991 227602 1258 226344 82.2 53.4 82.4 0 0 0.0 48976 4166
1992 169702 364 169338 70.4 14.9 71.0 0 0 0.0 52815 4519
1993 155766 588 155178 69.2 31.7 69.5 0 0 0.0 67224 5438
1994 143747 2784 140963 70.1 210.7 69.1 0 0 0.0 100341 8656
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 410260 33383
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1E COMMERCIAL MULTIPLE PERIL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 1744 47 785 6 68 -11 0 0 0 33 2588 28
1985 157 0 0 0 16 0 0 0 0 7 180 8
1986 1107 262 6 0 77 16 0 0 0 43 955 14
1987 845 0 102 3 60 0 5 0 0 41 1050 22
1988 1961 177 619 414 133 22 6 0 0 81 2187 37
1989 8338 119 587 278 556 15 15 0 0 392 9476 158
1990 14967 1581 1349 709 887 19 30 0 0 633 15557 1036
1991 23616 1914 4747 513 2682 19 477 169 0 1075 29982 519
1992 32291 1196 12549 479 3514 41 1508 84 0 1850 49912 626
1993 63855 1751 23214 407 5263 70 1722 28 0 3900 95698 1328
1993 406047 13207 392840 145244 37 5801 1 1541 14219 165226 46146
1994 383725 15810 367915 103364 1659 1728 0 673 14858 118291 37660
TOTAL 0 0 0 1554107 64176 182088 8421 27913 120612 1784210 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 5395 1020 2993 15 1840 395 1061 0 0 441 10300 150
1985 2791 2 1997 0 997 0 719 0 0 303 6805 72
1986 2602 3 2778 0 938 0 1000 0 0 340 7655 110
1987 7869 578 4660 0 2618 225 1641 0 0 718 16703 175
1988 10547 16 6934 0 3221 3 2035 0 0 936 23654 258
1989 19764 9 13909 0 6989 0 5007 0 0 2136 47796 425
1990 26534 3 20376 0 9400 0 7334 0 0 2984 66625 554
1991 45647 7 30866 0 18369 0 13301 0 0 4597 112773 831
1992 50352 11 35276 0 18670 0 14256 0 0 5055 123598 1178
1993 48608 7 45703 0 16790 0 17706 0 0 5750 134550 1981
1994 57708 151 75298 0 14806 10 24356 0 0 8602 180609 5468
TOTAL 277817 1807 240790 15 94638 633 88416 0 0 31862 731068 11202
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 7353 2947
1985 138648 8854 129794 75.8 65.5 76.7 0 0 0.0 4786 2019
1986 133232 7002 126230 51.0 62.8 50.4 0 0 0.0 5377 2278
1987 162124 12471 149653 48.4 31.2 50.7 0 0 0.0 11951 4752
1988 210062 10342 199720 54.3 26.8 57.3 0 0 0.0 17465 6189
1989 294779 7841 286938 77.5 162.8 76.4 0 0 0.0 33664 14132
1990 316169 7437 308732 74.3 154.1 73.4 0 0 0.0 46907 19718
1991 351839 3752 348087 78.3 55.9 78.7 0 0 0.0 76506 36267
1992 368497 13904 354593 85.5 138.4 84.3 0 0 0.0 85617 37981
1993 299819 45 299774 73.8 0.3 76.3 0 0 0.0 94304 40246
1994 300722 1819 298903 78.4 11.5 81.2 0 0 0.0 132855 47754
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 516785 214283
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 2 0 0 0 0 2 4 0
1985 91 3 88 21 -1 12 0 0 9 43 10
1986 111 5 106 199 3 24 1 0 8 227 10
1987 161 64 97 -6 0 -1 0 0 8 1 3
1988 103 37 66 1 3 9 1 0 -4 2 4
1989 59 0 59 167 11 91 3 0 -2 242 7
1990 75 0 75 0 0 0 0 0 0 0 5
1991 86 0 86 0 0 0 0 0 4 4 3
1992 79 0 79 -2 0 9 0 0 2 9 12
1993 79 0 79 9 0 9 0 0 10 28 7
1994 75 0 75 0 0 0 0 0 7 7 2
TOTAL 0 0 0 391 16 153 5 0 44 567 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 18 0 33 0 6 0 10 0 0 3 70 4
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 278 0 0 0 89 0 0 0 0 19 386 4
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 296 0 33 0 95 0 10 0 0 22 456 8
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1985 44 0 44 48.4 0.0 50.0 0 0 0.0 0 0
1986 232 4 228 209.0 80.0 215.1 0 0 0.0 0 0
1987 1 0 1 0.6 0.0 1.0 0 0 0.0 0 0
1988 78 4 74 75.7 10.8 112.1 0 0 0.0 51 19
1989 256 15 241 433.9 0.0 408.5 0 0 0.0 0 0
1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1991 4 0 4 4.7 0.0 4.7 0 0 0.0 0 0
1992 394 0 394 498.7 0.0 498.7 0 0 0.0 278 108
1993 30 0 30 38.0 0.0 38.0 0 0 0.0 0 0
1994 7 0 7 9.3 0.0 9.3 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 329 127
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1985 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1986 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1987 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1988 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1989 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1991 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1992 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1993 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1994 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 1 0 0 0 0 0 1 0
1985 3510 1076 2434 974 263 28 25 1 103 817 0
1986 4267 1131 3136 826 278 88 83 0 98 651 0
1987 4991 1230 3761 533 113 71 73 3 122 540 0
1988 4585 511 4074 777 151 95 96 3 177 802 0
1989 4417 23 4394 873 283 63 54 0 190 789 0
1990 4729 38 4691 733 64 58 51 0 207 883 0
1991 4596 39 4557 824 238 22 20 0 201 789 0
1992 4585 41 4544 634 0 4 0 0 203 841 0
1993 5157 79 5078 800 0 0 0 0 243 1043 0
1994 5509 92 5417 866 0 1 0 0 297 1164 0
TOTAL 0 0 0 7841 1390 430 402 7 1841 8320 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 56 0 0 0 0 0 0 0 0 0 56 4
1985 3 0 0 0 0 0 0 0 0 0 3 2
1986 36 0 0 0 0 0 0 0 0 0 36 3
1987 3 0 0 0 0 0 0 0 0 0 3 2
1988 24 0 0 0 0 0 0 0 0 0 24 3
1989 21 0 0 0 0 0 0 0 0 0 21 3
1990 0 0 0 0 0 0 0 0 0 0 0 1
1991 0 0 0 0 0 0 0 0 0 0 0 1
1992 29 0 0 0 9 0 0 0 0 2 40 3
1993 20 0 0 0 6 0 0 0 0 1 27 3
1994 315 0 49 0 100 0 16 0 0 25 505 15
TOTAL 507 0 49 0 115 0 16 0 0 28 715 40
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 56 0
1985 1109 288 821 31.6 26.8 33.7 0 0 0.0 3 0
1986 1049 361 688 24.6 31.9 21.9 0 0 0.0 36 0
1987 728 185 543 14.6 15.0 14.4 0 0 0.0 3 0
1988 1073 247 826 23.4 48.3 20.3 0 0 0.0 24 0
1989 1146 336 810 25.9 1460.9 18.4 0 0 0.0 21 0
1990 998 116 882 21.1 305.3 18.8 0 0 0.0 0 0
1991 1050 258 792 22.8 661.5 17.4 0 0 0.0 0 0
1992 883 0 883 19.3 0.0 19.4 0 0 0.0 29 11
1993 1071 0 1071 20.8 0.0 21.1 0 0 0.0 20 7
1994 1670 0 1670 30.3 0.0 30.8 0 0 0.0 364 141
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 556 159
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1H SECTION 1 OTHER LIABILITY - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 3141 379 2876 317 21 164 5485 0
1985 90573 13038 77535 49279 7998 13712 95 462 2906 57804 12369
1986 130554 21616 108938 51883 9293 11881 -91 354 3335 57897 11802
1987 172142 35043 137099 53697 11651 12414 459 317 3293 57294 13538
1988 198081 40870 157211 64107 11695 15407 572 404 3332 70579 14301
1989 159938 11275 148663 63662 12629 13936 215 260 2571 67325 13520
1990 156925 11824 145101 80270 28084 15269 3259 520 1681 65877 17352
1991 153783 14294 139489 53411 11640 7696 456 570 2294 51305 17173
1992 151722 28323 123399 44307 14042 3888 404 34 2355 36104 8147
1993 140350 15173 125177 27306 2080 1488 18 67 2522 29218 6977
1994 128471 21747 106724 6928 114 250 3 18 2996 10057 5052
TOTAL 0 0 0 497991 109605 98817 5707 3027 27449 508945 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 21219 3133 13673 84 4687 867 2138 0 0 1447 39080 1072
1985 2487 185 1203 0 714 56 356 0 0 241 4760 120
1986 2064 101 1131 0 598 29 328 0 0 212 4203 99
1987 4213 66 1387 0 1166 0 370 0 0 357 7427 140
1988 9331 3048 2313 93 2508 938 431 0 0 528 11032 148
1989 11323 1529 4421 0 3061 371 1124 0 0 925 18954 216
1990 15847 2345 13318 229 3950 345 3504 0 0 1699 35399 348
1991 16404 816 15837 604 5583 79 5006 109 0 2011 43233 709
1992 24629 3303 18967 565 7215 1033 5396 73 0 2324 53557 610
1993 23666 4733 28465 479 7000 1443 8027 0 0 2938 63441 592
1994 21511 4195 44306 467 5928 1224 11089 0 0 3934 80882 983
TOTAL 152694 23454 145021 2521 42410 6385 37769 182 0 16616 361968 5037
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 31675 7405
1985 70899 8334 62565 78.3 63.9 80.7 0 0 0.0 3505 1255
1986 71432 9333 62099 54.7 43.2 57.0 0 0 0.0 3094 1109
1987 76814 12093 64721 44.6 34.5 47.2 0 0 0.0 5534 1893
