-----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, N3ixUihdOyUFsVfo9BHmEda88TG5LT7eGFIwjv0xbXIpvvBCtF7XozYeR9O9PY1e zQXTqvJ7O7LKD/ibQQA+VQ== 0000950144-95-003119.txt : 19951119 0000950144-95-003119.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950144-95-003119 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BANKERS INSURANCE GROUP INC CENTRAL INDEX KEY: 0000350571 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 591985922 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09633 FILM NUMBER: 95589960 BUSINESS ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 BUSINESS PHONE: 3052532244 MAIL ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 10-Q 1 AMERICAN BANKERS INSURANCE GROUP 10-Q 9-30-95 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD 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 ------- --------- AMERICAN BANKERS INSURANCE GROUP, INC. 11222 QUAIL ROOST DRIVE MIAMI, FLORIDA 33157 (305) 253-2244 Commission File Number: 0-9633 State of Incorporation: Florida I.R.S. Employer Identification Number: 59-1985922 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 report), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Common Stock - Par Value $1.00 20,198,399 Shares Outstanding on October 25, 1995 2 Form 10-Q Company or group of companies for which report is filed: AMERICAN BANKERS INSURANCE GROUP, INC. This quarterly report, filed pursuant to Rule 13A-13 of the General Rules and Regulations under the Securities Exchange Act of 1934, consists of the following information as specified in Form 10-Q. Part I - Financial Information Item 1 - Financial Statements 1. Consolidated Balance Sheets, September 30, 1995 and December 31, 1994. 2. Consolidated Statements of Income for the three months ended September 30, 1995 and 1994. 3. Consolidated Statements of Income for the nine months ended September 30, 1995 and 1994. 4. Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1994. 5. Notes to Consolidated Financial Statements. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. Part II - Other Information Item 1 - Legal Proceedings Item 4 - Submission of matters to a vote of security holders Item 6 - Exhibits and Reports a. Exhibits. The following exhibits are included herein: (11) Statement re: computation of earnings per share. (27) Financial Data Schedule (for SEC use only). b. Report on Form 8-K. The Company filed a Form 8-K dated October 24, 1995. 2 3 Form 10-Q SIGNATURE Pursuant to the requirements 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. AMERICAN BANKERS INSURANCE GROUP, INC. November 10, 1995 Date /s/ Arthur W. Heggen -------------------------- Arthur W. Heggen Vice President and Treasurer 3 4 PART I FINANCIAL INFORMATION 4 5 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 (IN THOUSANDS)
1995 1994 -------- -------- Assets (unaudited) - ------ Investments Held-to-Maturity securities, at amortized cost $ 621,831 $ 555,576 Available-for-Sale securities, at approximate market value 691,723 488,266 Equity securities, at approximate market value 102,003 65,432 Mortgage loans on real estate 12,341 13,787 Policy loans 7,569 6,841 Short-term and other investments 198,678 134,968 ------------ ------------- Total investments 1,634,145 1,264,870 Cash 16,169 89,536 Accounts receivable, net of allowance for doubtful accounts of $6,558 in 1995 and $5,861 in 1994 125,974 105,556 Reinsurance receivable 145,953 130,938 Accrued investment income 19,723 16,062 Deferred policy acquisition costs 299,590 229,581 Prepaid reinsurance premiums 448,667 396,796 Other assets 187,687 199,160 ------------ ------------- Total assets $ 2,877,908 $ 2,432,499 ============ ============= Liabilities, Common Stock and - ----------------------------- Other Stockholders' Equity -------------------------- Policy liabilities $ 270,928 $ 266,221 Unearned premiums 1,110,018 903,279 Claim liabilities 388,110 333,113 ------------ ------------- 1,769,056 1,502,613 Other policyholders' funds 7,003 13,221 Notes payable 235,512 197,789 Deferred income taxes 21,994 - Accrued commissions and other expenses 129,772 98,819 Other liabilities 231,519 214,182 ------------ ------------- Total liabilities 2,394,856 2,026,624 ------------ ------------- Commitments and Contingencies (Note 4) Common Stock and Other Stockholders' Equity - ------------------------------------------- Common stock of $1 par value. Authorized 35,000 shares. Issued and outstanding: 1995-20,323 shares; 1994-20,244 shares 20,323 20,244 Additional paid-in capital 213,830 212,139 Net unrealized investment and foreign exchange losses (2,375) (38,554) Retained earnings 263,802 225,374 Less: Treasury stock, at cost - 136 shares in 1995 and 106 shares in 1994 (2,516) (1,623) Unamortized restricted stock (3,106) (3,205) Collateralization of loan to Leveraged Employee Stock Ownership Plan (6,906) (8,500) ------------ ------------- Total common stock and other stockholders' equity 483,052 405,875 ------------ ------------- Total liabilities, common stock and other stockholders' equity $ 2,877,908 $ 2,432,499 ============ =============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 5 6 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (IN THOUSANDS EXCEPT PER COMMON SHARE DATA) (UNAUDITED)
