UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
The registrant meets the conditions set forth in General Instruction
I(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced
disclosure format.
For fiscal year ended December 31, 1996 Commission file numbers: 033-62193
----------------- ---------
033-91916
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033-92842
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333-00987
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GLENBROOK LIFE AND ANNUITY COMPANY
(Exact name of registrant as specified in its charter)
ILLINOIS 35-1113325
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
(Address of Principal executive offices)(Zip Code)
847/402-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
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
--- ---
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. [X]
As of December 31, 1996, there were 4,200 shares of common capital stock
outstanding, par value $500 per share all of which shares are held by Allstate
Life Insurance Company.
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY (A wholly owned
subsidiary of Allstate Life Insurance Company)
Annual Report for 1996 On Form 10-K
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business**....................................................... 3
Item 2. Properties**..................................................... 4
Item 3. Legal Proceedings................................................ 4
Item 4. Submission of Matters to a Vote of Security Holders*........... N/A
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters...................................... 5
Item 6. Selected Financial Data*....................................... N/A
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................ 6
Item 8. Financial Statements and Supplemental Data........... ........... 9
Item 9. Disagreements on Accounting and Financial Disclosure............N/A
PART III
Item 10. Directors and Executive Officers of the Registrant*............ N/A
Item 11. Executive Compensation*.........................................N/A
Item 12. Security Ownership of Certain Beneficial Owners and
Management*.....................................................N/A
Item 13. Certain Relationships and Related Transactions*.................N/A
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K..............................................25
Index to Financial Statement Schedules....................................... 9
Signatures...................................................................26
* Omitted pursuant to General Instruction I(2) of Form 10-K.
** Item prepared in accordance with General Instruction I(2) of Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
Glenbrook Life and Annuity Company (hereinafter "Glenbrook Life" or the
"Company"), is a stock life insurance company which was organized under the laws
of the State of Illinois in 1992. The Company was originally organized under the
laws of the State of Indiana in 1965. From 1965 to 1983 the Comany was known as
"United Standard Life Assurance Company" and from 1983 to 1992 the Company was
known as "William Penn Life Assurance Company of America."
Glenbrook Life is a wholly owned subsidiary of Allstate Life Insurance
Company ("Allstate Life" or "ALIC"), a stock life insurance company incorporated
under the laws of Illinois. Allstate Life is a wholly owned subsidiary of
Allstate Insurance Company ("Allstate" or "AIC"), a stock property-liability
insurance company incorporated under the laws of Illinois. With the exception of
directors' qualifying shares, all of the outstanding capital stock of Allstate
is owned by The Allstate Corporation ("Corporation"). On June 30, 1995, Sears,
Roebuck and Co. ("Sears")distributed its 80.3% ownership in the Corporation to
Sears common shareholders through a tax-free dividend.
Glenbrook Life and Allstate Life entered into reinsurance agreements,
effective June 5, 1992, under which Glenbrook Life reinsures substantially all
of its business with Allstate Life. Under the agreements, purchase payments
under all general account contracts are transferred to Allstate Life and become
invested with the assets of Allstate Life, and Allstate Life accepts 100% of
the liability under such contracts. However, the obligations of Allstate Life
under the reinsurance agreement are to the Company. In addition, assets of the
Company that relate to insurance in-force excluding separate account assets are
transferred to Allstate Life. Therefore, the funds necessary to support the
operations of the Company are provided by Allstate Life and the Company is not
required to obtain additional capital to support in-force or future business.
Under the Company's reinsurance agreements with Allstate Life, the
Company reinsures all reserve liabilities with Allstate Life except for variable
contracts. The Company's variable contract assets are held in
legally-segregated, unitized separate accounts and are retained by the Company.
Investment income and realized gains and losses of the separate account
investments accrue directly to the contractholders (net of fees), and are not
included in the Company's results of operations. However, the transactions
related to such variable contracts such as premiums, expenses and benefits are
transferred to Allstate Life.
Glenbrook Life's operations consist of one business segment which is
the sale of life insurance and annuity products.
Glenbrook Life's and Allstate Life's general account assets must be
invested in accordance with applicable state laws. These laws govern the nature
and quality of investments that may be made by life insurance companies and the
percentage of their assets that may be committed to any particular type
3
<PAGE>
of investment. Of Allstate Life's consolidated invested assets of $28,037
million on December 31, 1996, 82.3% was invested in fixed income securities,
3.0% in equities, 10.9% in mortgage loans, and 3.8% in real estate, short-term
investments and other assets.
Glenbrook Life is engaged in a business that is highly competitive
because of the large number of stock and mutual life insurance companies and
other entities competing in the sale of insurance and annuities. There are
approximately 1,700 stock, mutual and other types of insurers in business in the
United States. Several independent rating agencies regularly evaluate life
insurer's claims paying ability, quality of investments and overall stability.
