EXHIBIT 99.4
FINANCIAL STATEMENT SCHEDULES
SCHEDULE I--SUMMARY OF INVESTMENTS -
OTHER THAN INVESTMENTS IN RELATED PARTIES
UNUMPROVIDENT CORPORATION AND SUBSIDIARIES
December 31, 1998
Amount at which
shown in the
Fair Statement
Type of Investment Cost Value of Financial Position
(in millions of dollars)
- ------------------------------------------------------------------------------------------------------------------
Available-for-Sale Fixed Maturity Securities:
Bonds
United States Government and Government
Agencies and Authorities $ 248.2 $ 323.5 $ 323.5
States, Municipalities, and Political Subdivisions 1,204.2 1,261.6 1,261.6
Foreign Governments 868.3 1,071.6 1,071.6
Public Utilities 3,797.7 4,226.1 4,226.1
Mortgage-backed Securities 1,782.2 1,925.9 1,925.9
Convertible Bonds 142.3 152.4 152.4
All Other Corporate Bonds 12,392.3 13,607.9 13,607.9
Redeemable Preferred Stocks 146.4 163.2 163.2
--------- --------- ---------
Total 20,581.6 $22,732.2 22,732.2
--------- ========= ---------
Held-to-Maturity Fixed Maturity Securities:
Bonds
United States Government and Government
Agencies and Authorities 13.5 $ 17.4 13.5
States, Municipalities, and Political Subdivisions 2.4 2.6 2.4
Mortgage-backed Securities 276.1 311.5 276.1
All Other Corporate Bonds 15.0 21.0 15.0
--------- --------- ---------
Total 307.0 $ 352.5 307.0
--------- ========= ---------
Equity Securities:
Common Stocks 22.8 $ 32.0 32.0
Nonredeemable Preferred Stocks 1.2 1.1 1.1
--------- --------- ---------
Total 24.0 $ 33.1 33.1
--------- ========= ---------
Mortgage Loans 1,321.2 1,321.2
Real Estate Acquired in Satisfaction of Debt 96.0 62.4 *
Other Real Estate 304.1 247.4 *
Policy Loans 2,227.2 2,227.2
Other Long-term Investments 10.4 10.4
Short-term Investments 245.1 245.1
--------- ---------
$25,116.0 $27,186.0
========= =========
*Difference between cost and carrying value results from certain valuation
allowances and other temporary declines in value.
1
SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
UNUMPROVIDENT CORPORATION (Parent Company)
STATEMENTS OF FINANCIAL CONDITION
December 31
1998 1997
(in millions of dollars)
--------------------------------------------
ASSETS
Fixed Maturity Securities
Available-for-Sale--at fair value (cost: $9.6; $9.6) $ 11.4 $ 10.8
Short-term Investments - 13.3
Investment in Subsidiaries 6,803.0 6,154.8
Short-term Notes Receivable from Subsidiaries 16.1 36.6
Surplus Notes of Subsidiaries 250.0 250.0
Other Assets 133.5 36.9
-------- --------
Total Assets $7,214.0 $6,502.4
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Short-term Debt from Subsidiaries $ 32.4 $ 24.7
Long-term Debt 600.0 725.0
Other Liabilities 135.4 38.6
-------- --------
Total Liabilities 767.8 788.3
-------- --------
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust Holding Solely Junior
Subordinated Debt Securities of the Company 300.0 -
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock - 156.2
Common Stock 23.8 23.7
Additional Paid-in Capital 959.2 954.8
Accumulated Other Comprehensive Income 914.7 799.0
Retained Earnings 4,279.2 3,797.7
Treasury Stock (9.2) (1.5)
Deferred Compensation (21.5) (15.8)
-------- --------
Total Stockholders' Equity 6,146.2 5,714.1
-------- --------
Total Liabilities and Stockholders' Equity $7,214.0 $6,502.4
======== ========
See notes to condensed financial information.
2
SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Continued)
UNUMPROVIDENT CORPORATION (Parent Company)
STATEMENTS OF NET INCOME
Year Ended December 31
1998 1997 1996
(in millions of dollars)
------------------------------------------------
Dividends from Subsidiaries $ 77.9 $109.9 $ 52.6
Interest from Subsidiaries 21.3 17.1 12.3
Other Income 10.4 1.3 1.7
------ ------ ------
Total Revenue 109.6 128.3 66.6
------ ------ ------
Interest Expense on Debt 62.7 38.7 10.2
Other Expenses 2.6 4.3 1.2
------ ------ ------
Total Expenses 65.3 43.0 11.4
------ ------ ------
Income Before Federal Income Taxes and Equity in
Undistributed Earnings of Subsidiaries 44.3 85.3 55.2
Federal Income Taxes (Credit) 8.1 (7.3) 1.1
------ ------ ------
Income Before Equity in Undistributed Earnings
of Subsidiaries 36.2 92.6 54.1
Equity in Undistributed Earnings of Subsidiaries 581.2 525.0 329.5
------ ------ ------
Net Income $617.4 $617.6 $383.6
====== ====== ======
See notes to condensed financial information.
