-----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, AlfnEx0plcPhCL5qHN0hjSz3+3eDp/enIycsLp4jN0ayHyDxQTBSnwlyoTQqsd3V +haroopNA4QbQDwW2tZZbg== 0000950152-99-008639.txt : 19991105 0000950152-99-008639.hdr.sgml : 19991105 ACCESSION NUMBER: 0000950152-99-008639 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANCINSURANCE CORP CENTRAL INDEX KEY: 0000276400 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 310790882 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-08738 FILM NUMBER: 99740627 BUSINESS ADDRESS: STREET 1: 20 E BROAD ST STREET 2: 4TH FLOOR CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142282800 MAIL ADDRESS: STREET 1: 20 E. BROAD STREET STREET 2: 4TH FLOOR CITY: COLUMBUS STATE: OH ZIP: 43215 10-Q 1 BANCINSURANCE CORPORATION 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1999 Commission File Number 0-8738 ---------------------- --------------------------------- BANCINSURANCE CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Ohio 31-0790882 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 20 East Broad Street, Columbus, Ohio 43215 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (614) 228-2800 ---------------- None - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 twelve 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 issuer's classes of common stock, as of the last practicable date. Class Outstanding at September 30, 1999 - ------------------------------- --------------------------------- Common stock, without par value 6,095,129 2 BANCINSURANCE CORPORATION AND SUBSIDIARIES INDEX
Page No. PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of September 30, 1999 (unaudited) and December 31, 1998 3 Consolidated Statements of Income for the three months and nine months ended September 30, 1999 and 1998 (unaudited) 5 Consolidated Statements of Comprehensive Income for the three months and nine months ended September 30, 1999 and 1998 (unaudited) 6 Consolidated Statements of Cash Flows for the nine months ended September 30, 1999 and 1998 (unaudited) 7 Notes to Consolidated Financial Statements (unaudited) 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 18 PART II - OTHER INFORMATION AND SIGNATURES Item 1. Legal Proceedings Not Applicable Item 2. Changes in Securities and Use of Proceeds Not Applicable Item 3. Default Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K 19 Signatures 20
2 3 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements -------------------- BANCINSURANCE CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets
September 30, December 31, Assets 1999 1998 - ------ ------------ ----------- (Unaudited) Investments: Held to maturity: Fixed maturities, at amortized cost (fair value $4,660,619 in 1999 and $4,841,414 in 1998) $ 4,626,951 $ 4,702,163 Available for sale: Fixed maturities, at fair value (amortized cost $14,824,396 in 1999 and $10,763,962 in 1998) 14,619,468 11,170,469 Equity securities, at fair value (cost $4,008,084 in 1999 and $3,434,573 in 1998) 4,380,619 4,024,800 Short-term investments, at cost which approximates fair value 5,606,123 5,824,464 Securities purchased under agreements to resell 1,739,646 1,260,857 ----------- ----------- Total investments 30,972,807 26,982,753 ----------- ----------- Cash 3,427,869 4,582,168 Premiums receivable 2,336,867 1,783,719 Accounts receivable, net of allowance for doubtful accounts 430,837 286,242 Reinsurance receivable 2,250 2,750 Reinsurance recoverable on paid losses 13,283 - Prepaid reinsurance premiums 48,659 28,400 Deferred policy acquisition costs 368,685 152,678 Loans to affiliates 814,420 578,621 Note receivable - 6,031 Land and building, net 39,358 - Furniture, fixtures and leasehold improvements, net 298,597 171,764 Excess of investment over net assets of subsidiaries, net 2,960,798 964,453 Prepaid federal income taxes 154,742 - Accrued investment income 419,934 269,690 Other assets 347,529 139,398 ----------- ----------- Total assets $42,636,635 $35,948,667 =========== ===========
(Continued) 3 4 BANCINSURANCE CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets, Continued
September 30, December 31, Liabilities and Shareholders' Equity 1999 1998 - ------------------------------------ ------------ ------------ (Unaudited) Reserve for unpaid losses and loss adjustment expenses $ 5,446,959 $ 3,177,845 Unearned premiums 1,984,703 718,795 Return premiums payable 87,041 33,671 Contract funds on deposit 2,590,454 2,917,868 Reinsurance premiums payable 1,960 5,430 Note payable to bank 5,200,000 4,250,000 Note payable 19,510 28,076 Acquisition liability 611,617 - Taxes, licenses, and fees payable 162,033 373,679 Deferred federal income taxes 106,371 290,846 Federal income taxes payable - 44,191 Commissions payable 529,550 438,175 Other 1,072,686 1,165,609 ------------ ------------ Total liabilities 17,812,884 13,444,185 ------------ ------------ Commitments and contingent liabilities Shareholders' equity: Non-voting preferred stock: Class A Serial Preference shares without par value; authorized 100,000 shares; no shares issued or outstanding - - Class B Serial Preference shares without par value; authorized 98,646 shares; no shares issued or outstanding - - Common stock without par value; authorized 20,000,000 shares; 6,170,341 shares issued at September 30, 1999 and 5,878,277 shares at December 31, 1998 1,794,141 315,567 Additional paid-in capital 1,495,387 1,495,387 Accumulated other comprehensive income 110,621 657,844 Retained earnings 21,755,876 20,136,198 ------------ ------------ 25,156,025 22,604,996 Less: Treasury stock, at cost (75,212 common shares at September 30, 1999 and 35,162 at December 31, 1998) (332,274) (100,514) ------------ ------------ Total shareholders' equity 24,823,751 22,504,482 ------------ ------------ Total liabilities and shareholders' equity $ 42,636,635 $ 35,948,667 ============ ============
