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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 11-K
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ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 1995 Commission File Number 001-12746
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SECURITY-CONNECTICUT CORPORATION
SAVINGS & PROFIT SHARING PLAN
(Exact Name of Registrant as Specified in its Charter)
Delaware 06-1383088
(State of Incorporation) (I.R.S. Employer Identification Number)
20 Security Drive, Avon, Connecticut 06001
(Address of Principal Executive Offices)
Registrant's telephone number (860) 677-8621
SECURITY-CONNECTICUT CORPORATION
(Issuer of Securities)
20 Security Drive, Avon, Connecticut 06001
(Address of Issuer's Executive Offices)
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<PAGE>
REQUIRED INFORMATION
Security-Connecticut Corporation Savings & Profit Sharing Plan ("Plan") is
subject to the Employee Retirement Income Security Act of 1974 ("ERISA").
Therefore, in lieu of the requirements of Items 1-3 of Form 11-K, the financial
statements and schedules of the Plan for the year ended December 31, 1995 and
the period from February 2, 1994 to December 31, 1994, which have been prepared
in accordance with the financial reporting requirements of ERISA, are attached
hereto as Appendix 1 and incorporated herein by this reference.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Security-Connecticut Corporation Savings & Profit Sharing Plan
--------------------------------------------------------------
(Name of Plan)
/s/ Robert J. Voight
--------------------------------------------------------------
Robert J. Voight
Senior Vice President, Financial Management
June 19, 1996
<PAGE>
APPENDIX 1
SECURITY-CONNECTICUT CORPORATION SAVINGS & PROFIT SHARING PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995 AND
1994 AND FOR THE YEAR ENDED DECEMBER 31, 1995 AND
FOR THE PERIOD FROM FEBRUARY 2, 1994 TO DECEMBER 31, 1994,
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR
ENDED DECEMBER 31, 1995 AND INDEPENDENT AUDITORS' REPORT
<PAGE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Audited Financial Statements
and Supplemental Schedules
Year ended December 31, 1995 and the
Period from February 2, 1994 to December 31, 1994
Contents
Report of Independent Auditors............................................... 1
Audited Financial Statements
Statements of Net Assets Available for Benefits, by Investment Option........ 2
Statements of Changes in Net Assets Available for Benefits,
by Investment Option...................................................... 7
Notes to Financial Statements................................................12
Supplemental Schedules
Assets Held for Investment Purposes..........................................20
Reportable Transactions......................................................21
<PAGE>
Report of Independent Auditors
Retirement Plan Committee
Security-Connecticut Corporation
We have audited the accompanying statements of net assets available for
benefits of the Security-Connecticut Corporation Savings & Profit Sharing Plan
as of December 31, 1995 and 1994, and the related statements of changes in net
assets available for benefits for the year ended December 31, 1995 and for the
period from February 2, 1994 through December 31, 1994. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 net assets available for benefits of the Plan at
December 31, 1995 and 1994, and the changes in net assets available for benefits
for the year ended December 31, 1995 and for the period from February 2, 1994
through December 31, 1994, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1995, and reportable
transactions for the year ended December 31, 1995, are presented for purposes of
complying with the Department of Labor's Rules and Regulations for Reporting and
Disclosures under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The Investment Option
Information in the statement of net assets available for benefits and the
statement of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the net assets available
for benefits and changes in net assets available for benefits of each Investment
Option Account. The supplemental schedules and Investment Option Information
have been subjected to the auditing procedures applied in our audit of the
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the financial statements taken as a whole.
