-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M0D67LUvXcOjRZYQMC0VX29BNyfPvGa1wPuo4K0eHgQS2vpt/uDlwYUhMIwVb8vw 618KHyvlNeXJXa0Raw88cQ== 0000795581-96-000004.txt : 19960221 0000795581-96-000004.hdr.sgml : 19960221 ACCESSION NUMBER: 0000795581-96-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960124 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960220 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNUM CORP CENTRAL INDEX KEY: 0000795581 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 010405657 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09254 FILM NUMBER: 96523175 BUSINESS ADDRESS: STREET 1: 2211 CONGRESS ST P612 CITY: PORTLAND STATE: ME ZIP: 04122 BUSINESS PHONE: 207-770-43 MAIL ADDRESS: STREET 1: 2211 CONGRESS STREET CITY: PORTLAND STATE: ME ZIP: 04122 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities and Exchange Act of 1934 Date of Report (Date of earliest event reported): January 24, 1996 UNUM Corporation (Exact name of registrant as specified in its charter) Delaware 1-9254 01-0405657 (State or other jurisdiction (Commission (IRS Employer of incorporation or organization) File Number) Identification 2211 Congress Street, Portland, Maine 04122 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (207) 770-2211 UNUM Corporation Form 8-K Table of Contents ITEM 5. OTHER EVENTS ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS SIGNATURE EXHIBIT NO. 99 ITEM 5. OTHER EVENTS On January 24, 1996, the Registrant's ("the Company") wholly-owned subsidiary, UNUM Life Insurance Company of America ("UNUM America") entered into an agreement for the sale of its group tax-sheltered annuity ("TSA") business to The Lincoln National Life Insurance Company ("the Purchaser"), a part of Lincoln National Corporation, and to a new New York insurance subsidiary of the Purchaser. The agreement also contemplates that the Registrant's wholly-owned subsidiary, First UNUM Life Insurance Company ("First UNUM"), will enter into a similar agreement with the Purchaser's New York insurance subsidiary. The sale, which is subject to regulatory approvals, involves approximately 1,700 group contractholders and assets under management of $3.1 billion as of December 31, 1995. The agreement initially contemplates the reinsurance of these contracts under an indemnity reinsurance arrangement. These contracts will then be reinsured pursuant to an assumption reinsurance arrangement upon consent of the TSA contractholders and/or participants ("Novation"). The purchase price (ceding commission) at closing is expected to be approximately $70 million. It is anticipated that it will take several months (perhaps six to nine months) to obtain the necessary approvals and otherwise close the sale. There is no guarantee that the sale will close. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED not applicable (B) PRO FORMA FINANCIAL INFORMATION These unaudited pro forma financial statements have been prepared by the Company based upon available information and assumptions deemed appropriate to reflect the indemnity and assumption reinsurance arrangements. The accompanying unaudited pro forma condensed balance sheet as of December 31, 1995, reflects the financial position of the Company as reported and as adjusted as though the sale of the tax sheltered annuity business ("TSA") had been consummated at December 31, 1995. The accompanying unaudited pro forma consolidated statements of income for the year ended December 31, 1995, reflect the results of operations of the Company as though the sale of the TSA business had occurred on January 1, 1995. These unaudited pro forma financial statements are not necessarily indicative of what the actual financial position or results of operations of the Company would have been had the sale occurred on the dates indicated, nor does it purport to indicate the future financial position or results of operations of the Company. Actual values will vary from the amounts shown in the pro forma financial statements, subject to the actual results of operations for the TSA business and certain post-closing adjustments. The unaudited pro forma financial statements should be read in conjunction with the Company's historical consolidated financial statements and notes thereto previously filed in the Company's Annual Report on Form 10-K for the year ended December 31, 1994, and the Quarterly Report on Form 10-Q for the nine months ended September 30, 1995. UNUM CORPORATION AND SUBSIDIARIES PRO FORMA CONDENSED BALANCE SHEET DECEMBER 31, 1995 UNAUDITED - DOLLARS IN MILLIONS
