-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FUhdO6us2nc99mm8flc32mNZ8wd4/Amliitn5vFngrJDmgejFg5Kp0xxEH3ji6Ub 3bk5MxiERdu43atrGMLvlg== 0000950131-02-004463.txt : 20021118 0000950131-02-004463.hdr.sgml : 20021118 20021114182509 ACCESSION NUMBER: 0000950131-02-004463 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERINST INSURANCE GROUP LTD CENTRAL INDEX KEY: 0001065201 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE CARRIERS, NEC [6399] IRS NUMBER: 980207447 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28249 FILM NUMBER: 02827385 BUSINESS ADDRESS: STREET 1: C/O USA RISK GROUP INC STREET 2: P O BOX 1330 CITY: MONTPELIER STATE: VT ZIP: 05601 BUSINESS PHONE: 8022295042 MAIL ADDRESS: STREET 1: C/O USA RISK GROUP INC STREET 2: P O BOX 1330 CITY: MONTPELIER STATE: VT ZIP: 05601 10-Q 1 d10q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the Quarterly period ended September 30, 2002. [_] 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 000-28249 AMERINST INSURANCE GROUP, LTD. ------------------------------ (Exact Name of Registrant as Specified in its Charter) BERMUDA 98-020-7447 (State or other jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) (Identification No.) C/O USA Offshore Management, Windsor Place, (Zip Code) 18 Queen Street, 2nd Floor, PO Box HM 1601, Hamilton HM GX, Bermuda Registrant's telephone number, including area code: (441) 296-3973 Indicate by check mark whether the Registrant (1) has filed all reports required 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. [X] YES [_] NO Number of shares of common stock outstanding: Number outstanding Class as of November 4, 2002 ----- ------------------ COMMON SHARES, PAR VALUE $1.00 PER SHARE 307,711
Part I, Item 1 AMERINST INSURANCE GROUP, LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) As of As of September 30, December 31, ASSETS 2002 2001 ------------ ------------ INVESTMENTS Fixed maturity investments, at market value (amortized cost $30,827,892 and $28,529,843) ...................... $32,561,996 $29,529,239 Equity securities, at market value (cost $14,498,479 and $13,972,736) ....................................... 13,154,476 16,556,194 ----------- ----------- TOTAL INVESTMENTS ....................................... 45,716,472 46,085,433 Cash and cash equivalents ................................ 1,966,236 2,855,781 Assumed reinsurance premiums receivable .................. 1,030,423 1,145,874 Reinsurance balances recoverable ......................... 674,223 674,223 Fund deposit with a reinsurer ............................ 108,000 108,000 Accrued investment income ................................ 413,625 448,786 Deferred policy acquisition costs ........................ 926,735 891,311 Federal income taxes receivable .......................... 0 504,658 Prepaid expenses and other assets ........................ 158,047 130,427 ----------- ----------- TOTAL ASSETS ............................................ $50,993,761 $52,844,493 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Unpaid losses and loss adjustment expenses ............... $30,551,561 $29,242,625 Unearned premiums ........................................ 3,251,701 3,127,409 Reinsurance balances payable ............................. 174,833 174,833 Accrued expenses and other liabilities ................... 585,584 572,407 ----------- ----------- TOTAL LIABILITIES ....................................... 34,563,679 33,117,274 ----------- ----------- STOCKHOLDERS' EQUITY Common shares, $1 par value, 500,000 shares authorized, 2002 and 2001: 331,751 issued and outstanding .......... 331,751 331,751 Additional paid-in capital ............................... 6,801,870 6,801,870 Retained earnings ........................................ 9,855,434 9,747,981 Accumulated other comprehensive income ................... 321,363 3,582,854 Treasury Stock (23,961 and 20,388 shares) at cost (880,336) (737,237) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY .............................. 16,430,082 19,727,219 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .............. $50,993,761 $52,844,493 =========== ===========
See the accompanying notes to the condensed consolidated financial statements. 2
