<PAGE>
Exhibit 99.1
PROPERTY AND CASUALTY COMPANIES - ASSOCIATION EDITION
000025828199820100104 1998 Document Code: 201
ANNUAL STATEMENT
For the Year Ended December 31, 1998
OF THE CONDITION AND AFFAIRS OF THE
American Union Insurance Company
--------------------------------------------------------------------------------
NAIC Group Code 0193 NAIC Company Code 25828 Employer's ID Number
---- ----- ----------
Organized under the laws of the State of Illinois, using
-------- ----------------------
as the Port of Entry, made to the
INSURANCE DEPARTMENT OF THE STATE OF
PURSUANT TO THE LAWS THEREOF
Incorporated 06/12/1916 Commenced Business 10/03/1916
---------- ----------
Statutory Home Office 303 East Washington Street, Bloomington, IL 61701
----------------------------------------------------------
Main Administrative Office 303 East Washington Street
-----------------------------------------------------
Bloomington, IL 61701 (309) 829-1061
--------------------------------------------------------------------------------
Mail Address 303 East Washington Street, Bloomington, IL 61701
-------------------------------------------------------------------
Primary Location of Books and Records 303 East Washington Street,
------------------------------------------
Bloomington, IL 61701 (309) 829-1061
--------------------------------------------------------------------------------
Annual Statement Contact James David Dickinson (309) 829-1061
-------------------------------------------------------
OFFICERS
President Gregory Mark Shepard
Secretary William Mark Dalton
Treasurer James David Dickinson
Vice Presidents
Tracy Morgan Shepard
James David Dickinson
William Mark Dalton
Wallace Theodore Marciniak
DIRECTORS OR TRUSTEES
Tracy Morgan Shepard
Patrick Francis Busch
Andrew Floyd Anderson
Gregory Mark Shepard
Mark Allen Weaver
State of Illinois
----------------------
County of McLean ss
---------------------
The officers of this company, being duly sworn, each deposes and says that they
are the above described officers of said insurer, and that on the thirty-first
day of December last, all of the herein described assets were the absolute
property of said insurer, free and clear from any liens or claims thereon,
except as herein stated, and that this annual statement, together with related
exhibits, schedules and explanations therein contained, annexed or referred to
is a full and true statement of all the assets and liabilities and of the
condition and affairs of said Insurer as of the thirty-first day of December
last, and of its income and deductions therefrom for the year ended on that
date, and have been completed in accordance with the NAIC annual statement
instructions and accounting practices and procedures manuals except to the
extent that: (1) state law may differ, or, (2) that state rules or regulations
require differences in reporting not related to accounting practices and
procedures, according to the best of their information, knowledge and belief,
respectively.
------------------------------------- --------------------------------------
(Signature) (Signature)
------------------------------------- --------------------------------------
(Printed Name) (Printed Name)
President Secretary
------------------------------------- --------------------------------------
(Signature)
------------------------------------- --------------------------------------
(Printed Name)
Treasurer
<TABLE>
<CAPTION>
<S> <C> <C>
Subscribed and sworn to before me this a. Is this an original filing? Yes [x] No [_]
_________day of __________________, 1999 b. If no: 1. State the amendment number ________________
2. Date filed ________________
3. Number of pages attached ________________
________________________________________
</TABLE>
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
<TABLE>
<CAPTION>
ASSETS
====================================================================================================================================
Current Year Prior Year
------------------------------------------------------------------------
1 2 3 4 5
Net Admitted
Ledger Non-Ledger Assets Not Assets Net Admitted
Assets Assets Admitted (Columns 1+2-3) Assets
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Bonds (less $.......... liability for asset transfers
with put options, Schedule D, Part 1).................. 1,612,480 1,612,480 4,050,721
2. Stocks:
2.1 Preferred stocks (Schedule D, Part 2, Section 1)...
2.2 Common Stocks (Schedule D, Part 2, Section 2)...... 80,548,469 33,754,857 103,430,805 10,872,521 24,761,509
3. Mortgage loans on real estate (Schedule B):
3.1 First liens........................................
3.2 Other than first liens.............................
4. Real estate (Schedule A):
4.1 Properties occupied by the company (less
$.................... encumbrances)................
4.2 Other properties (less $......... encumbrances)...
5. Cash ($....(336,426) Schedule E, Part 1) and short-term
investments ($....... 499,337 Schedule DA, Part 1)..... 162,911 162,911 183,250
6. Other invested assets (Schedule BA)....................
7. Receivable for securities..............................
8. Aggregate write-ins for invested assets................
------------------------------------------------------------------------
9. Subtotals, cash and invested assets (Lines 1 to 8)..... 82,323,860 33,754,857 103,430,805 12,647,912 28,995,480
10. Agents' balances or uncollected premiums (net as to
commissions and dividends):
10.1 Premiums and agents' balances in course of
collection (after deducting ceded reinsurance
balances payable of ($....... )................... 15,818 15,818 19,200
10.2 Premiums, agents' balances and installments booked
but deferred and not yet due (after deducting
ceded reinsurance balances payable of $........ )
(including $........ earned but unbilled premiums)
10.3 Accrued retrospective premiums (after deducting
ceded reinsurance balances payable of $........ )..
11. Funds held by or deposited with reinsured companies...
12. Bills receivable, taken for premiums..................
13. Reinsurance recoverables on loss and loss adjustment
expense payments (Schedule F, Pan 3, Columns 2 and 3).
14. Federal income tax recoverable and interest thereon...
14A. Guaranty funds receivable or on deposit...............
15. Electronic data processing equipment.................. 5,423
16. Interest, dividends and real estate income due
and accrued........................................... 7,833 7,833 66,824
17. Receivable from parent, subsidiaries and affiliates... 432,688 432,688 163,838
18. Equities and deposits in pools and associations.......
19. Amounts receivable relating to uninsured accident and
health plans..........................................
20. Other assets nonadmitted (Exhibit 1)..................
21. Aggregate write-ins for other than invested assets.... 176,212 176,212
-----------------------------------------------------------------------
22. TOTALS (Lines 9 through 21)........................... 82,948,578 33,762,690 104,039,705 12,671,563 29,250,765
====================================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------------------
0801........................................................
0802........................................................
0803........................................................
0898. Summary of remaining write-ins for
Line 8 from overflow page............................
------------------------------------------------------------------------------------------------------------------------------------
0899. TOTALS (Lines 0801 through 0803 plus 0898)
(Line 8 above)........................................
------------------------------------------------------------------------------------------------------------------------------------
2102 Advance to fund a newly formed insurance company....... 176,212 176,212
2102........................................................
2103........................................................
2198. Summary of remaining write-ins for Line 21 from
overflow page.........................................
------------------------------------------------------------------------
2199. TOTALS (Lines 2101 through 2103 plus 2198)
(Line 21 above)....................................... 176,212 176,212
====================================================================================================================================
2
</TABLE>
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
LIABILITIES, SURPLUS AND OTHER FUNDS
<TABLE>
<CAPTION>
========================================================================================================================
1 2
Current Prior
Year Year
----------- ------------
<C> <S> <C> <C>
1. Losses (Part 3A, Line 32, Column 5)............................................... 116,739 91,066
1A. Reinsurance payable on paid loss and loss adjustment expenses
(Schedule F, Part 1, Column 2)....................................................
2. Loss adjustment expenses (Part 3A, Line 32, Column 6)............................. 35,000 35,000
3. Contingent commissions and other similar charges..................................
4. Other expenses (excluding taxes, licenses and fees)............................... 19,175 238,309
5. Taxes, licenses and fees (excluding federal and foreign income taxes)............. 100,199 33,330
6. Federal and foreign income taxes (excluding deferred taxes)....................... 654,911 103,983
7. Borrowed money.................................................................... 5,308,792 900,000
8. Interest, including $.............. on borrowed money.............................
9. Unearned premiums (Part 2A, Line 34, Column 5) (after deducting ceded
reinsurance unearned premiums of $.............).................................. 125,122 139,976
10. Dividends declared and unpaid:
A. Stockholders..................................................................
B. Policyholders.................................................................
11. Funds held by company under reinsurance treaties (Schedule F, Part 3,
Column 14)........................................................................
12. Amounts withheld or retained by company for account of others..................... 8,365 10,103
13. Remittances and items not allocated...............................................
14. Provision for reinsurance (Schedule F, Part 7)....................................
15. Excess of statutory reserves over statement reserves (Schedule P
Interrogatories).................................................................. 79,000 90,000
16. Net adjustments in assets and liabilities due to foreign exchange rates...........
17. Drafts outstanding................................................................ 930
18. Payable to parent, subsidiaries and affiliates.................................... 551,801 240,096
19. Payable for securities............................................................
20. Liability for amounts held under uninsured accident and health plans..............
21. Capital notes $............ and interest thereon $............ ...................
22. Aggregate write-ins for liabilities...............................................
----------- ------------
23. TOTAL liabilities (Lines 1 through 22)............................................ 6,999,104 1,882,793
24. Aggregate write-ins for special surplus funds.....................................
25A. Common capital stock.............................................................. 10,200,000 10,200,000
25B. Preferred capital stock...........................................................
25C. Aggregate write-ins for other than special surplus funds..........................
26A. Surplus notes.....................................................................
26B. Gross paid in and contributed surplus............................................. 19,124,371 19,124,371
26C. Unassigned funds (surplus)........................................................ (23,651,912) (1,956,399)
26D. Less treasury stock, at cost:
(1) .......... shares common (value included in Line 25A $..........) ...........
(2) .......... shares preferred (value included in Line 25B $..........) ........
----------- ------------
27. Surplus as regards policyholders (Lines 24 to 26C, less 26D) (Page 4, Line 32).... 5,672,459 27,367,972
----------- ------------
28. TOTALS (Page 2, Line 22, Column 4).............................................. 12,671,563 29,250,765
========================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------
2201. ..................................................................................
2202. ..................................................................................
2203. ..................................................................................
2298. Summary of remaining write-ins for Line 22 from overflow page.....................
----------- ------------
2299. TOTALS (Lines 2201 through 2203 plus 2298) (Line 22 above)........................
------------------------------------------------------------------------------------------------------------------------
2401. .................................................................................
2402. .................................................................................
2403. .................................................................................
2498. Summary of remaining write-ins for Line 24 from overflow page.....................
----------- ------------
2499. TOTALS (Lines 2401 through 2403 plus 2498) (Line 24 above)........................
------------------------------------------------------------------------------------------------------------------------
25C01. .................................................................................
25C02. .................................................................................
25C03. .................................................................................
25C98. Summary of remaining write-ins for Line 25C from overflow page.....................
----------- ------------
25C99. TOTALS (Lines 25C0l through 25C03 plus 25C98) (Line 25C above)....................
========================================================================================================================
</TABLE>
3
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
UNDERWRITING AND INVESTMENT EXHIBIT
<TABLE>
<CAPTION>
1 2
STATEMENT OF INCOME Current Prior
Year Year
---------- ---------
<S> <C> <C>
UNDERWRITING INCOME
1. Premiums earned (Part 2, Line 32, Column 4)........... 562,760 581,592
DEDUCTIONS
2. Losses incurred (Part 3, Line 32, Column 7)........... 297,119 249,758
3. Loss expenses incurred (Part 4, Line 22, Column 1).... 77,796 32,309
4. Other underwriting expenses incurred (Part 4,
Line 22, Column 2).................................... 601,110 457,484
5. Aggregate write-ins for underwriting deductions.......
---------- ---------
6. Total underwriting deductions (Lines 2 through 5)... 976,025 739,551
---------- ---------
7. Net underwriting gain or (loss) (Line 1 minus
Line 6)............................................... (413,265) (157,959)
INVESTMENT INCOME
8. Net investment income earned (Part 1, Line 14)........ 8,734,972 3,489,210
9. Net realized capital gains or (losses)
(Part 1A, Line 10).................................... 3,577,329 42,003
---------- ---------
9A. Net investment gain or (loss) (Lines 8 plus 9)........ 12,312,301 3,531,213
OTHER INCOME
10. Net gain or (loss) from agents' or premium
balances charged off (amount recovered
amount charged off ................................... (51) (34)
11. Finance and service charges not included
in premiums........................................... 2,240 2,282
12. Aggregate write-ins for miscellaneous income..........
---------- ---------
13. Total other income (Lines 10 through 12)............ 2,189 2,248
---------- ---------
14. Net income before dividends to policyholders
and before federal & foreign income taxes
(Lines 7 plus 9A plus 13)............................. 11,901,225 3,375,502
14A. Dividends to policyholders (Exhibit 2, Line 16,
Column 1 plus Page 3, Line 10B, Column 1
minus Column 2).......................................
