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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period from to
Commission File Number 2-39458
ERIE FAMILY LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1186315
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
100 Erie Insurance Place, Erie, Pennsylvania 16530
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (814) 870-2000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.10 par value
(Tile of class)
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. [ ]
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date: 3,150,000 shares of Common
Stock outstanding on February 28, 1996.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's Annual Report to shareholders for the fiscal year
ended December 31, 1995 (the "Annual Report") are incorporated by reference into
Parts II and IV of this Form 10-K Report.
1
INDEX
ITEM NUMBER AND CAPTION PAGE
Item 1. Business 3
Item 2. Properties 8
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a
Vote of Security Holders 8
Item 5. Market for Registrant's Common Stock
and Related Stockholder Matters 8
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes In and Disagreements With
Accountants on Accounting and Financial
Disclosure 9
Item 10. Directors and Executive Officers
of the Registrant 10
Item 11. Executive Compensation 14
Item 12. Security Ownership of Certain
Beneficial Owners and Management 19
Item 13. Certain Relationships and Related
Transactions 21
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 22
2
PART I
ITEM 1. BUSINESS
Erie Family Life Insurance Company (hereinafter referred to as "The
Company", the "Registrant" or "Erie Family Life") was incorporated in the
Commonwealth of Pennsylvania on May 23, 1967 and commenced business on
September 1, 1967. The Company is primarily engaged in the business of
underwriting and selling non-participating individual and group life
insurance policies, including universal life. Erie Family Life also sells
individual and group annuities.
Products
The Company's portfolio of life insurance includes the usual forms of
permanent life, endowment and term policies, including whole life, family
income, mortgage and decreasing term, group, and universal life
insurance. In terms of face value, new life business issued in 1995 had a
ratio of 4:1 of term insurance to whole life insurance coverage.
Life insurance premiums and annuity deposits have been the primary
sources of cash inflows for the Company.
Classes of Life Insurance
Percentage of Total Sales
For the year ended December 31,
Class 1995 1994 1993 1992 1991
----- ---- ---- ---- ---- ----
Ordinary Life (including Total
and Permanent Disability and
Additional Accidental Death) 91.8% 92.1% 92.3% 91.9% 92.1%
Group 8.2 7.9 7.7 8.1 7.9
------ ----- ----- ----- -----
100.0% 100.0% 100.0% 100.0% 100.0%
Certain elements of revenue and expense reflect the requirements of
Financial Accounting Standard (FAS) 97. FAS 97 prescribes a uniform
method by which life insurance companies record certain long-term
contracts, specifically annuities, universal life, and other interest
sensitive products. This method involves separating the premium income
into the "premium" portion (shown in the sales figures) which represents
insurance protection purchased, and the "deposit" portion, which
represents funds to be held at interest for future uses. Under this
standard, the "deposit" portion of the premium income is accounted for
using methods applicable to comparable "interest bearing obligations" of
other types of financial institutions.
3
Structured settlement annuities sold to affiliate companies represented
$22,018,313 in annuity deposits in 1995, $11,431,965 in 1994 and
$7,516,908 in 1993. Also included in the annuity deposits are annuity
contracts purchased by the Erie Insurance Group Retirement Plan for
Employees. These annuity contracts purchased totaled $6,024,125 in 1995
and $8,880,714 in 1994.
Classes of Deposits
Total Deposits
For the year ended December 31,
Class 1995 1994 1993 1992 1991
----- ---- ---- ---- ---- ----
Universal Life Deposit $ 8,490,667 $ 7,482,156 $ 6,130,390 $ 5,543,162 $ 4,560,411
Annuity Deposit 66,051,230 62,048,541 50,550,323 53,526,178 44,040,442
------------- ------------- --------------- -------------- --------------
$ 74,541,897 $ 69,530,697 $ 56,680,713 $ 59,069,340 $ 48,600,853
The Registrant reinsures with other insurance companies the portion of
the insurance coverage above acceptable retentions. Beginning January 1,
1995, the retention limit on an acceptable risk was increased to $300,000
on each individual life written. Prior to January 1, 1995, the limit was
$225,000.
The Company reinsures under a number of different reinsurance agreements.
The primary purpose of this reinsurance is to enable the Company to write
a policy in an amount larger than the risk it is willing to assume for
itself. The secondary purposes are to receive commissions on the
reinsurance ceded and in some instances to participate in the profits of
the reinsured business by way of an "experience rating refund."
Marketing
The Company markets its products through independent agents throughout
Pennsylvania, Maryland, Virginia, West Virginia, Ohio, Indiana,
Tennessee, North Carolina and the District of Columbia. The policies sold
are evaluated by the Company's Underwriting Department which selects or
declines applicants for insurance. Premium on policies which are accepted
may be standard or rated, depending on the nature of the risk.
4
Competition
The Company operates in a highly competitive field which consists of many
stock and mutual life insurance companies. A large number of established
insurance companies compete in states in which the Company transacts
business and many of these companies offer more diversified lines of
insurance coverage and have substantially greater financial resources
than does the Company. Competition is based primarily on price,
availability of insurance products and the financial strength of the
Company.
Insurance Regulation
The Company is subject to supervision and regulation by the insurance
departments of the states in which it does business. Although the extent
of the regulation varies from state to state, generally the supervisory
agencies are vested with broad administrative powers relating to the
granting and revocation of licenses to transact business, regulation of
trade practices, licensing of agents, approval of policy forms, deposits
of security for the benefits of policy owners and investments and
maintenance of specified reserves and capital, all designed primarily for
the protection of policy owners. In accordance with the rules of the
National Association of Insurance Commissioners, the Company is examined
periodically by one or more of the state supervisory agencies. The latest
such examination of the Company was conducted by the Pennsylvania and
Ohio Insurance Departments and covered the four years ended December 31,
1990.
The Commonwealth of Pennsylvania has adopted the minimum risk-based
capital requirements on domestic insurance companies that were developed
by the National Association of Insurance Commissioners (NAIC). The
formulas for determining the amount of risk-based capital specify various
weighing factors that are applied to financial balances or various levels
of activity based on the perceived degree of risk. These formulas
determine a ratio of the company's regulatory total adjusted capital to
its authorized control level risk-based capital, as defined by the NAIC.
Companies below specific trigger points or ratios are classified within
certain levels, each of which requires specified corrective action. The
levels and ratios are as follows.
