-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OQORKH9OcjiX+bYFBoaJ5IRn3LFkU/FPUozPcGjzZRNCQQibe960bd6zI20C4xOR QG77BAqp0or9L634MXRIqw== 0000074931-94-000005.txt : 19940321 0000074931-94-000005.hdr.sgml : 19940321 ACCESSION NUMBER: 0000074931-94-000005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940318 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORION CAPITAL CORP CENTRAL INDEX KEY: 0000074931 STANDARD INDUSTRIAL CLASSIFICATION: 6331 IRS NUMBER: 956069054 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-07801 FILM NUMBER: 94516728 BUSINESS ADDRESS: STREET 1: 30 ROCKFELLER PLZ CITY: NEW YORK STATE: NY ZIP: 10112 BUSINESS PHONE: 2123328080 MAIL ADDRESS: STREET 1: 30 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10112 FORMER COMPANY: FORMER CONFORMED NAME: EQUITY FUNDING CORP OF AMERICA DATE OF NAME CHANGE: 19760518 FORMER COMPANY: FORMER CONFORMED NAME: TONGOR CORP OF AMERICA DATE OF NAME CHANGE: 19670330 FORMER COMPANY: FORMER CONFORMED NAME: TONGOR CORP DATE OF NAME CHANGE: 19661024 10-K 1 ORION 1993 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended Commission file number December 31, 1993 1-7801 ---------------- ORION CAPITAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-6069054 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 30 Rockefeller Plaza, New York, NY 10112-0156 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 212-332-8080 ------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- --------------------- Common Stock, $1 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: 9 1/8% Senior Notes due September 1, 2002 (Title of Class) 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [x] The aggregate market value of the voting stock of the registrant held by non-affiliates was $443,005,343 as of March 11, 1994. As of March 11, 1994, 14,352,088 shares of Common Stock, $1.00 par value, of registrant were outstanding exclusive of shares held by registrant and its subsidiaries. DOCUMENTS INCORPORATED BY REFERENCE The information required by Part III is incorporated by reference from registrant's definitive proxy statement for its Annual Meeting to be held on June 1, 1994. Registrant intends to file the proxy material, which involves the election of directors, not later than 120 days after the close of its fiscal year. PART I ITEM 1. BUSINESS Orion Capital Corporation ("Orion") is a property and casualty insurance holding company incorporated under the laws of the State of Delaware in 1960. Although Orion's insurance subsidiaries and affiliates are authorized to underwrite and sell most types of property and casualty insurance, their businesses are concentrated in niche insurance markets, particularly specialty workers compensation, architect and engineer professional liability and nonstandard automobile insurance. (Orion and its wholly-owned subsidiaries are referred to collectively as the "Company.") The Company markets its workers compensation insurance through the EBI Companies and a newly created entity, Nations' Care, Inc. ("Nations' Care"). Nations' Care was created in late 1993 and will primarily focus on alternative workers compensation services and products. The Company sells its professional liability insurance through the DPIC Companies and participates in the nonstandard commercial and personal automobile insurance business through its slightly less than 50% interest in Guaranty National Corporation ("Guaranty National"). (Guaranty National and its wholly-owned subsidiaries are referred to collectively as the "Guaranty National Companies.") The Company writes assumed reinsurance through SecurityRe Companies and other specialty property and casualty insurance, principally through the Connecticut Specialty Insurance Group. The Company currently holds 6,143,414 shares of Guaranty National common stock. Between November 1988 and November 20, 1991, Guaranty National was a wholly-owned subsidiary of the Company. On November 20, 1991, the Company sold slightly more than half of its interest in Guaranty National. Guaranty National and its subsidiaries operate as an independent publicly-held company and, except for certain services contractually provided, are not managed by the Company. Three of the eight members of Guaranty National's board of directors are selected by Orion. See "Summary of Insurance Operations - Guaranty National Companies." In December 1993, the Company completed the acquisition of approximately 20% of the outstanding common stock (1,526,484 shares) of Intercargo Corporation ("Intercargo") for a total cash purchase price of $19,314,000. Intercargo is an insurance holding company whose subsidiaries specialize in international trade and transportation coverages. Intercargo operates as an independent company. One member of Intercargo's seven-member board of directors is selected by Orion. The Company's insurance subsidiaries are licensed to transact business throughout the United States and in several Canadian provinces. They obtain substantially all of their business from approximately 675 independent insurance agents and brokers. The Company has approximately 1,400 employees, substantially all of whom are employed in the Company's insurance operations. -2- During 1992 and the first part of 1993, Orion reconfigured and simplified its debt and capital structure by issuing $110,000,000 of 9 1/8% Notes due September 1, 2002, ("9 1/8% Senior Notes") and calling for the redemption of all three of its outstanding preferred stocks and both issues of its outstanding debentures. Most holders of its two Convertible Exchangeable Preferred Stocks opted to convert their shares of preferred stock into shares of Common Stock at or prior to the redemption date. The conversions resulted in the issuance of 3,982,000 shares of Common Stock. As a result of those actions, the only outstanding securities of Orion are its common stock and its 9 1/8% Senior Notes. The reconfiguration and simplification of its debt and capital structure enabled the Company to take advantage of generally lower interest rates, decrease the cost of its capital, and reduce the amount of debt and preferred stock sinking fund payments that were coming due in the next few years. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." The Company's principal executive offices are located at 30 Rockefeller Plaza, New York, New York 10112, and its telephone number is (212) 332-8080. The home offices of all the Company's insurance subsidiaries are located at 9 Farm Springs Drive, Farmington, Connecticut 06032. For segment reporting purposes, the operations of the Company are reported as four segments. The insurance operations of the Company are treated as three segments, Regional Operations, Reinsurance/Special Programs and the Company's interest in the Guaranty National Companies. Guaranty National's operations were reported on a consolidated basis from 1988 through November 20, 1991 and on the equity accounting basis since then. The miscellaneous activities of Orion, the parent holding company, and various incidental subsidiaries not involved in insurance-related activities are reported as a fourth segment under the heading "Other." Regional Operations is composed primarily of two divisions, the EBI Companies and Nations' Care. These operations underwrite and sell workers compensation insurance through independent agents and brokers. Nations' Care also offers workers compensation consulting and administrative services. Regional Operations' results include the declining costs associated with the run-off of the Company's commercial multiple peril insurance business, which was discontinued in 1988. Reinsurance/Special Programs includes the DPIC Companies, which markets professional liability insurance; SecurityRe Companies, which writes reinsurance; the Connecticut Specialty Insurance Group, which underwrites and sells specialty insurance programs through independent agents and general agents; and Intercargo, which specializes in international trade and transportation coverages. The Guaranty National Companies specialize in writing nonstandard commercial and personal automobile insurance, general liability insurance, surplus lines commercial property and casualty insurance and collateral protection insurance. The business of Orion's other subsidiaries, all of which are insubstantial, as well as the miscellaneous income and expenses (primarily interest, general and administrative expenses and other consolidating elimination entries) of Orion itself, are reported as a fourth segment. -3- Net earnings for 1993 amounted to $68,813,000 or $4.69 per primary common share (after preferred dividends) on 14,598,000 weighted average common shares outstanding as compared with net earnings of $42,872,000 or $3.35 per primary common share (after preferred dividends) in 1992 on 10,914,000 weighted average common shares outstanding. Earnings per share in 1993 include a benefit of $.81 from the cumulative effect of changes in accounting principles and 1992 earnings per share were reduced $.27 per share by an extraordinary loss from the early extinguishment of debt. Common stock and per common share data have been restated to reflect Orion's 5-for-4 stock splits paid on both December 7, 1992 and November 15, 1993. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." The following tables present condensed financial information showing revenues, pre-tax earnings (loss) and other financial data and ratios of the Company's four segments for each of the three years in the period ended December 31, 1993. Identifiable assets, by segment, are included in Note L to Consolidated Financial Statements, "Industry Segment Information." - 4 -
Year Ended December 31, -------------------------------- 1993 1992 1991 ---- ---- ---- (000s omitted) REVENUES: Regional Operations (1) ................. $304,286 $303,211 $311,607 Reinsurance/Special Programs (1)......... 414,152 344,352 319,635 Guaranty National Companies (2) ......... - - 205,167 Other ................................... 1,717 155 885 -------- -------- -------- $720,155 $647,718 $837,294 ======== ======== ======== EARNINGS (LOSS): Regional Operations (1) ................. $ 34,025 $ 4,227 $ (9,816) Reinsurance/Special Programs (1) ........ 44,032 50,384 50,500 Guaranty National Companies (2): Pre-tax earnings ...................... - - 22,477 Equity in net earnings of affiliate ... 9,509 9,994 1,207 -------- -------- -------- Total property and casualty operations. 87,566 64,605 64,368(1) Other ................................... (15,061) (17,891) (18,299) -------- -------- -------- 72,505 46,714 46,069(1) Federal income taxes .................... (15,517) (922) (1,401) Cumulative effect of adoption of new accounting principles ................. 11,825 - - Extraordinary loss, net of taxes ........ - (2,920) - -------- -------- -------- Net earnings .......................... $ 68,813 $ 42,872 $ 44,668(1) ======== ======== ======== SUMMARY OF INSURANCE OPERATIONS The following tables present certain summary operating data for the Company's three insurance segments: Year Ended December 31, --------------------------------- 1993 1992 1991 ---- ---- ---- (000s omitted) REGIONAL OPERATIONS (1): Revenues - Premiums earned ....................... $266,373 $268,145 $263,478 Net investment income ................. 33,760 33,182 32,014 Realized investment gains (losses) .... 4,153 2,077 (517) Gain on sale of common stock of Guaranty National ................... - - 14,692 Other income .......................... - (193) 1,940 -------- -------- -------- Total ............................... $304,286 $303,211 $311,607 ======== ======== ======== Earnings (loss) before federal income taxes ................................. $ 34,025 $ 4,227 $ (9,816) ======== ======== ======== __________________________ Footnotes on following page -5- Year Ended December 31, -------------------------------- 1993 1992 1991 ---- ---- ---- (000s omitted) REINSURANCE/SPECIAL PROGRAMS (1): Revenues - Premiums earned ....................... $351,031 $292,060 $256,619 Net investment income ................. 55,500 48,416 43,924 Realized investment gains (losses) .... 6,706 3,027 (1,161) Gain on sale of common stock of Guaranty National ................... - - 19,239 Other income .......................... 915 849 1,014 -------- -------- -------- Total ............................... $414,152 $344,352 $319,635 ======== ======== ======== Earnings before federal income taxes .... $ 44,032 $ 50,384 $ 50,500 ======== ======== ======== GUARANTY NATIONAL COMPANIES (2): Earnings before federal income taxes .... $ - $ - $ 22,477 ======== ======== ======== Equity in net earnings of affiliate ..... $ 9,509 $ 9,994 $ 1,207 ======== ======== ======== The following table sets forth, on a consolidated basis, certain insurance ratios for the Company (2): Year Ended December 31, -------------------------------- 1993 1992 1991 ---- ---- ---- Loss and loss adjustment expenses to premiums earned ....................... 74.4% 75.7% 76.8% Policy acquisition and other insurance expenses to premiums earned ........... 26.8 27.3 30.2 ----- ----- ----- Total before policyholders' dividends.. 101.2 103.0 107.0 Policyholders' dividends to premiums earned ................................ 2.0 2.4 2.4 ----- ----- ----- Total after policyholders' dividends .. 103.2% 105.4% 109.4% ===== ===== ===== - ----------------------- (1) 1991 includes a gain of $33,931,000 ($14,692,000 for Regional Operations and $19,239,000 for Reinsurance/Special Programs) from the sale of the Guaranty National shares and a cumulative loss provision of $25,000,000 ($12,100,000 for Regional Operations and $12,900,000 for Reinsurance/Special Programs). (See "Management's Discussion and Analysis of Financial Condition and Results of Operations"). (2) The operations of the Guaranty National Companies are included in revenues and expenses through November 20, 1991, the date that the Company sold 6,250,000 shares of Guaranty National's common stock in a public offering, reducing the Company's ownership of Guaranty National to approximately 49%. Subsequent to November 20, 1991, the Company's share of Guaranty National's after-tax earnings are included on an equity accounting basis. -6-
The Company's insurance subsidiaries include eight active wholly-owned insurance companies, as well as a wholly-owned reinsurance underwriting management company, service companies and an insurance brokerage firm. One or more of Orion's insurance subsidiaries is licensed and transacts business in each of the 50 states of the United States, the District of Columbia, Puerto Rico and several provinces of Canada. In 1993, approximately 13.1% of the direct premiums written by the insurance subsidiaries was generated in Florida, 11.4% in Pennsylvania and, in the aggregate, an additional 25.1% was generated in the states of California, Wisconsin and Texas. No other state accounts for more than 5% of the insurance premiums written by the Company. Growth in premiums written in Florida in 1993 is attributable to personal automobile insurance generally written with minimum statutory liability limits and professional liability insurance. The following table shows the geographical distribution of direct insurance premiums written by the Company in 1993, 1992 and 1991, including premiums of the Guaranty National Companies through November 20, 1991.
Geographical Distribution of Direct Premiums Written Year Ended December 31, -------------------------------------------------------------- State 1993 Pct. 1992 Pct. 1991 Pct. - ----- ---- ---- ---- ---- ---- ---- (000s omitted - except for percentages) Florida .......... $ 84,754 13.1% $ 49,008 8.0% $ 24,295 3.1% Pennsylvania ..... 74,066 11.4 80,392 13.1 73,878 9.3 California ....... 60,675 9.4 59,664 9.7 72,157 9.1 Wisconsin ........ 56,209 8.7 53,083 8.6 51,217 6.5 Texas ............ 45,050 7.0 46,684 7.6 81,127 10.2 All others ....... 326,672(1) 50.4 327,185 53.0 489,008 61.8 -------- ----- -------- ----- -------- ----- $647,426 100.0% $616,016 100.0% $791,682 100.0% ======== ===== ======== ===== ======== ===== (1) In 1993, no other single state or country accounts for more than 5% of total direct written premiums.
-7- For 1993, approximately 49.0% of the Company's net premiums written was derived from workers compensation insurance written in twelve selected states (including all states listed in the preceding table except Florida and California), approximately 22.9% related to liability insurance other than automobile, primarily professional liability insurance, and approximately 21.1% came from automobile insurance (not including premiums from Guaranty National Companies). No other line of business contributed in excess of 3% to 1993 premiums written. The following table shows premiums written for the Company, net of reinsurance, by major statutory lines of business.
Net Premiums Written Year Ended December 31, ------------------------------------------------------ 1993 Pct. 1992 Pct. 1991 Pct. ---- ---- ---- ---- ---- ---- (000s omitted - except for percentages) Workers compensation .. $311,150 49.0% $331,044 58.3% $331,647 45.2% Liability other than automobile .......... 145,493 22.9 123,973 21.8 163,224 22.2 Private passenger automobile .......... 72,286 11.4 36,560 6.4 94,479 12.9 Commercial automobile . 61,798 9.7 43,246 7.6 111,192 15.2 Surety ................ 11,420 1.8 10,085 1.8 3,671 0.5 Commercial multiple peril ............... 9,028 1.4 9,104 1.6 6,901 0.9 All others ............ 24,411 3.8 13,418 2.5 22,951 3.1 -------- ----- -------- ----- -------- ----- $635,586 100.0% $567,430 100.0% $734,065 100.0% ======== ===== ======== ===== ======== =====
See "Insurance Industry Characteristics - Loss Reserves" for a discussion of losses incurred in specific geographical regions and in specific lines of business. -8- REGIONAL OPERATIONS The Regional Operations segment is comprised primarily of two divisions, the EBI Companies and the newly created entity, Nations' Care. The EBI Companies provides traditional workers compensation insurance and Nations' Care will focus on providing alternative workers compensation services and products. From 1989 through 1993, the EBI Companies' net premiums written have accounted for almost all of the premium volume of the Regional Operations segment. The EBI Companies devote substantially all of their resources to underwriting and selling workers compensation insurance through independent agents and brokers. EBI believes it has a competitive edge stemming from its service oriented approach. It is among the 25 largest writers of workers compensation insurance in the United States based on net premiums written. For a variety of reasons, EBI has phased out of the workers compensation business in California, a process it began in 1990. The decrease in premium volume in California has been substantially offset by growth in other markets, such as Connecticut, Illinois, Indiana, Pennsylvania, Texas and Wisconsin. Regional Operations staffs its offices with underwriters, field production representatives, claims and loss control representatives, medical and rehabilitation experts and other technical and administrative personnel. The EBI Companies' specialized approach is founded upon a team concept under which loss control and claims management personnel have significant direct involvement in account selection and in underwriting each policy. Upon acceptance of each new account, an EBI team begins to work with the insured and its employees to identify the factors that influence their insurance costs. During the policy term, the EBI team continues to provide services designed to reduce the frequency and severity of injuries. Because of its desire to influence and impact the workplace environment in order to reduce losses, EBI concentrates its efforts on single-location, fixed-plant insureds, such as small to medium-sized manufacturers and selected service businesses. Regional Operations' new division, Nations' Care, will capitalize on the Company's expertise acquired from its service oriented and team approach to traditional workers compensation. It will apply these skills in writing workers compensation for large accounts, accounts with large deductibles and other insurance products. It will also offer consulting and administrative services to self-insured workers compensation programs. Nations' Care will emphasize its cost effective loss control and claims management consulting services. Nations' Care currently operates in five states but expects ultimately to sell its services more broadly throughout the United States. A workers compensation policy obligates an insurance company to pay all compensation and other benefits for injured workers as may be required by applicable state workers compensation laws. Such benefits include, among other things, payments for medical and hospital expenses, and disability and vocational rehabilitation expenses. The insurance policies currently written by the EBI Companies provide workers compensation coverage with limits of liability set by the provisions of the state workers compensation laws. The benefits provided by these laws vary with the nature and severity of the injury or disease, as well as with the wage level, occupation and age of the employee. Employers liability coverage is also provided to employers who may be subject to claims for damages (not workers compensation benefits) because of an injury to a worker. -9- The amount of workers compensation premiums earned is directly dependent upon wage levels as well as the number of employees on the payroll of each policyholder and the job classification of those employees. Accordingly, premiums may be affected by the level of unemployment in general, and particularly by the level of unemployment experienced in those industries and geographic areas which represent a substantial portion of the Company's workers compensation insurance business. Premium rates are revised annually in most states in which the EBI Companies do business. Rates vary with different job classifications and among different employers. The EBI Companies use the rates and rating plans filed in the states where they do business. See "Industry Characteristics - Rates." Approximately 600 independent agents and brokers produced substantially all of the direct business written in 1993 by the EBI Companies. All of such agents and brokers receive commissions on the sale of insurance. No single independent agent or broker contributed more than 5% of this segment's net written premiums. The agents and brokers provide a broad range of insurance services to the public within their local areas, operate as independent contractors and generally represent other insurers as well. REINSURANCE/SPECIAL PROGRAMS The Company's Reinsurance/Special Programs segment is comprised of four components: DPIC Companies, SecurityRe Companies, Connecticut Specialty Insurance Group ("Connecticut Specialty") and the Company's 20% equity interest in Intercargo Corporation. All of such components concentrate in highly specialized lines of business in the property and casualty insurance field. DPIC Companies writes professional liability insurance for architects, engineers and accountants. DPIC Companies is the second largest underwriter of architect and engineer liability insurance in the United States. DPIC Companies also writes business in Canada. On October 1, 1993, DPIC Companies substantially reorganized its operations into a structure that more directly aligns its various business functions with particular types of customers. DPIC Companies' Architects and Engineers Underwriting unit was divided into three major divisions: Architects, Engineers and Special Risks. Each division is now staffed with underwriters focused on a more specific discipline thus engendering in them a greater familiarity with the issues facing their customers. DPIC Companies markets a program of professional liability insurance, similar to its architects and engineers products, for selected medium-sized certified public accounting firms in a program called A/PLS+. In 1994 DPIC Companies plans to introduce a similar program for preferred law firms in a program called L/PLS+. DPIC Companies' accountants, lawyers and Canadian programs comprise a fourth DPIC Companies division - the Emerging Businesses group. -10- Professional liability insurance covers liability arising out of alleged negligent performance of professional services. Underwriting and claims management require a high level of knowledge and expertise. In an attempt to limit risk exposure, DPIC Companies' specialized underwriters evaluate a great number of factors, including the experience of an applicant firm's professional personnel, the loss history of the firm and the employees to be covered, the type of work performed and the firm's utilization of suggested loss prevention measures. DPIC Companies uses a premium credit incentive program to encourage insureds to participate in its interactive liability education program and to use other loss prevention practices, such as use of "limitation of liability" clauses in their client contracts. The coverage offered by DPIC Companies is on a "claims-made and reported" policy form, a form which generally insures claims reported by the insured only during the policy term. DPIC Companies generally uses a policy form under which defense costs, primarily legal fees, are limited by their inclusion within the insured's stated policy limits. This policy form has had a favorable impact in controlling legal costs. DPIC Companies' specialized claims staff, located in eight offices in the United States and Canada, stress early intervention in disputes to avoid litigation whenever possible. DPIC Companies has been a pioneer in using alternative dispute resolution methods to mediate and promptly resolve disputes. DPIC Companies' "Mediation Works" program has been particularly successful. DPIC Companies offers incentives to insureds who agree to mediate disputes. Currently, nearly 28% of all open claims are in mediation or proceeding under some other form of alternative dispute resolution. Management believes that the use of such methods has had a beneficial impact on DPIC Companies' operating results. DPIC Companies markets its products through 54 specialized agencies, each highly knowledgeable about risk management for the professions served and about the DPIC Companies' loss reduction programs. Management believes that this "value added" approach is the reason why DPIC Companies has experienced a high customer retention rate over a long period of time and why it is less vulnerable to price competition. The agents participate in continuing education programs sponsored by DPIC Companies, and also actively participate in professional societies. Connecticut Specialty administers the operation of approximately 30 specialty programs written through general agencies. The specialized coverages include personal lines automobile insurance, workers compensation insurance, as well as various liability coverages for the trucking industry. Connecticut Specialty utilizes a profit sharing approach in writing its special programs whereby minimal profit is earned by the general agent until the program is profitable. Connecticut Specialty closely monitors its programs throughout their existence to ensure that profit potential is maximized. Pricing volatility for the business that Connecticut Specialty writes is generally low. The specialty nature of such business provides some insulation against the competitive pressures of the overall insurance market. Connecticut Specialty's ability to exit and enter markets rather quickly is an added competitive advantage. -11- The Reinsurance/Special Programs segment also participates in facultative and treaty reinsurance throughout the United States through SecurityRe Companies. SecurityRe Companies underwrites a diverse book of property and casualty business using reinsurance intermediaries. Treaty business is focused on small to medium-sized specialty or regional insurance companies. The Reinsurance/Special Programs segment also includes the Company's 20% interest in Intercargo. Intercargo is an insurance holding company whose subsidiaries specialize in international trade and transportation coverages. Its principal product lines are U.S. Customs bonds and marine cargo insurance sold to importers and exporters through customs brokers and other service firms engaged in the international movement of goods. Intercargo operates as an independent entity and a pro rata share of any profit or loss is reflected in the Company's consolidated financial statements, based on the Company's equity interest in Intercargo. The shares of Intercargo were purchased by the Company in September and December 1993. GUARANTY NATIONAL COMPANIES The Company participates in nonstandard commercial and personal automobile insurance and surplus lines insurance through its slightly less than 50% interest in Guaranty National. Based in Englewood, Colorado, the Guaranty National Companies underwrite and sell specialty property and casualty coverages which are not readily available in traditional insurance markets. Approximately 87% of the Guaranty National Companies' net written premiums during 1993 was derived from writing automobile (both private passenger and commercial) insurance. Other types of insurance products sold by Guaranty National Companies are general liability, commercial multi-peril, umbrella and property. Guaranty National Companies has historically focused its operations on the nonstandard markets. Nonstandard risks require specialized underwriting, claims management and other skills and experience. Guaranty National Companies' expertise and market position has allowed it to generate an underwriting profit in five of the last six years. Guaranty National Companies' personal lines unit principally writes nonstandard automobile insurance, insurance for drivers usually unacceptable to other insurers for, among other reasons, adverse driving or accident histories, ages or vehicle types. This business represents approximately 33% of the Guaranty National Companies' total gross written premiums and is sold through approximately 1,950 independent agents in 21 states, primarily in the Rocky Mountain and Pacific Northwest regions. Guaranty National Companies' largest unit, its commercial lines, wrote approximately 58% of Guaranty National Companies' gross written premiums in 1993. Approximately 73% of the commercial insurance was derived during 1993 from commercial automobile insurance, which covers policyholders such as sand and gravel haulers, used car dealers, automobile repair facilities, and local log hauling and trucking firms. Other commercial lines coverage includes property (for example, motor-truck cargo), general liability (for example, contractors and fuel convenience stores), low hazard professional liability (for example, teachers), standard umbrella insurance, standard commercial packages and other commercial coverages. -12- Guaranty National Companies' commercial lines business is written through three divisions. The general and specialty divisions write business through 68 general agents and various brokers throughout the United States except for New Jersey, Massachusetts and four other Northeastern states. Guaranty National Companies' third commercial lines division is the standard division, whose business is written by Colorado Casualty Insurance Company ("CCIC"). In October 1992, Guaranty National acquired CCIC, an insurance company which writes primarily small standard commercial packages in the Rocky Mountain Region. CCIC has been successful in serving a niche market of approximately 290 rural retail agents. The Guaranty National Companies' third operating unit, Intercon General Agency, Inc., is a wholly-owned managing general agency which obtains business from 28 general agents across the country. Intercon principally markets collateral protection insurance, primarily insuring automobiles pledged as security for bank loans for which the borrower has not maintained physical damage coverage as required by the bank. The collateral protection business represents 9% of Guaranty National Companies' gross written premiums for 1993. Nonstandard risks generally involve a potential for poor claims experience because of increased risk exposure. Premium levels for nonstandard risks are substantially higher than for preferred or standard risks. In personal lines, Guaranty National Companies' loss exposure is limited by the fact that its insureds typically purchase low liability limits, often a state's statutory minimum. The nonstandard insurance industry is also characterized by the insurer's ability to minimize its exposure to unprofitable business by effecting timely changes in premium rates and policy terms in response to changing loss and other experiences. In the states where the Guaranty National Companies writes the majority of its business, prior approval to effectuate rate changes is not required. In those states where prior approval is required, the Guaranty National Companies has generally gained approval in a timely manner. In November 1993, Guaranty National acquired Peak Property and Casualty Insurance Corporation ("PEAK"), a property and casualty insurance company "shell" licensed in 39 states. The PEAK acquisition increases the Guaranty National Companies' marketing and licensing flexibility to take advantage of opportunities to write more special program business and allows the Guaranty National Companies to expand its standard commercial business to states outside the Rocky Mountain region. On November 20, 1991, the Company sold 6,250,000 shares, or slightly more than half, of the common stock of Guaranty National in a public offering ("Guaranty Sale") and received a special one-time dividend in the form of notes. As a result of the Guaranty Sale, Guaranty National became a publicly- held company with its stock listed on the New York Stock Exchange. In February 1994 Guaranty National's Board of Directors approved a stock repurchase program. The Company has agreed to sell, and Guaranty National to buy, a portion of Guaranty National's common stock to the extent necessary for the Company to maintain its ownership interest in Guaranty National at approximately its present level of slightly under 50%. -13- In conjunction with the Guaranty Sale, Guaranty National and its subsidiaries entered into a series of agreements to formalize their continuing business relationships with Orion and the Company's insurance subsidiaries. Among the more significant of these agreements is a shareholders agreement pursuant to which the Company has the right to designate three members of Guaranty National's board, including the Chairman of the Board, for so long as the Company beneficially owns 30% or more of Guaranty National. Under this agreement, the Company also has a right until 1997 to require Guaranty National to register under the Securities Act of 1933 all or part of the 6,143,414 shares of common stock it continues to hold. In addition, the Company's insurance subsidiaries and the Guaranty National Companies also entered into certain reinsurance agreements and a trade name agreement. Orion and Guaranty National have signed an investment management agreement pursuant to which the Guaranty National Companies' investment portfolio (except for a portion of the equity securities portfolio which is managed by an unaffiliated portfolio manager) is managed by Orion's investment managers (under the direction and supervision of Guaranty National) for a fee of $550,000 per year for 1993 and 1994. After September 30, 1994, the investment management agreement continues for annual periods, unless terminated by either party upon 90 days prior written notice. -14- INSURANCE INDUSTRY CHARACTERISTICS Loss Reserves - ------------- The Company establishes reserve liabilities for reported losses, incurred but not reported ("IBNR") losses, and claim settlement and administration expenses. Reserves for reported losses and loss adjustment expenses are estimates of the ultimate costs of claims incurred but not settled. IBNR loss reserves are estimates for both unreported claims and additional development of previously reported claims. Such reserves are primarily based on the circumstances surrounding each claim, the Company's historical experience with losses arising from claims not yet reported, the particular experience associated with the line of business and type of risk involved, and changes in costs. Changes in costs relate to costs for property, repairs to property, medical care, litigation and other legal costs, and vocational rehabilitation. The Company regularly monitors the factors affecting its reserves to better control claim costs, which also provides a base of information to reevaluate reserve estimates with regard to the amount and timing of claim reporting. The reserve estimation process is regularly reviewed and adjusted to consider all pertinent information as it becomes available as to the ultimate net cost of losses and claims incurred. Such reevaluation is a normal, recurring activity that is inherent in the process of loss reserves estimation. Management revises its reserve estimates as appropriate and believes that the loss and loss adjustment expense reserves of the Company's insurance subsidiaries make reasonable and sufficient provision for the ultimate net cost of all losses and claims incurred. However, no assurances can be given that reserve development will not occur in the future. Accident Year Loss and Loss Adjustment Expense Analysis - ------------------------------------------------------- Accident year is a period of exposure that is used to accumulate loss and loss adjustment experience by the year in which an incident giving rise to a claim occurs. Accident year information is used for loss reserving and in establishing premium rates. Accident year loss experience is updated in subsequent calendar years until all losses and loss adjustment expenses related to that given accident year have been settled. Accident year loss ratio relates losses associated with incidents giving rise to claims occurring within a given calendar year to premiums earned during the same calendar year. Presented below is a loss reserve development table for the five years ended December 31, 1993 prepared in accident year format. In this accident year analysis, reserves related to insurance subsidiaries acquired in 1984 and 1988 are included from the dates of acquisition. Redundancies or deficiencies related to the reserves of these subsidiaries are included in years subsequent to their acquisition. For each accident year, the following table presents premiums earned, and the provision for loss and loss adjustment expenses as a percentage of premiums earned (the "loss ratios") as established in the initial accident year and cumulative as of December 31, 1993. -15-
Loss and Loss Adjustment Accident Premiums Expense Development ------------------------------- Year Earned Initial Cumulative - -------- -------- ------- ---------- (000s omitted) 1989 $718,554 67.5% 69.0% 1990 687,976 67.4 69.5 1991 701,386 67.7 67.4 1992 560,205 71.0 71.7 1993 617,404 70.4 - The table set forth below indicates premiums earned, the loss ratio, the ratio of policy acquisition costs and other insurance expenses to premiums earned (the "expense ratio"), the ratio of policyholders' dividends to premiums earned (the "policyholders' dividend ratio") and the total of the ratios (the "combined ratio") at December 31, 1993. Accident Premiums Loss Expense Policyholders' Combined Year Earned Ratio Ratio Dividend Ratio Ratio - -------- -------- ----- ------- -------------- -------- (000s omitted) 1989 $718,554 69.0% 28.1% 2.5% 99.6% 1990 687,976 69.5 28.7 2.9 101.1 1991 701,386 67.4 30.2 2.4 100.0 1992 560,205 71.7 27.3 2.4 101.4 1993 617,404 70.4 26.8 2.0 99.2 Calendar Year Loss Reserve Analysis - ----------------------------------- An analysis of the Company's calendar year loss and loss adjustment expense reserves (net of reinsurance and excluding Guaranty National Companies for all years) is presented below: Year Ended December 31, ------------------------------------ 1993 1992 1991 -------- -------- -------- (000s omitted) Beginning of year .................. $746,298 $668,467 $595,455 -------- -------- -------- Provision: Current year ..................... 434,840 397,551 360,223 Prior years ...................... 24,292 26,481 61,645 -------- -------- -------- 459,132 424,032 421,868 -------- -------- -------- Payments: Current year ..................... 125,042 105,883 87,392 Prior years ...................... 249,583 240,318 261,464 -------- -------- -------- 374,625 346,201 348,856 -------- -------- -------- End of year ........................ $830,805 $746,298 $668,467 ======== ======== ======== -16-
Cumulative reserve development for the Company's wholly-owned insurance subsidiaries (excluding Guaranty National Companies for all years) as of December 31, 1993 for the calendar years 1983 through 1993 is shown in the table that follows: Year Ended December 31, 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 - ----------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- (000s omitted) Net liability for unpaid loss and loss adjustment expenses ............... $276,831 $284,480 $294,427 $359,623 $401,677 $520,304 $602,519 $595,455 $668,467 $ 746,298 $ 830,805 Paid (cumulative) as of: One year later ......... 135,148 197,895 226,776 211,102 178,100 236,657 281,224 261,464 240,318 249,583 - Two years later......... 220,681 317,705 364,206 320,000 318,883 403,147 438,250 408,624 378,524 - - Three years later ...... 272,506 396,482 436,665 409,019 414,616 488,397 526,235 493,218 - - - Four years later ....... 312,994 424,881 493,399 468,971 457,182 544,449 581,880 - - - - Five years later ....... 326,822 467,781 534,321 494,838 490,973 582,527 - - - - - Six years later ........ 359,498 494,273 550,743 518,397 515,478 - - - - - - Seven years later ...... 375,687 514,382 571,652 537,567 - - - - - - - Eight years later ...... 394,141 531,036 588,050 - - - - - - - - Nine years later ....... 407,506 547,286 - - - - - - - - - Ten years later ........ 422,812 - - - - - - - - - - Net liability reestimated as of: One year later ......... 275,716 354,216 416,208 434,056 469,137 573,632 647,585 657,100 694,948 770,590 - Two years later ........ 313,134 432,944 478,093 486,631 504,814 624,337 695,154 685,692 714,953 - - Three years later ...... 350,698 471,155 527,200 517,476 548,883 658,024 722,626 705,516 - - - Four years later ....... 361,138 500,835 574,073 557,124 568,114 687,818 741,789 - - - - Five years later ....... 379,156 533,435 605,513 577,977 597,103 705,475 - - - - - Six years later ........ 411,583 555,123 623,291 604,056 610,086 - - - - - - Seven years later ...... 425,702 575,438 645,114 611,108 - - - - - - - Eight years later ...... 445,550 590,215 652,011 - - - - - - - - Nine years later ....... 457,758 602,085 - - - - - - - - - Ten years later ........ 468,737 - - - - - - - - - - Net deficiency ........... (191,906)(317,605)(357,584)(251,485)(208,409)(185,171)(139,270)(110,061) (46,486) (24,292) - Gross liability .......... $1,081,396 $1,140,403 Reinsurance recoverable .. 335,098 309,598 ---------- ---------- Net liability ............ $ 746,298 $ 830,805 ========== ========== Gross re-estimated liability .............. $1,085,578 Re-estimated recoverable.. 314,988 ---------- Net re-estimated liability $ 770,590 ========== Gross deficiency ......... $ (4,182) ========== -17-
The preceding loss reserve development table indicates the aggregate year-end liability for loss and loss adjustment expenses net of reinsurance, the cumulative amounts paid attributable to those reserves through December 31, 1993, the re-estimate of the aggregate liability as of December 31 of each subsequent year and the cumulative development of prior years' reserves. Information is also provided on a gross basis for 1992 and 1993. Consistent with industry practice, certain claims for long-term disability workers compensation benefits are carried at discounted values. At December 31, 1993 and 1992, approximately $73,215,000 and $68,882,000, respectively, of long- term disability workers compensation loss reserves are included in the consolidated financial statements at net present value using a statutory interest rate of 3.5%. The Company's IBNR loss and loss adjustment expense reserves and other reserves for losses and loss adjustment expenses for which claim files have not been established, net of reinsurance and exclusive of Guaranty National Companies, were $336,446,000, $298,653,000 and $271,959,000 as of December 31, 1993, 1992 and 1991, respectively. The following table presents the differences between loss and loss adjustment expense reserves reported in the consolidated financial statements in accordance with generally accepted accounting principles ("GAAP"), and those reported in the consolidated annual statement filed with state insurance departments in accordance with statutory accounting practices ("SAP"):
December 31, ---------------------- 1993 1992 ---- ---- (000s omitted) Liability on SAP basis ...................... $ 850,418 $ 754,452 Estimated salvage and subrogation recoveries recorded on a cash basis for SAP and on an accrual basis for GAAP .... (15,164) (14,019) GAAP Reinsurance payable included in SAP liability in 1993 ....................... (11,244) - Foreign subsidiary reserves ............... 6,795 5,865 ---------- ---------- Liability on GAAP basis, net of reinsurance.. 830,805 746,298 Reinsurance on GAAP reserves ................ 309,598 335,098 ---------- ---------- Liability on GAAP basis ..................... $1,140,403 $1,081,396 ========== ==========
During 1993, the Company strengthened loss reserves and experienced development for prior years' business based upon the Company's ongoing actuarial analysis utilizing the most current information available. The 1993 provision for prior accident year losses by major line of business is as follows: -18- (000s omitted) Reinsurance, pools and associations ....... $ 7,719 Other liability ........................... 5,364 Automobile liability ...................... 5,314 Surety .................................... 3,017 Commercial multiple peril ................. 1,869 Other...................................... 1,009 ------- $24,292 ======= Adverse development relating to reinsurance, pools and associations includes the Company's assumed reinsurance business, in which loss and loss adjustment expense experience is indicative of the ceding companies' experience. The Company's voluntary participation in various pools and associations business is generally recorded as the information is reported to the Company. Adverse development relating to other liability includes the Company's professional liability program for architects and engineers and losses from the Company's discontinued general liability line of business. The development from automobile liability relates to the Company's truck and Florida non-standard automobile programs where reported losses in 1993 developed greater than anticipated. Losses in the surety line of business principally relates to a program that was discontinued in 1993. The majority of the adverse development for the other lines of business relate to strengthening reserves based on historical loss development patterns. In prior years, the commercial multiple peril line was responsible for a greater amount of the adverse development. Starting in 1983, the Company expanded its commercial multiple peril business and then withdrew from that line of business in 1988 due to greater than expected losses. In 1993, the commercial multiple peril line had significantly less development due to stronger reserving. The significantly decreased level of adverse development during 1992 and 1993 is consistent with the Company's expectations. Loss reserve estimates are based on forecasts of the ultimate settlement of claims and are subject to uncertainty with respect to future events. Loss reserve amounts are based on management's informed estimates and judgments, using data currently available. Reserve amounts and the underlying actuarial factors and assumptions are regularly analyzed and adjusted to reflect new information. The Company has experienced substantial development of losses from prior accident years, particularly accident years 1984 and 1985 which were the worst years in recent history for the Company and for the property/casualty insurance industry in general. The Company's adverse development primarily resulted from the terminated lines of business, pools and other programs, higher than anticipated inflationary pressures, unforeseen judicial decisions (including interpretations of policy coverages beyond what was originally anticipated) and other external factors exposing the Company to risks not known when the insurance policies were priced and issued. To reduce loss development, the Company realigned certain management responsibilities in its Regional Operations segment over the past several years, thereby streamlining operations. Key management positions were added in that segment to further strengthen loss control and prevention, and to focus more attention towards back-to-work programs for injured workers. These -19- factors tend to reduce loss costs and adverse development. For the design professionals liability line of business, the Company has increasingly used alternative dispute resolution techniques which includes the extensive use of mediation procedures to settle claims. These procedures often result in reduced litigation and other claim related expenses. The commercial multiple peril business that is being run off has a specifically designated group of claim personnel assigned who have been aggressively settling claims, resulting in an acceleration of payment patterns in more recent years. Estimates for IBNR claim reserves are based on actuarial analysis of historical loss experience and current trends. Although the reserve is deemed adequate to cover all probable claims, there is a reasonable possibility that the adverse development from prior accident years could continue into the future. Variability in claim emergence and settlement patterns, and other trends in loss experience, can result in future development patterns different than expected. The Company believes that the adverse development experienced in recent years relates to the timing of recurring claims activities that are inherent to the estimation of property/casualty reserves. Future variability cannot be accurately factored into the reserve estimations. In recent years, to limit future adverse loss development, the Company has reserved at higher initial levels as can be seen in the table on page 16, where initial accident year reserving percentages for the applicable calendar years have increased from 67.5%, 67.4% and 67.7% in 1989, 1990 and 1991, respectively, to 71.0% in 1992 and 70.4% in 1993. Management believes that the reserve strengthening and the higher level of initial reserving, together with increased stabilization in the Company's business, are expected to limit adverse loss development in the future. The Company analyzes loss reserves for its major lines of business on a regular basis. Several methods are used, including paid and incurred loss development, and incurred claim counts and average claim costs. These methods are subject to variability in reserve estimation for various reasons, including improved claims department operating procedures and accelerated claims settlement due to the use of alternate dispute resolution and expedited resolution of civil suits in litigation. Additionally, other factors that are analyzed and are considered in the determination of loss reserves include (i) claim emergence and settlement patterns and changes in these patterns from year to year,(ii) trends in the frequency and severity of paid and incurred losses, (iii) changes in policy limits and changes in reinsurance coverages, (iv) changes in the mix and classes of business, and (v) changes in claims handling procedures as determined by discussions with claims and operating staff and through claim audits. Current operations are greater focused on underwriting selection where the Company has specialized knowledge and can provide enhanced service to its customers. This concentration, and the specialized knowledge and growing experience in its selected lines of business arising from such concentration, have enabled the Company to implement improvements in its claims administration and underwriting procedures which have enhanced the Company's ability to analyze data and project reserve trends. -20- Investments - ------------ The Company derives a significant part of its income from its investments. Investments of the Company's insurance subsidiaries are made in compliance with applicable insurance laws and regulations of the respective states in which such companies are domiciled and other jurisdictions in which they conduct business. Neither Orion nor any of its non-insurance subsidiaries is constrained by investment restrictions set forth in state insurance laws. The Company maintains a diversified portfolio representing a broad spectrum of industries and types of securities. The Company has no significant investments in real estate, although it does own the DPIC Companies' home office building and has invested in several real estate limited partnerships valued at $11,891,000. Investments are managed to achieve superior total return, while maintaining a proper balance of safety, liquidity, maturity and marketability. Investments are made based on long-term economic value rather than short-term market conditions. Except for investments in Guaranty National and securities of the United States Government and its agencies, the Company did not have any other investments in any one issuer that exceeded $20,000,000. During 1993 and 1992 the Company has continued in the process of changing the composition of its investment portfolio toward more tax- advantaged securities. Historically, as a result of the Company's net operating tax loss carryforwards ("NOLs"), the Company invested primarily in fully taxable securities, since the income of such securities could be offset by the NOLs. Such fully taxable securities, in general, pay a higher pre-tax rate of return than tax advantaged securities. With the change in the Company's tax position, resulting from the full utilization of all of its NOLs for federal income tax purposes, and with the increased liquidity from the sale of Guaranty National shares, management began in 1991 a shift in the composition of the Company's investment portfolio toward the purchase of a greater percentage of tax-advantaged securities. The following table shows the composition of the investment portfolio of the Company as of December 31, 1993 and 1992, and the quality ratings for the Company's fixed maturity investments. The investments shown below are listed at their cost, market value and financial statement values (carrying or book values). Fixed maturity investments that the Company has both the positive intent and the ability to hold to maturity are recorded at amortized cost. Fixed maturity investments which may be sold in response to, among other things, changes in interest rates, prepayment risk, income tax strategies, or liquidity needs are recorded at market value, and changes in unrealized appreciation are reflected in stockholders' equity. Equity securities are stated at market value. Both the fixed maturities and equity investments consist primarily of readily marketable securities. - 21 -