---------- ---------
14B. Net income, after dividends to policyholders but
before federal and foreign income taxes (Line
14 minus Line 14A).................................... 11,901,225 3,375,502
15. Federal and foreign income taxes incurred............. 1,162,644 166,849
---------- ---------
16. Net income (Line 14B minus Line 15) (to Line 18)...... 10,738,581 3,208,653
CAPITAL AND SURPLUS ACCOUNT
17. Surplus as regards policyholders, December 31
prior year (Page 4, Line 32, Column 2)................ 27,367,972 29,764,785
GAINS AND (LOSSES) IN SURPLUS
18. Net income (from Line 16)............................. 10,738,581 3,208,653
19. Net unrealized capital gains or (losses)
(Part 1A, Line 11).................................... (16,480,320) (3,579,961)
20. Change in nonadmitted assets (Exhibit 1,
Line 6, Column 3)..................................... (564,774) 25,495
21. Change in provision for reinsurance (Page 3,
Line 14, Column 2 minus Column 1).....................
22. Change in foreign exchange adjustment.................
23. Change in excess of statutory reserves over
statement reserves (Page 3, Line 15, Column
2 minus Column 1)..................................... 11,000 69,000
23A. Change in surplus notes...............................
24. Capital changes:
A. Paid in (Exhibit 2, Line 6, Column 1)..............
B. Transferred from surplus (Stock Dividend)..........
C. Transferred to surplus.............................
25. Surplus adjustments:
A. Paid in (Exhibit 2, Line 7, Column 1)..............
B. Transferred to capital (Stock Dividend)............
C. Transferred from capital...........................
26. Net remittances from or (to) Home Office
(Exhibit 2, Line 4B minus Line 12B, Column 1).........
27. Dividends to stockholders (cash)...................... (15,400,000) (2,120,000)
28. Change in treasury stock (Page 3, Line 26D
(1) and (2), Column 2 minus Column 1).................
29. Extraordinary amounts of taxes for prior years........
30. Aggregate write-ins for gains and losses in surplus
----------- ---------
31. Change in surplus as regards policyholders for the
year (Lines 18 through 30)............................ (21,695,513) (2,396,813)
----------- ----------
32. Surplus as regards policyholders, December 31
current year (Line 17 plus Line 31) (Page 3, Line 27). 5,672,459 27,367,972
====================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------
0501. .....................................................
0502. .....................................................
0503. .....................................................
0598. Summary of remaining write-ins for Line 5
from overflow page...................................
---------- ---------
0599. Totals (Lines 0501 through 0503 plus 0598)
(Line 5 above).......................................
----- -----------------------------------------------------------------------------
1201. .....................................................
1202. .....................................................
1203. .....................................................
1298. Summary of remaining write-ins for Line 12
from overflow page...................................
---------- ---------
1299. Totals (Lines 1201 through 1203 plus 1298)
(Line 12 above)......................................
-----------------------------------------------------------------------------------
3001. .....................................................
3002. .....................................................
3003. .....................................................
3098. Summary of remaining write-ins for Line 30
from overflow page...................................
---------- ---------
3099. Totals (Lines 3001 through 3003 plus 3098)
(Line 30 above)......................................
===================================================================================
</TABLE>
4
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
<TABLE>
<CAPTION>
CASH FLOW
===========================================================================================================
1 2
CASH FROM OPERATIONS Current Year Prior Year
----------------------------
<S> <C> <C>
1. Premiums collected net of reinsurance..................................... 551,288 581,278
2. Loss and loss adjustment expenses paid (net of salvage and subrogation)... 350,172 635,407
3. Underwriting expenses paid................................................ 753,325 340,093
4. Other underwriting income (expenses)...................................... 677
----------------------------
5. Cash from underwriting (Line 1 minus Line 2 minus Line 3 plus Line 4)..... (552,209) (393,545)
6. Net investment income..................................................... 8,785,934 3,323,095
7. Other income (expenses):
7.1 Agents' balances charged off.......................................... (51) (34)
7.2 Net funds held under reinsurance treaties.............................
7.3 Net amount withheld or retained for account of others................. (1,738)
7.4 Aggregate write-ins for miscellaneous items........................... 2,240 2,282
----------------------------
7.5 TOTAL other income (Lines 7.1 to 7.4)................................. 451 2,248
8. Dividends to policyholders on direct business, less $ dividends
on reinsurance assumed or ceded (net).....................................
9. Federal and foreign income taxes (paid) recovered......................... (611,716) (7,986)
----------------------------
10. Net cash from operations (Line 5 plus Line 6 plus Line 7.5
minus Line 8 plus Line 9)................................................. 7,622,460 2,923,812
CASH FROM INVESTMENTS
11. Proceeds from investments sold, matured or repaid:
11.1 Bonds................................................................ 4,094,406 100,890
11.2 Stocks............................................................... 6,921,990 3,000,000
11.3 Mortgage loans.......................................................
11.4 Real estate..........................................................
11.5 Other invested assets................................................
11.6 Net gains or (losses) on cash and short-term investments............. 3,253
11.7 Miscellaneous proceeds...............................................
----------------------------
11.8 Total investment proceeds (Lines 11.1 to 11.7)....................... 11,019,649 3,100,890
12. Cost of investments acquired (long-term only):
12.1 Bonds................................................................ 1,615,500 964,102
12.2 Stocks............................................................... 5,971,932 2,000,000
12.3 Mortgage loans.......................................................
12.4 Real estate..........................................................
12.5 Other invested assets................................................
12.6 Miscellaneous applications...........................................
----------------------------
12.7 TOTAL investments acquired (Lines 12.1 to 12.6)...................... 7,587,432 2,964,102
----------------------------
13. Net Cash from investments (Line 11.8 minus Line 12.7)..................... 3,432,217 136,788
CASH FROM FINANCING AND MISCELLANEOUS SOURCES
14. Cash provided:
14.1 Surplus notes, capital and surplus paid in...........................
14.2 Capital notes $ less amounts repaid $ ..................
14.3 Net transfers from affiliates........................................ 42,855 10,577
14.4 Borrowed funds received.............................................. 4,408,792
14.5 Other cash provided.................................................. 30,146
----------------------------
14.6 TOTAL (Lines 14.1 to 14.5)........................................... 4,451,647 40,723
15. Cash applied:
15.1 Dividends to stockholders paid....................................... 15,400,000 2,120,000
15.2 Net transfers to affiliates.......................................... 415,096
15.3 Borrowed funds repaid................................................ 500,000
15.4 Other applications................................................... 126,663
----------------------------
15.5 TOTAL (Lines 15.1 to 15.4) 15,526,663 3,035,096
----------------------------
16. Net cash from financing and miscellaneous sources
(Line 14.6 minus Line 15.5)............................................... (11,075,016) (2,994,373)
RECONCILIATION OF CASH
AND SHORT-TERM INVESTMENTS
17. Net change in cash and short-term investments (Line 10,
plus Line 13, plus Line 16)............................................... (20,339) 66,227
18. Cash and short-term investments:
18.1 Beginning of year.................................................... 183,250 117,023
----------------------------
18.2 End of year (Line 17 plus Line 18.1)................................. 162,911 183,250
============================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------
7.401 Finance Charges......................................................... 2,240 2,282
7.402.........................................................................
7.403.........................................................................
7.498 Summary of remaining write-ins for Line 7.4 from overflow page.........
----------------------------
7.499 TOTALS (Lines 7.401 through 7.403 plus 7.498) (Line 7.4 above)......... 2,240 2,282
============================================================================================================
</TABLE>
5
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
UNDERWRITING AND INVESTMENT EXHIBIT
PART 1 - INTEREST, DIVIDENDS AND REAL ESTATE INCOME
<TABLE>
<CAPTION>
====================================================================================================================================
1 2 3 Paid in Advance Due and Accrued (h) 8
-------------------------------------------
Earned
4 5 6 7 During Year
Collected Current Prior Current Prior Columns
Schedule During Year Year Year Year Year 3+5+6-4-7
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. U.S. government bonds ............ D (a) 232,587 7,833 44,000 196,420
1.1 Bonds exempt from U.S. tax ....... D (a)
1.2 Other bonds (unaffiliated) ....... D (a) 38,974 5,047 33,927
1.3 Bonds of affiliates .............. D (a)
2.1 Preferred stocks (unaffiliated) .. D (b)
2.11 Preferred stocks of affiliates ... D (b)
2.2 Common stock (unaffiliated) ...... D 3,122,649 17,777 3,104,872
2.21 Common stock of affiliates ....... D 6,000,000 6,000,000
3. Mortgage loans ................... B (c)
4. Real estate ...................... A (d)
5.1 Cash on hand and on deposit ...... E
5.2 Short-term investments ........... DA (e) 49,056 49,056
6. Other invested assets ............ BA
7. Derivative instruments ........... DB/DC(f)
8. Aggregate write-ins for investment
income ........................... 16,183 16,183
-----------------------------------------------------------------------------------
9. TOTALS ........................... (g) 9,459,449 7,833 66,824 (g) 9,400,458
------------------------------------------------------------------------------------------------------------------------------------
DEDUCTIONS
-------------
10. Total investment expenses incurred (Part 4, Line 22, Column 3) ................................. 342,486
10A. Interest expense ............................................................................... (i) 323,000
11. Depreciation on real estate (for companies which depreciate annually on a formula basis) .......
12. Aggregate write-ins for deductions from investment income ......................................
-------------
13. Total deductions (Lines 10 to 12) .............................................................. 665,486
----------
14. Net investment income earned (Line 9 minus Line 13 - to Page 4, Line 8) ........................ 8,734,972
====================================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------------------
0801. Furniture Rental ................ 16,183 16,183
0802. .................................
0803. .................................
0898. Summary of remaining write-ins
for Line 8 from overflow page ...
-----------------------------------------------------------------------------------
0899. TOTALS (Lines 0801 through
0803 plus 0898) (Part 1,
Line 8) ......................... 16,183 16,183
------------------------------------------------------------------------------------------------------------------------------------
DEDUCTIONS
-------------
1201. ...............................................................................................
1202. ...............................................................................................
1203. .................... . ...... ............ ....................................................
1298. Summary of remaining write-ins for Line 12 from overflow page .................................
-------------
1299. TOTALS (Lines 1201 through 1203 plus 1298) (Part 1, Line 12) ..................................
====================================================================================================================================
</TABLE>
(a) Includes $........ 10,999 accrual of discount less $........ 3,020
amortization of premium.
(b) Includes $................ accrual of discount less $...............
amortization of premium.
(c) Includes $................ accrual of discount less $...............
amortization of premium.
(d) Includes $................ for company's occupancy of its own buildings.
(e) Includes $........ 22,450 accrual of discount less $...............
amortization of premium.
