Item 1. Description of Business
Incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, pages 17, 29, 55 and 56.
Insurance Regulation. Like other insurance companies, the Registrant's subsidiaries are subject to regulation and supervision by the Florida Insurance Department, as well as other insurance departments of each jurisdiction in which they are licensed to do business. These supervisory agencies have broad administrative powers relating to the granting and revocation of licenses to transact business, the licensing of agents, the approval of policy forms, reserve requirements and the form and content of required financial statements. As to its investments, each of the Registrant's insurance subsidiaries must meet the standards and tests established by the National Association of Insurance Commissioners (NAIC) and, in particular, the investment laws and regulations of the Florida Insurance Department. The insurance companies are also subject to laws in most states that require solvent insurance companies to pay guaranty fund assessments to protect the interests of policyholders of insolvent insurance companies.
In December, 1991, the NAIC adopted two new reserve requirements (the Asset Valuation Reserve or "AVR" and the Interest Maintenance Reserve or "IMR") to replace the former Mandatory Securities Valuation Reserve or "MSVR." These reserves are generally required by state insurance regulatory authorities to be established as a liability on a life insurer's statutory financial statements beginning with the 1992 annual statement, but do not affect financial statements of the Registrant prepared in accordance with generally accepted accounting principles. AVR establishes a statutory reserve for mortgage loans and investments in real estate, as well as for the types of investments (i.e., fixed maturities and common and preferred stock) that have been subject to the MSVR. AVR generally captures all realized and unrealized gains and losses on such assets, other than those resulting from changes in interest rates. IMR captures the net gains that are realized upon the sale of fixed income securities (bonds, preferred stocks, mortgage-backed securities and mortgage loans) and that result from changes in the overall level of interest rates, and amortizes these net realized gains into income over the remaining life of each investment sold, thus limiting the ability of an insurer to enhance statutory surplus by taking gains on fixed income securities. The implementation of the IMR and AVR has not had a material impact on the Registrant's life insurance subsidiary's surplus nor on its ability to pay dividends to the Registrant.
In recent years, the NAIC has approved several regulatory initiatives designed to decrease the risk of insolvency of insurance companies in general. These initiatives include the implementation of a risk-based capital formula for determining adequate levels of capital and surplus and further restrictions on an insurance company's ability to pay dividends to its shareholders. Florida has adopted the risk-based capital requirements and has recently revised its dividend limitation policy.
Under NAIC's risk-based capital (RBC)initiatives, life insurance companies must calculate and report information under a risk-based capital formula, beginning with their year-end 1993 statutory financial statements. (Property/Casualty companies must implement a different risk-based capital formula in their 1994 year-end statutory filings). This RBC information is intended to permit insurance regulators to identify and require remedial action for inadequately capitalized insurance companies. The NAIC initiatives provide for four levels of potential involvement by state regulators for inadequately capitalized insurance companies, ranging from regulatory control of the insurance company to a requirement for the insurance company to submit a plan to improve its capital. The life insurance subsidiary's surplus exceeds the authorized control level risk-based capital by approximately $80 million. Holdings in common stock require considerably more risk-based capital similar monies been invested in bonds. However, investment decisions are driven principally by long-term economic considerations and not altered to produce more attractive risk-based capital results. The subsidiary believes that over the long-term, the total return on equities outperforms that on debt security investments. It sells options against select holdings in the equity portfolio to generate realized investment gains and further enhance current yield and total return. Such net gains totaled $1.8 million in 1993.
Another NAIC Model Act provision limits dividends that may be paid in any calendar year without regulatory approval to the lesser of (i) 10% of the insurer's statutory surplus at the prior year-end, or (ii) the statutory net gain from operations of the insurer (excluding realized capital gains and losses) for the prior calendar year. The NAIC has determined that it will not grant accreditation to any state insurance regulatory authority in a state that has not enacted statutes "substantially similar" to the NAIC Model Act regulating the payment of dividends by insurers. Under current Florida law, without prior approval from the Florida Commissioner of Insurance and conditional that insurers maintain at least 115 percent of required risk- based capital after the payment of dividends, the maximum allowable dividend in 1994 is $16 million.
