-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ko3hYzGAQDjbTtZCKiJBEBqQ40fp5P2WsisKQ9OnMmrMawSfHyDvBODexHYTFFff ZFeiLCQiK3FK0gnOddZqDQ== 0000074931-97-000042.txt : 19971105 0000074931-97-000042.hdr.sgml : 19971105 ACCESSION NUMBER: 0000074931-97-000042 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971104 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORION CAPITAL CORP CENTRAL INDEX KEY: 0000074931 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 956069054 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07801 FILM NUMBER: 97707663 BUSINESS ADDRESS: STREET 1: 9 FARM SPRINGS RD STREET 2: 24TH FLOOR CITY: FARMINGTON STATE: CT ZIP: 06032 BUSINESS PHONE: 8606746600 MAIL ADDRESS: STREET 1: 600 FIFTH AVENUE STREET 2: 24TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020-2302 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-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1997 ( ) TRANSITION REPORT, PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 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) 9 Farm Springs Road Farmington, Connecticut 06032 - ---------------------------------------- ----------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (860) 674-6600 -------------- Former name, former address and former fiscal year if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 ---- ---- 27,562,292 shares of Common Stock, $1.00 par value, of the registrant were outstanding on November 4, 1997 Page 1 of 28 Exhibit Index Appears at Page 24 ORION CAPITAL CORPORATION FORM 10-Q INDEX For the Quarter Ended September 30, 1997 Page Number ------ PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements: Consolidated Balance Sheet at September 30, 1997 (Unaudited) and December 31, 1996 .................... 3 - 4 Consolidated Statement of Earnings for the three and nine-month periods ended September 30, 1997 and 1996 (Unaudited) ................................. 5 Consolidated Statement of Stockholders' Equity for the nine-month periods ended September 30, 1997 and 1996 (Unaudited), and for the year ended December 31, 1996 .................................... 6 Consolidated Statement of Cash Flows for the nine-month periods ended September 30, 1997 and 1996 (Unaudited). 7 - 8 Notes to Consolidated Financial Statements (Unaudited).. 9 - 12 Independent Accountants' Review Report ................. 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ............. 14 - 22 PART II. OTHER INFORMATION ................................ 23 Page 2
PART 1. FINANCIAL INFORMATION ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ASSETS (000s omitted) September 30, 1997 December 31, (Unaudited) 1996 ------------------ ------------- Investments: Fixed maturities at amortized cost (market $327,661 - 1997 and $334,755 - 1996) .................................. $ 318,614 $ 326,841 Fixed maturities at market (amortized cost $1,358,878 - 1997 and $1,169,812 - 1996) ..................... 1,424,615 1,205,308 Common stocks at market (cost $134,406 - 1997 and $136,631 - 1996) .............. 232,267 209,281 Non-redeemable preferred stocks at market (cost $185,665 - 1997 and $151,439 - 1996) ....................... 200,498 152,312 Other long-term investments .............. 89,402 90,129 Short-term investments ................... 352,135 325,896 --------- --------- Total investments ...................... 2,617,531 2,309,767 Cash ....................................... 2,529 11,607 Accrued investment income .................. 28,049 25,724 Investment in affiliate .................... 23,347 22,170 Accounts and notes receivable .............. 184,317 181,495 Reinsurance recoverables and prepaid reinsurance .............................. 521,878 517,209 Deferred policy acquisition costs .......... 145,377 136,168 Property and equipment ..................... 70,893 68,763 Excess of cost over fair value of net assets acquired .......................... 78,948 81,198 Deferred federal income taxes .............. - 23,554 Other assets ............................... 88,303 86,702 ---------- ---------- Total assets .......................... $3,761,172 $3,464,357 ========== ========== See Notes to Consolidated Financial Statements (Unaudited) Page 3 ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITY (000s omitted - except for share data) September 30, 1997 December 31, (Unaudited) 1996 ------------------ ------------- Liabilities: Policy liabilities - Losses ...................................... $1,407,831 $1,421,920 Loss adjustment expenses .................... 397,226 363,744 Unearned premiums ........................... 508,910 496,249 Policyholders'dividends ..................... 21,286 22,489 ---------- ---------- Total policy liabilities ................ 2,335,253 2,304,402 Notes payable ............................... 310,395 310,904 Other liabilities ........................... 251,678 227,087 ---------- ---------- Total liabilities ........................ 2,897,326 2,842,393 ---------- ---------- Contingencies (Note F) Minority interest in subsidiary ............... 54,142 45,231 ---------- ---------- Company-obligated mandatorily redeemable capital securities of subsidiary trust holding solely the Junior Subordinated Debentures of Orion ......................... 125,000 - ---------- ---------- Stockholders' equity: Preferred stock, authorized 5,000,000 shares- issued and outstanding - none Common stock, $1 par value; authorized 50,000,000 shares; issued 30,675,300 shares 30,675 15,338 Capital surplus ............................. 143,667 158,587 Net unrealized investment gains, net of federal income taxes of $53,891 - 1997 and $31,674 - 1996 ............................ 114,999 72,260 Net unrealized foreign exchange translation losses, net of federal income taxes of $206 - 1997 and $414 - 1996 ............... (3,316) (2,164) Retained earnings ........................... 437,505 370,793 Treasury stock, at cost(3,103,829 shares - 1997 and 3,138,230 shares - 1996) ......... (34,846) (34,980) Deferred compensation on restricted stock ... (3,980) (3,101) ---------- ---------- Total stockholders' equity .............. 684,704 576,733 ---------- ---------- Total liabilities and stockholders equity.... $3,761,172 $3,464,357 ========== ========== See Notes to Consolidated Financial Statements (Unaudited) Page 4 ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) (000s omitted - except for per common share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ---------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Revenues: Premiums earned ........................... $347,450 $332,936 $1,006,639 $ 954,447 Net investment income ..................... 