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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission file number: 0-15286
Full title of the plan and the address of the plan,
if different from that of the issuer named below:
CHANDLER (U.S.A.), INC. 401(k) THRIFT PLAN
1010 Manvel Avenue
Chandler, Oklahoma 74834
Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
CHANDLER INSURANCE COMPANY, LTD.
Fifth Floor Anderson Square
P.O. Box 1854
Grand Cayman, Cayman Islands B.W.I.
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<PAGE>
PAGE i
CHANDLER (U.S.A.), INC. 401(k) THRIFT PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits, December 31, 1999
and 1998 2
Statements of Changes in Net Assets Available for Benefits,
Years Ended December 31, 1999 and 1998 3
Notes to Financial Statements, Years Ended December 31, 1999 and 1998 4
SUPPLEMENTAL SCHEDULES:
Line 27a - Schedule of Assets Held for Investment Purposes,
December 31, 1999 9
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PAGE 1
INDEPENDENT AUDITORS' REPORT
To the Trustee and Participants of
Chandler (U.S.A.), Inc. 401(k) Thrift Plan:
We have audited the accompanying financial statements of Chandler (U.S.A.),
Inc. 401(k) Thrift Plan (the "Plan") as of December 31, 1999 and 1998, and for
the years then ended, listed in the Table of Contents. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31,
1999 and 1998, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted
in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in
the Table of Contents is presented for the purpose of additional analysis and
is not a required part of the basic financial statements, but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This schedule is the responsibility of the Plan's
management. Such schedule has been subjected to the auditing procedures
applied in our audit of the basic 1999 financial statements and, in our
opinion, is fairly stated in all material respects when considered in relation
to the basic financial statements taken as a whole.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Oklahoma City, Oklahoma
May 26, 2000
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PAGE 2
CHANDLER (U.S.A.), INC. 401(k) THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
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<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments, at fair value (Note 4) $ 9,921,723 $ 8,341,387
Receivables - Contributions receivable - 40,298
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 9,921,723 $ 8,381,685
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
PAGE 3
CHANDLER (U.S.A.), INC. 401(k) THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS:
Investment income:
Interest and dividend income $ 422,864 $ 325,375
Net appreciation in fair value of certain
investments 803,840 260,371
Increase in cash surrender value of life
insurance policies 1,766 1,719
---------- ----------
Total investment income 1,228,470 587,465
---------- ----------
Contributions:
Participant contributions 642,058 602,725
Employer contributions 275,689 259,123
---------- ----------
Total contributions 917,747 861,848
---------- ----------
Participant rollovers from other plans 5,733 9,158
---------- ----------
Total additions 2,151,950 1,458,471
---------- ----------
DEDUCTIONS:
Withdrawals and benefits paid to participants 607,187 170,692
Life insurance premiums paid for participants 1,400 1,400
Loan maintenance fees paid 3,325 -
---------- ----------
Total deductions 611,912 172,092
---------- ----------
NET INCREASE 1,540,038 1,286,379
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 8,381,685 7,095,306
---------- ----------
End of year $9,921,723 $8,381,685
========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
PAGE 4
CHANDLER (U.S.A.), INC. 401(k) THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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1. PLAN DESCRIPTION
The following description of the Chandler (U.S.A.), Inc. 401(k) Thrift
Plan (the "Plan") provides only general information. Participants should
refer to the Plan document for a more complete description of the Plan's
provisions.
GENERAL - The Plan is a defined contribution plan subject to the Employee
Retirement Income Security Act of 1974 ("ERISA"), as amended. All
full-time employees of Chandler (U.S.A.), Inc. and subsidiaries (the
"Company") who have completed one year of service and attained age 21 on
the Plan entry date are eligible to participate in the Plan.
CONTRIBUTIONS - Each year, participants may contribute from 1% to 15% of
their annual compensation to the Plan, subject to limitations under the
Internal Revenue Code 402(g) of $10,000 in 1999 and 1998. Amounts
contributed by a participant are excluded from the participant's current
taxable income.
The Company matches 50% of the first $2,000, 40% of the next $3,000, 30%
of the next $3,000 and 25% of the remaining participant contributions up
to a maximum contribution of $3,600 per participant each year. In
addition, the Company may make additional annual contributions to the
Plan at its discretion. Discretionary contributions by the Company are
allocated to participating employees based on a percentage of the
participant's salary to total salaries of all Plan participants.