Historical Pro Forma Pro Forma As Pro Forma Proforma Adjustments Adjusted Adjustments As Adjusted at Closing before Assuming 100% after 100% Novation Novation Novation Assets Investments Fixed maturities - available for sale $9,135.4 $(2,783.3) (a) $6,352.1 $6,352.1 Policy loans 219.2 219.2 $(106.8) (f) 112.4 Other investments 2,337.9 2,337.9 2,337.9 Total investments 11,692.5 (2,783.3) 8,909.2 (106.8) 8,802.4 Cash, accrued investment income and premiums due 475.3 71.6 (b) 546.9 546.9 Deferred policy acquisition costs 1,142.3 (32.5) (c) 1,109.8 1,109.8 Deposit with Purchaser -- 2,783.3 (a) 2,783.3 (2,783.3) (f) -- Other assets 945.5 945.5 945.5 Separate account assets 532.2 532.2 (329.4) (g) 202.8 Total assets $14,787.8 $39.1 $14,826.9 $(3,219.5) $11,607.4 Liabilities Future policy benefits $1,718.7 $1,718.7 $1,718.7 Unpaid claims and claim expenses 4,856.4 4,856.4 4,856.4 Other policyholder funds 3,840.3 3,840.3 $(2,957.7) (f) 882.6 Income taxes 412.7 $6.1 (c) 418.8 31.4 (h) 450.2 Other liabilities 540.8 33.0 (b,d,e) 573.8 (22.0) (h) 551.8 Notes payable 583.8 583.8 583.8 Separate account liabilities 532.2 532.2 (329.4) (g) 202.8 Total liabilities 12,484.9 39.1 12,524.0 (3,277.7) 9,246.3 Stockholders' Equity Common stock 10.0 10.0 10.0 Additional paid-in capital 1,088.2 1,088.2 1,088.2 Unrealized gains, net 213.1 213.1 213.1 Unrealized foreign currency translation adjustment (23.1) (23.1) (23.1) Retained earnings 1,713.2 1,713.2 58.2 (h) 1,771.4 3,001.4 3,001.4 58.2 3,059.6 Less treasury and restricted stock 698.5 698.5 698.5 Total stockholders' equity 2,302.9 2,302.9 58.2 2,361.1 Total liabilities and stockholders' equity $14,787.8 $39.1 $14,826.9 $(3,219.5) $11,607.4
See notes to unaudited condensed pro forma balance sheet. UNUM CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEET The pro forma adjustments to the December 31, 1995, condensed balance sheet have been prepared to demonstrate the effect of the transaction before and after novation of the tax sheltered annuity business to the Purchaser. Upon novation, UNUM's balance sheet will no longer reflect amounts related to the TSA business. Novations will occur over a time frame which management cannot reasonably determine at this time. Pro Forma Balance Sheet Adjustments at Closing - ----------------------------------------------- (a) Records the sale of available for sale fixed maturity securities and transfer of the proceeds to the Purchaser. The transfer to the Purchaser is equal to the statutory reserves for the TSA business less the amount for policy loans related to the TSA business at December 31, 1995. The actual proceeds for the sale will most likely be financed through the liquidation of a combination of available for sale fixed maturity securities and short-term investments. These unaudited pro forma financial statements assume that the sale of securities does not result in the realization of investment gains or losses. Realized gains and losses may be recognized when the invested assets are actually sold, dependent upon market conditions. (b) Records cash received and a deferred gain of $71.6 million for the estimated purchase price (ceding commission) calculated at December 31, 1995. (c) Records the write-off of deferred policy acquisition costs of $32.5 million and a deferred tax asset of $6.1 million related to the TSA business. (d) Records estimated expenses associated with the transaction of $11.0 million. UNUM may be required to pay additional costs for severance of certain employees. These costs have not been included in these pro forma financial statements since the amounts cannot be reasonably estimated at this time. (e) Records the recognition of $49.6 million of the $71.6 million deferred gain to offset expenses described in (c) and (d) above. Pro Forma Balance Sheet Adjustments Assuming 100% Novation - ---------------------------------------------------------- (f) Records release of TSA liabilities of $2,957.7 million and corresponding deposit of $2,783.3 million and policy loans of $106.8 million. (g) Records transfer of Separate Account assets and liabilities to Purchaser. (h) Recognition of remaining deferred gain with related tax into income. UNUM CORPORATION PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995 UNAUDITED - DOLLARS IN MILLIONS, EXCEPT PER COMMON SHARE DATA
Historical Historical Pro Forma Pro Forma Pro Forma as Consolidated TSA Adjustments Adjustments Adjusted Business at Closing Assuming After (Note a) (Note b) 100% 100% Novation Novation (Note c) Revenues Premiums $3,018.2 $(7.3) $3,010.9 Investment income 806.3 (214.7) 591.6 Net realized investment gains 225.1 (18.6) 206.5 Fees and other income 73.3 (7.0) $49.6 $22.0 137.9 Total revenues 4,122.9 (247.6) 49.6 22.0 3,946.9 Benefits and expenses Benefits to policyholders 2,493.0 (13.7) (67.6) 2,411.7 Interest credited 227.4 (167.4) 60.0 Operating expenses 728.2 (29.1) 11.0 710.1 Commissions 369.9 (6.7) 363.2 Increase in deferred policy acquisition costs (114.7) 3.3 32.5 (78.9) Interest expense 37.2 -- 37.2 Total benefits and expenses 3,741.0 (213.6) 43.5 (67.6) 3,503.3 Income before income taxes 381.9 (34.0) 6.1 89.6 443.6 Income taxes Current 98.6 (1.2) 31.4 128.8 Deferred 2.2 (1.7) 6.1 6.6 Total income taxes 100.8 (2.9) 6.1 31.4 135.4 Net Income $281.1 $(31.1) -- $58.2 $308.2 Net income per common share $3.87 ($0.43) -- $0.80 $4.24 Weighted average 72,676,788 72,676,788 common shares outstanding
