The following table sets forth summary consolidated income statement data, consolidated balance sheet data and other operating data for the periods indicated. The following consolidated income statement data of the Company for each of the years in the five-year period ended December 31, 1996, and the consolidated balance sheet data of the Company as of December 31, 1996 and each of the preceding four years ended December 31, have been derived from the Company's audited consolidated financial statements. The following data should be read in conjunction with the Company's Consolidated Financial Statements and related notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information appearing elsewhere herein.
Income statement data includes the effect of amortizing the purchase accounting entries related to the acquisition of the Company by B.A.T in December 1988. See Note A to the Company's Consolidated Financial Statements. Major items incorporated in the purchase price of the Company include goodwill and the value of the AIF contracts of the P&C Group. The amortization of these two items, which is being taken on a straight-line basis over forty years, reduced annual pretax income by approximately $102.8 million in each of the years 1992 through 1996.
__________________ (1) Net income reflects the charge resulting from expensing the transition obligation upon the implementation of SFAS No. 112, "Employers' Accounting for Postemployment Benefits". Such amounts were $4.5 million and $0.2 million, after tax, for Management services to property and casualty insurance companies; and other and the Life Subsidiaries, respectively, for the year ended December 31, 1994. (2) Includes cash, short-term investments and notes receivable-affiliate. (3) The ratio of earnings to fixed charges has been determined by dividing the sum of net income before income taxes plus fixed charges by fixed charges. Fixed charges consist of interest, capitalized interest, dividends paid to QUIPS holders, amortization of QUIPS offering expenses and that portion of rent expenses deemed to be interest.
The Company underwrites life insurance and annuity products through its life insurance subsidiaries. Revenues attributable to traditional life insurance products, such as whole life or term insurance contracts, are classified as premiums as they become due. Future benefits are associated with such premiums (through increases in liabilities for future policy benefits), and prior period capitalized costs are amortized (through amortization of DAC) so that profits are generally recognized over the same period as revenue income. Revenues attributable to universal life products consist of policy charges for the cost of insurance, policy administration charges, surrender charges, and investment income on assets allocated to support policyholder account balances on deposit. Revenues for deferred annuity products consist of surrender charges and investment income on assets allocated to support policyholder account balances. Expenses on universal life and annuity policies include interest credited to policyholders on policy balances as well as benefit claims incurred in excess of policy account balances.
Operating Revenues. Operating revenues increased from $1,183.1 million in 1995 to $1,245.4 million in 1996, an increase of $62.3 million, or 5.3%. Operating revenues primarily consist of management fees paid to the Company as a percentage of gross premiums earned by the P&C Group. Such premiums increased from $9,003.8 million in 1995 to $9,458.2 million in 1996 due primarily to higher average premium levels across all major lines of business and an increase in the number of policies-in-force between years. Partially offsetting these increases is the fact that, in recognition of expense savings realized as a result of improved operating efficiencies, the Farmers Preferred Auto Management fee rate was reduced by 0.45% on November 1, 1996. This resulted in a $4.1 million reduction in management fees in 1996 from what such fees would have been using the 1995 rates. As the Company continues to benefit from improved operating efficiencies, it may further reduce management fee rates in the future.
Salaries and Employee Benefits. Salaries and employee benefits decreased from $348.8 million in 1995 to $337.2 million in 1996, a decrease of $11.6 million, or 3.3%, primarily due to a reduction in employee complement.
Buildings and Equipment Expenses. Buildings and equipment expenses increased from $75.0 million in 1995 to $86.1 million in 1996, an increase of $11.1 million, or 14.8%. This increase was primarily due to the amortization of new information technology systems software, offset in part by a decrease in computer mainframe related expenses.
General and Administrative Expenses. General and administrative expenses increased from $170.5 million in 1995 to $171.5 million in 1996. The increase in expense between years has been held to less than one percent as a result of attention to cost controls and automation through the greater use of information technology systems.
Net Investment Income. Net investment income increased from $79.5 million in 1995 to $117.9 million in 1996, an increase of $38.4 million, or 48.3%. This increase was primarily due to higher yield rates and a larger invested asset base in 1996.
Dividends on Preferred Securities of Subsidiary Trusts. Dividend expense related to the $500.0 million of Cumulative Quarterly Income Preferred Securities ("QUIPS") issued in September and October of 1995 increased from $10.4 million in 1995 to $42.1 million in 1996.