December 31, 1993 Cost Market Value Carrying Value - ----------------- ------------------ ------------------ ------------------ (000s omitted - except for percentages) Fixed Maturities: AAA ............. $ 408,254 32.4% $ 427,448 31.9% $ 417,147 31.5% AA .............. 191,858 15.2 207,461 15.5 202,614 15.3 A ............... 101,172 8.0 105,456 7.9 103,772 7.9 BBB ............. 107,958 8.6 112,814 8.4 111,552 8.4 BB .............. 31,728 2.5 31,972 2.4 32,319 2.4 B and Below ..... 20,371 1.6 22,118 1.6 22,118 1.7 Not Rated ....... 40,777 3.3 43,216 3.2 43,216 3.3 ---------- ----- ---------- ----- ---------- ----- Sub-total ..... 902,118 71.6 950,485 70.9 932,738 70.5 Equity Securities.. 210,311 16.7 242,643 18.1 242,643 18.4 Other Long Term Investments ..... 50,682 4.0 50,682 3.8 50,682 3.8 Short Term Investments ..... 96,473 7.7 96,473 7.2 96,473 7.3 ---------- ----- ---------- ----- ---------- ----- $1,259,584 100.0% $1,340,283 100.0% $1,322,536 100.0% ========== ===== ========== ===== ========== ===== December 31, 1992 - ----------------- Fixed Maturities: AAA ............. $ 363,894 32.0% $ 379,283 32.1% $ 362,851 31.4% AA .............. 178,177 15.6 183,556 15.5 178,289 15.4 A ............... 97,679 8.6 102,223 8.6 99,874 8.6 BBB ............. 96,670 8.5 98,223 8.3 96,856 8.4 BB .............. 28,474 2.5 28,127 2.4 28,341 2.4 B and Below ..... 26,156 2.3 26,684 2.3 26,328 2.3 Not Rated ....... 34,487 3.0 34,252 2.9 34,487 3.0 ---------- ----- ---------- ----- ---------- ----- Sub-total ..... 825,537 72.5 852,348 72.1 827,026 71.5 Equity Securities.. 169,836 14.9 185,700 15.7 185,700 16.1 Other Long Term Investments ..... 36,419 3.2 36,419 3.1 36,419 3.1 Short Term Investments ..... 107,470 9.4 107,470 9.1 107,470 9.3 ---------- ----- ---------- ----- ---------- ----- $1,139,262 100.0% $1,181,937 100.0% $1,156,615 100.0% ========== ===== ========== ===== ========== ===== Year Ended December 31, ----------------------- 1993 1992 ---- ---- Pre-tax investment yield on average investments ..... 7.4% 7.4% === === -22-
Effective December 31, 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which establishes the "available- for-sale" category of investment securities and requires such securities to be recorded at market value, with unrealized gains and losses reported in a separate component of stockholders' equity. As a result of the adoption of this standard, the Company increased its investments recorded at market value on December 31, 1993 by $452,102,000, and its unrealized appreciation on investments, a component of stockholders' equity, by $20,720,000, net of deferred income taxes. The Company strives to enhance the average return of its portfolio by investing a small percentage of it in a diversified group of non-investment grade fixed maturity securities, or securities that are not rated. The risk of loss due to default is generally considered greater for non-investment grade securities than for investment grade securities because the former, among other things, are typically unsecured, often subordinated to other debts of the issuer and are often issued by highly leveraged companies. In the non- investment grade segment of the investment portfolio, the Company maintains a high degree of diversity, with an average investment per issuer of approximately $1,935,000 at December 31, 1993. Only four high yield investments, aggregating $23,422,000, were in excess of $5,000,000 as of December 31, 1993. The Company closely monitors the financial stability of issuers of securities that it owns. When conditions are deemed appropriate, the Company ceases to accrete discount, or accrue interest and dividends. In cases where the value of investments are deemed to be other than temporarily impaired, the Company recognizes losses. During 1993, provisions for such losses were $6,310,000 for equity securities and $2,147,000 for fixed maturity investments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Net Investment Income and Realized Investment Gains." Reinsurance - ------------ In the ordinary course of business, the Company's insurance subsidiaries enter into reinsurance contracts with other insurers which serve to limit such insurer's maximum loss from catastrophes, large risks or unusually hazardous risks. Ceding reinsurance reduces an insurer's operating leverage ratio. A large portion of the Company's reinsurance protection is provided by reinsurance contracts known as treaties. In other instances, reinsurance is obtained by negotiation for individual risks, or facultative reinsurance. The Company's insurance subsidiaries have certain excess-of-loss and catastrophe treaties with unaffiliated insurers or reinsurers which provide protection against a specified part or all of certain types of losses over stipulated dollar amounts arising from one or more occurrences. The amount of each risk retained by an insurer is subject to maximum limits which vary by -23- line of business and type of coverage. Retention limits are periodically revised as the capacity of the Company's insurance subsidiaries to retain risk varies and as reinsurance prices change. The Company is very selective as to its reinsurers, placing reinsurance with only those reinsurers considered to be in sound financial condition and having satisfactory underwriting ability. Many of the Company's reinsurance agreements are subject to annual renewal as to coverage, limits and price. The Company continually monitors the financial strength of its reinsurers. The Company's insurance subsidiaries, to their knowledge, have no material exposure to potential unrecognized losses due to reinsurers that are in known financial difficulties. The Company's insurance subsidiaries have reinsurance protection for workers compensation losses in excess of $1,500,000 up to $100,000,000. DPIC Companies have reinsurance for a portion of losses from architect and engineer liability in excess of $250,000 up to $5,000,000, the maximum policy limit written by the DPIC Companies. In 1990 certain of the Company's insurance subsidiaries entered into an aggregate excess-of-loss reinsurance contract for workers compensation and architect and engineer professional liability lines of business which provides excess coverage and limits future loss development. That reinsurance protection provides various layers of coverage up to a maximum aggregate limit of liability of $48,000,000. Certain commercial auto and general liability policies are reinsured by a 35% quota share with excess of loss protection from $500,000 to $1,000,000. The Company's reinsurance subsidiary maintains various reinsurance arrangements for its facultative and treaty exposures, including catastrophe protection above the $1,000,000 level. In addition to the foregoing, the Company's insurance subsidiaries also maintain other reinsurance arrangements in support of their specific business needs. In 1993 and 1992, the Company's insurance subsidiaries net premiums written to year-end statutory surplus were at the conservative levels of 1.4:1 and 1.5:1, respectively. Government Regulation - ---------------------- The Company's insurance subsidiaries are subject to regulation primarily by the insurance departments of the states of their incorporation, Connecticut and California. All insurance companies must file annual statements and other reports with state regulatory agencies and are subject to regular and special examinations by those agencies. A regular periodic examination of the Company's California and Connecticut pooled insurance subsidiaries, covering their operations and statutory financial statements through December 31, 1991, was satisfactorily completed in 1993 by the Insurance Departments of California and Connecticut. Each of the Company's insurance subsidiaries is also subject to regulation by other jurisdictions in which it sells insurance, including certain Canadian provinces. States regulate the insurance business through supervisory agencies which have broad administrative powers, including powers relating to, among other things, the standards of solvency which must be met and maintained; the licensing of insurers and their agents; restrictions on the amount of risk which may be insured under a single policy; the approval of premium rates; the form and content of the insurance policy and sales literature; the form and content of financial statements; reserve -24- requirements; and the nature of and limitations on permitted investments. In general, such regulation is for the protection of policyholders rather than shareholders. In some instances, particularly in connection with workers compensation insurance, various states routinely require deposits of assets for the protection of policyholders and their employee claimants in those states. As of December 31, 1993 and 1992, securities representing approximately 21% and 29%, respectively, of the book value of the Company's investment portfolio were on deposit with various state treasurers or custodians. Such deposits consist of securities of types which comply with the standards that each state has established. The Company is also subject to state laws regulating insurance holding company systems. Most states have enacted legislation and adopted administrative regulations affecting insurance holding companies and the acquisition of control of insur-ance companies, as well as transactions between insurance companies and their affiliates. The nature and extent of such legislation and regulations currently in effect vary from state to state. However, most states currently require administrative approval of the acquisition of 10% or more of the outstanding shares of an insurance company incorporated in the state or the acquisition of 10% or more of an insurance holding company whose insurance subsidiary is incorporated in the state. The acquisition of 10% of such shares (which would include securities convertible into voting securities) is deemed to be the acquisition of "control" for the purpose of most holding company statutes and requires not only the filing of detailed information concerning the acquiring parties and the plan of acquisition but also administrative approval prior to the acquisition. Material transactions between insurance companies and affiliated members of the holding company system are generally required to be "fair and reasonable" and in some cases are subject to administrative approval. All state jurisdictions in which the Company is authorized to transact business require participation in guaranty funds. Insurers authorized to transact business in those jurisdictions can be assessed by a state guaranty fund a percentage (usually from 1% to 2%) of direct premiums written in that jurisdiction each year to pay claims on behalf of insolvent insurers. The likelihood and amount of any future assessment cannot be estimated until after an insolvency has occurred. For the years ended December 31, 1993 and 1992 the Company's insurance subsidiaries were assessed approximately $407,000 and $54,000, respectively (net of estimated future recoveries) as a result of known insolvencies. Insurance companies are required by certain states in which they do business to participate in automobile insurance plans and workers compensation plans. These plans provide insurance on risks which are not written in the voluntary market. Participation in these plans has usually been unprofitable for the Company. A number of state legislatures and the United States Congress have for years been considering, or have now enacted, some type of legislative proposals which alter the rules for tort claims and increase the states' authority to regulate insurance companies. These initiatives have expanded, in some instances, the states' regulation over rates (See "Rates" below) and -25- also have increased data reporting requirements. In recent years the state insurance regulatory framework has come under federal scrutiny, and certain state legislatures have considered or enacted laws that alter, and in many cases increase, state authority to regulate insurance companies and insurance holding company systems. Further, the National Association of Insurance Commissioners ("NAIC") and state regulators are re-examining existing laws and regulations and issues relating to the solvency of insurers. The NAIC has decided to adopt risk based capital ("RBC") requirements for property and casualty insurers to test the solvency of an insurer to write specific lines of insurance. Applying the current RBC requirements to the Company's insurance operations at December 31, 1993 reveal that the capital of each of its insurance subsidiaries exceeds the RBC requirements. Although the federal government generally does not directly regulate the business of insurance, federal initiatives often have an impact on the business in a variety of ways. There are various current and proposed federal measures which may significantly affect the Company's insurance business, including, among other proposals, the revocation of the antitrust exemption provided by the McCarran-Ferguson Act. The Clinton administration's proposed reforms of the nation's health care system also might negatively affect the Company's workers compensation and automobile liability businesses. The economic and competitive effects of any proposals upon the Company would depend upon the final form such legislation might take. The Company is unable to predict what regulatory proposals may be adopted in the future, or the effect any such proposals might have on the Company's business if adopted. Limitations on Payments from Insurance Subsidiaries - ---------------------------------------------------- The principal sources of cash available to Orion are dividends and tax payments from its subsidiaries. The payment of dividends to Orion by its insurance subsidiaries is subject to state regulation. No state restricts dividend payments by Orion to its stockholders. The ability of the Company's insurance subsidiaries to declare dividends is governed primarily by the insurance laws of each subsidiary's state of incorporation. Generally, such laws currently provide that, unless prior approval is obtained, dividends of a property and casualty insurance company in any consecutive 12-month period shall not exceed the greater of its net income for the preceding calendar year or 10% of its policyholders' surplus as of the preceding December 31, determined on a statutory accounting basis. Dividends and distributions by the Company's insurance subsidiaries are also subject to a requirement that statutory policyholders' surplus be reasonable in relation to outstanding liabilities and adequate to meet the companies' financial needs following the declaration of any dividends or distributions. State insurance regulators have, however, broad discretionary authority with respect to approving the payment of dividends by insurance companies. As part of the process of accreditation by the NAIC, state insurance regulators have been recommending the adoption of new state statutory standards for the payment of dividends by insurance companies without prior approval. Some states have implemented more restrictive dividend standards. Under current regulations, the maximum dividends permitted at December 31, 1993 for the ensuing twelve months, without prior -26- approval, aggregated $37,373,000. Since it is difficult to predict future levels of statutory policyholders' surplus or earnings, the amount of dividends that could be paid in the future without prior approval cannot be determined at this time. All business written and expenses incurred by most of the Company's insurance subsidiaries are combined, and allocated back to each insurance company in accordance with a reinsurance pooling agreement among them. Effective December 31, 1992, the Company changed the pooling percentages among its insurance subsidiaries to 85% and 15% between the Connecticut and California insurance companies, respectively. Previously, the pooling percentages had been 50% for each group of companies. As a result of the change in pooling, on January 4, 1993 a directly owned California-domiciled subsidiary paid Orion an extraordinary dividend totalling $65,470,000, after receiving approval from the California Department. The proceeds from this dividend were simultaneously contributed by Orion to a directly owned Connecticut-domiciled subsidiary. Rates - ----- All of the Company's insurance subsidiaries are subject to regulation as to rates, availability and cancellation of insurance. Most states have insurance laws requiring that rate schedules and other information be filed with or made available to the state's regulatory authority, either directly or through a rating organization with which the insurer is affiliated. The regulatory authority may, in most states, disapprove a rate filing if it finds that the rates are inadequate, excessive or unfairly discriminatory. Rates, which are not necessarily uniform for all insurers, vary by class of business, hazard assumed and size of risk. Subject to regulatory requirements, the Company's management determines the prices charged for its policies based on a variety of factors including recent historical claims experience, inflation, competition, tax law and rate changes and anticipated changes in the legal environment, both judicial and legislative. Subject to the possible adoption of legislation which would require rate rollbacks in the Company's major lines of business, the Company's management believes that its rate outlook for its principal lines of business will remain stable during 1994. Some states have adopted open rating systems for workers compensation which permit insurers to set premium rates independently without the prior approval of the insurance commissioners. A number of other states permit insurers to deviate from standard rates for workers compensation insurance after receiving prior approval. In insuring professional liability risks the DPIC Companies are generally not limited to the standard rates of a rating organization, but set their own rates because of the unique nature of the risk being underwritten. In November 1988, California voters passed an initiative known as Proposition 103 (the "California Proposition") which amended the California Insurance Code to provide, among other things, that rates for automobile and many other insurance policies issued or renewed on or after November 8, 1988, be rolled back to the levels of November 8, 1987 and then reduced by 20%. -27- Workers compensation insurance and reinsurance are excluded from the California Proposition's rate rollback provisions. On January 8, 1991, the California Insurance Department issued rate regulation proposals regarding the California Proposition. On October 16, 1991, the California Insurance Commissioner issued notices of premium refunds to 14 insurers. In February 1993, the California State Court invalidated the regulations with respect to one insurance company that received notice of a premium refund. The decision is currently on appeal to the California Supreme Court. None of the Company's insurance subsidiaries were among the companies that received the refund notices. Although it is not possible to predict with any degree of certainty the ultimate outcome of such regulations or their impact on the Company's rates charged since November 8, 1988, management currently believes the effect of the regulations will not be material to the Company. Based on the foregoing and management's belief that the rates filed by the Company comply with applicable California law, no provision has been made in the Company's consolidated financial statements for denial or partial denial of the Company's rollback exemption applications or the partial or total disapproval of the Company's rates filed since November 8, 1989. In recent years, certain social, economic and political issues have led to an increased number of legislative and regulatory proposals and judicial decisions aimed at addressing the cost, benefits and availability of certain types of insurance. Initiatives attempting to freeze or roll back premium rates, similar to the California Proposition have been introduced in other states, as well as proposals to redefine or expand risk exposure, such as by increasing the amount and types of workers compensation benefits and by the expansion of the liability for employee illness caused by cumulative trauma, stress or previously unknown causes. While most of the new legislative proposals have failed to date to become law, the Company believes that these initiatives will continue. It is impossible to predict whether any such proposals will be adopted. However, depending on the circumstances, the Company may be able to mitigate the longer term effects on profitability through discontinuance of the affected business and redeployment into more attractive markets. Competition - ------------ The insurance industry is highly competitive. Of the nearly 3,900 property and casualty insurance companies in the United States, about 900 companies write most of the business but no single company or group has more than 10% of the market. The Company's insurance subsidiaries are in competition with numerous stock and mutual property and casualty insurance companies, as well as state run workers compensation insurance funds, many of which are substantially larger and have significantly greater resources than the Company. Competition may take the form of lower premiums, specialized products, more complete and complex product lines, greater pricing flexibility, superior service, different marketing methods or higher -28- policyholder dividend rates. Superior service and marketing methods are of particular importance in workers compensation. Competition might also come from service organizations which administer self-insured programs. The Company's insurance subsidiaries sell their insurance principally through independent agents, brokers and general agencies, who typically also represent one or more competing insurance companies. They are paid commissions based on premiums collected from insureds. Commission rates vary according to the type and amount of insurance sold. Some competitors in certain lines obtain their business at a lower direct cost through the use of salaried personnel rather than independent agents and brokers. Rating - ------ A.M. Best Company raised the Company's rating in September, 1993 to an "A (Excellent)" from a "A- (Excellent)." In general, A.M. Best Company's ratings are based on an analysis of the financial condition and operation of an insurance company as they relate to the industry. These ratings are not primarily designed for investors and do not constitute recommendations to buy, sell or hold any security. A.M. Best Company has upgraded the ratings of the Company three times in the last four years. -29- MISCELLANEOUS OPERATIONS The Company's fourth business segment consists primarily of the miscellaneous income and expense (principally interest and general and administrative expenses) of Orion itself. For financial reporting purposes, the Company applies federal income taxes and benefits, as if fully utilizable, to its segments. Any consolidating elimination entries are accounted for in this fourth segment. In late 1984 the Company purchased 26.3% of the common stock of Sentry Savings and Loan Association ("Sentry"), located in Stamford, Connecticut. Sentry operated as an independent entity and a pro rata share of any profit or loss was reflected in the Company's consolidated financial statements, based on the Company's equity interest in Sentry. On November 22, 1993, after obtaining all necessary state and federal regulatory approvals, Sentry's assets were acquired by the Frank and Joanne Warren Connecticut Stock Revocable Trust (the "Trust"). As a result of consummation of the sale of the assets of Sentry to the Trust, the Company is no longer a unitary savings and loan holding company under federal law and has been released from all obligations and restrictions under those laws. ITEM 2. PROPERTIES The Company's executive office is located at 30 Rockefeller Plaza, New York, New York and the home office of the insurance operations of the Company is located in Farmington, Connecticut. These office facilities consist of approximately 150,000 square feet, in the aggregate, and are leased at a total annual rental of $4,650,000. The DPIC Companies owns its office building in Monterey, California. The DPIC Companies occupy 39,900 square feet of the building and lease to others the remaining 12,200 square feet. The DPIC Companies purchased the building on January 26, 1990 for aproximately $11,950,000. In November 1990 the DPIC Companies mortgaged the leasehold interest in its office building to other subsidiaries of the Company and to Guaranty National Insurance Company for an aggregate of $9,000,000. The other insurance operations of the Company are conducted from leased premises in or adjacent to major urban centers throughout the United States and in Canada. These operations, in the aggregate, occupy approximately 303,000 square feet, excluding the home office building in Connecticut, at an annual rental of approximately $4,483,000. The Company believes that its current facilities are suitable and adequate for its present use and its presently anticipated requirements. -30- ITEM 3. LEGAL PROCEEDINGS The Company is routinely engaged in litigation incidental to its businesses; however, in the judgment of the Company's management, there are no significant legal proceedings pending against Orion or its wholly-owned subsidiaries which, net of reserves established therefor and giving effect to reinsurance, are likely to result in judgments for amounts that are material to the financial condition of Orion and its consolidated subsidiaries, taken as a whole. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. INFORMATION CONCERNING EXECUTIVE OFFICERS OF THE COMPANY The following is a summary of certain information regarding the executive officers of Orion. All officers of Orion and its subsidiaries serve at the pleasure of their respective Boards of Directors. Alan R. Gruber, Chairman of the Board and Chief Executive Officer of Orion since March 1976; Chairman of Orion Capital Companies, Inc. ("OC Companies"), which provides management services to the Orion Capital Companies, since October 1982; age 66. Robert B. Sanborn, Vice Chairman of Orion since March 1, 1994, and a Director since May 1987; President and Chief Operating Officer of Orion from May 1987 to February 28, 1994; Chairman of the American Insurance Association, a property and casualty insurance company trade group, from January 1993 to January 1994; President of OC Companies from May 1987 to February 28, 1994; age 65. Larry D. Hollen, President and Chief Operating Officer of Orion since March 1, 1994; Executive Vice President and Assistant Chief Operating Officer of Orion from December 1, 1992 to February 28, 1994; Senior Vice President of Orion from March 1990 to December 1992; a director of Orion since March 20, 1992; Vice President of Orion from 1988 to March 1990; President of the EBI Companies from January 1990 to May 31, 1993; President of the Eastern Division of the EBI Companies from July 1988 to December 1989; age 48. Peter B. Hawes, Senior Vice President and a Director of Orion since March 1988; President of the DPIC Companies since 1982; Senior Vice President of OC Companies since March 1987; age 58. Daniel L. Barry, Vice President and Controller of Orion since October 1987; Senior Vice President of OC Companies since January 1989; Controller of OC Companies since October 1986; Treasurer of OC Companies from October 1987 to December 1990; age 43. Raymond W. Jacobsen, Vice President of Orion since March 1990; President of the EBI Companies since June 1, 1993; Executive Vice President of the EBI Companies from December 1989 to May 31, 1993; Regional Vice President of the EBI Companies from July 1988 to December 1989; age 41. -31- Michael P. Maloney, Vice President, General Counsel and Secretary of Orion since August 1979; Senior Vice President of OC Companies since March 1987; age 49. William G. McGovern, Vice President and Chief Actuary of Orion since March 1990; Senior Vice President and Chief Actuary of OC Companies since October 1989; Manager in the Management Consulting Department of Peat Marwick Main & Co. from January 1988 to October 1989; age 41. Vincent T. Papa, Vice President and Treasurer of Orion since June 1985; Senior Vice President of OC Companies since March 1987 and Treasurer since December 1990; age 47. Raymond J. Schuyler, Vice President-Investments of Orion since June 1984; Senior Vice President of OC Companies since March 1986; age 58. -32- PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) Principal Market. The principal market on which Orion's Common Stock is traded is the New York Stock Exchange. (b) Stock Price and Dividend Information The table below presents the high and low market prices and dividend information for Orion's Common Stock for 1993 and 1992, adjusted to reflect the effect of the 5-for-4 stock splits paid on both December 7, 1992 and November 15, 1993. Cash Stock Prices Dividends High Low Declared ---- --- --------- 1993: Quarter Ended December 31........ $36.30 $28.625 $.18 Quarter Ended September 30....... 37.50 30.30 .18 Quarter Ended June 30............ 37.10 30.10 .16 Quarter Ended March 31........... 36.80 27.20 .16 ---- Total........................ $.68 ===== 1992: Quarter Ended December 31........ $28.70 $23.84 $.16 Quarter Ended September 30....... 25.76 21.92 .147 Quarter Ended June 30............ 22.72 19.68 .147 Quarter Ended March 31........... 21.92 18.56 .147 ----- Total........................ $.601 ===== Cash dividends have been paid on Orion's Common stock in every quarter since the fourth quarter of 1978, when dividends were first commenced. (c) Approximate Number of Holders of Common Stock The number of holders of record of Orion's Common Stock as of March 11, 1994 was 2,000. -33- ITEM 6. SELECTED FINANCIAL DATA The following table summarizes information with respect to the operations and financial condition of Orion and its subsidiaries. Common stock and per common share data have been restated to give effect to the 5-for-4 stock splits paid on both November 15, 1993 and December 7, 1992. All of the Company's $1.90 Preferred Stock, $2.125 Preferred Stock and Adjustable Rate Preferred Stock were converted into common stock or redeemed during 1992 and 1993. In November 1991, the Company sold 6,250,000 shares of Guaranty National Corporation in an initial public offering, reducing its level of ownership from 100% to approximately 49%. Guaranty National's financial statements have been consolidated with those of the Company through November 20, 1991. For the periods subsequent to November 20, 1991, the portion of Guaranty National's results attributable to the Company's ownership is included on an equity accounting basis. Information presented as of December 31, 1993, 1992 and 1991 excludes the accounts of Guaranty National. Assets and policy liabilities for 1989 through 1992 have been restated to reflect the adoption of SFAS No. 113, which requires reinsurance recoverables to be reported as assets rather than offsetting liabilities. The consolidated financial statements and related notes thereto are furnished under Item 8 of this report.
1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- (000s omitted-except for per share data) For the year ended December 31: Total revenues ................. $ 720,155 $ 647,718 $ 837,294 $ 783,879 $ 821,762 Gain on sale of common stock of Guaranty National ......... - - 33,931 - - After-tax investment gains (losses) ..................... 5,888 3,113 (1,804) (7,368) 872 Earnings before cumulative effect of change in accounting principles and extraordinary loss ......................... 56,988 45,792 44,668 25,461 30,346 Net earnings ................... 68,813 42,872 44,668 25,461 30,346 Earnings per common share before cumulative effect of change in accounting principles and extraordinary loss ........... 3.88 3.62 3.75 1.79 2.22 Net earnings per common share ........................ 4.69 3.35 3.75 1.79 2.22 Dividends declared - Adjustable rate preferred share ...................... 1.10 4.16 4.37 4.44 4.50 $1.90 preferred share ........ - 1.43 1.90 1.90 1.90 $2.125 preferred share ....... .12 2.125 2.125 2.125 2.125 Common share ................. .68 .60 .59 .58 .52 Weighted average number of common shares and equivalents outstanding .................. 14,598 10,914 9,964 10,091 10,171 As of December 31: Total cash and investments ..... $1,328,969 $1,169,379 $1,087,454 $1,145,887 $1,112,278 Total assets ................... 2,117,454 1,937,408 1,827,069 1,995,729 1,786,883 Total policy liabilities ....... 1,412,285 1,326,872 1,228,951 1,443,720 1,258,420 Notes payable and debentures ... 160,372 129,863 142,311 175,290 174,979 Adjustable rate preferred stock - 18,705 19,125 19,505 22,500 Stockholders' equity ........... 394,195 311,287 249,829 191,958 203,026 Common shares outstanding ...... 14,372 13,100 9,905 9,928 10,143 Book value per common share .... $ 27.43 $ 21.48 $ 19.00 $ 13.07 $ 13.88 -34-
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Orion Capital Corporation ("Orion") and its wholly-owned subsidiaries (collectively the "Company") operate principally in the property and casualty insurance business which is reported as three segments - Regional Operations, Reinsurance/Special Programs and Guaranty National Companies. Regional Operations markets workers compensation insurance through EBI Companies and Nation's Care, Inc. Reinsurance/Special Programs includes (i) DPIC Companies ("DPIC"), which markets the Company's professional liability insurance, (ii) Connecticut Specialty Insurance Group ("Connecticut Specialty"), which underwrites and sells specialty insurance programs, (iii) SecurityRe Companies ("SecurityRe"), which writes reinsurance and (iv) a 20.0% interest in Intercargo Corporation ("Intercargo") which underwrites insurance coverages for international trade. The third segment, Guaranty National Companies, specializes in writing nonstandard commercial and personal automobile insurance. The miscellaneous income and expenses (primarily interest, general and administrative expenses and other consolidating elimination entries) of the parent company are reported as a fourth segment. During 1993 Orion completed the recapitalization and debt restructuring which it began in 1992. The Company issued $110,000,000 of 9 1/8% Senior Notes due September 1, 2002 (the "9 1/8% Senior Notes"), redeemed both its 13 1/2% Senior Subordinated Debentures and its 12 1/2% Subordinated Debentures with face values of $19,375,000 and $20,000,000, respectively, entered into a new bank loan agreement and called for the redemption of all of its preferred stock. Substantially all of the outstanding shares of the $1.90 Convertible Exchangeable Preferred Stock were converted into 2,554,594 shares of common stock. Shares of the $2.125 Convertible Exchangeable Preferred Stock were converted into 1,427,123 shares of common stock, and the Adjustable Rate Preferred Stock was redeemed for $18,520,000. As a result of the refinancing, the Company recorded a loss on the redemption of its Debentures prior to maturity of $2,920,000, net of a tax benefit of $60,000, as an extraordinary item in 1992. The Company's objectives in this refinancing were to reduce the amount of the Company's debt maturing in the next five years, lower the interest rate on its long-term debt and increase the earnings available to common stockholders by lowering the cost of capital. RESULTS OF OPERATIONS Earnings (loss) by segment before federal income taxes, cumulative effect of the adoption of new accounting principles and extraordinary item are summarized as follows for the three years ended December 31, 1993: -35-
Year Ended December 31, ----------------------------------- 1993 1992 1991 ---- ---- ---- (000s omitted) Regional Operations ................... $ 34,025 $ 4,227 $ (9,816)(1) Reinsurance/Special Programs .......... 44,032 50,384 50,500 (1) Guaranty National Corporation (2): Pre-tax earnings .................... - - 22,477 Equity in net earnings of affiliate.. 9,509 9,994 1,207 -------- -------- -------- Total ............................. 87,566 64,605 64,368(1) Other ................................. (15,061) (17,891) (18,299) -------- -------- -------- $ 72,505 $ 46,714 $ 46,069(1) ======== ======== ======== (1) Includes a gain of $33,931,000 ($14,692,000 for Regional Operations and $19,239,000 for Reinsurance/Special Programs) from the sale of the Guaranty National Corporation ("Guaranty National") shares and a cumulative loss provision of $25,000,000 ($12,100,000 for Regional Operations and $12,900,000 for Reinsurance/Special Programs), both discussed below. (2) Earnings for the periods subsequent to the sale of Guaranty National common stock are proportionate to the Company's share of Guaranty National's net earnings after federal income taxes. For the years ended December 31, 1993, 1992 and 1991, Guaranty National's pre-tax earnings amounted to $24,626,000, $27,332,000 and $24,784,000, respectively.
REVENUES Premiums Net premiums written increased 12.0% ($68,156,000) in 1993 to $635,586,000. Net premiums written in 1992 were $567,430,000, which was a decrease of 22.7% ($166,635,000) from the 1991 net premiums written of $734,065,000. The decrease in 1992 results from the exclusion of net premiums written by the Guaranty National Companies, which amounted to $181,226,000 from January 1 to November 20, 1991. The results by segment are as follows: - Regional Operations' net premiums written decreased 1.7% ($4,468,000) to $265,082,000 in 1993 from $269,550,000 in 1992 and 1.2% ($3,208,000) in 1992 from $272,758,000 in 1991. The reduction in premium volume for 1993, while operating results continue to improve, reflects this segment's emphasis on underwriting profitability rather than premium growth and the impact of legislative reforms in certain states which has led to lower premium rates. Such reforms have also had the effect of reducing loss expenses, generally leading to more profitable business. Premiums written in 1993 and 1992 were reduced in states where the business or regulatory environment has become less favorable and by the closure of offices during these years in certain areas, offset by growth in geographic areas where the Company has had favorable loss experience stemming from its service-oriented approach. -36- - Reinsurance/Special Programs' net premiums written increased 24.4% ($72,624,000) to $370,504,000 in 1993 from $297,880,000 in 1992 and 6.4% ($17,799,000) in 1992 from $280,081,000 in 1991. Premium volume for Connecticut Specialty increased 21.8% ($34,360,000) to $192,246,000 in 1993 from $157,886,000 in 1992 and increased 44.7% ($48,740,000) in 1992 from $109,146,000 in 1991. The largest increases were in the automobile personal injury protection ($17,372,000) and physical damage ($14,010,000) programs, which programs have been growing steadily throughout 1992 and 1993. Gross premiums written by DPIC for professional liability insurance, the largest special program, were $167,273,000, $161,432,000 and $184,314,000 in 1993, 1992 and 1991, respectively. The increase for 1993 is reflective of both new business and a continuation of a high level of policy renewals. Contributing to the decrease in professional liability insurance premiums written in 1992 as compared to 1991 were the impact of generally weak economic conditions in the construction industry, increased premium credits given for favorable loss experience or an insureds participation in loss prevention programs, and non-recurring premiums in 1991 representing a reimbursement of losses incurred on behalf of an insured. The percentage of treaty and facultative reinsurance assumed to total net premiums written for Reinsurance/Special Programs amounted to 14.7%, 11.7% and 10.2% in 1993, 1992 and 1991, respectively. Premiums earned increased 10.2% ($57,199,000) in 1993 to $617,404,000. Premiums earned in 1992 were $560,205,000, which was a decrease of 20.1% ($141,181,000) versus the 1991 premiums earned of $701,386,000. Premiums earned for 1993 and 1992 reflect the recognition in income of the changing levels of net premium writings. The decrease in 1992 results from the exclusion of net premiums earned by the Guaranty National Companies, which amounted to $181,289,000 from January 1 to November 20, 1991. Gain on Sale of Common Stock of Guaranty National The Company sold 6,250,000 shares of Guaranty National's common stock in a public offering on November 20, 1991, (the "Guaranty Sale") reducing ownership of its common stock to 49.3%. The sale resulted in a gain of $33,931,000, and reduced the operating leverage and strengthened the capital positions of the Company's other insurance subsidiaries. The Guaranty National Companies' operations have been consolidated in the Company's financial statements through November 20, 1991. For periods subsequent to that date, the financial statements of the Company include the portion of Guaranty National's earnings attributable to the Company's ownership on an equity accounting basis. The shares of Guaranty National owned by the Company at December 31, 1993 and 1992 carried on an equity basis had book values of $75,394,000 and $64,436,000, respectively; the market values of these shares, based on the New York Stock Exchange closing price on those dates, were $107,510,000 and $121,332,000, respectively. Net Investment Income Pre-tax net investment income amounted to $91,803,000, $82,483,000 and $100,206,000 in 1993, 1992 and 1991, respectively. Included in net investment income is $23,060,000 for the 1991 period attributable to the consolidation of Guaranty National. The increase in net investment income for 1993 was attributable to an increase in average investable assets of approximately $132,000,000, and an increase in equity earnings from limited partnerships of $5,708,000 compared to 1992 due to both increased investment and a higher rate of return from these partnerships. The pre-tax yields on the average -37- investment portfolio were 7.4% for both 1993 and 1992, and 8.5% for 1991, reflecting the increase in earnings from limited partnership investments in 1993, offset by a change in the Company's mix of investments toward higher amounts of tax-advantaged securities which generally yield less than fully taxable securities, issuers calling their securities in order to refinance at lower rates and generally lower yields on new investments due to current market conditions. The decrease in net investment income for 1992 as compared to 1991 was the result of the deconsolidation of Guaranty National and lower pre-tax investment yields, offset by the investment of the proceeds of the Guaranty Sale. The impact of the lower interest rates for 1992 and 1993 on net income is offset in part by reductions in interest expense on the Company's variable rate bank loans. The carrying value of the Company's investment portfolio increased $165,921,000 in 1993 (including the change attributable to a new in accounting principle discussed in the following paragraph) to $1,322,536,000 at December 31, 1993 from $1,156,615,000 at December 31, 1992. The Company's investment philosophy is to achieve a superior rate of return after taxes and maintain a high degree of safety and liquidity. Effective December 31, 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which establishes the "available-for-sale" category of investment securities and requires such securities to be recorded at market value, with unrealized gains and losses reported in a separate component of stockholders' equity. As a result of the adoption of this standard, the Company increased its investments recorded at market value on December 31, 1993 by $452,102,000, and its unrealized appreciation on investments, a component of stockholders' equity, by $20,720,000, net of deferred income taxes. Fixed maturity investments which the Company has both the positive intent and the ability to hold to maturity are recorded at amortized cost. Investments which may be sold in response to, among other things, changes in interest rates, prepayment risk, income tax strategies or liquidity needs are included in the available-for-sale category at market value. The carrying value of fixed maturity and short-term investments amounted to $1,029,211,000 and $934,496,000 at December 31, 1993 and 1992, respectively, or approximately 77.8% and 80.8% of the investment portfolio. The Company invests primarily in investment grade securities and strives to enhance the average return of its portfolio through limited investment in a diversified group of non-investment grade fixed maturity securities or securities that are not rated. The risk of loss due to default is generally considered greater for non-investment grade securities than for investment grade securities because the former, among other things, are often subordinated to other indebtedness of the issuer and are often issued by highly leveraged companies. At December 31, 1993 and 1992, the Company's investment in non-investment grade and unrated fixed maturity securities were carried at $97,653,000 and $89,156,000 with market values of $97,306,000 and $89,064,000, respectively. These investments represented a total of 7.2% and 7.6% of cash and investments at December 31, 1993 and 1992, respectively, and 4.6% of total assets as of both year end dates. The Company closely monitors the financial condition of the issuers of securities that it owns. When conditions are deemed appropriate, the Company ceases to accrete discount, or accrue interest and dividends, and, in cases where the value of such investments is deemed to be other than temporarily impaired, recognizes losses. The Company's non-investment grade investments are highly diversified, with an average investment per issuer of approximately $1,935,000 at December 31, 1993. Only four non-investment grade investments aggregating $23,422,000 were in excess of $5,000,000 at December 31, 1993. -38- Realized Investment Gains Net realized investment gains (losses) amounted to $9,478,000 in 1993, $3,667,000 in 1992 and ($1,009,000) in 1991 excluding the $33,931,000 gain on the Guaranty Sale. Sales of equity securities resulted in net gains of $11,273,000, $5,864,000 and $4,960,000 and sales of fixed maturities resulted in net gains of $6,662,000, $5,365,000 and $6,925,000 in 1993, 1992 and 1991, respectively. Realized investment gains were reduced by provisions for losses on securities deemed to be other than temporarily impaired. These provisions amounted to $6,310,000 in 1993, $5,429,000 in 1992 and $5,124,000 in 1991 for equity securities and $2,147,000, $2,133,000 and $7,770,000 in 1993, 1992 and 1991, respectively, for fixed maturity investments. Such provisions, based on available information at the time, were made in consideration of the decline in the financial condition of the issuers of these securities. Realized gains (losses) vary from period to period, depending on market conditions relative to the Company's investment holdings, the timing of investment sales generating gains and losses, the occurrence of events which give rise to other than temporary impairment of investments, and other factors. At December 31, 1993 the Company held equity securities with unrealized appreciation of $32,332,000, as compared to $15,864,000 for equity securities held at December 31, 1992. The market value of the fixed maturities portfolio at December 31, 1993 exceeded their amortized cost values by $48,367,000. This compares with an excess of market value over amortized cost of $26,811,000 for fixed maturities at December 31, 1992. Such amounts can vary significantly depending upon fluctuations in the financial markets. The average maturity of the Company's fixed maturity investments has not varied significantly in recent years, and no material change in average maturity is expected in the foreseeable future. The performance of the Company's investments, including net investment income, net realized gains (losses) and unrealized appreciation (depreciation), and excluding the $33,931,000 gain on the sale of Guaranty National stock in 1991, is as follows for the three most recent years: 1993 1992 1991 ---- ---- ---- (000s omitted) Net investment income ..................... $ 91,803 $ 82,483 $100,206 -------- -------- -------- Net realized gains (losses) - Fixed maturities ........................ 4,515 3,232 (845) Equity securities ....................... 4,963 435 (164) -------- -------- -------- 9,478 3,667 (1,009) -------- -------- -------- Net unrealized appreciation - Fixed maturities ........................ 21,556 11,954 71,787 Equity securities ....................... 16,468 22,584 25,515 -------- -------- -------- 38,024 34,538 97,302 -------- -------- -------- $139,305 $120,688 $196,499 ======== ======== ======== -39- EXPENSES AND OTHER Operating Ratios The following table sets forth certain ratios of insurance operating expenses to premiums earned for the Company: Year Ended December 31, -------------------------------- 1993 1992 1991 ---- ---- ---- Loss and loss adjustment expenses ....... 74.4% 75.7% 76.8% Policy acquisition and other insurance expenses .............................. 26.8 27.3 30.2 ----- ----- ----- Total before policyholders' dividends.. 101.2 103.0 107.0 Policyholders' dividends ................ 2.0 2.4 2.4 ----- ----- ----- Total after policyholders' dividends .. 103.2% 105.4% 109.4% ===== ===== ===== The ratio of loss and loss adjustment expenses to premiums earned (the "loss ratio") was 74.4%, 75.7% and 76.8% in 1993, 1992 and 1991, respectively. The improvement in the 1993 loss ratio was attributable to a decrease in the loss ratio for the Regional Operations segment offset by higher levels of initial reserving in the Reinsurance/Special Programs segment. The improvement in the 1992 loss ratio was primarily attributable to a decrease in adverse development of prior years' losses. Lower assignments from the National Council on Compensation Insurance ("NCCI") improved the operating results for 1992 as compared to 1991 by $6,042,000 and had a favorable impact on the loss ratio of .9 percentage points. The decreases in adverse development and NCCI assignments in 1992 were offset by establishing initial loss reserves at higher levels and by an increase of .6 percentage points from losses stemming from Hurricanes Andrew and Iniki. The inclusion of Guaranty National Companies' loss experience for 1991 had the effect of lowering the loss ratio by 3.0 percentage points. The 1991 loss ratio also included a provision (the "cumulative loss provision") of $25,000,000, or 3.6 percentage points, recorded at year end 1991 in response to the Company's internal actuarial analysis, and to an independent actuarial review commissioned by the Connecticut Insurance Department in connection with a regular statutory examination of the Company's insurance subsidiaries. The loss ratio for Regional Operations was 72.0% in 1993, 80.1% in 1992 and 85.5% in 1991 (80.9% excluding the effect of the cumulative loss provision). These loss ratios reflect continued improvement in workers compensation insurance, reduced losses due to the cancellation in 1992 of participation in a workers compensation loss sharing pool and lower losses for runoff, principally from closed offices and discontinued commercial package business. Reinsurance/Special Programs' loss ratio was 76.1% in 1993, 71.7% in 1992 and 73.9% in 1991, (68.9% excluding the effect of the cumulative loss provision). The increase for 1993 is primarily due to higher levels of initial reserving. The segment's loss ratio for 1992 was favorably impacted by lower assignments from assigned risk pools and increased premium volume for programs with lower loss ratios, offset by higher levels of loss reserving for the DPIC program. -40- The ratio of deferred acquisition costs and other insurance expenses to premiums earned (the "expense ratio") was 26.8%, 27.3% and 30.2% in 1993, 1992 and 1991, respectively. The 1993 expense ratio was favorably impacted by the spreading of costs over a higher premium volume. The higher ratio for 1991 results from increased provisions for assessments from statutory assigned risk plans, particularly in Texas. Provisions for losses and loss adjustment expenses include development of loss and loss adjustment expense reserves relating to prior accident years, which increased the calendar year combined ratio by 3.9 percentage points in 1993, 4.7 percentage points in 1992 and 9.1 percentage points in 1991 including the impact of the cumulative loss provision. The loss ratios were adversely affected by such factors as higher than anticipated reported losses for automobile liability business and reserve strengthening for certain other lines of business. Other sources of loss development included pool and association business (including assigned risk pools) where loss reserves are established by the Company based on information provided by the pools and associations and loss patterns which were significantly different than in the past. Management believes that the Company's reserves for loss and loss adjustment expenses make reasonable and sufficient provision for the ultimate net cost of all losses on claims incurred. However, there can be no assurance that changes in loss trends will not result in additional development of prior years' reserves in the future. Variability in claim emergence and settlement patterns and other trends in loss experience can result in future development patterns different than expected. The Company believes that any such development will continue to be substantially lower than that experienced in years prior to 1992, considering the actions taken to increase reserving levels, to improve underwriting standards and to emphasize loss control and prevention. The Company's loss ratios in recent years, including development of prior years' losses, have compared favorably with loss ratios experienced by the industry. The Company limits both current loss expense and future development of losses by ceding business to reinsurers (See Note D to Consolidated Financial Statements). The Company continually monitors the financial strength of its reinsurers and, to the Company's knowledge, has no material exposure with regard to potential unrecognized losses due to reinsurers having known financial difficulties. The Company's environmental claims principally relate to asbestos and hazardous waste, arising from certain liability business written prior to the mid 1980's, which business was never a major element of the Company's operations. Environmental claims are also received from certain reinsurance pools and associations where reserves are established based on information reported to the Company by the managers of those pools and associations. Establishing reserve liabilities for environmental claims is subject to significant uncertainties that make reserve estimation difficult. Legal decisions have tended to expand insurance coverage beyond the intent of the original policies. The disposition of such claims often requires lengthy and costly litigation. Uncertainties as to required clean-up remedies, and difficulties in identifying the responsible parties, add further to the complexity of reserve estimation for these claims. In recent years, the Company has intensified its efforts to settle and close environmental claims. To help minimize the cost of losses and claims, the Company maintains a dedicated environmental claims staff which administers the defense and -41- settlement of each claim and continually evaluates them. In 1993 and 1992, the Company paid $5,557,000 and $4,221,000, respectively, for the costs of defending and settling claims. Payments in 1993 and 1992 related to 216 and 117 claims, respectively, for the Company's direct business. Claim counts have been aggregated by the Company by year of coverage for each alleged occurrence for which policyholders are being defended, and often include numerous claimants. As of December 31, 1993, the Company has environmental claims-related loss and loss adjustment expense reserves, net of reinsurance recoverables, of $17,189,000, which include 512 claims for direct business written by the Company. In estimating liabilities for environmental-related claims, the Company considers all pertinent information as it becomes available. Interest Expense Interest expense was $13,044,000 in 1993, $12,754,000 in 1992 and $16,131,000 in 1991. The 2.3% increase from 1992 to 1993 reflects an increase in the average amount of debt outstanding in 1993 as compared to 1992, including debt incurred to redeem the Company's Adjustable Rate Preferred Stock, offset for the most part by lower average interest rates. The 20.9% decrease from 1991 to 1992 is the result of declining average interest rates and a reduction in the amount of debt outstanding. Interest expense for both 1993 and 1992 was impacted by the issuance of $110,000,000 of 9 1/8% Senior Notes on September 8, 1992, and the reduction of average bank debt outstanding and repayment of debentures (See "Liquidity and Capital Resources"). Equity in Earnings of Affiliates The Company's portion of Guaranty National's net earnings before the cumulative effect of adopting changes in accounting principles was $9,509,000 in 1993, $9,994,000 for 1992 and $1,207,000 for the period from November 20 to December 31, 1991. The Company's portion of Intercargo's net loss for 1993 was $122,000. Guaranty National's full year net earnings were $19,285,000, $20,271,000 and $17,813,000 for 1993, 1992 and 1991, respectively. Gross premiums written for Guaranty National increased to $321,766,000 in 1993 from $273,400,000 in 1992 and $229,139,000 in 1991. Guaranty National's combined ratios were 99.6% in 1993, 97.7% in 1992 and 99.2% in 1991. Earnings From Operations Before Federal Income Taxes Operating earnings before income taxes were $72,505,000, $46,714,000 and $46,069,000 for 1993, 1992 and 1991, respectively. The 55.2% increase in pre- tax earnings from 1992 to 1993 reflects an improvement in insurance operations profitability of $19,980,000 and an increase in realized investment gains of $5,811,000. Pre-tax earnings for 1991 were increased by the gain of $33,931,000 realized on the Guaranty Sale and decreased by the $25,000,000 cumulative loss provision. Excluding these items, the 25.8% increase in pre- tax earnings for 1992 over 1991 is the result of an increase in insurance operations profitability of $4,900,000 and an increase in realized investment gains of $4,676,000. Federal Income Taxes Federal income taxes on pre-tax operating results and the related effective tax rates amounted to $15,517,000 (21.4%), $922,000 (2.0%) and $1,401,000 (3.0%) in 1993, 1992 and 1991, respectively. The Company files consolidated federal income tax returns, which include the taxable income of -42- Guaranty National from November 1, 1988 through November 20, 1991. Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes." Upon adoption of SFAS No. 109, the Company recorded a benefit of $16,881,000 which was principally attributable to its deferred tax benefits that had not been recognized due to limitations under prior accounting standards. The Company's effective tax rate for 1993 reflects the absence of such deferred tax benefits, as well as a continuation of the Company's shift in its investment portfolio toward more tax-advantaged securities. The tax rate for 1993 reflects a tax benefit of $450,000 from the effect of the increase in the federal tax rate on the Company's deferred tax asset. The consolidated federal income tax provisions for 1991 through 1993 were computed by the regular tax method, reduced by alternative minimum and other tax credits in 1991 and the recognition of deferred tax benefits in 1991 and 1992 to the extent that the Company was able to utilize its NOL for financial reporting purposes under SFAS No. 96, "Accounting for Income Taxes." Cumulative effect of adoption of new accounting principles Effective January 1, 1993 the Company recorded the cumulative effect of adopting SFAS No. 109 (discussed above) and SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other than Pensions." SFAS No. 106 requires the accrual of the estimated cost of retiree benefit payments during the years the employees provide services. Upon adoption of SFAS No. 106 the cumulative effect of the Company's accumulated obligation for providing medical benefits to retirees was $5,056,000, after a related tax benefit of $2,604,000. Included in the cumulative effects of adopting these accounting principles is the Company's portion of Guaranty National's benefit from changes in accounting principles in 1993 of $360,000, net of $185,000 of federal income taxes provided by the Company. Earnings Per Common Share Common stock and per common share data have been restated to give effect to the 5-for-4 stock splits paid on both November 15, 1993 and December 7, 1992. Primary earnings per share amounted to $4.69 ($3.88 before the effect of adopting new accounting principles) in 1993, $3.35 ($3.62 before extraordinary item) in 1992 and $3.75 in 1991. Reflected in the calculation of 1993, 1992 and 1991 earnings per common share are dividends of $409,000, $6,358,000 and $7,276,000, respectively, on the Company's Adjustable Rate Preferred Stock, (redeemed in 1993), $1.90 Preferred Stock (converted into common stock or redeemed in 1992) and $2.125 Preferred Stock (converted into common stock or redeemed in 1993). All of these conversions and redemptions were effected pursuant to the terms of the preferred stock. The $1.90 Preferred Stock and the $2.125 Preferred Stock were assumed to be converted, if dilutive, for the purpose of computing fully-diluted earnings per common share. Fully-diluted earnings per share amounted to $4.67 ($3.86 before the effect of adopting new accounting principles in 1993, $2.85 ($3.05 before extraordinary item) in 1992 and $3.05 in 1991. Reflected in the calculation of fully-diluted earnings per share in 1993, 1992 and 1991 are Adjustable Rate Preferred Stock dividends of $407,000, $1,581,000 and $1,679,000, respectively. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities increased $42,621,000 to $123,154,000 in 1993 from $80,533,000 in 1992 and decreased $59,371,000 in 1992 from $139,904,000 in 1991. The increase in operating cash flow for 1993 is primarily due to an increase in premiums collected, particularly for -43- Connecticut Specialty, and a receipt of $17,096,000 under a retrospectively rated program written by DPIC, offset in part by an increase in paid losses. Also, cash provided by operations in 1992 was decreased by an $18,410,000 payment for reinsurance applicable to a 1991 contract. The decrease in 1992 is attributable to the exclusion of Guaranty National's cash flow which amounted to $17,048,000 from January 1 through November 20, 1991, as well as a decrease in premiums collected and increases in payments for reinsurance and federal income taxes, offset by a decrease in paid losses and loss adjustment expenses, policy acquisition costs and interest expense. Cash used in investment activities increased $65,162,000 to $124,415,000 in 1993 from $59,253,000 in 1992 and decreased by $46,081,000 in 1992 from $105,334,000 in 1991. The use of investment cash is attributable to purchases of investments which exceeded maturities and sales of investments, reflecting positive operating cash flows. Investable cash of $84,885,000 was provided on November 20, 1991 by the Guaranty Sale which significantly increased short- term investments at the end of that year. Cash used in financing activities decreased $16,250,000 to $5,046,000 in 1993 from $21,296,000 in 1992 and decreased $11,255,000 in 1992 from $32,551,000 in 1991. Cash provided in 1993 from an increase in bank borrowings was more than offset by the redemption of the Company's Adjustable Rate Preferred Stock, purchase of common stock and the payment of dividends. Dividends paid to stockholders were lower in 1993 due to the conversions and redemptions of the $1.90 Preferred Stock and $2.125 Preferred Stock into common stock and the redemption of the Adjustable Rate Preferred Stock. Proceeds from financing activities in 1992 include $107,834,000 from the issuance of 9 1/8% Senior Notes on September 8, 1992, $19,930,000 from the issuance of bank debt in December 1992 and proceeds of $9,497,000 from the issuance of common stock in April 1992. These sources of cash were offset by debt repayments in 1992, including repayment of the Company's bank loan and the retirement of the Company's 13 1/2% Senior Subordinated Debentures and its 12 1/2% Subordinated Debentures. Orion's uses of cash consist of debt service, dividends to stockholders and overhead expenses. These cash uses are funded from existing available cash, financing transactions and receipt of dividends, reimbursement of overhead expenses and amounts in lieu of federal income taxes from Orion's insurance subsidiaries. In 1993 Orion received $25,512,000 in dividends, $5,230,000 for overhead expenses and federal tax payments of $5,600,000 from its insurance subsidiaries. Orion also received an extraordinary dividend of $65,470,000 (principally securities) from a California-domiciled subsidiary which was simultaneously contributed as capital to a Connecticut-domiciled subsidiary to effect a change in pooling percentages among its insurance subsidiaries. Payments of dividends by Orion's insurance subsidiaries must comply with insurance regulatory limitations concerning stockholder dividends and capital adequacy. State insurance regulators have broad discretionary authority with respect to limitations on the payment of dividends by insurance companies. Limitations under current regulations are well in excess of Orion's cash requirements. Orion's insurance subsidiaries maintain liquidity in their investment portfolios substantially in excess of that required to pay claims and expenses. The insurance subsidiaries held cash and short-term investments of $92,421,000 and $115,527,000 at December 31, 1993 and 1992, respectively. Orion's insurance subsidiaries had consolidated policyholders' surplus of $460,986,000 at December 31, 1993 and $385,803,000 at December 31, 1992, and statutory operating leverage ratios of net premiums written to policyholders' -44- surplus of 1.4:1 and 1.5:1 at December 31, 1993 and 1992, respectively. Approximately $21,800,000 of the increase in surplus during 1993 relates to the elimination of a statutory valuation allowance related to the Guaranty National investment. During 1992 and 1993, Orion reconfigured its debt structure to take advantage of generally lower interest rates and the stronger capital position of the Company, and to reduce the amount of debt maturing in the next five years. On September 8, 1992, the Company issued 9 1/8% Senior Notes due 2002 with a face value of $110,000,000 in a public offering. The net proceeds from the offering of $107,834,000 were used to repay the Company's bank debt of $80,100,000, and to retire the Company's 13 1/2% Senior Subordinated Debentures on October 9, 1992 for $20,160,000 plus accrued interest. On November 30, the Company entered into a bridge loan facility (the "Bridge Loan") with two banks aggregating $25,000,000. In December 1992, the Company borrowed $20,000,000 under the Bridge Loan to redeem the Company's 12 1/2% Subordinated Debentures on December 31, 1992 for $20,500,000 plus accrued interest. In March 1993 Orion entered into a bank loan arrangement (the "Loan Agreement") that provided for initial borrowings of up to $60,000,000, consisting of a $50,000,000 term loan (reduced by $4,500,000 in scheduled commitment reductions through December 31, 1993) and a $10,000,000 line of credit. These borrowings are unsecured and bear interest at or below prime. Borrowings under the Loan Agreement amounted to $50,500,000 at December 31, 1993. The proceeds were used to repay the Bridge Loan and to redeem the Company's Adjustable Rate Preferred Stock. At December 31, 1993, the Company has available $5,000,000 in unused commitments under the line of credit. The terms of the Loan Agreement and Orion's Indenture for its 9 1/8% Senior Notes limit the amount of additional borrowings, prepayments on existing indebtedness, liens and guarantees by the Company. Management does not believe that any of these limitations unduly restrict the Company's operations or limits Orion's ability to pay dividends on its stock. At December 31, 1993 the Company was in compliance with the terms of its debt agreements. Management believes that the Company continues to have substantial sources of capital and liquidity from the capital markets and bank borrowings. On October 1, 1992 and December 21, 1992, Orion called for the redemption of all of its $1.90 Preferred Stock and $2.125 Preferred Stock on November 2, 1992 and January 21, 1993, respectively. In both cases, the market price of the shares of common stock that a holder would receive upon conversion of the preferred stock was substantially higher than the redemption price of $21.30 per share and $25.76 per share, respectively. Consequently, most holders converted into common stock prior to the redemption dates, resulting in the issuance of 2,558,173 shares of common stock prior to December 31, 1992 and 1,423,544 shares of common stock in January 1993. Holders of 2,730 shares of $1.90 Preferred Stock and 21,605 shares of $2.125 Preferred Stock, who did not elect to convert, redeemed their shares for an aggregate of $58,000 and $557,000, respectively. On April 15, 1992, Orion sold 515,625 shares of its common stock for $9,497,000, net of expenses. The sale was made in a private transaction, subject to the provisions of Regulation S of the Securities Act of 1933, as amended. The proceeds from the sale were used for general corporate purposes. -45- The Company repurchased 177,658 shares, 22,420 shares and 52,700 shares of its common stock at an aggregate cost of $5,472,000, $554,000 and $655,000 in 1993, 1992 and 1991, respectively. The Company's remaining stock purchase authorization from its Board of Directors amounted to $5,819,000 at December 31, 1993. As of December 31, 1993 there were no significant contingencies or commitments outstanding which, net of reserves established therefor and giving effect to reinsurance, are likely to have a material effect on the liquidity or financial position of Orion and its consolidated subsidiaries, taken as a whole (See Notes G and H to the consolidated financial statements). -46- ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF MANAGEMENT The management of Orion Capital Corporation is responsible for the consolidated financial statements and the information included therein. The consolidated financial statements are fairly presented and have been prepared in accordance with generally accepted accounting principles appropriate in the circumstances, and, where necessary, include amounts based on management's informed estimates and judgments. The Company has a system of internal controls which it believes provides reasonable assurance that assets are safeguarded from loss or unauthorized use, transactions are recorded in accordance with management's policies and that the financial records are reliable for preparing financial statements. The system of internal controls includes written policies and procedures which are communicated to all appropriate personnel and updated as necessary. Compliance with the system of internal controls is continuously maintained and monitored by management. The internal audit staff of the Company evaluates and reports on the adequacy of and adherence to these controls, policies and procedures. In addition, as part of its audit of the consolidated financial statements, Deloitte & Touche, the independent auditors for the Company, perform a review and evaluation of the system of internal controls to the extent they consider necessary to express an opinion on the consolidated financial statements. Recommendations concerning the system of internal controls are provided by both the internal auditors and Deloitte & Touche, and management takes actions which are believed to be appropriate responses to these recommendations. The Audit Committee of the Board of Directors is comprised of independent directors, and has general responsibility for oversight of financial controls and audit activities of the Company and its subsidiaries. The Audit Committee, which reports to the Board, annually reviews the qualifications of the independent auditors and meets periodically with them, the internal auditors and management to review the plans and results of the audits. Both internal and independent auditors have free access to the Audit Committee, without members of management present, to discuss the adequacy of the system of internal controls and any other matters which they believe should be brought to the attention of the Committee. Alan R. Gruber Daniel L. Barry Chairman & Chief Executive Officer Vice President & Controller -47- INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders ORION CAPITAL CORPORATION New York, New York We have audited the accompanying consolidated balance sheets of Orion Capital Corporation and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1993. Our audits also included the financial statement schedules listed in the Index at Item 14(a)2. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Orion Capital Corporation and subsidiaries as of December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in Note A to the consolidated financial statements, in 1993 the Company adopted four new accounting standards required by generally accepted accounting principles. On January 1, 1993 the Company changed its method of accounting for income taxes and postretirement benefits to conform with Statement of Financial Accounting Standards Nos. 109 and 106, respectively. The Company changed its method of accounting for reinsurance to conform with Statement of Financial Accounting Standards No. 113. Also, effective December 31, 1993 the Company changed its method of accounting for investments to conform with Statement of Financial Accounting Standards No. 115. DELOITTE & TOUCHE Hartford, Connecticut February 22, 1994 -48-
ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (000s omitted) ASSETS December 31, ------------------------- 1993 1992 ---- ---- Investments: Fixed maturities at amortized cost (market $402,149 - 1993 and $756,736 - 1992) .. $ 384,402 $ 731,414 Fixed maturities at market (amortized cost $517,716 - 1993 and $94,123 - 1992) ...... 548,336 95,612 Common stocks at market (cost $111,325 - 1993 and $111,199 - 1992) .......................... 139,022 123,744 Non-redeemable preferred stocks at market (cost $98,986 - 1993 and $58,637 - 1992) ...... 103,621 61,956 Other long-term investments ..................... 50,682 36,419 Short-term investments .......................... 96,473 107,470 ---------- ---------- Total investments ............................ 1,322,536 1,156,615 Cash .............................................. 6,433 12,764 Accrued investment income ......................... 17,623 18,115 Investments in and advances to affiliates ......... 111,459 81,632 Accounts and notes receivable (less allowance for doubtful accounts $1,859 - 1993 and $1,959 - 1992) .................................. 111,539 102,241 Reinsurance recoverables and prepaid reinsurance .. 393,309 414,635 Deferred policy acquisition costs ................. 57,522 56,134 Property and equipment (less accumulated depreciation $19,788 - 1993 and $16,685 - 1992).. 23,596 22,410 Excess of cost over fair value of net assets acquired (less accumulated amortization $16,414 - 1993 and $15,241 - 1992) .............. 30,587 31,760 Deferred federal income taxes ..................... 18,891 17,539 Other assets ...................................... 23,959 23,563 ---------- ---------- Total assets ................................. $2,117,454 $1,937,408 ========== ========== See Notes to Consolidated Financial Statements -49- ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (000s omitted - except for share data) LIABILITIES AND STOCKHOLDERS' EQUITY December 31, ------------------------- 1993 1992 ---- ---- Liabilities: Policy liabilities - Losses ........................................ $ 937,775 $ 885,080 Loss adjustment expenses ...................... 202,628 196,316 Unearned premiums ............................. 259,359 232,316 Policyholders' dividends ...................... 12,523 13,160 ---------- ---------- Total policy liabilities .................... 1,412,285 1,326,872 Federal income taxes payable .................... 19,294 10,052 Other liabilities ............................... 131,308 140,629 Notes payable ................................... 160,372 129,863 ---------- ---------- Total liabilities ........................... 1,723,259 1,607,416 ---------- ---------- Commitments and Contingencies (Notes G and H) Adjustable rate preferred stock with mandatory redemption - at liquidation value; $1 par value; issued and outstanding 374,100 shares - 1992 .... - 18,705 ---------- ---------- Stockholders' equity: Preferred stock, authorized 5,000,000 shares - $2.125 convertible exchangeable, $1 par value; issued and outstanding 1,197,042 shares - 1992. - 28,524 Common stock, $1 par value; authorized 30,000,000 shares; issued 15,337,650 shares - 1993 and 13,886,929 shares - 1992 ............. 15,338 11,110 Capital surplus ................................. 148,167 124,754 Net unrealized investment gains, net of federal income taxes of $18,718 - 1993 ................ 49,566 18,815 Net unrealized foreign exchange translation losses, net of federal income tax benefit of $394 - 1993 ................................... (3,665) (2,918) Retained earnings ............................... 198,491 139,947 Treasury stock, at cost (965,442 shares - 1993 and 786,755 shares - 1992) .................... (12,182) (6,694) Deferred compensation on restricted stock ....... (1,520) (2,251) ---------- ---------- Total stockholders' equity .................. 394,195 311,287 ---------- ---------- Total liabilities and stockholders' equity... $2,117,454 $1,937,408 ========== ========== See Notes to Consolidated Financial Statements -50- ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (000s omitted - except for per share data) Year Ended December 31, ------------------------------ 1993 1992 1991 ---- ---- ---- Revenues: Premiums earned ..................................... $617,404 $560,205 $701,386 Net investment income ............................... 91,803 82,483 100,206 Realized investment gains (losses) .................. 9,478 3,667 (1,009) Gain on sale of common stock of Guaranty National ... - - 33,931 Other income ........................................ 1,470 1,363 2,780 -------- -------- -------- Total revenues .................................... 720,155 647,718 837,294 -------- -------- -------- Expenses: Losses incurred ..................................... 366,716 332,653 429,498 Loss adjustment expenses ............................ 92,416 91,379 108,917 Amortization of deferred policy acquisition costs ... 148,440 135,670 183,773 Other insurance expenses ............................ 17,381 17,158 28,362 Dividends to policyholders .......................... 12,513 13,558 16,460 Interest expense .................................... 13,044 12,754 16,131 Other expenses ...................................... 6,527 7,826 9,291 -------- -------- -------- Total expenses .................................... 657,037 610,998 792,432 -------- -------- -------- Earnings from operations before equity in earnings of affiliates, federal income taxes, cumulative effect of adoption of new accounting principles and extraordinary item .................................. 63,118 36,720 44,862 Equity in earnings of affiliates ...................... 9,387 9,994 1,207 -------- -------- -------- Earnings from operations before federal income taxes, cumulative effect of adoption of new accounting principles and extraordinary item ................... 72,505 46,714 46,069 Federal income taxes .................................. 15,517 922 1,401 -------- -------- -------- Earnings before cumulative effect of adoption of new accounting principles and extraordinary item ........ 56,988 45,792 44,668 Cumulative effect of adoption of new accounting principles .......................................... 11,825 - - Extraordinary item - loss on early extinguishment of debt, net of income tax benefit of $60 .............. - 2,920 - -------- -------- -------- Net earnings ........................................ $ 68,813 $ 42,872 $ 44,668 ======== ======== ======== Earnings (loss) per common share: Primary - Earnings before cumulative effect of adoption of new accounting principles and extraordinary item. $ 3.88 $ 3.62 $ 3.75 Cumulative effect of adoption of new accounting principles ...................................... .81 - - Extraordinary item ................................ - (.27) - -------- -------- -------- Net earnings .................................... $ 4.69 $ 3.35 $ 3.75 ======== ======== ======== Fully diluted - Earnings before cumulative effect of adoption of new accounting principles and extraordinary item. $ 3.86 $ 3.05 $ 3.05 Cumulative effect of adoption of new accounting principles ...................................... .81 - - Extraordinary item ................................ - (.20) - -------- -------- -------- Net earnings .................................... $ 4.67 $ 2.85 $ 3.05 ======== ======== ======== See Notes to Consolidated Financial Statements -51- ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (000s omitted) Year Ended December 31, ------------------------------ 1993 1992 1991 ---- ---- ---- Convertible exchangeable preferred stock: Balance, beginning of year ................ $ 28,524 $ 58,576 $ 59,064 Conversion of preferred stock ............. (28,524) (30,052) (488) -------- -------- -------- Balance, end of year ...................... $ - $ 28,524 $ 58,576 ======== ======== ======== Common stock: Balance, beginning of year ................ $ 11,110 $ 7,527 $ 7,500 Conversion of preferred stock ............. 1,139 1,667 27 Sale of common stock ...................... - 330 - Exercise of stock options and issuance of restricted stock ........................ 24 14 - Stock issued in 5-for-4 stock splits ...... 3,065 1,572 - -------- -------- -------- Balance, end of year ...................... $ 15,338 $ 11,110 $ 7,527 ======== ======== ======== Capital surplus: Balance, beginning of year ................ $124,754 $ 96,345 $ 95,907 Redemptions and conversions of preferred stock ................................... 26,072 28,118 542 Sale of common stock ...................... - 9,167 - Exercise of stock options and issuance (cancellation) of restricted stock ...... 406 1,153 (104) Stock issued in 5-for-4 stock splits ...... (3,065) (10,029) - -------- -------- -------- Balance, end of year ...................... $148,167 $124,754 $ 96,345 ======== ======== ======== Net unrealized investment gains (losses): Balance, beginning of year ................ $ 18,815 $ (6,324) $(31,839) Cumulative effect of adoption of new accounting principle, net of taxes of $11,157 .............................. 20,720 - - Change in unrealized investment gains (losses), net of taxes in 1993 .......... 10,031 25,139 25,515 -------- -------- -------- Balance, end of year ...................... $ 49,566 $ 18,815 $ (6,324) ======== ======== ======== Net unrealized foreign exchange translation gains (losses): Balance, beginning of year ................ $ (2,918) $ 191 $ (405) Change in unrealized foreign exchange translation gains (losses), net of taxes in 1993 ................................. (747) (3,109) 596 -------- -------- -------- Balance, end of year ...................... $ (3,665) $ (2,918) $ 191 ======== ======== ======== Retained earnings: Balance, beginning of year ................ $139,947 $110,074 $ 78,505 Net earnings .............................. 68,813 42,872 44,668 Dividends declared ........................ (10,269) (12,999) (13,099) -------- -------- -------- Balance, end of year ...................... $198,491 $139,947 $110,074 ======== ======== ======== Treasury stock: Balance, beginning of year ................ $ (6,694) $(15,267) $(14,555) Exercise of stock options and issuance (cancellation) of restricted stock ...... (15) 671 (57) Acquisition of treasury stock ............. (5,473) (555) (655) Stock issued in 5-for-4 stock split ....... - 8,457 - -------- -------- -------- Balance, end of year ...................... $(12,182) $ (6,694) $(15,267) ======== ======== ======== Deferred compensation on restricted stock: Balance, beginning of year ................ $ (2,251) $ (1,293) $ (2,219) (Issuance) cancellation of restricted stock (108) (1,438) 381 Amortization of deferred compensation on restricted stock ........................ 839 480 545 -------- -------- -------- Balance, end of year ...................... $ (1,520) $ (2,251) $ (1,293) ======== ======== ======== See Notes to Consolidated Financial Statements -52- ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (000s omitted) Year Ended December 31, ---------------------------------- 1993 1992 1991 ---- ---- ---- Cash flows from operating activities: Premiums collected ........................ $ 626,678 $ 540,437 $ 742,440 Net investment income collected ........... 81,178 72,168 86,054 Losses and loss adjustment expenses paid .. (374,625) (346,201) (461,888) Policy acquisition costs paid ............. (162,717) (153,246) (208,817) Dividends paid to policyholders ........... (13,150) (11,728) (16,350) Interest paid ............................. (12,405) (11,032) (17,242) Federal income tax payments ............... (7,100) (6,805) (1,944) Other receipts (payments) ................. (14,705) (3,060) 17,651 --------- --------- --------- Net cash provided by operating activities ............................ 123,154 80,533 139,904 --------- --------- --------- Cash flows from investing activities: Maturities of fixed maturity investments .. 152,442 118,301 104,472 Sales of fixed maturity investments ....... 90,720 189,282 535,975 Sales of equity securities................. 91,144 89,799 77,800 Sale of common stock of Guaranty National.. - - 84,885 Effect on cash of deconsolidating Guaranty National ....................... - - (31,762) Investments in fixed maturities ........... (311,183) (442,633) (602,014) Investments in equity securities .......... (120,609) (110,571) (111,077) Investment in Intercargo Corporation ...... (19,315) - - Net sales (purchases) of short-term investments ............................. 8,885 105,662 (154,582) Other payments ............................ (16,499) (9,093) (9,031) --------- --------- --------- Net cash used in investing activities ... (124,415) (59,253) (105,334) --------- --------- --------- Cash flows from financing activities: Proceeds from issuance of notes payable ... 59,672 127,764 2,000 Proceeds from issuance of common stock .... 286 9,545 65 Repayment of notes payable and debentures.. (29,500) (144,998) (20,586) Dividends paid to stockholders ............ (10,776) (13,155) (13,158) Purchase and redemption of adjustable rate preferred and common stock .............. (23,615) (412) (872) Other payments ........................... (1,113) (40) - --------- --------- --------- Net cash used in financing activities ... (5,046) (21,296) (32,551) --------- --------- --------- Effect of foreign exchange rate changes on cash ................................... (24) 2 (756) --------- --------- --------- Net increase (decrease) in cash ......... (6,331) (14) 1,263 Cash balance, beginning of year ............. 12,764 12,778 11,515 --------- --------- --------- Cash balance, end of year ................... $ 6,433 $ 12,764 $ 12,778 ========= ========= ========= See Notes to Consolidated Financial Statements -53- ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS - (Continued) (000s omitted) Year Ended December 31, ------------------------------ 1993 1992 1991 ---- ---- ---- Reconciliation of net earnings to net cash provided by operating activities: Net earnings ................................. $ 68,813 $ 42,872 $ 44,668 -------- -------- -------- Adjustments: Cumulative effect of adoption of new accounting principles .................... (11,825) - - Depreciation and amortization .............. 3,939 2,970 4,640 Amortization of excess of cost over fair value of net assets acquired ............. 1,173 1,173 1,812 Deferred federal income taxes .............. (931) (5,182) (12,357) Amortization of fixed maturity investments . 128 (659) (3,519) Non-cash investment income ................. (11,586) (6,378) (8,093) Equity in earnings of affiliates ........... (9,387) (9,994) (1,207) Dividends received from affiliates ......... 3,135 3,072 - Realized investment losses (gains) ......... (9,478) (3,667) 1,009 Gain on sale of common stock of Guaranty National ........................ - - (33,931) Foreign exchange translation adjustment .... 152 (73) (175) Extraordinary loss ......................... - 2,920 - Other....................................... (34) - 303 Changes in assets and liabilities (net of effects of deconsolidation of Guaranty National in 1991): Decrease (increase) in accrued investment income ................................... 492 (1,550) (1,135) Increase in accounts and notes receivable .. (9,298) (6,245) (1,378) Decrease (increase) in reinsurance recoverables and prepaid reinsurance ..... 21,326 (7,402) 136,130 Decrease (increase) in deferred policy acquisition costs ........................ (1,388) 2,737 (9,674) Increase in other assets ................... (431) (861) (110) Increase (decrease) in losses .............. 52,695 47,043 (72,220) Increase in loss adjustment expenses ....... 6,312 23,414 36,321 Increase in unearned premiums .............. 27,043 25,634 19,338 Increase (decrease) in policyholders' dividends ................................ (637) 1,830 110 Increase in federal income taxes payable ... 9,242 944 11,000 Increase (decrease) in other liabilities ... (16,301) (32,065) 28,372 -------- -------- -------- Total adjustments and changes ............ 54,341 37,661 95,236 -------- -------- -------- Net cash provided by operating activities .. $123,154 $ 80,533 $139,904 ======== ======== ======== See Notes to Consolidated Financial Statements -54- /TABLE ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 1993, 1992 and 1991 Note A - Significant Accounting Policies Basis of Financial Statement Presentation - The consolidated financial statements and notes thereto are presented in accordance with generally accepted accounting principles ("GAAP") for property and casualty insurance companies and include the accounts of Orion and its majority-owned subsidiaries. The Company's investments in unconsolidated affiliates are accounted for using the equity method (See Note B). All material intercompany balances and transactions have been eliminated. Adoption of new accounting principles - The Financial Accounting Standards Board has issued four new accounting standards which significantly impact the Company's financial statements. The Company is required to adopt these standards in accordance with generally accepted accounting principles. Therefore in 1993 the Company adopted the following standards, which are discussed in the notes below: SFAS No. 106 - Employers' Accounting for Postretirement Benefits Other Than Pensions SFAS No. 109 - Accounting for Income Taxes SFAS No. 113 - Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts SFAS No. 115 - Accounting for Certain Investments in Debt and Equity Securities Regulation - The Company's insurance subsidiaries are subject to comprehensive regulation by various state insurance departments including regulations limiting dividend payments to Orion and intercompany transactions. Under these regulations, the maximum dividends permitted at December 31, 1993 for the ensuing twelve months, without prior approval, aggregated $37,373,000. However, state insurance regulators have broad discretionary authority with respect to approving the payment of dividends by insurance companies. Policyholders' surplus of Orion's wholly-owned insurance subsidiaries determined in accordance with statutory accounting practices prescribed or permitted by state insurance regulations, amounted to $460,986,000 at December 31, 1993 and $385,803,000 at December 31, 1992. Statutory net income amounted to $66,862,000, $43,733,000 and $45,452,000 for 1993, 1992 and 1991, respectively. Cash - For purposes of the consolidated statement of cash flows, the Company considers only demand deposit accounts to be cash. -55- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Investments - Effective December 31, 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which establishes the "available- for-sale" category of investment securities and requires such securities to be recorded at market value, with unrealized gains and losses reported in a separate component of stockholders' equity. As a result of the adoption of this standard on December 31, 1993, the Company increased its investments recorded at market value by $452,102,000, and its unrealized appreciation on investments, a component of stockholders' equity, by $20,720,000, net of deferred income taxes. Fixed maturity investments include bonds, preferred stocks with mandatory redemption features, and certificates of deposit that mature more than one year after the balance sheet date. Fixed maturity investments that the Company has both the positive intent and the ability to hold to maturity are recorded at amortized cost. Fixed maturity investments which may be sold in response to, among other things, changes in interest rates, prepayment risk, income tax strategies or liquidity needs, are included in the available-for-sale category at market value. Common stocks and non- redeemable preferred stocks are stated at market value. Fluctuations in the market value of these equity securities are recorded as unrealized investment gains or losses and credited or charged to stockholders' equity. Other long- term investments include equity ownership interests in limited partnerships which are recorded using the equity method of accounting, and mortgage loans which are stated at their unpaid balance. Short-term investments include certificates of deposit and commercial paper which mature within one year of the balance sheet date, money market accounts and United States Treasury Bills. Estimates of market values are generally based on quoted market prices or dealer quotes, if available, or otherwise on an evaluation of the issuers' financial statements. Realized investment gains and losses, including other than temporary impairment of investment securities, are recognized on the specific identification method. Deferred Policy Acquisition Costs - Costs that vary with, and are directly related to, the production of new and renewal business are deferred and amortized as the related premiums are earned. The test for recoverability of such deferred costs includes the consideration of net investment income. Excess of Cost Over Fair Value of Net Assets Acquired - The excess of the cost of acquiring subsidiaries over the fair value of their net assets ("goodwill") is amortized on a straight-line basis over periods of 25 to 40 years. Revenue Recognition - Premiums are earned on a daily pro rata basis over the policy period. A provision is made for anticipated retrospective premium adjustments and audit premiums. Direct and assumed premiums are reduced for reinsurance ceded to other insurers. Policy Liabilities and Reinsurance - Loss and loss adjustment expense liabilities are established in consideration of individual cases for reported losses and past experience for unreported losses. The Company adopted SFAS -56- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) No. 113 "Accounting and Reporting for Reinsurance of Short-Duration and Long- Duration Contracts" on January 1, 1993. The statement establishes the conditions required for a contract with a reinsurer to be accounted for as reinsurance, and amends SFAS No. 60, "Accounting and Reporting by Insurance Enterprises", to require reinsurance receivables and prepaid reinsurance premiums to be reported as assets rather than to be offset against the related liabilities. Estimated reinsurance receivables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts. The Company reclassified its assets and liabilities as of December 31, 1992 to conform with the SFAS No. 113 presentation, thereby increasing both reinsurance related assets and policy liabilities by $383,484,000. At December 31, 1993 and 1992, approximately $73,215,000 and $68,882,000, respectively, of long-term disability workers compensation loss reserves are included in the consolidated financial statements at net present value using a statutory interest rate of 3.5%. Policyholders' dividends on participating policies are accrued at estimated payment rates as the related premiums are earned. Participating business represented 21% of premiums in-force at December 31, 1993, 28% at year-end 1992 and 33% at the end of 1991. As a percent of premiums earned, participating business amounted to 21% in 1993, 28% in 1992, and 24% in 1991. Federal Income Taxes - As of January 1, 1993 the Company prospectively adopted SFAS No. 109, "Accounting for Income Taxes," replacing the previous standard for accounting for income taxes, SFAS No. 96. The objectives of SFAS No. 109 are to recognize taxes payable or refundable for the current year, and deferred tax assets or liabilities for the future tax consequences of events that have been recognized in the Company's financial statements or tax returns. The new standard provides for the recognition of deferred tax assets that were not recognized under SFAS No. 96, and resulted in the recognition of a cumulative tax benefit of $16,881,000 ($1.16 per share). Postretirement Benefits - Effective January 1, 1993 the Company adopted SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" which requires the Company to accrue the estimated cost of retiree benefits during the years the employees provide services. The Company previously expensed the cost of medical benefits provided to retirees as they were paid. The cumulative effect of adopting SFAS No. 106 as of January 1, 1993 was a decrease in net earnings of $5,056,000 ($.35 per share), net of a tax benefit of $2,604,000, which has been included in the Company's consolidated statement of earnings for the year ended December 31, 1993. Stock Split - Common stock and per common share data have been restated, as required, to give effect to the 5-for-4 stock splits paid on November 15, 1993 to stockholders of record on October 15, 1993 and on December 7, 1992 to stockholders of record on November 20, 1992. Earnings Per Common Share - Primary and fully-diluted earnings per common share are computed using the weighted average common and dilutive common equivalent shares outstanding. -57- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Reclassifications - The 1992 and 1991 consolidated financial statements have been reclassified to conform to the classifications used in 1993. Note B - Investment in Affiliates On November 20, 1991 the Company sold 6,250,000 shares of common stock of its wholly-owned subsidiary, Guaranty National Corporation ("Guaranty National"), in a public offering, and reduced its ownership to 49.3%. Proceeds from the sale of $14.50 per share, or approximately $84,400,000 after expenses, resulted in a gain of $33,931,000 before federal income taxes. Just prior to the sale, Guaranty National issued 9 1/2% subordinated notes, with a final maturity in January 1998, to the Company aggregating $20,896,000, which included $19,829,000 as a special dividend and $1,067,000 in payment for office furniture and equipment. The principal of the notes was refinanced on August 1, 1993 at 7.85%, with the terms extended to semi-annual installments beginning January 1, 1998 through July 1, 2003. The Company's ownership of Guaranty National was reduced to 49.2% in 1993 by the issuance of shares of restricted stock by Guaranty National to certain of its employees. On September 13, 1993 the Company acquired 700,000 shares of common stock of Intercargo Corporation ("Intercargo"), a publicly held corporation. On December 28, 1993 the Company purchased an additional 826,484 shares which increased its ownership to 20.0%. The aggregate purchase price, including expenses, was $19,314,000. The excess of cost over the fair value of the underlying equity in net assets acquired was $11,158,000, which will be amortized over a 25 year period. Guaranty National's financial statements for 1988 through November 20, 1991, the period that Guaranty National was wholly-owned by the Company, have been consolidated with those of the Company. The financial statements for the periods subsequent to the sale include the portion of Guaranty National's results attributable to the Company's ownership on an equity accounting basis. Intercargo's results are also recorded by the Company using the equity method. The Company's share of the undistributed earnings of Guaranty National after November 20, 1991, and Intercargo after September 13, 1993, were $14,926,000 as of December 31, 1993 and $8,129,000 as of December 31, 1992. Transactions with Guaranty National for 1993, 1992 and the period from November 20 to December 31, 1991 reported in the consolidated statement of earnings include interest income on the subordinated notes of $1,843,000, $2,004,000 and $251,000, investment management fee income of $550,000, $700,000 and $78,000 and interest expense on a mortgage participation loan of $407,000, $407,000 and $45,000, respectively. -58-
ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Summarized financial information of the Company's affiliates, including Guaranty National for 1993, 1992 and the period from November 20, 1991 to December 31, 1991, and as of December 31, 1993 and 1992, and Intercargo for the fourth quarter of 1993 and as of December 31, 1993, is set forth below (See Note L for segment information which includes the operating results of Guaranty National from January 1 through November 20, 1991): Period from Year Ended November 20 to December 31, December 31, 1991 ----------------- ----------------- 1993 1992 ---- ---- (000s omitted) Revenues: Premiums earned ...................... $272,636 $220,033 $ 21,345 Realized investment gains (losses) ... 5,996 2,342 (1,687) Investment and other income .......... 21,813 23,125 1,940 -------- -------- -------- 300,445 245,500 21,598 -------- -------- -------- Expenses: Insurance expenses ................... 274,377 214,927 18,709 Interest and other ................... 3,447 3,241 454 -------- -------- -------- 277,824 218,168 19,163 -------- -------- -------- Earnings before federal income taxes (benefit) and cumulative effect of change in accounting principles ...... 22,621 27,332 2,435 Federal income taxes (benefit) ......... 4,481 7,061 (13) -------- -------- -------- Earnings before cumulative effect of change in accounting principles .... $ 18,140 $ 20,271 $ 2,448 ======== ======== ======== The Company's proportionate share: Earnings before cumulative effect of change in accounting principles .... $ 9,387 $ 9,994 $ 1,207 ======== ======== ======== Cumulative effect of change in accounting principles (SFAS Nos. 106 and 109) ............ $ 545 $ - $ - ======== ======== ======== December 31, ------------------- 1993 1992 ---- ---- (000s omitted) Cash and investments ................................. $460,779 $327,572 Other assets ......................................... 228,803 149,912 -------- -------- 689,582 477,484 Policy liabilities ................................... (387,783) (276,443) Notes payable ........................................ (49,844) (32,896) Other liabilities .................................... (60,915) (38,022) -------- -------- Stockholders' equity ................................. $191,040 $130,123 ======== ======== -59- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, ------------------- 1993 1992 ---- ---- (000s omitted) The Company's investment in and advances to affiliates were as follows: Book value ......................................... $111,459 $ 81,632 Market value ....................................... 143,255 138,526 Guaranty National shares held ...................... 6,143 6,143 - Book value of shares held ...................... $ 75,394 $ 64,436 - Market value of shares held .................... 107,510 121,332 Intercargo shares held ............................. 1,526 - Book value of shares held ...................... $ 18,869 - Market value of shares held .................... 17,936 Note C - Investments The tables below set forth certain information concerning net investment income, and realized and unrealized investment gains (losses): Year Ended December 31, --------------------------------- 1993 1992 1991 ---- ---- ---- (000s omitted) Net investment income: Fixed maturities ...................... $ 69,565 $ 63,739 $ 77,756 Equity securities ..................... 10,495 9,842 8,346 Other long-term investments ........... 9,130 3,499 4,209 Short-term investments ................ 3,276 5,919 9,051 Accounts and notes receivable ......... 179 105 112 Other ................................. 712 467 1,872 -------- -------- -------- Total investment income ............. 93,357 83,571 101,346 Less investment expenses .............. 1,554 1,088 1,140 -------- -------- -------- Net investment income ............... $ 91,803 $ 82,483 $100,206 ======== ======== ======== Realized investment gains (losses): Fixed maturities ...................... $ 4,515 $ 3,232 $ (845) Equity securities ..................... 4,963 435 (164) -------- -------- -------- $ 9,478 $ 3,667 $ (1,009) ======== ======== ======== -60- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The amortized cost and estimated market values of investments in fixed maturities, equity securities and short-term investments are as follows: Gross Gross Estimated Amortized Unrealized Unrealized Market December 31, 1993 Cost Gains Losses Value - ----------------- ---------- ---------- ---------- --------- (000s omitted) Held-to-maturity securities: United States Government and government agencies and authorities ........... $ 140,784 $ 8,224 $ (627) $ 148,381 States, municipalities and political subdivisions .... 123,852 7,528 (202) 131,178 Foreign governments ......... 7,270 308 - 7,578 Corporate securities ........ 112,496 3,704 (1,188) 115,012 ---------- -------- -------- ---------- $ 384,402 $ 19,764 $ (2,017) $ 402,149 ========== ======== ======== ========== Available-for-sale securities: United States Government and government agencies and authorities ........... $ 145,511 $ 10,156 $ (4,573) $ 151,094 States, municipalities and political subdivisions .... 144,839 15,183 (180) 159,842 Foreign governments ......... 7,381 923 - 8,304 Corporate securities ........ 175,853 10,540 (2,126) 184,267 Mortgage-backed securities (exclusive of government agencies) ................ 44,132 1,020 (323) 44,829 Equity securities ........... 210,311 38,568 (6,236) 242,643 Short-term investments....... 96,473 - - 96,473 ---------- -------- -------- ---------- $ 824,500 $ 76,390 $(13,438) $ 887,452 ========== ======== ======== ========== December 31, 1992 - ----------------- Fixed maturities: United States Government and government agencies and authorities ........... $ 216,309 $ 12,138 $ (1,106) $ 227,341 States, municipalities and political subdivisions .... 252,617 7,685 (16) 260,286 Foreign governments ......... 33,366 1,647 (80) 34,933 Corporate securities ........ 267,160 11,497 (6,308) 272,349 Mortgage-backed securities (exclusive of government agencies) ................ 56,085 1,446 (92) 57,439 Equity securities ............. 169,836 29,731 (13,867) 185,700 Short-term investments......... 107,470 - - 107,470 ---------- -------- -------- ---------- $1,102,843 $ 64,144 $(21,469) $1,145,518 ========== ======== ======== ========== -61- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The amortized cost and estimated market values of fixed maturity and short-term investments at December 31, 1993, by contractual fiscal maturity, are shown below. Expected maturities will differ from contractual maturities because issuers of securities may have the right to call or prepay obligations with or without call or prepayment penalties. Fixed Maturities Fixed Maturities Held-to-Maturity Available-for-Sale -------------------- -------------------- Estimated Estimated Amortized Market Amortized Market Cost Value Cost Value --------- --------- --------- --------- (000s omitted) Due in one year or less .......... $ 27,022 $ 27,267 $113,804 $114,261 Due after one year through five years .......................... 143,168 152,629 38,006 39,199 Due after five years through ten years .......................... 120,506 123,936 56,366 60,290 Due after ten years .............. 93,706 98,317 263,069 288,429 -------- -------- -------- -------- 384,402 402,149 471,245 502,179 Mortgage-backed securities ....... - - 142,944 142,630 -------- -------- -------- -------- $384,402 $402,149 $614,189 $644,809 ======== ======== ======== ========
Proceeds from sales of investments in fixed maturities were $90,720,000 in 1993, $189,282,000 in 1992, and $535,975,000 during 1991. Realized investment gains (losses) on fixed maturities during 1993, 1992 and 1991 include gross gains of $10,817,000, $10,273,000 and $18,287,000, gross losses realized from sales of $4,155,000, $4,908,000 and $11,362,000 and $2,147,000, $2,133,000 and $7,770,000, respectively, of loss provisions recorded for other than temporary impairment in the value of investments. The Company had $226,000 and $1,666,000 of fixed maturity investments for which it was not accruing income for the years ended December 31, 1993 and 1992, respectively. Other long-term investments had aggregate carrying values of $50,682,000 at December 31, 1993 and $36,419,000 at December 31, 1992 including mortgage loans on real estate of $1,690,000 and $434,000, respectively. Estimated market values of mortgage loans and other long-term investments approximate their carrying values. The carrying value of securities on deposit with state regulatory authorities in accordance with statutory requirements totalled $283,537,000 and $340,699,000 at December 31, 1993 and 1992, respectively. Excluding investments in Guaranty National and securities of the United States Government and its agencies, the Company did not have any investments in securities of any one issuer that exceeded $20,000,000. -62- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note D - Reinsurance In the normal course of business, the Company's insurance subsidiaries reinsure certain risks, generally on an excess-of-loss or pro rata basis, with other companies in order to limit losses. Reinsurance does not discharge the primary liability of the original insurer. As of December 31, 1993 and 1992, recoverables for reinsurance ceded to the Company's three largest reinsurers were an aggregate of $106,414,000 and $112,553,000, respectively. At December 31, 1993, these reinsurers provided qualified trust accounts for the benefit of the Company of $46,167,000 and letters of credit totalling $4,372,000. At December 31, 1992, the Company held $36,855,000 in funds of one of these reinsurers, and another provided a qualified trust account for the benefit of the Company of $31,129,000 and a letter of credit for $3,131,000. The table below illustrates the effect of reinsurance on premiums written and premiums earned:
Year Ended December 31, ------------------------------------- 1993 1992 1991 ---- ---- ---- (000s omitted-except for percentages) Direct premiums written ................ $ 647,426 $ 616,016 $ 791,682 Reinsurance assumed .................... 132,702 74,726 76,425 --------- --------- --------- Gross premiums written ................. 780,128 690,742 868,107 Reinsurance ceded ...................... (144,542) (123,312) (134,042) --------- --------- --------- Net premiums written ................... $ 635,586 $ 567,430 $ 734,065 ========= ========= ========= Percentage of amount assumed to net .... 20.9% 13.2% 10.4% ========= ========= ========= Direct premiums earned ................. $ 635,374 $ 589,570 $ 770,433 Reinsurance assumed .................... 117,711 75,540 69,242 --------- --------- --------- Gross premiums earned .................. 753,085 665,110 839,675 Reinsurance ceded ...................... (135,681) (104,905) (138,289) --------- --------- --------- Net premiums earned .................... $ 617,404 $ 560,205 $ 701,386 ========= ========= ========= Loss and loss adjustment expenses recoverable from reinsurers .......... $ 70,297 $ 75,521 $ 125,575 ========= ========= =========