Ratio of Total Adjusted Capital to
Authorized Control Level Risk-Based
Regulatory Event Capital (Less Than or Equal to)
Company action level 2 (or 2.5 with negative trends)
Regulatory action level 1.5
Authorized control level 1
Mandatory control level .7
Erie Family Life has regulatory total adjusted capital of $76 million and
$56 million at December 31, 1995, and 1994, respectively, and a ratio of
total adjusted capital to authorized control level risk-based capital of
7.1 and 5.8 at December 31, 1995, and 1994, respectively. These levels
far exceed the minimum risk-based capital requirements.
5
Life Reserves
In accordance with generally accepted accounting principles (GAAP), the
Company is required to establish and maintain as liabilities, actuarial
reserves to meet its obligations on life insurance policies and
annuities. These reserves are amounts which, with additions from premiums
to be received on outstanding policies and with interest on such reserves
compounded annually at certain assumed rates, are calculated to be
sufficient to meet policy obligations at death or maturity in accordance
with the mortality tables employed when the policies are issued.
The interest factors used in the computation of material reserves are:
Basis of Assumption
Years of Policy
Issue Type Interest Mortality Withdrawal
1967 - 1975 All Life 4% graded to 3 1/2% 1955-60 Basic Modified
Select Plus Ultimate Linton B
1976 - 1980 All Life 6% graded to 4% 1955-60 Basic Linton B
Select Plus Ultimate
1981 - 1988 Permanent 7 1/4% graded to 6% 85% of 1965-70 150% of
Life Select and Ultimate Linton A
1981 - 1988 Other 7 1/4% graded to 6% 85% or 90% of Pricing
Life 1965-70 Select and Assumptions
Ultimate
1988 - 1995 All Life 7% graded to 6% Multiple of 1965-70 Pricing
and Annual Select and Ultimate Assumptions
Renewable
Term
1987 - 1995 Universal 7 1/2% graded to 6% 85% or 90% of Pricing
Life 1965-70 Select and Assumptions
Ultimate
Investments
In accordance with standard insurance practice, the Registrant invests
its funds principally in corporate bonds and preferred and common stocks.
In 1995, the Company's real estate held for investment purposes
constituted 0.3% of the Company's total assets while mortgage loans
accounted for 1.0% and Other Invested Assets accounted for 0.6%. The real
estate owned by the Company is leased to an affiliate, Erie Indemnity
Company (EIC), for rentals of $423,120 per year through December 31,
2000. In addition, the Company makes policy loans to its Policyholders,
and at December 31, 1995, such policy loans constituted 0.5% of the
Registrant's total assets. Annual increases in the number and dollar
amount of policy loans, generally, will vary with changes in short-term
rates of interest. When short-term rates are high, policy loans are also
expected to increase.
6
Subject to certain laws that prescribe the nature, quality and percentage
of the various types of investments which may be made by insurance
companies, the Company manages its investments to meet diversification,
yield and liquidity objectives.
Employees
Services of seventy-nine full-time Employees are provided through an
affiliate, EIC. All employees are salaried and ten are officers. These
Employee expenses along with other operating expenses are paid by the EIC
and reimbursed on a monthly basis. None of the Employees are covered by
collective bargaining agreements and the Company believes its Employee
relations are satisfactory.
Other Data
The Company's Lapse Rate for 1995 was 7.9%.
Reinsurance Profitability - Not Applicable.
New Types of Insurance - Not Applicable.
Total Insurance In Force for the last five years Net of
Reinsurance was:
1995 - $8,370,940,000
1994 - $7,481,537,000
1993 - $6,428,223,000
1992 - $5,545,197,000
1991 - $4,678,254,000
7
ITEM 2. PROPERTIES
The Registrant owns no real property and no tangible personal property used in
the operation of its business except office supplies and forms. The Registrant
does, however, own real property for investment purposes as outlined under ITEM
1 - INVESTMENTS. The executive and administrative offices of the Registrant are
located in the headquarters office of Erie Insurance Group in Erie,
Pennsylvania. The Registrant pays other members of the group an amount
determined by an arm's length agreement for office space and for the use of
facilities, equipment and services.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is not involved in any material pending legal proceedings other
than ordinary routine litigation incidental to its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted for a vote to shareholders during the fourth
quarter of 1995.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Currently there is no market on which the Registrant's stock is traded.
The Company had 1,145 recordholders of Common Stock at December 31, 1995.
Date Dividends Declared Date Dividends Paid Dividends per Share
March 1, 1994 April 1, 1994 $ .30
March 1, 1994 July 1, 1994 .30
July 21, 1994 October 1, 1994 .30
September 29, 1994 January 1, 1995 .30
March 2, 1995 April 1, 1995 .34
April 25, 1995 July 3, 1995 .34
June 22, 1995 October 2, 1995 .34
September 21, 1995 January 2, 1996 .34
8
ITEM 6. SELECTED FINANCIAL DATA
The information contained in "Selected Financial Data" on Page 12 of the
Company's 1995 Annual Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATION
The information set forth on pages 13 through 18 of the Company's 1995 Annual
Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The 1995 Financial Statements and the Registrant's independent auditor's report
on pages 20 through 28 of the Company's 1995 Annual Report are incorporated
herein by reference, as is the unaudited information set forth in the Notes to
the Financial Statements under the caption "Unaudited Quarterly Summary of
Operations" on page 28.
ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
9
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Present Principal Position with Erie
Name and Age Family Life and Other Material Positions
as of 12/31/95 Held During the Last Five Years
Samuel P. Black, Jr. 1 Director since 1967. Chairman of the Board, Samuel P. Black & Associates, Inc.--
93 insurance agency; Director--Erie Insurance Company, Flagship City Insurance Company,
Erie Insurance Property & Casualty Company and Erie Indemnity Company,
Attorney-in-Fact for Erie Insurance Exchange.
J. Ralph Borneman, Jr. Director since 1992. President and Chief Executive Officer of Body-Borneman
57 Associates Inc., insurance agency. President Body-Borneman, Ltd. and Body-Borneman,
Inc., insurance agencies. Director--Erie Insurance Company, Erie Indemnity Company,
Attorney-in-Fact for Erie Insurance Exchange, Erie Insurance Company of New York and
National Penn Bankshares.
John J. Brinling, Jr. Executive Vice President of the Company since December 1990. Division Officer 1984-
48 present.