A.M. Best Company assigns A+(Superior) to Allstate Life which automatically
reinsures all net business of Glenbrook Life. A.M. Best Company also assigns
Glenbrook Life the rating of A+(r) because Glenbrook Life automatically
reinsures all business with Allstate Life. Standard & Poor's Insurance Rating
Services assigns AA+ (Excellent) to the Company's claims-paying ability and
Moody's Investors Service assigns an Aa3 (excellent) financial strength rating
to the Company. Glenbrook Life shares the same ratings of its parent, Allstate
Life.
Although the federal government generally does not directly regulate
the business of insurance, federal initiatives often have an impact on the
business in a variety of ways. Current and proposed measures which may
significantly affect the Company's insurance business relate to the taxation of
insurance companies, the tax treatment of insurance products and the removal of
barriers preventing banks from engaging in the insurance business.
Glenbrook Life is regulated by the Securities and Exchange Commission
("SEC") as an issuer of registered products. The SEC also regulates certain
Glenbrook Life Separate Accounts which together with the Company issue variable
annuity contracts.
ITEM 2. PROPERTIES
Glenbrook Life occupies office space provided by Allstate, in
Northbrook, Illinois. Expenses associated with these offices are allocated on a
direct and indirect basis to Glenbrook Life.
ITEM 3. LEGAL PROCEEDINGS
The Company and its Board of Directors know of no material legal
proceedings pending to which the Company is a party or which would materially
affect the Company. The Company is involved in pending and threatened litigation
in the normal course of its business in which claims for monetary damages are
asserted. Management, after consultation with legal counsel, does not anticipate
the ultimate liability arising from such pending or threatened litigation to
have a material effect on the financial condition of the Company.
4
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
All of the Company's outstanding shares are owned by its parent,
Allstate Life. Allstate Life's outstanding shares are owned by Allstate. With
the exception of director's qualifying shares, all of the outstanding capital
stock of Allstate is owned by The Allstate Corporation ("Corporation"). On June
30, 1995, Sears distributed its 80.3% ownership in the Corporation to Sears
common shareholders through a tax free dividend.
5
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GLENBROOK LIFE AND ANNUITY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion highlights significant factors influencing results
of operations and financial position of Glenbrook Life and Annuity Company (the
"Company"). It should be read in conjunction with the financial statements and
related notes.
The Company, which is wholly owned by Allstate Life Insurance Company
("ALIC"), markets life insurance contracts and annuity products through banks
and broker-dealers.
The Company and ALIC entered into a reinsurance agreement effective on June
5, 1992. All business issued subsequent to that date is ceded to ALIC. Life
insurance in force prior to that date is ceded to non-affiliated reinsurers. The
Company's results of operations relate to the investment of those assets of the
Company that are not transferred to ALIC under the reinsurance agreement.
Separate Account assets and liabilities are carried at fair value in the
statements of financial position. The Separate Account investment portfolios
were initially funded with a $10.0 million seed money contribution from the
Company in 1995. Investment income and realized gains and losses of the Separate
Accounts, other than the portion related to the Company's participation, accrue
directly to the contractholders and, therefore, are not included in the
Company's statements of operations.
Results of Operations
- - - ---------------------
($ in thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net investment income $ 3,774 $ 3,996 $ 2,017
====== ====== ======
Realized capital gains, after tax $ - $ 298 $ -
====== ===== =====
Net income $ 2,435 $ 2,879 $ 1,294
====== ====== ======
Fixed income securities, at amortized cost $46,925 $44,112 $51,527
====== ====== ======
</TABLE>
Net income decreased by $444 thousand or 15.4% in 1996 to $2.4 million due to
decreases in net investment income and realized capital gains. The $1.6 million
increase in net income in 1995 reflects the increase in net investment income
and realized capital gains.
As a result of the reinsurance agreement, the Company's results of operations
include only investment income earned on its investment portfolio. Net
investment income in 1996 decreased 5.6% or $222 thousand to $3.8 million
compared to $4.0 million in 1995. The decrease reflects the impact of the
Company's $10.0 million original investment in the variable funds of the
Separate Account, whose assets are invested predominantly in equity securities.
The dividend yield on the variable funds is significantly below the level of
interest earned on fixed income securities in which the $10.0 million was
invested prior to the fourth quarter of 1995. This decrease in income was
partially offset by additional investment income earned on the higher base of
investments arising from positive cash flows from operating activities in 1996.
Net investment income increased $2.0 million in 1995 due to an increased level
of investments and a $40.0 million capital contribution received from ALIC in
the third quarter of 1994.
Realized capital gains after tax of $298 thousand in 1995 were the result of
sales of investments to fund the Company's participation in the Separate
Accounts.
