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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period ______ to ______ Commission File Number 001-12746
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SECURITY-CONNECTICUT CORPORATION
(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)
(860) 677-8621
Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
There were 8,559,844 shares outstanding of the Registrant's Common Stock, $.01
par value, as of November 1, 1996.
The exhibit index to this report is located on page 10.
Page 1 of 12
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<PAGE>
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1 Financial Statements (Unaudited)
Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995.......................... 3
Consolidated Statements of Income -
Three and Nine Months Ended September 30, 1996 and 1995........... 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995..................... 5
Notes to Consolidated Financial Statements......................... 6
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 7
PART II - OTHER INFORMATION
- ---------------------------
Item 5 Other Information.................................................. 10
Item 6 Exhibits and Reports on Form 8-K................................... 10
Signatures......................................................... 11
-2-
<PAGE>
<TABLE>
<CAPTION>
SECURITY-CONNECTICUT CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
(Unaudited)
September 30,December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Investments:
Securities available-for-sale at fair value:
Fixed maturity securities (cost:1996-$1,529,691;
1995-$1,469,970) $ 1,541,987 $ 1,564,576
Equity securities (cost:1996-$1,501; 1995-$3,435) 1,545 6,331
Mortgage loans on real estate 133,277 145,080
Policy loans 74,206 73,916
Other invested assets 6,806 6,221
------------ ------------
Total investments 1,757,821 1,796,124
Cash and invested cash 41,923 29,753
Deferred policy acquisition costs 393,158 335,821
Premiums and fees receivable 7,782 5,871
Accrued investment income 31,597 28,710
Goodwill 20,879 21,557
Property and equipment 8,611 9,455
Acquired insurance in-force 8,455 8,966
Amounts recoverable from reinsurers 41,044 34,974
Other assets 9,759 10,188
------------ ------------
Total assets $ 2,321,029 $ 2,281,419
============ ============
LIABILITIES
Future policy benefits and claims $ 1,727,787 $ 1,682,364
Contractholder funds 58,575 49,978
Long-term debt 75,000 65,000
Federal income taxes payable 16,198 38,178
Dividends payable 1,027 1,066
Accrued expenses and other liabilities 91,923 87,470
Deferred gain on sale/leasebacks 1,259 1,334
Participating department equity 7,928 7,667
------------ ------------
Total liabilities 1,979,697 1,933,057
SHAREHOLDERS' EQUITY
Preferred stock, par value $0.01 per share;
Authorized-10,000,000 shares;
issued and outstanding - none
Common stock, par value $0.01 per share;
Authorized-50,000,000 shares;
issued and outstanding-1996-8,564,626
shares less 4,782 treasury shares;
1995-8,556,903 shares 86 86
Paid-in capital 82,558 82,405
Deferred compensation (379)
Net unrealized gains on securities available-for-sale 3,214 35,748
Retained earnings 255,474 230,502
------------ ------------
Total shareholders' equity 341,332 348,362
------------ ------------
Total liabilities and shareholders' equity $ 2,321,029 $ 2,281,419
============ ============
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
SECURITY-CONNECTICUT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
-------------------------- -------------------------
September 30, September 30,
-------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE
Premiums $ 15,857 $ 17,225 $ 44,960 $ 52,278
Insurance fees 34,014 31,511 102,572 93,233
Net investment income 34,056 32,565 101,592 97,605
Realized gains on investments 528 737 7,907 1,285
Other 292 300 573 1,135
----------- ----------- ----------- -----------
Total revenue 84,747 82,338 257,604 245,536
BENEFITS AND EXPENSES
Benefits and reserves 49,013 49,725 145,387 154,688
Insurance and other expenses 23,427 20,817 69,567 61,674
Participating department gain 33 27 261 61
----------- ----------- ----------- -----------
Total benefits and expenses 72,473 70,569 215,215 216,423
----------- ----------- ----------- -----------
Income before federal income taxes 12,274 11,769 42,389 29,113
Federal income taxes 3,872 3,999 14,312 9,829
----------- ----------- ----------- -----------
NET INCOME $ 8,402 $ 7,770 $ 28,077 $ 19,284
=========== =========== =========== ===========
