1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
X Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange
- ----- Act of 1934
X For the Quarterly Period Ended September 30, 1996
- -----
Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
-----------------------
Commission File Number 0-4604
CINCINNATI FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
An Ohio Corporation 31-0746871
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6200 South Gilmore Road
Fairfield, Ohio 45014-5141
(Address of principal executive offices)
Registrant's telephone number, including area code: 513/870-2000
*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
--- ---
Securities registered pursuant to Section 12(g) of the Act:
$2.00 Par Common--55,704,822 shares outstanding at September 30, 1996
$80,000,000 of 5-1/2% Convertible Senior Debentures Due 2002
2
PART I
ITEM 1. FINANCIAL STATEMENTS
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1996 1995
---- ----
ASSETS
Cash ........................................................ $ 55,370,552 $ 20,019,459
Investments
Fixed Maturities (Cost: 1996--$2,430,289,742;
1995--$2,298,718,542) ................................ 2,523,003,748 2,446,995,519
Equity Securities (Cost: 1996--$1,528,062,288;
1995--$1,423,671,759) ................................ 3,452,644,298 3,041,762,260
Other Invested Assets ................................... 49,865,633 46,963,230
Finance Receivables ......................................... 24,911,719 20,281,562
Premiums Receivable ......................................... 154,487,977 161,116,592
Reinsurance Receivable ...................................... 113,227,109 103,682,717
Prepaid Reinsurance Premiums ................................ 22,798,125 21,835,186
Investment Income Receivable ................................ 68,019,445 65,045,195
Land, Buildings and Equipment for Company Use (at Cost
Less Accumulated Depreciation) .......................... 37,681,529 33,056,396
Deferred Acquisition Costs Pertaining to Unearned
Premiums and to Life Policies in Force .................. 124,890,279 119,589,232
Other Assets ................................................ 25,323,581 28,950,551
-------------- ---------------
Total Assets ........................................ $6,652,223,995 $ 6,109,297,899
============== ===============
LIABILITIES
Insurance Reserves:
Life Policy Reserves .................................... $ 429,263,406 $ 403,263,716
Losses and Loss Expenses ................................ 1,857,548,855 1,743,533,951
Unearned Premiums ........................................... 422,309,955 408,624,414
Notes Payable ............................................... 252,775,191 221,005,282
5-1/2% Convertible Senior Debentures Due 2002 .............. 80,000,000 80,000,000
Federal Income Taxes
Current ................................................. 14,507,027 10,475,088
Deferred ................................................ 568,969,296 487,840,052
Other Liabilities ........................................... 107,069,655 96,584,203
-------------- ---------------
Total Liabilities ................................... 3,732,443,385 3,451,326,706
-------------- ---------------
SHAREHOLDERS' EQUITY
Common Stock, $2 per Share; Authorized 80,000,000
Shares; Issued 1996--55,812,009; 1995--53,084,081
Shares; Outstanding 1996--55,704,822; 1995--53,056,934
Shares .................................................. 111,624,018 106,168,162
Paid-In Capital ............................................. 401,116,798 237,171,509
Retained Earnings ........................................... 1,090,497,989 1,156,626,751
Unrealized Gain on Investments, Less Taxes .................. 1,322,491,813 1,159,388,263
-------------- ---------------
2,925,730,618 2,659,354,685
Less Treasury shares at Cost (1996--107,187 Shares;
1995--27,147 Shares) .................................... (5,950,008) (1,383,492)
-------------- ---------------
Total Shareholders' Equity .......................... 2,919,780,610 2,657,971,193
-------------- ---------------
Total Liabilities and Shareholders' Equity ....... $6,652,223,995 $ 6,109,297,899
============== ===============
Accompanying notes are an integral part of these financial statements.