See notes to unaudited pro forma statement of income. UNUM CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME (a) Eliminates the historical results of operations for the TSA business for the year ended December 31, 1995. (b) Records the write-off of deferred policy acquisition costs and deferred income taxes and records the estimated costs of the transaction offset by the recognition of $49.6 million of the deferred gain. (c) Assuming 100% novation, records the release of TSA liabilities of $2,957.7 million for the corresponding deposit of $2,783.3 million and policy loans of $106.8 million along with the recognition of the remaining deferred gain of $22.0 million, less applicable income tax expense. Actual novations will occur over a time frame which management cannot reasonably determine at this time. NOTE: The unaudited pro forma statement of income assumes that the sale of available for sale fixed maturity securities by UNUM to finance the proceeds to the Purchaser does not result in the realization of investment gains or losses. The actual proceeds for the sale will most likely be financed through the liquidation of a combination of available for sale fixed maturity securities and short-term investments. Realized gains and losses may be recognized when the invested assets are actually sold, dependent upon market conditions. (C) EXHIBIT Exhibit No. - ----------- 99 Press Release Dated January 24, 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 hereunto duly authorized. UNUM Corporation By: /s/ Robert W. Crispin --------------------------------- Robert W. Crispin Executive Vice President and Chief Financial Officer Date: February 16, 1996 EX-99 2 EXHIBIT NO. 99 PRESS RELEASE DATED JANUARY 24, 1996 LINCOLN LIFE TO BUY UNUM'S TAX-SHELTERED BUSINESS FORT WAYNE, IN: Jan. 24 1996 -- The Lincoln National Life Insurance Company, a part of Lincoln National Corporation, announced today that it has reached a definitive agreement to acquire the group tax-sheltered annuity business from UNUM Life Insurance Company of America and First UNUM Life Insurance Company of New York, affiliates of UNUM Corporation. The acquisition, which is subject to regulatory approvals, involves about 1,700 group contracts and has assets under management of $3.2 billion. The purchase price is approximately $70 million. UNUM America announced its intention last fall to withdraw from the tax- sheltered annuity business. Tax-sheltered annuities are a tax-deferred retirement plan available to employees of institutions which are tax-exempt under section 501(c)(3) of the Internal Revenue Code and certain educational institutions. "This transaction further solidifies Lincoln Life's position as the leader in the annuity business where we enjoy a reputation of high customer satisfaction, growth and financial strength," said John Boscia, president of Lincoln Life. With this transaction, Lincoln Life's tax-qualified annuity assets under management will exceed $32 billion. "This acquisition is a perfect strategic fit for Lincoln Life which is committed to further building its annuity business," Boscia said. James F. Orr III, chairman and chief executive officer of UNUM Corporation, said, "As an asset accumulation vehicle, tax-sheltered annuities are not a strategic fit with UNUM's core disability and special risk businesses. This agreement supports our decision last year to find a buyer that is financially strong, committed to the annuity business and known for providing quality service. Between now and closing, we will maintain our commitment to our tax- sheltered annuity customers by providing quality service and sound management. Following the sale, we will continue to sharpen the focus of our operations and make the very best use of our capital and other resources," Orr said. "Including the purchase price of approximately $70 million, we expect to generate approximately $160 million in capital from this transaction. Plans for the use of this capital may include repaying debt, investing in existing or new businesses and buying back UNUM stock." Included in the agreement is the sale of the tax-sheltered annuity business written by UNUM America and First UNUM in New York state. Lincoln Life said that it intends to establish a subsidiary in New York and has met with state regulators to discuss its plans. Boscia and Orr said they expected the transaction will be completed by late summer. Approximately 215 positions within UNUM directly support the group tax- sheltered annuity business, including about 185 in Portland, Maine, headquarters of UNUM. Lincoln Life said its intent is to maintain a presence in Portland for at least a year after closing and at related field locations for at least six months after closing. Lincoln Life, the nation's 11th largest life insurance company, is an affiliate of Lincoln National Corporation (NYSE: LNC) which owns and operates financial services businesses that provide individual life insurance, annuities, pensions, property-casualty insurance, life-health reinsurance, mutual funds and investment services. LNC, which has its headquarters in Fort Wayne, has assets of more than $60 billion and annual revenues of more than $6 billion. UNUM Life Insurance Company of America is an affiliate of the Portland, Maine based UNUM Corporation (NYSE: UNM), North America's leading provider of disability insurance products and services, and a provider of employee benefits and long term care insurance. The corporation also markets special risk products and is a leading reinsurer of long term disability and other specialty insurance business. UNUM and its affiliates have offices in the United States, Canada, the United Kingdom and the Pacific Rim. UNUM Corporation assets at the end of the third quarter totaled $14.1 billion. For further information, contact: MEDIA: - ------ Scott Bushnell Lincoln National Corporation 219/455-7512 Diane Cantello UNUM Corporation 207/770-4495 ANALYSTS: - --------- Daniel Weber Lincoln National Corporation 219/455-2336 Kent Mohnkern UNUM Corporation 207/770-4392 -----END PRIVACY-ENHANCED MESSAGE-----