<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K/A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NO.
DECEMBER 31, 1993 0-8403
------------------------
LAURENTIAN CAPITAL CORPORATION
-------------
DELAWARE 59-1611314
(State of Incorporation) (IRS Employer ID #)
640 Lee Road
Wayne, Pennsylvania 19087
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (610) 889-7400
------------------------
Securities Registered Pursuant to Section 12(b) of the Act:
TITLE OF CLASS NAME OF EXCHANGE ON WHICH REGISTERED
- --------------------------------------- ---------------------------------------
Common Stock, $.05 par value American Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
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 and 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 _____
Aggregate market value of voting shares held by nonaffiliates of the
Registrant as of March 18, 1994: $10,784,265
Number of shares outstanding of the Registrant's Common Stock as of March 18,
1994:
Common Stock, $.05 Par Value -- 7,548,757 shares
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's Proxy Statement for the 1994 Annual Meeting of
Stockholders are incorporated by reference into Part III.
- --------------------------------------------------------------------------------
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<PAGE>
AMENDMENT NO. 1 TO ANNUAL REPORT ON FORM 10-K
The following Item 8 is being filed to amend the corresponding Item of the
Annual Report on Form 10-K filed by Laurentian Capital Corporation on March 30,
1994, and reflects typographical corrections on pages F-3 and S-3.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to be
signed on its behalf by the undersigned, thereunto duly authorized.
LAURENTIAN CAPITAL CORPORATION
By: /s/ BERNHARD M. KOCH
--------------------------------------
Bernhard M. Koch
SENIOR VICE PRESIDENT, CHIEF
FINANCIAL OFFICER, TREASURER AND
SECRETARY
Date: April 14, 1994
<PAGE>
LAURENTIAN CAPITAL CORPORATION
AND SUBSIDIARIES
FORM 10-K, PART II, ITEM 8
YEAR ENDED DECEMBER 31, 1993
<PAGE>
LAURENTIAN CAPITAL CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants.......................................................................... F-2
Consolidated Balance Sheets as of December 31, 1993 and 1992............................................... F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1993, 1992 and 1991.......................................................................... F-4
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1993, 1992 and
1991...................................................................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991.......................................................................... F-6
Notes to Consolidated Financial Statements................................................................. F-7
</TABLE>
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S> <C>
III Condensed Financial Information of Registrant....................................................... S-1
VI Reinsurance......................................................................................... S-5
</TABLE>
All other schedules are omitted as the required information is not
applicable or the information is presented in the financial statements or
related notes.
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Laurentian Capital Corporation
We have audited the consolidated financial statements and the financial
statement schedules of Laurentian Capital Corporation and Subsidiaries listed in
the index on page F-1 of this Form 10-K. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement 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 consolidated financial position of Laurentian
Capital Corporation and Subsidiaries as of December 31, 1993 and 1992 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
As discussed in Notes 1 and 5 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1993.
COOPERS & LYBRAND
Philadelphia, Pennsylvania
February 11, 1994
F-2
<PAGE>
LAURENTIAN CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1992
--------- ---------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, at amortized cost (market, 1993 - $468,497; 1992 - $406,821)............ $ 458,668 $ 399,012
Equity securities, at market (cost, 1993 - $28,481; 1992 - $19,636)....................... 30,379 19,438
Mortgage loans on real estate............................................................. 29,438 39,579
Investment real estate, net of accumulated depreciation (1993 - $816; 1992 - $828)........ 4,643 7,293
Policy loans.............................................................................. 51,677 54,190
Short-term investments.................................................................... 10,479 23,472
--------- ---------
Total investments..................................................................... 585,284 542,984
Cash........................................................................................ 8,722 20,292
Accounts, notes and premiums receivable, net of allowance for uncollectible amounts
(1993 - $935; 1992 - $1,656)............................................................... 5,011 4,606
Reinsurance receivables..................................................................... 38,982 38,855
Accrued investment income................................................................... 5,855 5,940
Deferred policy acquisition costs........................................................... 71,745 73,976
Costs in excess of net assets of business acquired, net of accumulated amortization
(1993 - $5,219; 1992 - $4,929)............................................................. 7,130 8,335
Property and equipment, net of accumulated depreciation (1993 - $10,542; 1992 - $8,158)..... 11,972 12,782
Other assets................................................................................ 1,780 2,130
Assets held in separate accounts............................................................ 236,251 232,280
--------- ---------
$ 972,732 $ 942,180
--------- ---------
--------- ---------
<CAPTION>
LIABILITIES
<S> <C> <C>
Policy liabilities and accruals:
Future policy benefits.................................................................... $ 411,951 $ 402,104
Unearned premiums......................................................................... 1,804 1,861
Other policy claims and benefits payable.................................................. 12,629 9,321
--------- ---------
426,384 413,286
Other policyholders' funds.................................................................. 122,409 123,867
Debt........................................................................................ 54,822 54,454
Other liabilities........................................................................... 15,257 15,347
Current income taxes........................................................................ 145 170
Deferred income taxes....................................................................... 11,827 6,140
Liabilities related to separate accounts.................................................... 236,251 232,280
--------- ---------
Total liabilities..................................................................... 867,095 845,544
--------- ---------
Commitments and contingent liabilities
Redeemable preferred stock, Series A Convertible, $.01 par value,
at redemption value
Shares authorized: 5 million
Shares issued: 57,767
Outstanding: 1993 - 41,528; 1992 - 46,062................................................. 4,153 4,606
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $.05 par value
Shares authorized: 20 million
Shares issued: 8,111,496.................................................................. 406 406
Capital in excess of par value.............................................................. 59,071 59,010
Net unrealized gains (losses) on equity securities, net of tax: 1993 - $645; 1992 - $0...... 1,253 (198)
Treasury stock, at cost (shares outstanding: 1993 - 562,739; 1992 - 566,831)................ (2,818) (2,837)
Retained earnings........................................................................... 43,572 35,649
--------- ---------
Total stockholders' equity............................................................ 101,484 92,030
--------- ---------
$ 972,732 $ 942,180
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
LAURENTIAN CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Premiums................................................................. $ 81,443 $ 80,186 $ 79,551
Net investment income.................................................... 46,820 46,927 45,307
Realized investment gains................................................ 2,773 53 3,696
Other income............................................................. 3,218 3,232 2,467
----------- ----------- -----------
134,254 130,398 131,021
----------- ----------- -----------
Benefits and expenses:
Benefits and settlement expenses......................................... 77,115 72,491 76,304
Amortization of deferred policy acquisition costs........................ 13,226 13,489 12,928
Insurance and other expenses............................................. 32,535 34,241 33,566
----------- ----------- -----------
122,876 120,221 122,798
----------- ----------- -----------
Income before income taxes and cumulative effect
of accounting change...................................................... 11,378 10,177 8,223
Income tax expense:
Current.................................................................. 250 361 451
Deferred................................................................. 3,334 3,102 2,326
----------- ----------- -----------
3,584 3,463 2,777
----------- ----------- -----------
Income before cumulative effect of accounting change....................... 7,794 6,714 5,446
Cumulative effect of accounting change:
Adoption of SFAS 109..................................................... 400 0 0
----------- ----------- -----------
Net income................................................................. $ 8,194 $ 6,714 $ 5,446
----------- ----------- -----------
----------- ----------- -----------
Net income available to common shareholders:
