SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 AND 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1995 Commission File No. 0-16867
UNITED TRUST, INC.
(Exact Name of Registrant as specified in its Charter)
Illinois 37-1172848
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 5147, Springfield, Illinois 62705
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (217) 786-4300
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date.
Shares outstanding at October 31, 1995:18,675,935
Common stock, no par value per share
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UNITED TRUST, INC.
(the "Company")
INDEX
Part I: Financial Information
Consolidated Balance Sheets - September 30, 1995 and
December 31, 1994 . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the nine months
and three months ended September 30, 1995 and 1994 . . 4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1995 and 1994 . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . 13
Part II: Other Information
Legal Proceedings. . . . . . . . . . . . . . . . . . . 22
Signatures . . . . . . . . . . . . . . . . . . . . . . 23
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
UNITED TRUST, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, December 31,
ASSETS 1995 1994
Investments:
Fixed maturities at amortized cost (market
$186,986,521 and $172,822,882) $ 186,835,952 $ 184,590,646
Equity securities at market (cost
$1,246,164 and $395,846) 1,877,477 911,012
Mortgage loans on real estate at amortized
cost 14,309,461 15,822,056
Investment real estate, at cost, net of
accumulated depreciation 12,056,279 11,737,847
Real estate acquired in satisfaction of debt,
at cost net of accumulated depreciation 5,323,762 5,620,101
Policy loans 16,614,178 16,338,632
Short term investments 425,000 350,000
Investments held for sale at market (cost
$3,001,497 and $3,450,273) 2,988,146 3,337,672
240,430,255 238,707,966
Cash and cash equivalents 15,622,657 11,697,067
Investment in affiliates 5,729,957 5,161,034
Indebtedness of affiliates, net 99,133 67,865
Accrued investment income 4,184,325 3,500,585
Reinsurance receivables:
Future policy benefit 13,427,971 12,818,658
Unpaid policy claims and benefits 856,683 975,613
Paid policy claims and benefits 158,208 125,355
Other accounts and notes receivable 405,304 694,773
Cost of insurance acquired 50,517,924 53,324,051
Deferred policy acquisition costs 10,978,665 10,634,476
Value of agency force acquired 14,966,671 15,489,946
Costs in excess of net assets purchased,
less accumulated amortization 6,433,813 9,992,621
Other assets 1,603,048 1,068,820
Total assets $ 365,414,614 $ 364,258,830
LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities and accruals:
Future policy benefits $ 241,967,059 $ 234,875,800
Policy claims and benefits payable 3,215,497 3,207,014
Other policyholder funds 3,146,584 3,124,851
Dividend and endowment accumulations 12,151,073 11,106,903
Income taxes payable 200,542 237,846
Deferred income taxes 20,790,449 22,035,873
Notes payable 21,448,910 22,053,289
Other liabilities 6,161,245 6,200,879
Total liabilities 309,081,359 302,842,455
Minority interests in consolidated subsidiaries 34,662,918 39,547,280
SHAREHOLDERS' EQUITY
Common stock - no par value, stated value
$.02 per share.
Authorized 35,000,000 shares - 18,675,935 and
18,655,935 shares issued after deducting treasury
shares of 423,840 and 423,840 373,519 373,119
Additional paid-in capital 18,288,410 18,276,311
Unrealized depreciation of equity securities (42,568) (143,405)
Retained earnings 3,050,976 3,363,070
Total shareholders' equity 21,670,337 21,869,095
Total liabilities and shareholders' equity $ 365,414,614 $ 364,258,830
See accompanying notes.
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UNITED TRUST, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
Revenue
Premium income $ 8,585,351 $ 8,572,398 $ 27,703,013 $ 28,940,725
Reinsurance premium (1,513,299) (1,349,917) (3,947,584) (4,077,272)
Other considerations 837,140 749,682 2,464,463 2,280,594
Other considerations
paid to reinsurers (40,389) (58,666) (140,063) (176,220)
Net investment income 3,747,069 3,633,334 11,440,748 10,556,962
Realized investment
gains (losses) (115,524) (869,684) (108,256) (1,082,098)
Other income 329,573 223,238 1,045,441 756,003
11,829,921 10,900,385 38,457,762 37,198,694
Benefits and expenses:
Benefits, claims and settlement expenses:
Life 5,322,841 7,033,132 20,994,480 20,541,473
Annuity 454,355 420,362 1,405,512 977,186
Reinsurance benefits
and claims (844,340) (888,264) (2,499,156) (2,392,113)
Dividends to
policyholders 1,045,939 918,338 3,289,722 2,781,530
Commissions and
amortization of
deferred policy
acquisition costs 1,350,662 1,366,717 4,867,646 3,308,565
Amortization of cost
of insurance acquired 1,460,230 1,600,133 2,806,127 5,158,017
Amortization of agency
force 184,718 120,051 523,275 405,101
Operating expenses 2,232,938 2,328,443 7,929,844 6,593,217
Interest expense 502,185 478,774 1,455,246 1,433,914
11,709,528 13,377,686 40,772,696 38,806,890
Income (loss) before
income taxes and
minority interest 120,393 (2,477,301) (2,314,934) (1,608,196)
Credit (provision)
for income taxes 214,525 769,763 1,240,694 796,232
Minority interest in
income of consolidated
subsidiaries (175,775) 1,178,536 839,193 632,894
Equity in earnings (loss)
of investees 39,321 13,868 (77,047) (857,235)
Net income (loss) $ 198,464 $ (515,134) $ (312,094) $ (1,036,305)
Net income (loss) per
common share $ 0.01 $ (0.03) $ (0.02) $ (0.06)
Average common
shares outstanding 18,695,935 18,664,830 18,686,008 18,664,830
See accompanying notes.