EARNINGS PER COMMON SHARE $ 0.97 $ 0.90 $ 3.26 $ 2.25
=========== =========== =========== ===========
DIVIDENDS DECLARED PER
COMMON SHARE $ 0.12 $ 0.12 $ 0.36 $ 0.36
=========== =========== =========== ===========
Common stock and equivalents 8,628,955 8,600,625 8,613,572 8,587,394
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
SECURITY-CONNECTICUT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine Months Ended September 30,
-------------------------------
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 28,077 $ 19,284
Adjustments to reconcile net income to net cash used:
Deferred policy acquisition costs:
Amortization 28,167 26,654
Deferral (46,321) (50,422)
Increase in accrued investment income (2,887) (1,259)
Decrease in policy liabilities and contractholder funds (49,409) (40,397)
Decrease in federal income taxes (4,463) (5,966)
Net amortization of acquired insurance in-force and goodwill 1,189 1,222
Increase in participating department equity 261 61
Decrease (increase) in amounts recoverable from reinsurers (6,070) 4,040
Decrease (increase) in premiums and fees receivable (1,911) 3,866
Realized gain on investments (7,907) (1,285)
Other 1,196 (3,229)
----------- -----------
Net cash used in operating activities (60,078) (47,431)
INVESTING ACTIVITIES
Fixed maturity securities available-for-sale:
Purchases (285,936) (364,928)
Sales 146,300 162,032
Maturities 83,881 80,970
Equity securities:
Purchases (1,768) (1,458)
Sales 7,145
Purchases of other investments (1,080) (3,738)
Sale or maturity of other investments 13,057 12,537
Other 4,199 25,271
----------- -----------
Net cash used in investing activities (34,202) (89,314)
FINANCING ACTIVITIES
Universal life and investment contract deposits 186,104 196,699
Universal life and investment contract withdrawals (87,041) (61,698)
Issuance of long-term debt 75,000
Repayment of long-term debt (65,000)
Dividends to shareholders (3,081) (3,078)
Issuance of common stock 258 200
Acquisition of treasury stock (129)
Other cash provided 339 278
----------- -----------
Net cash provided by financing activities 106,450 132,401
----------- -----------
Net increase (decrease) in cash and invested cash 12,170 (4,344)
Cash and invested cash at beginning of period 29,753 26,338
----------- -----------
Cash and invested cash at end of period $ 41,923 $ 21,994
=========== ===========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
-5-
<PAGE>
SECURITY-CONNECTICUT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Accounting Policies and Principles
Basis of Financial Statements
The accompanying unaudited consolidated financial statements have been
prepared in conformity with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
only of normal recurring accruals considered necessary for a fair presentation,
have been included. Operating results for the nine month period ended September
30, 1996 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1995. The
accompanying financial information relates to the consolidated financial
statements of Security-Connecticut Corporation (the "Company") and its wholly
owned subsidiaries, Arrowhead Ltd. (a Bermuda insurance corporation) and
Security-Connecticut Life Insurance Company ("SCL") and SCL's wholly owned
subsidiary, Lincoln Security Life Insurance Company ("LSL"). Significant
intercompany transactions and balances have been eliminated.
Earnings Per Common Share
Fully diluted earnings per common share are not presented as they are not
materially different from primary earnings per common share.
2. Long-Term Debt
On June 8, 1995, the Company registered $100 million of debt securities on
Form S-3 with the Securities and Exchange Commission. The Company sold $75
million of medium term debt securities on March 1, 1996 and used $65 million of
the net proceeds to repay the Term Note to Lincoln National Life Insurance
Company ("LNL"). The remainder of the proceeds have been used for general
corporate purposes. The Fixed Rate Notes ("Notes") have an effective rate of
7.39% and are due March 1, 2003 and may not be redeemed prior to maturity.
Interest on the Notes is payable semi-annually in arrears on March 1 and
September 1 of each year. Interest payments began on September 1, 1996.
3. Litigation
The Company is involved in litigation concerning policy terms and benefits,
which seek both punitive and compensatory damages. Management believes these
suits are substantially without merit, that valid defenses exist, and that the
results of such litigation will not have a material adverse effect on the
accompanying financial statements.
