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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ------ to ------
Commission File Number 0-13300
THE HARTFORD STEAM BOILER
INSPECTION AND INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Connecticut 06-0384680
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One State Street
Hartford, Connecticut 06102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 722-1866
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
Common stock, without par value New York Stock Exchange, Inc.
Rights to Purchase Depositary Receipts New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant(1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes...X..., No.......
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.......
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of February 8, 1994 was $1,017,004,459.
Number of shares of common stock outstanding as of February 8, 1994:
20,535,064.
Documents Incorporated By Reference
Portions of the Annual Report to shareholders for the fiscal year ended
December 31, 1993 are incorporated by reference in Parts I, II and IV of this
Form 10-K. Portions of the Proxy Statement dated March 1, 1994 for the Annual
Meeting of Shareholders to be held April 19, 1994 are incorporated by reference
in Parts III and IV herein.
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PART I
Item 1. Business.
A. GENERAL DEVELOPMENT OF BUSINESS
The Hartford Steam Boiler Inspection and Insurance Company (together
with its subsidiaries referred to as "Registrant" or the "Company" hereinafter)
was chartered under the laws of the State of Connecticut in 1866. The
Company's operations are divided into three industry segments - insurance,
engineering services and investments. The most significant business of the
Company is boiler and machinery insurance which provides insurance against
losses from accidents to boilers, pressure vessels, and a wide variety of
mechanical and electrical machinery and equipment along with a high level of
inspection services aimed at loss prevention. Earned premiums for boiler and
machinery insurance and the Company's other insurance products were $349.2
million for 1993, which accounted for approximately 55 percent of the Company's
revenues.
The Company also offers professional scientific and technical
consulting services for industry and government on a world-wide basis through
its Engineering Department and its engineering subsidiaries, the largest of
which is Radian Corporation, acquired by Hartford Steam Boiler in 1975 and
headquartered in Austin, Texas. In 1993 net Engineering Services revenues were
$231.5 million which accounted for approximately 36 percent of the Company's
revenues.
During the latter part of 1993, the Company commenced a restructuring
of its insurance and engineering operations for which the Company recorded a
$20 million charge in September. The charge reflected costs for severance and
other expenses related to the reduction in staff of approximately 300
employees. The initial phase of the restructuring was the reorganization of
the insurance segment of the Company into a Special Risks Division, which will
focus on large accounts requiring customized policies or specialized
engineering services and a Commercial Division, which will focus on small and
medium accounts. The purpose of the reorganization was to better align the
structure of the Company with the needs of its customers by focusing on
industry specialization.
The Company conducts its business in Canada through its wholly-owned
subsidiary, the Boiler Inspection and Insurance Company of Canada. Insurance
for risks located outside of North America is written by Engineering Insurance
Group, an unincorporated insurance facility formed in December 1988 which is
owned jointly by the Company and General Reinsurance Corporation and is
accounted for under the equity method of accounting.
The Company's principal market for its insurance and engineering
services is the United States. Revenues, net income and
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assets associated with operations outside of the United States are less than 10
percent of the respective consolidated amounts.
The Company derives approximately 10 percent of its revenues from
engineering contracts with various agencies and departments of the U.S.
government.
For additional information on the Company's business segments, see
Notes 1 and 4 to the Consolidated Financial Statements on pages 24 and 25 of
the Company's 1993 Annual Report to shareholders. Certain reclassifications
have been made to 1992 and 1991 financial information to conform to the 1993
presentation.
B. PRODUCTS AND SERVICES
Boiler and machinery insurance provides for the indemnification of the
policyholder for financial loss resulting from destruction or damage to an
insured boiler, pressure vessel, or other machine caused by an accident. This
financial loss can include the cost to repair or replace the damaged equipment
(property damage), and product spoilage, lost profits and expenses to avert
lost profits (business interruption) stemming from an accident.
The Company distinguishes itself from other insurance suppliers by
providing a high level of loss prevention, failure analysis and other
engineering services with the insurance product. This heavy emphasis on loss
prevention is intended to have the dual effect of increasing underwriting and
inspection expenses, while reducing loss and loss adjustment expenses.
An important ancillary benefit for the policyholder is that the
inspection performed by the Company's inspector on a boiler, pressure vessel,
or other piece of equipment, as part of the insurance process, is normally
viewed by state and other regulatory jurisdictions as acceptable for their
certification purposes. Without the issuance of a certificate of inspection by
the insurance carrier or another inspection agency, policyholders cannot
legally operate many types of equipment.
The Company also writes other types of insurance, primarily as an
adjunct to its boiler and machinery insurance. Such insurance accounted for
approximately 18 percent of net earned premium in 1993. By far the largest of
these other lines is the UNITECH all risk property insurance product. The
UNITECH line is marketed to accounts with equipment and machinery exposures,
such as electric utilities, where sophisticated engineering services are
important to loss prevention and control. UNITECH customers are offered
technical services such as computerized evaluation of fire protection systems
in addition to fire inspections and boiler and machinery inspections. The
Company's HSB BACK.UP policy provides all risk coverage for data processing
systems.
Separate divisions of the Company's Engineering Department
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provide quality assurance services, training for nondestructive testing,
inspections to code standards of the American Society of Mechanical Engineers
(ASME), and other specialized consulting and inspection services related to the
design and application of boilers, pressure vessels, and many other types of
equipment for equipment manufacturers and their customers. Hartford Steam
Boiler is the largest Authorized Inspection Agency for ASME codes in the world.
In addition, the Company's Engineering Department focuses on researching and
developing potential new products and services and new markets for current
services.
Radian Corporation provides advanced technical, engineering, and
scientific consulting services for industry and government. Radian's areas of
expertise include environmental engineering, health and safety, materials and
mechanical technologies, specialty chemicals, electronic systems and services,
and information technologies.
Other engineering subsidiaries provide fire protection consulting
services, and computerized maintenance management systems and services.
