UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file numbers 33-50884, 33-84480, 33-90272
Northbrook Life Insurance Company
(Exact name of Registrant as specified in its charter)
__________Illinois__________ __________36-3001527__________
(State or Other Jurisdiction, (IRS Employer Identification No.)
Incorporation or Organization)
3100 Sanders Road
Northbrook, Illinois 60062
(Address of Principal Executive Offices) (Zip Code)
708.402.5000
(Registrant's Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) 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 for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES _X_ NO ___
State the aggregate market value of the voting stock held by
non-affiliates of the registrant: NONE
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of September 30, 1995: Common stock, par value
of $100 per share: 25,000 shares outstanding.<PAGE>
Northbrook Life Insurance Company
(Registrant)
INDEX
Page
Cover Page
Index
PART I - Financial Information
Item 1. Financial Statements
Statements of Financial Position
Sept. 30, 1995 (Unaudited) and Dec. 31, 1994 1
Statements of Income (Unaudited)
Periods Ended Sept. 30, 1995 and Sept. 30, 1994 2
Statements of Cash Flows (Unaudited)
Periods Ended Sept. 30, 1995 and Sept. 30, 1994 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 5
PART II - Other Information
Item 1. Legal Proceedings 6
Item 2. Change in Securities 6
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters to a Vote of Security Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
Signature Page<PAGE>
<TABLE>
<CAPTION>
<C>
NORTHBROOK LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
<S>Sept 30, <S>Dec 31,
($ in thousands) 1995 1994
(Unaudited)
Assets
Investments
Fixed income securities
Available for sale, at fair value
(amortized cost $71,437 and $61,581) $ 73,801 $ 59,191
Short-term 4,905 3,374
Total investments 78,706 62,565
Amounts recoverable from Allstate Life
Insurance Company under reinsurance
treaties 2,692,248 3,085,781
Cash 59
Deferred income taxes 1,157 77
Net receivable from affiliates 49,768 46,608
Other assets 15,034 21,775
Separate Accounts 3,126,352 2,604,623
Total assets $ 5,963,265 $ 5,821,488
Liabilities
Reserve for life insurance policy
benefits $ 138,726 $ 120,328
Contractholder funds 2,563,696 2,965,146
Other liabilities and accrued expenses 59,427 61,889
Separate Accounts 3,126,352 2,604,623
Total liabilities 5,888,201 5,751,986
Shareholder equity
Common stock 2,500 2,500
Additional capital paid-in 56,600 56,600
Unrealized net capital gains (losses) 1,536 (1,553)
Retained income 14,428 11,955
Total shareholder equity 75,064 69,502
Total liabilities and
shareholder equity $ 5,963,265 $ 5,821,488
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NORTHBROOK LIFE INSURANCE COMPANY
STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30 September 30
($ in thousands) 1995 1994 1995 1994
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues
Investment income, less
investment expense $ 1,311 $ 738 $ 3,720 $ 2,148
Realized capital gains
and losses 1 67 (13)
Income before income taxes 1,311 739 3,787 2,135
Income tax expense 440 (850) 1,314 (376)
Net income $ 871 $ 1,589 $ 2,473 $ 2,511
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
NORTHBROOK LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30
($ in thousands) 1995 1994
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,473 $ 2,511
Adjustments to reconcile net income to net
cash from operating activities:
Net realized capital (gains) and losses (67) 13
Amortization and other non-cash items 568 465
Net change in reserve for policy
benefits and contractholder funds 10,481 1,489
Change in deferred income taxes (2,744) (3,694)
Changes in other operating assets and
liabilities 395 (748)
Net cash from operating activities 11,106 36
Cash flows from investing activities:
Fixed income securities available for sale:
Proceeds from sales 5,423
Investment collections 4,864 7,092
Investment purchases (19,920) (10,754)
Net change in short-term investments (1,532) 4,545
Net cash from investing activities (11,165) 883
Net increase in cash (59) 919
Cash at beginning of period 59 214
Cash at end of period $ 0 $ 1,133
See notes to financial statements.
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. Financial Statements
The Statement of Financial Position as of September 30, 1995, the
Statements of Income for the three-month and nine-month periods ended
September 30, 1995 and 1994 and the Statements of Cash Flow for the nine-month periods then
ended are unaudited. The interim financial statements
reflect all adjustments (consisting only of normal recurring accruals)
which are, in the opinion of management, necessary for a fair statement of
the results for the interim periods presented. The financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Northbrook Life Insurance Company 1994 Financial
Statements. The results of operations for the interim periods should not
be considered indicative of results to be expected for the full year.