6
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL POSITION
- - - ------------------
($ in thousands)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Fixed income securities, at fair value $ 49,389 $ 48,815
============ ============
Short-term investments $ 1,287 $ 2,102
============ ============
Separate Account assets $ 272,420 $ 15,578
============ ============
Contractholder funds $ 2,060,419 $ 1,340,925
============ ============
Reinsurance recoverable from ALIC $ 2,060,419 $ 1,340,925
============ ============
Separate Account liabilities $ 260,290 $ 5,048
============ ============
</TABLE>
The Company's fixed income securities portfolio consists of publicly traded
corporate bonds, mortgage-backed securities and U.S. government bonds. The
Company generally holds its fixed income securities for the long term, but has
classified all of these securities as available for sale to allow maximum
flexibility in portfolio management. At December 31, 1996, net unrealized
capital gains on the fixed income securities portfolio totaled $4.3 million
compared to $5.2 million as of December 31, 1995. The decrease in the unrealized
gain position is primarily attributable to rising interest rates, partially
offset by an increase in unrealized gains on the Company's participation in the
Separate Account.
All of the Company's fixed income securities portfolio is rated investment
grade, with a National Association of Insurance Commissioners ("NAIC") rating of
1 or a Moody's rating of Aaa, Aa or A.
At December 31, 1996 and 1995, $16.4 million and $19.2 million, respectively,
of the fixed income portfolio were invested in mortgage-backed securities
("MBS"). At December 31, 1996, all of the MBS were investment grade and have
underlying collateral that is guaranteed by U.S. government entities.
MBS, however, are subject to interest rate risk as the duration and ultimate
realized yield are affected by the rate of repayment of the underlying
mortgages. The Company attempts to limit interest rate risk by purchasing MBS
whose cost does not significantly exceed par value, and with repayment
protection to provide a more certain cash flow to the Company. At December 31,
1996, the amortized cost of the MBS portfolio was below par value by $402
thousand.
The Company closely monitors its fixed income portfolio for declines in value
that are other than temporary. Securities are placed on non-accrual status when
they are in default or when the receipt of interest payments is in doubt.
The Company's short-term investment portfolio was $1.3 million and $2.1
million at December 31, 1996 and 1995, respectively. The Company invests all
available cash balances in taxable and tax-exempt short-term securities having a
final maturity date or redemption date of one year or less.
7
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During 1996, contractholder funds and amounts recoverable from ALIC under the
reinsurance agreement increased by $719.5 million. The increases resulted from
sales of the Company's flexible premium deferred annuities, interest credited to
contractholders, and sales of single premium life insurance policies, partially
offset by surrenders, withdrawals and death benefits. Reinsurance recoverable
from ALIC relates to contract benefit obligations ceded to ALIC.
Separate Account assets increased by $256.8 million and Separate Account
liabilities increased by $255.2 million as compared with December 31, 1995. The
increases were attributable to increased sales of flexible premium deferred
variable annuity contracts and the favorable investment performance of the
Separate Account investment portfolios, partially offset by variable annuity
contract charges, surrenders and withdrawals.
LIQUIDITY AND CAPITAL RESOURCES
- - - -------------------------------
ALIC authorized a $20.0 million capital contribution to the Company in 1996,
which the Company received in January 1997.
Under the terms of intercompany reinsurance agreements, assets of the Company
that relate to insurance in force, excluding Separate Account assets, are
transferred to ALIC, which maintains the investment portfolios supporting the
Company's products.
The NAIC has a standard for assessing the solvency of insurance companies,
which is referred to as risk-based capital ("RBC"). The requirement consists of
a formula for determining each insurer's RBC and a model law specifying
regulatory actions if an insurer's RBC falls below specified levels. The RBC
formula for life insurance companies establishes capital requirements relating
to insurance risk, business risk, asset risk and interest rate risk. At December
31, 1996, RBC for the Company was significantly above a level that would require
regulatory action.
PENDING ACCOUNTING STANDARD
- - - ---------------------------
In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers of Financial
Assets and Extinguishments of Liabilities." This standard distinguishes between
transfers of financial assets as sales versus financing transactions based upon
relinquishment of control and addresses the accounting for securitizations,
securities lending, repurchase agreements and insubstance defeasance
transactions. The requirements of this statement that were effective on January
1, 1997 were adopted and are not expected to have a material impact on the
results of operations or financial position of the Company.
