<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 33-85988
C. M. L I F E I N S U R A N C E C O M P A N Y
Incorporated under the laws
of the State of Connecticut IRS Employer Identification
No. 06-104383
140 Garden Street, Hartford, Connecticut 06154
Telephone Number: Area Code 860-987-6500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports 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.
(1) Yes X No
----- --
(2) Yes X No
----- --
Registrant has 12,500 shares of common stock outstanding on March 28, 1996, all
of which are owned by Massachusetts Mutual Life Insurance Company.
<PAGE>
PART I
ITEM 1. BUSINESS
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C.M. Life Insurance Company (C.M. Life), 140 Garden Street, Hartford,
Connecticut, 06154, is a stock life insurance company. It was chartered by a
Special Act of the Connecticut General Assembly on April 25, 1980. It is
principally engaged in the sale of life insurance and annuities, and is licensed
to sell insurance in all states except New York. As of December 31, 1995, C.M.
Life is licensed to sell annuities in a majority of states and is seeking to be
licensed in all states except New York. As of December 31, 1995 C.M. Life was a
wholly owned subsidiary of Connecticut Mutual Life Insurance Company
(Connecticut Mutual), the sixth oldest life insurance company in the United
States, and the first life insurance company formed in Connecticut. Connecticut
Mutual was chartered by a Special Act of the Connecticut General Assembly in
1846 and has continuously engaged in the insurance business since that time.
On September 8, 1995, the Board of Directors of Connecticut Mutual approved the
merger of Connecticut Mutual and Massachusetts Mutual Life Insurance Company.
Thereafter, a definitive agreement was signed by both companies. On January 27,
1996, Connecticut Mutual and insurance subsidiary policyholders and other
insureds and annuitants approved the merger. The merger was reviewed by the
insurance regulatory authorities in Massachusetts and Connecticut, and approved.
The merger was effective March 1, 1996.
Massachusetts Mutual Life Insurance Company (MassMutual) is a mutual life
insurance company specially chartered by the Commonwealth of Massachusetts on
May 14, 1851. It is currently licensed to transact life (including variable
life), and accident and health insurance business in all states, the District of
Columbia and certain provinces of Canada.
The surviving company will be the fifth largest mutual life insurance company,
and the eighth largest life insurance company, in the United States, in each
case based on the combined statutory total assets of MassMutual and Connecticut
Mutual at December 31, 1994.
Further references to Connecticut Mutual contained herein should be read to be
MassMutual.
Products
--------
C.M. Life sells universal life and annuity products. The Regular Series
Universal Life product is an interest-sensitive, flexible-premium universal
life policy. An additional universal life product is an Employee Series
Universal Life product sold as a flexible-premium universal life policy for
use in employer-sponsored sales. These products are sold in all states except
New York. In New York, these products are participating contracts issued
through Connecticut Mutual. Also available for sale beginning in 1995 is
Enterprise Plus Universal Life sold as a flexible-premium, non-participating
interest sensitive universal life policy.
The annuity products include CM Windows, Panorama Plus Variable Annuity
(Panorama Plus), the SEI Variable Annuity (SEI VA), Panorama Premier Variable
Annuity (Panorama Premier), and OFFITBANK Variable Annuity (OFFITBANK VA).
CM Windows is a single-premium deferred annuity paying a fixed interest rate
guaranteed for the life of the contract. This product is not registered with
the Securities and Exchange Commission. CM Windows may be sold by any
licensed agent or broker who is contracted with C.M. Life. As of December 31,
1995, CM Windows was available for sale in 47 states.
Panorama Plus is distributed by Connecticut Mutual Financial Services, LLC
(`CMFS''), and begining March 1, 1996, by MassMutual Life Investors Services,
Inc. (MMLISI), and allows for investment in Panorama Plus Separate Account or
C.M. Life's General Account. The Separate Account invests in shares of
Connecticut Mutual Financial Services Series Fund I, Inc. The Company intends
to have the Separate Account also invest in shares of Oppenheimer Variable
Account Funds on or about May 1, 1996 subject to appropriate regulatory
approvals. The General Account provides for a guaranteed interest rate and
the conservation of principal. Interest rates are declared quarterly and are
guaranteed never to fall below 3 percent per year. An investment in Panorama
Plus may be divided among the investment
<PAGE>
portfolios offered by the Separate Account, the General Account, or any
combination thereof. This product is sold by licensed representatives of
broker-dealers who maintain a current selling group agreement with CMFS. As
of December 31, 1995, Panorama Plus was available in 48 states.
The SEI VA is distributed by SEI Financial Services Company and allows
contractholders to allocate their premiums into the SEI Division of C.M.
Multi-Account A, a separate account of C.M. Life. The SEI Division of the
Separate Account invests in shares of the Insurance Investment Products Trust,
an investment company advised by SEI Financial Management Corporation. This
product is registered with the SEC and is sold by registered representatives.
As of December 31, 1995, this product was not actively marketed.
Panorama Premier is distributed by CMFS, and beginning March 1, 1996 by
MMLISI, and allows for investment in the Panorama Premier Division of C.M.
Multi-Account A, a separate account of C.M. Life, or C.M. Life's General
Account. The Panorama Premier Division of the Separate Account invests in
shares of Connecticut Mutual Financial Services Series Fund I, Inc. and shares
of Oppenheimer Variable Account Funds. The General Account provides for a
guaranteed interest rate and the protection of principal. Interest rates are
declared quarterly and are guaranteed never to fall below 3 percent per year.
An investment in Panorama Premier may be divided among the investment
portfolios of the Panorama Premier Division of the Separate Account, the
General Account, or any combination thereof. This product is sold by licensed
representatives of broker-dealers who maintain a current selling group
agreement with CMFS. As of December 31, 1995, Panorama Premier was not
available for sale in any state. However, the product is expected to be
available in the majority of states in 1996.
OFFITBANK VA is distributed by CMFS and allows for investment in the OFFITBANK
Division of C.M. Multi-Account A , a separate account of C.M. Life. The
OFFITBANK Division of the Separate Account invests in shares of the OFFITBANK
Variable Insurance Fund, Inc. and shares of Oppenheimer Variable Account
Funds. An investment in OFFITBANK VA may be divided among the investment
portfolios of the OFFITBANK Division of the Separate Account. This product is
sold by licensed representatives of broker-dealers who maintain a current
selling group agreement with CMFS. As of December 31, 1995, OFFITBANK VA was
not available for sale in any state. However, the product is expected to be
available in approximately eight states in 1996.
Liquidity and Capital Resources
-------------------------------
C.M. Life's operations have historically provided substantial cash flow. The
majority of the Company's cash is invested in investment-grade securities to
provide ample protection for policyholders. The liabilities of the Company
are predominantly long-term in nature and, therefore, the Company invests in
long-term fixed maturity investments such as bonds.
C.M. Life's liquidity requirements were met by funds provided from operations
and investment activity. The primary uses of funds were to purchase
investments and to pay commissions, insurance operating expenses and policy
benefits.
There is not expected to be any material change to C.M. Life's liquidity as a
result of the merger of Connecticut Mutual and MassMutual.
Reinsurance
-----------
($ in thousands)
C.M. Life reinsures (cedes) a portion of its life insurance business to
Connecticut Mutual and other insurers, in order to reduce insurance risk.
C.M. Life's retention limit per individual insured is $4 million; the portion
of the risk exceeding the retention limit is reinsured with other insurers.
The reinsurance contract with Connecticut Mutual is a modified coinsurance
quota-share treaty. Under the treaty C.M. Life cedes 50% of the premiums on
universal life policies issued in 1985 and 75% of the premiums with issue
dates on or after January 1, 1986. In return Connecticut Mutual pays C.M.
Life a stipulated expense allowance, death and surrender benefits, and a
modified coinsurance adjustment. Reserves for payment of future benefits for
the ceded policies are retained by C.M. Life.
<PAGE>
C.M. Life also maintains a stop-loss agreement with Connecticut Mutual under
which C.M. Life cedes claims which, in aggregate, exceed $24,245 in 1995,
$18,348 in 1994, and $16,431 in 1993. In 1995, 1994, and 1993, the limit was
not exceeded. The agreement was amended and renewed in 1994 for a duration of
three years. The amended maximum coverage is $25,000. C.M. Life paid
approximately $602, $435, and $446 in premiums under the agreement in 1995,
1994, and 1993, respectively.
C.M. Life is contingently liable with respect to ceded reinsurance in the
event any reinsurer is unable to fulfill its contractual obligations.