C. COMPETITION
Insurance
The Company is the largest writer of boiler and machinery insurance in
North America. Based on gross earned premium, the Company's U.S. market share,
at approximately 40%, has remained fairly stable over the past ten years. No
other single company has more than a 10% market share. Members of an
affiliated group of insurers have a market share of approximately 25%.
In general, the insurance market is influenced by the total insurance
capacity available based on policyholder surplus which in turn is driven by the
level of profits experienced by the industry. In addition, competition in the
boiler and machinery insurance market is based on price and service to the
insured. Service includes maintaining customer relationships, engineering and
loss prevention activities, and claims settlement. The Company prices its
product competitively in the marketplace, but competes by offering a high level
of service, not by offering the lowest-priced product. Recently the weak U.S.
economy has caused insurance customers to select programs with modest price
adjustments but higher deductibles resulting in a slower premium growth for the
Company.
The Company is predominantly a single line insurance company, unlike
its competitors which write boiler and machinery insurance as an adjunct to
their primary lines of insurance for fire and extended perils.
Many of its competitors have more assets than the Company. However,
the Company's leading position in the industry has
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allowed it to develop the largest force of inspectors, engineers and scientists
in the industry.
Engineering Services
The Company provides a wide range of engineering, consulting and
inspection services as described on pages 2-3. For most of these services it
has numerous competitors, some of whom are much larger and have greater
financial resources than the Company.
Competition in these areas is based on price and on the
qualifications, experience and availability of the individuals who perform the
work. The Company has a force of more than 2,500 inspectors, engineers,
scientists and technicians spread throughout the world. Ongoing training
programs ensure that the Company's inspectors, engineers, scientists and
technicians are kept up-to-date on the latest engineering and scientific
developments.
D. MARKETING
Insurance
The Company has contracts with independent insurance agencies in all
fifty states, the District of Columbia, Puerto Rico and Canada. These agencies
market the Company's direct insurance to the small and medium accounts serviced
by the Commercial Division. Personal contact with these independent insurance
agents is accomplished through the Company's field sales force which operates
out of 17 branch offices across the country. It is the Company's policy in
appointing agents to be selective, seeking to maintain and strengthen its
existing relationships and to develop relationships with new agents whom the
Company believes will become a continuing source of profitable business.
Recently the Company has undertaken efforts to review all of its agency
appointments and has selectively reduced them in order to retain only those
agents who consistently produce certain levels of business for the Company.
Special Risk accounts, which include high hazard occupancies and
UNITECH customers, are primarily serviced from the Company's Home Office.
Special Risk accounts generate approximately 38% of the annual premiums of the
Company.
The Company's reinsurance assumed business (see page 7) is marketed
through the distribution channels of the reinsured companies.
Engineering Services
The Company's engineering services are marketed in a variety of ways.
Customized services related to loss prevention, failure analysis, and equipment
testing are generally sold in conjunction
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with the insurance contract but are also available separately.
Most other engineering services, including those performed by Radian
Corporation, are marketed on a bid or proposal basis. While such business is
usually price sensitive, the exacting standards and requirements set by
industry and government for most of the services offered by the Company tend to
diminish that effect.
E. REGULATION
Insurance
The Company's insurance operations are subject to regulation
throughout the United States and in each foreign jurisdiction in which it does
business. Various aspects of the insurance operations are regulated, including
the type and amount of business that can be written, the price that can be
charged for particular forms of coverage, policy forms, trade and claim
settlement practices, reserve requirements and agency licensing. Regulations
also extend to the form and content of financial statements filed with such
regulatory authorities, the type and concentration of permitted investments for
insurers, and the extent and nature of affiliated transactions, including
dividends involving insurers. See Note 5 to the Consolidated Financial
Statements on page 25 of the Company's 1993 Annual Report to shareholders for
additional information.
The National Association of Insurance Commissioners recently adopted a
formula for Risk Based Capital (RBC) requirements applicable to property and
casualty insurers which establishes a required statutory surplus level for an
insurer based on the risks inherent in its overall operations. Use of the
formula is expected to begin in 1995 covering 1994 financial information. Based
upon the Company's financial position at December 31, 1993, the Company's
surplus exceeded the RBC requirements and therefore, such requirements are not
expected to affect the Company's ability to conduct its business.
The Company's operations are subject to examination by insurance
regulators at regular intervals. The most recent insurance financial
examination was completed for the year ending December 31, 1990 by the
Connecticut Insurance Department, the Company's domestic regulator. Similar
regulatory procedures govern the Company's U.S. insurance subsidiaries and its
Canadian subsidiary.
State insurance departments, consistent with sound underwriting
practices, require property and casualty insurance companies to maintain a
reasonable ratio of net premiums written to total capital and surplus.
Accordingly, a property and casualty insurance company's volume of net premiums
written is limited by the amount of its capital and surplus. The
reasonableness of a company's ratio is generally viewed in light
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of its underwriting history, investment practices, types of policies
written, policy limits and general financial condition. Currently, in the
absence of mitigating factors, a ratio of 3 to 1 or less is considered
acceptable by most regulatory authorities. The Company's ratio of net premiums
written to average statutory capital and surplus was approximately 1.2 to 1 in
1993. These ratios are expected to be replaced by RBC ratios as discussed on
the previous page.
As discussed earlier, the Company's insureds receive, in addition to
the insurance product, inspections which meet state, county or municipally
mandated requirements. In order for the Company's inspectors to perform these
mandated inspections, they must be commissioned. Commissioning is conducted by
the National Board of Boiler and Pressure Vessel Inspectors and the various
state jurisdictional authorities. The majority of the Company's inspectors are
commissioned, and the Company feels that it has an adequate number of
commissioned inspectors to conduct its business affairs.
Engineering Services
A portion of the Company's engineering services revenue comes from
certifying that boilers and pressure vessels are being constructed according to
standards adopted by the American Society of Mechanical Engineers (ASME). The
commission that authorizes inspectors to conduct insurance inspections also
authorizes them to perform ASME Code inspections.