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UNITED TRUST, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
September 30, September 30,
1995 1994
Increase (decrease) in cash and cash
equivalents
Cash flows from operating activities:
Net loss $ (312,094) $ (1,036,305)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities net of changes in assets and
liabilities resulting from the sales and
purchases of subsidiaries:
Charges for mortality and administration of
universal life and annuity products (7,351,824) (7,363,361)
Change in policy liabilities 2,988,239 8,811,442
Change in reinsurance receivables (523,236) (1,090,886)
Amortization of cost of business acquired 2,806,127 5,158,017
Amortization of goodwill, net (114,525) 213,750
Minorityinterest (839,193) (632,894)
Equity in earnings of investees 77,047 857,235
Change in accrued investment income (683,740) (1,041,084)
Depreciation 419,584 529,990
Change in federal income tax liability (1,282,728) (948,123)
Realized (gains) losses 108,256 1,082,098
Policy acquisition costs deferred (1,862,000) (3,740,663)
Amortization of deferred acquisition costs 2,206,189 664,737
Amortization of value of agency force 523,275 405,101
Change in indebtedness of affiliates, net (31,268) 371,812
Premiums, operating receivables, commissions,
general expenses, and other assets and
liabilities (1,578,851) 113,245
Net cash provided by (used in) operating
activities (5,450,742) 2,354,111
Cash flows from investing activities:
Proceeds from investments sold and matured:
Investments held for sale 101,849 0
Fixed maturities sold 0 0
Fixed maturities matured 9,226,009 20,293,299
Equity securities 104,260 0
Mortgage loans 1,917,743 3,753,108
Real estate 897,183 2,219,794
Collateral loans 0 0
Policy loans 3,269,380 3,203,972
Short term 200,000 1,003,856
Total proceeds from investments sold and
matured 15,614,575 30,474,029
Cost of investments acquired:
Investments held for sale
Fixed maturities (11,994,414) (46,536,690)
Equity securities (1,000,000) 0
Mortgage loans (405,148) (5,359,481)
Real estate (1,065,675) (3,096,136)
Policy loans (3,572,857) (3,032,815)
Short term (125,000) (575,000)
Total cost of investments acquired (18,163,094) (58,600,122)
Cash of subsidiary at date of sale 0 (3,134,343)
Cash received in sale of subsidiary 0 4,995,804
Net cash used in investing activities (2,548,519) (26,264,632)
Cash flows from financing activities:
Policyholder contract deposits 19,273,756 18,403,305
Policyholder contract withdrawals (11,517,370) (16,583,265)
Interest credited to account balances 4,772,844 4,720,485
Payments on principal of notes (604,379) (304,250)
Net cash provided by financing activities 11,924,851 6,236,275
Net increase (decrease) in cash and cash
equivalents 3,925,590 (17,674,246)
Cash and cash equivalents at beginning of year 11,697,067 32,303,668
Cash and cash equivalents at end of year $ 15,622,657 $ 14,629,422
See accompanying notes
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UNITED TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by
United Trust, Inc. ("Trust") and its consolidated subsidiaries (the "Company")
pursuant to the rules and regulations of the Securities and Exchange
Commission. Although the Company believes the disclosures are adequate to
make the information presented not be misleading, it is suggested that these
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto presented in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
year ended December 31, 1994.
The information furnished reflects, in the opinion of the Company, all
adjustments (which include only normal and recurring accruals) necessary for a
fair presentation of the results of operations for the periods presented.
Operating results for interim periods are not necessarily indicative of
operating results to be expected for the year or of the Company's future
financial condition.
At September 30, 1995, the parent, significant subsidiaries and affiliates of
United Trust, Inc. were as depicted on the following organizational chart.
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ORGANIZATIONAL CHART
AS OF SEPTEMBER 30, 1995
United Trust, Inc. ("UTI") is the ultimate controlling company. UTI owns 53%
of United Trust Group ("UTG") and 30% of United Income, Inc. ("UII"). UII
owns 47% of UTG. UTG owns 72% of First Commonwealth Corporation ("FCC"). FCC
owns 100% of Universal Guaranty Life Insurance Company ("UG"). UG owns 100%
of United Security Assurance Company ("USA"). USA owns 84% of Appalachian
Life Insurance Company ("APPL") and APPL owns 100% of Abraham Lincoln
Insurance Company ("ABE").
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2. FIXED MATURITIES AND INVESTMENTS HELD FOR SALE
As of September 30, 1995, fixed maturities and investments held for sale
represented 79% of total invested assets. As prescribed by the various state
insurance department statutes and regulations, the insurance companies'
investment portfolio is required to be invested primarily ininvestment grade
securities to provide ample protection for policyholders. The liabilities of
the insurance companies are predominantly long term in nature and therefore,
the companies invest primarily in long term fixed maturity investments. The
Company has analyzed its fixed maturities portfolio and reclassified those
securities expected to be sold prior to maturity as investments held for sale.
The investments held for sale are carried at market. Management has the
intent and ability to hold its fixed maturity portfolio to maturity and as
such carries these securities at amortized cost. As of September 30, 1995,
the carrying value of fixed maturity securities in default as to principal
or interest was immaterial in the context of consolidated assets or
shareholders' equity.
3. Mortgage Loans and Real Estate
The Company holds approximately $14,309,000 in mortgage loans and $17,380,000
in real estate holdings which represent 4% and 5% of the total assets of the
Company, respectively. All mortgage loans held by the Company are first
position loans. The Company has $685,000 in mortgage loans net of a $10,000
reserve allowance, which are in default or in the process of foreclosure
representing approximately 5% of the total portfolio. The Company has 3 loans
for approximately $104,000 which are under a repayment plan. Letters are sent
to each mortgagee when the loan becomes 30 days or more delinquent. Loans 90
days or more delinquent are placed on a non-performing status and classified
as delinquent loans. Reserves for loan losses on delinquent loans are
established based on management's analysis of the loan balances and what is
believed to be the realizable value of the property should foreclosure take
place. Loans are placed on a non-accrual status based on a quarterly case
analysis of the likelihood of repayment.
The following tables show the distribution of mortgage loans and real estate
by type.