Included in other liabilities are funds held under various reinsurance treaties of $5,487,000 and $39,072,000 at December 31, 1993 and 1992, respectively. Reinsurance recoverables and prepaid reinsurance includes prepaid reinsurance of $55,043,000 at December 31, 1993 and $46,183,000 at December 31, 1992. -63- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note E - Notes Payable Orion issued 9 1/8% Senior Notes due 2002 (the "9 1/8% Senior Notes") in a public offering on September 8, 1992. The proceeds were used to extinguish the Company's debt under its loan agreement with various banks at that date, and to redeem its 13 1/2% Senior Subordinated Debentures on October 9, 1992. The Company entered into a loan agreement (the "Bridge Loan") with two banks on November 30, 1992, and borrowed $20,000,000 under this agreement in December 1992, the proceeds of which were used to redeem the Company's 12 1/2% Subordinated Debentures on December 31, 1992. The costs of the early extinguishment of the Company's bank debt and debentures in 1992 were approximately $2,980,000. These costs are reported as an extraordinary item in the Company's financial statements, net of a $60,000 tax benefit. Debt extinguishment costs include the premiums required to call the debentures, the unamortized discount of the debentures and unamortized deferred financing costs of the debentures and bank debt. Orion entered into a bank loan agreement (the "Loan Agreement") in March 1993 that provided for initial borrowings of up to $60,000,000, consisting of a $50,000,000 term loan (reduced by $4,500,000 in scheduled commitment reductions through December 31, 1993) and a $10,000,000 line of credit. The proceeds were used to repay the Bridge Loan and to redeem the Company's Adjustable Rate Preferred Stock. As of December 31, 1993, the Company had $50,500,000 outstanding under the Loan Agreement, and $5,000,000 in unused commitments available under the line of credit. There is a commitment fee of 1/4% of 1% per annum on the unused portion of the revolving credit facility. The Company can elect to borrow at the prime rate, or at certain other short- term borrowing rates. The rates for notes payable under the Loan Agreement were between 4.59% and 4.90% at December 31, 1993. The terms of the Loan Agreement limit the amount of additional borrowings, prepayments on existing indebtedness, liens and guarantees by the Company, and require the Company to meet minimum net worth and certain financial ratio tests. The 9 1/8% Senior Notes Indenture limits the Company's ability to incur secured indebtedness without equally and ratably securing the 9 1/8% Senior Notes. -64- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Notes payable are recorded at face value less unamortized discount. The carrying value and estimated market value of notes payable consists of the following:
Estimated Carrying Value Market Value ------------------ ------------------ December 31, 1993 1992 1993 1992 ------------ ---- ---- ---- ---- (000s omitted) Borrowings under loan agreement with various banks (various interest rates) .............. $ 50,500 $ 20,000 $ 50,500 $ 20,000 $110,000,000 face amount, 9 1/8% Senior Notes, due September 1, 2002 ....................... 109,872 109,863 119,053 109,076 -------- -------- -------- -------- $160,372 $129,863 $169,553 $129,076 ======== ======== ======== ======== The Company's debt is scheduled to be repaid as follows: (000s omitted) 1994 ................................... $ 8,000 1995 ................................... 10,000 1996 ................................... 12,000 1997 ................................... 12,000 1998 ................................... 8,500 2002 ................................... 110,000 -------- 160,500 Less unamortized discount .............. 128 -------- $160,372 ========
Note F - Federal Income Taxes Orion and its wholly-owned subsidiaries file consolidated federal income tax returns. The Company adopted SFAS No. 109 effective January 1, 1993. The new standard provides for the recognition of deferred tax assets that were not recognized under the prior standard, SFAS No. 96. The cumulative effect of adopting SFAS No. 109 was a benefit of $16,881,000. Accounting for income taxes using SFAS No. 109 increased income taxes on continuing operations for 1993 by $3,909,000. The consolidated federal income tax current provisions for 1991 through 1993 were computed by the regular tax method, reduced by alternative minimum and other tax credits in 1991. The deferred tax benefit for 1993 results primarily from the increase in the discount on loss reserves for income tax purposes offset by the undistributed earnings of Guaranty National. The 1993 tax provision reflects a tax benefit of $450,000 from the -65- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) effect of the increase in the federal tax rate on the Company's deferred tax asset. The consolidated federal income tax deferred benefits for 1992 and 1991 result from the recognition of previously unrecorded deferred tax benefits to the extent that they could be carried back to generate the recovery of income taxes under SFAS No 96. Substantially all federal income taxes incurred by the Company and its subsidiaries relate to domestic operations. The tax effects of the temporary differences comprising the Company's net deferred tax asset as of December 31, 1993 and January 1, 1993 are as follows:
December 31, January 1, 1993 1993 ------------ ---------- (000s omitted) Deferred tax assets: Loss reserve discounting ...................... $55,479 $52,483 Unearned premium reserves ..................... 14,675 13,039 Policyholders' dividends ...................... 4,348 4,437 Realized investment losses .................... 4,054 3,239 Deferred income ............................... 2,836 2,927 Retiree medical benefits ...................... 2,726 - Other ......................................... 6,717 5,608 ------- ------- 90,835 81,733 ------- ------- Deferred tax liabilities: Deferred policy acquisition costs ............. 20,133 19,086 Investment in affiliates ...................... 15,800 12,204 Unrealized investment gains ................... 23,899 6,397 Other ......................................... 12,112 10,366 ------- ------- 71,944 48,053 ------- ------- $18,891 $33,680 ======= ======= Total income taxes on income from operations and allocations of taxes to other items for the year ended December 31, 1993 are as follows: (000s omitted) Taxes on income from continuing operations ............................ $ 15,517 Taxes allocated to other items: Cumulative effect of change in accounting for postretirement benefits ............................ (2,604) Stockholders' equity, for increase in unrealized appreciation of securities .......................... 18,718 Stockholders' equity, for increase in foreign exchange translation losses.. (394) -------- $ 31,237 ======== -66- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of the provision (benefit) for federal income taxes are as follows: Year Ended December 31, ----------------------------- 1993 1992 1991 ---- ---- ---- (000s omitted) Current ...................... $16,448 $ 6,104 $13,758 Deferred .................... (931) (5,182) (12,357) ------- ------- ------- $15,517 $ 922 $ 1,401 ======= ======= ======= A reconciliation of expected federal income tax expense on pre-tax earnings before cumulative effect of adoption of new accounting principles and extraordinary item at regular corporate rates to actual tax expense is as follows: Year Ended December 31, ------------------------------------------------ 1993 1992 1991 ---- ---- ---- Amount Rate Amount Rate Amount Rate ------ ---- ------ ---- ------ ---- (000s omitted-except for percentages) Expected income tax expense.. $25,377 35.0% $15,883 34.0% $15,663 34.0% Utilization of NOLs ......... - - (6,135) (13.1) (12,357) (26.8) Alternative minimum and other tax credits ............... - - - - (5,016) (10.9) Change in enacted tax rate .. (905) (1.3) - - - - Dividends-received deduction (4,659) (6.4) (4,003) (8.6) (2,685) (5.8) Tax-exempt interest ......... (5,791) (8.0) (3,006) (6.4) (478) (1.0) Amortization of goodwill .... 410 .6 399 .8 610 1.3 Temporary differences - Loss reserve discounting... - - 1,729 3.7 10,646 23.1 Amortization of fresh start discount .......... - - (1,262) (2.7) (1,958) (4.3) Unearned premium reserves.. - - 2,156 4.6 4,214 9.1 Deferred policy acquisition costs ................... - - 931 2.0 (3,317) (7.2) Salvage and subrogation ... - - (2,343) (5.0) (650) (1.4) Sale of Guaranty National stock ................... - - - - (4,829) (10.5) Equity in earnings of affiliates .............. - - (2,385) (5.1) (410) (.9) Realized investment losses. - - (1,540) (3.3) (369) (.8) Other ....................... 1,085 1.5 498 1.1 2,337 5.1 ------- ----- ------- ----- ------- ----- Actual income tax expense ... $15,517 21.4% $ 922 2.0% $ 1,401 3.0% ======= ===== ======= ===== ======= ===== -67-
ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note G - Commitments Minimum lease commitments at December 31, 1993, with the majority having initial lease periods from one to twenty-five years, are as follows: (000s omitted) 1994 ....................................... $10,721 1995 ....................................... 9,009 1996 ....................................... 7,446 1997 ....................................... 5,898 1998 ....................................... 4,959 1999 and thereafter ........................ 45,439 ------- Minimum rental commitments ............... $83,472 ======= Rent expense amounted to $11,976,000, $12,224,000 and $13,521,000 net of sublease rentals of $419,000, $765,000 and $791,000 in 1993, 1992 and 1991, respectively. Substantially all leases are for office space and equipment. A number of lease commitments contain renewal options ranging from one to thirty years. Note H - Contingencies In November 1988, California voters passed an initiative known as Proposition 103 (the "California Proposition") which amended the California Insurance Code to provide, among other things, that rates for automobile and many other insurance policies issued or renewed on or after November 8, 1988, be rolled back to the levels of November 8, 1987 and then reduced by 20%. Workers compensation insurance and reinsurance are excluded from the California Proposition's rate rollback provisions. On January 8, 1991, the California Insurance Department issued rate regulation proposals regarding the California proposition. On October 16, 1991, the California Insurance Commissioner issued notices of premium refunds to 14 insurers. In February 1993, the California State Court invalidated the regulations with respect to one insurance company that received notice of a premium refund. The decision is currently on appeal to the California Supreme Court. None of the Company's insurance subsidiaries were among the companies that received the refund notices. Although it is not possible to predict with any degree of certainty the ultimate outcome of such regulations or their impact on the Company's rates charged since November 8, 1988, management currently believes that the effect of the regulations will not be material to the Company. Based on the foregoing, and management's belief that the rates filed by the Company comply with applicable California law, no provision has been made in the accompanying consolidated financial statements for denial or partial denial of the Company's rollback exemption applications or partial or total disapproval of the Company's rates filed since November 8, 1989. -68- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Orion and its subsidiaries are routinely engaged in litigation incidental to their businesses; however, in the judgment of the Company's management, there are no significant legal proceedings pending against Orion or its subsidiaries, which, net of reserves established therefor and giving effect to reinsurance, are likely to result in judgments for amounts that are material to the financial condition of Orion and its consolidated subsidiaries, taken as a whole. Note I - Stockholders' Equity and Earnings Per Common Share Orion declared a 5-for-4 split of its common stock which was paid on November 15, 1993 to shareholders of record on October 15, 1993. All common stock and per common share data presented in the financial statements has been restated to give effect to this stock split. The Company had also paid a 5- for-4 common stock split on December 7, 1992 to shareholders of record on November 20, 1992. During 1993, the Company repurchased 177,658 shares of its common stock at an aggregate cost of $5,472,000. The Company repurchased 22,420 shares for $554,000 in 1992 and 52,700 shares for $655,000 in 1991. On April 15, 1992, Orion sold 515,625 shares of its common stock for $9,497,000, net of expenses. The sale was made in a private transaction, subject to the provisions of Regulation S of the Securities Act of 1933, as amended. On December 21, 1992, Orion called for the redemption of its $2.125 Convertible Exchangeable Preferred Stock (the "$2.125 Preferred Stock") on January 21, 1993. The market price of the shares of common stock that a holder would receive upon conversion of the preferred stock was substantially higher than the redemption price of $25.76 per share. Consequently, most holders converted into common stock prior to the redemption date, resulting in the issuance of 3,579 shares of common stock in December 1992 and 1,423,544 shares of common stock in January 1993. Holders of 21,605 shares of $2.125 Preferred Stock, who did not elect to convert, redeemed their shares for an aggregate of $557,000. Orion issued 2,601,050 and 42,428 shares of common stock for conversions elected by holders of 1,581,470 and 25,800 shares of the Company's $1.90 Convertible Exchangeable Preferred Stock (the "$1.90 Preferred Stock"), in 1992 and 1991, respectively. The 1992 conversions were primarily the result of Orion calling this issue on November 2, 1992 at the redemption price of $21.30 per share including accrued dividends. The remaining 2,730 shares of $1.90 Preferred Stock were redeemed for approximately $58,000. -69- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) On April 7, 1993, the Company redeemed all of the outstanding shares of its Adjustable Rate Preferred Stock for $18,520,000 in cash. The redemption was funded with borrowings under the Loan Agreement. Dividends declared on Orion's common and preferred stock for 1993, 1992 and 1991 were as follows:
Year Ended December 31, ------------------------------------------------------- 1993 1992 1991 ----------------- ----------------- ----------------- Per Share Amount Per Share Amount Per Share Amount --------- ------- --------- ------- --------- ------- (000s omitted - except for per share data) Adjustable Rate Preferred Stock ..... $1.10 $ 407 $4.16 $ 1,581 $4.37 $ 1,679 $1.90 Preferred Stock.. - - 1.43 2,227 1.90 3,047 $2.125 Preferred Stock. .12 2 2.13 2,550 2.13 2,550 Common Stock .......... .68 9,860 .60 6,641 .59 5,823 ------- ------- ------- $10,269 $12,999 $13,099 ======= ======= =======
The weighted average common shares outstanding for purposes of computing earnings per share amounted to 14,598,000, 10,914,000 and 9,964,000 shares for 1993, 1992 and 1991, respectively. Dividends on preferred stock were deducted from earnings to compute primary earnings per common share. The $2.125 Preferred Stock and, for 1992 and 1991, the $1.90 Preferred Stock are assumed to be converted for the full year, if dilutive, for the purpose of computing fully-diluted earnings per common share. The weighted average common shares, on a fully-diluted basis, amounted to 14,655,000, 14,474,000 and 14,086,000 shares for 1993, 1992 and 1991, respectively. Orion has a Stockholder Rights Plan (the "Rights Plan") under which each outstanding share of common stock includes 64% of one preferred stock purchase right (the "Rights"). The Rights Plan is designed to assure stockholders that they will receive equitable treatment in the event of a proposed takeover. Under the Rights Plan, each holder of a Right is entitled to buy one-hundredth of a share of Series A Participating Junior Preferred Stock. The Rights become exercisable if an acquiror gains a 20% or greater beneficial ownership interest in Orion's common stock, on other than fair and favorable terms to all stockholders. Each Right not owned by such acquiror will enable the holder to purchase, at an initial exercise price of $80, common stock having a value of twice the Right's exercise price. In addition, under certain circumstances if Orion is involved in a merger each Right will entitle its holder to purchase, at the Right's then current exercise price, common shares of such other company having a value of twice the Right's exercise price. -70- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note J - Employee Benefit Plans The Company maintains a Stock Savings and Retirement Plan (the "Plan"), qualified under Internal Revenue Code Section 401(k), for eligible employees of the Company. Employee and employer matched contributions to the savings funds are limited to the extent allowable under the Plan and federal income tax law. The Plan also provides for a defined contribution retirement benefit that allows the Company to make annual contributions to the Plan based on a percentage of the participating employees' compensation. Employees vest in the Company's contributions over a six-year period with vesting credit given for prior service with the Company. The Company has adopted a Surplus Benefit Plan which provides deferred benefits for those employees who received less than the full employer contribution to the Company's 401(k) plan as a result of federal tax limitations on participation in the Plan. The Company maintains a number of incentive plans for key employees. These plans include the Company's 1979 stock option plan and the Company's 1982 Long-Term Performance Incentive Plan. Under the latter plan, shares of restricted stock as well as stock options may be granted by Orion. Orion granted 5,688, 66,016 and 4,063 shares of restricted stock to key employees during 1993, 1992 and 1991, respectively. Restricted stock is considered issued and outstanding when awarded, and is recorded as deferred compensation. There are restrictions as to its transferability, which restrictions lapse proportionately from the second to the fifth anniversaries of grant date. As of December 31, 1993, the restrictions have not lapsed on 130,089 shares of restricted stock. All stock options granted by Orion, at fair market value at date of grant, are intended to qualify as incentive stock options becoming exercisable from the first through fourth anniversaries of the date of grant, expiring ten years after the date of grant. As of December 31, 1993, the number of shares of stock reserved under all plans is 641,113 of which 284,337 are for outstanding stock options and 197,696 of these stock options are exercisable. A summary of the option transactions is as follows:
Year Ended December 31, --------------------------------------------------------------------- 1993 1992 1991 ---- ---- ---- Price Price Price Options Range Options Range Options Range ------- ----- ------- ----- ------- ----- Balance - January 1 ... 305,860 $10.16-23.92 257,422 $ 8.64-19.20 284,375 $ 8.64-19.20 Granted ............... 3,438 32.40 92,969 23.92 - Cancelled ............. - - (3,125) 10.88 Exercised ............. (24,961) 10.16-14.56 (44,531) 8.64- 9.04 (23,828) 8.64-13.92 ------- ------- ------- Balance - December 31.. 284,337 10.16-32.40 305,860 10.16-23.92 257,422 8.64-19.20 ======= ======= =======
-71- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Orion also maintains a non-qualified defined benefit retirement plan for members of the Board of Directors who are not employees. Benefits are based on years of service and director fee levels at retirement. The total expense for 1993, 1992 and 1991 for the above pension benefit plans for employees and directors amounted to $3,277,000, $2,694,000 and $1,695,000, respectively. Note K - Postretirement Medical Benefits The Company provides postretirement medical benefits to full-time employees who have worked for 10 years and attained age 55 while in service with the Company. The effect on income from continuing operations after federal income taxes for 1993 of accounting for retirement benefits using SFAS No. 106 was to increase expenses by $211,000, net of federal income taxes. The Company's postretirement health care plan is not funded. The accumulated postretirement benefit obligation of the plan at December 31, 1993 included in other liabilities in the consolidated balance sheet is as follows: (000s omitted) Retirees ................................. $2,260 Fully eligible active plan participants .. 1,425 Other active plan participants ........... 4,104 ------ $7,789 ====== Net postretirement benefit cost for the year ended December 31, 1993 was $598,000 and consisted of service cost benefits earned of $130,000 and interest on the accumulated postretirement benefit obligation of $468,000. The expected health care cost trend rate used as of December 31, 1993 was 16.0% for 1994, and 10% in 1995 decreasing linearly each year until it reaches 6% for 2003 and future years. A one-percentage-point increase in the assumed health care cost trend rate for each year would increase the accumulated postretirement benefit obligation as of December 31, 1993 by $1,325,000 and increase net postretirement health care costs by $145,000 for 1993. The assumed discount rate used in determining the accumulated postretirement benefit obligation was 7.0% at December 31, 1993. -72- ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note L - Industry Segment Information The Company's insurance operations are organized and reported as three business segments: Regional Operations, Reinsurance/Special Programs and Guaranty National Companies. Regional Operations markets workers compensation insurance through EBI Companies and Nation's Care, Inc. Reinsurance/Special Programs includes DPIC Companies (which markets the Company's professional liability insurance), Connecticut Specialty Insurance Group (which directs the underwriting and sale of specialty insurance programs), SecurityRe Companies (which underwrites reinsurance), and a 20% interest in Intercargo (which underwrites international trade). The third segment, Guaranty National Companies, specializes in writing nonstandard commercial and personal automobile insurance. The operations of the Guaranty National Companies are included in revenues and expenses through November 20, 1991, the date that the Company sold 6,250,000 shares of Guaranty National's common stock in a public offering, reducing the Company's ownership of Guaranty National to approximately 49%. Earnings subsequent to November 20, 1991 include the Company's share of Guaranty National's earnings using the equity method of accounting. The miscellaneous income and expenses (primarily interest, general and administrative expenses and other consolidating elimination entries) of the parent company are reported as a fourth segment. Identifiable assets of the Regional Operations and Reinsurance/Special Programs segments are primarily allocated based on the cash flows of these segments, and for 1992 and 1991 have been restated to conform with SFAS No. 113. -73-
Financial information for the Company's segments for 1993, 1992 and 1991 is shown below: Earnings (Loss) from Operations Before Federal Gain on Income Taxes, Sale of Cumulative Effect Realized Guaranty of Accounting Net Investment National Changes and Premiums Investment Gains Common Other Total Extraordinary Identifiable Earned Income (Losses) Stock Income Revenues Item Assets -------- ---------- ---------- ---------- -------- -------- ----------------- ------------ (000s omitted) 1993: Regional Operations ... $266,373 $ 33,760 $ 4,153 $ - $ - $304,286 $ 34,025 $ 758,596 Reinsurance/Special Programs ............ 351,031 55,500 6,706 - 915 414,152 44,032 1,234,033 Guaranty National Companies ........... - - - - - - 9,509 92,590 Other ................. - 2,543 (1,381) - 555 1,717 (15,061) 32,235 -------- -------- -------- -------- -------- -------- -------- ---------- Total ............... $617,404 $ 91,803 $ 9,478 $ - $ 1,470 $720,155 $ 72,505 $2,117,454 ======== ======== ======== ======== ======== ======== ======== ========== 1992: Regional Operations.... $268,145 $ 33,182 $ 2,077 $ - $ (193) $303,211 $ 4,227 $ 774,030 Reinsurance/Special Programs ............ 292,060 48,416 3,027 - 849 344,352 50,384 1,055,679 Guaranty National Companies ........... - - - - - - 9,994 81,632 Other ................. - 885 (1,437) - 707 155 (17,891) 26,067 -------- -------- -------- -------- -------- -------- -------- ---------- Total ............... $560,205 $ 82,483 $ 3,667 $ - $ 1,363 $647,718 $ 46,714 $1,937,408 ======== ======== ======== ======== ======== ======== ======== ========== 1991: Regional Operations ... $263,478 $ 32,014 $ (517) $ 14,692 $ 1,940 $311,607 $ (9,816) $ 769,267 Reinsurance/Special Programs ............ 256,619 43,924 (1,161) 19,239 1,014 319,635 50,500 941,906 Guaranty National Companies ........... 181,289 23,060 1,022 - (204) 205,167 23,684 96,558 Other ................. - 1,208 (353) - 30 885 (18,299) 19,338 -------- -------- -------- -------- -------- -------- -------- ---------- Total ............... $701,386 $100,206 $ (1,009) $ 33,931 $ 2,780 $837,294 $ 46,069 $1,827,069 ======== ======== ======== ======== ======== ======== ======== ==========
ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note M - Selected Quarterly Financial Data (Unaudited) Quarterly results of operations and earnings per common share for 1993 and 1992 are summarized as follows:
First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- (000s omitted-except for per share data) 1993: Premiums earned ........................ $149,272 $157,404 $151,641 $159,087 Net investment income .................. 21,677 21,170 22,218 26,738 Realized investment gains .............. 4,812 1,755 1,131 1,780 Other income ........................... 303 464 428 275 -------- -------- -------- -------- Total revenues ..................... $176,064 $180,793 $175,418 $187,880 ======== ======== ======== ======== Earnings before cumulative effect of change in accounting principles .. $ 14,328 $ 13,907 $ 12,868 $ 15,885 ======== ======== ======== ======== Net earnings ....................... $ 26,153 $ 13,907 $ 12,868 $ 15,885 ======== ======== ======== ======== Net earnings per common share - Primary: Earnings before cumulative effect of change in accounting principles .. $ .97 $ .95 $ .88 $ 1.09 ======== ======== ======== ======== Net earnings ....................... $ 1.78 $ .95 $ .88 $ 1.09 ======== ======== ======== ======== Fully diluted: Earnings before cumulative effect of change in accounting principles .. $ .95 $ .95 $ .88 $ 1.09 ======== ======== ======== ======== Net earnings ....................... $ 1.75 $ .95 $ .88 $ 1.09 ======== ======== ======== ======== 1992: Premiums earned ......................... $143,223 $134,773 $136,218 $145,991 Net investment income ................... 20,702 19,671 20,630 21,480 Realized investment gains ............... 604 827 2,147 89 Other income ............................ 385 166 466 346 -------- -------- -------- -------- Total revenues ...................... $164,914 $155,437 $159,461 $167,906 ======== ======== ======== ======== Earnings before extraordinary item .. $ 10,689 $ 9,931 $ 12,824 $ 12,348 ======== ======== ======== ======== Net earnings ........................ $ 10,689 $ 9,931 $ 12,718 $ 9,534 ======== ======== ======== ======== Net earnings per common share - Primary: Earnings before extraordinary item .. $ .89 $ .78 $ 1.04 $ .89 ======== ======== ======== ======== Net Earnings ........................ $ .89 $ .78 $ 1.03 $ .67 ======== ======== ======== ======== Fully diluted: Earnings before extraordinary item .. $ .73 $ .66 $ .85 $ .81 ======== ======== ======== ======== Net Earnings ........................ $ .73 $ .66 $ .84 $ .62 ======== ======== ======== ======== The sum of quarterly per common share amounts may not agree with the corresponding annual amounts due to rounding or antidilution during certain quarters. -74-
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III Pursuant to General Instruction G(3) to this form, the information required by Part III (Items 10, 11, 12 and 13) hereof is incorporated by reference from the Company's definitive proxy statement for its Annual Meeting to be held on June 1, 1994. The Company intends to file the proxy material, which involves the election of directors, not later than 120 days after the close of the Company's fiscal year. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1 Financial Statements: The following financial statements are included in Part II, Item 8. Page ---- Report of Management................................. 47 Independent Auditors' Report......................... 48 Orion Capital Corporation and Subsidiaries: December 31, 1993 and 1992 Consolidated Balance Sheet................. 49-50 For the years ended December 31, 1993, 1992 and 1991 Consolidated Statement of Earnings......... 51 Consolidated Statement of Stockholders' Equity..................................... 52 Consolidated Statement of Cash Flows....... 53-54 Notes to the Consolidated Financial Statements.. 55-74 (a) 2. Financial Statement Schedules: Selected Quarterly Financial Data - for the years ended December 31, 1993, 1992 and 1991 - Included in Part II, Item 8. -75- Page ---- Schedule I Consolidated Summary of Investments - Other than Investments in Related Parties - December 31, 1993........................ S-1 III Condensed Financial Information of Registrant - S-2, S-3, December 31, 1993, 1992 S-4, S-5, and 1991.................... S-6 V Supplementary Insurance Information - December 31, 1993, 1992 and 1991......... S-7 VIII Valuation and Qualifying Accounts - December 31, 1993, 1992 and 1991............... S-8 IX Short-Term Borrowings - December 31, 1993, 1992 and 1991.................... S-9 X Supplemental Information For Property - Casualty Insurance Underwriters - December 31, 1993, 1992 and 1991........................ S-10 Schedules other than those listed above are omitted for the reason that they are not required or are not applicable, or the required information is shown in the Financial Statements or notes thereto. (a) 3. Exhibits: Exhibit 3(i) Restated Certificate of Incorporation of the Company, as amended on June 3, 1993. Exhibit 3(ii) By-Laws of the Company, as amended on May 7, 1993. Exhibit 4(i) Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of the Company, dated March 23, 1989; filed as Exhibit 4(xi) to the Company's Annual Report on Form 10-K for 1988. -76- Exhibit 4(ii) Specimen certificate representing shares of the Company's Common Stock (proof of March 27, 1989); filed as Exhibit 4(xii) to the Company's Annual Report on Form 10-K for 1988. Exhibit 4(iii) Indenture, dated as of September 8, 1992, between the Company and the Connecticut National Bank (now known as Shawmut Bank Connecticut, National Association), as Trustee of the Company's 9 1/8% Senior Notes due September 1, 2002; filed as Exhibit 4(v) to the Company's Annual Report on Form 10-K for 1992. Exhibit 4(iv) Specimen certificate representing the Company's 9 1/8% Senior Notes; filed as Exhibit 4(vi) to the Company's Annual Report on Form 10-K for 1992. Exhibit 10 (i)* The Company's Deferred Compensation Plan, as amended (effective July 1, 1992); filed as Exhibit 10(i) to the Company's Annual Report on Form 10-K for 1991. Exhibit 10(ii)* The Company's 1982 Long-Term Performance Incentive Plan (as amended); filed as Exhibit 10(iii) to the Company's Annual Report on Form 10-K for 1992. Exhibit 10(iii)* The Company's 1979 Stock Option Plan, as amended; filed as Exhibit 10(lx) to the Company's Annual Report on Form 10-K for 1981. Exhibit 10(iv)* Employment Agreement between Alan R. Gruber and the Company, dated as of March 19, 1993; filed as Exhibit 10(v) to the Company's Annual Report on Form 10-K for 1992. Exhibit 10(v)* Employment Agreement, between the Company and Robert B. Sanborn, dated as of March 19, 1993; filed as Exhibit 10(vi) to the Company's Annual Report on Form 10-K for 1992. Exhibit 10(vi)* Employment Agreement, dated as of August 1, 1987, between the Company and Peter B. Hawes; filed as Exhibit 10(x) to the Company's Annual Report on Form 10-K for 1989. *Management contract or compensatory plan or arrangement. -77- Exhibit 10(vii)* Employent Agreement, dated as of December 1, 1992 between the Company and Larry D. Hollen; filed as Exhibit 10(viii) to the Company's Annual Report on Form 10-K for 1992. Exhibit 10(viii) Lease Agreement between Connecticut UTF, Inc., as lessor, and Security Insurance Company of Hartford ("Security"), as lessee, dated as of December 19, 1984; filed as Exhibit 10(xxxiii) to the Company's Annual Report on Form 10-K for l984. Exhibit 10(ix) Second Assignment of Lease and Agreement from Connecticut UTF, Inc. to Security, dated as of December 19, 1984; filed as Exhibit 10(xxxiv) to the Company's Annual Report on Form 10-K for 1984. Exhibit 10(x) Purchase Money Second Mortgage from Connecticut UTF, Inc., as mortgagor, to Security, as mortgagee, dated as of December 19, 1984; filed as Exhibit 10(xxxvi) to the Company's Annual Report on Form 10-K for 1984. Exhibit 10(xi) Purchase Money Note, in the face amount of $2,800,000, from Connecticut UTF, Inc. to Security, dated December 19, 1984; filed as Exhibit 10(xxxvi) to the Company's Annual Report on Form 10-K for l984. Exhibit 10(xii) Guarantee from the Company to Connecticut UTF, Inc., dated as of December 19, 1984, guaranteeing the performance of Security under its lease with Connecticut UTF, Inc.; filed as Exhibit 10(xxxvii) to the Company's Annual Report on Form 10-K for 1984. Exhibit 10(xiii) Form of Indemnification Agreement, dated as of June 3, 1987, between the Company and each of its Directors and Executive Officers; filed as Exhibit 10(xl) to the Company's Annual Report on Form 10-K for l987. Exhibit 10(xiv) Rights Agreement, dated as of March 15, 1989, between the Company and Manufacturers Hanover Trust Company, Rights Agent; filed as Exhibit 1 to the Company's Form 8-A filed March 28, 1989. *Management contract or compensatory plan or arrangement. -78- Exhibit 10(xv) First Aggregate Excess of Loss Reinsurance Contract, effective January 1, 1990, by and among several of the Company's wholly-owned insurance subsidiaries and United States Fidelity and Guaranty Company; filed as Exhibit 10(xxxvi) to the Company's Annual Report on Form 10-K for 1990. Exhibit 10(xvi) Second Aggregate Excess of Loss Reinsurance Contract, effective January 1, 1990, by and among several of the Company's wholly-owned insurance subsidiaries and Helmsman Insurance Company, Ltd.; filed as Exhibit 10(xxvii) to the Company's Annual Report on Form 10-K for 1990. Exhibit 10(xvii) Specific Excess Reinsurance Agreement, effective January 1, 1990, by and among several of the Company's wholly-owned insurance subsidiaries and Cologne Reinsurance Company (Dublin) Ltd.; filed as Exhibit 10(xxiv) to the Company's Annual Report on Form 10-K for 1990. Exhibit 10(xviii)* Retirement Plan for Directors of Orion Capital Corporation, as amended (May 9, 1990); filed as Exhibit 10(xxviii) to the Company's Annual Report on Form 10-K for 1990. Exhibit 10(xix)* Orion Capital Companies Supplemental Benefits Plan, adopted in February 1991, filed as Exhibit 10(xxv) to the Company's Annual Report on Form 10-K for 1991. Exhibit 10(xx) Shareholder Agreement, dated as of November 7, 1991 by and among the Company, Guaranty National Corporation and certain wholly owned subsidiaries and affiliates filed as Exhibit 10(xxvi) to the Company's Annual Report on Form 10K for 1991. *Management contract or compensatory plan or arrangement. -79- Exhibit 10(xxi) Loan Agreement, dated March 8, 1993, by and among the Company, the banks signatory thereto and National Westminster Bank USA, as Agent; filed as Exhibit 10(xxvi) to the Company's Annual Report on Form 10-K for 1992. Exhibit 10(xxii) Letter Agreement, dated September 13, 1993, by and between the Company and Intercargo Corporation. Exhibit 10(xxiii) Agreement, dated September 13, 1993, by and between the Company and The Harper Group, Inc. Exhibit 11 Statement re: computation of earnings per common share. Exhibit 21 Subsidiaries of the Company. Exhibit 23 Consents of Deloitte & Touche Exhibit 28 Information from reports furnished to state insurance regulatory authorities. Copies of exhibits may be obtained upon payment of a $.50 per page fee. Such requests should be made in writing to: Corporate Secretary, Orion Capital Corporation, 30 Rockefeller Plaza, New York, New York 10112. (b) Reports on Form 8-K: None. (c) Filed exhibits: See Exhibit Index (d) Financial statements of non-consolidated subsidiaries: The Audited Consolidated Financial Statements of Guaranty National Corporation and subsidiaries, Consolidated Balance Sheets at December 31, 1993 and 1992, Consolidated Statement of Earnings, Statement of Changes to Stockholders Equity and Statement of Cash Flows for the periods ended December 31, 1993, 1992 and 1991, the Related Notes to the Consolidated Financial Statements and Financial Statement Schedules are incorporated herein by reference. -80- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ORION CAPITAL CORPORATION By: /s/ Alan R. Gruber March 16, 1994 ------------------ Alan R. Gruber Chairman of the Board (Principal Executive) and Financial Officer) By: /s/ Daniel L. Barry March 16, 1994 --------------------- Daniel L. Barry Vice President and Controller (Principal Accounting Officer) -81- Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons (including a majority of the members of the Board of Directors of the Registrant) in the capacities and on the dates indicated: Signature and Title Date - ---------------------- -------- /s/ Alan R. Gruber March 16, 1994 - ------------------------- Alan R. Gruber Chairman of the Board /s/ Bertram J. Cohn March 16, 1994 - ------------------------- Bertram J. Cohn Director /s/ John C. Colman March 16, 1994 - ------------------------- John C. Colman Director /s/ Peter B. Hawes March 16, 1994 - ------------------------- Peter B. Hawes Director /s/ Larry D. Hollen March 16, 1994 ------------------------ Larry D. Hollen Director /s/ R. H. Jeffrey March 16, 1994 - ------------------------- Robert H. Jeffrey Director /s/ Warren R. Lyons March 16, 1994 - ------------------------ Warren R. Lyons Director /s/ James K. McWilliams March 16, 1994 - ------------------------- James K. McWilliams Director -82- Signature and Title Date - ---------------------- -------- /s/ R. W. Moore March 16, 1994 - ---------------------- Ronald W. Moore Director /s/ Donald Reich March 16, 1994 - ---------------------- Donald Reich Director /s/ Robert B. Sanborn March 16, 1994 - ------------------------ Robert B. Sanborn Director /s/ William J. Shepherd March 16, 1994 - -------------------------- William J. Shepherd Director /s/ John R. Thorne March 16, 1994 - -------------------------- John R. Thorne Director /s/ Roger Ware March 16, 1994 - ---------------------------- Roger B. Ware Director -83-
SCHEDULE I ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES December 31, 1993 (000s omitted) ============================================================================== Column A Column B Column C Column D -------- -------- -------- -------- Amount Shown on Balance Type of Investment Cost Value Sheet ______________________________________________________________________________ Fixed maturities held-to-maturity: Bonds - United States Government and government agencies and authorities ................ $ 140,784 $148,381 $ 140,784 States, municipalities and political subdivisions .... 123,852 131,178 123,852 Foreign governments ......... 7,270 7,578 7,270 Public utilities ............ 2,438 2,623 2,438 All other corporate bonds ... 43,516 45,281 43,516 Redeemable preferred stocks ... 66,542 67,108 66,542 ---------- -------- ---------- Total fixed maturities .... 384,402 402,149 384,402 ---------- ======== ---------- Fixed maturities available-for-sale: Bonds - United States Government and government agencies and authorities ................ 145,511 151,094 151,094 States, municipalities and political subdivisions .... 153,498 168,542 168,542 Foreign governments ......... 7,381 8,304 8,304 Public utilities ............ 13,805 14,160 14,160 All other corporate bonds ... 185,459 193,968 193,968 Redeemable preferred stocks ... 12,062 12,268 12,268 ---------- -------- ---------- Total fixed maturities .... 517,716 548,336 548,336 ---------- ======== ---------- Equity securities: Common stocks - Public utilities ............ 6,752 7,709 7,709 Banks, trusts and insurance companies ................. 44,970 64,867 64,867 Industrial, miscellaneous and all other ................. 59,603 66,446 66,446 Non-redeemable preferred stocks 98,986 103,621 103,621 ---------- -------- ---------- Total equity securities ... 210,311 242,643 242,643 ---------- ======== ---------- Mortgage loans on real estate ... 1,690 1,690 Other long-term investments ..... 48,992 48,992 Short-term investments .......... 96,473 96,473 ---------- ---------- Total investments ......... $1,259,584 $1,322,536 ========== ========== S-1 SCHEDULE III ORION CAPITAL CORPORATION AND SUBSIDIARIES CONDENSED FINANCIAL INFORMATION OF REGISTRANT ORION CAPITAL CORPORATION BALANCE SHEET (000s omitted) ASSETS December 31, -------------------- 1993 1992 ---- ---- Equity securities at market (cost $439 - 1992) ........ $ - $ 503 Short-term investments ................................ 8,527 3,735 Cash .................................................. 446 26 Notes receivable and other assets ..................... 2,911 3,108 Deferred income taxes ................................. 18,891 17,539 Investment in subsidiaries ............................ 556,240 457,952 Excess of cost over fair value of net assets acquired.. 29,250 30,361 -------- -------- Total assets ........................................ $616,265 $513,224 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Other liabilities ..................................... $ 23,960 $ 16,507 Due to affiliates ..................................... 18,444 26,810 Federal income taxes payable .......................... 19,294 10,052 Notes payable ......................................... 160,372 129,863 -------- -------- Total liabilities ................................... 222,070 183,232 Adjustable rate preferred stock ....................... - 18,705 Stockholders' equity .................................. 394,195 311,287 -------- -------- Total liabilities and stockholders' equity .......... $616,265 $513,224 ======== ======== See Notes to Condensed Financial Information of Registrant S-2 SCHEDULE III ORION CAPITAL CORPORATION AND SUBSIDIARIES CONDENSED FINANCIAL INFORMATION OF REGISTRANT ORION CAPITAL CORPORATION STATEMENT OF EARNINGS (000s omitted) Year Ended December 31, ---------------------------- 1993 1992 1991 ---- ---- ---- Revenues: Net investment income ....................... $ 458 $ 325 $ 431 Realized investment gains (losses) .......... (13) 13 - Other income ................................ 550 700 - -------- -------- -------- 995 1,038 431 -------- -------- -------- Expenses: Interest .................................... 12,670 12,192 14,027 General and administrative .................. 1,629 3,801 3,240 Amortization of excess of cost over fair value of net assets acquired .............. 1,111 1,111 1,110 -------- -------- -------- 15,410 17,104 18,377 -------- -------- -------- Loss before federal income taxes (benefit), equity in net earnings of subsidiaries, cumulative effect of adoption of new accounting principles and extraordinary item ........................................ (14,415) (16,066) (17,946) -------- -------- -------- Federal income taxes (benefit): Current ..................................... 16,448 6,104 13,758 Deferred .................................... (931) (5,182) (12,357) -------- -------- -------- 15,517 922 1,401 -------- -------- -------- Loss before equity in net earnings of subsidiaries, cumulative effect of change in accounting principles and extraordinary item. (29,932) (16,988) (19,347) Equity in net earnings of subsidiaries ........ 86,920 62,780 64,015 -------- -------- -------- Earnings before cumulative effect of change in accounting principles and extraordinary item. 56,988 45,792 44,668 Cumulative effect of change in accounting principles .................................. 11,825 - - Extraordinary item - loss on early extinguishment of debt, net of income tax benefit of $60 .............................. - 2,920 - -------- -------- -------- Net earnings .................................. $ 68,813 $ 42,872 $ 44,668 ======== ======== ======== See Notes to Condensed Financial Information of Registrant S-3 SCHEDULE III ORION CAPITAL CORPORATION AND SUBSIDIARIES CONDENSED FINANCIAL INFORMATION OF REGISTRANT ORION CAPITAL CORPORATION STATEMENT OF CASH FLOWS (000s omitted) Year Ended December 31, ------------------------------ 1993 1992 1991 ---- ---- ---- Cash flows from operating activities: Dividends received from subsidiaries ...... $ 25,512 $ 15,645 $ 28,680 Net investment income collected ........... 156 326 357 Federal income taxes received from subsidiaries ............................ 5,600 6,250 13,615 Interest paid ............................. (11,998) (10,362) (14,610) Other expenses paid ....................... (2,249) (2,486) (2,096) Other receipts ............................ 634 7,331 547 -------- -------- -------- Net cash provided by operating activities. 17,655 16,704 26,493 -------- -------- -------- Cash flows from investing activities: Sales of equity securities ................ 426 188 - Net sales (purchases) of short-term investments ............................. (4,793) (1,603) (225) Investments in subsidiaries ............... (6,983) (3,578) - Other receipts (payments) ................. (17) 94 (2) -------- -------- -------- Net cash used in investing activities ... (11,367) (4,899) (227) -------- -------- -------- Cash flows from financing activities: Proceeds from issuance of notes payable ... 59,672 127,764 2,000 Proceeds from issuance of common stock .... 286 9,545 65 Repayment of notes payable and debentures.. (29,500) (134,123) (13,315) Dividends paid to stockholders ............ (11,598) (14,539) (14,529) Purchase and redemption of adjustable rate preferred and common stock .............. (23,615) (412) (577) Other payments ............................ (1,113) (40) - -------- -------- -------- Net cash used in financing activities ... (5,868) (11,805) (26,356) -------- -------- -------- Net increase (decrease) in cash ......... 420 - (90) Cash balance, beginning of year ........... 26 26 116 -------- -------- -------- Cash balance, end of year ................. $ 446 $ 26 $ 26 ======== ======== ======== See Notes to Condensed Financial Statements of Registrant S-4 SCHEDULE III ORION CAPITAL CORPORATION AND SUBSIDIARIES CONDENSED FINANCIAL INFORMATION OF REGISTRANT ORION CAPITAL CORPORATION STATEMENT OF CASH FLOWS - (Continued) (000s omitted) Year Ended December 31, ------------------------------ 1993 1992 1991 ---- ---- ---- Reconciliation of net earnings to net cash provided by operating activities: Net earnings ................................ $ 68,813 $ 42,872 $ 44,668 -------- -------- -------- Adjustments: Cumulative effect of change in accounting principles .............................. (11,825) - - Equity in net earnings of subsidiaries .... (86,920) (62,780) (64,015) Consolidating elimination of subsidiaries income taxes ............................ 18,962 11,631 24,681 Dividends received from subsidiaries ...... 25,512 15,645 28,680 Depreciation and amortization ............. 1,966 1,603 1,667 Deferred federal income tax benefit ....... (931) (5,182) (12,357) Realized investment (gains) losses ........ 13 (13) - Amortization of discount on debt .......... 9 292 255 Extraordinary loss ........................ - 2,920 - Change in assets and liabilities: Decrease in notes receivable and other assets .................................. 470 276 292 Increase in taxes payable and other liabilities ............................. 9,952 1,361 12,205 Increase (decrease) in due to affiliates .. (8,366) 8,079 (9,583) -------- -------- -------- Total adjustments and changes ........... (51,158) (26,168) (18,175) -------- -------- -------- Net cash provided by operating activities.. $ 17,655 $ 16,704 $ 26,493 ======== ======== ======== Non-cash transaction: As a result of a change in pooling by the Registrant's insurance subsidiaries, the Registrant received an extraordinary dividend of $65,470,000 (principally securities) in 1993 which it simultaneously contributed to another insurance subsidiary. See Notes to Condensed Financial Information of Registrant S-5
SCHEDULE III ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT Years Ended December 31, 1993, 1992 and 1991 Note A - Reclassifications The condensed financial information of Orion Capital Corporation (the "Registrant") has been reclassified for 1992 and 1991 to conform to the classifications used in 1993. Note B - Notes Payable Notes payable consist of the following:
Estimated Carrying Value Market Value ----------------- ----------------- 1993 1992 1993 1992 ---- ---- ---- ---- (000s omitted) Borrowings under loan agreement with various banks (various interest rates). $ 50,500 $ 20,000 $ 50,500 $ 20,000 $110,000,000 face amount, 9 1/8% Senior Notes, due September 1, 2002 .......... 109,872 109,863 119,053 109,076 -------- -------- -------- -------- $160,372 $129,863 $169,553 $129,076 ======== ======== ======== ======== The Registrant's debt is scheduled to be repaid as follows: (000s omitted) 1994 ................................. $ 8,000 1995 ................................. 10,000 1996 ................................. 12,000 1997 ................................. 12,000 1998 ................................. 8,500 2002 ................................. 110,000 -------- $160,500 Less unamortized discount ............ 128 -------- $160,372 ========
Note C - Expense Reimbursement and Management Fees During 1991 through 1993, the Registrant was reimbursed for payroll, office rental and other expenses incurred by it to support the operations of its insurance subsidiaries. This reimbursement of $5,230,000, $4,500,000 and $4,078,000 in 1993, 1992 and 1991, respectively, is accounted for as a reduction of general and administrative expenses. The Company received an investment management fee from Guaranty National of $550,000 in 1993 and $700,000 in 1992. Note D - Sale of Guaranty National Common Stock The equity in net earnings of subsidiaries for 1991 reflects the impact of the sale of the common stock of Guaranty National by the Company's insurance subsidiaries which resulted in a net gain of $33,931,000. S-6
SCHEDULE V ORION CAPITAL CORPORATION AND SUBSIDIARIES SUPPLEMENTARY INSURANCE INFORMATION (000s omitted) - ----------------------------------------------------------------------------------------------------------------------------------- Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column J Column K -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Reserve For Unpaid Dividends Amortization Deferred Losses Payable Losses and of Deferred Policy- Policy and Loss to Net Loss Policy Other holders' Acquisition Adjustment Unearned Policy- Premiums Investment Adjustment Acquisition Insurance Dividends Premiums Segment Costs Expenses Premiums Holders Earned Income Expenses Costs Expenses Expenses Written (a) (a) (b) ___________________________________________________________________________________________________________________________________ 1993: Regional Operations $19,326 $ 474,903 $ 67,310 $10,581 $266,373 $ 33,760 $191,826 $ 59,596 $ 8,144 $ 9,232 $265,082 Reinsurance/ Special Programs. 38,196 665,500 192,049 1,942 351,031 55,500 267,306 88,844 9,237 3,281 370,504 Other ............. - - - - - 2,543 - - - - - ------- ---------- -------- ------- -------- -------- -------- -------- ------- ------- -------- $57,522 $1,140,403 $259,359 $12,523 $617,404 $ 91,803 $459,132 $148,440 $17,381 $12,513 $635,586 ======= ========== ======== ======= ======== ======== ======== ======== ======= ======= ======== 1992: Regional Operations $21,481 $ 510,836 $ 67,791 $ 9,919 $268,145 $ 33,182 $214,692 $ 62,704 $10,595 $ 9,366 $269,550 Reinsurance/ Special Programs. 34,653 570,560 164,525 3,241 292,060 48,416 209,340 72,966 6,563 4,192 297,880 Other ............. - - - - - 885 - - - - - ------- ---------- -------- ------- -------- -------- -------- -------- ------- ------- -------- $56,134 $1,081,396 $232,316 $13,160 $560,205 $ 82,483 $424,032 $135,670 $17,158 $13,558 $567,430 ======= ========== ======== ======= ======== ======== ======== ======== ======= ======= ======== 1991: Regional Operations $263,478 $ 32,014 $225,369 $ 67,500 $12,534 $12,738 $272,758 Reinsurance/ Special Programs. 256,619 43,924 189,628 63,782 10,378 3,722 280,081 Guaranty National Companies ....... 181,289 23,060 123,418 52,491 5,450 - 181,226 Other ............. - 1,208 - - - - - -------- -------- -------- -------- ------- ------- -------- $701,386 $100,206 $538,415 $183,773 $28,362 $16,460 $734,065 ======== ======== ======== ======== ======= ======= ======== (a) Balances for 1992 have been restated to reflect the adoption of SFAS No. 113, which requires reinsurance recoverables to be reported as assets rather than offsetting liabilities. (b) Net investment income for Regional Operations and Reinsurance/Special Programs is allocated on the basis of cash flow. S-7 /TABLE
SCHEDULE VIII ORION CAPITAL CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS (000s omitted) =============================================================================== Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Additions ---------------------- (1) (2) Balance at Charged to Charged to Balance at Beginning of Costs and Other Deductions End of Description Period Expenses Accounts (a) Period _______________________________________________________________________________ 1993: Allowance for doubtful accounts- Accounts and notes receivable $1,959 $2,337 $ - $2,437 $1,859 ====== ====== ====== ====== ====== 1992: Allowance for doubtful accounts- Accounts and notes receivable $2,636 $2,327 $ - $3,004 $1,959 ====== ====== ====== ====== ====== 1991: Allowance for doubtful accounts- Accounts and notes receivable $3,227 $2,293 $ - $2,884(b) $2,636 ====== ====== ====== ====== ====== (a) Accounts written off (b) Includes $336 deducted in the deconsolidation of Guaranty National S-8 SCHEDULE IX ORION CAPITAL CORPORATION AND SUBSIDIARIES SHORT-TERM BORROWINGS (000s omitted-except for percentages) ========================================================================================= Column A Column B Column C Column D Column E Column F -------- -------- -------- -------- -------- -------- Maximum Average Weighted Weighted Amount Amount Average Category of Aggregate Average Outstanding Outstanding Interest Rate Short-Term Balance at Interest During the During the During the Borrowings End of Period Rate Period Period Period _________________________________________________________________________________________ 1993: Notes payable to banks ........ $ - -% $ - $ - -% ======= ===== ======= ======= ==== 1992: Notes payable to banks ........ $ - -% $10,875 $ 3,320 5.72% ======= ===== ======= ======= ==== 1991: Notes payable to banks ........ $10,875 6.45% $14,500 $13,740 7.74% ======= ===== ======= ======= ====
S-9