(f) Includes $............... accrual of discount less $...............
amortization of premium.
(g) Includes asset transfers with put options accounted for as financing
arrangements: $.................. Column 3, $................... Column 8.
(h) Admitted items only. State basis of exclusions
(i) Includes $................ interest on surplus notes and $................
interest on capital notes.
PART 1A - CAPITAL GAINS AND (LOSSES) ON INVESTMENTS
<TABLE>
<CAPTION>
====================================================================================================================================
1 2 3 4 5 6 7
Net Gain or
(Loss) from Total (Net
Change in of Columns 2
Profit Loss on Increases by Decreases by Difference to 6 inclusive)
on Sales Sales or Adjustment in Adjustment in Between Book and (Columns
or Maturity Maturity Book Value Book Value Admitted Values 2-3+4-5+6)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. U.S. government bonds ............ 7,080 7,080
1.1 Bonds exempt from U.S. tax .......
1.2 Other bonds (unaffiliated) ....... 25,605 25,605
1.3 Bonds of affiliates ..............
2.1 Preferred stocks (unaffiliated) ..
2.11 Preferred stocks of affiliates ...
2.2 Common stock (unaffiliated) ...... 3,541,391 (7,188,462) (3,647,071)
2.21 Common stock of affiliates ....... (9,291,858) (9,291,858)
3. Mortgage loans ..................
4. Real estate ..................... (a)
5.1 Cash on hand and on deposit ......
5.2 Short-term investments ........... 3,253 3,253
6. Other invested assets ...........
7. Derivative instruments ..........
8. Aggregate write-ins for capital
gains and (losses) ..............
----------------------------------------------------------------------------------------
9. TOTALS ........................ 3,577,329 (16,480,320) (12,902,991)
------------------------------------------------------------------------------------------------------------------------------------
(Distribution of Line 9, Column 7)
10. Net realized capital gains or (losses) (Page 4, Line 9) (Column 2 - 3, Line 9) ................................ 3,577,329
11. Net unrealized capital gains or (losses) (Page 4, Line 19) (Column 4 - 5 + 6, Line 9) ......................... (16,480,320)
====================================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------------------
0801. .................................
0802. .................................
0803. .................................
0898. Summary of remaining write-ins
for Line 8 from overflow page ...
-----------------------------------------------------------------------------------
0899. TOTALS (Lines 0801 through 0803
plus 0898) (Part 1A, Line 8) ....
====================================================================================================================================
(a) Excluding $............... depreciation on real estate included in Part 1,
Line 11.
</TABLE>
6
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
UNDERWRITING AND INVESTMENT EXHIBIT
PART 2 - PREMIUMS EARNED
<TABLE>
<CAPTION>
================================================================================================================================
1 2 3 4
Unearned Unearned
Net Premiums Premiums Premiums
Written Per Dec. 31 Prior Year - Dec. 31 Premiums Earned
Column 4, per Column 3, Current Year - per During Year
Line of Business Part 2B Last Year's Part 2 Column 5, Part 2A (Columns 1 + 2 - 3)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Fire ........................... 2,301 5,093 314 7,080
2. Allied lines.................... 409 886 55 1,240
3. Farmowners multiple peril.......
4. Homeowners multiple peril....... 4,352 9,360 575 13,137
5. Commercial multiple peril.......
6. Mortgage guaranty...............
8. Ocean marine....................
9. Inland marine...................
10. Financial guaranty..............
11.1 Medical malpractice -
occurrence......................
11.2 Medical malpractice -
claims-made.....................
12. Earthquake......................
13. Group accident and health.......
14. Credit accident and health
(group and individual).........
15. Other accident and health.......
16. Workers' compensation...........
17.1 Other liability -
occurrence.....................
17.2 Other liability -
claims-made.....................
18.1 Products liability -
occurrence......................
18.2 Products liability -
claims-made.....................
19.1 19.2 Private passenger
auto liability.................. 278,680 65,627 64,449 279,858
19.3 19.4 Commercial auto
liability.......................
21. Auto physical damage............ 262,164 59,010 59,729 261,445
22. Aircraft (all perils)...........
23. Fidelity .......................
24. Surety..........................
26. Burglary and theft..............
27. Boiler and machinery............
28. Credit..........................
29. International...................
30A. Reinsurance-Nonproportional
Assumed Property................
30B. Reinsurance-Nonproportional
Assumed Liability...............
30C. Reinsurance-Nonproportional
Assumed Financial Lines.........
31. Aggregate write-ins for other
lines of business............... -----------------------------------------------------------------------
32. TOTALS........................ 547,906 139,976 125,122 562,760
===========================================================================================================================
DETAILS OF WRITE-INS
---------------------------------------------------------------------------------------------------------------------------
3101. ...............................
3102. ...............................
3103. ...............................
3198. Summary of remaining write-ins for
Line 31 from overflow page
-----------------------------------------------------------------------
3199. TOTALS (Lines 3101 through 3103
+ 3198) (Line 31 above)........
===========================================================================================================================
</TABLE>
7
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
UNDERWRITING AND INVESTMENT EXHIBIT
PART 2A - RECAPITULATION OF ALL PREMIUMS
(a) Gross premiums (less reinsurance) and unearned premiums on all unexpired
risks and reserve for return premiums under rate credit or retrospective
rating plans based upon experience, viz:
<TABLE>
<CAPTION>
====================================================================================================================================
1 2 3 4 5
Amount Unearned Amount Unearned Reserve for Total
(Running One (Running More Rate Credits Reserve
Year or Less Than One Year and Retrospective For Unearned
From Date From Date Advance Adjustments Premiums
of Policy) of Policy) Premiums Based on Columns
Line of Business (b) (b) 100% Experience 1+2+3+4
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Fire..................................................... 314 314
2. Allied lines............................................. 55 55
3. Farmowners multiple peril................................
4. Homeowners multiple peril................................ 575 575
5. Commercial multiple peril................................
6. Mortgage guaranty........................................
8. Ocean marine.............................................
9. Inland marine............................................
10. Financial guaranty.......................................
11.1 Medical malpractice - occurrence.........................
11.2 Medical malpractice - claims-made........................
12. Earthquake...............................................
13. Group accident and health................................ (c)
14. Credit accident and health (group and individual)........
15. Other accident and health................................ (c)
16. Workers' compensation....................................
17.1 Other liability - occurrence.............................
17.2 Other liability - claims-made............................
18.1 Products liability - occurrence..........................
18.2 Products liability - claims-made.........................
19.1 19.2 Private passenger auto liability.................... 64,449 64,449
19.3 19.4 Commercial auto liability...........................
21. Auto physical damage..................................... 59,729 59,729
22. Aircraft (all perils)....................................
23. Fidelity.................................................
24. Surety...................................................
26. Burglary and theft.......................................
27. Boiler and machinery.....................................
28. Credit...................................................
29. International............................................
30A. Reinsurance-Nonproportional Assumed Property.............
30B. Reinsurance-Nonproportional Assumed Liability............
30C. Reinsurance-Nonproportional Assumed Financial Lines......
31. Aggregate write-ins for other lines of business..........
---------------------------------------------------------------------
32. TOTALS................................................... 125,122 125,122
------------------------------------------------------------------------------------------------------------------------------------
33. Accrued retrospective premiums based on experience.......
-------------
34. Balance (Line 32 plus Line 33)........................... 125,122
====================================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------------------
3101..........................................................
3102..........................................................
3103..........................................................
3198. Summary of remaining write-ins for Line 31 from
overflow page...........................................
---------------------------------------------------------------------
3199. TOTALS (Lines 3101 through 3103 plus 3198) (Line 31
above)................................................
====================================================================================================================================
</TABLE>
(a) By gross premiums is meant the aggregate of all the premiums written in the
policies or renewals in force. Are they so returned in this statement?
Yes[X] No[ ]
(b) State here basis of computation used in each case Monthly pro-rata
(c) Including $ .............................. reserved for deferred maternity
and other similar benefits.
8
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
UNDERWRITING AND INVESTMENT EXHIBIT
PART 2B - PREMIUMS WRITTEN
Gross Premiums (Less Return Premiums), Including Policy and Membership Fees
Written and Renewed During Year
<TABLE>
<CAPTION>
====================================================================================================================================
Reinsurance Assumed Reinsurance Ceded 4
1 ------------------------------------------------------ Net Premiums
Direct 2a 2b 3a 3b Written
Business From From To To Columns
Line of Business (a) Affiliates Non-Affiliates Affiliates Non-Affiliates 1 + 2a + 2b - 3a - 3b
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Fire .................................. 2,301 2,301
2. Allied lines .......................... 409 409
3. Farmowners multiple peril .............
4. Homeowners multiple peril ............. 4,352 4,352
5. Commercial multiple peril .............
6. Mortgage guaranty .....................
8. Ocean marine ..........................
9. Inland marine .........................
10. Financial guaranty ....................
11.1 Medical malpractice - occurrence ......
11.2 Medical malpractice - claims-made .....
12. Earthquake ............................
13. Group accident and health .............
14. Credit accident and health (group and
individual) ...........................
15. Other accident and health .............
16. Workers' compensation .................
17.1 Other liability - occurrence ..........
17.2 Other liability - claims-made .........
18.1 Products liability - occurrence .......
18.2 Products liability - claims-made ......
19.1 19.2 Private passenger auto liability. 278,680 278,680
19.3 19.4 Commercial auto liability........
21. Auto physical damage .................. 262,164 262,164
22. Aircraft (all perils) .................
23. Fidelity ..............................
24. Surety ................................
26. Burglary and theft ....................
27. Boiler and machinery ..................
28. Credit ................................
29. International .........................
30A. Reinsurance-Nonproportional Assumed
Property .............................. XXX
30B. Reinsurance-Nonproportional Assumed
Liability ............................. XXX
30C. Reinsurance-Nonproportional Assumed
Financial Lines ....................... XXX
31. Aggregate write-ins for other lines
of business ...........................
---------------------------------------------------------------------------------------
32. TOTALS ............................ 547,906 547,906
====================================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------------------
101. .......................................
102. .......................................
103. .......................................
198. Summary of remaining write-ins for
Line 31 from overflow page ............
---------------------------------------------------------------------------------------
199. TOTALS (Lines 3101 through 3103 plus
3198) (Line 31 above) .................
====================================================================================================================================
</TABLE>
(a) Does the company's direct premiums written include premiums recorded on an
installment basis? Yes [ ] No [X]
If yes, (1) The amount of such installment premiums $..................
(2) Amount at which such installment premiums would have been
reported had they been recorded on an annualized basis $...
9
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
UNDERWRITING AND INVESTMENT EXHIBIT
PART 3 - LOSSES PAID AND INCURRED
<TABLE>
<CAPTION>
Losses Paid Less Salvage
--------------------------------------------------------------
1 2 3 4
Net Payments
Direct Reinsurance Reinsurance (Columns
Line of Business Business Assumed Recovered 1 +2-3)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Fire ........................................................ 6,385 6,385
2. Allied lines ................................................ 802 802
3. Farmowners multiple peril....................................
4. Homeowners multiple peril ................................... 9,474 9.474
5. Commercial multiple peril....................................
6. Mortgage guaranty............................................
8. Ocean marine.................................................
9. Inland marine................................................
10. Financial guaranty...........................................
11.1 Medical malpractice - occurrence.............................
11.2 Medical malpractice - claims-made............................
12. Earthquake...................................................
13. Group accident and health....................................
14. Credit accident and health (group and individual)............
15. Other accident and health....................................
16. Workers' compensation........................................
17.1 Other liability - occurrence.................................
17.2 Other liability - claims-made................................
18.1 Products liability - occurrence..............................
18.2 Products liability - claims made.............................
19.1 19.2 Private passenger auto liability ....................... 100,474 100,474
19.3 19.4 Commercial auto liability...............................