Reserves
--------
In accordance with the life insurance laws and regulations under which C.M.
Life operates, it is obligated to carry on its books, as liabilities,
actuarially determined reserves to meet its obligations on outstanding
contracts. Reserves are based on mortality tables in general use in the
United States and are computed to equal amounts that, with additions from
premiums to be received, and with interest on such reserves computed annually
at certain assumed rates, will be sufficient to meet C.M. Life's policy
obligations at their maturities or in the event of an insured's death. In the
accompanying financial statements, these reserves are determined in accordance
with statutory regulations which is a generally accepted accounting principle
(see Item 7, New Accounting Pronouncements) for wholly owned stock life
insurance subsidiaries of mutual life insurance companies.
Competition
-----------
C.M. Life is engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other entities
marketing insurance products comparable to those of C.M. Life.
MassMutual is the eighth largest life insurance company in the country with
over $52 billion in life insurance assets and $103 billion in total assets.
Best's Insurance Reports, Life-Health Edition, upgraded C.M. Life's rating on
March 4, 1996 to the highest possible rating of A++ as a result of the merger.
MassMutual's ratings were the highest possible from A.M. Best (A++), Duff
&Phelps (AAA) and Standard & Poors (AAA), and the second-highest rating from
Moody's Investors Service (Aa1).
Transactions with Connecticut Mutual
------------------------------------
Connecticut Mutual and C.M. Life have an agreement whereby Connecticut Mutual
for a fee will furnish C.M. Life, as required, operating facilities, human
resources, computer software development and managerial services.
Regulation
----------
C.M. Life is organized as a Connecticut stock life insurance company, and is
subject to Connecticut laws governing insurance companies. C.M. Life is
regulated and supervised by the State of Connecticut Insurance Commissioner.
By March 1 of every year, C.M. Life must prepare and file an annual statement,
in a form prescribed by the State of Connecticut Insurance Department, as of
December 31 of the preceding year. The Commissioner and his or her agents
have the right at all times to review or examine C.M. Life's books and assets.
A full examination of C.M. Life's operations is conducted periodically
according to the rules and practices of the National Association of Insurance
Commissioners (NAIC). C.M. Life is also subject to the insurance laws of the
states in which it is authorized to do business, to various federal and state
securities laws and regulations, and to regulatory agencies which administer
those laws and regulations.
C.M. Life can be assessed, up to prescribed limits, for policyholder losses
incurred by insolvent insurers under the insurance guaranty fund laws of most
states. C.M. Life cannot predict or estimate the amount of any such future
assessments it may have to pay. However, the insurance guaranty laws of most
states provide for deferring payment or exempting a company from paying such
an assessment if it would threaten such insurer's financial strength.
<PAGE>
Several states, including Connecticut, also regulate insurers and their
affiliates, such as C.M. Life and its affiliates, under insurance holding
company laws and regulations. Under such laws, intercompany transactions such
as dividend payments to parent companies and transfers of assets, may be
subject to prior notice and approval, depending on factors such as the size of
the transaction in relation to the financial position of the companies. Also,
the laws of the various jurisdictions establish supervisory agencies with
broad administrative powers with respect to licensing to transact business,
overseeing trade practices, licensing agents, approving policy forms,
establishing reserve requirements, fixing maximum interest rates on life
insurance policy loans and minimum rates for accumulation of surrender values,
prescribing the form and content of required financial statements and
regulating the type and amount of investments permitted.
Currently, the federal government does not directly regulate the business of
insurance. However, federal legislative, regulatory and judicial decisions
and initiatives often have significant effects on C.M. Life's business. Types
of changes that are most likely to affect C.M. Life's business include changes
to: (a) the taxation of life insurance companies; (b) the tax treatment of
insurance products; (c) the securities laws, particularly as they relate to
insurance and annuity products; (d) the "business of insurance" exemption from
any of the provisions of the anti-trust laws; and (e) declining barriers which
prevent some banks from selling or underwriting insurance. C.M. Life could
also be affected by federal initiatives that have impact on the ownership of
or investment in United States companies by foreign companies or investors.
C.M. Life alone, and not the federal government, or any of its agencies or
instrumentalities, backs the guarantees associated with C.M. Life's insurance
and annuity contracts.
ITEM 2. PROPERTIES
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C.M. Life's principal office is located at 140 Garden Street, Hartford,
Connecticut, where all of C.M. Life's records are maintained. This office space
is owned by Connecticut Mutual.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
C.M. Life is not involved in any litigation that is of material importance in
relation to its financial statements. In addition, there are no legal
proceedings to which the Panorama Plus or Panorama Premier Separate Accounts are
a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
On January 27, 1996 Connecticut Mutual and insurance subsidiary policyholders
and other insureds and annuitants approved the merger of Connecticut Mutual and
MassMutual.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------------------------------------------------------------------------------
C.M. Life is a wholly owned subsidiary of Connecticut Mutual Life Insurance
Company, and as such, there is no market for its common stock. As of March 1,
1996, C.M. Life became a wholly owned subsidiary of MassMutual.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
C.M. LIFE INSURANCE COMPANY
SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31,
($ IN THOUSANDS)
Revenues: 1995 1994 1993 1992 1991
- --------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Premiums, annuity $135,949 $112,222 $108,460 $117,805 $125,763
Considerations and other income
Less: reinsurance ceded (50,732) (54,032) (56,905) (60,830) (15,846)
-------- -------- -------- -------- --------
Net premiums, annuity 85,217 58,190 51,555 56,975 109,917
considerations and other income
Net investment income and 67,675 57,354 57,919 56,286 53,187
realized gains and losses ------- ------ ------ ------ ------
Total Revenue 152,892 115,544 109,474 113,261 163,104
Benefits, Losses and Expenses:
- ------------------------------
Benefits, claims and 132,067 101,243 98,700 111,843 129,797
settlement expenses
Other operating expenses 50,837 28,829 28,440 35,369 47,199
Less: reinsurance (52,538) (45,804) (50,001) (54,537) (25,156)
benefits and expenses ceded -------- -------- -------- -------- --------
Total Benefits, Losses and 130,366 84,268 77,139 92,675 151,840
------- ------ ------ ------ -------
Expenses
Income Before Federal 22,526 31,276 32,335 20,586 11,264
Income Tax Expense
Federal Income Tax Expense 8,776 13,488 11,241 9,055 6,429
----- ------ ------ ----- -----
Net Income $13,750 $17,788 $21,094 $11,531 $4,835
======= ======= ======= ======= ======
Total Assets $1,533,748 $1,208,291 $970,010 $768,333 $664,755
========== ========== ======== ======== ========
<FN>
The preceding selected financial data of C.M. Life should be read in conjunction
with the financial statements and notes thereto and the related management's
discussion and analysis
</FN>
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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Results of Operations (dollar amounts in thousands)
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1995 Compared with 1994
-----------------------
For the year ended December 31, 1995, C.M. Life had net income of $13,750, as
compared with net income of $17,788 in 1994. The decrease in net income of
$4,038 is attributable to increased benefit, claims and settlement expenses
and increased acquisition and insurance expenses which exceeded the increase
in net premiums and net investment income.
Premiums before reinsurance ceded increased $23,040 to $134,278 in 1995 from
$111,238 in 1994. Premiums for CM Windows, a single premium deferred annuity,
increased $9,412 to $18,894 in 1995 from $9,482 in 1994. The increase is
attributable to higher interest rates and increased promotional efforts, which
increased demand for single premium deferred annuity products. Premiums for
life insurance products increased $13,628 to $115,384 in 1995 from $101,756 in
1994 due to higher sales of universal life policies, primarily the Enterprise
Plus product, as well as by increased renewal premiums.
Reinsurance premiums ceded decreased by $3,300 in 1995. The decrease is
attributable to the decrease in reinsured business as well as increased
retention limits. The Enterprise Plus Universal Life product is not included
in the C.M. Life/Connecticut Mutual reinsurance treaty.
Net investment income increased by $8,928 over 1994. This increase is
attributable to increased invested assets and policy loans.
Net realized capital losses were $1,140 in 1995 as compared to net realized
capital losses of $2,533 in 1994. This loss is due to realized net losses of
$1,962, with $822 being transferred to the IMR (Interest Maintenance Reserve)
in 1995 as compared to realized net losses of $7,332 in 1994, with $4,799
being transferred to the IMR.