40,754 36,028 122,291 106,821 Realized investment gains ................. 5,152 5,480 29,299 16,606 Other income .............................. 5,014 5,940 15,133 17,473 -------- -------- ---------- ---------- 398,370 380,384 1,173,362 1,095,347 -------- -------- ---------- ---------- Expenses: Losses incurred ........................... 177,293 175,729 520,840 518,533 Loss adjustment expenses .................. 51,792 47,979 152,941 136,485 Amortization of deferred policy acquisition costs ....................... 99,490 95,021 287,565 260,270 Other insurance expenses .................. 9,491 6,329 26,110 21,862 Dividends to policyholders ................ 7,950 7,137 17,818 16,029 Interest expense .......................... 6,196 6,165 18,498 18,483 Other expenses ............................ 8,470 8,848 30,132 32,003 -------- -------- ---------- ---------- 360,682 347,208 1,053,904 1,003,665 -------- -------- ---------- ---------- Earnings before equity in earnings (loss) of affiliate, federal income taxes and minority interest expense ................. 37,688 33,176 119,458 91,682 Equity in earnings (loss) of affiliate....... 385 291 1,294 (430) -------- -------- ---------- ---------- Earnings before federal income taxes and minority interest expense .................. 38,073 33,467 120,752 91,252 Federal income taxes ........................ 9,728 7,677 30,519 21,444 Minority interest expense: Subsidiary net earnings .................... 2,045 1,429 5,764 6,987 Subsidiary trust preferred securities,net of federal income taxes ..................... 1,774 - 5,084 - -------- -------- ---------- ---------- Net earnings............................... $ 24,526 $ 24,361 $ 79,385 $ 62,821 ======== ======== ========== ========== Net earnings per common share ............. $ .88 $ .88 $ 2.85 $ 2.26 ======== ======== ========== ========== See Notes to Consolidated Financial Statements (Unaudited) Page 5 ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (000s omitted) Nine Months Ended September 30, Year Ended (Unaudited) December 31, ------------------- ------------ 1997 1996 1996 ---- ---- ---- Common stock: Balance, beginning of period ................ $ 15,338 $ 15,338 $ 15,338 Stock issued in 2-for-1 common stock split .. 15,337 - - -------- -------- -------- Balance, end of period ...................... $ 30,675 $ 15,338 $ 15,338 ======== ======== ======== Capital surplus: Balance, beginning of period ................ $158,587 $146,658 $146,658 Exercise of stock options and issuance/ (cancellation) of restricted stock ........ 417 (250) 29 Recognition of pre-reorganization federal income tax benefits ............... - - 11,900 Stock issued in 2-for-1 common stock split .. (15,337) - - -------- -------- -------- Balance, end of period ...................... $143,667 $146,408 $158,587 ======== ======== ======== Net unrealized investment gains: Balance, beginning of period ................ $ 72,260 $ 63,255 $ 63,255 Change in unrealized investment gains, net of taxes .............................. 42,739 (5,430) 9,005 -------- -------- -------- Balance, end of period ...................... $114,999 $ 57,825 $ 72,260 ======== ======== ======== Net unrealized foreign exchange translation losses: Balance, beginning of period ................ $ (2,164) $ (3,935) $ (3,935) Change in unrealized foreign exchange translation losses, net of taxes .......... (1,152) 225 1,771 -------- -------- -------- Balance, end of period ...................... $ (3,316) $ (3,710) $ (2,164) ======== ======== ======== Retained earnings: Balance, beginning of period ................ $370,793 $298,452 $298,452 Net earnings ................................ 79,385 62,821 86,631 Dividends declared .......................... (12,673) (10,436) (14,290) -------- -------- -------- Balance, end of period ...................... $437,505 $350,837 $370,793 ======== ======== ======== Treasury stock: Balance, beginning of period ................ $(34,980) $(26,534) $(26,534) Exercise of stock options and issuance/ (cancellation) of restricted stock......... 1,667 1,049 2,702 Acquisition of treasury stock ............... (1,533) (9,844) (11,148) -------- -------- -------- Balance, end of period ...................... $(34,846) $(35,329) $(34,980) ======== ======== ======== Deferred compensation on restricted stock: Balance, beginning of period ................ $ (3,101) $ (2,331) $ (2,331) (Issuance)/cancellation of restricted stock.. (1,557) (109) (1,827) Amortization of deferred compensation on restricted stock .......................... 678 961 1,057 -------- -------- -------- Balance, end of period ...................... $ (3,980) $ (1,479) $ (3,101) ======== ======== ======== See Notes to Consolidated Financial Statements (Unaudited) Page 6 ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (000s omitted) Nine Months Ended September 30, ------------------------------- 1997 1996 ---- ---- Cash flows from operating activities: Premiums collected .......................... $1,034,590 $1,000,285 Net investment income collected ............. 104,396 101,007 Losses and loss adjustment expenses paid .... (658,402) (606,332) Policy acquisition costs paid ............... (307,241) (295,984) Dividends paid to policyholders ............. (19,021) (14,096) Interest paid ............................... (22,196) (22,290) Federal income tax payments ................. (23,176) (22,337) Payments to minority interest shareholders of subsidiary trust preferred securities... (5,092) - Other payments............................... (26,089) (5,637) ---------- ---------- Net cash provided by operating activities.. 77,769 134,616 ---------- ---------- Cash flows from investing activities: Maturities of fixed maturity investments .... 107,403 122,620 Sales of fixed maturity investments ......... 231,938 179,067 Sales of equity securities .................. 134,086 109,522 Investments in fixed maturities ............. (509,370) (275,937) Investments in equity securities ............ (135,931) (60,193) Purchase of Guaranty National common stock .. - (88,493) Effect on cash of consolidating Guaranty National .................................. - 6,794 Net purchases of short-term investments ..... (26,558) (71,023) Purchase of property and equipment .......... (11,602) (10,782) Other receipts (payments).................... 