Provision for Income Taxes. Provision for income taxes increased from $224.3 million in 1995 to $275.1 million in 1996, an increase of $50.8 million, or 22.6%. This increase was due in part to $22.5 million of taxes that resulted from the $374.9 million extraordinary dividend paid to FGI by FNWL in December 1996. The remaining increase is attributable to an increase in pretax operating income between years.
Total Revenues. Total revenues increased from $709.0 million in 1995 to $767.5 million in 1996, an increase of $58.5 million, or 8.3%.
Amortization of DAC and Value of Life Business Acquired. Amortization expense increased from $103.2 million in 1995 to $108.8 million in 1996, or 5.4%. This increase reflects the continued growth in universal life-type business and lower traditional terminations in 1996.
Commissions. Commissions increased from $20.1 million in 1995 to $21.0 million in 1996, reflecting increased renewal premiums from universal life products.
Life Subsidiaries Income. As a result of the foregoing, Life Subsidiaries income increased from $139.9 million in 1995 to $159.4 million in 1996, an increase of $19.5 million, or 13.9%.
Operating Revenues. Operating revenues increased from $1,130.1 million in 1994 to $1,183.1 million in 1995, an increase of $53.0 million, or 4.7%. This growth reflects higher gross premiums earned by the P&C Group, which increased from $8,667.9 million in 1994 to $9,003.8 million in 1995 due primarily to a 3.9% increase in the number of policies-in-force and, to a lesser extent, from an increase in average premium levels. Recognizing that efficiencies from automation and greater use of information technology systems lowered its operating costs, in 1995, the Company reduced management fee rates from the rates in place during 1994. Preferred Auto rates were reduced by 0.30%, Residential Fire rates were reduced 4.0% and Protector Landlord rates were reduced 0.75%, which resulted in a $22.5 million reduction in management fees in 1995 from what such fees would have been using the 1994 rates.
Salaries and Employee Benefits. Salaries and employee benefits remained constant at $348.8 million for the years 1995 and 1994. Although salaries expense decreased slightly due to a reduction in employee complement, this decrease was offset by higher average salaries per employee and an increase in various employee benefits expenses, including profit sharing.
Buildings and Equipment Expenses. Buildings and equipment expenses increased from $55.1 million in 1994 to $75.0 million in 1995, an increase of $19.9 million, or 36.1%. This increase was primarily due to the amortization of new information technology systems software and greater depreciation, maintenance and lease costs resulting from additional equipment purchases and software leases.
Management Services Income. As a result of the foregoing, management services income increased from $304.3 million in 1994 to $330.8 million in 1995, an increase of $26.5 million, or 8.7%.
Premiums. Premiums increased $5.7 million, or 3.7%, over 1994 due in part to an increase in renewal premiums from growth in traditional life insurance in-force resulting from improved persistency and an increase in average policy size. Also contributing to the increase in premiums were higher Annuity in Payment ("AIP") premiums resulting from an increase in the number of annuities entering the payment phase in 1995.
Investment income. Net investment income increased $46.4 million in 1995, or 18.4%, over 1994 due largely to higher bond interest income resulting from a higher invested asset base and higher yield rates.
Amortization of DAC and Value of Life Business Acquired. Amortization expense increased from $92.8 million in 1994 to $103.2 million in 1995, or 11.2%, reflecting the growth in universal life-type business and traditional business in 1995.
Commissions. Commissions increased from $18.7 million in 1994 to $20.1 million in 1995, reflecting increased renewal premiums from traditional and universal life products.
General and Administrative Expenses. General and administrative expenses increased from $57.4 million in 1994 to $61.6 million in 1995, or 7.3%. The increase resulted mainly from higher premium taxes, guaranty assessments and advertising expenses in 1995. Partially offsetting these increases were lower salaries and benefits expenses.
Provision for Income Taxes. Provision for income taxes decreased from $67.7 million in 1994 to $67.5 million in 1995, a decrease of $0.2 million. This decrease was attributable to a lower effective tax rate in 1995 of 32.5%, compared to a 33.2% effective tax rate in 1994. Incorporated in the effective tax rates were permanent tax adjustments which, in 1995, increased in the area of tax preference items, particularly tax exempt interest, thus resulting in a decrease in the effective tax rate between years.