Robert H. Dreyer Senior Vice President of the Company since 1990. Chief Actuary 1983-Present.
58
Philip A. Garcia Senior Vice President and Controller and Division Officer since October 1993. Vice
39 President and Manager of the Life Accounting Department of the Company prior to 1993.
Susan Hirt Hagen 1,* Director since 1980. Managing Partner, Hagen, Herr & Peppin, Group Relations
60 Consultants since 1990; Associate, Center for Practice of Conflict Management 1972-
1990; Director--Erie Insurance Company and Erie Indemnity Company,
Attorney-in-Fact for Erie Insurance Exchange, since 1980; Director, Erie
Insurance Property & Casualty Company and Erie Insurance Company of New York
since 1995.
Thomas B. Hagen* Director since 1980. Secretary of Commerce of the Commonwealth of Pennsylvania
60 since January 1995; Chairman, Hagen & Company, business consultants from 1994 to
January 1995, Special Consultant to the Chairman of the Board of the Erie
Indemnity Company, Attorney-in-Fact for the Erie Insurance Exchange from
September 1993 to January 1995; Chairman of the Board and Chief
Executive Officer of the Erie Indemnity Company, Attorney-in-Fact
for the Erie Insurance Exchange, Erie Family Life Insurance Company and Erie
Insurance Company from November 1990, and of Flagship City Insurance Company
and Erie Insurance Property & Casualty Company, since 1992 and 1993,
respectively, to September 1993; President of the Erie Indemnity
Company, Attorney-in-Fact for the Erie Insurance Exchange and Erie Insurance
Company and Executive Vice President of Erie Family Life Insurance Company
from 1982 to November 1990; Director, the Erie Indemnity Company,
Attorney-in-Fact for the Erie Insurance Exchange and Erie Insurance
Company, General Public Utilities Corporation 1988-1995. Erie Small
Business Investment Company 1985-1995.
1 Member of Executive Committee
* F. William Hirt is the brother of Susan Hirt Hagen and the
brother-in-law of Thomas B. Hagen. Susan Hirt Hagen is the
wife of Thomas B. Hagen.
10
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Present Principal Position with Erie
Name and Age Family Life and Other Material Positions
as of 12/31/95 Held During the Last Five Years
F. William Hirt 1C,* Chairman of the Board. Director since 1967. Chairman of the Board of the Erie
70 Insurance Company, Erie Indemnity Company, Attorney-in-Fact for Erie Insurance
Exchange, Erie Insurance Property & Casualty Company and Flagship City
Insurance Company since September 1993; Chairman of the Board of Erie
Insurance Company of New York since April 1994. Chairman of the Executive
Committee of the Company and the Erie Indemnity Company, Attorney-in-Fact
for Erie Insurance Exchange since November 1990; Interim President and
Chief Executive Officer of the Company, Erie Indemnity Company,
Attorney-in-Fact for Erie Insurance Exchange, Erie Insurance Company, Erie
Insurance Property & Casualty Company, Flagship City Insurance Company and
Erie Insurance Company of New York from January 1, 1996 to February 12,
1996; Chairman of the Board, Chief Executive Officer and Chairman of the
Executive Committee of the Company, Erie Indemnity Company, Attorney-in-
Fact for Erie Insurance Exchange and Erie Insurance Company for more than
five years prior thereto; Director--Erie Insurance Company,
Flagship City Insurance Company, Erie Indemnity Company, Attorney-in-Fact
for Erie Insurance Exchange, Erie Insurance Property & Casualty Company,
Erie Insurance Company of New York and Integra Financial Corporation.
Thomas H. Hubbard Director since 1967. Financial Consultant, Butcher & Singer--Division of Wheat
72 First Securities, Ashtabula, Ohio--September 1990-April 1991. Vice President,
Parker/ Hunter, Inc., Investments, Ashtabula, Ohio 1976-1990. Partner in Markko
Vineyard, Conneaut, Ohio since 1968. Director--Erie Insurance Company.
Stephen E. Jones, Esq. Director since 1967. Rear Admiral USNR (Ret.) of Counsel, Knox, McLaughlin,
89 Gornall & Sennett, P.C., Erie, PA. Director--Erie Insurance Company and Erie
Plastics, Corry, PA.
Dr. Irvin H. Kochel 2 Director since 1970. Retired Assistant Vice President Emeritus, The Pennsylvania
72 State University; Director--Erie Insurance Company and Erie Indemnity Company,
Attorney-in-Fact for Erie Insurance Exchange.
Edmund J. Mehl 1,2C Director since 1969. Retired Chairman and Chief Executive Officer, Dispatch
72 Printing, Inc.; Director--Erie Insurance Company, Erie Indemnity Company, Attorney-
in-Fact for Erie Insurance Exchange, Flagship City Insurance Company, Erie
Insurance Property & Casualty Company and Erie Insurance Company of New
York.
1 Member of Executive Committee
2 Member of Audit Committee
C Committee Chairman
* F. William Hirt is the brother of Susan Hirt Hagen and the brother-in-law of
Thomas B. Hagen. Susan Hirt Hagen is the wife of Thomas B. Hagen.
11
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Present Principal Position with Erie
Name and Age Family Life and Other Material Positions
as of 12/31/95 Held During the Last Five Years
Stephen A. Milne President, Chief Executive Officer and Director since February 12, 1996. President
47 and Chief Executive Officer of the Erie Insurance Company and Erie Indemnity
Company, Attorney-in-Fact for Erie Insurance Exchange since February 12,
1996. President and Chief Executive Officer of Flagship City Insurance
Company, Erie Insurance Property & Casualty Company and Erie Insurance
Company of New York since March 11, 1996; Executive Vice President of the
Erie Insurance Company, Erie Indemnity Company, Attorney-in-Fact for Erie
Insurance Exchange, Flagship City Insurance Company, Erie Insurance
Property & Casualty Company and Erie Insurance Company of New York
1994-February 1996. Owner, Bennett-Damascus Insurance Agency
March 1991-December 31, 1993; Senior Vice President-Agency Division Erie
Insurance Group 1988-1991. Director--Erie Insurance Company, Erie
Indemnity Company, Attorney-in-Fact for Erie Insurance Exchange and Erie
Insurance Company of New York, Flagship City Insurance Company and
Erie Insurance Property & Casualty Company.
