35-CERT 1 w84179e35vcert.txt RULE 24 COLUMBIA ENERGY February 27, 2003 Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, NW Washington, DC USA 20549 INTERIM REPORT AND BUSINESS PLAN AMENDMENT UNDER RULE 24 OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NISOURCE INSURANCE CORPORATION, LIMITED 801 E. 86TH AVE. MERRILLVILLE, IN 46410 FILE NO. 70-8905 FILE NO. 70-9371 Gentlemen: In compliance with the terms and conditions of Rule 24 under the Public Utility Holding Company Act of 1935, and the Order of the Commission dated October 25, 1996 authorizing the financing transactions and business activities as more fully described in the Joint Application/Declaration, as amended (the "application"), the undersigned hereby submits the following information applicable to NiSource Insurance Corporation, Limited. ("NICL") for the June 30, 2002 through December 31, 2002 period. 1. Provide a general description of loss exposure/experience for the lines of coverage being underwritten by NICL. Columbia Insurance Corporation, Limited was licensed in 1996 to reinsure certain of the "all risks" property, general and automobile liability risks of Columbia Energy Group ("CEG"), its subsidiaries and associates. NiSource, Inc. acquired CEG on November 1, 2000 and NiSource individual subsidiaries were added to the CEG insurance programs. In 2002, NiSource changed the name from Columbia Insurance Corporation, Limited ("CICL") to NiSource Insurance Corporation Limited ("NICL"). In 2002, NICL was given permission to underwrite risks on a direct insurance basis rather than on a pure reinsurance basis. Therefore, NICL now underwrites programs on a direct as well as reinsurance basis depending upon risk and nature of the transaction. At July 1, 2002 the General and Automobile Liability reinsurance agreement was renewed at existing terms and conditions. At July 1, 2002 a new All-Risk Property reinsurance agreement was negotiated, with NICL's retentions increasing due to adverse conditions in the commercial insurance market. At July 1, 2002 the Long-term Disability reinsurance agreement was renewed at existing terms and conditions. At July 1, 2002 a new excess indemnity policy for workers compensation was also added to NICL on a reinsurance basis. At November 1, 2002, "T&D" (property coverage for transmission and distribution lines) was insured to NICL and fully reinsured by a third party and secured by a letter of credit. The addition of T&D coverage poses no loss or credit risk to NICL. Details of the coverage and limits reinsured, by line of business and underwriting year, are provided as Exhibit 1. As further discussed under point 2 below, NICL's loss experience under each of the reinsurance agreements continues to fall within the "expected" range, based on the actuarial analysis of its losses. There has been $15,712,146 in paid claims since inception - $4,111,715 (including LTD) for the period under review. 2. Provide an analysis by subsidiary or associate company of coverage line, losses and expenses incurred during the six-month period as compared to premiums paid. For the period under review NICL's incurred loss to earned premium ratios for the policies which incepted on or after 7/1/02 were as follows:
