Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
GENERAL
The Registrant, The Liberty Corporation ("the Company") is a holding company engaged through its subsidiaries primarily in the insurance and broadcasting businesses.
The Company's primary insurance subsidiaries are Liberty Life Insurance Company ("Liberty Life") and its pre-need insurance group of companies. The pre-need companies include Pierce National Life Insurance Company ("Pierce National"), North American National Corporation ("North American") and American Funeral Assurance Company ("American Funeral"). North American is an insurance holding company whose subsidiaries include Pan Western Life Insurance Company, Brookings International Life Insurance Company and Howard Life Insurance Company. Howard Life Insurance Company was merged into Pierce National in January 1995. Together, these insurance subsidiaries offer a diverse portfolio of individual life and health insurance products. In addition to Liberty Life and the pre-need companies, Liberty Insurance Services Corporation ("Liberty Insurance Services") provides home office support services for unaffiliated life and health insurance companies, as well as for the Company's insurance subsidiaries. Other subsidiaries of the Company provide investment advisory services to the Company's insurance subsidiaries and unaffiliated insurance companies, and property development and management services to the Company.
The Company's broadcasting subsidiary, Cosmos Broadcasting Corporation ("Cosmos"), currently owns and operates eight network affiliated television stations, the most recent being WLOX-TV in Biloxi, Mississippi, acquired in February 1995.
STRATEGY; RECENT DEVELOPMENTS
The Company's principal strategy is to grow internally and through acquisitions, while maintaining its emphasis on cost controls.
We will continue to seek opportunities to acquire insurance companies and blocks of business that complement or fit with the Company's existing marketing divisions and product lines. The Company's acquisition strategy has focused on both home service and pre-need businesses. Home service business represents the Company's primary core business, whereas the pre-need business is a relatively new line of business for the Company. The Company largely entered the pre-need business with the acquisition of Pierce National in July 1992. The 1994 pre-need acquisitions significantly strengthened the Company's market position in the pre-need market, which provides life insurance products to pre-fund funeral services. The Company believes that the pre-need business has favorable demographics which can provide attractive future premium and earnings growth.
Management's philosophy regarding broadcasting acquisitions is to make selective acquisitions in local markets where we can be among the dominant television stations.
The following page summarizes the Company's acquisitions since 1991.
(1) Represents amount of annualized premiums acquired at the time of acquisition. (2) Net of annual premiums associated with western portion of Kentucky Central block of business, which the Company sold in December 1991. (3) Represents amount of annual premiums reported by the selling company in its 1992 annual financial statements filed under applicable statutory requirements. (4) Represents amount of annual premiums reported by the selling company in its 1993 annual financial statements filed under applicable statutory requirements.
BROADCASTING ACQUISITION
On February 28, 1995, the Company completed the acquisition of WLOX-TV in Biloxi, Mississippi, bringing to eight the total number of television stations in the broadcasting subsidiary. The purchase price of $41.0 million was funded with a combination of redeemable preferred stock, cash and a note payable. WLOX is an ABC affiliate that carries strong local news and is the top station in its market.
INSURANCE OPERATIONS
LIBERTY LIFE. Liberty Life is a stock life insurance company engaged in the business of writing a broad range of individual life insurance policies and accident and health insurance policies. Liberty Life is ranked 131st, based on ordinary life insurance in force among approximately 1,200 United States life insurance companies, according to data provided by A.M. Best Company. While Liberty Life is licensed in forty-nine states, and the District of Columbia, its focus has been the Southeast and Midwest. For 1994, the largest percentages of its premium income were from South Carolina (31%), North Carolina (23%), Louisiana (4%) and Ohio (3%). The Company believes that Liberty Life is the largest provider of home service business in the Carolinas. State National was integrated into Liberty Life during late 1994 and is included in the discussion of Liberty Life.
Life insurance and annuity premiums contributed 83% of Liberty Life's total premiums in 1994, 79% in 1993 and 78% in 1992. Accident and health insurance premiums contributed the remainder.
The Company decided to cease sales of its products through its general agency distribution system due to the absence of critical volume. The decision to close the general agency distribution system resulted in a pre-tax charge to earnings of $10.3 million, primarily to reduce deferred acquisition costs no longer considered recoverable. Premiums and policy charges from the general agency division represented approximately 2% of the Company's total premiums and policy charges in 1994.
Liberty Life continues to market its insurance products through its Home Service and Mortgage Protection divisions.
HOME SERVICE DIVISION. The Home Service Division is Liberty Life's largest division, contributing 70% of Liberty Life's premiums in 1994. Home Service agents of Liberty Life sell primarily individual life, including universal life and interest-sensitive whole life products, as well as health insurance. As of December 1994, the Company had approximately 1,400 agents and managers in this division operating out of 60 district offices. These agents periodically visit the insureds' homes and businesses to collect premiums. Although the Company has broadened this division's area of concentration beyond the Carolinas, principally through strategic acquisitions, the Company has maintained a regional focus for its home service business on the Southeast and Midwest.
MORTGAGE PROTECTION DIVISION. The Mortgage Protection Division contributed 26% of Liberty Life's premiums in 1994. The Mortgage Protection Division primarily sells decreasing term life insurance designed to extinguish the unpaid portion of a residential mortgage upon the death of the insured. This division also sells accidental death, disability income and credit life insurance. A staff of full-time representatives and independent brokers offer these products through more than 1,000 financial institutions located throughout the United States. The Company supports the marketing of these products through direct mail and phone solicitations.
PRE-NEED GROUP. The Company's pre-need subsidiaries provide life insurance products which pre-fund funeral services. Pierce National, a stock life insurance company acquired in July 1992, is domiciled in California, but its principal executive offices are in Greenville, South Carolina. Pre-need policies consist primarily of ordinary life insurance policies for which the premiums are paid in a single payment at the outset or primarily over a three, five or ten-year period. In April 1993, Pierce National acquired through coinsurance all of the ordinary life insurance, representing pre-need life insurance, of Estate Assurance Company, effective as of January 1, 1993.
North American, acquired in February 1994, has executive offices in Greenville, South Carolina while its insurance subsidiaries are domiciled in other states. Pan-Western Life Insurance Company, a stock life insurance company, is domiciled in Ohio. Brookings International Life Insurance Company, also a stock life insurance company, is domiciled in South Dakota.