8
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements
INDEX
PAGE
Independent Auditors' Report.................................................10
Financial Statements:
Statements of Financial Position
December 31, 1996 and 1995........................................11
Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994..................................12
Statements of Shareholder's Equity for the Years Ended
December 31, 1996, 1995 and 1994..................................13
Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994..................................14
Notes to Financial Statements.......................................15
Schedule IV - Reinsurance for the Years Ended
December 31, 1996, 1995 and 1994..................................24
9
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF
GLENBROOK LIFE AND ANNUITY COMPANY:
We have audited the accompanying Statements of Financial Position of Glenbrook
Life and Annuity Company (the "Company") as of December 31, 1996 and 1995, and
the related Statements of Operations, Shareholder's Equity and Cash Flows for
each of the three years in the period ended December 31, 1996. Our audits also
included Schedule IV - Reinsurance. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule 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, such financial statements present fairly, in all material
respects, the financial position of Glenbrook Life and Annuity Company as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996 in conformity
with generally accepted accounting principles. Also, in our opinion, Schedule IV
- - - - Reinsurance, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information set
forth therein.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
February 21, 1997
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
($ in thousands) 1996 1995
---------- ---------
<S> <C> <C>
ASSETS
Investments
Fixed income securities, at fair value
(amortized cost $46,925 and $44,112) $ 49,389 $ 48,815
Short-term 1,287 2,102
----------- ----------
Total investments 50,676 50,917
Reinsurance recoverable from Allstate Life Insurance Company 2,060,419 1,340,925
Cash - 264
Net receivable from affiliates 19,206 -
Other assets 2,049 2,021
Separate Accounts 272,420 15,578
--------- ---------
Total assets $2,404,770 $1,409,705
========== ==========
LIABILITIES
Contractholder funds $2,060,419 $1,340,925
Income taxes payable 653 1,637
Deferred income taxes 1,528 1,828
Net payable to affiliates - 255
Separate Accounts 260,290 5,048
--------- ---------
Total liabilities 2,322,890 1,349,693
--------- ---------
SHAREHOLDER'S EQUITY
Common stock, $500 par value, 4,200 shares authorized,
issued, and outstanding 2,100 2,100
Additional capital paid-in 69,641 49,641
Unrealized net capital gains 2,790 3,357
Retained income 7,349 4,914
--------- ---------
Total shareholder's equity 81,880 60,012
--------- ---------
Total liabilities and shareholder's equity $2,404,770 $1,409,705
========== ==========
</TABLE>
See notes to financial statements.
11
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
($ in thousands) 1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
REVENUES
Net investment income $3,774 $3,996 $2,017
Realized capital gains and losses - 459 -
------ ------ ------
INCOME BEFORE INCOME TAX EXPENSE 3,774 4,455 2,017
INCOME TAX EXPENSE 1,339 1,576 723
----- ----- -----
NET INCOME $2,435 $2,879 $1,294
======= ======= =======
</TABLE>
See notes to financial statements.
12
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
($ in thousands) 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
COMMON STOCK $ 2,100 $ 2,100 $ 2,100
---------- ---------- ---------
ADDITIONAL CAPITAL PAID-IN
Balance, beginning of year 49,641 49,641 9,641
Capital contributions 20,000 - 40,000
---------- --------- ---------
Balance, end of year 69,641 49,641 49,641
---------- --------- ---------
UNREALIZED NET CAPITAL GAINS
Balance, beginning of year 3,357 (1,118) 693
Net (decrease) increase (567) 4,475 (1,811)
---------- --------- ---------
Balance, end of year 2,790 3,357 (1,118)
---------- --------- ---------
RETAINED INCOME
Balance, beginning of year 4,914 2,035 741
Net income 2,435 2,879 1,294
---------- --------- ---------
Balance, end of year 7,349 4,914 2,035
---------- --------- ---------
Total shareholder's equity $ 81,880 $ 60,012 $ 52,658
========= ========= =========
</TABLE>
See notes to financial statements.
13
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
($ in thousands) 1996 1995 1994
---------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,435 $ 2,879 $ 1,294
Adjustments to reconcile net income to net cash
provided by operating activities
Change in deferred income taxes 4 (39) 71
Realized capital gains and losses - (459) -
Changes in other operating assets and liabilities (510) 1,217 (251)
----------- ------------ ------------
Net cash provided by operating activities 1,929 3,598 1,114
---------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed income securities
Proceeds from sales - 7,836 -
Investment collections 2,891 1,568 649
Investment purchases (5,667) (1,491) (42,729)
Participation in Separate Accounts (232) (10,069) -
Change in short-term investments, net 815 (1,178) 667
---------- ------------ ---------
Net cash used in investing activities (2,193) (3,334) (41,413)
---------- ------------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution - - 40,000
---------- ----------- ----------
Net cash provided by financing activities - - 40,000
---------- ----------- ----------
NET (DECREASE) INCREASE IN CASH (264) 264 (299)
CASH AT BEGINNING OF YEAR 264 - 299
---------- ---------- ---------
-
CASH AT END OF YEAR $ - $ 264 $ -
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Noncash financing activity:
Capital contribution receivable from
Allstate Life Insurance Company $ 20,000 $ - $ -
========== ========= ==========
</TABLE>
See notes to financial statements.
14
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
1. GENERAL
BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Glenbrook Life and
Annuity Company (the "Company"), a wholly owned subsidiary of Allstate Life
Insurance Company ("ALIC"), which is wholly owned by Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation (the
"Corporation"). On June 30, 1995, Sears, Roebuck and Co. ("Sears") distributed
its 80.3% ownership in the Corporation to Sears common shareholders through a
tax-free dividend (the "Distribution"). These financial statements have been
prepared in conformity with generally accepted accounting principles.
To conform with the 1996 presentation, certain items in the prior years'
financial statements and notes have been reclassified.