-------------------------------------------------------------------------------- NET EARNED PREMIUM INCURRED LOSS COVERAGE LINE (7/1-12/31) (INCL. IBNR) LOSS RATIO -------------------------------------------------------------------------------- All Risk Property $2,165,000 $2,250,000 103.93% T&D $ 12,433 $ 0 0.00% General/ Auto Liability $1,350,000 $1,783,603 132.12% Long-Term Disability $ 797,892 $2,164,663 271.30% Workers Compensation $1,525,000 $1,479,680 97.03% -------------------------------------------------------------------------------- TOTALS $5,850,325 $7,677,946 131.24% --------------------------------------------------------------------------------
The above ratios reflect a conservative reserving position, as is appropriate for a company the size of NiSource Insurance Corporation, Limited. 3. Provide an analysis by subsidiary or associate companies of claims paid by NICL on behalf of such subsidiary or associate company and include the lead-in reserve available to NICL and end-of-period reserve balance. Reported beginning-of-period loss reserves and end-of-period loss reserves on NICL's property and liability programs as at June 30, 2002 and December 31, 2002, were $19,102,496 and $17,423,641 respectively. Detail of incurred and paid losses, by line of business and underwriting year, is provided in Exhibit 2. At December 31, 2002, NICL also had a reserve for long term disability (LTD) risks assumed under portfolio transfer agreements with two unrelated insurers and two policy periods being effective 7/1/01 and 7/1/02. Qualified actuaries have estimated the LTD reserve to be approximately $11,045,474 as of June 30, 2002. Loss reserves as of December 31, 2002 are $11,765,624. The combined totals as at June 30, 2002 and December 31, 2002, were $30,147,970 and $29,189,265 respectively. Prior to assuming this risk, NICL applied for, and was granted, a Prohibited Transaction Exemption by the Department of Labor, having shown in their application that the reinsurance of the LTD risks of employees of CEG by NICL would allow CEG to improve the LTD benefits provided. In order to provide this employee benefit reinsurance program, NICL formed a Vermont branch of their Bermuda captive, exclusively for the purpose of reinsuring ERISA risks. NICL also changed its license class to allow it to underwrite Long Term risks. 4. Provide a listing that illustrates the increases and decreases to premiums for each subsidiary or associate company as a result of the operations of NICL and loss experience of each subsidiary as a result of operations of NICL. NICL employs a premium allocation model based on exposure and experience of each subsidiary. Exhibit 3 highlights the model which uses an 80%/20% weighting for experience/exposure to derive premium. Premium for Automobile and General Liability as well as T&D have remained virtually the same while the property premium has increased due to the increased retention. The corporate reimbursement workers compensation policy results in an increase to reflect the new line of business being added to NICL. The net premium for the LTD risks assumed by the captive during the period under review represents a 12-month (7/1/02-03) period for LTD premium. It is anticipated that using NICL to reinsure this risk will allow NiSource to continue to provide the expanded employee benefit coverage, without a commensurate increase in rates. 5. Provide a copy of NICL's income statement and balance sheet, including any notes thereto. NICL's income statement and balance sheet including any notes are attached. We look forward to your response and further discussion regarding our business plan amendment. Very truly yours, NISOURCE INSURANCE CORPORATION, LIMITED By: /s/ J.W. Grossman -------------------------------- J. W. Grossman, President NISOURCE INSURANCE CORPORATION, LTD. EXHIBIT 1 INTERIM REPORT RULE 24 File No. 70-8905 DESCRIPTION OF CURRENT BUSINESS WRITTEN FOR THE PERIOD 6/30/02 - 12/31/02 All Risk Property