13,736 (5,941) ---------- ---------- Net cash used in investing activities ..... (196,298) (94,366) ---------- ---------- Cash flows from financing activities: Net proceeds from issuance of trust preferred securities ................................ 123,036 - Proceeds from exercise of stock options ..... 383 42 Dividends paid to stockholders .............. (12,169) ( 10,121) Dividends paid to minority stockholders ..... (1,105) (2,308) Repayment of notes payable .................. (563) (1,125) Purchases of common stock ................... (1,415) (9,439) Other receipts .............................. 1,299 37 ---------- ---------- Net cash provided by (used in) financing activities .............................. 109,466 (22,914) ---------- ---------- Effect of foreign exchange rate changes on cash (15) 4 ---------- ---------- Net (decrease) increase in cash ........... (9,078) 17,340 Cash balance, beginning of period ............. 11,607 3,584 ---------- ---------- Cash balance, end of period ................... $ 2,529 $ 20,924 ========== ========== See Notes to Consolidated Financial Statements (Unaudited) Page 7 ORION CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS - (Continued) (UNAUDITED) (000s omitted) Nine Months Ended September 30, ------------------------------- 1997 1996 ---- ---- Reconciliation of net earnings to net cash provided by operating activities: Net earnings .................................. $ 79,385 $ 62,821 -------- -------- Adjustments: Depreciation and amortization ............... 9,376 8,313 Amortization of excess of cost over fair value of net assets acquired .............. 2,251 2,329 Deferred federal income taxes ............... 348 4,653 Amortization of fixed maturity investments .. (1,703) (2,414) Non-cash investment income .................. (13,354) (9,053) Equity in (earnings) loss of affiliate ...... (1,294) 430 Dividends received from affiliate ........... 342 302 Realized investment gains ................... (29,299) (16,606) Minority interest expense in subsidiary net earnings............................... 5,764 6,987 Foreign exchange translation adjustment ..... 332 777 Other ....................................... 115 1,084 Change in assets and liabilities(net of effects of consolidating Guaranty National in 1996): (Increase) decrease in accrued investment income ......................... (2,325) 4,570 (Increase) decrease in accounts and notes receivable ................................ (2,822) 6,765 Increase in reinsurance recoverables and prepaid reinsurance ....................... (4,669) (55,914) Increase in deferred policy acquisition costs (9,209) (21,704) Increase in other assets .................... (8,229) (10,893) (Decrease) increase in losses................ (14,089) 67,611 Increase in loss adjustment expenses......... 33,482 22,604 Increase in unearned premiums ............... 12,661 64,712 (Decrease) increase in policyholders' dividends ................................. (1,203) 1,933 Increase (decrease) in other liabilities..... 21,909 (4,691) -------- -------- Total adjustments and changes ............. (1,616) 71,795 -------- -------- Net cash provided by operating activities ..... $ 77,769 $134,616 ======== ======== See Notes to Consolidated Financial Statements (Unaudited) Page 8
ORION CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Nine Months Ended September 30, 1997 and 1996 Note A - Basis of Financial Statement Presentation The consolidated financial statements and notes thereto are prepared in accordance with generally accepted accounting principles for property and casualty insurance companies. The consolidated financial statements include Orion Capital Corporation ("Orion") and its majority-owned subsidiaries (collectively the "Company"). The Company's investment in its unconsolidated affiliate is accounted for using the equity method. All material intercompany balances and transactions have been eliminated. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the Company's results of operations, financial position and cash flows for all periods presented. Although these consolidated financial statements are unaudited, they have been reviewed by the Company's independent accountants, Deloitte & Touche LLP, for conformity with accounting requirements for interim financial reporting. Their report on such review is included herein. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1996 annual report on Form 10-K. Note B - Investments in Affiliate As of September 30, 1997 the Company owned 24.8% of the common stock of Intercargo Corporation ("Intercargo"), a publicly held company. The Company records its share of Intercargo's operating results in the subsequent quarter, after Intercargo has reported its financial results. Summarized financial information of Intercargo for the three-month and nine-month periods ended September 30, 1997 and 1996 is as follows: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1997 1996 1997 1996 ---- ---- ---- ---- (000s omitted) Revenues: Premiums earned .................... $13,835 $ 16,590 $43,917 $ 52,958 Investment and other income ........ 1,305 1,306 6,312 4,720 -------- -------- -------- -------- 15,140 17,896 50,229 57,678 -------- -------- -------- -------- Expenses: Insurance expenses ................. 14,067 16,728 45,394 59,508 Interest ........................... 190 125 639 624 -------- -------- -------- -------- 14,257 16,853 46,033 60,132 -------- -------- -------- -------- Earnings (loss) before equity in earnings of affiliate and federal income taxes ....................... 883 1,043 4,196 (2,454) Equity in earnings of affiliate ...... 1,437 1,108 3,389 1,660 Federal income tax (expense) benefit.. ( 276) (397) (883) 25 -------- -------- -------- -------- Net earnings (loss) .................. $ 2,044 $ 1,754 $ 6,702 $ (769) ======== ======== ======== ======== The Company's proportionate share, including amortization of goodwill.. $ 385 $ 291 $ 1,294 $ (430) ======== ======== ======== ======== Page 9 Note C - 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 to limit exposure to losses. Reinsurance does not discharge the primary liability of the original insurer. The table below summarizes certain reinsurance information: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ---------------------- 1997 1996 1997 1996 ---- ---- ---- ---- (000s omitted) Direct premiums written ......... $394,318 $380,053 $1,142,611 $1,078,369 Reinsurance assumed ............. 18,744 41,170 73,972 135,506 -------- -------- ---------- ---------- Gross premiums written .......... 