John M. Petersen 1 Director since 1980. Retired; President and Chief Executive Officer of the Erie
67 Indemnity Company, Attorney-in-Fact for Erie Insurance Exchange, Erie Family Life
Insurance Company, Erie Insurance Company, Flagship City Insurance
Company and Erie Insurance Property & Casualty Company from 1993 to 1995 and
Erie Insurance Company of New York from 1994-1995; President, Treasurer
and Chief Financial Officer of the Erie Indemnity Company,
Attorney-in-Fact for the Erie Insurance Exchange, Erie Insurance
Company and Erie Family Life Insurance Company from November 1990, and of
Flagship City Insurance Company and Erie Insurance Property & Casualty
Company since 1992 and 1993, respectively, to September 1993;
President, Treasurer and Chief Financial officer of Erie Family Life
Insurance Company and Executive Vice President, Treasurer and Chief
Financial Officer of the Erie Indemnity Company, Attorney-in-Fact
for the Erie Insurance Exchange and Erie Insurance Company for more than
five years prior thereto; Director, the Erie Insurance Company, Flagship
City Insurance Company, Erie Indemnity Company, Attorney-in-Fact for Erie
Insurance Exchange, Erie Insurance Property & Casualty Company, Erie
Insurance Company of New York, and Spectrum Control, Inc.
Seth E. Schofield Director since 1991. Retired; Chairman of the Board and Chief Executive
56 Officer, USAir, Inc. from 1992 to January 1996; President and Chief Executive
Officer, USAir, Inc. from June 1991 to July 1992; President and Chief
Operating Officer, USAir, Inc. from June 1990 to June 1991; Executive Vice
President, USAir, Inc. from 1989 to June 1990; Chairman of the Board and a
Director, Greater Pittsburgh Chamber of Commerce; Director, USAir, Inc.,
the Erie Indemnity Company, Attorney-in-Fact for Erie Insurance
Exchange, Erie Insurance Company, PNC Bank, N.A., USX Corporation, Calgon
Carbon Corporation, and a member of the Desai Capital Management Advisory
Board.
1 Member of Executive Committee
12
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Present Principal Position with Erie
Name and Age Family Life and Other Material Positions
as of 12/31/95 Held During the Last Five Years
Thomas M. Sider Executive Vice President and Chief Financial Officer of the Company since
46 October 1993. Executive Vice President and Chief Financial Officer of the Erie
Insurance Company, Erie Indemnity Company, Attorney-in-Fact for Erie Insurance
Exchange, Flagship City Insurance Company, Erie Insurance Company of New York,
and Erie Insurance Property & Casualty Company. Treasurer of the E.I. Holding
Corp. and E.I. Service Corp. Director--Flagship City Insurance Company, Erie
Insurance Property & Casualty Company, E.I. Holding Corp., Erie Insurance
Company of New York and E.I. Service Corp.
Jan R. Van Gorder 1 Senior Executive Vice President, Secretary and General Counsel since 1990.
48 Director since September 1990. Senior Executive Vice President, Secretary and
General Counsel of the Erie Insurance Company, Erie Indemnity Company,
Attorney-in-Fact for Erie Insurance Exchange since 1990, and of Flagship
City Insurance Company and Erie Insurance Property & Casualty Company
since 1992 and 1993, respectively and of Erie Insurance Company of New York
since April 1994; Senior Vice President, Secretary and General
Counsel of the Company, Erie Insurance Company and Erie Indemnity Company,
Attorney-in-Fact for Erie Insurance Exchange for more than five years
prior thereto; Director--Erie Insurance Company, Flagship City
Insurance Company, Erie Insurance Property & Casualty Company, Erie
Insurance Company of New York and Erie Indemnity Company, Attorney-in-Fact
for Erie Insurance Exchange.
Harry H. Weil 2 Director since April 25, 1995. Senior Partner, Reed, Smith, Shaw & McClay,
62 Attorneys, since 1980, Partner 1969 to 1980, Associate 1964 to 1969; Director--Erie
Indemnity Company, Attorney-in-Fact for Erie Insurance Exchange, Erie
Insurance Company, Calgon Carbon Corporation and Pittsburgh Tube
Company.
Douglas F. Ziegler Senior Vice President, Treasurer and Chief Investment Officer of the Company
45 since October 1993. Senior Vice President, Treasurer and Chief Investment Officer of
the Erie Insurance Company, Erie Indemnity Company, Attorney-in-Fact for Erie
Insurance Exchange, Flagship City Insurance Company and Erie Insurance Property &
Casualty Company.
1 Member of Executive Committee
2 Member of Audit Committee
13
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The Company is a member of an insurance holding company system pursuant to
Pennsylvania law under which insurance companies are required to have
nominating, audit and executive compensation committees composed solely of
directors who are not officers, employees or controlling shareholders of the
Company or any entity controlling the Company. Insurance companies can satisfy
this requirement if the insurance company is controlled by an insurer or a
publicly held corporation that has committees that comply with this requirement.
Erie Indemnity Company, holder of 21.6% of the Company's stock directly and
52.2% of the Company's stock as attorney-in-fact for Erie Insurance Exchange,
has committees which meet these requirements.
The following table sets forth the total compensation paid during each of the
three fiscal years ended December 31, 1995 to the Chief Executive Officer and
the four other most highly compensated executive officers during 1995 for
services rendered in all capacities (as required by the SEC) to the Company,
Erie Indemnity Company and its subsidiaries, and the Erie Insurance Exchange and
its subsidiary which collectively make up the Erie Insurance Group. The amount
of total compensation paid by Erie Indemnity Company listed below which is
allocated to the Company is as follows: John M. Petersen - 10%; Jan R. Van
Gorder - 5%; Thomas M. Sider - 10%; Stephen A. Milne - 0%; John J. Brinling, Jr.
- - 100%.