1988 97960 16347 81613 49.5 40.0 51.9 0 0 0.0 8503 2529
1989 101009 14728 86281 63.2 130.6 58.0 0 0 0.0 14215 4739
1990 135536 34262 101274 86.4 289.8 69.8 0 0 0.0 26591 8808
1991 108243 13702 94541 70.4 95.9 67.8 0 0 0.0 30821 12412
1992 109080 19420 89660 71.9 68.6 72.7 0 0 0.0 39728 13829
1993 101409 8753 92656 72.3 57.7 74.0 0 0 0.0 46919 16522
1994 96944 6003 90941 75.5 27.6 85.2 0 0 0.0 61155 19727
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 271740 90228
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 10 25 11 0 0 -1 -5 0
1985 347 347 0 2100 2040 24 8 0 3 79 140
1986 2215 2215 0 1709 1714 4 3 0 0 -4 147
1987 2018 1965 53 3093 3091 5 5 0 0 2 178
1988 3328 3274 54 3552 3370 -1 14 0 17 184 172
1989 4362 4303 59 3180 3198 -11 0 0 0 -29 146
1990 4400 4316 84 6699 6690 -8 0 0 2 3 190
1991 7991 7985 6 3949 553 -132 0 0 285 3549 173
1992 17116 6466 10650 1736 0 -131 0 0 56 1661 185
1993 6124 -976 7100 1720 0 0 0 0 34 1754 170
1994 2781 -747 3528 173 0 0 0 0 89 262 143
TOTAL 0 0 0 27921 20681 -239 30 0 485 7456 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 780 579 487 0 244 184 144 0 0 59 951 32
1985 8 0 54 0 3 0 16 0 0 4 85 5
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 75 75 0 0 0 0 0 0 0 0 0 4
1988 3 3 0 0 0 0 0 0 0 0 0 2
1989 206 206 0 0 0 0 0 0 0 0 0 5
1990 1557 1407 0 0 0 0 0 0 0 0 150 11
1991 4428 0 0 0 0 0 0 0 0 0 4428 14
1992 4043 0 17 0 27 0 8 0 0 5 4100 29
1993 2295 0 43 0 0 0 19 0 0 3 2360 60
1994 3925 0 0 0 0 0 0 0 0 0 3925 104
TOTAL 17320 2270 601 0 274 184 187 0 0 71 15999 266
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 688 263
1985 2213 2047 166 637.8 589.9 0.0 0 0 0.0 62 23
1986 1713 1717 -4 77.3 77.5 0.0 0 0 0.0 0 0
1987 3173 3172 1 157.2 161.4 1.9 0 0 0.0 0 0
1988 3570 3386 184 107.3 103.4 340.7 0 0 0.0 0 0
1989 3377 3404 -27 77.4 79.1 -45.8 0 0 0.0 0 0
1990 8251 8098 153 187.5 187.6 182.1 0 0 0.0 150 0
1991 8531 553 7978 106.8 6.9 132966.7 0 0 0.0 4428 0
1992 5761 0 5761 33.7 0.0 54.1 0 0 0.0 4060 40
1993 4115 0 4115 67.2 0.0 58.0 0 0 0.0 2338 22
1994 4187 0 4187 150.6 0.0 118.7 0 0 0.0 3925 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 15651 348
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLARY & THEFT)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 4272 351 530 15 491 147 4583 0
1993 88983 5212 83771 40889 526 807 2 413 2889 44057 0
1994 85868 5693 80175 31694 434 354 0 231 2856 34470 0
TOTAL 0 0 0 76855 1311 1691 17 1135 5892 83110 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 2843 45 65 12 173 0 4 0 0 84 3112 73
1993 1720 6 13 0 44 0 1 0 0 96 1868 64
1994 5680 49 3749 0 308 1 106 0 0 590 10383 534
TOTAL 10243 100 3827 12 525 1 111 0 0 770 15363 671
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 2851 261
1993 46461 533 45928 52.2 10.2 54.8 0 0 0.0 1727 141
1994 45335 485 44850 52.8 8.5 55.9 0 0 0.0 9380 1003
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 13958 1405
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1J AUTO PHYSICAL DAMAGE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 -213 415 171 16 2056 -43 -516 0
1993 258566 1571 256995 137054 574 1144 3 14119 19333 156954 145227
1994 244146 1127 243019 130809 630 879 0 8859 11847 142905 130422
TOTAL 0 0 0 267650 1619 2194 19 25034 31137 299343 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 1419 588 1056 404 2 0 8 4 0 19 1508 223
1993 399 22 506 29 3 0 2 0 0 48 907 83
1994 9395 37 7927 0 84 0 73 0 0 2052 19494 2371
TOTAL 11213 647 9489 433 89 0 83 4 0 2119 21909 2677
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 1483 25
1993 158490 628 157862 61.3 40.0 61.4 0 0 0.0 854 53
1994 163068 668 162400 66.8 59.3 66.8 0 0 0.0 17285 2209
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 19622 2287
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1K FIDELITY / SURETY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 -260 -113 184 20 672 -21 -4 0
1993 11226 767 10459 1018 0 160 0 159 212 1390 0
1994 11597 630 10967 498 0 56 0 15 47 601 0
TOTAL 0 0 0 1256 -113 400 20 846 238 1987 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 1375 0 0 0 438 0 0 0 0 97 1910 106
1993 528 0 0 0 169 0 0 0 0 36 733 58
1994 921 5 815 0 294 2 260 0 0 106 2389 104
TOTAL 2824 5 815 0 901 2 260 0 0 239 5032 268
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 1375 535
1993 2124 0 2124 18.9 0.0 20.3 0 0 0.0 528 205
1994 2995 6 2989 25.8 1.0 27.3 0 0 0.0 1731 658
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 3634 1398
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 10433 3745 218 4 97 144 7046 0
1993 93719 21184 72535 47856 6135 576 0 50 752 43049 0
1994 111231 28348 82883 33061 7127 390 0 0 626 26950 0
TOTAL 0 0 0 91350 17007 1184 4 147 1522 77045 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 21613 18006 14269 5397 3 0 9 0 0 37 12528 396
1993 5780 3463 7759 1217 3 0 37 0 0 65 8964 1502
1994 16773 7107 34164 6789 0 0 513 0 0 144 37698 2210
TOTAL 44166 28576 56192 13403 6 0 559 0 0 246 59190 4108
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 12479 49
1993 62831 10815 52016 67.0 51.1 71.7 0 0 0.0 8859 105
1994 85672 21024 64648 77.0 74.2 78.0 0 0 0.0 37041 657
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 58379 811
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1M INTERNATIONAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0
1992 146 0 146 -6 0 0 0 0 0 -6 0
1993 113 0 113 0 0 0 0 0 -2 -2 0
1994 2 0 2 0 0 0 0 0 -2 -2 0
TOTAL 0 0 0 -6 0 0 0 0 -4 -10 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1985 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1986 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1987 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1988 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1989 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1991 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1992 -5 0 -5 -3.4 0.0 -3.4 0 0 0.0 0 0
1993 -2 0 -2 -1.8 0.0 -1.8 0 0 0.0 0 0
1994 -2 0 -2 -100.0 0.0 -100.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1N REINSURANCE A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
1988 2922 75 2847 8 3 -5 0 0 -2 -2 0
1989 1745 118 1627 647 -520 -5 0 0 -5 1157 0
1990 779 127 652 -496 -35 -25 0 0 -9 -495 0
1991 550 151 399 -972 297 -46 28 0 -31 -1374 0
1992 24677 9643 15034 42204 21741 28 1 0 108 20598 0
1993 6386 2109 4277 3349 389 16 0 0 3 2979 0
1994 -258 426 -684 0 0 0 0 0 0 0 0
TOTAL 0 0 0 44740 21875 -37 29 0 64 22863 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
1988 41 1 0 0 0 0 0 0 0 0 40 0
1989 498 287 0 0 12 0 0 0 0 0 223 0
1990 176 5 0 0 10 0 0 0 0 0 181 0
1991 722 179 0 0 13 2 0 0 0 0 554 0
1992 2451 631 500 0 13 2 0 0 0 0 2331 0
1993 633 62 500 0 3 0 0 0 0 0 1074 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 4521 1165 1000 0 51 4 0 0 0 0 4403 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
1988 43 3 40 1.5 4.0 1.4 0 0 0.0 40 0
1989 1147 -232 1379 65.7 -196.6 84.8 0 0 0.0 211 12
1990 -345 -28 -317 -44.3 -22.0 -48.6 0 0 0.0 171 10
1991 -314 506 -820 -57.1 335.1 -205.5 0 0 0.0 543 11
1992 45302 22376 22926 183.6 232.0 152.5 0 0 0.0 2320 11
1993 4505 451 4054 70.5 21.4 94.8 0 0 0.0 1071 3
1994 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 4356 47
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1O REINSURANCE B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
1988 255 0 255 -1275 -157 -128 0 0 -19 -1265 0
1989 127 0 127 -1853 -177 -210 0 0 -25 -1911 0
1990 4366 0 4366 -2054 -244 -327 0 0 -39 -2176 0
1991 39 0 39 -4150 -716 -845 0 0 -99 -4378 0
1992 4000 44 3956 1846 0 -77 0 0 20 1789 0
1993 5914 -27 5941 340 0 0 0 0 3 343 0
1994 1109 46 1063 0 0 0 0 0 -21 -21 0