Benefits, claims and settlement expenses, before reinsurance benefit
reimbursements increased by $30,824 from 1994. Surrender benefits before
reinsurance increased by $2,443, to $33,494 in 1995 from $31,051 in 1994 and
reserves ceded increased $6,173. Contributing to the increase was an
increase in death claims of $12,853, increased change in reserves of $8,300,
increased reserves ceded of $6,173 and increased surrenders and other benefits
of $3,498.
Acquisition expenses increased $21,190 over 1994. This increase is
attributable to increased sales, especially of the new Enterprise Plus
Universal Life product.
Income tax expense decreased by $4,712 over 1994. This decrease is
attributable to lower taxable income in 1995 versus 1994. Taxable income was
$27,726, $38,660 and $33,080 in 1995, 1994 and 1993, respectively. C.M.
Life's Federal income tax expense is based on income which is currently
taxable. The differences between pre-tax book income and taxable income are
primarily for lower tax basis reserves for future policy benefits and other
book/tax differences associated with gross investment income.
Results of Operations (dollar amounts in thousands)
---------------------------------------------------
1994 Compared with 1993
-----------------------
For the year ended December 31, 1994, C.M. Life had net income of $17,788, as
compared with net income of $21,094 in 1993. The decrease in net income of
$3,306 is attributable to increased benefit, claims and settlement expenses as
well as an increase in net realized capital losses and increased federal tax
expense, partially offset by increased net premiums, net investment income and
decreased reinsurance ceded and acquisition and insurance expenses.
Premiums before reinsurance ceded increased $3,141 to $111,238 in 1994 from
$108,097 in 1993. Premiums for CM Windows, a single premium deferred annuity,
increased $7,343 to $9,482 in 1994 from $2,139 in 1993. The increase is
attributable to higher interest rates, which increased demand for single
premium deferred annuity products. Premiums for life insurance products
decreased $4,202 to $101,756 in 1994 from $105,958 in 1993 due to lower sales
of new universal life policies and Executive Benefit Life policies offset by
higher term policy sales.
<PAGE>
Reinsurance premiums ceded decreased by $2,873 in 1994. The decrease is
attributable to the decrease in reinsured business as well as increased
retention limits.
Net investment income increased by $2,427 over 1993; this increase is
attributable to increased invested assets.
Net realized capital losses were $2,533 in 1994 as compared to a net realized
gain of $459 in 1993. This loss is due to realized net losses of $7,332, with
$4,799 being transferred to the IMR in 1994 as compared to realized net gains
of $4,906 in 1993, with $4,447 of those being transferred to the IMR. The
$7,332 loss included realized losses of $2,093 related to the bulk sale of a
number of mortgages during 1994 and losses of $2,158 resulted from the sale of
two real estate properties. There were no real estate sales in 1993.
Benefits, claims and settlement expenses, before reinsurance benefit
reimbursements increased by $2,543 from 1993. Surrender benefits before
reinsurance increased by $2,116, to $31,051 in 1994 from $28,935 in 1993 and
reserves ceded increased $4,928. This increase was partially offset by
decreased death claims of $3,217 and decreased change in reserves of $1,580.
Income tax expense increased by $2,247 over 1993. This increase is
attributable to higher taxable income in 1994 versus 1993. Taxable income was
$38,660, $33,080 and $27,414 in 1994, 1993 and 1992, respectively. C.M.
Life's Federal income tax expense is based on income which is currently
taxable. The differences between pre-tax book income and taxable income are
primarily lower tax basis reserves for future policy benefits and other
book/tax differences associated with gross investment income.
Liquidity and Capital Resources
-------------------------------
C.M. Life's operations have historically provided substantial positive cash
flows from operations. The majority of the Company's cash is invested in
investment-grade securities to provide ample protection for policyholders.
The liabilities of the Company are predominantly long-term in nature and,
therefore, the Company invests in long-term fixed maturity investments such as
bonds.
C.M. Life's liquidity requirements were met by funds provided from operations
and investment activity. The primary uses of funds were to purchase
investments and to pay commissions, insurance operating expenses and policy
benefits.
There is not expected to be any material change to C.M. Life's liquidity as a
result of the merger of CML and MassMutual.
Segment Information
-------------------
During 1995, 1994 and 1993, C.M. Life's operations consisted of one business
segment which was principally the sale of universal life insurance and annuity
products. C.M. Life is not dependent upon any single customer and no single
customer accounted for more than 10% of revenues in 1995, 1994 and 1993.
Reserves
--------
In accordance with the life insurance laws and regulations under which C.M.
Life operates, it is obligated to carry on its books, as liabilities,
actuarially determined reserves to meet its obligations on outstanding
contracts. Reserves are based on mortality tables in general use in the
United States and are computed to equal amounts that, with additions from
premiums to be received, and with interest on such reserves computed annually
at certain assumed rates, will be sufficient to meet C.M. Life's policy
obligations at their maturities or in the event of an insured's death. In the
accompanying financial statements, these reserves are determined in accordance
with statutory regulations which is a generally accepted accounting principle
for wholly owned stock life insurance subsidiaries of mutual life insurance
companies.
<PAGE>
Investments
-----------
At December 31, 1995, the composition of C.M. Life's $976,511 of invested
assets was 75.5% fixed maturities, 7.4% equity securities, 2.7% mortgage
loans, 12.9% policy loans, and 1.5% cash and cash equivalents.
Fixed Maturities
----------------
C.M. Life invests in fixed maturities with the objective of balancing
reasonable returns with liquidity, interest rate and credit risks. As a
result, C.M. Life's fixed maturity portfolio consists primarily of government
securities and high-quality marketable corporate securities. At December 31,
1995, the fixed maturity securities portfolio consisted of $675,850 of
investment grade bonds, which represented 91.8% of the fixed maturity
portfolio. Below investment grade bonds (those rated below "Baa") were
$60,249 , which represented 8.2% of the fixed maturity portfolio. Ratings are
obtained from external rating agencies, and if not externally rated, are rated
by C.M. Life internally using similar methods. The interest rates available
on below-investment-grade securities are generally significantly higher than
available on other corporate debt securities. Also the risk of loss due to
default by the borrower is significantly greater with respect to such below-
investment-grade securities for any of a number of reasons including: those
securities are unsecured or subordinated to other creditors of the issuer, or
are issued by companies that usually have high levels of indebtedness. C.M.
Life attempts to minimize the exposure to any one issuer and by closely
monitoring the credit worthiness of such issuers.
C.M. Life's fixed maturity securities portfolio included $150,694 and $167,641
of mortgage-backed securities at December 31, 1995 and 1994, respectively.
The mortgage-backed securities are subject to risks associated with variable
prepayments of the underlying mortgages. Prepayments of the underlying
mortgages cause those securities to have different actual maturities than
scheduled at the time of purchase. The Company limits its investment risk by
purchasing fixed maturities either guaranteed by U.S. government-sponsored
entities or securities supported in the securitization structure by junior
securities enabling the assets to achieve investment grade status.
Equity Securities
-----------------
In 1995, C.M. Life invested in common stock with the objective of securing
long-term asset appreciation.
Mortgage Loans On Real Estate
-----------------------------
C.M. Life is not currently originating any mortgages. At December 31, 1995
and 1994, C.M. Life's mortgage loans were $26,705 and $42,038, respectively.
Mortgage loans, as a percentage of invested assets, have decreased to 2.7% as
of December 31, 1995, from 4.8% as of December 31, 1994.
Management closely monitors the ongoing performance of the mortgage loan
portfolio. Loans are reviewed individually to determine if other than
temporary impairments exist. For non-performing loans, reserves are
established considering the value of the underlying collateral. Mortgage loans
in the amount of $2,774, or 10.4% of the mortgage loan portfolio, were
delinquent 90 days or more as of December 31, 1995. This compares with
$2,774, or 6.6% of the mortgage loan portfolio at December 31, 1994.
Restructured loans are loans whose terms such as interest rate, amortization,
or maturity have been modified and are currently performing pursuant to such
modified terms. C.M. Life restructures loans to protect its investment and
only when it is anticipated that the borrower will be able to meet the
modified terms. As of December 31, 1995 and 1994, $17,128 and $24,034 of
mortgage loans have been restructured.
Policy Loans
------------
As of December 31, 1995 and 1994, C.M. Life's policy loans were $126,014 and
$109,720, respectively. Policy loans, as a percentage of invested assets,
have increased from 12.5% in 1994 to 12.9% in 1995. Variable interest rate
policy loans were 98.6% and 98.5% of total policy loans at December 31, 1995
and 1994, respectively. For loans with variable interest rates, the rates are
adjusted annually based upon changes in a corporate bond index.