Certain reclassifications have been made to the prior year financial
statements to conform to the presentation for the current year.
2. Transactions with Affiliates
Revenues ceded to Allstate Life Insurance Company consist of premiums
and contract charges of $2,177,000 and $34,562,000 for the nine-month
period ended September 30, 1995 and $1,787,000 and $28,115,000 for the
nine-month period ended September 30, 1994. Investment income earned on
the assets which support contractholder fund liabilities and reserve for
life insurance policy benefits were excluded from the Company's financial
statements as those assets were transferred to Allstate Life Insurance
Company under the terms of reinsurance treaties. Benefits and expenses
ceded to Allstate Life consist of paid benefits, credited interest on
reinsured contracts and operating expenses. These benefits and expenses
amounted to $172,252,000 and $187,767,000 for the nine-month periods
ended September 30, 1995 and 1994, respectively.
<PAGE>
Northbrook Life Insurance Company
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Three- and Nine-Months Ended September 30, 1995
General
Northbrook Life Insurance Company ("the Company") is wholly owned by
Allstate Life Insurance Company ("Allstate Life"). Allstate Life is
wholly-owned by Allstate Insurance Company, a wholly-owned subsidiary of
The Allstate Corporation ("the Corporation"). Sears, Roebuck and Co.
distributed its 80.3% ownership in the Corporation on June 30, 1995 to
Sears common shareholders through a tax-free dividend. As a result of the
distribution, Sears no longer has an ownership interest in the
Corporation.
The Company issues single and flexible premium annuity contracts and
universal life insurance policies. In addition, the Company issues
flexible premium deferred variable annuity contracts. Dean Witter
Reynolds, Inc. is the sole distributor of the Company's flexible premium
deferred variable annuity contracts, and certain single and flexible
premium annuities.
The Company reinsures all of its insurance in force with Allstate
Life. Accordingly, the results of operations with respect to applications
received and contracts issued by the Company are not reflected in the
Company's Statements of Income.
Results of Operations and Financial Condition
Pre-tax net investment income in the third quarter of 1995 increased
85.7% to $1.3 million compared to $.7 million for the same period in 1994.
For the first nine months of 1995 pre-tax net investment income increased
to $3.8 million compared to $2.1 million in the prior year. The increases
were related to an increased level of invested assets which resulted from
a $25 million capital contribution from Allstate Life at the end of
December 1994. Net income reflects the changes in pre-tax net investment
income.
The Statement of Financial Position at September 30, 1995 reflects a
decrease in amounts recoverable from Allstate Life Insurance Company
under reinsurance treaties and contractholder funds of 12.8% and 13.5%,
respectively, and an increase in Separate Accounts of 20.0% from December
31, 1994. This is due to policyholder transfers from fixed annuities,
which are invested in the Company's general account, to variable
annuities, which are invested in the funds of the Separate Account, as
well as fixed annuity surrenders, sales of the variable annuity product
and favorable investment performance of the Separate Account funds.
Unrealized net capital gains (losses) increased $3.1 million to an
unrealized net capital gain of $1.5 million, as compared to an unrealized
net capital loss of $1.6 million at December 31, 1994. Fluctuations in
unrealized gains (losses) are largely a function of overall market
conditions. Current year increases are the result of an overall lower
interest rate environment as compared to December 31, 1994.
<PAGE>
Liquidity and Capital Resources
Under the terms of the reinsurance agreements with Allstate Life,
assets of the Company that relate to most insurance inforce, excluding
Separate Account assets, are transferred to Allstate Life. Therefore, the
funds necessary to support the operations of the Company are provided by
Allstate Life and the Company is not required to obtain additional capital
to support inforce or future business.
Pending Accounting Standards
In March 1995, the Financial Accounting Standards Board issued SFAS
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of". The statement requires that long-lived
assets and certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The statement requires that impairment loss be measured for
those assets as the amount by which the carrying amount of the asset
exceeds the asset's fair value. This statement will be adopted in 1996
and is not expected to have a material impact on results of operations or
financial position.