21. Auto physical damage ........................................ 154,311 154,311
22. Aircraft (all perils)........................................
23. Fidelity.....................................................
24. Surety.......................................................
26. Burglary and theft...........................................
27. Boiler and machinery.........................................
28. Credit.......................................................
29. International................................................
30A. Reinsurance-Nonproportional Assumed Property ................ XXX
30B. Reinsurance-Nonproportional Assumed Liability ............... XXX
30C. Reinsurance-Nonproportional Assumed Financial Lines ......... XXX
31. Aggregate write-ins for other lines of business..............
-------------------------------------------------------------
32. TOTALS ...................................................... 271,446 271,446
=================================================================================================================================
DETAILS OF WRITE-INS
---------------------------------------------------------------------------------------------------------------------------------
3101. ............................................................
3102. ............................................................
3103. ............................................................
3198. Summary of remaining write-ins for Line 31 from overflow
page
-------------------------------------------------------------
3199. TOTALS (Lines 3101 through 3103 plus 3198) (Line 31 above)..
=================================================================================================================================
5 6 7 8
Net Losses Losses Percentage of
Unpaid Incurred Losses Incurred
Current Year Net Losses Current Year (Column 7, Part 3)
(Part 3A, Unpaid (Columns to Premiums Earned
Column 5) Prior Year 4+5-6) (Column 4, Part 2)
------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Fire ........................................................ 1,253 2.555 5,083 71.79
2. Allied lines ................................................ 89 416 475 38.31
3. Farmowners multiple peril....................................
4. Homeowners multiple peril ................................... 3,092 7,371 5,195 39.55
5. Commercial multiple peril.................................... 8,000 (8,000)
6. Mortgage guaranty............................................
8. Ocean marine.................................................
9. Inland marine................................................
10. Financial guaranty...........................................
11.1 Medical malpractice - occurrence.............................
11.2 Medical malpractice - claims-made............................
12. Earthquake...................................................
13. Group accident and health....................................
14. Credit accident and health (group and individual)............
15. Other accident and health....................................
16. Workers' compensation........................................
17.1 Other liability - occurrence.................................
17.2 Other liability - claims-made................................
18.1 Products liability - occurrence..............................
18.2 Products liability - claims made.............................
19.1 19.2 Private passenger auto liability ....................... 109,555 60,924 149,105 53.28
19.3 19.4 Commercial auto liability...............................
21. Auto physical damage ........................................ 2,750 11,800 145.261 55.56
22. Aircraft (all perils)........................................
23. Fidelity.....................................................
24. Surety.......................................................
26, Burglary and theft...........................................
27. Boiler and machinery.........................................
28. Credit.......................................................
29. International................................................
30A. Reinsurance-Nonproportional Assumed Property.................
30B. Reinsurance-Nonproportional Assumed Liability................
30C. Reinsurance-Nonproportional Assumed Financial Lines..........
31. Aggregate write-ins for other lines of business..............
--------------------------------------------------------------
32. TOTALS ...................................................... 116,739 91,066 297,119 52.80
=================================================================================================================================
DETAILS OF WRITE-INS
---------------------------------------------------------------------------------------------------------------------------------
3101
3102
3103
3198. Summary of remaining write-ins for Line 31 from overflow page
--------------------------------------------------------------
3199. TOTALS (Lines 3101 through 3103 plus 3198) (Line 31 above)
=================================================================================================================================
</TABLE>
10
<PAGE>
UNDERWRITING AND INVESTMENT EXHIBIT
PART 3A - UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES
<TABLE>
<CAPTION>
==================================================================================================================================
Adjusted or in 2 3
Process of Deduct Net
Adjustment Reinsurance Losses
---------------------- Recoverable Excluding
1a 1b from Incurred
Authorized But Not
Rein- and Reported
surance Unauthorized (Columns
Line of Business Direct Assumed Companies 1a + 1b - 2)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Fire ............................................................. 1,253 1,253
2. Allied Lines...................................................... 89 89
3. Farmowners multiple peril ........................................
4. Homeowners multiple peril ........................................ 3,092 3,092
5. Commercial multiple peril ........................................
6. Mortgage guaranty ................................................
8. Ocean marine .....................................................
9. Inland marine ....................................................
10. Financial guaranty ...............................................
11.1 Medical malpractice - occurrence .................................
11.2 Medical malpractice - claims-made ................................
12. Earthquake ......................................................
13. Group accident & health ..........................................
14. Credit accident & health (group & individual) ....................
15. Other accident & health ..........................................
16. Workers' compensation ............................................
17.1 Other liability - occurrence .....................................
17.2 Other liability - claims-made ....................................
18.1 Products liability - occurrence ..................................
18.2 Products liability - claims-made .................................
19.1 19.2 Private passenger auto liability............................. 73,555 73,555
19.3 19.4 Commercial auto liability ...................................
21. Auto physical damage ............................................. 750 750
22. Aircraft (all perils) ............................................
23. Fidelity .........................................................
24. Surety ...........................................................
26. Burglary and theft ...............................................
27. Boiler and machinery .............................................
28. Credit ...........................................................
29. International ....................................................
30A. Reinsurance-Nonproportional Assumed Property ..................... XXX
30B. Reinsurance-Nonproportional Assumed Liability .................... XXX
30C. Reinsurance-Nonproportional Assumed Financial Lines .............. XXX
31. Aggregate write-ins for other lines of business ..................
---------------------------------------------------------
32. TOTALS ........................................................... 78,739 78,739
==================================================================================================================================
DETAILS OF WRITE-INS
----------------------------------------------------------------------------------------------------------------------------------
3101. .................................................................
3102. .................................................................
3103. .................................................................
3198. Summary of remaining write-ins for Line 31 from overflow page....
3199. TOTALS (Lines 3101 through 3103 plus 3198) (Line 31 above).......
==================================================================================================================================
</TABLE>
UNDERWRITING AND INVESTMENT EXHIBIT
PART 3A - UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES
<TABLE>
<CAPTION>
====================================================================================================================================
Incurred But Not Reported 5 6
-------------------------
4a 4b 4c
Unpaid
Net Losses Loss
Rein- Rein- Unpaid Adjust-
surance surance (Columns ment
Line of Business Direct Assumed Ceded 3 + 4a + 4b - 4c) Expenses
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Fire ............................................................. 1,253
2. Allied Lines...................................................... 89
3. Farmowners multiple peril ........................................
4. Homeowners multiple peril ........................................ 3,092
5. Commercial multiple peril ........................................
6. Mortgage guaranty ................................................
8. Ocean marine .....................................................
9. Inland marine ....................................................
10. Financial guaranty ...............................................
11.1 Medical malpractice - occurrence .................................
11.2 Medical malpractice - claims-made ................................
12. Earthquake ......................................................
13. Group accident & health .......................................... (a)
14. Credit accident & health (group & individual) ....................
15. Other accident & health .......................................... (a)
16. Workers' compensation ............................................
17.1 Other liability - occurrence .....................................
17.2 Other liability - claims-made ....................................
18.1 Products liability - occurrence ..................................
18.2 Products liability - claims-made .................................
19.1 19.2 Private passenger auto liability ............................ 36,000 109,555 29,700
19.3 19.4 Commercial auto liability ...................................
21. Auto physical damage ............................................. 2,000 2,750 5,300
22. Aircraft (all perils) ............................................
23. Fidelity .........................................................
24. Surety ...........................................................
26. Burglary and theft ...............................................
27. Boiler and machinery .............................................
28. Credit ...........................................................
29. International ....................................................
30A. Reinsurance-Non proportional Assumed Property .................... XXX
30B. Reinsurance-Nonproportional Assumed Liability .................... XXX
30C. Reinsurance-Nonproportional Assumed Financial Lines .............. XXX
31. Aggregate write-ins for other lines of business ..................
----------------------------------------------------------
32. TOTALS ........................................................... 38,000 116,739 35,000
====================================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------------------
3101. .................................................................
3102. .................................................................
3103. .................................................................
3198. Summary of remaining write-ins for Line 31 from overflow page....
3199. TOTALS (Lines 3101 through 3103 plus 3198) (Line 31 above).......
===================================================================================================================================
</TABLE>
(a) Including $ ........................... for present value of life indemnity
claims and $ .................. reserved for deferred maternity and other
similar benefits.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
UNDERWRITING AND INVESTMENT EXHIBIT
PART 4 - EXPENSES
<TABLE>
<CAPTION>
====================================================================================================================================
1 2 3 4
Loss Other
Adjustment Underwriting Investment
Expenses Expenses Expenses Total
--------------------------------------------------------
<S> <C> <C> <C> <C>
1. Claim adjustment services:
A. Direct............................................................. 34,626 34,626
B. Reinsurance assumed................................................
C. Reinsurance ceded..................................................
--------------------------------------------------------
D. Net claim adjustment services (A + B - C).......................... 34,626 34,626
2. Commission and brokerage:
A. Direct excluding contingent........................................ 618 618
B. Reinsurance assumed excluding contingent...........................
C. Reinsurance ceded excluding contingent.............................
D. Contingent - direct................................................
E. Contingent - reinsurance assumed...................................
F. Contingent - reinsurance ceded.....................................
G. Policy and membership fees.........................................
--------------------------------------------------------
H. Net commission and brokerage
(A + B - C + D + E - F + G)........................................... 618 618
3. Allowances to manager and agents...................................... 55,112 55,112
4. Advertising........................................................... 179 179
5. Boards, bureaus and associations...................................... (34,113) (34,113)
6. Surveys and underwriting reports...................................... 672 672
7. Audit of assureds' records............................................
8. Salary and related items:
A. Salaries........................................................... 33,470 333,737 25,000 392,207
B. Payroll taxes...................................................... 2,510 12,461 750 15,721
9. Employee relations and welfare........................................ 1,000 25,807 26,807
10. Insurance............................................................. 30 30
11. Directors'fees........................................................ 8,100 8,100
12. Travel and travel items............................................... 3,117 3,117
13. Rent and rent items................................................... 500 21,072 12,000 33,572
14. Equipment.............................................................
15. Printing and stationery............................................... 650 2,983 3,633
16. Postage, telephone and telegraph, exchange and express................ 550 1,663 2,213
17. Legal and auditing.................................................... 4,490 42,100 304,736 351,326
--------------------------------------------------------
17A. TOTALS (Lines 3 to 17)................................................ 43,170 472,920 342,486 858,576
18. Taxes, licenses and fees:
A. State and local insurance taxes deducting guaranty
association credits of $_______ ................................. 95,966 95,966
B. Insurance department licenses and fees............................. 14,880 14,880
C. Gross guaranty association assessments.............................
D. All other (excluding federal and foreign income
and real estate)...................................................
--------------------------------------------------------
E. TOTAL taxes, licenses and fees (A + B + C + D).................. 110,846 110,846
19. Real estate expenses..................................................
20. Real estate taxes.....................................................
20A. Reimbursements by uninsured accident and health plans.................
21. Aggregate write-ins for miscellaneous expenses........................ 16,726 16,726
--------------------------------------------------------
22. TOTAL expenses incurred............................................. 77,796 601,110 342,486 (a) 1,021,392
23. Less unpaid expenses - current year................................... 35,000 119,374 154,374
24. Add unpaid expenses - prior year...................................... 35,000 271,589 50 306,639
25. Amounts receivable relating to uninsured accident and
health plans, prior year..............................................
26. Amounts receivable relating to uninsured accident and health
plans, current year...................................................
--------------------------------------------------------
27. TOTAL EXPENSES PAID (Lines 22 - 23 + 24 - 25 + 26).................. 77,796 753,325 342,536 1,173,657
====================================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------------------
2101. Contributions........................................................ 15,100 15,100
2102. Over & Short & Waived................................................ 1,626 1,626
2103. .....................................................................
