Jefferson-Pilot Life also owns a supply and printing facility, a parking deck,
company also owns 278 acres in Guilford County, North Carolina, near
radio studios and office buildings in Denver, Colorado and Miami, Florida.
California, as are the television studios and offices in Charleston, South
SUMMARY OF SELECTED FINANCIAL DATA (In Thousands Except Per Share Information)
1993 1992 1991 1990 1989 Operating income before effect of initial application of FAS 106 $ 181,952 $ 171,240 $ 153,128 $ 138,962 $ 126,264 Accumulated post- retirement benefit obligation at 1-1-93, net (24,109) 0 0 0 0
Operating income before effect of initial application of FAS 106 $ 3.62 $ 3.36 $ 2.98 $ 2.59 $ 2.23 Effect of initial application of FAS 106 (.48) .00 .00 .00 .00 Realized investment gains, net of taxes .74 .63 .44 .35 .20
Net income $ 3.88 $ 3.99 $ 3.42 $ 2.94 $ 2.43 =========== =========== =========== =========== =========== Average shares outstanding 50,251,676 50,952,147 51,319,143 53,636,223 56,588,878 =========== =========== =========== =========== ===========
Stockholders' equity $ 1,733,071 $ 1,668,210 $ 1,544,461 $ 1,334,434 $ 1,456,109 =========== =========== =========== =========== =========== Stockholders' equity per share of common stock $ 35.04 $ 33.07 $ 30.11 $ 25.77 $ 25.98 =========== =========== =========== =========== ===========
Total assets prior to 1993 were adjusted to reflect the adoption of Financial Accounting Standard (FAS) 113 "Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts." The amounts shown for 1992 to 1989 were increased by $20,925,000, $20,176,000, $19,615,000, and $13,886,000, respectively, compared to amounts previously reported.
1993 1992 1991 1990 1989 Life and accident and health insurance $ 986,972 $ 965,862 $ 956,426 $ 946,262 $ 936,599 Casualty and title insurance 51,462 53,907 53,472 55,164 50,307 Communications 144,961 129,734 125,045 127,330 126,990 Other 6,282 4,656 4,570 5,656 9,074 Realized investment gains 56,947 48,170 33,963 28,201 17,228
Net income $ 195,172 $ 203,238 $ 175,687 $ 157,637 $ 137,691 ========== ========== ========== ========== ==========
Proceeds from maturities, redemptions and sales of debt securities, mortgage loan repayments and proceeds from sales of equity securities are the primary sources of cash from investing activities. Continuing a trend related to overall interest rate declines, issuer calls and prepayments increased in 1993. This circumstance, combined with scheduled maturities and sales of certain debt securities expected to be called, resulted in cash proceeds from debt securities transactions approximating $940 million in 1993, compared to $375 million in 1992 and $266 million in 1991. Scheduled maturities for 1994 are less than the levels experienced in the three most recent years. While prediction of future calls and prepayments is complicated by interest rate uncertainties, the Company expects them to continue at some level during 1994.
The Company continues to select investments based on a disciplined strategy focused on long-term performance objectives. Consistent with that strategy, investments acquired during 1993 consisted primarily of investment
grade debt securities, mortgage loans of quality and diversification comparable to those previously held, and common stock issues offering acceptable relationships between risk and potential total return. Continuing a three-year trend, the Company increased its investment in new mortgage loans during 1993 to approximately $86 million, compared to $60 million in 1992 and $41 million in 1991. The trend reflects an increase in lending opportunities that are acceptable under the Company's standards. The cost of common stock investments acquired in 1993 approximated $65 million. This increase over 1992 and 1991 levels is primarily due to a dividend-roll program. Provision has been made for declines in value of debt securities considered other than temporary and for estimated unrecoverable amounts related to the mortgage loan portfolio. Debt securities and mortgage loans representing credit problems continue to fall below industry averages.
The Company's overall investment management strategy encompasses both internal objectives and external circumstances. Its business plan emphasizes growth of the life insurance and other core businesses, achievement of which will require investment of liquid resources. The Company monitors and evaluates securities market conditions and specific external circumstances that may impact individual investment holdings. Asset/liability management strategies may require action in response to such factors as interest rate changes and the effect thereof on prepayment risk. The above-described factors may result in future sales of selected debt securities prior to maturity. In connection with a process begun in 1993, and continuing into 1994, the Company expects that a significant portion of its debt securities will be designated as available for sale in response to these factors. In the first quarter of 1994, the Company will adopt SFAS 115. Under SFAS 115, all equity securities and debt securities classified as available for sale will be stated at value in the consolidated balance sheets. Since classification of the Company's debt securities is not complete, the effect of SFAS 115 on the stated amount of debt securities and the corresponding effects on deferred income tax liabilities, equity and other balance sheet amounts have not yet been determined. Adoption of SFAS 115 will increase the stated amount of equity securities held by the parent company as of January 1, 1994 by $70 million, with associated increases of $28 million in deferred income tax liabilities and $42 million in stockholders' equity.
During 1993, the Company utilized an uncommitted bank line of credit in application of its asset/liability management strategies. The line permits the Company to request aggregate advances totaling up to $100 million until October 1994. Maximum utilization of the line approximated $40 million during the year and interest expense was not material. Management expects to increase the utilization of external financing sources as considered appropriate and consistent with its investment management and growth strategies.
Cash dividends to stockholders amounted to $78.1 million in 1993, $69.1 million in 1992 and $57.4 million in 1991. The Company has consistently returned cash dividends to its stockholders and expects to continue to do so in the future. Capital resources requirements are not expected to represent practical restrictions on future dividend payment plans.
Premiums and other insurance considerations increased by $11.4 million in 1993, to approximately $670 million. The 1993 growth is attributable to individual life premiums and related considerations which increased by 8% over 1992 amounts and improved upon a recent annual growth trend of less than 2% per year. The increase results from implementation of various aspects of the Company's current business plan. Accident and health and casualty and title premiums remained substantially stable during 1993, with the former increasing and the latter decreasing modestly. Net investment income increased by $8.7 million (2.4%) during 1993, with the increase in the debt securities investment base offsetting the effects of a lower interest rate environment. Communications revenue increased by $15.2 million over 1992, to about $145 million, due primarily to a combination of the improved economic environment and measures taken to strengthen the market position of certain broadcast properties, including acquisitions in new and previously existing markets. Realized investment gains increased to $56.9 million in 1993, compared to $48.2 million in 1992, with call premiums and gains from sales of debt securities expected to be called more than offsetting a provision for other than temporary decline in value of certain debt securities ($8 million) and reduced gains on sales of common stocks.
increase attributable to interest credited on interest-sensitive products. Accident and health benefits continued to decline, decreasing from approximately $318 million in 1992 to approximately $306 million in 1993 and reflect the continued emphasis on underwriting and claims management effectiveness. Casualty and title claims decreased by about $2 million in 1993, as reinsurance recoveries on incurred losses more than offset an increase in incurred losses before reinsurance.
Before the cumulative effect charge, consolidated after-tax income increased by approximately $16 million during 1993, to $219.3 million. Each of the Company's significant business activities made some contribution to the current year increase. Approximate increases by major business activity, exclusive of realized investment gains were as follows: life and accident and health insurance $2 million, casualty and title insurance $1 million, communications $3 million, and corporate level activities $5 million (primarily through expense reductions). The balance of the 1993 increase in consolidated pre-SFAS 106 income ($5 million) is attributable to the increase in realized investment gains.
Financial statements and notes included on pages 29 through 49 of