NATURE OF OPERATIONS
The Company markets interest-sensitive life insurance and various annuity
products in the United States through banks and broker-dealers. Annuities
include deferred annuities, such as variable annuities and fixed rate flexible
premium annuities. The Company has entered into exclusive distribution
arrangements with management investment companies to market its variable annuity
contracts.
Annuity and life insurance contracts issued by the Company are subject to
discretionary withdrawal or surrender by the contractholder, subject to
applicable surrender charges. These contracts are reinsured with ALIC (see Note
3), which invests premiums and deposits to create cash flows that will fund
future benefits and expenses. In order to support competitive credited rates,
ALIC adheres to a basic philosophy of matching assets with related liabilities
to limit interest rate risk, while maintaining adequate liquidity and a prudent
and diversified level of credit risk.
The Company monitors economic and regulatory developments which have the
potential to impact its business. There continues to be proposed federal
legislation and regulation which would allow banks greater participation in
securities and insurance businesses, which could present an increased level of
competition for sales of the Company's annuity contracts. Furthermore, the
market for deferred annuities and interest-sensitive life insurance is enhanced
by the tax incentives available under current law. Any legislative changes which
lessen these incentives are likely to negatively impact the market for these
products.
The Company is authorized to sell life and annuity products in all states except
New York, as well as the District of Columbia. The top geographic locations for
statutory premiums earned are Florida, California, Pennsylvania, Michigan,
Oregon, Texas and Georgia for the year ended December 31, 1996. No other
jurisdiction accounted for more than 5% of statutory premiums. All premiums and
contract charges are ceded to ALIC under reinsurance agreements.
15
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Fixed income securities include bonds and mortgage-backed securities. All fixed
income securities are carried at fair value and may be sold prior to their
contractual maturity ("available for sale"). The difference between amortized
cost and fair value, net of deferred income taxes, is reflected as a component
of shareholder's equity. Provisions are recognized for declines in the value of
fixed income securities that are other than temporary. Such writedowns are
included in realized capital gains and losses.
Short-term investments are carried at cost which approximates fair value.
Investment income consists primarily of interest, which is recognized on an
accrual basis. Interest income on mortgage-backed securities is determined on
the effective yield method, based on the estimated principal repayments. Accrual
of income is suspended for fixed income securities that are in default or when
the receipt of interest payments is in doubt. Realized capital gains and losses
are determined on a specific identification basis.
RECOGNITION OF PREMIUM REVENUE AND CONTRACT CHARGES
Revenues on interest-sensitive life insurance contracts are comprised of
contract charges and fees, and are recognized when assessed against the
policyholder account balance. Revenues on annuities, which are considered
investment contracts, include contract charges and fees for contract
administration and surrenders. These revenues are recognized when levied against
the contract balances.
REINSURANCE
The Company and ALIC entered into a reinsurance agreement effective on June 5,
1992. All business issued subsequent to that date is ceded to ALIC. Life
insurance in force prior to that date is ceded to non-affiliated reinsurers.
Contract charges and credited interest are ceded and shown net of such cessions
in the statements of operations. Under the reinsurance agreement with ALIC, all
premiums and deposits are transferred to ALIC. The amounts shown in the
Company's statements of operations relate to the investment of those assets of
the Company that are not transferred to ALIC under the reinsurance agreement.
Reinsurance recoverable and contractholder funds are reported separately in the
statements of financial position. The Company continues to have primary
liability as the direct insurer for risks reinsured.
INCOME TAXES
The income tax provision is calculated under the liability method. Deferred tax
assets and liabilities are recorded based on the difference between the
financial statement and tax bases of assets and liabilities and the enacted tax
regulations. Deferred income taxes also arise from unrealized capital gains or
losses on fixed income securities carried at fair value.
16
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
SEPARATE ACCOUNTS
During 1995, the Company began issuing flexible premium deferred variable
annuity contracts, the assets and liabilities of which are legally segregated
and shown in the accompanying statements of financial position as assets and
liabilities of the Separate Accounts (Glenbrook Life and Annuity Company
Variable Annuity Account and Glenbrook Life and Annuity Company Separate Account
A), unit investment trusts registered with the Securities and Exchange
Commission.
Assets of the Separate Accounts, including the Company's ownership interest
("Participation"), are invested in funds of management investment companies and
are carried at fair value. Unrealized gains and losses on the Company's
Participation, net of deferred income taxes, is shown as a component of
shareholder's equity. Investment income and realized capital gains and losses
arising from the Participation are included in the Company's statements of
operations. At December 31, 1996 and 1995, the Participation amounted to $12,130
and $10,530, respectively. The Company intends to liquidate its Participation
during 1997.
Investment income and realized capital gains and losses of the Separate
Accounts, other than the portion related to the Participation, accrue directly
to the contractholders and, therefore, are not included in the accompanying
statements of operations. Revenues to the Company from the Separate Accounts
consist of contract maintenance fees, administrative fees and mortality and
expense risk charges, which are ceded to ALIC.