In accordance with the rules and practices of the NAIC and in accordance with state law, every insurance company is examined generally once each three years by examiners from its state of domicile and from several of the other states where it is licensed to do business. The most recent examinations for all the Registrant's insurance subsidiaries were for the year ending December 31, 1992.
Item 2.
Item 2. Properties
Incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, page 17.
Item 3.
Item 3. Legal Proceedings
Incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, page 54.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No reportable events
PART II
Item 5.
Item 5. Market for the Registrant's Common Stock and Related Security Holder Matters
Incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, page 18.
The Registrant has been informed that holders of more than 90% of the voting stock of the Registrant have entered into an Agreement (the "No Transfer Agreement") prohibiting the parties thereto from transferring shares of voting stock held by them except under certain circumstances. The excepted transfers include: (i) transfers pursuant to an offer which has been approved or recommended by the Board of Directors of the Registrant, (ii) transfers pursuant to the written consent of holders of a majority of the shares of voting stock subject to the No Transfer Agreement and, (iii) transfers to the Registrant pursuant to the Exchange Agreement referred to in Item 12. The No Transfer Agreement has an initial term ending on November 10, 1996, renewable for two additional five-year terms by vote of the holders of a majority of the voting stock subject thereto prior to the expiration of each successive term.
The restrictions on transfer of voting stock imposed by the No Transfer Agreement are in addition to, and not in lieu of, restrictions on such transfers imposed by the Articles of Incorporation of the Registrant.
Item 6.
Item 6. Selected Financial Data
Incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, pages 23-24.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, pages 25-33.
Item 8.
Item 8. Financial Statements and Supplementary Data
Incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, pages 35-57.
Item 9.
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure No reportable events
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The directors of the Registrant and the year originally elected are:
Wilford C. Lyon, Jr.* 1980 Kendall G. Bryan* 1982
Jacob F. Bryan, IV* 1980 Carter B. Bryan 1984
Boyd E. Lyon, Sr.* 1980 William G. Howard 1993
G. Howard Bryan 1980 George M. Baldwin 1980
Patricia H. Doane 1992 Lucy B. Gooding 1980
Michael C. Lyon 1991
*Executive officer of the Registrant
The annual terms of all directors will expire April 13, 1994. Carter B. Bryan, age 49, is employed by the Registrant's subsidiary as a territorial manager. G. Howard Bryan and Patrica H. Doane, ages 79 and 58, respectively, are retired vice presidents of the Registrant's principal subsidiary and are not otherwise employed. George M. Baldwin, and Lucy B. Gooding, ages 78 and 91, respectively, are not otherwise employed. Michael C. Lyon and William G. Howard are 43 and 42, and are vice presidents of the principal subsidiary of the Registrant. See below for information regarding the positions and offices of directors who are executive officers of the Registrant and for family relationships between such directors and officers.
The names, ages and positions of the executive officers of the Registrant as of February 8, 1994, are listed below. The principal business experience during the past five years for each person listed has been as an officer of the Registrant.
Name Age Position and Business Experience
Wilford C. Lyon,Jr. 58 Chairman of the Board of Directors and Chief Executive Officer - 1984
Jacob F. Bryan, IV 50 President - 1984
Boyd E. Lyon, Sr. 54 Vice President, Treasurer and Chief Financial Officer - 1984
Kendall G. Bryan 47 Vice President and Chief Operating Officer - 1984
Guy Marvin III 53 Assistant Secretary and General Counsel - 1980
David A. Skup 41 Vice President and Internal Auditor - 1984
Each officer of the Registrant is elected at the annual meeting of the Board of Directors and holds office until the next annual meeting (to be held in 1994 on April 13).
Wilford C. Lyon, Jr. and Boyd E. Lyon, Sr. are brothers, and are also cousins of Michael C. Lyon. Jacob F. Bryan, IV, Kendall G. Bryan and Carter B. Bryan are brothers, and nephews of G. Howard Bryan. Patricia Howard Doane and William G. Howard are cousins.
Section 16(a) of the Securities Exchange Act of 1934 requires the Registrant's directors and executive officers, and persons who own more than 10% of a registered class of the Registrant's equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Registrant. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Registrant with copies of all Section 16(a) forms they file.