AMERINST INSURANCE GROUP, LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME AND RETAINED EARNINGS (Unaudited) Nine Months Nine Months Three Months Three Months Ended Ended Ended Ended Sept. 30, 2002 Sept. 30, 2001 Sept. 30, 2002 Sept. 30, 2001 -------------- -------------- -------------- -------------- Revenue Premiums earned ................................... $ 4,680,080 $ 4,756,478 $ 1,382,612 $ 1,600,860 Net investment income ............................. 1,533,858 1,702,203 599,778 485,599 Net realized capital gain (loss) .................. 752,808 367,480 (129,060) 118,211 ----------- ----------- ----------- ----------- Total Revenue .................................. 6,966,746 6,826,161 1,853,330 2,204,670 Losses And Expenses Losses and loss adjustment expenses ............... 4,212,236 4,667,550 1,244,351 1,518,407 Policy acquisition costs .......................... 1,381,868 1,402,714 413,268 473,937 Operating and management expenses ................. 661,300 630,394 213,583 114,567 ----------- ----------- ----------- ----------- Total Losses And Expenses ...................... 6,255,404 6,700,658 1,871,202 2,106,911 ----------- ----------- ----------- ----------- Net Income (Loss) .................................. $ 711,342 $ 125,503 $ (17,872) $ 97,759 Other Comprehensive Income (Loss) Net unrealized holding gain (loss) arising during the period ...................... (2,508,683) 444,935 (1,962,376) (1,126,298) Reclassification adjustment for gains included in net income ......................... (752,808) (367,480) 129,060 (118,211) ----------- ----------- ----------- ----------- Other Comprehensive Income(Loss) .................. (3,261,491) 77,455 (1,833,316) (1,008,087) ----------- ----------- ----------- ----------- Comprehensive Income (Loss) ........................ $(2,550,149) $ 202,958 $(1,851,188) $ (910,328) =========== =========== =========== =========== Retained Earnings, Beginning Of Period ............. $ 9,747,981 $ 9,818,445 $10,073,486 $ 9,432,012 Net income (loss) .................................. 711,342 125,503 (17,872) 97,759 Dividends paid ..................................... (603,889) (619,051) (200,180) (204,874) ----------- ----------- ----------- ----------- Retained Earnings, End Of Period ................... $ 9,855,434 $ 9,324,897 $ 9,855,434 $ 9,324,897 =========== =========== =========== =========== Per share amounts Net income(loss) ................................ $ 2.30 $ 0.39 $ (0.06) $ 0.31 =========== =========== =========== =========== Dividends paid .................................. $ 1.95 $ 1.95 $ 0.65 $ 0.65 =========== =========== =========== =========== Weighted average number of shares outstanding for the entire period ............... 309,577 317,993 308,735 315,105 =========== =========== =========== ===========
See the accompanying notes to the condensed consolidated financial statements. 3
AMERINST INSURANCE GROUP, LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Nine Months Ended Ended Sept. 30, Sept. 30, 2002 2001 ----------- ----------- OPERATING ACTIVITIES Net Cash Provided by Operating Activities ........................... $ 1,850,482 $ (367,559) ----------- ----------- INVESTING ACTIVITIES Purchases of investments ........................................... (25,529,267) (11,602,618) Proceeds from sales and maturities of investments .................. 23,536,228 11,867,264 ----------- ----------- Net Cash Provided by (Used in) Investing Activities .............................................. (1,993,039) 264,646 ----------- ----------- FINANCING ACTIVITIES Purchase treasury stock ............................................ (143,099) (78,896) Dividends paid ..................................................... (603,889) (619,051) ----------- ----------- Net Cash Used in Financing Activities ............................... (746,988) (697,947) ----------- ----------- DECREASE IN CASH .................................................... $ (889,545) $ (800,860) =========== ===========
See the accompanying notes to the condensed consolidated financial statements. 4 AMERINST INSURANCE GROUP, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 2002 Basis of Presentation The condensed consolidated financial statements included herein have been prepared by AmerInst Insurance Group, Ltd. (AIG) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and reflect all adjustments consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of the results of operations for the periods shown. These statements are condensed and do not incorporate all the information required under generally accepted accounting principles to be included in a full set of financial statements. It is suggested that these condensed statements be read in conjunction with the consolidated financial statements at and for the year ended December 31, 2001 and notes thereto, included in the Registrant's annual report as of that date. Part I, Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OPERATIONS Three months ended September 