<PAGE>
Competition
-----------
C.M. Life is engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other entities
marketing insurance products comparable to those of C.M. Life.
MassMutual is the eighth largest life insurance company in the country with
over $52 billion in life insurance assets and $103 billion in total assets.
Best's Insurance Reports, Life-Health Edition, upgraded C.M. Life's rating on
March 4, 1996 to the highest possible rating of A++ as a result of the merger.
MassMutual's ratings were the highest possible from A.M. Best (A++), Duff
&Phelps (AAA) and Standard & Poors (AAA), and the second-highest rating from
Moody's Investors Service (Aa1).
Transactions with Connecticut Mutual
------------------------------------
Connecticut Mutual allocates certain expenses to C.M. Life for providing
operating facilities, human resources, computer software development and
managerial services. Total expenses allocated to C.M. Life were approximately
$34,008, $16,412, and $18,831 in 1995, 1994 and 1993, respectively. The
increase is attributable to increased sales for C.M. Life and decreased sales
for the parent, Connecticut Mutual, resulting in a larger portion of certain
expenses being allocated to C.M. Life.
Regulation
----------
Currently, the Federal government does not directly regulate the business of
insurance. However, Federal legislative, regulatory and judicial decisions
and initiatives often have significant effects on C.M. Life's business. Types
of changes that are most likely to affect C.M. Life's business include changes
to: (a) the taxation of life insurance companies; (b) the tax treatment of
insurance products; (c) the securities laws, particularly as they relate to
insurance and annuity products; (d) the "business of insurance" exemption from
any of the provisions of the anti-trust laws; and (e) declining barriers which
prevent most banks from selling or underwriting insurance. C.M. Life could
also be affected by federal initiatives that have impact on the ownership of
or investment in United States companies by foreign companies or investors.
New Accounting Pronouncements
-----------------------------
The Financial Accounting Standards Board (FASB) has issued an interpretation
declaring that financial statements of mutual life insurance companies, and
their wholly owned subsidiaries, which are prepared on the basis of statutory
accounting principles, will no longer be considered to be in conformity with
Generally Accepted Accounting Principles (GAAP). This interpretation applies
to financial statements issued for fiscal years beginning after December 15,
1995. Certain accounting principles for mutual life insurance companies,
which will be required to be in compliance with GAAP, were also issued by the
FASB and the American Institute of Certified Public Accountants in January
1995. The financial statement impact of adopting these accounting principles
has not been determined by the Company. The effect of initially adopting the
FASB interpretation will be reported retroactively through restatement of all
previously issued financial statements presented for comparative purposes for
fiscal years beginning after December 15, 1992.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
Financial statements, in the form required by Regulation S-X, are set forth
below. The Registrant is not required to file supplementary financial data
specified by Item 302 of Regulation S-K.
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
($ IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1995 1994
---- ----
<S> <C> <C>
ASSETS:
Investments:
Fixed maturities at cost (fair value: $736,099 $717,291
$767,888 in 1995 and $684,213 in 1994)
Preferred stock at cost (fair value: $210
in 1995 and $2,065 in 1994) 263 1,815
Common stock at market value (cost: $64,225 72,361 -
in 1995)
Mortgage loans on real estate at net 26,705 42,038
realizable value
Real estate at cost - 1,897
Policy loans at outstanding balance 126,014 109,720
Cash and cash equivalents 15,069 3,025
------ -----
Total investments 976,511 875,786
Accrued investment income 14,781 14,023
Premiums due and deferred 6,831 5,330
Amounts due from reinsurers 902 1,162
Other assets 3,291 2,318
Assets of Separate Account 531,432 309,672
------- -------
TOTAL ASSETS $1,533,748 $1,208,291
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY:
LIABILITIES:
Future policy benefits $813,188 $751,808
Policy claims and benefits currently 2,026 1,772
payable
Indebtedness to related parties 12,624 6,965
Federal income tax payable 2,820 2,446
Asset valuation reserve 15,868 6,640
Other liabilities 10,622 7,906
Other deposits 54,269 31,690
Transfers due from Separate Account (22,300) (14,445)
Liabilities of Separate Account 531,432 309,672
------- -------
TOTAL LIABILITIES 1,420,549 1,104,454
--------- ---------
COMMITMENTS AND CONTINGENCIES - SEE NOTE 12
STOCKHOLDER'S EQUITY:
Common stock, $200 par value - 50,000 2,500 2,500
shares authorized,
12,500 shares issued and outstanding
Additional paid-in capital 43,759 43,759
Retained earnings 66,940 57,578
------ ------
TOTAL STOCKHOLDER'S EQUITY 113,199 103,837
------- -------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $1,533,748 $1,208,291
========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
($ IN THOUSANDS)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Premiums and annuity considerations $134,278 $111,238 $108,097
Less: reinsurance ceded (50,732) (54,032) (56,905)
-------- -------- --------
Net premiums and annuity considerations 83,546 57,206 51,192
Net investment income 68,815 59,887 57,460
Net realized capital (losses) gains on (1,140) (2,533) 459
investments
Other income 1,671 984 363
----- --- ---
TOTAL REVENUES 152,892 115,544 109,474
------- ------- -------
BENEFITS, LOSSES AND EXPENSES:
Benefits, claims and settlement expenses 132,067 101,243 98,700
Acquisition and insurance expenses 45,820 24,630 25,436
Other expenses 5,017 4,199 3,004
Less: reinsurance benefits and expenses (52,538) (45,804) (50,001)
ceded -------- -------- --------
TOTAL BENEFITS, LOSSES AND EXPENSES 130,366 84,268 77,139
------- ------ ------
INCOME BEFORE FEDERAL INCOME TAX EXPENSE 22,526 31,276 32,335
FEDERAL INCOME TAX EXPENSE 8,776 13,488 11,241
----- ------ ------
NET INCOME $13,750 $17,788 $21,094
======= ======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
($ IN THOUSANDS)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Common Stock $2,500 $2,500 $2,500
Additional Paid-in Capital 43,759 43,759 43,759
------ ------ ------
46,259 46,259 46,259
Retained Earnings
Balance, beginning of year 57,578 41,639 21,163
Net income 13,750 17,788 21,094
Change in asset valuation reserve (9,228) (106) (1,313)
Change in nonadmitted assets (1,157) (1,761) 675
Net unrealized capital gain 5,997 18 84
Other
- - (64)
---- ---- ----
Balance, end of year 66,940 57,578 41,639
------ ------ ------
TOTAL STOCKHOLDER'S EQUITY $113,199 $103,837 $87,898
======== ======== =======
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
($ IN THOUSANDS)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CASH PROVIDED:
Premiums and annuity considerations, $82,207 $56,346 $49,530
net of reinsurance
Other deposits 177,301 193,970 129,030
Net investment income 69,306 60,886 58,728
Commission and expense allowance and
reserve adjustment 13,904 22,484 29,576
on reinsurance ceded
Other 9,196 - 2,106
----- ------- -----
351,914 333,686 268,970
------- ------- -------
Benefits and interest to policyholders
and beneficiaries, net of reinsurance (58,415) (43,808) (28,973)
Acquisition and insurance expenses, (49,690) (25,934) (28,619)
net of reinsurance
Transfers to Separate Account (135,757) (168,913) (114,917)
Federal income taxes paid (8,445) (10,076) (11,579)
Other payments, net (17,838) (15,132) (17,903)
-------- -------- --------
(270,145) (263,863) (201,991)
--------- --------- ---------
Net cash provided by operations 81,769 69,823 66,979
Proceeds from the disposition of:
Fixed maturities 382,105 224,884 334,801
Equity securities 11,191 - 2,629
Mortgage loans on real estate 12,725 24,154 10,833
Other cash provided - - 855
------- ------- ---
Total cash provided 487,790 318,861 416,097
------- ------- -------
CASH APPLIED:
Purchases of fixed maturities 401,658 320,272 408,017
Purchases of equity securities 72,911 - 296
Other applications 1,177 1,153 3,974
----- ----- -----
Total cash applied 475,746 321,425 412,287
------- ------- -------
Net increase (decrease) in cash and 12,044 (2,564) 3,810
cash equivalents
CASH AND CASH EQUIVALENTS:
Beginning of year 3,025 5,589 1,779
----- ----- -----
End of year $15,069 $3,025 $5,589
======= ====== ======
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
C.M. Life Insurance Company
Notes to Financial Statements
December 31, 1995, 1994 and 1993
($ In Thousands)
1. Organization:
------------
C.M. Life Insurance Company (C.M. Life) is a wholly owned stock life insurance
subsidiary of Connecticut Mutual Life Insurance Company (Connecticut Mutual).
