UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
--------------
or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number 33-20104
--------
MetLife Texas Holdings, Inc.
- - -------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3437648
- - -------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Madison Avenue, New York, New York 10010
- - -------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 578-7791
------------------
Not Applicable
- - -------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $1.00 Par Value 1,000
- - ----------------------------- --------------------------------
Title of Class Outstanding at March 31, 1996<PAGE>
METLIFE TEXAS HOLDINGS, INC.
- - ----------------------------
INDEX
-----
Part I. FINANCIAL INFORMATION Page No(s).
-----------
Item 1. Financial Statements
Condensed Consolidated Statements of
Income for the quarters and years-to-date
ended March 31, 1996 and 1995
(Unaudited) 3
Condensed Consolidated Balance Sheets
as of March 31, 1996 (Unaudited) and
December 31, 1995 4
Condensed Consolidated Statements of
Cash Flows for the years-to-date ended
March 31, 1996 and 1995 (Unaudited) 5
Notes to Condensed Consolidated Financial
Statements (Unaudited) 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K
(including Exhibit Index) 13
Signatures 14
METLIFE TEXAS HOLDINGS, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
METLIFE TEXAS HOLDINGS, INC. AND SUBSIDIARY
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Quarters and
Years-to-Date
Ended
March 31,
1996 1995
------- -------
<In Thousands>
Revenues:
<S> <C> <C>
Insurance revenues
Traditional life insurance premiums........ $ 3,382 $ 2,939
Universal life and investment product
policy charges........................... 3,629 3,644
Investment income (less related expenses).... 8,431 7,450
Trading securities - unrealized losses....... (710) 0
Realized gain on investments................. 502 73
Other income................................. 66 60
------- -------
15,300 14,166
------- -------
Benefits, Claims and Expenses:
Policyholder benefits and claims............. 3,668 3,088
Change in liability for future
policyholder benefits...................... 6,229 5,548
Operating expenses........................... 2,110 1,860
Commissions, taxes and fees.................. 873 781
Amortization of policy acquisition costs..... 873 799
Amortization of cost of insurance acquired... 547 557
------- -------
14,300 12,633
------- -------
Income before income taxes................... 1,000 1,533
------- -------
Provision (benefit) for federal income taxes
Current ................................... 839 522
Deferred................................... (537) 60
------- -------
302 582
------- -------
Net income................................... $ 698 $ 951
</TABLE> ======= =======
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
METLIFE TEXAS HOLDINGS, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1996 1995
---------- ------------
(Unaudited)
(In Thousands)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available for sale.... $280,234 $276,101
Fixed maturities held to maturity...... 57,944 59,406
Fixed maturities held for trading...... 15,317 13,134
Equity securities...................... 3,035 3,362
Mortgage loans......................... 33,850 35,155
Cash and cash equivalents.............. 15,310 20,930
Policy loans........................... 29,444 29,642
Other.................................. 3,556 3,550
-------- --------
438,690 441,280
Deferred policy acquisition costs........... 42,796 38,474
Cost of insurance acquired.................. 40,300 36,911
Goodwill.................................... 4,302 4,352
Investment income due and accrued........... 5,611 6,194
Amounts due from reinsurers................. 5,213 4,706
Other....................................... 3,146 4,803
-------- --------
TOTAL ASSETS $540,058 $536,720
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Policy liabilities.......................... $391,138 $384,825
Deferred federal income tax................. 15,767 17,044
Contingent notes payable.................... 7,874 7,874
Notes payable to affiliates................. 12,500 12,500
General expenses............................ 9,720 9,659
Other....................................... 14,309 15,138
-------- --------
Total Liabilities 451,308 447,040
-------- --------
Stockholder's Equity:
Common stock, par value $1.00 (1,000 shares
authorized, issued and outstanding)....... 1 1
Additional paid-in capital.................. 60,200 60,200
Retained earnings........................... 27,543 26,845
Net unrealized investment gains on
fixed maturities available for sale and on
equity securities......................... 1,006 2,634
-------- --------
Total Stockholder's Equity 88,750 89,680