-6-
<PAGE>
In addition, the Company is involved in two class action lawsuits as
follows:
Zipf vs. Security-Connecticut Life Insurance Company, et al., Court of
Common Pleas of Allegheny County, Pennsylvania.
The complaint, seeking actual and punitive damages, alleges that SCL has a
practice of misleading and/or misinforming policyholders on the basis of a
policy rate class designation. Specifically, the plaintiff alleges that the
"special non-smoker" designation leads policyholders to believe that they are
being charged premiums based on a "superior" rate when the actual premiums are
based on an "inferior, substandard or rated class."
In June 1995, the Pennsylvania court ordered the case certified as a class
action. The court later limited the class to Pennsylvania residents "who
purchased life insurance policies from Security-Connecticut Life Insurance
Company designated as 'Premium Rate Class Special Non-Smoker' on or after
November 17, 1986." SCL has filed a motion for revocation of class
certification. Management believes this suit is without merit and will continue
to vigorously defend the action.
Jacobson vs. Security-Connecticut Life Insurance Company,
Security-Connecticut Corporation and Lincoln National Life Insurance Company,
Superior Court, Judicial District of Hartford/New Britain at Hartford,
Connecticut.
Plaintiffs filed a class action complaint in November 1995, seeking
contractual damages, attorneys' fees and the imposition of a constructive trust.
Plaintiffs allege breach of contract, fraud and violation of Connecticut's
Unfair Trade Practices Act. Plaintiffs claim that SCL improperly charged
additional premiums to pay for the deferred acquisition cost tax incurred by
defendants LNL and the Company. Management believes this suit is without merit
and will vigorously defend the action.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Nine Months Ended September 30, 1996 compared to Nine Months Ended September 30,
1995.
Premiums - Premiums decreased $7.3 million, or 14.0%, from $52.3 million in
1995 to $45.0 million in 1996 due principally to a decrease in single premium
immediate annuity premiums of $8.4 million and an increase in ceded premiums
under various reinsurance agreements of $12.5 million, partially offset by an
increase in term insurance premiums of $7.1 million and assumed reinsurance
premiums of $7.1 million.
The Company's first year annualized life premiums on new individual life
insurance sales for 1996 increased $5.8 million or 17.5% to $39.5 million from
$33.7 million in 1995 primarily as a result of an increase in term and universal
life sales. Annualized annuity sales decreased $37.4 million or 48.0% from $77.9
million in 1995 to $40.5 million in 1996 due primarily to the Company's decision
to maintain its pricing structure on such products.
Insurance Fees - Insurance fees increased $9.4 million, or 10.0%, from
$93.2 million in 1995 to $102.6 million in 1996, reflecting primarily an
increase in the mortality and expense assessments on universal life products.
The assessment increases resulted primarily from the growth of insurance
in-force, higher fees and aging of the in-force block of business.
-7-
<PAGE>
Net Investment Income - Net investment income increased $4.0 million, or
4.1%, from $97.6 million in 1995 to $101.6 million in 1996. This reflects the
increase in the cost basis of invested assets offset by a slightly lower
effective yield on such assets. The effective yield on invested assets was 7.7%
for 1996 compared with 7.9% for 1995.
Realized Gains on Investments - Net realized gains on investments were $7.9
million in 1996 compared with $1.3 million in 1995. The 1996 gains were the
result of net realized capital gains of $8.3 million from the sale of
investments offset by increases in the reserve for losses of $0.1 million and
deferred policy acquisition costs ("DAC") associated with realized gains of $0.3
million. The 1995 gains were the result of net realized gains from the sale of
investments of $6.4 million offset by increases in the reserve for losses of
$2.4 million and DAC associated with realized gains of $2.7 million.
Benefits and Reserves - Benefits and reserves decreased $9.3 million, or
6.0%, from $154.7 million in 1995 to $145.4 million in 1996. Life and annuity
benefits decreased $1.1 million, or 1.5%, from $72.5 million in 1995 to $71.4
million in 1996. The Company's life claim experience for 1996 was better than
plan by $0.5 million, or approximately $0.04 per share, after tax and was
approximately $2.0 million less than 1995. Policy reserves and other fund
deposits decreased $7.5 million from $15.2 million in 1995 to $7.7 million in
1996 due primarily to decreased single premium annuity sales. Interest credited
to policyholders decreased $1.0 million or 1.6%, from $65.0 million in 1995 to
$64.0 million in 1996.