30, 2002 compared to three months ended September 30, 2001: A net loss of $(17,872) was recorded for the third quarter of 2002 in comparison to a net income of $97,759 for the same period of 2001. The decline in the results is due to decrease in the net realized capital gain (loss) for the period in comparison to the same period in 2001. Earned premiums for the third quarter of 2002 amounted to $1,382,612 as compared to $1,600,860 for the third quarter of 2001, a decrease of $218,248 or 13.6%. Premiums written for the three months ended September 30, 2002 were $1,922,290, as compared to $1,769,244 for the third quarter of 2001, an increase of $153,046 or 8.7%. The loss ratio for the third quarter of 2002 was 90.0% for the current treaty, as compared to 94.8% for the same period of 2001. The loss ratio of 90.0% represents management's current estimated effective loss rate selected in consultation with the Company's independent consulting actuary to apply to current premiums assumed and earned. The Company's overall loss ratio for the year ended December 31, 2001 was 94.7%. 5 AMERINST INSURANCE GROUP, LTD. OPERATIONS--(Continued) Policy acquisition costs of $413,268 were expensed in the third quarter of 2002 as compared to $473,937 for the same period of 2001, a decrease of $60,669 or 12.8%. Such costs as a percentage of premiums earned are 29.9% and 29.6% for the quarters ended September 30, 2002 and 2001, respectively. Policy acquisition costs result from ceding commissions paid to ceding companies determined contractually pursuant to reinsurance agreements and federal excise taxes paid on premiums written to ceding companies. These fluctuations in premiums, losses and expenses combined to result in a net underwriting loss of $(488,590) for the third quarter of 2002 as compared to $(506,051) for the same period of 2001, an improvement of $17,461 or 3.5%. The improvement is due to a decrease in the recorded losses. Investment yield for the third quarter of 2002 was 1.2%, consisting of interest and dividend income, and represents a decrease from the 4.1% return earned in the third quarter of 2001. Sales of securities during the third quarter of 2002 resulted in realized capital losses of $129,060, as compared to gains of $118,211 in the third quarter of 2001. Losses recorded in the third quarter of 2002 primarily related to sales of equities. Proceeds from these sales were subsequently reinvested in other equity securities. Nine months ended September 30, 2002 compared to nine months ended September 30, 2001: Net income of $711,342 was recorded for the nine months ended September 30, 2002 in comparison to a net income of $125,503 for the nine months ended September 30, 2001. The improved results are due to a decrease of incurred losses. Sales of securities during the nine months ended September 30, 2002 resulted in realized capital gains of $752,808 as compared to $367,480 in the same period of 2001. Gains recorded in 2002 primarily related to sales of equities, which were reinvested in other equity securities. Net investment income through September 30, 2002 was $1,533,858 compared to $1,702,203 for the same period of 2001. Investment yield for the nine months period was approximately 4.27% as compared to 4.8% for the first nine months of 2001. Earned premiums for the first nine months of 2002 amounted to $4,680,080 as compared to $4,756,478 for 2001. The change of $76,398 represents a 1.6% decrease. The decrease in earned premiums is attributable to the timing of policies written under the current treaty compared to the same period in 2001. Premiums written in the nine months ended September 30, 2002 were $4,804,372 as compared to $4,711,792 for the same period in 2001. The increase of $92,580 is due to the continued growth of the AICPA Professional Liability Insurance Plan ("AICPA Plan"), an increase in the number of insureds under the AICPA Plan, and certain rate increases associated with a "step plan" that was initiated during 1995. Under the step plan, insureds are offered discounted premium rates for favorable loss experience. However, as these insureds experience losses their premiums are "stepped up" accordingly. Because of the use of claims-made policies, as the number of years of coverage provided increases, CNA's (and AIG's) exposure increases. This additional exposure results in an increase in premiums charged. The loss ratio through the first nine months of 2002 was 90.0% as compared to 98.1% for the same period of 2001. The loss ratio of 90.0% represents management's current estimated effective loss ratio selected in consultation with the Company's independent consulting actuary. 