-----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, UnWDTgY4wBETpiCTyXlB238Odzy/UloiIE3Y3QbUkL8tvg1+wlVnRIp9bfBwzTQr qH2jD27MFX4DYNejz7F+VQ== 0000276380-95-000024.txt : 19951121 0000276380-95-000024.hdr.sgml : 19951121 ACCESSION NUMBER: 0000276380-95-000024 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951117 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEIBELS BRUCE GROUP INC CENTRAL INDEX KEY: 0000276380 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 570672136 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-08804 FILM NUMBER: 95594412 BUSINESS ADDRESS: STREET 1: 1501 LADY ST STREET 2: P O BOX 1 CITY: COLUMBIA STATE: SC ZIP: 29201 BUSINESS PHONE: 8037482000 MAIL ADDRESS: STREET 1: 1501 LADY ST STREET 2: P O BOX 1 CITY: COLUMBIA STATE: SC ZIP: 29201 10-Q/A 1 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 Quarter Ended September 30, 1995 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number 0-8804 THE SEIBELS BRUCE GROUP, INC. (Exact name of registrant as specified in its charter) South Carolina 57-0672136 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1501 Lady Street (PO Box 1), Columbia, SC 29201(2) (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (803) 748-2000 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. Yes X No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 16,752,686 shares of Common Stock, $1 par value, at November 13, 1995. ITEM 1. FINANCIAL STATEMENTS THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December 31, ASSETS 1995 1994 -------------- ------------- Investments: (Unaudited) Fixed maturities, at market (cost of $34,668,805 at 1995 and $41,321,214 at 1994) $ 34,083,591 $ 38,940,939 Equity securities available-for-sale, at market (cost of $221,561 at 1995 and $540,655 at 1994) 346,618 458,492 Short-term investments, including temporary cash investments of $15,975,496 ($20,243,331 at 1994) 16,101,412 20,457,513 Mortgage loan on real estate, at estimated realizable value (cost of $2,949,080 at 1994) - 1,965,000 Other long-term investments 45,342 46,092 ---------- ---------- Total investments 50,576,963 61,868,036 Cash, other than invested cash 249,393 - Accrued investment income 292,442 808,774 Premiums and agents' balances receivable, net 8,712,014 13,027,605 Reinsurance recoverable on paid losses and loss adjustment expenses 29,622,305 30,277,569 Reinsurance recoverable on unpaid losses and loss adjustment expenses 78,558,734 88,730,898 Property and equipment, net 5,598,037 6,270,334 Prepaid reinsurance premiums - ceded business 47,153,066 48,482,673 Deferred policy acquisition costs 673,042 899,053 Other assets 3,988,005 5,569,630 ----------- ----------- Total assets $ 225,424,001 $ 255,934,572 =========== =========== LIABILITIES Losses and claims: Reported and estimated losses and claims - retained business $ 51,374,713 $ 64,220,902 - ceded business 66,616,228 74,140,671 Adjustment expenses - retained business 13,745,921 14,893,169 - ceded business 11,942,506 14,590,227 Unearned premiums: Property and casualty - retained business 3,339,556 6,945,280 - ceded business 47,153,066 48,482,673 Credit life 922,344 1,570,468 Balances due other insurance companies 13,785,645 17,264,627 Notes payable 2,476,496 439,167 Current income taxes payable 74,012 148,966 Other liabilities and deferred items 6,457,380 12,588,570 ----------- ----------- Total liabilities 217,887,867 255,284,720 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Special stock, no par value, authorized 5,000,000 shares, none issued and outstanding - Common stock, $1 par value, authorized 25,000,000 shares, issued & outstanding 16,752,686 shares (14,500,534 at 1994) 16,752,686 14,500,534 Additional paid-in capital 34,091,983 30,983,592 Unrealized loss on securities (614,688) (2,615,004) Retained deficit (42,693,847) (42,219,270) ------------ ------------ Total shareholders' equity 7,536,134 649,852 ----------- ----------- Total liabilities and shareholders' equity $ 225,424,001 $ 255,934,572 =========== ===========