Net income............................................................... $ 8,194 $ 6,714 $ 5,446
Less: dividends on preferred stock....................................... 271 290 305
----------- ----------- -----------
$ 7,923 $ 6,424 $ 5,141
----------- ----------- -----------
----------- ----------- -----------
Earnings per share:
Income before cumulative effect of accounting change..................... $ 1.00 $ 0.80 $ 0.63
Cumulative effect of accounting change:
Adoption of SFAS 109................................................... .05 0 0
----------- ----------- -----------
Net income............................................................... $ 1.05 $ 0.80 $ 0.63
----------- ----------- -----------
----------- ----------- -----------
Weighted average shares outstanding (in thousands)......................... 7,549 7,984 8,111
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
LAURENTIAN CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1993 1992 1991
----------- --------- ---------
<S> <C> <C> <C>
Common Stock
Balance at beginning and end of year........................................ $ 406 $ 406 $ 406
----------- --------- ---------
Capital in Excess of Par Value
Balance at beginning of year................................................ 59,010 58,892 58,892
Elimination of fractional shares resulting from
reverse stock split........................................................ 0 0 (8)
Conversion of preferred stock to common stock............................... 0 0 8
Redemption of preferred stock............................................... 61 118 0
----------- --------- ---------
Balance at end of year...................................................... 59,071 59,010 58,892
----------- --------- ---------
Net Unrealized Gains (Losses)
Balance at beginning of year................................................ (198) (653) (1,789)
Change during the year...................................................... 1,451 455 1,136
----------- --------- ---------
Balance at end of year...................................................... 1,253 (198) (653)
----------- --------- ---------
Treasury Stock
Balance at beginning of year................................................ (2,837) 0 0
Treasury shares purchased................................................... 0 (2,877) 0
Shares issued from treasury................................................. 19 40 0
----------- --------- ---------
Balance at end of year...................................................... (2,818) (2,837) 0
----------- --------- ---------
Retained Earnings
Balance at beginning of year................................................ 35,649 29,273 24,132
Net income.................................................................. 8,194 6,714 5,446
Dividends on preferred stock................................................ (271) (338) (305)
----------- --------- ---------
Balance at end of year...................................................... 43,572 35,649 29,273
----------- --------- ---------
Total Stockholders' Equity.................................................... $ 101,484 $ 92,030 $ 87,918
----------- --------- ---------
----------- --------- ---------
</TABLE>
See notes to consolidated financial statements
F-5
<PAGE>
LAURENTIAN CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Cash flow from operations:
Net income............................................................ $ 8,194 $ 6,714 $ 5,446
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of adoption of SFAS 109........................... (400) 0 0
Increase in policy liabilities and accruals, policyholders' funds
and income taxes................................................... 15,832 10,557 23,598
Decrease (increase) in accrued investment income and accounts and
notes receivable................................................... 270 (188) 3,874
Increase (decrease) in other liabilities............................ 1,334 (4,252) (1,084)
Amortization of deferred policy acquisition costs................... 13,226 13,489 12,928
Policy acquisition costs deferred................................... (10,996) (9,974) (9,983)
Depreciation expense................................................ 1,535 1,324 1,051
Amortization of goodwill............................................ 290 268 339
Realized investment (gains)......................................... (2,773) (53) (3,696)
Other, net.......................................................... (3,172) (1,633) (2,339)
------------ ------------ ------------
Net cash provided by operating activities......................... 23,340 16,252 30,134
------------ ------------ ------------
Cash flow from investing activities:
Sale of investments................................................... 15,884 45,324 43,130
Maturity or repayment of investments.................................. 195,081 141,805 39,214
Disposal of property and equipment.................................... 37 36 169
Purchase of investments............................................... (257,214) (184,399) (102,356)
Purchase of property and equipment.................................... (1,477) (2,753) (1,550)
Short-term investments, net........................................... 12,993 (12,996) (766)
Other, net............................................................ 65 2 341
------------ ------------ ------------
Net cash used in investing activities............................. (34,631) (12,981) (21,818)
------------ ------------ ------------
Cash flow from financing activities:
Proceeds from borrowing............................................... 368 257 878
Repayment of debt..................................................... 0 (52) (6)
Net (purchases) sales of treasury shares, at cost..................... 19 (2,837) 0
Dividends paid on preferred stock..................................... (271) (303) (297)
Redemption of preferred stock......................................... (395) (351) 0
Other, net............................................................ 0 0 (9)
------------ ------------ ------------
Net cash provided by (used in) financing activities............... (279) (3,286) 566
------------ ------------ ------------
Net increase (decrease) in cash......................................... (11,570) (15) 8,882
Cash at beginning of year............................................... 20,292 20,307 11,425
------------ ------------ ------------
Cash at end of year..................................................... $ 8,722 $ 20,292 $ 20,307
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND PRINCIPLES OF CONSOLIDATION -- The consolidated financial
statements include, after intercompany eliminations, Laurentian Capital
Corporation (individually or collectively with its subsidiaries, the Company),
and its wholly-owned subsidiaries, principally Loyal American Life Insurance
Company (Loyal), and Prairie States Life Insurance Company (Prairie). Prairie
owns Rushmore National Life Insurance Company (Rushmore).
The Imperial Life Assurance Company of Canada (Imperial) directly owned
approximately 72% of the Company, and Imperial's parent, Laurentian Financial,
Inc. directly owned approximately 10% of the Company as of December 31, 1993.
Laurentian Financial, Inc. is a wholly-owned subsidiary of The Laurentian Group
Corporation (Group). Effective January 1, 1994, Group became a subsidiary of
Desjardins Laurentian Financial Corporation (Desjardins Laurentian). The
ultimate owner of Desjardins Laurentian is La Confederation des caisses
popularies et d'economie Desjardins du Quebec.
BASIS OF PRESENTATION -- The accompanying financial statements have been
prepared on the basis of generally accepted accounting principles (GAAP), which
vary from accounting principles used by its subsidiaries to prepare financial
statements filed with state insurance departments.
INVESTMENTS -- Investments are reported as follows:
- Fixed maturities (bonds, notes and redeemable preferred stocks)
-- at cost, adjusted for amortization of premium or discount
and other than temporary market value declines. The Company has
the ability and intent to hold such investments to maturity and
accordingly, reports these investments at amortized cost.
- Equity securities (common and nonredeemable preferred stocks)
-- at current market value, net of other than temporary
impairments in market value.
- Mortgage loans on real estate -- at unpaid balances, net of
valuation allowances and adjusted for amortization of premium
or discount.
- Investment real estate -- at cost, net of valuation allowances
and less allowances for depreciation computed on the
straight-line method.
- Policy loans -- at unpaid balances.
- Short-term investments -- at cost, which approximates market.
Realized gains and losses on sales of investments are recognized in net
income. The cost of investments sold is determined on a specific identification
basis. Temporary market value changes in equity securities are reflected as
unrealized gains or losses directly in stockholders' equity net of related
income taxes and, accordingly, have no effect on net income. The rate of
amortization of discount or premiums on mortgage-backed securities is adjusted
to reflect the current rate of prepayments on the related securities. The
amortization adjustments are recorded as net investment income in the period
that the rate of prepayment changed.
DEFERRED POLICY ACQUISITION COSTS -- The costs of acquiring new business,
which vary with and are directly related to the production of new business, have
been deferred to the extent that such costs are deemed recoverable. Such costs
include commissions, certain costs of policy issuance and underwriting, and
certain variable agency expenses.
F-7
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Costs deferred related to traditional life and health insurance are
amortized over the premium paying period of the related policies, in proportion
to the ratio of annual premium revenues to total anticipated premium revenues.
Such anticipated premium revenues were estimated using the same assumptions used
for computing liabilities for future policy benefits.
Costs deferred related to universal life insurance and deferred annuity
products are being amortized over the lives of the policies, in relation to the
present value of estimated gross profits.