Hartford, Connecticut ERNST & YOUNG LLP
June 6, 1996
-1-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Net Assets Available for Benefits, by Investment Option
December 31, 1995
Investment Options
<CAPTION>
Small Medium Large
SCC LNC Int'l Cap Cap Cap Core Value
Stock Stock Equity Equity Equity Equity Equity Equity
Account Account Account Account Account Account Account Account
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock $3,071,282 $3,370,125
Segregated investment accounts $ 22,904 $ 89,162 $ 991,678 $ 506,214 $1,016,316 $ 21,671
Unallocated insurance contract
Participant notes receivable
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
3,071,282 3,370,125 22,904 89,162 991,678 506,214 1,016,316 21,671
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Cash and invested cash 184,347 35,152
Accrued interest receivable 792 188
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets available for benefits $3,256,421 $3,405,465 $ 22,904 $ 89,162 $ 991,678 $ 506,214 $1,016,316 $ 21,671
========== ========== ========== ========== ========== ========== ========== ==========
See notes to financial statements
</TABLE>
-2-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Net Assets Available for Benefits, by Investment Option (continued)
December 31, 1995
Investment Options
<CAPTION>
High Government/ T. Rowe Price
Yield Corporate Government Short International Strong Fidelity
Bond Bond Bond Term Equity Discovery Contrafund Janus
Account Account Account Account Account Account Account Account
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock
Segregated investment accounts $ 4,639 $ 194,884 $ 196,976 $ 398,603 $ 35,774 $ 59,052 $ 70,430 $ 36,131
Unallocated insurance contract
Participant notes receivable
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
4,639 194,884 196,976 398,603 35,774 59,052 70,430 36,131
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Cash and invested cash
Accrued interest receivable
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets available for benefits $ 4,639 $ 194,884 $ 196,976 $ 398,603 $ 35,774 $ 59,052 $ 70,430 $ 36,131
========== ========== ========== ========== ========== ========== ========== ==========
See notes to financial statements
</TABLE>
-3-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Net Assets Available for Benefits, by Investment Option (continued)
December 31, 1995
Investment Options
<CAPTION>
Fidelity
Asset Aggressive Conservative
Manager Balanced Balanced Balanced Guaranteed Loan
Account Account Account Account Account Account Total
---------- ---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock $ 6,441,407
Segregated investment accounts $ 4,191 $ 18,269 $ 23,306 $ 2,053 3,692,253
Unallocated insurance contract $3,054,562 3,054,562
Participant notes receivable $ 464,377 464,377
---------- ---------- ---------- ---------- ---------- ---------- -----------
4,191 18,269 23,306 2,053 3,054,562 464,377 13,652,599
---------- ---------- ---------- ---------- ---------- ---------- -----------
Cash and invested cash 219,499
Accrued interest receivable 980
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net assets available for benefits $ 4,191 $ 18,269 $ 23,306 $ 2,053 $3,054,562 $ 464,377 $13,873,078
========== ========== ========== ========== ========== ========== ===========
See notes to financial statements
</TABLE>
-4-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Net Assets Available for Benefits, by Investment Option
December 31, 1994
Investment Options
<CAPTION>
SCC Medium Large Gov't/
Common LNC Cap Cap Core Corporate
Stock Stock Equity Equity Equity Bond
Account Account Account Account Account Account
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock $1,657,980 $2,616,565
Segregated investment accounts $ 642,292 $ 266,218 $ 708,073 $ 124,498
Unallocated insurance contract
Participant notes receivable
---------- ---------- ---------- ---------- ---------- ----------
1,657,980 2,616,565 642,292 266,218 708,073 124,498
---------- ---------- ---------- ---------- ---------- ----------
Cash and invested cash 755,637 8,577
Accrued interest receivable 1,401 42
---------- ---------- ---------- ---------- ---------- ----------
Total assets 2,415,018 2,625,184 642,292 266,218 708,073 124,498
Liabilities:
Payable to Security-Connecticut
Corporation 20,769
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities 20,769
---------- ---------- ---------- ---------- ---------- ----------
Net assets available for benefits $2,394,249 $2,625,184 $ 642,292 $ 266,218 $ 708,073 $ 124,498
========== ========== ========== ========== ========== ==========
See notes to financial statements
</TABLE>
-5-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Net Assets Available for Benefits, by Investment Option
December 31, 1994
Investment Options
<CAPTION>
Gov't Short
Bond Term Guaranteed Loan
Account Account Account Account Total
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock $ 4,274,545
Segregated investment accounts $ 139,887 $ 340,421 2,221,389
Unallocated insurance contract $2,707,860 2,707,860
Participant notes receivable $ 425,148 425,148
---------- ---------- ---------- ---------- -----------
139,887 340,421 2,707,860 425,148 9,628,942
---------- ---------- ---------- ---------- -----------
Cash and invested cash 764,214
Accrued interest receivable 1,443
---------- ---------- ---------- ---------- -----------
Total assets 139,887 340,421 2,707,860 425,148 10,394,599
Liabilities:
Payable to Security-Connecticut
Corporation 20,769
---------- ---------- ---------- ---------- -----------
Total liabilities 20,769
---------- ---------- ---------- ---------- -----------
Net assets available for benefits $ 139,887 $ 340,421 $2,707,860 $ 425,148 $10,373,830
========== ========== ========== ========== ===========