In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation" which encourages entities to adopt a fair value based
method of accounting for compensation cost of employee stock compensation
plans. The statement allows an entity to continue the application of
accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued
to Employees", however pro forma disclosures of net income and earnings per
share, as if the fair value based method of accounting defined by this
statement had been applied, are required. The disclosure requirements of
this statement will be adopted in 1996. Results of operations and
financial position will not be affected by the adoption of this statement.
<PAGE>
PART II
Item 1. Legal Proceedings
Northbrook Life Insurance Company is not involved in any litigation that
is expected to have a material effect.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits, Financial Statements and Reports on Form 8-K
(a) (1) and (2) Financial Statements of registrant are listed on pages
hereof and are filed as part of this Report.
(a) (3) Exhibits
Regulation S-K
2. Not applicable.
3. Incorporated by reference to Registrant's Form S-1 Registration
Statement, Registration No.33-50884, filed March 30, 1993.
4. Northbrook Life Insurance Company Flexible Premium Deferred Annuity
Contract, incorporated by reference to Registrant's Form S-1 Registration
Statement, Registration No. 33-50884, filed March 30, 1993.
10. Incorporated by reference to Registrant's Form S-1 Registration
Statement, Registration No. 33-50884, filed March 7, 1995.
11. Not applicable.
15. Not Applicable.
18. Not Applicable.
19. Not Applicable.
22. None.
23. Incorporated by reference to Registrant's Form S-1 Registration
Statement, Registration No.33-50884, filed March 30, 1993.
24. Incorporated by reference to Registrant's Form S-1 Registration
Statement, Registration No.33-50884, filed March 30, 1993.
27. Filed herewith.
99. None.
(b) Reports on 8-K: No reports on Form 8-K were filed during the third
quarter of 1995.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Northbrook Life Insurance Company
(Registrant)
Signature Title Date
_/s/LOUIS G. LOWER, II_ President and Chairman November 10, 1995
LOUIS G. LOWER, II (Principal Executive Officer)
_/s/BARRY S. PAUL______ Assistant Vice President November 10, 1995
BARRY S. PAUL (Chief Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORAMTION EXTRACTED FROM STMTS OF
FIN'L POSITION PERIODS ENDED 9/30/95 & 12/31/94, STMTS OF INCOME AND STMTS OF
CASH FLOWS PERIODS ENDED 9/30/95 & 9/30/94, NOTES THERETO AND MANAGEMENT'S
DISCUSSION AND ANALYSIS, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STMTS
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> SEP-30-1995 DEC-31-1994
<DEBT-HELD-FOR-SALE> 7380000 59191000
<DEBT-CARRYING-VALUE> 0 0
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 0 0
<MORTGAGE> 0 0
<REAL-ESTATE> 0 0
<TOTAL-INVEST> 78706000 62565000
<CASH> 0 59000
<RECOVER-REINSURE> 2692248000 3085781000
<DEFERRED-ACQUISITION> 0 0
<TOTAL-ASSETS> 5963265000 5821488000
<POLICY-LOSSES> 138726000 120328000
<UNEARNED-PREMIUMS> 0 0
<POLICY-OTHER> 0 0
<POLICY-HOLDER-FUNDS> 2563696000 2965146000
<NOTES-PAYABLE> 0 0
<COMMON> 2500000 2500000
0 0
0 0
<OTHER-SE> 72564000 67002000
<TOTAL-LIABILITY-AND-EQUITY> 5963265000 5821488000
0 0
<INVESTMENT-INCOME> 3720000 2881000
<INVESTMENT-GAINS> 67000 (193000)
<OTHER-INCOME> 0 0
<BENEFITS> 0 0
<UNDERWRITING-AMORTIZATION> 0 0
<UNDERWRITING-OTHER> 0 0
<INCOME-PRETAX> 3787000 2688000
<INCOME-TAX> 1314000 955000
<INCOME-CONTINUING> 2473000 1733000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2473000 1733000
<EPS-PRIMARY> 98.92 69.32
<EPS-DILUTED> 98.92 69.32
<RESERVE-OPEN> 0 0
<PROVISION-CURRENT> 0 0
<PROVISION-PRIOR> 0 0
<PAYMENTS-CURRENT> 0 0
<PAYMENTS-PRIOR> 0 0
<RESERVE-CLOSE> 0 0
<CUMULATIVE-DEFICIENCY> 0 0
</TABLE>