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Nine Months Ended September 30, Third Quarter ------------------- ---------------------- 1995 1994 1995 1994 --------- ---------- ---------- ---------- Premiums: Property and casualty: Net premiums written $ 5,466,293 $ 11,109,648 $ 408,763 $ 3,717,610 Change in unearned premiums 3,043,558 792,033 2,588,320 (230,085) ---------- ---------- --------- ---------- Premiums earned 8,509,851 11,901,681 2,997,083 3,487,525 Credit life premiums earned 160,140 1,851,671 47,985 829,925 Commission and service income, net 17,396,916 20,670,538 6,311,986 7,105,541 Net investment income 2,502,080 5,053,415 924,959 1,857,907 Other interest income 985,999 525,259 212,189 102,445 Realized gains (losses) on investments 34,933 (2,174,646) (142) (3,404,825) Other income 815,530 2,259,710 8,651 329,063 ---------- ---------- ---------- ---------- Total revenue 30,405,449 40,087,628 10,502,711 10,307,581 ---------- ---------- ---------- ---------- Expenses: Property and casualty: Losses and loss adjustment expenses 10,322,594 11,153,492 3,159,056 (3,423,275) Policy acquisition costs 1,854,966 3,889,725 (258,339) 1,342,889 Credit life benefits 347,429 533,181 81,264 165,417 Interest expense 194,069 288,807 91,104 37,122 Other operating costs and expenses 18,088,516 20,148,209 6,084,487 8,999,046 ---------- ---------- ---------- ---------- Total expenses 30,807,574 36,013,414 9,157,572 7,121,199 Income (loss) from operations, before inco (402,125) 4,074,214 1,345,139 3,186,382 Provision (benefit) for income taxes 72,452 22,794 60,892 (84,599) ---------- ---------- ---------- --------- Net income (loss) $ (474,577) $ 4,051,420 $ 1,284,247 $ 3,270,981 ========== ========== ========== ========== Per share: Net income (loss) $ (0.03) $ 0.41 $ 0.08 $ 0.23 Average number of shares outstanding 16,491,653 9,910,789 16,749,262 14,500,534 Change in value of marketable securities credited /(charged) directly to equity$ 2,000,316 $ (7,897,328) $ 95,532 $ 1,496,773
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Temporary Cash Investments (Unaudited) Nine Months Ended September 30, ------------------------------- 1995 1994 ----------- ----------- Cash flows from operating activities: Net income (loss) $ (474,577) $ 4,051,420 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 603,686 359,996 Realized losses (gains) on investments (34,933) 2,174,646 Net change in assets and liabilities affecting cash flows from operating activities (18,638,753) (35,752,906) ------------ ------------ Net cash used in operating activities (18,544,577) (29,166,844) ------------ ------------ Cash flows from investing activities: Proceeds from investments sold 8,164,930 118,845,800 Proceeds from investments matured 2,030,000 242,350 Cost of investments acquired (3,184,169) (80,921,673) Net change in short-term investments 88,266 717,400 Proceeds from property and equipment sold 106,164 943,894 Purchases of property and equipment (37,553) (2,222,362) ----------- ----------- Net cash provided by investing activities 7,167,638 37,605,409 ----------- ----------- Cash flows from financing activities: Proceeds from stock rights offering 5,321,168 - Increase in notes payable 2,037,329 439,167 Repayment of notes payable - (1,749,161) ----------- ----------- Net cash provided by (used in) financing activities 7,358,497 (1,309,994) ----------- ----------- Net increase (decrease) in cash and temporary cash investments (4,018,442) 7,128,571 Cash and temporary cash investments, January 1 20,243,331 12,218,893 ----------- ----------- Cash and temporary cash investments, September 30 $ 16,224,889 $ 19,347,464 =========== =========== Supplemental cash flow information: Cash paid for - interest $ 53,827 $ 187,184 - income taxes paid 147,405 601,307 Non-cash financing activities: Notes payable exchanged for common stock $ - $ 10,000,000 Notes payable exchanged for accrued interest 439,167 - Issuance of common stock 39,375 -
PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The interim financial statements in Item 1 are unaudited, but in the opinion of management, reflect all adjustments necessary for fair presentation of results for such periods. All such adjustments are of a normal recurring nature. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's annual report Form 10-K for the year ended December 31, 1994. The following table indicates the more significant financial comparisons with the applicable prior periods (dollars shown in thousands, except per share amounts): September 30, December 31, FINANCIAL CONDITION 1995 1994 ------------- ----------- Total investments $ 50,577 $ 61,868 Total assets 225,424 255,935 Total liabilities 217,888 255,285 Shareholders' equity 7,536 650 Per Share 0.45 0.05