1995 1994 -------- -------- Gross collected premiums $ 605,033 $ 460,937 ============ ============= Premiums and other revenues: Net premiums earned $ 325,919 $ 278,756 Net investment income 25,877 20,848 Realized investment gains (losses) 495 (476) Other income 4,954 3,556 ------------ ------------- Total premiums and other revenues 357,245 302,684 ------------ ------------- Benefits and expenses: Net benefits, claims, losses and settlement expenses 119,280 103,670 Credit bond losses and expenses 7,240 5,640 Commissions 137,364 115,140 Operating expense 64,526 57,197 Interest expense 3,748 3,100 ------------ ------------- Total benefits and expenses 332,158 284,747 ------------ ------------- Income before taxes 25,087 17,937 ------------ ------------- Income tax expense: Current 2,778 3,128 Deferred 3,625 2,170 ------------ ------------- 6,403 5,298 ------------ ------------- Net Income $ 18,684 $ 12,639 ============ ============= PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA Primary: Net Income $ .90 $ .61 ============ ============ Weighted average number of shares outstanding 20,864 20,684 ============ ============ Fully diluted: Net Income $ .90 $ .61 ============ ============ Weighted average number of shares outstanding 20,887 20,684 ============ ============ Dividends per common share $ .19 $ .18 ============ ============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 6 7 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME FOR NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (IN THOUSANDS EXCEPT PER COMMON SHARE DATA) (UNAUDITED)
1995 1994 -------- -------- Gross collected premiums $ 1,657,190 $ 1,291,756 ============ ============= Premiums and other revenues: Net premiums earned $ 907,591 $ 818,554 Net investment income 72,415 54,615 Realized investment (losses) gains (707) 2,196 Other income 13,928 10,671 ------------ ------------- Total premiums and other revenues 993,227 886,036 ------------ ------------- Benefits and expenses: Net benefits, claims, losses and settlement expenses 335,234 328,266 Credit bond losses and expenses 10,198 6,989 Commissions 385,827 328,505 Operating expense 181,350 163,440 Interest expense 11,483 8,034 ------------ ------------- Total benefits and expenses 924,092 835,234 ------------ ------------- Income before taxes 69,135 50,802 ------------ ------------- Income tax expense: Current 13,243 12,783 Deferred 6,289 2,051 ------------ ------------- 19,532 14,834 ------------ ------------- Net Income $ 49,603 $ 35,968 PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA Primary: Net Income $ 2.39 $ 1.74 ============ ============= Weighted average number of shares outstanding 20,722 20,639 ============ ============= Fully diluted: Net Income $ 2.39 $ 1.74 ============ ============= Weighted average number of shares outstanding 20,821 20,639 ============ ============= Dividends per common share $ .56 $ .53 ============ =============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 7 8 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (IN THOUSANDS) (UNAUDITED)
1995 1994 ------------- -------------- OPERATING ACTIVITIES: Net income $ 49,603 $ 35,968 Adjustments to reconcile net income to net cash provided by operating activities: Change in policy liabilities, unearned premiums, claim liabilities, reinsurance receivable and prepaid reinsurance premiums 198,567 52,615 Change in other assets and other liabilities 22,820 35,194 (Increase) decrease in accounts receivable (20,418) 21,393 Increase in accrued investment income (3,661) (1,265) Increase (decrease) in accrued commission and expenses 30,953 (21,175) (Decrease) increase in policyholders' funds (6,218) 9,111 Increase in policy loans (728) (151) Amortization of deferred policy acquisition costs 309,290 252,480 Amortization of cost of insurance acquired 1,857 5,284 Policy acquisition costs deferred (379,299) (271,957) Provision for amortization and depreciation 12,077 8,420 Provision for deferred income taxes 6,289 2,051 Net loss (gain) on