PERIOD PER OCC/ AGGREGATE DEDUCTIBLE FRONTING COMPANY ------------------------------------------------------------------------------------------------------------------------------------ 6/30/96-97 $500,000-$650,000/$3MM $100,000-250,000 Arkwright 6/30/97-98 $500,000-$650,000/$3MM $100,000-250,000 Arkwright 6/30/98-99 $500,000-$650,000/$3MM $100,000-250,000 Hartford Steam Boiler 6/30/99-7/1/00 $500,000-$650,000/$3MM $100,000-250,000 Hartford Steam Boiler 7/1/00-01 $500,000-$650,000/$3MM $100,000-250,000 Hartford Steam Boiler 7/1/01-02 $500,000-$650,000/$3MM $100,000-250,000 AEGIS 7/1/02-03 Onshore Gas: $750,000/$2.25M $250,000 AEGIS All Onshore Assets: $3MM/$6MM $1MM,$1.5MM,$2MM AEGIS
General/Auto Liability
PERIOD LAYER/PER OCC/AGG LIMIT ATTACHMENT FRONTING COMPANY ------------------------------------------------------------------------------------------------------------------------------------ 7/1/96-97 Primary US$800,000/3,000,000 $ 200,000 AEGIS Excess US$1,000,000/1,000,000 $1,000,000 AEGIS 7/1/97-98 Primary US$800,000/3,800,000* $ 200,000 AEGIS Excess US$1,000,000/1,500,000* $1,000,000 AEGIS 7/1/98-99 Primary US$800,000/3,000,000 $ 200,000 AEGIS Excess US$1,000,000/1,000,000 $1,000,000 AEGIS 7/1/99-00 Primary US$800,000/3,000,000 $ 200,000 AEGIS Excess US$1,000,000/1,000,000 $1,000,000 AEGIS 7/1/00-01 Primary US$800,000/3,000,000 $ 200,000 AEGIS Excess US$1,000,000/1,000,000 $1,000,000 AEGIS 7/1/01-02 Primary US$800,000/3,000,000 $ 200,000 AEGIS Excess US$1,000,000/1,000,000 $1,000,000 AEGIS 7/1/02-03 Primary US$800,000/3,000,000 $ 200,000 AEGIS Excess US$1,000,000/1,000,000 $1,000,000 AEGIS
Long-Term Disability
PERIOD PER OCC/ AGGREGATE DEDUCTIBLE FRONTING COMPANY ------------------------------------------------------------------------------------------------------------------------------------ 1/1/99-00 Unlimited/$7.0MM $ 0 Wausau 1/1/00-01 Unlimited/$10.2MM $ 0 Liberty Mutual 1/1/01-7/1/01 Unlimited/$4.6MM $ 0 Liberty Mutual 7/1/01-02 Unlimited/$2.78MM $ 0 UNUM/Provident 7/1/02-03 Unlimited/$2.4MM $ 0 UNUM/Provident
Transmission and Distribution
PERIOD PER OCC/ AGGREGATE ATTACHMENT FRONTING COMPANY ------------------------------------------------------------------------------------------------------------------------------------ 11/1/01-02 $4MM/$4MM $5MM AEGIS 11/1/02-03 $5MM/$5MM $5MM Direct to NICL and Reinsured
Excess Indemnity-Workers Compensation
PERIOD PER OCC/ AGGREGATE ATTACHMENT FRONTING COMPANY ------------------------------------------------------------------------------------------------------------------------------------ 7/1/02-03 $450,000/$6,000,000 $50,000 Travelers (Bermuda)
NISOURCE INSURANCE CORPORATION, LTD. INTERIM REPORT RULE 24 File No. 70-8905 EXHIBIT 2 INCURRED AND PAID LOSSES FOR THE PERIOD 6/30/02 - 12/31/02
Lead-in loss Paid losses OSLR at IBNR at Closing Updated Movement Policy Year Coverage reserves in period 12/31/02 12/31/02 Reserve incurred from 6/30/02 ------------------------------------------------------------------------------------------------------------------------------------ 7/1/96-97 AL/GL 902,387 -- -- 578,503 578,503 578,503 (323,884) 7/1/97-98 AL/GL 1,911,243 -- 1,045,000 264,062 1,309,062 1,309,062 (602,181) 7/1/98-99 AL/GL 1,392,000 1,412 208,588 461,984 670,572 671,984 (720,016) 7/1/99-00 AL/GL 2,656,847 413,450 838,127 892,559 1,730,686 2,144,136 (512,711) 7/1/00-01 AL/GL 