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $540,058 $536,720
======== ========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE>
METLIFE TEXAS HOLDINGS, INC. AND SUBSIDIARY
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the
(In Thousands) Years-to-Date Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income....................................$ 698 $ 951
Adjustments to reconcile net income to cash
provided by operating activities:
Increase (decrease) in liability for future
policy benefits and other policy
liabilities............................... 874 (201)
Amortization and depreciation............... 1,603 1,366
Decrease (increase) in other assets......... 1,273 (390)
Deferred policy acquisition costs........... (2,447) (2,142)
(Decrease) increase in other non-policy
related liabilities....................... (1,619) 346
Increase in trading securities.............. (2,183) 0
Interest credited to policyholder accounts.. 4,742 4,533
------ ------
CASH PROVIDED BY OPERATING ACTIVITIES........... 2,941 4,463
------ ------
INVESTING ACTIVITIES
Purchase of investments and loans made........(38,243) (14,165)
Sale or maturities of investments and
receipts from repayment of loans............ 28,671 11,529
------- -------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES.... (9,572) (2,636)
------- -------
FINANCING ACTIVITIES
Net receipts from universal life policyholders
credited to policyholder account balances... 697 874
Other......................................... 314 3
------- -------
CASH PROVIDED BY FINANCING ACTIVITIES........... 1,011 877
------- -------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (5,620) 2,704
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD....................................... 20,930 10,092
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......$15,310 $12,796
======= =======
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
METLIFE TEXAS HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996 (UNAUDITED)
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for
the three months ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.
NOTE 1 - CONTINGENT PAYMENT NOTES
MetLife Texas Holdings, Inc. (Holdings) issued 9.41% Contingent Payment Notes
(Notes) in the face amount of $12,800,000 in connection with its acquisition
of Texas Life Insurance Company (TLIC) on July 31, 1988. The principal
amount of these Notes is due on December 31, 1997 (unless redeemed earlier at
the option of Holdings) and interest is payable semi-annually at the stated
interest rate of 9.41%. The principal and interest payments on the Notes
are, however, subject to reduction. In general, the reduction is equal to
the difference between the contractual terms of, and amounts of principal and
interest payments actually received by TLIC on, certain specified real estate
mortgage notes receivable (Pool Loans) with an unpaid balance of $1,738,000
at March 31, 1996. The holders of the Notes received no interest for the
three months ended March 31, 1996 and 1995.
The carrying values of the Notes and related Pool Loans in the accompanying
Condensed Consolidated Balance Sheets were reduced by valuation allowances
for possible losses of $4,703,000 and $2,451,000, respectively, at both March
31, 1996 and December 31, 1995.
See Note 9 to the consolidated financial statements included in the
Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 for a description of certain restrictions on Holdings contained in
the indenture pursuant to which the Notes were issued.
NOTE 2 - NOTES PAYABLE TO AFFILIATES
On June 30, 1989, TLIC issued a $7,000,000 note payable (called a surplus
debenture) to Metropolitan Life Insurance Company (Metropolitan), the parent
of Holdings. Such note has no specified maturity date and semi-annual
principal payments will not begin until TLIC's statutory surplus, as
calculated under Texas insurance regulations, increases to $50,000,000.
TLIC's statutory surplus amounted to $27,924,000 at March 31, 1996.
METLIFE TEXAS HOLDINGS, INC. AND SUBSIDIARY
NOTE 2 - NOTES PAYABLE TO AFFILIATES (Continued)
Interest is payable semi-annually at any time TLIC's statutory surplus is in
excess of $12,798,000. The note bears interest at a rate of 7.60% per annum
until June 30, 1999. Interest on such note is adjusted every five years to
a rate equal to .75% over the then five year U.S. Treasury note rate.
Interest of $266,000 was paid on January 2, 1996, June 30, 1995 and January
3, 1995.
An additional $5,500,000 note payable (also called a surplus debenture) was
issued by TLIC to MetLife Credit Corp., a wholly-owned subsidiary of
Metropolitan, on December 31, 1990. Such note has no specified maturity date
and annual principal payments will not begin until TLIC's statutory surplus,
as calculated under Texas insurance regulations, increases to $40,000,000.