See accompanying notes to consolidated financial statements 4 5 BANCINSURANCE CORPORATION AND SUBSIDIARIES Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Income: Premiums written $ 6,388,893 $ 4,025,837 $ 20,718,099 $ 14,703,804 (Increase) decrease in unearned premiums 725,471 675,344 (1,265,909) (729,139) ------------ ------------ ------------ ------------ Premiums earned 7,114,364 4,701,181 19,452,190 13,974,665 Premiums ceded (18,249) (15,964) (77,030) (57,482) ------------ ------------ ------------ ------------ Net premiums earned 7,096,115 4,685,217 19,375,160 13,917,183 Investment income (net of expenses of $77,742 and $45,378, respectively) 384,522 346,801 1,080,275 1,040,456 Net realized gain (loss) on investments 49,650 (1,025) 163,094 49,968 Claims administration fees 154,292 152,046 415,515 443,810 Title and appraisal fees 690,318 488,991 1,851,978 1,458,696 Management fees 285,504 668,978 864,702 1,130,185 Commission fees 50,054 - 50,054 - Other income 20,529 3,888 71,385 30,896 ------------ ------------ ------------ ------------ Total revenue 8,730,984 6,344,896 23,872,163 18,071,194 ------------ ------------ ------------ ------------ Losses and operating expenses: Losses and loss adjustment expenses 4,705,565 2,825,170 12,019,266 8,768,324 Commission expense 1,054,455 657,526 2,933,096 1,642,507 Other insurance operating expenses 619,139 458,445 1,711,709 1,422,559 General and administrative expenses 864,355 1,244,681 2,711,868 2,659,228 Interest expense 37,210 64,827 119,907 221,795 ------------ ------------ ------------ ------------ Total expenses 7,280,724 5,250,649 19,495,846 14,714,413 ------------ ------------ ------------ ------------ Income before federal income taxes 1,450,260 1,094,247 4,376,317 3,356,781 Federal income tax expense 415,317 310,083 1,277,601 934,148 ------------ ------------ ------------ ------------ Net income $ 1,034,943 $ 784,164 $ 3,098,716 $ 2,422,633 ============ ============ ============ ============ Net income per common share $ .17 $ .13 $ .50 $ .39 ============ ============ ============ ============ Net income per common share, assuming dilution $ .17 $ .13 $ .50 $ .39 ============ ============ ============ ============
See accompanying notes to consolidated financial statements. 5 6 BANCINSURANCE CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Net income $ 1,034,943 $ 784,164 $ 3,098,716 $ 2,422,633 Other comprehensive income, net of tax: Unrealized holding losses on securities arising during period (314,337) (78,674) (547,223) (137,455) ----------- ----------- ----------- ----------- Comprehensive income $ 720,606 $ 705,490 $ 2,551,493 $ 2,285,178 =========== =========== =========== ===========
6 7 BANCINSURANCE CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1999 1998 ----------- ----------- Cash flows from operating activities: Net income $ 3,098,716 $ 2,422,633 Adjustments to reconcile net income to net cash provided by operating activities: Net realized gain on investments (163,094) (49,968) Net realized loss on disposal of equipment 628 51,747 Depreciation and amortization 164,395 111,487 Deferred federal income tax expense (benefit) 96,535 (14,095) Increase in premiums receivable (553,148) (322,827) Increase in deferred policy acquisition costs, net (216,007) (145,518) Increase in other assets (920,522) (108,638) Increase in reserve for unpaid losses and loss adjustment expenses 2,269,114 433,856 Increase in unearned premiums 1,265,908 729,140 Decrease in contract funds on deposit (327,414) (567,350) Decrease in reinsurance premiums payable (3,470) (21,219) Increase (decrease) in commissions payable 91,375 (183,796) Increase (decrease) in other liabilities (324,758) 368,138 ----------- ----------- Net cash provided by operating activities 4,478,258 2,703,590 ----------- ----------- Cash flows used in investing activities: Proceeds from held to maturity: fixed maturities due to redemption or maturity 215,000 340,000 Proceeds from available for sale: fixed maturities sold, redeemed and matured 3,847,756 1,012,000 Proceeds from available for sale equity securities sold 3,569,511 2,198,975 Cost of investments purchased: Held to maturity: fixed maturities (200,000) (411,469) Available for sale: fixed maturities (7,916,695) (207,946) Equity securities (3,889,755) (2,935,211) Net (increase) decrease in short-term investments 218,350 (626,079) Net (increase) decrease securities purchased under agreements to resell (478,789) 399,904 Purchase of furniture, fixtures and leasehold improvements (215,811) (149,923) Proceeds from disposal of equipment 100 225 Cash used in purchase of subsidiary (1,500,000) - ----------- ----------- Net cash used in investing activities (6,350,333) (379,524) ----------- ----------- Cash flows from financing activities: Proceeds from note payable to bank 7,200,000 5,950,000 Repayments of note payable to bank (6,250,000) (5,950,000) Dividends paid (464) - Acquisition of treasury stock (231,760) - ----------- ----------- Net cash provided by financing activities 717,776 - ----------- ----------- Net increase (decrease) in cash (1,154,299) 2,324,066 ----------- ----------- Cash at December 31 4,582,168 1,146,317 ----------- ----------- Cash at September 30 $ 3,427,869 $ 3,470,383 =========== =========== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 113,998 $ 221,795 =========== =========== Income taxes $ 1,500,000 $ 955,000 =========== =========== Supplemental schedule of noncash investing activities: Common stock received in debenture conversion $ 50,000 - =========== ===========
See accompanying notes to consolidated financial statements. 7 8 BANCINSURANCE CORPORATION AND SUBSIDIARIES Notes To Consolidated Financial Statements (Unaudited) 1. The Consolidated Balance Sheets as of September 30, 1999, the Consolidated Statements of Income for the three and nine months ended September 30, 1999 and 1998, the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 1999 and 1998, and the Consolidated Statements of Cash Flows for the nine months then ended have been prepared by Bancinsurance Corporation (the "Company") without an audit. In the opinion of Company's management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flow at September 30, 1999 and for all periods presented have been made. 2. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these unaudited Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 1998. The results of operations for the period ended September 30, 1999 are not necessarily indicative of the results of operations for the full year. In 1998, the National Association of Insurance Commissioners ("NAIC") adopted the Codification of Statutory Accounting Principles guidance, which will replace the current Accounting Practices and Procedures manual as the NAIC's primary guidance on statutory accounting. The NAIC is now considering amendments to the Codification guidance that would also be effective upon implementation. The Codification provides guidance for areas where statutory accounting has been silent and changes current statutory accounting in some areas. The Ohio Insurance Department has adopted the Codification guidance, effective January 1, 2001. The Company has not estimated the potential effect of the Codification guidance adopted by the Department. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. In 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement, which is effective for periods beginning after June 15, 1999, establishes accounting and reporting standards which require derivatives to be measured at fair value and recognized as assets or liabilities in the balance sheet. The Company's balance sheet and statements of earnings and cash flows will not be materially impacted by this statement, upon adoption. 4. Supplemental Disclosure For Earnings Per Share
