-----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, Qpk6g7LpQndggPb77URcbQyAjouyqX27jLXvhqet7EV1VjLstleqf9FL7tQaSrcF Xg225ZUhYQX55irZGdQduA== 0000950131-03-002955.txt : 20030515 0000950131-03-002955.hdr.sgml : 20030515 20030515164125 ACCESSION NUMBER: 0000950131-03-002955 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030515 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: 03705494 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 March 31, 2003. [_] 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 ------- 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 Incorporation or Organization) Identification No.) C/O USA Risk Group (Bermuda) Ltd., Windsor Place, 18 Queen Street, 2/nd/ Floor PO Box HM 1601, Hamilton HM GX, Bermuda (Address of Principal Executive Offices) (Zip Code) 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 May 1, 2003 ----- ------------------ COMMON SHARES, PAR VALUE $1.00 PER SHARE 304,445 Part I, Item 1 AMERINST INSURANCE GROUP, LTD. CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) As of As of March 31, December 31, ASSETS 2003 2002 ----------- ------------ INVESTMENTS Fixed maturity investments, at market value................................... $29,745,068 $31,905,804 Equity securities, at market value............................................ 14,340,075 14,361,502 ----------- ----------- TOTAL INVESTMENTS................................................... 44,085,143 46,267,306 Cash and cash equivalents..................................................... 5,214,569 3,159,545 Assumed reinsurance premiums receivable....................................... 523,376 514,992 Reinsurance balances recoverable ............................................. 674,223 674,223 Fund deposit with a reinsurer................................................. 108,000 108,000 Accrued investment income..................................................... 279,511 399,435 Deferred policy acquisition costs............................................. 1,063,018 954,858 Prepaid expenses and other assets............................................. 92,492 136,204 ----------- ----------- TOTAL ASSETS........................................................ $52,040,332 $52,214,563 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Unpaid losses and loss adjustment expenses.................................... $31,100,307 $30,478,843 Unearned premiums............................................................. 3,729,887 3,350,380 Reinsurance balances payable.................................................. - - Accrued expenses and other liabilities........................................ 626,243 668,604 ----------- ----------- TOTAL LIABILITIES................................................... 35,456,437 34,497,827 ----------- ----------- STOCKHOLDERS' EQUITY Common shares, $1 par value, 500,000 shares authorized: 2003 and 2002: 331,751 issued and outstanding....................... 331,751 331,751 Additional paid-in capital.................................................... 6,801,870 6,801,870 Retained earnings............................................................. 7,939,307 8,202,991 Accumulated other comprehensive income........................................ 2,523,605 3,330,260 Treasury stock (27,306 and 25,615 shares) at cost............................. (1,012,638) (950,136) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY.......................................... 16,583,895 17,716,736 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......................... $52,040,332 $52,214,563 =========== ===========
See the accompanying notes to the condensed consolidated financial statements. AMERINST INSURANCE GROUP, LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited)
Three Months Three Months Ended Ended March 31, March 31, 2003 2002 ------------- ------------ REVENUE Net premiums earned......................................................................... $ 1,829,666 $ 1,712,320 Net investment income....................................................................... 393,355 434,073 Net realized capital gain (loss)............................................................ 197,188 293,360 ----------- ----------- Total revenue........................................................................... 2,420,209 2,439,753 LOSSES AND EXPENSES Losses and loss adjustment expense.......................................................... 1,646,699 1,541,252 Policy acquisition costs.................................................................... 543,548 506,053 Operating and management expenses........................................................... 295,346 222,385 ----------- ----------- Total losses and expenses............................................................... 