See notes to financial statements
</TABLE>
-6-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits, by Investment Option
Year Ended December 31, 1995
Investment Options
<CAPTION>
Small Medium Large
SCC LNC Int'l Cap Cap Cap Core Value
Stock Stock Equity Equity Equity Equity Equity Equity
Account Account Account Account Account Account Account Account
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net realized and unrealized
appreciation in fair value
of investments $ 426,411 $1,278,873 $ 807 $ 3,631 $ 220,504 $ 91,255 $ 277,824 $ 2,770
Investment income:
Interest 12,373 975
Dividends 41,869 125,689
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total investment income 54,242 126,664
Contributions:
Participants 130,065 3,096 3,965 114,298 61,220 102,856 3,748
Employer 146,799
Rollovers 9,497 4,622 3,094 8,194 7,713 9,542 7,814
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total contributions 286,361 7,718 7,059 122,492 68,933 112,398 11,562
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total additions 767,014 1,405,537 8,525 10,690 342,996 160,188 390,222 14,332
Deductions from net assets attributed to:
Distributions to participants 28,135 142,856 10,637 5,671 82,958
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total deductions 28,135 142,856 10,637 5,671 82,958
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase prior to interfund
transfers 738,879 1,262,681 8,525 10,690 332,359 154,517 307,264 14,332
Interfund transfers (net) 123,293 (482,400) 14,379 78,472 17,027 85,479 979 7,339
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase 862,172 780,281 22,904 89,162 349,386 239,996 308,243 21,671
Net assets available for benefits
Beginning of period 2,394,249 2,625,184 0 0 642,292 266,218 708,073 0
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
End of year $3,256,421 $3,405,465 $ 22,904 $ 89,162 $ 991,678 $ 506,214 $1,016,316 $ 21,671
========== ========== ========== ========== ========== ========== ========== ==========
See notes to financial statements
</TABLE>
-7-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits, by Investment Option (continued)
Year Ended December 31, 1995
Investment Options
<CAPTION>
High Government/ T. Rowe Price
Yield Corporate Government Short International Strong Fidelity
Bond Bond Bond Term Equity Discovery Contrafund Janus
Account Account Account Account Account Account Account Account
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net realized and unrealized
appreciation in fair value
of investments $ 276 $ 29,700 $ 21,685 $ 21,334 $ 1,882 $ 5,229 $ 6,876 $ 2,464
Investment income:
Interest
Dividends
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total investment income
Contributions:
Participants 317 33,872 27,561 14,702 4,627 2,387 12,005 4,360
Employer
Rollovers 4,046 8,902 2,246 3,094 4,799 6,271 25,572
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total contributions 4,363 42,774 29,807 14,702 7,721 7,186 18,276 29,932
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total additions 4,639 72,474 51,492 36,036 9,603 12,415 25,152 32,396
Deductions from net assets attributed to:
Distributions to participants 4,597 350 12,076
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total deductions 4,597 350 12,076
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase prior to interfund
transfers 4,639 67,877 51,142 23,960 9,603 12,415 25,152 32,396
Interfund transfers (net) 2,509 5,947 34,222 26,171 46,637 45,278 3,735
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase 4,639 70,386 57,089 58,182 35,774 59,052 70,430 36,131
Net assets available for benefits
Beginning of period 0 124,498 139,887 340,421 0 0 0 0
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
End of year $ 4,639 $ 194,884 $ 196,976 $ 398,603 $ 35,774 $ 59,052 $ 70,430 $ 36,131
========== ========== ========== ========== ========== ========== ========== ==========
See notes to financial statements
</TABLE>
-8-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits, by Investment Option (continued)
Year Ended December 31, 1995
Investment Options
<CAPTION>
Fidelity
Asset Aggressive Conservative
Manager Balanced Balanced Balanced Guaranteed Loan
Account Account Account Account Account Account Total
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net realized and unrealized
appreciation in fair value
of investments $ 176 $ 1,471 $ 2,477 $ 33 $ 2,395,678
Investment income:
Interest $ 193,286 $ 37,100 243,734
Dividends 167,558
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment income 193,286 37,100 411,292
Contributions:
Participants 3,632 2,323 3,370 559 268,605 797,568
Employer 146,799
Rollovers 14,475 66,481 186,362
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total contributions 3,632 16,798 3,370 559 335,086 1,130,729
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total additions 3,808 18,269 5,847 592 528,372 37,100 3,937,699
Deductions from net assets attributed to:
Distributions to participants 139,638 11,533 438,451
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total deductions 139,638 11,533 438,451
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase prior to interfund
transfers 3,808 18,269 5,847 592 388,734 25,567 3,499,248
Interfund transfers (net) 383 17,459 1,461 (42,032) 13,662 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase 4,191 18,269 23,306 2,053 346,702 39,229 3,499,248
Net assets available for benefits
Beginning of period 2,707,860 425,148 10,373,830
----------- ----------- ----------- ----------- ----------- ----------- -----------
End of year $ 4,191 $ 18,269 $ 23,306 $ 2,053 $3,054,562 $ 464,377 $13,873,078
=========== =========== =========== =========== =========== =========== ===========
See notes to financial statements
</TABLE>
-9-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits, by Investment Option