Insurance and Other Expenses - Insurance and other expenses increased $7.9
million, or 12.8%, from $61.7 million in 1995 to $69.6 million in 1996.
Commissions, net of deferral and amortization of DAC increased $3.4 million, or
15.5%, from $22.2 million in 1995 to $25.6 million in 1996 primarily due to a
decrease in deferral of commissions on new business resulting from increased
reinsurance in connection with the quota share reinsurance agreements. General
administrative and other operating costs, net of DAC, increased $4.5 million, or
11.3%, from $39.5 million in 1995 to $44.0 million in 1996 primarily due to
higher staff related expenses, data processing, legal costs and interest
expense.
Federal Income Taxes - Federal income taxes increased $4.5 million from
$9.8 million in 1995 to $14.3 million in 1996. This was primarily due to higher
pre-tax income. The effective tax rate was 33.8% in 1996 and 1995.
Three Months Ended September 30, 1996 compared to Three Months Ended September
30, 1995.
Premiums - Premiums decreased $1.3 million, or 7.9%, from $17.2 million in
1995 to $15.9 million in 1996 due principally to a decrease in single premium
immediate annuity premiums of $2.0 million and an increase in ceded premiums
under various reinsurance agreements of $4.8 million, partially offset by an
increase in term insurance premiums of $3.2 million and assumed reinsurance
premiums of $2.2 million.
The Company's first year annualized life premiums on new life insurance
sales for individual life insurance increased $1.3 million, or 12.2%, from $11.0
million in 1995 to $12.3 million in 1996. This was primarily the result of an
increase in term sales. Annualized annuity sales decreased $8.8 million, or
39.8%, from $22.0 million in 1995 to $13.3 million in 1996 due primarily to the
Company's decision to maintain its pricing structure on such products.
Insurance Fees - Insurance fees increased $2.5 million, or 7.9%, from $31.5
million in 1995 to $ 34.0 million in 1996, reflecting primarily an increase in
the mortality and expense assessments on universal life products. The assessment
increases resulted primarily from the growth of insurance in-force, higher fees
and aging of the in-force block of business.
-8-
<PAGE>
Net Investment Income - Net investment income increased $1.5 million, or
4.6%, from $32.6 million in 1995 to $34.1 million in 1996. This reflects the
growth in the cost of invested assets offset by a slightly lower effective yield
on such assets. The effective yield on invested assets was 7.6% for 1996
compared with 7.7% for 1995.
Realized Gains on Investments - Net realized gains on investments were $0.5
million in 1996 compared with $0.7 million in 1995. The 1996 gains were the
result of net realized capital gains of $0.2 million from the sale of
investments and a decrease in reserves for losses of $0.1 million and DAC
associated with realized gains of $0.2 million. The 1995 gains were the result
of net realized capital gains of $3.7 million from the sale of investments,
offset by increases in reserves for losses of $0.6 million and DAC associated
with realized gains of $2.4 million.
Benefits and Reserves - Benefits and reserves decreased $0.7 million, or
1.4%, from $49.7 million in 1995 to $49.0 million in 1996. The decrease was
primarily due to a decrease in policy reserve increases of $2.5 million due to
the decrease in single premium annuity sales and a decrease in interest credited
to policyholders of $0.9 million. These decreases were offset by an increase in
life and annuity benefits of $2.6 million, or 11.9%, from $22.0 million in 1995
to $24.6 million in 1996. The Company's life claim experience for 1996 was $3.2
million more than the same period in 1995 and unfavorable compared to plan by
$0.9 million, or approximately $0.07 per share, after tax.
Insurance and Other Expenses - Insurance and other expenses increased $2.6
million, or 12.5%, from $20.8 million in 1995 to $23.4 million in 1996.