To the Registrant's knowledge, based solely on review of the copies of reports furnished to the Registrant and written representations that no other reports were required, during the year ended December 31, 1993 all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with.
Item 11.
Item 11. Executive Compensation
(a) (b)(2)(i)(ii)(iii) The following table provides information concerning the annual compensation for the Registrant's Chief Executive Officer (CEO) and the four most highly compensated executive officers other than the CEO as of Decemeber 31, 1993. G. Howard Bryan who retired in October, 1993, as an executive officer also is included.
SUMMARY COMPENSATION TABLE
|--------- ANNUAL COMPENSATION -------|
Other Name and Principal Annual Position Year Salary Bonus Compensation
Wilford C. Lyon, Jr. 1993 345,748 0 0 Chairman of the Board & 1992 364,922 0 0 Chief Executive Officer 1991 339,170 20,239 0
Jacob F. Bryan IV 1993 297,151 0 0 President 1992 309,481 0 0 Director 1991 272,037 14,712 0
Boyd E. Lyon, Sr. 1993 240,977 0 0 Vice President 1992 249,668 0 0 Treasurer & Director 1991 225,106 13,476 0
Kendall G. Bryan 1993 229,054 0 0 Vice President 1992 244,959 0 0 Secretary & Director 1991 223,836 12,163 0
Guy Marvin, III 1993 162,906 0 0 Assistant Secretary & 1992 176,298 0 0 General Counsel 1991 175,077 8,260 0
G. Howard Bryan 1993 162,649 0 0 Vice President 1992 175,644 0 0 Secretary & Director 1991 165,914 15,563 0
|-- Long-Term Compensation --|
|----- Awards ----| Payouts
Restricted All Name and Principal Stock Options LTIP Other Position Year Awards SAR's Payouts Compensation
Wilford C. Lyon, Jr. 1993 0 0 0 27,535 Chairman of the Board & 1992 0 0 0 27,134 Chief Executive Officer 1991 0 0 0 26,483
Jacob F. Bryan IV 1993 0 0 0 19,365 President 1992 0 0 0 19,137 Director 1991 0 0 0 18,752
Boyd E. Lyon, Sr. 1993 0 0 0 29,991 Vice President 1992 0 0 0 29,541 Treasurer & Director 1991 0 0 0 28,708
Kendall G. Bryan 1993 0 0 0 15,872 Vice President 1992 0 0 0 15,754 Secretary & Director 1991 0 0 0 15,652
Guy Marvin, III 1993 0 0 0 9,736 Assistant Secretary & 1992 0 0 0 9,655 General Counsel 1991 0 0 0 9,519
G. Howard Bryan 1993 0 0 0 91,944 Vice President 1992 0 0 0 90,661 Secretary & Director 1991 0 0 0 84,734
Amounts reported as All Other Compensation represent premiums paid by the Registrant for insurance policies issued in connection with a Deferred Death Benefit Plan for Key Personnel.
(f)(1)(i) The following table shows estimated annual benefits payable pursuant to the Registrant's defined benefit plan, under which benefits are determined primarily by final compensation and years of service.
Pension Plan Table
Years of Service
Remuneration 15 20 25 30 35
$125,000 $41,498 $55,330 $ 69,162 $ 82,995 $ 96,828 150,000 50,310 67,080 83,850 100,620 115,641(2) 175,000 59,122 78,830 98,538 115,641(2) 115,641 200,000 67,935 90,580 113,225 115,641 115,641 225,000 74,711(1) 99,615(1) 115,641(2) 115,641 115,641 250,000 74,711 99,615 115,641 115,641 115,641 300,000 74,711 99,615 115,641 115,641 115,641 400,000 74,711 99,615 115,641 115,641 115,641 450,000 74,711 99,615 115,641 115,641 115,641 500,000 74,711 99,615 115,641 115,641 115,641
(1) Limited by maximum five year average (2) Limited by maximum annual benefit limit
(ii)(A)The Plan uses the average of an individual highest consecutive five years of earnings as a basis upon which to calculate benefits. Since earnings which can be credited under a defined benefit plan are limited, there is an effective limit on what this five year average can be. Tax limits have been as follows:
1989 200,000 1990 209,200 1991 222,220 1992 228,860 1993 235,840
This provides a maximum five year average of $219,224. Each year a maximum limitation is placed on the benefits which can be received from a plan. For 1993 this limit was $115,641. For purposes of tax calculations, an individual is assumed to have retired on December 31, 1993 at age 65. Amounts are annual income, straight life basis.