CONTRACTHOLDER FUNDS
Contractholder funds arise from the issuance of individual or group contracts
that include an investment component, including most annuities and
interest-sensitive life insurance. Payments received are recorded as
interest-bearing liabilities. Contractholder funds are equal to deposits
received and interest credited to the benefit of the contractholder less
withdrawals, mortality charges and administrative expenses. Credited interest
rates on contractholder funds ranged from 3.15% to 7.45% for those contracts
with fixed interest rates and from 4.25% to 7.90% for those with flexible rates
during 1996.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
17
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
3. RELATED PARTY TRANSACTIONS
REINSURANCE
Contract charges ceded to ALIC under reinsurance agreements were $4,254, $1,523
and $409 in 1996, 1995, and 1994, respectively. Credited interest, policy
benefits and expenses ceded to ALIC amounted to $113,703, $71,905, and $26,177
in 1996, 1995, and 1994, respectively. Investment income earned on the assets
which support contractholder funds is not included in the Company's financial
statements as those assets are owned and managed by ALIC under the terms of the
reinsurance agreements.
BUSINESS OPERATIONS
The Company utilizes services and business facilities owned or leased, and
operated by AIC in conducting its business activities. The Company reimburses
AIC for the operating expenses incurred by AIC on behalf of the Company. The
cost to the Company is determined by various allocation methods and is primarily
related to the level of services provided. Operating expenses, including
compensation and retirement and other benefit programs, allocated to the Company
were $759, $348 and $271 in 1996, 1995 and 1994, respectively. Of these costs,
the Company retains investment related expenses. All other costs are ceded to
ALIC under reinsurance agreements.
LAUGHLIN GROUP
Laughlin Group, Inc. ("Laughlin") is an indirect wholly owned subsidiary of
ALIC. Laughlin markets certain of the Company's flexible premium deferred
variable annuity contracts and flexible premium deferred fixed annuity
contracts. Sales commissions paid to Laughlin and ceded to ALIC were $8,623
during 1996 and $3,439 subsequent to the Laughlin acquisition in September 1995.
The Company had a receivable of $850 from Laughlin at December 31, 1996, which
is included in net receivable from affiliates in the statements of financial
position.
4. INVESTMENTS
FAIR VALUES
The amortized cost, gross unrealized gains and losses and fair value for fixed
income securities are as follows:
<TABLE>
<CAPTION>
AMORTIZED GROSS UNREALIZED FAIR
COST GAINS (LOSSES) VALUE
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
AT DECEMBER 31, 1996
--------------------
U.S. government and agencies $ 24,265 $ 1,722 $ (3) $ 25,984
Corporate 6,970 96 (15) 7,051
Mortgage-backed securities 15,690 664 - 16,354
--------- --------- ---------- ---------
Total $ 46,925 $ 2,482 $ (18) $ 49,389
========= ========= ========= ========
AT DECEMBER 31, 1995
--------------------
U.S. government and agencies $ 24,722 $ 3,470 $ - $ 28,192
Corporate 1,304 120 - 1,424
Mortgage-backed securities 18,086 1,113 - 19,199
--------- --------- --------- ---------
Total $ 44,112 $ 4,703 $ - $ 48,815
========= ======== ========= =========
</TABLE>
18
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
SCHEDULED MATURITIES
The scheduled maturities for fixed income securities at December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- -----------
<S> <C> <C>
Due in one year or less $ - $ -
Due after one year through five years - -
Due after five years through ten years 22,395 23,325
Due after ten years 8,840 9,710
--------- ----------
31,235 33,035
Mortgage-backed securities 15,690 16,354
--------- ----------
Total $ 46,925 $ 49,389
========= =========
</TABLE>
Actual maturities may differ from those scheduled as a result of prepayments by
the issuers.
NET INVESTMENT INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Fixed income securities $ 3,478 $ 3,850 $ 1,984
Short-term 126 113 48
Participation in Separate Accounts 232 69 -
------- ------ ------
Investment income, before expense 3,836 4,032 2,032
Investment expense 62 36 15
------- ------ ------
Net investment income $ 3,774 $ 3,996 $ 2,017
======== ======== ========
</TABLE>
PROCEEDS FROM SALES OF FIXED INCOME SECURITIES AND REALIZED CAPITAL GAINS
There were no sales of investments in 1996 or 1994. In 1995, proceeds from
sales of investments in fixed income securities were $7,836. These sales
resulted in gross realized gains of $459 and related income taxes of $161.