3,791,019 1,800,000 730,000 1,056,333 1,786,333 3,586,333 (204,686) 7/1/01-02 AL/GL 4,000,000 -- 802,500 2,801,350 3,603,850 3,603,850 (396,150) 7/1/02-03 AL/GL -- -- 1,783,603 1,783,603 1,783,603 1,783,603 6/30/96-97 All Risk -- -- -- -- -- -- -- 6/30/97-98 All Risk -- -- -- -- -- -- -- 6/30/98-99 All Risk 799,000 606,039 193,000 -- 193,000 799,039 39 6/30/99-7/1/00 All Risk -- -- -- -- -- -- -- 7/1/00-01 All Risk 650,000 -- 650,000 -- 650,000 650,000 -- 7/1/01-02 All Risk 3,000,000 902,156 1,388,352 -- 1,388,352 2,290,508 (709,492) 7/1/02-03 All Risk -- -- 2,250,000 -- 2,250,000 2,250,000 2,250,000 7/1/02/03 Excess Ind- WC -- -- 70,820 1,408,860 1,479,680 1,479,680 1,479,680 ------------------------------------------------------------------------------------------------------------------------------------ Subtotal 19,102,496 3,723,057 8,176,387 9,247,254 17,423,641 21,146,698 2,044,202 ------------------------------------------------------------------------------------------------------------------------------------ 1/1/99-00 LTD 3,888,553 93,217 2,732,859 53,764 2,786,623 2,879,840 (1,008,713) 1/1/00-7/1/01 LTD 5,009,041 213,602 3,438,671 757,931 4,196,602 4,410,204 (598,837) 7/1/01-02 LTD 2,147,880 81,840 689,361 1,928,375 2,617,736 2,699,576 551,696 7/1/02-03 LTD -- -- 282,121 1,882,542 2,164,663 2,164,663 2,164,663 ------------------------------------------------------------------------------------------------------------------------------------ Subtotal 11,045,474 388,659 7,143,012 4,622,612 11,765,624 12,154,283 1,108,809 ------------------------------------------------------------------------------------------------------------------------------------ 30,147,970 4,111,716 15,319,399 13,869,866 29,189,265 33,300,981 3,153,011 =================================================================================================
INCEPTION TO DATE
Period Coverage Line Paid losses -------------------------------------------------------------- 7/1/96-97 General Liability 726,613 7/1/97-98 General Liability 1,837,757 7/1/98-99 General Liability 1,412 7/1/99-00 General Liability 1,756,603 7/1/00-01 General Liability 2,008,981 7/1/01-02 General Liability -- 7/1/02-03 General Liability -- 6/30/96-97 All Risk -- 6/30/97-98 All Risk 1,423,776 6/30/98-99 All Risk 1,909,179 6/30/99-7/1/00 All Risk 2,168,952 7/1/00-01 All Risk 664,511 7/1/01-02 All Risk 902,156 7/1/02-03 All Risk -- 7/1/02-03 Excess Ind-WC -- 1/1/99-00 LTD 913,888 1/1/00-7/1/01 LTD 1,304,503 7/1/01-02 LTD 93,816 7/1/02-03 LTD -- ----------- Total 15,712,147 -----------
NISOURCE INSURANCE CORPORATION, LTD. EXHIBIT 3 INTERIM REPORT RULE 24 File No. 70-8905 PREMIUM ALLOCATION MODEL FOR THE PERIOD 7/1/02-12/31/02 Total NICL Premium Allocation Line of Business Property GL/AL Exc Ind-WC T&D Totals --------------------------------------------------------------------------- Premium Account 4,330,000 2,700,000 3,050,000 1,000,000 11,080,000 ---------------------------------------------------------------------------
--------------------------------------------------------------------------- Weighting Weighting Weighting Weighting Weighting --------------------------------------------------------------------------- Exposure 80.00% 80.00% 80.00% 80.00% 80.00% Loss 20.00% 20.00% 20.00% 20.00% 20.00%