Nine Months Ended September 30, Third Quarter ----------------- --------------- RESULTS OF OPERATIONS 1995 1994 1995 1994 -------- ------- ------- -------- Operating revenues Insurance Commission and service income $ 17,397 $ 20,671 $ 6,312 $ 7,106 Premiums earned 8,670 13,753 3,045 4,318 Net investment and other interest income 3,488 5,579 1,137 1,960 Realized gains (losses) on investments 35 (2,175) - (3,405) Other income 815 2,260 9 329 Total operating revenues $ 30,405 $ 40,088 $ 10,503 $ 10,308 Net income (loss) $ (475) $ 4,051 $ 1,284 $ 3,271 Per share $ (0.03) $ 0.41 $ 0.08 $ 0.23
Results of Operations The Company had net income during the third quarter of 1995 of $1.3 million compared to $3.3 million for the third quarter of 1994. While revenues (excluding realized losses on investments) have decreased 23.4%, expenses (policy acquisition and other operating costs and expenses, combined) have decreased 43.1%. The decrease in revenues is related to the Company ceasing to write any voluntary business that would be retained by the Company. Additionally, the Company has seen commission and service income decrease as its participation in the South Carolina Reinsurance Facility decreased effective October 1, 1994. The Company has seen expenses decrease steadily during 1995 and expects this trend to continue as all expenses are reviewed to find ways to implement further reductions. The third quarter of 1994 includes a non-recurring reduction to losses and loss adjustment expenses ("LAE") in the amount of $6.1 million. On September 30, 1994, the Company satisfied its obligation with respect to all outstanding and future claims estimated at $22.2 million associated with the Company's participation in the National Workers' Compensation Reinsurance Pool ("NCCI") for a cash payment of $16.2 million. The settlement reduced losses and LAE incurred. The nine months ended September 30, 1995 reflect a net loss of $.5 million compared to net income of $4.1 million in 1994. As discussed above, the Company continues to see expenses drop at a faster rate than revenues. However, the effects of these reductions have only begun to help reduce losses during the second and third quarters. The Company expects the continued efforts of management and all employees to result in additional expense reductions in future quarters. The nine months ended September 30, 1994 includes reductions to losses and LAE incurred with a net effect of $3.3 million increase to net income. The NCCI commutation, discussed above, decreased losses and LAE by $6.1 million. In the second quarter of 1994, the Company settled pending arbitration related to certain reserves that resulted in an increase to losses and LAE incurred in the amount of $2.9 million. Net realized investment losses of $3.4 million were recognized in the third quarter of 1994. The nine months ended September 30, 1994 reflected net realized losses of $2.2 million. The losses are due to sales of securities in the second and third quarter to provide operating cash, commute the workers' compensation reserves and to settle the arbitration dispute. At December 31, 1994, three groups of independant actuaries reviewed the Company's reserves at the request of management. The result of this was additional reserve strengthening recorded in the fourth quarter of 1994. Since then, management has been monitoring the development on these reserves and believes that reserves remain adequate at this time. This belief was confirmed by an independant review of reserves at June 30, 1995. In an area that historically had proven troublesome in the past, the Company's West Coast business terminated in 1986, the Company is seeing favorable development. The trends for the past eighteen months have shown decreased legal expenses, decreases in new claims reported and lower severity in these claims than in the past. Net investment income for the third quarter of 1995 was $1.1 million, compared to $2.0 million