American Funeral, also acquired in February 1994, is domiciled in the state of Mississippi. Administrative and service operations of American Funeral are located in Amory, Mississippi.
The Company's current plans are to integrate each of the North American subsidiaries into Pierce National and or American Funeral by the end of 1995.
The pre-need companies are currently licensed in 41 states, the District of Columbia, and ten Canadian provinces. Pierce National has licensing applications pending in 4 additional states, three of which are not covered by another pre-need company. The current plan is to seek licensure in the majority of the remaining states by the end of 1995. The largest percentages of premium income for 1994 came from Canada (13%), Mississippi (11%) and California (9%).
At December 31, 1994, the pre-need companies had 26 employees in its home office in Greenville who perform administrative and clerical duties. Policy administration for Pierce National and North American is carried out by Liberty Insurance Services who employs approximately 85 people in this area. American Funeral employs approximately 45 people in its Amory, Mississippi office to provide administrative, clerical and policy administration services.
PREMIUM BREAKDOWN. The following table sets forth the insurance premiums and policy charges for Liberty Life's marketing and distribution divisions and the pre-need companies for the years ended December 31.
(1) Represents premiums from date of acquisition. (2) Increase reflects, in part, the acquisition of Estate Assurance Company's insurance in force in April 1993. (3) Includes the results of State National Life Insurance Company from April 1994
UNDERWRITING PRACTICES. Liberty Life's underwriting practices for ordinary life insurance require medical examinations for applicants over age 60 or for policies in excess of certain prescribed face amounts. Approximately 72% OF non-home service life insurance policies issued in 1994 were issued without medical examinations. In accordance with the general practice in the life insurance industry, Liberty Life writes life insurance on substandard risks at increased premium rates. Generally, home service life insurance for non-universal life products is written for amounts under $5,000 and typically no medical examination is required. Mortgage protection life insurance is usually written without medical examination. Substantially all of pre-need policies are written for amounts under $5,000, and no medical examination is required unless the applicant requests a preferred rate.
REINSURANCE. The Company's insurance subsidiaries use reinsurance in two distinct ways: first, as a risk management tool in the normal course of business and second, in isolated strategic transactions to effectively buy or sell blocks of in force business. The Company's insurance subsidiaries remain liable with respect to reinsurance ceded should any reinsurer be unable to meet the obligations assumed by it. As a result of its reinsurance transactions, the Company's insurance subsidiaries remain liable on $4.8 billion (22%) of its total $21.6 billion life insurance in force at December 31, 1994.
For the years ended December 31, 1994, 1993 and 1992, the Insurance Group had ceded life insurance premiums of $26.4 million, $26.1 million and $28.3 million, respectively. Accident and Health premiums ceded for the Insurance Group made up the remainder of ceded premiums which were $3.7 million, $3.5 million and $3.0 million for the years ended December 31, 1994, 1993 and 1992, respectively.
RISK MANAGEMENT REINSURANCE TRANSACTIONS. Liberty Life reinsures with other insurance companies portions of the life insurance it writes in order to limit its exposure on large or substandard risks. The maximum amount of life insurance that Liberty Life will retain on any life is $300,000, plus an additional $50,000 in the event of accidental death. This maximum is reduced for higher ages and for special classes of risks. The maximum amount of life insurance that any of the pre-need companies will retain on any life is $50,000. Insurance in excess of the retention limit is either automatically ceded under reinsurance agreements or is reinsured on an individually agreed basis with other insurance companies. Liberty Life has ceded a significant portion of its risks on accidental death and disability coverage to other insurance companies. Liberty Life and Pierce National also have coverage for catastrophic accidents. At December 31, 1994, Liberty Life and the pre-need companies had ceded in the normal course of business portions of their risks to a number of other insurance companies.
STRATEGIC REINSURANCE TRANSACTIONS. In 1991, 80% or $3.2 billion face amount of Liberty Life's General Agency Marketing Division net insurance in force was coinsured with Life Reassurance Corporation ("Life Re"). The agreement with Life Re also provides for the coinsurance of 50% of this division's insurance in force issued after 1991. The total face value of amounts ceded to Life Re at December 31, 1994 was $2.9 billion. Under terms of the agreement, assets supporting the business ceded are required to be held in escrow.
In order to facilitate the 1991 acquisition through reinsurance of the Kentucky Central block of business, Liberty Life coinsured 50% of its home service traditional life insurance business with Lincoln National Life Reinsurance Insurance Company. The Lincoln National reinsurance has been accounted for under generally accepted accounting principles as financial reinsurance. The reinsurance contract contains an escrow agreement that requires assets equal to the reserves reinsured, as determined under statutory accounting principles, be held in escrow for the benefit of this block of business.
The Company uses assumption reinsurance to effectively acquire blocks of in force business by acting as the "reinsurer" for other insurance companies. For instance, the Company acquired the Kentucky Central and Estate Assurance blocks in this manner.
OPERATIONS. The administrative functions of underwriting and issuing new policies, and the ongoing servicing and claims settlement of in force policies, are centralized at the home office of Liberty Life, Pierce National and North American in Greenville, South Carolina, and American Funeral's home office in Amory, Mississippi. In acquiring additional blocks of insurance business, the Company's strategy is to integrate the administrative functions into its existing operations, either directly or through Liberty Insurance Services, as soon as practical after the effective date of the acquisition. The Company believes that this centralization permits economies of scale and promotes greater cost efficiencies. The Company is currently in the process of consolidating the pre-need businesses of Pierce National, North American and American Funeral.
The Company's Insurance Group services approximately 3.0 million policies representing $21.6 billion of life insurance in force, of which $4.8 billion of insurance in force has been ceded to other companies. Approximately 152,000 policies representing $3.2 billion of life insurance in force were issued during 1994. The Company intends to continue its focus on reducing the unit costs of administrative services by increasing the volume of business through acquisitions of blocks of business similar in nature to its existing business, by internal growth in those businesses, and by investing in up-to-date technology to further improve efficiency in its operations.