Annual Compensation
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation (1)
- --------------------------------------------------------------------------------
John M. Petersen 1995 $700,808 $242,923 $8,100 $23,956
President and Chief 1994 716,123 74,993 8,100 69,058
Executive Officer(2) 1993 427,379 94,643 5,383 10,828
Jan R. Van Gorder 1995 $296,095 $26,725 $1,029 $29,625
Executive Vice 1994 278,442 25,590 1,029 14,834
President, Secretary 1993 261,769 18,981 642 14,853
& General Counsel
Thomas M. Sider 1995 $231,901 $26,696 $941 $22,410
Executive Vice 1994 190,049 22,571 941 21,109
President & Chief 1993 168,243 17,604 66 20,836
Financial Officer
Stephen A. Milne 1995 $245,611 $26,623 $927 $39,993
Executive Vice 1994 189,512 34,943 965 4,433
President - Insurance
Operations(3)
John J. Brinling, 1995 $184,104 $20,853 $877 $28,837
Jr., Executive 1994 176,365 19,527 877 22,682
Vice President of 1993 164,530 19,712 642 22,006
EFL
(1) Amounts shown include matching contributions made by the Company pursuant
to the Company's Employee Savings Plans and premiums paid by the Company
on behalf of the named individuals on Split Dollar Life insurance
policies. For the year 1995, contributions made to the Employee Savings
Plans amounted to $18,173, $6,849, $6,143, $5,424 and $4,910, on behalf
of Messrs. Petersen, Van Gorder, Sider, Milne and Brinling,
14
respectively. For the year 1994, contributions made to the Employee
Savings Plans amounted to $17,500, $6,190, $4,788, $4,433 and $4,478 on
behalf of Messrs. Petersen, Van Gorder, Sider, Milne and Brinling,
respectively. For the year 1993, contributions made to the Employee
Savings Plans amounted to $10,828, $5,917, $4,467 and $3,748 on behalf of
Messrs. Petersen, Van Gorder, Sider and Brinling, respectively. Premiums
paid during 1995 for Split Dollar Life insurance policies for Messrs.
Petersen, Van Gorder, Sider, Milne and Brinling, are as follows: $-0-,
$17,420, $16,267, $28,786 and $18,144. Premiums paid during 1994 for
Split Dollar Life insurance policies for Messrs. Petersen, Van Gorder,
Sider, Milne and Brinling, respectively, are as follows: $51,558, $8,644,
$16,321, $-0- and $18,204. Premiums paid during 1993 for Split Dollar
Life insurance policies for Messrs. Petersen, Van Gorder, Sider and
Brinling, respectively, are as follows: $-0-, $8,936, $16,369 and
$18,258. The Company is entitled to recover the premiums from any
proceeds paid on such Split Dollar Life insurance policies and has
retained a collateral interest in each policy to the extent of the
premiums paid with respect to such policies.
(2) Mr. Petersen retired as President and Chief Executive Officer of the
Company on December 31, 1995.
(3) Mr. Milne became an officer of the Company on January 11, 1994. Mr. Milne
had been previously employed by the Company; his last position with the
Company at that time was Senior Vice President -- Agency Division, a
position he held from 1988 to 1991. On February 12, 1996, Mr. Milne
became President, Chief Executive Officer and a director of the Company.
Stock Options and Stock Appreciation Rights
The Company does not have a stock option plan, nor has it ever
granted any stock option or stock appreciation right to any of the persons named
in the Summary Compensation Table.
Pension Plan
The following table sets forth the estimated annual benefits
payable upon retirement at age 65 under the Erie Insurance Group Retirement Plan
for Employees.
PENSION PLAN TABLE
Years of Service
Remuneration 15 20 25 30 35
- -------------------------------------------------------------------
$ 200,000 60,000 80,000 100,000 120,000 120,000
225,000 67,500 90,000 112,500 135,000 135,000
250,000 75,000 100,000 125,000 150,000 150,000
300,000 90,000 120,000 150,000 180,000 180,000
350,000 105,000 140,000 175,000 210,000 210,000
400,000 120,000 160,000 200,000 240,000 240,000
450,000 135,000 180,000 225,000 270,000 270,000
500,000 150,000 200,000 250,000 300,000 300,000
550,000 165,000 220,000 275,000 330,000 330,000
600,000 180,000 240,000 300,000 360,000 360,000
650,000 195,000 260,000 325,000 390,000 390,000
700,000 210,000 280,000 350,000 420,000 420,000
750,000 225,000 300,000 375,000 450,000 450,000
The compensation covered by such plan is the base salary
reported in the Summary Compensation Table.
Under the pension plan, credited years of service is capped at
30 years. Credited years of service for each of the individuals named in the
Summary Compensation Table is as follows: John M. Petersen - 31 years, Jan R.
Van Gorder - 15 years, Thomas M. Sider - 25 years, Stephen A. Milne - 18 years
and John J. Brinling, Jr. - 28 years.
15
The benefits under such plan are computed on the basis of straight-life
annuity amounts and a life annuity with a ten-year certain benefit. The benefits
listed in the Pension Plan Table are not subject to deduction for Social
Security or other offset amounts. The information in the foregoing table does
not reflect certain limitations imposed by the Internal Revenue Code of 1986, as
amended (the "Code"). Beginning in 1994, the Code prohibits the inclusion of
earnings in excess of $150,000 per year (adjusted periodically for
cost-of-living increases) in the average earnings used to calculate benefits.
The Code also limits the maximum annual pension (currently $120,000, but
adjusted annually for cost-of-living increases) that can be paid to each
eligible employee. A Supplemental Employee Retirement Plan for senior management
is in effect which provides benefits in excess of the earnings limitations
imposed by the Internal Revenue Code of 1986 as amended.
Director Compensation
Effective January 1, 1995, the annual retainer for directors increased
to $15,000, plus $1,200 for each meeting attended and $800 for each committee
meeting attended (unless the committee meeting is held the same day as a Board
of Directors meeting, for which committee meeting $500 will be paid) plus an
additional $2,000 per year for each committee chairperson. In addition, all
directors are reimbursed for their expenses incurred in attending meetings.
Officers of the Company who serve as directors are not compensated separately
for attendance at meetings of the Board of Directors and its committees.
Agreements with Executive Officers
Upon the recommendation of the Executive Compensation Committee of the
Company's Board of Directors the Company has entered into employment agreements
with the following four of the Company's senior executive officers: John J.
Brinling, Jr., Executive Vice President of the Company in November, 1995;
Stephen A. Milne, President and CEO of the Company; Thomas M. Sider, Executive
Vice President and Chief Financial Officer of the Company, and Jan R. Van
Gorder, Executive Vice President, General Counsel and Secretary of the Company.