Period from February 2, 1994 to December 31, 1994
Investment Options
<CAPTION>
SCC Medium Large Gov't/
Common LNC Cap Cap Core Corporate
Stock Stock Equity Equity Equity Bond
Account Account Account Account Account Account
---------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net realized and unrealized
appreciation (depreciation) in
fair value of investments $ 122,422 $ (448,414) $ (26,994) $ (23,715) $ (9,728) $ (4,670)
Investment income:
Interest 9,358 1,293
Dividends 21,183 90,608
---------- ---------- ---------- ---------- ----------- ----------
Total investment income 30,541 91,901
Contributions:
Participants 94,679 104,708 56,541 88,113 26,682
Employer 509,368
Rollovers 156,581 13,325 228 228
---------- ---------- ---------- ---------- ----------- ----------
Total contributions 760,628 118,033 56,769 88,341 26,682
---------- ---------- ---------- ---------- ----------- ----------
Transfer of assets from Lincoln
National Corporation Plan 0 4,372,639 542,567 290,281 601,858 82,777
---------- ---------- ---------- ---------- ----------- ----------
Total additions 913,591 4,016,126 633,587 323,335 680,471 104,789
Deductions from net assets attributed to:
Distributions to participants 40,967 60,299 11,468 281 1,524 397
---------- ---------- ---------- ---------- ----------- ----------
Total deductions 40,967 60,299 11,468 281 1,524 397
---------- ---------- ---------- ---------- ----------- ----------
Net increase prior to interfund
transfers 872,624 3,955,827 622,138 323,054 678,947 104,392
Interfund transfers (net) 1,521,625 (1,330,643) 20,154 (56,836) 29,126 20,106
---------- ---------- ---------- ---------- ----------- ----------
Net increase 2,394,249 2,625,184 642,292 266,218 708,073 124,498
Net assets available for benefits
Beginning of period 0 0 0 0 0 0
---------- ---------- ---------- ---------- ----------- ----------
End of year $2,394,249 $2,625,184 $ 642,292 $ 266,218 $ 708,073 $ 124,498
========== ========== ========== ========== =========== ==========
See notes to financial statements
</TABLE>
-10-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits, by Investment Option
Period from February 2, 1994 to December 31, 1994
Investment Options
<CAPTION>
Gov't Short
Bond Term Guaranteed Loan
Account Account Account Account Total
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net realized and unrealized
appreciation (depreciation) in
fair value of investments $ (2,951) $ 10,818 $ (383,232)
Investment income:
Interest $ 163,615 $ 31,707 205,973
Dividends 111,791
---------- ---------- ---------- ---------- -----------
Total investment income 163,615 31,707 317,764
Contributions:
Participants 23,586 13,061 261,664 669,034
Employer 509,368
Rollovers 189,620 9,803 369,785
---------- ---------- ---------- ---------- -----------
23,586 202,681 271,467 1,548,187
---------- ---------- ---------- ---------- -----------
Transfer of assets from Lincoln
National Corporation Plan 123,309 170,083 2,653,609 345,450 9,182,573
---------- ---------- ---------- ---------- -----------
Total additions 143,944 383,582 3,088,691 377,157 10,665,292
Deductions from net assets attributed to:
Distributions to participants 2,839 10,418 157,419 5,850 291,462
---------- ---------- ---------- ---------- -----------
Total deductions 2,839 10,418 157,419 5,850 291,462
---------- ---------- ---------- ---------- -----------
Net increase prior to interfund
transfers 141,105 373,164 2,931,272 371,307 10,373,830
Interfund transfers (net) (1,218) (32,743) (223,412) 53,841 -
---------- ---------- ---------- ---------- -----------
Net increase 139,887 340,421 2,707,860 425,148 10,373,830
Net assets available for benefits
Beginning of period 0 0 0 0 0
---------- ---------- ---------- ---------- -----------
End of year $ 139,887 $ 340,421 $2,707,860 $ 425,148 $10,373,830
========== ========== ========== ========== ===========
See notes to financial statements
</TABLE>
-11-
<PAGE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Notes to Financial Statements
Note 1. Description of Plan
Security-Connecticut Corporation (the "Company" or "SCC") was formed in
1993 by its then parent corporation, Lincoln National Life Insurance Company
("LNL") to serve as an insurance holding company for Security-Connecticut Life
Insurance Company and Lincoln Security Life Insurance Company. On February 2,
1994 LNL sold 100% of the outstanding shares of the Company in an Initial Public
Offering ("IPO").
Through the date of the IPO, eligible employees of the Company participated
in a contributory defined contribution plan, the Lincoln National Corporation
Employees' Savings & Profit Sharing Plan ("LNC Plan") sponsored by Lincoln
National Corporation ("LNC"). Subsequent to the IPO, the Company established the
Security-Connecticut Corporation Savings & Profit Sharing Plan (the "Plan") for
the benefit of eligible employees. The accounts of employees who had
participated in the LNC Plan were transferred to the Plan.
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
General
The Plan is a contributory defined contribution plan covering all employees
of the Company and its subsidiaries who have at least one year of service and
are age twenty-one or older. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
Contributions
Each year, participants may contribute 1% to 15% of compensation, as
defined in the Plan up to a maximum of $9,240. Participants are not allowed to
make after-tax contributions to the Plan. However, after-tax contributions and
the earnings on such contributions which were made under the LNC Plan have been
transferred to the Plan and are held in an after-tax account. Participants are
also permitted to make cash rollover contributions or direct transfers to the
Plan from other qualified plans in which they participated.