LIBERTY INSURANCE SERVICES. Liberty Insurance Services provides a wide range of home office support services to unaffiliated life and health insurance companies on a fee basis, as well as to the Company's insurance subsidiaries. These services include underwriting, preparation of policies, accounting, customer service and claims processing and adjudication and can be tailored to support the special features of insurance products offered by other companies that desire these services. The Company's strategy is to target (i) insurance companies that have closed blocks of business that are expensive to administer, (ii) insurance companies that have start-up or new product lines requiring new support levels, (iii) small to midsize insurance companies that cannot justify large investments in home office technology, and (iv) insurance companies acquired by financial investors lacking experience in providing home office support. Liberty Insurance Services believes that its economies of scale will permit its customers to reduce their home office support costs and focus resources on marketing their insurance products. Although Liberty Insurance Services profits generated to date have not been material, the Company believes that Liberty Insurance Services has significant growth potential. Liberty Insurance Services has 270 employees who provide services to the Company's insurance subsidiaries as well as to its outside clients.
SPECIAL CHARGES
The Company recognized special charges in the fourth quarter of $20.3 million (after-tax) relating to two unique situations: a write off of deferred costs connected with the development of a software system for administration of the Company's insurance business, and a decision to cease marketing products through the general agency distribution system.
SYSTEMS DEVELOPMENT COSTS. The largest component of the special charges relates to a write off of previously deferred systems development costs. In 1989, the Company entered into a joint venture effort with the objective of developing a state-of-the-art system that would service all of the types of insurance products sold by the Company's insurance subsidiaries. It was expected that the Company would be able to have this system fully implemented by the end of 1993, and that it would provide a substantial competitive advantage. Additionally, it was contemplated that the software would be sold to other companies, through the joint venture partner (JVP), and that the Company would receive royalty income from the venture.
In 1993, it became apparent that the system was not going to be completed and available for implementation by the end of 1993. Further, the JVP had acquired another software company and had made a decision that the system being developed for the Company would not be the one the JVP marketed to other insurance companies. In late 1993, the JVP suggested an alternative approach for the Company to receive value for the costs that it had incurred. Namely, the Company was offered the rights to all software produced, or to be produced, by the JVP and the company it had acquired. The Company was to receive these rights with no, or substantially reduced, fees. Further, as a part of this proposal, the JVP would complete and deliver certain system components (these were to interface with the systems for which the Company was to receive rights) to the Company by mid-1994.
The system components have not been delivered and the JVP asked for additional time to complete the development. As a result, it was necessary that the Company, again, assess the value of the related asset taking into consideration the current circumstances. The Company engaged a consulting firm to review the situation and assist in estimating a reasonable value or range of values that might be attributed to the costs that had been incurred and deferred in connection with the development of the anticipated systems. As a result of this review, it was determined that a write off amounting to $13.6 million after-tax was appropriate to reflect the current estimated economic value.
GENERAL AGENCY MARKETING. One of the channels of distribution for Liberty Life has been a general agency marketing system (GAM). However, GAM did not produce the expected sales volume and there was no reasonable basis to expect significant increases in such sales in the foreseeable future. It was determined to be unlikely that the business sold through GAM would produce the level of returns that justified continuation of an allocation of capital and resources.
A charge was made to reduce previously deferred policy acquisition costs and results in an expectation of no future profits or losses on the GAM business. Additionally, provision was made to estimate other losses that may reasonably be expected to result from this decision. (e.g. uncollectible advances to general agents). Total charges recognized in 1994 related ceasing marketing through general agency amounted to $6.7 million after-tax.
INSURANCE COMPETITION. The Company's Insurance Group competes with numerous United States and Canadian insurance companies, some of which have greater financial resources, broader product lines and larger staffs. In addition, banks and savings and loan associations in some jurisdictions compete with the Company's Insurance Group for sales of life insurance products, and the Insurance Group competes with banks, investment advisors, mutual funds and other financial entities to attract investment funds generally.
Competition in the home service business is largely regional or local, highly dependent on the quality of the local management, and is less price competitive than other insurance markets. The home service business involves frequent contacts by agents with their customers. Liberty emphasizes to its agents the importance of taking advantage of these contacts to establish personal relationships which the Company believes add stability to its home service business.
The Company believes that competition in the pre-need market is national and, therefore, has expanded the market of its pre-need business. The Company intends to capitalize on its affinity marketing expertise gained in the mortgage protection insurance business by targeting national chains of funeral homes and by supplementing this effort with direct marketing and telemarketing campaigns.
The Company currently believes that it ranks third nationally in mortgage protection insurance with an estimated 15% market share. Slightly over 70% of the mortgage protection market share is believed to be held by four companies and 33% of the market is held by the market leader.
INSURANCE REGULATION. Like other insurance companies, the Company's insurance subsidiaries are subject to regulation and supervision by the state or other insurance department of each jurisdiction in which they are licensed to do business. These supervisory agencies have broad administrative powers relating to the granting and revocation of licenses to transact business, the licensing of agents, the approval of policy forms, reserve requirements and the form and content of required statutory basis financial statements. As to its investments, each of the Company's insurance subsidiaries must meet the standards and tests established by the National Association of Insurance Commissioners (the "NAIC") and, in particular, the investment laws and regulations of the states in which each subsidiary is domiciled. All states and jurisdictions (including the Canadian provinces where Pierce National is also licensed) have their own statutes and regulations, which vary in certain respects. However, the NAIC Model Act and regulations have tended to make the various states' regulation more uniform. The insurance companies are also subject to laws in most states that require solvent life insurance companies to pay guaranty fund assessments to protect the interests of policyholders of insolvent life insurance companies.
The NAIC and state regulatory authorities require the Asset Valuation Reserve or "AVR" and the Interest Maintenance Reserve or "IMR" to be established as a liability on a life insurer's statutory financial statements, but do not affect financial
statements of the Company prepared in accordance with generally accepted accounting principles. AVR establishes a statutory reserve for mortgage loans, equity real estate and joint ventures, as well as for fixed maturities and common and preferred stock. AVR generally captures all realized and unrealized gains and losses on such assets, other than those resulting from changes in interest rates. IMR captures the net gains or losses that are realized upon the sale of fixed income securities (bonds, preferred stocks, mortgage-backed securities and mortgage loans) and that result from changes in the overall level of interest rates, and amortizes these net realized gains or losses into income over the remaining life of each investment sold, thus limiting the ability of an insurer to enhance statutory surplus by taking gains on fixed income securities. The IMR and AVR requirements have not had a material impact on the Company's insurance subsidiaries' surplus nor Liberty Life's ability to pay dividends to the Company.