SCHEDULE X ORION CAPITAL CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION FOR PROPERTY-CASUALTY INSURANCE UNDERWRITERS (000s omitted) =================================================================================================================================== Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Reserve for Losses and Loss Unpaid Adjustment Expenses Amortization Paid Deferred Losses Discount Incurred Related to of Deferred Losses Policy and Loss Deducted Net (1) (2) Policy and Loss Affiliation with Acquisition Adjustment in Column Unearned Premiums Investment Current Prior Acquisition Adjustment Premiums Registrant Costs Expenses (C) Premiums Earned Income Year Year Costs Expenses Written (a) (b) (a) ___________________________________________________________________________________________________________________________________ 1993: Consolidated property and casualty entities $ 57,522 $1,140,403 $ 4,100 $259,359 $617,404 $ 89,260 $434,840 $ 24,292 $148,440 $374,625 $635,586 ======== ========== ======== ======== ======== ======== ======== ======== ======== ======== ======== 1992: Consolidated property and casualty entities $ 56,134 $1,081,396 $ 4,100 $232,316 $560,205 $ 81,598 $397,551 $ 26,481 $135,670 $346,201 $567,430 ======== ========== ======== ======== ======== ======== ======== ======== ======== ======== ======== 1991: Consolidated property and casualty entities $701,386 $ 98,998 $474,925 $ 63,490 $183,773 $461,888 $734,065 ======== ======== ======== ======== ======== ======== ======== (a) Balances for 1992 have been restated to reflect the adoption of SFAS No. 113, which requires reinsurance recoverables to be recorded as assets rather than offsetting liabilities. (b) Discount deducted in Column C is computed using a statutory interest rate of 3.5% at December 31, 1993 and 1992 for certain workers compensation losses. Amounts for Guaranty National are consolidated through November 20, 1991. At that date, Guaranty National became a separate registrant and files its own Form 10-K and related schedules. S-10 /TABLE EXHIBIT INDEX Exhibit 3(i) Restated Certificate of Incorporation of the Company, as amended on June 3, 1993. Exhibit 3(ii) By-Laws of the Company, as amended on May 7, 1993. Exhibit 10(xxii) Letter Agreement, dated September 13, 1993, by and between the Company and Intercargo Corporation. Exhibit 10(xxiii) Agreement, dated September 13, 1993, by and between the Company and The Harper Group, Inc. Exhibit 11 Statement re: computation of earnings per common share. Exhibit 21 Subsidiaries of the Company. Exhibit 23 Consents of Deloitte & Touche. Exhibit 28 Information from reports furnished to state insurance regulatory authorities. EX-3.(I) 2 ARTICLES OF INCORPORATION Exhibit 3(i) RESTATED CERTIFICATE OF INCORPORATION OF ORION CAPITAL CORPORATION, a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1. The name of the corporation is Orion Capital Corporation, and the name under which the corporation was originally incorporated is Tongor Corporation of America. The date of filing of its original Certificate of Incorporation with the Secretary of State was September 2, 1960. 2. This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Certificate of Incorporation of this corporation as heretofore amended or supplemented and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation. 3. The text of the Certificate of Incorporation as amended or supplemented heretofore is hereby restated without further amendments or changes to read as herein set forth in full: I. NAME The name of the corporation is ORION CAPITAL CORPORATION. II. REGISTERED OFFICE AND AGENT The address of the corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name and address of the corporation's registered agent is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. III. BUSINESS OR PURPOSES The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware, as amended. IV. STOCK The total number of shares of all classes which the corporation has authority to issue is Thirty-five Million (35,000,000) shares of which Thirty Million (30,000,000) shares shall be Common Stock, with a par value of One Dollar ($1.00) per share, and Five Million (5,000,000) shares shall be Preferred Stock, with a par value of One Dollar ($1.00) per share. The designations and the powers, preferences, and rights, and the qualifications, limitations or restrictions of the shares of each class of stock are as follows: PREFERRED STOCK The Preferred Stock may be issued from time to time by the Board of Directors as shares of one or more series. Subject to the provisions hereof and the limitations prescribed by law, the Board of Directors is expressly authorized, prior to issuance, by adopting resolutions providing for the issue of, or providing for a change in the number of, shares of any particular series and, if and to the extent from time to time required by law, by filing a certificate pursuant to the General Corporation Law (or other law hereafter in effect relating to the same or substantially similar subject matter), to establish or change the number of shares to be included in each such series and to fix the designation and relative powers, preferences and rights and the qualifications and limitations or restrictions thereof relating to the shares of each such series. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following: (a) the distinctive serial designation of such series and the number of shares constituting such series (provided that the aggregate number of shares constituting all series of Preferred Stock shall not exceed Five Million (5,000,000)); - 2 - (b) the annual dividend rate on shares of such series, whether dividends shall be cumulative and, if so, from which date or dates; (c) whether the shares of such series shall be redeemable and, if so, the terms and conditions of such redemption, including the date or dates upon and after which such shares shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; (d) the obligation, if any, of the corporation to retire shares of such series pursuant to a sinking fund; (e) whether shares of such series shall be convertible into, or exhangeable for, shares of stock of any other class or classes and, if so, the terms and conditions of such conversion or exchange, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any; (f) whether the shares of such series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; (g) the rights of the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation; and (h) any other relative rights, powers, preferences, qualifications, limitations or restrictions thereof relating to such series. The shares of Preferred Stock of any one series shall be identical with each other in all respects except as to the dates from and after which dividends thereon shall cumulate, if cumulative. The number of authorized shares of Preferred Stock may be increased or decreased by the affirmative vote of the holders of a majority of the stock of the corporation entitled to vote without the separate vote of holders of Preferred Stock as a class. COMMON STOCK Subject to all of the rights of the Preferred Stock and except as may be expressly provided with respect to the Preferred Stock herein, by law or by the Board of Directors pursuant to this Article IV: (a) dividends may be declared and paid or set apart for payment upon the Common Stock out of any assets or funds of the corporation legally available for the payment of dividends; - 3 - (b) the holders of Common Stock shall have the exclusive right to vote for the election of directors and on all other matters requiring stockholder action, each share being entitled to one vote; and (c) upon the voluntary or involuntary liquidation, dissolution or winding up of the corporation, the net assets of the corporation shall be distributed pro rata to the holders of the Common Stock in accordance with their respective rights and interests. V. NUMBER OF DIRECTORS The number of directors of this corporation shall be fixed and may be altered from time to time as may be provided in the By-Laws. In the event of any increase in the number of directors, the additional directors may be elected by a majority of the directors then in office, to hold office until the next annual meeting of the stockholders and until their successors are elected and qualified. In the event of vacancies in the Board of Directors, a majority of the remaining members of the Board may elect directors to fill such vacancies. VI. POWERS OF BOARD OF DIRECTORS All of the powers of this corporation, insofar as the same may be lawfully vested by this Restated Certificate of Incorporation in the Board of Directors of this corporation, are hereby conferred upon the Board of Directors of this corporation. In furtherance and not in limitation of that power the Board of Directors is authorized to make, adopt, alter, amend and repeal from time to time the By-Laws of the corporation, by vote of a majority of the whole Board at any meeting thereof provided that regardless of whether such meeting be special or regular, notice of such proposed alteration, amendment, repeal or adoption of new By-Laws shall be given in the manner and within the time specified for notice of special meetings of the Board or by written consent without a meeting signed by all directors. The power of the Board of Directors to adopt, amend or repeal By-Laws is subject to the right of Stockholders entitled to vote with respect thereto to alter and repeal By-Laws made by the Board of Directors. VII. LIMITATIONS ON DIRECTORS' PERSONAL LIABILITY; INDEMNIFICATION No Director of the corporation shall be personally liable to the corporation or its stockholders for monetary damages for - 4 - breach of fiduciary duty as a director, except to the extent that the Delaware General Corporation Law, as the same exists or may hereafter be amended, shall provide that such liability may not be eliminated or limited. Each director, officer, employee or agent of the corporation subsequent to March 30, 1987 shall be indemnified by the corporation to the fullest extent permitted by the Delaware General Corporation Law, as the same may be amended from time to time. VIII. ELECTIONS OF DIRECTORS Elections of directors of the corporation need not be by written ballot unless the By-Laws of the corporation so provide. IX. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK Section 1. Designation, Amount and Par Value. The shares of such series shall be designated as "Series A Junior Participating Preferred Stock," the number of shares constituting such series shall be 150,000 and the par value of such series shall be $1.00 per share. Section 2. Dividends and Distributions. (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first business day of January, April, July and October in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $.75 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $1.00 per share, - 5 - of the Corporation (the "Common Stock") since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the corporation shall at any time after March 15, 1989 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $.75 per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior - 6 - pating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights: (A) Except as provided in paragraph C of this Section 3 and subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the corporation. In the event the corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the corporation. (C) (i) Notwithstanding the provisions of paragraphs A and B of this Section 3, if, on the date used to determine stockholders of record for any meeting of stockholders for the election of directors, a default in preference dividends (as defined in subparagraph (v) below) on the Series A Junior Participating Preferred Stock shall exist, the holders of the Series A Junior Participating Preferred Stock shall have the right, voting as a class as described in subparagraph (ii) below, to elect two directors (in addition to the directors elected by holders of Common Stock of the Corporation). Such right may be exercised at any meeting of stockholders for the election of directors until all such accrued dividends (referred to above) shall have been paid in full. (ii) The right of the holders of Series A Junior Participating Preferred Stock to elect two directors, as described above, shall be exercised as a class concurrently with the rights of holders of any other series of Preferred Stock upon which voting rights to elect such directors have been conferred and are then exercisable. The Series A Junior Participating Preferred Stock and any additional series of Preferred Stock which the corporation may - 7 - issue and which may provide for the right to vote with the foregoing series of Preferred Stock are collectively referred to herein as "Voting Preferred Stock." (iii) Each director elected by the holders of shares of Voting Preferred Stock shall be referred to herein as a "Preferred Director." A Preferred Director so elected shall continue to serve as such director for a term of one year, except that upon any termination of the right of all of such holders to vote as a class for Preferred Directors, the term of office of such directors shall terminate. Any Preferred Director may be removed by, and shall not be removed except by, the vote of the holders of record of a majority of the outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors, present (in person or by proxy) and voting together as a single class (i) at a meeting of the stockholders, or (ii) at a meeting of the holders of shares of such Voting Preferred Stock, called for the purpose in accordance with the By-laws of the corporation, or (iii) by written consent signed by the holders of a majority of the outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors, taken together as a single class. (iv) So long as a default in any preference dividends on the Series A Junior Participating Preferred Stock shall exist or the holders of any other series of Voting Preferred Stock shall be entitled to elect Preferred Directors (i) any vacancy in the office of a Preferred Director may be filled (except as provided in the following clause (ii) by an instrument in writing signed by the remaining Preferred Director and filed with the corporation and (iii) in the case of the removal of any Preferred Director, the vacancy may be filled by the vote or written consent of the holders of a majority of the outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors, present (in person or by proxy) and voting together as a single class, at such time and in such manner as the removal shall be effected. Each director appointed as aforesaid by the remaining Preferred Director shall be deemed, for all purposes hereof, to be a Preferred Director. Whenever (i) no default in preference dividends on the Series A Junior Participating Preferred Stock shall exist and (ii) the holders of other series of Voting Preferred Stock shall no longer be entitled to elect such Preferred Directors, then the number of directors constituting the Board of Directors of the corporation shall be reduced by two. (v) For purposes hereof, a "default in preference dividends" on the Series A Junior Participating Preferred Stock shall be deemed to have occurred whenever the amount of accrued and unpaid dividends on the Series A Junior Participating Preferred Stock shall be equivalent to six full quarterly dividends or more (whether or not consecutive), and, having so occurred, such default shall be deemed to exist thereafter until, but only until, all accrued dividends on all shares of the Series A Junior Participating Preferred Stock then outstanding shall have been paid through the last Quarterly Dividend Payment Date. - 8 - (D) Except as set forth herein, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the corporation shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock; (ii) declare or pay dividends on, or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, provided that the corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the corporation ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock; (iv) purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms - 9 - as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The corporation shall not permit any subsidiary of the corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding Up. (A) Subject to the prior and superior rights of holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to liquidation, dissolution or winding up rights, upon any liquidation (voluntary or otherwise), dissolution or winding up of the corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in subparagraph C below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred Stock and holders of - 10 - shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (C) In the event the corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. - 11 - Section 8. No Redemption. The shares of Series A Junior Participating Preferred Stock shall not be redeemable. Section 9. Ranking.The Series A Junior Participating Preferred Stock shall rank junior to all other series of the corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. Section 10. Amendment.The Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately as a class. 4. This Restated Certificate of Incorporation was duly adopted by the Board of Directors in accordance with Section 245 of the General Corporation Law of the State of Delaware. - 12 - IN WITNESS WHEREOF, said ORION CAPITAL CORPORATION has caused this Certificate to be signed by Alan R. Gruber, its Chairman and Chief Executive Officer, and attested by Michael P. Maloney, its Secretary, this 3rd day of June, 1993. ORION CAPITAL CORPORATION By /s/ Alan R. Gruber --------------------- Alan R. Gruber Chairman and Chief Executive Officer ATTEST: /s/ Michael P. Maloney - ------------------------ Michael P. Maloney Secretary - 13 - EX-3.(II) 3 BY-LAWS Exhibit 3(ii) BY-LAWS OF ORION CAPITAL CORPORATION (a Delaware corporation) ARTICLE I. Offices Section 1. REGISTERED OFFICE. The registered office of the Corporation shall be in the City of Wilmington, County of New Cas- tle, State of Delaware. Section 2. OTHER OFFICES. The Corporation may also have of- fices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II. Meetings of Stockholders Section 1. PLACE OF MEETINGS. Meetings of stockholders shall be held at such time and such place, within or without the State of Delaware, as shall be stated in the notice of the meeting or a duly executed waiver of notice thereof. Section 2. ANNUAL MEETINGS. The annual meeting of stockhold- ers shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, for the purpose of electing a Board of Directors, and for the transaction of such other business as may properly be brought before the meeting. Section 3. SPECIAL MEETINGS. Special meetings of the stock- holders, for any purpose or purposes, unless otherwise prescribed by statute or by the Restated Certificate of Incorporation, may be called by the Chairman of the Board and shall be called by the Chairman of the Board or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting, and the business transacted at any such special meeting of stockholders shall be limited to the purposes set forth in the notice. - 1 - Section 4. NOMINATIONS; INTRODUCTION OF BUSINESS AT A MEETING OF STOCKHOLDERS. (a) Only persons who are nominated in accordance with the procedures set forth in these By-Laws shall be eligible to serve as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Section 4(a), who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this Section 4(a). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting, regardless of any postponement, deferral or adjournment of that meeting to a later date; provided, however, that in the event that less than seventy (70) days' notice or public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting or such public disclosure was made. Such stockholder's notice shall contain the written consent of each proposed nominee to serve as a director if so elected and shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director and as to each person, acting alone or in conjunction with one or more other persons as a partnership, limited partnership, syndicate or other group, who participates or is expected to participate in making such nomination or in organizing, directing or financing such nomination or solicitation of proxies to vote for the nominee (w) the name, age, residence address, and business address of each proposed nominee and of each such person; (x) the principal occupation or employment, and the name, type of business and address of the corporation or other organization in which such employment is carried on, of each proposed nominee and of each such person; (y) the amount of stock of the Corporation owned beneficially, either directly or indirectly, by each proposed nominee and each such person; and (z) a description of any arrangement or understanding of each proposed nominee and of each such person with each other or any other person regarding future employment or any future transaction to which the Corporation will or may be a party, and (ii) as to the stockholder giving the notice (x) the name and address, as they appear on the Corporation's books, of such stockholder and (y) the class and - 2 - number of shares of the Corporation which are beneficially owned by such stockholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. Subject to the rights of holders of preferred stock, no person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in the By-Laws. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the By-Laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 4(a), a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section. (b) At an annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the annual meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Section 4(b), who shall be entitled to vote at such annual meeting and who complies with the notice of procedures set forth in this Section 4(b). For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the annual meeting, regardless of any postponement, deferral or adjournment of that meeting to a later date; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the annual meeting is given or made to stockholders, notice by the stockholder to be timely must be received no later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (iii) the class and number of shares of the Corporation which are beneficially owned by the stockholder and (iv) any material interest of the stockholder in such business. - 3 - Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at the stockholder meeting except in accordance with the procedures set forth in this section 4(b). The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of the By- Laws, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Section 4(b), a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section. Section 5. STOCKHOLDER LISTS. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a com- plete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of and the num- ber of shares registered in the name of each stockholder. Such list shall be open to examination of any stockholder, for any pur- pose germane to the meeting, during ordinary business hours, for a period not less than ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of election during the whole time thereof and may be inspected by any stock- holder who is present. Section 6. QUORUM AND ADJOURNMENT. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quo- rum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Restated Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or repre- sented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new date is set for the determination of the stockholders entitled to vote at the ad- journed meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. - 4 - Section 7. Voting.When a quorum is present at any meeting, in all matters other than the election of Directors, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy, and entitled to vote, shall decide any question brought before such meeting, or unless the question is one upon which by express provision of statute or the Restated Certificate of Incorporation a different vote is required, in which case such express provision shall govern and control the decision of such question. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at such meeting and entitled to vote on the election of directors. Section 8. VOTING AND PROXIES. At all meetings of stockholders, every stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than one (1) year prior to said meeting, unless said instrument shall provide for a longer period. Each stockholder entitled to vote at such meeting shall have one vote for each share of stock entitled to vote and registered in his name on the books of the Corporation. Except as provided by statute, the vote at any meeting of stockholders need not be by ballot unless so directed by the chairman of the meeting. Section 9. STOCK LEDGER. The original or duplicate stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list required under Article II, Section 5 of these By-Laws or the books of the Corporation, or to vote in person or by proxy at any meeting of the stockholders. Section 10. NOTICE. Written or printed notice of each meeting of the stockholders, whether annual or special, stating the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes thereof, shall be given to each stockholder of record of the Corporation entitled to vote at such meeting, either personally by mail, not less than ten (10) days or more than sixty (60) days prior to the meeting. Section 11. RECORD DATE. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which shall not precede the date such record date is fixed and shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall - 5 - be the close of business on the day next preceding the day on which notice is given. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorized or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date thereafter on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of stockholders' meetings are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. Section 12. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. In the event of the delivery to the Corporation of a written consent or consents purporting to authorize or take corporate action and/or related revocations (each such written consent and any revocation thereof is referred to in this Section 12 as a - 6 - "Consent"), the Secretary of the Corporation shall provide for the safekeeping of such Consents and shall as soon as practicable thereafter conduct such reasonable investigation as he or she deems necessary or appropriate for the purpose of ascertaining the validity of such Consents and all matters incident thereto, including, without limitation, whether the holders of shares having the requisite voting power to authorize or take the action specified in the Consents have given consent; provided, however, that if the corporate action to which the Consents relate is the removal or election of one or more members of the Board of Directors, the Secretary of the Corporation shall designate an independent, qualified inspector with respect to such Consents and such inspector shall discharge the functions of the Secretary of the Corporation under this Section 12. If after such investigation the Secretary or the inspector (as the case may be) shall determine that any action purportedly taken by such Consents has been validly taken, that fact shall be certified on the records of the Corporation kept for the purpose of recording the proceedings of meetings of the stockholders and the Consents shall be filed with such records. In conducting the investigation required by this Section 12, the Secretary or the inspector may, at the expense of the Corporation, retain to assist them special legal counsel and any other necessary or appropriate professional advisors, and such other personnel as they may deem necessary or appropriate. ARTICLE III. Directors Section 1. NUMBER AND QUALIFICATION OF DIRECTORS. The number of directors which shall constitute the whole Board shall not be less than five (5) nor more than fourteen (14). The exact number shall be that number specified from time to time by duly adopted resolutions of the Board. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article III, and each director shall hold office until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. No individual may run for election or reelection to the Board or be appointed a director from and after the date he or she reaches 72 years of age. Section 2. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Va- cancies caused by death, resignation, removal or otherwise, and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the - 7 - directors then in office, though less than a quorum, or by the stockholders of the Corporation and each director so chosen shall hold office until the next annual election of directors and until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. Section 3. POWERS. The business of the Corporation shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Restated Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders. Section 4. PLACE OF MEETINGS. The Board of Directors of the Corporation may hold meetings, both regular and special, within or without the State of Delaware. Section 5. ORGANIZATIONAL MEETING. The organizational meeting of each newly elected Board of Directors shall be held immediately after the annual meeting of stockholders or at such time and place as shall be designated by the Chairman of the Board or as may otherwise be fixed by the vote of the stockholders at the annual meeting and if such meeting is held immediately after the annual meeting of stockholders or if a majority of the whole Board shall be present, no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting provided a quorum shall be present; or they may meet at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors or as shall be specified in a written waiver signed by all of the directors. Section 6. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board. Section 7. SPECIAL MEETINGS. Special meetings of the Board of Directors may, at any time and for any purpose permitted by law, either be called by the Chairman of the Board or by the Secretary if the Secretary shall have received written request therefor from any two directors, which meetings shall be held at the time and place designated by the person or persons calling the meeting. No- tice of the time, place and purpose of such meeting shall be given to the directors by the Secretary, or in case of his or her ab- sence, refusal or inability to act, by any other officer. Any such notice may be given by mail, by telegraph, by telephone, by - 8 - personal service or any means thereby as to different directors. If the notice is by mail, then it shall be deposited in the mail at least forty-eight hours before the time of the meeting; if by telegram, by delivery of the message to the telegraph company at least twelve (12) hours before the time of the meeting; if by telephone or personal service, at least twelve (12) hours before the time of the meeting. Section 8. QUORUM. At all meetings of the Board of Directors, a majority of the whole Board shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Restated Certificate of Incorporation or by these By-Laws. Any meeting of the Board of Directors may be adjourned to meet again at a stated time and place. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. ACTION WITHOUT A MEETING. Unless otherwise re- stricted by the Restated Certificate of Incorporation or these By- Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 10. MEETINGS BY CONFERENCE TELEPHONE. Unless otherwise restricted by the Restated Certificate of Incorporation or these By-Laws, members of the Board of Directors or any committee thereof may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting in this manner shall constitute presence in person at such meeting. Section 11. COMMITTEES. There are hereby established an Executive Committee, an Audit Committee and a Compensation Committee, each of which shall have the powers and functions set forth in the following paragraphs of this Section 11 and such additional powers as may be delegated to it by the Board of Directors. The Board of Directors may, by resolution passed by a - 9 - majority of the whole Board, establish one or more additional standing committees or special committees of the Board of Directors. Each committee of the Board of Directors shall have such powers and functions as may be delegated to it by the Board of Directors, except as limited by the General Corporation Law of the State of Delaware. The Board of Directors may abolish any committee established by or pursuant to this Section 11 as it may deem advisable. Each such committee shall consist of three or more members, the exact number to be determined from time to time by the Board of Directors. Designation of members of each such committee shall be made by the Board of Directors. The Board may also designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. The Executive Committee, during intervals between meetings of the Board of Directors, shall have and may exercise, in the best inter- ests of the Corporation, all of the powers of the Board of Direc- tors in the management and control of the business of the Corpo- ration, except as limited by the General Corporation Law of the State of Delaware and except with respect to matters within the powers of the Audit Committee or the Compensation Committee. The powers of the Executive Committee shall be exercised in a manner which is consistent with any specific directions of the Board of Directors as to the conduct of the Corporation's affairs. All action taken by the Executive Committee shall be reported to the Board of Directors at the next meeting of the Board following the Executive Committee meeting at which such action was taken. The Audit Committee, a majority of which shall not be employees of the Corporation, shall confer periodically with the Corporation's independent accountants in respect of the preparation of the Corpo- ration's financial statements and the maintenance of proper finan- cial records and controls, shall make such recommendations to the Board of Directors with respect thereto as it shall deem advisable and shall bring to the attention of the Board of Directors the criticisms and recommendations of such independent accountants. The Audit Committee shall also perform such other functions as may be delegated to it by the Board of Directors. - 10 - The Compensation Committee shall consist entirely of members who are not officers or employees of the Corporation. The Compensation Committee shall be empowered to review the amount and terms of com- pensation paid to the principal executive officers of the Corpo- ration and to the principal executive officers of the Corporation's subsidiaries, and to authorize, or to recommend to the Board of Directors of the Corporation and such subsidiaries the au- thorization of such salary levels and employment agreements with respect to such officers as such Committee may deem appropriate. The Compensation Committee shall also be empowered to authorize, or recommend to the Board of Directors the authorization of such general incentive compensation arrangements, including any bonus, stock option or special compensation plans for the Corporation, as such Committee may deem appropriate. The Compensation Committee shall also recommend to the Board of Directors annually a slate of nominees to the Board of Directors to be proposed to the share- holders, and, from time to time, to recommend persons to fill any vacancy on the Board, such recommendation to be based on general criteria (as established by the full Board of Directors) for the selection of members of the Board. The Compensation Committee shall also perform such other functions as may be delegated to it by the Board of Directors. Section 12. REMUNERATION. The directors may be paid f or their expenses, if any, including but not limited to those incurred in connection with attendance at each meeting of the Board of Directors, and may be paid a fixed sum for attendance at each meeting of the Board of Directors, a stated salary, a fee as such director or any combination thereof. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. ARTICLE IV. Notices Section 1. MANNER OF NOTICES. Whenever under the provisions of statute or of the Restated Certificate of Incorporation or of these By-Laws notice is required to be given to any director, committee member, officer or stockholder, it shall not be construed to mean personal notice, but such notice may be given, in the case of stockholders, in writing, by mail, by depositing the same in a post office or letter box, in a postpaid, sealed wrapper, addressed to such stockholder, at such address as appears on the books of the - 11 - Corporation, or, in default of other address, to such stockholder at the General Post Office in the City of Wilmington, Delaware, and, in the case of directors, committee members and officers, by telephone or by mail or telegram to the last business address known to the Secretary, and such notice shall be deemed to be given at the time when the same shall be thus mailed or telegraphed or telephoned. Section 2. WAIVER. Whenever any notice is required to be given under the provisions of statute or of the Restated Certificate of Incorporation or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of any and all objections to the date, time, and purposes of such meeting, and the sufficiency of notice thereof, except when the person attends a meeting for the purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. ARTICLE V. Officers Section 1. OFFICERS. The officers of the Corporation shall be appointed by the Board of Directors and shall be a Chairman of the Board of Directors, a President, a Vice Chairman of the Board of Directors who shall preside over meetings of the Board of Directors in the absence of the Chairman, one or more Vice Presidents (which term may include Executive Vice President, Senior Vice President and any other title approved by the Board of Directors), a Secretary and a Treasurer. The Board of Directors may also choose one or more assistant officers. Any two or more offices may be held by the same person except for the offices of Chairman of the Board and Secretary, which shall be held by two individuals. Section 2. ELECTION. The Board of Directors at its first or- ganizational meeting after each annual meeting of stockholders, shall choose a Chairman of the Board of Directors, a President, a Vice Chairman of the Board of Directors, one or more Vice Presidents as set forth in Article V, Section 1, a Secretary and a Treasurer. Section 3. APPOINTMENT OF SUBORDINATE OFFICERS. The Board of Directors may appoint or empower the Chairman of the Board to ap- point, such other officers and agents as deemed necessary who shall - 12 - hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. Section 4. SALARIES. The salaries of the Chairman of the Board, President, all Vice Presidents, the Secretary and the Trea- surer of the Corporation shall be fixed by the Board of Directors. Section 5. TERM OF OFFICE: REMOVAL AND RESIGNATION. After his or her appointment to an office of the Corporation an individual shall hold such office until a new slate of officers is appointed by the Board of Directors at an organizational meeting thereof, or until any other time that his or her successor is chosen and has qualified, or until his or her earlier removal or resignation. Any officer appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the entire Board of Directors. Any officer at any time may resign from any or all of the offices he or she holds, and his or her resignation may be either oral or written. Unless otherwise specified in the form of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any vacancy occurring in any office of the Corporation may be filled by appointment by the Board of Directors. Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the Chief Executive Officer of the Corporation with the powers of general manager, and he or she shall have supervision over and may exercise general executive powers concerning all of the operations and business of the Corporation, with the authority from time to time to delegate to other officers such executive and other powers and duties as he or she may deem advisable. He or she shall preside at all meetings of the stockholders and the Board of Directors. Section 7. THE PRESIDENT. The President shall, in the absence of the Chairman of the Board and the Vice-Chairman of the Board, preside at all meetings of the stockholders and the Board of Directors. The President shall have the same power as the Chairman of the Board to execute and deliver such certificates, contracts, bonds, mortgages, notes and other instruments and documents for and on behalf of the Corporation and under the seal of the Corporation where so required. He shall have general responsibility for the management of the operations of the Corporation and shall perform such duties, in that regard, as are incident to his office or properly required of him by the Chairman of the Board or by the Board of Directors. - 13 - Section 8. VICE PRESIDENT. The Vice President or Vice Presi- dents, as the case may be, shall perform such duties and have such powers as the Board of Directors may from time to time prescribe. Section 9. SECRETARY. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all of the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the committees when required. He or she shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or Chairman of the Board and have custody of the corporate seal of the Corporation and he or she, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. Section 10. ASSISTANT SECRETARY. The Assistant Secretary or, if there be more than one, the Assistant Secretaries, in the order determined by the Board of Directors (or in the absence of any such determination, then in the order of their appointment), shall, in the absence or disability of the Secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. Section 11. TREASURER. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. Section 12. DISBURSEMENT OF FUNDS. The Treasurer shall dis- burse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board and the Board of Direc- tors, at its regular meetings, or when the Board of Directors so requires, an account of his or her transactions as Treasurer and of the financial condition of the Corporation. Section 13. ASSISTANT TREASURER. The Assistant Treasurer or, if there shall be more than one, the Assistant Treasurers, in the - 14 - order determined by the Board of Directors (or in the absence of any such determination, then in the order of their appointment), shall, in the absence of the Treasurer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. ARTICLE VI. Certificates of Stock Section 1. CERTIFICATES OF STOCK. Every holder of stock in the Corporation shall be entitled to have a certificate certifying the number of shares owned by him or her in the Corporation. Such certificate shall be signed by or in the name of the Corporation by the Chairman of the Board or the President or a Vice President and also signed by the Treasurer or an Assistant Treasurer, or the Se- cretary, or an Assistant Secretary of the Corporation. Section 2. SIGNATURES. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent, or registrar who signed, or whose facsimile signature has been placed upon a certificate, shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent, or registrar at the date of issue. Section 3. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore is- sued by the Corporation alleged to have been lost, stolen or des- troyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her leg- al representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate or certificates alleged to have been lost, stolen or destroyed. Section 4. TRANSFERS OF STOCK. Upon surrender to the Corpo- ration or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succes- sion, assignment or authority to transfer, it shall be the duty of - 15 - the Corporation to issue a new certificate to the person entitled thereto, to cancel the old certificate and to record the transac- tion upon its books. Section 5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat the person registered on its books as the owner of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not it shall have actual or other notice thereof, except as otherwise provided by applicable law. ARTICLE VII. General Provisions Section 1. DIVIDENDS. Dividends upon the capital stock of the Corporation, subject to the provisions of the Restated Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to applicable law. Dividends may be paid in cash, in property, or in shares of the capital stock of the Corporation. Section 2. CHECKS. All checks or demands for monies and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 3. FISCAL YEAR. The fiscal year of the Corporation shall be on a calendar year basis unless otherwise fixed by resolu- tion of the Board of Directors. Section 4. CORPORATE SEAL. The corporate seal shall have in- scribed thereon the name of the corporation and the words "Corpo rate Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. It shall not be necessary to the validity of any instrument executed by any authorized official of the Corporation that the execution of such instrument be evidenced by the corporate seal, and all documents, instruments, contracts and writings of all kinds signed on behalf of the Corporation by any authorized officer or officers thereof shall be as effectual and binding on the Corpo- ration without the corporate seal as if the execution of the same had been evidenced by affixing the corporate seal thereto. - 16 - ARTICLE VIII. Amendments These By-Laws, or any of them, may be altered, amended or re- pealed, and new By-Laws may be adopted either: (i) by the Board of Directors, by vote of a majority of the directors present at any regular meeting of the Board and without previous notice, or at any special meeting of the Board, provided that notice of such proposed alteration, amendment, repeal or adoption of new By-Laws is given in the notice of such special meeting, or by written consent with- out a meeting signed by all directors; or (ii) by the stockholders, at any annual meeting of stockholders and without previous notice, or at any special meeting of stockholders, provided that notice of such proposed alteration, amendment, repeal or adoption is given in the notice of special meeting. ARTICLE IX. Indemnification of Officers and Directors Section 1. INDEMNITY FOR CERTAIN EXPENSES, JUDGMENTS, FINES AND SETTLEMENTS. The Corporation shall indemnify and make whole any person who was or is a party or is threatened to be made a par- ty to any threatened, pending or completed action, suit or proceed- ing, whether civil, criminal, administrative or investigative (oth- er than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation subsequent to March 30, 1976, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise subsequent to March 30, 1976, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendre or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. - 17 - Section 2. INDEMNITY FOR CERTAIN DEFENSE AND SETTLEMENT EX- PENSES -- COURT APPROVAL. The Corporation shall indemnify and make whole any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation subsequent to March 30, 1976, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise subsequent to March 30, 1976, against expenses (including attorneys' fees) ac- tually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, is- sue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 3. INDEMNITY FOR SUCCESSFUL DEFENSE OF CERTAIN MAT- TERS. Notwithstanding the other provisions of this Article IX, to the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1 or 2 of this Article IX, or in defense of any claim, issue or matter therein, he or she shall be indemnified and made whole against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith. Section 4. DETERMINATION THAT STANDARD OF CONDUCT HAS BEEN MET. Any indemnification under Sections 1 or 2 of this Article IX (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he or she has met the applica- ble standard of conduct set forth in said Sections 1 or 2. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders. - 18 - Section 5. PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred by any person who may have a right of indemnification under this Article IX in defending a civil or criminal action, suit or pro- ceeding may be paid by the Corporation in advance of the final dis- position of such action, suit or proceeding upon receipt of an un- dertaking by or on behalf of such director, officer, employee or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article IX. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. Section 6. OTHER INDEMNIFICATION RIGHTS NOT AFFECTED BY THIS ARTICLE. The indemnification and advancement of expenses provided by or granted pursuant to this Article IX shall not be deemed exclusive of any other rights to which those seeking in- demnification or advancement of expenses may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. Section 7. INSURANCE. Upon resolution passed by the Board of Directors, the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of anoth- er corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article IX or the General Corporation Law of the State of Delaware, as amended. Section 8. INDEMNIFICATION TO THE FULLEST EXTENT PERMITTED BY LAW. The Corporation shall, to the fullest extent permitted by applicable law from time to time in effect, indemnify any and all persons who are or were directors, officers, employees or agents of this Corporation subsequent to March 30, 1976, or who are or were serving at the request of this Corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise subsequent to March 30, 1976, from and against any and all of the expenses, liabilities or other matters referred to in or covered by said law. Section 9. CONSTITUENT AND RESULTING CORPORATION. For the purposes of this Article IX, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent - 19 - corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its di- rectors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constitu- ent corporation subsequent to March 30, 1976, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise subsequent to March 30, 1976, shall stand in the same position under the provisions of this Article IX with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued. Section 10. OTHER ENTERPRISE. For the purposes of this Article IX, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as reflected to in this Article IX. Section 11. CONTINUING BENEFIT. The indemnification and advancement of expenses provided by or granted pursuant to this Article IX shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. ARTICLE X. Annual Reports A periodic report, including profit and loss statements and balance sheets, prepared in accordance with generally accepted accounting principles, shall be made to stockholders at least once a year. - 20 - EX-10.22 4 INTERCARGO AGREEMENT (Exhibit 10(xxii) Conformed INTERCARGO CORPORATION 1450 EAST AMERICAN LANE SCHAUMBURG, IL 60173 September 13, 1993 Mr. Alan R. Gruber Chairman & Chief Executive Officer Orion Capital Corporation 30 Rockefeller Plaza New York, N.Y. 10112 Dear Alan: This letter agreement ("Agreement") will confirm the mutual agreements of Intercargo Corporation, (the "Company") and Orion Capital Corporation ("Orion") with respect to the proposed purchase by Orion or one or more of its wholly-owned subsidiaries (the "Subsidiaries") of 500,000 shares of Common Stock of the Company from the Company (the "Proposed Transaction"). The parties acknowledge, in that connection, that Orion has agreed to purchase 1,006,484 shares of Common Stock owned by Harper Group, Inc. and its affiliates ("Harper"), of which 700,000 shares may have heretofore been purchased. For purposes of this Agreement, "Common Stock Outstanding" at a particular time shall mean not only all shares of the Company's Common Stock actually outstandinng, but also all shares of such Common Stock issuable or deliverable upon conversion or exercise of any outstanding options, warrants or convertible securities of the Company. 1. The Company will use reasonable best efforts to facilitate the Proposed Transaction, including among other things supporting all applications by Orion to regulatory authorities whose approval or clearance is required for Orion to consummate the Proposed Transaction in accordance with this agreement, provided (i) no new circumstances or conditions occur which cause the Board of Directors of the Company in good faith to conclude that the Proposed Transaction is materially adverse to the best interests of the Company, and (ii) the Agreement shall not have been terminated pursuant to Section 6 hereof. 2. Promptly following the receipt of all regulatory approvals which may be required, Orion (i) may acquire the remaining shares of the Company's Common Stock held directly or indirectly by Harper Group, Inc. and (ii) will purchase from the Company 500,000 shares of the Company's Common Stock for an aggregate purchase price of $6,375,000, such sum to be paid to the Company in U.S. dollars in immediately available funds as of the closing date. Seller represents and warrants that the shares of Common Stock to be sold by the Company to Orion will have been duly authorized and issued, will be fully paid and non-assessable, and are free and clear of any claim, lien or encumbrance of any type whatsoever and that Orion will, upon purchasing the shares of Common Stock from the Company in accordance with this Agreement, acquire all right, title and interest in and to such shares, free and clear of all rights, claims and encumbrances of any type whatsoever. The shares of Common Stock issued to Orion by the Company will not be registered for sale under any federal or state law, and, accordingly, no sale or disposition of such shares will be permitted except pursuant to the provisions of Rule 144 of the Securities Act of 1933 ("Rule 144") or another applicable exemption from registration, or pursuant to a public offering of the Common Stock in accordance with the registration rights set forth in Annex I. The Company shall, at all times when Orion or a Subsidiary shall own shares of Common Stock which may not be sold other than in compliance with Rule 144 or another applicable exemption from registration, take all steps necessary, on a timely basis, to cause the conditions of Rule 144(c) to be met. 3. At such time as Orion first files a Schedule 13D in respect to its acquisition of shares of Common Stock of the Company, the Company and Orion will issue a joint press release describing the Proposed Transaction. Until such time, the Proposed Transaction and the existence of this Agreement shall remain confidential and neither party shall disclose the existence of the Proposed Transaction or of this Agreement except as may be required by law or in connection with any necessary regulatory filings as contemplated hereby or as may be determined to be required by counsel for either the Company or Orion. 4. The Company agrees that so long as Orion and its Subsidiaries shall beneficially own at least 1,000,000 shares of Common Stock of the Company (such number to be appropriately increased or decreased, as the case may be, to reflect stock splits, recapitalizations, repurchases by the Company and the like), it will use its reasonable best efforts to cause one person to be designated by Orion to be elected to the Board of Directors of the Company and that a designee of Orion will thereafter be included on management's slate of nominees to be elected to the Board of Directors. 