Included in deferred policy acquisition costs are amounts representing the
present value of future profits on business in force of acquired insurance
subsidiaries, which represents the portion of the cost to acquire such
subsidiaries that is allocated to the value of the right to receive future cash
flows from insurance contracts existing at the dates of acquisition. These
amounts are amortized with interest over the estimated remaining life of the
acquired policies.
COSTS IN EXCESS OF NET ASSETS OF BUSINESS ACQUIRED -- The costs in excess of
net assets of business acquired are being amortized to expense on a
straight-line basis over periods ranging from twenty-five to forty years.
PROPERTY AND EQUIPMENT -- Property and equipment is reported at cost.
Depreciation is charged to operations over the estimated useful lives of the
assets using the straight-line method.
CASH -- For purposes of reporting cash flows, cash includes all cash and
short-term deposits available on demand, including certificates of deposit with
an initial term to maturity of less than three months.
POLICY LIABILITIES -- Liabilities for future policy benefits of traditional
ordinary life policies are computed using a net level premium method including
assumptions as to investment yields, mortality, withdrawals, and other
assumptions commensurate with the Company's past experience, modified as
necessary to reflect anticipated trends, including possible unfavorable
deviations. The liability for future policy benefits for universal life policies
is equal to the accumulated fund balance including interest credits at rates
declared by the Company. Interest rate assumptions range from 4.25% to 10%.
Assumed mortality and withdrawals are based on various industry published tables
modified as appropriate for the Company's actual experience. Morbidity and
withdrawals are based on actual and projected experience.
Life insurance in force, net of reinsurance, as of December 31, 1993 and
1992 was $2.6 billion and $2.9 billion, respectively.
Liabilities for other policy claims and benefits payable include provisions
for reported claims and an estimate based on ratios developed through prior
experience for claims incurred but not reported.
ASSETS HELD IN AND LIABILITIES RELATED TO SEPARATE ACCOUNTS -- Investment
annuity deposits and related liabilities represent deposits maintained by
several banks under a previously offered tax deferred annuity program. The
Company receives an annual fee from each bank for sponsoring the program and
depositors may elect to purchase an annuity from the Company at which time funds
are transferred to the Company.
F-8
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PREMIUM REVENUE AND RELATED EXPENSES -- For traditional life and accident
and health products, premiums are recognized as revenue when legally collectible
from policyholders. Policy reserves have been established in a manner which
allocates policy benefits and expenses on a basis consistent with the
recognition of related premiums and generally results in the recognition of
profits over the premium-paying period of the policies.
For interest-sensitive life and universal life products, premiums are
recorded in a policyholder account which is classified as a liability. Revenue
is recognized as amounts are assessed against the policyholder account for
mortality coverage and contract expenses. Surrender benefits reduce the account
value. Death benefits are expensed when incurred, net of the account value.
For investment type contracts, principally deferred annuity contracts,
premiums are treated as policyholder deposits and are recorded as liabilities.
Benefits paid reduce the policyholder liability. Revenues for investment
products consist of investment income, with profits recognized as investment
income earned in excess of the amount credited to the contracts. Reserves for
these contracts represent the premiums received, plus accumulated interest.
Contract benefits that are charged to expense include benefit claims incurred in
excess of related contract values, and interest credited to contract values.
INCOME TAXES -- In 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the differences between the financial statement
and income tax bases of assets and liabilities using enacted tax rates in effect
for the year in which the differences are expected to reverse. Prior years'
financial statements have not been restated to reflect the provisions of SFAS
109. The adoption of SFAS 109 resulted in a cumulative benefit of $400,000 or
$0.05 per common share.
REINSURANCE -- In 1993, the Company adopted Statement of Financial
Accounting Standards No. 113, "Accounting and Reporting for Reinsurance of
Short-Duration and Long-Duration Contracts" (SFAS 113). In accordance with SFAS
113, insurance liabilities are reported before the effects of reinsurance.
Reinsurance receivables, including amounts related to insurance liabilities, are
reported as assets. Estimated reinsurance receivables are recognized in a manner
consistent with the liabilities related to the underlying reinsured contracts.
Except for financial statement presentation, SFAS 113 had no impact on the
Company's results.
RECENTLY ISSUED ACCOUNTING STANDARDS -- In May 1993, the Financial
Accounting Standards Board (FASB), issued Statement of Financial Accounting
Standard No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS 115). This statement addresses the accounting and reporting on
the ownership of investment securities. The statement specifically applies to
the accounting for fixed income securities, which have historically been
reported at amortized cost. SFAS 115 allows for the continued use of amortized
cost reporting only for those securities that the Company has the positive
intent and ability to hold to maturity. Any held securities not qualifying for
amortized cost treatment must be reported at fair value. SFAS 115 is required to
be adopted on January 1, 1994 and the effects of this statement on the Company
have not been quantified.
RECLASSIFICATIONS -- Certain reclassifications have been made in the
previously reported financial statements to make the prior year amounts
comparable to those of the current year.
F-9
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. INVESTMENTS
Major categories of net investment income for the years ended December 31
are summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Fixed maturities..................................................... $ 39,243 $ 37,718 $ 33,740
Equity securities.................................................... 485 656 933
Mortgage loans on real estate........................................ 3,331 4,721 5,249
Policy loans......................................................... 3,082 3,301 3,197
Short-term investments............................................... 1,053 1,094 1,571
Investment real estate............................................... 1,820 2,215 2,338
Other investments.................................................... 583 823 1,804
--------- --------- ---------
49,597 50,528 48,832
Less investment expenses............................................. 2,777 3,601 3,525
--------- --------- ---------
Net investment income................................................ $ 46,820 $ 46,927 $ 45,307
--------- --------- ---------
--------- --------- ---------
</TABLE>
Realized investment gains (losses) for the years ended December 31 are
summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Fixed maturities..................................................... $ 3,306 $ 2,799 $ 1,954
Equity securities.................................................... 310 658 807
Mortgage loans on real estate........................................ (205) (311) (26)
Investment real estate............................................... (671) (3,093) 1,131
Other investments.................................................... 33 0 (170)
--------- --------- ---------
Total realized investment gains...................................... $ 2,773 $ 53 $ 3,696
--------- --------- ---------
--------- --------- ---------
</TABLE>
Included in realized investment gains for the years ended December 31 are
adjustments for other than temporary impairments to the carrying value of
investments, as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Fixed maturities..................................................... $ (17) $ (199) $ (319)
Equity securities.................................................... (100) (167) (356)
Mortgage loans on real estate........................................ (235) (350) (150)
Investment real estate............................................... 0 (3,937) (57)
--------- --------- ---------
Total impairments.................................................... $ (352) $ (4,653) $ (882)
--------- --------- ---------
--------- --------- ---------
</TABLE>
The increase (decrease) in unrealized gains (losses) on fixed maturities and
equity securities for the years ended December 31 is summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Fixed maturities (not tax effected).................................. $ 2,020 $ (6,792) $ 18,018
Equity securities (net of applicable deferred taxes)................. $ 1,451 $ 455 $ 1,136
</TABLE>
Gross unrealized gains pertaining to equity securities were $2.4 million and
$0.6 million and gross unrealized losses were $0.5 million and $0.8 million,
before tax effect, at December 31, 1993 and 1992, respectively.
F-10
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. INVESTMENTS (CONTINUED)
Certain investments, principally fixed maturities and mortgage loans on
which the accrual of interest has been discontinued, amounted to $1.3 million
and $2.2 million at December 31, 1993 and 1992, respectively.
Certain investments totalling $324.9 million and $313.1 million, principally
fixed maturities and mortgages, were on deposit with insurance departments of
various states for the protection of policyholders at December 31, 1993 and
1992, respectively.