In recent years the NAIC has approved and recommended to the states for adoption and implementation several regulatory initiatives designed to decrease the risk of insolvency of insurance companies in general. These initiatives include the implementation of a risk-based capital formula for determining adequate levels of capital and surplus and further restrictions on an insurance company's payment of dividends to its shareholders. To date, South Carolina has not adopted the NAIC risk-based capital model act; however, it does require prior notice to the South Carolina Commissioner of dividend distributions to shareholders, and permits the Commissioner to disapprove or limit the dividend within 30 days of notice if the dividend or distribution is deemed an unreasonable strain on surplus. The NAIC risk-based capital model act or similar initiatives may be adopted by South Carolina or the various states in which Liberty Life and the Company's other insurance subsidiaries are licensed, but the ultimate content and timing of any statutes and regulations adopted by the states cannot be determined at this time.
Under the NAIC's risk-based capital requirements, insurance companies must calculate and report information under a risk-based capital formula in their annual statutory financial statement. This information is intended to permit insurance regulators to identify and require remedial action for inadequately capitalized insurance companies, but is not designed to rank adequately capitalized companies. The NAIC requirements provide for four levels of potential involvement by state regulators for inadequately capitalized insurance companies, ranging from regulatory control of the insurance company to a requirement for the insurance company to submit a plan to improve its capital. Implementation of the substantive regulatory authority by this NAIC initiative depends on adoption by the states of the NAIC Model Act on risk-based capital requirements. The NAIC has determined to deny accreditation to state insurance regulatory authorities in states failing to adopt this risk-based capital Model Act by January 1, 1996. The RBC ratios for the Company's insurance subsidiaries exceed the minimum capital requirements at December 31, 1994.
Another NAIC Model Act limits dividends that may be paid in any calendar year without regulatory approval to the lesser of (i) 10% of the insurer's statutory surplus at the prior year-end, or (ii) the statutory net gain from operations of the insurer (excluding realized capital gains and losses) for the prior calendar year. The current South Carolina statutes applicable to Liberty Life do not conform to the NAIC Model Act (South Carolina limits dividends to the greater of 10% of statutory surplus or gain from operations). Under current South Carolina law, without prior approval from the South Carolina Commissioner of Insurance, dividend payments from Liberty Life to the Company are limited to the greater of the prior year's statutory gain from operations or 10% of the prior year's statutory surplus. This resulted in a maximum allowable dividend in 1994 of $20.4 million without approval from the South Carolina Insurance Commissioner. Actual dividends and distributions paid by Liberty Life were $20.3 million in 1994, $22.0 million in 1993 and $14.0 million in 1992. Under regulations effective July 1, 1995, the South Carolina Insurance Department must be notified of all dividends and distributions to shareholders within five days following the declaration, and at least ten days prior to the payment of the dividend or distribution, and will have the authority to limit the amount of any dividends or distributions. Extraordinary dividends, defined as distributions that, together with all other distributions within a 12 month period, exceed the greater of the net gain from operations or 10% of statutory surplus, cannot be made without the approval of the South Carolina Insurance Department, or unless the department has not disapproved the payment within 30 days following the notice of the declaration. Pierce National has agreed with several states to not pay dividends until after 1995.
In accordance with the rules and practices of the NAIC and in accordance with state law, every insurance company is generally examined once every three years by examiners from its state of domicile and from several of the other states where it is licensed to do business. Liberty Life, Pierce National and Pan-Western's most recent examinations were for the period ending December 31, 1990. American Funeral's most recent examination was for the period ending December 31, 1992; and Brookings International Life's most recent examination was for the period ending December 31, 1988. Examinations of Liberty Life and Pierce National for the periods ended December 31, 1993, are currently in progress.
The Office of the Superintendent of Financial Institutions - Canada, and the Canadian provinces regulate and supervise the Canadian operations of Pierce National in the same manner as the NAIC and the states. Separate financial statements are required to meet the Canadian regulatory requirements and a separate examination is conducted by the Canadian regulatory agencies.
The Company's insurance subsidiaries are also subject to regulation as an insurance holding company system under statutes which have been enacted in their states of domicile and other states in which they are licensed to do business. Pursuant to these statutes, Liberty Life and Pierce National are required to file an annual registration statement with the Office of the Commissioner of Insurance and to report all material changes or transactions. In addition, these statutes restrict the ability of any person to acquire control (generally presumed at 10% or more) of the outstanding voting securities of the Company without prior regulatory approval.
BROADCASTING OPERATIONS
Cosmos currently owns and operates the following television stations, six of which were ranked No. 1 in their market by the November 1994 Nielsen ratings for sign-on to sign-off:
Cosmos has approximately 653 full-time employees and 94 part-time employees, including their cable sales operations in Columbia, S.C. and Frankfort, KY.
NETWORK AFFILIATES. Each Cosmos station is affiliated with one of the major networks - NBC, ABC, CBS. The affiliation contracts provide that the network will offer to the affiliated station a variety of network programs, both sponsored and unsponsored, for which the station has the right of first refusal against any other television station located in its community. The station has the right to reject or accept the programs offered by the network and also has the right to broadcast programs either produced by the station or acquired from other sources. The major networks provide their affiliated stations with programming and sell the programs, or commercial time during the programs, to national advertisers. Each affiliate is compensated by its network for carrying the network's programs. That compensation is based on the local market rating strength of the affiliate and the audience it helps bring to the network programs. The major networks typically provide programming for approximately 90 hours of the approximately 135 hours per week broadcast by their affiliated stations.
The NBC affiliation contracts with each of Cosmos' NBC affiliated stations have been continuously in effect for over thirty-eight years. Cosmos' CBS affiliation contract and ABC affiliation contract have each been continuously in effect for approximately thirty years.
SOURCES OF COSMOS' TELEVISION OPERATING REVENUES. The following table shows the approximate percentage of Cosmos' gross television operating revenues by source excluding other income for the three years ended December 31, 1994:
Local and regional advertising is sold by each station's own sales representatives to local and other non-national advertisers or agencies. Generally these contracts are short-term, although occasionally longer-term packages will be sold. National spot advertising (generally a series of spot announcements between programs or within the station's own programs) is sold by the station or its sales representatives directly to agencies representing national advertisers. Most of these national sales contracts are also short-term, often covering spot campaigns running for thirteen weeks or less. Network compensation is paid by the network to its affiliated stations for broadcasting network programs that include
advertising sold by the network to agencies representing national advertisers. Political advertising is generated by national and local elections, which is by definition very cyclical.