3
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Nine Months Ended Sept. 30, Three Months Ended Sept. 30,
--------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Premiums Earned:
Property and Casualty ........ $ 1,014,604,868 $ 935,212,076 $ 343,761,384 $ 316,795,076
Life ......................... 37,527,566 32,923,047 12,484,097 11,246,097
Accident and Health .......... 5,696,378 5,562,013 1,938,550 1,870,379
--------------- --------------- ------------- -------------
Net Premiums Earned ....... 1,057,828,812 973,697,136 358,184,031 329,911,552
Investment Income, Less Expenses . 242,451,646 223,550,773 79,929,131 76,105,459
Realized Gain on Investments ..... 40,939,681 31,303,394 15,050,236 7,668,261
Other Income ..................... 8,301,379 7,816,844 2,517,977 2,972,281
--------------- --------------- ------------- -------------
Total Revenues ............... 1,349,521,518 1,236,368,147 455,681,375 416,657,553
--------------- --------------- ------------- -------------
Benefits & Expenses:
Ins. Losses and Policyholder Ben.. 825,923,896 712,086,070 285,994,824 241,044,955
Commissions ...................... 191,965,072 183,440,100 67,755,020 61,587,975
Other Operating Expenses ......... 83,253,361 73,025,419 28,269,464 26,364,563
Taxes, Licenses & Fees ........... 32,678,364 28,281,967 10,971,913 8,925,878
Increase in Deferred Acquisition
Costs Pertaining to Unearned
Premiums and to Life Policies
in Force ..................... (5,301,048) (8,615,731) (2,631,647) (4,522,789)
Interest Expense ................. 13,885,007 12,819,852 4,763,461 4,837,283
Other Expenses ................... 4,987,529 4,904,822 1,899,951 1,446,355
--------------- --------------- ------------- -------------
Total Expenses ............... 1,147,392,181 1,005,942,499 397,022,986 339,684,220
--------------- --------------- ------------- -------------
Income Before Income Taxes ......... 202,129,337 230,425,648 58,658,389 76,973,333
--------------- --------------- ------------- -------------
Provision (Ben.) for Inc. Taxes:
Current .......................... 48,031,937 53,139,686 13,999,560 14,054,820
Deferred ......................... (6,695,743) 297,883 (2,289,871) 4,315,613
--------------- --------------- ------------- -------------
Total ........................ 41,336,194 53,437,569 11,709,689 18,370,433
--------------- --------------- ------------- -------------
Net Income ......................... $ 160,793,143 $ 176,988,079 $ 46,948,700 $ 58,602,900
=============== =============== ============= =============
Weighted Avg. Shares Outstanding ... 57,807,728 57,661,339* 57,799,697 57,691,919*
=============== =============== ============= =============
Per Common Share:
Total Net Income ............. $ 2.82 $ 3.11* $ .82 $ 1.03*
=============== =============== ============= =============
Cash Dividends Declared ...... $ 1.09 $ .95* $ .37 $ .32*
=============== =============== ============= =============
*Adjusted to reflect 5% stock dividend effective March 15, 1996.
Accompanying notes are an integral part of these financial statements.
4
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
Common Stock Treasury Paid-In Retained Unrealized
Shares Amount Stock Capital Earnings Capital Gains
------ ------ ----- ------- -------- -------------
Bal. Dec. 31,
l994 50,435,974 $100,871,948 $ (913,765) $ 105,791,761 $1,133,104,811 $ 601,192,480
Net Income 176,988,079
Change in Unreal.
Gains Net of
Inc. Taxes of
$ 176,182,278 327,195,659
Div. Declared (53,224,793)
5% Stock Div.
at Market 2,521,546 5,043,092 127,338,073 (132,564,883)*
Purchase of
Treasury Shares (1,101,236) 4,436
Stock Options
Exercised 110,131 220,262 3,264,796
------------ ------------ ------------- ------------- -------------- --------------
Bal. Sept. 30,
l995 53,067,651 $106,135,302 $ (2,015,001) $ 236,399,066 $1,124,303,214 $ 928,388,139
============ ============ ============= ============= ============== ==============
Bal. Dec. 31,
l995 53,084,081 $106,168,162 $ (1,383,492) $ 237,171,509 $1,156,626,751 $1,159,388,263
Net Income 160,793,143
Change in Unreal.
Gains Net of
Inc. Taxes of
$ 87,824,988 163,103,550
Div. Declared (60,913,179)
5% Stock Div.
at Market 2,652,110 5,304,220 160,452,655 (166,008,726)*
Purchase of
Treasury Shares (4,566,516) 744,299
Stock Options
Exercised 75,818 151,636 2,748,335
------------ ------------ ------------- ------------- -------------- --------------
Bal. Sept. 30,
l996 55,812,009 $111,624,018 $ (5,950,008) $ 401,116,798 $1,090,497,989 $1,322,491,813
============ ============ ============= ============= ============== ==============
Accompanying notes are an integral part of these financial statements.
*Includes $183,718 and $251,851 for fractional shares in March 17, 1995 and
March 15, 1996, respectively.