sale of investments 707 (2,196) Compensation on option plans shares exercised 983 934 Net cash flow from purchases and sales of trading securities (607) (1,516) ------------ -------------- Net cash provided by operating activities 222,215 125,190 ------------ -------------- INVESTING ACTIVITIES: Purchase of investments Held-to-maturity securities (130,379) (136,662) Available-for-sale securities (259,003) (389,676) Mortgage loans (648) (1) Proceeds from sale of investments Held-to-maturity securities - 158 Available-for-sale securities 57,554 215,956 Mortgage loans 2,103 2,507 Proceeds from maturities of investments Held-to-maturity securities 65,008 69,783 Available-for-sale securities 16,520 53,959 (Increase) decrease in short-term investments (67,385) 14,530 Transactions related to capital assets Capital expenditures (7,763) (4,995) Sales of capital assets 275 229 ------------ -------------- Net cash used in investing activities (323,718) (174,212) ------------ -------------- FINANCING ACTIVITIES: Proceeds from issuance of debt 93,000 96,723 Repayment of debt (53,683) (50,683) Dividends paid to shareholders (11,157) (10,681) Proceeds from issuance of common stock 869 921 Purchase of treasury stock (893) - ------------ -------------- Net cash provided by financing activities 28,136 36,280 ------------ -------------- Net decrease in cash (73,367) (12,742) Cash at beginning of period 89,536 39,826 ------------ -------------- Cash at end of period $ 16,169 $ 27,084 ============ ============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 9,207 $ 5,995 Income taxes $ 16,742 $ 17,549
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 8 9 AMERICAN BANKERS INSURANCE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) 1. Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended September 30, 1995 are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report to Shareholders and Form 10-K for the year ended December 31, 1994. Certain items have been reclassed to conform with 1995 presentation. 2. Translation of Foreign Currencies Unrealized foreign exchange losses, totaling $10,579,000 and $9,440,000 as of September 30, 1995 and December 31, 1994 respectively, are included in Other Stockholders' Equity under the caption "Net unrealized investment and foreign exchange losses." 3. Reinsurance The Company accounts for reinsurance contracts under Financial Accounting Standards Board's Statement 113. The Company recognizes the income on reinsurance contracts principally on a pro-rata basis over the life of the policies covered under the reinsurance agreements. Reinsurance Recoverables on Unpaid Losses are included as an asset in the Balance Sheet under the caption "Reinsurance Receivables". Ceded Unearned Premiums are included as an asset in the Balance Sheet under the caption "Prepaid Reinsurance Premiums". The effect of reinsurance on premiums earned is as follows for the nine months and three months ended September 30, 1995 and 1994:
(in thousands) Nine Months Ended September 30, 1995 September 30, 1994 ------------------ ------------------ Direct premiums $ 1,364,260 $ 1,122,732 Reinsurance assumed 122,032 109,646 Reinsurance ceded (578,701) (413,824) ------------- -------------- Net premiums earned $ 907,591 $ 818,554 ============= ==============
(in thousands) Three Months Ended September 30, 1995 September 30, 1994 ------------------ ------------------ Direct premiums $ 477,137 $ 377,789 Reinsurance assumed 48,362 48,549 Reinsurance ceded (199,580) (147,582) ------------- -------------- Net premiums earned $ 325,919 $ 278,756 ============= ==============
Reinsurance ceded incurred losses for the nine months ended September 30, 1995 and 1994 were $181,967,000 and $134,213,000 respectively. Reinsurance ceded incurred losses for the three months ended September 30, 1995 and 1994 were $48,232,000 and $48,515,000 respectively. 9 10 4. Commitments and Contingencies For a comprehensive description of the Company's litigation, see Item III of the Company's 1994 Form 10-K and Note 10, included in the Consolidated Financial Statements in the 1994 Annual Report to Shareholders. Credit Bond Litigation: On October 24, 1995, the Company completed a settlement with the Federal Deposit Insurance Corporation ("FDIC") of the only remaining lawsuit against the Company relating to American Bankers' relationship with a former client which filed for bankruptcy in 1987. This settlement included the entry of orders by the Court dismissing all claims between American Bankers and the FDIC with prejudice. The settlement, net of previously established reserves, resulted in an after tax