Of the fixed maturity investments, $8.8 million at amortized cost, less
other than temporary impairments, were rated as below investment grade as of
December 31, 1993. These investments have an associated market value of $9.1
million. As of December 31, 1992, $12.7 million at amortized cost, with an
associated market value of $12.7 million were rated as below investment grade.
Most of these securities have been evaluated by the National Association of
Insurance Commissioners and found to be suitable for reporting at amortized
cost. The Company does not expect these investment holdings to result in a
material adverse effect on either the financial condition or results of
operations. The Company's investment strategy is to hold fixed income
instruments to maturity and to recognize other than temporary impairments on
those investments where reduction in amounts to be received at maturity is
likely.
The amortized cost and estimated market values of investments in debt
securities are as follows as of December 31, 1993:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S.
government or other U.S. government corporations or
agencies............................................ $ 135,816 $ 2,975 $ 1,038 $ 137,753
Obligations of states and political subdivisions..... 4,138 57 32 4,163
Debt securities issued by foreign governments........ 1,027 42 0 1,069
Corporate securities................................. 56,690 4,618 201 61,107
Private mortgage-backed securities................... 260,997 4,916 1,508 264,405
----------- ----------- ----------- -----------
Total................................................ $ 458,668 $ 12,608 $ 2,779 $ 468,497
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Included in U.S. government obligations are $128.5 million of
mortgage-backed securities, of which $91.0 million carry a U.S. government or
quasi-government guarantee. Included in obligations of states and political
subdivisions are $3.3 million of mortgage-backed securities which carry
guarantees of various states.
F-11
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. INVESTMENTS (CONTINUED)
The amortized cost and estimated market value of debt securities as of
December 31, 1993, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED MARKET
COST VALUE
----------- -----------
<S> <C> <C>
Due in one year or less....................................................... $ 5,248 $ 5,348
Due after one year through five years......................................... 32,288 34,589
Due after five years through ten years........................................ 18,347 19,758
Due after ten years........................................................... 9,938 10,864
----------- -----------
65,821 70,559
Mortgage-backed securities.................................................... 392,847 397,938
----------- -----------
$ 458,668 $ 468,497
----------- -----------
----------- -----------
</TABLE>
The amortized cost and estimated market values of investments in debt
securities are as follows as of December 31, 1992:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S.
government or other U.S. government corporations or
agencies............................................ $ 133,350 $ 1,571 $ 604 $ 134,317
Obligations of states and political subdivisions..... 1,956 116 0 2,072
Debt securities issued by foreign governments........ 3,289 157 0 3,446
Corporate securities................................. 92,660 6,660 904 98,416
Private mortgage-backed securities................... 167,757 1,663 850 168,570
----------- ----------- ----------- -----------
Total................................................ $ 399,012 $ 10,167 $ 2,358 $ 406,821
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Included in U.S. government obligations as of December 31, 1992 are $126.3
million of mortgage-backed securities, of which $107.8 million carry a U.S.
government or quasi-government guarantee.
Proceeds from sales, maturities and repayments of investments in fixed
maturities for 1993, 1992 and 1991 totalled $128.5 million, $166.2 million, and
$65.4 million, respectively. Related gross investment gains and losses for the
period were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Gross gains.................................... $ 3,710 $ 4,286 $ 2,804
Gross losses................................... (387) (1,288) (531)
</TABLE>
F-12
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
3. OTHER FINANCIAL INSTRUMENTS
The following estimated fair value disclosures are limited to the reasonable
estimates of the fair value of the Company's financial instruments, whether or
not recognized in the balance sheet. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot necessarily be
substantiated by comparison to independent markets and, in many cases, could not
be realized in immediate settlement of the instrument. The disclosures exclude
certain financial and all nonfinancial instruments. Therefore, presentation of
the estimated fair value of assets based on the above methodology without a
corresponding revaluation of liabilities associated with insurance contracts can
be misinterpreted.
POLICY LOANS
Policy loans are issued with interest rates that range from 3 1/2% to 8%,
depending on the terms of the insurance policy. Future cash flows of policy
loans are uncertain and difficult to predict. As a result, management deems it
impractical to calculate the fair value of policy loans.
MORTGAGE LOANS AND REAL ESTATE
Mortgage loans are valued at unpaid balances, net of valuation allowances
and adjusted for amortization of discount or premium. The Company has not been
active in mortgage lending for some time, and the carrying value of the loan
portfolio has decreased from $73.0 million as of December 31, 1986 to the
current balance of $29.4 million. Approximately 75% of the portfolio consists of
commercial loans. After comparing the yield and maturity make-up of the
portfolio with current offerings of mortgage-backed securities (both residential
and commercial), the Company believes that the fair value of its mortgage loans
approximates its current carrying value. Real estate is valued at cost less
accumulated depreciation. Appraisals are obtained on a periodic basis and
adjustments are made when necessary to ensure carrying values are not in excess
of the underlying market values of the property.
4. DEBT
Debt as of December 31 is summarized as follows:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Amounts due under Revolving Underwriting Facility....... $ 54,822 $ 54,454
--------- ---------
--------- ---------
</TABLE>
Repayment of the outstanding indebtedness under the Revolving Underwriting
Facility (RUF) is due on April 25, 1994. The Company has been actively pursuing
refinancing of its presently outstanding debt obligations. While there can be no
assurances that the Company will be able to accomplish a refinancing of its
presently outstanding debt, management believes that the Company has the ability
to execute a plan which will accomplish the desired objectives before the RUF
becomes due.
The Company restructured its finances through the implementation of a five
year RUF for maximum unsecured borrowings of $55 million on April 25, 1989.
Pursuant to the terms of the RUF, the Company pays interest at a variable rate,
with a maximum rate equal to 0.30% above the London Interbank Offered Rate
(LIBOR). On March 6, 1991, the Company entered into an interest rate swap
agreement which fixes the LIBOR component of the RUF at 7.94% beginning April
29, 1991 and continuing through April 25, 1994. There are covenants relating to
the Company's activities and
F-13
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
4. DEBT (CONTINUED)
financial condition. With respect to the financial condition covenants, the
Company must maintain a minimum net worth, as defined, and not permit a ratio of
outstanding indebtedness, as defined, to net worth to be greater than 1.0 to
1.0.
Interest expense included in the consolidated statements of operations was
$4.9 million, $5.0 million, and $5.0 million for 1993, 1992 and 1991,
respectively.
Cash paid for interest was $4.9 million, $5.3 million, and $5.2 million for
1993, 1992 and 1991, respectively.
5. FEDERAL INCOME TAXES
Deferred tax assets and liabilities computed at the statutory rate related
to temporary differences as of December 31, 1993 are as follows:
<TABLE>
<S> <C>
Deferred Tax Assets:
Fixed maturities....................................................... $ 340
Net operating loss and credit carryforwards............................ 12,363
Value of business in force............................................. 2,966
Policyholder liabilities............................................... 1,056
Other assets and liabilities........................................... 3,423
---------
Total deferred tax assets................................................ 20,148
Valuation allowance.................................................... (8,735)
---------
Deferred tax assets -- net of valuation allowance........................ 11,413
---------
Deferred Tax Liabilities:
Deferred policy acquisition costs...................................... (19,833)
Equity securities...................................................... (1,008)
Mortgage loans and real estate......................................... (1,850)
Property, plant and equipment.......................................... (549)
---------
Deferred tax liabilities................................................. (23,240)
---------
Total deferred taxes -- net.............................................. $ (11,827)
---------
---------
</TABLE>
A valuation allowance of $8.7 million has been established as of December
31, 1993 for certain capital and operating loss carryforwards due to the
uncertainty of their eventual realization. The valuation allowance was reduced
by $588,000 during 1993 for the realization of benefits associated with the sale
of certain real estate assets. During 1994 and in later years the valuation
allowance against deferred tax assets will be continually evaluated and
adjustments will be reflected in the Statement of Operations as an increase or
decrease in income tax expense.