F. INSURANCE OPERATIONS
Rates
Rates for the Company's products are developed based upon estimated
claim costs, expenses related to the acquisition and servicing of the business,
engineering expenses and a profit component. Traditionally the Company has used
boiler and machinery rates that were established by the Insurance Services
Office (ISO) and filed in the various jurisdictions within which the Company
does business. Due to the Company's large market share in the boiler and
machinery line of insurance, it has provided the largest weighting in the data
used by ISO. Consequently, ISO rates have been reflective of the Company's
experience. The Company has also developed its own rates, based on ISO rates,
for some of its boiler and machinery products.
The Company also has utilized rates developed and filed by ISO for its
UNITECH product. The Company's loss experience has been only a small factor in
the industry all risk line, and therefore its experience has not meaningfully
affected the industry ISO rates.
ISO no longer develops and files advisory rates for its member
companies, rather it compiles and makes available loss
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cost information based upon loss data furnished by its members which the
Company and other insurers can then use to develop their own rates and file
with the states.
Coverages for unique risks are judgment-rated, taking into account
deductibles, the condition of the insured's equipment, loss prevention and
maintenance programs of the insured, and other factors.
Policies
Policies are normally written for a term of one year. Most of the
Company's policies provide coverage for property damage and business
interruption to insured property (including buildings and structures under the
Company's UNITECH policy) resulting from covered perils. Property insured
under the Company's boiler and machinery policies includes such equipment as
steam boilers, hot water boilers, pressure vessels, refrigerating and air
conditioning systems, motors, generators, compressors, pumps, engines, fans,
blowers, gear sets, turbines, transformers, electrical switch gear, data
processing and business equipment and a wide variety of production and
processing equipment.
Reinsurance Assumed
The predominant practice in the insurance industry is to combine
several types of insurance coverages, including boiler and machinery, into one
policy referred to as a package policy. In response to this, the Company has
negotiated reinsurance agreements with several large and medium sized
multi-line insurance companies to reach the small to mid-size customers that
purchase such package policies. To date, more than 100 insurance companies
have signed reinsurance agreements with the Company. This segment of the
business, which focuses on small commercial customers, has been consistently
more profitable than the large accounts and offers more opportunity for growth
by the Company since boiler and machinery coverage has historically been
excluded from commercial package policies.
Under the reinsurance agreements, the Company's reinsured companies
may include boiler and machinery exposures in their multi-peril policies, and
such risks will be assumed by the Company under the terms of the agreement.
These plans generally provide that the Company will assume 100% of each boiler
and machinery risk, subject to the capacity specified in the agreement, and
will receive the entire boiler and machinery premium except for a ceding
commission which will be retained by the reinsured company for commissions to
agents and brokers, premium taxes and handling expenses.
Although the Company assumes the role of reinsurer, it continues to
have selling and underwriting responsibilities as well as involvement in
inspecting and claims adjusting. In
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effect, the Company becomes the boiler and machinery department of the
reinsured company and provides all boiler and machinery services as if it were
part of that organization. The Company retains the right to decline or
restrict coverage in the same manner as it does for its own business. In
summary, the Company's position as a reinsurer is substantially unchanged from
the normal method of doing business except that insurance coverage is written
on forms issued through the reinsured company.
The written premium generated through reinsurance assumed totaled $131
million in 1993, representing approximately 38% of the Company's net written
premium.
The Company's largest source of accepted reinsurance is Industrial Risk
Insurers (IRI). IRI is an insurance association funded by 43 members (each of
which is a property-casualty insurance company). While the Company provides
the largest share of boiler and machinery insurance capacity to IRI, there are
other IRI members who provide the same coverages. In addition, IRI often
writes boiler and machinery insurance for its own account. The Company assumed
$23.3 million of boiler and machinery premiums from IRI in 1993.
Other than Engineering Insurance Group which is described on page 1,
the Company does not participate to any significant degree in reinsurance pools
of other insurance companies because the Company chooses to insure only those
risks which it has inspected or has the right to inspect.
Reinsurance Ceded
The Company purchases reinsurance in support of its insurance
operations in order to guard against catastrophic losses and provide
competitive policy limits. The Company utilizes two primary reinsurance
arrangements. Liability in excess of the Company's retention (which is
currently $3.5 million for most of the Company's business, with limits up to $6
million in certain instances) is first assumed by the Company's primary
reinsurance group, made up of large, well-capitalized reinsurance companies.
Additional liability in excess of the first reinsurance treaty is covered by an
additional reinsurance facility composed of other U.S. and international
reinsurance companies and syndicates. In addition, the Company purchases
facultative reinsurance on certain high exposure risks and has catastrophe
reinsurance for aggregate losses greater than a $15 million retention. In the
unlikely event that the Company's reinsurers are unable to meet their
obligations, the Company would continue to have primary liability to
policyholders for losses incurred.
Recent experience under the excess of loss reinsurance program,
including losses related to hurricane Andrew and other large losses, resulted
in increased reinsurance costs in the
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second half of 1993. The Company expects additional price increases in 1994.
For additional information on reinsurance, see Note 9 to the
Consolidated Financial Statements on page 29 of the Company's 1993 Annual
Report to shareholders.
Claims and Claim Adjustment
The overwhelming majority of claims are handled by the Company's own
claims adjusters. Management believes that this is much more cost-efficient
than the retention of independent claims adjusters and that the Company's
adjusters are better able to make the connection between loss prevention and
loss control. The Company employs claims adjusters in its various branch
offices throughout the country and Canada and also operates a claims department
in its home office in Hartford, Connecticut. Home office claims adjusters
provide expertise and assistance to the branch office adjusters and also direct
the handling of larger, more complicated claims.
The Company establishes reserves for losses to account for the
estimate of the ultimate cost of claims that have been incurred but not
reported ("IBNR" reserves) and ones that have been reported but not settled.
The setting of IBNR reserves is based on actuarial techniques and historical
data, as adjusted to reflect current trends and economic developments. The
reserve set for a reported loss represents the informed judgment and experience
of the claims personnel regarding the nature and value of the specific type of
claim. Reserves are revised upward or downward over time as experience
develops and claims are reported and paid. Adjustments to reserves are
reflected in the net income of the period in which such adjustments are made.