(B) The years of service for named executive officers are: Wilford C. Lyon, Jr., 35; Jacob F. Bryan IV, 27; Boyd E. Lyon, Sr., 32; Kendall G. Bryan, 24; Guy Marvin, III, 14 and G. Howard Bryan, 60.
(C) Under the plan, eligible employees are entitled to annual pension benefits beginning at normal retirement age (65 to 67 depending on participants' year of birth) equal to the sum of: (1) 1.6% of average earnings of the highest five years multiplied by number of years of service not to exceed 35 years; and (2) .75% of average earnings in excess of Social Security wages multiplied by number of years of service, not to exceed 35 years.
(g) All directors who are not employees of the Registrant or one of its subsidiaries receive $1,000 for each board meeting that the director attends, $250 for each telephone meeting the director participates in and $250 for each committee meeting of the Board that the non-employee director attends.
(j)(2)The Registrant uses the Hay point-factor job evaluation system which applies to all employees, including the Chief Executive Officer and executive officers. Each year the CEO selects members of the Board of Directors to evaluate his performance. During the last fiscal year, these members were Jacob F. Bryan, IV, Boyd E. Lyon, Sr. and Kendall G. Bryan. Overall increases, which are tied to performance evaluations and the evaluation system, are approved by the full Board. The CEO evaluates all other named executive officers. For the year 1993, the salaries of the CEO and the other named executive officers were reduced 5%-7%.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a)The principal holders of voting securities (Voting Common Stock, Par Value $1.00) of the Registrant as of February 8, 1994 are:
Name and Address of Amount and Nature of Percent Beneficial Owner Beneficial Ownership of Class
George M. Baldwin 1,033,288(1) 16.9% 2929 Murray Road Orange Park, Florida
James L. Baldwin 1,033,088(1) 16.9 2753 Haver Hill Ct. Clearwater, FL
Frederick E. Williams 1,032,888(1) 16.9 109 North Street Neptune Beach, Florida and John G. Grimsley 50 North Laura Street Jacksonville, FL
Lucy B. Gooding 981,612 16.1 2970 St. Johns Avenue Jacksonville, Florida
Jacob F. Bryan IV 865,598(2) 14.2 5249 Yacht Club Road Jacksonville, Florida
Julia Olive Craig Brooke 834,516(2) 13.7 467 Ortega Blvd. Jacksonville, Florida
G. Howard Bryan 829,612(2) 13.6 1596 Lancaster Terrace Jacksonville, Florida
Boyd E. Lyon, Sr. 349,922(4) 5.7 129 Middleton Place Ponte Vedra Beach, Florida
Catherine H. Stanley 344,446 5.6 7650 Hollyridge Road Jacksonville, Florida
(b)The following table shows as to each class of equity securities of the Registrant, the number of shares owned beneficially, directly or indirectly, by each director and named executive offices, and by all directors and officers of the Registrant as a group as of February 8, 1994. In some instances more than one beneficial owner is listed for the same securities. Shares held beneficially by spouses or relatives of such officers and directors may be included.
Amount and Nature of Beneficial Ownership and Title of Class Percent of Class Name of Common Common Beneficial Owner Voting Nonvoting Voting Nonvoting
George M. Baldwin 1,033,288(1) 16.9%
Lucy B. Gooding 981,612 1,222,340 16.1 17.3
Jacob F. Bryan IV 865,598(2) 1,075,594(3) 14.2 15.2
G. Howard Bryan 829,612(2) 1,032,396(3) 13.6 14.6
Boyd E. Lyon, Sr. 349,922(4) 5.7
Wilford C. Lyon, Jr. 176,357(5) 2.9
Patricia H. Doane 92,102 620 1.5
Michael C. Lyon 49,531 100 .8
Carter B. Bryan 36,400 32,642 .6 .5
Kendall G. Bryan 35,200 13,877 .6 .2
William G. Howard 2,474
David A. Skup 420
All directors and officers as a group 3,526,084 2,371,373 57.8 33.6
(1) Includes 1,032,888 shares held of record by a trust under the will of Grace D. Coburn,deceased. Frederick E. Williams and John G. Grimsley are trustees. George M. Baldwin and James L. Baldwin are beneficiaries of the trust.