A television station's rates are primarily determined by the estimated number of television homes it can provide for an advertiser's message. The estimates of the total number of television homes in the market and of the station's share of those homes is based on the AC Nielsen industry wide television rating service. The demographic make-up of the viewing audience is equally important to advertisers. A station's rate card for national and local advertisers takes into account, in addition to audience delivered, such variables as the length of the commercial announcements and the quantity purchased. The payments by a network to an affiliated station are largely determined by the total homes delivered, the relative preference of the station among the viewers in the market area and other factors related to management and ownership.
TELEVISION BROADCASTING COMPETITION. The television broadcasting industry competes with other leisure time activities for the time of viewers and with all other advertising media for advertising dollars. Within its coverage area a television station competes with other stations and with other advertising media serving the same area. The outcome of the competition among stations for advertising dollars in a market depends principally on share of audience, advertising rates and the effectiveness of the sales effort.
Cosmos believes that each of its stations has a strong competitive position in its local market, enabling it to deliver a high percentage of the local television audience to local advertisers. Cosmos' commitment to local news programming, combined with syndicated programming, are important elements in maintaining Cosmos' current market positions.
Another source of competition is cable television, which brings additional television programming, including pay cable (HBO, Showtime, Movie Channel, etc.), into subscribers' homes in a television station's service area. Cable television competes for the station's viewing audience and, on a more modest scale, its advertising.
Federal law now requires that cable operators negotiate with television operators for the right to carry a station's signal (programs) on cable systems. Cosmos recently used this "retransmission consent" negotiation to forge long term partnerships with cable operators with the purpose of developing secondary revenue streams from programs and services specifically produced for cable. Cosmos also recently formed CableVantage Inc., a marketing company designed to assist local cable operators in the sale of commercial time available in cable network programs.
Subscription Television, an over-the-air pay television service, and Multipoint Distribution Service, a microwave-distributed pay television service, also compete for television audiences. In addition, licenses are now being granted for Multichannel Multipoint Distribution Service. None of these services has yet significantly fractionalized the audiences of commercial television stations. The use of home video recording and playback (VCR) equipment is has grown and provides another element of competition for television audiences.
Two other television broadcast services are providing consumers with additional technical delivery/programming opportunities. Low power television, sometimes referred to as "neighborhood TV," is authorized to operate in a limited coverage area. Authorizations are being granted by the Federal Communication Commission ("FCC") on a lottery basis. Direct Broadcast Satellite, which transmits television signals from satellite transponders to parabolic home antennae, is now being actively marketed.
FEDERAL REGULATION OF BROADCASTING. Cosmos' broadcasting operations are subject to the jurisdiction of the FCC under the Communications Act. The Communications Act empowers the FCC, among other things, to issue, revoke or modify broadcasting licenses; to assign frequency bands; to determine the location of stations; to regulate the apparatus used by stations; to establish areas to be served; to adopt such regulations as may be necessary to carry out the provisions of the Communications Act and to impose certain penalties for violation of such regulations.
Television broadcasting licenses may be granted for a maximum term of five years and, upon application, and in the absence of a conflicting application or a petition to deny which raises a substantial and material issue of relevant fact (which would require the FCC to hold a hearing) or adverse findings as to the licensee's qualifications, are usually renewed without hearing by the FCC for additional five year terms. Cosmos' renewal applications have always been granted without hearing for the full term. The Communications Act prohibits the transfer of a license or the transfer of control or other change in control of a licensee without prior approval of the FCC. The Hipp family is considered by the FCC to have de facto control over Cosmos, and any action that would change such control would require prior approval of the FCC.
Under FCC regulations governing multiple ownership, a license to operate a television station generally will not be granted to any person (or persons under common control) if such person directly or indirectly holds a significant interest in (i) another radio or television station, with an overlapping service area, (ii) more than 12 television stations or (iii) less than
12 television stations if their audience coverage exceeds 25% of total United States households. FCC regulations also limit ownership of television stations by those having interests in cable television systems and daily newspapers serving the same service area as the television stations. The rules provide that each case will be considered on the basis of its particular facts. During 1995, legislation is expected which will remove many of the ownership restrictions now encumbering broadcasters. Congress has publicly stated that broadcasters need regulatory relief in order to effectively compete in the multi-channel environment of the future commonly referred to as the "electronic information superhighway".
There are additional FCC Regulations and Policies, and regulations and policies of other federal agencies, principally the Federal Trade Commission, regulating network/affiliate relations, political broadcasts, children's programming, advertising practices, equal employment opportunity, carriage of television signals by CATV systems, application and reporting procedures and other areas affecting the business and operations of television stations.
INVESTMENTS AND INVESTMENT POLICY
The Company derives a substantial portion of its total revenues from investment income. Invested assets are held primarily through Liberty Life and the pre-need companies, although the parent company and its real estate subsidiaries hold $70.7 million (52%) of the $135.5 million of the consolidated investment real estate portfolio at December 31, 1994. The Company's investment advisory subsidiary manages securities and non-real estate related assets for the Company and its subsidiaries, while the Company's property development and management subsidiary manages all investment real estate assets and the mortgage loan portfolio for the Company and its subsidiaries.
All investments made for the Company are governed by the general requirements and guidelines established and approved by the Company's Investment Committee and by qualitative and quantitative limits prescribed by applicable insurance laws and regulations. The Committee, comprised of seven senior officers of the Company and appropriate subsidiaries, meets monthly to set and review investment policy and to approve current investment plans.
The Company follows a value-oriented investment philosophy in which purchases are generally made with the intention of holding securities to maturity. Investment philosophy is focused on the intermediate to longer-term horizon and is not oriented towards trading. As market relationships change and individual securities become increasingly over or undervalued, securities may be sold prior to maturity and replaced with similar securities. In addition, the Company attempts to minimize liquidity risk by using an integrated asset/liability matching process. As an additional risk control measure, the Company's investment strategy focuses on diversity through a relatively large number of smaller investments in contrast to larger, more concentrated investments.