Under the Plan, participants are eligible for matching contributions after
completion of one year of service. The Company contributes and allocates to each
participant's matching contribution account an amount equal to 25% of
participant elective contributions which do not exceed 6% of base compensation
per payroll period. Matching contributions are made in Security-Connecticut
Corporation common stock. Additional matching contributions, based upon a
percentage of participant elective contributions up to 6% of the participant's
base compensation, per payroll period may be made solely based upon the
profitability of the Company as determined by the board of directors each plan
year. The participant must be an employee as of the last day of the Plan year to
receive any additional matching contributions. The sum of employee and Company
contributions for a plan year may not exceed the lesser of $30,000 or 25% of
compensation.
-12-
<PAGE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Notes to Financial Statements (continued)
Participants Accounts
Each participant's account is credited with the participant's contributions
and allocations of the Company's contributions and the selected investment
option account's earnings. Allocations are based on investment option earnings
or account balances, as defined in the Plan. Forfeited balances of terminated
participants' nonvested accounts are used to reduce the Company's contribution
for the current plan year. As of December 31, 1995 and 1994, net assets
available for plan benefits included $579,161 and $443,858, respectively, for
participants who have terminated from the plan, but have not withdrawn their
vested account balances.
Vesting
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company contribution portion of participants'
accounts plus actual earnings thereon is based on vesting years of service. Upon
termination of employment prior to age 55, a participant would be 50% vested
after having credit for two vesting years of service, and 100% vested after
three or more vesting years of service.
As used in the Plan, a vesting year of service is any completed twelve
month period of service with the Company. All service counted under the LNC Plan
as of the effective date of this Plan is counted under this Plan as well.
The account of each participant shall be fully vested upon attainment of
normal retirement age. As used in the Plan, normal retirement age is age 55. If
a participant becomes disabled, that participant shall be entitled to be 100%
vested in the participant's account. If a participant dies while employed by the
Company, the participant's account shall be fully vested and the beneficiary
shall receive a death benefit equal to the value of the account.
Investment Options
The Plan trustee (Norwest Bank Fort Wayne, N.A.) holds a group annuity
contract issued by The Lincoln National Life Insurance Company ("LNL") for the
benefit of the Plan which provides for contributions to and investments in LNL
segregated investment accounts whose objectives are the same as described for
the accounts. Participants are entitled to direct the investment of their
accounts, other than the matching contribution account, which is invested in the
SCC Common Stock Account. Participants can also direct their investment to the
SCC Common Stock Account. A participant may direct contributions in 1%
increments in any of the following twenty-one investment options:
SCC Common Stock Account - invests primarily in shares of Security-Connecticut
Corporation Common Stock.
LNC Common Stock Account - invests in Lincoln National Corporation Common Stock.
No current or future contributions or transfers into this account are permitted,
although participants may transfer their prior investment out of this account.
-13-
<PAGE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Notes to Financial Statements (continued)
Investment Options (continued)
International Equity Account - invests in stocks of non-United States Companies.
The portfolio is well diversified to control risk and is not highly traded.
Small Capitalization Equity Account - invests in the stocks of small companies
which have the potential to grow rapidly and produce superior returns. Small
capitalization companies generally are those between $100 million and $600
million in market capitalization.
Medium Capitalization Equity Account - invests in the common stock of
medium-sized companies with strong financial characteristics.
Large Capitalization Equity Account - invests in the common stocks of large
companies which have the potential for a significant appreciation in value over
an 18-24 month period.
Core Equity Account - invests in the common stock and securities convertible
into common stock of established companies and broadly diversifies them to
control risk.
Value Equity Account - invests in large capitalization stocks of undervalued
companies which are leaders in their industries.
High Yield Bond Account - invests in below-investment-grade bonds. These are
bonds with a debt rating below BBB by Moody's or Baa by Standard & Poor's.
Government/Corporate Bond Account - invests in medium-term to long-term
corporate and government bonds.
Government Bond Account - invests in fixed income securities issued by the
United States government.
Short Term Account - invests in notes of government agencies and private
corporations.
T. Rowe Price International Equity Account - invests exclusively in the T. Rowe
Price International Stock Fund, a mutual fund which invests primarily in common
stocks of established non-U.S. companies having the potential for growth of
capital.
Strong Discovery Account - invests exclusively in the Strong Discovery Fund, a
mutual fund which invests primarily in common stocks, emphasizing smaller
companies with favorable prospects for earnings growth. The Fund may also invest
in foreign securities, warrants and corporate or government debt.