3
SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Continued)
UNUMPROVIDENT CORPORATION (Parent Company)
STATEMENTS OF CASH FLOWS
Year Ended December 31
1998 1997 1996
(in millions of dollars)
---------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES $ 11.6 $ 105.8 $ 69.7
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (Purchases) Sales of Short-term Investments 13.3 108.2 (120.8)
Acquisition of Business and Business Combinations 146.0 (495.9) 198.9
Cash Distribution (to) from Subsidiaries 13.3 (5.0) 100.0
Short-term Notes Receivable from Subsidiaries 20.5 (29.5) -
Surplus Notes Issued to Subsidiaries - (100.0) (3.0)
Other (24.2) (0.1) (2.5)
------- ------- -------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES 168.9 (522.3) 172.6
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Short-term Borrowings from Subsidiaries 7.7 24.7 -
Issuance of Long-term Debt 600.0 725.0 200.0
Long-term Debt Repayments (725.0) (299.1) (200.0)
Issuance of Company-Obligated Mandatorily
Redeemable Preferred Securities 300.0 - -
Redemption of Preferred Stock (156.2) - -
Issuance of Common Stock 11.9 389.8 5.8
Dividends Paid to Stockholders (139.1) (139.2) (125.3)
Repurchase of Common Stock (72.7) (286.7) (119.1)
Other (6.6) 2.0 (3.6)
------- ------- -------
CASH PROVIDED (USED) BY FINANCING ACTIVITIES (180.0) 416.5 (242.2)
------- ------- -------
INCREASE IN CASH $ 0.5 $ - $ 0.1
======= ======= =======
See notes to condensed financial information.
4
SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Continued)
UNUMPROVIDENT CORPORATION (Parent Company)
NOTES TO CONDENSED FINANCIAL INFORMATION
Note 1--Basis of Presentation
The accompanying condensed financial statements should be read in conjunction
with the consolidated financial statements and notes thereto of UNUMProvident
Corporation and Subsidiaries.
Note 2--Surplus Notes of Subsidiaries
At December 31, 1998 and 1997, UNUMProvident Corporation (Parent Company) held
from its insurance subsidiaries a $150.0 million surplus debenture due in 2006,
and a $100.0 million surplus debenture due in 2027. Semi-annual interest
payments are conditional upon the approval by the insurance departments of the
subsidiaries' state of domicile. The weighted average interest rate for surplus
notes of subsidiaries was 8.1%, 7.1%, and 9.5% in 1998, 1997, and 1996,
respectively.
5
SCHEDULE III--SUPPLEMENTARY INSURANCE INFORMATION
UNUMPROVIDENT CORPORATION AND SUBSIDIARIES
Deferred Future Policy Other Policy
Policy Benefits, Claims and
Acquisition Losses, Unearned Benefits
Segment Costs Claims, and Premiums Payable
Loss Expenses
(in millions of dollars)
- ----------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Employee Benefits $ 683.4 $ 5,181.0 $ 11.7 $ 595.4
Individual 862.8 11,228.3 191.9 531.9
Voluntary Benefits 403.2 863.5 15.4 62.8
Other 111.1 4,998.9 - 194.8
-------- --------- ------ --------
Total $2,060.5 $22,271.7 $219.0 $1,384.9
======== ========= ====== ========
Year Ended December 31, 1997
Employee Benefits $ 553.9 $ 4,664.6 $ 8.5 $ 502.1
Individual 757.7 10,594.8 191.1 492.0
Voluntary Benefits 357.0 769.8 15.3 53.5
Other 88.8 4,674.8 4.8 228.9
-------- --------- ------ --------
Total $1,757.4 $20,704.0 $219.7 $1,276.5
======== ========= ====== ========
(Continued on the following page)
6
SCHEDULE III--SUPPLEMENTARY INSURANCE INFORMATION
UNUMPROVIDENT CORPORATION AND SUBSIDIARIES
(continued from preceding page)
Benefits, Amortization
Claims, of Deferred
Premium Net Losses and Policy Other
Revenue Investment Settlement Acquisition Operating Premiums
Segment Income(1) Expenses Costs Expenses(2) Written
(in millions of dollars)
- -------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Employee Benefits $ 3,364.4 $ 541.8 $ 2,642.6 $ 82.6 $ 763.9 $ 2,353.7
Individual 1,675.4 827.8 1,682.1 74.6 591.3 1,595.9
Voluntary Benefits 666.7 94.8 369.4 99.4 170.5 499.4
Other 422.5 540.0 755.6 120.9 89.0 410.9
Corporate - 31.0 - - 157.2
---------- ---------- ---------- ---------- ----------
Total $ 6,129.0 $ 2,035.4 $ 5,449.7 $ 377.5 $ 1,771.9
========== ========== ========== ========== ==========
Year Ended December 31, 1997
Employee Benefits $ 2,810.1 $ 507.2 $ 2,174.5 $ 66.7 $ 699.2 $ 1,974.2
Individual 1,480.3 692.7 1,426.7 68.7 517.1 1,399.7
Voluntary Benefits 626.6 84.5 354.2 87.8 168.4 482.7
Other 376.1 704.0 900.7 78.1 117.2 305.0
Corporate - 27.3 - - 101.3
---------- ---------- ---------- ---------- ----------
Total $ 5,293.1 $ 2,015.7 $ 4,856.1 $ 301.3 $ 1,603.2
========== ========== ========== ========== ==========
Year Ended December 31, 1996
Employee Benefits $ 2,277.6 $ 431.9 $ 1,759.2 $ 57.5 $ 537.6 $ 1,598.9
Individual 1,105.9 508.3 1,069.9 115.2 368.1 1,039.0
Voluntary Benefits 583.6 72.1 324.7 78.1 159.7 462.4
Other 321.7 844.1 1,011.8 38.6 139.0 328.7
Corporate - 37.0 - - 98.0
---------- ---------- ---------- ---------- ----------
Total $ 4,288.8 $ 1,893.4 $ 4,165.6 $ 289.4 $ 1,302.4
========== ========== ========== ========== ==========
(1) Net investment income is allocated based upon segmentation. Each
segment has its own specifically identified assets and receives the investment
income generated by those assets.