INVESTMENT OPTIONS - Upon enrollment in the Plan, a participant may
direct employee contributions in 1% increments in any of the following
options. Participants may change or transfer their investment options at
any time. Company matching contributions are automatically contributed
into the funds at the ratio of the participant contributions.
- Kemper Blue Chip Fund - Funds are invested primarily in common stocks
of large, well-known companies operating in more attractive industries.
- Kemper Growth Fund - Funds are invested in common stocks of companies
whose earnings are growing at a faster rate than the market average.
- Kemper Technology Fund - Funds are invested in common stock of companies
which are expected to benefit from technological advances and
improvements.
- Kemper-Dreman High Return Equity Fund - Funds are invested in large
capitalization stocks ($1 billion and greater) in the undervalued
sectors of the market.
- Kemper Small Capitalization Equity Fund - Fund seeks maximum capital
appreciation by investing primarily in common stocks of small companies
(market capitalization of $1 billion or less) considered undervalued,
emerging or recovering.
<PAGE>
PAGE 5
- Kemper International Fund - Fund seeks total return, a combination of
capital growth and income, principally through an internationally
diversified portfolio of equity securities.
- Kemper Small Cap Value Fund - Fund seeks long-term capital appreciation
by investing primarily in small capitalization stocks ($100 million to
$1 billion) in at least 15 industries.
- Kemper Horizon 20+ Portfolio - Fund seeks growth of capital with income
as a secondary objective. Funds are invested in a wide variety of
investments, including U.S. and international stocks, bonds, and money
market securities.
- Kemper Horizon 10+ Portfolio - Fund seeks a balance between growth of
capital and income while preserving capital by investing in U.S. and
international stocks, bonds, and money market securities.
- Kemper High Yield Fund - Fund seeks a high level of current income from
a highly diversified portfolio of low rated or nonrated corporate
securities, consistent with reasonable risk.
- Kemper Strategic Income Fund - Fund seeks a high current income return
by investing primarily in fixed income securities including U.S.
corporate bonds, U.S. government securities and foreign fixed income
and currency investments.
- Kemper Horizon 5 Portfolio - Fund seeks income with preservation of
capital, with capital growth as a secondary objective by investing in
U.S. and international stocks, bonds, and money market securities.
- Kemper U.S. Government Securities Fund - Fund seeks high current
income, liquidity and security of principal by investing in high
quality U.S. government-backed securities.
- Zurich Money Market Fund - Fund seeks maximum current income consistent
with stability of principal by investing in high quality money market
instruments.
- Chandler Insurance Company, Ltd. Stock - Funds are invested in the
common stock of Chandler Insurance Company, Ltd., the Company's
ultimate parent.
INSURANCE - Included in the Plan's assets is the cash surrender value of
life insurance policies. The purchase of life insurance is no longer an
investment option for participants.
PARTICIPANT ROLLOVERS - Employees who have received distributions of
their entire interest in another qualified plan (the "other plan") as a
result of a termination of employment, disability or attainment of age
59-1/2, may transfer the distributions received from the other plan to
the Plan, provided the conditions set forth in the Plan Agreement are met.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contributions, the employer's contribution, and an
allocation of the Plan's earnings including gains and losses on
investments. The Plan's earnings are allocated to the participants'
accounts based on the ratio of the account balance of the individual
participant to the aggregate of all account balances of all participants
in the fund within the Plan.
<PAGE>
PAGE 6
Participants are fully vested in their contributions at all times.
Participants are vested in the contributions made by the Plan sponsor based on
their vested percentage. A participant's vested percentage is determined
based on completed years of service as follows:
<TABLE>
<CAPTION>
COMPLETED YEARS OF SERVICE VESTED PERCENTAGE
<S> <S>
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 100%
</TABLE>
Upon termination of participants who are not fully vested, the nonvested
portion of their account is forfeited, and the forfeited portion will be
allocated to all eligible participants in the proportion to which the
participant's compensation for the Plan year bears to the total compensation
of all eligible participants for the Plan year.