2198. Summary of remaining write-ins for Line 21 from overflow page........
--------------------------------------------------------
2199. TOTALS (Lines 2101 through 2103 plus 2198) (Line 21 above)........... 16,726 16,726
====================================================================================================================================
</TABLE>
(a) Includes management fees of $55,112 to affiliates and $_____ to
non-affiliates
12
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
EXHIBIT 1 -
ANALYSIS OF NONADMITTED ASSETS AND RELATED ITEMS
<TABLE>
<CAPTION>
====================================================================================================================================
1 2 3
Changes for Year
End of End of (Increase)
Current Year Prior Year Decrease
---------------------------------------------
<S> <C> <C> <C>
1. Summary of Items Page 2, Lines 10 to 15 and 17 to 19, Column 3 ..........................432,688......................(432,688)
2. Other Assets:
2.1 Bills receivable not taken for premiums ..................................................................................
2.2 Furniture, equipment and supplies .................................................................44,126..........44,126
2.3 Loans on personal security, endorsed or not ..............................................................................
3. TOTAL (Lines 2.1 to 2.3) (Page 2, Line 20, Column 3) ...................................................44,126..........44,126
4. Aggregate write-ins for other than invested assets (Page 2, Line 21, Column 3) ..........176,212......................(176,212)
5. Aggregate write-ins for related items .........................................................................................
---------------------------------------------
6. TOTAL (Line 1 plus Lines 3 to 5) ........................................................608,900........44,126........(564,774)
====================================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------------------
0401. Advances to fund a new insurance company ...............................................176,212......................(176,212)
0402................................................................................................................................
0403................................................................................................................................
0498. Summary of remaining write-ins for Line 4 from overflow page .................................................................
---------------------------------------------
0499. TOTALS (Lines 0401 through 0403 plus 0498) (Line 4 above) ..............................176,212......................(176,212)
------------------------------------------------------------------------------------------------------------------------------------
0501................................................................................................................................
0502................................................................................................................................
0503................................................................................................................................
0598. Summary of remaining write-ins for Line 5 from overflow page .................................................................
0599. TOTALS (Lines 0501 through 0503 plus 0598) (Line 5 above) ....................................................................
====================================================================================================================================
</TABLE>
13
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
EXHIBIT 2 - RECONCILIATION OF LEDGER ASSETS
<TABLE>
<CAPTION>
====================================================================================================================================
1 2
INCREASE IN LEDGER ASSETS Current Year Prior Year
---------------------------------------
<S> <C> <C>
1. Net premiums written (Part 2, Line 32, Column 1) .....................................................547,906..........579,749
2. Interest, dividends and real estate income received (Part 1, Line 9, Column 3) .....................9,459,449........3,800,334
3. From sale or maturity of ledger assets (Part 1A, Line 9, Column 2) ................................3,577,329...........42,369
4. Other income items or increases, viz:
A. Agents' balances previously charged off ....................................................................................
B. Remittances from home office to U.S. branch (gross) ........................................................................
C. Funds held under reinsurance treaties (net) ................................................................................
D. Borrowed money (gross) .....................................................................................................
E. Amounts withheld or retained for account of others (net) ...................................................................
F. Aggregate write-ins for increases in ledger assets ..............................................4,721,000............2,282
5. Adjustment in book value of ledger assets (Part 1A, Line 9, Column 4) .........................................................
6. Capital paid in (Page 4, Line 24A) ............................................................................................
7. Surplus paid in (Page 4, Line 25A) ............................................................................................
7A. Surplus notes (Page 4, Line 23A) ..............................................................................................
---------------------------------------
8. TOTAL (Lines 1 to 7A) ..........................................................................18,305,684........4,424,734
DECREASE IN LEDGER ASSETS
9. Net losses paid (Part 3, Line 32, Column 4) ..........................................................271,446..........449,756
10. Expenses paid (Part 4, Line 27, Column 4) ..........................................................1,173,657..........868,048
10A. Interest expense (Part 1, Line 10A) ..................................................................323,000..................
11. From sale or maturity of ledger assets (Part 1A, Line 9, Column 3) ........................................................366
11A. Surplus notes (Page 4, Line 23A) ..............................................................................................
12. Other disbursement items or decreases, viz:
A. Agents' balances charged off ...........................................................................51...............34
B. Remittances to home office from U.S. branch (gross) ........................................................................
C. Funds held under reinsurance treaties (net) ................................................................................
D. Borrowed money (gross) .....................................................................................................
E. Amounts withheld or retained for account of others (net) ...................................................................
F. Aggregate write-ins for decreases in ledger assets ....................................................930..........961,930
13. Adjustment in book value of ledger assets (Part 1A, Line 9, Column 5) and depreciation
(Part 1, Line 11) ..........................................................................................................
14. Federal and foreign income taxes paid ................................................................611,716............7,986
15. Dividends paid stockholders .......................................................................15,400,000........2,120,000
16. Dividends to policyholders on direct business, less $....... dividends
on reinsurance assumed or ceded (net) ........................................................................................
---------------------------------------
17. TOTAL (Lines 9 to 16) .........................................................................17,780,800........4,408,120
RECONCILIATION BETWEEN YEARS
18. Amount of ledger assets as per balance December 31 of prior year ..................................82,423,695.......82,407,081
---------------------------------------
19. Increase or (decrease) in ledger assets during the year (Line 8 minus Line 17) .......... ............524,884...........16,614
---------------------------------------
20. Balance = ledger assets December 31 of current year ...........................................82,948,579.......82,423,695
====================================================================================================================================
DETAILS OF WRITE-INS
------------------------------------------------------------------------------------------------------------------------------------
04F01. Service Charges ......................................................................................2,240............2,282
04F02. Increase in Ledger Liabilities ...................................................................4,718,760..................
04FO3. .............................................................................................................................
04F98. Summary of remaining write-ins for Line 4F from overflow page ...............................................................
---------------------------------------
04F99. TOTALS (Lines 04F01 through 04F03 plus Q4F98) (Line 4F above) ....................................4,721,000............2,282
------------------------------------------------------------------------------------------------------------------------------------
12F01. Decrease in Drafts Issued and Outstanding ..............................................................930..........113,070
12FO2. Decrease in Ledger Liabilities ......................................................................................848,860
12FO3. .............................................................................................................................
12F98. Summary of remaining write-ins for Line 12F from overflow page ..............................................................
---------------------------------------
12F99. TOTALS (Lines 12F01 through 12F03 plus 12F98) (Line 12F above) .........................................930..........961,930
====================================================================================================================================
</TABLE>
14
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
<TABLE>
<CAPTION>
EXHIBIT OF PREMIUMS AND LOSSES
(Statutory Page 14 Data) 000001937199843014100 1998 Document Code: 430
NAIC Group Code 0193 DIRECT BUSINESS IN THE STATE OF Illinois DURING THE YEAR NAIC Company Code 01937
====================================================================================================================================
1 Gross Premiums, Including Policy and 4 5
Membership Fees, Less Return Premiums
and Premiums on Policies Not Taken Dividends Paid
------------------------------------- or Credited to Direct
2 3 Policyholders Unearned
Direct Premiums Direct Premiums on Direct Premium
Line of Business Written Earned Business Reserves
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Fire ....................................................................2,301...............7,080........................314
2.1 Allied lines ..............................................................409...............1,240.........................55
2.2 Multiple peril crop .........................................................................................................
2.3 Federal Flood ...............................................................................................................
3. Farmowners multiple peril ...................................................................................................
4. Homeowners multiple peril ...............................................4,352..............13,137........................575
5.1 Commercial multiple peril (non-liability portion) ...........................................................................
5.2 Commercial multiple peril (liability portion) ...............................................................................
6. Mortgage guaranty ...........................................................................................................
8. Ocean marine ................................................................................................................
9. Inland marine ...............................................................................................................
10. Financial guaranty ..........................................................................................................
11. Medical malpractice .........................................................................................................
12. Earthquake ..................................................................................................................
13. Group accident and health ...................................................................................................
14. Credit A & H (group and individual) .........................................................................................
15.1 Collectively renewable A & H ................................................................................................
15.2 Non-cancellable A & H .......................................................................................................
15.3 Guaranteed renewable A & H ..................................................................................................
15.4 Non-renewable for stated reasons only .......................................................................................
15.5 Other accident only .........................................................................................................
15.6 All other A & H .............................................................................................................
15.7 Federal employees health benefits program premium ...........................................................................
16. Workers' compensation .......................................................................................................
17. Other liability .............................................................................................................
18. Products liability ..........................................................................................................
19.1 Private passenger auto no-fault (personal injury protection) ................................................................
19.2 Other private passenger auto liability .................................10,406..............10,962......................2,407
19.3 Commercial auto no-fault (personal injury protection) .......................................................................
19.4 Other commercial auto liability .............................................................................................
21.1 Private passenger auto physical damage .................................11,714..............11,969......................2,669
21.2 Commercial auto physical damage .............................................................................................
22. Aircraft (all perils) .......................................................................................................
23. Fidelity ....................................................................................................................
24. Surety ......................................................................................................................
26. Burglary and theft ..........................................................................................................
27. Boiler and machinery ........................................................................................................
28. Credit ......................................................................................................................
31. Aggregate write-ins for other lines of business .............................................................................
32. TOTALS (a) ..........................................................29,182..............44,388......................6,020
===================================================================================================================================
DETAILS OF WRITE-INS
-----------------------------------------------------------------------------------------------------------------------------------
3101. ............................................................................................................................
3102. ............................................................................................................................
3103. ............................................................................................................................
3198. Summary of remaining write-ins for Line 31 from overflow page ..............................................................
3199. TOTALS (Lines 3101 through 3103 plus 3198) (Line 31 above) .................................................................
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================================================
1 6 7 8 9 10
Direct Direct
Allocated Allocated
Direct Loss Loss
Losses Paid Direct Direct Adjustment Adjustment
(deducting) Losses Losses Expense Expense
Line of Business salvage) Incurred Unpaid Paid Incurred
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Fire .............................................................6,385.......5,083....1,253.........312..........312
2.1 Allied lines .......................................................802.........475.......89..........64...........64
2.2 Multiple peril crop .................................................................................................
2.3 Federal Flood .......................................................................................................
3. Farmowners multiple peril ...........................................................................................
4. Homeowners multiple peril ........................................9,474.......5,196....3,092.........847..........847
5.1 Commercial multiple peril (non-liability portion) ...................................................................
5.2 Commercial multiple peril (liability portion) ...............................(8,000)..............16,426.......16,426
6. Mortgage guaranty ...................................................................................................
8. Ocean marine ........................................................................................................
9. Inland marine .......................................................................................................
10. Financial guaranty ..................................................................................................
11. Medical malpractice .................................................................................................
12. Earthquake ..........................................................................................................
13. Group accident and health ...........................................................................................
14. Credit A & H (group and individual) .................................................................................
15.1 Collectively renewable A & H ........................................................................................
15.2 Non-cancellable A & H ...............................................................................................
15.3 Guaranteed renewable A & H ..........................................................................................
15.4 Non-renewable for stated reasons only ...............................................................................
15.5 Other accident only .................................................................................................
15.6 All other A & H .....................................................................................................
15.7 Federal employees health benefits program premium ...................................................................
16. Workers' compensation ...............................................................................................
17. Other liability .....................................................................................................
18. Products liability ..................................................................................................
19.1 Private passenger auto no-fault (personal injury protection) ........................................................
19.2 Other private passenger auto liability ...........................6,994.......1,994....1,000.........415..........415
19.3 Commercial auto no-fault (personal injury protection) ...............................................................