For 1992 and 1991, under previously enacted GAAP, the total provision for
federal income tax differed from amounts currently payable due to providing
deferred taxes on certain items reported for financial statement purposes in
periods which differed from those in which they were reported for tax purposes.
F-14
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
5. FEDERAL INCOME TAXES (CONTINUED)
Details of the deferred tax provision for the years ended December 31 are as
follows:
<TABLE>
<CAPTION>
1992 1991
--------- ---------
<S> <C> <C>
Deferred policy acquisition costs.................................................. $ (1,301) $ 223
Benefit and other policy liability changes......................................... 4,403 2,103
--------- ---------
$ 3,102 $ 2,326
--------- ---------
--------- ---------
</TABLE>
The Company's effective income tax rate varied from the statutory federal
income tax rate for the years ended December 31 as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Statutory federal income tax rate applied to pre-tax income.............. $ 3,869 $ 3,460 $ 2,796
Dividends received and tax-exempt interest deduction..................... (36) (44) (125)
Reduction in valuation allowance......................................... (588) 0 0
Operating losses for which no benefit has been recognized................ 0 739 812
Permanent differences related to sales of subsidiaries................... 194 0 0
Net effects of purchase accounting adjustments........................... 0 (888) (728)
Other items, net......................................................... 145 196 22
--------- --------- ---------
Income tax expense on income............................................. $ 3,584 $ 3,463 $ 2,777
--------- --------- ---------
--------- --------- ---------
</TABLE>
Under previous life insurance company tax laws, a portion of the Company's
gain from operations which was not subject to current income taxation was
accumulated for tax purposes in memoranda accounts designated as the
Policyholders' Surplus Accounts. The aggregate accumulation in these accounts at
December 31, 1993 was approximately $9.6 million. The unrecognized deferred tax
liability related to this temporary difference is $3.3 million. Should the
accumulation in the Policyholders' Surplus Accounts exceed certain stated
maximums, or if certain other events occur, all or a portion of the
Policyholders' Surplus Accounts may be subject to federal income taxes at rates
then in effect. Deferred taxes have not been established for such amounts since
the Company does not anticipate paying taxes on the Policyholders' Surplus
Accounts.
For federal income tax return purposes, the Company has total estimated
unused tax loss carryforwards as of December 31, 1993 as follows:
<TABLE>
<CAPTION>
GENERATED AMOUNT EXPIRATION
- ------------------------------------------------ --------- ----------------------
<S> <C> <C>
Pre-1984........................................ $ 164 1994 through 1998
1984............................................ 41 1999
1985............................................ 0 2000
1986............................................ 5,694 2001
1987............................................ 10,768 2002
1988............................................ 4,855 2003
1989............................................ 10,801 2004
1990............................................ 3,751 2005
1991............................................ 3,816 2006
1992............................................ 2,347 2007
1993............................................ 310 2008
---------
$ 42,547
---------
---------
</TABLE>
F-15
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
5. FEDERAL INCOME TAXES (CONTINUED)
For federal income tax purposes, the Company has total estimated investment
tax credit carryforwards of $0.2 million which expire in years 1997 through
1999. The Company has a total estimated alternative minimum tax (AMT)
carryforwards of $1.0 million which can be utilized in future tax years to
reduce current taxes payable. Utilization of this AMT credit is limited to the
excess, if any, of the Company's regular tax liability over its AMT liability.
However, this credit can be carried forward indefinitely into future tax years.
Included in the tax loss and credit carryforwards are certain amounts that may
only be utilized by the company that generated the loss.
The Company recognized tax benefits of $2.7 million and $2.2 million, in
1992 and 1991, respectively, associated with certain tax loss carryforwards
related to previous acquisitions. For 1992 and 1991, under the then enacted GAAP
pronouncements, these benefits were recorded as an adjustment to the purchase
price allocation and were reflected as decreases in Deferred Income Taxes, Costs
In Excess of Net Assets Acquired, and Deferred Policy Acquisition Costs in the
consolidated balance sheets. For 1993, under SFAS 109, deferred tax assets have
been established for the benefits arising from net loss and credit carryforwards
of the Company and its subsidiaries. Future utilization of the net loss and
credit carryforwards of the life insurance companies will not affect the
Company's effective tax rate in those years because the full tax benefit for
these items is reflected in the current year's financial statements. A portion
of the benefit realized from the future utilization of the net losses of the
non-life companies will affect the Company's effective tax rates in those years
because a valuation allowance has been established against some of these
deferred tax assets.
Cash paid for federal income taxes, principally alternative minimum taxes,
was $0.3 million, $0.4 million, and $0.3 million for 1993, 1992 and 1991,
respectively.
6. REDEEMABLE PREFERRED STOCK
The Company has authorized 5 million shares of preferred stock of which
approximately 58,000 shares were issued on July 7, 1987. Each share of Series A
Redeemable Preferred Stock is entitled to receive cumulative annual dividends of
$6 per share. Each share of the Series A Redeemable Preferred Stock is
convertible into 3.75 shares of the Company's common stock until July 7, 1994,
and 2.75 shares from July 8, 1994 until July 7, 1997, subject to adjustment in
certain events. The stock has a liquidation preference of $100 per share plus
accrued dividends and is subject to mandatory redemption provisions which
provide that no more than 80% of the original issue will be outstanding at the
end of the sixth year after the issuance, with further reductions of 20% of the
original issue being required in each of the following four years. During 1993
and 1992, the Company completed tender offers wherein 4,534 and 4,697 shares,
respectively, of the redeemable preferred stock were purchased for $87 and $75
per share, respectively, and subsequently retired. The mandatory redemption
provision for 1994 has not been satisfied as a result of the 1993 tender offer.
In order to satisfy the 1994 mandatory redemption provision, the Company must
redeem 6,868 additional shares.
The remaining 4.9 million unissued shares of preferred stock may be divided
into series with rights and preferences established at the discretion of the
Board of Directors.
7. STOCKHOLDERS' EQUITY AND RESTRICTIONS
Dividend payments to the Company from its insurance subsidiaries are
restricted by state insurance law as to the amount that may be paid without
prior notice or approval by insurance regulatory authorities. The maximum
dividend distribution which can be made by the Company's insurance subsidiaries
during 1994 without prior notice or approval is $7.0 million. Dividend payments
of $4.3 million, $2.1 million, and $4.0 million were made to the Company by its
insurance subsidiaries during the years ended December 31, 1993, 1992 and 1991,
respectively.
F-16
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
7. STOCKHOLDERS' EQUITY AND RESTRICTIONS (CONTINUED)
In connection with the 1989 acquisition of Rushmore, the policyholders of
Rushmore are entitled to 90% of the statutory accounting earnings arising from
the existing participating business during the ten years after the acquisition.
In addition, the statutory surplus which was in existence at the date of
acquisition has been distributed to the policyholders.
Approximately 17% of the Company's insurance in force is related to
participating insurance policies. A portion of the Company's earnings is
allocated to these policies based on excess interest earnings, mortality savings
and premium loading experience. Premium income and dividends allocated to
participating policies during the past three years were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Premium income............................................. $ 12,924 $ 15,131 $ 16,877
Dividends allocated........................................ 2,540 3,894 3,695
</TABLE>
8. STOCK OPTION AND OTHER INCENTIVE PLANS
STOCK OPTION PLAN
Under the terms of the Company's Amended and Restated Executive Stock Option
Plan (Plan), options to purchase up to the greater of 800,000 shares or 10.3% of
the Company's outstanding common stock may be granted to officers and key
employees. Options are granted at not less than market value on the date of
grant and are exercisable during the term fixed by the Company, but not earlier
than six months, nor later than ten years after the date of the grant.