This note must be repaid in full before TLIC may make any principal payments
on the $7,000,000 note payable to Metropolitan discussed above. Interest is
payable monthly, at a variable interest rate which is set by MetLife Credit
Corp. on the first of each month, at any time TLIC's statutory surplus
exceeds $10,000,000. $99,000 of interest was paid for the first three months
of 1996 and $104,000 was paid for the first three months of 1995.
NOTE 3 - REINSURANCE
Reinsurance receivables of $4,722,000 and $5,385,000 are recorded in
accordance with Statement of Financial Accounting Standards No. 113
"Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration
Contracts", and are included in other assets in the accompanying March 31,
1996 and December 31, 1995 Condensed Consolidated Balance Sheets,
respectively. For the three months ended March 31, 1996 and March 31, 1995,
earned premiums ceded were $2,181,000 and $1,862,000, respectively, and
recoveries recognized under reinsurance contracts were $1,583,000 and
$729,000, respectively.
NOTE 4 - INVESTMENTS
As of January 1, 1994, Holdings adopted Statement of Financial Accounting
Standards No. 115 "Accounting for Certain Investments in Debt and Equity
Securities". SFAS No. 115 establishes standards of financial accounting and
reporting for investments in equity securities that have readily determinable
fair values and for all investments in debt securities. As a result of the
adoption of SFAS No. 115, stockholder's equity at March 31, 1996 and December
31, 1995, as shown on the Condensed Consolidated Balance Sheets, were
impacted as follows: at March 31, 1996 stockholder's equity was decreased
approximately $1,374,000 net of adjustments of $2,747,000 for deferred
acquisition costs, $3,936,000 for the cost of insurance acquired and $740,000
for deferred federal income taxes; and at December 31, 1995 stockholder's
equity was increased approximately $2,634,000 net of adjustments of
$8,029,000 for deferred acquisition costs, $11,059,000 for the cost of
insurance acquired and $1,281,000 for deferred federal income taxes.
METLIFE TEXAS HOLDINGS, INC. AND SUBSIDIARY
NOTE 5 - MORTGAGE LOANS
As of January 1, 1995, Holdings adopted Statement of Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan", as amended by SFAS
No. 118, "Accounting by Creditors for the Impairment of a Loan - Income
Recognition and Disclosure", which addresses the accounting by creditors for
the impairment of certain loans. Total impaired loans and the allowance for
all known credit losses on mortgages were $2,951,000 and $2,992,000,
respectively, at March 31, 1996. Holdings' primary policy is to utilize the
cash basis of accounting for the recognition of interest income on impaired
loans.
The average recorded investment in impaired loans during the three months
ended March 31, 1996 was $2,951,000 and the related interest income
recognized during the period related to impaired loans was $48,000 on both
the accrual and cash bases of accounting.
Activity in the allowance for credit losses for the three months ended March
31, 1996 was as follows:
Balance at December 31, 1995 $3,302,000
Provision for impaired loans -
Write-downs (310,000)
Recoveries -
----------
Balance at March 31, 1996 $2,992,000
METLIFE TEXAS HOLDINGS, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
HISTORICAL RESULTS OF OPERATIONS
MetLife Texas Holdings, Inc. (Holdings) is a wholly-owned subsidiary of
Metropolitan Life Insurance Company (Metropolitan) and was formed for the
purpose of acquiring Texas Life Insurance Company (TLIC). Holdings'
unconsolidated revenues are exclusively attributable to its interest bearing
investments. Therefore, the changes in the Condensed Consolidated Statements
of Income that are discussed below are primarily attributable to TLIC.
YEAR-TO-DATE RESULTS
TLIC's sales in annualized premiums were $1.8 million for the three months
ended March 31, 1996, up $152,000, or 9.0%, from the comparable period of
1995. During this period, sales of universal life products increased
$284,000, or 37.8%, primarily due to the success of TLIC's Convenient Life
product, while sales of permanent traditional life products decreased
$122,000, or 17.6%, and term life sales decreased $10,000, or 4.2%.