2,485,593 2,269,690 ----------- ----------- NET INCOME (LOSS)............................................................................. (65,384) 170,063 ----------- ----------- OTHER COMPREHENSIVE INCOME Net unrealized holding gains (losses) arising during the period............................. (609,467) 388,674 Reclassification adjustment for gains and losses included in net income..................... (197,188) (293,360) ----------- ----------- OTHER COMPREHENSIVE INCOME (806,655) 95,314 --------- ----------- COMPREHENSIVE INCOME $ (872,039) $ 265,377 =========== =========== RETAINED EARNINGS, BEGINNING OF PERIOD........................................................ $ 8,202,991 $ 9,747,981 Net income (loss)............................................................................. (65,384) 170,063 Dividends paid................................................................................ (198,300) (202,115) ----------- ----------- RETAINED EARNINGS, END OF PERIOD.............................................................. $ 7,939,307 $ 9,715,929 =========== =========== Per share amounts Net income (loss).......................................................................... $ (0.21) $ 0.55 =========== =========== Dividends paid.............................................................................. $ 0.65 $ 0.65 =========== =========== Weighted average number of shares outstanding for the entire period......................................................... 305,290 311,155 =========== ===========
See the accompanying notes to the condensed consolidated financial statements. AMERINST INSURANCE GROUP, LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Three Months Ended Ended March 31, March 31, 2003 2002 ----------- ----------- OPERATING ACTIVITIES Net Cash Provided by Operating Activities.............................. $ 799,349 $ 1,102,572 ----------- ----------- INVESTING ACTIVITIES Purchases of investments............................................. (5,723,679) (10,069,691) Proceeds from sales and maturities of investments.................... 7,240,156 9,217,387 ----------- ----------- Net Cash Provided by (Used in) Investing Activities.................... 1,516,477 (852,304) ----------- ----------- FINANCING ACTIVITIES Redemption of shares................................................. - - Purchase of treasury shares.......................................... (62,502) (17,379) Dividends paid....................................................... (198,300) (202,115) ----------- ----------- Net Cash Provided by (Used in) Financing Activities.................... (260,802) (219,494) ----------- ----------- INCREASE IN CASH....................................................... $ 2,055,024 $ 30,774 =========== ===========
See the accompanying notes to the condensed consolidated financial statements. AMERINST INSURANCE GROUP, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) March 31, 2003 Basis of Presentation The condensed consolidated financial statements included herein have been prepared by AmerInst Insurance Group, Ltd. (AMIG Ltd.) 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 include all information required by 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, 2002 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 A net loss of $(65,384) was recorded for the first quarter of 2003 in comparison to a net income of $170,063 for the same period of 2002. Earned premiums for the first quarter of 2003 amounted to $1,829,666 as compared to $1,712,320 for the first quarter of 2002. The change of $117,346 represents a 6.9% increase. Premium written in the first quarter of 2003 was $2,209,173 as compared to $1,804,065 for the same period in 2002. The increase of $405,108 is due to the continued growth of the AICPA Plan, primarily the result of an increase in the number of insureds and from rate increases under the AICPA Plan and from rate increases associated with a "step plan" which 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. On February 27, 2003, the Board of Directors of AMIG Ltd. approved an agreement to reinsure attorney's professional liability business. As of March 31, 2003, no reports relating to the new business had been received. The reporting procedures are still being finalized. The gross premium written for the first quarter is a de minimus amount. The loss ratio for the first quarter of 2003 was 90% for the current treaty, as compared to 90% for the same period of 2002. The loss ratio of 90% 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, 2002 was 89.2%. AMERINST INSURANCE GROUP, LTD. OPERATIONS--(Continued) Policy acquisition costs of $543,548 were expensed in the first quarter of 2003 as compared to $506,053 for the same period of 2002, an increase of $37,495 or 7.4%. Such costs as a percentage of premiums earned are 29.7% and 29.6% for the quarters ended March 31, 2003 and 2002, 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 policy acquisition costs combined to result in a net underwriting loss of $(360,581) for the first quarter of 2003 as compared to $(334,985) for the same period of 2002. Investment yield of 3.2%, consisting of interest and dividend income, represents a decrease from the 3.8% return earned in the first quarter of 2002 and the 1.8% return