FIXED MATURITY SECURITIES. As of December 31, 1994, fixed maturity securities comprised approximately 68% ($1.2 billion) of the Company's invested assets and had a weighted average credit rating of AA. As of December 31, 1994, approximately 54% of the Company's fixed maturity portfolio was comprised of mortgage-backed securities. Certain mortgage-backed securities are subject to significant prepayment risk or extension risk due to changes in interest rates. In periods of declining interest rates, mortgages may be repaid more rapidly than scheduled as borrowers refinance higher rates to take advantage of the lower current rates. The Company's emphasis on call protection as part of its investment strategy makes its portfolio less vulnerable to prepayments which reduce portfolio yield during low interest rate environments. The Company's emphasis on well-structured mortgage securities makes the portfolio less vulnerable to maturity extension risk which occurs as prepayments slow during a rising rate environment. Prepayment activity slowed dramatically during 1994 due to the sharp increase in interest rates. In contrast to a year ago when reinvestment rates were significantly below portfolio yields, current purchase yields are approaching existing portfolio yields. As a result, the downward pressure on investment income is expected to stabilize.
MORTGAGES. As of December 31, 1994, mortgage loans comprised 12% ($203.4 million) of the Company's invested assets. Mortgage loans on real estate are carried at amortized cost which include valuation adjustments for impaired value where appropriate. As of December 31, 1994, 2.81% of the Company's mortgage loan portfolio was more than 60 days delinquent, compared to the industry average of 3.38% at December 31, 1994 (as reported in the American Council of Life Insurance's "Investment Bulletin" dated March 9, 1995). It is the Company's policy to stop accruing mortgage loan interest income for financial statement purposes once a loan is more than 90 days past due. At that time the accrued interest on the loan is deducted from income.
REAL ESTATE. As of December 31, 1994, 8% ($135.5 million) of the Company's invested assets were real estate. Liberty Life holds 47% ($64.5 million) of the real estate portfolio and the remainder is held by the parent company and its real estate subsidiary. During 1994, the Company purchased approximately $43 million of real estate assets from SCANA Development Corporation. The Company's real estate assets are comprised primarily of residential land development, business parks, business property rentals and shopping centers. Residential land development is partially developed and
undeveloped properties zoned residential that are sold to home builders. Business parks are partially developed and undeveloped properties zoned for business use that are primarily sold to various industrial, manufacturing, and office users. The Company records gains (losses) on the sale of residential land development and business parks as investment income. Business property rentals and shopping centers are leased to commercial and rental tenants, respectively, and gains (losses) from sales of such properties are recorded as realized investment gains (losses). The Company's real estate investment properties are carried at cost less accumulated depreciation and valuation adjustments for impaired value where appropriate.
The Company's methodology for determining permanent impairment of a property begins with an annual review of estimated value for each property in the portfolio. This process uses projected cash flows to value partially developed land for resale, a combination of comparable tract sales and projected cash flows to value undeveloped land and capitalization rates are applied to net operating cash flow for developed properties. As of December 31, 1994, the Company does not believe that the values of these properties have been impaired from their carrying values.
EXECUTIVE OFFICERS
The following is a list of the Executive Officers of the Registrant indicating their age and certain biographical data.
FRANCIS M. HIPP, Age 84 (1) Chairman of the Board of Liberty since 1967
W. HAYNE HIPP, Age 55 (1)
Chairman of the Board of Liberty Life from January 1, 1979 - February 9, 1988; September 18, 1989 - present Chairman of the Board of Cosmos - May 1, 1989 - February 18, 1992 President and Chief Executive Officer of Liberty since September, 1981
MARTHA G. WILLIAMS, Age 52
Vice President, General Counsel & Secretary of Liberty since January, 1982 Vice President, General Counsel & Secretary of Liberty Life since January, Secretary and Counsel of Cosmos since February 11, 1982
H. RAY EANES, Age 54
Senior Vice President of Finance and Treasurer of Liberty since May 20, 1994 Prior to joining Liberty was Vice Chairman - Finance and Administration of Ernst & Young LLP
W. KENNETH HUNT, III, Age 41
President of Liberty Life Insurance Company since December, 1994 President of Pierce National Life Insurance Company from September, 1993 to December, 1994 President of Liberty Insurance Services Corporation from August, 1991 to September, 1993 Chief Financial Officer of Liberty Life Insurance Company from February, 1987 to August, 1991
JENNIE M. JOHNSON, Age 48
Vice President, Planning, of Liberty since February 1, 1986
JAMES M. KEELOR, Age 52
President of Cosmos since February 18, 1992 Vice President, Operations, of Cosmos from December, 1989 to February 18, Vice President & General Manager of WDSU-TV from January, 1987 to December, 1989
M. PORTER B. ROSE, Age 53
President, Liberty Investment Group, Inc. since March 24, 1992 Chairman, Liberty Capital Advisors, Inc. since January 1, 1987 Chairman, Liberty Properties Group, Inc. since January 1, 1987
JOHN P. SMITH, Age 42
Controller of Liberty since September 15, 1994 Previously Vice President/Finance of Liberty Life Insurance Company
(1) W. Hayne Hipp is the son of Francis M. Hipp.
OTHER BUSINESS
In addition to the operating subsidiaries, the Company has other minor organizations. These include the Company's administrative staff, an investment advisory company, a property development & management company and transportation operations. There are approximately 123 full-time employees in these areas.
RESEARCH ACTIVITIES
The Company and its subsidiaries do not have a formal program of research on new or improved products. As a part of its operation, each company continues to seek improved methods and products. No material amounts were spent in this area during 1994.
INDUSTRY SEGMENT DATA
Information concerning the Company's industry segments is contained in Selected Financial Data on page 43 of The Liberty Corporation Annual Report to Shareholders and is filed as Exhibit 13 on page 94 of this report and is incorporated in this Item 1 by reference.
ITEM 2.



ITEM 2. PROPERTIES
MAIN OFFICES. The main office of the Company, Liberty Life and Cosmos is located on a 30-acre tract in Greenville, SC and consists of three buildings totaling approximately 360,000 square feet plus parking. The main office facilities are owned by the Company and Liberty Life, a wholly owned subsidiary of the Company. The Company also owns the main office of Brookings International Life, (approximately 6,000 square feet plus parking), in Brookings, SD and the home office of American Funeral (approximately 40,000 square feet plus parking), in Amory, MS. Liberty Life leases branch office space in various cities. Leases are normally made for terms of one to ten years.