TOTAL 0 0 0 -7146 -1294 -1587 0 0 -180 -7619 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
1988 473 0 900 0 25 0 0 0 0 0 1398 0
1989 1191 12 900 0 31 0 0 0 0 0 2110 0
1990 1667 21 1400 0 31 0 0 0 0 0 3077 0
1991 972 0 1400 0 34 0 0 0 0 0 2406 0
1992 1203 0 1400 0 40 0 0 0 0 0 2643 0
1993 709 0 500 0 1 0 0 0 0 0 1210 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 6215 33 6500 0 162 0 0 0 0 0 12844 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
1988 -26 -157 131 -10.2 0.0 51.4 0 0 0.0 1373 25
1989 34 -165 199 26.8 0.0 156.7 0 0 0.0 2079 31
1990 677 -221 898 15.5 0.0 20.6 0 0 0.0 3046 31
1991 -2687 -716 -1971 -6889.7 0.0 -5053.8 0 0 0.0 2372 34
1992 4434 0 4434 110.9 0.0 112.1 0 0 0.0 2603 40
1993 1553 0 1553 26.3 0.0 26.1 0 0 0.0 1209 1
1994 -21 0 -21 -1.9 0.0 -2.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 12682 162
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1P REINSURANCE C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
1988 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
1988 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1989 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1991 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1992 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1993 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1994 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1Q REINSURANCE D
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 5175 2626 787 6 0 895 4225 0
1985 92775 36401 56374 85690 23745 6697 3 0 1519 70158 0
1986 35133 10388 24745 -473 109 -50 0 0 0 -632 0
1987 11444 126 11318 -471 -48 -46 0 0 2 -467 0
TOTAL 0 0 0 89921 26432 7388 9 0 2416 73284 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 102513 15575 51081 10320 6489 146 37 0 0 0 134079 0
1985 10705 278 2766 0 159 23 20 0 0 0 13349 0
1986 530 5 0 0 0 0 0 0 0 0 525 0
1987 447 0 0 0 0 0 0 0 0 0 447 0
TOTAL 114195 15858 53847 10320 6648 169 57 0 0 0 148400 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 127699 6380
1985 107553 24048 83505 115.9 66.1 148.1 0 0 0.0 13193 156
1986 7 115 -108 0.0 1.1 -0.4 0 0 0.0 525 0
1987 -65 -47 -18 -0.6 -37.3 -0.2 0 0 0.0 447 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 141864 6536
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 0 0 0 0 0 0 0 0
1985 4792 37 4755 1382 -562 973 152 4 782 3547 99
1986 8392 520 7872 1438 -929 977 27 20 945 4262 85
1987 11517 3003 8514 790 -1185 700 82 15 1184 3777 130
1988 12241 2498 9743 2314 -529 1177 145 17 1679 5554 323
1989 18433 7590 10843 1660 113 738 0 3 1096 3381 807
1990 15587 5646 9941 1329 166 401 0 12 1059 2623 552
1991 9588 60 9528 1401 0 785 0 5 1383 3569 424
1992 4969 21 4948 416 0 366 0 0 739 1521 163
1993 4587 19 4568 149 0 82 0 0 525 756 166
1994 4660 24 4636 80 0 9 0 0 127 216 111
TOTAL 0 0 0 10959 -2926 6208 406 76 9519 29206 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 759 300 80 0 230 96 19 0 0 41 733 11
1985 138 0 40 0 38 0 1 0 0 9 226 6
1986 51 0 46 0 13 0 3 0 0 3 116 7
1987 146 0 64 0 43 0 19 0 0 15 287 10
1988 514 0 69 0 153 0 20 0 0 41 797 10
1989 560 0 312 0 166 0 92 0 0 62 1192 21
1990 960 0 341 0 284 0 100 0 0 91 1776 15
1991 1244 0 1047 0 425 0 359 0 0 160 3235 37
1992 1428 0 791 0 489 0 270 0 0 156 3134 32
1993 1130 0 834 0 371 0 275 0 0 138 2748 25
1994 405 0 946 0 119 0 279 0 0 95 1844 26
TOTAL 7335 300 4570 0 2331 96 1437 0 0 811 16088 200
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 539 194
1985 3364 -410 3774 70.2 -1108.1 79.4 0 0 0.0 178 48
1986 3476 -902 4378 41.4 -173.5 55.6 0 0 0.0 97 19
1987 2961 -1103 4064 25.7 -36.7 47.7 0 0 0.0 210 77
1988 5965 -384 6349 48.7 -15.4 65.2 0 0 0.0 583 214
1989 4684 113 4571 25.4 1.5 42.2 0 0 0.0 872 320
1990 4568 166 4402 29.3 2.9 44.3 0 0 0.0 1301 475
1991 6806 0 6806 71.0 0.0 71.4 0 0 0.0 2291 944
1992 4652 0 4652 93.6 0.0 94.0 0 0 0.0 2219 915
1993 3503 0 3503 76.4 0.0 76.7 0 0 0.0 1964 784
1994 2062 0 2062 44.2 0.0 44.5 0 0 0.0 1351 493
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 11605 4483
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1985 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1986 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1987 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1988 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1989 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1991 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1992 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1993 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1994 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 1S FINANCIAL GUARANTY / MORTGAGE GUARANTY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
PRIOR 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1993 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1994 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2A HOMEOWNERS/FARMOWNERS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 16059 18962 15986 15770 15922 15996 16179 16207 19057 17289 -1768 1082
1985 100433 99936 98309 98155 97975 97808 97827 97728 97777 97785 8 57
1986 0 92150 87204 86457 86354 86012 85981 86110 86138 86200 62 90
1987 0 0 105090 92399 90727 90034 89598 89323 89625 89635 10 312
1988 0 0 0 134914 123490 122927 124523 123419 123530 123830 300 411
1989 0 0 0 0 166199 150780 148215 146940 146684 146220 -464 -720
1990 0 0 0 0 0 180535 164754 161466 161527 160894 -633 -572
1991 0 0 0 0 0 0 187912 178533 175867 175457 -410 -3076
1992 0 0 0 0 0 0 0 175222 169922 169461 -461 -5761
1993 0 0 0 0 0 0 0 0 168925 169154 229 0
1994 0 0 0 0 0 0 0 0 0 174703 0 0
TOTAL -3127 -8177
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 75034 77389 80323 78560 76914 77584 77361 77425 80486 89689 9203 12264
1985 161244 157584 162508 163855 163726 163221 162883 162890 162703 162660 -43 -230
1986 0 168621 150306 148696 151102 151806 151453 151275 151010 150995 -15 -280
1987 0 0 189794 164839 164199 164949 164858 164458 164754 164094 -660 -364
1988 0 0 0 237184 228667 229838 226859 226698 226073 226785 712 87
1989 0 0 0 0 243886 243308 241785 239085 238170 239364 1194 279
1990 0 0 0 0 0 273715 275730 269069 266510 264748 -1762 -4321
1991 0 0 0 0 0 0 269236 262149 251857 248041 -3816 -14108
1992 0 0 0 0 0 0 0 241094 233331 226213 -7118 -14881
1993 0 0 0 0 0 0 0 0 233747 221430 -12317 0
1994 0 0 0 0 0 0 0 0 0 220299 0 0
TOTAL -14622 -21554
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 57308 58727 59191 60467 59902 58547 58565 58363 60884 59777 -1107 1414
1985 72768 80532 86358 84509 84647 84633 84074 84229 84201 84159 -42 -70
1986 0 99692 96705 100830 102174 101018 101429 101707 102254 101852 -402 145
1987 0 0 119611 122148 120680 121965 120818 119552 119238 118243 -995 -1309
1988 0 0 0 147179 148230 152239 151934 149297 150088 147547 -2541 -1750
1989 0 0 0 0 174084 179222 181272 180186 176273 178995 2722 -1191
1990 0 0 0 0 0 199225 197296 198887 196453 192356 -4097 -6531
1991 0 0 0 0 0 0 206143 205380 197417 186022 -11395 -19358
1992 0 0 0 0 0 0 0 192760 181893 164955 -16938 -27805
1993 0 0 0 0 0 0 0 0 173217 166487 -6730 0
1994 0 0 0 0 0 0 0 0 0 155433 0 0
TOTAL -41525 -56455
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2D WORKERS' COMPENSATION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 109272 109066 110417 112870 114269 114681 115922 117828 120379 119073 -1306 1245
1985 94755 97360 103791 108174 108104 109156 110080 110248 110929 110372 -557 124
1986 0 113214 100646 105526 109078 109723 113016 113323 113286 113071 -215 -252
1987 0 0 133171 128384 125935 130810 133061 136571 137988 138022 34 1451
1988 0 0 0 155717 171291 173074 179700 180178 181077 182131 1054 1953