5
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended Sept. 30,
---------------------------
1996 1995
---- ----
Cash flows from operating activities:
Net income ............................................... $ 160,793,143 $ 176,988,079
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation and amortization ........................ 3,079,669 6,740,990
Increase in net unearned premiums .................... 12,722,602 25,094,237
Increase in net life policy reserves ................. 25,999,690 25,236,292
Increase in net loss and loss expense reserves ....... 104,470,512 122,631,824
Decrease (Increase) in net premiums receivable ....... 6,628,615 (19,846,989)
Increase in deferred acquisition costs ............... (5,301,048) (8,615,730)
Increase in other liabilities ........................ 7,637,661 12,450,089
Increase in investment income receivable ............. (2,974,250) (7,377,978)
Decrease (Increase) in accounts receivable ........... 490,827 (3,419,352)
Decrease in deferred income taxes .................... (6,695,743) (1,553,149)
Increase in current income taxes ..................... 4,031,939 12,566,440
Realized gain on investments ......................... (40,939,681) (31,303,394)
Other ................................................ 2,887,619 (10,205,963)
------------- -------------
Net cash provided by operating activities ......... 272,831,555 299,385,396
------------- -------------
Cash flows from investing activities:
Sale of fixed maturities investments ................. 114,996,810 110,330,569
Called and maturity of fixed maturities investments .. 163,806,962 145,656,562
Sale of equity securities investments ................ 210,796,170 221,452,824
Collection of finance receivables .................... 7,584,116 5,992,361
Purchase of fixed maturities investments ............. (398,394,012) (492,073,695)
Purchase of equity securities investments ............ (281,615,680) (299,571,471)
Investment in land, buildings and equipment .......... (12,055,474) (7,210,591)
Investment in finance receivables .................... (12,214,273) (9,103,340)
Investment in other invested assets .................. (2,915,505) (3,645,344)
------------- -------------
Net cash used in investing activities ............. (210,010,886) (328,172,125)
------------- -------------
Cash flows from financing activities:
Proceeds from stock options exercised ................ 2,899,971 3,485,058
Purchase of treasury shares .......................... (3,822,217) (1,096,800)
Increase in notes payable ............................ 31,769,909 68,533,660
Payment of cash dividends to shareholders ............ (58,317,239) (51,512,452)
------------- -------------
Net cash (used in) provided by financing activities (27,469,576) 19,409,466
------------- -------------
Net increase (decrease) in cash .............................. 35,351,093 (9,377,263)
Cash at beginning of period .................................. 20,019,459 48,254,464
------------- -------------
Cash at end of period ........................................ $ 55,370,552 $ 38,877,201
============= =============
Supplemental disclosures of cash flow information
Interest paid ............................................ $ 12,481,950 $ 11,485,922
============= =============
Income taxes paid ........................................ $ 44,000,000 $ 46,000,000
============= =============
Accompanying notes are an integral part of these financial statements.
6
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE I - ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the Company and
all of its subsidiaries, each of which is wholly owned, and are presented in
conformity with generally accepted accounting principles. All significant
inter-company investments and transactions have been eliminated in
consolidation. The December 31, 1995 consolidated balance sheet amounts are
derived from the audited financial statements but do not include all disclosures
required by generally accepted accounting principles.
INVESTMENTS--Fixed maturities and equity securities have been classified as
available for sale and are carried at fair values at September 30, 1996 and
December 31, 1995.
UNREALIZED GAINS AND LOSSES--The increases (decreases) in unrealized gains for
fixed maturities and equity securities (net of income tax effect) for the
nine-month and three-month periods ended September 30 are as follows:
Fixed Equity
Maturities Securities Total
---------- ---------- -----
Nine-Month Periods Ended
September 30, 1996 $(36,115,931) $199,219,481 $163,103,550
September 30, 1995 $ 94,342,296 $232,853,363 $327,195,659
Three-Month Periods Ended
September 30, 1996 $ 11,657,602 $ 80,155,359 $ 91,812,961
September 30, 1995 $ 1,595,539 $ 93,963,151 $ 95,558,690
Such amounts are included as additions to and deductions from shareholders'
equity.
REINSURANCE--Premiums earned are net of premiums on ceded business, and
insurance losses and policyholder benefits are net of reinsurance recoveries in
the accompanying statements of income for the nine-month and three-month periods
ended September 30 as follows:
Ceded Reinsurance
Premiums Recoveries
-------- ----------
Nine-Month-Periods Ended
September 30, 1996 ... $70,213,173 $30,009,990
September 30, 1995 ... $63,858,772 $29,849,669
Three-Month Periods Ended
September 30, 1996 ... $24,716,567 $11,233,535
September 30, 1995 ... $23,252,553 $ 1,632,321
7
NOTE II - STOCK OPTIONS
The Company has primarily qualified stock option plans under which options are
granted to employees of the Company at prices which are not less than market
price at the date of grant and which are exercisable over ten-year periods. On
September 30, 1996, outstanding options for Stock Option Plan No. III totalled
92,378 shares with purchase prices ranging from a low of $11.87 to a high of
$22.03 and outstanding options for Stock Option Plan No. IV totalled 1,175,839
shares with purchase prices ranging from a low of $22.38 to a high of $61.50.