Consolidated net income of the Company increased from $435.7 million in 1994 to $470.7 million in 1995, an increase of $35.0 million, or 8.0%. Consolidated net income for 1994 included the expensing of $4.7 million, net of tax, for the SFAS No. 112, "Employers' Accounting for Postemployment Benefits", transition obligation.
General. The principal uses of funds by the Company are (i) operating expenses, (ii) dividends to the holders of the Company's QUIPS, (iii) capital expenditures and (iv) dividends to its stockholder. In 1996, dividends paid on the QUIPS issuance were $42.1 million, capital expenditures totaled $75.8 million and cash dividends paid to the stockholder totaled $464.9 million.
$192.2 million was available for distribution as a dividend without approval of the state insurance departments (see Note G). Additionally, the Company had available revolving credit facilities as of December 31, 1996 enabling it to borrow up to $500.0 million in the event such a need should arise (see Note T).
In order to maintain the policyholders' surplus of the Exchanges, the Company has purchased approximately $850.0 million of surplus certificates of the Exchanges ($400.0 million of which were purchased in 1996, $250.0 million of which were purchased in 1995 and $200.0 million of which were purchased in 1986 and repaid in 1996). In addition, in 1991, the Company arranged for two subsidiaries of B.A.T to purchase an aggregate of $400.0 million of surplus notes of two subsidiaries of the Exchanges. The Company has, from time to time, made other surplus contributions to the Exchanges totaling approximately $34.4 million, receiving certificates of contribution which bear interest at various rates. The Company believes that these purchases of surplus certificates and notes have helped to support the historical growth in premiums earned and the related growth in management fees paid to the Company (see Note D).
Net cash used in investing activities decreased from $626.7 million in 1995 to $510.1 million in 1996, an increase in cash of $116.6 million, or 18.6%, between years. This increase in cash was principally due to a $438.3 million increase in proceeds received from sales and maturities of investments available-for-sale coupled with the receipt of $200.0 million received from the Exchanges in repayment of the $200.0 million certificate of contribution issued in 1986. Partially offsetting the above increases in cash was a $339.9 million increase in purchases of investments available-for-sale and a $150.0 million increase in the purchase of surplus certificates of the Exchanges between years. The Company purchased $400.0 million of surplus certificates of the Exchanges in 1996, compared to $250.0 million in 1995.
Life Subsidiaries. The principal uses of funds by the Life Subsidiaries are (i) policy benefits and claims and policyholder dividends, (ii) loans to policyholders, (iii) capital expenditures, (iv) operating expenses, and (v) stockholder's dividends. The principal sources of funds available to the Life Subsidiaries are premiums and amounts earned from the investment of premiums and deposits. These sources of funds have historically satisfied the liquidity needs of the Life Subsidiaries.
As discussed in Notes H and Q, in 1994 the Company changed its method of accounting for investments to conform with Statement of Financial Accounting Standards No. 115.
The Company is attorney-in-fact for three inter-insurance exchanges: Farmers Insurance Exchange, Fire Insurance Exchange and Truck Insurance Exchange (collectively the "Exchanges"), which operate in the property and casualty insurance industry. As attorney-in-fact, the Company, or its subsidiaries, as applicable, manages the affairs of the Exchanges, their respective subsidiaries and Farmers Texas County Mutual Insurance Company (collectively the "P&C Group") and receives compensation based on a percentage of earned premiums. The management services generate a substantial portion of the Company's revenue and profits, and as a result, the Company's ongoing financial performance depends on the volume of business written by, and the efficiency and financial strength of, the P&C Group. A portion of the purchase price ($1,709,043,000) associated with the acquisition was assigned to these attorney-in-fact ("AIF") contract relationships. The value so assigned is being amortized on a straight-line basis over forty years.
The excess of the purchase price over the fair value of the net assets ("Goodwill") of the Company at the date of acquisition ($2,401,755,000) is being amortized on a straight-line basis over forty years. The carrying amount of the Goodwill is regularly reviewed for indications of impairment in value which in the view of management are other than temporary, including unexpected or adverse changes in the following: (1) the economic or competitive environments in which the Company operates, (2) profitability analyses and (3) cashflow analyses. As of December 31, 1996, the reported value and the remaining life of Goodwill are considered appropriate.