Three Months Ended Nine Months Ended September 30, September 30, 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Net income $1,034,943 $ 784,164 $3,098,716 $2,422,633 ---------- ---------- ---------- ---------- Income available to common stockholders, assuming dilution $1,034,943 $ 784,164 $3,098,716 $2,422,633 ---------- ---------- ---------- ---------- Weighted average common shares outstanding 6,129,291 6,135,179 6,133,195 6,135,179 Adjustments for dilutive securities: Dilutive effect of outstanding options 84,033 99,955 86,108 96,604 ---------- ---------- ---------- ---------- Diluted common shares 6,213,324 6,235,134 6,219,303 6,231,783 ========== ========== ========== ========== Net income per common share $ .17 $ .13 $ .50 $ .39 Net income per common share, assuming dilution $ .17 $ .13 $ .50 $ .39
8 9 BANCINSURANCE CORPORATION AND SUBSIDIARIES Notes To Consolidated Financial Statements (Unaudited) (Continued) On May 5, 1999, the Company declared a 5% common stock dividend to shareholders of record on May 25, 1999. Accordingly, all common stock share data have been adjusted to include the effect of the stock dividend. 5. During 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" was issued. This SFAS was adopted by the Company as of January 1, 1998. SFAS No. 131 requires disclosure of revenues and other information based on the way management organizes the segments of the business for making operating decisions and assessing performance. The Company operates primarily in the property/casualty insurance industry. There are intersegment management and commission fees. The allocations of certain general expenses within segments are based on a number of assumptions, and the reported operating results would change if different methods were applied. Depreciation and capital expenditures are not considered material.
SEPTEMBER 30, 1999 ------------------------------------------------------------------------------------------- WORKERS PROPERTY/CASUALTY TITLE COMPENSATION INSURANCE ALL CONSOLIDATED INSURANCE AGENCY ADMINISTRATION AGENCY OTHER TOTALS ------------------------------------------------------------------------------------------- Revenues from external customers $20,558,117 $ 1,851,778 $ 415,515 $ 209,115 $ 70 $23,034,595 Intersegment revenues .......... 7,110 - - 158,974 7,830 173,914 Interest revenue ............... 990,232 - - - 21,250 1,011,482 Interest expense ............... 3,915 1,928 29 - 114,035 119,907 Depreciation and amortization .. 46,699 47,614 3,528 17,518 49,036 164,395 Segment profit (loss) .......... 4,745,569 35,971 (24,194) 130,620 (337,735) 4,550,231 Income tax expense (benefit) ... 1,400,063 14,452 - 50,242 (187,156) 1,277,601 Segment assets ................. 37,146,588 938,961 238,129 2,296,128 3,457,432 44,077,238 SEPTEMBER 30, 1998 ------------------------------------------------------------------------------------------- WORKERS PROPERTY/CASUALTY TITLE COMPENSATION INSURANCE ALL CONSOLIDATED INSURANCE AGENCY ADMINISTRATION AGENCY OTHER TOTALS ------------------------------------------------------------------------------------------- Revenues from external customers $15,149,362 $ 1,474,151 $ 443,810 $ - $ 2,402 $17,069,725 Intersegment revenues .......... 7,110 - - - 7,830 14,940 Interest revenue ............... 998,691 - - - 17,718 1,016,409 Interest expense ............... 935 - 339 - 220,521 221,795 Depreciation and amortization .. 42,256 27,137 3,554 - 38,540 111,487 Segment profit (loss) .......... 4,305,698 (85,863) 17,959 - (866,073) 3,371,721 Income tax expense (benefit) ... 1,254,489 - 6,653 - (326,994) 934,148 Segment assets ................. 33,342,576 606,328 207,571 - 2,875,603 37,032,078
9 10 BANCINSURANCE CORPORATION AND SUBSIDIARIES Notes To Consolidated Financial Statements (Unaudited) (Continued)
------------------------------------- SEPTEMBER 30, SEPTEMBER 30, 1999 1998 ------------------------------------- REVENUES -------- Total revenues for reportable segments ..................................... $ 23,034,595 $ 17,069,725 Interest revenue ........................................................... 1,011,482 1,016,409 Elimination of intersegment revenues ....................................... (173,914) (14,940) ------------ ------------ Total consolidated revenues ................................................ $ 23,872,163 $ 18,017,194 ============ ============ PROFIT ------ Total profit for reportable segments ....................................... $ 4,887,966 $ 4,237,794 Other loss ................................................................. (337,735) (866,073) Elimination of intersegment profits ........................................ (173,914) (14,940) ------------ ------------ Income before income taxes ................................................. $ 4,376,317 $ 3,356,781 ============ ============ ASSETS ------ Total assets for reportable segments ....................................... $ 40,619,806 $ 34,156,475 Other assets ............................................................... 3,457,432 2,875,603 Elimination of intersegment receivables .................................... (1,440,603) (1,083,411) ------------ ------------ Consolidated assets ........................................................ $ 42,636,635 $ 35,948,667 ============ ============
6. On August 25, 1999, the Company acquired the stock of Paul Boardway and Associates, Inc., ("Paul Boardway"). The Company purchased the wholly-owned subsidiary for $1,500,000 in cash; $300,000 of the Company's stock to be issued on the first anniversary of the closing date; and $331,159 of contingent acquisition liabilities. Paul Boardway is a property/casualty insurance agency serving lending institutions throughout the northeast United States. The acquisition has been accounted for a purchase and resulted in $2,025,149 of goodwill. The consolidated statements of income for the nine months ended September 30, 1999, included the operating results of the acquired business from August 25, 1999. 7. On August 16, 1999, the Board of Directors adopted a common share repurchase program. The program allows the Company to repurchase, from time to time, up to a total of 500,000 of its common shares. The program will expire on December 31, 2000. As of September 30, 1999, the Company repurchased 40,050 shares at an average price per share of $5.79 under this program. Repurchases have been and will continue to be funded by cash flows from operations. 8. On August 7, 1992, a $50,000 convertible debenture was issued to the Company by Westford Group, Inc., ("Westford"), an affiliate of the Company through a common officer and principal shareholder. On December 1, 1995, a resolution was adopted by Westford to renew the debenture. On August 30, 1999 the Company exercised their conversion for 345,000 shares of common stock of Westford. 