Fidelity Contrafund Account - invests exclusively in Fidelity Contrafund, a
mutual fund that invests in undervalued stocks of medium-sized and smaller
companies not currently favored by the public, but which show a potential for
capital appreciation. These include both well-known and lesser-known companies.
Janus Account - purchases shares of the Janus Fund, a mutual fund which invests
primarily in common stocks of companies experiencing favorable demand for their
products and services.
-14-
<PAGE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Notes to Financial Statements (continued)
Investment Options (continued)
Fidelity Asset Manager Account - invests exclusively in Fidelity Asset Manager,
a mutual fund that invests in three different asset classes: stocks, bonds and
short-term, fixed-income instruments. The percentage of assets in each class is
adjusted periodically as changing market and economic conditions warrant.
Aggressive Balanced Account - invests in three different asset classes: stocks,
bonds and money-market instruments. Within each asset class, the accounts invest
primarily in Lincoln National Life Insurance Company's separate accounts. The
Aggressive Balanced Account places an emphasis on common stocks, both domestic
and international.
Balanced Account - invests in three different asset classes: stocks, bonds and
money-market instruments. Within each asset class, the accounts invest primarily
in Lincoln National Life Insurance Company's separate accounts.
Conservative Balanced Account - invests in three different asset classes:
stocks, bonds and money-market instruments. Within each asset class, the
accounts invest primarily in Lincoln National Life Insurance Company's separate
accounts.
Guaranteed Account - invests in high-quality bonds and mortgages and guarantees
principal and a minimum rate of interest.
Participant Notes Receivable
Loans are available to all participants and beneficiaries on a reasonably
equivalent basis. Loans are not available to highly compensated individuals, as
defined in Section 414(q) of the Internal Revenue Code, in an amount greater
than the amount made available to other participants. Participants may borrow
from their accounts a minimum of $1,000 up to a maximum of the lesser of (a)
$50,000, or (b) one-half of their vested account balance. The $50,000 maximum is
reduced by the highest outstanding balance in the previous 12 months. Loan
transactions are treated as a transfer from (to) the investment account to
(from) the loan account. Loan terms range from 1-5 years or up to 10 years for
the purchase of a primary residence. The loans are secured by one-half of the
vested balance in the participant's account and bear interest at a rate
commensurate with local prevailing rates as determined by the Plan
administrator. In 1995, interest rates charged on loans from the Plan ranged
from 6.5% to 11.0%. Principal and interest is paid ratably through bimonthly
payroll deductions.
Payment of Benefits
On termination of service, a participant may receive a lump-sum amount
equal to the vested value of his or her account. On retirement, disability, or
death, distributions from the Plan will be made only in the form of a single
lump-sum payment in cash, except that amounts held in the LNC and SCC Common
Stock Accounts shall be made in cash and whole shares unless the participant
elects to receive cash in lieu of shares.
-15-
<PAGE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Notes to Financial Statements (continued)
Note 2. Summary of Accounting Policies
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value on the basis of (1) the
closing price on an exchange on which such securities are listed, (2) the
average bid quotations of such securities, (3) quotations from other sources
deemed by the Security-Connecticut Corporation Retirement Plan Committee to be
reliable as fairly reflecting the market price or redemption price of the
securities, (4) the value as reported by an insurance company with respect to a
segregated investment account in which the Plan invests, or (5) the average sale
or purchase price of the securities when the Trustee is required to sell or
purchase securities on the open market to comply with the requests of employees.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on an accrual basis. Dividends are recorded on the
ex-dividend date.
The unallocated insurance contract is valued at contract value as estimated
by LNL. Contract values represent net contributions made under the contract plus
interest at the contract rate.
Use of Estimates
The preparation of financial statements in conformity with general accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of net assets available for benefits as of the date
of the financial statements, and that affect the reported amounts of changes in
net assets available for benefits during the reporting period. Actual results
could differ from these estimates.
Note 3. Investments
The Plan's investments in the SCC and LNC Common Stock Accounts are held by
a bank administered trust fund. The trustee also holds a group annuity contract
issued by LNL. The annuity contract provides for participant contributions to
the LNL segregated investment accounts, as described in Note 1.