earned throughout 2002. The decrease in investment yield excluding realized capital gains and losses from 2002 to 2003 is primarily due to a decrease in the fixed term investments market yield. Sales of securities during the first quarter of 2003 resulted in realized capital gains of $197,188 as compared to gains of $293,360 in the first quarter of 2002. Gains are related to sales in both the equity and fixed term investments, which were subsequently reinvested. FINANCIAL CONDITION AND LIQUIDITY As of March 31, 2003, total invested assets amounted to $44,085,143, a decrease of $2,182,163 or 4.7% from $46,267,306 at December 31, 2002. Cash and cash equivalent balances increased from $3,159,545 at December 31, 2002 to $5,214,569 at March 31, 2003, an increase of $2,055,024, or 65.0%. 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 March 31, 2003 was 1.39:1, compared to a ratio of 1.43:1 at March 31, 2002. Assumed reinsurance premiums receivable represents current assumed premiums receivable less commissions payable to the fronting carriers. This balance was $514,992 at December 31, 2002 and $523,376 at March 31, 2003. This balance fluctuates due to the timing of renewal premiums written. Reinsurance balances payable represents AMIG Ltd.'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, 2002 and at March 31, 2003 the balance was $0. QUANTITATIVE AND QUALITATIVE 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 have 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 March 31, 2003 and December 31, 2002 respectively. Estimated Estimated Fair Value Fair Value 03/31/2003 12/31/2002 ----------- ----------- Fixed Income Portfolio - ------------------------ Due in 1 year or less $ 542,895 $ 539,405 Due after 1 year through 5 years 8,077,475 6,509,437 Due after 5 years through 10 years 2,609,060 3,312,414 Due after ten years 1,366,120 1,217,128 ----------- ----------- Sub-total $12,595,550 $11,578,384 Mortgage backed securities and Obligations of U.S. government Corporations and agencies $17,149,518 $20,327,420 ----------- ----------- Total Fixed-Income $29,745,068 $31,905,804 =========== =========== FINANCIAL CONDITION AND LIQUIDITY On June 1, 2000, the Board of Directors of Investco, which holds almost all of the Company's investment portfolio, authorized Investco to spend up to $1,000,000 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 affected through privately negotiated transactions and are in addition to Investco's practice of purchasing 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 accounting and on a negotiated case-by-case basis without limit. To date, Investco has purchased 12,250 Common Shares for a purchase price of $471,280. In addition, to date Investco has purchased 15,056 Common shares from individuals who have died or retired for a purchase price of $541,358. The Company paid its thirty-first consecutive quarterly dividend of $0.65 per share during the first quarter of 2003. Item 4. CONTROLS AND PROCEDURES Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's President and our 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, our 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) required to be included in the Company's quarterly reports on Form 10-Q and its current reports on Form 8-K. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these internal controls subsequent to the date the President and the Chief Financial Officer completed their last evaluation. AMERINST INSURANCE GROUP, LTD. 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 March 31, 2003 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) 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. Dated: May 15, 2003 AMERINST INSURANCE GROUP, LTD. -------------- By: /s/ Stuart H. Grayston ----------------------------- Stuart H. Grayston (President, duly authorized to sign this Report in such capacity and on behalf of the Registrant) Pursuant to the requirements of Section 13 or 15 (d) 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. Dated: May 15, 2003 AMERINST INSURANCE GROUP, LTD. -------------- By: /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) CERTIFICATIONS I, Stuart Grayston, certify that: 1. I have reviewed this quarterly report on Form 10-Q of AmerInst Insurance Group, Ltd.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary 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 this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant'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 registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly 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 our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Stuart Grayston ------------------------- Stuart Grayston President I, Murray Nicol, certify that: 1. I have reviewed this quarterly report on Form 10-Q of AmerInst Insurance Group, Ltd.