-----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, Sx63O3OFQBmaPVploGy1uhGdbsXC/wIAxqjFaczY7mjRjuMO8VqhqToyCOvFSeH1 leq5r+H7/YGGDlLiw9zIOA== 0000276380-96-000010.txt : 19960518 0000276380-96-000010.hdr.sgml : 19960518 ACCESSION NUMBER: 0000276380-96-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-08804 FILM NUMBER: 96568128 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 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 March 31, 1996 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: 18,407,686 shares of Common Stock, $1 par value, at April 30, 1996 ITEM 1. FINANCIAL STATEMENTS THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars shown in thousands) March 31, December 31 ASSETS 1996 1995 Investments: (Unaudited) Fixed maturities, at market (cost of $35,094 at 1996 and $33,171 at 1995) $ 34,625 $ 33,581 Equity securities available-for-sale, at market (cost of $34 at 1996 and $221 at 1995) 34 377 Short-term investments, including temporary cash investments of $17,953 ($10,235 at 1995) 18,028 10,310 Other long-term investments 34 34 Total investments 52,721 44,302 Cash, other than invested cash 4,744 6,339 Accrued investment income 364 697 Premiums and agents' balances receivable, net 7,469 7,005 Reinsurance recoverable on paid losses and loss adjustment expenses 26,193 27,423 Reinsurance recoverable on unpaid losses and loss adjustment expenses 65,263 84,492 Property and equipment, net 5,467 5,396 Prepaid reinsurance premiums - ceded business 42,614 43,469 Deferred policy acquisition costs 194 293 Other assets 4,994 4,589 Total assets $ 210,023 $ 224,005 LIABILITIES Losses and claims: Reported and estimated losses and claims - retained $ 44,556 $ 47,445 56,224 74,918 Adjustment expenses - retained business 12,673 13,586 - ceded business 9,039 9,574 Unearned premiums: Property and casualty - retained business 1,253 1,900 - ceded business 42,615 43,469 Credit life 500 758 Balances due other insurance companies 16,751 12,438 Notes payable 2,476 2,476 Current income taxes payable 155 191 Escrow liability 6,283 0 Other liabilities and deferred items 4,380 7,063 Total liabilities 196,906 213,818 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 18,407,686 shares (16,772,686 at 18,408 16,773 Additional paid-in capital 35,653 34,080 Unrealized gain/(loss) on securities (634) 401 Accumulated deficit (40,310) (41,067) Total shareholders' equity 13,117 10,187 Total liabilities and shareholders' equity $ 210,022 $ 224,005
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIE CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts shown in thousands, except per sh Three Months Ended March 31, 1996 1995 Premiums: Property and casualty: Net premiums written $ 2,354 $ 4,143 Change in unearned premiums 645 (836) Premiums earned 2,999 3,307 Credit life premiums earned 125 192 Commission and service income 10,221 13,024 Net investment income 660 767 Other interest income 118 408 Realized gains on investments 194 64 Other income 23 97 Total revenue 14,340 17,859 Expenses: Property and casualty: Losses and loss adjustment expenses 3,004 5,068 Policy acquisition costs 683 1,208 Credit life benefits 70 138 Interest expense 85 30 Other operating costs and expenses 9,733 13,412 Total expenses 13,575 19,856 Income (loss) from operations, before income taxes 765 (1,997) Provision for income taxes 8 11 Net income (loss) $ 757 $ (2,008) Per share and common equivalent share: Net income (loss) - primary and fully diluted $ 0.04 $ (0.13) Shares used in computing per common and common equivalent share: Primary 17,421 16,000 Full dilution 17,541 16,000 Change in value of marketable securities credited /(charged) directly to equity $ (1,035) $ 559
THE SEIBELS BRUCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Increase in Cash and Temporary Cash Investments (Unaudited) (Amounts shown in thousands) Three Months Ended March 31, 1996 1995 Cash flows from operating activities: Net income (loss) $ 757 $ (2,008) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 239 243 Realized losses (gains) on investments (194) (64) Net change in assets and liabilities affecting cash flows from operating activities (2,294) 1,467 Net cash used in operating activities (1,492) (362) Cash flows from investing activities: Proceeds from investments sold 1,170 5,752 Proceeds from investments matured 2,795 1,710 Cost of investments acquired (5,510) (1,949) Net change in short-term investments - (75) Proceeds from property and equipment sold 108 16 Purchases of property and equipment (406) (25) Net cash provided by (used in) investing activities (1,843) 5,429 Cash flows from financing activities: Issuance of capital stock held in escrow 6,250 - Issuance of capital stock 3,208 - Proceeds from stock rights offering - 5,321 Net cash provided by financing activities 9,458 5,321 Net increase in cash and temporary cash investments 6,123 10,388 Cash and temporary cash investments, January 1 16,574 20,243 Cash and temporary cash investments, March 31 $ 22,697 $ 30,631 Supplemental cash flow information: Cash paid for - income taxes $ 43 $ 147
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, 1995. The following table indicates the more significant financial comparisons with the applicable prior periods (dollars shown in thousands, except per share amounts): March 31, December 31, FINANCIAL CONDITION 1996 1995 Total investments $ 52,721 $ 44,302 Total assets 209,952 224,005 Total liabilities 196,835 213,818 Shareholders' equity 13,117 10,187 Per Share 0.71 0.61 Three Months Ended March 31, RESULTS OF OPERATIONS 1996 1995 Operating revenues Commission and service income $ 10,221 $ 13,024 Premiums earned 3,124 3,499 Net investment and other interest income 778 1,175 Realized gains on investments 194 64 Other income 23 97 Total operating revenues $ 14,340 $ 17,859 Net income (loss) $ 757 $ (2,008) Per share $ 0.04 $ (0.13) Results of Operations The net income for the first quarter of 1996 was $0.8 million ($0.04 per share), compared to a net loss of $2.0 million ($0.13 per share) for