9. Subsequent Events. On July 19, 1999, the Company entered into an Agreement and Plan of Merger with Westford, an Ohio corporation, and Bancinsurance Acquisitions, Inc., an Ohio corporation and a wholly-owned subsidiary of the Company ("Acquisitions"), whereby Westford will be merged with and into Acquisitions, with Acquisitions being the surviving entity as a wholly-owned subsidiary of the Company under the name Westford Group, Inc. (the "Merger"). If the Merger is consummated the Company will pay the Westford shareholders cash in the amount of $.70 per share for each share of Westford common stock, without par value. The total amount of the merger consideration payable by the Company is anticipated to be $958,094 (the "Merger Consideration"). The Company anticipates paying the Merger Consideration from existing cash reserves. 10 11 Item 2. Management's Discussion and Analysis of --------------------------------------- Financial Condition and Results of Operations --------------------------------------------- OVERVIEW Bancinsurance Corporation is a specialty property insurance holding company. The Company's principal sources of revenue are premiums paid by insureds for insurance policies issued by the Company's wholly-owned subsidiary, Ohio Indemnity Company ("Ohio Indemnity"). Premium volume principally is earned as written due to the nature of the monthly policies issued by the Company. The Company's principal costs are losses and loss adjustment expenses. The principal factor in determining the level of the Company's profit is the difference between these premiums earned and losses and loss adjustment expenses incurred. Loss and loss adjustment expense reserves are estimates of what an insurer expects to pay on behalf of claimants. The Company is required to maintain reserves for payment of estimated losses and loss adjustment expenses for both reported claims and incurred but not reported ("IBNR") claims. The ultimate liability incurred by the Company may be different from current reserve estimates. Loss and loss adjustment expense reserves for IBNR claims are estimated based on many variables including historical and statistical information, inflation, legal developments, economic conditions, general trends in claim severity and frequency and other factors that could affect the adequacy of loss reserves. The Company reviews case and IBNR reserves monthly and makes appropriate adjustments. During 1993, BCIS Services, Inc. ("BCIS Services") was incorporated as a wholly-owned subsidiary of the Company. BCIS Services provides workers' compensation professional administration and cost control services to employers who self-insure this obligation. BCIS Services derives its revenues principally from claims administration fees. During 1997, Custom Title Services, Inc. (formerly known as Title Research Corporation) ("Custom Title") was incorporated in Ohio as a wholly-owned subsidiary of the Company. Custom Title is a title lien search and mortgage service company and derives its revenues principally from title and appraisal fees. On August 25, 1999, Paul Boardway and Associates, Inc. ("Paul Boardway") was acquired as a wholly-owned subsidiary of the Company. Paul Boardway is a property/casualty insurance agency serving lending institutions and derives its revenues principally from commission fees. SUMMARY RESULTS The following table sets forth period to period changes in selected financial data:
------------------------------- Period to Period Increase Nine Months Ended September 30, ------------------------------- 1998-99 ------------------------------- Amount % Change ------------- ------------- Premiums written $ 6,014,295 40.9% Net premiums earned 5,457,977 39.2% Net investment income 152,945 14.0% Total revenue 5,800,969 32.1% Loss and loss adjustment expense, net of reinsurance recoveries 3,250,942 37.1% Operating expense 1,632,379 28.5% Interest expense (101,888) (45.9)% Operating income 1,019,536 30.4% Net income 676,083 27.9%
The combined ratio, which is the sum of the loss ratio and expense ratio, is the traditional measure of underwriting experience for insurance companies. The following table reflects the loss, expense and combined ratios of Ohio Indemnity on both a statutory and GAAP basis for the nine months ended September 30: 11 12
1999 1998 --------------------------- Statutory: Loss ratio 62.0% 63.0% Expense ratio 24.1% 22.5% ------ ------ Combined ratio 86.1% 85.5% ====== ====== GAAP: Loss ratio 62.0% 63.0% Expense ratio 23.1% 20.9% ------ ------ Combined ratio 85.1% 83.9% ====== ======
Investments of Ohio Indemnity's assets are restricted to certain investments permitted by Ohio insurance laws. The Company's overall investment policy is determined by the Company's Board of Directors and is reviewed periodically. The Company principally invests in investment-grade obligations of states, municipalities and political subdivisions because the majority of the interest income from such investments is tax-exempt and such investments have generally resulted in favorable net yields. The Company has the ability and intent to hold its held to maturity fixed income securities to maturity or put date, and as a result carries its held to maturity fixed income securities at amortized cost for GAAP purposes. As the Company's fixed income securities mature, there can be no assurance that the Company will be able to reinvest in securities with comparable yields. RESULTS OF OPERATIONS SEPTEMBER 30, 1999 AS COMPARED TO SEPTEMBER 30, 1998 Premiums Written; Net Premiums Earned. Premiums written for the nine months increased 40.9% from $14,703,804 at September 30, 1998 to $20,718,099 at September 30, 1999, and net premiums earned increased 39.2% from $13,917,183 at September 30, 1998 to $19,375,160 at September 30, 1999. Premiums written increased 58.7% from $4,025,837 during the three months ended September 30, 1998 to $6,388,893 during the three months ended September 30, 1999, while net premiums earned increased 51.5 % from $4,685,217 to $7,096,115 during the same period, respectively. Premiums increased due to a strong performance in the Company's expanding core product lines of business. Premiums written for Ultimate Loss Insurance increased 53.1% from $10,507,500 in the first nine months of 1998 to $16,087,673 in the first nine months of 1999. Net premiums earned from Ultimate Loss Insurance increased 49.9% from $10,521,409 in the first nine months of 1998 to $15,766,967 in the first nine months of 1999. Premiums written for Ultimate Loss Insurance increased 75.1% from $3,473,720 in the third quarter of 1998 to $6,084,067 in the third quarter of 1999. Net premiums earned for Ultimate Loss Insurance increased 74.8% from $3,371,687 in the third quarter of 1998 to $5,894,356 in the third quarter of 1999. The increase in premiums written and premiums earned was primarily attributable to five new major financial institution