BENEFIT PAYMENTS - Benefits paid to participants can be made to each
participant upon the participant's retirement, termination of service, or to
the participant's beneficiary in the case of the participant's death. The
amount of the distribution would be equal to the vested balance of the
participant's account plus the cash surrender value of any insurance policies
held by the Plan on behalf of the participant, or the face value of such
policies in the event of the participant's death. If a participant becomes
disabled and is deemed to be permanently prevented from engaging in the
participant's regular profession, occupation or employment, a distribution
shall be made to the participant equal to the total amount of the
participant's account balance plus the cash surrender value of any life
insurance policies held by the trustees on behalf of the participant.
Distribution payments can be made under one or any combination of the
following methods:
- Payment in a lump sum.
- Payment in monthly, quarterly, or annual installments under a fixed
period of time not exceeding the life expectancy of the participant.
Benefits paid to employees who terminated employment in 1999 but did not
receive distributions until 2000 totaled approximately $29,000. Distributions
to employees who terminated employment in 1998 but did not receive
distributions until 1999 totaled approximately $309,000.
PARTICIPANT NOTES RECEIVABLE - Participants may borrow from their fund
accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000
or 50% of their account balance. Loan transactions are treated as a transfer
from the various investment funds to participant notes receivable. The loans
are secured by the balance in the participant's account and bear interest at
a rate commensurate with local prevailing rates as determined quarterly by
the Plan administrator. Interest rates range from 8.20% to 9.5%. Principal
and interest is paid ratably through semi-monthly payroll deductions.
Participants are charged annually a loan maintenance fee of $25. Loan terms
range from one to five years.
<PAGE>
PAGE 7
2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
BASIS OF PRESENTATION - The Plan operates on a calendar year basis and the
financial statements are presented using the accrual basis of accounting. In
preparing its financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as
of the dates shown on the statement of net assets available for benefits for
the period presented. Actual results could differ significantly from those
estimates.
VALUATION OF INVESTMENTS - Investments are stated at fair value. The fair
value of investments is based on quotations obtained from national securities
exchanges; where investments are not listed on an exchange, quotations are
provided by brokerage firms. Participant notes receivable are valued at cost
which approximates fair value.
The Plan's cash surrender value of life insurance policies represents the
current cash value of life insurance policies for specific participants in
the Plan.
ADMINISTRATIVE EXPENSES - All administrative expenses of the Plan are borne
by the Company.
RECLASSIFICATIONS - Certain reclassifications of prior year amounts have been
made to conform to the current year presentation.
3. RELATED PARTY TRANSACTIONS
Certain Plan investments known as the Kemper Funds are shares of mutual funds
managed by Scudder Trust Company ("Scudder"). Scudder serves as custodian
of the Plan's investments. Scudder is the trustee as defined by the Plan and,
therefore, these transactions qualify as party-in-interest transactions. The
Company serves as plan administrator.
4. INVESTMENTS EXCEEDING 5% OF NET ASSETS AVAILABLE FOR BENEFITS
The following table presents the fair value of investments at December 31,
1999 and 1998, that exceed five percent of the Plan's net assets available
for benefits:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
1999 1998
---------------------- ----------------------
NUMBER OF NUMBER OF
SHARES OR FAIR SHARES OR FAIR
PAR VALUE VALUE PAR VALUE VALUE
MUTUAL FUNDS AND SECURITIES:
<S> <C> <C> <C> <C>
Kemper-Dreman High Return
Equity Fund 36,922 $ 990,261 35,030 $ 1,199,434
Kemper Blue Chip Fund 64,448 1,423,019 60,530 1,097,404
Zurich Money Market Fund 762,683 762,683 794,529 794,529
Kemper Technology Fund 32,122 910,028
Chandler Insurance Co. Ltd.