The Company's life insurance operations are conducted by three wholly owned subsidiaries. They market a broad line of individual life insurance products, including universal life, term life and whole life insurance, and annuity products, predominately flexible premium deferred annuities. A portion of the purchase price ($662,778,000) was assigned to the "Value of Life Business Acquired", which represented an actuarial determination of the expected profits from the business in force at the date of acquisition. The amount so assigned is being amortized over its actuarially determined useful life with the unamortized amount included in "Deferred Policy Acquisition Costs and Value of Life Business Acquired" in the accompanying consolidated balance sheets.
In 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation". This Statement establishes accounting and disclosure requirements using a fair value based method of accounting for stock-based employee compensation plans. Under SFAS No. 123, a company may either adopt the new fair value based accounting method or continue to apply the intrinsic value based method and provide pro forma disclosures of net income and earnings per share as if the accounting provisions of SFAS No. 123 had been adopted. Farmers Group, Inc. adopted only the disclosure requirements of SFAS No. 123; therefore, the adoption of this Statement had no effect on its consolidated financial statements.
Traditional product premiums are recognized as revenues when they become due, and future benefits and expenses are matched with such premiums so that the majority of profits are recognized over the premium-paying period of the policy. This matching of revenues and expenses is accomplished through the provision for future policy benefits and the amortization of deferred policy acquisition costs ("DAC").
Revenues associated with universal life products consist of policy charges for the cost of insurance, policy administration fees, surrender charges and investment income on assets allocated to support policyholder account balances. Revenues for deferred annuity products consist of surrender charges and investment income on assets allocated to support policyholder account balances. Expenses include interest credited to policyholder account balances and benefit claims incurred in excess of policyholder account balances. Liabilities for future policy benefits on universal life and deferred annuity products are determined under the retrospective deposit method. DAC is amortized in relation to the present value of expected gross profit margins on the policies, after giving recognition to differences between actual and expected gross profit margins to date. DAC and Value of Life Business Acquired also includes amounts associated with the unrealized gains and losses recorded as a component of stockholder's equity in accordance with the application of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities". Accordingly, DAC and Value of Life Business Acquired is increased or decreased for the impact on estimated future gross profits as if net unrealized gains or losses on securities had been realized at the balance sheet date. Net unrealized gains or losses on securities within stockholder's equity also reflects this impact. These entries decrease the DAC and Value of Life Business Acquired asset by $27,927,000 and $42,992,000 as of December 31, 1996 and 1995, respectively.
On July 1, 1996, the Company received $200,000,000 from the Exchanges in repayment of a surplus contribution made by the Company in 1986.
In 1995, Farmers Group Capital and Farmers Group Capital II (the "Subsidiary Trusts"), consolidated wholly owned subsidiaries of Farmers Group, Inc., issued $410 million of 8.45% Cumulative Quarterly Income Preferred Securities ("QUIPS"), Series A and $90 million of 8.25% QUIPS, Series B, respectively. In connection with the Subsidiary Trusts' issuance of the QUIPS and the related purchase by Farmers Group, Inc. of all of the Subsidiary Trusts' Common Securities
("Common Securities"), Farmers Group, Inc. issued to Farmers Group Capital $422,680,399 principal amount of its 8.45% Junior Subordinated Debentures, Series A due on December 31, 2025, (the "Junior Subordinated Debentures, Series A") and issued to Farmers Group Capital II $92,783,505 principal amount of its 8.25% Junior Subordinated Debentures, Series B due on December 31, 2025 (the "Junior Subordinated Debentures, Series B" and, together with the Junior Subordinated Debentures, Series A, the "Junior Subordinated Debentures"). The sole assets of Farmers Group Capital are the Junior Subordinated Debentures, Series A. The sole assets of Farmers Group Capital II are the Junior Subordinated Debentures, Series B. In addition, these arrangements are governed by various agreements between Farmers Group, Inc. and the Subsidiary Trusts (the Guarantee Agreements, the Trust Agreements, the Expense Agreements, the Indentures and the Junior Subordinated Debentures) which considered together constitute a full and unconditional guarantee by Farmers Group, Inc. of the Subsidiary Trusts' obligations under the Preferred Securities.
As of December 31, 1996 and 1995, a total of 20,000,000 shares of QUIPS were outstanding.