------------------------------------------------------------------------------------------------------------------------------------ Property GL/AL Exc Ind-WC T&D Exposure/Loss Exposure/Loss Exposure/Loss Exposure/Loss Selected Allocation Allocation Allocation Allocation W/AVG Code Operating Company Factor Factor Factor Factor Premium ==================================================================================================================================== CKY Columbia Gas of Kentucky, Inc. 86,036 2,700 57,389 -- 146,125 CMD Columbia Gas of Maryland, Inc. 19,502 810 13,057 -- 33,369 COH Columbia Gas of Ohio, Inc. 1,168,547 30,510 280,546 -- 1,479,604 COS Columbia Gas of Virginia 117,253 3,780 74,985 -- 196,018 CPA Columbia Gas of Pennsylvania 286,343 9,720 172,029 -- 468,092 TCO Columbia Gas Transmission Corp 705,749 315,090 409,233 -- 1,430,072 CGT Columbia Gulf Transmission Co 272,206 459,810 99,166 -- 831,182 CNR Columbia Energy Resources, Inc. 110,518 203,850 33,876 -- 348,244 CTC Columbia Transmission Comm 3,464 9,990 300 -- 13,754 PLP Columbia Propane Corporation LP -- -- -- -- -- CPC Columbia Propane Corporation -- -- -- -- -- PET Columbia Petroleum Corporation -- -- -- -- -- CLG Columbia LNG Corporation -- -- -- -- -- CNS Columbia Network Services 3,464 -- 812 -- 4,276 CAT Columbia Atlantic Trading Corporation 3,464 -- -- -- 3,464 CPL Columbia Pipeline Corp 3,464 -- -- -- 3,464 CFC Columbia Finance Corp 3,464 -- -- -- 3,464 CEC Columbia Electric Corporation -- -- -- -- - CSP Columbia Energy Group Service 3,464 -- 4,019 -- 7,483 CG Columbia Energy Group - Parent -- -- -- -- - TCC Columbia Energy Group Capital 3,464 -- -- -- 3,464 CTL Columbia Transcom -- -- -- -- - NCS NiSource Corporate Services 147,259 -- 636,180 -- 783,439 NSI NiSource Inc. 3,464 -- -- -- 3,464 NIP NIPSCO - Electric Merchant 136,362 1,105,650 194,329 -- 1,436,341 NIP NIPSCO - Electric Distribution 271,061 287,550 426,042 1,000,000 1,984,653 NIP NIPSCO - Gas Distribution 416,634 48,060 319,584 -- 784,278 NDC NiSource Development 3,464 2,970 -- -- 6,434 NES NI Energy Services 3,464 -- -- -- 3,464 NET NiSource Energy Technologies 3,464 -- 6,201 -- 9,665 KGF Kokomo Gas 22,247 2,700 17,446 -- 42,393 NIF NO. IN. Fuel & Light 22,266 810 17,484 -- 40,560 BSG Bay State Gas 203,024 16,200 187,193 -- 406,417 NPG NiSource Pipeline Group 27,048 -- - -- 27,048 EUS Energy USA 222,541 -- 48,831 -- 271,372 PEI Primary Energy 7,606 194,940 17,571 -- 220,118 GSG Granite State Gas Transmission 9,480 -- 1,836 -- 11,315 NUM Northern Utilities - Maine 10,719 2,700 10,067 -- 23,486 NUN Northern Utilities - New Hampshire 14,052 810 21,822 -- 36,684 NFC NiSource Finance Company 3,464 -- -- -- 3,464 NCP Crossroads Pipeline Company 11,980 1,350 -- -- 13,330 IWC IWC Resources -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ TOTALS 4,330,000 2,700,000 3,050,000 1,000,000 11,080,000 ------------------------------------------------------------------------------------------------------------------------------------
NISOURCE INSURANCE CORPORATION LTD. EXHIBIT 4 INTERIM REPORT RULE 24 File No. 70-8905 PREMIUM ALLOCATION FOR THE PERIOD 7/1/02-12/31/02
Property GL/AL Exc Ind-WC T&D Totals ------------------------------------------------------------------------------ Allocated Premium Amount: 4,330,000 2,700,000 3,050,000 1,000,000 11,080,000 ------------------------------------------------------------------------------ Actual Premium Amount: 4,330,000 2,700,000 3,050,000 1,000,000 11,080,000 ------------------------------------------------------------------------------
Weighting Factors Exposure 80.00% Loss 20.00%