19.4 Other commercial auto liability .....................................................................................
21.1 Private passenger auto physical damage ...........................4,275.......2,275..................200..........200
21.2 Commercial auto physical damage .....................................................................................
22. Aircraft (all perils) ...............................................................................................
23. Fidelity ............................................................................................................
24. Surety ..............................................................................................................
26. Burglary and theft ..................................................................................................
27. Boiler and machinery ................................................................................................
28. Credit ..............................................................................................................
31. Aggregate write-ins for other lines of business .....................................................................
32. TOTALS (a) ...................................................27,930.......7,023....5,434......18,264.......18,264
==========================================================================================================================
DETAILS OF WRITE-INS
--------------------------------------------------------------------------------------------------------------------------
3101. ....................................................................................................................
3102. ....................................................................................................................
3103. ....................................................................................................................
3198. Summary of remaining write-ins for Line 31 from overflow page ......................................................
3199. TOTALS (Lines 3101 through 3103 plus 3198) (Line 31 above) .........................................................
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================================
1 11 12 13
Direct
Allocated
Loss
Adjustment Commissions Taxes,
Expense and Brokerage Licenses
Line of Business Unpaid Expenses and Fees
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Fire ................................................................................................
2.1 Allied lines ........................................................................................
2.2 Multiple peril crop .................................................................................
2.3 Federal Flood .......................................................................................
3. Farmowners multiple peril ...........................................................................
4. Homeowners multiple peril ........................................................615................
5.1 Commercial multiple peril (non-liability portion) ...................................................
5.2 Commercial multiple peril (liability portion) .......................................................
6. Mortgage guaranty ...................................................................................
8. Ocean marine ........................................................................................
9. Inland marine .......................................................................................
10. Financial guaranty ..................................................................................
11. Medical malpractice .................................................................................
12. Earthquake ..........................................................................................
13. Group accident and health ...........................................................................
14. Credit A & H (group and individual) .................................................................
15.1 Collectively renewable A & H ........................................................................
15.2 Non-cancellable A & H ...............................................................................
15.3 Guaranteed renewable A & H ..........................................................................
15.4 Non-renewable for stated reasons only ...............................................................
15.5 Other accident only .................................................................................
15.6 All other A & H .....................................................................................
15.7 Federal employees health benefits program premium ...................................................
16. Workers' compensation ...............................................................................
17. Other liability .....................................................................................
18. Products liability ..................................................................................
19.1 Private passenger auto no-fault (personal injury protection) ........................................
19.2 Other private passenger auto liability ............................4,000.............................
19.3 Commercial auto no-fault (personal injury protection) ...............................................
19.4 Other commercial auto liability .....................................................................
21.1 Private passenger auto physical damage ..............................................................
21.2 Commercial auto physical damage .....................................................................
22. Aircraft (all perils) ...............................................................................
23. Fidelity ............................................................................................
24. Surety ..............................................................................................
26. Burglary and theft ..................................................................................
27. Boiler and machinery ................................................................................
28. Credit ..............................................................................................
31. Aggregate write-ins for other lines of business .....................................................
32. TOTALS (a) .....................................................4,000.........615.................
==========================================================================================================
DETAILS OF WRITE-INS
----------------------------------------------------------------------------------------------------------
3101. ....................................................................................................
3102. ....................................................................................................
3103. ....................................................................................................
3198. Summary of remaining write-ins for Line 31 from overflow page ......................................
3199. TOTALS (Lines 3101 through 3103 plus 3198) (Line 31 above) .........................................
==========================================================================================================
(a) Finance and service charges not included in Lines 1 to 32 $....................................
</TABLE>
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
15 Illinois
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
GENERAL INTERROGATORIES
<TABLE>
<CAPTION>
<S> <C>
1. (a) Does the company issue both participating and non-participating policies? Yes[ ] No[X]
(b) If yes, state the amount of calendar year net premiums written on:
(i) Participating policies: $..................
(ii) Non-participating policies: $..................
2. For Mutual Companies and Reciprocal Exchanges Only:
(a) Does company issue assessable policies? Yes[ ] No[X]
(b) Does company issue non-assessable policies? Yes[ ] No(X]
(c) If assessable policies are issued, what is the extent of the contingent liability of the policyholders? ...................
(d) Total amount of assessments laid or ordered to be laid during the year on deposit notes or contingent
premiums? $..................
3. For Reciprocal Exchanges Only:
(a) Does the Exchange appoint local agents? Yes[ ] No[X]
(b) If yes, is the commission paid:
(i) out of Attorney's-in-Fact compensation? Yes[ ] No[ ] N/A[X]
(ii) as a direct expense of the Exchange? Yes[ ] No[ ] N/A[X]
(c) What expenses of the Exchange are not paid out of the compensation of the Attorney-in-Fact?
(d) Has any Attorney-in-Fact compensation, contingent on fulfillment of certain conditions, been deferred? Yes[ ] No[X]
(e) If yes, give full information
4. CAPITAL STOCK OF THIS COMPANY
====================================================================================================================
1 2 3 4 5 6 7
Number of Shares Number of Shares Par Value Redemption Price Is Dividend Rate Are Dividends
Class Authorized Outstanding Per Share if Callable Limited? Cumulative?
--------------------------------------------------------------------------------------------------------------------
Preferred ....................................................................... Yes[ ] No[X] Yes[ ] No[X]
Common ...........102,000.............102,000..........100.00 X X X XXX XXX XXX XXX
====================================================================================================================
5. (a) Does the company own any securities of a real estate holding company or otherwise hold real estate
indirectly? Yes[ ] No[X]
(b) If yes,
(i) explain
(ii) Name of real estate holding company
(iii) Number of parcels involved? ...................
(iv) Total book value $..................
6. (a) Is the company a member of an Insurance Holding Company System consisting of two or more affiliated
persons, one or more of which is an insurer? Yes[X] No[ ]
(b) If yes, did the company register and file with its domiciliary state Insurance Commissioner, Director,
or Superintendent, or with such regulatory official of the State of domicile of the principal insurer
in the Holding Company System, a registration statement providing disclosure substantially similar to
the standards adopted by the National Association of Insurance Commissioners in its Model Holding
Company System Regulatory Act and model regulations pertaining thereto, or is the company subject to
standards and disclosure requirements substantially similar to those required by such Act and
regulations? Yes[X] No[ ] N/A[ ]
(c) State regulating Illinois
7. (a) Does any foreign (non-United States) person or entity directly or indirectly control 10% or more of
the company? Yes[ ] No[X]
(b) If yes,
(i) state the percentage of foreign control: ..................%
8. (a) Total amount loaned during the year:
(i) to directors or other officers $..................
(ii) to stockholders not officers $..................
(b) Total amount of loans outstanding at end of year:
(i) to directors or other officers $..................
(ii) to stockholders not officers $..................
9. (a) Did any person while an officer, director or trustee of the company receive directly or indirectly,
during the period covered by this statement, any commission on the business transactions of the company? Yes[ ] No[X]
(b) Did any person while an officer, director, trustee or employee receive directly or indirectly, during
the period covered by this statement, any compensation in addition to their regular compensation on
account of the reinsurance transactions of the company? Yes[ ] No[X]
(c) Has the company an established procedure for disclosure to its board of directors or trustees of any
material interest or affiliation on the part of its officers, directors, trustees, or responsible
employees which is in or is likely to conflict with the official duties of such person? Yes[X] No[ ]
(d) Except for retirement plans generally applicable to its staff employees and agents and contracts
with its agents for the payment of commissions, has the company any agreement with a person whereby
it agrees that for any service rendered or to be rendered, they shall receive directly or indirectly
any salary, compensation or emolument that will extend beyond a period of 12 months from the date of
the agreement? Yes[ ] No[X]
10. What amount of installment notes is owed and now held by the company? $..................
11. (a) Have any of these notes been hypothecated, sold or used in any manner as security for money loaned
within the past year? Yes[ ] No[X]
(b) If yes, what amount? $..................
12. (a) Largest net aggregate amount insured in any one risk (excluding workers' compensation): $............500.00
(b) Does any reinsurance contract considered in the calculation of this amount include an aggregate
limit of recovery without also including a reinstatement provision? Yes[ ] No[X]
(c) State the number of reinsurance contracts (excluding individual facultative risk certificates,
but including facultative programs, automatic facilities or facultative obligatory contracts)
considered in the calculation of this amount. $..................
</TABLE>
16
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
GENERAL INTERROGATORIES (Continued)
<TABLE>
<CAPTION>
<S> <C>
13. (a) What provision has this company made to protect itself from an excessive loss in the event of a
catastrophe under a workers' compensation contract issued without limit of loss? None Written
(b) Describe the method used to estimate this company's probable maximum insurance loss, and identify
the types of insured exposures comprising that probable maximum loss, the locations of
concentrations of those exposures and the external resources (such as consulting firms or computer
software models), if any, used in the estimation process. What provision has this company made
(such as a catastrophic reinsurance program) to protect itself from an excessive loss arising
from the types and concentrations of insured exposures comprising its probable maximum property
insurance loss? None Written
14. (a) Has this company guaranteed any financed premium accounts? Yes[ ] No[X]
(b) If yes, give full information
15. (a) Has this company reinsured any risk with any other company under a quota share reinsurance contract
which includes a provision which would limit the reinsurer's losses below the stated quota share
percentage (e.g., a deductable, a loss ratio corridor, a loss ratio cap, an aggregate limit or any
similar provision)? Yes[ ] No[X]
(b) If yes, indicate the number of reinsurance contracts containing such provisions: $..................
16. (a) Has this company reinsured any risk with any other company and agreed to release such company from
liability, in whole or in part, from any loss that may occur on the risk, or portion thereof, reinsured? Yes[ ] No[X]
(b) If yes, give full information
17. If the company has assumed risks from another company, there should be charged on account of such
reinsurances a reserve equal to that which the original company would have been required to charge had
it retained the risks. Has this been done? Yes[ ] No[X] N/A[ ]
18. (a) Has this company guaranteed policies issued by any other company and now in force? Yes[ ] No[X]
(b) If yes, give full information
19. (a) Were all stocks, bonds and other securities owned December 31 of current year, over which the company
has exclusive control in the actual possession of the company on said date, except as shown by the
Schedule E - Part 2 - Special Deposits? Yes[ ] No[X]
(b) If no, give full and complete information relating thereto:
20. (a) Were any of the stocks, bonds or other assets of the company owned at December 31 of the current year
not exclusively under the control of the company, except as shown on the Schedule E - Part 2 - Special
Deposits; or has the company sold or transferred any assets subject to a put option contract that is
currently in force? (Exclude securities subject to Interrogatory 21.) Yes[X] No[ ]
(b) If yes, state the amount thereof at December 31 of the current year:
(i) loaned to others $..................
(ii) subject to repurchase agreements $..................
(iii) subject to reverse repurchase agreements $..................
(iv) subject to dollar repurchase agreements $..................
(v) subject to reverse dollar repurchase agreements $..................
(vi) pledged as collateral $........54,740,657
(vii) placed under option agreements $..................
(viii) letter stock or other securities restricted as to sale $..................
(ix) other $..................
(c) For each category above, if any of these assets are held by others, identify by whom held.
(i)
(ii)
(iii)
(iv)
(v)
(vi) Commerce Bank-Bloomington, Illinois
(vii)
(viii)
(ix)
(d) For categories (b)(i) and (iii) above, and for any other securities that were made available
for use by another person during the year covered by this statement, attach a schedule as shown
in the instructions to the annual statement.
(e) For category (b)(vii) above, do any of the option agreements involve asset transfers with put options? Yes[ ] No[ ] N/A[X]
If yes, disclose in the Notes to Financial Statements the information specified in the instructions
to the annual statement.