Mortgage loans Amount % of Total
FHA/VA $ 798,968 6%
Commercial $ 3,421,181 24%
Residential $ 10,089,312 70%
Real Estate Amount % of Total
Home Office $ 3,107,286 18%
Commercial $ 2,168,962 12%
Residential development $ 6,780,031 39%
Foreclosed real estate $ 5,323,762 31%
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4. LONG-TERM DEBT
At September 30, 1995, the Company has $21,449,000 in long term debt
outstanding. The debt is comprised of the following components:
Senior debt $ 11,400,000
Subordinated 10 yr. notes 6,494,000
Subordinated 20 yr. notes 3,530,000
Encumbrance on real estate 25,000
$ 21,449,000
The senior debt is comprised of participations of several lenders. Interest
is based on 1% above the lead bank's base rate and is payable quarterly. The
1995 principal payment of $2,900,000 was prepaid $2,000,000 in December 1994
and $900,000 in March 1995. The next scheduled principal payment is not due
until June 1996. Principal reductions are due June 1 of each year.
The subordinated debt was incurred June 16, 1992 as a part of the acquisition
of CIC. The 10 year notes bear interest at the rate of 7 1/2% per annum,
payable semi-annually beginning December 16, 1992. These notes provide for
principal payments equal to 1/20th of the principal balance due with each
interest installment beginning June 16, 1997, with a final payment due June
16, 2002. The 20 year notes bear interest at the rate of 8 1/2% per annum,
payable semi-annually beginning December 16, 1992, with a lump sum principal
payment due June 16, 2012.
Scheduled principal reductions on the Company's debt for the next five years
are as follows:
Year Amount
1995 $ 0
1996 3,900,000
1997 4,549,000
1998 3,249,000
1999 649,000
5. Commitments and Contingencies
During the third quarter of 1994, the Company became aware that certain new
insurance business was being solicited by certain agents of UG and issued to
individuals considered to be not insurable by Company standards. These
policies had a face amount of $22,700,000 and represent less than 1/2 of 1% of
the insurance in force of the Company. Management's analysis of the business
in force indicates that the expected death claims on the business in force to
be adequately covered by the mortality assumptions inherent in the calculation
of statutory reserves. Nevertheless, management has determined it is in the
best interest of the Company to attempt to acquire as many of the policies as
possible. As of September 30, 1995, there remained approximately $4,728,000
of the original face amount which the Company has either determined to
have bad health or not yet contacted by the Company regarding a possible
repurchase of the insurance policy.
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During 1994, the Company authorized $1,250,000 for the acquisition of these
policies. At December 31, 1994, the Company had $227,961 remaining for the
purchase of these policies. Through September 30, 1995, the Company spent an
additional $1,158,000 for the purchase of the policies and legal costs.
Freeman v. Universal Guaranty Life Insurance Company (U.S.D.C., N.D. Ga, 1994,
1-94-CV-2593-RCF); Tappan v. Universal Guaranty Life Insurance Company and
James Melville (U.S.D.C., M.D. Fla, 1994, 94-1044-CIV-ORL-18); Armstrong v.
Universal Guaranty Life Insurance Company and James Melville (Circuit Court of
Davidson County, Tenn., 1994, 94C3222); Armstrong v. Universal Guaranty Life
Insurance Company and James Melville (Circuit Court of Davidson County, Tenn.,
1994, 94C3720); Ridings v. Universal Guaranty Life Insurance Company and James
Melville (Circuit Court of Davidson County, Tenn., 1994, 94C3221); Ronald L.
Mekkes, Jr. v. Universal Guaranty Life Insurance Company and James Melville,
(Circuit Court of Kent County, Michigan, 1995, 95-1073-NZ).
Four general agents of UG filed independent suits against UG in the latter
part of September or early October, 1994. Kathy Armstrong (3-94-1085),
another general agent, filed her suit on November 16, 1994. Ronald L. Mekkes,
Jr., a general agent, filed a suit on March 15, 1995. All of the suits allege
that the plaintiff was libeled by statements made in a letter sent by UG. The
letter was sent to persons who had been issued life insurance policies by UG
as the result of policy applications submitted by the five agents. Mr.
Melville is a defendant in some of the suits because he signed the letter as
president of UG. In addition to the defamation count, Mr. Freeman and Ms.
Tappan allege that UG also breached a contract with each of them by failing to
pay them commissions for policies issued. Mr. Freeman claims unpaid
commissions of $104,000 and Ms. Tappan's commission claim is for an
unspecified amount. In the libel claim, Mr. Freeman claims compensatory
damages of over $5,000,000 punitive damages of over $3,000,000, costs, and
litigation expenses. The other plaintiffs request the award of unspecified
compensatory damages and punitive (or special) damages as well as costs and
attorney's fees. UG has filed Answers to all five of these suits asserting
various defenses and, where appropriate, counterclaims. UG believes that it
has no liability to any of the plaintiffs and intends to defend each of the
suits vigorously. On August 1, 1995, the Tappan suit was dismissed with
prejudice.
Terl, et al. v. Universal Guaranty Life Insurance Company (U.S.D.C., M.D.
Fla., 1995, 94-1236-CIV-ORL-19).
A lawsuit was filed against UG on November 23, 1994 on behalf of five insureds
and a potential class of other insureds. The plaintiffs allege that UG
violated the Racketeer Influenced and Corrupt Organizations Act. The
plaintiffs contend they were fraudulently induced by misrepresentations on the
part of UG to purchase, and in some instances to surrender, policies of
insurance. The plaintiffs contend that UG knew it would never honor the terms
of the policies and was attempting to achieve short-term profits by willfully
targeting high risk applicants. The plaintiffs seek damages, including treble
damages, in excess of $50,000, exclusive of interest and costs, and other
equitable relief. UG filed an Answer to this class action suit inFebruary,
1995, asserting various defenses and reserving the right to assert counter
claims. This lawsuit was settled during the first quarter of 1995.
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S.D., et al. v. Universal Guaranty Life Insurance Company. (U.S.D.C., N.D.
Ga., 1995, 195-CV-0454-GET).
A lawsuit was filed against UG in February, 1995 on behalf of four applicants
for insurance and a potential class of other applicants. The plaintiffs
alleged that UG violated Title III of the Americans WithDisabilities Act of
1990 (the "ADA") by discriminating against the plaintiffs in connection with
the issuance of insurance policies by requiring the plaintiffs to submit
additional medical evidence not required of others.