-16-
<PAGE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Notes to Financial Statements (continued)
Note 3. Investments (continued)
For the year ended December 31, 1995 and for the period from February 2,
1994, to December 31, 1994, the Plan's investments (including investments
bought, sold, and held during the year) appreciated (depreciated) in value by
$2,395,678 and $(383,232) as follows:
<TABLE>
<CAPTION>
Net Appreciation
in Fair Value Fair Value
during the year at end of year
--------------- --------------
Year ended December 31, 1995:
Investments at fair value as determined by quoted market price:
<S> <C> <C>
Common Stock:
Security-Connecticut Corporation Common Stock Account,
113,227 shares $ 426,411 $ 3,071,282
Lincoln National Corporation Common Stock Account,
62,700 shares 1,278,873 3,370,125
----------- -----------
1,705,284 6,441,407
Investments at fair value as determined by redemption price:
Segregated Investment Accounts:
Lincoln National Life Insurance Company Separate Accounts:
International Equity Account (4,995.389 units) 807 22,904
Small Capitalization Equity Account (29,056.758 units) 3,631 89,162
Medium Capitalization Equity Account (126,681.745 units) 220,504 991,678
Large Capitalization Equity Account (105,697.285 units) 91,255 506,214
Core Equity Account (147,901.055 units) 277,824 1,016,316
Value Equity Account (15,982.436 units) 2,770 21,671
High Yield Bond Account (2,469.985 units) 276 4,639
Government/Corporate Bond Account (40,564.655 units) 29,700 194,884
Government Bond Account (136,070.926 units) 21,685 196,976
Short Term Account (152,109.463 units) 21,334 398,603
----------- -----------
669,786 3,443,047
Mutual Fund Investments:
T. Rowe Price International Equity Account (32,130.382 units) 1,882 35,774
Strong Discovery Account (41,208,394 units) 5,229 59,052
Fidelity Contrafund Account (50,386.898 units) 6,876 70,430
Janus Account (27,340.156 units) 2,464 36,131
Fidelity Asset Manager Account (3,614.445 units) 176 4,191
----------- -----------
16,627 205,578
Diversified Investments:
Aggressive Balanced Account (14,893.615 units) 1,471 18,269
Balanced Account (5,847.281 units) 2,477 23,306
Conservative Balanced Account (1,743.085 units) 33 2,053
----------- -----------
3,981 43,628
Contract value as estimated by the Lincoln National
Life Insurance Company:
Unallocated insurance contracts 3,054,562
Investments at estimated fair value:
Participant loans receivable 464,377
----------- -----------
Total investments $ 2,395,678 $13,652,599
=========== ===========
</TABLE>
-17-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Notes to Financial Statements (continued)
Note 3. Investments (continued)
<CAPTION>
Net Appreciation
(Depreciation)
in Fair Value Fair Value
during the period at end of year
----------------- --------------
Period ended December 31, 1994:
Investments at fair value as determined by quoted market price:
<S> <C> <C>
Common Stock:
Security-Connecticut Corporation Common Stock Account,
73,688 shares $ 122,422 $ 1,657,980
Lincoln National Corporation Common Stock Account,
74,759 shares (448,414) 2,616,565
----------- -----------
(325,992) 4,274,545
Investments at fair value as determined by redemption price:
Segregated Investment Accounts:
Lincoln National Life Insurance Company Separate Accounts:
Medium Capitalization Equity Account (108,105.179 units) (26,994) 642,292
Large Capitalization Equity Account (71,483.610 units) (23,715) 266,218
Core Equity Account (141,579.631 units) (9,728) 708,073
Government/Corporate Bond Account (31,064.908 units) (4,670) 124,498
Government Bond Account (109,869.017 units) (2,951) 139,887
Short Term Account (137,443.860 units) 10,818 340,421
----------- -----------
(57,240) 2,221,389
Contract value as estimated by the Lincoln National
Life Insurance Company:
Unallocated insurance contracts 2,707,860
Investments at Estimated Fair Value:
Participant loans receivable 425,148
----------- -----------
Total investments $ (383,232) $ 9,628,942
=========== ===========
</TABLE>
<TABLE>
The fair value of individual investments that represent 5% or more of the Plan's
assets is as follows:
<CAPTION>
December 31,
1995 1994
----------- -----------
<S> <C> <C>
Security-Connecticut Corporation Common Stock $ 3,071,282 $ 1,657,980
Lincoln National Corporation Common Stock 3,370,125 2,616,565
Lincoln National Life Insurance Company
Separate Accounts:
Medium Capitalization Equity Account 991,678 642,292
Core Equity Account 1,016,316 708,073
Unallocated insurance contract with
The Lincoln National Life Insurance Company 3,054,562 2,707,860
</TABLE>
-18-
<PAGE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Notes to Financial Statements (continued)
Note 4. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become fully vested in their accounts and shall
not be subject to forfeiture.
Note 5. Income Tax Status
The Internal Revenue Service has determined that the Plan qualifies under
Section 401(a) of the Internal Revenue Code (IRC) and, therefore, is not subject
to tax under the present income tax laws. Once qualified, the Plan is required
to operate in conformity with the IRC to maintain it's qualification. The Plan's
administrator is not aware of any course of action or series of events that have
occurred that might adversely affect the Plan's qualified status.
Note 6. Transactions with Parties-In-Interest
All common stock and short-term cash investments of the Plan were held by
Norwest Bank Fort Wayne, N.A.. All other investments of the Plan were held by
The Lincoln National Life Insurance Company. Investment management fees incurred
for the SCC and LNC Stock Funds were paid by the Company while all investment
management fees for the other investment options were charged directly to
earnings of the accounts based upon the market value of the respective
investment options. All other administrative expenses for the Plan were paid by
the Company.