------------------------------------------------------------------------------------------------------------------------------------ Property GL/AL Exc Ind-WC T&D Exposure/Loss Exposure/Loss Exposure/Loss Exposure/Loss Selected Allocation Allocation Allocation Allocation W/AVG Code Operating Company Factor Factor Factor Factor Premium ==================================================================================================================================== CKY Columbia Gas of Kentucky, Inc. 1.99% 0.10% 1.88% 0.00% 146,125 CMD Columbia Gas of Maryland, Inc. 0.45% 0.03% 0.43% 0.00% 33,369 COH Columbia Gas of Ohio, Inc. 26.99% 1.13% 9.20% 0.00% 1,479,604 COS Columbia Gas of Virginia 2.71% 0.14% 2.46% 0.00% 196,018 CPA Columbia Gas of Pennsylvania 6.61% 0.36% 5.64% 0.00% 468,092 TCO Columbia Gas Transmission Corp 16.30% 11.67% 13.42% 0.00% 1,430,072 CGT Columbia Gulf Transmission Co 6.29% 17.03% 3.25% 0.00% 831,182 CNR Columbia Energy Resources, Inc. 2.55% 7.55% 1.11% 0.00% 348,244 CTC Columbia Transmission Comm 0.08% 0.37% 0.01% 0.00% 13,754 PLP Columbia Propane Corporation LP 0.00% 0.00% 0.00% 0.00% - CPC Columbia Propane Corporation 0.00% 0.00% 0.00% 0.00% - PET Columbia Petroleum Corporation 0.00% 0.00% 0.00% 0.00% - CLG Columbia LNG Corporation 0.00% 0.00% 0.00% 0.00% - CNS Columbia Network Services 0.08% 0.00% 0.03% 0.00% 4,276 CAT Columbia Atlantic Trading Corporation 0.08% 0.00% 0.00% 0.00% 3,464 CPL Columbia Pipeline Corp 0.08% 0.00% 0.00% 0.00% 3,464 CFC Columbia Finance Corp 0.08% 0.00% 0.00% 0.00% 3,464 CEC Columbia Electric Corporation 0.00% 0.00% 0.00% 0.00% - CSP Columbia Energy Group Service 0.08% 0.00% 0.13% 0.00% 7,483 CG Columbia Energy Group - Parent 0.00% 0.00% 0.00% 0.00% - TCC Columbia Energy Group Capital 0.08% 0.00% 0.00% 0.00% 3,464 CTL Columbia Transcom 0.00% 0.00% 0.00% 0.00% - NCS NiSource Corporate Services 3.40% 0.00% 20.86% 0.00% 783,439 NSI NiSource Inc. 0.08% 0.00% 0.00% 0.00% 3,464 NIP NIPSCO - Electric Merchant 3.15% 40.95% 6.37% 0.00% 1,436,341 NIP NIPSCO - Electric Distribution 6.26% 10.65% 13.97% 100.00% 1,984,653 NIP NIPSCO - Gas Distribution 9.62% 1.78% 10.48% 0.00% 784,278 NDC NiSource Development 0.08% 0.11% 0.00% 0.00% 6,434 NES NI Energy Services 0.08% 0.00% 0.00% 0.00% 3,464 NET NiSource Energy Technologies 0.08% 0.00% 0.20% 0.00% 9,665 KGF Kokomo Gas 0.51% 0.10% 0.57% 0.00% 42,393 NIF NO. IN. Fuel & Light 0.51% 0.03% 0.57% 0.00% 40,560 BSG Bay State Gas 4.69% 0.6000% 6.14% 0.00% 406,417 NPG NiSource Pipeline Group 0.62% 0.00% 0.00% 0.00% 27,048 EUS Energy USA 5.14% 0.00% 1.60% 0.00% 271,372 PEI Primary Energy 0.18% 7.2200% 0.58% 0.00% 220,118 GSG Granite State Gas Transmission 0.22% 0.00% 0.06% 0.00% 11,315 NUM Northern Utilities - Maine 0.25% 0.1000% 0.33% 0.00% 23,486 NUN Northern Utilities - New Hampshire 0.32% 0.0300% 0.72% 0.00% 36,684 NFC NiSource Finanace Company 0.08% 0.00% 0.00% 0.00% 3,464 NCP Crossroads Pipeline Company 0.28% 0.0500% 0.00% 0.00% 13,330 IWC IWC Resources 0.00% 0.00% 0.00% 0.00% - ------------------------------------------------------------------------------------------------------------------------------------ TOTALS 100.00% 100.00% 100.00% 100.00% 11,080,000 ------------------------------------------------------------------------------------------------------------------------------------
NISOURCE INSURANCE CORPORATION, LTD. INTERIM REPORT RULE 24 Estimated savings - captive compared to EXHIBIT 5 commercial insurance File No. 70-8905 7/1/02-12/31/02