the first quarter of 1995. Total revenues in the first quarter of 1995 decreased $3.5 million (19.7%), when compared to the first quarter of 1995. The majority of this is related to the decrease in commission and service income due to the reduction in volume and rates. However, total expenses (includes losses and loss adjustment expenses) also decreased in the first quarter of 1996 by $6.3 million (31.6%), when compared to the first quarter of 1995. While the Company has seen premiums earned decrease as the related policies runoff, the losses and loss adjustment expenses on the business earned prior to 1996 have stabilized. Results in the first quarter of 1996, and the last three quarters of 1995, confirm management's opinion that reserves appear to be adequate to cover any future development on this business. In addition, the Company continues its constant monitoring of expenses related to the contracts it services to keep the profit margin from decreasing at the same rate as revenues. The majority of the loss in the first quarter of 1995 is due to losses incurred on business the Company wrote in prior years. In addition, during the first quarter of 1995, the Company began to feel the effects of the lower rates and volume on the contracts from which it earns commission and service income. The related expense reductions did not begin until the second quarter. Net investment income for the first quarter of 1996 was $0.8 million, compared to $1.2 million for the same quarter in 1995. This decease is due to lower average invested assets during the first quarter of 1996, as compared to the same quarter in 1995. In addition, only minimal earnings were recognized on the capital contributions discussed below. While the capital investment of $6.3 million is included in short-term investments at March 31, 1996, the Company will not recognize the interest earnings until the transaction is approved by all parties in the second quarter. The capital investment of $3.3 million is included in short-term investments at March 31, 1996; however, it was only available for earnings the last three days of the quarter. Other income in 1995 includes an $85,000 gain on the sale of certain assets of Forest Lake Travel Service, Inc. This subsidiary was dissolved in the second quarter of 1995. Capital Resources and Liquidity Cash used in operations during the first quarter of 1996 was $1.5 million, compared to $0.4 million in 1995. The negative cash flow in both periods was due to reduced premium collections and the payment of claims for the three months. While additional cash drain is anticipated during 1996, the expected amount is less than the $22.8 million of cash and short-term investments held at March 31, 1996. Hence, no unplanned sales of securities are anticipated during 1996. Shareholders' equity at March 31, 1996 was $13.1 million ($0.71 per share), compared to $10.2 million ($0.61 per share) at December 31, 1995. During the first quarter of 1996, the Company issued 6,250,000 shares of authorized but unissued shares at a price of $1.00 to several related investors. The proceeds of the sale were deposited into escrow pending approval of the transaction by shareholders and by the South Carolina Department of Insurance. In conjunction with the sale of common stock, the Company also has issued stock options to acquire an additional 3,125,000 shares at the higher of $1.50 per share or book value at December 31, 1998 and 3,125,000 shares at the higher of $2.00 or book value at December 31, 2000. Also during the first quarter of 1996, the Company issued 1,635,000 shares of authorized but unissued shares at a price of $2.00 to a different group of investors. The proceeds of this stock sale were used to liquidate the notes payable that were due May 1, 1996. In addition, subject to shareholder approval of increasing the number of authorized shares, the Company has issued to this group stock options expiring December 31, 2000 to acquire an additional 1,635,000 shares at the higher of $2.50 per share or book value at the date of exercise. PART I. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K On January 10, 1996, Form 8-K was filed reporting that a letter of intent had been signed with a group of related investors to invest in 5.5 million shares of authorized but unissued common stock of the Company. The Company also announced the election of Kenneth W. Pavia as a member of the Board of Directors to replace Roy L. Faulks, who had resigned. On February 2, 1996, Form 8-K was filed reporting that the investment of 6,250,000 shares of the Company's authorized but unissued common stock by a related group of investors had closed. The investment was increased from the previously reported 5.5 million shares. The proceeds were placed in escrow pending approval by shareholders and the South Carolina Department of Insurance. On March 14, 1996, Form 8-K was filed reporting an agreement in principle for South Carolina Insurance Company, a subsidiary of the Company, to sell its inactive subsidiary, Consolidated American Insurance Company, to Hogan Holding Corporation. This sale is continent upon the negotiation of a definitive agreement and regulatory approval. The Company subsequently announced that neither contingency was resolved during the first quarter. 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: May 15, 1996 /s/John A. Weitzel John A. Weitzel Chief Financial Officer and Director Date: May 15, 1996 /s/Ernst N. Csiszar Ernst N. Csiszar President and Director Date: May 15, 1996 /s/Mary M. Gardner Mary M. Gardner Controller (Principal Accounting Officer) EX-27 2
7 3-MOS DEC-31-1996 MAR-31-1996 34,625,000 34,625,000 34,625,000 34,000 0 0 52,721,000 4,744,000 26,193,000 194,000 210,023,000 57,229,000 1,753,000 0 0 2,476,000 0 0 18,408,000 (5,291,000) 210,023,000 3,124,000 778,000 194,000 10,244,000 3,074,000 683,000 9,818,000 765,000 8,000 757,000 0 0 0 757,000 0.04 0.04 61,031,000 794,000 2,210,000 370,000 6,436,000 57,229,000 2,210,000
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