UNREALIZED NET CAPITAL GAINS AND LOSSES
Unrealized net capital gains and losses on fixed income securities and the
Company's participation in the Separate Accounts included in shareholder's
equity at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED FAIR NET
COST VALUE GAINS
----------- --------- ----------
<S> <C> <C> <C>
Fixed income securities $ 46,925 $ 49,389 $ 2,464
Participation in Separate Accounts 10,301 12,130 1,829
--------- -------- --------
Total $ 57,226 $ 61,519 4,293
========== =========
Deferred income taxes (1,503)
--------
Unrealized net capital gains $ 2,790
=========
</TABLE>
19
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
CHANGE IN UNREALIZED NET CAPITAL GAINS AND LOSSES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Fixed income securities $ (2,239) $ 6,423 $ (2,786)
Participation in Separate Accounts 1,368 461 -
Deferred income taxes 304 (2,409) 975
--------- --------- -------
Change in unrealized net capital gains and
losses $ (567) $ 4,475 $ (1,811)
========== =========== ========
</TABLE>
SECURITIES ON DEPOSIT
At December 31, 1996, fixed income securities with a carrying value of $9,105
were on deposit with regulatory authorities as required by law.
5. FINANCIAL INSTRUMENTS
In the normal course of business, the Company invests in various financial
assets and incurs various financial liabilities. The fair value estimates of
financial instruments are not necessarily indicative of the amounts the Company
might pay or receive in actual market transactions. Potential taxes and other
transaction costs have not been considered in estimating fair value. The
disclosures that follow do not reflect the fair value of the Company as a whole
since a number of the Company's assets (including reinsurance recoverable) and
liabilities (including deferred income taxes) are not considered financial
instruments and are not carried at fair value. Other assets and liabilities
considered financial instruments, including accrued investment income and cash,
are generally of a short-term nature. It is assumed that their carrying value
approximates fair value.
FINANCIAL ASSETS
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------
1996 1995
---- ----
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Fixed income securities $ 49,389 $ 49,389 $ 48,815 $ 48,815
Short-term investments 1,287 1,287 2,102 2,102
Separate Accounts 272,420 272,420 15,578 15,578
</TABLE>
Fair values for fixed income securities are based on quoted market prices.
Short-term investments are highly liquid investments with maturities of less
than one year whose carrying value approximates fair value. Assets of the
Separate Accounts are carried in the statements of financial position at fair
value.
20
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
FINANCIAL LIABILITIES
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------
1996 1995
---- ----
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Contractholder funds on
investment contracts $2,059,642 $1,949,329 $1,340,925 $1,282,248
Separate Accounts 260,290 260,290 5,048 5,048
</TABLE>
The fair value of contractholder funds on investment contracts is based on the
terms of the underlying contracts. Reserves on investment contracts with no
stated maturities (single premium and flexible premium deferred annuities) are
valued at the account balance less surrender charges. The fair value of
immediate annuities and annuities without life contingencies with fixed terms is
estimated using discounted cash flow calculations based on interest rates
currently offered for contracts with similar terms and durations. Separate
Account liabilities are carried at the fair value of the underlying assets.
6. INCOME TAXES
The Company will file a separate federal income tax return and is not a party to
any tax sharing agreements in the current tax year.
Prior to the Distribution, the Corporation and all of its domestic subsidiaries
including the Company (the "Allstate Group") joined with Sears and its domestic
business units (the "Sears Group") in the filing of a consolidated federal
income tax return (the "Sears Tax Group") and were parties to a federal income
tax allocation agreement (the "Tax Sharing Agreement"). Under the Tax Sharing
Agreement, the Company, through the Corporation, paid to or received from the
Sears Group the amount, if any, by which the Sears Tax Group's federal income
tax liability was affected by virtue of inclusion of the Company in the
consolidated federal income tax return. Effectively, this resulted in the
Company's annual income tax provision being computed as if the Company filed a
separate return, except that items such as net operating losses, capital losses
or similar items, which might not be recognized in a separate return, were
allocated according to the Tax Sharing Agreement.
The Allstate Group and Sears Group have entered into an agreement which governs
their respective rights and obligations with respect to federal income taxes for
all periods prior to the Distribution ("Consolidated Tax Years"). The agreement
provides that all Consolidated Tax Years will continue to be governed by the Tax
Sharing Agreement with respect to the Company's federal income tax liability.
The Company will be eligible for inclusion in the consolidated federal income
tax return of the Corporation and its subsidiaries in 1997.
21
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
The components of the deferred income tax liability at December 31, 1996 and
1995 are as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------
1996 1995
---- ----
<S> <C> <C>
Unrealized net capital gains on fixed income securities $ 1,503 $ 1,807
Difference in tax bases of investments 25 21
------ ------
Total deferred liability $ 1,528 $ 1,828
======= =======
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current $ 1,335 $ 1,615 $ 652
Deferred 4 (39) 71
------ ------ -------
Total income tax expense $ 1,339 $ 1,576 $ 723
======= ======= ========
</TABLE>
The Company paid income taxes of $2,597, $874 and $57 in 1996, 1995 and 1994,
respectively. The Company had income taxes payable of $653 and $1,637 at
December 31, 1996 and 1995, respectively.