1989 0 0 0 0 182943 194205 200163 203591 201780 204361 2581 770
1990 0 0 0 0 0 211282 222814 225752 226718 227583 865 1831
1991 0 0 0 0 0 0 214236 221652 219670 214943 -4727 -6709
1992 0 0 0 0 0 0 0 178837 168465 159744 -8721 -19093
1993 0 0 0 0 0 0 0 0 161936 146338 -15598 0
1994 0 0 0 0 0 0 0 0 0 131446 0 0
TOTAL -26590 -18680
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2E COMMERCIAL MULTIPLE PERIL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 53315 61461 62603 67414 67864 68916 72344 77496 85077 76542 -8535 -954
1985 101357 104151 113776 120381 119759 118429 119460 123240 121745 122238 493 -1002
1986 0 135473 113681 108698 115672 117065 114053 117309 117132 118458 1326 1149
1987 0 0 174843 144688 136248 133604 131961 137012 137994 141017 3023 4005
1988 0 0 0 210338 187694 190070 185748 184810 185290 188346 3056 3536
1989 0 0 0 0 272659 265599 262111 274361 265797 271680 5883 -2681
1990 0 0 0 0 0 300511 293531 296552 293564 292532 -1032 -4020
1991 0 0 0 0 0 0 344073 345090 333933 327880 -6053 -17210
1992 0 0 0 0 0 0 0 345631 332688 333081 393 -12550
1993 0 0 0 0 0 0 0 0 300195 279806 -20389 0
1994 0 0 0 0 0 0 0 0 0 275443 0 0
TOTAL -21835 -29727
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 2995 2553 1779 1416 1207 1084 1157 1036 1033 934 -99 -102
1985 52 155 75 168 33 33 34 34 34 34 0 0
1986 0 216 4 4 100 86 219 219 219 219 0 0
1987 0 0 -1 -1 -1 -1 -1 2 -7 -7 0 -9
1988 0 0 0 0 0 67 67 69 72 74 2 5
1989 0 0 0 0 66 253 502 264 244 244 0 -20
1990 0 0 0 0 0 0 64 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 191 -7 373 380 182
1993 0 0 0 0 0 0 0 0 0 20 20 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 303 56
</TABLE>
<TABLE>
SCHEDULE P - PART 2F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 74 76 112 37 35 35 35 48 65 15 -50 -33
1985 688 729 720 720 720 720 720 717 718 717 -1 0
1986 0 578 551 554 554 554 554 592 590 590 0 -2
1987 0 0 561 436 425 425 426 421 422 421 -1 0
1988 0 0 0 851 826 760 759 673 636 649 13 -24
1989 0 0 0 0 730 630 621 632 634 620 -14 -12
1990 0 0 0 0 0 883 706 683 677 675 -2 -8
1991 0 0 0 0 0 0 742 589 594 589 -5 0
1992 0 0 0 0 0 0 0 942 699 677 -22 -265
1993 0 0 0 0 0 0 0 0 870 825 -45 0
1994 0 0 0 0 0 0 0 0 0 1346 0 0
TOTAL -127 -344
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2H SECTION 1 OTHER LIABILITY - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 110811 118199 128961 134999 127360 132951 141941 152467 152290 163280 10990 10813
1985 56593 50438 56096 53737 57874 53906 55233 57097 58511 59417 906 2320
1986 0 80230 55575 61838 62522 59688 57649 58758 58057 58551 494 -207
1987 0 0 70080 78626 67513 61784 63160 61470 60576 61070 494 -400
1988 0 0 0 86073 86471 79797 83850 82165 77542 77753 211 -4412
1989 0 0 0 0 89389 79267 90559 89821 86159 82785 -3374 -7036
1990 0 0 0 0 0 90887 92487 94717 95369 97895 2526 3178
1991 0 0 0 0 0 0 103393 92007 90177 90235 58 -1772
1992 0 0 0 0 0 0 0 73933 85472 84980 -492 11047
1993 0 0 0 0 0 0 0 0 88813 87198 -1615 0
1994 0 0 0 0 0 0 0 0 0 84012 0 0
TOTAL 10198 13531
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 10 0 0 0 0 0 0 1357 1505 1222 -283 -135
1985 476 0 190 0 0 0 0 147 234 159 -75 12
1986 0 954 305 0 0 97 -10 8 -4 -4 0 -12
1987 0 0 1785 12 12 12 12 1 1 1 0 0
1988 0 0 0 0 11 34 -4 167 167 167 0 0
1989 0 0 0 0 0 14 -1 147 -27 -27 0 -174
1990 0 0 0 0 0 126 -4 330 176 151 -25 -179
1991 0 0 0 0 0 0 0 12883 7327 7693 366 -5190
1992 0 0 0 0 0 0 0 10763 6499 5701 -798 -5062
1993 0 0 0 0 0 0 0 0 5377 4078 -1299 0
1994 0 0 0 0 0 0 0 0 0 4099 0 0
TOTAL -2114 -10740
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2N REINSURANCE A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
1988 0 0 0 0 0 6 5 -28 -19 41 60 69
1989 0 0 0 0 929 1093 1036 1140 1153 1384 231 244
1990 0 0 0 0 0 0 0 -133 -489 -307 182 -174
1991 0 0 0 0 0 0 0 -602 -1074 -789 285 -187
1992 0 0 0 0 0 0 0 27601 20506 22820 2314 -4781
1993 0 0 0 0 0 0 0 0 2749 4051 1302 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 4374 -4829
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2O REINSURANCE B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
1988 0 0 0 0 0 0 0 -842 -1261 149 1410 991
1989 0 0 0 0 0 0 0 873 -1478 224 1702 -649
1990 0 0 0 0 0 6172 0 1403 -2185 940 3125 -463
1991 0 0 0 0 0 0 0 -537 -4529 -1872 2657 -1335
1992 0 0 0 0 0 0 0 9867 1585 4413 2828 -5454
1993 0 0 0 0 0 0 0 0 262 1551 1289 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 13011 -6910
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2P REINSURANCE C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2Q REINSURANCE D
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 48746 30211 41223 54292 80314 95281 116642 127694 188430 191557 3127 63863
1985 4299 74406 84771 79994 68229 71171 74272 78513 80859 82038 1179 3525
1986 0 5214 4203 4010 0 0 0 -287 -101 -107 -6 180
1987 0 0 0 0 0 0 0 -186 -321 -20 301 166
TOTAL 4601 67734
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 4252 3164 2634 3099 2688 5677 2515 1739 1714 1565 -149 -174
1985 697 1567 1670 2401 3462 4870 3434 2826 2794 2983 189 157
1986 0 1491 1665 2601 2646 4324 3064 2795 3393 3430 37 635
1987 0 0 2230 2746 3684 6367 3775 2753 2654 2863 209 110
1988 0 0 0 2567 4426 9739 6438 4353 4500 4629 129 276
1989 0 0 0 0 3192 6654 5408 3337 3740 3414 -326 77
1990 0 0 0 0 0 3642 4190 3544 4293 3250 -1043 -294
1991 0 0 0 0 0 0 4507 3338 5109 5263 154 1925
1992 0 0 0 0 0 0 0 1928 3170 3759 589 1831
1993 0 0 0 0 0 0 0 0 2778 2841 63 0
1994 0 0 0 0 0 0 0 0 0 1840 0 0
TOTAL -148 4543
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 2S FINANCIAL GUARANTY / MORTGAGE GUARANTY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3A HOMEOWNERS/FARMOWNERS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 7549 10641 12216 14056 14365 15191 15213 16063 16311 253 114
1985 70768 91050 93727 95824 96715 96923 97311 97612 97665 97704 57136 1983
1986 0 61725 79506 81732 83858 84807 85180 85522 85629 85841 48478 588
1987 0 0 66392 82966 85855 87230 88116 88559 89001 89323 57931 3058
1988 0 0 0 89234 113947 116302 118940 120430 122194 122852 62759 649
1989 0 0 0 0 106859 137398 141267 143360 144236 144969 73157 5234
1990 0 0 0 0 0 113400 148002 153492 156059 157586 81919 7597
1991 0 0 0 0 0 0 125957 159931 167329 170483 77180 7014
1992 0 0 0 0 0 0 0 118115 151094 159731 60666 5575
1993 0 0 0 0 0 0 0 0 124303 154978 61978 4566
1994 0 0 0 0 0 0 0 0 0 125964 47715 3604
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 41366 63336 67780 72234 73828 75057 76005 80030 77219 1013 301
1985 64556 116643 140779 151564 158321 160093 161579 162377 162620 162728 51460 7957
1986 0 58028 110077 127078 140861 145397 148560 149719 149949 150410 47360 8516
1987 0 0 65172 103615 135821 150938 158408 161160 163038 163556 64739 12706
1988 0 0 0 85573 159413 195726 213152 219524 222724 223986 68179 14821
1989 0 0 0 0 90971 167497 204054 220367 228126 232691 71392 15196
1990 0 0 0 0 0 97913 186523 227719 247450 255891 69030 14752
1991 0 0 0 0 0 0 90118 172244 211454 230632 59854 12826
1992 0 0 0 0 0 0 0 82707 157035 191321 52959 11593
1993 0 0 0 0 0 0 0 0 81601 149324 51806 11119
1994 0 0 0 0 0 0 0 0 0 77916 33693 7943
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 25739 42956 49766 52399 55133 55931 56269 56698 57221 830 275
1985 23527 47247 63739 73108 78197 81144 83008 83830 83988 83985 24566 3355
1986 0 24372 51899 70242 84871 91278 96190 98563 99799 100938 23813 4058
1987 0 0 29315 60999 88069 104592 112367 115160 116360 117233 27789 5086
1988 0 0 0 37192 75777 109876 128506 138192 142993 145439 33011 6218
1989 0 0 0 0 42107 92119 126602 150989 162769 169911 35839 6833