common stock 410,822 3,440,630 351,675 2,615,584
PARTICIPANT NOTES RECEIVABLE 452,340 452,340
</TABLE>
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PAGE 8
5. NET APPRECIATION IN FAIR VALUE OF CERTAIN INVESTMENTS
During 1999 and 1998, the Plan's investments (excluding cash surrender value of
life insurance policies, participant notes receivable, and interest and
dividend income), including investments bought, sold, as well as held during
the year, appreciated (depreciated) in value as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------
NET APPRECIATION IN FAIR VALUE OF CERTAIN INVESTMENTS: 1999 1998
<S> <C> <C>
Kemper Blue Chip Fund $ 245,937 $ 137,502
Kemper Growth Fund 49,615 22,196
Kemper Technology Fund 377,697 56,430
Kemper-Dreman High Return Equity Fund (247,443) 95,238
Kemper Small Capitalization Equity Fund 10,091 (20,234)
Kemper International Fund 79,250 (18,897)
Kemper Small Cap Value Fund (95) (50,844)
Kemper Horizon 20+ Portfolio (12,576) 38,388
Kemper Horizon 10+ Portfolio (19,840) 37,729
Kemper High Yield Fund (19,314) (35,431)
Kemper Strategic Income Fund (2,730) (2,739)
Kemper Horizon 5 Portfolio (1,430) 2,942
Kemper U.S. Government Securities Fund (4,430) (3,534)
Chandler Insurance Co. Ltd. stock 349,108 1,625
---------- ----------
Net appreciation in fair value of certain investments $ 803,840 $ 260,371
========== ==========
</TABLE>
6. PLAN TERMINATION
Although the Company has not expressed any intent to do so, the Company has
the right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the Plan's provisions set forth in ERISA. In
the event of Plan termination, or upon complete or partial discontinuance of
contributions, the accounts of each affected participant shall become fully
vested.
7. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated August 12, 1993, that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code (the
"Code"). The Plan has been amended since receiving this determination
letter. The Plan sponsor and the Plan's counsel believe that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Code. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
* * * * * *
<PAGE>
PAGE 9
CHANDLER (U.S.A.), INC. 401(k) THRIFT PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION OF
INVESTMENT INCLUDING
MATURITY DATE,
RATE OF INTEREST,
IDENTITY OF ISSUE, BORROWER, COLLATERAL, PAR OR CURRENT
LESSOR OR SIMILAR PARTY MATURITY VALUE VALUE
MUTUAL FUNDS AND SECURITIES:
<S> <C> <C>
* Kemper-Dreman High Return Equity Fund 36,922 shares $ 990,261
* Kemper Blue Chip Fund 64,448 shares 1,423,019
* Zurich Money Market Fund 762,683 shares 762,683
* Kemper Horizon 10+ Portfolio 32,643 shares 387,142
* Kemper Horizon 20+ Portfolio 33,534 shares 442,988
* Kemper Small Cap Value Fund 7,111 shares 132,412
* Kemper International Fund 21,778 shares 326,450
* Kemper Growth Fund 14,229 shares 264,092
* Kemper High Yield Fund 26,356 shares 189,236
* Kemper Technology Fund 32,122 shares 910,028
* Kemper Small Capitalization Equity Fund 7,766 shares 59,798
* Kemper Horizon 5 Portfolio 5,707 shares 62,777
* Kemper Strategic Income Fund 4,812 shares 25,261
* Kemper U. S. Government Securities Fund 8,292 shares 68,407
* Chandler Insurance Co. Ltd. common stock 410,822 shares 3,440,630
-----------
Total mutual funds and securities 9,485,184
PARTICIPANT NOTES RECEIVABLE (1) 413,027
CASH SURRENDER VALUE OF LIFE INSURANCE POLICIES:
Hartford Life Insurance Co. 23,512
-----------
Total investments $9,921,723
===========
* Party in interest.
<FN>
(1) Individual participant loan balances are not separately disclosed because
of the confidential nature of the loans and because participants are
borrowing funds from their own vested accounts. These loans have interest
rates ranging from 8.20% to 9.5%.
</TABLE>
<PAGE>
PAGE 10
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
Chandler (U.S.A.), Inc. 401(k) Thrift Plan
Date: June 23, 2000 /s/ Mark C. Hart
-------------------------------------------
Mark C. Hart, Vice President - Finance
and Treasurer
Chandler (U.S.A.), Inc.
<PAGE>
PAGE 11
INDEX TO EXHIBITS
The following is a complete list of exhibits field or incorporated by reference
as part of their annual report:
23 Deloitte & Touche LLP Consent
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in Registration Statement
No. 333-72869 of Chandler Insurance Company, Ltd. on Form S-8 of our report
dated May 26, 2000 appearing in this Annual Report on Form 11-K of the
Chandler (U.S.A.), Inc. 401(k) Thrift Plan for the year ended December 31, 1999.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Oklahoma City, Oklahoma
June 22, 2000