customers for Ultimate Loss Insurance added after the second quarter of 1998. In addition, a new creditor-placed mortgage protection and collateral protection program recorded in the aggregate $258,579 and $578,564 of premiums written and $295,009 and $431,058 of premiums earned during the nine months ended September 30, 1998 and 1999, respectively. Premiums written for the Bonded Service program increased 24.1% from $3,617,730 in the first nine months of 1998 to $4,491,284 in the first nine months of 1999, while net premiums earned from the Bonded Service program increased 21.1% from $2,890,348 in the first nine months of 1998 to $3,499,508 in the first nine months of 1999. The increases in net premiums written and net premiums earned on the Bonded Service program were primarily attributable to increases in employee enrollment among existing trust members resulting in higher service fees. Premiums written for the Bonded Service program decreased 11.9% from $241,481 in the third quarter of 1998 to $212,679 in the third quarter of 1999 due to fluctuations in the timing of billing issuances by the Company's third party administrator, while net premiums earned increased 19.5% from $949,155 in the third quarter of 1998 to $1,134,342 in the third quarter of 1999. Net Investment Income. Net investment income increased 14.0% from $1,090,424 in the first nine months of 1998 to $1,243,369 in the first nine months of 1999 and net investment income increased 25.6% from $345,776 in the third quarter of 1998 to $434,172 in the third quarter of 1999. Net realized gains on investments increased $113,126 from $49,968 in the first nine 12 13 months of 1998 to $163,094 in the first nine months of 1999 and increased $50,675 in the third quarter of 1998 compared to the third quarter of 1999 due to changes in investment mix resulting from the application of the Company's investment strategy in the current market environment. In 1999, the Company intends to seek growth in investment income by increasing the average size of the investment portfolio. As new funds become available, they will be invested in accordance with the Company's strategy of emphasizing after tax return, which predominantly includes municipal tax-free securities. The Company strives to maintain a high quality investment portfolio. Claims Administration Fees. Claims administration fees generated by BCIS Services, a consolidated subsidiary, accounted for $443,810 of the revenues of the first nine months of 1998 and $415,515 in the first nine months in 1999, and increased from $152,046 in the third quarter of 1998 to $154,292 in the third quarter of 1999. The decrease of 6.4% during the nine months ended September 30, 1999 compared to 1998 was primarily attributable to a decline in claims processing and servicing responsibilities during the first six months of 1999. The marginal increase in the third quarter of 1999 compared with 1998 reflects the addition of claims administration customers. Title and Appraisal Fees. Title and appraisal fees generated by Custom Title, a consolidated subsidiary, accounted for $1,458,696 of the revenues for the first nine months of 1998 versus $1,851,978 for the first nine months of 1999 and $488,991 for the three months ended September 30, 1998 versus $690,318 for the three months ended September 30, 1999. This increase of 27.0% and 41.2%, respectively, was primarily attributable to an increase in the loan-closing segment of the business. Management Fees. Management fees were $864,702 for the nine months ended September 30, 1999 and $285,504 for the three months ended September 30, 1999. Management fees were $1,130,185 for the nine months ended September 30, 1998 and $668,978 for the three months ended September 30, 1998. This decrease of 23.5% and 57.3%, respectively, was attributable to recognition of less favorable results from a closed year of operations of the Bonded Service program. The Company expects management fees to vary from year to year depending on claims experience in the Bonded Service program. Commission Fees. Net Commission fees generated by Paul Boardway, a consolidated subsidiary, accounted for $50,054 of the revenues for the three and nine months ended September 30, 1999. Paul Boardway was acquired by the Company during the third quarter of 1999. Losses and Loss Adjustment Expenses, Net of Reinsurance Recoveries. Losses and loss adjustment expenses totaled $8,768,324, or 63.0% of net premiums earned during the first nine months of 1998 versus $12,019,266, or 62.0% of net premiums earned during the first nine months of 1999. Losses and loss adjustment expenses totaled $2,825,170, or 60.3% of net premiums earned during the third quarter of 1998 versus $4,705,565, or 66.3% of net premiums earned during the third quarter of 1999. The decrease in losses and loss adjustment expenses during the nine months ended September 30, 1999 compared with 1998, as a percentage of net premiums earned, were reflective of continued favorable loss experience in the Company's core lines and favorable development on prior year reserves. The absolute increase in losses and loss adjustment expenses was attributable to initial claims from the Ultimate Loss Insurance business which increased 37.7% from $8,071,128 during the nine months ended September 30, 1998 to $11,116,223 during the nine months ended September 30, 1999 and increased 67.9% from $2,491,877 during the third quarter of 1998 compared with $4,182,728 the third quarter of 1999. Loss and loss adjustment expenses for Ultimate Loss Insurance business increased primarily due to the addition of financial institution customers. Losses and loss adjustment expenses for the Bonded Service program marginally decreased 1.3% from $217,978 in the first nine months of 1998 to $215,075 in the first nine months of 1999 and decreased 2.5% from $115,136 for the third quarter of 1998 compared with $112,436 during the third quarter of 1999 due to redundancy development on prior year reserves. Operating Expense. Operating expense consists of commission expense, other insurance operating expense, amortization of deferred policy acquisition costs and general and administrative expenses. Operating expense increased 28.5% from $5,724,294 for the first nine months of 1998 to $7,356,673 for the first nine months of 1999 and increased 7.5% from $2,360,652 for the third quarter of 1998 compared with $2,537,949 during the third quarter of 1999. Commission expense increased 78.6% from $1,642,507 in the first nine months of 1998 to $2,933,096 in the first nine months of 1999 and increased 60.4% from $657,526 to $1,054,455 in the third quarter, primarily due to both higher direct and contingent commissions associated with the increase in 13 14 premiums written in the Ultimate Loss Insurance and Bonded Service programs. Other insurance operating expenses increased 