1990 0 0 0 0 0 48312 107231 141941 164882 177433 33262 6562
1991 0 0 0 0 0 0 41264 97238 135960 157116 30640 6336
1992 0 0 0 0 0 0 0 39023 83864 116895 23316 4896
1993 0 0 0 0 0 0 0 0 35849 74689 20703 4161
1994 0 0 0 0 0 0 0 0 0 36092 15750 2954
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3D WORKERS' COMPENSATION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 30241 51221 63280 72546 77552 82935 86525 88533 91841 2216 531
1985 27559 61535 79201 88907 94626 98370 100907 102224 103092 104376 37149 2672
1986 0 26377 63984 81819 91113 95278 99309 101411 102646 104130 38085 3156
1987 0 0 29150 74319 96066 106184 113960 119096 120988 123008 48559 4426
1988 0 0 0 36058 97062 126153 143666 153460 158294 162278 58145 6029
1989 0 0 0 0 44020 103658 140081 160439 169739 176157 61425 6264
1990 0 0 0 0 0 52140 119287 157200 174542 186435 53263 5339
1991 0 0 0 0 0 0 50477 115234 144926 163582 44078 4822
1992 0 0 0 0 0 0 0 40039 80234 104254 32004 3381
1993 0 0 0 0 0 0 0 0 33989 76013 23575 2266
1994 0 0 0 0 0 0 0 0 0 26401 16020 1417
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3E COMMERCIAL MULTIPLE PERIL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 20443 34346 47292 54647 58420 60963 62828 64216 66685 155 162
1985 50087 74891 85459 92985 103546 106961 110735 113533 115450 115735 32719 5422
1986 0 49028 72414 77792 90045 97340 102487 107451 109710 111142 29206 5370
1987 0 0 53980 73770 87146 99355 110626 116857 121128 125033 34118 6875
1988 0 0 0 73177 107791 125827 143425 150500 158453 165627 40282 9234
1989 0 0 0 0 96368 147864 174270 194985 213394 226023 49031 12332
1990 0 0 0 0 0 94314 151256 180507 208200 228889 49126 12843
1991 0 0 0 0 0 0 118238 172345 195557 219705 45950 12723
1992 0 0 0 0 0 0 0 119425 176833 214538 38487 10607
1993 0 0 0 0 0 0 0 0 104766 151005 35354 8809
1994 0 0 0 0 0 0 0 0 0 103435 26072 6120
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 423 734 694 859 958 966 929 932 934 18 31
1985 0 1 24 33 33 33 34 34 34 34 4 6
1986 0 4 4 4 7 21 219 219 219 219 3 7
1987 0 0 -1 -1 -1 -1 -1 -7 -7 -7 1 0
1988 0 0 0 0 0 3 3 5 4 7 0 0
1989 0 0 0 0 0 15 57 243 244 244 7 0
1990 0 0 0 0 0 0 0 0 0 0 0 4
1991 0 0 0 0 0 0 0 0 0 0 0 3
1992 0 0 0 0 0 0 0 0 -7 7 8 5
1993 0 0 0 0 0 0 0 0 0 20 3 3
1994 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 32 35 35 35 35 35 -38 -42 -41 0 0
1985 471 697 720 720 720 720 720 714 714 714 0 0
1986 0 327 551 554 554 554 554 554 553 553 0 0
1987 0 0 329 422 425 425 426 415 418 418 0 0
1988 0 0 0 517 599 694 693 621 624 625 0 0
1989 0 0 0 0 446 618 618 579 598 600 0 0
1990 0 0 0 0 0 485 687 674 674 675 0 0
1991 0 0 0 0 0 0 405 545 588 589 0 0
1992 0 0 0 0 0 0 0 402 629 639 0 0
1993 0 0 0 0 0 0 0 0 670 800 0 0
1994 0 0 0 0 0 0 0 0 0 867 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3H SECTION 1 OTHER LIABILITY - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 33600 63730 80464 99814 109556 116112 118254 120326 125648 1911 1757
1985 6348 13996 22533 32531 38714 44991 49086 50871 52292 54898 9726 2680
1986 0 7099 17357 26816 37030 45279 49110 51886 53563 54561 9241 2570
1987 0 0 7718 16801 28897 39222 46195 48719 52542 54000 10677 2886
1988 0 0 0 8737 19915 34927 47287 56781 62335 67247 11415 3128
1989 0 0 0 0 10232 22548 37279 50685 56903 64753 10875 3190
1990 0 0 0 0 0 12627 22732 43882 54211 64196 14177 2619
1991 0 0 0 0 0 0 7914 20586 34568 49013 13860 2227
1992 0 0 0 0 0 0 0 8191 19277 33746 5458 2127
1993 0 0 0 0 0 0 0 0 9970 26695 4881 1502
1994 0 0 0 0 0 0 0 0 0 7062 3261 808
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 38 334 331 0 14
1985 0 0 0 0 0 0 0 -3 62 77 59 91
1986 0 0 4 0 0 -10 -10 -10 -4 -4 59 112
1987 0 0 1 12 12 12 12 1 1 1 89 95
1988 0 0 0 0 0 -4 -4 167 167 167 58 57
1989 0 0 0 0 0 -1 -1 -18 -27 -27 55 62
1990 0 0 0 0 0 -4 -4 21 0 0 73 107
1991 0 0 0 0 0 0 0 2527 2873 3264 55 106
1992 0 0 0 0 0 0 0 23 855 1605 37 128
1993 0 0 0 0 0 0 0 0 1564 1720 22 93
1994 0 0 0 0 0 0 0 0 0 173 11 31
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLARY & THEFT)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 17992 22427 0 0
1993 0 0 0 0 0 0 0 0 33329 41169 0 0
1994 0 0 0 0 0 0 0 0 0 31613 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3J AUTO PHYSICAL DAMAGE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 7737 7265 353 272
1993 0 0 0 0 0 0 0 0 129512 137621 135955 9145
1994 0 0 0 0 0 0 0 0 0 131058 120455 7594
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3K FIDELITY / SURETY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 1123 1140 0 0
1993 0 0 0 0 0 0 0 0 411 1178 0 0
1994 0 0 0 0 0 0 0 0 0 554 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 51395 58296 0 0
1993 0 0 0 0 0 0 0 0 19030 42296 0 0
1994 0 0 0 0 0 0 0 0 0 26325 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3M INTERNATIONAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 -6 -6 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3N REINSURANCE A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
1988 0 0 0 0 0 5 5 -122 -45 0 0 0
1989 0 0 0 0 140 964 946 754 950 1160 0 0
1990 0 0 0 0 0 0 0 -598 -637 -489 0 0
1991 0 0 0 0 0 0 0 -2068 -1389 -1343 0 0
1992 0 0 0 0 0 0 0 10521 18761 20489 0 0
1993 0 0 0 0 0 0 0 0 2321 2977 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3O REINSURANCE B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
1988 0 0 0 0 0 0 0 -1617 -1413 -1249 0 0
1989 0 0 0 0 0 0 0 -2378 -2031 -1885 0 0
1990 0 0 0 0 0 0 0 -3179 -2682 -2138 0 0
1991 0 0 0 0 0 0 0 -4916 -4945 -4278 0 0
1992 0 0 0 0 0 0 0 599 1117 1770 0 0
1993 0 0 0 0 0 0 0 0 143 340 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3P REINSURANCE C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3Q REINSURANCE D
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 12335 23859 39207 17465 36090 50963 46862 54198 57476 0 0
1985 1273 24076 34991 43272 51072 60641 62830 62711 66786 68691 0 0
1986 0 974 -37 0 0 0 0 -950 -647 -632 0 0
1987 0 0 0 0 0 0 0 -657 -562 -469 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 743 1345 1045 -839 -277 318 773 874 874 0 8
1985 280 406 665 1394 2126 2454 2663 2681 2741 2765 22 24
1986 0 299 622 926 1407 1877 2279 2677 2892 3316 34 49
1987 0 0 227 283 663 1197 2364 2414 2470 2592 60 58
1988 0 0 0 298 769 1464 3317 3693 3779 3873 74 75
1989 0 0 0 0 392 691 1318 1666 1878 2284 188 122
1990 0 0 0 0 0 179 825 1071 1195 1564 696 243
1991 0 0 0 0 0 0 553 786 1400 2187 868 202
1992 0 0 0 0 0 0 0 101 172 781 84 50
1993 0 0 0 0 0 0 0 0 69 231 99 45
1994 0 0 0 0 0 0 0 0 0 91 59 26
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 3S FINANCIAL GUARANTY / MORTGAGE GUARANTY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4A HOMEOWNERS/FARMOWNERS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 3064 2746 151 75 59 78 95 16 1856 69
1985 10935 2353 244 152 73 64 44 23 1 0
1986 0 12268 1630 324 209 91 97 42 14 12
1987 0 0 19637 2774 263 230 203 46 18 9
1988 0 0 0 21531 2405 654 780 223 60 18
1989 0 0 0 0 33127 3648 1104 179 77 47
1990 0 0 0 0 0 34711 4923 792 391 115
1991 0 0 0 0 0 0 29706 4701 731 306
1992 0 0 0 0 0 0 0 26630 2440 718
1993 0 0 0 0 0 0 0 0 16846 3987
1994 0 0 0 0 0 0 0 0 0 22197
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 4268 1550 34 6 1 0 5 0 15 21
1985 27223 1496 476 22 11 7 5 1 6 3
1986 0 41102 2094 520 43 49 36 7 13 11
1987 0 0 48612 7552 1643 1054 101 21 13 28
1988 0 0 0 51737 10571 3602 763 58 33 49
1989 0 0 0 0 46258 15874 5005 1326 80 36
1990 0 0 0 0 0 53278 19611 3289 740 144
1991 0 0 0 0 0 0 56431 12233 1467 699
1992 0 0 0 0 0 0 0 48577 6491 5011
1993 0 0 0 0 0 0 0 0 40230 9101
1994 0 0 0 0 0 0 0 0 0 32944
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 2217 713 19 1 0 6 2 0 2591 781