Combined statutory capital and surplus of the Life Subsidiaries was $894,738,000 and $1,142,625,000 as of December 31, 1996 and 1995, respectively. Combined statutory net income for the years ended December 31, 1996, 1995 and 1994 was $167,517,000, $116,998,000, and $83,671,000, respectively.
In December 1996, upon approval of the Washington State Department of Insurance, Farmers New World Life Insurance Company paid a $374,916,000 extraordinary dividend to its parent company, Farmers Group, Inc., which consisted primarily of common stock investments. As
In compliance with a Securities and Exchange Commission ("SEC") staff announcement, the Company has recorded certain entries to the DAC and Value of Life Business Acquired line of the consolidated balance sheet in connection with SFAS No. 115. The SEC requires that companies record entries to those assets and liabilities that would have been adjusted had the unrealized investment gains or losses from securities classified as available-for-sale actually been realized, with corresponding credits or charges reported directly to stockholder's equity.
The sources of investment income on securities owned by the Company (excluding the Life Subsidiaries) for the years ended December 31 are:
The sources of investment income on securities owned by the Life Subsidiaries for the years ended December 31 are:
The amortized cost, gross unrealized gains and losses, and estimated market values of investments in equity securities pertaining to non-redeemable preferred stocks and common stocks owned by the Company (excluding the Life Subsidiaries) are as follows:
The amortized cost, gross unrealized gains and losses, and estimated market values of investments in equity securities pertaining to non-redeemable preferred stocks and common stocks owned by the Life Subsidiaries are as follows:
The amortized cost, gross unrealized gains and losses, and estimated market values of investments in debt securities, including bonds and redeemable preferred stocks, owned by the Life Subsidiaries are as follows:
Proceeds from sales of available-for-sale securities received by the Company were $551,122,000 during 1996. Gross gains of $76,431,000 and gross losses of $32,009,000 were realized on sales and writedowns during 1996.
Proceeds from sales and maturities of available-for-sale securities received by the Company were $541,376,000 and $627,743,000 during 1995 and 1994, respectively. Gross gains of $45,944,000 and $72,818,000 and gross losses of $13,371,000 and $24,628,000 were realized on sales and writedowns during 1995 and 1994, respectively.
The change in the net unrealized gains or losses of the Company (excluding the Life Subsidiaries) for the years ended December 31 is as follows:
The change in the net unrealized gains or losses of the Life Subsidiaries for the years ended December 31 is as follows:
The following methods and assumptions were used to estimate the fair value of financial instruments as of December 31, 1996 and 1995:
Certificates in surplus of exchanges-The carrying amounts of these certificates are a reasonable estimate of their fair values.
Joint ventures, at equity-The estimated fair values are based upon quoted market prices, current appraisals, and independent pricing services.
Other assets-Other assets consist primarily of advances to agents, the fair value of which is determined by discounting the estimated future cash flows using credit quality, the average maturity of related advances, and the current rates at which similar loans would be made to borrowers by the Company.
Mortgage loans-The estimated fair value of the mortgage loans portfolio is determined by discounting the estimated future cash flows, using a year- end market rate which is applicable to the yield, credit quality and average maturity of the composite portfolio.
Policy loans-The estimated fair values of policy loans are determined by discounting the future cash flows using the current rates at which similar loans would be made.
Real estate mortgages payable-The estimated fair values are determined by discounting the estimated future cash flows at a rate which approximates the Company's incremental borrowing rate.
Based on current conditions and assumptions as to future events, the Company expects to amortize the December 31, 1996 balance as follows: approximately 4.6% in 1997, 4.2% in 1998, 2.9% in 1999, 2.7% in 2000, and 2.6% in 2001. The discount rate used to determine the amortization rate of the Value of Life Business Acquired ranged from 12.5% to 7.5%.
The Company follows the principles of SFAS No. 118 (amending SFAS No. 114), "Accounting by Creditors for Impairment of a Loan". This statement requires that an impaired loan be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral, if the loan is collateral dependent.
The Life Subsidiaries have security lending agreements with a financial institution. The agreements in effect as of December 31, 1996 authorize the institution to lend securities held in the Life Subsidiaries' portfolios to a list of authorized borrowers. Concurrent with delivery of the securities, the borrower provides the Life Subsidiaries with cash collateral equal to at least 102% of the market value of domestic securities and 105% of the market value of other securities subject to the "loan."