6 AMERINST INSURANCE GROUP, LTD. OPERATIONS--(Continued) Losses recorded through September 30, 2002 do not reflect any development of prior year reserves. The Company's actuary provides a range for loss reserves at December 31 each year. At December 31, 2001 the Company's management determined that the reserve should be $29,242,625. This amount is within, and at the upper end of the range provided by the actuary. Due to the inherent uncertainty in reserving for accountants' professional liability claims management believes this is an appropriate reserving policy. It should be noted that any reserve amount selected in the range has a direct effect on the net income of any given year, as well as shareholders' equity and the book value per share of the Company. Management will review the actuary's report at December 31, 2002 and select a reserve amount based on the recommendations of the actuary and the maturity of the related loss reserves. Policy acquisition costs of $1,381,868 were expensed in the first nine months of 2002 as compared to $1,402,714 for the same period of 2001, a decrease of 1.5%. Such costs as a percentage of premiums earned are 29.5% and 29.5% for the nine-month periods ended September 30, 2002 and 2001, respectively. Policy acquisition costs result from ceding commissions paid to ceding companies which are determined contractually pursuant to reinsurance agreements and federal excise taxes paid on premiums written to ceding companies. These fluctuations combined to result in a net underwriting loss of $(1,575,324) for the nine month period as compared to $(1,944,180) for the same period in 2001, an improvement of $368,856 or 19.0%. The more favorable underwriting results in 2002 are due to the loss ratio of 90.0% in 2002, compared to 98.1% in 2001. FINANCIAL CONDITION AND LIQUIDITY As of September 30, 2002, total invested assets amounted to $47,682,708, a decrease of $1,258,506 or 2.6% from $48,941,214 at December 31, 2001. Cash and cash equivalents balances decreased from $2,855,781 at December 31, 2001 to $1,966,236 at September 30, 2002, a decrease of $889,545, or 31.1%. The amount of cash and cash equivalents varies depending on the maturities of fixed term investments and on the level of funds invested in money market mutual funds. The ratio of cash and invested assets to total liabilities at September 30, 2002 was 1.38:1, compared to a ratio of 1.41:1 at September 30, 2001. Assumed reinsurance premiums receivable represents current assumed premiums receivable less commissions payable to the fronting carriers. This balance was $1,145,874 at December 31, 2001 and $1,030,423 at September 30, 2002. This balance fluctuates due to the timing of renewal premiums written. Reinsurance balances payable represents AIG's estimate of the premiums due to the Company's reinsurer under the retrocession agreements described above, and amounts currently due for losses and loss adjustment expenses payable. At December 31, 2001 and at September 30, 2002 the balance was $174,833. 7 AMERINST INSURANCE GROUP, LTD. QUANTITATIVE AND QUALITATAIVE DISCLOSURES ABOUT MARKET RISK INFLATION The Company does not believe its operations have been materially affected by inflation. The potential adverse impacts of inflation include: (a) a decline in the market value of the Company's fixed maturity investment portfolio; (b) an increase in the ultimate cost of settling claims which remain unresolved for a significant period of time; and (c) an increase in the Company's operating expenses. However, the Company generally holds its fixed maturity investments to maturity and currently believes that the yield is adequate to compensate the Company for the risk of inflation. In addition, any increase from inflation in the ultimate cost of settling unpaid claims will be offset by investment income earned during the period that the claim is outstanding. Finally, the increase in operating expenses resulting from inflation should generally be matched by similar inflationary increases in the premium rates. Market Sensitive Instruments Market risk generally represents the risk of loss that may result from potential change in the value of a financial instrument due to a variety of market conditions. The Company's exposure to market risk is generally limited to potential losses arising from changes in the level of interest rates on market values of fixed term holdings and changes in the market values of equity securities. The Company does not hold or issue derivative financial instruments for either trading or hedging purposes. a) Interest Rate Risk. Interest rate risk