The employment agreements have the following principal terms:
(a) A three year term expiring in November , 1998 unless the agreement
is theretofore terminated in accordance with its terms with or without cause or
due to disability or death of the officer or notice of non-renewal is given by
the Company or the executive 30 days before any anniversary date;
(b) A minimum annual base salary at least equal to the executive's
annual base salary at the time the agreement was executed, subject to periodic
review to reflect the executive's performance and responsibilities, competitive
compensation levels and the impact of inflation;
(c) The eligibility of the executive under the Company's incentive
compensation programs and employee benefit plans;
(d) The establishment of the terms and conditions upon which the
executive's employment may be terminated by the Company and the compensation of
the executive in such circumstances. The agreements provide generally, among
other things, that if the employment of an executive is terminated without Cause
(as defined in the agreement) by the Company or by the executive for Good Reason
(as defined in the agreement) then the executive shall be entitled to receive an
amount equal to the sum of: (i) three times his highest annual base salary
during the preceding three years plus an amount equal to the total of the
executive's highest awards during the preceding three years under the Company's
bonus and other short-term incentive compensation plans and (ii) any award or
other compensation to which the executive is entitled under any of the Company's
incentive compensation programs and employee benefit plans as well as for the
continuing participation, for a period of three years following termination, in
all life, medical and dental insurance programs and other benefit plans to the
extent the executive and his dependents were eligible to participate in such
programs immediately prior to his termination;
(e) Provisions relating to confidentiality and non-disclosure
following an executive's termination; and
(f) An agreement by the executive not to compete with the Company for a
period of one year following his termination, unless his termination was without
Cause.
16
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee (the "Committee") of the Company
presently consists of Peter B. Bartlett, Chairman, J. Ralph Borneman, Jr., Seth
E. Schofield and Harry H. Weil. No member of the Committee is a former or
current officer or employee of the Company or any of its affiliates.
Furthermore, no executive officer of the Company serves as a member of a
compensation committee of another entity one of whose executive officers serves
on the Committee of the Company or as a director of the Company, nor does any
executive officer of the Company serve as a director of another entity, one of
whose executive officers serves on the Committee of the Company. Mr. Borneman is
the President and a principal shareholder of Body-Borneman Associates, Inc.,
Body-Borneman, Inc. and Body-Borneman, Ltd., all of which are independent
insurance agencies representing a number of insurers, including the Company and
its insurance affiliates.
Report of the Executive Compensation Committee of the Company
As noted previously, the Company is a member of an insurance holding
company system under Pennsylvania law which requires that the executive
compensation committee be composed of directors who are not officers, employees
or controlling shareholders, unless, as in the case of the Company, the insurer
is controlled by another insurer or a publicly held corporation which has
committees meeting this requirement. Erie Indemnity Company, which controls the
Company by virtue of its stock ownership, has a compensation committee that acts
on behalf of all members of the Erie Insurance Group (including the Company) and
which meets these "independent director" requirements.
The Committee is charged with the duty of recommending to the Board of
Directors the compensation of the five highest paid officers of the Erie
Insurance Group and such other officers as are determined by the Board of
Directors, recommending to the Board of Directors all forms of bonus
compensation including incentive programs that would be appropriate for the
Group and to undertake such other responsibilities as may be delegated to it.
The Board has authorized the Compensation Committee to consider the compensation
of the five highest paid officers, including the CEO. The Committee is composed
of four directors of the Erie Indemnity Company who are not officers or
employees of Erie Indemnity Company or any of its affiliates. The purpose of the
Committee is to determine the level and composition of compensation that is
sufficient to attract and retain top quality executives for the Erie Insurance
Group. It is the opinion of the Committee that the senior executives of the Erie
Insurance Group should receive compensation comparable to that paid by other
insurers of comparable size and financial performance.
The Committee reviewed the salary ranges and base salaries of the five
highest paid executives, including the CEO, in 1995. The Committee has position
descriptions for the five highest paid executives of the Group, including the
chief executive officer, which define the responsibilities and duties of each
position. The position descriptions also delineate the functional areas of
accountability and the qualifications and skills required to perform such
responsibilities and duties. The Committee then reviews the salary ranges for
the chief executive officer and the other four highest paid senior executives,
comparing the ranges to third party data compiled for similar positions with
other insurers. In reviewing the salary ranges for the five highest paid
executives, including the chief executive officer, the Committee references
Sibson's Management Compensation Survey published annually by Sibson & Company,
Inc., which summarizes compensation data for 100 insurance companies. The data
is reported by position and by company asset size, and by premium volume. The
Committee also uses compensation data obtained from Hay Management Consultants.
The information developed by Hay Management Consultants and Sibson & Company was
used for adjusting compensation levels for the three highest paid executive
positions. The unique aspects of each position, its duties and responsibilities,
the effect on the performance of the Company, the number of employees supervised
directly and other criteria are also considered in setting the base salaries.
The level of compensation for each executive reflects his or her
skills, experience and job performance. Normally, base salary will not be less
than the minimum for the salary range established for each position. Executives
with a broader range of skills, experience and consistently high performance
with the Group may receive compensation slightly above the mid-point for the
established salary range.
17
A promotional salary increase may also be added to the executive's
compensation when the executive assumes new responsibilities or has increased
accountability for results. Significant changes in duties and responsibilities
may also result in a higher salary range.
Compensation for the chief executive officer consists primarily of
salary and bonus and minor perquisites which amount to less than 10% of the
chief executive officer's salary and bonus. No long-term incentive plans (which
provide incentives for performance occurring over longer periods of time) are
currently utilized in determining the compensation of the chief executive
officer. Stock options, stock appreciation rights and restricted stock are not
currently part of the executive compensation package for any executives of the
Group. The compensation of the chief executive officer is determined as
previously outlined.
Performance factors applicable to the Group, such as investment
portfolio returns, overall company profitability, as well as other factors are
considered indirectly in evaluating the chief executive officer's performance.
Such performance factors were considered in approving Mr. Petersen's 1995
compensation.
Compensation of the next four most highly compensated individuals is
determined by the Committee and is based upon the factors and processes
enumerated, i.e., a determination of a salary range based upon market data and
evaluation of the executive with respect to the executive's job description and
his or her position within the salary range.
Compensation of the next highest paid executives (other than the five
highest paid executives) is based upon the Group's established standard
compensation policies and is not determined by the Committee. As with the chief
executive officer and the next four most highly compensated executive officers,
no long-term incentive plans are maintained for these executives.