1985 11215 1763 1535 116 27 23 6 6 1 0
1986 0 32983 5633 2416 436 294 104 31 12 6
1987 0 0 37112 10400 4713 2378 389 163 77 105
1988 0 0 0 38916 12526 6938 1910 363 994 211
1989 0 0 0 0 45824 22413 8578 1134 682 323
1990 0 0 0 0 0 63143 24978 9737 1648 669
1991 0 0 0 0 0 0 73923 25023 9256 4542
1992 0 0 0 0 0 0 0 73000 19723 13494
1993 0 0 0 0 0 0 0 0 51302 24500
1994 0 0 0 0 0 0 0 0 0 42725
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4D WORKERS' COMPENSATION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 9685 1727 1364 1286 1537 1825 3402 4916 5954 4631
1985 28676 4325 1467 1510 365 595 921 1159 1200 898
1986 0 55103 5814 2416 1569 1330 2135 2693 2356 1964
1987 0 0 65296 13956 3764 3878 3585 4450 3705 3484
1988 0 0 0 67397 20984 11331 8829 6122 5044 4873
1989 0 0 0 0 75712 29108 19441 14789 7225 6334
1990 0 0 0 0 0 86055 38400 23450 18240 8159
1991 0 0 0 0 0 0 92736 42931 28746 13554
1992 0 0 0 0 0 0 0 86312 39160 21067
1993 0 0 0 0 0 0 0 0 80969 25054
1994 0 0 0 0 0 0 0 0 0 57210
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4E COMMERCIAL MULTIPLE PERIL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 13459 5769 1665 4375 1030 1625 1604 4931 6938 4038
1985 23751 5721 5259 5139 3890 1385 1112 2065 1822 2716
1986 0 59618 15173 2967 4882 5960 1668 3410 2693 3778
1987 0 0 83866 34298 13725 10503 6088 6095 5073 6303
1988 0 0 0 89237 37024 24133 13472 10918 11067 8972
1989 0 0 0 0 111411 56704 33285 30992 18144 18916
1990 0 0 0 0 0 130753 71188 45917 33478 27711
1991 0 0 0 0 0 0 153703 90415 56161 44166
1992 0 0 0 0 0 0 0 144405 70176 49533
1993 0 0 0 0 0 0 0 0 122241 63409
1994 0 0 0 0 0 0 0 0 0 99655
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 546 461 203 142 38 39 90 37 47 0
1985 44 73 29 87 0 0 0 0 0 0
1986 0 87 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 9 0 0
1988 0 0 0 0 0 34 42 42 45 44
1989 0 0 0 0 56 6 20 21 0 0
1990 0 0 0 0 0 0 47 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 189 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 19 1 7 0 0 0 0 0 38 0
1985 89 0 0 0 0 0 0 0 0 0
1986 0 140 0 0 0 0 0 0 0 0
1987 0 0 107 0 0 0 0 0 0 0
1988 0 0 0 147 6 6 6 0 0 0
1989 0 0 0 0 151 0 0 0 0 0
1990 0 0 0 0 0 250 0 8 0 0
1991 0 0 0 0 0 0 186 14 0 0
1992 0 0 0 0 0 0 0 349 0 0
1993 0 0 0 0 0 0 0 0 105 0
1994 0 0 0 0 0 0 0 0 0 66
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4H SECTION 1 OTHER LIABILITY - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 16561 6264 2774 2311 272 2708 3097 12462 9019 15727
1985 29994 5131 3963 3103 2873 1046 634 1096 1440 1559
1986 0 52673 11611 5731 3883 3955 1084 1885 1178 1460
1987 0 0 37878 27740 13547 7095 6042 4270 2056 1757
1988 0 0 0 51881 30674 12983 9530 8699 4558 2652
1989 0 0 0 0 57150 24726 18932 16076 11582 5545
1990 0 0 0 0 0 47092 25306 17219 18868 16593
1991 0 0 0 0 0 0 65291 39103 22580 20130
1992 0 0 0 0 0 0 0 46394 31486 23725
1993 0 0 0 0 0 0 0 0 58266 36011
1994 0 0 0 0 0 0 0 0 0 54928
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 10 0 0 0 0 0 0 333 891 630
1985 476 0 190 0 0 0 0 41 94 70
1986 0 926 271 0 0 61 0 3 0 0
1987 0 0 1716 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 88 0 0
1990 0 0 0 0 0 83 0 14 0 0
1991 0 0 0 0 0 0 0 30 0 0
1992 0 0 0 0 0 0 0 0 31 25
1993 0 0 0 0 0 0 0 0 54 62
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 11467 3404 56
1993 0 0 0 0 0 0 0 0 4412 14
1994 0 0 0 0 0 0 0 0 0 3855
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4J AUTO PHYSICAL DAMAGE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 14083 1978 652
1993 0 0 0 0 0 0 0 0 8721 479
1994 0 0 0 0 0 0 0 0 0 8000
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4K FIDELITY / SURETY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 1070 0 0
1993 0 0 0 0 0 0 0 0 1176 0
1994 0 0 0 0 0 0 0 0 0 1075
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 57201 15819 8881
1993 0 0 0 0 0 0 0 0 29286 6580
1994 0 0 0 0 0 0 0 0 0 27887
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4M INTERNATIONAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 116 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4N REINSURANCE A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 26 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 8524 0 500
1993 0 0 0 0 0 0 0 0 0 500
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4O REINSURANCE B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
1988 0 0 0 0 0 0 0 6 0 900
1989 0 0 0 0 0 0 0 1604 0 900
1990 0 0 0 0 0 6172 0 2419 0 1400
1991 0 0 0 0 0 0 0 3085 0 1400
1992 0 0 0 0 0 0 0 8521 0 1400
1993 0 0 0 0 0 0 0 0 0 500
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4P REINSURANCE C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4Q REINSURANCE D
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 14177 21603 13581 8524 7113 5404 13434 13364 46114 40798
1985 878 11052 18967 13881 3883 900 2971 2864 2415 2786
1986 0 2 2 4 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 3327 922 17 2 9 129 82 55 153 98
1985 367 477 50 40 173 189 30 14 44 41
1986 0 817 317 148 160 513 25 3 53 49
1987 0 0 1418 1522 912 1542 272 136 57 82
1988 0 0 0 1442 1410 2361 1407 303 219 89
1989 0 0 0 0 1912 3370 1910 955 763 404
1990 0 0 0 0 0 2401 1830 1022 1497 441
1991 0 0 0 0 0 0 2255 936 1679 1406
1992 0 0 0 0 0 0 0 963 1162 1060
1993 0 0 0 0 0 0 0 0 1238 1109
1994 0 0 0 0 0 0 0 0 0 1225
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 4S FINANCIAL GUARANTY / MORTGAGE GUARANTY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5A HOMEOWNERS/FARMOWNERS
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 556 759 868 915 947 975 982 992 1001
1985 49029 56509 56892 57028 57071 57094 57119 57127 57132 57136
1986 0 41347 47836 48242 48349 48416 48455 48464 48469 48478
1987 0 0 46424 57311 57647 57788 57894 57914 57923 57931
1988 0 0 0 53400 61138 61558 62647 62704 62739 62759
1989 0 0 0 0 54081 65023 72965 73069 73134 73157
1990 0 0 0 0 0 63447 81278 81731 81861 81919
1991 0 0 0 0 0 0 67986 76574 77053 77180
1992 0 0 0 0 0 0 0 52540 60318 60666
1993 0 0 0 0 0 0 0 0 55678 61978
1994 0 0 0 0 0 0 0 0 0 47715
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5A HOMEOWNERS/FARMOWNERS
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 316 152 90 77 50 27 35 29 13
1985 1892 419 161 64 46 24 7 8 8 4
1986 0 2014 398 149 88 38 17 18 16 8
1987 0 0 2586 413 182 85 34 21 16 11
1988 0 0 0 2722 419 210 130 70 37 18
1989 0 0 0 0 4063 485 153 104 64 31
1990 0 0 0 0 0 4406 441 229 120 57
1991 0 0 0 0 0 0 3785 577 233 121
1992 0 0 0 0 0 0 0 3369 506 226
1993 0 0 0 0 0 0 0 0 2427 469
1994 0 0 0 0 0 0 0 0 0 2322
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5A HOMEOWNERS/FARMOWNERS
SECTION 3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 377 530 630 671 701 894 919 932 945
1985 52040 58601 58891 58988 59022 59034 59049 59055 59064 59067
1986 0 44647 50260 50534 50605 50637 50668 50681 50694 50702
1987 0 0 50815 60131 60362 60453 60552 60565 60580 60589
1988 0 0 0 58418 64671 64993 66241 66275 66304 66318
1989 0 0 0 0 59454 68232 76197 76282 76349 76366
1990 0 0 0 0 0 72941 88957 89298 89428 89470
1991 0 0 0 0 0 0 77053 83878 84282 84375
1992 0 0 0 0 0 0 0 59799 66009 66287
1993 0 0 0 0 0 0 0 0 61538 67009
1994 0 0 0 0 0 0 0 0 0 53641
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 1538 2344 2692 2813 2869 2914 2930 2941 2951
1985 39961 48836 50505 51085 51284 51359 51427 51442 51447 51460
1986 0 35024 45026 46527 46988 47155 47314 47339 47349 47360
1987 0 0 49461 62117 63662 64144 64625 64688 64721 64739
1988 0 0 0 51786 63957 65547 67925 68072 68147 68179
1989 0 0 0 0 49098 61845 70656 71116 71288 71392