Transactions for 1993, 1992, and 1991 are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
(AMOUNTS IN THOUSANDS EXCEPT
DOLLAR AMOUNTS)
<S> <C> <C> <C>
Options outstanding, January 1................................. 351 266 279
Granted........................................................ 190 139 98
Exercised...................................................... 37 8 0
Cancelled...................................................... 49 46 111
--------- --------- ---------
Options outstanding, December 31............................... 455 351 266
--------- --------- ---------
--------- --------- ---------
Option price range at December 31.............................. $2.125 $2.125 $2.125
to to to
$6.875 $ 5.25 $ 5.25
Options exercisable at December 31 236 129 118
Options available for grant at December 31 345 449 302
</TABLE>
The Plan allows the Company to grant up to 800,000 Rights to officers and
key employees. Rights entitle the grantee to receive the appreciation in value
of the shares (the difference between market price of a common share at the time
of exercise of the Rights and the base price) in cash. The Rights are
exercisable during the term fixed by the Company, but in no case sooner than six
months or later than ten years after the date of grant.
No Rights were exercised or cancelled during 1993. There are currently
349,044 rights granted at exercise prices ranging from $2.125 to $5.50 per
share. Compensation expense recorded in 1993, 1992 and 1991 with respect to
these Rights was approximately $720,000, $966,000, and $262,000, respectively.
F-17
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
8. STOCK OPTION AND OTHER INCENTIVE PLANS (CONTINUED)
DEFERRED AND INCENTIVE COMPENSATION PLANS
The Company has various incentive and deferred compensation plans
administered by the Human Resources Committee of the Board of Directors. In
1993, 1992 and 1991, the Company recognized associated expenses of approximately
$698,000, $532,000, and $382,000, respectively.
9. RELATED PARTY MATTERS
The Company paid or accrued approximately $209,000, $214,000, and $431,000,
to Group and its affiliates for various services in 1993, 1992, and 1991,
respectively.
During the fourth quarter of 1991, the Company obtained regulatory approval
for the acquisition of a block of insurance policies from Imperial. The effect
of this acquisition increased total revenues by $1.2 million.
10. EMPLOYEE BENEFIT PLANS
The Company maintains a 401(k) profit sharing savings plan for employees who
meet certain eligibility requirements. This plan provides for a Company matching
contribution of 25-50% of eligible employee contributions up to 6% of salary.
Supplemental Company contributions are provided based on consolidated earnings.
The Company contributed approximately $148,000, $98,000 and $58,000 to the
401(k) profit sharing savings plan during 1993, 1992 and 1991, respectively, for
employee matching. Effective January 1, 1993, the Company instituted a profit
sharing element which provides for contributions by the Company ranging from
2-6% of the annual salary of eligible employees. An additional $425,000 was
accrued in 1993 for the plan's profit sharing element.
In January 1993, the Company filed a standard termination notice with the
Pension Benefit Guaranty Corporation (PBGC) for the purpose of terminating the
Company's former defined benefit pension plan. The Company ceased to accrue
benefits for service cost as of December 31, 1992, and all participants in the
plan became fully vested at that date. On March 22, 1993 a favorable
determination was issued by the Internal Revenue Service on the plan
termination. The Company then distributed plan assets to vested participants in
accordance with PBGC established formulas. The Company made funding
contributions of $1.1 million to satisfy all plan obligations. Distribution was
in the form of either a rollover to the Company 401(k) profit sharing savings
plan, a purchase of a non-participating annuity contract, or a lump sum cash
payment.
Net pension cost associated with the former defined benefit pension plan for
1992 and 1991 included the following components:
<TABLE>
<CAPTION>
1992 1991
------ ------
<S> <C> <C>
Service cost-benefits earned during the year................ $ 387 $ 401
Interest cost on projected benefit obligation............... 465 437
Actual return on plan assets................................ (350) (672)
Net amortization and deferral............................... (86) 349
------ ------
Net pension cost............................................ $ 416 $ 515
------ ------
------ ------
</TABLE>
The pension cost for 1992 includes a charge of $182,000 relating to a
partial settlement of the plan's liabilities resulting from the purchase of
certain annuities, and a credit of $262,000 relating to the cessation of service
cost accruals as of December 31, 1992 as a result of the Company's decision to
terminate the plan.
F-18
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
10. EMPLOYEE BENEFIT PLANS (CONTINUED)
Assumptions used in determining pension cost for the former defined benefit
plan in 1992 and 1991 were as follows:
<TABLE>
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Weighted average discount rate.............................. 8% 8%
Rates of increase in compensation level..................... 6% 6%
Expected long-term rate of return on assets................. 8% 8%
</TABLE>
The funded status of the pension plan as of December 31, 1992 was as
follows:
<TABLE>
<S> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation........................................... $ 3,699
---------
---------
Projected benefit obligation for service rendered to date.................. $ 3,699
Plan assets at fair value.................................................. 2,671
---------
Projected benefit obligation in excess of plan assets...................... 1,028
Unrecognized net (gain) and unrecognized prior service cost................ 0
Unrecognized net transition obligation..................................... 0
---------
Accrued pension costs...................................................... $ 1,028
---------
---------
</TABLE>
11. REINSURANCE
The Company is contingently liable with respect to reinsurance ceded in that
the liability for such reinsurance would become that of the Company upon the
failure of any reinsurer to meet its obligations under a particular reinsurance
agreement. The maximum liability which the Company retains on any one life is
$125,000 under ordinary and group policies.
The Company had reinsured approximately $0.8 billion of life insurance in
force as of December 31, 1993 and 1992. Total premium income ceded during the
years ended December 31, 1993, 1992, and 1991 was $6.8 million, $6.4 million,
and $12.9 million, respectively. Reinsurance recoveries for the years ended
December 31, 1993, 1992 and 1991 were $6.8 million, $5.7 million and $10.7
million, respectively.
Included in reinsurance receivables are $1.7 million and $2.6 million
representing amounts recoverable for claims ceded to reinsurers as of December
31, 1993 and 1992, respectively. Included in other liabilities are $0.4 million
and $1.0 million representing amounts payable for premiums ceded to reinsurers
as of December 31, 1993 and 1992, respectively.
As of December 31, 1993, reinsurance receivables with carrying values of
$25.1 million were associated with two reinsurers.
12. COMMITMENTS AND CONTINGENCIES
LEASES
Other liabilities include a capitalized lease obligation associated with the
financing and leasing of Prairie's home office. In addition, the Company leases
office space, data processing equipment and certain other equipment under
operating leases expiring on various dates during 1994.