The normal turnaround time in paying small claims is less than six
months. The vast majority of claims are settled within one year and very few
remain unsettled two years after the loss occurs. This pattern is skewed in
terms of claim dollars (as noted in the schedule on page 12) as it is the
larger claims that take longer to settle. Compared to the property-casualty
industry as a whole, the Company has a very "short-tail" claims liability. For
this reason, reserve estimates are not adjusted for the effects of inflation.
The Company's claims expenses are based on estimates of the current costs of
replacing productive capacity. The Company does not employ discounting
techniques in establishing liabilities for claims and claim adjustment
expenses.
For those relatively few claims involving litigation, the Company uses
both its in-house law department and outside counsel, depending on the issues,
costs, and staffing requirements.
For additional information on reserves, see the discussion
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of Insurance Operations in the Management's Discussion and Analysis of
Consolidated Financial Condition and Results of Operations (page 16) of the
Company's 1993 Annual Report to shareholders.
The following table provides a reconciliation of the beginning and
ending reserves for claims and claim adjustment expenses for the years ended
December 31, 1993, 1992 and 1991.
RECONCILIATION OF NET LIABILITY FOR
CLAIMS AND CLAIMS ADJUSTMENT EXPENSES
1993 1992 1991
---- ---- ----
(In millions)
Net liability for claims and claim adjustment
expenses at beginning of year $132.8 $111.4 $115.7
------ ------ ------
Plus:
Provision for claims and claim adjustment
expenses occurring in the current year 172.2 146.3 119.4
Increase (decrease) in estimated claims
and claim adjustment expenses arising
in prior years 26.9 26.1 19.7
---- ---- ----
Total incurred claims and
claim adjustment expenses 199.1 172.4 139.1
----- ----- -----
Less:
Payment for claims arising in:
Current year 60.9 59.8 56.7
Prior years 99.7 91.2 86.7
---- ---- ----
Total payments 160.6 151.0 143.4
----- ----- -----
Net liability for claims and claim
adjustment expenses at end of year $171.3 $132.8 $111.4
====== ====== ======
The 1993, 1992 and 1991 claims and claim adjustment expenses included
adverse development of prior years' reserves. The adverse development of the
1992, 1991 and 1990 year-end reserves was attributable to the settlement of
certain large losses for which the Company initially determined it would not
have liability, the settlement of some outstanding claims for more than was
originally anticipated, unusually late notice of loss provided by the insured
for several large losses, and reserves established for losses on which the
coverage is being contested. The adverse development of the 1991 year-end
reserve was also impacted by two large December losses.
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The following table shows a reconciliation of the net liability to the
gross liability for claims and loss adjustment expenses based on reinsurance
recoverable on unpaid losses.
RECONCILIATION OF NET LIABILITY TO GROSS LIABILITY
FOR CLAIMS AND CLAIM ADJUSTMENT EXPENSES
1993 1992
---- ----
(in millions)
Net liability for claims and claim $171.3 $132.8
adjustment expenses at end of period
Reinsurance recoverable
on unpaid losses 43.1 39.9
---- ----
Gross liability for claims and claim
adjustment expenses at end of period $214.4 $172.7
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The claim and claim expense reserve runoff table on the following page
shows the amount of the net liability for 1983 through 1993. Each column shows
the net reserve established at calendar year-end as well as cumulative totals
for claims payments and reestimated liabilities for that accident year and all
previous years that make up that year-end reserve. The redundancy (deficiency)
is a cumulative number for that year and all previous years.
The deficiencies in 1992, 1991 and 1990 were explained on the previous
page. The deficiency in 1983 was related to the winter freeze that occurred in
late 1983.
The redundancies shown for 1985 through 1988 were attributed to the
difficulty in estimating claims due to inflationary impacts and business
interruption, which became a larger component of claims. The claim reserves
established in those years have been favorably settled, adjusted or closed
based on the results of claim audits, technical loss analysis, subrogation,
settlement with property carriers and the latest available information. The
net impact of those favorable settlements was to decrease claims expenses by
$10.2 million in 1990 and $28.0 million in 1989.
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RECONCILIATION OF BEGINNING AND ENDING NET CLAIMS RESERVES
AND EXHIBIT OF REDUNDANCIES (DEFICIENCIES)
(In Millions)
YEAR ENDED 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
- ---------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net Liability for Unpaid
Claims and Claim $52.3 $77.5 $99.9 $126.1 $147.5 $157.4 $139.6 $115.7 $111.4 $132.8 $171.3
Adjustment Expenses
Cumulative Amount Paid as of:
End of Year - - - - - - - - - - -
One Year Later 44.5 45.5 51.1 54.9 57.4 78.8 85.6 86.7 91.2 99.7 -
Two Years Later 57.1 59.3 65.8 73.6 75.9 92.1 104.2 109.7 115.5 - -
Three Years Later 62.0 65.0 70.6 79.5 74.5 95.5 110.3 120.6 - - -
Four Years Later 64.1 67.6 73.3 79.7 75.4 95.4 112.5 - - - -
Five Years Later 64.3 69.0 74.3 80.4 74.5 93.6 - - - - -
Six Years Later 65.4 69.9 74.5 79.0 74.2 - - - - - -
Seven Years Later 66.1 70.1 74.2 78.8 - - - - - - -
Eight Years Later 66.3 69.8 74.0 - - - - - - - -
Nine Years Later 66.6 69.6 - - - - - - - - -
Ten Years Later 66.4 - - - - - - - - - -
Net Liability Reestimated as of:
End of Year 52.3 77.5 99.9 126.1 147.5 157.4 139.6 115.7 111.4 132.8 171.3
One Year Later 75.8 80.9 104.7 126.4 131.9 129.4 129.4 135.4 137.5 159.7 -
Two Years Later 72.6 84.3 101.1 115.8 100.4 108.7 127.4 138.0 139.7 - -
Three Years Later 73.8 85.5 94.7 96.1 86.0 106.8 127.8 136.8 - - -
Four Years Later 73.6 83.3 85.9 88.0 83.7 103.0 125.0 - - - -
Five Years Later 74.2 79.6 80.8 86.9 80.8 102.3 - - - - -
Six Years Later 72.7 76.6 80.9 83.6 82.0 - - - - - -
Seven Years Later 71.1 76.7 80.7 85.7 - - - - - - -
Eight Years Later 71.3 76.5 84.1 - - - - - - - -
Nine Years Later 71.8 79.9 - - - - - - - - -
Ten Years Later 74.8 - - - - - - - - - -
Cumulative Redundancy
(Deficiency) (22.5) (2.4) 15.8 40.4 65.5 55.1 14.6 (21.1) (28.3) (26.9) -
G. INVESTMENTS
Income from the Company's investment portfolio contributes significantly
to operating income. Each year there is a significant inflow of cash from
insurance and engineering services operations and from investment income. In
addition, cash flow is affected by the normal maturity of fixed income
investments, and the purchase and sale of equity securities.