7. STATUTORY FINANCIAL INFORMATION
The following tables reconcile net income and shareholder's equity as reported
herein in conformity with generally accepted accounting principles with
statutory net income and capital and surplus, determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities:
<TABLE>
<CAPTION>
NET INCOME
----------
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Balance per generally accepted accounting principles
$ 2,435 $ 2,879 $ 1,294
Deferred income taxes 4 (39) 71
Unrealized gain on participation in
Separate Accounts 1,368 - -
Non-admitted assets and statutory reserves (50) (171) (80)
-------- -------- --------
Balance per statutory accounting practices $ 3,757 $ 2,669 $ 1,285
========== ========= =========
</TABLE>
22
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
SHAREHOLDER'S EQUITY
--------------------
AT DECEMBER 31,
---------------
1996 1995
---- ----
<S> <C> <C>
Balance per generally accepted accounting principles $81,880 $60,012
Deferred income taxes 1,528 1,828
Unrealized gain/loss on fixed income securities (2,464) (4,703)
Non-admitted assets and statutory reserves (3,751) (1,419)
Other (1,499) (1,413)
------ ------
Balance per statutory accounting practices $75,694 $54,305
======= ========
</TABLE>
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company prepares its statutory financial statements in accordance with
accounting principles and practices prescribed or permitted by the Illinois
Department of Insurance. Prescribed statutory accounting practices include a
variety of publications of the National Association of Insurance Commissioners,
as well as state laws, regulations, and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not so
prescribed. The Company does not follow any permitted statutory accounting
practices that have a material effect on statutory surplus or risk-based
capital.
DIVIDENDS
The ability of the Company to pay dividends is dependent on business conditions,
income, cash requirements of the Company and other relevant factors. The payment
of shareholder dividends by insurance companies without the prior approval of
the state insurance regulator is limited to formula amounts based on net income
and capital and surplus, determined in accordance with statutory accounting
practices, as well as the timing and amount of dividends paid in the preceding
twelve months. The maximum amount of dividends that the Company can distribute
during 1997 without prior approval of the Illinois Department of Insurance is
$7,359.
23
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
SCHEDULE IV--REINSURANCE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1996 AMOUNT CEDED AMOUNT
- - - ---------------------------- --------- ---------- -----------
<S> <C> <C> <C>
Life insurance in force $ 2,436 $ 2,436 $ -
========= ========== ==========
Premiums and contract charges:
Life and annuities $ 4,254 $ 4,254 $ -
========= ========== ==========
GROSS NET
YEAR ENDED DECEMBER 31, 1995 AMOUNT CEDED AMOUNT
- - - ---------------------------- --------- ---------- -----------
Life insurance in force $ 1,250 $ 1,250 $ -
========= ========== ===========
Premiums and contract charges:
Life and annuities $ 6,571 $ 6,571 $ -
========= ========== ===========
GROSS NET
YEAR ENDED DECEMBER 31, 1994 AMOUNT CEDED AMOUNT
- - - ---------------------------- --------- --------- ------------
Life insurance in force $ 1,250 $ 1,250 $ -
========= ========== ============
Premiums and contract charges:
Life and annuities $ 409 $ 409 $ -
========= ========== ============
</TABLE>
24
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this Report. The page
number, if any, listed opposite a document indicates the page number in the
sequential numbering system in the manually signed original of this Report where
such document can be found.
(1) The financial statements filed as part of this Report are listed
in Item 8.
(2) Financial Statement Schedules
Schedule IV - Reinsurance page 24
(3) Exhibits
Financial Data Schedule
25
<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.
GLENBROOK LIFE AND ANNUITY COMPANY
By LOUIS G. LOWER, II
------------------
Louis G. Lower, II
Chief Executive Officer and Chairman
(Principal Executive Officer)
Date March 27, 1997
--------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By LOUIS G. LOWER, II
------------------
Louis G. Lower, II
Chief Executive Officer and Chairman
(Principal Executive Officer)
Date March 27, 1997
--------------
By KEITH A. HAUSCHILDT
-------------------
Keith A. Hauschildt
Assistant Vice President and Controller
(Chief Accounting Officer)
Date March 27, 1997
----------------
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEUDLE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
STATEMENTS OF FINANCIAL POSITION AT DECEMBER 31, 1996; STATEMENTS
OF OPERATIONS YEAR ENDED DECEMBER 31, 1996; STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996; AND STATEMENTS OF CASH FLOWS FOR THE
YEARS ENDED DECEMBER 31, 1996.
</LEGEND>
<CIK> 0000945094
<NAME> GLENBROOK LIFE AND ANNUITY COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 49,389
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 50,676
<CASH> 0
<RECOVER-REINSURE> 2,060,419
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 2,404,770
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 2,060,419
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,100
<OTHER-SE> 79,780
<TOTAL-LIABILITY-AND-EQUITY> 2,404,770
0
<INVESTMENT-INCOME> 3,774
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 0
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 3,774
<INCOME-TAX> 1,339
<INCOME-CONTINUING> 2,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,435
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