21. Were any of the assets reported in this statement subject to a contractual obligation to transfer
to another party without the liability for such obligation being reported in this statement? Yes[ ] No[X]
If yes, state the amount thereof at December 31 of current year:
(i) Rented from others $..................
(ii) Borrowed from others $..................
(iii) Leased from others $..................
(iv) Other $..................
Disclose in Notes to Financial Statements the nature of each of these obligations.
22. (a) State as of what date the latest financial examination of the company was made or is being made. 12/31/1995
(b) State the as of date of the latest financial examination report that is available from either
the state of domicile or the company. This date should be the date of the examined balance sheet
and not the date the report was completed or released. 12/31/1995
(c) State as of what date the latest financial examination report became available to other states or
the public from either the state of domicile or the company. This is the release date or completion
date of the examination report and not the date of the examination (balance sheet date). 05/08/1998
(d) By what departments or department? Illinois
23. (a) Has any change been made during the year of this statement in the charter, by-laws, articles of
incorporation, or deed of settlement of the company? Yes[ ] No[X]
(b) If yes, date of change: / /
If not previously filed, furnish herewith a certified copy of the instrument as amended.
24. (a) Has any direct new business been solicited or written in any state where the company was not licensed? Yes[ ] No[X]
(b) If yes, explain
25. Is the purchase or sale of all investments of the company passed upon either by the board of directors
or a subordinate committee thereof? Yes[X] No[ ]
26. Does the company keep a complete permanent record of the proceedings of its board of directors and all
subordinate committees thereof? Yes[X] No[ ]
27. Have the instructions for completing the blank required by this department been followed in every detail? Yes[X] No[ ]
</TABLE>
17
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE American Union Insurance Company
GENERAL INTERROGATORIES (Continued)
<TABLE>
<CAPTION>
<S> <C>
(ONLY UNITED STATES BRANCHES OF FOREIGN COMPANIES NEED ANSWER INTERROGATORIES 28 AND 29)
28. What changes have been made during the year in the United States manager or the United States trustees
of the company?
29. Does this statement contain all business transacted for the company through its United States branch,
on risks wherever located? Yes[ ] No[X]
30. (a) During the period covered by this statement, did any agent, general agent, broker, sales
representative, non-affiliated sales/service organization or any combination thereof under common
control (other than salaried employees of the company) receive credit or commissions for or control
a substantial part (more than 20 percent of any major line of business measured on direct premiums) of:
(i) sales of new business? Yes[ ] No[X]
(ii) renewals? Yes[ ] No[X]
(b) During the period covered by this statement, did any sales/service organization owned in whole or
in part by the company or an affiliate, receive credit or commissions for or control a substantial
part (more than 20 percent of any major line of business measured on direct premiums) of:
(i) sales of new business? Yes[ ] No[X]
(ii) renewals? Yes[ ] No[X]
31. (a) If the company recorded accrued retrospective premiums on insurance contracts on Line 10.3 of the
assets schedule, Page 2, state the amount of corresponding liabilities recorded for:
(i) unpaid losses: $..................
(ii) unpaid underwriting expenses (including loss adjustment expenses): $..................
(b) Of the amount on Line 10.3 of the assets schedule, Page 2, state the amount which is secured by
letters of credit, collateral and other funds. $..................
(c) If the company underwrites commercial insurance risks, such as workers' compensation, are premium
or promissory notes accepted from its insureds covering unpaid premiums and/or unpaid losses? Yes[ ] No[ ] N/A[X]
(d) If yes, provide the range of interest rates charged under such notes during the period covered by
this statement:
(i) From: ...................
(ii) To: ...................
(e) Are letters of credit or collateral and other funds received from insureds being utilized by the
company to secure premium or promissory notes taken by the company, or to secure any of the company's
reported direct unpaid loss reserves, including unpaid losses under deductible features of commercial
policies? Yes[ ] No[X]
(f) If yes, state the amount thereof at December 31 of the current year:
(i) Letters of credit: $..................
(ii) Collateral and other funds: $..................
32. What interest, direct or indirect, has the company in the capital stock of any other insurance company?
See Schedule D
33. (a) Does the company have any direct Medicare Supplement Insurance in force? Yes[ ] No[X]
(b) If yes, indicate premium earned on U. S. business only. $..................
(c) What portion of Item (b) is not reported on the Medicare Supplement Insurance Experience Exhibit? $..................
Reason for excluding
(d) Indicate amount of earned premium attributable to Canadian and/or Other Alien not included in Item
(b) above. $..................
(e) Indicate total incurred claims on all Medicare Supplement Insurance. $..................
34. (a) Was the company's prior year's annual statement amended? Yes[ ] No[X]
(b) If yes, furnish the following information regarding the last amendment to the prior year's annual
statement filed with the company's state of domicile:
(i) Amendment number ...................
(ii) Date of amendment / /
35. What is the name, address and affiliation (officer/employee of the company or actuary/consultant
associated with a(n) actuarial consulting firm) of the individual providing the statement of actuarial
opinion? None required
36. What is the name and address of the independent certified public accountant or accounting firm retained
to conduct the annual audit? KPMG Peat Marwick, 303 East Wacker Drive, Chicago, IL
37. (a) Has the company been a party to a merger or consolidation during the period covered by this statement? Yes[X] No[ ]
(b) If yes, provide name of company, NAIC Company Code, and state of domicile (use 2 letter state
abbreviation) for any company that has ceased to exist as a result of the merger or consolidation.
==================================================================================================================
NAIC
Company State of
Name of Company Code Domicile
------------------------------------------------------------------------------------------------------------------
DIRECT AUTO INDEMNITY COMPANY ...............................................25801.................IL.............
==================================================================================================================
</TABLE>
18
<PAGE>
GENERAL INTERROGATORIES (Continued)
8. (a) Has this company had any Certificates of Authority, licenses or
registrations (including corporate registration, if applicable)
suspended or revoked by any governmental entity during the reporting
period? (You need not report an action, either formal or informal, if a
confidentiality clause is part of the agreement.) Yes [ ] No [X]
(b) If yes, give full information
9. (a) Does this statement include payments for assessments as described in the
Annual Statement Instructions other than guaranty fund or guaranty
association assessments? Yes [ ] No [X]
(b) If answer is yes,
(i) amount paid as losses or risk adjustment: $ ............
(ii) amount paid as expenses: $ ............
(iii) other amounts paid: $ ............
10. (a) Amount of payments to Trade Associations, Service Organizations and
Statistical or Rating Bureaus, if any? $ ...... 3,826
(b) List the name of the organization and the amount paid if any such
payment represented 25% or more of the total payments to Trade
Associations, Service Organizations and Statistical or Rating Bureaus
during the period covered by this statement.
Name of Organization Amount Paid
--------------------------------------------------------------
NAII ................................................... 1,250
ISO ................................................... 1,130
--------------------------------------------------------------
11. (a) Amount of payments for legal expenses, if any? $ .... 152,971
(b) List the name of the firm and the amount paid if any such payment
represented 25% or more of the total payments for legal expenses during
the period covered by this statement.
Name of Firm Amount Paid
--------------------------------------------------------------
Holleb & Coff ........................................ 100,000
--------------------------------------------------------------
12. (a) Amount of payments for expenditures in connection with matters before
legislative bodies, officers or departments of government,
if any? $ ............
(b) List the name of the firm and the amount paid if any such payment
represented 25% or more of the total payment expenditures in connection
with matters before legislative bodies, officers or departments of
government during the period covered by this statement.
Name of Firm Amount Paid
------------------------------------------------------------
------------------------------------------------------------
19
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statement
--------------------------------------------------------------------------------
1. Basis of Presentation.
This Statement was prepared in conformity with the NAIC Annual Statement
instructions and accounting practices and procedures manuals.
2. a. Asset values are generally stated as follows:
Bonds: Amortized Cost using the Scientific method.
Common Stocks: Market Value, except that the investment in the
stocks of subsidiaries are carried on the equity
basis. Market Value adjusted for State of
Illinois Statutory limitations.
b. No depreciation for the year.
3. No derivative instruments.
4. Federal Income Tax Allocation
a. 1. The Company's Federal Income Tax Return is combined with
the following entity: American Union Financial
Corporation
2. The method of allocation between the companies is subject
to written agreement approved by the Board of Directors.
Allocation is based upon separate return calculations
with current credit for net losses. Intercompany tax
balances are settled after the filing of the combined
return.
b. The amount of incurred available for offset against taxable
losses in the future is $1,162,644 from 1998.
5. a. American Union Insurance Company is owned as follows:
American Union Financial Corporation, an Illinois business
corporation, owns 100.00%.
b. See Schedule Y
c. None
d. None
e. None
f. None
6. The Company sponsors a 401K plan effective in 1988.
7. Capital and Surplus and Shareholders Dividend Restrictions
a. No restrictions other than statutory.
b. No preferred stock.
c. No restrictions on unassigned surplus.
d. No stock held for special purposes.
e. Not applicable.
f. None.
g. None.
8. No instructions
9. The Company has a loan outstanding of $5,308,792 payable to affiliate
American Union Life Insurance Company.
10. The Company has a contingent liability regarding the sale of an
affiliate Union Automobile Indemnity Company to Unitrin Corporation. If
Loss Reserves and Loss Expense Reserves develop adversely over a
pre-determined threshold, American Union will be liable for a portion of
the deficiencies. As of 12/31/98, it does not see to be probable that
any liability will be realized.
11. There are no material leases.
12. No subscriber Savings Accounts.
13. The Company has no amounts due from Reinsurers which exceed 3% of the
Policyholders surplus.
20
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statement
--------------------------------------------------------------------------------
14. There is no reinsurance recoverable in dispute.
15. No return commission due.
16. The Company has no purchased annuities under which the company is owner
and payee.
17. The Company did not write off any uncollectible reinsurance during the
year.
18. There was no commutation of ceded reinsurance during the year.
19. No retroactive reinsurance contracts that will generate special surplus
transactions.
20. No Intercompany pooling arrangements.
21. No accrued retrospective premiums.
22. The Company does not discount liabilities for unpaid losses or unpaid
loss adjustment expenses.
23. The Company has no Financial Guaranty Exposures.
24. The Company has no asset transfers with Put options.
25. There are no Direct Premiums written by Managing Agents/Third Party
Administrators.
26. There has been no gain or loss to the insurer from Uninsured A & H Plans
and the Uninsured portion of Partially Insured Plans.
27. No Asbestos/Environmental Reserves.
28. No material events subsequent.
29. The Company elected to use rounding in reporting items in the Statement.
20.1
<PAGE>
FIVE - YEAR HISTORICAL DATA
<TABLE>
<CAPTION>
====================================================================================================================================
Show amounts in whole dollars only, no cents; show percentages to one decimal
place, i.e., 17.6
1 2 3 4 5
1998 1997 1996 1995 1994
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross Premiums Written
(Page 9, Part 2B, Columns 1 and 2)
1. Liability Lines (Lines 11.1, 11.2, 16, 17.1, 17.2, 18.1,
18,2, 19.1, 19.2, & 19.3, 19.4) .................................278,680......290,579...16,624,414...17,867,171...16,860,636
2. Property Lines (Lines 1, 2, 9, 12, 21, & 26) ....................264,874......271,691...11,753,738...11,776,105...11,801,819
3. Property and Liability Combined Lines
(Lines 3, 4, 5, 8, 22 & 27) .......................................4,352.......17,479....8,092,351....7,833,375....7,356,031
4A. All Other Lines (Lines 6, 10, 13, 14, 15, 23, 24,
28, 29, & 31) ..............................................................................................................
4B. Nonproportional Reinsurance Lines (Lines 30A, 30B,
& 30C) .....................................................................................................................