The investment objective for the Company's portfolio is to achieve a
high after-tax yield on an annual basis while maximizing long-term growth in
surplus. Growth in surplus is important because the amount of new business
that a property-casualty company can write is limited by the amount of surplus
available.
The Company has traditionally attempted to meet this investment
objective by holding a large portion of investment assets in equity securities.
Although this exposes the Company to the movement of the stock market, the
Company's investment strategy remains based on the premise that common stocks
provide the highest total return available in the securities market. At
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year-end 1993 the Company had approximately 57 percent of its investments in
equity securities which accounted for 33 percent of total assets on a market
value basis. The Company also holds bonds and preferred stocks. See Note 6
(pages 26-28) to Consolidated Financial Statements and the discussion of
investment operations in the Management's Discussion and Analysis of
Consolidated Financial Condition and Results of Operations (page 17) of the
Company's 1993 Annual Report to shareholders for additional information.
The following table summarizes the investment results of the Company's
investment portfolio:
Annualized Rate
Net Invest- of Return (2) Investment
Cash and ment Income ------------------------- Gains (Losses) (3)
Invested Less Before After -------------------------
Assets, Less Interest Income Income Change in
Borrowed Money Expense (1) Taxes Taxes Realized Unrealized
-------------- ----------- ------ ------ -------- ----------
(In Millions) (In Millions)
1993 $462.6 $27.5 6.1% 5.3% $26.1 $(16.3)
1992 464.0 29.5 6.4 5.7 30.8 (22.6)
1991 482.4 33.0 7.2 6.3 33.9 28.7
(1) Net investment income excludes realized investment gains and is reduced by
investment expenses, but is before the deduction for income taxes.
(2) The rates of return on investments shown above have been determined in
accordance with rules prescribed by the National Association of Insurance
Commissioners. These rates have been determined by the following formula:
2I
---------
A + B - I
I is equal to net investment income, before taxes, earned on investment assets.
A+B is equal to the sum of the beginning and end of the year amounts shown
under "Cash and Invested Assets, Less Borrowed Money". The after tax rates of
return are computed in the same manner, but net investment income is reduced by
income taxes.
(3) Realized and unrealized investment gains (losses) are before income taxes.
H. EMPLOYEES
At year-end 1993, the Company, including its subsidiaries, employed
4,036 people. Of this total, 1,988 were employed by the Company's wholly-owned
subsidiary, Radian Corporation; 202 were employed by the Company's Canadian
affiliate, The Boiler Inspection and Insurance Company of Canada; and 212 were
employed
13
15
by other subsidiaries of the Company. Management believes that its relations
with its employees are satisfactory.
Item 2. Properties.
The Hartford Steam Boiler Inspection and Insurance Company leases
approximately 231,371 square feet for its home office at One State Street,
Hartford, Connecticut under a long-term capital lease with One State Street
Limited Partnership. In addition to its home office facility, the Company
leases facilities for its branch offices and subsidiaries throughout the United
States and Canada. The Company also leases space in a small number of foreign
locations. The Company considers the office facilities to be suitable and
adequate for its current and anticipated level of operations.
See Notes 8 (page 28) and 11 (page 31) to Consolidated Financial
Statements of the Company's 1993 Annual Report to shareholders for additional
information.
Item 3. Legal Proceedings.
The Company is involved in various legal proceedings as defendant or
co-defendant that have arisen in the normal course of its business. In the
judgment of management, after consultation with counsel, it is improbable that
any liabilities which may arise from such litigation will have a material
adverse impact on the consolidated financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 4(a). Executive Officers of the Registrant.
All officers are elected by the Board of Directors to hold office until
the next Annual Meeting of Shareholders. An officer may be removed at any time
by the Board of Directors.
Wilson Wilde, 66, Chairman and Chief Executive Officer since 9/93; Director
since 1967; President and Chief Executive Officer 11/71 - 9/93; Executive Vice
President 9/70 - 11/71; Vice President 11/67 - 9/70; Assistant Vice President
4/66 - 11/67; Assistant Secretary 2/64 - 4/66.
Gordon W. Kreh, 46, President and Director since 9/93; Senior Vice President -
Marketing 4/92 - 9/93; President - Engineering Insurance Group 10/89 - 4/92;
Vice President 11/84 - 10/89; Assistant Vice President 4/81 - 11/84.
Donald M. Carlton, 56, Executive Vice President since 4/92; Director since
7/75; President and Chairman of the Board - Radian Corporation since 1969.
14
16
Donald K. Wilson, 58, Executive Vice President since 11/88; Senior Vice
President 11/84 - 11/88; Vice President 11/71 - 11/84; Assistant Vice President
9/70 - 11/71.
Michael L. Downs, 44, Senior Vice President since 2/94; Managing Director -
Engineering Insurance Co., Ltd. 1/91 - 2/94; Second Vice President 7/87 - 1/91;
Assistant Vice President 2/85 - 7/87; Assistant Secretary 4/80 - 2/85.