(2) Includes all the shares of three trusts aggregating 812,412 shares of voting common stock of which Jacob F. Bryan IV, G. Howard Bryan and Julia Olive Craig Brooke are beneficiaries and/or trustees.
(3) Includes all the shares of three trusts aggregating 1,006,616 shares of nonvoting common stock of which Jacob F. Bryan IV, G. Howard Bryan and Julia Olive Craig Brooke are beneficiaries and/or trustees.
(4) Includes all the shares of three trusts aggregating 113,600 shares of voting common stock of which Boyd E. Lyon, Sr. is a trustee, and two trusts aggregating 101,760 shares of voting common stock held by the Registrant's retirement plans of which Boyd E. Lyon, Sr. is a trustee.
(5) Includes all the shares of three trusts aggregating 113,600 shares of voting common stock of which Wilford C. Lyon, Jr. is a trustee.
The Registrant has entered into "Exchange Agreements" with holders of more than 90% of the outstanding shares of voting common stock of the Registrant ("Voting Stock") pursuant to which such holders may, at any time on or prior to December 31, 2006, exchange shares of voting stock for an equal number of shares of nonvoting common stock of the Registrant without payment of any additional consideration. All of the principal shareholders, officers and directors listed above are parties to these agreements.
Item 13.
Item 13. Certain Relationships and Related Transactions
(a)The Registrant's subsidiary, The Independent Life and Accident Insurance Company ("Independent Life"), employs Carter B. Bryan as a manager of its general agency insurance operations, and in 1993 compensated Mr. Bryan $40,715 in salaries associated with his position. In addition, Mr. Bryan received commissions on personal insurance sales and overwrites from the sales of other agents he manages. Much of these operations involved the sale of Independent Life's small employer group insurance products, a line of business Independent Life has taken steps to withdraw from effective June 30, 1994. Independent Marketing Group, Inc. and Independent Life have worked closely to find replacement coverage for all terminated policyholders with another insurance carrier.
(b)The commissions and overwrites described above are paid to Independent Marketing Group, Inc., an entity owned by Mr. Bryan and his wife. The Registrant believes that $263,329 paid to this entity in 1993 by the Registrant exceeds five percent of the entity's gross revenues for the year. Independent Marketing Group, Inc., markets products of Independent Life and other insurance companies. Independent Life supplies office space to Mr. Bryan, which is used both by Mr. Bryan in his employment as manager of its general agency insurance operations and by Independent Marketing Group, Inc.
Part IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
Consolidated Balance Sheets, December 31, 1993 and 1992, incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, pages 35-36.
Consolidated Statements of Operations for years ended December 31, 1993, 1992 and 1991, incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, page 37.
Consolidated Statements of Cash Flows for years ended December 31, 1993, 1992 and 1991, incorporated by reference, Annual Report to Shareholders for year ended December 31, 1993, page 38.
Consolidated Statements of Shareholders' Equity for years ended December 31, 1993, 1992 and 1991, incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, page 39.
Notes to Consolidated Financial Statements for the three years ended December 31, 1993, incorporated by reference, Annual Report to Shareholders for year ended December 31, 1993, pages 40-56.
(2) Financial Statement Schedules
Consolidated Summary of Investments - Other Than Investments in Affiliates (Schedule I), incorporated by reference, Annual Report to Shareholders for the year ended December 31, 1993, page 45.
Condensed Financial Information of the Registrant (Schedule III)
Supplementary Insurance Information (Schedule V)
Reinsurance (Schedule VI)
All other financial statements and schedules are omitted because of the absence of conditions under which they are required or because the required information is included elsewhere herein.
(3) Exhibits
(3) Articles of incorporation currently in effect incorporated by reference as filed as an exhibit with the Registrants 1989 Form 10-K under Item 14(3)(c) and by-laws of the Registrant currently in effect incorporated by reference as filed December 20, 1990, with report Form 8-K.