F-19
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Aggregate maturities of the capitalized lease obligation and future minimum
aggregate rental payments required under non-cancelable operating leases as of
December 31, 1993, are as follows:
<TABLE>
<CAPTION>
CAPITALIZED OPERATING
LEASE LEASE
YEAR ENDING DECEMBER 31, OBLIGATION OBLIGATIONS
- ------------------------------------------------------------------ ------------- -------------
<S> <C> <C>
1994.............................................................. $ 314 $ 566
1995.............................................................. 314 0
1996.............................................................. 201 0
1997.............................................................. 0 0
1998.............................................................. 0 0
----- -----
829 $ 566
-----
-----
Less amount representing interest................................. 88
-----
$ 741
-----
-----
</TABLE>
Rental expense for operating leases was approximately $0.7 million in 1993,
$1.7 million in 1992, and $1.6 million in 1991.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to reduce its own exposure to fluctuations in
interest rates. As of December 31, 1993, the Company was a party to a five year
Revolving Underwriting Facility (RUF) for maximum unsecured borrowings of $55
million maturing in April of 1994. Pursuant to the RUF, the Company pays
interest at a variable rate, with a maximum rate equal to 0.30% above the London
Interbank Offered Rate (LIBOR). On March 6, 1991, the Company entered into an
Interest Rate Swap Agreement (SWAP AGREEMENT) to reduce the impact of changes in
interest rates on its floating debt. The SWAP AGREEMENT is with a commercial
bank for a notional amount of $55 million. This agreement has effectively
changed the Company's interest rate exposure on the RUF from a floating LIBOR
rate to a fixed LIBOR rate of 7.94%. The SWAP AGREEMENT matures at the time of
the RUF maturity. The Company is exposed to interest rate risk in the event of
nonperformance by the commercial bank.
INVESTMENT PORTFOLIO CREDIT RISK
BONDS:
The Company's bond investment portfolio is predominately comprised of
investment grade securities. At December 31, 1993, approximately $8.8 million in
debt securities (1.9% of debt securities) are considered "below investment
grade". Securities are classified as "below investment grade" by utilizing
rating criteria employed by independent bond rating agencies.
The Company has approximately 87% of its $459 million fixed maturity
portfolio invested in assets of either U.S. government agency pass-through
mortgages (GNMA, FNMA, or FHLMC) or "private-label" mortgage-backed securities
as of December 31, 1993.
MORTGAGE LOANS:
Mortgage loans are primarily related to underlying real property investments
in office and apartment buildings and retail/commercial and industrial
facilities.
F-20
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
As of December 31, 1993, delinquent mortgage loans (i.e., loans where
payments on principal and/ or interest are over 60 days past due) amounted to
$1.3 million, or 4.4% of the loan portfolio. The Company had loans outstanding
in the states of Colorado and Florida, with principal balances in the aggregate
exceeding $4 million.
LITIGATION
The Company is involved in certain litigation arising in the ordinary course
of business. Management does not anticipate any judgments against the Company in
excess of liabilities already established which would have a material impact,
individually or in the aggregate, on the financial position or results of
operations of the Company.
13. STATUTORY FINANCIAL STATEMENTS
Insurance subsidiaries of the Company are required to file statutory
financial statements with state insurance regulatory authorities. Accounting
principles used to prepare these financial statements differ from GAAP.
Consolidated net income and shareholders' equity on a statutory basis for the
insurance companies for the years ended December 31 are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Net income................................................. $ 7,625 $ 6,298 $ 6,982
Capital and surplus........................................ 59,167 55,240 48,024
</TABLE>
F-21
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
14. SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1993
REVENUES:
Premiums........................................................... $ 19,664 $ 20,650 $ 21,078 $ 20,051
Net investment income.............................................. 11,353 12,030 12,468 10,969
Realized investment gains.......................................... 236 1,028 851 658
Other income....................................................... 906 952 1,120 240
--------- --------- --------- ---------
32,159 34,660 35,517 31,918
--------- --------- --------- ---------
BENEFITS AND EXPENSES:
Benefits and settlement expenses................................... 19,442 19,753 20,759 17,161
Amortization of deferred policy acquisition costs.................. 3,164 3,164 2,857 4,041
Insurance and other expenses....................................... 7,156 8,778 8,849 7,752
--------- --------- --------- ---------
29,762 31,695 32,465 28,954
--------- --------- --------- ---------
Income before income taxes and cumulative effect of accounting
change............................................................ 2,397 2,965 3,052 2,964
INCOME TAX EXPENSE (BENEFIT):
Current............................................................ 50 160 190 (150)
Deferred........................................................... 645 756 765 1,168
--------- --------- --------- ---------
695 916 955 1,018
--------- --------- --------- ---------
Income before cumulative effect of accounting change............... 1,702 2,049 2,097 1,946
CUMULATIVE EFFECT OF ACCOUNTING CHANGE:
Adoption of SFAS 109............................................. 400 0 0 0
--------- --------- --------- ---------
Net income......................................................... $ 2,102 $ 2,049 $ 2,097 $ 1,946
--------- --------- --------- ---------
--------- --------- --------- ---------
EARNINGS PER SHARE:
Income before cumulative effect of accounting change............... $ 0.22 $ 0.26 $ 0.27 $ 0.25
Cumulative effect of accounting change:
Adoption of SFAS 109............................................. 0.05 0.00 0.00 0.00
--------- --------- --------- ---------
Net income......................................................... $ 0.27 $ 0.26 $ 0.27 $ 0.25
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
F-22
<PAGE>
LAURENTIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
14. SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1992
REVENUES:
Premiums........................................................... $ 19,014 $ 19,999 $ 19,720 $ 21,453
Net investment income.............................................. 11,665 11,029 11,605 12,628
Realized investment gains (losses)................................. 700 813 (506) (954)
Other income....................................................... 707 593 721 1,211
--------- --------- --------- ---------
32,086 32,434 31,540 34,338
--------- --------- --------- ---------
BENEFITS AND EXPENSES:
Benefits and settlement expenses................................... 17,547 18,264 18,014 18,666
Amortization of deferred policy acquisition costs.................. 3,413 2,957 3,163 3,956
Insurance and other expenses....................................... 8,367 8,399 7,990 9,485
--------- --------- --------- ---------
29,327 29,620 29,167 32,107
--------- --------- --------- ---------
Income before income taxes......................................... 2,759 2,814 2,373 2,231
INCOME TAX EXPENSE (BENEFIT):
Current............................................................ 148 150 162 (99)
Deferred........................................................... 1,088 961 473 580
--------- --------- --------- ---------
1,236 1,111 635 481
--------- --------- --------- ---------
NET INCOME......................................................... $ 1,523 $ 1,703 $ 1,738 $ 1,750
--------- --------- --------- ---------
--------- --------- --------- ---------
EARNINGS PER SHARE................................................. $ 0.18 $ 0.20 $ 0.21 $ 0.21
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
F-23
<PAGE>
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
LAURENTIAN CAPITAL CORPORATION (PARENT COMPANY)
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1993 1992
----------- -----------
<S> <C> <C>
Fixed maturities, at cost............................................................ $ 2,727 $ 3,238
Equity securities, at market......................................................... 10,372 1,403
Investment in real estate............................................................ 450 436
Cash................................................................................. 183 1,774
Investments in and advances to subsidiaries:
Investments in subsidiaries*....................................................... 112,802 107,223
Surplus debenture*................................................................. 30,500 35,000
Due from subsidiaries*............................................................. 826 820
Other................................................................................ 1,608 1,108
----------- -----------
$ 159,468 $ 151,002
----------- -----------
----------- -----------
LIABILITIES
Accrued expenses and other liabilities............................................... $ 2,800 $ 2,912
Deferred income tax (benefit)........................................................ (3,791) (3,000)
Debt................................................................................. 54,822 54,454
----------- -----------
Total liabilities.............................................................. 53,831 54,366
----------- -----------
Redeemable preferred stock........................................................... 4,153 4,606
----------- -----------
STOCKHOLDERS' EQUITY
Common stock......................................................................... 406 406
Capital in excess of par value....................................................... 59,071 59,010
Net unrealized gains (losses) on equity securities (substantially
all from subsidiaries).............................................................. 1,253 (198)
Treasury stock, at cost.............................................................. (2,818) (2,837)
Retained earnings (including undistributed income of subsidiaries)................... 43,572 35,649
----------- -----------
Total stockholders' equity..................................................... 101,484 92,030
----------- -----------
$ 159,468 $ 151,002
----------- -----------
----------- -----------
<FN>
- ------------------------
* Eliminated in consolidation.