The plaintiffs allege that UG's requirement of a blood test violated the ADA
by discriminating against each of the plaintiffs of the basis of a perceived
disability which resulted in the denial of an insurance policy.
In addition to the ADA violation, plaintiffs allege a violation of Georgia
Insurance Regulations with regard to procedures for obtaining information
regarding an applicant's HIV/AIDS status.
The plaintiffs seek relief in the form of requiring UG to reopen the
plaintiffs' insurance applications and process those applications, enjoining
UG from requiring blood tests from the plaintiffs, directing UG to issue life
insurance policies as applied for, and awarding the plaintiffs and other class
members costs, expenses, and reasonable attorneys' fees pursuant to Title III
of the ADA.
UG has filed an Answer to this potential class action. UG believes that it
has no liability to any of the plaintiffs, or other potential class members,
and intends to defend the lawsuit vigorously. In June 1995, summary judgment
was granted to dismiss the case.
Jeffrey Ploskonka, Keith Bohn and Paul Phinney v. Universal Guaranty Life
Insurance Company (Circuit Court of the Seventh Judicial Circuit Sangamon
County, Illinois Case No.: 95-L-0213).
On March 9, 1995 a lawsuit was filed against Universal Guaranty Life Insurance
on behalf of three insureds and a potential class of other insureds. The
Plaintiffs allege that UG violated the insurance contract in attempting to
cancel life insurance contracts. Additionally, the Plaintiffs assert
violations of Illinois law alleging vexations and unreasonable insurance
practices, breach of duty of good faith and fair dealing, and that Illinois
consumer fraud laws have been violated. The Plaintiffs seek unspecified
compensatory damages, injunctive relief, attorneys' fees, statutory damages in
an amount up to $25,000.00, punitive damages of $1,000,000.00, and other
equitable relief. UG filed an Answer to this lawsuit in May 1995, asserting
various defenses and reserving the right to assert counterclaims. UG has also
filed motions to dismiss certain allegations and claims made in the lawsuit.
UG believes it has no liability to any of the plaintiffs, or other potential
class members, and intends to defend the lawsuit vigorously. In June 1995,
the court conditionally certified a class of non-settling insureds.
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The Company and its subsidiaries are named as defendants in a number of legal
actions arising primarily from claims made under insurance policies. Those
actions have been considered in establishing the Company's liabilities.
Management and its legal counsel are of the opinion that the settlement of
those actions will not have a material adverse effect on the Company's
financial position or results of operations.
The number of insurance companies that are under regulatory supervision has
increased, and that increase is expected to result in an increase in
assessments by state guarantee funds to cover losses to policyholders of
insolvent or rehabilitated companies. Those mandatory assessments may be
partially recovered through a reduction in future premium taxes in some
states. For all assessment notifications received, the Company has accrued
for those assessments.
6. Plan of Liquidation and Dissolution of Affiliates.
The Board of Directors of CIC, ITI and UGIC ("the Affiliates"), by resolution
adopted at their meetings of the Board of Directors on June 7, 1994,
unanimously approved a Plan of Liquidation and Dissolution ("the Plan"). An
affirmative vote of the majority of the outstanding shares of the Affiliates
was received from shareholders at a Special Meeting of Shareholders of the
Affiliates on August 15, 1995. Each affiliate was the indirect owner of FCC's
common stock. The only assets held by the Affiliates, prior to dissolution,
was stock in its subsidiary. Each shareholder of the Affiliates now own
directly the same proportionate share of FCC's common stock.
The liquidation and dissolution of the Affiliates significantly streamlined
the organization of the UTI holding company system by eliminating three
holding companies from the system. The elimination of the Affiliates will
reduce filing fees and administrative expenses of the holding company system
associated with the continued existence of such companies, including fees and
expenses in connection with the filing of annual, quarterly and periodic
reports with the Securities and Exchange Commission and mailings to public
shareholders. UTG owns approximately 72% of the common stock of FCC.
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Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The purpose of this section is to discuss and analyze the Company's financial
condition, changes in financial condition and results of operations which
reflect the performance of the Company. The information in the consolidated
financial statements and related notes should be read in conjunction with this
section.
LIQUIDITY AND CAPITAL RESOURCES:
HOLDING COMPANY OPERATIONS
The payment of cash dividends to shareholders by UTI is not legally
restricted. At September 30, 1995 and December 31, 1994, substantially all of
consolidated stockholders' equity of UTI represented net assets of its
subsidiaries. UTI has limited day to day operations of its own. Cash
requirements of UTI primarily relate to the payment of expenses related to
maintaining the Company as a corporation in good standing with the various
regulatory bodies which govern corporations in the jurisdictions where the
Company does business. UTI is able to meet its cash needs through its
management agreement with UII, income received on invested assets and cash
balances. Insurance company dividend payments are regulated by the state
insurance department where the company is domiciled. UG's dividend
limitations are described below.
Ohio domiciled insurance companies require five days prior notification to the
insurance commissioner for the payment of an ordinary dividend. Ordinary
dividends are defined as the greater of: a) prior year statutory earnings or
b) 10% of statutory capital and surplus. For the year ended December 31,
1994, UG had a statutory gain from operations of $1,621,000. At December 31,
1994, UG statutory capital and surplus amounted to $7,683,000. Extraordinary
dividends (amounts in excess of ordinary dividend limitations) require prior
approval of the insurance commissioner and are not restricted to a specific
calculation as to amount.
The Company's Senior Debt bears interest at a variable per annum rate equal to
1% over the variable per annum rate of interest most recently announced by the
First Bank of Missouri as its "Base Rate". As of September 30, 1995, the
interest rate on the senior debt had increased to 9 3/4% compared to 7% one
year ago. On December 2, 1994, the Company prepaid $2,000,000 of the
$2,900,000 scheduled principal payment due June 1, 1995. On March 1, 1995,
the Company prepaid the remaining $900,000 of the June 1, 1995 scheduled
principal payment. The next scheduled principal payment is not due until June
1, 1996. The principal amount of the Company Senior Debt to outside parties
was $11,300,000 and $10,700,000 at December 31, 1994, and September30, 1995,
respectively.