(2) Other operating expenses are allocated to each segment based on activity
levels, time information, and usage statistics.
7
SCHEDULE IV--REINSURANCE
UNUMPROVIDENT CORPORATION AND SUBSIDIARIES
Percentage
Ceded Assumed Amount
Gross to Other from Other Net Assumed
Amount Companies Companies Amount to Net
(in millions of dollars)
- -------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Life Insurance in Force $472,703.5 $21,235.0 $1,067.8 $452,536.3 0.2%
========== ========= ======== ==========
Premium Income:
Life Insurance $ 1,318.3 $ 66.6 $ 18.6 $ 1,270.3 1.5%
Accident and Health 4,866.2 477.9 470.4 4,858.7 9.7%
Insurance ---------- --------- -------- ----------
Total $ 6,184.5 $ 544.5 $ 489.0 $ 6,129.0 8.0%
========== ========= ======== ==========
Year Ended December 31, 1997
Life Insurance in Force $397,939.4 $22,221.2 $2,485.9 $378,204.1 0.7%
========== ========= ======== ==========
Premium Income:
Life Insurance $ 1,122.6 $ 60.2 $ 10.2 $ 1,072.6 1.0%
Accident and Health 4,389.8 613.0 443.7 4,220.5 10.5%
Insurance ---------- --------- -------- ----------
Total $ 5,512.4 $ 673.2 $ 453.9 $ 5,293.1 8.6%
========== ========= ======== ==========
Year Ended December 31, 1996
Life Insurance in Force $301,246.7 $15,824.4 $ 437.0 $285,859.3 0.2%
========== ========= ======== ==========
Premium Income:
Life Insurance $ 932.9 $ 49.9 $ 1.1 $ 884.1 0.1%
Accident and Health 3,479.7 362.0 287.0 3,404.7 8.4%
Insurance ---------- --------- -------- ----------
Total $ 4,412.6 $ 411.9 $ 288.1 $ 4,288.8 6.7%
========== ========= ======== ==========
8
SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS
UNUMPROVIDENT CORPORATION AND SUBSIDIARIES
Deductions for
Additions Additions Amounts Applied
Balance at Charged to Charged to to Specific Loan Balance at
Beginning Costs and Other at Time of Sale/ End of
Description of Period Expenses Accounts Foreclosure Period
(in millions of dollars)
- -----------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Mortgage loan loss
reserve(1) $34.9 $ 2.3 $ - $ 4.4 $32.8
Real estate reserve(1) 40.7 10.5 $ - $ - $51.2
Allowance for doubtful
accounts
(deducted from accounts
and premiums receivable) $ 2.7 $ 0.2 $ - $ - $ 2.9
Year Ended December 31,
1997
Mortgage loan loss
reserve(1) $38.7 $ 3.3 $ - $ 7.1 $34.9
Real estate reserve(1) $36.3 $10.6 $ - $ 6.2 $40.7
Allowance for doubtful
accounts
(deducted from accounts
and premiums receivable)(2) $ 1.2 $ 0.5 $ 1.0 - $ 2.7
Year Ended December 31,
1996
Mortgage loan loss
reserve(1) $51.2 $ 1.0 $ - $13.5 $38.7
Real estate reserve(1) $38.2 $ 2.0 $ - $ 3.9 $36.3
Allowance for doubtful
accounts
(deducted from accounts
and premiums receivable) $ 0.8 $ 0.4 $ - $ - $ 1.2
(1) Amounts shown in additions charged to cost and expenses represent realized
investment losses.
(2) Amounts shown in additions charged to other accounts represent reserves
related to acquired business.
9