John J. Kelley, 48, Senior Vice President since 2/94; Corporate Secretary and
Special Assistant to the President 5/87 - 2/94; Assistant Vice President and
Special Assistant to the President 9/83 - 5/87; Assistant Vice President 9/79 -
9/83; Assistant Secretary 4/77 - 9/79.
Kenneth J. Kelly, 61, Senior Vice President and General Counsel since 11/84;
Vice President, Secretary and General Counsel 4/77 - 11/84; Secretary and
General Counsel 9/75 - 4/77; Assistant Vice President 4/74 - 9/75; Assistant
Secretary 3/70 - 4/74.
T. Skipwith Lewis, 57, Senior Vice President - Engineering since 3/94; Senior
Vice President - Engineering and Claims 11/84 - 3/94; Vice President 11/82 -
11/84; Assistant Vice President 10/81 - 11/82.
R. Kevin Price, 47, Senior Vice President and Corporate Secretary since 2/94;
Second Vice President 4/89 - 2/94; Assistant Vice President 1/84 - 4/89.
Robert W. Trainer, 44, Senior Vice President, Treasurer and Chief Financial
Officer since 2/94 and from 4/90 - 4/92; Senior Vice President - Underwriting
4/92-2/94; Vice President, Treasurer and Chief Financial Officer 7/86 - 4/90;
Vice President 11/84 - 7/86; Assistant Vice President 1/80 - 11/84; Assistant
Treasurer 4/78 - 1/80.
Robert C. Walker, 50, Senior Vice President - Claims since 3/94; Associate
General Counsel and head of Corporate Litigation Department of United
Technologies Corporation 5/89-3/94.
15
17
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
Note 5 on page 25 and Note 18 on page 37 of the Company's 1993 Annual
Report to shareholders are incorporated herein by reference. The Company's
common stock is traded on the New York Stock Exchange under the symbol HSB. As
of February 8, 1994, the Company had 5,697 holders of record. Amounts
available to be paid for dividends to shareholders are limited by
state insurance regulations. Regulatory approval was required and received by
the Company from the Connecticut Insurance Commissioner for the payment of
1993 dividends. Effective December 1, 1993 the restriction on dividends was
amended to require approval for dividend distributions within a twelve month
period which would exceed the greater of (i) 10 percent of an insurer's
statutory surplus or (ii) net income (net investment income under the prior
standard) calculated as of the December 31st last preceding. The Company
expects to be required to request regulatory approval for the payment of any
dividends in 1994.
Item 6. Selected Financial Data.
"Ten-Year Financial Summary" on pages 40-41 of the Company's 1993 Annual
Report to shareholders is incorporated herein by reference. Dividends declared
per share for the prior five years are shown below.
1993 1992 1991 1990 1989
- ---- ---- ---- ---- ----
$2.12 $2.06 $1.90 $1.75 $1.55
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
"Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations" on pages 15-19 of the Company's 1993
Annual Report to shareholders is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
Consolidated Financial Statements and the related Notes to Consolidated
Financial Statements on pages 20-37, including Note 18, "Consolidated Quarterly
Data (unaudited)", of the Company's 1993 Annual Report to shareholders are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
16
18
PART III
Item 10. Directors and Executive Officers of the Registrant.
"Nominees for Election to the Board of Directors for Three-Year Term
Expiring in 1997" and "Members of the Board of Directors Continuing in Office"
on pages 2-6; and "Reporting of Securities Transactions" on page 10 of the
Company's Proxy Statement dated March 1, 1994 are incorporated herein by
reference. Also see pages 14-15 herein.
Item 11. Executive Compensation.
"Meetings and Remuneration of the Directors" on pages 6-8, "Board
Compensation Committee Report on Executive Compensation" on pages 10-13,
"Summary Compensation Table" on pages 14-15, "Stock Option and Long-Term
Incentive Plan Tables" on pages 15-16, "Retirement Plans" on pages 16-18,
"Employment Arrangements" on pages 18-19, "Compensation Committee Interlocks
and Insider Participation" on page 19, and "Performance Graph" on page 20 of
the Company's Proxy Statement dated March 1, 1994 are incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
"Security Ownership of Certain Beneficial Owners and Management" on
pages 8-10 of the Company's Proxy Statement dated March 1, 1994 is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions.
"Compensation Committee Interlocks and Insider Participation" on page 19
of the Company's Proxy Statement dated March 1, 1994 is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
(a) The financial statements and schedules listed in the accompanying
Index to Financial Statements and Financial Statement Schedules
are filed as part of this report.
(b) No reports on Form 8-K were filed during the fiscal quarter ended
December 31, 1993.
(c) The exhibits listed in the accompanying Index to
Exhibits are filed as part of this report.
17
19
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE HARTFORD STEAM BOILER
INSPECTION AND INSURANCE COMPANY
(Registrant)
By: /s/ Robert W. Trainer
----------------------
Senior Vice President,
Treasurer and Chief
Financial Officer
March 30, 1994
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 and on the dates indicated.
(Signature) (Title)
By: /s/ Robert W. Trainer Senior Vice President, Treasurer
--------------------- and Chief Financial Officer
Robert W. Trainer (Principal Financial Officer and
March 30, 1994 Principal Accounting Officer)
(Wilson Wilde)* Chairman, Chief Executive Officer
and Director
(Gordon W. Kreh)* President and Director
(Joel B Alvord)* Director
(Colin G. Campbell)* Director
(Donald M. Carlton)* Director
(Richard G. Dooley)* Director
(William B. Ellis)* Director
18
20
(E. James Ferland)* Director
(John A. Powers)* Director
(Paul A. Vatter)* Director
(John M. Washburn, Jr.)* Director
*By: /s/ Kenneth J. Kelly
-----------------------
Kenneth J. Kelly
(Attorney-in-Fact)
March 30, 1994
19
21
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Page No.