All outstanding shares have been adjusted for the 5% stock dividend declared
February 3, 1996, payable April 30, 1996 to shareholders of record of March 15,
1996. No shares have been granted from Plan V at this time.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," which will be effective for the Company beginning January 1,
1996. SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25, which
recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to its
stock based compensation awards to employees.
NOTE III INTERIM ADJUSTMENTS
The preceding summary of financial information for Cincinnati Financial
Corporation and consolidated subsidiaries is unaudited, but the Company believes
that all adjustments (consisting only of normal recurring accruals) necessary
for fair presentation have been made. The results of operations for this interim
period is not necessarily an indication of results to be expected for the
remaining three months of the year.
8
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Premiums earned for the nine months ended September 30, 1996 have increased
$84,131,676 (9%) over the nine months ended September 30, 1995. Also, premiums
earned have increased $28,272,479 (9%) for the three months ended September 30,
1996 over the three months ended September 30, 1995. For the nine-month period
ended September 30, 1996, the growth rate of our property and casualty
subsidiaries is greater than last year on both a gross written and earned
premium basis. For the three-month period ended September 30, 1996, the growth
rate is slightly less on a gross written basis and slightly greater on an earned
premium basis when compared to the third quarter of 1995. The premium growth is
attributable to increases in new business, and some rate increases; however,
these increases were somewhat offset by the continued softness of the commercial
lines market. The premium volume of our life and health subsidiary has increased
12% for the nine months ended September 30, 1996 and 10% for the three months
ended September 30, 1996 compared to the comparable periods of 1995. The premium
growth in our life subsidiary is mainly attributable to increased sales of both
traditional and interest sensitive products. For the nine-month and three-month
periods ended September 30, 1996, investment income, net of expenses, has
increased $18,900,873 (8%) and $3,823,672 (5%) when compared with the first nine
months and third three months of 1995, respectively. This increase is the result
of the growth of the investment portfolio because of investing cash flows from
operations and dividend increases from equity securities.
Realized gains on investments for the nine months ended September 30, 1996
amounted to $40,939,681 compared to $31,303,394 for the nine-month period ended
September 30, 1995, and $15,050,236 for the three-month period ended September
30, 1996 compared to $7,668,261 for the three-month period ended September 30,
1995. The realized gains are predominantly the result of the sale of equity
securities and management's decision to realize the gains and reinvest the
proceeds at higher dividend yields to cost.
Insurance losses and policyholder benefits (net of reinsurance recoveries)
increased $113,837,826 (16%) for the first nine months of 1996 over the same
period in 1995 and increased $44,949,869 (19%) for the third quarter when
compared to the third quarter of 1995. The losses and benefits of the property
and casualty companies have increased $108,303,458 for the nine-month period and
increased $44,105,874 for the third quarter of 1996 compared to the comparable
periods for 1995. The losses for the first nine months and for the third quarter
have increased because of the growth of new business and a higher incidence of
claims. Catastrophe losses were $60.1 million and $9.9 million, respectively,
for the first nine months of 1996 and 1995 and were $22.9 million and $5.4
million, respectively, for the third quarter of 1996 and 1995. These losses were
substantially higher for the first nine months and the third quarter of 1996
compared to the comparable periods of 1995 because of a higher incidence and
severity of these weather related claims.
Policyholder benefits of the life insurance subsidiary increased $5,534,368 for
the first nine months of 1996 over the same period of 1995 and increased
$843,995 for the third quarter when compared to the third quarter of 1995. The
majority of the nine-month and third quarter increase is the result of a higher
incidence of death and accident and health claims and related costs.
9
Commission expenses increased $8,524,972 for the nine-month period ended
September 30, 1996 compared to the same period for 1995 and increased $6,167,045
for the third quarter of 1996 compared to the same period in 1995. The increase
is attributable to the increases in new business. Other operating expenses
increased $10,227,942 for the nine-month period ended September 30, 1996
compared to the same period for 1995 and increased $1,904,901 for the third
quarter of 1996 compared to the same period in 1995. The increase is the result
of general wage increases, the increase in the number of employees, and the
related expenses associated with the production of new business.