C.M. Life is primarily engaged in the sale of individual life insurance and
annuity products. C.M. Life is licensed to transact business in all states
except New York.
2. Summary of Significant Accounting Policies:
------------------------------------------
C.M. Life's financial statements have been prepared in conformity with
accounting practices and procedures of the National Association of Insurance
Commissioners (NAIC) as prescribed or permitted by the Insurance Department of
the State of Connecticut, which are considered to be generally accepted
accounting principles (GAAP) for wholly owned stock life insurance
subsidiaries of mutual life insurance companies. (see Note 2.h.).
The principal accounting practices currently followed by C.M. Life are as
follows:
a. Assets - Assets are stated at amounts reported to state regulatory
authorities. Certain assets, such as prepaid agent commissions and
other prepaid expenses, are excluded from the balance sheet and amounted
to $3,839 and $2,684 as of December 31, 1995 and 1994.
b. Investments - Investments are valued in accordance with procedures
prescribed by the NAIC. Fixed maturities eligible for amortization are
reported at amortized cost. Eligible preferred stocks are reported at
cost and common stocks are reported at market value. Mortgage loans on
real estate are reported at the unpaid principal balance unless
delinquent, at which time they are reported at the lower of the unpaid
principal balance or fair value. Investments in real estate which have
been identified for possible sale within the next twelve months are
reported at the lower of cost, less accumulated depreciation or market
value. The Company calculates depreciation for its real estate
investments using principally the straight line method. Policy loans
are reported at the aggregate amount of the unpaid balances.
The Company maintains an Interest Maintenance Reserve (IMR), prescribed
by the NAIC, for all fixed income investments and defers all interest
rate related losses, net of taxes, as they occur. The deferral is
subsequently amortized to net investment income over the period
remaining to maturity of the assets sold. All other realized gains and
losses are reported in the Statements of Operations upon sale.
Unrealized capital gains and losses are reported as additions to or
reductions from retained earnings.
The Asset Valuation Reserve (AVR), prescribed by the NAIC, provides a
general reserve for possible decline in the value of bonds, stocks,
mortgage loans, real estate and other invested assets. The reserve is
computed based on prescribed factors, each designed to address specific
asset risks. Changes in the AVR are charged or credited directly to
retained earnings. The AVR increased by $9,228 and $106 in 1995 and
1994, respectively.
<PAGE>
There were no investments which exceeded 10% of total stockholder's
equity as of December 31, 1995 and 1994.
Loans overdue more than 12 months were as follows:
1995 1994
---- ----
Defaults on mortgages: (non-income
producing for 12 months) $2,774 $2,774
c. Disclosure of the Fair Value of Financial Instruments - Fair value is
defined as "the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale." See Note 8.
d. Reserves for Payment of Future Benefits: Reserves for payment of future
benefits on life insurance, developed using accepted actuarial methods,
are established and maintained primarily on the Commissioners' Reserve
Valuation Method utilizing the 1980 Commissioners' Standard Ordinary
Mortality Table with interest rates of 4%-4 1/2%. Reserves for single
premium deferred annuities are calculated based on the Commissioners'
Annuity Reserve Valuation Method utilizing the change in fund method and
assuming interest on changes in funds of 8.0%, 7.0% and 7.5% in 1995,
1994 and 1993, respectively. Additional reserves are maintained for
contracts where the cash surrender value exceeds the actuarially
determined reserve.
e. Separate Accounts: Separate accounts include the assets and liabilities
of certain annuity contracts that must be segregated from C.M. Life's
general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Reserves
for these annuity contracts have been established using assumed interest
rates and valuation methods that will provide reserves at least as great
as those required by law and contract provisions. Transfers due from
Separate Account, a contra-liability, represents Separate Account
liabilities in excess of Separate Account reserves.
f. Premiums and Insurance Operating Expenses: Premiums are reported as
income when due. Commissions and other costs relating to the
solicitation, underwriting and issuance of new contracts are reported as
acquisition and insurance expenses in the year incurred.
g. Cash Equivalents: For purposes of the Statements of Cash Flows, C.M.
Life considers all highly liquid short-term investments with a maturity
of twelve months or less from the date of purchase to be cash
equivalents. The carrying amounts reported approximate those assets'
fair value.
h. New Accounting Pronouncements: The Financial Accounting Standards Board
(FASB) has issued an interpretation stating that financial statements of
mutual life insurance companies, and their wholly owned subsidiaries,
which are prepared on the basis of statutory accounting principles, will
no longer be considered to be in conformity with GAAP. This
interpretation applies to financial statements issued for fiscal years
beginning after December 15, 1995. Certain accounting principles for
mutual life insurance companies, which will be required to be in
compliance with GAAP, were also issued by the FASB and the American
Institute of Certified Public Accountants in January 1995. The
financial statement impact of adopting these accounting principles has
not been determined by the Company. The effect of initially adopting
the FASB interpretation shall be reported retroactively through
restatement of all previously issued financial statements presented for
comparative purposes for fiscal years beginning after December 15, 1992.
i. Reclassifications: The 1994 and 1993 financial statements and Notes to
Financial Statements reflect certain reclassifications to conform with
the 1995 presentation.
<PAGE>
j. Certain Risks and Uncertainties: The preparation of these financial
statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities as well as
disclosures of contingent assets and liabilities, both at the date of
the financial statements. Management must also make estimates and
assumptions that affect amounts of revenues and expenses for the
reporting period. Actual results could differ from these estimates.
Future events, which could impact the estimates used in these financial
statements, include changes in the levels of mortality and interest
rates.
3. Federal Income Taxes:
--------------------
C.M. Life is included in Connecticut Mutual's consolidated Federal income tax
return and, in accordance with a written tax-sharing agreement, makes a
provision for payment to Connecticut Mutual based on its income included in
Connecticut Mutual's consolidated taxable income. This provision is based on
income which is currently taxable.
4. Stockholder's Equity:
--------------------
The Board of Directors of Connecticut Mutual has authorized the contribution
of funds to C.M. Life sufficient to meet the capital requirements of all
states in which C.M. Life is licensed to do business. Substantially all of
the statutory stockholder's equity is subject to dividend restrictions
relating to various state regulations which limit the payment of dividends
without prior approval.
5. Reinsurance:
-----------
C.M. Life reinsures (cedes) a portion of its life insurance business to
Connecticut Mutual and other insurers, in order to reduce insurance risk.
C.M. Life's retention limit per individual insured is $4 million; the portion
of the risk exceeding the retention limit is reinsured with other insurers.
The reinsurance contract with Connecticut Mutual is a modified coinsurance
quota-share treaty. Under the treaty C.M. Life cedes 50% of the premiums on
universal life policies issued in 1985 and 75% of the premiums with issue
dates on or after January 1, 1986. In return Connecticut Mutual pays C.M.
Life a stipulated expense allowance, death and surrender benefits, and a
modified coinsurance adjustment. Reserves for payment of future benefits for
the ceded policies are retained by C.M. Life.
C.M. Life also has a stop-loss agreement with Connecticut Mutual under which
C.M. Life cedes claims which, in aggregate, exceed $24,245 in 1995, $18,348 in
1994, and $16,431 in 1993. In 1995, 1994, and 1993, the limit was not
exceeded. The agreement was amended and renewed in 1994 for a duration of
three years. The amended maximum coverage is $25,000. C.M. Life paid
approximately $602, $435, and $446 in premiums under the agreement in 1995,
1994 and 1993, respectively.
C.M. Life is contingently liable with respect to ceded reinsurance in the
event any reinsurer is unable to fulfill its contractual obligations.