413,062 421,223 1,216,583 1,213,875 Reinsurance ceded ............... (61,569) (71,451) (190,631) (218,075) -------- -------- ---------- ---------- Net premiums written ............ $351,493 $349,772 $1,025,952 $ 995,800 ======== ======== ========== ========== Direct premiums earned .......... $378,999 $357,544 $1,113,156 $1,028,242 Reinsurance assumed ............. 27,034 41,416 89,598 125,678 -------- -------- ---------- ---------- Gross premiums earned ........... 406,033 398,960 1,202,754 1,153,920 Reinsurance ceded ............... (58,583) (66,024) (196,115) (199,473) -------- -------- ---------- ---------- Net premiums earned ............. $347,450 $332,936 $1,006,639 $ 954,447 ======== ======== ========== ========== Loss and loss adjustment expenses recoverable from reinsurers ... $ 56,477 $ 55,536 $ 130,669 $ 114,547 ======== ======== ========== ========== Note D - Trust Preferred Securities On January 13, 1997 Orion issued $125,000,000 of 8.73% Junior Subordinated Deferrable Interest Debentures due January 1, 2037 (the "Debentures") to Orion Capital Trust I (the "Trust"), a Delaware statutory business trust sponsored by Orion. The Trust simultaneously sold $125,000,000 of 8.73% Capital Securities (the "Trust Preferred Securities") which have substantially the same terms as the Debentures. The Trust Preferred Securities are subordinate to all liabilities of the Company, and may be redeemed without premium on or after January 1, 2007. Orion registered the Trust Preferred Securities under the Securities Act of 1933 in April 1997. The Trust is wholly-owned by Orion and the sole assets of the Trust are the Debentures issued by Orion. Orion has provided a full and unconditional guaranty of the Trust's obligations under the Trust Preferred Securities, including all costs, expenses, debts and liabilities of the Trust. Page 10 Note E - Stockholders' Equity and Earnings Per Common Share On June 5, 1997 the Company declared a 2-for-1 split of its common stock payable on July 7, 1997 to shareholders of record on June 23, 1997. All common stock and per common share data presented in these financial statements have been restated to give effect to this stock split. The Company repurchased 42,916 shares of its common stock at an aggregate cost of $1,533,000 in the first nine months of 1997. The remaining authorization from the Board of Directors for the Company's stock repurchase program was $3,169,000 on September 30, 1997. Earnings per common share are computed using the weighted average common and dilutive common equivalent shares outstanding. The weighted average common shares amounted to 27,881,000 and 27,702,000 shares for the three months ended September 30, 1997 and 1996, respectively, and 27,828,000 and 27,798,000 shares for the nine months ended September 30, 1997 and 1996, respectively. Note F - Contingencies Orion and its subsidiaries are routinely engaged in litigation incidental to their businesses. Management believes that there are no significant legal proceedings pending against the Company which, net of reserves established therefor, are likely to result in judgments for amounts that are material to the financial condition, liquidity or results of operations of Orion and its consolidated subsidiaries, taken as a whole. On September 18, 1997, a complaint naming the Company, Guaranty National Corporation and Guaranty National's Directors, as defendants, was filed on behalf of the Guaranty National's shareholders in connection with the Company's exchange offer announced on that date. A response to this complaint will be made promptly after the offer commences (See Note H regarding purchase of Guaranty National shares). Note G - Accounting Standards Not Yet Adopted In February 1997 the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128 "Earnings per Share" which establishes new guidelines for the computation and disclosure of earnings per share. SFAS No. 128 is required to be adopted at the end of 1997. Current earnings per share ("EPS") disclosures will be replaced by Basic EPS and Diluted EPS as defined in SFAS No. 128. Pro forma Basic EPS and Diluted EPS computed in accordance with SFAS No. 128 would be $.90 and $.88 for the third quarter of 1997 and $.89 and $.88 for the third quarter of 1996, respectively. The pro forma nine-month Basic EPS and Diluted EPS would be $2.91 and $2.85 for 1997 and $2.29 and $2.26 for 1996, respectively. Page 11 In June 1997 the FASB issued SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information", which changes the way public companies report information about segments. This statement is effective for financial statements for periods beginning after December 15, 1997. Management is currently evaluating the effects of this change on the Company's financial statements. Note H - Purchase of Guaranty National Shares On October 31, 1997, the Company and Guaranty National Corporation announced that their respective Boards of Directors have approved an agreement providing for the merger of Guaranty National into a wholly-owned subsidiary of Orion. Under the agreement reached, the merger will take place following the completion of an Orion tender offer for the approximately 2.9 million shares of Guaranty National common stock that it does not already own for $36 per share in cash. The cash tender offer supersedes the exchange offer previously announced on September 18, 1997. Orion currently owns 80.5% of the outstanding stock of Guaranty National. Page 12 INDEPENDENT ACCOUNTANTS' REVIEW REPORT Board of Directors Orion Capital Corporation Farmington, Connecticut We have reviewed the accompanying consolidated balance sheet of Orion Capital Corporation and subsidiaries (the "Company") as of September 30, 1997, and the related consolidated statements of earnings for the three- month and nine-month periods ended September 30, 1997 and 1996 and the statements of stockholders' equity and cash flows for the nine-month periods ended September 30, 1997 and 1996. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Orion Capital Corporation and subsidiaries as of December 31, 1996, and the related consolidated statements of earnings, stockholders' equity and cash flows for the year then ended; and in our report dated February 14, 1997, we expressed an unqualified opinion on those consolidated financial statements. The consolidated statements of earnings and cash flows for the year ended December 31, 1996 are not presented herein. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1996 and related consolidated statement of stockholders' equity for the year then ended is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. DELOITTE & TOUCHE LLP Hartford, Connecticut October 31, 1997 Page 13 ORION CAPITAL CORPORATION AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations Nine Months Ended September 30, 1997 and 1996 RESULTS OF OPERATIONS Orion Capital Corporation ("Orion") and its majority-owned subsidiaries (collectively the "Company") operate principally in the property and casualty insurance business. The Company reports its insurance operations in three segments. In addition, 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. The three insurance segments are as follows: Regional Operations - this segment includes the workers compensation insurance products and services sold by the EBI Companies. Special Programs - this segment is comprised of several parts - DPIC Companies, which markets professional liability insurance; - Connecticut Specialty, which writes specialty insurance programs; - Wm. H. McGee, an underwriting management company that specializes in ocean marine, inland marine and commercial property insurance; and - the Company's 24.8% interest in Intercargo Corporation, which sells insurance coverages for international trade. Guaranty National - this segment specializes primarily in non-standard automobile insurance and other property insurance. Earnings (loss) by segment before federal income taxes and minority interest expense are summarized as follows for the quarterly and nine-month periods ended September 30, 1997 and 1996. Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 1997 1996 1997 1996 ---- ---- ---- ---- (000s omitted) Regional Operations ................. $22,899 $12,454 $ 60,360 $ 42,555 Special Programs .................... 5,187 16,201 33,143 40,662 Guaranty National ................... 14,209 9,778 40,519 23,964 ------- ------- -------- -------- 42,295 38,433 134,022 107,181 Other ............................... (4,222) (4,966) (13,270) (15,929) ------- ------- -------- -------- Total.............................. $38,073 $33,467 $120,752 $ 91,252 ======= ======= ======== ======== Page 14 Net premiums written for the Company by segment are as follows: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------- 1997 1996 1997 1996 ---- ---- ---- ---- (000s ommitted) Regional Operations ............. $ 99,176 $ 87,367 $ 276,971 $266,525 Special Programs ................ 106,785 138,101 325,248 360,616 Guaranty National ............... 145,532 124,304 423,733 368,659 -------- -------- ---------- -------- $351,493 $349,772 $1,025,952 $995,800 ======== ======== ========== ======== Regional Operations' net premiums written increased 13.5% in the third quarter of 1997 and increased 3.9% in the first nine months of 1997 compared to the same 1996 periods. The increase in premiums written in the third quarter of 1997 over the 1996 period was from the growth generated by a national account program EBI started in the first quarter of 1997. The increase in premiums written in 1997 was also from EBI's selective geographic expansion and penetration, including the opening of five branch offices in 1997 and seven in 1996 in territories where the Company believes it will benefit from its service-oriented approach. The increase in premiums was mitigated in part by the effects of legislative reforms in certain states that have led to an increasingly competitive workers compensation marketplace. Special Programs' net premiums written decreased 22.7% in the third quarter of 1997 and 9.8% in the first nine months of 1997 compared to the same 1996 periods. In November 1996, the Company sold the renewal book of business of its reinsurance operations to concentrate on businesses where the Company can better service specialized niche markets. Excluding premiums from the assumed reinsurance business, this segment's net premiums written decreased 9.9% for the third quarter and increased 4.6% for the nine-month period ended September 30, 1997. The decrease in premiums written in the third quarter of 1997 in comparison to the 1996 period largely related to a cancelled Connecticut Specialty inland marine program. Premiums written by DPIC Companies for professional liability insurance decreased 0.4% to $142,020,000 in the first nine months of 1997 from $142,544,000 for the same 1996 period. The decrease is primarily attributable to rate reductions in a very competitive professional liability insurance market offset in part by a continued high level of policy renewals. Premium volume for Connecticut Specialty in the first nine months of the year increased 1.5% to $129,856,000 in 1997 from $127,901,000 in 1996. The increase in premiums was primarily from transportation programs, including truck liability and physical damage coverages, and from increases in low exposure professional liability programs, in part offset by a decrease in premiums from a cancelled inland marine program. Also, premiums written for most Connecticut Specialty programs increased in 1997 from the comparable 1996 period from higher retentions after a change in reinsurance effective May 1996. Premiums written by Wm. H. McGee increased 40.9% to $43,292,000 for the first nine months of 1997 from $30,736,000 for the same 1996 period. The increase is principally the result of the Company's greater participation in the underwriting pools managed by McGee. Page 15 Guaranty National's net premiums written increased 17.1% for the third quarter of 1997 and increased 14.9% for the nine-months of 1997 compared to the same periods in 1996. Net premiums written for personal lines increased 30.1% to $248,502,000 in the first nine months of 1997 from $191,030,000 in the same period of 1996. Much of this premium volume growth in the private passenger line of business was due mainly to newly-enacted legislation in the state of California which requires all drivers to maintain liability insurance. This change in California law resulted in a significant increase in the personal lines one-month product business. Commercial lines premiums decreased 11.4% to $107,007,000 in 1997 from $120,750,000 during the first nine months of 1996. The majority of the decrease for commercial lines was from lower production in the nonstandard division, increased competition by standard carriers in the nonstandard marketplace, and the effect of both agent and program cancellations during 1996. Premiums written by the collateral protection unit increased 20.0% to $68,224,000 in the first nine months of 1997 from $56,879,000 for the comparable period