(4) Instruments defining rights of security holders incorporated by reference as filed as an exhibit with the Registrant's Registration Statement No. 2-69530 on Form S-14 which became effective November 20, 1980, and as included or amended in articles of incorporation.
(10)Material contracts - (1) Deferred Death Benefit Plan for Key Personnel of the Registrant and its subsidiaries incorporated by reference as previously filed as an exhibit with the Registrant's Form 10-K, December 31, 1981. (2) Medical Reimbursement Plan covering benefits of certain employees of the Registrant or its affiliates incorporated by reference as previously filed as an exhibit with the Registrant's Form 10-K, December 31, 1990. (3) Independent Life Invest Plan - 401(K) incorporated by reference as previously filed with the Registrant's Form S-8, Registration No. 33-35785. (5) The Registrant's Exchange Agreement incorporated by reference as previously filed as an exhibit with the Registrant's Form 10-K, December 31, 1990.
(13) Portions of the Annual Report to Shareholders for the year ended December 31, 1993.
(22)The Registrant's subsidiaries include the following companies and their wholly owned subsidiaries,all of which are incorporated under the laws of the state of Florida:
(A)The Independent Life and Accident Insurance Company
(B)Independent Fire Insurance Company
(C)Herald Fire Insurance Company
(D)Thomas Jefferson Insurance Company
(E)Independent Investment Advisory Services, Inc
(F)Independent Real Estate Management Corporation
(G)Independent Property & Casualty Insurance Company
(24)Consent of Independent Certified Public Accountants
(b) There were no reports on Form 8-K filed for the three months ended December 31, 1993.
(c) The Registrant previously filed exhibits listed above in Item 14 (a)(3)-(3),(4) and (10).
(d) The following pages include the Financial Statement Schedules of the Registrant required by Regulation S-X which are excluded from the Annual Report to Shareholders.
INDEPENDENT INSURANCE GROUP, INC. CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT BALANCE SHEETS DECEMBER 31, 1993 AND 1992 (000 OMITTED)
ASSETS
1993 1992
Cash $ 556 $ 199
Short-term investments 2,497 10
Investment in subsidiaries - continuing operations 307,196 331,056
Investment in subsidiaries - discontinued operations - 11,671
Real estate - net 6,899 7,237
Income taxes receivable 11,052 12,003
Other assets 4,053 257
Total $332,253 $362,433
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 6,800 $ 8,000
Due to subsidiaries - federal income taxes 9,522 12,310
Other liabilities 8 417
Total liabilities 16,330 20,727
Shareholders' equity: Voting common stock 6,100 6,267 Nonvoting common stock 8,606 8,439 Additional paid-in capital 6,378 6,378 Net unrealized gain on equity securities held by subsidiaries 25,393 11,756 Retained earnings 293,997 333,417 Treasury stock - at cost - nonvoting common stock, 1,542 shares (24,551) (24,551)
Total shareholders'equity 315,923 341,706
Total $332,253 $362,433
See notes to consolidated financial statements
SCHEDULE III
INDEPENDENT INSURANCE GROUP, INC. CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (000 OMITTED)
1993 1992 1991 Revenues:
Interest income $ 352 $ 94 $ 418
Other income 1,435 2,185 1,848
Total 1,787 2,279 2,266
Costs and Expenses:
Interest expense 330 1,019 2,241 Professional services 293 133 377 Real estate expenses 350 381 389 Taxes, licenses and fees (51) 183 (1,366) Other expenses 422 568 167
Total 1,344 2,284 1,808
Income (loss) before income taxes and equity in income of consolidated subsidiaries 443 (5) 458
Provision (credit) for income taxes 123 (1) 156
Income (loss) before equity in income of consolidated subsidiaries 320 (4) 302
Equity in income (loss) of consolidated subsidiaries- continuing operations (including $2,150, $7,600 and $17,450 of dividends received from subsidiaries) (43,885) (16,990) 26,670
Equity in income of subsidiaries discontinued operations (including $173, $600 and $369 of dividends received) 465 1,906 1,670
Gain on disposition of discontinued operations 6,904 - -
Cumulative effect of change in accounting principles (66) - -
Net income (loss) (36,262) (15,088) 28,642
Retained Earnings, Beginning of Year 333,417 360,089 342,900
Less: Dividends to shareholders ($.24,$.88 and $.87 per share) 3,159 11,584 11,453
Retained earnings, end of year $ 293,996 $ 333,417 $ 360,089
SCHEDULE III
INDEPENDENT INSURANCE GROUP, INC. CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (000 OMITTED)
1993 1992 1991 Operating Activities:
Net income (loss) $(36,262) $(15,088) $ 28,642 Adjustments to reconcile net income to net cash provided by operating activities: Change in - Accounts receivable (2,545) 20,852 8,803 Other assets and other liabilities (4,446) 305 (34) Liability for income taxes (3,260) (10,662) (4,154) Equity in (income) of consolidated subsidiaries- continuing operations 43,885 16,990 (26,670) Equity in (income) of consolidated subsidiaries- discontinued operations (465) (1,906) (1,670) Gain from discontinued operations (net of taxes) (6,904) - - Dividends received from consolidated subsidiaries- continuing operations 2,150 7,600 17,450 Dividends received from subsidiaries - discontinued operations 173 600 369 Depreciation of property and equipment 378 340 359 Cumulative effect of changes in accounting principles 66 - -
Net cash provided (used) by operating activities (7,230) 19,031 23,095
Investing Activities:
Sales, maturities or payments from investments and loans - - 84 Purchases of investments and loans granted (2,127) (9) - Cash from sale of discontinued operations 22,573 - - Investment in subsidiary (8,500) (2,150) (800)
Net cash provided (used) by investing activites 11,946 (2,159) (716)
Financing Activities:
Reductions in mortgage loans payable - (8,135) (162) Additions to notes payable 4,000 13,092 Reductions in notes payable (5,200) (10,018) (10,849) Dividends to shareholders (3,159) (11,584) (11,453)
Net cash used by financing activities (4,359) (16,645) (22,464)
Increase (Decrease) in Cash 357 227 (85)
Cash, Beginning of Year 199 (28) 57
Cash, End of Year $ 556 $ 199 $ (28)
See notes to condensed financial statements.
Schedule III
INDEPENDENT INSURANCE GROUP, INC. CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
NOTES TO CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Independent Insurance Group, Inc. and its wholly owned subsidiaries.
Notes payable at December 31 consists of the following (000 omitted): 1993 1992
4.00% 180-day note $ 3,000 - 4.02% 90-day note - $ 8,000 6.25% Bank term loan 3,800 -
The Company also has available another $24,000,000 short-term line of credit with two banks which can be terminated at any time by the banks. As of December 31, 1993, none of this line of credit was utilized.
SCHEDULE V
INDEPENDENT INSURANCE GROUP, INC. AND SUBSIDIARIES SUPPLEMENTARY INSURANCE INFORMATION FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (000 OMITTED)
COLUMN B COLUMN C COLUMN D COLUMN E
Other Policy Deferred Reserves Claims and Policy Losses, Claims Unearned Benefits Segment Acq. Costs & Loss Expenses Premiums Payable
Year Ended December 31, 1993
Life $159,842 $754,960 $ 2,457 Property and casualty 3,491 40,478 39,387 Accident and health 33,387 64,524 Other
Total $196,720 $859,962 $41,844 -
Year Ended December 31, 1992
Life $157,616 $752,875 $ 4,236 Property and casualty 16,062 72,129 75,369 Accident and health 33,750 71,994 Other
Total $207,428 $896,998 $79,605 -
Year Ended December 31, 1991
Life $153,011 $743,105 $ 1,736 Property and casualty 21,579 34,014 67,280 Accident and health 33,423 71,789 Other
Total $208,013 $848,908 $69,016 -
COLUMN F COLUMN G COLUMN H
Benefits, Net Claims, Losses Premium Investment & Settlement Segment Revenue Income* Expenses
Year Ended December 31, 1993
Life $177,102 $62,063 $ 99,385 Property and casualty 100,136 6,422 77,282 Accident and health 94,441 5,142 37,161 Other 79
Total $371,679 $73,706 $213,828
Year Ended December 31, 1992
Life $174,100 $64,108 $102,014 Property and casualty 151,482 12,380 150,962 Accident and health 101,426 5,550 45,469 Other 30
Total $427,008 $82,068 $298,445
Year Ended December 31, 1991
Life $175,800 $69,396 $103,952 Property and casualty 164,085 13,459 95,686 Accident and health 103,950 6,029 51,788 Other 49
Total $443,835 $88,933 $251,426
COLUMN I COLUMN J COLUMN K
Amortization of Deferred Pol Other Acquisition Operating Premiums Segment Costs Expenses# Written
Year Ended December 31, 1993
Life $24,831 $105,724 Property and casualty 19,724 53,338 $52,764 Accident and health 5,926 49,030 94,441 Other 2,609
Total $50,481 $210,701
Year Ended December 31, 1992
Life $23,235 $104,027 Property and casualty 20,944 52,548 $132,370 Accident and health 5,864 56,390 101,426 Other 1,735
Total $50,043 $214,700
Year Ended December 31, 1991
Life $21,421 $102,338 Property and casualty 19,800 58,825 $164,639 Accident and health 5,980 48,965 103,950 Other 1,998
Total $47,201 $212,126
*The allocation of net investment income to life and accident and health is based on the raio of the mean liabilities (primarily, policy reserves and claims payable) attributed to life and to accident and health to total mean liabilities. Property and casualty net investment income is directly allocated. Other net investment income is that of noninsurance subsidiaries.