20.3% from $1,422,559 in the first nine months of 1998 to $1,711,709 in the first nine months of 1999 and increased 35.1% from $458,445 to $619,139 during the three months ended September 30, 1998 and 1999, respectively, primarily due to increases in allocable salaries and related benefits, consulting and appraisal fees, office supplies and travel expense. General and administrative expenses increased 2.0% from $2,659,228 in the first nine months of 1998 to $2,711,868 in the first nine months of 1999 and decreased 30.6% from $1,244,681 to 864,355 in the third quarter of 1998 versus 1999, respectively, primarily due to decreases in legal, consulting and appraisal fees. BCIS Services operating expenses increased 3.3% from $425,851 during the third quarter of 1998 to $439,865 during the third quarter of 1999. Custom Title's operating expenses increased 16.3% from $1,560,014 during the nine months of 1998 compared with $1,813,870 in the first nine months of 1999 and increased 25.4% from $542,681 during the third quarter of 1998 to $680,635 during the third quarter of 1999, principally due to increases in subcontract search and closing fees, bad debt expense and depreciation. Interest Expense. Interest expense decreased 45.9% from $221,795 in the first nine months of 1998 to $119,907 in the first nine months of 1999 and decreased 42.6% from $64,827 for the three months ended September 30, 1998 versus $37,210 for the three months ended September 30, 1999 due to lower borrowing levels on the Company's revolving credit line. Federal Income Taxes. The difference between federal income taxes, $934,148 in the first nine months of 1998 to $1,277,601 in the first nine months of 1999 and $310,083 to $415,317 in the third quarter, respectively, resulted from higher pre-tax income and lower permanent tax differences resulting in a higher effective tax rate. Statutory Combined Ratios. The change in the statutory combined ratio from 85.5% at September 30, 1998 to 86.1% at September 30, 1999 was an anticipated increase in the loss ratio due to management's continuing emphasis on larger accounts in the Ultimate Loss Insurance program. DISCONTINUED PRODUCTS In November 1998, one of the Company's significant Ultimate Loss Insurance program customers closed their auto finance division as part of an overall strategy to focus on more profitable areas of lending. This customer represented 26.7% and 19.8% of the Company's premiums written and 28.2% and 17.0% of the Company's premiums earned during the nine months ended September 30, 1998 and three months ended September 30, 1998, respectively. LIQUIDITY AND CAPITAL RESOURCES The Company is an insurance holding company whose principal asset is the stock of Ohio Indemnity. The Company is, and will continue to be, dependent on dividends from the Ohio Indemnity to meet its liquidity requirements, including debt service obligations. The Company has a $10 million credit facility to fund working capital requirements. Based on statutory limitations, the maximum amount of dividends that the Company would be able to receive in 1999 from Ohio Indemnity, absent regulatory consent, is $3,718,691. Ohio Indemnity derives its funds principally from net premiums written, reinsurance recoveries, investment income and contributions of capital from the Company. The principal use of these funds is for payment of losses and loss adjustment expenses, commissions, operating expenses and income taxes. Net cash provided by operating activities equaled $4,478,258 and $2,703,590 for the nine months ended September 30, 1999 and 1998, respectively. Net cash provided by financing activities was $717,776 for the nine months ended September 30, 1999. Net cash used in investing activities of the Company was $6,350,333 and $379,524 for the nine months ended September 30, 1999 and 1998, respectively. BCIS Services derives its funds principally from claims administration fees, Custom Title from title and appraisal fees and Paul Boardway from commission fees which are sufficient to meet their respective operating obligations. Although it is impossible to estimate accurately the future cash flows from the operations of these business segments, management believes the Company's effective capital costs may increase. Management is actively exploring further avenues for preserving capital and improving liquidity. 14 15 The Company's balance sheet liquidity remains favorable as evidenced by invested assets that significantly exceed liabilities. The liquidity position has been enhanced by increased premiums, positive underwriting, favorable loss experience and investment income. The Company maintains a level of cash and liquid short-term investments, which it believes, will be adequate to meet anticipated payment obligations without being required to liquidate intermediate-term and long-term investments through the next twelve months. Due to the nature of the risks the Company insures, losses and loss adjustment expenses emanating from its policies are characterized by relatively short settlement periods and quick development of ultimate losses compared to claims emanating from other types of insurance products. Therefore, the Company believes that it can estimate its cash needs to meet its loss and expense payment obligations through the next twelve months. The Company's investments at September 30, 1999 consisted primary of investment-grade fixed income securities. Cash and short-term investments at June 30, 1999 amounted to $10,773,638 or 31.3% of total cash and invested assets. The fair values of the Company's held to maturity fixed income securities are subject to market fluctuations but are carried on the balance sheet at amortized cost because the Company has the ability and intent to hold these securities to their maturity or put date. Available for sale fixed income securities are reported at fair value with unrealized gain or losses, net of applicable deferred taxes, reflected in accumulated other comprehensive income. The Company earned net investment income of $1,243,369 and $1,090,424 for the nine months ended September 30, 1999 and 1998, respectively. Interest rate risk is the risk that interest rates will change and cause a decrease in the value of an insurer's investments. The Company mitigates this risk by attempting to match the maturity schedule of its assets with the expected payouts of its liabilities. To the extent that liabilities come due more quickly than assets mature, the Company would have to sell assets prior to maturity and recognize a gain or loss. The Company's total shareholders' equity increased $2,319,269 to $24,823,751 at September 30, 1999 from $22,504,482 at December 31, representing a 10.3% increase over the nine month period. Driven by profitable operating earnings, the increase in total shareholders' equity has strengthened the Company's