Upon purchase of the Company in 1988, the Company allocated part of the purchase price to its portion of the Regular Plan assets in excess of the projected benefit obligation at the date of acquisition. The asset is being amortized for the difference between the Company's net pension cost and amounts contributed to the Plan. The unamortized balance as of December 31, 1996 and 1995 was $29,252,000 and $33,101,000, respectively.
The Company uses the projected unit credit cost actuarial method for attribution of expense for financial reporting purposes. The interest cost and the actuarial present value of benefit obligations were computed using an interest rate of 7.25% in 1996 and 1995 and 8.25% in 1994, while the expected return on plan assets was computed using an interest rate of 9.00% in 1996, 9.25% in 1995 and 9.00% in 1994. The rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation was 5.00% in 1996, 4.50% in 1995 and 5.50% in 1994.
The Company's postretirement benefits plan is a contributory defined benefit plan for current retirees and those employees who were eligible for early retirement on January 1,
1991, and is a contributory defined dollar plan for all other employees. Health benefits are provided for all employees who participated in the Company's and the Exchanges' group medical benefits plan for 15 years prior to retirement at age 55 or later. A life insurance benefit of $5,000 is provided at no cost to retirees who maintained group life coverage for 15 years prior to retirement at age 55 or later.
The funded status of the entire plan, which includes the Company and the Exchanges, as of December 1, 1996 and 1995 (the latest date for which information is available) was as follows:
The Company's share of the accrued postretirement benefit cost was approximately $47,948,000 in 1996 and $44,726,000 in 1995. The unrecognized net transition obligation of $20,976,000 in 1996 and $22,287,000 in 1995 represents the remaining transition obligation of the Exchanges.
The Company has long-term operating lease commitments on equipment and buildings, with options to renew at the end of the lease periods. As of December 31, 1996, the remaining commitments payable over the next five years under these leases are:
In July 1996, the Company used the $200,000,000 of proceeds it received from the Exchanges in connection with the repayment of the 1986 surplus contribution (see note D) to extinguish the $200,000,000 of 8.25% Notes Payable the Company issued in July 1986.
As of December 31, 1995, the Company had revolving credit agreements with certain financial institutions and had an aggregate borrowing facility of $500,000,000. The proceeds of
The Life Subsidiaries have reciprocal reinsurance treaties in place among themselves so that the maximum exposure to the Life Subsidiaries, in the aggregate, for any one life is the sum of their individual retention levels, or $1,400,000. Any coverage in excess of $1,400,000 is reinsured with an outside reinsurance company pursuant to one of several facultative reinsurance agreements. Premiums ceded under these agreements totaled $3,868,000, $3,577,000 and $2,925,000 for the years ended December 31, 1996, 1995 and 1994, respectively. Reinsurance receivables, which totaled $10,621,000 and $12,969,000 at December 31, 1996 and 1995, respectively, were included in Other assets under Other assets of Life Subsidiaries.
The 1995 accrued interest balance includes $7,562,500 of interest payable on the $200,000,000 of Notes Payable extinguished by the Company in July 1996 (see Note O).
Operating profit is comprised of total revenues less operating expenses. Accordingly, investment income on securities and real estate investment income earned as a result of the management services to the P&C Group have not been added, and general corporate expenses and income taxes have not been deducted. The Management Services to the P&C Group segment incurred depreciation expense of $40,096,000, $28,023,000 and $12,147,000 in 1996, 1995 and 1994, respectively, while depreciation for the Life Subsidiaries was $3,108,000 in 1996, $3,699,000 in 1995 and $3,687,000 in 1994. Capital expenditures for the Management Services to the P&C Group totaled $51,605,000, $55,811,000 and $58,321,000 in 1996, 1995 and 1994, respectively, while capital expenditures for the Life Subsidiaries were $132,000 in 1996, $301,000 in 1995 and $507,000 in 1994. The Other industry category includes certain subsidiary companies engaged in real estate investment and leasing activities. These companies incurred depreciation expenses of $20,202,000, $17,270,000 and $14,720,000 in 1996, 1995 and 1994, respectively. Capital expenditures within the Other industry category were $24,074,000 in 1996, $17,493,000 in 1995 and $16,088,000 in 1994.
Identifiable assets by industry are those assets used in the Company's operations within each industry. Corporate assets are principally marketable securities owned by the Company and its non-life insurance subsidiaries and amounts invested by the Company in joint ventures.