Cosmos owns its television broadcast studios, office buildings and transmitter sites in Columbia, SC; Montgomery, AL; Toledo, OH; Louisville, KY; Evansville, IN; Jonesboro, AR; Lake Charles, LA; and Biloxi, Mississippi.
The following properties are owned by the Company or a wholly owned subsidiary.
INDUSTRIAL PROPERTY
OFFICE & OTHER BUILDINGS
RESIDENTIAL LAND
SHOPPING CENTERS
TIMBER TRACTS
UNDEVELOPED LAND
Park Avenue Associates, Inc., a wholly owned subsidiary of Liberty Life, has a 60% interest as General Partner of Tanyard Creek Partnership. The partnership owns a 49,500 square foot office building. Commerce Center of Greenville, Inc., a wholly owned subsidiary of Liberty Properties Group, Inc., has a 50% interest as Limited Partner of Park Place Partnership. This partnership owns a 50, 251 square foot office building.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Company is not currently engaged in legal proceedings of material consequence other than ordinary routine litigation incidental to its business. Any proceedings reported in prior filings have been settled or otherwise satisfied.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
None
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY STOCKHOLDER MATTERS
Information concerning the market for the Company's Common Stock and related stockholder matters is contained on the inside back cover of The Liberty Corporation Annual Report to Shareholders and is filed as Exhibit 13 on page 93 of this report and is incorporated in this Item 5 by reference.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data for the Company is contained on page 43 of The Liberty Corporation Annual Report to Shareholders and is filed as Exhibit 13 on page 94 of this report and is incorporated in this Item 6 by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations is contained on pages 9-13, 16-18 and 21 of The Liberty Corporation Annual Report to Shareholders and is filed as Exhibit 13 on pages 95 - 102 of this report and is incorporated in this Item 7 by reference.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
The Company's Consolidated Financial Statements and Report of Independent Auditors are contained on pages 8, 14, 15, 20, 22-41 and 43 of The Liberty Corporation Annual Report to Shareholders and is filed as Exhibit 13 on pages 103 - 126 of this report and are incorporated in this Item 8 by reference.
ITEM 9.

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Directors of the Company is contained in The Liberty Corporation Proxy Statement for the May 2, 1995 Annual Meeting of Shareholders and is incorporated in this Item 10 by reference.
Information concerning Executive Officers of the Company is submitted in a separate section of this report in Part I, Item 1 on page 13 and is incorporated in this Item 10 by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Information concerning Executive Compensation and transactions is contained in The Liberty Corporation Proxy Statement for the May 2, 1995 Annual Meeting of Shareholders and is incorporated in this Item 11 by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning Security Ownership of Certain Beneficial Owners and Management is contained in The Liberty Corporation Proxy Statement for the May 2, 1995 Annual Meeting of Shareholders and is incorporated in this Item 12 by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning Certain Relationships and Related Transactions is contained in The Liberty Corporation Proxy Statement for the May 2, 1995 Annual Meeting of Shareholders and is incorporated in this Item 13 by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) AND (2). LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of The Liberty Corporation and Subsidiaries are included in the Company's Annual Report to Shareholders for the year ended December 31, 1994, filed as Exhibit 13 to this report and incorporated in Item 8 by reference:
Consolidated Balance Sheets - December 31, 1994 and 1993
Consolidated Statements of Income - For Each of the Three Years Ended December 31, 1994
Consolidated Statements of Cash Flows - For Each of the Three Years Ended December 31, 1994
Consolidated Statements of Shareholders' Equity - For Each of the Three Years Ended December 31, 1994
Notes to Consolidated Financial Statements - December 31,
Report of Independent Auditors
The following consolidated financial statement schedules of The Liberty Corporation and Subsidiaries are included in Item 14(d):
I - Summary of Investments II - Condensed Financial Statements of The Liberty Corporation (Parent Company) III - Supplementary Insurance Information IV - Reinsurance V - Valuation and Qualifying Accounts and Reserves
All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission, but which are excluded from this report, are not required under the related instructions or are inapplicable, and therefore have been omitted.
(A)(3). LIST OF EXHIBITS ------- ----------------
2. Agreement and Plan of Merger by and among The Liberty Corporation, State National Capital Corporation, and certain shareholders of State National Capital Corporation.
3.1 Restated Articles of Incorporation, as amended through March 15, 1995.
3.2 Bylaws, as amended (filed as Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 and incorporated herein by reference).
4.1 See Articles 4, 5, 7 and 9 of the Company's Restated Articles of Incorporation (filed as Exhibit 3.1) and Articles I, II and VI of the Company's Bylaws (filed as Exhibit 3.2).
4.2 See the Form of Rights Agreement dated as of August 7, 1990 between The Liberty Corporation and The Bank of New York, as Rights Agent, which includes as Exhibit B thereto the form of Right Certificate (filed as Exhibits 1 and 2 to the Registrant's Form 8-A, dated August 10, 1990, and incorporated herein by reference) with respect to the Rights to purchase Series A Participating Cumulative Preferred Stock.
4.3 See Credit Agreement dated September 28, 1993 (filed as Exhibit 10 to the Registrant's Annual Report on Form 10K for the year ended December 31, 1993 and incorporated herein by reference).