Management believes that it will be able to continue to service this debt in
the future.
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INSURANCE OPERATIONS
The primary sources of liquidity for the insurance subsidiaries include their
operating cash flows, financing cash flows, dividends, and short-term
investments, which principally consist of certificates of deposit. The net
cash provided by (used in) operating activities equalled ($5,451,000) during
the first nine months of 1995, compared to $2,354,000 inthe same period one
year ago.
The net cash used in investing activities equalled $2,549,000 during the first
nine months of 1995, compared to $26,265,000 as of September 30, 1994. As of
September 30, 1995, the Company has $15,623,000 in cash and cash equivalents,
which represents 4% of total assets.
Other principal sources of liquidity available to the Company are invested
assets. Sources available are $425,000 of short-term investments, $2,988,000
of investments held for sale at market and $1,877,000 of equity securities.
Other sources are maturities of the fixed maturity portfolio. As of September
30, 1995, the Company had $9,226,000 of fixed maturities matured compared to
$20,293,000 in the same period one year ago.
The principal requirement for liquidity in connection with the Company's
insurance operations is its contractual obligations to policyholders and
annuitants, including payments of surrender benefits, policyholder dividends,
claims under outstanding insurance policies and annuities, and policy loans.
Policyholder surrender benefits totalled $11,877,000 as of September 30, 1995,
and $13,282,000 as of September 30, 1994. The Company believes that it
maintains adequate liquidity to pay anticipated benefits and claims to
policyholders and annuitants.
The Company had net cash provided by (used in) operating activities of
$(5,451,000) and $2,354,000 as of September 30, 1995 and 1994, respectively.
The net cash provided by (used in) operating activities, interest credited to
account balances and net policyholder contract deposits of the Company's
insurance subsidiaries after the payment of policyholder withdrawals, equalled
$7,078,000 and $8,895,000 as September 30, 1995 and 1994, respectively. This
measurement of cash flow indicates the performance of the Company's insurance
operations as well as the Company's universal life production. The decrease
in 1995 compared to 1994 is due to a decline in first year premium production.
Policy acquisition costs deferred decreased significantly when comparing the
first nine months of 1995 to 1994. The decrease is due to two factors. The
decline in first year production as was discussed in the operating activities
of the Company. The decline is also the result of a change in the commission
structure. The commission structure was changed in reference to the products
that are being marketed currently compared to the first nine months of 1994.
Management believes that the overall sources of liquidity available to the
Company will continue to be more than sufficient to satisfy its financial
obligations and operating expenses.
14
<PAGE>
Results of Operations
Year-to-date 1995 compared to 1994:
(a) Revenues:
Revenues increased 3% during first nine months of 1995 compared to the same
period of one year ago. The increase in net investment income contributed
significantly to the increase in revenues.
Premium income, net of reinsurance, decreased 4% during the first nine months
of 1995 compared to the same period of 1994. The decrease in premium income
was expected by management. In late 1994, the Company discontinued marketing
the traditional and interest sensitive whole life products. The Company is
currently marketing three universal life insurance products. Universal life
insurance products contribute only cost of insurance charges to the premium
income line item.
Other considerations, net of reinsurance, consisting of administrative loads
charged on interest sensitive whole life and universal life products,
increased 10% for the first nine months of 1995 compared to first nine months
of 1994. The Company is currently marketing three universal life products.
In late 1994, the Company discontinued marketing the traditional whole life
and interest sensitive whole life insurance products.
Net investment income increased 8% during the first nine months of 1995
compared to the same period one year ago. The increase is attributable to the
Company investing a significant portion of its cash and cash equivalents in
long term fixed maturities and mortgage loans during March and April of 1994.
The Company's investments are generally managed to match related insurance and
contract holder liabilities. The overall annualized gross investment yields
as of third quarter 1995 and 1994, are 7.18% and 7.20%, respectively. The
comparison of investment return with insurance or investment product crediting
rates establishes an interest spread. Minimum interest spreads between earned
and credited rates are 1% to 1.5%. The Company continually assesses
investment yields, and when necessary takes action to reduce credited interest
rates on its insurance products to preserve targeted spreads. Credited rates
are established by the Board of Directors. Over 60% of the insurance and
investment product reserves are crediting 5% or less in interest and 39% of
the insurance and investment product reserves are crediting 5.25% to 6% in
interest. It is expected that the monitoring of the interest spreads by
management will provide the necessary margin to adequately provide for
associated costs on insurance policies that the Company has in force and will
write in the future.
The Company realized $108,000 of investment losses during the first nine
months of 1995 compared to realized investment losses of $1,082,000 in the
same period in 1994. Realized investment losses in the current period are
attributable to securities in the bond portfolio that were called by the
issuer prior to maturity. The realized investment losses in the previous
period was due in part to $628,000 on foreclosed real estate. The realized
loss in the previous period was atttributable to real estate sales activity
in the same geographic area as the Company's foreclosed real estate.
15
<PAGE>
(b) Expenses:
Expenses increased 5% during the first nine months of 1995, compared to the
same period in 1994. The increase in expenses is due to the increase in
commissions and amortization of deferred policy acquisition costs and
operating expenses.
Life benefits and reinsurance benefits and claims increased 2% for the first
nine months of 1995, compared to the same period in 1994. There are two
factors that contributed to decrease life benefits. The first factor is that
the Company's mortality experience decreased $592,000 in the current period
compared to the previous period. The second factor that is contributing to
decrease life and annuity benefits is that the Company in 1994, lowered the
interest rates credited on its interest sensitive, universal life and annuity
products to a 6% interest rate. This has resulted in a lower reserve increase
on these products than was experienced in the prior year as a lower interest
rate is being credited to the policies involved. The life insurance and
annuity products are continuing to credit interest at 6% in 1995. By
maintaining the credited interest rates at 6%, it has enabled the Company to
achieve larger interest spreads.