Commissions, net of deferral and amortization of DAC increased $1.2 million, or
17.1%, from $7.3 million in 1995 to $8.5 million in 1996. General administrative
and other operating costs, net of deferral and amortization of DAC, increased
$1.4 million, or 10.1%, from $13.5 million in 1995 to $14.9 million in 1996
primarily due to increases in interest expense, guaranty fund assessment accrual
and staff related expenses.
Federal Income Taxes - Federal income taxes decreased $0.1 million from
$4.0 million in 1995 to $3.9 million in 1996 due to slightly higher pre-tax
income offset by a research and development credit of $0.3 million received on
data processing expenses incurred during 1991 and 1992. The effective tax rate
was 31.5% for 1996 (34.0% without the R&D credit) compared to 34.0% for 1995.
Liquidity and Capital Resources
Security-Connecticut Corporation is a holding company whose principal
assets are Arrowhead Ltd. and SCL and its wholly owned insurance subsidiary. The
Company is dependent on receiving dividends from SCL and Arrowhead Ltd. to pay
operating expenses, meet debt service payments and make dividend payments to its
shareholders. The dividends from SCL are subject to certain statutory
limitations.
Cash flow from SCL's insurance operations consists primarily of its
contractual obligations to policyholders and annuitants and its payment of
dividends to the Company. The primary source of meeting these contractual
requirements is investment income from its total investment portfolio, scheduled
maturities from its available-for-sale fixed maturity security portfolio, and
principal repayment from its mortgage portfolio, as well as a portion of premium
income.
To provide for additional liquidity to meet normal variations in contract
obligations, the Company maintains cash and short-term investments and a
significant portion (77.7% at September 30, 1996) of its fixed maturity
portfolio in investment grade public debt securities. The Company believes that
its liquidity needs are adequately met with the aforementioned investment
policies, combined with the contractual terms of its life insurance and annuity
products.
-9-
<PAGE>
The Company has entered into several interest rate cap agreements as a
hedge against rising interest rates in its SPDA investment portfolio. As of
September 30, 1996, these agreements established cap rates ranging from 7.1% to
12.5% on notional principal of $460 million with termination dates through 2001.
The aggregate cost of $3.0 million is being amortized to net investment income
over the effective life of the caps. These investments are reported as fixed
maturity securities and classified as available-for-sale and are carried at fair
value ($1.8 million at September 30, 1996) with unrealized gains and losses
reported in shareholders' equity. The Company is exposed to credit loss in the
event of non-performance by counterparties on the caps. Due to the high quality
rating of the counterparties, the Company does not anticipate non-performance by
any of the counterparties. The amount of such exposure is approximately the
unrealized gain in such contracts as interest rates rise.
The Company does not believe that inflation has had a material effect on
its consolidated results of operations. The Company manages its investment
portfolio in part to reduce its exposure to interest rate fluctuations. In
general, the market value of the Company's fixed maturity portfolio increases or
decreases in inverse relationship with fluctuations in interest rates, and the
Company's net investment income increases or decreases in direct relationship
with interest rate changes. For example, if interest rates decline (as was the
case in 1995), the Company's fixed maturity investments generally will increase
in market value, while net investment income may decrease as fixed maturity
investments mature or are sold and proceeds are reinvested at the declining
rates. If interest rates increase (as was the case in 1994), the Company's fixed
maturity investments generally will decrease in market value, while net
investment income may increase as fixed maturity investments mature or are sold
and proceeds are reinvested at the increased rates.
Interest rate changes may have temporary effects on the sale and
profitability of the universal life and annuity products offered by the Company.
For example, if interest rates rise, competing investments (such as annuities or
life insurance offered by the Company's competitors, certificates of deposit,
mutual funds, and similar instruments) may become more attractive to potential
purchasers of the Company's products until the Company increases the rate
credited to holders of its universal life and annuity products. As part of the
Company's management of interest spreads, the Company constantly monitors
interest rates with respect to a spectrum of durations and sells policies and
annuities that permit flexible responses to interest rate changes.
Part II - Other Information
ITEMS 1, 2, 3 and 4 are either inapplicable or are answered in the negative and
are omitted pursuant to the instructions to Part II.