results from the Company's holdings in interest-rate-sensitive instruments. The Company is exposed to potential losses arising from changes in the level of interest rates on fixed rate instruments held. The Company is also exposed to credit spread risk resulting from possible changes in the issuer's credit rating. To manage its exposure to interest rate risk the Company attempts to select investments with characteristics that match the characteristics of the related insurance liabilities. Additionally, the Company generally only invests in higher-grade interest bearing instruments. b) Foreign Exchange Risk. The Company only invests in U.S. dollar denominated financial instruments and does not believe it has any exposure to foreign exchange risk. c) Equity Price Risk Equity price risk arises from fluctuations in the value of securities held. The Company invests in equity securities in order to diversify its investment portfolio, which Management believes will assist the Company to achieve its goal of long-term growth of capital and surplus. Management has adopted investment guidelines that set out rate of return and asset allocation targets, as well as degree of risk and equity investment restrictions to minimize exposure to material risk from changes in equity prices. The tables below provide information about the Company's available for sale investments that are sensitive to change in interest rates at September 30, 2002 and December 31, 2001 respectively. We believe that a 100 basis point interest rate change would not have a material affect on the Company's financial position. Market Value Market Value 09/30/2002 12/31/2001 ------------ ------------ Fixed Income Portfolio - ---------------------- Due in 1 year or less $ 1,000,000 $ 2,034,652 Due after 1 year through 5 years 5,005,402 3,724,912 Due after 5 years through 10 years 2,871,121 4,435,397 Due after ten years 1,282,050 1,419,268 ----------- ----------- Sub-total $10,158,573 $11,614,229 Mortgage backed securities and Obligations of U.S. government Corporations and agencies $22,403,423 $17,915,010 ----------- ----------- Total Fixed-Income $32,561,996 $29,529,239 =========== =========== Total Equities $13,154,476 $16,556,194 =========== =========== 8 AMERINST INSURANCE GROUP, LTD. FINANCIAL CONDITION AND LIQUIDITY On June 1, 2000, the Board of Directors of AmerInst Investment Company, Ltd ("Investco"), which holds almost all of the Company's investment portfolio, authorized to spend up to $1 million to purchase outstanding Common Shares of the Company. On September 8, 2000, the Bermuda Monetary Authority authorized the purchase of up to 15,000 Common Shares pursuant to the June 1 Board authorization. Such purchases are effected through privately negotiated transactions and are in addition to Investco's practice of redeeming the shares of individuals who have died or retired from the practice of public accounting. Subsequently, on July 19, 2002, the Bermuda Monetary Authority authorized blanket permission for Investco to purchase Common Shares from individuals who have died or retired from the practice of public account and on a negotiated case-by-case basis without limit. To date, Investco has purchased 13,281 Common Shares for a purchase price of $411,353. In addition, to date Investco has purchases 10,759 Common Shares from individuals who have died or retired for a purchase price of $471,625. The Company paid its twenty-ninth consecutive quarterly dividend of $0.65 per share during the third quarter of 2002. CONTROLS AND PROCEDURES Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervison and with the participation of the Company's management, including the Company's President and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a - 14. Based upon that evaluation, the President and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including it's consolidated subsidiaries) as required to be included in the Company's periodic SEC filings. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation. Part II, Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits See Index to Exhibits immediately following the signature page. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 2001. 9 SIGNATURES ---------- Pursuant to the requirements 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. AMERINST INSURANCE GROUP, LTD. ------------------------------------- (Registrant) November 14, 2002 /s/ Murray Nicol --------------------------------- Murray Nicol (Vice President and Chief Financial Officer, duly authorized to sign this Report in such capacity and on behalf of the Registrant.) 