There is one item that contributed to increase life benefits. During the
third quarter of 1994, UG became aware that certain new insurance business was
being solicited by certain agents and issued to individuals considered to be
not insurable by Company standards. These policies had a face amount of
$22,700,000 and represent less than 1/2 of 1% of the insurance in force of the
Company. Management's analysis of the business in force indicates that the
expected death claims on the business in force to be adequately covered by the
mortality assumptions inherent in the calculation of statutory reserves.
Nevertheless, management has determined it is in the best interest of the
Company to attempt to acquire as many of the policies as possible. As of
September 30, 1995, there remained policies which represented $4,728,000 of
the original face amount of these policies which the Company has either
determined that the insurer has bad health or the owners have not yet been
contacted by the Company regarding a possible repurchase of the insurance
policy.
During 1994, the Company authorized $1,250,000 for the acquisition of these
policies. At December 31, 1994, the Company had $227,961 remaining for the
purchase of these policies. Through September 30, 1995, the Company paid an
additional $562,000 for the acquisition of these policies and $596,000 in
in legal fees that is reported in the general expense line item.
Dividends to policyholders increased 18% for first nine months of 1995
compared to the same period for 1994. USA continued to market participating
policies through most of 1994. Management expects dividends to policyholders
will continue to increase in the future. A portion of the Company's insurance
in force is participating insurance. A significant portion of the
participating business is relatively newerbusiness. The dividend scale for
participating policies increasessignificantly in the early years. The
dividend scale is subject toapproval of the Board of Directors and may be
changed at their discretion. The Company no longer markets any participating
policies.
16
<PAGE>
Commissions and amortization of deferred policy acquisition costs increased
significantly for the first nine months of 1995 compared to the same period of
1994. The products that are currently being marketed are designed differently
than the products offered one year ago. The current products do not defer as
much acquisition costs for future periods.
Operating expenses increased 20% for the period. There are several factors
that are contributing to the increase in operating expenses. Through
September 30, 1995, the Company paid $596,000 in legal fees for the
acquisition of certain policies and the defense of related legal issues.
Please refer to the notes to the consolidated financial statements and the
analysis of life benefits expense in the management's discussion and analysis
for a detailed explanation.
The other factor contributing to the increase in operating expenses is that
the portfolio of products currently being marketed does not defer as much
acquisition costs for future periods.
Management continues its efforts to reduce operating costs and streamline
operations. The Company was able to streamline its operations by reducing the
number of companies through a series of mergers and the sale of F&R. As of
September 30, 1995, the Company controls four insurance companies.
Interest expense increased slightly when comparing the current period to
previous period. The interest rate on the senior debt is the prime interest
rate plus an additional 1% of interest. As of September 30, 1995, the
interest rate on the senior debt had increased to 9 3/4% compared to 7% one
year ago. The Company has reduced its senior debt $2,900,000 within the last
twelve months.
(c) Net loss:
The Company recorded net losses of $312,000 during the first nine months of
1995 compared to $1,036,000 for the same period in 1994. The improvement in
results is attributable to the increase in net investment income, a decrease
in mortality experience, the credit for income taxes and the improvement of
the equity loss from investees.
Third quarter 1995 compared to third quarter 1994:
(a) Revenues:
Revenues increased 9% during third quarter 1995 compared to third quarter
1994. The improvement of realized investment losses and the increase in other
income contributed significantly to the increase in revenues.
Premium income, net of reinsurance, decreased 2% during the third quarter of
1995 compared to the third quarter of 1994. The decrease in premium income
was expected by management. In late 1994, the Company discontinued marketing
the traditional and interest sensitive whole life products. The Company is
currently marketing three universal life insurance products. Universal life
insurance products contribute only cost of insurance charges to the premium
income line item.
17
<PAGE>
Other considerations, net of reinsurance, consisting of administrative loads
charged on interest sensitive and universal life products, increased 15% for
the third quarter 1995 compared to third quarter 1994. The Company is
currently marketing three universal life products. In late 1994, the Company
discontinued marketing the traditional and interest sensitive products.
Net investment income increased 3% during the third quarter of 1995 compared
to third quarter 1994. The increase is attributable to the Company investing
a significant portion of its cash and cash equivalents in long term fixed
maturities and mortgage loans during March and April of 1994.
The Company's investments are generally managed to match related insurance and
contract holder liabilities. The overall annualized gross investment yields
as of third quarter 1995 and 1994, are 7.18% and 7.20%, respectively. The
comparison of investment return with insurance or investment product crediting
rates establishes an interest spread. Minimum interest spreads between earned
and credited rates are 1% to 1.5%. The Company continually assesses
investment yields, and when necessary takes action to reduce credited interest
rates on its insurance products to preserve targeted spreads. Credited rates
are established by the Board of Directors. Over 60% of the insurance and
investment product reserves are crediting 5% or less in interest and 39% of
the insurance and investment product reserves are crediting 5.25% to 6% in
interest. It is expected that the monitoring of the interest spreads by
management will provide the necessary margin to adequately provide for
associated costs on insurance policies that the Company has in force and will
write in the future.
The Company realized $116,000 of investment losses during the third quarter of
1995 compared to realized investment losses of $870,000 in the same period in
1994. Realized investment losses in the current period are attributable to
securities in the bond portfolio that were called by the issuer prior to
maturity. The realized investment losses in the previous period were due in
part to $628,000 on foreclosed real estate. The realized loss in the previous
period was atttributable to real estate sales activity in the same geographic
area as the Company's foreclosed real estate.
(b) Expenses:
Expenses decreased 12% during the third quarter of 1995, compared to third
quarter 1994. The decrease in expenses is due to the decrease in life
benefits.
Life benefits and reinsurance benefits and claims decreased 27% for third
quarter of 1995, compared to the same period in 1994. The Company's mortality
experience decreased $895,000 in the current period compared to the previous
period. Another factor that is contributing to decrease life and annuity
benefits is that the Company in 1994, lowered the interest rates credited on
its interest sensitive, universal life and annuity products to a 6% interest
rate. This has resulted in a lower reserve increase on these products than
was experienced in the prior year as a lower interest rate is being credited
to the policies involved. The life insurance and annuity products are
continuing to credit interest at 6% in 1995. By maintaining the credited
interest rates at 6%, it has enabled the Companyto achieve larger interest
spreads.