</TABLE>
S-1
<PAGE>
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
LAURENTIAN CAPITAL CORPORATION (PARENT COMPANY)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Income from subsidiaries:
Management and service fees*................................................. $ 6,232 $ 6,496 $ 6,550
Dividends*................................................................... 4,332 2,133 4,000
Interest income*............................................................. 2,182 1,791 0
Realized investment loss*.................................................... 0 (1,452) 0
Net investment income.......................................................... 524 541 936
Realized investment gains (losses)............................................. 99 0 (41)
Other income................................................................... 8 14 7
--------- --------- ---------
13,377 9,523 11,452
--------- --------- ---------
EXPENSES
Operating and administrative................................................... 5,041 5,986 5,612
Depreciation and amortization.................................................. 180 246 268
Interest....................................................................... 4,838 4,961 4,884
--------- --------- ---------
10,059 11,193 10,764
--------- --------- ---------
Income (loss) before federal income taxes, cumulative effect of accounting
change and equity in income of subsidiaries................................... 3,318 (1,670) 688
Income tax benefit............................................................. (347) (500) (161)
--------- --------- ---------
Income (loss) before cumulative effect of accounting change and equity in
income of subsidiaries........................................................ 3,665 (1,170) 849
--------- --------- ---------
Cumulative effect of accounting change:
Adoption of SFAS 109......................................................... 400 0 0
--------- --------- ---------
Income (loss) before equity in income of subsidiaries.......................... 4,065 (1,170) 849
Equity in income of subsidiaries, less dividends received...................... 4,129 7,884 4,597
--------- --------- ---------
Net income..................................................................... $ 8,194 $ 6,714 $ 5,446
--------- --------- ---------
--------- --------- ---------
<FN>
- ------------------------
* Eliminated in consolidation.
</TABLE>
S-2
<PAGE>
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
LAURENTIAN CAPITAL CORPORATION (PARENT COMPANY)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash flow from operations:
Net income.................................................................... $ 8,194 $ 6,714 $ 5,446
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of adoption of SFAS 109................................... (400) 0 0
Realized investment losses (gains).......................................... (99) 1,452 41
Depreciation and amortization............................................... 180 246 268
Equity in subsidiaries' earnings*........................................... (8,461) (10,017) (8,597)
Dividends from subsidiaries*................................................ 4,332 2,133 4,000
Increase (decrease) in accrued expenses and liabilities..................... (111) 361 87
Increase (decrease) in deferred income taxes................................ (347) (439) (161)
Other items, net............................................................ 75 (953) (202)
--------- --------- ---------
Net cash provided by (used in) operations................................. 3,363 (503) 882
--------- --------- ---------
Cash flow from investing activities:
Sale of investments to subsidiaries*........................................ 0 4,621 0
Repayments of surplus debenture*............................................ 4,500 0 0
Purchase of real estate..................................................... (13) (12) 0
Purchase of property and equipment.......................................... (172) (129) (96)
Purchases of investments.................................................... (8,987) (739) (104)
--------- --------- ---------
Net cash provided by (used in) investing activities....................... (4,672) 3,741 (200)
--------- --------- ---------
Cash flow from financing activities:
Proceeds from borrowing..................................................... 368 257 878
Net (purchases) sales of treasury shares, at cost........................... 19 (2,837) 0
Redemption of preferred stock............................................... (395) (351) 0
Dividends paid on preferred stock........................................... (271) (303) (297)
Other....................................................................... (3) 0 (9)
--------- --------- ---------
Net cash provided by (used in) financing activities....................... (282) (3,234) 572
--------- --------- ---------
Net increase (decrease) in cash................................................. (1,591) 4 1,254
Cash at beginning of year....................................................... 1,774 1,770 516
--------- --------- ---------
Cash at end of year............................................................. $ 183 $ 1,774 $ 1,770
--------- --------- ---------
--------- --------- ---------
<FN>
- ------------------------
* Eliminated in consolidation.
</TABLE>
S-3
<PAGE>
LAURENTIAN CAPITAL CORPORATION (PARENT COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
The condensed financial statements of Laurentian Capital Corporation (the
parent company) should be read in conjunction with the Laurentian Capital
Corporation and Subsidiaries consolidated financial statements and notes
thereto.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying parent company financial statements reflect only the
accounts of Laurentian Capital Corporation. The parent company's investment in
its subsidiaries is reflected on the equity basis. Intercompany accounts and
transactions have not been eliminated since consolidated financial statements
are not presented.
2. RELATED PARTY TRANSACTIONS
During 1992, the Company restructured its holding in Prairie States Life
Insurance Company (Prairie). Following approval by the Division of Insurance for
the State of South Dakota, Prairie was sold to a wholly-owned life insurance
subsidiary of the Company, Prairie National Life Insurance Company, of Rapid
City, South Dakota (Prairie National). As part of the consideration for Prairie
National purchasing Prairie, Prairie National issued capital stock and a $35
million surplus debenture to the parent company. Interest and repayment of
principal on the debenture is subject to prior approval by the South Dakota
Division of Insurance. Since April 4, 1992, the date of the restructuring, the
Division of Insurance has approved $2.2 million and $1.8 million in interest
payments associated with the surplus debenture for the years ended December 31,
1993 and 1992, respectively. Principal payments of $4.5 million were approved by
the Division of Insurance during 1993.
During 1992, the parent company sold equity securities to its insurance
subsidiaries at fair market value at the dates of sale. Total proceeds, which
consisted of cash and marketable securities, amounted to $7.9 million and
resulted in a loss on transfer of $1.5 million.
S-4
<PAGE>
SCHEDULE VI -- REINSURANCE
LAURENTIAN CAPITAL CORPORATION AND SUBSIDIARIES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- --------------------------------- ---------- ---------- --------- ---------- ---------------
ASSUMED
CEDED TO FROM PERCENTAGE OF
GROSS OTHER OTHER AMOUNT ASSUMED
AMOUNT COMPANIES COMPANIES NET AMOUNT TO NET
---------- ---------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Life insurance in force........ $3,426,591 $ 817,980 $ 32,206 $2,640,817
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Premium:
Life insurance............... $ 68,845 $ 6,685 $ 297 $ 62,457 0.5%
Accident/health insurance.... 19,091 105 0 18,986 0
---------- ---------- --------- ----------
Total...................... $ 87,936 $ 6,790 $ 297 $ 81,443 0.4%
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Year ended December 31, 1992:
Life insurance in force........ $3,733,568 $ 851,252 $ 13,484 $2,895,800
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Premium:
Life insurance............... $ 68,621 $ 6,289 $ 370 $ 62,702 0.6%
Accident/health insurance.... 17,619 135 0 17,484 0
---------- ---------- --------- ----------
Total...................... $ 86,240 $ 6,424 $ 370 $ 80,186 0.5%
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Year ended December 31, 1991:
Life insurance in force........ $4,094,329 $1,059,678 $ 37,838 $3,072,489
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Premium:
Life insurance............... $ 74,842 $ 12,714 $ 1,275 $ 63,403 2.0%
Accident/health insurance.... 16,290 142 0 16,148 0
---------- ---------- --------- ----------
Total...................... $ 91,132 $ 12,856 $ 1,275 $ 79,551 1.6%
---------- ---------- --------- ----------
---------- ---------- --------- ----------
</TABLE>
S-5