ERIE INDEMNITY COMPANY
EXECUTIVE COMPENSATION COMMITTEE
Peter B. Bartlett, Chairman
J. Ralph Borneman, Jr.
Seth E. Schofield
Harry H. Weil
18
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a)
Name & Address Amount & Nature
of Beneficial of Beneficial Percent of
Owner Ownership Class
Erie Indemnity Company 681,300(1) 21.6%(1)
100 Erie Insurance Place Direct
Erie, PA 16530
(b) Shares beneficially owned directly or indirectly by all Directors
and Officers:
Name & Address Amount & Nature
of Beneficial of Beneficial Percent of
Owner Ownership Class
Erie Insurance Exchange 1,644,300(1) 52.2%(1)
100 Erie Insurance Place Direct
Erie, PA
Samuel P. Black, Jr. 22,706 .72%
400 French St., Suite 100
Erie, PA 16507
J. Ralph Borneman 512 .02%
Box 552
17 East Philadelphia Ave.
Boyertown, PA 19512
Susan Hirt Hagen 100 --
5727 Grubb Rd.
Erie, PA 16506
Thomas B. Hagen 51,494 1.63%
5727 Grubb Rd.
Erie, PA 16506
F. William Hirt 55,678 1.77%
3270 Kingston Court S.
Erie, PA 16506
Thomas H. Hubbard 23,070 .73%
Box 245
Ashtabula, OH 44004-0245
Stephen E. Jones, Esq. 9,807 .31%
120 West 10th St.
Erie, PA
Dr. Irvin H. Kochel 2,083 .07%
4737 Reese Road
Erie, PA 16510
19
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (Cont.)
(b) Shares beneficially owned directly or indirectly by all Directors
and Officers:
Name & Address Amount & Nature
of Beneficial of Beneficial Percent of
Owner Ownership Class
Edmund J. Mehl 4,050 .13%
504 Frontier Dr.
Erie, PA 16505
John M. Petersen 29,739 .94%
124 Voyageur Dr.
Erie, PA 16505
Seth E. Schofield 600 .02%
2341 South Queen St.
Arlington, VA 22202
Jan R. Van Gorder 25 --
6796 Manchester Beach Road
Fairview, PA 16415
John J. Brinling, Jr. 210 .01%
1522 Sumner Drive
Erie, PA 16505
Robert H. Dreyer 300 .01%
465 Hawthorne Trace
Fairview, PA 16415
Philip Alan Garcia 425 .01%
786 Stockbridge Drive
Erie, PA 16505
Thomas M. Sider 140 --
11810 Old Lake Road
North East, PA 16428
Douglas F. Ziegler 90 --
378 Ridgeview Drive
Erie, PA 16505
All officers and directors
as a group (17 persons) 201,029(2) 6.38%(2)
20
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (Cont.)
(1) Erie Insurance Exchange (the "Exchange") is a reciprocal insurance
exchange controlled by its subscribers, each of whom has designated
Erie Indemnity Company as such subscriber's attorney-in-fact for
certain purposes, including Indemnity's holding of Common Stock of the
Company. 76% of the outstanding voting stock of Erie Indemnity Company
is owned beneficially by a trust established by H. O. Hirt, the father
of F. William Hirt and Susan H. Hagen and the father-in-law of Thomas
B. Hagen. Mr. Hirt and Mrs. Hagen are beneficiaries of the trust and
are co-trustees with Mellon Bank, N.A. An additional 12.7% of the Erie
Indemnity Company voting stock is beneficially owned by Samuel P.
Black, Jr.
(2) Includes direct and indirect beneficial ownership and shares owned by
and with spouses.
(c) There are no contractual arrangements known to the Registrant which may
result in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors Black and Borneman are officers and principal shareholders of
insurance agencies which receive insurance commissions in the ordinary
course of business from Erie Family Life and its affiliates in accordance
with such companies standard commission schedules and agents' contracts.
The former President and CEO and previous Chief Investment Officer of the
Erie Insurance Group of Companies, John M. Petersen, who retired as an
employee of EIC on December 31, 1995, entered into a consulting arrangement
with EIC effective January 2, 1996. Under the terms of the arrangement, EIC
engaged Mr. Petersen as a consultant to furnish EIC and its pension trust,
Erie Insurance Exchange, and Erie Family Life Insurance Company, with
investment services with respect to their investments in common stocks.
21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The following financial statements of the Registrant and the
report of independent certified public accountants are incorporated
herein by reference to pages 20 through 28 in the Registrant's annual
report to shareholders for the year ended December 31, 1995.
Independent Auditor Report
Statements of Financial Position - December 31, 1995 and 1994
Statements of Operations for the years ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993
Statements of Shareholders' Equity for the years ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
(2) The following financial statement schedules are included in this
report on FORM 10-K:
Page
Independent Auditors' Report on Schedules 24
Schedule I - Summary of Investments other than
investments in related parties 25
Schedule III - Supplementary Insurance Information 26
Schedule IV - Reinsurance 27
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable, and
therefore, have been omitted.
(3) Exhibits:
Exhibit 13 - Annual Report to Shareholders
Exhibit 27 - Financial Data Schedule
All exhibits for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore,
have been omitted.
(b) No reports on Form 8-K have been filed or were required to be filed
during the last quarter of the period covered by this report.
22
SIGNATURES
Pursuant to the requirements of Section 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.
Date: March 1, 1996 ERIE FAMILY LIFE INSURANCE COMPANY
(Registrant)
Principal Officers
/s/ F. William Hirt
F. William Hirt, Chairman of the Board
/s/ Stephan A. Milne
Stephen A. Milne, President and C.E.O.
/s/ Thomas M. Sider
Thomas M. Sider, Executive Vice President & CFO
/s/ Philip A. Garcia
Philip A. Garcia, Senior Vice President & Controller
Board of Directors
/s/ Samuel P. Black, Jr. /s/ Irvin H. Kochel
Samuel P. Black, Jr. Dr. Irvin H. Kochel
/s/ J. Ralph Borneman /s/ Edmund J. Mehl
J. Ralph Borneman Edmund J. Mehl
/s/ Susan Hirt Hagen /s/ Stephen A. Milne
Susan Hirt Hagen Stephen A. Milne
/s/ Thomas B. Hagen /s/ John M. Petersen
Thomas B. Hagen John M. Petersen
/s/ F. William Hirt /s/ Seth E. Schofield
F. William Hirt Seth E. Schofield
/s/ Thomas H. Hubbard /s/ Jan R. Van Gorder
Thomas H. Hubbard Jan R. Van Gorder
/s/ Stephen E. Jones /s/ Harry H. Weil
Stephen E. Jones Harry H. Weil
23
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Stockholders
Erie Family Life Insurance Company
We have audited the statements of financial position of Erie
Family Life Insurance Company (Company) as of December 31, 1995 and 1994 and the
related statements of operations, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1995, as contained in the
1995 annual report, incorporated by reference in the annual report on Form 10-K
for the year ended December 31, 1995. In connection with our audits of the
financial statements, we also have audited the financial statement schedules, as
listed in the accompanying index. 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 financial position of Erie Family
Life Insurance Company as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Also in our opinion, the related financial statement schedules, when considered
in relation to the basic financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
/s/ Brown Schwab Bergquist & Co.