charge of $3.8 million for the third quarter. Effective with this settlement, the Company has now concluded all litigation ever initiated against it in connection with its discontinued credit bond insurance business. Alabama Litigation: Certain of the Company's subsidiaries have been sued in a number of individual consumer lawsuits and class actions brought in the State of Alabama. As has been widely reported in the press, the insurance and finance industries have come under attack in Alabama by plaintiffs' lawyers who enjoy a favorable judicial climate. A number of credit insurers operating in the State of Alabama have been named in one or more of these suits. In suits relating to the Company, it or a subsidiary has generally been named as a co-defendant with one or several retailer or finance companies who have sold the Company's product to a consumer/plaintiff. Other insurers are named as co-defendants in many of the suits. Although these Alabama lawsuits generally involve relatively small amounts of actual or compensatory damages, they typically assert claims requesting substantial punitive awards. The Company denies any wrongdoing in any of these suits and believes that it has not engaged in any conduct that would warrant an award of punitive damages. The Company has been advised by legal counsel that it has meritorious defenses to all claims being asserted against it. While no one case is necessarily significant in terms of risk to the Company, the judicial climate in Alabama is such that the outcome of these cases is extremely unpredictable. Without admitting any wrongdoing, the Company has settled a number of these suits. The Company intends to continue defend itself vigorously against all such suits. 10 11 5. Segment Information Gross collected premiums, net premiums earned and income (loss) before federal income taxes are summarized as follows:
(in thousands) Nine Months Ended September 30, ------------- 1995 1994 -------- -------- GROSS COLLECTED PREMIUMS: Life $ 493,896 $ 84,816 Property and Casualty 1,163,294 906,940 ------------ ---------- Total $ 1,657,190 $1,291,756 ============ ========== NET PREMIUMS EARNED: Life $ 280,500 $ 254,783 Property and Casualty 627,091 563,771 ------------ ---------- Total $ 907,591 $ 818,554 ============ ========== INCOME (LOSS) BEFORE INCOME TAXES: Life $ 38,725 $ 22,505 Property and Casualty 53,376 44,588 Other (11,483) (8,257) ----------- ---------- 80,618 58,836 Interest Expense 11,483 8,034 ---------- ---------- Total Income $ 69,135 $ 50,802 ============ ==========
6. Accounting for Investments The Company accounts for its investments according to the Financial Accounting Standards Board's Statement 115 - Accounting for Certain Investments in Debt and Equity Securities. This Statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Those investments are to be classified in three categories and accounted for as follows: Held-to-Maturity - Securities for which the enterprise has the positive intent and ability to hold to maturity. These securities are carried at amortized cost. Trading Securities - Securities that are bought and held principally for the purpose of selling them in the near term. These securities are carried at market value with the unrealized holding gain or loss included in earnings. Available-for-Sale - Securities not classified as trading or held-to-maturity. These securities are carried at market value with the unrealized holding gain or loss reported as a separate component of equity, net of the income tax effect. 11 12 The detail of Cost and Statement Value for the Fixed Maturities and Equity Securities held at September 30, 1995 is as follows:
(in thousands) Amortized Statement Cost Value ----------- ---------- Fixed Maturities - ---------------- Held-to-Maturity Securities $ 621,831 $ 621,831 Available-for-Sale Securities 690,559 691,723 Trading Securities - - ------------ ----------- Total Fixed Maturities $ 1,312,390 $ 1,313,554 ============ =========== Net unrealized gain $ 1,164 =========== Market Cost Value ----------- ----------- Equity Securities - ----------------- Held-to-Maturity Securities $ - $ - Available-for-Sale Securities 90,110 102,003 Trading Securities - - ------------ ----------- Total Equity Securities $ 90,110 $ 102,003 ============ =========== Net unrealized gain $ 11,893 ===========
The net unrealized loss for "Available-for-Sale Securities" decreased by $35,963,000 (net of $17,919,000 in deferred income taxes) from December 31, 1994 to September 30, 1995. There were no unrealized gains and losses from transfers of Held-to-Maturity Securities. An analysis of the realized gains and losses of the Company for the nine months ended September 30, 1995 is as follows:
(in thousands) Gross realized gains from sales of Available-for-Sale Securities $ 4,512 Gross realized losses from sales of Available-for-Sale Securities (1,500) Gross realized losses from sales of Held-to-Maturity Securities (168) Gross realized gains from sales of Trading Securities 176 Gross realized losses from sales of Trading Securities ( 276) ---------- Net realized gain from investment activity 2,744 Net realized loss from other investment activity (3,451) ----------- Total realized loss $ (707) ===========
The Company uses the specific identification method to determine cost for computing the realized gains and losses. There were no transfers of securities from Available-for-Sale to Trading for the nine months ended September 30, 1995. 12 13 AMERICAN BANKERS INSURANCE GROUP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Gross collected premiums increased $144.1 million or 31% to $605.0 million for the three months ended September 30, 1995, from $460.9 million for the same period of 1994. The Company's largest product lines -- Credit Property and Credit Life, Accident and Health and Unemployment contributed 63% or $90.4 million of the increase in gross collected premium. Also contributing to the increase is the Company's extended service contract products that approximate $38.4 million or 6% of the gross collected premium for the three months. During the three months ended September 30, 1995, total premiums and other revenues were $357.2 million, an increase of $54.5 million over total premiums and other revenues of $302.7 million for the same period in 1994. The increase includes a $47.2 million increase in net premiums earned resulting generally from the premium growth experienced by the Company's existing clients. The increase also includes $5.0 million additional investment income during the third quarter of 1995 as compared to the same period of 1994 resulting from higher interest rates and an overall increase in invested assets. Operating results for the third quarter of 1995 include the settlement of the final portion of the credit bond litigation that began in 1987. The results for the quarter were negatively impacted by approximately $5.8 million pre-tax related to this settlement. Last year's third quarter results were also negatively impacted by a credit bond settlement approximating $4.5 million pre-tax. Excluding these settlements the benefits and claims ratio improved slightly to 37% for the three months ended September 30, 1995, compared to 38% for the same period of 1994. The effective tax rate decreased from 29.5% for the three months ended September 30, 1994, to 25.5% for the same period of 1995. This change resulted, in part, from increased earnings generated by certain of the Company's foreign subsidiaries that have a lower effective tax rate. Also contributing is an increased commitment to certain tax advantaged investments by the US operating companies. For the fourth quarter 1995, the Company expects to report net losses of approximately $2.0 million related to Hurricane Opal. Although the Company discontinued participation in reinsurance pools in or prior to 1981 it continues to evaluate and review the adequacy of reserves held for the losses experienced by the pools. The business is long tail in nature, and losses have exceeded both Company and industry expectations. Lack of historical development indicative of the ultimate claim cost and changing legal definition of what the ultimate liability will be creates significant uncertainty in the reserving process. At September 30, 1995, the Company held $20.0 million of reserves related to the reinsurance pools including $2.0 million added to strengthen overall reserves during 1995. The increase in interest expense from $3.1 million to $3.7 million reflects primarily the effects of higher debt levels ($235.5 million at September 30, 1995 versus $203.3 million at September 30, 1994). Financial Condition Total assets at September 30, 1995 and December 31, 1994 were $2.9 billion and $2.4 billion, respectively. Invested assets at the same dates were $1.6 billion and $1.3 billion, respectively. As of September 30, 1995, mortgage loans and investment in real estate pertaining to Florida properties were $9.1 million, which represents 67% of the total mortgage loans and real estate portfolio and .3% of total assets. Liabilities were $2.4 billion and $2.0 billion at September 30, 1995 and December 31, 1994, respectively, and were primarily comprised of insurance liabilities of $1.8 billion and $1.5 billion respectively. 