10 I Stuart Grayston, President of the AmerInst Insurance Group, Ltd. certify that: 1. I have reviewed this quarterly report on Form 10-Q of AmerInst Insurance Group, Ltd; 2. based on my knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report; 3. based on my knowledge, the financial statements, and other financial information included in the report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in the report; 4. The other certifying officer and I are responsible for establishing and maintaining "disclosure controls and procedures" (as defined in Section 302(a)(4) of the Act) for the issuer; a. have designed such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which the periodic report is being prepared; b. have evaluated the effectiveness of the issuer's disclosure controls and procedures as of a date within 90 days prior to the filing date of the report; and c. have presented in the report their conclusions about the effectiveness of the disclosure controls and procedures based on the required evaluation as of that date; 5. The other certifying officer and I have disclosed to the issuer's auditors and to the audit committee of the board of directors: a. all significant deficiencies in the design or operation of internal control which could adversely affect the issuer's ability to record, process, summarize and report financial data and have identified for the issuer's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal controls; and 6. The other certifying officer and I have indicated in the report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 By: /s/ Stuart Grayston ----------------- ------------------- Stuart Grayston President I Murray Nicol, Vice President and CFO of the AmerInst Insurance Group, Ltd. certify that: 1. I have reviewed this quarterly report on Form 10-Q of AmerInst Insurance Group, Ltd; 2. based on my knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report; 3. based on my knowledge, the financial statements, and other financial information included in the report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in the report; 4. The other certifying officer and I are responsible for establishing and maintaining "disclosure controls and procedures" (as defined in Section 302(a)(4) of the Act) for the issuer; a. have designed such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which the periodic report is being prepared; b. have evaluated the effectiveness of the issuer's disclosure controls and procedures as of a date within 90 days prior to the filing date of the report; and c. have presented in the report their conclusions about the effectiveness of the disclosure controls and procedures based on the required evaluation as of that date; 5. The other certifying officer and I have disclosed to the issuer's auditors and to the audit committee of the board of directors: a. all significant deficiencies in the design or operation of internal control which could adversely affect the issuer's ability to record, process, summarize and report financial data and have identified for the issuer's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal controls; and 6. The other certifying officer and I have indicated in the report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 By: /s/ Murray Nicol ----------------- -------------------- Murray Nicol Vice President & CFO AMERINST INSURANCE GROUP, LTD. INDEX TO EXHIBITS Quarterly Period Ended September 30, 2002 Exhibit Number Description - ------- ----------- 3(i) Memorandum of Association of the Company (1) 3(ii) Bye-laws of the Company (1) 4.1 Section 47 of the Company's Bye-laws -- included in Exhibit 3(ii) above 4.2 Statement of Share Ownership Policy, as Amended (9) 10.1 Reinsurance Treaty between AIIC and Virginia Surety Company, Inc. (2) 10.2 Agreement between Country Club Bank and AIIC (2) 10.3 Agreement between Country Club Bank and AIIG (2) 10.4 Reinsurance Treaty between AIIC and CNA Insurance Companies (3), 1994 placement slip (4), 1995 placement slip (5), 1996 placement slip (6), 1997 placement slip (9), and 1998 placement slip (10) and Endorsement No. 1 to the Treaty effective July 1, 1999 (11) 10.5 Revised Management Agreement between Vermont Insurance Management, Inc. and AIIC dated May 1, 1997 (7), Addenda to Management Agreement dated July 1, 1997 (8), Addenda to Management Agreement dated July 1, 1998 (10), Management Agreement between USA Offshore Management, Ltd. and AmerInst Insurance Company Ltd. dated as of December 2, 1999 (12) and Addenda to Agreement between AmerInst Insurance Company Ltd. and USA Offshore Management, Ltd. dated June 2, 2000 (12). 