Erie, Pennsylvania
February 16, 1996
24
SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 1995
Cost or Amount at which
Amortized Market Shown in the
Cost Value Balance Sheet
Type of Investment
Fixed Maturities
Available-for-Sale
Bonds and Notes
U. S. Treasuries $ 6,568,499 $ 7,442,496 $ 7,442,496
Political Subdivisions 2,063,013 2,310,929 2,310,929
Special Revenue 50,683,120 52,853,098 52,853,098
Public Utilities 99,653,629 103,576,784 103,576,784
Industrial and Misc. 240,803,281 258,317,701 258,317,701
Redeemable Preferred Stocks
Banks, Trusts and
Insurance Companies 2,000,000 1,880,000 1,880,000
Total Fixed Maturities
Held-to-Maturity $ 401,771,542 $ 426,381,008 $ 426,381,008
Equity Securities
Common Stocks
Industrial and Misc. $ 3,500,006 $ 3,414,640 $ 3,414,640
Non-Redeemable Preferred Stocks
Public Utilities 5,273,282 5,299,712 5,299,712
Banks, Trusts and
Insurance Companies 83,749,715 84,656,625 80,382,125
Industrial and Misc. 33,240,871 32,953,744 37,228,244
Total Equity Securities $ 125,763,874 $ 126,324,721 $ 126,324,721
Real Estate
Investment Property $ 1,796,395 $ 1,796,395 $ 1,796,395
Policy Loans 3,694,530 3,694,530 3,694,530
Mortgage Loans 7,062,742 7,062,742 7,062,742
Other Invested Assets 4,165,721 4,165,721 4,165,721
Total Investments $ 544,254,804 $ 569,425,117 $ 569,425,117
25
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
At December 31,
Deferred Future
Policy Policy Other
Acquisition Benefits & Unearned Policy
Segment Costs Deposits Premium Claims
1995
Ordinary Life Insurance $ 43,893,056 93,756,432 104,951 823,618
Group Life Insurance 0 984,149 0 73,408
Annuities 6,869,236 405,346,808 0 0
Supplemental Contracts 0 872,745 0 0
Total $ 50,762,292 500,960,134 104,951 897,026
1994
Ordinary Life Insurance $ 38,740,281 79,503,597 98,700 723,638
Group Life Insurance 0 653,979 0 73,847
Annuities 6,211,514 341,242,154 0 0
Supplemental Contracts 0 767,457 0 0
Total $ 44,951,795 422,167,187 98,700 797,485
1993
Ordinary Life Insurance $ 33,419,935 67,423,466 80,070 1,070,429
Group Life Insurance 0 616,218 0 84,930
Annuities 5,062,903 281,489,139 0 0
Supplemental Contracts 0 882,586 0 0
Total $ 38,482,838 350,411,409 80,070 1,155,359
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION (CONTINUED)
For the Years Ended December 31,
Amortization
Net Life & of Deferred Other
Policy Investment Annuity Acquisition Operating
Segment Revenues(a) Income Benefits Costs Expenses
1995
Ordinary Life Insurance 25,764,413 11,329,270 10,083,138 1,813,419 8,814,413
Group Life Insurance 1,854,910 59,239 705,429 0 360,556
Annuities 454,674 29,509,614 22,664,856 544,708 2,281,533
Supplemental Contract 0 64,689 53,930 0 4,101
Total 28,073,997 40,962,812 33,507,353 2,358,127 11,460,603
1994
Ordinary Life Insurance 22,931,783 9,651,029 5,856,784 1,700,028 8,245,639
Group Life Insurance 1,717,589 46,571 799,772 0 330,111
Annuities 244,111 25,800,361 18,128,885 279,737 2,297,726
Supplemental Contract 0 68,288 36,737 0 2,813
Total 24,893,483 35,566,249 24,822,178 1,979,765 10,876,289
1993
Ordinary Life Insurance 20,440,636 8,517,118 6,019,207 1,634,843 6,912,809
Group Life Insurance 1,552,939 52,933 1,251,698 0 298,612
Annuities 163,247 22,283,079 16,284,434 457,921 1,726,956
Supplemental Contract 0 75,481 20,634 0 3,026
Total 22,156,822 30,928,611 23,575,973 2,092,764 8,941,403
(a) Net of reinsurance
26
SCHEDULE IV - REINSURANCE
Percentage
Ceded to Assumed of Amount
Gross Other From Other Net Assumed
Amount Companies Companies Amount to Net
December 31, 1995
Life Insurance in force $ 9,568,795,000 1,197,855,000 N/A 8,370,940,000 -0-
Premiums for the year
Life Insurance 29,118,897 3,354,484 -0- 25,764,413 -0-
Other 2,309,584 0 -0- 2,309,584 -0-
Total Premiums $ 31,428,481 3,354,484 -0- 28,073,997 -0-
December 31, 1994
Life Insurance in force $ 8,468,890,000 987,353,000 N/A 7,481,537,000 -0-
Premiums for the year
Life Insurance 26,117,501 3,185,718 -0- 22,931,783 -0-
Other 1,961,700 0 -0- 1,961,700 -0-
Total Premiums $ 28,079,201 3,185,718 -0- 24,893,483 -0-
December 31, 1993
Life Insurance in force $ 7,265,509,000 837,286,000 N/A 6,428,223,000 -0-
Premiums for the year
Life Insurance 22,573,306 2,132,670 -0- 20,440,636 -0-
Other 1,716,186 0 -0- 1,716,186 -0-
Total Premiums $ 24,289,492 2,132,670 -0- 22,156,822 -0-
27