in 1996. The premium volume growth for this unit comes from increased writing in mortgage fire coverages and a new mechanical breakdown program. Premiums earned by the Company increased 4.4% to $347,450,000 in the third quarter of 1997 compared to $332,936,000 in the third quarter of 1996, and 5.5% to $1,006,639,000 in the first nine months of 1997 from $954,447,000 in 1996. Premiums earned reflects the recognition in income of the changing levels of net premium writings. Net investment income - --------------------- Pre-tax net investment income increased 13.1% to $40,754,000 for the third quarter of 1997 versus $36,028,000 for the third quarter of 1996, and increased 14.5% to $122,291,000 for the first nine months of 1997 as compared to $106,821,000 for 1996. The pre-tax yields on the average investment portfolio were 7.0% and 6.7% for the first nine months of 1997 and 1996, respectively, and the after-tax yields were 5.3% in both 1997 and 1996. The increase in net investment income resulted from increased earnings both on a higher investment base and from investments in limited partnerships. The higher investment base includes the proceeds related to the issuance of $125,000,000 of trust preferred securities in January 1997 and the effects of operating cash flow, offset in part by the July 1996 cash outlay of approximately $88,000,000 for the purchase of Guaranty National common shares. Limited partnership earnings were $3,768,000 and $12,333,000 for the third quarter and first nine months of 1997, respectively, versus $3,803,000 and $9,906,000 for the respective 1996 periods. Fixed maturity investments which 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 classified as available-for-sale and are carried at market value. The carrying value of fixed maturity and short-term investments amounted to $2,095,364,000 and $1,858,045,000, or approximately 80.0% of the Company's cash and investments at both September 30, 1997 and December 31, 1996. Page 16 The Company's investment philosophy is to achieve a superior rate of return after taxes while maintaining a proper balance of safety, liquidity, maturity and marketability. 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. At September 30, 1997 and December 31, 1996, the Company's investments in non-investment grade and unrated fixed maturity securities were carried at $242,671,000 and $219,473,000, respectively. These investments represented a total of 9.3% and 9.5% of cash and investments and 6.5% and 6.3% of total assets at September 30, 1997 and December 31, 1996, respectively. Realized investment gains - ------------------------- Net realized investment gains decreased $328,000 and increased $12,693,000 to $5,152,000 and $29,299,000 in the third quarter and first nine months of 1997, respectively, from net realized investment gains of $5,480,000 and $16,606,000 in the respective periods of 1996. Realized investment gains are net of provisions for losses on securities deemed to be other than temporarily impaired of $1,778,000 and $1,300,000 for the first nine months of 1997 and 1996, respectively, all from the first half of such years. 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. EXPENSES AND OTHER Operating ratios - ---------------- The following table sets forth certain ratios of insurance operating expenses to premiums earned for the Company and the ratio of loss and loss adjustment expenses to premiums earned (the "loss ratio") by segment: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1997 1996 1997 1996 ---- ---- ---- ---- Loss and loss adjustment expenses.. 65.9% 67.2% 66.9% 68.6% Policy acquisition costs and other insurance expenses .............. 31.4 30.4 31.2 29.6 ---- ---- ---- ---- Total before policyholders' dividends ................... 97.3 97.6 98.1 98.2 Policyholders' dividends .......... 2.3 2.2 1.8 1.7 ---- ---- ---- ---- Total after policyholders' dividends ................... 99.6% 99.8% 99.9% 99.9% ==== ==== ==== ==== Loss and loss adjustment expense ratio by segment: Regional Operations ........... 49.4% 61.4% 55.5% 62.8% Special Programs .............. 75.1 69.3 72.9 70.7 Guaranty National ............. 69.8 69.4 69.6 71.0 Page 17 Management believes that the Company's reserves for losses and loss adjustment expenses make reasonable and sufficient provision for the ultimate cost of all losses on claims incurred. Adverse development of prior years' losses amounted to $6,683,000 in the first nine months of 1997 compared with $6,662,000 in the first nine months of 1996. The current year improvement in the loss ratios for the Regional Operations segment results from favorable loss experience achieved by EBI Companies through its service oriented approach of working with its customers to prevent losses and reduce claim costs. The increase in loss ratios for the Special Programs segment is mainly attributable to losses from certain programs cancelled by Connecticut Specialty. The increase in the loss ratios for this segment has been offset in part by the impact of the change in this segment's mix of business, particularly the lower premiums and losses from the assumed reinsurance business that the Company exited in November 1996. The improvement in the year-to-date loss ratio for Guaranty National is primarily attributable to lower claim frequency for the personal lines and commercial lines units. This improvement has been offset in part by costs incurred to improve claim handling and reduce insurance fraud in the personal lines unit and by higher estimates for loss adjustment expenses for the commercial lines unit. The increase in the ratio of deferred policy acquisition costs and other insurance expenses to premiums earned is attributable to the Company's continued investment in building its loss prevention and claims management competencies. The increase for 1997 was also the result of the change in Connecticut Specialty's reinsurance in May 1996, which provides for lower ceding commissions. Interest expense - ---------------- Interest expense was $6,196,000 in the third quarter of 1997 compared to $6,165,000 in 1996, and $18,498,000 in the first nine months of 1997 versus $18,483,000 in 1996, reflecting consistent levels of debt outstanding and interest rates on the Company's debt for the first three quarters of both years. Equity in earnings (loss) of affiliate - -------------------------------------- Equity in earnings (loss) of affiliate includes the Company's portion of earnings of $385,000 and $291,000 from the investment in Intercargo in the