18
<PAGE>
During the third quarter of 1994, UG became aware that certain new insurance
business was being solicited by certain agents and issued to individuals
considered to be not insurable by Company standards. These policies had a
face amount of $22,700,000 and represent less than 1/2 of 1% of the insurance
in force of the Company. Management's analysis of the business in force
indicates that the expected death claims on the business in force to be
adequately covered by the mortality assumptions inherent in thecalculation of
statutory reserves. Nevertheless, management has determined itis in the best
interest of the Company to attempt to acquire as many of the policies as
possible. As of September 30, 1995, there remained policies which represented
$4,728,000 of the original face amount of these policies which the Company has
either determined that the insurer has bad health or the owners have not yet
been contacted by the Company regarding a posible repurchase of the insurance
policy.
During 1994, the Company authorized $1,250,000 for the acquisition of these
policies. At December 31, 1994, the Company had $227,961 remaining for the
purchase of these policies. Through September 30, 1995, the Company paid an
additional $562,000 for the acquisition of these policies and $596,000 in
legal fees that is reported in the general expense line item. The impact of
legal fees in the current quarter is $133,000.
Dividends to policyholders increased 14% for third quarter 1995 compared to
the same period for 1994. USA continued to market participating policies
through most of 1994. Management expects dividends to policyholders will
continue to increase in the future. A portion of the Company's insurance in
force is participating insurance. A significant portion of the participating
business is relatively newer business. The dividend scale for participating
policies increases significantly in the early years. The dividend scale is
subject to approval of the Board of Directors and may be changed at their
discretion. The Company no longer markets any participating policies.
Commissions and amortization of deferred policy acquisition costs decreased
slightly for third quarter 1995 compared to the same period of 1994. The
products that are currently being marketed are designed differently than the
products offered one year ago. The current products do not defer as much
acquisition costs for future periods.
Operating expenses decreased 4% for the period. Management continues its
efforts to reduce operating costs and streamline operations. The Company was
able to streamline its operations by reducing the number of companies through
a series of mergers and the sale of F&R. As of September 30, 1995, the
Company controls four insurance companies.
There are several factors that contributed to increase operating expenses.
The first factor is related to increased legal fees incurred regarding the
legal matters discussed in the Notes to the Financial Statements and in the
earlier discussion of life benefits. Another factor that is contributing to
increase operating expenses is that the portfolio of products currently being
marketed do not defer as much acquisition costs for future periods.
19
<PAGE>
Interest expense increased 5% for 1995 compared to 1994. The interest rate on
the senior debt is the prime interest rate plus an additional 1% of interest.
As of September 30, 1995, the interest rate on the senior debt had increased
to 9 3/4% compared to 7% one year ago. The Company has reduced its senior
debt $2,900,000 within the last twelve months.
(c) Net (loss) income:
The Company recorded a net gain of $198,000 during the third quarter of 1995
compared to net losses of $515,000 for the same period in 1994. The
improvement in results is attributable to the decrease in mortality expenses
in life benefits.
FINANCIAL CONDITION
(a) Assets:
The Company's financial position at September 30, 1995, reflected an increase
in assets and liabilities compared to December 31, 1994.
As of September 30, 1995, and December 31, 1994, invested assets represented
approximately 66% of consolidated assets. As of September 30, 1995, fixed
maturities and investments held for sale represented 79% of total invested
assets.
Invested assets changed very little through third quarter 1995 compared to
December 31, 1994. The Company acquired $1,000,000 of American General
Capital Corporation's preferred stock. Mortgage loans declined 10% due to
refinancing activity. The Company does not actively solicit new mortgage
loans.
Other accounts and notes receivable decreased $289,000 at September 30, 1995
compared to December 31, 1994. The decrease is due to a change in Company
policy during 1994 as to how the agents are advanced on submitted insurance
applications. The change in Company policy enables the Company to better
control advances made to agents.
Deferred policy acquisition costs ("DPAC") increased 3% through the third
quarter of 1995 compared to December 31, 1994. DPAC will increase due to new
business and will decrease due to amortization in relation to insurance in
force. The products that are currently being marketed are designed
differently than the products offered one year ago. The current products do
not defer as much acquisition costs for future periods.
Cost of insurance acquired, value of agency force and cost in excess of net
assets purchased decreased as expected by management through third quarter
1995 compared to December 31, 1994.
20
<PAGE>
(b) Liabilities:
Liabilities increased 2% through third quarter of 1995 compared to December
31, 1994. Future policy benefits represented 78% of total liabilities at
September 30, 1995 and at December 31, 1994. Future policy benefits will
increase related to growth in and duration of insurance in force and decrease
from reserves released on deaths and other policy terminations.
Policyholders' dividend accumulations increased 9% through third quarter of
1995 compared to December 31, 1994. The policyholder dividend accumulation
originates from the policyowner selecting the option to have their dividend
deposited with the insurance company to accumulate with interest. A
significant portion of the participating business is relatively newer
business. The dividend scale for participating policies increases
significantly in the early years. The dividend scale is subject to approval
of the Board of Directors and may be changed at their discretion. The Company
no longer markets any participating policies.
Deferred income taxes decreased approximately 6% through third quarter of 1995
compared to December 31, 1994. A deferred tax liability is recognized for the
estimated future tax effects attributable to temporary differences and
carryforwards. The measurement of this liability is based on provisions of
the enacted tax law. Primary items affecting deferred taxes of the Company
are cost of insurance acquired, deferred policy acquisition costs and future
policy benefits.
Notes payable decreased $604,000 through third quarter of 1995 compared to
December 31, 1994. On March 1, 1995, the Company prepaid the remaining
$900,000 of the June 1, 1995 scheduled principal payment. Nopayments are due on
Company debt until June 1996.