Consolidated year-to-date revenue increased $1,134,000, or 8.0%, for the
first three months of 1996 as compared to the same period of 1995. This was
attributable to (i) an increase of $443,000, or 15.1%, in traditional life
insurance premiums related to the increase in traditional life sales in
recent years; (ii) an increase of $981,000, or 13.2%, in investment income
attributable to an increase in invested assets and an increase in the yields
on investments, and (iii) an increase of $429,000, or 587.7%, in realized
gains on investments, primarily related to profits realized on the sale of
bonds as part of TLIC's aggressive mortgage-backed securities program, and
Holdings' sale of its long-term Treasuries. These increases were partially
offset by a $710,000 unrealized loss on the trading portfolio for the first
quarter of 1996 due to market value decreases on the portfolio. There was no
trading portfolio for the comparable period of 1995.
Consolidated year-to-date benefits, claims and expenses increased $1,667,000,
or 13.2%, for the first three months of 1996 as compared to the same period
of 1995. This is primarily a result of (i) a $681,000, or 12.3%, increase in
the change in liability for future policyholder benefits resulting from the
increase in traditional life insurance in force due to increased sales and
the aging of the block of business in force and (ii) an increase of $580,000,
or 18.8%, in policyholder benefits and claims related primarily to a
$461,000, or 19.9%, increase in death claims and a $102,000 increase in
annuity benefits.
Federal income taxes decreased $280,000 for the first three months of 1996 as
compared to the first three months of 1995 resulting from a $317,000 increase
in current taxes and a $597,000 decrease in deferred taxes. Current income
taxes increased $236,000 primarily as a result of increased taxes on capital
gains and $91,000 due to a decrease in the bad debt deduction on mortgage
loans. Deferred taxes decreased $580,000 primarily due to the change in the
difference between the book and tax basis of invested assets caused
METLIFE TEXAS HOLDINGS, INC.
primarily by adjustments to the tax basis of such assets.
As a result of the items discussed above, year-to-date net income decreased
$253,000, or 26.6%, for the first three months of 1996 from the comparable
period of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Holdings' sole activities consist of the investment of its assets in certain
high grade, liquid investments permitted by the indenture pursuant to which
its Contingent Payment Notes (Notes) were issued (see Note 1 to the
accompanying financial statements), administration of its Notes and ownership
of the outstanding common stock of its wholly-owned subsidiary, TLIC. Since
payment of principal on the Notes is not required until 1997, Holdings does
not have substantial short-term liquidity needs. Nevertheless, on March 31,
1996, Holdings had $17,298,000 of high grade, liquid investments which will
be available to make the required principal payments, if any, on the Notes in
1997.
For the three months ended March 31, 1996, Holdings had a gain of
approximately $93,000 on a stand-alone basis resulting entirely from realized
gains on the sale of fixed investments as compared to a loss of $25,000 for
the comparable period of 1995. March 31, 1996 results are not necessarily
indicative of the results that may be expected for the year ending December
31, 1996. No interest payments on the Notes were required to be made in
1995. Holdings does not expect to be required to make any interest payments
on the Notes in 1996 or 1997. Holdings' funds, including earnings on its
investments, should be sufficient to cover the required semi-annual interest
payments, if any, on the Notes to the maturity date thereof.
On June 30, 1989, TLIC issued a $7 million note payable to Metropolitan and,
on December 31, 1990, it issued a $5.5 million note payable to MetLife Credit
Corp., a wholly-owned subsidiary of Metropolitan (see Note 2 to the
accompanying financial statements). While both of these notes are considered
a liability by the Registrant on a GAAP basis, they are surplus for TLIC on
a statutory basis. The $7 million note payable was issued to provide
additional statutory surplus to TLIC for expansion of premium writings.
Increases in first year premium volume reduce statutory surplus since, for
statutory purposes, acquisition costs are expensed rather than deferred as
required by GAAP. The $5.5 million note payable is being used to provide a
voluntary statutory reserve for mortgage loans and foreclosed properties.