10. See Credit Agreement dated September 28, 1993 (filed as Exhibit 4.3).
11. The Liberty Corporation and Subsidiaries Consolidated Earnings Per Share Computation
13. Portions of The Liberty Corporation Annual Report to Shareholders for the year ended December 31, 1994:
Market for the Registrant's Common Stock and Related Security Stockholder Matters Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Financial Statements and Supplementary Information: Consolidated Balance Sheets - December 31, 1994 and Consolidated Statements of Income - For the three years ended December 31, 1994 Consolidated Statements of Cash Flows - For the three years ended December 31, 1994 Consolidated Statements of Shareholders' Equity - For the three years ended December 31, 1994 Notes to Consolidated Financial Statements - December 31, 1994 Report of Independent Auditors
21. The Liberty Corporation and Subsidiaries, List of Subsidiaries
23. Consent of Independent Auditors
24. A. Powers of Attorney applicable for certain signatures of members of the Board of Directors in Registrant's 10-K filed for the year ended December 31, 1983
B. Powers of Attorney applicable for certain signatures of members of the Board of Directors in Registrant's 10-K filed for the year ended December 31, 1985
C. Powers of Attorney applicable for certain signatures of members of the Board of Directors in Registrant's 10-K filed for the year ended December 31, 1986
D. Powers of Attorney applicable for certain signatures of members of the Board of Directors in Registrant's 10-K filed for the year ended December 31, 1989
E. Powers of Attorney applicable for certain signatures of members of the Board of Directors in Registrant's 10-K filed for the year ended December 31, 1994
27. Financial Data Schedule (Electronic Filing Only)
99. Additional Exhibits
A. Annual Statement on Form 11-K for The Liberty Corporation and Related Adopting Employers' 401(k) Thrift Plan for the year ended December 31, 1994
(B). REPORTS ON FORM 8-K FILED IN 1994
None
(C). EXHIBITS FILED WITH THIS REPORT
2. Agreement and Plan of Merger by and among The Liberty Corporation, State National Capital Corporation, and certain shareholders of State National Capital Corporation.
3.1 Amendment to Articles of Incorporation, as amended through March 15, 1995.
11. The Liberty Corporation and Subsidiaries Consolidated Earnings Per Share Computation
13. Portions of The Liberty Corporation Annual Report to Shareholders for the year ended December 31, 1994: Market for the Registrant's Common Stock and Related Security Stockholder Matters Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Statements and Supplementary Information: Consolidated Balance Sheets - December 31, 1994 and Consolidated Statements of Income - For the three years ended December 31, 1994 Consolidated Statements of Cash Flows - For the three years ended December 31, 1994 Consolidated Statements of Shareholders' Equity - For the three years ended December 31, 1994 Notes to Consolidated Financial Statements - December 31, 1994 Report of Independent Auditors
21. The Liberty Corporation and Subsidiaries, List of Subsidiaries
23. Consent of Independent Auditors
24. Powers of Attorney applicable for certain signatures of members of the Board of Directors in Registrant's 10-K filed for the year ended December 31, 1994.
27. Financial Data Schedule (Electronic Filing Only)
99. Additional Exhibits
A. Annual Statement on Form 11-K for The Liberty Corporation and Related Adopting Employers' 401(k) Thrift Plan for the year ended December 31, 1994
(D). CONSOLIDATED FINANCIAL STATEMENT SCHEDULES FILED WITH THIS REPORT I - Summary of Investments - December 31, 1994 II - Condensed Financial Statements of The Liberty Corporation (Parent Company) December 31, 1994 and 1993 III - Supplementary Insurance Information - For the Three Years Ended December 31, 1994 IV - Reinsurance - For the Three Years Ended December 31, 1994 V - Valuation and Qualifying Accounts and Reserves - For the Three Years Ended December 31, 1994
Schedule I
THE LIBERTY CORPORATION AND SUBSIDIARIES SUMMARY OF INVESTMENTS DECEMBER 31, 1994 (In 000's)
Schedule II
THE LIBERTY CORPORATION (PARENT COMPANY) CONDENSED BALANCE SHEETS DECEMBER 31, 1994 and 1993 (In $000's, except share data)
*Eliminated in consolidation. See notes to condensed financial statements.
SCHEDULE II
THE LIBERTY CORPORATION (PARENT COMPANY) CONDENSED STATEMENTS OF INCOME FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (In $000's)
*Eliminated in consolidation.
**Differs from consolidated net income by $103, $1,612 and $3,407 in 1994, 1993 and 1992, respectively, due to gains recognized on a consolidated basis previously recognized by subsidiaries on intercompany transactions. Gains were deferred on a consolidated basis until completion of the earnings process.
See notes to condensed financial statements.
Schedule II THE LIBERTY CORPORATION (PARENT COMPANY) CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (In $000's)
*Eliminated in consolidation. See notes to condensed financial statements.
Schedule II THE LIBERTY CORPORATION (PARENT COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS DECEMBER 31, 1994
1. NOTES, MORTGAGES AND OTHER DEBT
The general debt obligations at December 31, 1994, are as follows:
On March 21, 1995, the Parent Company completed the restructuring of its $325,000,000 revolving credit facility into a new $375,000,000, multi-tranche credit facility which will mature on various dates beginning in March 1998. This facility will be used to refinance indebtedness under the $325,000,000 facility, as well as to provide funds to meet working capital requirements and finance acquisitions. Note 5 of The Liberty Corporation and Subsidiaries Consolidated Financial Statements provides additional information as to this agreement. The maturities of the general debt obligations at December 31, 1994 are as follows:
2. COMMITMENTS AND CONTINGENT LIABILITIES
The Parent Company has guaranteed $554,000 of debt incurred by a subsidiary and $3,000,000 of debt for an unaffiliated marketing company. In addition, the Company had various guarantees to regulatory agencies concerning maintenance of minimum levels of capital in certain regulated subsidiaries. The Company does not anticipate any material adverse impact on its financial position as a result of these guarantees.
3. RETAINED EARNINGS
As of December 31, 1994 and 1993, retained earnings of $304,060,000 and $292,138,000 respectively, in The Liberty Corporation (Parent Company) financial statements differs from The Liberty Corporation and Subsidiaries consolidated financial statements. The difference of $1,508,000 and $1,405,000 at December 31, 1994 and 1993, respectively, relates to the capitalization of interest on a consolidated basis and the elimination of gains on intercompany transactions.
Schedule III THE LIBERTY CORPORATION AND SUBSIDIARIES SUPPLEMENTARY INSURANCE INFORMATION FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (In $000's)
Schedule IV THE LIBERTY CORPORATION AND SUBSIDIARIES REINSURANCE FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (In $000's)
Schedule V THE LIBERTY CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (In 000's)
Notes:
(a) Uncollectible accounts written off, net of recoveries. (b) Reversal of reserves no longer required.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized, as of the 28th day of March, 1995
THE LIBERTY CORPORATION By: /s/ Hayne Hipp ----------------------- ------------------- Registrant Hayne Hipp President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, as of the 28th day of March, 1995.
Annual Report on Form 10-K
The Liberty Corporation
December 31, 1994
Index to Exhibits