#Expenses not directly identifiable to any line of business are allocated on bases considered reasonable under the circumstances.
SCHEDULE VI
INDEPENDENT INSURANCE GROUP, INC. AND SUBSIDIARIES REINSURANCE FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (OOO OMITTED)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Percentage Ceded to Assumed of Amount Gross Other From Other Net Assumed
Year Ended December 31, 1993
Life insurance in force* $ 7,733 $ 237 $ 2 $ 7,498 .03 %
Insurance Premiums: Life $179,921 $ 2,841 $ 22 $177,102 (.01)% Property and casualty 182,279 85,629 3,486 100,136 3.48 % Accident and health 95,533 1,101 9 94,441 (.01)%
Total $457,733 $89,571 $ 3,517 $371,679 .95 %
Year Ended December 31, 1992
Life insurance in force* $ 7,719 $ 247 $ 4 $ 7,476 .05 %
Insurance Premiums: Life $176,418 $ 2,318 $ $174,100 (.02)% Property and casualty 211,994 61,627 1,115 151,482 .74 % Accident and health 102,187 761 101,426 (.01)%
Total $490,599 $64,706 $ 1,115 $427,008 .25 %
Year Ended December 31, 1991
Life insurance in force* $ 7,387 $ 261 $ 10 $ 7,136 .14%
Insurance Premiums: Life 177,948 $ 2,302 $ 154 $175,800 .09 % Property and casualty 179,245 16,269 1,109 164,085 .68 % Accident and health 104,356 427 21 103,950 .02 %
Total $461,549 $ 18,998 $ 1,284 $443,835 .29%
EXHIBIT 24
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K) of Independent Insurance Group, Inc. of our report dated March 11, 1994, included in the 1993 Annual Report to Shareholders of Independent Insurance Group, Inc.
Our audits also included the financial statement schedules of Independent Insurance Group, Inc. listed in Item 14(a). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. 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 set forth therein.
We also consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-35785) pertaining to the Independent Life Invest Plan of our report dated March 11, 1994, with respect to the consolidated financial statements incorporated herein by reference and our report included in the preceding paragraph with respect to the financial statement schedules included in the Annual Report (Form 10-K) of Independent Insurance Group, Inc.
Ernst & Young
Jacksonville, Florida March 29, 1994
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.
(Registrant) INDEPENDENT INSURANCE GROUP, INC.
Wilford C. Lyon, Jr. March 29, 1994 BY Wilford C. Lyon, Jr., Chairman of the Board and Chief Executive Officer
Jacob F. Bryan, IV March 29, 1994 BY Jacob F. Bryan, IV, President and Director
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.
Boyd E. Lyon, Sr. March 29, 1994 BY Boyd E. Lyon, Sr., Director, Treasurer (Chief Financial and Accounting Officer)
Kendall G. Bryan March 29, 1994 BY Kendall G. Bryan, Director
William G. Howard March 29, 1994 BY William G. Howard, Director
Michael C. Lyon March 29, 1994 BY Michael C. Lyon, Director