Note 7. Subsequent Events
Effective July 1, 1996, the administration of the Plan will be performed by
Fidelity Institutional Retirement Services Company. Also effective July 1, 1996,
eligibility requirements will be modified to allow participation in the Plan by
employees of the Company and its subsidiaries who have both attained age
twenty-one and completed six months of service. Participants will become
eligible for matching contributions after completion of twelve full calendar
months of service.
-19-
<PAGE>
<TABLE>
Security-Connecticut Corporation
Savings & Profit Sharing Plan
Assets Held for Investment Purposes
December 31, 1995
<CAPTION>
Description of
Investment Including
Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Par or
Lessor or Similar Party Maturity Value Cost Fair Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock-
Security-Connecticut Corporation 113,227 shares $ 2,526,809 $ 3,071,282
Lincoln National Corporation 62,700 shares 2,414,198 3,370,125
----------- -----------
4,941,007 6,441,407
Segregated investment accounts-
Lincoln National Life Insurance Company
Separate Accounts:
International Equity Account 4,995.389 units 22,124 22,904
Small Capitalization Equity Account 29,056.758 units 85,590 89,162
Medium Capitalization Equity Account 126,681.745 units 806,186 991,678
Large Capitalization Equity Account 105,697.285 units 434,954 506,214
Core Equity Account 147,901.055 units 776,246 1,016,316
Value Equity Account 15,982.436 units 19,004 21,671
High Yield Bond Account 2,469.985 units 4,364 4,639
Government/Corporate Bond Account 40,564.655 units 170,926 194,884
Government Bond Account 136,070.926 units 178,719 196,976
Short Term Account 152,109.463 units 375,114 398,603
----------- -----------
2,873,227 3,443,047
Mutual Fund Investments:
T. Rowe Price International Equity Account 32,130.382 units 33,933 35,774
Strong Discovery Account 41,208.394 units 53,830 59,052
Fidelity Contrafund Account 50,386.898 units 63,877 70,430
Janus Account 27,340.156 units 33,775 36,131
Fidelity Asset Manager Account 3,614.445 units 4,015 4,191
----------- -----------
189,430 205,578
Diversified Investments:
Aggressive Balanced Account 14,893.615 units 16,798 18,269
Balanced Account 5,847.281 units 20,831 23,306
Conservative Balanced Account 1,743.085 units 2,020 2,053
----------- -----------
39,649 43,628
Unallocated insurance contracts-
The Lincoln National Life
Insurance Company 3,054,562 3,054,562
Participant loans Various loans at interest
rates varying from 6.5%
to 11.0%, due from
1996 to 2005 464,377 464,377
----------- -----------
$11,562,252 $13,652,599
=========== ===========
</TABLE>
-20-
<PAGE>
<TABLE>
Security-Connecticut Corporation Savings & Profit Sharing Plan
Reportable Transactions
Year Ended December 31, 1995
<CAPTION>
(a) (b) (c) (d) (g) (h) (i)
Fair Value
Identity of Cost Total Total of Assets on Net
Party Involved Description of Asset of Assets Purchase Price Selling Price Transaction Date Gain (Loss)
- ----------------- -------------------------------- --------- -------------- ------------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) - series of transactions in
excess of 5 percent of plan assets
* Norwest Bank Security-Connecticut Corporation $ 986,891 $ 986,891 $ 986,891
Fort Wayne, N.A. common stock, 39,539 shares
* Norwest Bank Lincoln National Corporation $ 464,319 $ 525,313 $ 525,313 $ 60,994
Fort Wayne, N.A. common stock, 12,059 shares
* Norwest Bank Norwest Short Term Investment
Fort Wayne, N.A. Account
Purchases $1,476,684 $1,476,684 $1,476,684
Sales 1,590,220 $1,590,220 1,590,220
* The Lincoln Unallocated insurance contract -
National Life The Lincoln National Life
Insurance Co. Insurance Company
Purchases $ 703,786 $ 703,786 $ 703,786
Sales 507,579 $ 551,656 551,656 $ 44,077
<FN>
* The Lincoln National Life Insurance Company and Norwest Bank Fort Wayne, N.A. are parties-in-interest.
Note: Columns (e) and (f) and categories (i), (ii) and (iv) are not applicable.
</FN>
</TABLE>
-21-
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-74410) pertaining to the Security-Connecticut Corporation Savings and
Profit Sharing Plan of our report dated June 6, 1996, with respect to the
financial statements and schedules of the Security-Connecticut Corporation
Savings and Profit Sharing Plan included in the Annual Report (Form 11-K) for
the year ended December 31, 1995.
ERNST & YOUNG LLP
Hartford, Connecticut
June 14, 1996
-22-