--------
Report of Independent Accountants 21
Financial Statements
Consolidated Statements of Operations for the years ended
December 31, 1993, 1992 and 1991. *
Consolidated Statements of Financial Position
- December 31, 1993 and 1992. *
Consolidated Statements of Cash Flows for the
years ended December 31, 1993, 1992 and 1991. *
Consolidated Statements of Changes in Shareholders'
Equity for the years ended December 31, 1993, 1992
and 1991. *
Notes to Consolidated Financial Statements. *
Schedule I - Summary of Investments -
Other than Investments in Related Parties 22
Schedule VI - Reinsurance 23
Schedule VIII - Valuation and Qualifying Accounts 24
Schedule IX - Short-Term Borrowings 25
Schedule X - Supplemental Information Concerning Property -
Casualty Insurance Operations 26
No other schedules are required to be filed herewith pursuant to Article 7 of
Regulation S-X.
* Incorporated herein by reference from pages 20-37 of The Hartford Steam
Boiler Inspection and Insurance Company 1993 Annual Report to shareholders.
20
22
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
The Hartford Steam Boiler Inspection and Insurance Company:
We have audited the consolidated statements of financial position of The
Hartford Steam Boiler Inspection and Insurance Company and its subsidiaries as
of December 31, 1993 and 1992, and the related consolidated statements of
operations, cash flows and changes in shareholders' equity for each of the
three years in the period ended December 31, 1993, which financial statements
are included on pages 20 through 37 of the 1993 Annual Report to shareholders
of The Hartford Steam Boiler Inspection and Insurance Company and incorporated
by reference herein. We have also audited the financial statement schedules
listed in the index on page 20 of this Form 10-K. These financial statements
and financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Hartford
Steam Boiler Inspection and Insurance Company and its subsidiaries as of
December 31, 1993 and 1992, and the consolidated results of their operations
and their cash flows for each of the three years in the period ended December
31, 1993, in conformity with generally accepted accounting principles. In
addition, in our opinion, the financial statement schedules referred to above,
when considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
As discussed in Note 2 to the consolidated financial statements, the Company
changed its method of accounting for postemployment benefits, accounting for
investments in debt and equity securities, and accounting and reporting for
reinsurance during 1993, and its method of accounting for postretirement
benefits other than pensions in 1992.
COOPERS & LYBRAND
Hartford, Connecticut
January 24, 1994
21
23
SCHEDULE I
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Summary of Investments - Other Than Investments in Related Parties
(in millions)
Column A Column B Column C Column D Column E Column F Column G
- ----------------------------------------- --------- -------- -------- -------- -------- --------
1993 1992
--------------------------------- ------------------------------
Amount Amount
Shown Shown
In The In The
Market Balance Market Balance
Type of Investment Cost Value Sheet * Cost Value Sheet *
- ----------------------------------------------------------------------------------------------------------------
Fixed Maturities:
Bonds:
U.S. Government and Government Agencies
and Authorities $0.2 $0.2 $0.2 $0.2 $0.2 $0.2
States, Municipalities and Political
Subdivisions 28.9 31.2 31.2 28.4 30.0 28.4
Foreign Governments 26.6 28.4 28.4 26.6 27.2 26.6
Convertibles and Bonds with Warrants Attached 0.0 0.0 0.0 0.0 0.0 0.0
All Other Bonds 7.6 7.7 7.7 2.7 2.7 2.7
Mortgage Receivable 11.1 11.1 11.1 11.1 11.1 11.1
Redeemable Preferred Stocks 72.3 76.3 76.3 82.6 86.4 82.6
--------------------------------------------------------------
Total Fixed Maturities $146.7 $154.9 $154.9 $151.6 $157.6 $151.6
---------------------------------------------------------------
Equity Securities:
Common Stocks:
Public Utilities $47.8 $48.1 $48.1 $57.7 $64.9 $64.9
Banks and Insurance 6.7 8.1 8.1 8.1 10.4 10.4
Industrial & Other 108.9 149.5 149.5 105.0 159.8 159.8
Non-Redeemable Preferred Stocks 73.4 84.3 84.3 68.2 74.8 74.8
---------------------------------------------------------------
Total Equity Securities $236.8 $290.0 $290.0 $239.0 $309.9 $309.9
---------------------------------------------------------------
Short-Term Investments and Cash: 61.1 61.1 61.1 55.5 55.5 55.5
---------------------------------------------------------------
Total Investments $444.6 $506.0 $506.0 $446.1 $523.0 $517.0
===============================================================
* In 1993, the company adopted FAS 115, and as such classified all
amounts as available for sale and presented them at fair value. In 1992,
fixed maturities were carried at amortized cost.
22
24
SCHEDULE VI
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Reinsurance
(in millions)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------- -------- -------- -------- -------- -----------
Insurance Gross Ceded To Assumed Net Percentage Of
Premiums Amount Other From Other Amount Amount Assumed
Companies Companies To Net
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
1993
Property and
Liability
Insurance $246.9 $29.3 $131.6 $349.2 37.7%
1992
Property and
Liability
Insurance $245.0 $19.4 $117.3 $342.9 34.2%
1991
Property and
Liability
Insurance $235.2 $18.5 $102.1 $318.8 32.0%
23
25
SCHEDULE VIII
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Valuation and Qualifying Accounts
(in millions)
Column A Column B Column C Column D Column E Column F
----------- ------------ ---------- --------- ---------- -----------
Description Balance at Charged to Charged to Balance
Beginning of Costs and Other Deductions At End of
Period Expenses Acccounts Describe (a) Period
1993
Reserve for Bad Debts $0.4 $0.9 - $0.7 $0.6
1992
Reserve for Bad Debts $0.3 $0.5 - $0.4 $0.4
1991
Reserve for Bad Debts $0.4 $0.1 - $0.2 $0.3
(a) Engineering Services Receivable written off as uncollectible.