13 14 Stockholders' Equity increased $77.1 million from $405.9 million at December 31, 1994, to $483.0 million at September 30, 1995. A reduction in the unrealized investment losses recorded by the Company and the contribution of net income after dividends of $38.4 million were the primary causes for the increase. The reduction in unrealized investment losses was a result of the impact of the interest rate environment on the market values of the Company's investment portfolio. Liquidity and Capital Resources On September 30, 1995, $1.6 billion or 57% of the Company's total assets were comprised of securities, short-term investments and cash. The securities were principally readily marketable and did not include any significant concentration in private placements. As more fully described in Note 6 in the Notes to Consolidated Financial Statements (pages 11 and 12), the Consolidated Balance Sheet at September 30, 1995 reflects accounting for investments under FASB Statement 115. The Company does not hold significant investments in equity securities; consequently, market changes in the equity securities markets do not significantly affect the investment portfolio. The Company expects to continue its policy of paying regular cash dividends; however, future dividends are dependent on the Company's future earnings, capital requirements and financial condition. In addition, the payment of dividends is subject to the restrictions described in Note 7 to the Consolidated Financial Statements in the 1994 Annual Report to Shareholders. In April 1994, the Company filed a shelf registration with the Securities and Exchange Commission for $200 million medium-term notes. The Company issued $50 million of these medium-term notes in April 1995. To date, $125 million of these notes have been issued. The Company has maintained a financing program for $140 million with a group of banks which features a revolving line of credit, commercial paper and/or bid loan facilities. The program is due to expire on March 1, 1996. At September 30, 1995, $86 million was outstanding under the program. The Company is currently in the process of arranging a new financing program with a group of banks to replace its existing program and expects it to be in place by the end of the year. 14 15 PART II OTHER INFORMATION 15 16 Item 1 - Legal Proceedings Commitments and Contingencies information which appears on page 10 elsewhere in this report is incorporated by reference in this item. Additional information regarding litigation can be found in the Company's 1994 Annual Report to Shareholders and on Form 10-K. Item 4 - Submission of Matters to a Vote of Security Holders None. 16 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 ITEM 6 (A) EXHIBITS EXHIBIT 11 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE (in thousands except per common share data)
Three Months Ended Nine Months Ended September 30 September 30 -------------------------------------------------------------- PRIMARY: 1995 1994 1995 1994 ---- ---- ---- ---- Weighted average shares outstanding 20,864 20,684 20,722 20,639 ======= ======= ======= ======= Net Income $18,684 $12,639 $49,603 $35,968 ======= ======= ======= ======= Net Income - per share $ .90 $ .61 $ 2.39 $ 1.74 ======= ======= ======= ======= FULLY DILUTED: Weighted average of shares outstanding 20,864 20,684 20,722 20,639 Assumed conversion of common stock equivalents 23 - 99 - ------- ------- ------- ------- Total 20,887 20,684 20,821 20,639 ======= ======= ======= ======= Net income $18,684 $12,639 $49,603 $35,968 Add convertible debenture interest, net of federal income 65 - 195 - tax ------- ------- ------- ------- Total $18,749 $12,639 $49,798 $35,968 ======= ======= ======= ======= Net income - per share $ .90 $ .61 $ 2.39 $ 1.74 ======= ======= ======= =======
ITEM 6 (b) REPORTS ON FORM 8-K A Form 8-K dated October 24, 1995 has been filed reporting the settlement of litigation with the Federal Deposit Insurance Corporation. This previously disclosed litigation arose in connection with the Company's discontinued credit bond business. See Note 4 -- page 10 of this report. 17 EX-27 3 FINANCIAL DATA SCHEDULE
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF AMERICAN BANKERS INSURANCE GROUP, INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 1 691,723 621,831 0 102,003 12,341 0 1,634,145 16,169 145,953 299,590 2,877,908 270,928 1,110,018 388,110 7,003 235,512 20,323 0 0 462,729 2,877,908 907,591 72,415 (707) 13,928 335,234 309,290 279,568 69,135 19,532 0 0 0 0 49,603 2.39 2.39 0 0 0 0 0 0 0
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