<PAGE>
6. Investments:
-----------
Fixed maturities:
----------------
The carrying value and estimated fair value of investments in fixed maturities
as of December 31, 1995 and 1994 are as follows:
<TABLE>
1995
- ----
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government $24,102 $1,764 $2 $25,864
Special Revenue and
Special Assessment
Obligations and all
Non-guaranteed Obli-
gations of Government
Agencies, Authorities,
and Subdivisions 3,715 - 6 3,709
Foreign Government,
Province & Municipal 11,186 483 295 11,374
Public Utility 45,150 2,303 16 47,437
Mortgage Backed
Obligations 150,694 7,144 347 157,491
Industrial and
Miscellaneous 501,252 21,472 711 522,013
------- ------ --- -------
Total Fixed Maturities $736,099 $33,166 $1,377 $767,888
======== ======= ====== ========
</TABLE>
<TABLE>
1994
- ----
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government $62,501 $ - $ 1,874 $60,627
Special Revenue and
Special Assessment
Obligations and all
Non-guaranteed Obli-
gations of Government
Agencies, Authorities,
and Subdivisions 4,373 - 375 3,998
Foreign Government,
Province & Municipal 16,175 117 904 15,388
Public Utility 38,773 227 1,605 37,395
Mortgage Backed
Obligations 167,641 533 12,184 155,990
Industrial and
Miscellaneous 427,828 967 17,980 410,815
------- --- ------ -------
Total Fixed Maturities $717,291 $1,844 $34,922 $684,213
======== ====== ======= ========
</TABLE>
The carrying value and estimated fair value of C.M. Life's fixed maturities
at December 31, 1995, by contractual maturity, are shown below. Actual
maturities may differ from contractual maturities because borrowers may have
the right to prepay obligations with or without prepayment penalties.
Estimated
Carrying Fair
Value Value
----- -----
Due in one year or less $ 17,729 $ 17,781
Due after one year 306,539 313,886
through five years
Due after five years 225,283 240,231
through ten years
Due after ten years 35,854 38,499
Mortgage-backed 150,694 157,491
securities ------- -------
Total $736,099 $767,888
======== ========
Proceeds from sales of fixed maturities were $380,567, $224,884, and $334,801
for 1995, 1994 and 1993, respectively. Gross gains of $3,598, $1,358, and
$5,931 and gross losses of $4,658, $4,439, and $1,016 were realized on those
sales for 1995, 1994 and 1993, respectively.
Mortgage Loans on Real Estate:
-----------------------------
The following table provides a breakdown of the carrying value of mortgage
loans on real estate by geographical location:
1995 1994
---- ----
United States
Northeast $15,241 $22,111
South Atlantic 8,187 13,090
South Central - 3,462
West 3,277 3,375
----- -----
Total $26,705 $42,038
======= =======
Outstanding mortgages whose terms have been modified aggregated $17,128 and
$24,034 which represents 64.1% and 57.2% of the total portfolio as of December
31, 1995 and 1994, respectively. Income recognized during 1995, 1994 and 1993
on these restructured loans was $1,317, $1,379 and $1,495, respectively.
Income that would have been recognized during 1995, 1994 and 1993 on these
loans, if such loans had been current in accordance with their original terms
and had been outstanding throughout the year, was $1,799, $2,296 and $2,568,
respectively. Commitments to loan additional funds to mortgage loan
borrowers, on loans whose terms have been modified, are not significant.
Loans either overdue more than three months or in the process of foreclosure
were $2,774 at December 31, 1995 and 1994. Additionally, C.M. Life had
properties which it acquired in satisfaction of debt of $1,897 at December 31,
1994.
7. Derivatives:
-----------
C.M. Life makes only limited use of derivative instruments (as defined in
Statement of Financial Accounting Standards No. 119 `Disclosure About
Derivative Financial Instruments and Fair Value of Financial Instruments')
which include swaps, options and futures, to hedge equity exposure and to
hedge reinvestment of proceeds from major anticipated transactions.
Derivatives are not used for trading purposes. C.M. Life held one swap
investment totaling $12,000 notional amount as of December 31, 1995.
<PAGE>
During 1995 options (protective puts) were utilized to hedge equity exposures
and were accounted for on a mark to market basis. The net 1995 realized losses
from this activity were $140. The notional amount of such options totaled
$35,900 as of December 31, 1995.
During 1994 interest rate futures were acquired to hedge the reinvestment of
anticipated proceeds from a bulk mortgage sale. The actual gain of $95 was
amortized over the expected term of the assets acquired with the mortgage sale
proceeds. No interest rate futures were held as of December 31, 1995 and 1994.
8. Fair Value Disclosure of Other Financial Instruments:
----------------------------------------------------
The Company has identified certain assets and liabilities as financial
instruments that require fair value disclosure. Fair value is defined as the
amount at which the instrument could be exchanged in a current transaction
between willing parties other than in a forced liquidation sale. If quoted
market prices are not available, the values are estimated using discounted
cash flow analysis or other valuation techniques. These various techniques are
significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. The following methods and assumptions were
used to estimate the fair value of each class of these instruments for which
it is practicable to estimate the value.
The estimated fair value for the public bonds is based on the quoted market
price from various external bond pricing services. Private bonds are assigned
an internal quality rating which parallels independent rating agency criteria
and is consistent with NAIC ratings. The fair value of these bonds is
estimated by discounting the expected future cash flows using a current
discount rate based on the quality rating and maturity of the specific
instruments.
The estimated fair value for the equity securities is based on quoted market
prices from national securities exchanges and over-the-counter markets.
The fair value for performing mortgages is determined by discounting the
expected future cash flows using the current interest rates at which similar
loans would be made to borrowers with similar credit ratings and remaining
maturities. Non-performing mortgages are valued based on a discounted cash
flow analysis on the underlying collateral using the current market rate for
similar collateral.
Policy loans are issued with either fixed or variable interest rates,
depending upon the terms of the policies. For those loans with fixed interest
rates, the interest rates range from 5% to 8%. Since policy loans do not have
defined maturities, management believes it is impractical to estimate the fair
value of fixed rate policy loans. For loans with variable interest rates, the
rates are adjusted annually based upon changes in a corporate bond index and
are stated at fair value.
Separate Account assets and liabilities are valued at market.
A portion of annuity reserves, which represent contracts in their accumulation
phase, are considered to be financial instruments. The Company determines fair
value to be equal to the cash surrender value of these contracts (including
market value adjustments, if any), which represents the amount payable to
policyholders on demand.
Since supplementary contracts may be perceived as deposit liabilities with
defined maturities, the Company has determined fair value based on the
discounted value of amounts payable at maturity of the contract. Discount
rates used to determine fair value range from 6.5% to 7.9%. All other deposit
liabilities are not considered to have defined maturities. The Company has
determined fair value for these contracts to be equal to the cash surrender
value, which is that amount which is payable to policyholders on demand.
<PAGE>
The estimated fair values for assets and liabilities, which the Company has
identified as investment contracts and borrowed funds, are as follows:
1995 1994
---- ----
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
----- ---------- ----- ----------
Assets
------
Bonds $736,099 $767,888 $717,291 $684,213
Common and Preferred 72,624 72,571 1,815 2,065
Stock
Mortgages 26,705 26,783 42,038 40,241
Policy Loans 126,014 126,014 109,720 109,720
Cash and Cash Equivalents 15,069 15,069 3,025 3,025
Assets of Separate 531,432 531,432 309,672 309,672
Account
Liabilities
-----------
Future Policy Benefits
Annuity Reserves-
Accumulation Phase 49,078 49,683 30,239 28,868
Other Deposits 54,269 54,918 31,690 29,484
Other Liabilities
Funds Deposited Under
Income Settlements-
Supplementary
Contracts Without
Life Contingencies 215 208 270 260
Liabilities of Separate 531,432 531,432 309,672 309,672
Account
9. Related Party Transactions:
--------------------------
Connecticut Mutual allocates certain expenses to C.M. Life for providing
operating facilities, human resources, computer software development and
managerial services. Total expenses allocated to C.M. Life were approximately
$34,008, $16,412 and $18,831 in 1995, 1994 and 1993, respectively. The
increase is attributable to increased sales for C.M. Life and decreased sales
for the parent, Connecticut Mutual, resulting in a larger portion of certain
expenses being allocated to C.M. Life.
10. Net Investment Income:
---------------------
Net Investment Income is comprised of the following:
1995 1994 1993
---- ---- ----
Fixed maturities $54,625 $47,658 $ 43,983
Mortgage loans on real estate 2,709 4,383 5,813
Policy loans 9,905 7,925 7,448
Amortization of IMR (60) 309 251
Other 3,091 1,449 1,844
----- ----- -----
Total investment income 70,270 61,742 59,339
Less: Applicable investment 1,455 1,837 1,879
expenses ----- ----- -----
Net investment income $68,815 $59,887 $ 57,460
======= ======= ========
Net investment income and realized gains and losses applicable to the Separate
Account are not included in C.M. Life's net investment income and realized
gains and losses reported in the Statements of Operations.