third quarters of 1997 and 1996, respectively, and earnings of $1,294,000 in the first nine months of 1997 versus a loss of $430,000 recorded in the first nine months of 1996. The Company records its share of Intercargo's results in the subsequent quarter. Page 18 Federal income taxes - -------------------- Federal income taxes on pre-tax operating results and the related effective tax rates, including the tax benefit from the minority interest expense in subsidiary trust, amounted to $8,772,000 (24.8%) and $7,677,000 (23.0%) in the third quarters of 1997 and 1996, respectively. The corresponding amounts for the first nine months of 1997 and 1996 were $27,781,000 (24.6%) and $21,444,000 (23.5%), respectively. The Company's effective tax rate is less than the statutory tax rate of 35.0% primarily because of income derived from tax-advantaged securities. Minority interest expense - ------------------------- Minority interest in subsidiary net earnings of $2,045,000 and $1,429,000 for the third quarters and $5,764,000 and $6,987,000 for the first nine months of 1997 and 1996, respectively, represents the portion of Guaranty National's earnings, net of federal income taxes, attributable to Guaranty National's minority shareholders. The 1997 nine month expense was lower due to the increase in the Company's ownership of Guaranty National in July 1996. Minority interest in subsidiary trust of $1,774,000 and $5,084,000 for the third quarter and first nine months of 1997, respectively, represents the financing cost after the federal income tax deduction on Orion's $125,000,000 of 8.73% trust preferred securities issued in January 1997. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities decreased by $56,847,000 for the first nine months of 1997 from $134,616,000 in 1996 to $77,769,000 in 1997. The decrease in operating cash flow for 1997 was the result of higher payments for losses, policy acquisition costs, policyholders' dividends, minority interest in subsidiary trust, and other payments, consistent with the Company's growth level in recent years and including the payment of losses for the assumed reinsurance business the Company exited in November 1996. Partially offsetting these increased cash outflows were higher premiums collected, reflective of the Company's current rate of growth. Cash used in investment activities increased to $196,298,000 for the first nine months of 1997 from $94,366,000 in 1996. Cash is used in investment activities primarily for purchases of investments. The purchases are funded by maturities and sales of investments, as well as by the net cash from operating cash flows after cash provided by or used in financing activities. Cash invested in 1997 includes the investment of the net proceeds from $125,000,000 of trust preferred securities issued by Orion in January 1997. Cash provided by financing activities was $109,466,000 for the first nine months of 1997 and cash used in financing activities was $22,914,000 for the same period of 1996. Cash was provided by the net proceeds from the issuance of $125,000,000 of trust preferred securities by Orion. Cash was used for dividend payments and the Company's stock repurchase program in both 1997 and 1996. Orion increased its quarterly dividend rate by 14.3% in the second quarter of 1997 and by 8.7% and 12.0% in the first and fourth quarters of 1996, respectively. Page 19 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. Payments of dividends by Orion's insurance subsidiaries must comply with insurance regulatory limitations concerning stockholder dividends and capital adequacy. 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 $182,117,000 and $293,477,000 at September 30, 1997 and December 31, 1996, respectively. Orion's insurance subsidiaries had combined policyholders' surplus of $795,079,000 at September 30, 1997 and $670,572,000 at December 31, 1996, and statutory operating leverage ratios based on trailing twelve months net premiums written to policyholders' surplus of 1.7:1 at September 30, 1997 and 2.0:1 at December 31, 1996. The terms of Orion's indentures for its $100,000,000 of 7 1/4% Senior Notes due 2005 and its $110,000,000 of 9 1/8% Senior Notes due 2002 limit the amount of liens and guaranties by the Company, and the Company's ability to incur secured indebtedness without equally and ratably securing the senior notes. Management does not believe that these limitations unduly restrict the Company's operations or limit Orion's ability to pay dividends on its stock. At September 30, 1997, the Company was in compliance with the terms of its senior note indentures. Management believes that the Company continues to have substantial sources of capital and liquidity from the capital markets and bank borrowings. As of September 30, 1997, Guaranty National has $100,000,000 outstanding under an agreement with several banks which provides for an unsecured reducing revolving credit facility. Principal payments are due from April 1999 until 2002. Interest is payable quarterly at interest rates based on the floating LIBOR rate, plus a margin of 0.375% to 0.75%. Guaranty National has two interest rate swap agreements which effectively change the interest rate exposure on $80,000,000 of these borrowings to a fixed rate of approximately 6.3% through March 31, 1998. Guaranty National is in compliance with the various covenants and restrictions in its bank loan agreement. On January 13, 1997 Orion issued $125,000,000 of 8.73% Junior Subordinated Deferrable Interest Debentures due January 1, 2037 (the "Debentures") to Orion Capital Trust I (the "Trust"), a Delaware statutory business trust sponsored by Orion. The Trust simultaneously sold $125,000,000 of 8.73% Capital Securities (the "Trust Preferred Securities") which have substantially the same terms as the Debentures. The net proceeds from the sale of the Trust Preferred Securities will be used in part for the recently announced acquisition of Guaranty National common stock not already owned by Orion. The Trust Preferred Securities are subordinate to all liabilities of the Company, and may be redeemed without premium on or after January 1, 2007. The Company may defer interest distributions on the Trust Preferred Securities; however, during any period when such cumulative distributions Page 20 have been deferred, Orion may not declare or pay any dividends or distributions on its common stock. On June 5, 1997 the Company declared a 2-for-1 split of its common stock payable on July 7, 1997 to shareholders of record on June 23, 1997. 