(c) Shareholders' Equity:
Overall shareholders' equity decreased 1% through third quarter 1995 compared
to December 31, 1994. Unrealized depreciation of equity securities and
investments held for sale improved due to the general decline in bond yields
in the market place. The decline in bond yields has improved the market value
of the Company's holdings of investments held for sale at market. Retained
earnings experienced a decline due to the operating results of the Company.
FUTURE OUTLOOK
Factors expected to influence life insurance industry growth include: 1)
competitive pressure among the large number of existing firms; 2)
competition from financial service companies, as they seek to expand into
insurance products; 3) customers' changing needs for new types of insurance
products; 4) customers' lack of confidence in the entire industry as a
result of the recent highly visible failures; and 5) uncertainty concerning
the future regulation of the industry. Growth in demand for insurance
products will depend on demographic variables such as incomegrowth, wealth
accumulation, populations and workforce changes.
21
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings
S.D., et al. v. Universal Guaranty Life Insurance Company. (U.S.D.C., N.D.
Ga., 1995, 195-CV-0454-GET).
A lawsuit was filed against UG in February, 1995 on behalf of four applicants
for insurance and a potential class of other applicants. The plaintiffs
alleged that UG violated Title III of the Americans With Disabilities Act of
1990 (the "ADA") by discriminating against the plaintiffs in connection with
the issuance of insurance policies by requiring the plaintiffs to submit
additional medical evidence not required of others.
The plaintiffs allege that UG's requirement of a blood test violated the ADA
by discriminating against each of the plaintiffs of the basis of a perceive
disability which resulted in the denial of an insurance policy.
In addition to the ADA violation, plaintiffs allege a violation of Georgia
Insurance Regulations with regard to procedures for obtaining information
regarding an applicant's HIV/AIDS status.
The plaintiffs seek relief in the form of requiring UG to reopen the
plaintiffs' insurance applications and process those applications, enjoining
UG from requiring blood tests from the plaintiffs, directing UG to issue life
insurance policies as applied for, and awarding the plaintiffs and other class
members costs, expenses, and reasonable attorneys' fees pursuant toTitle III
of the ADA.
UG has filed an Answer to this potential class action. UG believes that it
has no liability to any of the plaintiffs, or other potential class members,
and intends to defend the lawsuit vigorously. In June 1995, summary judgment
was granted to dismiss the case.
Jeffrey Ploskonka, Keith Bohn and Paul Phinney v. Universal Guaranty Life
Insurance Company (Circuit Court of the Seventh Judicial Circuit Sangamon
County, Illinois Case No.: 95-L-0213)
On March 9, 1995 a lawsuit was filed against Universal Guaranty Life Insurance
on behalf of three insureds and a potential class of other insureds. The
Plaintiffs allege that UG violated the insurance contract in attempting to
cancel life insurance contracts. Additionally, the Plaintiffs assert
violations of Illinois law alleging vexations and unreasonable insurance
practices, breach of duty of good faith and fair dealing, and that Illinois
consumer fraud laws have been violated. The Plaintiffs seek unspecified
compensatory damages, injunctive relief, attorneys' fees, statutory damages in
an amount up to $25,000.00, punitive damages of $1,000,000.00, and other
equitable relief. UG filed an Answer to this lawsuit in May 1995, asserting
various defenses and reserving the right to assert counterclaims. UG has also
filed motions to dismiss certain allegations and claims made in the lawsuit.
UG believes it has no liability to any of the plaintiffs, or other potential
class members, and intends to defend the lawsuit vigorously. In June 1995,
the court conditionally certified a class of non-settling insureds.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED TRUST, INC.
(Registrant)
Date November 10, 1995 By /s/ Thomas F. Morrow
Thomas F. Morrow, Chief Operating
Officer, President, Treasurer
and Director
Date November 10, 1995 By /s/ James E. Melville
James E. Melville, Chief Financial
Officer and Senior Executive Vice
President
23
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> SEP-30-1995 SEP-30-1995
<DEBT-HELD-FOR-SALE> 2,988,146 3,337,672
<DEBT-CARRYING-VALUE> 186,835,952 184,590,646
<DEBT-MARKET-VALUE> 186,986,521 172,822,882
<EQUITIES> 1,877,477 911,012
<MORTGAGE> 14,309,461 15,822,056
<REAL-ESTATE> 12,056,279 11,737,847
<TOTAL-INVEST> 240,430,255 238,707,966
<CASH> 15,622,657 11,697,067
<RECOVER-REINSURE> 14,442,862 13,919,626
<DEFERRED-ACQUISITION> 10,978,665 10,634,476
<TOTAL-ASSETS> 365,414,614 364,258,830
<POLICY-LOSSES> 0 0
<UNEARNED-PREMIUMS> 0 0
<POLICY-OTHER> 241,967,059 234,875,800
<POLICY-HOLDER-FUNDS> 18,513,154 17,438,768
<NOTES-PAYABLE> 21,448,910 22,053,289
<COMMON> 373,519 373,119
0 0
0 0
<OTHER-SE> 21,296,818 21,495,976
<TOTAL-LIABILITY-AND-EQUITY> 365,414,614 364,258,830
7,072,052 23,755,429
<INVESTMENT-INCOME> 3,747,069 11,440,748
<INVESTMENT-GAINS> (115,524) (108,256)
<OTHER-INCOME> 1,126,324 3,369,841
<BENEFITS> 5,978,795 23,190,558
<UNDERWRITING-AMORTIZATION> 1,350,662 4,867,646
<UNDERWRITING-OTHER> 4,380,071 12,714,492
<INCOME-PRETAX> 120,393 (2,314,934)
<INCOME-TAX> (214,525) (1,240,694)
<INCOME-CONTINUING> 198,464 (312,094)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 198,464 (312,094)
<EPS-PRIMARY> .01 (.02)
<EPS-DILUTED> .01 (.02)
<RESERVE-OPEN> 0 0
<PROVISION-CURRENT> 0 0
<PROVISION-PRIOR> 0 0
<PAYMENTS-CURRENT> 0 0
<PAYMENTS-PRIOR> 0 0
<RESERVE-CLOSE> 0 0
<CUMULATIVE-DEFICIENCY> 0 0
</TABLE>