<PAGE>
11. Realized and Unrealized Gains and Losses:
----------------------------------------
The cost of investments sold is determined by the specific identification
method. Realized gains and losses and the change in the difference between
market value and cost for fixed maturities and equity securities are
summarized as follows:
1995 1994 1993
---- ---- ----
Realized Gains and Losses:
Fixed Maturities:
Realized gains $ 3,598 $ 1,358 $ 5,931
Realized losses (4,658) (4,439) (1,016)
------- ------- -------
(1,060) (3,081) 4,915
------- ------- -----
Equity Securities and
Options:
Realized gains 1,518 - 4
Realized losses (758) - -
----- ---------- ----------
760 - 4
--- ---------- ---------
Real Estate:
Realized gains - - -
Realized losses (310) (2,158) -
----- -------
(310) (2,158) -
----- ------- --------
Mortgage Loans:
Realized gains 52 - -
Realized losses (1,404) (2,093) (13)
------- ------- ----
(1,352) (2,093) (13)
------- ------- ----
(Gains)/Losses 822 4,799 (4,447)
--- ----- ------
Transferred to IMR
Net Realized Capital $ (1,140) $ (2,533) $ 459
---------- ----------- -----------
Gains/(Losses)
Unrealized Gains and Losses:
Fixed Maturities:
Net unrealized
gains(losses),end of year $31,789 $(33,077) $ 20,870
Net unrealized gains, beginning (33,077) 20,870 16,497
of year --------- ------ ------
Change in unrealized gains or
losses on fixed maturities $64,866 $(53,947) $ 4,373
======= ======== ==========
The change in unrealized gains and (losses) for equity securities were $7,422,
$(30), and $50 as of December 31, 1995, 1994 and 1993, respectively.
12. Contingencies:
-------------
C.M. Life is involved in regulatory proceedings and various litigation in the
ordinary course of business. In the opinion of management, the ultimate
resolution of such proceedings and litigation will not result in fines or
judgements which, in the aggregate, would materially affect C.M. Life's
financial position.
13. Merger of Connecticut Mutual:
----------------------------
On September 8, 1995, the Board of Directors of Connecticut Mutual
approved the merger of Connecticut Mutual and Massachusetts Mutual
Life Insurance Company. Thereafter, a definitive agreement was
signed by both companies. On January 27, 1996, Connecticut Mutual
and insurance subsidiary policyholders' and other insureds and
annuitants approved the merger. The merger was reviewed by the
insurance regulatory authorities in Massachusetts and Connecticut,
and approved. The merger was effective March 1, 1996.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To C.M. Life Insurance Company:
We have audited the accompanying balance sheets of C.M. Life Insurance Company
(a Connecticut corporation and a wholly owned subsidiary of Connecticut Mutual
Life Insurance Company) as of December 31, 1995 and 1994, and the related
statements of operations, stockholder's equity and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
and the schedules referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of C.M. Life Insurance Company as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedules I and VI are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
s/ Arthur Andersen LLP
Hartford, Connecticut
February 15, 1996
(Except with respect to the matter discussed in Note 13,
as to which the date is March 4, 1996.)
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
- --------------------------------------------------------------------
AND FINANCIAL
- -------------
DISCLOSURE
- ----------
No events have occurred which are required to be reported by Item 304
of Regulation S-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
Position with
C.M. Life; Year Other Positions During
Name (Age at 12/31/95) Commenced the Past Five Years
- ---------------------- ---------------- -------------------
David E. Sams, Jr. (52) Director and President and Chief Executive
President, July Officer of Connecticut Mutual;
1993 (Principal previously President and Chief
Executive Officer) Executive Officer of Capital
Holding Corp - Agency Group
and Chairman, Commonwealth
Life Insurance Company;
Director, Compdent Dental
Benefit Plans
J. Brinke Marcuccilli (41) Chief Financial Officer, Chief Financial Officer,
May 1994 Connecticut Mutual since
May of 1994; Vice
President/Chief Financial
Officer of Providian
Corporation, Agency
Group from September
1987 until May 1994.
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. (CONT'D)
- ------------------------------------------------------------
Position with
C.M. Life; Year Other Positions During
Name (Age at 12/31/95) Commenced the Past Five Years
- ---------------------- ---------------- -------------------
John A. Hubbard (42) Actuary, May 1987 Actuary, Connecticut Mutual
since December 1991; Associate
Actuary, Connecticut Mutual,
March 1990 until December
1991.
Ann F. Lomeli (39) Secretary, December Corporate Secretary (since
1988 December 1988) and Counsel
(since May 1991) of Connect-
icut Mutual.
Scott C. Peters (37 ) Treasurer, February 1994 Vice President and
Treasurer (since February
1994);Associate Treasurer
from August 1992 until
February 1994; Assistant
Vice President and
Director of Treasurey
Operations September 1990
until August 1992
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
The officers and directors of C.M. Life are employees of Connecticut Mutual and
perform their duties for C.M. Life as part of their employment with Connecticut
Mutual. Many of them serve as directors and officers of other companies that
are also wholly owned by Connecticut Mutual. Although applicable expense
allocation agreements between and among Connecticut Mutual and its subsidiaries
(such as C.M. Life) do not specifically allocate to the subsidiaries, portions
of the salaries paid by Connecticut Mutual, the amount of compensation received
by any one director or officer of C.M. Life from Connecticut Mutual for services
performed for C.M. Life would not exceed $100,000 annually. The directors of
C.M. Life do not receive fees (or expenses) for serving as directors of C.M.
Life or for attending directors' meetings. None of the officers or directors of
C.M. Life owns shares of capital stock of C.M. Life, which is wholly owned by
Connecticut Mutual. The officers and directors of C.M. Life, individually and
as a group, hold (by virtue of their ownership of insurance policies issued by
Connecticut Mutual) interests in Connecticut Mutual of less than one percent.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- -------------------------------------------------------------
MANAGEMENT
- ----------
This item is not applicable since the Registrant is wholly owned by
Connecticut Mutual.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Reinsurance (dollar amounts in thousands):
- -----------------------------------------
C.M. Life reinsures (cedes) a portion of its life insurance business to
Connecticut Mutual and other insurers, in order to reduce insurance risk. C.M.
life's retention limit per individual insured is $4 million; the portion of the
risk exceeding the retention limit is reinsured with other insurers.
The reinsurance contract with Connecticut mutual is a modified coinsurance
quota-share treaty. Under the treaty C.M. Life cedes 50% of the premiums on
universal life policies issued in 1985 and 75% of the premiums with issue dates
on or after January 1, 1986. In return Connecticut Mutual pays C.M. Life a
stipulated expense allowance, death and surrender benefits, and a modified
coinsurance adjustment. Reserves for payment of future benefits for the ceded
policies are retained by C.M. Life.
C.M. Life also has a stop-loss agreement with Connecticut Mutual under which
C.M. Life cedes claims which, in aggregate, exceed $24,245, $18,348 in 1994, and
$16,431 in 1993. In 1995, 1994, and 1993, the limit was not exceeded. The
agreement was amended and renewed in 1994 for a duration of three years. The
amended maximum coverage is $25,000. C.M. Life paid approximately $602, $435,
and $446 in premiums under the agreement in 1995, 1994 and 1993, respectively.
C.M. Life is contingently liable with respect to ceded reinsurance in the event
any reinsurer is unable to fulfill its contractual obligations.
Related Party Transactions (dollar amounts in thousands):
- --------------------------------------------------------
Connecticut Mutual allocates certain expenses to C.M. Life for providing
operating facilities, human resources, computer software development and
managerial services. Total expenses allocated to C.M. Life were approximately
$34,008, $16,412, and $18,831 in 1995, 1994 and 1993, respectively. The
increase is attributable to increased sales for C.M. Life and decreased sales
for the parent, Connecticut Mutual, resulting in a larger portion of certain
expenses being allocated to C.M. Life.
<PAGE>
<TABLE>
SCHEDULE I
C.M. LIFE INSURANCE COMPANY
SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 1995
($ IN THOUSANDS)
Fair Balance
Cost or Value Sheet
Type of Investment Other (see Amount
Basis note) Basis
----- ----- ------
<S> <C> <C> <C>
Fixed Maturities:
U.S. Government $24,102 $25,864 $24,102
Special Revenue and Special
Assessment Obligations
and all Non-guaranteed
Obligations
of Government Agencies
Authorities, and Subdivisions 3,715 3,709 3,715
Foreign Government, Province and
Municipal 11,186 11,374 11,186
Public Utility 45,150 47,437 45,150
Mortgage Backed Obligations 150,694 157,491 150,694
Industrial and Miscellaneous 501,252 522,013 501,252
------- ------- -------
Total Fixed Maturities 736,099 767,888 736,099
------- ------- -------
Equity Securities:
Nonredeemable Preferred Stocks 263 210 263
Common Stocks 64,225 72,361 72,361
------ ------ ------
Total Equity Securities 64,488 72,571 72,624
------ ------ ------
Total Fixed Maturities and
Equity Securities 800,587 840,459 808,723
------- ======= -------
Other Investments:
Mortgage Loans on Real Estate 33,611 26,783 26,705
Real Estate - (see -
note)
Policy Loans 126,014 (see 126,014
note)
Cash and Cash Equivalents 15,069 15,069 15,069
------ ------
Total Other Investments 174,694 167,788
------- -------
Total Investments $975,281 $976,511
======== ========
<FN>
Note: Fair values for equity securities and fixed maturities
approximate those quotations published by applicable stock exchanges
or are received from other reliable sources. Fair values for real
estate are not readily available. Approximately 98% of policy loans
are comprised of variable interest rate loans whose carrying value
approximate fair value.