5. (a) Orion agrees and covenants that prior to December 31, 1998, without the Company's prior written consent, Orion will not and Orion will cause each of its Controlled Subsidiaries (as defined herein) not to (A) acquire, offer or by purchase or otherwise, any Common Stock - 2 - of the Company, or direct or indirect rights or options to acquire (through purchase, exchange, conversion or otherwise), any Common Stock of the Company, if immediately after any such acquisition, Orion and its Controlled Subsidiaries would beneficially own, in the aggregate, Common Stock representing more than 22% (the "Percentage Limitation") of the Common Stock Outstanding of the Company; provided, however, that notwithstanding anything to the contrary contained in this Agreement, the foregoing restriction shall not be deemed to be violated to the extent the percentage of the Common Stock of the Company beneficially owned, in the aggregate, by Orion and its Controlled Subsidiaries is increased as a result of a recapitalization of the Company, a repurchase of securities by the Company or any other action other than the acquisition of shares by Orion and its Controlled Subsidiaries; (B) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" to vote (as such terms are used in the proxy rules of the Securities and Exchange Commission), seek to advise, encourage or influence any person or entity with respect to the voting of any Common Stock of the Company, initiate, propose or otherwise solicit shareholders of the Company for the approval of one or more shareholder proposals or induce or attempt to induce any other person to initiate any shareholder proposal; (C) make any statement or proposal, whether written or oral, to the Board of Directors of the Company, any director or officer of the Company, or otherwise make any public announcement or proposal whatsoever with respect to a merger or other business combination, sale or transfer of all or substantially all of the assets of the Company, liquidation or other extraordinary corporate transaction with the Company; (D) except as contemplated by this Agreement, form, join or in any way participate in a "group" (within the meaning of Section 13(d)(3) of the 1934 Act) with respect to any shares of Common Stock of the Company; (E) deposit any shares of Common Stock of the Company into a voting trust or subject any shares of Common Stock of the Company to any arrangement or agreement with any person other than Orion or one or more Controlled Subsidiaries of Orion with respect to the voting of any shares of Common Stock of the Company; (F) execute in favor of any person other than Orion or a Controlled Subsidiary any written consent with respect to the voting of its shares of Common Stock of the Company; or (G) otherwise act, alone or in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company, except as contemplated by this Agreement. "Controlled Subsidiary" shall mean an entity in which Orion owns voting securities and as to which Orion and its Controlled Subsidiaries have the right to elect a majority of the Board of Directors of such entity in the case of a corporation or to determine its business policies in the case of a non-corporate entity. A natural - 3 - person or persons shall not be deemed to be a Controlled Subsidiary. (b) After December 31, 1998 and for a period of five years thereafter, Orion and its Controlled Subsidiaries may purchase or otherwise acquire shares of Common Stock of the Company (or direct or indirect rights or options to acquire, through purchase, exchange, conversion or otherwise, any such shares) without notice to the Company if immediately after any such acquisition, Orion and its Controlled Subsidiaries would not beneficially own, in the aggregate, shares of Common Stock of the Company representing more than 49% of the Common Stock Outstanding of the Company; and Orion and its Controlled Subsidiaries shall not purchase or otherwise acquire shares of Common Stock of the Company (or direct or indirect rights or options to acquire through purchase, exchange, conversion, or otherwise such shares) if immediately after any such acquisition, Orion and its Controlled Subsidiaries would beneficially own, in the aggregate, shares of Common Stock of the Company representing more than 49% of the Common Stock Outstanding of the Company, unless Orion shall have delivered to the Company written notice (the "Purchase Notice") at least ten days prior to any such acquisition. The Purchase Notice shall specify the number of shares of Common Stock to be acquired. Commencing on the tenth day following delivery of the Purchase Notice to the Company, Orion shall have the right to acquire such securities, but only in the amount set forth in the Purchase Notice. (c) For purposes of this Agreement "beneficially own" shall have the meaning set forth in Rule 13d-3 under the 1934 Act. (d) In the event that at any time prior to December 31, 1998 the Company shall at any time issue or sell any treasury or other shares of Common Stock of the Company, other than in connection with employee benefit and incentive compensation plans or an acquisition by the Company or a wholly-owned subsidiary of another business entity or of substantially all of its stock or assets, the Company shall, not less than ten days prior to the consummation of such issuance of sale offer to sell to Orion (or to a subsidiary or subsidiaries designated by it) a sufficient number of shares, at a price equal to that of the shares to be issued or sold by the Company, so that the percentage of Common Stock Outstanding owned by Orion and its Subsidiaries shall be the same prior and subsequent to such proposed issuance or sale. (e) If, at any time prior or subsequent to the closing referred to in Section 2, any person other than the - 4 - Company, a wholly-owned subsidiary of the Company, Orion, a Subsidiary of Orion or a person controlled by Orion or one of its Subsidiaries should make an offer to acquire by tender or otherwise 20% or more of the Common Stock Outstanding at the time of such offer, Orion and its Controlled Subsidiaries shall not be bound by the provisions of this Section 5 so long as such offer shall be outstanding. 6. Upon the occurrence of any of the following events either Orion or the Company may terminate this Agreement on not less than 10 days' notice to the other party and the provisions of this Agreement other than Section 3 will on the date specified in such notice become null and void, and will cease to have any further force and effect: (a) If the initial 700,000 shares to be purchased by Orion from Harper Group, Inc. are not acquired by November 1, 1993. (b) If all requests for approval which are required to be filed with any insurance department in connection with the Proposed Transaction shall not have been filed by the thirtieth day after the execution and delivery of this Agreement and if each approval so required is not obtained within 90 days after a submission of the required request for approval. (c) If any legal action is commenced by any governmental agency seeking to enjoin or prohibit the Proposed Transaction or if a temporary or preliminary restraining order or injunction shall have been entered upon the complaint of any person and not stayed or dismissed. (d) If the Proposed Transaction is not fully completed within 30 days after approval by all insurance departments whose approval is required for any reason other than (i) by delay occasioned by the failure of the party giving such notice to use its reasonable best efforts to complete the proposed transaction or (ii) by requests for further information from any governmental agency. (e) If there is a material adverse change in the financial condition or business prospects of either the Company or Orion. 7. Until the termination of this Agreement, the Company will notify Orion forthwith (i) upon receiving any offer for a merger or sale of all or substantially all of the Company's assets, or for any other transaction or business combination of the Company with any other person wherein the Company, or all or substantially all of the assets of the - 5 - Company or such person, or any material asset or material amount of the securities of the Company or such person, would be acquired by the other, or the Company would be restructure, or (ii) upon any person or group of persons (within the meaning of Section 13(d)(3) of the 1934 Act) filing a statement on Schedule 13D under the 1934 Act with respect to the Company's Common Stock Outstanding, or otherwise informing the Company to substantially similar effect with respect to any acquisition of the Company's Common Stock Outstanding. 8. The Company agrees to provide Orion and its representatives (who shall be designated in writing to the Company) reasonable access to the business records of the Company and, for information purposes to its personnel as Orion may request. In addition, the Company shall provide Orion with copes of all press releases and filings with the Securities and Exchange Commission ("SEC") or the National Association of Security Dealers ("NASD") promptly upon release or filing as is applicable. Orion shall keep all information which is not otherwise disclosed to the public or filed with the SEC confidential, including any information which is filed with the NASD or any other regulatory agency unless written consent to such disclosure is obtained from the Company. Except as provided in the next sentence, Orion agrees that while this Agreement is in effect and for a period of five (5) years thereafter, Orion shall not sell or provide, and Orion shall cause its Controlled Subsidiaries to refrain from selling or providing, the following coverages: U.S. or foreign customs bonds, marine cargo insurance (including associated overland freight transportation coverage) to customs brokers, freight forwarders and international transportation specialists, and professional liability insurance for such persons. Notwithstanding the foregoing, underwriting of coverage generated by the Wm. H. McGee Syndicate by Orion or any Controlled Subsidiary shall not be deemed to violate the covenant contained in this Section 8. 9. Notwithstanding assignment to any Subsidiary of its rights hereunder, Orion shall remain responsible for any damage or loss suffered by the Company as a result of a breach of any terms, covenant, representations or warranties contained herein or in any agreement or undertaking referred to herein or contemplated hereby. This Agreement shall be binding upon and inure to the benefit of the assigns, successors and interests of the parties. 10. As an inducement to enter into this Agreement and perform its terms, Orion and the Company each make the representations and warranties set out below to the other. Each party shall be deemed to have made these representations and warranties only about itself. - 6 - (a) Orion and the Company are each duly incorporated respectively in the state of Delaware and are on the date hereof in good standing. Further, Orion and the Company are authorized to do business in each foreign jurisdiction where the character of their respective businesses or location of their respective assets requires such qualification. Each of Orion and the Company has the corporate authority to enter into this Agreement and the agreements and instruments referred to herein and contemplated hereby and has taken all necessary corporate action to authorize the due execution and performance thereof. The execution, delivery and performance of this Agreement and the agreements and instruments referred to herein and contemplated hereby do not violate the terms and conditions of any agreement to which either Orion or the Company is a party or any order, judgment, or decree to which either of them may be subject, nor to their best knowledge, the provisions of any applicable law, rule or regulation to which either of them may be subject, nor will the execution, delivery and performance of this Agreement and the agreements and instruments referred to herein and contemplated hereby, cause, with the passage of time or otherwise, a violation or default to occur with respect to any of the foregoing. (b) Neither the Company, nor Orion as to itself and each of its Controlled Subsidiaries, has any knowledge of any fact, circumstance or condition which in their respective reasonable judgments is likely to cause a material adverse change in the financial condition or business prospectus of Orion or the Company as the case may be, or any of their respective Controlled Subsidiaries. 11. Each of Orion and the Company acknowledges that the other party would not have an adequate remedy at law for money damages in the event that any of the covenants or agreements of the other party in this Agreement were not performed in accordance with its term and therefore agrees that the other party shall be entitled to specific enforcement of such covenants or agreements and to injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. 12. The representations, warranties, covenants and agreements contained in this Agreement shall survive the execution and delivery of this Agreement. 13. Orion hereby acknowledges that each of the certificates representing the shares of Common Stock of the Company acquired from the Company shall be subject to stop - 7 - transfer instructions and shall include the following legend: "The shares represented by this certificate have not been registered under the Securities Act and are subject to certain limitations on transfer set forth in an agreement dated September 13, 1993 between Orion Capital Corporation and Intercargo Corporation. A copy of such agreement is on file with the Secretary of Intercargo Corporation". 14. This Agreement and Annex contain the entire understandings of the parties with respect to the subject matter hereof and may not be amended except by a writing signed by the parties. This Agreement is not assignable by either of the parties except that Orion may designate one or more Subsidiaries as a purchaser of some or all of the shares of Common Stock to be purchased by Orion pursuant to this Agreement. This Agreement shall be binding upon the respective successors of the parties. 15. Any notices and other communications required to be given pursuant to this Agreement shall be in writing and shall be given by delivery by hand, by mail (registered or certified mail, postage prepaid, return receipt requested), facsimile transmission or by telex, as follows: If to the Company: Mr. James R. Zuhlke Intercargo Corporation 1450 East American Lane 20th Floor Schaumburg, Illinois 60173 with a copy to: Michael Sklar, Esq. Keck, Mahin & Cate 77 West Wacker Drive 49th Floor Chicago, Illinois 60601-1693 - 8 - If to Orion: Mr. Alan R. Gruber Chairman & Chief Executive Officer Orion Capital Corporation 30 Rockefeller Plaza New York, N.Y. 10112 with a copy to: John J. McCann, Esq. Hall, Dickler, Lawler, Kent & Friedman 909 Third Avenue New York, New York 10022 or to such addresses as either the Company or Orion shall designate to the other by notice in writing. 16. Subject to the terms and conditions of this Agreement, each of the parties hereby agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws, rules and regulations to consummate and make effective the transactions contemplated by this Agreement, including using its reasonable best efforts to obtain all necessary waivers, consents and approvals. In case at any time after the execution of this Agreement, further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each of the parties shall take all such necessary action. 17. Each of Orion and the Company represents and warrants to the other that it has not engaged any broker, finder, financial advisor or other intermediary in connection with the sale of shares of Common Stock by the Company to Orion. Each party hereby agrees to hold the other entirely harmless against all loss, cost and expense to the other party arising out of any claim for a fee, commission or other compensation by any such person claiming to have acted for or been retained or engaged by the indemnifying party. - 9 - 18. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. Very truly yours, INTERCARGO CORPORATION By: /s/ James R. Zuhlke ---------------------- - - James R. Zuhlke President and Chief Executive Officer Accepted and agreed on the date written above: ORION CAPITAL CORPORATION By: /s/ Alan R. Gruber -------------------------------------- Alan R. Gruber Chairman and Chief Executive Officer - 10 - ANNEX I REGISTRATION RIGHTS (a) If, at any time the Company proposes to register any of its securities under the Securities Act of 1933 (the "Securities Act") (other than securities to be issued pursuant to a stock option or other employee benefit or similar plan), the Company shall, promptly give written notice to Orion of the Company's intention to effect such registration (all references to "Orion" herein being deemed to mean and include Orion and all wholly-owned subsidiaries of Orion which are owners or sellers of Subject Stock, as the context requires). If, within 15 days after receipt of such notice, Orion submits a written request to the Company specifying the number of shares of Common stock (not to exceed, for all registrations pursuant to this Annex I, an aggregate of 500,000 shares, subject to appropriate adjustment for any stock splits, recapitalizations and the like which may occur after September 13, 1993) that it proposes to sell or to otherwise dispose of, (the "Subject Stock") the Company shall include the Subject Stock in such registration statement and the Company shall keep each registration statement covering any Subject Stock in effect for a period of not less than 90 days following the effectiveness of such registration statement and maintain compliance with each federal and state law and regulation. Notwithstanding the foregoing, if the offering of the Company's securities pursuant to such registration-statement is to be made by or through underwriters, the Company shall not be required to include the Subject Stock therein if and to the extent that the underwriter managing the offering advises the Company in writing that such inclusion would materially adversely affect such offering and, in such event, the Company may delay registration of the Subject Stock for a period of not more than 30 days after completion of the distribution of securities being underwritten on behalf of the Company (but in no event for more than 180 days after the registration statement first becomes effective) and the Company shall thereupon promptly file such supplements and post effective amendments and take such other steps as may be necessary to permit Orion to make its proposed offering following the end of such period of delay. (b) An any time after September 13, 1994 but on not more than one occasion, Orion may request that the Company register part or all of the Subject Stock owned by Orion, provided that the exercise of the right granted hereunder by Orion shall exhaust such right, and Orion shall not have any further rights under this Section (b). The Company will, upon receipt of a request in writing pursuant hereto stating the amount of Subject Stock to be registered for sale, endeavor in good faith to effect the registration or qualification under the Act of such Subject Stock. The Company shall not be required to file a registration statement pursuant to this Section (b) covering any Subject Stock unless registration is requested for at least 250,000 shares of Common Stock (or such lesser number as may represent the difference between the total number of shares of Subject Stock owned at the time by Orion and the number of shares of Subject Stock theretofore registered in accordance with this Annex I). The right of Orion to demand that the Company file a registration statement pursuant to this Section (b) shall exist only if no other opportunity to register the Subject Stock has been given to Orion under the provisions of Section (a) hereof within the six (6) month period next preceding the request for such registration. (c) In connection with any offering of shares of Subject Stock registered pursuant to this Annex I of the Company (i) shall furnish to Orion such number of copies of each registration statement, each prospectus and each preliminary prospectus, and of each amendment and supplement to any thereof as Orion may reasonably request in order to effect the offering and sale of the Subject Stock to be offered and sold, but only while the Company shall be required under the provisions hereof to cause the registration statement to remain current and (ii) take such action as shall be necessary to qualify the shares covered by such registration statement under such blue sky or other state securities laws for offer and sale as Orion shall request; provided, however, that the Company shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it shall not then be qualified or to file any general consent to service of process in any jurisdiction in which such a consent has not been previously filed. The Company shall enter into an underwriting agreement (the "Agreement") with a managing underwriter or underwriters selected by it containing representations, warranties, indemnities and agreements then customarily included by an issuer in underwriting agreements with respect to secondary distributions and Orion agrees as a condition to participation in such offering to make such representations and warranties with respect to information as to it as selling stockholder, and as to its holdings, which is furnished in writing to the underwriter for use in the registration statement as are customary and appropriate. In connection with any offering of Subject Stock registered pursuant to this Annex I, the Company shall furnish to the underwriter, at the Company's expense, unlegended certificates representing ownership of the Subject Stock being sold in such denominations as requested and instruct any transfer agent and registrar of the Subject Stock to release any stop transfer orders with respect to such Subject Stock. - 2 - (d) In connection with any registration pursuant to this Annex I all expenses of registration shall be borne by the Company (unless contrary to the federal securities laws or the laws of any state where the Subject Stock is to be offered), provided, however, in connection with any such registration, Orion shall be obligated to pay any and all underwriter's commissions and filing fees incurred by the Company, to the extent that such fees and commissions would not have been so incurred in the absence of the registration of such Subject Stock. Under no circumstances shall the Company have any liability for any fees and expenses of underwriters, counsel, accountants or other agents of Orion with respect to any registration statement filed pursuant to Sections (a) or (b) hereof, including but not limited to the costs of any investigations by or on behalf of Orion of the accuracy and completeness of such registration or related to the furnishing of information of Orion in connection with such registration statement. (e) Post Effective Amendments and Supplements. For a period of ninety (90) days from and after the effective date of any registration statement filed pursuant to Sections (a) or (b) hereof in which any of the Subject Stock is included, the Company shall from time to time amend or supplement the registration statement and the prospectus used in connection therewith as may be necessary to permit such sale and disposition and to the extent necessary in order to keep such registration statement effective and such prospectus current under the Act so that neither the registration statement nor the prospectus contains any untrue statement as to any material fact, omits any statements necessary to make the statements contained therein not misleading. In connection with any registration statement filed pursuant to Section (b) hereof, the Company will, at Orion's expense, use its best efforts to qualify the Subject Stock being registered under the "blue sky" and state securities laws of such states as Orion may reasonably request, provided however, that the Company shall not be obligated so to qualify the Subject Stock if, in connection therewith or as a result thereof, the Company would be or become obligated to qualify as a foreign corporation or as a dealer in securities or to execute or file any general consents to service of process under the laws of any such state. (f) In the case of any offering registered pursuant to this Annex I, the Company agrees to indemnify and hold harmless Orion and each controlling person of Orion within the meaning of Section 15 of the Securities Act, and the directors and officers of Orion, against any and all losses, claims, damages or liabilities to which they or any of them may become subject - 3 - under the Securities Act or any other statute or common law or otherwise, and to reimburse them, from time to time upon request, for any legal or other expenses reasonably incurred by them in connection with investigating any claims and defending any actions, insofar as any such losses, claims, damages, liabilities or actions shall arise out of or shall be based upon (i) any untrue statement or alleged untrue statement contained in the registration statement relating to the sale of such Subject Stock in any preliminary prospectus or in any prospectus or in any supplement or amendment to any of the foregoing of a material fact or the omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) any failure or omission on the part of the Company to comply with any provision of the Act and the rules and regulations of the Securities and Exchange Commission (or other Federal agency at the time charged with administration of the Act) applicable to such offering; provided, however, that the indemnification agreement contained in this paragraph (f) shall not apply to such losses, claims, damages, liabilities or actions which shall arise from the sale of Subject Stock if such losses, claims, damages, liabilities or actions shall arise out of or shall be based upon any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission shall have been made in reliance upon and in conformity with information furnished in writing to the Company by Orion specifically for use in connection with the preparation of the registration statement or any preliminary prospectus or prospectus contained in the registration statement or any amendment thereof or supplement thereto. (g) In connection with any registration statement in which Orion is participating, Orion will indemnify, to the extent permitted by law, the Company and its directors and officers against any losses, claims, damages, liabilities and expenses resulting solely by reason of any untrue statement of a material fact or any omission of a material fact necessary to make the statements therein not misleading, in the registration statement or any prospectus or preliminary prospectus or any amendment or supplement thereto, but only to the extent that such untrue statement is contained in, or such omission is omitted from, information so furnished to the Company by Orion in writing; provided, however, that Orion shall not be liable in the aggregate for any amounts exceeding the product of the sale price per share of Subject Stock of Orion sold in such registered offering and the number of shares of Subject Stock sold pursuant to such registration statement or prospectus by Orion. - 4 - (h) Each party indemnified under paragraph (f) or (g) of this Annex I shall promptly after receipt of notice of the commencement of any action against such indemnified party in respect of which indemnity may be sought hereunder, notify the indemnifying party in writing of the commencement thereof. The omission of any indemnified party to so notify and indemnifying party of any such action shall not relieve the indemnifying party from any liability in respect of such action which it may have to such indemnified party on account of the indemnity agreement contained in paragraph (f) or (g) of this Annex I, unless the indemnifying party was prejudiced by such omission, and in no event shall relieve the indemnifying party from any other liability which it may have to such indemnified party. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it may desire to assume the defense thereof through counsel satisfactory to the indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under paragraph (f) or (g) of this Annex I for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable costs of investigation (unless such indemnified party reasonably objects to such assumption on the grounds that there may be defenses available to it which are different from or in addition to such indemnifying party in which event the indemnified party shall be reimbursed by the indemnifying party for the expenses incurred in connection with retaining separate legal counsel). (i) Nothing in Section (f) or (g) of this Annex I shall prevent the indemnified party from retaining counsel of its own choosing, at its own expense, to defend or cooperate in the defense or investigation of any claim in respect of which indemnification is available hereunder. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. (j) Capitalized terms not defined herein shall have the meanings set forth in the Letter Agreement dated September 13, 1993 between the Company and Orion. - 5 - EX-10.23 5 HARPER AGREEMENT Exhibit 10(xxiii) Conformed Copy AGREEMENT between Orion Capital Corporation, a Delaware corporation ("Buyer"), and The Harper Group, Inc., a Delaware corporation ("Seller"). 1. Seller hereby agrees to sell and assign to Buyer, and Buyer hereby agrees to purchase and pay for, shares of Common Stock, par value $1.00, of Intercargo Corporation (the "Common Stock") at the price, at the times and on the terms and conditions set forth herein. Each represents and warrants to the other that the purchase and sale of Common Stock has been duly authorized by all necessary corporate action and that this Agreement creates a valid and legally binding obligation. 2. Seller represents and warrants that it or one of its wholly-owned subsidiaries is the owner of 1,006,484 shares of Common Stock, having full right, title and interest in and to such shares free and clear of claims, liens and encumbrances of any type whatsoever and that Buyer will, upon purchasing shares of Common stock form Seller in accordance with this Agreement, acquire all right, title and interest in and to such shares, free and clear of all rights, claims and encumbrances of any type whatsoever. 3. The shares of Common Stock to be sold hereunder shall be sold at a price of $12.50 per share, such price to be subject to adjustment as set forth in this Section 3. Seller will deliver to Buyer certificates for all shares sold on any date (a "Transfer Date"), accompanied by Stock powers duly endorsed in blank, all in form satisfactory to Buyer and Buyer's counsel and Buyer shall transfer to Seller or to Seller's order, in immediately available funds, cash in an amount equal to the purchase price of the shares of Common Stock to be transferred on that Transfer Date. (a) The date hereof shall be the first Transfer Date. Simultaneously with the execution and delivery of this Agreement Seller shall transfer to Buyer 700,000 shares of Common Stock and Buyer shall pay to Seller $8,750,000 in full and final payment therefor. (b) On a date to be determined by Buyer on not less than five days prior written notice to Seller (the "Future Transfer Date"), and in consideration of the execution and delivery of this Agreement and for other good and valuable consideration the receipt of which is mutually acknowledged by Buyer and Seller, Seller shall, subject to compliance with Section 4, transfer to Buyer 306,484 shares of Common Stock and Buyer shall pay therefor the Adjusted Future Price. The Adjusted Future Price per share shall be the sum of $12.50 per share plus an adjustment on such amount computed at a rate of 3% per annum from the date hereof to the Future Transfer Date. 4. Buyer may not give notice of the determination of the Future Transfer Date unless prior to the giving of such notice Buyer and Seller shall have received all regulatory approvals which may be required under any applicable federal or state statute and unless Buyer shall have been advised by its counsel that no other regulatory filings need be made nor approvals obtained which have not theretofore been made or obtained. Buyer and Seller shall, in good faith, seek all required regulatory approvals. Notice of determination of a Future Transfer Date shall include a certification by an officer of Buyer that the requirements of this Section have been met and shall be given by Buyer not later than the 30th day following receipt of the last required approval or the making of the last required filing, whichever shall last occur. The Future Transfer Date shall occur not later than December 31, 1993 if the Buyer shall have received the last required approval and made the last required filing on or before the third business day prior to December 31, 1993. 5. Buyer and Seller agree that each will cooperate with the other party and with legal counsel and other advisers of such other party in the preparation and making of all filings and applications required to be made in connection with any of the transactions contemplated by this Agreement. 6. This Agreement shall be governed by the laws of the State of New York. The rights of the parties hereunder may not be assigned except to the extent that Buyer may designate one or more wholly-owned subsidiaries as the purchaser of some or all of the shares of Common Stock to be purchased by Buyer on any Transfer Date. 7. If the Future Transfer Date shall not have occurred by 5:00 p.m. on December 31, 1993, then either party may terminate this Agreement on ten days' written notice to the other; provided that this Agreement shall automatically remain in force so long as such notice of termination shall not be given and provided further that a notice of termination given pursuant hereto shall not affect the validity or finality of any purchase and sale of shares of Common Stock theretofore made. 8. Each of Orion and Harper represents and warrants to the other that it has not engaged any broker, finder, financial adviser or other intermediary in connection with the sale of shares of Common Stock by Harper to Orion except that Harper has engaged the firm of Lehman Brothers. Harper agrees to be responsible for and save Orion entirely harmless against any claim by Lehman Brothers for fees, commissions, expenses or other compensation arising out of or as a result of the sale of shares contemplated by this Agreement. Each of Orion and Harper agrees to hold the other entirely harmless against all loss, cost and expense to the other arising out of any claim for fees, commissions, expenses or other compensation by any person claiming to have been retained or engaged by the indemnifying party. IN WITNESS WHEREOF, this Agreement has been made and entered into in New York City, N.Y. this 13th day of September, 1993. The Harper Group, Inc. By: /s/Robert H. Kennis ----------------------- Orion Capital Corporation By: /s/ Alan R. Gruber ------------------------ Chairman - 2 - EX-11 6 EARNINGS PER SHARE
EXHIBIT 11 ORION CAPITAL CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE (000s omitted-except for per common share data) Year Ended December 31, --------------------------- 1993 1992 1991 ---- ---- ---- Computation of weighted average number of common and equivalent shares outstanding: PRIMARY - Weighted average number of shares outstanding ............................. 14,461 10,826 9,888 Dilutive effect of stock options .......... 137 88 76 ------- ------- ------- Weighted average number of common and equivalent shares ....................... 14,598 10,914 9,964 ======= ======= ======= Net earnings before preferred dividend requirements ............................ $68,813 $42,872 $44,668 Preferred dividends ....................... 409 6,358 7,276 ------- ------- ------- Net earnings attributable to common stockholders ............................ $68,404 $36,514 $37,392 ======= ======= ======= Net earnings per common share ............. $ 4.69 $ 3.35 $ 3.75 ======= ======= ======= FULLY DILUTED - Weighted average number of shares outstanding ............................. 14,461 10,826 9,888 Dilutive effect of stock options .......... 137 128 100 Conversion of $1.90 Preferred Stock ....... - 2,066 2,644 Conversion of $2.125 Preferred Stock ...... 57 1,454 1,454 ------- ------- ------- Weighted average number of common and equivalent shares ....................... 14,655 14,474 14,086 ======= ======= ======= Net earnings before preferred dividend requirements ............................ $68,813 $42,872 $44,668 Adjustable rate preferred stock dividends.. 407 1,581 1,679 ------- ------- ------- Net earnings attributable to common stockholders ............................ $68,406 $41,291 $42,989 ======= ======= ======= Net earnings per common share ............. $ 4.67 $ 2.85 $ 3.05 ======= ======= ======= Common stock and per common share data have been restated to give effect to the 5-for-4 stock splits paid on November 15, 1993 and December 7, 1992.
EX-21 7 LIST OF SUBSIDIARIES EXHIBIT 21 SUBSIDIARIES* OF ORION CAPITAL CORPORATION State or Other Jurisdiction Subsidiary of Incorporation - ------------ ----------------- Clarke & Towner, Inc. Connecticut Connecticut Specialty Group, Inc. Connecticut Connecticut Specialty Insurance Company Connecticut Connecticut Specialty Insurance Group, Inc. Connecticut Design Professionals Administration Corporation California Design Professionals Insurance Company California DPIC Companies, Inc. California EBI Companies, Inc. Connecticut EBI Consulting Services, Inc. California EBI Indemnity Company Connecticut EFC Property Management, Inc. California Employee Benefits Insurance Company California Independent Financial Planners Corporation New Jersey Jabawwat, Inc. Delaware Nations' Care, Inc. Connecticut Orion Capital Companies, Inc. Connecticut Orion Properties Corporation Delaware Peninsula Excess Insurance Brokers, Inc. California ________________________________________________________________________________ * The listed subsidiaries are wholly-owned by Orion Capital Corporation (the "Company") as of December 31, 1993. The Company owns slightly less than 50% of Guaranty National Corporation of Englewood, Colorado and approximately 20% of Intercargo Corporation of Schaumburg, Illinois. EXHIBIT 21 Risk Analysis and Research Corporation California Security Insurance Company of Hartford Connecticut Security Insurance Company (U.K.) Limited United Kingdom SecurityRe, Inc. Connecticut Security Reinsurance Company Connecticut Security Warranty Association of Florida, Inc. Florida The Connecticut Indemnity Company Connecticut The Fire and Casualty Insurance Company of Connecticut Connecticut - 2 - EX-23 8 CONSENTS OF ACCOUNTANTS EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 2-65348 on Forms S-8 and S-16 relating to the Orion Capital Corporation 1976 and 1979 Stock Option Plans, No. 2-80636 on Form S-8 relating to the Orion Capital Corporation 1982 Long-Term Performance Incentive Plan and No. 2-63344 on Form S-8 relating to the Orion Capital Corporation Employees' Stock Savings and Retirement Plan of our report dated February 22, 1994, appearing in this Annual Report on Form 10-K of Orion Capital Corporation for the year ended December 31, 1993. Deloitte & Touche Hartford, Connecticut March 11, 1994 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Annual Report on Form 10-K of Orion Capital Corporation for the year ended December 31, 1993 of our reports dated February 21, 1994, appearing in the Annual Report on Form 10-K of Guaranty National Corporation for the year ended December 31, 1993. Deloitte & Touche Denver, Colorado March 11, 1994 EX-28 9 STATUTORY INSURANCE REPORT EXHIBIT 28 ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ------------------------ (Name) SCHEDULE P - ANALYSIS OF LOSSES AND LOSS EXPENSES Notes to Schedule P (1) The Parts of Schedule P: Part 1 - detailed information on losses and loss expenses. Part 2 - history of incurred losses and allocated expenses. Part 3 - history of loss and allocated expense payments. Part 4 - history of bulk and incurred-but-not reported reserves. Schedule P Interrogatories (2) Lines of business A through M and R are groupings of the lines of business used on Page 14, the state page. (3) Reinsurance A, B, C, and D (lines N to Q) are: Reinsurance A = nonproportional property (1988 and subsequent) Reinsurance B = nonproportional liability (1988 and subsequent) Reinsurance C = financial lines (1988 and subsequent) Reinsurance D = old Schedule O line 30 (1987 and prior) (4) The Instructions to Schedule P contain directions necessary for filling out Schedule P.
SCHEDULE P - PART 1 - SUMMARY (000 omitted) - ------------------------------------------------------------------------------------------------------------------------- Premiums Earned Loss and Loss Expense Payments 1 ---------------------------- --------------------------------------------------------------------- 12 Years 2 3 4 Loss Payments Allocated Loss 9 10 11 in Which Expense Payment Number of Premiums ------------------- ------------------ Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported Losses and Ceded (2 - 3) Direct Direct Subrogati Expense (5 - 6 + 7 Direct & Incurred Assum. & Assum. Ceded & Assum. Ceded Received Payments - 8 + 10) Assum. - ------------ --------- -------- --------- ---------- -------- --------- -------- --------- --------- ---------- --------- 1. Prior .. X X X X X X X X X X X X 19,471 11,640 959 (4,454) 0 735 13,979 X X X X 2. 1984.... 433,822 133,382 300,440 412,821 122,708 48,980 13,816 5,952 22,733 348,010 X X X X 3. 1985.... 514,171 149,848 364,323 387,415 104,092 56,468 20,958 6,341 27,918 346,751 X X X X 4. 1986.... 528,047 137,551 390,496 256,388 61,067 49,182 15,469 5,185 24,562 253,596 X X X X 5. 1987.... 547,683 112,913 434,770 235,974 31,749 42,679 11,163 5,996 23,126 258,867 X X X X 6. 1988.... 571,548 56,526 515,022 297,330 21,506 36,737 3,289 3,129 26,152 335,424 X X X X 7. 1989.... 653,120 115,634 537,486 334,975 57,838 37,156 4,460 3,304 24,239 334,072 X X X X 8. 1990.... 639,505 149,922 489,583 287,534 53,230 31,359 6,696 1,561 26,841 285,808 X X X X 9. 1991.... 657,969 123,310 534,659 231,339 46,217 28,849 5,496 1,035 26,293 234,768 X X X X 10. 1992.... 682,082 122,937 559,145 198,664 16,830 16,503 2,240 417 27,676 223,773 X X X X 11. 1993.... 750,986 134,219 616,767 112,045 14,124 6,768 1,337 449 21,628 124,980 X X X X - ------------ --------- -------- --------- ---------- -------- --------- -------- --------- --------- ---------- --------- 12. Totals .. X X X X X X X X X X X X 2,773,956 541,001 355,640 80,470 33,369 251,903 2,760,028 X X X X - ------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ----------------------------------------------------------------------------------------------------------------------------------- Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- ------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------ -------------------- ------------------ ------------------ Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Losse Outstandi Direct Direct Direct Direct Subrogati Expenses and Exp. Direct & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticipat Unpaid Unpaid & Assum. - ------------ --------- -------- --------- ---------- -------- --------- -------- --------- --------- ---------- --------- --------- 1. Prior .. 82,046 49,339 25,268 20,229 578 381 3,355 174 0 1,162 42,286 X X X X 2. 1984.... 11,462 4,889 861 689 750 520 810 0 0 353 8,138 X X X X 3. 1985.... 14,753 9,721 6,280 2,156 459 757 1,447 2,133 0 336 8,508 X X X X 4. 1986.... 12,210 7,232 9,512 6,942 607 340 1,209 0 0 387 9,411 X X X X 5. 1987.... 19,765 3,717 4,007 400 1,403 368 994 0 0 482 22,166 X X X X 6. 1988.... 19,188 893 9,768 975 1,563 446 1,220 0 0 744 30,169 X X X X 7. 1989.... 34,049 3,527 11,238 7,655 4,628 2,096 3,205 1,346 0 1,752 40,248 X X X X 8. 1990.... 44,109 3,130 18,465 12,219 3,806 815 6,948 3,296 0 2,389 56,257 X X X X 9. 1991.... 73,121 5,070 61,804 19,462 7,013 329 15,902 7,295 0 3,583 129,267 X X X X 10. 1992.... 109,894 12,555 77,243 21,287 6,497 197 27,757 5,385 0 4,907 186,874 X X X X 11. 1993.... 151,702 21,071 149,391 35,262 8,832 89 80,865 35,202 0 6,677 305,843 X X X X - ------------ --------- -------- --------- ---------- -------- --------- -------- --------- --------- ---------- --------- --------- 12. Totals . 572,299 121,144 373,837 127,276 36,136 6,338 143,712 54,831 0 22,772 839,167 X X X X - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Expense Percent Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ---------------------------- ----------------------------- ------------------ Inter-Co. -------------------- 25 26 27 28 29 30 31 32 Pooling 34 35 Direct Direct Loss Participa Losses Loss Exp. & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent Unpaid Unpaid - ------------ --------- -------- --------- ---------- -------- --------- -------- --------- --------- ---------- --------- 1. Prior ... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 37,746 4,540 2. 1984.... 498,770 142,622 356,148 115.0 106.9 118.5 0 0 0.0 6,745 1,393 3. 1985.... 495,076 139,817 355,259 96.3 93.3 97.5 0 0 0.0 9,156 (648) 4. 1986.... 354,057 91,050 263,007 67.1 66.2 67.4 0 0 0.0 7,548 1,863 5. 1987.... 328,430 47,397 281,033 60.0 42.0 64.6 0 0 0.0 19,655 2,511 6. 1988.... 392,702 27,109 365,593 68.7 48.0 71.0 0 0 0.0 27,088 3,081 7. 1989.... 451,242 76,922 374,320 69.1 66.5 69.6 0 0 0.0 34,105 6,143 8. 1990.... 421,451 79,386 342,065 65.9 53.0 69.9 0 0 0.0 47,225 9,032 9. 1991.... 447,904 83,869 364,035 68.1 68.0 68.1 0 0 0.0 110,393 18,874 10. 1992.... 469,141 58,494 410,647 68.8 47.6 73.4 0 0 0.0 153,295 33,579 11. 1993.... 537,908 107,085 430,823 71.6 79.8 69.9 0 0 0.0 244,760 61,083 - ------------ --------- -------- --------- ---------- -------- --------- -------- --------- --------- ---------- --------- 12. Totals .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 697,716 141,451 - ------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 2 - SUMMARY - ------------------------------------------------------------------------------------------------------------------------------------ 1 Incurred Losses and Allocated Expenses Reported At Year End (000 omitted) Development** Years in --------------------------------------------------------------------------------------------------- ------------------- Which 2 3 4 5 6 7 8 9 10 11 12 13 Losses 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 One Year Two Year Incurred - ------------ ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior 153,698 * 190,737 222,241 228,163 249,917 273,937 281,978 293,867 301,917 309,132 7,215 15,265 2. 1984.. 215,447 244,742 296,082 307,722 320,162 322,956 329,422 329,920 330,744 333,062 2,318 3,142 3. 1985... X X X X 237,407 262,437 289,631 301,135 320,889 327,271 326,139 332,558 327,006 (5,552) 867 4. 1986.. X X X X X X X X 201,436 240,445 246,466 224,571 230,912 234,896 239,275 238,049 (1,226) 3,153 5. 1987.. X X X X X X X X X X X X 233,232 247,089 249,530 252,521 251,718 251,758 257,424 5,666 5,706 6. 1988.. X X X X X X X X X X X X X X X X 284,193 312,457 323,868 336,466 333,906 338,698 4,792 2,232 7. 1989.. X X X X X X X X X X X X X X X X X X X X 332,863 330,580 344,324 347,432 348,322 890 3,998 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X X 296,040 310,870 312,106 312,837 731 1,967 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 335,255 334,859 334,159 (700) (1,096) 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 374,587 378,069 3,482 X X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 402,517 X X X X X X X X - ---------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 17,616 35,234 - ------------------------------------------------------------------------------------------------------------------------------------ *Reported reserves only. Subsequent development relates only to subsequent payments and reserves. **Current year less first or second prior year, showing (redundant) or adverse. SCHEDULE P - PART 3 - SUMMARY - ------------------------------------------------------------------------------------------------------------------------------------ 12 13 1 Cumulative Paid Losses and Allocated Expenses At Year End (000 omitted) Number of Number of Years in --------------------------------------------------------------------------------------------------- Claims Claims Which 2 3 4 5 6 7 8 9 10 11 Closed Closed Losses 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 W/Loss W/O Loss Incurred Payment Payment - ------------ ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior 000 85,680 142,858 185,356 198,582 223,753 234,398 246,135 256,725 268,007 X X X X X X X X 2. 1984.. 91,644 187,726 246,523 281,035 285,409 309,248 319,336 321,046 324,281 325,277 X X X X X X X X 3. 1985... X X X X 100,574 195,435 249,223 289,726 304,024 317,398 314,667 318,679 318,833 X X X X X X X X 4. 1986.. X X X X X X X X 68,270 135,041 169,131 197,076 214,656 224,350 226,744 229,034 X X X X X X X X 5. 1987.. X X X X X X X X X X X X 58,418 122,409 170,813 205,083 221,041 230,658 235,741 X X X X X X X X 6. 1988.. X X X X X X X X X X X X X X X X 77,857 167,372 236,249 275,497 297,153 309,272 X X X X X X X X 7. 1989.. X X X X X X X X X X X X X X X X X X X X 85,294 193,855 263,474 294,549 309,833 X X X X X X X X 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X X 77,392 175,386 233,025 258,969 X X X X X X X X 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 70,336 159,572 208,474 X X X X X X X X 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 86,782 196,097 X X X X X X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 103,349 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ Note: Net of salvage and subrogation received. SCHEDULE P - PART 4 - SUMMARY - ---------------------------------------------------------------------------------------------------------------- 1 Bulk and Incurred But Not Reported Reserves on Losses and Allocated Expenses at Y/E (000 omitted) Years in --------------------------------------------------------------------------------------------------- Which 2 3 4 5 6 7 8 9 10 11 Losses 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Incurred - ---------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior . 25,548 16,717 10,094 5,842 6,794 7,888 6,646 9,973 6,783 8,220 2. 1984... 66,402 23,773 9,769 4,368 3,600 2,420 1,878 1,931 1,854 980 3. 1985... X X X X 52,847 23,823 11,881 9,500 2,051 3,939 3,256 3,462 3,438 4. 1986... X X X X X X X X 82,191 37,605 18,584 7,635 5,990 4,844 4,421 3,780 5. 1987... X X X X X X X X X X X X 91,998 43,510 18,288 8,101 9,850 5,131 4,600 6. 1988... X X X X X X X X X X X X X X X X 87,706 42,691 13,595 16,922 10,193 10,014 7. 1989... X X X X X X X X X X X X X X X X X X X X 114,304 28,254 20,276 7,621 5,441 8. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 76,684 38,909 15,799 9,899 9. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 152,951 76,900 50,950 10. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 146,794 78,327 11. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 159,794 - ---------------------------------------------------------------------------------------------------------------- ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS (000 omitted) - -------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X 6 0 12 0 0 0 18 X X X X 2. 1984.... 20,279 12,312 7,967 14,329 4,324 1,137 86 125 674 11,730 0 3. 1985.... 15,268 6,275 8,993 11,385 3,736 399 34 242 622 8,636 0 4. 1986.... 9,004 (584) 9,588 8,199 1,446 477 150 23 580 7,660 0 5. 1987.... 6,905 461 6,444 2,733 1 128 4 0 219 3,075 0 6. 1988.... 7,079 3,223 3,856 5,507 2,115 556 401 0 200 3,747 0 7. 1989.... 2,176 (1) 2,177 1,585 81 50 12 0 46 1,588 0 8. 1990.... 1,530 0 1,530 1,019 31 35 0 0 4 1,027 0 9. 1991.... 2,011 0 2,011 537 0 19 0 0 2 558 0 10. 1992.... 2,614 249 2,365 700 208 8 0 0 1 501 0 11. 1993.... 1,416 32 1,384 5 0 1 0 0 1 7 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X 46,005 11,942 2,822 687 390 2,349 38,547 X X X X - -------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. 237 0 0 0 0 0 6 0 0 1 244 0 2. 1984.... 156 23 0 0 0 0 40 0 0 6 179 0 3. 1985.... 33 0 0 0 0 0 6 0 0 1 40 0 4. 1986.... 8 0 1 0 0 0 0 0 0 0 9 0 5. 1987.... 31 0 20 0 0 0 2 0 0 0 53 0 6. 1988.... 38 0 20 0 0 0 0 0 0 0 58 0 7. 1989.... 103 0 30 0 0 0 0 0 0 0 133 0 8. 1990.... 274 0 50 0 0 0 0 0 0 0 324 0 9. 1991.... 537 0 50 0 0 0 0 0 0 0 587 0 10. 1992.... 787 0 175 0 0 0 0 0 0 0 962 0 11. 1993.... 1,070 12 179 0 0 0 3 0 0 1 1,241 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . 3,274 35 525 0 0 0 57 0 0 9 3,830 0 - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 237 7 2. 1984.... 16,342 4,433 11,909 80.6 36.0 149.5 0 0 0.0 133 46 3. 1985.... 12,446 3,770 8,676 81.5 60.1 96.5 0 0 0.0 33 7 4. 1986.... 9,265 1,596 7,669 102.9 (273.3) 80.0 0 0 0.0 9 0 5. 1987.... 3,133 5 3,128 45.4 1.1 48.5 0 0 0.0 51 2 6. 1988.... 6,321 2,516 3,805 89.3 78.1 98.7 0 0 0.0 58 0 7. 1989.... 1,814 93 1,721 83.4 (9,300.0) 79.1 0 0 0.0 133 0 8. 1990.... 1,382 31 1,351 90.3 0.0 88.3 0 0 0.0 324 0 9. 1991.... 1,145 0 1,145 56.9 0.0 56.9 0 0 0.0 587 0 10. 1992.... 1,671 208 1,463 63.9 83.5 61.9 0 0 0.0 962 0 11. 1993.... 1,260 12 1,248 89.0 37.5 90.2 0 0 0.0 1,237 4 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 3,764 66 - -------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL (000 omitted) - -------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported - Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X 2. 1984.... 20,184 18,166 2,018 35,826 28,701 3,866 3,272 0 370 8,089 0 3. 1985.... 19,936 17,942 1,994 26,217 19,134 2,492 2,181 0 174 7,568 0 4. 1986.... 6,537 654 5,883 2,456 0 120 0 0 523 3,099 0 5. 1987.... 3,037 304 2,733 3,304 0 164 0 0 279 3,747 0 6. 1988.... 2,466 247 2,219 1,821 0 85 0 0 232 2,138 0 7. 1989.... 1,448 145 1,303 1,141 0 110 0 0 146 1,397 0 8. 1990.... 595 127 468 449 0 50 0 0 182 681 0 9. 1991.... 4,000 0 4,000 2,530 0 256 0 0 413 3,199 0 10. 1992.... 22,525 0 22,525 14,429 0 426 0 0 2,186 17,041 0 11. 1993.... 54,150 3,606 50,544 17,418 360 301 3 0 2,598 19,954 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X 105,591 48,195 7,870 5,456 0 7,103 66,913 X X X X - -------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. 12 0 0 0 0 0 2 0 0 0 14 0 2. 1984.... 30 0 0 0 0 0 4 0 0 0 34 0 3. 1985.... 0 0 0 0 0 0 0 0 0 0 0 0 4. 1986.... 0 0 0 0 0 0 0 0 0 0 0 0 5. 1987.... 0 0 0 0 0 0 0 0 0 0 0 0 6. 1988.... 26 0 0 0 0 0 3 0 0 0 29 0 7. 1989.... 0 0 0 0 0 0 0 0 0 0 0 0 8. 1990.... 5 0 0 0 0 0 1 0 0 0 6 0 9. 1991.... 97 0 0 0 0 0 12 0 0 1 110 0 10. 1992.... 1,053 0 600 0 0 0 213 0 0 23 1,889 0 11. 1993.... 8,964 563 3,362 520 0 0 1,513 1 0 141 12,896 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . 10,187 563 3,962 520 0 0 1,748 1 0 165 14,978 0 - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 12 2 2. 1984.... 40,096 31,973 8,123 198.7 176.0 402.5 0 0 0.0 30 4 3. 1985.... 28,883 21,315 7,568 144.9 118.8 379.5 0 0 0.0 0 0 4. 1986.... 3,099 0 3,099 47.4 0.0 52.7 0 0 0.0 0 0 5. 1987.... 3,747 0 3,747 123.4 0.0 137.1 0 0 0.0 0 0 6. 1988.... 2,167 0 2,167 87.9 0.0 97.7 0 0 0.0 26 3 7. 1989.... 1,397 0 1,397 96.5 0.0 107.2 0 0 0.0 0 0 8. 1990.... 687 0 687 115.5 0.0 146.8 0 0 0.0 5 1 9. 1991.... 3,309 0 3,309 82.7 0.0 82.7 0 0 0.0 97 13 10. 1992.... 18,930 0 18,930 84.0 0.0 84.0 0 0 0.0 1,653 236 11. 1993.... 34,297 1,447 32,850 63.3 40.1 65.0 0 0 0.0 11,243 1,653 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 13,066 1,912 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL (000 omitted) - ------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported - Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ----------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior . X X X X X X X X X X X X 123 0 2 0 0 0 125 X X X X 2. 1984... 24,055 10,107 13,948 19,432 4,341 1,941 397 212 2,164 18,799 0 3. 1985... 23,389 1,646 21,743 16,984 3,490 1,216 221 187 1,297 15,786 0 4. 1986... 19,302 5,259 14,043 9,296 190 1,539 30 118 779 11,394 0 5. 1987... 19,965 3,630 16,335 13,050 624 2,455 45 193 1,308 16,144 0 6. 1988... 12,784 1,401 11,383 7,032 215 704 14 131 868 8,375 0 7. 1989... 4,927 302 4,625 4,141 244 483 (2) 86 252 4,634 0 8. 1990... 14,920 2,272 12,648 6,435 287 1,007 2 17 542 7,695 0 9. 1991... 39,624 17,610 22,014 16,964 5,667 2,358 852 79 816 13,619 0 10. 1992... 60,474 27,142 33,332 21,329 8,692 2,893 1,178 110 823 15,175 0 11. 1993... 89,373 41,440 47,933 12,261 6,068 1,844 836 147 751 7,952 0 - ----------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals X X X X X X X X X X X X 127,047 29,818 16,442 3,573 1,280 9,600 119,698 X X X X - ------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ----------------------------------------------------------------------------------------------------------------------------------- Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ----------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior . 1,272 45 91 0 0 0 11 3 0 2 1,328 0 2. 1984... 299 0 23 0 0 0 6 0 0 2 330 0 3. 1985... 345 0 40 0 25 0 0 0 0 0 410 0 4. 1986... 634 0 399 0 40 0 2 0 0 1 1,076 0 5. 1987... 1,390 455 11 0 50 0 64 0 0 18 1,078 0 6. 1988... 665 83 15 0 75 0 42 0 0 12 726 0 7. 1989... 737 0 276 0 100 0 70 0 0 20 1,203 0 8. 1990... 2,257 88 209 0 125 0 159 1 0 45 2,706 0 9. 1991... 7,851 2,466 858 0 282 0 500 0 0 140 7,165 0 10. 1992... 15,478 6,555 2,498 500 301 0 1,066 0 0 385 12,673 0 11. 