1990 0 0 0 0 0 48728 66717 68286 68786 69030
1991 0 0 0 0 0 0 47261 57771 59261 59854
1992 0 0 0 0 0 0 0 41280 51271 52959
1993 0 0 0 0 0 0 0 0 41908 51806
1994 0 0 0 0 0 0 0 0 0 33693
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 1496 565 348 152 96 65 46 39 30
1985 9845 2640 925 489 199 85 38 21 17 10
1986 0 9722 2445 1049 370 161 69 35 26 18
1987 0 0 14100 3312 1082 435 182 82 35 20
1988 0 0 0 14618 3257 1100 383 192 94 43
1989 0 0 0 0 13575 3274 1090 436 206 92
1990 0 0 0 0 0 13483 3192 1177 466 180
1991 0 0 0 0 0 0 11686 3053 1099 417
1992 0 0 0 0 0 0 0 11045 2811 1007
1993 0 0 0 0 0 0 0 0 10767 2714
1994 0 0 0 0 0 0 0 0 0 10536
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
SECTION 3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 496 1138 1345 1386 1420 2068 2084 2093 2104
1985 50416 56241 57426 57637 57679 57702 57776 57781 57783 57786
1986 0 46500 54589 55027 55142 55196 55362 55372 55380 55383
1987 0 0 72168 76796 77193 77344 77915 77935 77956 77961
1988 0 0 0 73608 80348 80921 84063 84114 84144 84154
1989 0 0 0 0 69291 77248 84909 85065 85127 85156
1990 0 0 0 0 0 67288 81286 81834 82026 82073
1991 0 0 0 0 0 0 61649 67312 67889 68016
1992 0 0 0 0 0 0 0 55002 60404 60825
1993 0 0 0 0 0 0 0 0 54359 59161
1994 0 0 0 0 0 0 0 0 0 52172
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 1108 1603 1788 1857 1901 1920 1930 1938 1941
1985 17686 23139 23998 24349 24463 24508 24556 24565 24566 24566
1986 0 16755 22471 23282 23576 23684 23781 23800 23809 23813
1987 0 0 20556 26349 27171 27461 27712 27757 27779 27789
1988 0 0 0 24628 30875 31698 32826 32933 32986 33011
1989 0 0 0 0 24374 30701 35258 35631 35794 35839
1990 0 0 0 0 0 22275 31553 32684 33145 33262
1991 0 0 0 0 0 0 22749 27941 30341 30640
1992 0 0 0 0 0 0 0 17650 22661 23316
1993 0 0 0 0 0 0 0 0 16966 20703
1994 0 0 0 0 0 0 0 0 0 15750
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 988 392 187 93 57 43 48 34 28
1985 3903 1416 589 242 110 56 20 12 8 8
1986 0 4274 1386 593 222 108 45 26 18 14
1987 0 0 4990 1501 526 233 98 49 32 22
1988 0 0 0 5402 1412 573 263 110 64 37
1989 0 0 0 0 5501 1519 682 338 137 158
1990 0 0 0 0 0 5459 2898 2705 1161 1036
1991 0 0 0 0 0 0 8998 4471 888 519
1992 0 0 0 0 0 0 0 4689 1409 626
1993 0 0 0 0 0 0 0 0 3840 1328
1994 0 0 0 0 0 0 0 0 0 3885
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 324 437 491 507 531 1427 1449 1461 1471
1985 23153 27258 27653 27766 27793 27805 27809 27815 27817 27822
1986 0 22912 27241 27559 27637 27666 27688 27694 27701 27710
1987 0 0 28226 32066 32265 32370 32526 32539 32551 32560
1988 0 0 0 33702 37655 37993 39012 39041 39070 39090
1989 0 0 0 0 33532 37805 41998 42130 42160 42284
1990 0 0 0 0 0 30884 39927 41021 40245 40826
1991 0 0 0 0 0 0 36213 38168 36732 37422
1992 0 0 0 0 0 0 0 25527 27729 28629
1993 0 0 0 0 0 0 0 0 23788 26194
1994 0 0 0 0 0 0 0 0 0 22588
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5D WORKERS' COMPENSATION
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 1943 3699 4492 4849 5149 5350 5457 5544 5603
1985 24649 33684 35659 36420 36747 36902 37037 37097 37117 37149
1986 0 24365 34688 36737 37394 37694 37921 38009 38047 38085
1987 0 0 32608 45345 47104 47734 48276 48434 48508 48559
1988 0 0 0 40963 53390 55153 57577 57906 58060 58145
1989 0 0 0 0 39869 51942 60133 60920 61254 61425
1990 0 0 0 0 0 34507 50355 52201 52930 53263
1991 0 0 0 0 0 0 31676 41592 43431 44078
1992 0 0 0 0 0 0 0 23357 30751 32004
1993 0 0 0 0 0 0 0 0 17824 23575
1994 0 0 0 0 0 0 0 0 0 16020
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5D WORKERS' COMPENSATION
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 2718 1445 1217 874 732 581 480 428 403
1985 7251 2520 1180 711 359 249 165 111 98 72
1986 0 6752 2791 1251 597 379 264 172 140 102
1987 0 0 9259 2998 1126 666 399 241 178 130
1988 0 0 0 10017 2941 1436 758 407 278 202
1989 0 0 0 0 9491 3226 1507 743 424 257
1990 0 0 0 0 0 9579 3335 1526 859 482
1991 0 0 0 0 0 0 8831 3179 1514 844
1992 0 0 0 0 0 0 0 6320 2206 1008
1993 0 0 0 0 0 0 0 0 4872 1583
1994 0 0 0 0 0 0 0 0 0 4236
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5D WORKERS' COMPENSATION
SECTION 3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 306 995 1334 1472 1612 3534 3611 3663 3733
1985 33004 38232 39183 39357 39396 39447 39383 39398 39407 39422
1986 0 32393 40057 40575 40698 40770 40590 40607 40615 40622
1987 0 0 44070 51674 51838 52014 52029 52054 52070 52081
1988 0 0 0 54566 61586 62042 63599 63640 63666 63689
1989 0 0 0 0 52629 60175 66396 66565 66604 66644
1990 0 0 0 0 0 47009 58548 58881 58974 59005
1991 0 0 0 0 0 0 43389 49171 49476 49578
1992 0 0 0 0 0 0 0 31819 35813 36058
1993 0 0 0 0 0 0 0 0 24213 27422
1994 0 0 0 0 0 0 0 0 0 21673
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5E COMMERCIAL MULTIPLE PERIL
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 878 1305 1591 1720 1807 1861 1881 1906 1931
1985 24497 31126 31843 32256 32441 32550 32645 32682 32705 32719
1986 0 21370 27630 28354 28697 28901 29071 29131 29177 29206
1987 0 0 24201 32352 33189 33538 33863 33996 34068 34118
1988 0 0 0 29036 37394 38375 39853 40045 40189 40282
1989 0 0 0 0 31892 41972 48077 48530 48837 49031
1990 0 0 0 0 0 33070 47106 48266 48828 49126
1991 0 0 0 0 0 0 35181 44211 45401 45950
1992 0 0 0 0 0 0 0 29800 37501 38487
1993 0 0 0 0 0 0 0 0 28830 35354
1994 0 0 0 0 0 0 0 0 0 26072
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5E COMMERCIAL MULTIPLE PERIL
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 1217 766 411 255 169 177 268 162 150
1985 3581 1599 1244 506 284 166 116 112 70 72
1986 0 3658 1339 767 494 294 175 156 106 110
1987 0 0 4861 1637 782 483 311 208 181 175
1988 0 0 0 5842 1728 925 547 377 303 258
1989 0 0 0 0 6603 2086 1137 761 516 425
1990 0 0 0 0 0 6787 2281 1294 828 554
1991 0 0 0 0 0 0 6799 2524 1436 831
1992 0 0 0 0 0 0 0 5722 2253 1178
1993 0 0 0 0 0 0 0 0 5375 1981
1994 0 0 0 0 0 0 0 0 0 5468
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5E COMMERCIAL MULTIPLE PERIL
SECTION 3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 612 927 1142 1240 1304 1556 1740 1749 1833
1985 30233 36367 37237 37616 37749 37828 37949 38032 38052 38108
1986 0 27271 32910 33614 33914 34084 34274 34380 34447 34532
1987 0 0 32272 39063 39677 39981 40379 40506 40635 40769
1988 0 0 0 39436 46362 47194 49153 49352 49548 49729
1989 0 0 0 0 44592 53426 59747 60248 60577 60890
1990 0 0 0 0 0 46392 60469 61586 62103 62451
1991 0 0 0 0 0 0 49586 57785 58857 59371
1992 0 0 0 0 0 0 0 42003 49109 49970
1993 0 0 0 0 0 0 0 0 40100 46146
1994 0 0 0 0 0 0 0 0 0 37660
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
SECTION 1A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 4 16 24 27 29 29 29 29 29
1985 2 2 4 4 4 4 4 4 4 4
1986 0 0 0 0 0 0 3 3 3 3
1987 0 0 1 1 1 1 1 1 1 1
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 3 3 7 7 7
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 4 5 8
1993 0 0 0 0 0 0 0 0 0 3
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
SECTION 2A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 34 15 7 5 3 3 0 0 0
1985 1 4 1 2 0 0 0 0 0 0
1986 0 4 0 0 4 3 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 3 3 4 4 4
1989 0 0 0 0 4 3 4 0 0 0
1990 0 0 0 0 0 0 3 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 5 0 4
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
SECTION 3A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 9 15 18 21 21 55 55 55 55
1985 3 7 7 9 9 9 8 8 8 10
1986 0 9 9 9 12 12 10 10 10 10
1987 0 0 1 1 1 1 1 1 1 3
1988 0 0 0 0 0 3 3 3 3 4
1989 0 0 0 0 3 5 6 6 6 7
1990 0 0 0 0 0 0 3 5 5 5
1991 0 0 0 0 0 0 3 3 3 3
1992 0 0 0 0 0 0 0 7 7 12