capital position to support future business growth. All material capital commitments and financial obligations of the Company are reflected in the Company's financial statements, except the Company's risk on surety bonds and state mandated performance bonds, written in connection with the Bonded Service program. The financial statements include reserves for losses on such programs for any claims filed and for an estimate of incurred but not reported losses. Such loses were $330,375 and $396,000 at September 30, 1999 and December 31, 1998, respectively. Under applicable insurance statutes and regulations, Ohio Indemnity is required to maintain prescribed amounts of capital and surplus as well as statutory deposits with the appropriate insurance authorities. Ohio Indemnity is in compliance with all applicable statutory capital and surplus requirements. Ohio Indemnity's investments consist only of permitted investments under Ohio insurance laws. DISCLOSURE ABOUT MARKET RISK The following discussion about the Company's risk-management activities includes "forward-looking statements" that involve risk and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates, and other relevant market rate or price changes. Market risk is directly influenced by the volatility and liquidity in the markets in which the related underlying assets are traded. The Company's market risk sensitive instruments are entered into for purposes other than trading. The carrying value of the Company's investment portfolio as of September 30, 1999 was $30,972,807, 61.3% of which is invested in fixed maturity securities. The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed maturity securities as well as fixed-rate short-term investments. The Company's exposure to equity risk is not significant. The Company has no foreign exchange risk or direct commodity risk. 15 16 For fixed maturity securities, the short-term liquidity needs and the potential liquidity needs of the business are key factors in managing the portfolio. The portfolio duration relative to the liabilities' duration is primarily managed through cash market transactions. For additional information regarding the Company's objectives and strategies pertaining to the investment portfolio, see "Liquidity and Capital Resources" above. For the Company's investment portfolio, there were no significant changes in the Company's primary market risk exposures or in how these exposures are managed compared to the year ended December 31, 1998. The Company does not anticipate significant changes in the Company's primary market risk exposures or in how those exposures are managed in future reporting periods based upon what is known or expected to be in effect in future reporting periods. The fair values of loans to affiliates and notes payable would not be materially different as compared to their fair values at December 31, 1998 as interest rates have remained relatively consistent. FACTORS TO CONSIDER FORWARD LOOKING Going forward, management will consider underwriting, acquisition and investment opportunities which fit the Company's strategy of penetrating niche and short-tail risk markets. These decisions will be in areas where management feels they have an understanding of the underwriting and inherent risks. Management is intent on adding independent agents to expand its market presence. The Company will further concentrate on penetrating larger financial institutions for collateral protection insurance and expanding financial institution programs to include mortgage collateral insurance. Opportunities will be considered for underwriting additional non-profit organizations as they continue to consolidate into national trusts and seek to retain and transfer their unemployment claim exposure. One of the Company's significant Ultimate Loss Insurance program customers decided to close their auto finance division as part of an overall strategy to focus on more profitable areas of lending. Management expects the discontinuance of this policy will not have a material adverse effect on the Company's operating results. See "Discontinued Products." IMPACT OF THE YEAR 2000 ISSUE State of Readiness. The Year 2000 issue relates to the way computer systems and programs define calendar dates; they could fail or make miscalculations due to interpreting a date including "00" to mean 1900, not 2000. During fiscal 1997, the Company completed the installation and testing of its internal financial systems and believes that such systems are Year 2000 compliant. The Company utilizes the latest version of Year 2000 compliant Platinum SQL software for its internal financial system. The Company began work on the Year 2000 Compliance issue for all remaining internal software in fiscal 1997. The scope of the project included: ensuring the compliance of all applications, operating systems and hardware on network, PC platforms and addressing the compliance of key business partners. The most significant category of key business partners are financial institutions. Their critical functions include safeguarding and management of investment portfolios and processing of the Company's operating bank accounts. Other partner categories include insurance agencies, communication services, utilities, materials and supplies. Based on the importance of each relationship, the Company defined a strategy to determine compliance. All phases were completed during the third quarter of 1999. The Company has completed the assessment and strategy phases for applications, operating systems and hardware. All policyholder network systems are compliant. The Company has a MCSE (Microsoft Certified Systems Engineer) on staff to review the impact of its Year 2000 risks. Continuing evaluation by our MCSE in developing contingency plans are on going. 16 17 Costs to Address the Company's Year 2000 Issues. Since the inception of the project, the Company has incurred external costs of approximately $52,200. There was no material adverse impact on the Company's operations or financial condition as a result of projects being deferred due to resource constraints caused by the Year 2000 project. The Company's Contingency Plans. With respect to contingency plans for critical policyholder systems, the Company recognizes that there is no viable alternative if these systems are non-compliant. However, the Company completed all critical policyholder systems by the third quarter end of 1999. The Company will continue to reassess the need for formal contingency plans, based on progress of Year 2000 efforts by third parties. Risks of the Company's Year 2000 Issue. Although the Company's critical systems are considered Year 2000 compliant, there can be no assurance that failure to identify all susceptible systems and non-compliance by third parties whose systems and operations impact the Company, and other similar