NICL Option Policy Period 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 Cum Premium ----------------------------------------------------------------------------------------------------------------------------------- GL/AL 3,250,672 3,949,662 3,190,770 3,041,000 2,812,000 2,800,000 2,700,000 All-Risk 1,397,203 1,618,057 1,960,760 2,400,000 2,646,000 2,580,000 4,330,000 LTD -- -- -- 4,588,000 7,627,823 2,297,484 1,595,784 WC -- -- -- -- -- -- 3,050,000 ----------------------------------------------------------------------------------------------------------- Total 4,647,875 5,567,719 5,151,530 10,029,000 13,085,823 7,677,484 11,675,784 46,159,431 Investment Income o/s Pre-tax saving 602,125 179,511 79,149 1,242,900 1,538,582 1,089,748 1,464,216 4,732,016 ----------- Total Cost 41,427,415
Guaranteed Cost Option Policy Period 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 ----------------------------------------------------------------------------------------------------------------------------------- GL/AL 2,750,000 3,159,730 2,552,616 3,345,100 3,233,800 3,240,000 3,240,000 All-risk 2,500,000 2,587,500 2,678,063 2,880,000 3,000,000 3,000,000 5,000,000 LTD -- -- -- 5,046,800 8,390,605 2,527,232 1,650,000 WC -- -- -- -- -- -- 3,250,000 ----------------------------------------------------------------------------------------------------------- Total 5,250,000 5,747,230 5,230,679 11,271,900 14,624,405 8,767,232 13,140,000 50,891,447 ANNUAL SAVINGS 11.47% 3.12% 1.51% 11.03% 10.52% 12.43% 11.14% CUMULATIVE INVESTMENT INCOME (EST.) 4,000,000 CUMULATIVE SAVINGS 17.16% 8,732,016
-------------------------------------------------------------- NiSource Insurance Corporation, Limited Management Accounts - consolidated for the period ending December 31, 2002 --------------------------------------------------------------- NISOURCE INSURANCE CORPORATION, LTD. CONSOLIDATED INCOME STATEMENT
--------------------------------------------------------------------------------------------------- 12 months to 12 months to 31-Dec-01 31-Dec-02 --------------------------------------------------------------------------------------------------- REVENUE Premium written - General Liability 2,800,000 2,700,000 Premium written - All Risk 3,021,000 4,330,000 Premium written - Long term 3,765,565 1,946,634 Premium written - WC 3,050,000 Premium written - T&D 1,250,000 1,000,000 Premium ceded - T&D (1,217,700) (990,000) Claims servicing fees 60,000 -- ------------------------------- 9,678,865 12,036,634 Movement in unearned premiums (208,417) (2,331,416) ------------------------------- Net earned premium 9,470,448 9,705,218 ------------------------------- --------------------------------------------------------------------------------------------------- EXPENSES Gross Incurred Claims 5,209,198 7,127,751 ------------------------------- Net Claims $ 5,209,198 $ 7,127,751 ------------------------------- UNDERWRITING EXPENSES Deferred acquisition costs incurred 344,877.00 277,037 ------------------------------- ADMINISTRATION EXPENSES Management fees 135,000 135,000 Bank charges 9,378 9,183 Corporate secretarial fees 6,203 6,355 Audit fees 38,881 40,227 Government fees 8,535 8,536 Letter of credit costs 31,679 39,848 Legal costs - reinsurance security -- -- Underwriting consultancy fees 27,895 97,474 Service Corporation expenses 292,660 149,455 Fees for set-up of Vermont branch -- -- Federal excise tax 2,030 11,939 Miscellaneous expenses 9,718 8,945 ------------------------------- Total Administration expenses 561,979 506,962 ------------------------------- Total Expenses $ 6,116,054 $ 7,911,750 =============================== --------------------------------------------------------------------------------------------------- Operating