--------------------------------------------------------------
5. TOTAL (Line 32) .............................................547,906......579,749...36,470,503...37,476,651...36,018,486
Net Premiums Written
(Page 9, Part 2B, Column 4)
6. Liability Lines (Lines 11.1, 11.2, 16, 17.1, 17.2,
18.1, 18.2, 19.1, 19.2 & 19.3, 19.4) ............................278,680......290,579...16,264,414...17,537,342...16,466,310
7. Property Lines (Lines 1, 2, 9, 12, 21 & 26) .....................264,874......271,691...11,495,895...11,631,464...11,228,434
8. Property and Liability Combined Lines
(Lines 3, 4, 5, 8, 22 & 27) .......................................4,352.......17,479....7,609,459....8,552,487....4,731,183
9A. All Other Lines (Lines 6, 10, 13, 14, 15, 23, 24,
28, 29 & 31) ...............................................................................................................
9B. Non-proportional Reinsurance Lines
(Lines 30A, 30B & 30C) .....................................................................................................
--------------------------------------------------------------
10. TOTAL (Line 32) .............................................547,906......579,749...35,369,768...37,721,293...32,425,927
Statement of Income (Page 4)
11. Net Underwriting Gain or (Loss) (Line 7) .......................(413,265)....(157,959)..(2,682,079)..(1,882,550)..(3,772,658)
12. Net Investment Gain or (Loss) (Line 9A) ......................12,312,301....3,531,213....8,486,054...22,346,554....4,207,803
13. Total Other Income (Line 13) ......................................2,189........2,248......187,595......142,751......163,372
14. Dividends to Policyholders (Line 14A) ......................................................................................
15. Federal and Foreign Income Taxes Incurred (Line 15) ...........1,162,644......166,849......191,713......432,491.....(429,867)
--------------------------------------------------------------
16. Net Income (Line 16) .........................................10,738,581....3,208,653....5,799,857...20,174,264....1,028,384
Balance Sheet Lines (Pages 2 and 3)
17. TOTAL Admitted Assets (Page 2, Line 22, Column 4) ............12,671,563...29,250,765...65,001,546...71,424,387...73,686,277
18. Agents' Balances or Uncollected Premiums (Page 2, Column 4)
18.1 In Course of Collection (Line 10.1) .......................15,818.......19,200....1,695,636....1,887,701....1,375,067
18.2 Deferred and Not Yet Due (Line 10.2) ...............................................202,491......181,671.............
18.3 Accrued Retrospective Premiums (Line 10.3) ..........................................................................
19. TOTAL Liabilities (Page 3, Line 23) ...........................6,999,104....1,882,793...35,236,761...40,408,401...43,288,582
20. Losses (Page 3, Lines 1 and 1A) .................................116,739.......91,066...14,481,892...16,222,132...15,078,474
21. Loss Adjustment Expenses (Page 3, Line 2) ........................35,000.......35,000....3,986,818....3,935,727....3,711,745
22. Unearned premiums (Page 3, Line 9) ..............................125,122......139,976...11,337,552...11,434,397...10,205,204
23. Capital Paid Up (Page 3, Lines 25A & 25B) ....................10,200,000...10,200,000...10,200,000...10,200,000...12,069,400
24. Surplus as Regards Policyholders (Page 3, Line 27) ............5,672,459...27,367,972...29,764,785...31,015,986...30,397,645
Risk-Based Capital Analysis
25. TOTAL Adjusted Capital ........................................5,672,459...27,367,972...29,764,785...31,015,986.............
26. Authorized Control Level Risk-Based Capital ...................1,921,593...16,443,819...15,147,479....8,184,620.............
Percentage Distribution of Cash and Invested Assets
(Page 2, Column 4)
(Item divided by Page 2, Line 9, Column 4) x 100.0
27. Bonds (Line 1) .....................................................12.7.........14.0..........7.6.........53.2.........16.3
28. Stocks (Lines 2.1 & 2.2) ...........................................86.0.........85.4.........37.4.........46.5.........79.3
29. Mortgage Loans on Real Estate (Lines 3.1 and 3.2) ..........................................................................
30. Real Estate (Lines 4.1 & 4.2) ...........................................................................................1.9
31. Cash and Short-Term Investments (Line 5) ............................1.3..........0.6.........55.0..........0.3..........2.5
32. Other Invested Assets (Line 6) .............................................................................................
32A. Receivable for Securities (Line 7) .........................................................................................
33. Aggregate Write-ins for Invested Assets (Line 8) ...........................................................................
--------------------------------------------------------------
34. Cash and Invested Assets (Line 9) .................................100.0........100.0........100.0........100.0........100.0
Investments in Parent Subsidiaries and Affiliates
35. Affiliated Bonds, (Schedule D, Summary, Line 25, Column 6) .................................................................
36. Affiliated Preferred Stocks (Schedule D, Summary, Line 39,
Column 3) ..................................................................................................................
37. Affiliated Common Stocks (Schedule D, Summary, Line 53,
Column 3) ..................................................................9,291,858...10,958,964...13,792,590...34,724,017
38. Affiliated Short-Term Investments (subtotals included
in Schedule DA, Part 1, Column 10) .........................................................................................
38A. Affiliated Mortgage Loans on Real Estate ...................................................................................
38B. All Other Affiliated .......................................................................................................
--------------------------------------------------------------
39. TOTAL of above Lines 35, 36, 37, 38, 38A, & 38B ........................9,291,858...10,958,964...13,792,590...34,724,017
40. Percentage of Investments in Parent, Subsidiaries and
Affiliates to Surplus as Regards Policyholders (Line 39
above divided by Page 3, Column 1, Line 27 x 100.0) .............................34.0.........36.8.........44.5........114.2
--------------------------------------------------------------
===================================================================================================================================
</TABLE>
21
The prior year amounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
FIVE - YEAR HISTORICAL DATA (Continued)
<TABLE>
<CAPTION>
====================================================================================================================================
1 2 3 4 5
1998 1997 1996 1995 1994
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital and Surplus Accounts (Page 4)
41. Net Unrealized Capital Gains or (Losses) (Line 19) ......(16,480,320) (3,579,961)...(3,166,859)...13,216,066...(23,923,300)
42. Dividends to Stockholders (Cash) (Line 27) ..............(15,400,000)..(2,120,000)...(3,280,000)...(1,300,000)...(2,500,000)
43. Change in Surplus as Regards Policyholders for
the Year (Line 31) ......................................(21,695,513)..(2,396,813)...(1,251,201)......618,341...(49,930,485)
Gross Losses Paid
(Page 10, Part 3, Columns 1 and 2)
44. Liability Lines (Lines 11.1, 11.2, 16, 17.1, 17.2,
18.1, 18.2, 19.1, 19.2 & 19.3, 19.4) ........................100,474......287,245....11,890,615....11,246,843....11,707,529
45. Property Lines (Lines 1, 2, 9, 12, 21 & 26) .................161,498......150,145.....8,696,018.....7,453,503.....7,460,896
46. Property and Liability Combined Lines
(Lines 3, 4, 5, 8, 22, & 27) ..................................9,474.......12,366.....8,352,022.....5,135,447.....4,915,913
47A. All Other Lines (Lines 6, 10, 13, 14, 15, 23,
24, 28, 29 & 31) ..........................................................................................................
47B. Nonproportional Reinsurance Lines
(Lines 30A, 30B & 30C) ....................................................................................................
---------------------------------------------------------------------
48. TOTAL (Line 32) ...........................................271,446......449,756....28,938,655...23,835,793.....24,084,338
Net Losses Paid
(Page 10, Part 3, Column 4)
49. Liability Lines (Lines 11.1, 11.2, 16, 17.1, 17.2,
18.1, 18.2, 19.1, 19.2 & 19.3, 19.4) ........................100,474......287,245....11,842,858...11,110,045.....11,177,290
50. Property Lines (Lines 1, 2, 9, 12, 21 & 26) .................161,498......150,145.....8,343,035....7,452,008......6,759,696
51. Property and Liability Combined Lines
(Lines 3, 4, 5, 8, 22, & 27) ..................................9,474.......12,366.....6,513,695....4,201,301......2,769,736
52A. All Other Lines (Lines 6, 10, 13, 14, 15, 23, 24,
28, 29, & 31) .............................................................................................................
52B. Nonproportional Reinsurance Lines
(Lines 30A, 30B & 30C) ....................................................................................................
---------------------------------------------------------------------
53. TOTAL (Line 32) ...........................................271,446......449,756....26,699,588...22,763,354.....20,706,722
Operating Percentages (Page 4)
(Item divided by Page 4, Line 1) x 100.0
54. Premiums Earned (Line 1) ......................................100.0........100.0.........100.0........100.0..........100.0
55. Losses Incurred (Line 2) .......................................52.8.........42.9..........70.4.........65.5...........68.7
56. Loss Expenses Incurred (Line 3) ................................13.8..........5.6..........10.9..........9.8...........12.1
57. Other Underwriting Expenses Incurred (Line 4) .................106.8.........78.7..........26.3.........29.8...........31.4
58. Net Underwriting Gain or (Loss) (Line 7) ......................(73.4).......(27.2).........(7.6)........(5.2).........(12.1)
Other Percentages
59. Other Underwriting Expenses to Net Premiums Written
(Page 4, Lines 4 + 5 - 13 divided by Page 9, Part 2B,
Column 4, Line 32 x 100.0) ....................................109.3.........78.9..........26.3.........28.9...........30.1
60. Losses and Loss Expenses Incurred to Premiums Earned
(Page 4, Lines 2 + 3 divided by Page 4, Line 1 x 100.0) ........66.6.........48.5..........81.3.........75.3...........80.8
61. Net Premiums Written to Policyholders' Surplus (Page 9
Part 2B, Column 4, Line 32 divided by Page 3, Line 27,
Column 1 x 100.0) ...............................................9.7..........2.0...........1.2..........1.2............1.1
One Year Loss Development (000 omitted)
62. Development in Estimated Losses and Loss Expenses
Incurred Prior to Current Year (Schedule P, Part 2 -
Summary, Line 12, Column 12) ......................................4..........(43).......(1,687)......(2,106)........(2,419)
63. Percent of Development of Losses and Loss Expenses
Incurred to Policyholders' Surplus of Prior Year
End (Line 62 above divided by Page 4, Line 17,
Column 1 x 100.0) ...............................................0.0.........(0.1).........(5.4)........(6.9)..........(3.0)
Two Year Loss Development (000 omitted)
64. Development in Estimated Losses and Loss Expenses
Incurred 2 years before the current year and prior
year (Schedule P, Part 2 - Summary, Line 12, Column
13) .............................................................(34)........(81)........(2,794)......(3,417)........(1,684)
65. Percent of Development of Losses and Loss Expenses
Incurred to Reported Policyholders' Surplus of
Second Prior Year End (Line 64 above divided
by Page 4, Line 17, Column 2 x 100.0) ..........................(0.1).......(0.3)..........(9.2)........(4.3)..........(4.5)
====================================================================================================================================
</TABLE>
22
The prior year accounts have been restated to include merged figures for
consistency in comparing 1998 merged figures. American Union Insurance Company
and Direct Auto Indemnity Company were merged 12/31/98.
<PAGE>
23 Schedule A Part 1 ........................... NONE
24 Schedule A Part 2 ........................... NONE
25 Schedule A Part 3 ........................... NONE
Schedule A Verification ..................... NONE
26 Schedule B Part 1 ........................... NONE
27 Schedule B Part 2 ........................... NONE
Schedule B Verification ..................... NONE
28 Schedule BA Part 1 .......................... NONE
29 Schedule BA Part 2 .......................... NONE
Schedule BA Verification .................... NONE
23, 24, 25, 26, 27, 28, 29