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary 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 this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant'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 registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly 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 our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Murray Nicol --------------------------- Murray Nicol Vice President and Chief Financial Officer AMERINST INSURANCE GROUP, LTD. INDEX TO EXHIBITS Quarterly Period Ended March 31, 2003 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 (filed herewith). 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 AMIG Ltd., dated as of January 20, 1999 (1) 10.10 Reinsurance Treaty between AMIC Ltd. and CNA Insurance Companies, effective December 1, 1999 (11) 10.11 Value Plan Reinsurance Treaty between AMIC Ltd. and CNA Insurance Companies, effective December 1, 1999 (11) 10.12 Trust Agreement among AMIC Ltd., Continental Casualty Company and Chase Manhattan Bank dated as of December 21, 2000 (13) 10.13 Investment Counsel Agreement between AMIC Ltd. and Northwest Investment Management, Inc. dated August 1, 2000 (13) 10.14 Registrar and Transfer Agent Agreement between AMIC Ltd. and Butterfield Corporate Services Limited dated as of January 1, 2001 (14) 10.15 Reinsurance Treaty between AMIC Ltd. and CNA Insurance Companies, effective January 1, 2002 (15) 10.16 Value Plan Reinsurance Treaty between AMIC Ltd. and CNA Insurance Companies, effective January 1, 2002 (15) 10.17 Reinsurance Placement Slip between AMIC Ltd. and Professional Direct Insurance Company (PDIC) effective January 1, 2003 (filed herewith). 23 Consent of Independent Accountants (11) 27 Financial Data Schedule (14) 99.1 President Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002. 99.2 Vice President Certification pursuant to Section 906 of Sabanes-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-10.5.(A) 3 dex105a.txt ADDENDA TO MANAGEMENT AGREEMENT DATED JUNE 2, 2000 Exhibit 10.5 ADDENDUM TO THE CAPTIVE INSURANCE COMPANY MANAGEMENT SERVICES AGREEMENT BETWEEN USA OFFSHORE MANAGEMENT, LTD. ("USAOM") AND AMERINST INSURANCE COMPANY, LTD. ("THE COMPANY") EFFECTIVE: April 1, 2003 The AGREEMENT between MANAGER and COMPANY is amended as follows: (1) MANAGER is now defined as USA RISK GROUP (BERMUDA) LTD., formerly known as USA OFFSHORE MANAGEMENT, LTD. due to MANAGER'S name change; (2) It is hereby further agreed that the COMPANY will pay MANAGER a fee of $2,500 for the setup of reporting for the quota share for Professional Direct Insurance Company; and (3) COMPANY will compensate MANAGER at a rate of $5,000 per annum for ongoing services for Professional Direct Insurance Company. IN WITNESS WHEREOF, the parties have duly executed this Addendum this 1st day of May, 2003. By: /s/ Andrew Sargeant ---------------------- USA RISK GROUP (BERMUDA) LTD. By: /s/ Ronald S. Katch ---------------------- AMERINST INSURANCE COMPANY, LTD. EX-10.17 4 dex1017.txt REINSURANCE PLACEMENT SLIP BETWEEN AMIC LTD. AND PDIC DATED JANUARY 1, 2003. Exhibit 10.17 Guy Carpenter & Company, Inc. Centennial Lakes, Suite 400 GUY CARPENTER 3600 Minnesota Drive Edina, MN 55435 952 920 3300 Fax 952 920 9382 Placement Slip - -------------------------------------------------------------------------------- File #: 2557-00-0001-00 Effective Date: January 1, 2003 COMPANY: PROFESSIONALS DIRECT INSURANCE COMPANY Grand Rapids, Michigan (herein called the COMPANY) TITLE: FIRST EXCESS CASUALTY REINSURANCE AGREEMENT BUSINESS COVERED: New and renewal business classified by the Company as Lawyers Professional Liability, including, but not limited to, claims made business written or assumed under the Company's Select and Essentials or Premier Programs. Prior Acts and Extended Reporting Endorsements covered as per original policy. TERRITORY: To follow the Company's policies as respects insureds domiciled in the United States, its territories or possessions. PERIOD: Continuous and to take effect January 1, 2003 as respects new and renewal business. Annual or multi-year renewals thereafter as mutually agreed. Original policy shall be issued for a maximum policy period of 12 months plus odd time (not exceeding 18 months in all), plus any extended reporting period endorsements. Underwriting year account basis. Cancellation at December 31, 2003, or any December 31 thereafter, by either party via 180 days prior notice by certified or registered mail. Run-off for all policies in force at the date of termination until their natural expiration. Page: 2 of 5 GUY CARPENTER File #: 2557-00-0001-00 Effective Date: January 1, 2002 PERIOD CONTINUED: Reinsurers' liability will continue in the event any extended discovery or reporting options are exercised in accordance with the original policies, and/or in the event the Company is bound by statute, regulation, or judicial decision to continue coverage. LIMIT & RETENTION: $500,000 each original insured, each and every claim in excess of $500,000 each original insured, each and every claim. Loss Expenses to be included within and subject to the Reinsurers' limit of liability. It is understood and agreed all ceded policies shall include claims expense