Income (Loss) 3,354,394 1,793,468 ------------------------------- INTEREST INCOME & RELATED CHARGES Net interest income - excluding Money Pool 1,361,191 871,634 Money Pool interest income - Non-Affiliated 359 5 Money Pool interest income - Affiliated 22,028 1,528 Gain (loss) on sale of Investments -- 131,135 ------------------------------- Total Interest Income and Related Charges 1,383,578 1,004,302 ------------------------------- ------------------------------- INCOME (LOSS) BEFORE TAXES $ 4,737,972 $ 2,797,770 =============================== --------------------------------------------------------------------------------------------------- Income taxes (1,847,396) (1,167,792) Deferred taxes 189,484 204,738 ------------------------------- Tax (charge) / recovery (1,657,912) (963,054) ------------------------------- INCOME (LOSS) AFTER TAXES 3,080,060 1,834,716 =============================== Dividends declared -- -- ------------------------------- INCOME (LOSS) AFTER TAXES AND DIVIDEND $ 3,080,060 $ 1,834,716 ===============================
NISOURCE INSURANCE CORPORATION, LTD. CONSOLIDATED BALANCE SHEET
------------------------------------------------------------------------------------------------------------- 31-Dec-01 31-Dec-02 ------------------------------------------------------------------------------------------------------------- ASSETS Cash 4,436,540 3,314,909 Cash equivalents - time deposits & Money Market Funds 28,782,502 24,160,178 Money Pool - Non-Affiliated 511 -- Money Pool - Affiliated 31,687 68,635 Premiums receivable 48,457 48,457 Accrued interest receivable 107,873 171,630 Money Pool accrued interest receivable - Non-Affiliated 1 -- Money Pool accrued interest receivable - Affiliated 335 121 Prepaid reinsurance premiums 1,014,750 825,000 Prepaid expenses 272,398 329,340 Funds withheld (UNUM) 2,100,384 3,633,030 Fixed income investments at market value 3,209,356 11,691,942 Deferred tax asset (general and long-term) 1,731,375 1,709,602 -------------------------------- Total Assets $ 41,736,169 $ 45,952,844 ================================ -------------------------------------------------------------------------------------------------------- SHAREHOLDER'S EQUITY Issued Capital - intercompany 370,000 370,000 Contributed Surplus - intercompany 789,059 789,059 Additional Paid in Capital 353,364 473,019 Unrealized gain/(loss) on investments 420,662 Retained Earnings/(Deficit) 4,131,393 5,966,109 -------------------------------- Total Shareholders' Equity $ 5,643,816 $ 8,018,849 ================================ -------------------------------------------------------------------------------------------------------- LIABILITIES Accounts payable 88,389 110,135 Accounts payable - System Inc -- -- Accounts payable - Service Corporation -- -- Dividends payable to Parent -- -- Income taxes payable by Shareholder - prior years 130,494 -- Income taxes payable - Prior years (300) (300) Income taxes payable - Current year 1,838,592 924,166 Unearned premiums - intercompany 3,731,667 5,873,333 Premiums Paid in Advance - intercompany 1,148,742 797,892 Deferred income - intercompany -- -- Unearned premiums - nonaffiliated -- -- Reinsurance balance payable 1,280,899 1,039,504 Outstanding loss reserves 27,873,870 29,189,265 -------------------------------- Total Liabilities $ 36,092,353 $ 37,933,995 ================================ -------------------------------- Total Liabilities and Shareholders' Equity $ 41,736,169 $ 45,952,844 ================================