The Registrant has no outstanding borrowings other than the Notes and TLIC's
notes payable to Metropolitan and MetLife Credit Corp. and has no need or
plans to borrow funds in the foreseeable future other than additional notes
which may be issued to affiliates by TLIC to provide additional statutory
surplus. Borrowings by Holdings are prohibited by the terms of the indenture
pursuant to which the Notes were issued.
The Registrant is involved in the life insurance business solely through its
ownership of TLIC. The liabilities of TLIC are predominantly long-term in
nature and, therefore, in order to match these liabilities with assets, TLIC
has long-term fixed maturity investments such as bonds and mortgages.
METLIFE TEXAS HOLDINGS, INC.
Most of TLIC's invested assets are investment grade securities to provide
ample protection for its policyholders. As of March 31, 1996, TLIC had
$3,130,000 of securities rated below investment grade by the National
Association of Insurance Commissioners, representing 0.7% of its total
investment securities. Two of these investments, which are carried on the
balance sheet at $184,000, were in default as to interest at March 31, 1996.
TLIC has mortgage loans with a carrying value of $33,850,000 ($36,842,000
book value less a $2,992,000 reserve for losses) at March 31, 1996. The
carrying value of these mortgage loans comprises 7.7% of total invested
assets. The reserve represents 8.1% of total mortgage loan book value.
Management believes that the reserve for losses is adequate.
Delinquent mortgage loans (those overdue more than 90 days) total $2,951,000
at March 31, 1996 and are totally comprised of performing cash flow loans.
At December 31, 1995, delinquent loans amounted to $2,951,000. Expressed as
a percentage of mortgage loans, delinquencies were 8.0% at March 31, 1996,
7.7% at December 31, 1995 and 11.0% at March 31, 1995.
Included in the mortgage loan balance is $3,508,000 of "loans on watch"
(i.e., loans which are not delinquent over 90 days but are being monitored
more carefully for possible problems in the future). Of the eleven loans
included in this category, ten loans, totalling $2,878,000, are current and
one loan totaling $630,000 is 30 days overdue.
TLIC's mortgage loan portfolio includes $18,017,000 of commercial loans,
$18,393,000 of agricultural loans, $85,000 of loans on apartments and
$347,000 of residential loans. 50.1% of these loans are in Texas and the
remaining 49.9% are spread over 13 states. The gross yield on all mortgage
loans was 8.0% for the first three months of 1996 and 8.3% for the year ended
December 31, 1995.
Since its acquisition by Holdings, TLIC has made eleven new commercial
mortgage loans, with a book value aggregating $4,025,000, fourteen purchase
money mortgages on foreclosed real estate aggregating $3,663,000 and 44
agricultural loans aggregating $20,203,000 through Metropolitan's
Agricultural Investments Department, for a total of $27,891,000. Since the
acquisition, TLIC's policy relating to new loans is not to loan more than 75%
of appraised value based on earnings conditions at the time of the loan.
Additionally, these loans are issued to borrowers having strong financial
backgrounds. Collateral on loans generally includes personal guarantees for
the entire amount of the mortgage indebtedness as well as a lien on the
mortgaged property. Loans generally mature within ten years, with recent ten
year loans containing a provision for adjustment in the interest rate after
three or five years.
As of March 31, 1996, TLIC had $1,261,000 of foreclosed real estate
($2,240,000 less a $979,000 allowance for losses) which had net income of
$14,000 in the first three months of 1996. This consists of one commercial
loan with a book value of $1,258,000 and one acreage loan with a book value
of $982,000. The allowance for loss represents 43.7% of book value and is
METLIFE TEXAS HOLDINGS, INC.
based on estimated market value.
Due to the relatively small amount of TLIC's below investment grade and non-
performing investments, they have not had, and are not expected to have, a
material effect on TLIC's financial condition or results of operations.
Nevertheless, TLIC maintains liquidity through its selection of investments.
Over 80 percent of its securities at March 31, 1996 were readily marketable
securities, primarily publicly traded bonds and stocks. TLIC must maintain
adequate liquidity to provide funds needed to make current payments to
policyholders. Significant changes in market interest rates could affect
TLIC's liquidity. TLIC has utilized an asset/liability matching process to
help determine the investment rate it can credit to its policyholders.