ITEM 5 - OTHER INFORMATION
On November 5, 1996, A.M. Best announced that it has reclassified the
ratings of Security-Connecticut Life Insurance Company and its subsidiary,
Lincoln Security Life Insurance Company from "A+" (Superior) to "A" (Excellent).
SCL is the principal insurance operating subsidiary of Security-Connecticut
Corporation.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a.) Exhibit 12.01 Calculation of ratios of earnings to fixed charges, Page 12.
b.) The Company did not file any reports on Form 8-K during the three months
ended September 30, 1996.
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SECURITY-CONNECTICUT CORPORATION
(Registrant)
Date: November 5, 1996 /s/Ronald D. Jarvis
----------------- ---------------------------------------
Ronald D. Jarvis, Chairman, President
and Chief Executive Officer
(Principal Executive Officer); Director
Date: November 5, 1996 /s/Robert J. Voight
----------------- ---------------------------------------
Robert J. Voight, Executive Vice President,
Financial Management
(Principal Financial Officer)
Date: November 5, 1996 /s/Richard D. Mocarski
----------------- ---------------------------------------
Richard D. Mocarski, Vice President,
Controller and Treasurer
(Principal Accounting Officer)
-11-
<TABLE>
<CAPTION>
Exhibit 12.01
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
Nine Months
Ended
September 30, Year Ended December 31,
------------- -----------------------------------------------------------
1996 1995 1994 1993(1) 1992(1) 1991(1)
---------- ---------- ---------- ---------- --------- ----------
(thousands of dollars, except ratio data)
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Income before federal
income tax and
cumulative effects
of accounting change................. $ 42,389 $ 36,396 $ 37,967 $ 40,513 $ 32,815 $ 39,782
Fixed charges, excluding
interest on annuities
and financial products............... 5,331 6,355 5,027 4,434 4,760 6,130
---------- ---------- ---------- ---------- --------- ----------
Earnings, excluding interest
on annuities and
financial products................. 47,720 42,751 42,994 44,947 37,575 45,912
Interest on annuities and
financial products................... 63,952 87,034 75,747 70,785 67,708 59,339
---------- ---------- ---------- ---------- --------- ----------
Earnings............................. $ 111,672 $ 129,785 $ 118,741 $ 115,732 $ 105,283 $ 105,251
========== ========== ========== ========= ========= ==========
Fixed Charges:
Interest expense on debt................ $ 3,913 $ 4,495 $ 3,208 $ 2,641 $ 2,990 $ 4,381
Interest component of
rent expense......................... 1,418 1,860 1,819 1,793 1,770 1,749
---------- ---------- ---------- ---------- --------- ----------
Fixed charges, excluding
interest on annuities and
financial products................. 5,331 6,355 5,027 4,434 4,760 6,130
Interest on annuities and
financial products................... 63,952 87,034 75,747 70,785 67,708 59,339
---------- ---------- ---------- ---------- --------- ----------
Fixed charges........................ $ 69,283 $ 93,389 $ 80,774 $ 75,219 $ 72,468 $ 65,469
========== ========== ========== ========= ========= ==========
Ratios of Earnings to Fixed Charges:
Excluding interest on annuities
and financial products (2)........... 8.95 6.73 8.55 10.14 7.89 7.49
Including interest on annuities
and financial products (3)........... 1.61 1.39 1.47 1.54 1.45 1.61
<FN>
(1) The amounts reported are pro-forma and assume the $65 million Term Note
was outstanding in years 1993-1991, at LIBOR plus .75%, as more fully
described in the Company's financial statements included in its Annual
Report on Form 10-K, for the year ended December 31, 1995.
(2) This ratio is comprised of the relationship of "earnings excluding
interest on annuities and financial products" to "fixed charges excluding
interest on annuities and financial products" as disclosed above.
(3) This ratio is comprised of the relationship of "earnings" to "fixed
charges" as disclosed above.
</FN>
</TABLE>
-12-
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for the nine month period ended September 30, 1996 as filed
on Form 10-Q and is qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<CIK> 0000913601
<NAME> Security-Connecticut Corporation
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 1,541,987,000
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 1,545,000
<MORTGAGE> 133,277,000
<REAL-ESTATE> 0
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0
0
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147,532,000
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</TABLE>