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 repurchased 42,916 shares of its common stock at an aggregate cost of $1,533,000 in the first nine months of 1997. The remaining authorization for the stock repurchase program from the Company's Board of Directors was $3,169,000 as of September 30, 1997. On October 31, 1997, the Company and Guaranty National Corporation announced that their respective Boards of Directors have approved an agreement providing for the merger of Guaranty National into a wholly-owned subsidiary of Orion. Under the agreement reached, the merger will take place following the completion of an Orion tender offer for the approximately 2.9 million shares of Guaranty National common stock that it does not already own for $36 per share in cash. The cash tender offer supersedes the exchange offer previously announced on September 18, 1997. A complaint naming the Company, Guaranty National and Guaranty National's Directors, as defendants, was filed on behalf of the Guaranty National's shareholders in connection with the Company's exchange offer announced. A response to this complaint will be made promptly after the offer commences. Orion currently owns 80.5% of the outstanding stock of Guaranty National. On October 20, 1997, Guaranty National announced plans to purchase Unisun Insurance ("Unisun") from Michigan Mutual Insurance Company for $26 million. Unisun, which is primarily a personal lines company, is headquartered in Charleston, South Carolina. Unisun also writes commercial multi-lines, homeowners protection and flood insurance under the U.S. Government insured Write Your Own program. Guaranty National expects the transaction to be completed by year end following appropriate approvals by regulatory authorities. FORWARD-LOOKING STATEMENTS All statements made in this Quarterly Report on Form 10-Q that do not reflect historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and other factors include, among other things, (i) general economic and business conditions; (ii) interest rate and financial market changes; (iii) competition and the regulatory environment in which we operate; (iv) claims frequency; (v) claims severity; (vi) medical cost inflation; (vii) increases in the cost of property repair; (viii) the number Page 21 of new and renewal policy applications submitted to us; and (ix) other factors over which we have little or no control. The Company disclaims any obligation to update or to publicly announce the impact of any such factors or any revisions to any forward looking statements to reflect future events or developments. Page 22 PART II. OTHER INFORMATION Items 1 - 5. - ------------- None. Item 6. Exhibits and Reports on Form 8-K - ---------------------------------------- (a) Exhibits Exhibit 11: Computation of Earnings Per Common Share Exhibit 15: Deloitte & Touche LLP Letter re unaudited interim financial information Exhibit 27: Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K have been filed during the quarter. Page 23 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ORION CAPITAL CORPORATION Date: November 4, 1997 By: /s/ W. Marston Becker -------------------------- Chairman of the Board and Chief Executive Officer Date: November 4, 1997 By: /s/ Daniel L. Barry -------------------------- Senior Vice President and Chief Financial Officer Page 24 EXHIBIT INDEX Page No. Exhibit 11 Computation of Earnings 25 Per Common Share Exhibit 15 Deloitte & Touche LLP Letter re unaudited interim financial information 26 Exhibit 27 Financial Data Schedule 27 Page 25 EX-11 2
EXHIBIT 11 ORION CAPITAL CORPORATION COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED) (000s omitted - except for per common share data) Three months ended Nine months ended September 30, September 30, ------------------ ----------------- 1997 1996 1997 1996 ---- ---- ---- ---- Computation of weighted average number of common and equivalent shares outstanding: PRIMARY - Weighted average number of shares outstanding ...................... 27,335 27,328 27,313 27,428 Dilutive effect of stock options and stock awards ..................... 546 374 515 370 ------ ------ ------ ------ Weighted average number of common and equivalent shares ................ 27,881 27,702 27,828 27,798 ====== ====== ====== ====== Net earnings attributable to common stockholders ....................... $24,526 $24,361 $79,385 $62,821 ====== ====== ====== ====== Net earnings per common share ........ $ .88 $ .88 $ 2.85 $ 2.26 ====== ====== ====== ====== FULLY DILUTED - Weighted average number of shares outstanding ....................... 27,335 27,328 27,313 27,428 Dilutive effect of stock options and stock awards ...................... 625 388 558 388 ------ ------ ----- ------ Weighted average number of common and equivalent shares ................ 27,960 27,716 27,871 27,816 ====== ====== ====== ====== Net earnings attributable to common stockholders ....................... $24,526 $24,361 $79,395 $62,821 ====== ====== ====== ====== Net earnings per common share ........ $ .88 $ .88 $ 2.85 $ 2.26 ======= ======= ======= =======
Page 26 EX-15 3 EXHIBIT 15 October 31, 1997 Orion Capital Corporation 9 Farm Springs Road Farmington, CT 06032 We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Orion Capital Corporation and subsidiaries for the periods ended September 30, 1997 and 1996, as indicated in our report dated October 31, 1997; because we did not perform an audit, we expressed no opinion on the information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, is incorporated by reference in Registration Statements No. 2- 65348 on Form 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, No. 2-63344 on Form S-8 relating to the Orion Capital Corporation Employees' Stock Savings and Retirement Plan and No. 33- 59847 on Form S-8 relating to the Orion Capital Corporation 1994 Stock Option Plan for Non-Employee Directors. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP Hartford, Connecticut Page 27 EX-27 4
7 EXHIBIT 27 THIS FINANCIAL SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ORION CAPITAL CORPORATION'S FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1997 JAN-1-1997 SEP-30-1997 1,424,615 318,614 327,661 432,765 2,000 0 2,617,531 2,529 441,898 145,377 3,761,172 1,805,057 508,910 0 21,286 310,395 174,342 0 0 510,362 3,761,172 1,006,639 122,291 29,299 15,133 673,781 287,565 43,928 120,752 30,519 79,385 0 0 0 79,385 2.85 2.85 1,368,420 667,098 6,683 277,151 381,249 1,383,801 6,683
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