within limits of liability or so deemed. EXCLUSIONS: 1. Insolvency Funds Exclusion Clause 2. Pools, Associations, and Syndicates 3. Nuclear Incident Exclusion Clause - Liability - Reinsurance 4. All actual or threatened loss or damage (including all consequential loss or damage of any type) caused by, arising or resulting from, or in connection with, an act or acts of Terrorism, including all costs and expenses of whatever nature, related thereto. For purposes of this exclusion, "Terrorism" shall mean any act(s), attempt(s) or threat(s) thereof, which endangers human life or health, tangible or intangible property or infrastructure, or intimidates, disrupts or coerces a government or a unit of government, business or commercial enterprise, the public, or any segment thereof, in furtherance of political, religious, ideological or social objectives. This Exclusion shall apply regardless of any otherwise covered cause, event or peril contributing concurrently or in any other sequence to the loss. PREMIUM: 85% of the layer net increased limits ceded premium. Within thirty (30) days of the end of each quarter, the Company shall furnish the Reinsurer with a statement of account detailing the ceded premium to be paid to the Reinsurer together with a bordereau of policies ceded under this agreement during the quarter. Page: 3 of 5 GUY CARPENTER File #: 2557-00-0001-00 Effective Date: January 1, 2002 RESERVES: Letters of Credit and/or Trust Agreements required from unauthorized Reinsurers for outstanding losses and expenses, recoverables, IBNR, and unearned premium. GENERAL CONDITIONS: All reinsurance under this Contract shall be subject to the same rates, terms, conditions, deductibles, waivers and interpretations and to the same modifications and alterations as the respective policies of the Company. "Original Insured" shall mean all interests covered under one Policy. "Claim" shall mean any notice received by the Company in writing of an incident, or claim or suit which is sufficient to enable the Company to establish a claim advice file. A Claim, for purposes hereon, shall include each Claim or series of Claims arising out of any one incident as respects any one Insured, such Claim(s) arising due to the same accident, error or omission in providing a professional service, or series of accidents, errors or omissions in providing professional service having a common cause, unless otherwise defined in the Company's original policy. "Increased Limits Net Written Premium" as used herein, shall mean the Company's gross written premium associated by the Company to the limits ceded to this contract. As respects business produced through agents and brokers, it is understood and agreed the Company may gross up their ILF premium for the representative expenses of acquiring the business, with said commission not to exceed 15% of the layer increased limits net written premium. CLAUSES: Access to Records Clause Amendments Arbitration Clause Confidentiality Clause Coverage Currency Clause Definitions (ALAE included within the UNL; DJ expenses covered) ECO 90%, XPL 90% (within UNL on ceded policies) Exclusions Federal Excise Tax Clause Governing Law Clause Indemnification and Errors and Omissions Clause Insolvency Clause, applies severally to each reinsured entity Loss Notices and Settlements Page: 4 of 5 GUY CARPENTER File #: 2557-00-0001-00 Effective Date: January 1, 2002 CLAUSES CONTINUED: Net Retained Lines Offset Clause, this Agreement only Other Reinsurance Reinsurance Follows Original Policies Reinsurance Premium Reserve and Funding Reports and Remittances Retention and Limit Salvage and Subrogation Clause Service of Suit Clause Settlements Clause Several Liability Notice - LSW - 1001 Taxes Clause Term and Cancellation Territory GUY CARPENTER & COMPANY, INC., Intermediary Clause INFORMATION: Estimated 2003 gross ceded premium equals $1,700,000. Page: 5 of 5 GUY CARPENTER File #: 2557-00-0001-00 Effective Date: January 1, 2002 BROKERAGE: 10.00% of net premium ceded to reinsurers. ACCEPTED: First Layer: 15% of $500,000 Ref # 03XL02001 Reinsurer: AmerInst Insurance Company, Ltd. FEIN #: NAIC #: Authorized Signature: /s/ Stuart Grayston Date: February 27, 2003 EX-99.1 5 dex991.txt CERTIFICATION OF PRESIDENT Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Amerinst Insurance Group, Ltd. (the "Company") on Form 10-Q for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stuart Grayston, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Stuart Grayston - ------------------- Stuart Grayston President May 15, 2003 EX-99.2 6 dex992.txt CERTIFICATION OF VICE PRESIDENT AND CFO Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of AmerInst Insurance Group, Ltd. (the "Company") on Form 10-Q for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Murray Nicol, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002 that, to my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Murray Nicol - ---------------- Murray Nicol Vice President and Chief Financial Officer May 15, 2003 -----END PRIVACY-ENHANCED MESSAGE-----