1993... 26,916 13,798 19,953 9,055 1,012 0 1,574 1 0 702 27,303 0 - ----------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals 57,844 23,490 24,373 9,555 2,010 0 3,494 5 0 1,327 55,998 0 - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ----------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 1,318 10 2. 1984... 23,867 4,738 19,129 99.2 46.9 137.1 0 0 0.0 322 8 3. 1985... 19,907 3,711 16,196 85.1 225.5 74.5 0 0 0.0 385 25 4. 1986... 12,690 220 12,470 65.7 4.2 88.8 0 0 0.0 1,033 43 5. 1987... 18,346 1,124 17,222 91.9 31.0 105.4 0 0 0.0 946 132 6. 1988... 9,413 312 9,101 73.6 22.3 80.0 0 0 0.0 597 129 7. 1989... 6,079 242 5,837 123.4 80.1 126.2 0 0 0.0 1,013 190 8. 1990... 10,779 378 10,401 72.2 16.6 82.2 0 0 0.0 2,378 328 9. 1991... 29,769 8,985 20,784 75.1 51.0 94.4 0 0 0.0 6,243 922 10. 1992... 44,773 16,925 27,848 74.0 62.4 83.5 0 0 0.0 10,921 1,752 11. 1993... 65,013 29,758 35,255 72.7 71.8 73.6 0 0 0.0 24,016 3,287 - ----------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 49,172 6,826 - ------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1D - WORKERS' COMPENSATION (000 omitted) - -------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported - Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X 6,039 3,768 319 0 0 149 2,739 X X X X 2. 1984.... 190,669 47,080 143,589 178,534 44,046 9,723 0 2,573 7,751 151,962 0 3. 1985.... 178,423 14,563 163,860 166,665 39,963 10,345 1,680 3,131 13,112 148,479 0 4. 1986.... 199,810 42,338 157,472 120,129 30,550 6,658 16 2,373 11,162 107,383 0 5. 1987.... 206,894 8,202 198,692 131,025 8,731 9,155 0 3,992 14,986 146,435 0 6. 1988.... 294,207 4,383 289,824 195,900 2,755 11,684 0 2,079 18,476 223,305 0 7. 1989.... 377,203 30,876 346,327 219,334 20,026 12,926 0 2,799 17,666 229,900 0 8. 1990.... 350,601 37,234 313,367 182,949 4,260 11,116 118 1,410 21,021 210,708 0 9. 1991.... 326,805 7,256 319,549 139,366 3,502 7,867 107 806 20,249 163,873 0 10. 1992.... 337,564 6,195 331,369 119,107 391 4,312 17 186 19,355 142,366 0 11. 1993.... 318,612 5,338 313,274 49,880 459 1,417 41 28 13,464 64,261 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X ********* 158,451 85,522 1,979 19,377 157,391 ********* X X X X - -------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. 41,022 28,236 21,331 19,114 0 0 510 367 0 414 15,560 0 2. 1984.... 7,929 4,027 798 689 0 0 349 0 0 296 4,656 0 3. 1985.... 8,422 6,489 1,099 996 0 0 254 1,421 0 216 1,085 0 4. 1986.... 5,697 4,725 7,491 6,942 0 0 322 0 0 274 2,117 0 5. 1987.... 12,119 1,006 1,278 0 0 0 446 0 0 379 13,216 0 6. 1988.... 14,250 431 2,641 0 0 0 738 0 0 628 17,826 0 7. 1989.... 22,879 2,525 2,719 2,250 0 0 1,173 0 0 997 22,993 0 8. 1990.... 27,444 541 1,664 0 0 0 1,640 0 0 1,440 31,647 0 9. 1991.... 40,702 0 26,192 0 0 0 3,028 0 0 1,725 71,647 0 10. 1992.... 64,004 891 34,943 0 0 0 5,777 0 0 2,288 106,121 0 11. 1993.... 90,744 2,416 47,403 294 0 0 18,454 39 0 2,703 156,555 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . 335,212 51,287 147,559 30,285 0 0 32,691 1,827 0 11,360 443,423 0 - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 15,003 557 2. 1984.... 205,380 48,762 156,618 107.7 103.6 109.1 0 0 0.0 4,011 645 3. 1985.... 200,113 50,549 149,564 112.2 347.1 91.3 0 0 0.0 2,036 (951) 4. 1986.... 151,733 42,233 109,500 75.9 99.8 69.5 0 0 0.0 1,521 596 5. 1987.... 169,388 9,737 159,651 82.0 118.7 80.5 0 0 0.0 12,391 825 6. 1988.... 244,317 3,186 241,131 83.0 72.7 83.2 0 0 0.0 16,460 1,366 7. 1989.... 277,694 24,801 252,893 73.6 80.3 73.0 0 0 0.0 20,823 2,170 8. 1990.... 247,274 4,919 242,355 70.5 13.2 77.3 0 0 0.0 28,567 3,080 9. 1991.... 239,129 3,609 235,520 73.2 49.7 73.7 0 0 0.0 66,894 4,753 10. 1992.... 249,786 1,299 248,487 74.0 21.0 75.0 0 0 0.0 98,056 8,065 11. 1993.... 224,065 3,249 220,816 70.3 60.9 70.5 0 0 0.0 135,437 21,118 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 401,199 42,224 - -------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1E - COMMERCIAL MULTIPLE PERIL (000 omitted) - -------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported - Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X 365 0 690 734 0 63 384 X X X X 2. 1984.... 79,729 19,552 60,177 82,731 16,624 12,658 1,134 2,270 6,832 84,463 3. 1985.... 108,192 28,367 79,825 90,926 15,715 19,218 4,864 1,983 8,295 97,860 4. 1986.... 96,931 25,228 71,703 47,691 7,694 18,370 5,773 2,136 7,345 59,939 5. 1987.... 67,974 14,978 52,996 25,906 961 6,913 428 1,010 3,519 34,949 6. 1988.... 33,129 5,975 27,154 14,460 1,760 3,666 127 188 2,757 18,996 7. 1989.... 10,757 2,243 8,514 8,831 2,280 534 38 61 697 7,744 8. 1990.... 6,058 0 6,058 4,853 774 401 20 2 426 4,886 9. 1991.... 6,446 9 6,437 3,218 2 791 81 5 198 4,124 10. 1992.... 8,692 744 7,948 6,912 502 417 16 6 245 7,056 11. 1993.... 10,281 1,890 8,391 3,306 103 217 8 2 415 3,827 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X 289,199 46,415 63,875 13,223 7,663 30,792 324,228 X X X X - -------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. 1,993 1,060 0 0 0 0 471 0 0 68 1,472 0 2. 1984.... 978 0 0 0 0 0 336 0 0 49 1,363 0 3. 1985.... 1,042 650 50 0 0 0 258 0 0 38 738 0 4. 1986.... 1,925 858 50 0 0 0 510 0 0 75 1,702 0 5. 1987.... 753 150 451 400 0 0 273 0 0 40 967 0 6. 1988.... 731 103 2,076 975 0 0 216 0 0 32 1,977 0 7. 1989.... 320 65 126 0 0 0 11 0 0 2 394 0 8. 1990.... 675 115 151 50 0 0 57 0 0 8 726 0 9. 1991.... 1,907 362 558 80 2 0 18 0 0 2 2,045 0 10. 1992.... 2,614 945 282 22 5 0 90 0 0 14 2,038 0 11. 1993.... 5,491 1,986 1,592 751 16 0 1,894 0 0 312 6,568 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . 18,429 6,294 5,336 2,278 23 0 4,134 0 0 640 19,990 0 - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 933 539 2. 1984.... 103,584 17,758 85,826 129.9 90.8 142.6 0 0 0.0 978 385 3. 1985.... 119,827 21,229 98,598 110.8 74.8 123.5 0 0 0.0 442 296 4. 1986.... 75,966 14,325 61,641 78.4 56.8 86.0 0 0 0.0 1,117 585 5. 1987.... 37,855 1,939 35,916 55.7 12.9 67.8 0 0 0.0 654 313 6. 1988.... 23,938 2,965 20,973 72.3 49.6 77.2 0 0 0.0 1,729 248 7. 1989.... 10,521 2,383 8,138 97.8 106.2 95.6 0 0 0.0 381 13 8. 1990.... 6,571 959 5,612 108.5 0.0 92.6 0 0 0.0 661 65 9. 1991.... 6,694 525 6,169 103.8 5,833.3 95.8 0 0 0.0 2,023 22 10. 1992.... 10,579 1,485 9,094 121.7 199.6 114.4 0 0 0.0 1,929 109 11. 1993.... 13,243 2,848 10,395 128.8 150.7 123.9 0 0 0.0 4,346 2,222 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 15,193 4,797 - -------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE (000 omitted) - -------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported - Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X 2. 1984.... 0 0 0 0 0 0 0 0 0 0 0 3. 1985.... 0 0 0 0 0 0 0 0 0 0 0 4. 1986.... 0 0 0 0 0 0 0 0 0 0 0 5. 1987.... 0 0 0 0 0 0 0 0 0 0 0 6. 1988.... 470 424 46 0 0 0 0 0 0 0 0 7. 1989.... 488 468 20 0 0 0 0 0 0 0 0 8. 1990.... 1,497 696 801 0 0 0 0 0 0 0 0 9. 1991.... 5,904 3,003 2,901 3 1 15 3 0 0 14 0 10. 1992.... 6,186 3,474 2,712 29 15 140 74 0 53 133 0 11. 1993.... 5,392 4,380 1,012 0 0 0 0 0 43 43 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X 32 16 155 77 0 96 190 X X X X - -------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. 1 0 0 0 0 0 0 0 0 0 1 0 2. 1984.... 0 0 0 0 0 0 0 0 0 0 0 0 3. 1985.... 0 0 0 0 0 0 0 0 0 0 0 0 4. 1986.... 0 0 0 0 0 0 0 0 0 0 0 0 5. 1987.... 0 0 0 0 0 0 0 0 0 0 0 0 6. 1988.... 0 0 0 0 0 0 0 0 0 0 0 0 7. 1989.... 0 0 0 0 0 0 0 0 0 0 0 0 8. 1990.... 378 162 100 50 0 0 83 0 0 4 353 0 9. 1991.... 1,038 519 500 250 0 0 291 0 0 14 1,074 0 10. 1992.... 450 225 750 375 0 0 235 0 0 16 851 0 11. 1993.... 171 48 1,275 1,173 18 0 389 0 0 31 663 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . 2,038 954 2,625 1,848 18 0 998 0 0 65 2,942 0 - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 1 0 2. 1984.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 3. 1985.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 4. 1986.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 5. 1987.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 6. 1988.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 7. 1989.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 8. 1990.... 565 212 353 37.7 30.5 44.1 0 0 0.0 266 87 9. 1991.... 1,861 773 1,088 31.5 25.7 37.5 0 0 0.0 769 305 10. 1992.... 1,673 689 984 27.0 19.8 36.3 0 0 0.0 600 251 11. 1993.... 1,927 1,221 706 35.7 27.9 69.8 0 0 0.0 225 438 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 1,861 1,081 - -------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE (000 omitted) - -------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported - Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X 2. 1984.... 0 0 0 0 0 0 0 0 0 0 0 3. 1985.... 0 0 0 0 0 0 0 0 0 0 0 4. 1986.... 0 0 0 0 0 0 0 0 0 0 0 5. 1987.... 0 0 0 0 0 0 0 0 0 0 0 6. 1988.... 0 0 0 0 0 0 0 0 0 0 0 7. 1989.... 0 0 0 0 0 0 0 0 0 0 0 8. 1990.... 0 0 0 0 0 0 0 0 0 0 0 9. 1991.... 0 0 0 0 0 0 0 0 0 0 0 10. 1992.... 0 0 0 0 0 0 0 0 0 0 0 11. 1993.... 3 0 3 0 0 0 0 0 0 0 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X - -------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. 0 0 0 0 0 0 0 0 0 0 0 0 2. 1984.... 0 0 0 0 0 0 0 0 0 0 0 0 3. 1985.... 0 0 0 0 0 0 0 0 0 0 0 0 4. 1986.... 0 0 0 0 0 0 0 0 0 0 0 0 5. 1987.... 0 0 0 0 0 0 0 0 0 0 0 0 6. 1988.... 0 0 0 0 0 0 0 0 0 0 0 0 7. 1989.... 0 0 0 0 0 0 0 0 0 0 0 0 8. 1990.... 0 0 0 0 0 0 0 0 0 0 0 0 9. 1991.... 0 0 0 0 0 0 0 0 0 0 0 0 10. 1992.... 0 0 0 0 0 0 0 0 0 0 0 0 11. 1993.... 0 0 1 0 8 0 0 0 0 0 9 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . 0 0 1 0 8 0 0 0 0 0 9 0 - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 0 0 2. 1984.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 3. 1985.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 4. 1986.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 5. 1987.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 6. 1988.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 7. 1989.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 8. 1990.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 9. 1991.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 10. 1992.... 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 11. 1993.... 9 0 9 300.0 0.0 300.0 0 0 0.0 1 8 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X 1 8 - -------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY) (000 omitted) - -------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported - Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X 39 5 0 0 0 1 35 X X X X 2. 1984.... 4,008 1,117 2,891 4,483 0 493 1 0 317 5,292 0 3. 1985.... 7,659 589 7,070 2,589 (157) 515 2 0 589 3,848 0 4. 1986.... 7,654 754 6,900 1,418 4 256 2 0 492 2,160 0 5. 1987.... 2,103 179 1,924 746 12 38 3 0 168 937 0 6. 1988.... 1,690 9 1,681 990 35 78 9 0 140 1,164 0 7. 1989.... 1,318 0 1,318 1,198 292 52 21 0 1 938 0 8. 1990.... 1,398 45 1,353 505 61 45 10 0 11 490 0 9. 1991.... 2,372 0 2,372 2,223 7 163 1 0 137 2,515 0 10. 1992.... 3,788 149 3,639 1,796 14 143 2 0 119 2,042 0 11. 1993.... 6,301 480 5,821 1,936 19 113 2 0 95 2,123 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X 17,923 292 1,896 53 0 2,070 21,544 X X X X - -------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. 245 178 40 31 0 0 16 13 0 0 79 0 2. 1984.... 9 0 1 0 0 0 0 0 0 0 10 0 3. 1985.... 1,234 0 0 0 0 0 0 0 0 0 1,234 0 4. 1986.... 62 10 0 0 0 0 0 0 0 0 52 0 5. 1987.... 21 5 0 0 0 0 37 0 0 0 53 0 6. 1988.... 45 7 0 0 0 0 0 0 0 0 38 0 7. 1989.... 49 16 1 0 0 0 0 0 0 0 34 0 8. 1990.... 49 2 3 0 0 0 0 0 0 0 50 0 9. 1991.... 148 22 26 5 0 0 1 0 0 1 149 0 10. 1992.... 350 97 65 18 0 0 2 0 0 2 304 0 11. 1993.... 1,574 458 464 207 1 0 100 0 0 18 1,492 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . 3,786 795 600 261 1 0 156 13 0 21 3,495 0 - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 76 3 2. 1984.... 5,303 1 5,302 132.3 0.1 183.4 0 0 0.0 10 0 3. 1985.... 4,927 (155) 5,082 64.3 (26.3) 71.9 0 0 0.0 1,234 0 4. 1986.... 2,228 16 2,212 29.1 2.1 32.1 0 0 0.0 52 0 5. 1987.... 1,010 20 990 48.0 11.2 51.5 0 0 0.0 16 37 6. 1988.... 1,253 51 1,202 74.1 566.7 71.5 0 0 0.0 38 0 7. 1989.... 1,301 329 972 98.7 0.0 73.7 0 0 0.0 34 0 8. 1990.... 613 73 540 43.8 162.2 39.9 0 0 0.0 50 0 9. 1991.... 2,699 35 2,664 113.8 0.0 112.3 0 0 0.0 147 2 10. 1992.... 2,477 131 2,346 65.4 87.9 64.5 0 0 0.0 300 4 11. 1993.... 4,301 686 3,615 68.3 142.9 62.1 0 0 0.0 1,373 119 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 3,330 165 - -------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1H - SECTION 1 - OTHER LIABILITY - OCCURRENCE (000 omitted) - -------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported - Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X 7,196 6,135 1,480 (111) 0 453 3,105 X X X X 2. 1984.... 8,504 4,672 3,832 3,507 430 396 0 0 74 3,547 0 3. 1985.... 7,428 547 6,881 2,680 400 166 117 2 82 2,411 0 4. 1986.... 11,906 (1,276) 13,182 5,945 2,071 509 286 0 177 4,274 0 5. 1987.... 11,841 (1,881) 13,722 2,394 363 263 5 0 71 2,360 0 6. 1988.... 3,526 (88) 3,614 3,260 450 399 0 0 65 3,274 0 7. 1989.... 6,343 197 6,146 5,508 66 145 15 0 172 5,744 0 8. 1990.... 7,613 1,321 6,292 4,553 1,398 729 151 2 265 3,998 0 9. 1991.... 5,976 (463) 6,439 1,100 31 272 59 0 55 1,337 0 10. 1992.... 6,568 773 5,795 2,113 32 253 9 1 29 2,354 0 11. 1993.... 19,975 5,668 14,307 420 4 109 26 0 411 910 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X 38,676 11,380 4,721 557 5 1,854 33,314 X X X X - -------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. 5,237 754 421 0 0 0 2,191 0 0 663 7,758 0 2. 1984.... 201 0 21 0 5 0 0 0 0 0 227 0 3. 1985.... 86 0 156 0 10 0 19 0 0 6 277 0 4. 1986.... 1,535 0 494 0 10 0 248 0 0 7 2,294 0 5. 1987.... 388 0 102 0 15 0 21 0 0 6 532 0 6. 1988.... 373 0 105 0 20 0 45 0 0 14 557 0 7. 1989.... 398 0 75 0 30 0 13 0 0 4 520 0 8. 1990.... 1,338 0 150 0 30 0 0 0 0 0 1,518 0 9. 1991.... 1,359 0 617 0 332 0 38 0 0 12 2,358 0 10. 1992.... 1,378 56 1,106 20 100 0 290 0 0 80 2,878 0 11. 1993.... 2,127 48 5,896 477 830 0 710 0 0 197 9,235 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . 14,420 858 9,143 497 1,382 0 3,575 0 0 989 28,154 0 - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 4,904 2,854 2. 1984.... 4,204 430 3,774 49.4 9.2 98.5 0 0 0.0 222 5 3. 1985.... 3,205 517 2,688 43.1 94.5 39.1 0 0 0.0 242 35 4. 1986.... 8,925 2,357 6,568 75.0 (184.7) 49.8 0 0 0.0 2,029 265 5. 1987.... 3,260 368 2,892 27.5 (19.6) 21.1 0 0 0.0 490 42 6. 1988.... 4,281 450 3,831 121.4 (511.4) 106.0 0 0 0.0 478 79 7. 1989.... 6,345 81 6,264 100.0 41.1 101.9 0 0 0.0 473 47 8. 1990.... 7,065 1,549 5,516 92.8 117.3 87.7 0 0 0.0 1,488 30 9. 1991.... 3,785 90 3,695 63.3 (19.4) 57.4 0 0 0.0 1,976 382 10. 1992.... 5,349 117 5,232 81.4 15.1 90.3 0 0 0.0 2,408 470 11. 1993.... 10,700 555 10,145 53.6 9.8 70.9 0 0 0.0 7,498 1,737 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 22,208 5,946 - -------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE (000 omitted) - -------------------------------------------------------------------------------------------------------------------------- 1 Premiums Earned Loss and Loss Expense Payments ----------------------------- --------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Premiums ------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Paid Reported - Losses and Ceded (2 - 3) Direct Direct Subro. Expense (5-6+7 Direct & Incurred Assumed & Assum. Ceded & Assum. Ceded Received Payments -8+10) Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X 958 413 (2,425) (5,111) 0 66 3,297 X X X X 2. 1984.... 33,479 14,855 18,624 36,385 23,921 17,136 8,819 0 1,830 22,611 0 3. 1985.... 74,722 50,385 24,337 36,733 20,974 21,347 11,814 0 3,510 28,802 0 4. 1986.... 120,483 56,536 63,947 39,230 16,266 20,558 9,185 0 3,279 37,616 0 5. 1987.... 146,969 58,082 88,887 36,589 19,450 23,207 10,608 0 2,157 31,895 0 6. 1988.... 154,675 37,465 117,210 35,033 5,629 18,169 2,188 0 2,564 47,949 0 7. 1989.... 176,092 49,245 126,847 42,783 8,919 21,663 3,880 0 4,737 56,384 0 8. 1990.... 170,611 66,453 104,158 35,723 18,393 15,448 5,840 0 3,939 30,877 0 9. 1991.... 179,918 49,021 130,897 21,845 9,920 15,630 3,954 0 4,148 27,749 0 10. 1992.... 170,424 46,207 124,217 10,654 16 6,349 526 0 4,482 20,943 0 11. 1993.... 164,043 41,220 122,823 1,843 0 1,561 0 0 3,052 6,456 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X 297,776 123,901 158,643 51,703 0 33,764 314,579 X X X X - -------------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid --------------------------------------- --------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of ------------------- ------------------- ------------------- ------------------- Salvage Unalloc. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss. Outstand. Direct Direct Direct Direct Subro. Expenses & Exp. Direct & & Assum. Ceded & Assum. Ceded & Assum. Ceded & Assum. Ceded Anticip. Unpaid Unpaid Assum. - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. (364) (802) 0 0 578 381 50 0 0 0 685 0 2. 1984.... 1,039 839 5 0 745 520 75 0 0 0 505 0 3. 1985.... 2,606 2,582 3,570 1,160 424 757 850 712 0 76 2,315 0 4. 1986.... 2,281 1,626 755 0 557 340 125 0 0 29 1,781 0 5. 1987.... 4,980 2,100 1,506 0 1,338 368 150 0 0 38 5,544 0 6. 1988.... 2,567 223 4,008 0 1,468 446 175 0 0 57 7,606 0 7. 1989.... 8,907 853 6,256 5,405 4,468 2,096 1,936 1,346 0 728 12,595 0 8. 1990.... 10,445 1,764 14,270 12,119 3,616 815 5,000 3,295 0 883 16,221 0 9. 1991.... 17,813 1,151 30,550 19,119 6,343 329 12,000 7,295 0 1,682 40,494 0 10. 1992.... 18,256 2,148 35,169 20,318 6,014 197 20,000 5,385 0 2,072 53,463 0 11. 1993.... 9,248 (49) 61,920 21,361 6,839 89 55,873 35,162 0 2,267 79,584 0 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . 77,778 12,435 158,009 79,482 32,390 6,338 96,234 53,195 0 7,832 220,793 0 - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Discount for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ----------------------------- ----------------------------- ------------------- ------------------- 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Loss Direct Direct Loss Particip. Losses Expenses & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percent. Unpaid Unpaid - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 438 247 2. 1984.... 57,215 34,099 23,116 170.9 229.5 124.1 0 0 0.0 205 300 3. 1985.... 69,116 37,999 31,117 92.5 75.4 127.9 0 0 0.0 2,434 (119) 4. 1986.... 66,814 27,417 39,397 55.5 48.5 61.6 0 0 0.0 1,410 371 5. 1987.... 69,965 32,526 37,439 47.6 56.0 42.1 0 0 0.0 4,386 1,158 6. 1988.... 64,041 8,486 55,555 41.4 22.7 47.4 0 0 0.0 6,352 1,254 7. 1989.... 91,478 22,499 68,979 51.9 45.7 54.4 0 0 0.0 8,905 3,690 8. 1990.... 89,324 42,226 47,098 52.4 63.5 45.2 0 0 0.0 10,832 5,389 9. 1991.... 110,011 41,768 68,243 61.1 85.2 52.1 0 0 0.0 28,093 12,401 10. 1992.... 102,996 28,590 74,406 60.4 61.9 59.9 0 0 0.0 30,959 22,504 11. 1993.... 142,603 56,563 86,040 86.9 137.2 70.1 0 0 0.0 49,856 29,728 - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 12. Totals . X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 143,870 76,923 - -------------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLARY AND THEFT) (000 omitted) - ------------------------------------------------------------------------------------------------------------------------ 1 Premiums Earned Loss and Loss Expense Payments ------------------------------- ------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Prem Were -------------------- ------------------- Salvage Unalloc. Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd Reported - Loss Were and Ceded (2 - 3) Direct Direct Subrog. Expense (5-6+7 Direct and Incurred Assum. & Assum. Ceded & Assum. Ceded Rec'd Payments -8+10) Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X 4,662 266 950 22 221 1,667 6,991 X X X X 2. 1992. 12,287 2,068 10,219 11,259 1,478 322 47 13 74 10,130 X X X X 3. 1993. 16,189 4,322 11,867 7,936 1,018 239 27 4 73 7,203 X X X X - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 4. Total X X X X X X X X X X X X 23,857 2,762 1,511 96 238 1,814 24,324 X X X X - ------------------------------------------------------------------------------------------------------------------------ Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid ----------------------------------------- -------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of -------------------- -------------------- --------------------- ---------------- Salvage Unalloc Total Claims 13 14 15 16 17 18 19 20 and Loss Net Losses Outstanding Direct Direct Direct Direct Subrog. Expense & Expenses Direct & & Assum. Ceded and Assum. Ceded and Assum. Ceded & Assum. Ceded Antic. Unpaid Unpaid Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- ----------- 1. Prior 3,379 946 186 8 4 0 16 0 0 18 2,649 0 2. 1992. 3,151 810 335 34 11 0 8 0 0 9 2,670 0 3. 1993. 3,290 1,044 1,019 378 30 0 200 0 0 69 3,186 0 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- ----------- 4. Total 9,820 2,800 1,540 420 45 0 224 0 0 96 8,505 0 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ------------------------------- ------------------------------- ---------------- ------------------ 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Direct Direct Loss Particip. Losses Loss Exp. & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percentage Unpaid Unpaid - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 2,611 38 2. 1992. 15,169 2,369 12,800 123.5 114.6 125.3 0 0 0.0 2,642 28 3. 1993. 12,856 2,467 10,389 79.4 57.1 87.5 0 0 0.0 2,887 299 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 4. Total X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 8,140 365 - ------------------------------------------------------------------------------------------------------------------------ *Net = (25 - 26) = (11 + 23) SCHEDULE P - PART 1J - AUTO PHYSICAL DAMAGE (000 omitted) - ------------------------------------------------------------------------------------------------------------------------ 1 Premiums Earned Loss and Loss Expense Payments ------------------------------- ------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Prem Were -------------------- ------------------- Salvage Unallocate Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd. Reported - Loss Were and Ceded (2 - 3) Direct Direct Subrog. Expense (5-6+7 Direct and Incurred Assum. and Assum Ceded and Assum. Ceded Rec'd Payments -8+10) Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X 331 3 29 0 4,047 2,933 3,290 X X X X 2. 1992. 5,338 927 4,411 2,666 376 118 29 101 113 2,492 0 3. 1993. 24,452 2,217 22,235 10,830 630 465 4 268 486 11,147 0 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 4. Total X X X X X X X X X X X X 13,827 1,009 612 33 4,416 3,532 16,929 X X X X - ------------------------------------------------------------------------------------------------------------------------ Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid ----------------------------------------- -------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of -------------------- -------------------- --------------------- ---------------- Salvage Unalloc Total Claims 13 14 15 16 17 18 19 20 and Loss Net Losses Outstanding Direct Direct Direct Direct Subrog. Expense & Expenses Direct & & Assum. Ceded and Assum. Ceded and Assum. Ceded & Assum. Ceded Antic. Unpaid Unpaid Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- ----------- 1. Prior 513 3 105 0 0 0 0 0 0 0 615 0 2. 1992. 325 3 241 0 1 0 0 0 0 0 564 0 3. 1993. 972 30 1,590 0 3 0 33 0 0 108 2,676 0 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- ----------- 4. Total 1,810 36 1,936 0 4 0 33 0 0 108 3,855 0 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ------------------------------- ------------------------------- ---------------- ------------------ 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Direct Direct Loss Particip. Losses Loss Exp. & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percentage Unpaid Unpaid - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 615 0 2. 1992. 3,464 408 3,056 64.9 44.0 69.3 0 0 0.0 563 1 3. 1993. 14,487 664 13,823 59.2 30.0 62.2 0 0 0.0 2,532 144 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 4. Total X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 3,710 145 - ------------------------------------------------------------------------------------------------------------------------ *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY (000 omitted) - ------------------------------------------------------------------------------------------------------------------------ 1 Premiums Earned Loss and Loss Expense Payments ------------------------------- ------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Prem Were -------------------- ------------------- Salvage Unallocate Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd Reported - Loss Were and Ceded (2 - 3) Direct Direct Subrog. Expense (5-6+7 Direct and Incurred Assum. & Assum. Ceded & Assum. Ceded Rec'd Payments -8+10) Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X 396 0 145 0 0 63 604 X X X X 2. 1992. 10,444 2,537 7,907 2,668 308 818 86 0 165 3,257 X X X X 3. 1993. 19,599 7,065 12,534 1,097 620 262 155 0 144 728 X X X X - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 4. Total X X X X X X X X X X X X 4,161 928 1,225 241 0 372 4,589 X X X X - ------------------------------------------------------------------------------------------------------------------------ Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid ----------------------------------------- -------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of -------------------- -------------------- --------------------- ---------------- Salvage Unalloc Total Claims 13 14 15 16 17 18 19 20 and Loss Net Losses Outstanding Direct Direct Direct Direct Subrog. Expense & Expenses Direct & & Assum. Ceded and Assum. Ceded & Assum. Ceded & Assum. Ceded Antic. Unpaid Unpaid Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- ----------- 1. Prior 366 0 0 0 0 0 19 0 0 2 387 0 2. 1992. 1,984 825 0 0 0 0 70 33 0 7 1,236 0 3. 1993. 463 277 2,329 1,031 0 0 48 0 0 5 1,537 0 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- ----------- 4. Total 2,813 1,102 2,329 1,031 0 0 137 33 0 14 3,160 0 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ------------------------------- ------------------------------- ---------------- ------------------ 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Direct Direct Loss Particip. Losses Loss Exp. & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percentage Unpaid Unpaid - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 366 21 2. 1992. 5,712 1,219 4,493 54.7 48.0 56.8 0 0 0.0 1,159 77 3. 1993. 4,348 2,083 2,265 22.2 29.5 18.1 0 0 0.0 1,484 53 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 4. Total X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 3,009 151 - ------------------------------------------------------------------------------------------------------------------------ *Net = (25 - 26) = (11 + 23) SCHEDULE P - PART 1L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH) (000 omitted) - ------------------------------------------------------------------------------------------------------------------------ 1 Premiums Earned Loss and Loss Expense Payments ------------------------------- ------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Prem Were -------------------- ------------------- Salvage Unallocate Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd Reported - Loss Were and Ceded (2 - 3) Direct Direct Subrog. Expense (5-6+7 Direct and Incurred Assum. & Assum. Ceded and Assum. Ceded Rec'd Payments -8+10) Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X 19 2 0 0 0 370 387 X X X X 2. 1992. 33,257 32,472 785 5,002 4,798 302 259 0 31 278 X X X X 3. 1993. 19,188 16,560 2,628 5,047 4,843 239 235 0 95 303 X X X X - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 4. Total X X X X X X X X X X X X 10,068 9,643 541 494 0 496 968 X X X X - ------------------------------------------------------------------------------------------------------------------------ Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid ----------------------------------------- -------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of -------------------- -------------------- --------------------- ---------------- Salvage Unalloc Total Claims 13 14 15 16 17 18 19 20 and Loss Net Losses Outstanding Direct Direct Direct Direct Subrog. Expense & Expenses Direct & & Assum. Ceded and Assum. Ceded & Assum. Ceded & Assum. Ceded Antic. Unpaid Unpaid Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- ----------- 1. Prior 35 4 0 0 0 0 0 0 0 2 33 0 2. 1992. 52 0 0 0 0 0 6 0 0 11 69 0 3. 1993. 548 440 1,158 15 0 0 75 0 0 121 1,447 0 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- ----------- 4. Total 635 444 1,158 15 0 0 81 0 0 134 1,549 0 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Total Losses and Loss and Loss Expense Percentag Dis. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ------------------------------- ------------------------------- ---------------- ------------------ 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Direct Direct Loss Particip. Losses Loss Exp. & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percentage Unpaid Unpaid - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 31 2 2. 1992. 5,404 5,057 347 16.2 15.6 44.2 0 0 0.0 52 17 3. 1993. 7,283 5,533 1,750 38.0 33.4 66.6 0 0 0.0 1,251 196 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- ---------- 4. Total X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 1,334 215 - ------------------------------------------------------------------------------------------------------------------------ *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1M - INTERNATIONAL (000 omitted) - ----------------------------------------------------------------------------------------------------------------------- Premiums Earned Loss and Loss Expense Payments 1 ------------------------------- ------------------------------------------------------------------- Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Prem Were -------------------- ------------------- Salvage Unallocate Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd Reported Loss Were and Ceded (2 - 3) Direct Direct Subrog. Expense (5-6+7 Direct & Incurred Assum. and Assum Ceded and Assum. Ceded Rec'd Payments -8+10) Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- --------- 1. Prior X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X 2. 1984. 0 0 0 0 0 0 0 0 0 0 X X X X 3. 1985. 0 0 0 0 0 0 0 0 0 0 X X X X 4. 1986. 0 0 0 0 0 0 0 0 0 0 X X X X 5. 1987. 0 0 0 0 0 0 0 0 0 0 X X X X 6. 1988. 0 0 0 0 0 0 0 0 0 0 X X X X 7. 1989. 0 0 0 0 0 0 0 0 0 0 X X X X 8. 1990. 0 0 0 0 0 0 0 0 0 0 X X X X 9. 1991. 0 0 0 0 0 0 0 0 0 0 X X X X 10. 1992. 0 0 0 0 0 0 0 0 0 0 X X X X 11. 1993. 61 0 61 62 0 0 0 0 0 62 X X X X - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- --------- 12. Total X X X X X X X X X X X X 62 0 0 0 0 0 62 X X X X - ----------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received - --------------------------------------------------------------------------------------------------------------------------------- Losses Unpaid Allocated Loss Expenses Unpaid ----------------------------------------- -------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of -------------------- -------------------- --------------------- ---------------- Salvage Unall. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss Outstand. Direct Direct Direct Direct Subrog. Exp. and Exp. Direct & Assum. Ceded and Assum. Ceded and Assum. Ceded &Assum. Ceded Antic. Unpaid Unpaid & Assum. - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- --------- --------- 1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 2. 1984. 0 0 0 0 0 0 0 0 0 0 0 0 3. 1985. 0 0 0 0 0 0 0 0 0 0 0 0 4. 1986. 0 0 0 0 0 0 0 0 0 0 0 0 5. 1987. 0 0 0 0 0 0 0 0 0 0 0 0 6. 1988. 0 0 0 0 0 0 0 0 0 0 0 0 7. 1989. 0 0 0 0 0 0 0 0 0 0 0 0 8. 1990. 0 0 0 0 0 0 0 0 0 0 0 0 9. 1991. 0 0 0 0 0 0 0 0 0 0 0 0 10. 1992. 0 0 0 0 0 0 0 0 0 0 0 0 11. 1993. 108 0 4 0 0 0 0 0 0 0 112 0 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- --------- --------- 12. Total 108 0 4 0 0 0 0 0 0 0 112 0 - --------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ------------------------------- ------------------------------- ---------------- Inter-Co. ----------------- 25 26 27 28 29 30 31 32 Pooling 34 35 Direct Direct Loss Particip. Losses Loss Exp. and Assum Ceded Net * and Assum Ceded Net Loss Expense Percentage Unpaid Unpaid - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- --------- 1. Prior X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 0 0 2. 1984. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 3. 1985. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 4. 1986. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 5. 1987. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 6. 1988. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 7. 1989. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 8. 1990. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 9. 1991. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 10. 1992. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 11. 1993. 174 0 174 285.2 0.0 285.2 0 0 0.0 112 0 - --------- --------- ---------- ---------- --------- ---------- ---------- -------- ------- ---------- ------- --------- 12. Total X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 112 0 - ----------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1N - REINSURANCE A (000 omitted) - ------------------------------------------------------------------------------------------------------------------------ 1 Premiums Earned Loss and Loss Expense Payments -------------------------------- ------------------------------------------------------------------ Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Prem Were --------------------- ----------------- Salvage Unallocate Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd Reported - Loss Were and Ceded (2 - 3) Direct Direct Subrog. Expense (5-6+7 Direct and Incurred Assum. & Assum. Ceded & Assum. Ceded Rec'd Payments -8+10) Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- 1. 1988. 0 0 0 0 0 0 0 0 0 0 X X X X 2. 1989. 0 0 0 0 0 0 0 0 0 0 X X X X 3. 1990. 0 0 0 0 0 0 0 0 0 0 X X X X 4. 1991. 0 0 0 0 0 0 0 0 0 0 X X X X 5. 1992. 0 0 0 0 0 0 0 0 0 0 X X X X 6. 1993. 0 0 0 0 0 0 0 0 0 0 X X X X - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- 7. Total X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X - ------------------------------------------------------------------------------------------------------------------------ NOTE: Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid ------------------------------------------- ------------------------------------ 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of --------------------- --------------------- --------------------- -------------- Salvage Unalloc Total Claims 13 14 15 16 17 18 19 20 and Loss Net Losses Outstanding Direct Direct Direct Direct Subrog. Expense & Expenses Direct & and Assum. Ceded and Assum. Ceded and Assum. Ceded & Assu Ceded Antic. Unpaid Unpaid Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- ----------- 1. 1988. 0 0 0 0 0 0 0 0 0 0 0 X X X X 2. 1989. 0 0 0 0 0 0 0 0 0 0 0 X X X X 3. 1990. 0 0 0 0 0 0 0 0 0 0 0 X X X X 4. 1991. 0 0 0 0 0 0 0 0 0 0 0 X X X X 5. 1992. 0 0 0 0 0 0 0 0 0 0 0 X X X X 6. 1993. 0 0 0 0 0 0 0 0 0 0 0 X X X X - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- ----------- 7. Total 0 0 0 0 0 0 0 0 0 0 0 X X X X - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount -------------------------------- -------------------------------- -------------- ------------------ 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Direct Direct Loss Particip. Losses Loss Exp. & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percentage Unpaid Unpaid - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- 1. 1988. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 2. 1989. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 3. 1990. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 4. 1991. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 5. 1992. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 6. 1993. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- 7. Total X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 0 0 - ------------------------------------------------------------------------------------------------------------------------ *Net = (25 - 26) = (11 + 23) SCHEDULE P - PART 1O - REINSURANCE B (000 omitted) - ------------------------------------------------------------------------------------------------------------------------ 1 Premiums Earned Loss and Loss Expense Payments -------------------------------- ------------------------------------------------------------------ Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Prem Were --------------------- ----------------- Salvage Unallocate Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd Reported - Loss Were and Ceded (2 - 3) Direct Direct Subrog. Expense (5-6+7 Direct and Incurred Assum. & Assum. Ceded and Assum. Ceded Rec'd Payments -8+10) Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- 1. 1988. 0 0 0 0 0 0 0 0 0 0 X X X X 2. 1989. 0 0 0 0 0 0 0 0 0 0 X X X X 3. 1990. 0 0 0 0 0 0 0 0 0 0 X X X X 4. 1991. 0 0 0 0 0 0 0 0 0 0 X X X X 5. 1992. 0 0 0 0 0 0 0 0 0 0 X X X X 6. 1993. 0 0 0 0 0 0 0 0 0 0 X X X X - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- 7. Total X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X - ------------------------------------------------------------------------------------------------------------------------ NOTE: Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses U ------------------------------------------- ------------------------------------ 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of --------------------- --------------------- --------------------- -------------- Salvage Unalloc Total Claims 13 14 15 16 17 18 19 20 and Loss Net Losses Outstanding Direct Direct Direct Direct Subrog. Expense & Expenses Direct and and Assum. Ceded and Assum. Ceded and Assum. Ceded & Assu Ceded Antic. Unpaid Unpaid Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- ----------- 1. 1988. 0 0 0 0 0 0 0 0 0 0 0 X X X X 2. 1989. 0 0 0 0 0 0 0 0 0 0 0 X X X X 3. 1990. 0 0 0 0 0 0 0 0 0 0 0 X X X X 4. 1991. 0 0 0 0 0 0 0 0 0 0 0 X X X X 5. 1992. 0 0 0 0 0 0 0 0 0 0 0 X X X X 6. 1993. 0 0 0 0 0 0 0 0 0 0 0 X X X X - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- ----------- 7. Total 0 0 0 0 0 0 0 0 0 0 0 X X X X - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount -------------------------------- -------------------------------- -------------- ------------------ 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Direct Direct Loss Particip. Losses Loss Exp. & Assum. Ceded Net * & Assum. Ceded Net Loss Expense Percentage Unpaid Unpaid - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- 1. 1988. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 2. 1989. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 3. 1990. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 4. 1991. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 5. 1992. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 6. 1993. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------- ---------- ------- ---------- 7. Total X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 0 0 - ------------------------------------------------------------------------------------------------------------------------ *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1P - REINSURANCE C (000 omitted) - ------------------------------------------------------------------------------------------------------------------------ 1 Premiums Earned Loss and Loss Expense Payments -------------------------------- ------------------------------------------------------------------ Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Prem Were --------------------- ------------------ Salvag Unallocate Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd Reported - Loss Were and Ceded (2 - 3) Direct Direct Subrog Expense (5-6+7 Direct and Incurred Assum. & Assum. Ceded & Assum. Ceded Rec'd Payments -8+10) Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- 1. 1988. 0 0 0 0 0 0 0 0 0 0 X X X X 2. 1989. 0 0 0 0 0 0 0 0 0 0 X X X X 3. 1990. 0 0 0 0 0 0 0 0 0 0 X X X X 4. 1991. 0 0 0 0 0 0 0 0 0 0 X X X X 5. 1992. 0 0 0 0 0 0 0 0 0 0 X X X X 6. 1993. 0 0 0 0 0 0 0 0 0 0 X X X X - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- 7. Total X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X - ------------------------------------------------------------------------------------------------------------------------ NOTE: Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid ------------------------------------------- ------------------------------------ 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of --------------------- --------------------- --------------------- -------------- Salvage Unalloc Total Claims 13 14 15 16 17 18 19 20 and Loss Net Losses Outstanding Direct Direct Direct Direct Subrog. Expense & Expense Direct & and Assum. Ceded and Assum. Ceded and Assum. Ceded & Assum Ceded Anticip. Unpaid Unpaid Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- ----------- 1. 1988. 0 0 0 0 0 0 0 0 0 0 0 X X X X 2. 1989. 0 0 0 0 0 0 0 0 0 0 0 X X X X 3. 1990. 0 0 0 0 0 0 0 0 0 0 0 X X X X 4. 1991. 0 0 0 0 0 0 0 0 0 0 0 X X X X 5. 1992. 0 0 0 0 0 0 0 0 0 0 0 X X X X 6. 1993. 0 0 0 0 0 0 0 0 0 0 0 X X X X - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- ----------- 7. Total 0 0 0 0 0 0 0 0 0 0 0 X X X X - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount -------------------------------- -------------------------------- -------------- ------------------ 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Direct Direct Loss Particip. Losses Loss Exp. and Assum. Ceded Net * and Assum. Ceded Net Loss Exp. Percentage Unpaid Unpaid - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- 1. 1988. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 2. 1989. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 3. 1990. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 4. 1991. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 5. 1992. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 6. 1993. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- 7. Total X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 0 0 - ------------------------------------------------------------------------------------------------------------------------ *Net = (25 - 26) = (11 + 23) SCHEDULE P - PART 1Q - REINSURANCE D (000 omitted) - ------------------------------------------------------------------------------------------------------------------------ 1 Premiums Earned Loss and Loss Expense Payments -------------------------------- ------------------------------------------------------------------ Years 2 3 4 Loss Payments Allocated Loss 9 10 11 12 in Which Expense Payments Number of Prem Were --------------------- ------------------ Salvag Unallocate Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd Reported - Loss Were and Ceded (2 - 3) Direct Direct Subrog Expense (5-6+7 Direct & Incurred Assum. and Assum. Ceded and Assum. Ceded Rec'd Payments -8+10) Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- 1. Prior X X X X X X X X X X X X 4,182 2,259 91 34 0 0 1,980 X X X X 2. 1984. 2,212 (2,809) 5,021 822 0 6 0 0 409 1,237 X X X X 3. 1985. 13,402 11,545 1,857 247 0 35 0 0 12 294 X X X X 4. 1986. (12,711) (11,557) (1,154) (118) 0 7 0 0 (9) (120) X X X X 5. 1987. 10,623 12,020 (1,397) 17 0 0 0 0 (26) (9) X X X X - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- 6. Total X X X X X X X X X X X X 5,150 2,259 139 34 0 386 3,382 X X X X - ------------------------------------------------------------------------------------------------------------------------ NOTE: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ------------------------------------------------------------------------------------------------------------------------------------ Losses Unpaid Allocated Loss Expenses Unpaid ------------------------------------------- ------------------------------------ 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of --------------------- --------------------- --------------------- -------------- Salvage Unalloc Total Claims 13 14 15 16 17 18 19 20 and Loss Net Losses Outstanding Direct Direct Direct Direct Subrog. Expense & Expenses Direct and and Assum. Ceded and Assum. Ceded & Assum. Ceded &Assum. Ceded Antic. Unpaid Unpaid Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- ----------- 1. Prior 28,239 17,964 3,061 1,084 0 0 56 (209) 0 0 12,517 X X X X 2. 1984. 362 0 0 0 0 0 0 0 0 0 362 X X X X 3. 1985. 909 0 1,143 0 0 0 60 0 0 0 2,112 X X X X 4. 1986. 0 0 0 0 0 0 0 0 0 0 0 X X X X 5. 1987. 0 0 0 0 0 0 0 0 0 0 0 X X X X - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- ----------- 6. Total 29,510 17,964 4,204 1,084 0 0 116 (209) 0 0 14,991 X X X X - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount -------------------------------- -------------------------------- -------------- ------------------ 25 26 27 28 29 30 31 32 Inter-Co. 34 35 Pooling Direct Direct Loss Particip. Losses Loss Exp. and Assum. Ceded Net * and Assum. Ceded Net Loss Exp. Percentage Unpaid Unpaid - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- 1. Prior X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0.0 12,252 265 2. 1984. 1,599 0 1,599 72.3 0.0 31.8 0 0 0.0 362 0 3. 1985. 2,406 0 2,406 18.0 0.0 129.6 0 0 0.0 2,052 60 4. 1986. (120) 0 (120) 0.9 0.0 10.4 0 0 0.0 0 0 5. 1987. (9) 0 (9) (0.1) 0.0 0.6 0 0 0.0 0 0 - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------ ---------- ------- ---------- 6. Total X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 14,666 325 - ------------------------------------------------------------------------------------------------------------------------ *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE (000 omitted) - ----------------------------------------------------------------------------------------------------------------------- Premiums Earned Loss and Loss Expense Payments 1 -------------------------------- ------------------------------------------------------------------ 12 Years 2 3 4 Loss Payments Allocated Loss 9 10 11 in Which Expense Payments Number of Prem Were --------------------- ------------------ Salvage Unallocate Total Claims Earned Direct Net 5 6 7 8 and Loss Net Pd Reported Loss Were and Ceded (2 - 3) Direct Direct Subrog. Expense (5-6+7 Direct & Incurred Assum. and Assum. Ceded and Assum. Ceded Rec'd Payments -8+10) Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------- ---------- ------ --------- 1. Prior X X X X X X X X X X X X 184 0 7 0 0 0 191 X X X X 2. 1984. 1,072 0 1,072 518 0 40 0 0 0 558 0 3. 1985. 1,850 0 1,850 163 0 4 0 0 0 167 0 4. 1986. 3,005 0 3,005 107 0 3 0 0 0 110 0 5. 1987. 3,244 0 3,244 439 0 (19) 0 0 0 420 0 6. 1988. 3,453 0 3,453 998 0 (40) 0 0 0 958 0 7. 1989. 2,682 0 2,682 104 0 (1) 0 0 0 103 0 8. 1990. 2,419 0 2,419 142 0 (9) 0 0 0 133 0 9. 1991. 3,136 0 3,136 0 0 0 0 0 0 0 0 10. 1992. 1,920 0 1,920 0 0 0 0 0 0 0 0 11. 1993. 1,951 0 1,951 0 0 0 0 0 0 0 0 - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------- ---------- ------ --------- 12. Total X X X X X X X X X X X X 2,655 0 (15) 0 0 0 2,640 X X X X - ----------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ----------------------------------------------------------------------------------------------------------------------------------- Losses Unpaid Allocated Loss Expenses Unpaid ------------------------------------------- ------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of --------------------- --------------------- --------------------- --------------- Salvage Unall. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss Outstanding Direct Direct Direct Direct Subrog. Exp. & Expense Direct and Assum. Ceded and Assum. Ceded and Assum. Ceded &Assum. Ceded Antic. Unpaid Unpaid and Assum. - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------- ---------- ------ --------- ----------- 1. Prior 3,661 2,086 310 0 0 0 12 0 0 36 1,933 0 2. 1984. 301 0 10 0 0 0 0 0 0 0 311 0 3. 1985. 24 0 221 0 0 0 0 0 0 0 245 0 4. 1986. 25 0 322 0 0 0 0 0 0 0 347 0 5. 1987. 20 0 638 0 0 0 0 0 0 0 658 0 6. 1988. 251 0 901 0 0 0 0 0 0 0 1,152 0 7. 1989. 256 0 1,750 0 30 0 0 0 0 0 2,036 0 8. 1990. 36 0 1,855 0 35 0 0 0 0 0 1,926 0 9. 1991. 32 0 2,200 0 50 0 0 0 0 0 2,282 0 10. 1992. 12 0 1,078 0 65 0 0 0 0 0 1,155 0 11. 1993. 16 0 1,248 0 75 0 0 0 0 0 1,339 0 - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------- ---------- ------ --------- ----------- 12. Total 4,634 2,086 10,533 0 255 0 12 0 0 36 13,384 0 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount -------------------------------- -------------------------------- --------------- Inter-Co. ---------------- 25 26 27 28 29 30 31 32 Pooling 34 35 Direct Direct Loss Particip. Losses Loss Exp. and Assum. Ceded Net * and Assum. Ceded Net Loss Expense Percentage Unpaid Unpaid - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------- ---------- ------ --------- 1. Prior X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 1,885 48 2. 1984. 869 0 869 81.1 0.0 81.1 0 0 0.0 311 0 3. 1985. 412 0 412 22.3 0.0 22.3 0 0 0.0 245 0 4. 1986. 457 0 457 15.2 0.0 15.2 0 0 0.0 347 0 5. 1987. 1,078 0 1,078 33.2 0.0 33.2 0 0 0.0 658 0 6. 1988. 2,110 0 2,110 61.1 0.0 61.1 0 0 0.0 1,152 0 7. 1989. 2,139 0 2,139 79.8 0.0 79.8 0 0 0.0 2,006 30 8. 1990. 2,059 0 2,059 85.1 0.0 85.1 0 0 0.0 1,891 35 9. 1991. 2,282 0 2,282 72.8 0.0 72.8 0 0 0.0 2,232 50 10. 1992. 1,155 0 1,155 60.2 0.0 60.2 0 0 0.0 1,090 65 11. 1993. 1,339 0 1,339 68.6 0.0 68.6 0 0 0.0 1,264 75 - --------- ---------- ---------- ---------- ---------- ---------- ---------- ------- ------- ---------- ------ --------- 12. Total X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X ****** 303 - ----------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 1R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE (000 omitted) - ----------------------------------------------------------------------------------------------------------------------- Premiums Earned Loss and Loss Expense Payments 1 ------------------------------- ------------------------------------------------------------------ 12 Years 2 3 4 Loss Payments Allocated Loss 9 10 11 in Which Expense Payments Number of Prem Were ------------------- ------------------- Salvage Unallocate Total Claims Earned & Direct Net 5 6 7 8 and Loss Net Pd Reported Loss Were and Ceded (2 - 3) Direct Direct Subrog. Expense (5-6+7 Direct & Incurred Assum. and Assum Ceded and Assum. Ceded Rec'd Payments -8+10) Assum. - --------- --------- ---------- ---------- --------- --------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X 2. 1984. 0 0 0 0 0 0 0 0 0 0 0 3. 1985. 0 0 0 0 0 0 0 0 0 0 0 4. 1986. 0 0 0 0 0 0 0 0 0 0 0 5. 1987. 0 0 0 0 0 0 0 0 0 0 0 6. 1988. 0 0 0 0 0 0 0 0 0 0 0 7. 1989. 0 0 0 0 0 0 0 0 0 0 0 8. 1990. 0 0 0 0 0 0 0 0 0 0 0 9. 1991. 0 0 0 0 0 0 0 0 0 0 0 10. 1992. 0 0 0 0 0 0 0 0 0 0 0 11. 1993. 0 0 0 0 0 0 0 0 0 0 0 - --------- --------- ---------- ---------- --------- --------- ---------- -------- ------- ---------- ------- ---------- 12. Total X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X - ----------------------------------------------------------------------------------------------------------------------- Note: For "prior," report amounts paid or received in current year only. Report cumulative amounts paid or received for specific years. Report loss payments net of salvage and subrogation received. - ---------------------------------------------------------------------------------------------------------------------------------- Losses Unpaid Allocated Loss Expenses Unpaid ----------------------------------------- ------------------------------------- 21 22 23 24 Case Basis Bulk + IBNR Case Basis Bulk + IBNR Number of -------------------- -------------------- -------------------- ---------------- Salvage Unall. Total Claims 13 14 15 16 17 18 19 20 and Loss Net Loss Outstand. Direct Direct Direct Direct Subrog. Exp. & Expenses Direct & Assum. Ceded and Assum. Ceded and Assum Ceded & Assum. Ceded Antic. Unpaid Unpaid & Assum. - --------- --------- ---------- ---------- --------- --------- ---------- -------- ------- ---------- ------- ---------- ---------- 1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 2. 1984. 0 0 0 0 0 0 0 0 0 0 0 0 3. 1985. 0 0 0 0 0 0 0 0 0 0 0 0 4. 1986. 0 0 0 0 0 0 0 0 0 0 0 0 5. 1987. 0 0 0 0 0 0 0 0 0 0 0 0 6. 1988. 0 0 0 0 0 0 0 0 0 0 0 0 7. 1989. 0 0 0 0 0 0 0 0 0 0 0 0 8. 1990. 0 0 0 0 0 0 0 0 0 0 0 0 9. 1991. 0 0 0 0 0 0 0 0 0 0 0 0 10. 1992. 0 0 0 0 0 0 0 0 0 0 0 0 11. 1993. 0 0 0 0 0 0 0 0 0 0 0 0 - --------- --------- ---------- ---------- --------- --------- ---------- -------- ------- ---------- ------- ---------- ---------- 12. Total 0 0 0 0 0 0 0 0 0 0 0 0 - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- Total Losses and Loss and Loss Exp. Percentage Disc. for Time Net B/S Reserves Loss Expenses Incurred (Incurred/Premiums Earned) Value of Money 33 After Discount ------------------------------- ------------------------------ ---------------- Inter-Co. ------------------ 25 26 27 28 29 30 31 32 Pooling 34 35 Direct Direct Loss Particip. Losses Loss Exp. and Assum Ceded Net * and Assum Ceded Net Loss Exp. Percentage Unpaid Unpaid - --------- --------- ---------- ---------- --------- --------- ---------- -------- ------- ---------- ------- ---------- 1. Prior X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 0 0 2. 1984. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 3. 1985. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 4. 1986. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 5. 1987. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 6. 1988. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 7. 1989. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 8. 1990. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 9. 1991. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 10. 1992. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 11. 1993. 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 - --------- --------- ---------- ---------- --------- --------- ---------- -------- ------- ---------- ------- ---------- 12. Total X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 0 0 - ----------------------------------------------------------------------------------------------------------------------- *Net = (25 - 26) = (11 + 23) ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 2A - HOMEOWNERS/FARMOWNERS - ----------------------------------------------------------------------------------------------------------------------------------- 1 Incurred Losses and Allocated Expenses Reported at Year End (000 omitted) Development** Years --------------------------------------------------------------------------------------------------- ------------------- in Which 2 3 4 5 6 7 8 9 10 11 12 13 Losses 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 One Year Two Year Incurred - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior 828 * 3,884 4,686 5,300 5,614 5,428 5,773 5,848 5,856 5,769 (87) (79) 2. 1984.. 6,966 8,858 9,886 10,389 11,007 10,924 11,154 11,110 11,153 11,227 74 117 3. 1985.. X X X X 7,166 7,220 7,702 8,192 8,140 8,178 8,056 8,074 8,054 (20) (2) 4. 1986.. X X X X X X X X 6,962 7,081 6,940 7,047 7,105 7,088 7,079 7,088 9 0 5. 1987.. X X X X X X X X X X X X 3,508 2,850 2,881 2,862 2,844 2,890 2,909 19 65 6. 1988.. X X X X X X X X X X X X X X X X 4,433 2,905 3,188 3,477 3,592 3,604 12 127 7. 1989.. X X X X X X X X X X X X X X X X X X X X 1,668 1,868 1,541 1,665 1,675 10 134 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X X 486 1,236 1,350 1,347 (3) 111 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 681 1,166 1,143 (23) 462 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,614 1,462 (152) X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,246 X X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals, X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X (161) 935 ------------------- SCHEDULE P - PART 2B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior 2,004 * 1,611 1,960 1,951 2,129 2,173 2,194 2,195 2,196 2,194 (2) (1) 2. 