</FN>
</TABLE>
<TABLE>
SCHEDULE VI
C.M. LIFE INSURANCE COMPANY
REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
($ IN THOUSANDS)
Ceded
Gross To Other Net
Amount Companies Amount
------ --------- ------
<S> <C> <C> <C>
December 31, 1995
Life insurance in force $19,132,954 $7,323,441 $11,809,513
=========== ========== ===========
Premiums: Life Insurance $134,278 $50,732 $83,546
======== ======= =======
December 31, 1994
Life insurance in force $15,800,300 $7,310,290 $8,490,010
=========== ========== ==========
Premiums: Life Insurance $111,238 $54,032 $57,206
======== ======= =======
December 31, 1993
Life insurance in force $14,521,452 $7,382,223 $7,139,229
=========== ========== ==========
Premiums: Life insurance $108,097 $56,905 $51,192
======== ======= =======
</TABLE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
- ----------------------------------------------------------------------
8-K
- ---
(a) 1. Financial Statements (set forth in Item 8.):
- Balance sheets as of December 31, 1995 and 1994.
- Statements of Operations for each of the three years ended December 31,
1995, 1994 and 1993.
- Statements of Stockholder's Equity for each of the three years ended
December 31, 1995, 1994 and 1993.
- Statements of Cash Flows for each of the three years ended December 31,
1995, 1994 and 1993.
- Notes to Financial Statements.
- Report of Independent Public Accountants.
2. Financial Statement Schedules (set forth below):
- Schedule I - Summary of Investments - Other than Investments in
Related Parties as of December 31, 1995.
- Schedule VI - Reinsurance for the years ended December 31, 1995, 1994
and 1993.
All other schedules are omitted because of the absence of conditions under
which they are required or because the information is shown in the
financial statements or notes thereto.
3. Exhibit Number
Per Item 601 of Description
Regulation S-K of Exhibits
--------------- -----------
1 Principal Underwriting Agreement by and between C.M. Life
Insurance Company and G.R. Phelps & Co., Inc.**
3(a) Charter of C.M. Life Insurance Company.*
3(b) By Laws of C.M. Life Insurance Company.*
4(a) Form of Individual Contract for the Panorama Plus Annuity.**
(i) Form of IRA Endorsement for the Panorama Plus
Annuity Individual Contract.**
(ii) Form of Terminal Illness Endorsement for the
Panorama Plus Annuity Individual Contract.**
(iii) Form of Tax-Sheltered Annuity Endorsement for the
Panorama Plus Annuity Individual Contract.**
(iv) Form of Qualified Plan Endorsement for the
Panorama Plus Annuity Individual Contract.**
(v) Form of Unisex Endorsement for the Panorama Plus
Annuity Individual Contract.**
4(b) Form of Group Contract for the Panorama Plus
Annuity.**
(i) Form of IRA Endorsement for the Panorama Plus
Annuity Group Contract.**
(ii) Form of Terminal Illness Endorsement for the
Panorama Plus Annuity Group Contract.**
(iii) Form of Tax-Sheltered Annuity Endorsement for the
Panorama Plus Annuity Group Contract.**
<PAGE>
(iv) Form of Qualified Plan Endorsement for the
Panorama Plus Annuity Group Contract.**
(v) Form of Unisex Endorsement for the Panorama Plus
Annuity Group Contract.**
4(c) Form of Individual Certificate for the Panorama Plus
Annuity.**
(i) Form of IRA Endorsement for the Panorama Plus
Annuity Individual Certificate.**
(ii) Form of Terminal Illness Endorsement for the
Panorama Plus Annuity Individual Certificate.**
(iii) Form of Tax-Sheltered Annuity Endorsement for the
Panorama Plus Annuity Individual Certificate.**
(iv) Form of Qualified Plan Endorsement for the
Panorama Plus Annuity Individual Certificate.**
(v) Form of Unisex Endorsement for the Panorama Plus
Annuity Individual Certificate.**
4(d) Form of Application for the Individual Panorama Plus
Annuity.**
4(e) Form of Application for the Group Panorama Plus
Annuity.**
4(f) Form of Application Supplement for Panorama Plus Tax
Sheltered Annuity.**
4(g) Form of Certificate Application Supplement for
Panorama Plus Tax Sheltered Annuity.**
5 Opinion Regarding Legality (filed as Exhibit 5 to Pre-
Effective Amendment No. 1 to Registration Statement filed
April 13, 1992 on Form S-1 (Reg. No. 33-45123))
10 Agreement to Purchase Shares by and between C.M. Life
Insurance Company and Connecticut Mutual Financial Services
Series Fund I, Inc.**
24(b) Consent of Counsel (filed as Exhibit 24(b) to Pre-
Effective Amendment No. 1 to Registration Statement
filed April 13, 1992 on Form S-1 (Reg. No. 33-
45123)).
* Incorporated by reference to the initial registration statement on Form
N-4 for the Contracts and Panorama Plus Separate Account (File No. 33-
45122) as filed with the Securities and Exchange Commission on January
16, 1992.
** Incorporated by reference to Pre-Effective Amendment No. 1 to the
registration statement on Form N-4 for the Contracts and Panorama Plus
Separate Account (File No. 33-45122) as filed with the Securities and
Exchange Commission on April 13, 1992.
(b) Reports on Form 8-K.
No reports have been required to be filed on Form 8-K.
(d) No additional financial statements are required to be filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
C.M. LIFE INSURANCE COMPANY
(Registrant)
By: s/ David E. Sams, Jr.
---------------------
David E. Sams, Jr.
President
(Principal Executive Officer)
Date: March 27, 1996
---------------
Pursuant to the requirements of the Securities Act of 1934, this
report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
David E. Sams, Jr. Director and President March 27, 1996
- -------------------- ---------------
David E. Sams, Jr. (Principal Executive
Officer)
J. Brinke Marcuccilli Chief Financial Officer March 27, 1996
- ------------------------ --------------
J. Brinke Marcuccilli (Principal Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM C.M. LIFE'S DECEMBER
31, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000883232
<NAME> C.M. LIFE INSURANCE COMPANY
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<DEBT-HELD-FOR-SALE> 736099<F1>
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 72624
<MORTGAGE> 26705
<REAL-ESTATE> 0
<TOTAL-INVEST> 976511
<CASH> 15069
<RECOVER-REINSURE> 902
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 1533748
<POLICY-LOSSES> 813188
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 2026
<POLICY-HOLDER-FUNDS> 531432
<NOTES-PAYABLE> 0
2500
0
<COMMON> 0
<OTHER-SE> 110699
<TOTAL-LIABILITY-AND-EQUITY> 1533748
83546<F2>
<INVESTMENT-INCOME> 68815
<INVESTMENT-GAINS> (1140)
<OTHER-INCOME> 1671
<BENEFITS> 132067
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 45820
<INCOME-PRETAX> 22526
<INCOME-TAX> 8776
<INCOME-CONTINUING> 13750
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13750
<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
<FN>
<F1>C.M. LIFE'S FINANCIAL STATEMENTS HAVE BEEN PREPARED IN CONFORMITY WITH
ACCOUNTING PRACTICES AND PROCEDURES OF THE NATIONAL ASSOCIATION OF INSURANCE
COMMISSIONERS AS PRESCRIBED OR PERMITTED BY THE INSURANCE DEPARTMENT OF THE
STATE OF CONNECTICUT. UNDER THESE ACCOUNTING PRACTICES, FIXED MATURITIES
ELIGIBLE FOR AMORTIZATION ARE REPORTED AT AMORTIZED COST.
<F2>PREMIUMS ARE REPORTED NET OF $50,732 IN REINSURANCE CEDED.
</FN>
</TABLE>