10.6 Escrow Agreement among AIIC, United States Fire Insurance Company and Harris Trust and Savings Bank dated March 7, 1995 (5) 10.7 Security Trust Agreement among AIIC, Harris Trust and Savings Bank and Virginia Surety Company, Inc. dated March 9, 1995 (5) 10.8 Investment Advisory Agreement For Discretionary Accounts between Amerinst Insurance Company and Harris Associates L.P. dated as of January 22, 1996, as amended by the Amendment to Investment Advisory Agreement for Discretionary Accounts dated as of April 2, 1996 (10) 10.9 Exchange Agreement between the Company the AIG Ltd., dated as of January 20, 1999 (1) 10.10 Reinsurance Treaty between AIC Ltd. and CNA Insurance Companies, effective December 1, 1999 (11) 10.11 Value Plan Reinsurance Treaty between AIC Ltd. and CNA Insurance Companies, effective December 1, 1999 (11) 10.12 Trust Agreement among AIC Ltd., Continental Casualty Company and Chase Manhattan Bank dated as of December 21, 2000 (13) 10.13 Investment Counsel Agreement between AIC Ltd. and Northwest Investment Management, Inc. dated August 1, 2000 (13) 10.14 Registrar and Transfer Agent Agreement between AIC Ltd. and Butterfield Corporate Services Limited dated as of January 1, 2001 (14) 10.15 Reinsurance Treaty between AIC Ltd. and CNA Insurance Companies, effective January 1, 2002 (15) 10.16 Value Plan Reinsurance Treaty between AIC Ltd. and CNA Insurance Companies, effective January 1, 2002 (15) 21 Subsidiaries of the Registrant (1) 99.1 President Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Vice President Certification pursuant of Section 906 of the Sarbanes-Oxley Act of 2002 - ----------------------- (1) Filed with the Company's Registration Statement on Form S-4, Registration No. 333-64929 and incorporated herein by reference. (2) Filed with the AIIG's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference. (3) Filed with the AIIG's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference. (4) Filed with the AIIG's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference. (5) Filed with the AIIG's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 and incorporated herein by reference. (6) Filed with the AIIG's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 and incorporated herein by reference. (7) Filed with the AIIG's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 and incorporated herein by reference. (8) Filed with the AIIG's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by reference. (9) Filed with AIIG's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference. (10) Filed with AIIG's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 and incorporated herein by reference. (11) Filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1999. (12) Filed with AIIG's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference. (13) Filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference. (14) Filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2001. (15) Filed with the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 and incorporated herein by reference. EX-99.1 3 dex991.txt PRESIDENT CERTIFICATIOIN PURSUANT TO SECTION 906 EXHIBIT 99.1 AMERINST INSURANCE GROUP, LTD. CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) Pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002(18 U.S.C. Sections 1350 (a) and (b)), the undersigned hereby certify as follows: 1. Stuart Grayston is the President of AmerInst Insurance Group, Ltd. 2. The Company's Form 10-Q for the quarterly period ended September 30, 2002, accompanying this Certification, in the form filed with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13 (a) of the Securities Act of 1934 (the "Exchange Act"), and 3. The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 14, 2002 By: /s/Stuart Grayston ------------------------ Stuart Grayston President EX-99.2 4 dex992.txt VICE PRESIDENT CERTIFICATION PURSUANT SECTION 906 EXHIBIT 99.2 AMERINST INSURANCE GROUP, LTD. CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) Pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Sections 1350 (a) and (b)), the undersigned hereby certify as follows: 1. Murray Nicol is the Vice President and CFO of AmerInst Insurance Group, Ltd. 2. The Company's Form 10-Q for the quarterly period ended September 30, 2002, accompanying this Certification, in the form filed with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13 (a) of the Securities Act of 1934 (the "Exchange Act"), and 3. The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 14, 2002 By: /s/ Murray Nicol ----------------------- Murray Nicol Vice President and CFO -----END PRIVACY-ENHANCED MESSAGE-----