1993 0 0 0 0 0 0 0 0 4 7
1994 0 0 0 0 0 0 0 0 0 2
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
SECTION 1B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
SECTION 2B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
SECTION 3B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 1A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 1368 2285 2694 3007 3169 3252 3299 3503 3701
1985 6173 8520 9043 9350 9503 9589 9643 9664 9694 9726
1986 0 5593 8130 8605 8872 9034 9140 9185 9221 9241
1987 0 0 7085 9632 10159 10358 10518 10592 10642 10677
1988 0 0 0 7504 10091 10515 11070 11261 11355 11415
1989 0 0 0 0 6833 8792 10237 10600 10788 10875
1990 0 0 0 0 0 5550 13035 13775 14064 14177
1991 0 0 0 0 0 0 11440 12861 13635 13860
1992 0 0 0 0 0 0 0 3562 5171 5458
1993 0 0 0 0 0 0 0 0 3583 4881
1994 0 0 0 0 0 0 0 0 0 3261
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 2A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 2519 1373 1005 661 500 462 803 915 1072
1985 1777 1260 790 472 278 162 76 98 133 120
1986 0 1543 983 733 473 240 133 104 99 99
1987 0 0 1658 979 564 336 207 178 147 140
1988 0 0 0 1789 858 585 477 353 181 148
1989 0 0 0 0 1476 757 788 753 385 216
1990 0 0 0 0 0 1150 1717 1968 660 348
1991 0 0 0 0 0 0 2257 1498 624 709
1992 0 0 0 0 0 0 0 941 649 610
1993 0 0 0 0 0 0 0 0 1110 592
1994 0 0 0 0 0 0 0 0 0 983
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 3A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 1080 1721 2164 2457 2713 4839 5368 6031 6879
1985 8438 11126 11732 11998 12129 12208 12134 11189 12291 12369
1986 0 7769 10591 11212 11482 11594 11591 11640 11722 11802
1987 0 0 9716 12464 12980 13186 13262 13345 13433 13538
1988 0 0 0 10461 13042 13561 14009 14099 14188 14301
1989 0 0 0 0 9587 11749 13051 13340 13380 13520
1990 0 0 0 0 0 7889 17047 17838 17366 17352
1991 0 0 0 0 0 0 15285 16369 16474 17173
1992 0 0 0 0 0 0 0 5612 7245 8147
1993 0 0 0 0 0 0 0 0 5479 6977
1994 0 0 0 0 0 0 0 0 0 5052
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 1B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 2 6 6 6 6 6 6 6 6
1985 5 35 50 52 55 56 56 56 56 59
1986 0 15 43 51 58 59 59 59 59 59
1987 0 0 30 65 75 80 83 85 86 89
1988 0 0 0 20 44 49 52 54 54 58
1989 0 0 0 0 12 40 46 50 51 55
1990 0 0 0 0 0 21 56 64 67 73
1991 0 0 0 0 0 0 15 41 50 55
1992 0 0 0 0 0 0 0 12 21 37
1993 0 0 0 0 0 0 0 0 8 22
1994 0 0 0 0 0 0 0 0 0 11
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 2B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 5 0 0 0 0 0 0 0 32
1985 74 24 6 3 3 0 0 0 0 5
1986 0 76 25 9 0 0 0 0 0 0
1987 0 0 107 47 23 10 7 5 5 4
1988 0 0 0 84 19 10 7 7 7 2
1989 0 0 0 0 83 24 13 11 10 5
1990 0 0 0 0 0 97 29 20 18 11
1991 0 0 0 0 0 0 100 39 29 14
1992 0 0 0 0 0 0 0 106 62 29
1993 0 0 0 0 0 0 0 0 111 60
1994 0 0 0 0 0 0 0 0 0 104
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 3B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 2 5 5 16 16 16 17 17 17
1985 114 134 136 136 138 138 138 140 140 140
1986 0 129 138 139 146 146 146 146 146 147
1987 0 0 162 172 176 176 177 177 177 178
1988 0 0 0 149 166 168 170 170 172 172
1989 0 0 0 0 131 142 145 145 145 146
1990 0 0 0 0 0 173 183 183 185 190
1991 0 0 0 0 0 0 167 170 170 173
1992 0 0 0 0 0 0 0 174 179 185
1993 0 0 0 0 0 0 0 0 147 170
1994 0 0 0 0 0 0 0 0 0 143
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 1A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 53 53 56 56
1985 0 0 0 0 0 0 19 19 19 22
1986 0 0 0 0 0 0 28 28 31 34
1987 0 0 0 0 0 0 53 53 55 60
1988 0 0 0 0 0 0 63 63 68 74
1989 0 0 0 0 0 0 171 171 179 188
1990 0 0 0 0 0 0 670 672 686 696
1991 0 0 0 0 0 0 835 839 855 868
1992 0 0 0 0 0 0 0 40 68 84
1993 0 0 0 0 0 0 0 0 70 99
1994 0 0 0 0 0 0 0 0 0 59
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 2A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 29 19 14 11
1985 0 0 0 0 0 0 17 4 4 6
1986 0 0 0 0 0 0 19 5 11 7
1987 0 0 0 0 0 0 16 8 8 10
1988 0 0 0 0 0 0 36 11 13 10
1989 0 0 0 0 0 0 54 23 23 21
1990 0 0 0 0 0 0 53 23 28 15
1991 0 0 0 0 0 0 64 31 45 37
1992 0 0 0 0 0 0 0 26 34 32
1993 0 0 0 0 0 0 0 0 29 25
1994 0 0 0 0 0 0 0 0 0 26
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 3A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 85 77 82 86
1985 0 0 0 0 0 0 92 92 94 99
1986 0 0 0 0 0 0 70 66 78 85
1987 0 0 0 0 0 0 111 111 117 130
1988 0 0 0 0 0 0 306 303 312 323
1989 0 0 0 0 0 0 782 779 793 807
1990 0 0 0 0 0 0 501 509 541 552
1991 0 0 0 0 0 0 352 356 402 424
1992 0 0 0 0 0 0 0 68 121 163
1993 0 0 0 0 0 0 0 0 121 166
1994 0 0 0 0 0 0 0 0 0 111
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 1B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 2B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 5R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 3B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 222043 217005
1994 0 0 0 0 0 0 0 0 0 197590
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 6550 3562
1994 0 0 0 0 0 0 0 0 0 3523
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6D WORKERS' COMPENSATION
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 238981 225370
1994 0 0 0 0 0 0 0 0 0 219279
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6D WORKERS' COMPENSATION
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 1721 1769
1994 0 0 0 0 0 0 0 0 0 1274
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6E COMMERCIAL MULTIPLE PERIL
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 396794 401489
1994 0 0 0 0 0 0 0 0 0 360600
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6E COMMERCIAL MULTIPLE PERIL
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 12741 13331
1994 0 0 0 0 0 0 0 0 0 12381
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 1A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 136736 129420
1994 0 0 0 0 0 0 0 0 0 108478
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 2A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 14885 20645
1994 0 0 0 0 0 0 0 0 0 12006
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 1B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 10504 9691
1994 0 0 0 0 0 0 0 0 0 4788
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 2B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 54 54
1994 0 0 0 0 0 0 0 0 0 71
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6M INTERNATIONAL
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 113 116
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6M INTERNATIONAL
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6N REINSURANCE A
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 4260 3791
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6N REINSURANCE A
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 306 438
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6O REINSURANCE B
SECTION 1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 4270 3800
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6O REINSURANCE B
SECTION 2
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 16 31
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 1A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 4551 4705
1994 0 0 0 0 0 0 0 0 0 4506
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 2A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 19 19
1994 0 0 0 0 0 0 0 0 0 24
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 1B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE P - PART 6R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 2B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
PRIOR 0 0 0 0 0 0 0 0 0 0
1985 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
</TABLE>