1984.. 2,507 5,484 6,021 6,277 7,508 7,911 7,754 7,745 7,758 7,753 (5) 8 3. 1985.. X X X X 6,167 6,484 7,019 6,999 7,226 7,444 7,391 7,392 7,392 0 1 4. 1986.. X X X X X X X 1,885 2,548 2,662 2,569 2,567 2,575 2,576 2,575 (1) 0 5. 1987.. X X X X X X X X X X X 2,605 3,311 3,254 3,408 3,389 3,480 3,468 (12) 79 6. 1988.. X X X X X X X X X X X X X X X 2,128 1,943 2,086 1,921 1,935 1,934 (1) 13 7. 1989.. X X X X X X X X X X X X X X X X X X X 1,756 1,209 1,256 1,236 1,251 15 (5) 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X 569 556 530 506 (24) (50) 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,438 2,954 2,894 (60) 456 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 12,770 16,721 3,951 X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 30,110 X X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 3,861 501 ------------------- SCHEDULE P - PART 2C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior 6,301 * 7,311 7,631 9,037 9,614 9,809 9,774 9,699 10,352 10,976 624 1,277 2. 1984.. 9,923 13,012 15,844 17,972 17,511 17,282 16,781 16,954 16,820 16,963 143 9 3. 1985.. X X X X 16,308 14,460 15,434 14,707 16,042 15,570 15,452 15,094 14,899 (195) (553) 4. 1986.. X X X X X X X 11,905 10,213 11,630 12,489 10,830 11,480 11,485 11,689 204 209 5. 1987.. X X X X X X X X X X X 12,959 12,453 13,716 13,461 15,207 14,892 15,895 1,003 688 6. 1988.. X X X X X X X X X X X X X X X 8,255 8,098 8,145 8,577 8,020 8,220 200 (357) 7. 1989.. X X X X X X X X X X X X X X X X X X X 3,910 6,753 5,994 6,128 5,566 (562) (428) 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X 11,266 10,405 10,364 9,815 (549) (590) 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X 17,076 21,239 19,827 (1,412) 2,751 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 23,776 26,640 2,864 X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 33,804 X X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,320 3,006 ------------------- SCHEDULE P - PART 2D - WORKERS' COMPENSATION - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior 84,736 * 97,622 112,736 100,704 112,293 117,503 121,747 122,873 123,405 123,497 92 624 2. 1984.. 93,826 100,741 136,097 140,718 143,831 146,458 149,210 146,465 147,203 148,571 1,368 2,106 3. 1985.. X X X X 101,835 105,637 127,512 138,081 142,087 141,783 138,140 139,431 136,236 (3,195) (1,904) 4. 1986.. X X X X X X X X 70,827 112,624 118,934 97,144 97,816 98,991 99,013 98,064 (949) (927) 5. 1987.. X X X X X X X X X X X X 119,974 137,024 136,259 139,936 139,618 139,610 144,286 4,676 4,668 6. 1988.. X X X X X X X X X X X X X X X X 180,193 205,121 213,835 218,166 218,235 222,026 3,791 3,860 7. 1989.. X X X X X X X X X X X X X X X X X X X X 224,550 226,195 236,425 238,741 234,229 (4,512) (2,196) 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X X 201,482 219,670 218,866 219,893 1,027 223 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 217,386 211,663 213,546 1,883 (3,840) 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 232,942 226,844 (6,098) X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 204,649 X X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X (1,917) 2,614 ------------------- SCHEDULE P - PART 2E - COMMERCIAL MULTIPLE PERIL - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior 19,094 * 26,151 33,001 36,650 39,356 42,029 44,221 45,346 45,574 44,618 (956) (728) 2. 1984.. 40,357 57,046 66,208 69,827 74,360 74,136 76,611 77,643 77,743 78,943 1,200 1,300 3. 1985.. X X X X 47,368 63,443 72,810 80,893 84,659 85,159 89,282 90,085 90,267 182 985 4. 1986.. X X X X X X X 29,320 35,080 41,039 46,683 48,858 52,692 54,858 54,221 (637) 1,529 5. 1987.. X X X X X X X X X X X 17,823 22,371 27,475 28,516 30,673 31,519 32,357 838 1,684 6. 1988.. X X X X X X X X X X X X X X X 9,656 10,872 12,897 16,108 16,477 18,185 1,708 2,077 7. 1989.. X X X X X X X X X X X X X X X X X X X 9,429 8,320 6,965 7,306 7,438 132 473 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X 3,562 4,855 5,259 5,178 (81) 323 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X 7,061 6,124 5,969 (155) (1,092) 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 8,945 8,845 (100) X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 9,669 X X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,131 6,551 --------- --------- *Reported reserves only. Subsequent development relates only to subsequent payments and reserves. **Current year less first or second prior year, showing (redundant) or adverse. ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 2F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE - ----------------------------------------------------------------------------------------------------------------------------------- 1 Incurred Losses and Allocated Expenses Reported at Year End (000 omitted) Development** Years --------------------------------------------------------------------------------------------------- ------------------- in Which 2 3 4 5 6 7 8 9 10 11 12 13 Losses 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 One Year Two Year Incurred - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior 77 * 227 376 518 661 660 651 551 551 526 (25) (25) 2. 1984.. 1 0 0 3. 1985.. X X X X 0 0 4. 1986.. X X X X X X X 0 0 5. 1987.. X X X X X X X X X X X 0 0 6. 1988.. X X X X X X X X X X X X X X X 6 35 28 0 0 7. 1989.. X X X X X X X X X X X X X X X X X X X 15 13 0 0 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X 285 250 325 348 23 98 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,999 1,469 1,074 (395) (925) 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,548 915 (633) X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 632 X X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X (1,030) (852) ------------------- SCHEDULE P - PART 2F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior * 0 0 2. 1984.. 0 0 3. 1985.. X X X X 0 0 4. 1986.. X X X X X X X 0 0 5. 1987.. X X X X X X X X X X X 0 0 6. 1988.. X X X X X X X X X X X X X X X 0 0 7. 1989.. X X X X X X X X X X X X X X X X X X X 0 0 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X 0 0 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 9 X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 SCHEDULE P - PART 2G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY) - ----------- ----------------------------------------------------------------------------------------------------------------------- 1. Prior 1,927 * 2,253 2,228 2,678 3,799 3,981 3,894 3,804 3,880 3,862 (18) 58 2. 1984.. 3,194 3,302 3,585 3,746 4,634 4,504 4,949 4,934 4,994 4,985 (9) 51 3. 1985.. X X X X 3,898 4,629 5,117 6,443 6,063 5,458 4,706 4,496 4,492 (4) (214) 4. 1986.. X X X X X X X 4,982 5,472 1,723 1,698 1,699 1,671 1,707 1,720 13 49 5. 1987.. X X X X X X X X X X X 1,248 847 809 827 774 774 822 48 48 6. 1988.. X X X X X X X X X X X X X X X 1,203 983 1,141 1,033 1,032 1,062 30 29 7. 1989.. X X X X X X X X X X X X X X X X X X X 1,189 1,010 958 961 971 10 13 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X 655 513 537 529 (8) 16 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,759 2,622 2,527 (95) (232) 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,899 2,227 328 X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 3,503 X X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 295 (182) SCHEDULE P - PART 2H - SECTION 1 - OTHER LIABILITY - OCCURRENCE - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior 4,379 * 6,152 7,240 9,844 12,613 18,022 19,899 21,797 26,178 27,285 1,107 5,488 2. 1984.. 3,875 3,579 3,017 3,564 3,400 3,164 1,592 4,134 3,631 3,700 69 (434) 3. 1985.. X X X X 4,597 5,321 2,590 2,004 2,835 2,162 2,170 2,746 2,600 (146) 430 4. 1986.. X X X X X X X X 8,506 3,848 6,177 5,682 7,682 6,326 5,445 6,384 939 58 5. 1987.. X X X X X X X X X X X X 8,956 6,787 6,443 6,674 3,050 2,618 2,815 197 (235) 6. 1988.. X X X X X X X X X X X X X X X X 3,484 2,850 3,570 3,326 3,697 3,753 56 427 7. 1989.. X X X X X X X X X X X X X X X X X X X X 5,097 5,157 7,760 6,544 6,088 (456) (1,672) 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X X 7,648 6,166 5,628 5,251 (377) (915) 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 7,604 6,638 3,627 (3,011) (3,977) 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 6,442 5,120 (1,322) X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 9,538 X X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X (2,944) (830) SCHEDULE P - PART 2H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior 16,133 * 21,708 30,451 27,054 26,571 29,884 28,047 28,969 29,288 32,773 3,485 3,804 2. 1984.. 15,571 16,390 16,743 16,297 16,931 18,442 19,576 21,383 22,099 21,288 (811) (95) 3. 1985.. X X X X 16,852 20,996 17,268 19,617 19,649 26,621 26,408 29,279 27,530 (1,749) 1,122 4. 1986.. X X X X X X X X 40,918 40,500 35,274 29,326 32,426 33,077 36,138 36,089 (49) 3,012 5. 1987.. X X X X X X X X X X X X 45,432 39,003 36,929 35,264 35,774 35,761 35,244 (517) (530) 6. 1988.. X X X X X X X X X X X X X X X X 52,991 54,263 52,770 56,498 53,872 52,935 (937) (3,563) 7. 1989.. X X X X X X X X X X X X X X X X X X X X 61,753 54,109 56,531 57,801 63,514 5,713 6,983 8. 1990.. X X X X X X X X X X X X X X X X X X X X X X X X 49,097 42,262 43,844 42,276 (1,568) 14 9. 1991.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 60,008 61,458 62,413 955 2,405 10. 1992.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 67,227 67,852 625 X X X X 11. 1993.. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 80,721 X X X X X X X X - --------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 5,147 13,152 ------------------- *Reported reserves only. Subsequent development relates only to subsequent payments and reserves. **Current year less first or second prior year, showing (redundant) or adverse. ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 2I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLARY AND THEFT) - ------------------------------------------------------------------------------------------------------------------------------------ 1 Incurred Losses and Allocated Expenses Reported at Year End (000 omitted) Development** Years ---------------------------------------------------------------------------------------------------- ------------------- in Which 2 3 4 5 6 7 8 9 10 11 12 13 Losses 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 One Year Two Year Were Incurred - ----------- ------------------- --------- --------- --------- --------- --------- -------------------- --------- --------- --------- 1. Prior . X X X X X X X X X X X X X X X X X X X X X X X X X X X X 9,504 * 9,801 13,292 3,491 3,788 2. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 11,328 12,719 1,391 X X X X 3. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 10,246 X X X X X X X X - ---------------------------------------------------------------------------------------------------------------- --------- --------- 4. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 4,882 3,788 ------------------- SCHEDULE P - PART 2J - AUTO PHYSICAL DAMAGE - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior . X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,205 * 1,284 1,463 179 258 2. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,394 2,942 548 X X X X 3. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 13,229 X X X X X X X X - ---------------------------------------------------------------------------------------------------------------- --------- --------- 4. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 727 258 ------------------- SCHEDULE P - PART 2K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior . X X X X X X X X X X X X X X X X X X X X X X X X X X X X 600 * 891 1,401 510 801 2. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,972 4,322 2,350 X X X X 3. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,114 X X X X X X X X - ---------------------------------------------------------------------------------------------------------------- --------- --------- 4. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,860 801 ------------------- SCHEDULE P - PART 2L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH) - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior . X X X X X X X X X X X X X X X X X X X X X X X X X X X X 969 * 1,113 1,119 6 150 2. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 220 304 84 X X X X 3. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,534 X X X X X X X X - ---------------------------------------------------------------------------------------------------------------- --------- --------- 4. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 90 150 ------------------- SCHEDULE P - PART 2M - INTERNATIONAL - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior . 0 * 0 0 0 0 0 0 0 0 0 0 2. 1992... 0 0 0 0 0 0 0 0 0 0 0 3. 1993... X X X X 0 0 0 0 0 0 0 0 0 0 4. 1986... X X X X X X X X 0 0 0 0 0 0 0 0 0 5. 1987... X X X X X X X X X X X X 0 0 0 0 0 0 0 0 6. 1988... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 7. 1989... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 8. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 9. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 10. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X 11. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 174 X X X X X X X X - ---------------------------------------------------------------------------------------------------------------- --------- --------- 12. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 ------------------- *Reported reserves only. Subsequent development relates only to subsequent payments and reserves. **Current year less first or second prior year, showing (redundant) or adverse. ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 2N - REINSURANCE A - ----------------------------------------------------------------------------------------------------------------------------------- 1 Incurred Losses and Allocated Expenses Reported at Year End (000 omitted) Development** Years ----------------------------------------------------------------------------------------------------------------------- in Which 2 3 4 5 6 7 8 9 10 11 12 13 Losses 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 One Year Two Year Were Incurred - ----------------------------------------------------------------------------------------------------------------------------------- 1. 1988... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 0 2. 1989... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 3. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 4. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 5. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X 6. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X X X - ----------------------------------------------------------------------------------------------------------------------------------- 7. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 ------------------- SCHEDULE P - PART 2O - REINSURANCE B - ----------------------------------------------------------------------------------------------------------------------------------- 1. 1988... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 0 2. 1989... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 3. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 4. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 5. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X 6. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X X X - ----------------------------------------------------------------------------------------------------------------------------------- 7. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 ------------------- SCHEDULE P - PART 2P - REINSURANCE C - ----------------------------------------------------------------------------------------------------------------------------------- 1. 1988... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 0 2. 1989... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 3. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 4. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 5. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X 6. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X X X - ----------------------------------------------------------------------------------------------------------------------------------- 7. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 ------------------- SCHEDULE P - PART 2Q - REINSURANCE D - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior . 2,773 4,657 3,942 14,553 16,393 24,509 25,645 31,333 32,607 34,644 2,037 3,311 2. 1984... 649 1,774 1,761 1,371 1,678 989 2,075 929 1,108 1,190 82 261 3. 1985... X X X X 3,475 1,956 926 664 124 685 978 2,557 2,395 (162) 1,417 4. 1986... X X X X X X X X 3,480 (104) (102) (111) (111) (111) (111) (111) 0 0 5. 1987... X X X X X X X X X X X X 46 25 38 18 18 17 18 1 0 - ----------------------------------------------------------------------------------------------------------------------------------- 6. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,958 4,989 ------------------- SCHEDULE P - PART 2R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior . 629 * 1,596 1,666 2,130 2,181 2,186 1,931 4,373 6,196 7,195 999 2,822 2. 1984... 642 624 624 624 741 1,134 1,789 867 568 869 301 2 3. 1985... X X X X 1,159 1,159 1,166 1,257 1,251 1,245 332 656 412 (244) 80 4. 1986... X X X X X X X X 1,925 1,943 1,953 1,998 2,008 1,244 1,183 457 (726) (787) 5. 1987... X X X X X X X X X X X X 2,297 2,448 2,707 2,658 1,841 1,658 1,068 (590) (773) 6. 1988... X X X X X X X X X X X X X X X X 1,525 1,487 1,469 2,435 2,272 2,121 (151) (314) 7. 1989... X X X X X X X X X X X X X X X X X X X X 1,384 1,391 2,001 1,861 2,139 278 138 8. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 1,523 1,720 2,034 2,059 25 339 9. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,944 2,431 2,282 (149) (662) 10. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,505 1,155 (350) X X X X 11. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,339 X X X X X X X X - ----------------------------------------------------------------------------------------------------------------------------------- 12. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X (607) 845 ------------------- SCHEDULE P - PART 2R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE - ----------------------------------------------------------------------------------------------------------------------------------- 1. Prior . 0 * 0 0 0 0 0 0 0 0 0 0 0 2. 1984... 0 0 0 0 0 0 0 0 0 0 0 0 3. 1985... X X X X 0 0 0 0 0 0 0 0 0 0 0 4. 1986... X X X X X X X X 0 0 0 0 0 0 0 0 0 0 5. 1987... X X X X X X X X X X X X 0 0 0 0 0 0 0 0 0 6. 1988... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 0 7. 1989... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 8. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 9. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 10. 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X 11. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X X X - ----------------------------------------------------------------------------------------------------------------------------------- 12. Totals X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 ------------------- *Reported reserves only. Subsequent development relates only to subsequent payments and reserves. **Current year less first or second prior year, showing (redundant) or adverse. ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 3A - HOMEOWNERS/FARMOWNERS - ------------------------------------------------------------------------------------------------------------------------------------ 1 Cumulative Paid Losses and Allocated Expenses at Year End (000 omitted) 12 13 Years --------------------------------------------------------------------------------------------------- Number of Number of in Which Claims Claims Losses 2 3 4 5 6 7 8 9 10 11 Closed Closed Were 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 With Loss W/O Loss Incurred Payment Payment - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior . 000 1,882 3,492 4,593 4,899 5,179 5,224 5,356 5,509 5,526 0 0 2. 1984... 5,399 7,879 8,915 9,649 10,162 10,679 10,873 10,977 11,040 11,054 0 0 3. 1985... X X X X 4,111 6,561 7,348 7,791 7,953 7,960 7,984 8,015 8,014 0 0 4. 1986... X X X X X X X X 4,938 6,347 6,735 6,862 6,930 7,057 7,064 7,079 0 0 5. 1987... X X X X X X X X X X X X 1,791 2,550 2,784 2,750 2,811 2,857 2,856 0 0 6. 1988... X X X X X X X X X X X X X X X X 1,748 2,675 2,987 3,401 3,547 3,546 0 0 7. 1989... X X X X X X X X X X X X X X X X X X X X 834 1,285 1,359 1,542 1,542 0 0 8. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 134 722 1,023 1,023 0 0 9. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 118 556 556 6 0 10 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 499 500 3 0 11. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 6 3 0 - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior . 000 753 1,498 1,761 1,886 2,071 2,163 2,160 2,181 2,180 0 0 2. 1984... 1,108 4,019 5,273 5,789 7,262 7,525 7,715 7,720 7,722 7,719 0 0 3. 1985... X X X X 2,625 5,622 6,482 6,836 7,173 7,387 7,391 7,392 7,392 0 0 4. 1986... X X X X X X X X 802 1,777 2,088 2,427 2,549 2,575 2,576 2,575 0 0 5. 1987... X X X X X X X X X X X X 1,321 2,537 2,907 3,093 3,263 3,432 3,468 0 0 6. 1988... X X X X X X X X X X X X X X X X 755 1,631 1,826 1,864 1,904 1,905 0 0 7. 1989... X X X X X X X X X X X X X X X X X X X X 420 1,003 1,213 1,236 1,251 0 0 8. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 156 430 504 500 0 0 9. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 582 2,562 2,786 850 0 10 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 6,084 14,855 4,845 0 11. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 17,356 6,631 0 - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior . 000 3,096 4,821 6,383 8,007 8,214 9,000 9,225 9,524 9,649 0 0 2. 1984... 1,652 6,834 10,890 13,192 14,637 16,084 16,245 16,441 16,547 16,635 5,152 0 3. 1985... X X X X 3,809 7,843 10,469 12,578 12,750 13,620 13,878 14,375 14,489 5,554 0 4. 1986... X X X X X X X X 2,342 4,827 7,368 7,347 9,495 10,098 10,367 10,614 2,474 0 5. 1987... X X X X X X X X X X X X 3,497 6,938 9,327 11,662 13,086 13,682 14,836 2,874 0 6. 1988... X X X X X X X X X X X X X X X X 1,656 3,117 5,612 6,776 7,465 7,506 1,486 0 7. 1989... X X X X X X X X X X X X X X X X X X X X 576 2,644 3,487 4,114 4,383 447 0 8. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 792 3,944 5,637 7,153 714 0 9. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 3,283 8,874 12,803 2,106 0 10 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 4,295 14,353 2,781 0 11. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 7,201 2,205 0 - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3D - WORKERS' COMPENSATION - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior . 000 45,925 73,953 92,944 95,212 101,277 102,679 104,770 105,761 108,350 0 0 2. 1984... 38,712 90,670 122,341 139,703 140,407 143,554 147,410 143,484 144,637 144,211 19,733 0 3. 1985... X X X X 41,334 88,519 119,401 137,446 140,942 141,040 135,279 135,559 135,368 17,674 0 4. 1986... X X X X X X X X 30,556 68,334 83,636 93,589 97,103 97,926 96,314 96,220 13,420 0 5. 1987... X X X X X X X X X X X X 32,624 70,123 95,611 114,104 121,922 127,674 131,448 15,081 0 6. 1988... X X X X X X X X X X X X X X X X 53,151 118,946 161,575 184,918 197,848 204,829 20,328 0 7. 1989... X X X X X X X X X X X X X X X X X X X X 62,057 143,365 186,970 207,906 212,234 22,810 0 8. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 58,678 126,769 168,388 189,687 19,736 0 9. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 48,676 110,824 143,624 16,276 0 10 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 59,731 123,011 14,038 0 11. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 50,797 7,519 0 - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3E - COMMERCIAL MULTIPLE PERIL - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior . 000 12,777 20,905 28,865 34,497 39,634 41,846 42,402 42,892 43,213 0 0 2. 1984... 23,322 42,484 53,469 60,674 66,172 70,591 73,468 75,295 76,512 77,629 20,955 0 3. 1985... X X X X 26,495 47,826 58,869 69,947 77,557 82,105 86,897 88,651 89,566 19,477 0 4. 1986... X X X X X X X X 14,836 25,156 31,136 39,188 45,036 49,723 51,510 52,594 7,637 0 5. 1987... X X X X X X X X X X X X 7,012 15,075 20,302 23,812 28,111 30,236 31,429 3,615 0 6. 1988... X X X X X X X X X X X X X X X X 11,106 7,427 10,169 12,740 14,217 16,240 1,778 0 7. 1989... X X X X X X X X X X X X X X X X X X X X 2,842 5,374 6,358 6,894 7,047 647 0 8. 1990... X X X X X X X X X X X X X X X X X X X X X X X X 974 2,956 4,068 4,460 147 0 9. 1991... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,085 3,340 3,926 133 0 10 1992... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 3,643 6,820 222 0 11. 1993... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 3,413 163 0 - ------------------------------------------------------------------------------------------------------------------------------------ Note: Net of salvage and subrogation received. ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 3F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE - ------------------------------------------------------------------------------------------------------------------------------------ 1 Cumulative Paid Losses and Allocated Expenses at Year End (000 omitted) 12 13 Years --------------------------------------------------------------------------------------------------- Number of Number of in Which Claims Claims Losses 2 3 4 5 6 7 8 9 10 11 Closed Closed Were 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 With Loss W/O Loss Incurred Payment Payment - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. 000 107 155 325 525 525 525 525 525 525 0 0 2. 1984.... 0 0 0 0 0 0 0 0 0 0 0 0 3. 1985.... 0 0 0 0 0 0 0 0 0 0 0 0 4. 1986.... X X X X X X X X 0 0 0 0 0 0 0 0 0 0 5. 1987.... X X X X X X X X X X X X 0 0 0 0 0 0 0 0 0 6. 1988.... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 0 7. 1989.... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 8. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 9. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2 13 13 6 0 10. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 80 4 0 11. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. 000 2. 1984.... 0 0 0 0 0 0 0 0 0 0 0 0 3. 1985.... 0 0 0 0 0 0 0 0 0 0 0 0 4. 1986.... X X X X X X X X 0 0 0 0 0 0 0 0 0 0 5. 1987.... X X X X X X X X X X X X 0 0 0 0 0 0 0 0 0 6. 1988.... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 0 7. 1989.... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 8. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 9. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 10. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 11. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY) - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. 000 135 1,225 2,231 3,262 3,467 3,505 3,714 3,726 3,784 X X X X X X X X 2. 1984.... 733 1,131 2,344 2,876 2,973 3,272 3,999 4,911 4,975 4,975 X X X X X X X X 3. 1985.... 2,436 3,289 4,015 4,124 4,280 4,306 3,229 3,258 3,258 X X X X X X X X 4. 1986.... X X X X X X X X 310 1,583 1,638 1,643 1,661 1,666 1,669 1,668 X X X X X X X X 5. 1987.... X X X X X X X X X X X X 347 708 719 761 768 769 769 X X X X X X X X 6. 1988.... X X X X X X X X X X X X X X X X 363 789 1,006 1,018 1,024 1,024 X X X X X X X X 7. 1989.... X X X X X X X X X X X X X X X X X X X X 356 838 912 936 937 X X X X X X X X 8. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 217 420 469 479 X X X X X X X X 9. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,331 2,363 2,378 X X X X X X X X 10. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 917 1,925 X X X X X X X X 11. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,028 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3H - SECTION 1 - OTHER LIABILITY - OCCURRENCE - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. 000 1,052 (1,170) 6,091 8,662 11,250 12,932 14,337 17,539 20,191 0 0 2. 1984.... (10) 878 1,255 2,358 2,691 2,825 3,044 3,254 3,415 3,473 59 0 3. 1985.... X X X X 306 355 792 1,504 1,700 1,595 1,687 2,213 2,329 70 0 4. 1986.... X X X X X X X X 302 1,297 2,350 2,989 3,741 4,081 3,666 4,096 53 0 5. 1987.... X X X X X X X X X X X X 88 679 919 1,403 1,963 2,128 2,289 53 0 6. 1988.... X X X X X X X X X X X X X X X X 317 948 1,532 2,180 2,806 3,210 37 0 7. 1989.... X X X X X X X X X X X X X X X X X X X X 1,388 4,113 4,846 4,975 5,571 19 0 8. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 1,384 2,678 3,564 3,733 2 0 9. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 131 982 1,281 6 0 10. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,008 2,323 26 0 11. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 499 22 0 - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. 000 7,857 21,672 23,230 19,258 24,444 25,263 27,586 28,856 32,088 0 0 2. 1984.... 1,098 3,799 7,613 10,464 13,833 16,444 18,252 20,395 20,658 20,782 786 0 3. 1985.... 1,499 7,220 11,259 18,023 19,060 26,677 25,431 26,315 25,292 815 0 4. 1986.... X X X X X X X X 4,486 8,823 16,216 23,468 28,472 31,428 33,704 34,337 791 0 5. 1987.... X X X X X X X X X X X X 1,491 6,755 19,807 28,780 30,270 30,975 29,738 723 0 6. 1988.... X X X X X X X X X X X X X X X X 1,317 10,546 27,247 37,447 42,797 45,385 742 0 7. 1989.... X X X X X X X X X X X X X X X X X X X X 1,267 13,741 34,282 42,400 51,648 764 0 8. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 1,895 17,552 27,240 26,937 661 0 9. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 3,423 15,077 23,601 527 0 10. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,997 16,462 349 0 11. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 3,404 58 0 - ------------------------------------------------------------------------------------------------------------------------------------ Note: Net of salvage and subrogation received. ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 3I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLARY AND THEFT) - ------------------------------------------------------------------------------------------------------------------------------------ 1 Cumulative Paid Losses and Allocated Expenses at Year End (000 omitted) 12 13 Years --------------------------------------------------------------------------------------------------- Number of Number of in Which Claims Claims Losses 2 3 4 5 6 7 8 9 10 11 Closed Closed Were 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 With Loss W/O Loss Incurred Payment Payment - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 000 5,334 10,660 X X X X X X X X 2. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 5,147 10,056 X X X X X X X X 3. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 7,130 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3J - AUTO PHYSICAL DAMAGE - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 000 489 848 31,353 0 2. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,709 2,378 3,517 0 3. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 10,661 4,397 0 - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 000 474 1,015 X X X X X X X X 2. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 624 3,092 X X X X X X X X 3. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 583 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH) - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. X X X X X X X X X X X X X X X X X X X X X X X X X X X X 000 1,071 1,089 X X X X X X X X 2. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 124 246 X X X X X X X X 3. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 207 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3M - INTERNATIONAL - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. 000 X X X X X X X X 2. 1984.... 0 0 0 0 0 0 0 0 0 0 X X X X X X X X 3. 1985.... X X X X 0 0 0 0 0 0 0 0 0 X X X X X X X X 4. 1986.... X X X X X X X X 0 0 0 0 0 0 0 0 X X X X X X X X 5. 1987.... X X X X X X X X X X X X 0 0 0 0 0 0 0 X X X X X X X X 6. 1988.... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 X X X X X X X X 7. 1989.... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 X X X X X X X X 8. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 X X X X X X X X 9. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X X X X X 10. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X X X X X 11. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 62 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ Note: Net of salvage and subrogation received. ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 3N - REINSURANCE A - ------------------------------------------------------------------------------------------------------------------------------------ 1 Cumulative Paid Losses and Allocated Expenses at Year End (000 Omitted) 12 13 Years --------------------------------------------------------------------------------------------------- Number of Number of in Which Claims Claims Losses 2 3 4 5 6 7 8 9 10 11 Closed Closed Were 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 With Loss W/O Loss Incurred Payment Payment - ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1. 1988.... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 X X X X X X X X 2. 1989.... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 X X X X X X X X 3. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 X X X X X X X X 4. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X X X X X 5. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X X X X X 6. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3O - REINSURANCE B - ------------------------------------------------------------------------------------------------------------------------------------ 1. 1988.... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 X X X X X X X X 2. 1989.... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 X X X X X X X X 3. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 X X X X X X X X 4. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X X X X X 5. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X X X X X 6. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3P - REINSURANCE C - ------------------------------------------------------------------------------------------------------------------------------------ 1. 1988.... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 X X X X X X X X 2. 1989.... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 X X X X X X X X 3. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 X X X X X X X X 4. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X X X X X 5. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X X X X X 6. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3Q - REINSURANCE D - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior 000 1,162 1,518 2,178 4,807 9,457 12,677 17,194 20,147 22,127 X X X X X X X X 2. 1984.... 477 856 883 423 499 650 650 650 828 828 X X X X X X X X 3. 1985.... X X X X 901 801 (46) 34 84 84 84 84 282 X X X X X X X X 4. 1986.... X X X X X X X X (115) (111) (111) (111) (111) (111) (111) (111) X X X X X X X X 5. 1987.... X X X X X X X X X X X X 18 18 18 18 18 17 17 X X X X X X X X - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. 000 342 737 1,117 1,487 1,541 1,607 2,059 3,068 5,276 0 0 2. 1984.... 1 101 129 292 442 442 227 555 558 0 0 3. 1985.... X X X X 7 7 7 103 130 131 154 167 167 0 0 4. 1986.... X X X X X X X X 0 1 56 60 67 105 111 110 0 0 5. 1987.... X X X X X X X X X X X X 0 11 311 323 411 420 420 0 0 6. 1988.... X X X X X X X X X X X X X X X X 37 76 580 761 956 959 0 0 7. 1989.... X X X X X X X X X X X X X X X X X X X X 0 0 100 103 103 0 0 8. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 0 2 433 133 0 0 9. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 10. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 11. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------------ SCHEDULE P - PART 3R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE - ------------------------------------------------------------------------------------------------------------------------------------ 1. Prior .. 000 0 0 0 0 0 0 0 0 0 0 0 2. 1984.... 0 0 0 0 0 0 0 0 0 0 0 0 3. 1985.... X X X X 0 0 0 0 0 0 0 0 0 0 0 4. 1986.... X X X X X X X X 0 0 0 0 0 0 0 0 0 0 5. 1987.... X X X X X X X X X X X X 0 0 0 0 0 0 0 0 0 6. 1988.... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 0 7. 1989.... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0 8. 1990.... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 9. 1991.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 10. 1992.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 11. 1993.... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------------ Note: Net of salvage and subrogation received. ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 4A - HOMEOWNERS/FARMOWNERS - -------------------------------------------------------------------------------------------------------------------------------- 1 BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED EXPENSES AT YEAR END (000 OMITTED) Years ------------------------------------------------------------------------------------------------------------- in Which Losses 2 3 4 5 6 7 8 9 10 11 Were 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Incurred - ------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 1. Prior .... 132 142 70 40 14 6 25 52 14 6 2. 1984...... 1,356 80 150 37 7 20 5 0 0 40 3. 1985...... X X X X 1,217 244 138 26 23 21 2 6 6 4. 1986...... X X X X X X X X 1,114 302 23 32 24 6 2 1 5. 1987...... X X X X X X X X X X X X 1,134 26 31 0 1 2 22 6. 1988...... X X X X X X X X X X X X X X X X 298 80 23 1 0 20 7. 1989...... X X X X X X X X X X X X X X X X X X X X 444 59 56 0 30 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 140 146 63 50 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 364 157 50 10. 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 507 175 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 182 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... 62 109 42 14 8 9 3 3 2 2 2. 1984...... 132 168 81 58 36 22 4 5 6 4 3. 1985...... X X X X 1,626 84 86 26 5 0 0 0 0 4. 1986...... X X X X X X X X 116 88 37 13 2 0 0 0 5. 1987...... X X X X X X X X X X X X 99 75 32 34 17 8 0 6. 1988...... X X X X X X X X X X X X X X X X 631 29 12 8 5 3 7. 1989...... X X X X X X X X X X X X X X X X X X X X 850 22 6 0 0 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 223 17 4 1 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 760 231 12 10. 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,504 813 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 4,353 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... 1,459 798 523 84 51 44 19 71 44 99 2. 1984...... 4,209 1,113 923 627 222 (11) 27 37 36 29 3. 1985...... X X X X 5,358 2,188 1,349 202 1,140 459 572 18 40 4. 1986...... X X X X X X X X 6,670 2,809 2,622 2,587 247 107 503 401 5. 1987...... X X X X X X X X X X X X 5,545 1,516 1,333 103 1,138 325 74 6. 1988...... X X X X X X X X X X X X X X X X 3,888 1,304 913 1,099 73 57 7. 1989...... X X X X X X X X X X X X X X X X X X X X 2,094 2,288 1,526 1,207 346 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 6,946 3,444 1,866 367 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 7,071 4,585 1,357 10. 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 10,310 3,064 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 12,472 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4D - WORKERS' COMPENSATION - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... 10,957 7,650 4,601 3,187 6,315 3,251 3,620 3,453 1,259 2,361 2. 1984...... 36,846 10,693 1,756 1,114 2,612 2,242 727 1,192 480 457 3. 1985...... X X X X 18,111 3,712 2,487 4,544 (566) 2,836 1,935 717 (1,064) 4. 1986...... X X X X X X X X 25,087 3,798 5,096 1,358 689 1,032 922 872 5. 1987...... X X X X X X X X X X X X 28,764 10,144 3,468 1,252 2,208 1,578 1,724 6. 1988...... X X X X X X X X X X X X X X X X 32,191 7,692 2,819 2,546 1,919 3,379 7. 1989...... X X X X X X X X X X X X X X X X X X X X 55,382 4,759 7,851 3,756 1,642 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 43,475 24,020 7,649 3,304 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 85,198 39,130 29,220 10. 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 76,183 40,720 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 65,523 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4E - COMMERCIAL MULTIPLE PERIL - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... 1,236 1,194 921 402 227 39 112 731 570 471 2. 1984...... 3,195 1,280 1,259 183 465 92 103 650 308 335 3. 1985...... X X X X 3,425 1,491 818 647 144 7 714 425 308 4. 1986...... X X X X X X X X 4,508 1,186 613 158 73 962 1,050 560 5. 1987...... X X X X X X X X X X X X 3,360 506 1,722 59 1,053 454 324 6. 1988...... X X X X X X X X X X X X X X X X 2,786 917 111 1,656 1,457 1,317 7. 1989...... X X X X X X X X X X X X X X X X X X X X 4,306 1,128 199 43 137 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 937 509 319 158 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 3,862 1,397 495 10. 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 3,203 350 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,735 - -------------------------------------------------------------------------------------------------------------------------------- ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 4F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE - -------------------------------------------------------------------------------------------------------------------------------- 1 BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED EXPENSES AT YEAR END (000 OMITTED) Years ------------------------------------------------------------------------------------------------------------- in Which Losses 2 3 4 5 6 7 8 9 10 11 Were 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Incurred - ------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 1. Prior .... 18 19 20 20 0 0 0 0 0 0 2. 1984...... 2 0 0 0 0 0 0 0 0 0 3. 1985...... X X X X 0 0 0 0 0 0 0 0 0 4. 1986...... X X X X X X X X 0 0 0 0 0 0 0 0 5. 1987...... X X X X X X X X X X X X 0 0 0 0 0 0 0 6. 1988...... X X X X X X X X X X X X X X X X 6 35 3 0 0 0 7. 1989...... X X X X X X X X X X X X X X X X X X X X 15 13 0 0 0 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 285 250 325 133 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,849 1,125 542 10 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,548 610 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 491 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... 0 0 0 0 0 0 0 0 0 0 2. 1984...... 0 0 0 0 0 0 0 0 0 0 3. 1985...... X X X X 0 0 0 0 0 0 0 0 0 4. 1986...... X X X X X X X X 0 0 0 0 0 0 0 0 5. 1987...... X X X X X X X X X X X X 0 0 0 0 0 0 0 6. 1988...... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 7. 1989...... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 10 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY) - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... 168 239 102 63 25 0 1 12 49 11 2. 1984...... 638 318 127 183 101 0 0 3 2 1 3. 1985...... X X X X 537 216 90 140 0 0 2 1 0 4. 1986...... X X X X X X X X 1,448 282 23 0 0 1 0 0 5. 1987...... X X X X X X X X X X X X 395 20 0 0 1 1 37 6. 1988...... X X X X X X X X X X X X X X X X 408 0 29 4 1 0 7. 1989...... X X X X X X X X X X X X X X X X X X X X 305 14 13 6 1 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 194 24 14 3 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 246 63 23 10 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 221 48 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 357 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4H - SECTION 1 - OTHER LIABILITY - OCCURRENCE - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... 1,067 621 383 6 1 55 0 1,012 2,980 2,611 2. 1984...... 3,378 1,136 310 510 94 0 0 34 22 21 3. 1985...... X X X X 3,503 2,549 912 64 191 (1,082) 23 43 175 4. 1986...... X X X X X X X X 8,096 1,846 3,279 1,189 3,501 1,233 494 743 5. 1987...... X X X X X X X X X X X X 7,984 5,041 4,450 3,855 580 138 123 6. 1988...... X X X X X X X X X X X X X X X X 2,714 355 1,114 593 527 150 7. 1989...... X X X X X X X X X X X X X X X X X X X X 2,038 178 1,448 557 88 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 2,699 2,009 897 150 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 5,695 1,306 655 10 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,752 1,375 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 6,129 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... 8,160 5,126 3,295 2,011 0 528 343 10 (500) 50 2. 1984...... 11,626 7,839 4,628 1,568 10 4 2 0 1,000 80 3. 1985...... X X X X 15,147 12,274 5,073 3,010 32 13 0 438 2,547 4. 1986...... X X X X X X X X 29,469 24,837 4,927 411 142 43,910 500 880 5. 1987...... X X X X X X X X X X X X 39,889 23,694 4,899 608 3,597 1,525 1,656 6. 1988...... X X X X X X X X X X X X X X X X 42,466 30,464 7,700 9,504 5,010 4,183 7. 1989...... X X X X X X X X X X X X X X X X X X X X 45,684 18,197 7,100 443 1,440 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 18,784 6,778 2,786 3,856 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 43,291 26,648 16,136 10 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 46,145 29,465 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 61,270 - -------------------------------------------------------------------------------------------------------------------------------- ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 4I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLARY AND THEFT) - -------------------------------------------------------------------------------------------------------------------------------- BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED EXPENSES AT YEAR END (000 OMITTED) 1 ------------------------------------------------------------------------------------------------------------- Years in Which 2 3 4 5 6 7 8 9 10 11 losses Were 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Incurred - ------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 1. Prior .... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,644 471 195 2 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,284 309 3. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 840 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4J - AUTO PHYSICAL DAMAGE - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 505 157 105 2 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 497 241 3. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,623 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 278 17 19 2 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 617 71 3. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,345 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH) - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 375 0 0 2 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 83 6 3. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,218 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4M - INTERNATIONAL - -------------------------------------------------------------------------------------------------------------------------------- 1. Prior .... 0 0 0 0 0 0 0 0 0 0 2. 1984...... 0 0 0 0 0 0 0 0 0 0 3. 1985...... X X X X 0 0 0 0 0 0 0 0 0 4. 1986...... X X X X X X X X 0 0 0 0 0 0 0 0 5. 1987...... X X X X X X X X X X X X 0 0 0 0 0 0 0 6. 1988...... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 7. 1989...... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 8. 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 9. 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 10. 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 11. 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 4 - -------------------------------------------------------------------------------------------------------------------------------- ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P - PART 4N - REINSURANCE A - -------------------------------------------------------------------------------------------------------------------------------- 1 BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED EXPENSES AT YEAR END (000 OMITTED) Years ------------------------------------------------------------------------------------------------------------- in Which Losses 2 3 4 5 6 7 8 9 10 11 Were 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Incurred - ------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 1 1988...... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 2 1989...... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 3 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 4 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 5 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 6 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4O - REINSURANCE B - -------------------------------------------------------------------------------------------------------------------------------- 1 1988...... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 2 1989...... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 3 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 4 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 5 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 6 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4P - REINSURANCE C - -------------------------------------------------------------------------------------------------------------------------------- 1 1988...... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 2 1989...... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 3 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 4 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 5 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 6 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4Q - REINSURANCE D - -------------------------------------------------------------------------------------------------------------------------------- 1 Prior .... 194 25 0 0 0 3,949 2,524 4,527 2,166 2,242 2 1984...... 170 33 0 0 0 50 1,010 0 0 0 3 1985...... X X X X 7 3 0 0 0 601 0 1,514 1,204 4 1986...... X X X X X X X X 100 0 0 0 0 0 0 0 5 1987...... X X X X X X X X X X X X 54 0 0 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE - -------------------------------------------------------------------------------------------------------------------------------- 1 Prior .... 445 233 82 0 0 0 0 0 300 349 2 1984...... 609 419 469 82 0 0 0 0 0 10 3 1985...... X X X X 1,138 853 725 781 1,082 1,082 0 299 221 4 1986...... X X X X X X X X 1,925 1,810 1,886 1,886 1,311 1,050 950 322 5 1987...... X X X X X X X X X X X X 2,290 2,290 2,290 2,190 1,250 1,100 638 6 1988...... X X X X X X X X X X X X X X X X 1,325 1,325 825 1,500 1,200 901 7 1989...... X X X X X X X X X X X X X X X X X X X X 1,317 1,317 1,900 1,600 1,750 8 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 1,523 1,301 1,700 1,855 9 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,345 1,800 2,200 10 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 937 1,078 11 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,248 - -------------------------------------------------------------------------------------------------------------------------------- SCHEDULE P - PART 4R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE - -------------------------------------------------------------------------------------------------------------------------------- 1 Prior .... 0 0 0 0 0 0 0 0 0 0 2 1984...... 0 0 0 0 0 0 0 0 0 0 3 1985...... X X X X 0 0 0 0 0 0 0 0 0 4 1986...... X X X X X X X X 0 0 0 0 0 0 0 0 5 1987...... X X X X X X X X X X X X 0 0 0 0 0 0 0 6 1988...... X X X X X X X X X X X X X X X X 0 0 0 0 0 0 7 1989...... X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 8 1990...... X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 9 1991...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 10 1992...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 11 1993...... X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 - -------------------------------------------------------------------------------------------------------------------------------- ANNUAL STATEMENT FOR THE YEAR 1993 OF THE ORION CAPITAL COMPANIES ....................... (Name) SCHEDULE P INTERROGATORIES 1. Computation of excess statutory reserves over statement reserves. See Instructions for explanation and formulas. (a) Auto Liability (private passenger and commercial) 1993 $3,770 75.0%) 1992 $0 75.0%) 1991 $0 75.0%) Total $3,770 (b) Other Liability and Products Liability 1993 $0 60.0%) 1992 $160 60.0%) 1991 $11,124 60.0%) Total $11,284 (c) Medical Malpractice 1993 $0 60.0%) 1992 $643 60.0%) 1991 $653 60.0%) Total $1,296 (d) Workers' Compensation 1993 $0 69.5%) 1992 $0 69.5%) 1991 $0 69.5%) Total $0 (e) Credit Total $3,650 (f) All Lines Total (Report here and Page 3) Total $20,000 2. What is the extended loss and expense reserve - direct and assumed - for the following classes? An example of an extended loss and expense reserve is the actuarial reserve for the free-tail coverage arising upon death, disability or retirement in most medical malpractice policies. Such a liability is to be reported here even if it was not reported elsewhere in Schedule P, but otherwise reported as a liability item on page 3. Show the full reserve amount, not just the change during the current year. ------------------------------------------------------------------------------------- | Year in which premiums | 1 | 2 | 3 | | were earned and losses | Medical | Other | Products | | were incurred | Malpractice | Liability | Liability | |---------------------------------------------|-------------|------------|------------| | | | | | | (a) 1987 | 0 | 0 | 0 | | (b) 1988 | 0 | 0 | 0 | | (c) 1989 | 0 | 0 | 0 | | (d) 1990 | 0 | 0 | 0 | | (e) 1991 | 0 | 0 | 0 | | (f) 1992 | 0 | 0 | 0 | | (g) 1993 | 0 | 0 | 0 | |---------------------------------------------|-------------|------------|------------| | (h) Totals | 0 | 0 | 0 | ------------------------------------------------------------------------------------- 3. The term "Loss expense" includes all payments for legal expenses, including attorney's and witness fees and court costs, salaries and expenses of investigators, adjustors and field men, rents, stationery, telegraph and telephone charges, postage, salaries and expenses of office employees, home office expenses and all other payments under or on account of such injuries, whether the payments are allocated to specific claims or are unallocated. Are they so reported in this statement? Answer: Yes [ X ] No [ ] 4. The unallocated loss expense payments paid during the most recent calendar year should be distributed to the various years in which losses were incurred as follows: (1) 45% to the most recent year, (2) 5% to the next most recent year, and (3) the balance to all years, including the most recent, in proportion to the amount of loss payments paid for each year during the most recent calendar year. If the distribution in (1) or (2) produces an accumulated distribution to such year in excess of 10% of the premiums earned for such year, disregarding all distributions made under (3), such accumulated distribution should be limited to 10% of premiums earned and the balance distributed in accordance with (3) Answer: Yes [ X ] No [ ] 5. Do any lines in Schedule P include reserves which are reported gross of any discount to present value of future payments, but are reported net of such discounts on page 10? Answer Yes [ ] No [ X ] If yes, proper reporting must be made in the Notes to Financial Statements, as specified in the Instructions. Also, the discounts must be reported in Schedule P - Part 1, Columns 31 and 32. Schedule P must be completed gross of non-tabular discounting. Work papers relating to discount calculations must be available for examination upon request. Discounting is allowed only if expressly permitted by the state insurance department to which this Annual Statment is being filed. 6. What were the net premiums in force at the end of the year for: (in thousands of dollars) (a) Fidelity $0 (b) Surety $31,850 7. Claim count information is reported (check one) (a) per claim X If not the same in all years, explain in Question 8. ------------ (b) per claimant See Below ------------ -----END PRIVACY-ENHANCED MESSAGE-----