Provision for income taxes, current and deferred, have decreased by $12,101,375
for the first nine months of 1996 compared to the first nine months of 1995 and
have decreased $6,660,744 for the third quarter of 1996 compared to the third
quarter of 1995. The decrease in federal taxes reflects a decline in the
effective tax rate from 23.2% to 20.5% at September 30, 1995 and 1996,
respectively, and a decline in the effective tax rate from 23.9% to 20.0% for
the third quarter of 1995 and 1996, respectively.
Notes payable increased $31,769,909 for the first nine months and increased
$65,847 for the third quarter of 1996. The Company borrowed the additional funds
to pay for the increased losses in the property and casualty companies instead
of paying the losses from cash flow because the Company decided to take
advantage of the investment opportunities that were available at that time.
Unrealized appreciation will fluctuate with changes in the overall fixed
maturities and equity securities markets. Changes in unrealized appreciation are
discussed in Note 1. The Company's equity investment portfolio continues to be
primarily investments in common stocks of public utility companies and financial
institutions.
10
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is involved in no material litigation other than routine litigation
incident to the nature of the insurance industry.
ITEM 2. Changes in Securities
There have been no material changes in securities during the third quarter.
ITEM 3. Defaults Upon Senior Securities
The Company has not defaulted on any interest or principal payment, and no
arrearage in the payment of dividends has occurred.
ITEM 4. Submission of Matters to a Vote of Security Holders
No special matters were voted upon by security holders during the third quarter.
ITEM 5. Other Information
No matters to report.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits included:
Exhibit 11--Statement re Computation of Per Share
Earnings.
Exhibit 27--Financial Data Schedule
(b) The Company was not required to file any reports on
Form 8-K during the quarter ended September 30, 1996.
Signature
Pursuant to the requirements 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.
CINCINNATI FINANCIAL CORPORATION
--------------------------------
(Registrant)
Date November 8, 1996
----------------
By/s/ Robert J. Driehaus
--------------------------------
R. J. Driehaus
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
1
EXHIBIT 11
CINCINNATI FINANCIAL CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(in thousands except for per share amounts)
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1996 1995* 1996 1995*
---- ----- ---- -----
Weighted average shares outstanding 55,753 55,660 55,769 55,686
Equivalent shares assumed to be
outstanding for:
Stock options 263 209 239 214
Convertible debentures
1,792 1,792 1,792 1,792
-------- -------- ------- -------
Number of shares for primary
computation 57,808 57,661 57,800 57,692
Other dilutive equivalent shares--
stock options -0- 7 -0- 7
-------- -------- ------- -------
Number of shares assuming full
dilution 57,808 57,668 57,800 57,699
======== ======== ======= =======
Net income $160,793 $176,988 $46,949 $58,603
Interest on convertible debentures--
net of tax 2,145 2,145 715 715
-------- -------- ------- -------
Net income for per share computation $162,938 $179,133 $47,664 $59,318
======== ======== ======= =======
Earnings per share:
Total Primary $ 2.82 $ 3.11 $ .82 $ 1.03
======== ======== ======= =======
Fully Diluted $ 2.82 $ 3.11 $ .82 $ 1.03
======== ======== ======= =======
*Common shares and their equivalent have been adjusted to reflect the 5% stock
dividend effective March 15, 1996.
7
9-MOS
DEC-31-1996
JAN-01-1996
SEP-30-1996
2,523,003,748
0
0
3,452,644,298
6,702,089
15,602,197
6,025,513,679
55,370,552
2,903,793
124,890,279
6,652,223,995
2,235,829,815
422,309,955
47,758,987
9,971,055
332,775,191
0
0
105,674,010
2,814,106,600
6,652,223,995
1,057,828,812
242,451,646
40,939,681
8,301,379
825,923,896
213,081,939
108,386,346
202,129,337
41,336,194
160,793,143
0
0
0
160,793,143
2.82
2.82
1,580,742,006
0
0
0
0
1,691,105,328
0
--Equals the sum of Fixed Maturities, Equity Securities and other Invested
Assets
--Equals the sum of Life Policy Reserves and Losses and Loss Expenses less the
Life Company liability for Supplementary Contracts without Life Contingencies
of $3,223,459 which is classified as Other Policyholder Funds
--Equals the sum of Notes Payable and the 5-1/2% Convertible Senior Debenture
--Equals the Total Shareholders Equity
--Equals the Sum of Commissions, Other Operating Expenses, Taxes licenses and
Fees, Increase in deferred acquisitions costs, Interest expense and other
expenses
--Equals the net reserve for unpaid claims for the property casualty
subsidiaries less loss checks payable as of December 31, 1995
--Equals the net reserve for unpaid claims for the property casualty subsidiaries
less loss checks payable as of September 30, 1996