TLIC's universal life insurance products are credited an interest rate based
upon earnings from allocated assets less an interest rate margin.
Management's philosophy has been to maintain a credited interest rate based
on the returns on its allocated investments rather than to credit current
market rates to its previously issued policies. Significant increases in
competitors' credited rates could cause TLIC either to reduce its margin or
to credit a rate that may be noncompetitive, which may result in surrenders
of policies. However, TLIC has high surrender charges on most of its
universal life products during the first ten policy years (and during the ten
years following any increases in the policy face amount) that would
discourage surrenders or result in low surrender values. A reduction in
market interest rates could reduce the reinvestment rate of its fixed
investments and result in a lower than expected yield. However, in this
environment, TLIC could reduce the rates credited to the products underlying
these investments and maintain its interest rate margin without risking
significant amounts of surrenders of policies. Thus, changes (other than
sudden significant changes) in the interest rate environment and the
resulting changes in the interest rates credited to policyholders would not
significantly affect withdrawal experience because of the significance of
surrender charges to policyholders.
However, a sudden significant increase in current market rates could have a
material adverse impact on TLIC's liquidity because policyholders might
convert to products of competitors to which higher rates are credited.
Conversely, sudden declines in interest rates could materially increase
TLIC's liquidity if the issuers of TLIC's fixed rate long-term investments
exercise their bond call options or refinance at lower rates the mortgages
that are owned by TLIC. Although they can significantly affect TLIC's
liquidity, the impact of sudden increases or decreases in the interest rate
environment would be tempered by the fact that 41% of TLIC's insurance in
force is traditional life insurance, which is not as susceptible to changes
in the interest rate environment (32% of TLIC's insurance in force is term
insurance, which has no cash surrender value and is not impacted by changes
in the interest rate).
In addition to the large amount of readily marketable securities referred to
above, it is also TLIC's policy to maintain at least $5,000,000 of cash and
short-term investments less any commitments for investment purchases within
the next month. At March 31, 1996, it had approximately $983,000 of cash and
$9,450,000 of short-term investments.
METLIFE TEXAS HOLDINGS, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Neither Holdings nor its subsidiary are involved in any material pending or
threatened legal proceedings.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Index
4.1 Form of Indenture, dated as of July 27, 1988, between
Registrant and Bankers Trust Company, as Trustee, is herein
incorporated by reference to Exhibit 4.1 to Registrant's Form
S-1 filed with the Securities and Exchange Commission (File
No. 33-20104), which became effective on May 13, 1988.
28.1 Registrant's Form 10-K for the fiscal year ended December 31,
1995, filed with the Securities and Exchange Commission on
March 28, 1996, is herein incorporated by reference.
(b) Reports on Form 8-K - No report on Form 8-K was filed during the
quarter ended March 31, 1996.
METLIFE TEXAS HOLDINGS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
METLIFE TEXAS HOLDINGS, INC.
(Registrant)
Date: May 15, 1996 By Myron O. Schlanger
------------------------------
Myron O. Schlanger
Vice-President and Controller
(Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 280,234
<DEBT-CARRYING-VALUE> 57,944
<DEBT-MARKET-VALUE> 60,613
<EQUITIES> 3,035
<MORTGAGE> 33,850
<REAL-ESTATE> 3,456
<TOTAL-INVEST> 438,690
<CASH> 15,310
<RECOVER-REINSURE> 5,213
<DEFERRED-ACQUISITION> 42,796
<TOTAL-ASSETS> 540,058
<POLICY-LOSSES> 391,138
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 7,874
0
0
<COMMON> 1
<OTHER-SE> 88,749
<TOTAL-LIABILITY-AND-EQUITY> 540,058
3,382
<INVESTMENT-INCOME> 8,431
<INVESTMENT-GAINS> 502
<OTHER-INCOME> 3,695
<BENEFITS> 9,897
<UNDERWRITING-AMORTIZATION> 873
<UNDERWRITING-OTHER> 3,530
<INCOME-PRETAX> 1,000
<INCOME-TAX> 302
<INCOME-CONTINUING> 698
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 698
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