24
26
SCHEDULE IX
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Short-Term Borrowings
(in millions)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- --------- -------- --------
Category of Balance At Weighted Maximum Amt. Avg. Amount Weighted Avg
Aggregate End of Period Average Outstanding Outstanding Interest Rate
Short-term Interest During the During the During the
Year Borrowings Rate* Period Period* Period*
- ------------------------------------------------------------------------------------------------------
1993 Commercial Paper $ 42.7 3.33% $ 56.7 $ 51.0 3.27%
Payable to Banks 0.0 6.00% 2.1 0.0 6.00
1992 Commercial Paper $ 52.2 3.47% $ 60.2 $ 52.8 3.96%
Payable to Banks 0.0 6.00 1.5 0.4 5.03
1991 Commercial Paper $ 45.6 5.06% $ 45.4 $ 36.8 5.93%
Payable to Banks 1.3 6.50 1.6 0.7 8.35
* Based on month-end balances and interest rates.
25
27
SCHEDULE X
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Supplemental Information Concerning Property - Casualty Insurance Operations
For the years ended December 31,1993, 1992 and 1991
(in millions)
Column A Column B Column C Column D Column E Column F Column G
- -------- -------- -------- -------- -------- -------- --------
Affiliation
with registrant Prepaid Reserves for Discount, if Unearned Earned Net invest-
acquisition unpaid claims any, deducted premiums premiums ment income
cost and claim in Column C
adjustment
expenses
The Hartford Steam
Boiler Inspection and
Insurance Company
Consolidated
1993 $30.0 $214.4 - $169.3 $349.2 $29.3
--------------------------------------------------------------------------
1992 $30.0 $172.7 - $171.0 $342.9 $32.0
--------------------------------------------------------------------------
1991 $28.0 $111.4 - $156.9 $318.8 $36.5
Column H Column I Column J Column K
-------- -------- -------- --------
Claims and claim Amortization Paid claims Premiums
adjustment expenses of prepaid and claim written
incurred related to policy adjustment
aquisition expenses
Current Prior costs
Year Years
1993 $172.2 $26.9 $64.2 $160.6 $344.5
----------------------------------------------------------
1992 $146.3 $26.1 $64.9 $151.0 $351.0
----------------------------------------------------------
1991 $119.4 $19.7 $60.5 $143.4 $325.0
26
28
INDEX TO EXHIBITS
Exhibit
Number Description
- -------- -----------
(3)(i) Charter of The Hartford Steam Boiler Inspection and Insurance Company, incorporated by reference
to Exhibit (3)(a) to registrant's Form 10-K for the year ended December 31, 1990.
(3)(ii) By-laws of The Hartford Steam Boiler Inspection and Insurance Company as amended April 19, 1988.
(4) Instruments defining the rights of holders of long-term debt of the registrant are not being
filed since the total amount of securities authorized under each such instrument does not
exceed ten percent of the total assets of the registrant and its subsidiaries on a
consolidated basis. The registrant shall furnish copies of such instruments to the
Securities and Exchange Commission upon request.
(10)(i) Lease Agreement with One State Street Limited Partnership; incorporated by reference to Exhibit
(10)(i) to registrant's Form 10. File No. 0-13300, filed March 18, 1985.
(10)(iii) (a) Employment Agreement dated February 28, 1988 between the registrant and various
executive officers; incorporated by reference to Exhibit (10)(iii)(a) to registrant's
Form 10-K for the year ended December 31, 1992. *
(b) The Hartford Steam Boiler Inspection and Insurance Company Long-Term Incentive Plan,
as amended and restated April 21, 1992; incorporated by reference to Exhibit
(10)(iii)(b) to registrant's Form 10-K for the year ended December 31, 1992. *
(c) The Hartford Steam Boiler Inspection and Insurance Company Short-Term Incentive
Plan, as amended and restated April 21, 1992; incorporated by reference to Exhibit
(10)(iii)(c) to registrant's Form 10-K for the year ended December 31, 1992. *
(d) The Hartford Steam Boiler Inspection and Insurance Company 1985 Stock Option Plan, as
amended and restated April 21, 1992; incorporated by reference to Exhibit (10)(iii)(d)
to registrant's Form 10-K for the year ended December 31, 1992. *
(e) Retirement Plan for Outside Directors, as
29
amended and restated October 24, 1988.*
(f) The Hartford Steam Boiler Inspection and Insurance Company 1989 Restricted Stock Plan for
Non-Employee Directors; as amended and restated November 1, 1991; incorporated by
reference to Exhibit (10)(iii)(f) to registrant's Form 10-K for the year ended
December 31, 1992. *
(g) The Radian Corporation Supplemental Executive Retirement Plan effective January 1, 1991;
incorporated by reference to Exhibit (10)(iii)(g) to registrant's Form 10-K for the
year ended December 31, 1992. *
(h) Salary Continuation Agreement between Radian Corporation and Donald M. Carlton dated
January 1, 1986; incorporated by reference to Exhibit (10)(iii)(h) to registrant's
Form 10-K for the year ended December 31, 1992. *
(i) Salary Continuation Agreement between Radian Corporation and Donald M. Carlton dated
April 4, 1989; incorporated by reference to Exhibit (10)(iii)(i) to registrant's Form
10-K for the year ended December 31, 1992. *
(j) Description of certain arrangements not set forth in any formal documents, as
described on pages 6 - 7, with respect to directors' compensation, and on pages
10 - 15 and 18 - 19, with respect to executive officers' compensation, which pages
are incorporated by reference to registrant's Proxy Statement dated March 1, 1994. *
(13)(ii) Pages 15 - 37 and 40 - 41 of The Hartford Steam Boiler Inspection and Insurance
Company 1993 Annual Report to shareholders.
(21) Subsidiaries of the registrant.
(23) Consent of experts and counsel -
consent of Coopers & Lybrand.
(24) Power of attorney.
(28)P Information from reports furnished to state insurance regulatory authorities. Schedule P of
the Consolidated Annual Statement of The Hartford Steam Boiler Inspection and Insurance Company
and its Affiliated Insurers for 1993. (Filed under cover of Form SE.)
* Management contract, compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of this report.