uncertainties might occur. A reasonable possible worst case scenario might include one or more of the Company's significant policyholder systems being non-compliant, but no loss of current data is anticipated. Such an event will not result in a material disruption to the Company's operations. If a third party system is not Year 2000 compliant, the Company could experience an interruption to manage its invested assets and its operating cash accounts. Should the worst case scenario occur, it could, depending on its duration, have a material impact on the Company's results of operations and financial position. TRENDS Management does not know of any trends, events or uncertainties that will have, or that are reasonably likely to have, a material adverse effect on the Company's liquidity, capital resources or results of operations. The Company's results of operations have varied from quarter to quarter principally because of fluctuations in underwriting results. The Company's experience indicates that more loans for automobile purchases are financed during summer months due to seasonal consumer buying habits. Title and appraisal fees are closely related to the level of real estate activity and the average price of real estate sales. The availability of funds to finance purchases directly affects real estate sales. Other factors include consumer confidence, economic conditions, supply and demand, mortgage interest rates and family income levels. Historically, the first quarter has had the least real estate activity, while the remaining quarters have been more active. Fluctuations in mortgage interest rates can cause shifts in real estate activity outside the normal seasonal pattern. FORWARD-LOOKING INFORMATION Statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" that indicate the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and shareholder values of the Company may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond the Company's ability to control or predict. Shareholders are cautioned not to put undue reliance on forward-looking statements. In addition, the Company does not have an intention or obligation to update forward-looking statements after the date hereof, even if new information, future events, or other circumstances have made them incorrect or misleading. For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. INFLATION Although the cumulative effects of inflation on premium growth cannot be fully determined, increases in the retail price of automobiles have generally resulted in increased amounts being financed which constitutes one of the bases for determining premiums on Ultimate Loss Insurance. Despite relatively low inflation during the first nine months of 1999, the Company has experienced no material adverse consequences with respect to its growth in premiums. 17 18 INSURANCE REGULATORY MATTERS On June 20, 1997, the Ohio Department of Insurance issued its triennial examination report on Ohio Indemnity as of December 31, 1996. The examiners reported that the financial statements set forth in the report reflected the financial condition of Ohio Indemnity. Management is not aware of any recommendations by regulatory authorities which would have, or are reasonably likely to have, a material effect on the Company's liquidity, capital resources or results of operations. The NAIC has developed a risk-based capital measurement formula to be applied to all property/casualty insurance companies. This formula calculates a minimum required statutory net worth, based on the underwriting, investment, credit, loss reserve and other business risks inherent in an individual company's operations. Under the current formula, any insurance company which does not meet threshold risk-based capital measurement standards could be forced to reduce the scope of its operations and ultimately could become subject to statutory receivership proceedings. Based on the Company's analysis, it appears that the Company's total adjusted capital is in excess of all required action levels and that no corrective action will be necessary. The Risk Based Capital provisions have been enacted into the Ohio Revised Code. RESERVES The amount of incurred losses and loss adjustment expenses is dependent upon a number of factors, including claims frequency, severity, the nature and types of losses incurred, and the number of policies written. These factors may fluctuate from year to year and do not necessarily bear any relationship to the amount of premiums written or earned. As claims are incurred, provisions are made for unpaid losses and loss adjustment expenses by accumulating case reserve estimates for claims reported prior to the close of the accounting period and by estimating IBNR claims based upon past experience modified for current trends. Notwithstanding the variability inherent in such estimates, management believes that the provisions made for unpaid losses and loss adjustment expenses are adequate to meet claims obligations of the Company. Such estimates are reviewed monthly by management and annually by an independent consulting actuary and, as adjustments thereto become necessary, such adjustments are reflected in the Company's results of operations. The Company's independent consulting actuary has opined that loss and loss adjustment expense reserve levels, as of December 31, 1998, were reasonable. Item 3. Quantitative and Qualitative Disclosures ---------------------------------------- About Market Risk ----------------- The information required by this item is included under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations - Disclosure About Market Risk". 18 19 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -------- Item 27 Financial Data Schedule (b) Reports on Form 8-K ------------------- A Form 8-K was filed by the Company as of July 19, 1999 -(Item 5 and 7). A Form 8-K was filed by the Company as of August 16, 1999 -(Item 5 and 7). 19 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BANCINSURANCE CORPORATION ------------------------- (Company) Date: November 4, 1999 By: /s/ Si Sokol ------------------ ----------------------------------- Si Sokol Chairman (Principal Executive Officer) Date: November 4, 1999 By: /s/ Sally Cress ------------------ -------------------------------------------- Sally Cress Treasurer and Secretary (Principal Financial and Accounting Officer) 20 EX-27 2 EXHIBIT 27
7 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 14,619,468 4,626,951 4,660,619 4,380,619 0 0 30,972,807 3,427,869 13,283 368,685 42,636,635 5,446,959 1,984,703 0 0 5,219,510 0 0 1,794,141 23,029,610 42,636,635 19,375,160 1,080,275 163,094 3,253,634 12,019,266 7,356,673 119,907 4,376,317 1,277,601 3,098,716 0 0 0 3,098,716 .50 .50 3,175,000 13,750,000 (1,731,000) 8,299,000 1,450,000 5,445,000 0
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