for the same quarter in 1994. The nine months ended September 30, 1995 also reflects a decrease of $2.1 million when compared to 1994. These decreases are related to the decrease in the investment portfolio as a result of large bond sales in the third and fourth quarter of 1994. Other income for the nine months ended September 30, 1995 includes a settlement received on litigation the Company was involved in for several years. Also included in other income is a gain on the sale of certain assets of Forest Lake Travel Service, Inc. This subsidiary has been dissolved as it is no longer a part of the Company's operating plans. In addition to the revenues of operations discontinued in 1995, other income in 1994 includes a $.6 million gain in connection with the sale of the assets of the Company's premium financing subsidiary. The 1995 provision for taxes on income from operations was $72,000 for the nine months and $61,000 for the quarter. These charges resulted from the tax limitations on offsetting the Company's net operating loss carryforwards against state income taxes and certain life insurance taxable income. The Company's tax net operating loss carryforward at September 30, 1995 is approximately $93 million and a capital loss carryforward of approximately $5 million. Capital Resources and Liquidity The investment portfolio at September 30, 1995 was $50.6 million, compared to $61.9 million at the end of 1994. Shareholders' equity at September 30, 1995 was $7.5 million ($0.45 per share), compared to $.6 million ($.05 per share) at December 31, 1994. This increase is due to proceeds received from a rights offering in the first quarter of 1995 and increases in the market value of the Company's investment portfolio. The increase in the market value of the Company's bond and stock portfolio resulted in an unrealized gain of $.1 million in the third quarter and $2.0 million for the nine months. Cash used in operations during the first nine months of 1995 was $18.5 million, compared to $29.2 million in 1994. The outflows in both periods were due to reduced premium volume and the payment of claims for the three months. The 1994 outflow also includes large cash payments resulting from the two settlements discussed previously. While additional cash drain is anticipated in 1995, the expected amount is less than the $16.4 million of cash and short-term investments held at September 30, 1995. Hence, no unplanned sales of securities from the investment portfolio are anticipated during 1995. Cash provided from financing activities includes the proceeds from the rights offering and $2 million of debt incurred by the Company in the form of a promissory note executed in the favor of the investors currently holding approximately 49% of the Company's stock. The proceeds of this note were contributed directly to the capital of South Carolina Insurance Company. PART I. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (b) Reports on Form 8-K On July 18, 1995, Form 8-K was filed reporting projected second quarter results at the request of the National Association of Security Dealers. On July 25, 1995, Form 8-K was filed reporting a projected balance sheet for the period ended June 30 ,1995 at the request of the National Association of Security Dealers. 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. THE SEIBELS BRUCE GROUP, INC. (Registrant) Date: November 14, 1995 /s/ John A. Weitzel ----------------- ------------------------- John A. Weitzel Chief Financial Officer and Board of Directors Date: November 14, 1995 /s/Ernst N. Csiszar ----------------- ------------------------- Ernst N. Csiszar President and Board of Directors Date: November 14, 1995 /s/Mary M. Gardner ----------------- ------------------------- Mary M. Gardner Controller (Principal Accounting Officer) EX-27 2
7 9-MOS DEC-31-1995 SEP-30-1995 34,083,591 0 0 346,618 0 0 50,576,963 249,393 29,622,305 673,042 225,424,001 65,120,634 4,261,900 0 0 2,476,496 16,752,686 0 0 (9,216,552) 225,424,001 8,669,991 3,488,079 34,933 18,212,446 10,670,023 1,854,966 18,282,585 (402,125) 72,452 (474,577) 0 0 0 (474,577) (0.03) (0.03) 79,114,071 9,590,000 732,594 5,479,000 18,837,031 65,120,634 (732,594)
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